A

SYNOPSIS REPORT
ON
INVENTORY MANAGEMENT
AT
ZUARARI CEMENT

Submitted
By
CHANDRAKALA
H.T.NO: ***
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
PEERZADIGUDA
(Affiliated to Osmania University)
2023-2024
 Aurora’s PG College ,PEERZADIGUDA
Department of Management

SYNOPSIS

Title of the Project : INVENTORY MANAGEMENT

Student Name :CHANDRAKALA

Hall Ticket Number : ***

Signature of the Student :

Signature of the Guide :

 INDEX
.No. CONTENTS PageNo

1 TITLE OF THE PROJECT

2 STATEMENT OF THE PROBLEM

3 INTRODUCTION

4 AIMS AND OBJECTIVES

1) NATURE OF THE STUDY
2) SCOPE OF THE STUDY
3) DATA COLLECTION METHODS
4) TOOLS FOR ANALYSIS
5) CHAPTERISATION
 CHAPTER-I
INRODUCTION

1.1 ABOUT THE STUDY

Inventory management is primarily about specifying the size and placement of

stocked goods. Inventory management is recurred at different locations within a facility or
within multiple locations of a supply or network to protect the regular and planned course of
production against the random disturbance of running out of materials or goods. The scope of
Inventory management also concerns the fine lines between replenishment lead time, carrying
costs of inventory, asset management, Inventory forecasting, physical inventory, available
physical space for Inventory, quality management, returns and defective goods and demand
and forecasting.

Types of inventory

Normally the inventory has divided into two types. These,

1. Merchandising inventory,
2. Manufacturing inventory.

The manufacturing inventory has been subdivided into three types. These,
1. Raw materials,
2. Work in process,
3. Finished goods.
 Raw materials: Everything the crafter buys to make the product is classified as raw
materials. That includes leather, dyes, snaps and grommets. The raw material
inventory only includes items that have not yet been put into the production process.
 Work in process: This includes all the leather raw materials that are in various stages
of development. For the leather crafting business, it would include leather pieces cut
and in the process of being sewn together and the leather belts and purse etc. that are
partially constructed.

In addition to the raw materials, the work in process inventory includes the cost of the
labor directly doing the work and manufacturing overhead. Manufacturing overhead
is a catchall phrase for any other expenses the leather crafting business has that
 indirectly relate to making the products. A good example is depreciation of leather
making fixed assets.

 Finished goods: When the leather items are completely ready to sell at craft shows or
other venues, they are finished goods. The finished goods inventory also consists of
the cost of raw materials, labor and manufacturing overhead, now for the entire
product.

STATEMENT OF THE PROBLEM

The research problem statement for the project is “How far EOQ (Economic Order
Quantity) Analysis is useful for effective inventory management at Zuari Cement Pvt.
Limited?”
OBJECTIVES OF THE STUDY

 To study the inventory management followed in Zuari cement.

 To identify the existing inventory management and its effectiveness.

 To calculate analysis for their performance in inventory management.

NEED OF THE STUDY:

The stock assumes a fundamental job in the proficient activity of an organization. Especially,
it is in direct touch with assembling offices, material divisions and promoting office in its
everyday exercises.

In all most all businesses, about 60% of the Working Capital welcomed in the materials. A
productive stock administration can assist with accomplishing better usage of this Investment
with significant level of progress.
Providing all the necessary crude materials, consumable stores, parts and so forth., to the
assembling units at the correct time and spot, at the most reduced conceivable expense and
receiving stock control measures, utilizing great material taking care of practices are the rule
goals of stores the executives.
In different words, decreasing the expense in all extras of the assembling exercises will help in
expanding the benefits of the organization.
The proficient with which the Inventory is overseen will constant decide the effectiveness of the
creation and levels of benefits of the endeavors.
Hence "Stock administration" has accomplished huge status in the present day business and
modern administration. Right now exertion has been made to contemplate profoundly the
stock framework and strategies embraced in the stock administration of ZUARI CEMENT
SCOPE OF THE STUDY

The study helps the management to improve its profitability through a reduction in
non- moving inventory.

It develops the policies for both continuous review of inventory management system.

The study helps to show the level of the inventory in the organization. The company
will make the proper inventory methods from the suggestions of the study.
RESEARCH METHODOLOGY
RESEARCH DESIGN
The Descriptive type of research has been applied in the study. In this research
the researcher has no control over the variables. He only reports what has happened or what
is happening. The research can only discover causes but cannot control the variables.
DATA COLLECTION
This study purely based on secondary sources of information. The necessary data
calculated from annual report, books, journals and websites.
PERIOD OF STUDY
This study covers a period of five years from 2023 – 2024 to 2022 – 2023. The
accounting year commenced from April and ending with March of the next year.
AREA OF STUDY
This study was conducted in Zuari cement pvt.ltd Yerraguntla, Kadapa District.

TOOLS FOR ANALYSIS

The following tools have been applied in the present study.
They are listed below
 Ration analysis (inventory) and
 EOQ analysis

1.5.5.1 RATIO ANALYSIS (INVENTORY)

The percentage of a mutual fund or other investment vehicle's holdings that have been
"turned over" or replaced with other holdings in a given year. The type of mutual fund, its
investment objective and/or the portfolio manager's investing style will play an important role
in determining its turnover ratio.

1.5.5.2 ECONOMIC ORDER QUANTITY (EOQ)

Economic order quantity is that level of inventory that minimizes the total of
inventory holding cost and ordering cost. The framework used to determine this order
quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in
1913.The most economical quantity of a product that should be purchased at one time. The
EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to
the size of the order which gives maximum economy in punches of materials.

EOQ=
√ 2 Ao
C1
Where
A=Annualusageinunit
O=Orderingcost
C 1=Carriyingcost

CHAPTER-II
REVIEW OF LITERATURE

REVIEW OF LITERATURE:
The investment in inventories constitutes the most significant part of current assets / working
capital in most of the undertakings. Thus, it is very essential to have proper control and
management of inventories.
The purpose of inventory management is to ensure availability of materials in
sufficient quantity as and when required and also to minimize investment in inventories.

3.2.1 MEANING AND NATURE OF INVENTORY

In accounting language, inventory may mean the stock of finished goods only. In a
manufacturing concern, it may include raw materials, work- in – progress and stores etc.

Inventory includes the following things:

a) Raw Material: Raw material from a major input into the organization. They are
required to carry out production activities uninterruptedly. The quantity of raw
materials required will be determined by the rate of consumption and the time
required for replenishing the supplies. The factors like the availability of raw
materials and Government regulations etc., too affect the stock of raw materials.
b) Work in progress: The work in progress is that stage of stocks which are in
between raw materials and finished goods. The quantum of work in progress
depends upon the time taken in the manufacturing process. The quantum of work
in progress depends upon the time taken in the manufacturing process. The greater
the time taken in manufacturing, the more will be the amount of work in progress.
Consumables: These are the materials which are needed to smoother the process
of production but they act as catalysts. Consumables may be classified according
to their consumption add critically. Generally, consumable stores does not create
any supply problem and firm a small part of production cost. There can be
instances where these materials may account for much value than the raw
materials. The fuel oil may form a substantial part of cost.
c) Finished goods: These are the goods, which are ready for the consumers. The
stock of finished goods provides a buffer between production and market, the
purpose of maintaining inventory is to ensure proper supply of goods to
customers.
d) Spares: The stock policies of spares fifer from industry to industry. Some
industries like transport will require more spares than the other concerns. The
costly spare parts like engines, maintenance spares etc., are not discarded after
use, rather they are kept in ready position for further use.
 All decisions about spares are based on the financial cost of inventory on such spares
and the costs that may arise due to their non – availability.

3.2.2 BENEFITS OF HOLDING INVENTORIES

Although holding inventories involves blocking of a firm’s and the costs of storage
and handling, every business enterprise has to be maintain certain level of inventories of
facilitate un – interrupted production and smooth running of business. In the absence of
inventories a firm will have to make purchases as soon as it receives orders. It will mean loss
of time and delays in execution of orders which sometimes may cause loss of customers and
business.
A firm also needs to maintain inventories to reduce ordering cost and avail quantity
discounts etc.
There are three main purpose of holding inventories.
1. The transaction motive: This facilitates continuous production and timely execution
of sales order.
2. The precautionary motive: Which necessitates the holding of inventories for
meeting the unpredictable changes in demand and supplies of materials
3. The speculative motive: Which induces to keep inventories for taking advantage of
price fluctuations, saving in re–ordering costs and quantity discounts

3.2.3 OBJECTS OF INVENTORY MANAGEMENT

Definition of Inventory Management: Inventory Management is concerned with the
determination of optimum level of investment for each components of inventory and the
operation of an effective control and review of mechanism

Objectives of inventory management:

1. To ensure continuous supply of materials, spares and finished goods so that
production should not suffer at any time and the customers demand should also be
met.
2. To avoid both over – stocking and under – stocking of inventory.
3. To maintain investment in inventories at the optimum level as required by the
operational and sales activities.
4. To keep material cost under control so that they contribute in reducing the cost of
production and overall costs.
5. To eliminate duplication in ordering or replenishing stocks. This is possible with the
help of centralizing purchases.
6. To minimize loses through deterioration, pilferages, wastages and damages.
7. To ensure perpetual inventory control so that materials shown in stock ledgers should
be actually lying in the stores.
8. To ensure right quality goods at reasonable prices. Suitable quality standards will
ensure proper quality of stocks. The price – analysis, the cost analysis and value –
analysis will ensure payment of proper prices.
9. To facilitate furnishing of data for short – term and long – term planning and control
of inventory.

3.2.4 TOOLS AND TECHNIQUES OF INVENTORY

MANAGEMENT
A proper inventory control not only helps in solving the acute problem of liquidity but
also increases profit and causes substantial reduction in the working capital of the concern.
The following are the important tools and techniques of inventory management and
control.

3.2.4.1 DETERMINATION OF STOCK LEVELS

Carrying of too much and too little of inventory is detrimental to the firm. If the
inventory level is too little, the firm will face frequent stock outs involving heavy ordering
cost and if the inventory level is too high it will be unnecessary tie up of capital.
An efficient inventory management requires that a firm should maintain an optimum
level of inventory where inventory costs are the minimum and at the same time there is no
stock out which may result in loss or sale or shortage of production.
a) Minimum stock level:
It represents the quantity below its stock of any item should not be allowed to fall.
Lead time: A purchasing firm requires sometime to process the order and time is also
required by the supplying firm to execute the order.
The time in processing the order and then executing it is known as lead time.
 Rate of Consumption: It is the average consumption of materials in the factory. The
rate of consumption will be decided on the basis of past experience and production plans.
Nature of materials: The nature of material also affects the minimum level. If a
material is required only against the special orders of the customer then minimum stock will
not be required for such material.
Minimum stock level can be calculated with the help of following formula.
Minimum stock level – Re – ordering level – (Normal consumption x Normal re – order
period)
b) Re – ordering Level:
When the quantity of materials reaches at a certain figure then fresh order is sent to
get materials again. The order is sent before the materials reach minimum stock level.
Re – ordering level is fixed between minimum level maximum level.

c) Maximum Level:
It is the quantity of materials beyond which a firm should not exceeds its stocks. If the
quantity exceeds maximum level limit then it will be over – stocking.
Overstocking will mean blocking of more working capital, more space for storing the
materials, more wastage of materials and more chances of losses from obsolescence.
Maximum stock level – Reordering Level + Reorder Quantity – (Maximum
Consumption x Minimum reorder period)
d) Danger Stock Level:
It is fixed below minimum stock level. The danger stock level indicates emergency of
stock position and urgency of obtaining fresh supply at any cost.
Danger Stock level = Average rate of consumption x emergency delivery time.
e) Average Stock Level:
This stock level indicates the average stock held by the concern.
Average stock level = Minimum stock level + ½ x reorder quantity.
3.2.4.2 DETERMINATION OF SAFETY STOCKS
Safety stock is a buffer to meet some unanticipated increase in usage. The demand for
materials may fluctuate and delivery of inventory may also be delayed in such a situation the
firm can be face a problem of stock out.
In order to protect against the stock out arising out of usage fluctuations, firms usually
maintain some margin of safety stocks.
 Two costs are involved in the determination of this stock that is opportunity cost of
stock outs and the carrying costs.
If a firm maintains low level of safety frequent stock outs will occur resulting into the
larger opportunity costs. On the other hand, the larger quantity of safety stocks involves
carrying costs.
3.2.4.3 ECONOMIC ORDER QUANTITY (EOQ)
The quantity of material to be ordered at one time is known as economic ordering
quantity.
This quantity is fixed in such a manner as to minimize the cost of ordering and
carrying costs.
Total cost material = Acquisition Cost + Cost + Carrying Costs + Ordering Cost.
Carrying Cost:
It is the cost of holding the materials in the store.

Ordering Cost:
It is the cost of placing orders for the purchase of materials.
EOQ can be calculated with the help of the following formula
EOQ = 2CO / I
Where C = Consumption of the material in units during the year
O = Ordering Cost
I = Carrying Cost or Interest payment on the capital.
3.2.4.4 A – B – C – ANALYSIS: (ALWAYS BETTER CONTROL
ANALYSIS)
Under A – B – C Analysis. The materials are divided into 3 categories viz., A, B and
C.
Almost 10% of the items contribute to 70% of value of consumption and this category
is called ‘A’ category.
About 20% of the items contribute about 20% of value of category ‘C’ covers about
70% of items of materials which contribute only 10% of value of consumption.
3.2.4.5 VED ANALYSIS: (VITALLY ESSENTIAL DESIRE)
The VED analysis is used generally for spare parts. Spare parts classified as Vital (V),
Essential (E) and Desirable (D).
 The vital spares are a must for running the concern smoothly and these must be stored
adequately. The ‘E’ type of spares is also necessary but their stocks may be kept at low
figures. The stocking of ‘D’ type spares may be avoided at times. If the lead time of these
spares is less, then stocking of these spares can be avoided.
3.2.4.6 INVENTORY TURNOVER RATIO
Inventory turnover ratios are calculated to indicate whether inventories have been
used efficiently or not.
The inventory turnover ratio also known as stock velocity is normally calculated as
sales / average inventory of cost of goods sold / average inventory.
Inventory conversion period may also be calculated to find the average time taken for
clearing the stocks. Symbolically.
Inventory Turnover Ratio = Cost of goods sold
_________________________
Average inventory at cost

(Or)
Net sales
= ________________________
(Average) Inventory
And,
Inventory conversion period = Days in a year
______________________
Inventory Turnover ratio

3.2.4.7 CLASSIFICATION AND CODIFICATION OF

INVENTORIES
The inventories should first be classified can then code numbers should be assigned
for their identification. The identification of short names are useful for inventory
management not only for large concerns but also for small concerns. Lack of proper
classification may also lead to reduction in production.
Generally, materials are classified accordingly to their nature such as construction
materials, consumable stocks, spares, lubricants etc. After classification the materials are
given code numbers. The coding may be done alphabetically or numerically. The later
method is generally used for coding.
 The class of materials is assigned two digits and then two or three digits are assigned
to the categories of items divided into 15 groups. Two numbers will be category of materials
in that class.
The third distinction is needed for the quality of goods and decimals are used to note
this factor.
3.2.4.8 VALUATION OF INVENTORIES – METHOD OF VALUATION
FIFO method
LIFO method
Base Stock method
Weighted average price method
3.2.4.8.1 THE FIFO METHOD (FIRST – IN FIRST – OUT METHOD)
Under this method it is assumed that the materials or goods first received are the first
to be issued or sold. Thus, according to this method, the inventory on a particular date is
presumed to be composed of the items which were acquired most recently.
The value inventory would remain the same even if the “perpetual inventory system”
is followed.
Advantages: - The FIFO method has the following advantages.
1) It values stock nearer to current market prices since stock is presumed to be
consisting of
2) The most recent purchases.
3) It is based on cost and, therefore, no unrealized profit enters into the financial
accounts of the company.
4) The method is realistic since it takes into account the normal procedure of
utilizing or selling those materials or goods which have been longer longest in
stock.

Disadvantages: - The method suffers from the following disadvantages.

1) It involves complicated calculations and hence increases the possibility of clerical
errors.
2) Comparison between different jobs using the same type of material becomes
sometimes difficult. A job commenced a few minutes after another job may have
to bear an entirely different charge for materials because the first job completely
exhausted the supply of materials of the particular lot.
 The FIFO method of valuation of inventories is particularly suitable in the following
circumstances:
I. The materials or goods are of a perishable nature.
II. The frequency of purchases is not large.
III. There are only moderate fluctuations in the prices of materials or goods
purchased.
IV. Materials are easily identifiable as belonging to a particular purchase lot.

3.2.4.8.2 THE LIFO METHOD (LAST – IN – FIRST – OUT METHOD)

This method is based on the assumption that last item of materials or goods purchased
are the first to be issued or sold. Thus, according to this method, inventory consists of items
purchased at the earliest cost.
Advantages: - This method has the following advantages:
1) It takes into account the current market conditions while valuing materials issued
to different jobs or calculating the cost of goods sold.
2) The method is based on cost and, therefore, no unrealized profit or loss is made on
account of use of this method.
The method is most suitable for materials which are of bulky and non – Perishable
type.
3.2.4.8.3 BASE STOCK METHOD
This method is based on the contention that each enterprise maintains at all times a
minimum quantity of materials or finished goods in its stock. This quantity is termed as base
stock. The base stock is always valued at this price and it’s carried forward as a fixed asset.
Any quantity over and above the base stock is valued in accordance with any other
appropriate method. As this method aims at matching current costs to current sales, the LIFO
method will be most suitable for valuing stock of materials or finished goods other than the
base stock. The base stock method has advantage of charging out material / goods at actual
cost. Its other merits or demerits will depend on the method which is used for valuing
materials other than the base stock.
3.2.4.8.4 WEIGHTED AVERAGE PRICE METHOD
This method is based on the presumption that once the materials are put into a
common bin, they lose their identity. Hence, the inventory consists of no specific batch of
goods. The inventory is thus priced on the basis of average priced on the quantity purchased
at each price.
Weighted average price method is very popular on account of its being based on the
total quantity and value of materials purchased besides reducing number of calculations. As a
matter of fact the new average price is to be calculated only when a fresh purchase of
materials is made in place of calculating it every now and then as is the case with FIFO,
LIFO methods. However, in case of this method different prices of materials are charged
from production particularly when the frequency of purchases and issues/sales in quite large
and the concern is following perpetual inventory system.
 CHAPTER III
COMPANY PROFILE

COMPANY PROFILE:
ABOUT US
Zuari Cement is one of the leading cement producers in South India. A owned subsidiary of
the HeidelbergCement Group its, Commitment to customer satisfaction has seen Zuari
Cement grow from a modest 0.5 million tonne capacity in 1995 to above 7.1 MnT in 2020
and has earned it amongst the leading innovative cement Brands in the country. A fully
owned subsidiary of the heidelbergCement Group, Germany commitment to its customer
satisfaction.
Zuari Cement is part of the worldwide HeidelbergCement Group, a global construction
material major Number 1 in aggregates and number 2 in cement, and number 3 in ready-
mixed concrete globally.
Zuari Cement has a total cement manufacturing capacity of 7.1 million tons in India, which
includes two manufacturing units at Sitapuram and Yerraguntla, along with two grinding
centres at Chennai and Solapur and a cement terminal at Kochi, Kerala. This makes Zuari
Cement a formidable brand in the South Indian Cement Market with more than 5% market
share. The states of Karnataka, Andhra Pradesh, Telengana, TamilNadu & Kerala form the
core markets for Zuari Cement with a notable footprint in Maharashtra, Orissa & Chattisgarh.
In line with Groups' global focus on quality and environment, Zuari Cement's manufacturing
units are ISO 50001:2011, ISO: 9001 and ISO: 14001 Certified. Zuari Cement has in its
growth strategy has chalked out ambitious plans for the future.
Adjudged “Power Brand” in 2012 & 2013, in the year 2020, among the accolades Zuari
Cement amongst other have won the other accolades, are “India’s Most Trusted Brand 2020”
by Consumer Survey Report-MRG, “Best Brands 2020 - Emerging No1 category”, by WCR
and “Greenco Gold Certification by Green Company Rating system 2020. In previous years
Zuari Cement won “Asia Manufacturing Excellence Award for Safety 2019”, CII “National
Award for Excellence in Energy Management” and “Excellence Award” by IES. Our Whole
Time Director won the “Udyog Ratan” Award by IES for 2019.
Strength lies in our People
Zuari Cement has an extensive human resource an empowered team of talent pool with strong
skills set of expertise in their respective fields. Our diverse work force is spread across a wide
geographical area across India.
Zuari Cement provides employment to over 3000 people and provides indirect employment
to over 5600 people for material handling, godown operations and transportation.
Our Products

Zuari cement products: preferred in the construction industry

Zuari Cement products are preferred by professionals throughout all disciplines of the
construction industry. Wheather sparked by an architect a owner or a building engineer, any
project's vision is only as realistic as access to materials capable of achieving precise details
in their purest form. At Zuari, we are proud to provide materials that are uncompromising in
creative breadth, technical quality and practical applicability.

Zuari Cement is aware of its social role and promotes socially responsible behavior among all
its employees and subsidiaries. We believe that Sustainable Development, as a combination
of economic prosperity, environmental protection and social responsibility, is the basis of our
own future.

As a corporate citizen, Zuari Cement is also acutely aware of its responsibilities towards the
near-by communities. As a part of this responsibility and in an effort to strengthen its
relationship with the villages around the factory, the Company has undertaken and carried out
many initiatives.

INDUSTRY PROFILE:
Introduction
India is the second largest producer of cement in the world. India has a lot of potential for
development in the infrastructure and construction sector and the cement sector is expected to
largely benefit from it. Some of the recent initiatives, such as development of 98 smart cities,
is expected to provide a major boost to the sector.
Aided by suitable Government foreign policies, several foreign players such as Lafarge-
Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A
significant factor which aids the growth of this sector is the ready availability of raw
materials for making cement, such as limestone and coal.
Market Size
Cement production reached 329 million tonnes (MT) in FY20 and is projected to reach 381
MT by FY22. However, the consumption stood at 327 MT in FY20 and will reach 379 MT
by FY22. The cement production capacity is estimated to touch 550 MT by 2024. As India
has a high quantity and quality of limestone deposits through-out the country, the cement
industry promises huge potential for growth.
According to CLSA (institutional brokerage and investment group), the Indian cement sector
is witnessing improved demand. Key players reported by the company are ACC, Dalmia and
Ultratech Cement. In the second quarter of FY21, Indian cement companies reported a sharp
rebound in earnings and demand for the industry increased, driven by rural recovery. With
the rural markets normalising, the demand outlook remained strong. For FY21, CLSA
expects a 14% YoY increase in EBITDA in the cement market for its coverage stocks.
Investments
According to the data released by Department for Promotion of Industry and Internal Trade
(DPIIT), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$
5.28 billion between April 2000 and March 2024.
Some of the major investments in Indian cement industry are as follows:
• In December 2024, the company planned to invest Rs. 5,477 crore (US$ 776.99
million) to raise its capacity by 12.8 mtpa. The expansion includes existing approval for the
cement plant at Pali in Rajasthan, in addition to capacity expansion of 6.7 mtpa that is
currently underway in Uttar Pradesh, Odisha, Bihar and West Bengal.
• In November 2024, Ramco Cements Ltd. acquired an additional stake worth Rs 2.48
crore (US$ 335.34 thousand) in Lynks Logistics.
• In November 2024, Dalmia Cement has signed a contract with Paytm for digitising its
payment processes. Paytm will help customers purchase Dalmia Cement products from
>30,000 dealers and distributors across 22 Indian states and union territories using Paytm
Wallet, Unified Payments Interface (UPI) and other cashless modes of payment.
• In October 2024, Dalmia Bharat Group announced plans to invest ~Rs 2,000 crore
(US$ 270.44 million) for setting up a cement plant in Kalaburgi, Karnataka.

• JK cement planned to invest Rs. 1,700 crore (US$ 246.7 million) to increase its
production capacity to 15 million tonnes by end of 2024.
• In November 2024, Shiva Cement Ltd, a subsidiary of JSW Cement Ltd, has
announced plans to invest over Rs. 1,500 crore (US$ 203.21 million) in a new 1.36 million
tonne per annum clinker unit project in Odisha.
Government Initiatives
In order to help private sector companies, thrive in the industry, the Government has been
approving their investment schemes. Some of the initiatives taken by the Government off late
are as below:
• The Union Budget has allocated Rs. 139 billion (US$ 1.93 billion) for Urban
Rejuvenation Mission: AMRUT and Smart Cities Mission. Government’s infrastructure push
combined with housing for all, Smart Cities Mission and Swachh Bharat Abhiyan is going to
boost cement demand in the country. The move is expected to boost the demand of cement
from the housing segment. As per Union Budget 2023-20, Government planned to upgrade
1,25,000 km of road length over the next five years.
• Also, the Government of India extended an additional outlay of Rs. 18,000 crore (US$
2.43 billion) for the PM Awaas Yojana - Urban over the already allocated Rs. 8,000 crore
(US$ 1.08 billion); this is expected to be used for the development of ~30 lakh houses
(ground support for 12 lakh houses and completion of 18 lakh houses) and will likely create
an additional 78 lakh jobs and boost production and sale in the steel and cement sectors.
An outlay of Rs. 27,500 crore (US$ 3.93 billion) has been allotted under Pradhan Mantri
Awas Yojana in the Union Budget 2024-21.
Road Ahead
The eastern states of India are likely to be the newer and untapped markets for cement
companies and could contribute to their bottom line in future. In the next 10 years, India
could become the main exporter of clinker and gray cement to the Middle East, Africa, and
other developing nations of the world. Cement plants near the ports, for instance the plants in
Gujarat and Visakhapatnam, will have an added advantage for export and will logistically be
well armed to face stiff competition from cement plants in the interior of the country. India’s
cement production capacity is expected to reach 550 MT by 2025.
Due to the increasing demand in various sectors such as housing, commercial construction
and industrial construction, cement industry is expected to reach 550-600 million tonnes per
annum (MTPA) by the year 2025.
Number of foreign players are also expected to enter the cement sector owing to the profit
margins and steady demand.
India is the second largest cement producer in the world and accounted for over 8% of the
global installed capacity as of 2023. India’s overall cement production capacity was nearly
545 million tonnes (MT) in FY20. Of the total capacity, 98% lies with the private sector and
the rest with public sector. The top 20 companies account for around 70% of the total cement
production in India. As India has a high quantity and quality of limestone deposits through-
out the country, the cement industry promises huge potential for growth.
The demand of cement industry is expected to reach 550-600 MT per annum (MTPA) by
2025 because of the expanding demand of different sectors, i.e., housing, commercial
construction, and industrial construction.
According to CLSA (institutional brokerage and investment group), the Indian cement sector
is witnessing improved demand. Key players reported by the company are ACC, Dalmia and
Ultratech Cement. In the second quarter of FY21, Indian cement companies reported a sharp
rebound in earnings and demand for the industry increased, driven by rural recovery. With
the rural markets normalising, the demand outlook remained strong. For FY21, CLSA
expects a 14% YoY increase in EBITDA in the cement market for its coverage stocks.
A total of 210 large cement plants account for a combined installed capacity of 410 MT in the
country, whereas, 350 mini cement plants make up for the rest. Of the total 210 large cement
plants in India, 77 are in the states of Andhra Pradesh, Rajasthan, and Tamil Nadu. Sale of
cement in India stood at Rs 63,771 crore (US$ 9.05 billion) in FY20. India’s export of
cement, clinker and asbestos increased at a CAGR of 6.44% between FY16-FY19. In FY20
(till January 2024), it reached US$ 1.66 billion. To enhance the source of capital for
infrastructure financing, Credit Guarantee Enhancement Corporation, for which regulations
have been notified by the RBI, will be set up in FY20.
According to the data released by Department for Promotion of Industry and Internal Trade
(DPIIT), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$
5.28 billion between April 2000 and March 2024.
India’s export of cement, clinker and asbestos increased at a CAGR of 1.68% between FY16-
FY20 and stood at US$ 1.98 billion in FY20.
The Government of India is strongly focused on infrastructure development to boost
economic growth and is aiming for 100 smart cities. The Government also intends to expand
the capacity of railways and the facilities for handling and storage to ease the transportation
of cement and reduce transportation cost. These measures would lead to an increased
construction activity, thereby boosting cement demand. As per Union Budget 2023-20, the
Government expected to upgrade 1,25,000 kms of road length over the next five years, which
would boost the demand for cement. Also, the Government of India extended an additional
outlay of Rs. 18,000 crore (US$ 2.43 billion) for the PM Awaas Yojana - Urban over the
already allocated Rs. 8,000 crore (US$ 1.08 billion); this is expected to be used for the
development of ~30 lakh houses (ground support for 12 lakh houses and completion of 18
lakh houses) and will likely create an additional 78 lakh jobs and boost production and sale in
the steel and cement sectors.
CHAPTER IV
 THEORETICAL FRAMEWORK

CONCEPTUAL AND THEORITICAL FRAME WORK OF INVENTORY

MANAGMENT
Inventory management is a process of evaluating and controlling method for inventory or
stock level of the company. The purpose of inventory management is to diagnose the
information contained in the stock book of the company, so as to judge the stock level and
control methods of the firm. The analysis and interpretation of inventory management is
essential to bring out the stock needed. The inventory management is an attempt to determine
the stock and meaning of the stock book statement data so that forecast may be made of the
future cost control of the company. The stock evaluation helps to understand how best the
organization is functioning with good stock control.
The analytical tools generally available to an analyst for this purpose are as follows,

 Inventory turnover analysis

 EOQ analysis

3.1.1 OBJECTIVES OF INVENTORY TURNOVER ANALYSIS,

EOQ ANALYSIS
The objectives of inventory turnover analysis EOQ analysis is to provide information
about the stock level and control when purchase of raw materials of an enterprise that is
useful to a wide range of purchasing power of raw materials. We have discussed in the
previous paragraphs the utility of the components of inventory turnover and EOQ. Later we
will us discussing how they are made use of by stock department
o To study the stock book of the company
o To evaluate the stock position of the company.
o To find out the efficiency in utilization of stock materials to produce the
goods.

3.1.2 USES OF INVENTORY TURNOVER ANALYSIS, EOQ

ANALYSIS
 It is helpful in assessing the stock position and productivity position of a concern. The
main objectives of an inventory turnover analysis are to assess
 The present and future stock capacity of a concern.
 To give corrective solution for the inventory problem.
 To differentiates the investment with EOQ and invest without EOQ for purchasing of
the raw material
3.1.3 INVENTORY TURNOVER RATIOS

3.1.3.1 INVENTORY TURNOVER RATIO

A ratio showing how many times a company's inventory is sold and replaced over a period.

3.1.3.2 INVENTORY TURNOVER PERIOD

How often interest is calculated and added on to your investment? If you have two
conversion periods, it means that interest is calculated every six months. The inventory
conversion period for calculate the interest for credit sales to their agents
3.1.4 ECONOMIC ORDER QUANTITY

Economic order quantity is that level of inventory that minimizes the total of
inventory holding cost and ordering cost. The framework used to determine this order
quantity is also known as Wilson EOQ Model. The model was developed by F. W. Harris in
1913.The most economical quantity of a product that should be purchased at one time. The
EOQ is based on all associated costs for ordering and maintaining the product. EOQ refers to
the size of the order which gives maximum economy in punches of materials.

EOQ=
√ 2 Ao
C1
Where
A=Annualusageinunit
O=Orderingcost
C 1=Carriyingcost
 CHAPTER-V
DATA ANALYSIS AND INTERPRETATION
ABC Analysis at ZUARI CEMENTS Division:
Table: RAW MATERIAL (AT COST*) *Rs In millions

Particulars 2021 2022 2023 2024

Raw Material (at cost*) 132 167 168 311
A 70% 92 69% 14 72% 120 70% 218
B 20% 26 23% 38 19% 32 17% 53
C 10% 14 8% 14 9% 16 13% 40

Chart Title
Particulars Work in process(at cost*) A(blended cement)
B(Portland cement) C(premeier cement)

2017 2018 2019 2020

0.700000000000288 0.720000000000 241

0.080000000000
2010.690000000000 178
123 128 0.700000000000169
0.090000000000
001
0.2
0.1 5829 001
0.23
0001 4114 0001 922412
001
0.19 001
0.17
0.13 4381

1 2 3 4

Interpretation:
Consumption of raw material A(blended cement) gradually increased every year from
2013 to 2024, raw material B’s(Portland cement) consumption increased from 2013 to 2021
and decreased thereafter and raw material C’s(premiere cement) Consumption increased
gradually every year from 2013 to 2024.

Table 4.2WORK IN PROCESS (AT COST*)

*Rs In Millions
Particulars 2021 2022 2023 2024
Work in process(at 288 178 128 241
cost*)
 A(blended cement) 70% 201 69% 123 72% 92 70% 169
B(Portland cement) 20% 58 23% 41 19% 24 17% 43
C(premeier cement) 10% 29 8% 14 9% 12 13% 81

Graph: Works in Process

Chart Title

Particulars
Work in process(at cost*) A(blended cement) B(Portland cement)
C(premeier cement)
2017 2018 2019 2020

0.70000000000 288 201 0.69000000000 178 0.72000000000 0.70000000000 24116981

0.1 22222 58
11111 0001
0.2 0.0844444 123
29 33333 0001
0.23 41 0.0966666128
14 55555 0001
0.19 92
24 0.1388888 43
12 77777 0001
0.17

1 2 3 4

Interpretation:
The consumption of work-in-progress A gradually increased from 2013 to 2022 and it
decreased in the year 2024, work-in-progress B’s consumption increased from 2013 to 2024
and decreased there after and work-in-progress C’s consumption decreased in the year 2021
compared to 2013 and increased thereafter.

Table FINISHED GOODS (A t cost*)

Table * Rs In millions
2021 2022 2023 2024
Finished Goods (at 633 280 236 422
cost*)
A(BLENDED 70% 432 69% 193 72% 170 70% 295
CEMENT)
B 20% 127 23% 64 19% 45 17% 72
C 10% 63 8% 23 9% 21 13% 55

Graph: Finished Goods

 60000

50000

40000

30000

20000 2015-2016 11690.67

2016-2017 49950.88
10000
2017-2018 42950.66
0
55%
24172.33

35575

236

422
Cur- Ratio 2019-17 2019 2020
rent (%)
assets

Interpretation:
The consumption of finished goods A (blended cement) increased in the year 2022
when compared 2023 and then it decreased in the year 2022 and again it is increased in the
year 2024. Finished goods B’s (Portland cement) consumption increased in the year 2024.
Finished goods C’s (premiere cement) consumption gradually decreased in the years 2021
and 2022 when compared to 2022. In the year 2024 it again increased.
The determination of the appropriate quantity to be purchased in each lot to replenish
stock as a solution to the order quantity problems necessitates resolution of conflicting goals.
Buying in a higher average inventory level will assure.
(i) Smooth production / sale operation and
(ii) Lower ordering or setup costs. But it will involve higher carrying costs. On the
other hand small orders would reduce the carrying cost of inventory by reducing
the average inventory level but the ordering costs would increase, as there is a
likelihood of interruption in operations due to stock-outs. A firm should not place
either to high or small orders on the basis of a trade off between benefits derived
from the availability of inventory and cost of carrying that level of inventory,
appropriate or optimum level of order to placed should be determined. The
optimum level of inventory is popularly referred to as the economic order quantity
or economic lot size. It may be defined as that level of inventory order that
minimizes the total cost associated with inventory management. It is based on
some assumptions, which are restrictive.
a. The firm knows with certainty the annual usage of a particular item of inventory.
b. Rate at which the firm uses inventory is steady over time.
c. The orders placed to replenish inventor stocks are received at exactly that point that
point in time when inventories reach zero.

2) INVENTORY TURNOVER RATIO:

This ratio judge’s annual turns, it is usually conducted once a year.
The formula = cost of goods sold /average values of Inventory

Inventory Turnover Ratio:

Table Calculation of Inventory turnover ratio:
Particulars 2020-17 2021-18 2022-19 2023-2024
Cost of Goods Sold 36445 29721 32491 35575
Average Inventory 1050 625 532 974
Inventory Turnover Ratio 34.7 23.4 61 36.5

Graph 4.4 Inventory turnover ratio

40000

35000

30000

25000

20000
Cost of Goods Sold
15000 Average Inventory
Inventory Turnover Ratio
10000

5000

Interpretation:
The interpretation increased to 61 in 2023-2024 from 36.5 implying there was a
consistent and good management control. Being Cement Company, generally the inventory
will be high.
3) Percentage of Inventory Turnover Current Assets:
In order to know the percentage of inventory over current assets the ratio of inventory to
current assets is calculated and which is presented in the following table.
Inventory
Inventory turnover current assets ratio= ----------------------- * 10

Current ratio

Year Inventory Current assets Ratio (%)

20218-2019 13386.80 24172.33 55%
2019-2020 11690.67 28770.78 40%
2020-2021 49950.88 53063.75 94%
2021-2022 42950.66 45598.02 92%
2022-2023 46087.45 46713.32 92%
2023-2024 93605.78 86811.49 107%

100000
90000
80000
70000
60000
50000 Inventory
Current assets
40000
Ratio (%)
30000
20000
10000
0

Interpretation:
From the above table it can be understand that the 55% of inventory over current assets ration
was showing trend for two years 2012-13.
1) How ever from the year 2023-17 it is showing an increasing trend.
2) The lowest inventory over current assets ratio was recorded at 40% during the year
2012-13 and the highest inventory over current assets ratio we recorded at 107%
during 2023-17.
3) The average inventory over current assets ratio was recorded at 80
4) Current ratio:
In order to know the current ratio the percentage of current assets to current liabilities is
calculated and which is presented in the following table.
Current assets
Current ratio= ----------------------
Current liabilities
Calculation of Current ratio:

Year Current assets Current liabilities Ratio

20218-2019 24172.33 7862.11 3.07%
2019-2020 28770.78 8042.62 3.57%
2020-2021 53063.75 16204.14 3.27%
2021-2022 45598.02 14876.45 3.06%
2022-2023 49713.32 17728.22 2.80%
2023-2024 86811.49 36253.41 2.39%

90000
80000
70000
60000
50000
40000 Current assets
Current liabilities
30000 Ratio
20000
10000
0

Interpretation:

1) From the above table it can be interpreted that the 3.07% of current assets over current
liabilities ratio i.e., current ratio was showing a decreasing trend from year 2012-13.
2) In the year 2011-12 the ratio was 3.07 and has increased to 3057 in the 2012-12.
3) The lowest current ratio was recorded at 2023-17 which is 2.39% and the highest ratio
was recorded at 3.57 during the year 2012-13.
4) The average current ratio was recorded at 3.02 during the review period.

5) Quick ratio:
 The quick ratio is the relationship between quick to current liabilities quick assets is
more rigorous test of liability position of a firm it is computed by applying the following
formula.
Quick ratio= current assets-current liability
Where quick assets = current assets- inventory
Year Quick assets Current liabilities Ratio
20218-2019 10785 7862.11 1.37%
2019-2020 17080 8042.62 2.12%
2020-2021 3112 16204.14 0.02%
2021-2022 3347 14876.45 0.22%
2022-2023 3625 17728.22 0.20%
2023-2024 3207 36253.41 0.08%

40000

35000

30000

25000

20000
Quick assets
15000 Current liabilities
Ratio
10000

5000

Interpretation:
1) From the above table it can be understand as that the % of quick assets to current
liabilities i.e., the quick ratio was 0.002 in 2013-14 and from that year it is showing
increasing trend.
2) The highest quick ratio was recorded at 2.12 during the year 2012-13 and the lowest
quick ratio was recorded at 0.002 during the year 2013-14.
3) The average quick ratio was recorded at 0.66 during the review period.
6) Inventory conversion period:
It may also be of interest to see average time taken for clearing the stocks. This can be
possible by calculating inventory conversion period. This period is calculated by dividing
the number of the days by inventory turns over.
 This formula may be as:
Days in a year (360 days)
Inventory conversion period = _____________________
Inventory turnover ratio
Inventory conversion period: (in crores)

Cost of Avg.
Year Ratio ICP (Days)
goods sold inventory
20218-2019 59567.65 7200.12 8.27 43
2019-2020 57046.56 36822.20 1.54 233
2020-2021 118561.78 94022.27 1.26 285
2021-2022 126368.65 11365.07 11.11 32
2022-2023 129568.89 12225.77 10.59 33
2023-2024 299726.18 155627.91 1.92 187

Chart Title
225000
125000
25000
2014- 2015- 2016- 2017- 2018- 2019-
2015 2016 2017 2018 2019 2020
Axis Title Cost 59567.6 57046.5 118561. 126368. 129568. 299726.
of 5 6 78 65 89 18
goo
ds
sold
Avg. 7200.12 36822.2 94022.2 11365.0 12225.7 155627.
in- 7 7 7 91
ven-
tory
Ra- 8.27 1.54 1.26 11.11 10.59 1.92
tio
ICP 43 233 285 32 33 187
(Day
s)

Interpretation:
From the above table it can be identified the following observations:
1) The inventory conversion period was 233 days during the year 2012 – 13 but it
declined to 285 during 2013 - 14, which indicates that the stock has been very quickly
converted into sales which mean the company is managing the inventory efficiently.
 2) The lowest inventory conversion period was recorded at 285 days in the year 2013- 14
and the highest inventory conversion was recorded at 187 days in the year 2023 – 17.
The average inventory conversion period was recorded at 97days during the review

period.

CHAPTER-VI

SUMMARY OF FINDINGS, SUGGESTIONS AND

CONCLUSION

FINDINGS
 Inventory level of the company has increased year by year. However there is

no problem in the inventory level of the Zuari cement pvt.limited.

 Inventory turnover ratio the ratios of the year has been found as low in the

years of 2013-13 and 2021-14. After those periods the inventory turnover ratio

has slightly increased in the year 2022-15. Even though that level is quite low

when compare with 2024-17.

 Inventory conversion period is found at good level though the effort is to keep

the inventory conversion period as low.

 EOQ analysis for the year 2023-16 to 2022-15 is good. For this year they

followed EOQ with investment for purchase of goods.

 EOQ analysis for the year 2012-16 to 2022-15 is good. For this year they

followed EOQ with investment for purchase of goods.

 In EOQ analysis for the year 2013-13 to 2022-15 is good. For this year they

followed EOQ with investment for purchase of goods.

 In EOQ analysis for the year 2021-14 to 2022-15 is good. In this year the EOQ

with investment and EOQ without investment are same.

 In EOQ analysis for the year 2022-15 to 2022-15 is good. All years of EOQ is

followed only investment with EOQ.

SUGGESTIONS
 Inventory level of the company shows the increase of the raw materials, work-

in-process and finished goods. The inventory level of Zuari cement pvt limited

is well.

 Inventory turnover ratio detected some problems. Now they use their cement

which are produced in Zuari cement pvt limited for their own purpose. If they

sell that to others also then only the ratio will be increased.

 Zuari cement pvt limited sells the 25 per cent of the cements produced,

remaining they used for own purpose. For sales to others more credit days may

be allowed to their agents.

CONCLUSION
The study covers the inventory management for effective inventory control. The

technique used is Economic Order Quantity Analysis named as EOQ Analysis to find

out the rate with EOQ and without EOQ investment for purchasing of good in

manufacturing the cement at Zuari Cement Pvt Limited. With this the inventory

management of the organization was found to be quite good during the years 2023-

2023. From this study it can be concluded that the organization has been in effective

in inventory management. The study will be used for Zuari Cement Pvt Limited in

varied ways.

BIBLIOGRAPHY
BOOKS
 Asohok Banerjee - Financial Accounting – A Managerial Emphasis – Excel Books –
2012
 Collis – Business Accounting – Palgrave Macmillan – 2021
  Khan MY Jain P.K – Management Accounting : Text, problems and cases 4th Edition
– Tata McGraw Hill – 2021
 Pandikumar – Management Accounting – Excel Books – 2021
 Ramachandran N Kakani Kumar Ram – Financial Accounting For Management –
Tata McGraw Hill – 2013
 Robert Anthony David Hawkins Kenneth A.Merchant – Accounting Text and Cases –
Tata McGraw Hill – 2021
 S.K Bhattacharyya JohnDeaden – Costing for Management – Vikas Publishing – 2002
 S.N Maheswari S.K Maheswari – Accounting for Management – Vikas Publishing –
2013
WEBSITES
 en.wikipedia.com
 Info.shine.com
 www.ask.com
 www zuaricements.com
 www.google.com
 www.indiacatalog.com
 www.inventoryquzz.com
 www.reportjunction.com
 www.scribed.com
 www.yahoo.com

ANNUXURE: