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Inventory Management Pattern of Steel Industry in India

Article  in  SSRN Electronic Journal · January 2020

DOI: 10.2139/ssrn.3563991

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 Inventory Management Pattern of Steel
Industry in India

Y. Maheswari*
*Assistant Professor, Department of Management Studies, Sri Venkateswara College of
Engineering, Tirupathi (AP), India

Dr. Nalla Bala Kalyan**

**Associate Professor, Department of Management Studies, Sri Venkateswara College of
Engineering, Tirupati, (AP), India

Abstract:
The aspire of the study is to examine the inventory management procedure and to
differentiate the key factors that collision inventory management practices, explore the
proficient and viable inventory management approaches. Inventory management is a
significant area of the developed industry. If the company fails to manage inventory, it will
face failure. It is a challenge for the company to maintain a fair inventory. There are different
inventory management techniques available for maintaining a fair inventory level in the
company. The essential purpose of this article is to revise inventory management techniques
used in the steel industry and find out some methods for the development of the inventory
management process of the concerned company.

Keywords: ABC Analysis, EOQ Analysis, Inventory Management, Material, Steel Industry

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1. Introduction
Inventory management involves the control of assets being produced for the purpose
of sale in the normal course of the company's operations. Inventories include raw materials
inventory, work in process inventory and finished goods inventory. The goal of effective
inventory management is to minimize the total costs direct and indirect those are associated with
holding inventories. However, the importance of inventory management to the company depends
upon the extent of investment in the inventory. Steel Industry in India is on an upswing because
of the strong global and domestic demand. India's rapid economic growth and soaring demand by
sectors like infrastructure, real estate, and automobiles, at home and abroad, has put the Indian
steel industry on the global map. According to the latest report by the International Iron and Steel
Institute (IISI), India is the tenth largest steel producer in the world.
The Indian steel industry is organized in to three categories i.e., main producers, other
major producers, and secondary producers. The main producers are Tata Steel, SAIL, and RINL,
while the other major producers are ESSAR, ISPAT and JVSL. The secondary sector is
dispersed and consists of:
1. Backward linkage from about 120 sponge iron producers that use iron ore and non-coking
coal, providing feedstock for steel producers;
2. Approximately 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy
optimizing furnaces that use iron ore, sponge iron and melting scrap to produce steel; and
3. Forward linkage with about 1,200 re-rollers that roll out semis into finished steel products for
consumer use.
India was the world’s second-largest steel producer@ with production standing at 106.5 MT
in 2018. The growth in the Indian steel sector has been driven by the domestic availability of raw
materials such as iron ore and cost-effective labor. Consequently, the steel sector has been a
major contributor to India’s manufacturing output. India’s steel production capacity has
expanded to 137.975 million tonnes in FY19. As of 2018, India is the world’s second-largest
producer of crude steel (up from the eighth spot in 2003). The Indian steel industry is very
modern with state-of-the-art steel mills. It has always strived for continuous modernization and
up-gradation of older plants and higher energy efficiency levels. Indian steel industries are
classified into three categories such as major producers, main producers, and secondary
producers.
India’s finished steel consumption grew at a CAGR of 5.69 percent during FY08-FY18 to
reach 90.68 MT. India’s crude steel and finished steel production increased to 106.56 MT and
131.57 MT in 2018-19, respectively. In FY20 (till November 2019), crude steel and finished
steel production stood at 73.17 MT and 67.52 MT respectively. During 2018-19, 6.36 MT of
steel was exported from India. Exports and imports of finished steel stood at 5.75 MT and 5.07
MT, respectively, in FY20P (up to November 2019).

2. Review of Literature
1. Plinere, D. &Borisov, A. (2015), concluded that, inventory management is necessary to
every company, having inventories. Companies have stock, but so much as to keep away
from overstock and out-of-stock situations. Inventory management can better company’s
inventory control existing condition and reduce costs of the company.
2. Jose, T., Jayakumar, A., &Sijo, M. T. (2013) found the difference between EOQ & number
of pieces purchased. It is observed that the company is not using EOQ for buying the
materials. Therefore, inventory management is not reasonable. From estimate of safety stock,
company can decide how much inventory the company can keep in back stock per annum.
3. Mohamad, S. J. A. N. bin S., Suraidi, N. N., Rahman, N. A. A., &Suhaimi, R. D. S. R.
(2016) concluded that efficiency of inventory management is a major concern area of
business. Suggestions are given to improve the performance of inventory management,
demand forecasting, scattered inventory & cycle counting.

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4. As mentioned by Sunitha, K. V. (2012) in her thesis, inventory management is vital for
keeping costs down, when meeting regulations. It is difficult to balance demand and supply
and inventory management to make sure that the balance is untouched. The trained
inventory management and good quality software will help make inventory management a
victory. The ROI of Inventory management has seen better revenue and profits, positive
employee ambiance and increase in customer satisfaction.
5. Atnafu, D. &Balda, A. (2018) focuses on inventory management & explains the
relationship between inventory management practices, competitive advantage &
organizational performance. The finding of the study on basis of data analysis is that there
is a positive relationship between competitive advantages and inventory management
performance. And better organizational performance gives a firm bigger capital to apply
various inventory management techniques
6. HongShen, Qiang. Deng, Rebbaca Lao, Simon Wu (2016) focused on boosting the
inventory management to improve the supply chain of the company. Drop in inventory is
considered one of the most significant aspects of inventory management. In practice, small
inventory level is not always a better solution, so manufacturers need to maintain the
correct amount of inventory at the correct level.

3. Research Methodology
Research the methodology is the way to systematically solve the research problems. This
study on inventory management is an analytical study. The study of research is exploratory
research. Because the facts and information that is readily available are being used to make a
critical evaluation of inventory management. Research design in purely and simply the
framework or plan for a study that guides the collection and analysis of the data. The function
of the researcher is to ensure that the required data are accurate and economical also. An
analytical research technique was adopted in the project. Generally, analytical techniques are
designed to analyze something and it collects data for a definite and certain purpose. The
project mainly focuses on the critical assessment of the inventory management of integral
coach factory and deals with manufacturing accounts analysis, and inventory control. The
tools for analysis of the data by using ABC analysis and EOQ

3.1 Objectives of the Study

1. To study about the inventory management pattern of JSW Steel
2. To examine the raw material classification for better control
3. To suggest measures for better inventory control and manageme

4. Data Analysis and Interpretation

The (JSW) Jindal South West Steel uses several types of inventories. Inventory
management of is an attempt to control the quantity and value of the inventory. Inventory
management process state with classification of different type of inventories to determine the
degree of control required for each.

ABC Analysis: The ABC method is an analytical method of stock control, which aims at
concentrative efforts on those items where attention is needed most. It is based on the premise
that a small number of the items in inventory may typically represent the bulk money value of
the total materials used in production process. While a relatively large number of items may
represent a small portion of the money value of stores used and that small number of items
should be subject to the greatest degree of continuous control. Under this system, the
materials stocked may be classified into a number of categories according to their importance
i.e., their value and frequency of replacement during a period. The first category, we may call
it the group of 'an' items, may consist of only a small percentage of total items handled but its
combined value may be a large portion of the total stock value. The second category, naming

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it as group of 'B' items, may be relatively less important. In the third category consisting of 'c'
items, all the remaining items of stock may be included which are quit large in number but
their value is not high.
Categories of ABC analysis
In ABC analysis the items are classified in three main categories based on their respective
consumption value.
1. Category ‘A’ items: The items, which are most costly and classified as 'A' nearly 10% of
the total number of items stored will account for 70% of total value of all items stocked.
2. Category 'B' items: The items having average consumption value are classified as 'B'
nearly 20% of total value. Statistical sampling is general useful to control them.
3. Category 'C' items: The items having low consumption value are put in category "C"
nearly 70% of total number as items will account for 10% total value. Generally these items
are slow and non-moving items in the stores, which are frequently used for production
process but with more quality.
Advantages of ABC Analysis
▪ Closer and stricter control on those items that represent a major portion of total stock
value.
▪ Investment in inventory can be regulated and funds can be utilized in the best possible
manner.
▪ Saving in stocks carrying costs.
▪ Helps in maintaining enough safety stock for "C" category of items.
▪ Scientific and selective control helps in the maintenance of high stock turnover rate.

Classification and Codification

Classification of materials: Materials of similar nature are suitably classified in major
groups. These groups are further classified into a number of sub groups for example soap,
lubricating oil, cotton waste, etc., may be classified as tools, raw materials like metals can be
classified into 'ferrous' and 'non-ferrous' metals etc.
Codification of materials: Generally classification and codification go together codification
is the producer of assigning distinctive symbols for each item of store. Such symbols may be
numeric or alphabetical of the two. These symbols are known as codes. Thus each material is
known by a code in addition its own name.
Advantages of Codification
▪ Codification has the following advantages
▪ Ambiguity in description is avoided.
▪ Length in description is minimized.
▪ Codification is essential in mechanized accounting.
▪ Codes also ensure secrecy.
▪ Each item of stores is easily identified particularly where the same item is known by more
than one name.

Stock Levels: For effective material control and to avoid over stocking and under stocking
of materials, an important requirement is to decide upon various levels of materials these
levels are maximum level, minimum level and re-order level. By taking action on the basis of
these levels. Each item of material will automatically be held within appropriate limit of
control. These levels are not permanent but need revision according to the changes in the
factors, which determine these levels.
Factors
The following factors help in the fixation of these levels:
• Rate of consumption of materials.
• Lead the time, i.e., time lag.
• Storage capacity.

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• Availability of funds for investment in inventories.
• Cost of storage.
• Risk of loss due to deterioration theft, fire etc.
• Seasonal factors - certain materials are cheaply available during certain seasons.
• Fluctuations in market price.
• Insurance costs.
The maximum stock level is that quantity of materials above which the stock of any item
should not generally be allowed to go up. This maximum level may be exceeding in certain
special cases. For instance, if a particular lot purchased at a reasonably low price, the
maximum level may be crossed. This level is fixed after taking into account such factors as:
• Rate of consumption of material.
• Amount of capital needed and available.
• Storage space available.
• Incidence of insurance costs which may be important for some materials.
• Costs of obsolescence and deterioration and
Re-order quantity.
The formula for computing maximum level is as follows
Maximum level = Re-order level + Re-order quantity - (Minimum Consumption * Minimum
re-order period)

Minimum Level
The minimum level is that level of stock below which is should not normally be allowed to
fall. This is essentially a safety stock and will not normally be touched in case of any item
falling below this level, there is a danger of stoppage in production and, therefore,
management should give top priority to the acquisition of new supplies. This level is fixed
after the consideration of the following factors.
• Rate of consumption and
• The time required under top priority condition to acquire enough supplies to avoid a
stoppage in production.
Formula for computing minimum level is as follows
Minimum level = Re-order level - (Normal consumption *Normal re-order Period)

Ordering level (or) re - order level

This is that level of materials at which a new order for material is to be placed. In other words
this is the level at which a purchase requisition is made out. This level will be fixed
somewhere between maximum and minimum levels. By re-ordering when stocks fall to this
level, then, in the normal course of events, new supplies will be received just before the
minimum level is reached. It is fixed after the consideration Rate of consumption.
1. Minimum level.
2. Delivery time and
3. Variation in delivery time.
Formula for computing Ordering level (or) re - order level is as follows
Re-order level = (maximum consumption * maximum re-order period
Average stock level
This is computed with the help of the following formula
Average stock level = minimum level + ½ of re-order quantity.
Danger level
It is that level below which stock should not be allowed to fall except under emergency
conditions. When stock reaches this level urgent action for purchases is initiated.
Formula for computing danger level
Danger level = average consumption * maximum re - order period for emergency purchase.

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Economic Order Quantity (EOQ)
The economic order quantity is that inventory level, which minimizes the total of ordering
costs and carrying costs. It is the question, how much to order the quantity when inventory is
replenished. If the firm buying raw materials, this is to purchase the quantity of each
replenishment and if it has to plan for production run, it is how much production to schedule.
It may be solved through EOQ.

EOQ Involves Two Types of Costs

➢ Carrying Cost
➢ Ordering Cost

Ordering Cost: Ordering cost is referred to as the cost of placing an order and securing the
supplies. Ordering cost depends upon the number of orders placed and a number of items
ordered at a time. Higher will be the ordering cost when frequent orders are placed. Similarly,
lesser the ordered quantity, higher the ordering cost.

Carrying Cost: Carrying cost or holding cost refers to the cost of keeping the materials
which includes capital cost, cost of storage and cost of deterioration and redundancy. Larger
the volume of inventory, higher the inventory carrying cost and vice versa.
EOQ For an item is arrived on the following assumptions.
➢ Demand is continuous at a constant rate
➢ The process continues infinity
➢ No constraints are imposed on quantities ordered, storage capacity, budget etc.,
➢ Replenishment is instantaneous.
➢ All cost is time invariant.
➢ No shortages are allowed.
➢ Quantity discounts are not available.

EOQ for an item is arrived by the following formula

EOQ = Where
EOQ = Economic order quantity
AC = Annual consumption of an item
Co = Cost of ordering an order
Ch = Cost of carrying one unit / year

4.1 ABC Analysis Steel during 2015-2016

Table-1
ABC Analysis Steel during 2015-2016
REQUIRED %OF REQUIRED NO.OF % OF
CLASS VALUE
QUANTITY(Tones) QUANTITY(Tones) ITEMS VALUE(Rs)
A 19935 6.07 10 475794 3.70
B 33908 10.33 20 1312752 10.19
C 274530 83.60 29 11085735 86.11
Total 328373 100.00 59 12874281 100
Source: Published Annual Reports of JSW Steel Ltd

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 ABC Analysis
Graph-1
14000000
12000000
10000000
8000000
6000000 A
4000000
2000000 B
0 C
Total

Inference: Every year the company will take regular items. So, the percentage of ABC
classification will be the same. The required quantity of ‘A’ Class is 19935 and ‘B’ 33908
and ‘C’ 274530 the percentage of “ABC” is 6.07% 10.33%, and 83.60% the number of
“ABC” is 10, 20, 29 and the value of these items is 475794, 1312752, and 11085735 and the
total is 1287481. And the percentage of the value is 3.70, 10.19, 86.11 and the total
percentage is 100.
Table-2
ABC Analysis Steel during 2016-2017
% OF
REQUIRED %OF REQUIRED NO.OF
CLASS VALUE(Rs) VALUE
QUANTITY(Tones) QUANTITY(Tones) ITEMS
(Rs)
A 272527.3 54.29 10 1038514.4 72.90
B 76539.88 15.42. 20 2980029.78 21.07
C 147096.33 29.64 30 851191 6.02
Total 49616351 100 60 14139735.18 100
Source: Published Annual Reports of JSW Steel Ltd

Inference: Every year the company will take regular items. So, the percentage of ABC
classification will be the same. The required quantity of ‘A’ Class is 2725 and 27.3 ‘B’ 76539.88
and ‘C’ 147096.33 the percentage of “ABC” is 54.92%, 15.42% and 29.64 the number of “ABC”
is 10,20,30 and the percentage of the value is 72.90, 21.07,6.02 and the total the percentage is 100.

Graph 2
ABC Analysis Steel during 2016-2017
60000000

50000000

40000000
A
30000000
B
20000000 C
10000000 Total

0
(Rs)
REQUIRED
%OFQUANTITY(Tones)
REQUIRED QUANTITY(Tones)
NO.OF ITEMS
VALUE(Rs)
% OF VALUE

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 Table-3
ABC Analysis Steel during 2017-2018
REQUIRED % OF REQUIRED NO.OF % OF
CLASS VALUE
QUANTITY(Tones) QUANTITY(Tones) ITEMS VALUE(Rs)
A 2746.24 84.18 10 87673270 97.37
B 40999 12.48 20 1918921 2.13
C 10950 3.33 29 452604 0.50
Total 328373 100.00 59 90044795 100.00
Source: Published Annual Reports of JSW Steel Ltd

Graph3
ABC Analysis Steel during 2017-2018

100000000
80000000 A
60000000 C
40000000 B
20000000 A
0 C
Total

Inference: Every year the company will take regular items. So, the percentage of ABC
classification will be the same. The required quantity of ‘A’ Class is 276424 and ‘B’ 40999
and ‘C’ 10950 the percentage of “ABC” is 84.18%, 12.48% and 3.33% the number of “ABC”
is 10,20,29 and the value these items is 87673270, 1918921, and 452604 and the total is
90044795. And the percentage of the value is 97.37, 2.13, 0.50 and the total percentage is
100.
Table-4
ABC Analysis Steel during 2018-2019
REQUIRED
% OF REQUIRED NO.OF % OF
CLASS QUANTITY VALUE
QUANTITY(Tones) ITEMS VALUE(Rs)
(Tones)
A 454211.17 59.49 10 17180855 75.61
B 68725.41 9.00 20 4122174 18.41
C 240612.32 31.51 30 1418652 6.24
Total 763548.9 100.00 60 22721681 100.26
Source: Published Annual Reports of JSW Steel Ltd

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 Graph 4
ABC Analysis Steel during 2018-2019

25000000
20000000
15000000
10000000 A
5000000 Total
C B
0 B
A C
Total

Inference: Every year the company is taking regular items. So, the percentage of ABC
classification will be the same. The required quantity of ‘A’ Class is 454211.17 and ‘B’
68725.41 and ‘C’ 240612.32 the percentage of “ABC” is 59.49%,9% and 31.51% the number
of “ABC” is 10,20,30 and the value of these items is 17180855, 4122174, and 14186552 and
the total is 22721681. And the percentage of the value is 75.61, 18.41, 6.24 and the total
percentage is 100.
Table 5
Annual Demand of JSW Steel during (2015-2016)
Quantity Consumption
S. No. Description Rate (Rs.)
(tons) (tons)
1 POLYROPLYENE COMPOLYMER
2,21,157 62.25 1,52,04,794
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,86,174 81.54 3,23,95,546
3 12.25 Copper Wire 62,052 371.64 2,31,85,501
4 RECYCLED PPCP PELLETES
1,65,019 53.02 97,91,022
(OTHER THAN B & W)
5 Antimony Trioxide (INDSTARRG) 22,830 317.05 72,87,170
6 DECO-BROMIDE 45,661 188.32 86,86,130
7 RUNNERS SCRAP-PPC BLACK 53,731 66.35 36,94,056
8 20 x 2mm COPPER FLATS 10,568 333.07 35,50,852
9 Poly Carbonate Resin (XENOY) 14,391 222.52 3,202,285
10 50sqmm elastomeric black colour sccc 7,885 368.08 29,20,937
Source: Published Annual Reports of JSW Steel Ltd

Table 6
Annual Demand of JSW Steel during (2016-2017)
Quantity Rate Consumption
S. No. Description
(tons) (Rs.) (tons)
1 Polyroplyene Compolymer
2,55,182 67.02 1,75,43,997
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 4,15,880 83.25 3,48,87,511
3 12.25 Copper Wire 66,826 372.34 2,49,69,000
4 Recycled PPCP Pellets (other Than B & W) 1,91,713 54 1,05,44,678
5 Antimony Trioxide (INDSTARRG) 24,586 318.18 78,47,721

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 6 DECO-Bromide 49,173 189.01 93,65,063
7 Runners SCRAP-PPC Black 57,864 66.89 39,78,214
8 20 x 2mm Copper Flats 11,381 335 38,23,994
9 Poly Carbonate Resin (XENOY) 15,498 223.79 34,81,690
10 50sqmm elastomeric black colour sccc 8,491 368.74 31,45,624
Source: Published Annual Reports of JSW Steel Ltd

Table-7
Annual Demand of JSW Steel during (2017-2018)
Quantity Rate Consumption
S. No. Description
(tons) (Rs.) (tons)
1 Polyroplyene Compolymer
2,72,194 68.75 1,87,13,597
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 4,75,291 83.89 39,871,922
3 12.25 Copper Wire 76,372 373.64 28,536,000
4 Recycled PPCP Pellets (Other Than B & W) 2,19,100 55.00 12,050,489
5 Antimony Trioxide (INDSTARRG) 28,098 319.20 8,968,824
6 DECO-Bromide 56,198 183.45 10,702,930
7 Runners Scrap-PPC Black 66,130 5.00 4,546,530
8 20 x 2mm Copper Flats 13,006 390.94 4,370,274
9 Poly Carbonate Resin (Xenoy) 17,712 324.65 3,979,074
10 50sqmm elastomeric black colour sccc 9,704, 267.11 3,594,999
Source: Published Annual Reports of JSW Steel Ltd
Table 8
Annual Demand of JSW Steel during (2018-2019)
S. Quantity Rate Consumption
Description
No. (tons) (Rs.) (tons)
1 Polyroplyene Compolymer
2,892,637 67.30 194,685,726
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,332,951 69.16 230,508,995
3 12.25 Copper Wire 80.033 381.23 30,511,024
4 Recycled Ppcp Pelletes (Other Than B & W) 254,136 41.23 10,476,929
5 Antimony Trioxide (INDSTARRG) 28,510 289.50 8,253,535
6 DECO-Bromide 55,949 183.94 10,291,290
7 Runners Scrap-PPC Black 166,095 5.00 830,475
8 20 x 2mm Copper Flats 22,291 390.94 8,714,386
9 POLY Carbonate Resin (XENOY) 35,424 324.65 11,500,402
10 50sqmm elastomeric black colour sccc 14,340 267.11 3,830,278
Source: Published Annual Reports of JSW Steel Ltd

Table 9
Comparison of Annual Demand for Four Years (2015-2019)
S. 2015-16 2016-17 2017-18 2018-19
Description
No. (tons) (tons) (tons) (tons)
1 Polyroplyene Compolymer
2,21,157 2,55,182 2,72,194 28,92,637
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,86,174 4,15,880 4,75.291 33,32,951
3 12.25 Copper Wire 62,052 66,826 76,372 80,033

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 4 Recycled PPCP Pelletes
1,65,019 1,91,713 2,19,100 2,54,136
(OTHER THAN B & W)
5 Antimony Trioxide (INDSTARRG) 22,830 24,586 28,098 28,510
6 DECO-Bromide 45,661 49,173 56,198 55,949
7 RUNNERS SCRAP-PPC Black 53,731 57,864 66,130 1,66,095
8 20 x 2mm Copper Flats 10,568 11,381 13,006 22,291
9 Poly Corbonate Resin (XENOY) 14,391 15,498 17,712 35,424
10 50sqmm elastomeric black colour sccc 7,885 8,491 9,704 14,340
Source: Published Annual Reports of JSW Steel Ltd
Graph 9
Comparison of Annual Demand for Four Years (2015-2019)
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000 2015-16 (tons)
0

RUNNERS SCRAP-PPC…
Polyroplyene…

Lead Antimony (3.1)…

Antimony Trioxide…

50sqmm elastomeric…
Poly Corbonate Resin…
DECO-Bromide 2016-17
(RAD- MSP-035)

Recycled PPCP Pelletes

(OTHER THAN B & W)
12.25 Copper Wire

20 x 2mm Copper Flats

2017-18
2018-19 (tons)

1 2 3 4 5 6 7 8 9 10

Inference: In all the above years the indigenous items polypropylene co-polymer
(RADMSP035), lead-antimony (3.10) alloy, 12.25 copper wire, recycle ppcp pellets (other
than B&W), antimony trioxide (INDSTARRG), Deco-Bromide, Runner scrap-
ppc black, 20x2mm copper flats, polycarbonate resin(xenoy) 5050 sqmm Electrometric black
colour SCCC are increased by year i.e., 2015-2019.

Table 10
Ordering Cost for Four Years (2015-2019)
% of
Ordering 2019-18 2018-17 2017-16 2016-15
S. Description (tons) (tons) (tons)
No. Cost (tons)
1 polyroplyene compolymer 1% 1,946,857 1,87,135 1,75,439 1,52,047
(RAD- MSP-035)
2 Lead Antimony (3.1) 1% 2,305,090 3,98,719 3,48,875 3,23,955
ALLOY
3 12.25 Copper Wire 1% 3,05,110 28,5360 2,49,690 2,31,855
4 Recycled Ppcp Pelletes 1% 1,04,769 1,20,504 1,05,446 97,910
(Other Than B & W)
5 Antimony Trioxide 1% 82,535 89,688 78,477 72,871
(INDSTARRG)
6 DECO-Bromide 1% 1,02,913 1,07,209 93,650 86,861
7 Runners SCRAP-PPC 1% 8,305 45,465 39,782 36,940
Black
8 20 x 2mm Copper Flats 1% 87,144 43,702 38,239 35,508
9 Poly Corbonate Resin 1% 115,004 39,790 34,816 32,029

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 (XENOY)
10 50sqmm elastomeric black 1% 38,303 35,949 31,456 29,209
colour sccc
Source: Published Annual Reports of JSW Steel Ltd
Table 11
Comparison of Ordering Cost for Four Years (2015-2019)
S. 2015-16 2016-17 2017-18 2018-19
No Description (Rs.) (Rs.) (Rs.) (Rs.)
.
1 Polyroplyene Compolymer 1,52,047 1,75,439 1,87,135 1,946,857
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,23,955 3,48,875 3,98,719 2,305090
3 12.25 Copper Wire 2,31,855 2,49,690 28,5360 3,05,110
4 Recycled Ppcp Pelletes 97,910 1,05,446 1,20,504 1,04,769
(OTHER THAN B & W)
5 Antimony Trioxide (INDSTARRG) 72,871 78,477 89,688 82,535
6 DECO-Bromide 86,861 93,650 1,07,029 1,02,913
7 Runners Scrap-PPC Black 36,940 39,782 45,465 8,305
8 20 x 2mm Copper Flats 35,508 38,239 43,702 87,144
9 Poly Corbonate Resin (XENOY) 32,329 34,816 39,709 115,004
10 50sqmm elastomeric black colour 29,209 31456 35,949 38,303
sccc
Source: Published Annual Reports of JSW Steel Ltd

Inference: In all the above years the indigenous items polypropylene co-polymer
(Radmspo35), lead-antimony (3.10) alloy, copper wire, recycle ppcp pellets (other than
B&W), antimony trioxide (Indstarrg), Deco-Bromide, Runner scrap-ppc black, 20x2mm
copper flats, poly carbonate resin (xenoy) 5050sqmm Elastomeric black color SCCC is
increased by year i.e., 2015-2019.

Table 12
Carrying Cost for Four Years (2015-2019)
% of
S. Carrying 2019-18 2018-17 2016-15
Description 2017-16
No. (tons) (tons) (tons)
Cost (tons)
1 Polyroplyene Compolymer 2.75% 5,353,857 5,14,624 4,82,460 4,18,132
(RAD- MSP-035)
2 lead antimony (3.1) Alloy 2.75% 6,338,997 10,96,478 9,59,407 8,90,878
3 12.25 copper wire 2.75% 39,053 7,84,740 6,86,648 6,37,601
4 Recycled PPCP Pelletes 2.75% 2,88,116 3,31,388 2,89,965 2,69,253
(Other Than B & W)
5 Antimony Trioxide 2.75% 2,26,972 2,46,643 2,15,812 2,00,397
(INDSTARRG)
6 DECO-Bromide 2.75% 2,83,010 2,94,331 2,57,539 2,39,144
7 Runners SCRAP-PPC Black 2.75% 22,838 1,25,030 1,01,587 1,01,587
8 20 x 2mm Copper Flats 2.75% 2,39,646 1,20,183 1,05,160 97,648
9 Poly Corbonate Resin 2.75% 3,16,261 1,09,425 95,746 88,063
(XENOY)
10 50sqmm elastomeric black 2.75% 1,05,333 98,862 86,505 80,326
colour sccc
Source: Published Annual Reports of JSW Steel Ltd

Electronic copy available at: https://ssrn.com/abstract=3563991

 Table 13
COMPARISON OF CARRYING COST FOR FOUR YEARS
% of 2015-16 2016-17 2017-18 2018-19
S. Description Carryin (Rs.) (Rs.) (Rs.) (Rs.)
No g Cost
1 Polyroplyene Compolymer 2.75% 4,18,132 4,82,460 5,14,624 5,353,857
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 2.75% 8,90,878 9,59,407 10,96,478 6,338,997
3 12.25 Copper Wire 2.75% 6,37,601 6,86,648 7,84,740 8,39,053
4 Recycled PPCP Pelletes 2.75% 2,69,253 2,89,965 3,31,388 2,88,116
(Other Than B & W)
5 Antimony Trioxide 2.75% 2,00,397 2,15,812 2,46,643 2,26,972
(INDSTARRG)
6 DECO-Bromide 2.75% 6,39,144 2,57,539 2,94,331 2,83,010
7 Runners SCRAP-PPC Black 2.75% 1,01,587 1,01,587 1,25,030 22,838
8 20 x 2mm Copper Flats 2.75% 97,648 1,05,160 20,183 2,39,646
9 Poly Carbonate Resin 2.75% 88,063 95,746 1,09,425 3,16,261
(XENOY)
10 50sqmm elastomeric black 2.75% 80,326 86,505 98,862 1,05,333
colour sccc
Source: Published Annual Reports of JSW Steel Ltd

Inference: In all the above year the indigenous item polypropylene co-polymer (Radmspo35),
lead antimony (3.10) alloy, 12.25 copper wire, recycle ppcp pellets (other than B&W), antimony
trioxide (Indstarrg), Deco-Bromide, Runner scrap-ppc black, 20x2mm copper flats, polycarbonate
resin (xenoy) 5050sqmm Elastomeric black color SCCC is increased by year i.e., 2015-2019.

Table 14
Economic Ordering Quantity (EOQ) FOR (2018-2019)
Annual Ordering EOQ
S. Carrying
Description Demand Cost (Tons
No Cost (Rs.)
(Tons) (Rs.) )
1 Polyroplyene Compolymer 2,892,637 1,946,857 5,353,857 1,450
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,332,951 2,305,090 6,338,997 1,556
3 12.25 Copper Wire 80,033 3,05,110 8,39,053 241
4 Recycled PPCP Pelletes 254,136 1,04,769 2,88,116 430
(OTHER THAN B & W)
5 Antimony Trioxide (INDSTARRG) 28,510 82,535 2,26,972 144
6 DECO-Bromide 55,949 1,02,913 2,83,010 202
7 Runners Scrap-PPC Black 166,095 8,305 22,838 348
8 20 x 2mm Copper Flats 22,291 87,144 2,39,646 127
9 Poly Carbonate Resin (XENOY) 35,424 115,004 3,16,261 161
10 50sqmm elastomeric black colour sccc 14,340 38,303 1,05,333 102
Source: Published Annual Reports of JSW Steel Ltd

Table 15
Economic Ordering Quantity (EOQ) FOR (2017-2018)
Annual Ordering Carrying
S. EOQ
Description Demand Cost
No. (Rs.) Cost (Rs.) (Tons)
(Tons)
1 Polyroplyene Compolymer 2,72,194 1,87,135 5,14,624 445
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 4,75,291 3,98,719 10,96,478 588
3 12.25 Copper Wire 76,372 2,85,360 7,84,740 236
4 Recycled PPCP Pelletes 2,19,100 1,20,504 3,31,388 399
(other than B & W)
5 Antimony Trioxide (INDSTARRG) 28,098 89,688 2,46,643 143

Electronic copy available at: https://ssrn.com/abstract=3563991

 6 DECO-Bromide 56,198 1,07,029 2,94,331 202
7 Runners SCRAP-PPC Black 66,130 45,465 1,25,030 219
8 20 x 2mm COPPER FLATS 13,006 43,702 1,25,183 97
9 Poly Carbonate Resin (XENOY) 17,712 39,790 1,09,425 113
10 50sqmm elastomeric black colour sccc 9,704 35,949 98,862 84
Source: Published Annual Reports of JSW Steel Ltd

Table 16
Economic Ordering Quantity (EOQ) FOR (2016-2017)
Annual Ordering Carrying
S. EOQ
Description Demand Cost
No Cost (Rs.) (Tons)
(Tons) (Rs.)
1 Polyroplyene Compolymer 2,55,182 1,75,439 4,82,460 431
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 4,15,8800 3,48,875 9,59,407 550
3 12.25 COPPER WIRE 66,826 2,49,690 6,86,648 220
4 Recycled Ppcp Pelletes 1,91,713 1,05.441 2,89,965 373
(other than B & W)
5 Antimony Trioxide (INDSTARRG) 24,586 78,477 2,15,812 134
6 DECO-Bromide 49,173 93,650 2,57,539 191
7 Runners SCRAP-PPC Black 57,864 39,782 1,01,587 205
8 20 x 2mm Copper Flats 11,381 38,239 1,05,160 91
9 Poly Corbonate Resin (XENOY) 15,498 34,816 95,746 106
10 50sqmm elastomeric black colour sccc 8,491 31,456 86,505 79
Source: Published Annual Reports of JSW Steel Ltd

Table 17
Economic Ordering Quantity (EOQ) For (2015-2016)
Annual Ordering Carrying
S. EOQ
Description Demand Cost
No. Cost (Rs.) (Tons)
(Tons) (Rs.)
1 Polyroplyene Compolymer 2,21,157 1,52,047 4,18,132 401
(RAD- MSP-035)
2 Lead Antimony (3.1) Alloy 3,86,174 3,23,955 8,90,878 529
3 12.25 COPPER WIRE 62,052 2,31,855 6,37,601 212
4 Recycled PPCP Pelletes 1,65,019 97,910 2,69,253 346
(Other Than B & W)
5 Antimony Trioxide (INDSTARRG) 22,830 72,871 2,00,397 129
6 DECO-Bromide 45,661 86,861 2,39,144 182
7 Runners SCRAP-PPC Black 53,731 36,940 1,01,587 190
8 20 x 2mm Copper Flats 10,568 35,508 97,648 891
9 POLY Carbonate Resin (XENOY) 14,391 32,029 88,063 102
10 50sqmm elastomeric black colour sccc 7,885 29,209 80,326 76
Source: Published Annual Reports of JSW Steel Ltd

Table-18
Comparison of Economic Order Quantity (EOQ) For (2015-2019)
S. 2015-16 2016-17 2017-18 2018-19
Description
No. (Rs.) (Rs.) (Rs.) (Rs.)
1 Polyroplyene Compolymer 401 431 445 1,450
(RAD- MSP-035)
2 Lead Antimony (3.1) ALLOY 529 550 588 1,556
3 12.25 COPPER WIRE 212 220 236 241
4 Recycled PPCP Pelletes 346 373 399 430
(other than B & W)
5 Antimony Trioxide (INDSTARRG) 129 134 143 144
6 DECO-Bromide 182 191 202 202

Electronic copy available at: https://ssrn.com/abstract=3563991

 7 Runners SCRAP-PPC Black 190 205 219 348
8 20 x 2mm Copper Flats 91 91 97 127
9 Poly Corbonate Resin (XENOY) 102 106 113 161
10 50sqmm elastomeric black colour sccc 76 79 84 102
Source: Published Annual Reports of JSW Steel Ltd

Inference: In all the above years the indigenous items polypropylene co-polymer
(RADMSPO35), lead antimony (3.10) alloy, 12.25 copper wire, recycle ppcp pellets (other than
B&W), antimony trioxide (INDSTRARRG), Deco-Bromide, Runner scrap-
ppc black, 20x2mm copper flats, polycarbonate resin (xenoy) 5050sqmm Elastomeric black
colour SCCC is increased by year i.e., 2015-2019.

5. Findings
➢ It was found that the company is consuming same raw-material as per ABC Classification
as ‘A’ Class items ‘B’ class items and ‘C’ class items.
➢ Basically the company was running on the basis of job work so, inventory management is
not given that much importance.
➢ Even the carrying cost is looking high i.e., 2.75% which constant for 4 years as it had a
greater impact on inventory maintenance cost.
➢ In general when orders increase automatically EOQ decreases which inversely
proportional. EOQ for the past 4 years shows that the company is going for fewer orders.
➢ Generally, it is a known fact that the annual consumption of raw-materials increases year
by year as companies, growing. In such a way annual consumption form 2015-2016 to
2018-2019 has also increased.

6. Suggestions
➢ As the company converted into own sales it should have its own inventory policy which can
produce better results by minimizing costs.
➢ The company has to implement a “JIT” (just in time) policy, which literally reduces inventory
cost.
➢ As of company is going for wide expansion in JSW STEEL -1 and JSW STEEL -2, it should
pay much more attention to research & development.
➢ A company is already maintaining ERP packages. But, an employee also has to be given firm
training regarding that.
➢ Even though inventory conversion the period is moderately good, still there are a lot of scopes
to improve it.

7. Conclusion
Optimum inventory is the goal of every organization. Over inventory and under inventory, both
cause financial impact and health of the business as well as effective business opportunities. The
steel industry is always an important part of the national economy in our country, which is the
leading industry to realize speeding up industrialization. Most countries that have implemented
industrialized in the world are almost putting priorities to develop basic industries including the
steel industry. Our country also invests a large number of money through a variety of financing
channels, in order to improve the competitiveness of the steel industry. The company is following
inventory management techniques like EOQ, ABC analysis can increase its profits. By supplying
the finished products at reasonable prices to the customers and thus increase its period of existence
in the market. It can be concluded from the analysis that the company inventory position is up to
some extent satisfactory. The Indian steel industry plays a significant role in the country’s
economic growth. The major contribution directs the attention that steel is having a stronghold in
the traditional sectors, such as infrastructure & construction, automobile, transportation, industrial
applications, etc.

Electronic copy available at: https://ssrn.com/abstract=3563991

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 Author’s Profile

Mrs.Y.Maheswari working as an Assistant professor in the Department of Management Studies

at Sri venkateswara college of Engineering, Tirupati. She has done her Masters with
specialisation of finance from Jawaharlal Nehru Technological University. She has published
articles on writing by mutual funds, Indian start-ups, equity stocks, corporate social
responsibility etc. She has 9 years of experience in research and teaching. She guided 50 PG
(Management) projects. She is author of 8 research papers published in various National &
International journals with good impact factor and citations. She is a professional life time
member of IAAC, IAASSE.

Dr. Nalla Bala Kalyan working as an Associate Professor in the Department of Management
Studies at Sri Venkateswara College of Engineering, Tirupati. He has done his Doctorate from
Sri Venkateswara University, Tirupati, Andhra Pradesh, in the year 2014”. He has 11 years of
experience in research and teaching.

He is the author of more than 60 research papers published in various national & international
journals with high Impact Factor and citations (Google Scholar Citations 60, h-index 3, and i10-
index 2; SSRN- Elsevier Author Rank is 100,294 out of 448,326, Research Gate Score 4.79
Citations 20, h-index 3).He has attended more than 40 National and International
conferences/seminars and presented papers that appeared in the proceedings published with
ISBN and he has Authored & Edited 13 books.

He is the Editorial/Advisory/Reviewer Board Member of more than 40 National &

International Journals. He has organized many programs (DST-NIMAT Projects, Govt. of
India) for imparting entrepreneurship skills among students and faculty. He has received more
than 10 awards [Most Promising Educators in Higher Education across India for the Year 2019
- ULeKtZ Wall of Fame, Mewadev Laurel Award- Contemporary Literary Society, Excellence
Teaching in Higher Education award for the year 2019-(SMCRAC) Saint Martin’s Centre for
Research & Accreditation Commission, Melbourne, Australia] from National and International
organizations. He has various professional affiliations as Fellow Member of FSASS, FMERC,
FSROSET, and FIARA. Life Time Member of MTC Global, IMRTC, ISRD, AICTSD,
INSC, IAASSE, IAER. He can be researched drnallabala@gmail.com

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