Top Banner

Click here to load reader

Final Project

Oct 23, 2014

ReportDownload

Documents

INTRODUCTION Finance in the modern business world is regarded as life and blood of a business enterprise. Finance function has become so important that it has given birth to financial management as a separate subject. Therefore, this subject is acquiring a universal applicability. Financial management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. As a separates activity or discipline is of recent origin it was a branch of economics till 1890. Still today, it has no unique body of knowledge of its own, and it draws heavily on economics for its theoretical concepts. The subjects of financial management are of immense interest to both academicians and practicing managers. It is of great interest to academicians because the subject is still certain area where controversies exist for which no unanimous solutions have been reaching yet. Practicing managers are interested in this subject because among the most crucial decisions of the firms are those which relate to finance and un understandings of theory of financial management provides them with conceptual and analytical insights to make decisions skillfully.

1

The modern thinking in financial management accords a far greater importance to management in decision-making and formulation of policy. Financial management occupies key position in top management and plays a dynamic role in solving complex management problems. They are now responsible for shaping the fortunes of the enterprise and are involved in allocation of capital.

DEFINITIONS:

Financial Management is an area of financial division making, harmonizing individual motives and enterprise goals. -Weston and Brigham

Financial Management is the application of the planning and control functions to the finance function. -Howard and Upon

2

NEED FOR THE STUDY Materials are equivalent to cash and they constitute an important part of the total cost. It is essential that materials should be properly safe-guarded and correctly accounted. Proper control of material can make a substantial contribution to the efficiency of a business. The success of a business concern largely depends upon efficient purchasing, storage, consumption and accounting.

3

OBJECTIVES OF THE STUDY

To learn various inventory management procedures followed at Ravali Spinners ltd. To understand relative advantages and disadvantages of various techniques To review the various techniques and their impact on business inventory.

4

METHODOLOGY Information is collected from primary and secondary sources. Primary sources of data: The data has been gathered through interactions and discussions with the Executives working in the division. Some important information has been gathered through couple of informal discussion of executives. Secondary source of data: Referred standards texts and reference books for collecting the information regarding the theoretical aspects, of the topic. Annual reports and other magazines published by the Company are used for collecting the required information. Many websites pertaining to the industry and pertaining to inventory management have also been used as secondary sources of data.

5

SCOPE OF THE STUDY

The study is done on inventories held by Ravali Spinners Pvt. Ltd. The scope of the study includes various methods & techniques used for management of inventories like Raw Material, WIP, Finished goods for four financial years. This study of items for a period of 4 years provides insight to the management of inventory. The study thus provides a scope to the management to understand their inventory position and take necessary actions as per the findings and suggestions.

6

LIMITATIONS OF THE STUDY The study of inventory management of the company had a few constraints One of the factors construing the study was the lack of availability of ample information. The information collected for the study had been taken from documents, which had been, let out to the public. To the extent that the executives could spare their time, they gave me the information by way of small discussions for the purpose of data collection. Most of the information has been kept confidential and as such was not passed on as part of the policy of the company. The time allotted for the completion of the project was very limited and proved to be a major constraint in the successful completion of the project.

7

INDUSTRY PROFILE

Spinning is the conversion of fibers into yarn. These fibers can be natural fibers (cotton) or manmade fibers (polyester). Spinning also entails production of manmade filament yarn (yarn that is not made from fibers). Final product of spinning is yarn. Cotton value c h a i n s t a r t s f r o m G i n n i n g t h a t a d d s v a l u e t o i t b y s e p a r a t i n g c o t t o n f r o m s e e d a n d impurities. Spinning is the foundation process and all the subsequent value additions i.e. Weaving, Knitting, Processing, Garments and Made ups, depend upon it. Any variation in quality of spinning product directly affects the entire value chain. Product Characterization T h e p r o c e s s o f ma k i n g f a b r i c f r o m r a w c o t t o n i s a l o n g o n e a n d c o n s i s t s o f v a r i ou s stages. There are two technologies available to spin the yarn, first and the foremost is Ring Spun and second is Open End. With the development in technology, and changing need of people world over different types of cotton yarns like 100% cotton compact yarn,100% organic cotton yarns, 100% cotton mercerized yarns etc. have been developed which are used to manufacture a wide variety of cotton fabrics and clothing. Mostly ring s p u n ya r n s a r e u s e d f o r p r o d u c i n g f i n e q u a l i t y c l o t h i n g , b e d l i ne n s , b e d s h e e t s , b e d spreads, pillow covers etc., while open end yarns are used for manufacturing denim wear, towels, etc This is similar to treating different diseases with different medicines. Like a wrong medicine can prove hazardous for the heath of a patient, in a similar way a wrong choice of yarn will result in the creation of the wrong type of fabric or clothing. The basic difference between the yarns is their count. Different counts8

are used to make different type of fabrics. In some cases, the cotton yarn is blended with some other yarn in different ratios to provide different effects like shining or to lend more elasticity to the yarn. It is the yarn count and the twisting mode of the yarn that actually determines the overall strength and look of the manufactured fabric. 100% cotton compact yarn and100% cotton mercerized yarns have less hairiness and the fabric made from these is of fine quality are is used for manufacturing luxury clothing and bedding The count of Yarn can vary from 2s to 72s, the higher the number, the finer the yarn is.

Spinning Companies in India T h e s p i n n i n g i nd u s t r y i s d o mi n a t e d b y l a r g e u ni t s a n d i t h a s b e e n a b l e t o u n d e r g o significant modernization since the 1990s. The main factors behind the modernization include lowering of custom duties and other restrictions on imports of machinery and equipment and lowering of restrictions on imports and exports of raw cotton and yarn. The spinning industry, which is dominated by medium and large units producing more than 90 percent of the output and total value added. During an early period of policy reform (19831990), the demand increased due to spurt in exports, which caused better utilization of existing spindles and led to reduction in idle capacity. During later phase (19902005), the investment in new spindles increased at a very rapid rate. This lead to rise in efficiency of the working spindles and relative productivity of working spindles compared to the most recent technology improved over time.9

The units in spinning sector are relatively less as most of the units in this segment belong to large sector. This becomes clear as units belonging to cotton and synthetic spinning in terms of value added accounts for 22.4 per cent in the total value added in textile and clothing sector. The high share in value added compared to units is mainly because of dominance of medium and large units in spinning sector. The share of large units in total value addition in cotton and synthetic spinning sector accounts for 86.1 per cent

Company Vardhaman Group Spindles Nahar Group Bannari Amman Spinning Mills Limited Sangam Group Malwa Cotton Spinning Mills Sambandam Spinning Mills Ltd

Capacity 8,00,000 spindles 3,70,000 spindles 2,20,000 spindles 1,93,920 spindles 1,40,000 Spindles 1,10,000 Spindles

There are1834 cotton/man-made fiber textile mills (non-Small Scale) in the country with37.07 million spindles, 4, 89,718 rotors and 56,524 looms. Share in GDP

10

Its importance is underlined by the fact that The Textile industry accounts for around 4% of Gross Domestic Product, 14% of industrial

p r o d u c t i o n , 9 % o f e x c i s e collections, 18% of employment in the industrial sector, and 16% of the countrys total exports earnings. The Spinning sector, w h i c h i s i n t e g r a t e d t o t h e T e x t i l e industry accounts to 22.4% of the total value of the Textile Industry Economic trends. The Textile industry has been witnessing a massive upsurge in the recent years. The industry size has expanded from USD 49 billion in 2006-07 to USD 65 billion in 2009-10. During this era, the local market witnessed a growth of USD 15 billion, that is, from USD 30 billion to USD 45 billion Domestic Production The Production of Yarn has been on the rise. Raw material has been less with respect to the demand for Spun Yarn. The prices of Cotton Hank Yarn increased by 32.5% in Oct.2010 in com