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A STUDY ON INVENTORY MANAGEMENT IN SUNGWOO GESTAMP HITECH PVT
LIMITED- CHENNAI
PROJECT REPORT
Submitted by
M. ELAKKIYA
Reg. No: 108001619012
In partial fulfillment for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
IN
DEPARTMENT OF MANAGEMENT STUDIES
VIVEKANANDHA COLLEGE OF ENGINEERING FOR WOMEN
TIRUCHENGODE-637205
JUNE-2012
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VIVEKANADHA COLLEGE OF ENGINEERING FOR WOMEN
(Affiliated to Anna University of Technology, Coimbatore)
Elayampalayam, Tiruchengode
DEPARTMENT OF MBA
PROJECT WORK
JUNE -2012
This is to certify that the project entitled
A STUDY ON INVENTORY MANAGEMENT IN SUNGWOO GESTAMP HITECH PVT LIMITED-CHENNAI
Is the bonafide record of project work done by
M. ELAKKIYA
Register No. 108001619012
Of M.B.A during the year 2010-2012.
-------------------------------- ------------------------------
Project Guide Head of the
Department
Submitted for the project Viva-Voce examination held on __________________
------------------------------------ -----------------------------
Internal Examiner External Examiner
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DECLARATION
I affirm that the project work title “A Study on inventory management in
sungwoo gestamp hitech pvt limited chennai. Being submitted in partial fulfillment
for the award of MBA is the original work carried out by me. It has not formed the
part of any other project work submitted for award of any degree, either in this or any
other university.
(Signature of the candidate)
ELAKKKIYA.M
Reg.No: 108001619012
I certify that the declaration made above by the candidate is true
Signature of the Guide,
Mrs.E.DEEPA, Assist Prof, MBA.,
M.Phil.,
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ACKNOWLEDGEMENT
I express my sincere thanks and gratitude to Vidhya Rathna RashtriaRatta, Hind
Rattan, Pen KalviSathanaiyalar Prof. Dr. M. Karunanidhi, B.Pharm., M.S., Ph.D., D.Lit.,
Chairman & Secretary, Vivekanandha Educational Institutions, for his support in all our
endevours.
I extent my heartfelt thanks to the principal, Dr. R. K. Gnanmoorthy, ME., Ph.D.,
for the constant support given in all our activities.
I wish to express my sincere thanks to Dr. M. Latha Natarajan, MBA., Ph.D., Head
of the Department of Business Management for the help and kind support rendered by her.
I express my profound thanks to Mrs.E.Deepa Assist Prof, MBA., M.Phil.,
Departement of management studies, Faculty guide for the encouragement, supervision and
guidance throughout the project.
I also thank Mr.sathish kumar, project guide, Sungwoo gestamp hitech pvt
limited,Chennai for granting me permission to undergo this project in their organization.
I would like to express my sincere thanks for my parents and friends for their unbounded
support to make this project a reality.
I also express my heartfelt thanks to all the respondents who have provided
information required for the study.
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CONTENTS
Chapter No Title Page No
ABSTRACT I
LIST OF TABLES Ii
LIST OF CHARTS Iii
I INTRODUCTION
1.1 About the study
1.2 About the Industry
1.3 About the company 5
II MAIN THEME OF THE PROJECT
2.1 Objectives of the Study 10
2.2 Scope of the Study 11
2.3 Limitations of the Study 12
2.4 Review of Literature 13
2.5 Research Methodology 15
2.6 Data Analysis And Interpretation 17
III FINDINGS, SUGGESTIONS AND CONCLUSION
3.1 Findings 58
3.2 Suggestions 59
3.3 Conclusion 60
IV SCOPE WORK FOR FUTURE 61
4.1. Appendix
4.2.Bibliography 63
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ABSTRACT
The project report is the result of “A STUDY ON INVENTORY MANAGEMENT
IN SUNGWOO GESTAMP HI-TECH (CHENNAI) PVT LIMITED.
Inventory management is the process of determining the significant management of
stock. The research has to use facts for information already viably and analyze these to make
a critical evaluation of the material. The study is based on the secondary data provided by the
company. The desired information has been derived from the inventory section.
Inventory in a wider sense is defined as any idle resource of an enterprise. However it
is commonly used to indicate materials raw, in process, finished. Packing, spares and others-
stocked in order to meet an expected demand or distribution in future even though inventory
of materials is an idle resource in the sense it is not meant for the most immediate use, it is
almost a necessity to maintain some inventories for the smooth functioning of an organization
inventories are a sort the supply-production-distribution system that protects it for excessive
friction. The period which is taken for the study, is five year.
The objective of the company is to find out how the company is managing their
stock in an efficient manner. The range of tools used in this project is ABC analysis, ratio
analysis, trend analysis, correlation and linear regression analysis. The finding that reveal that
the store is managed properly with modern business like SAP.
I
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LIST OF TABLES
LIST OF CHART
TABLE NO TITLE PAGE NO
RATIOS:
2.6.1.1 Current ratio 29
2.6.1.2 Quick ratio 31
2.6.1.3 Net working capital ratio 33
2.6.1.4 Total debt ratio 35
2.6.1.5 Proprietary ratio 37
2.6.1.6 Current assets turnover ratio 39
2.6.1.7 Total assets turnover ratio 41
STATISTICAL ANALYSIS
2.6.2.1 Correlation between inventories & current
liabilities
43
2.6.2.2 Correlation between inventories & fixed
deposits
44
2.6.2.3 Correlation between inventories & loan &
advance
45
2.6.2.4 Correlation between inventories & sundry
debtors
46
2.6.2.5 Correlation between inventories & reserves 47
TREND ANALYSIS
2.6.3.1 Trend analysis of future years for total assets 48
2.6.3.2 Trend analysis of future years for inventories 51
LINEAR REGRESSION ANALYSIS
2.6.4.1 Linear regression analysis for expected value 54
ABC ANALYSIS
2.6.5.1 ABC analysis for the year 2007 56
2.6.5.2 ABC analysis for the year 2008 58
2.6.5.3 ABC analysis for the year 2009 60
2.6.5.4 ABC analysis for the year 2010 62
2.6.5.5 ABC analysis for the year 2011 64
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CHAPTER 1
CHART NO TITLE PAGE NO
2.6.1.1 CURRENT RATIO 30
2.6.1.2 QUICK RATIO 32
2.6.1.3 NET WORKING CAPITAL RATIO 34
2.6.1.4 TOTAL DEBT RATIO 36
2.6.1.5 PROPRIETARY RATIO 38
2.6.1.6 CURRENT ASSETS TURNOVER RATIO 40
2.6.1.7 TOTAL ASSETS TURNOVER RATIO 42
2.6.3.1 TREND ANALYSIS FOR FUTURE YEARS
TOTAL ASSETS
50
2.6.3.2 TREND ANALYSIS FOR FUTURE YEARS
INVENTORIES
53
2.6.5.1 ABC ANALYSIS FOR THE YEAR 2007 57
2.6.5.2 ABC ANALYSIS FOR THE YEAR 2008 59
2.6.5.3 ABC ANALYSIS FOR THE YEAR 2009 61
2.6.5.4 ABC ANALYSIS FOR THE YEAR 2010 63
2.6.5.5 ABC ANALYSIS FOR THE YEAR 2011 65
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INTRODUCTION
INDUSTRY INTRODUCTION
AUTO COMPONENTS INDUSTRY IN INDIA:
The Indian auto component industry is expected to reach a turnover worth US$ 113 billion by
2020-21 from US$ 43.4 billion in 2011-12, according to Automotive Component
Manufactures' Association (ACMA) report titled, 'Auto Component Industry in India:
Growing Capabilities & Strengths'. The exports from the industry are expected to grow at a
compound annual growth rate (CAGR) of 17 per cent during 2012-21, the ACMA report
highlighted.
The small and medium enterprise (SME) dominated automotive sector is among the top three
sectors attracting heavy online traffic on the site, IndiaMART.com, in terms of the number of
buyers who visited from other countries, both developed and developing, as per a report by
IndiaMART.com. In addition, among the Indian suppliers registered on IndiaMART.com, the
auto component sector features in the top five categories, contributing 11.8 per cent to the
whole segment. Product categories such as pumps and pumping equipments took the top
position with 8.1 per cent buy leads posted, followed by products such as nuts and bolts, and
lights and accessories in second and third position, respectively.
"India is a growing market for us and we are pleased to partner with Uno Minda to bring best
practices to Indian original equipment manufacturers (OEMs) and to explore and expand the
markets within Asia," as per Mr S M Park, President, AMS.
Market Structure
The tyre production in India is anticipated to reach 191 million units by the end of 2015-16,
according to RNCOS research report titled, 'Indian Tyre Industry Forecast to 2015'.
Moreover, manufacturers are expected to invest huge amount into the industry over the next
few years, with a major proportion of this investment directed towards the radial tyre capacity
expansion.
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In an analysis of medium to heavy-duty Hybrid and Electric Commercial Vehicle Market in
China and India, Frost and Sullivan estimated that the component revenues from India will
reach US$ 212 million by 2020, which would account for 11 per cent of the global
component market.
The vision of Automotive Mission Plan (AMP 2006-16) aims India to emerge as the
destination of choice in the world for design and manufacture of automobiles and auto
components with output reaching a level of US$ 145 billion accounting for more than 10 per
cent of the gross domestic product (GDP) and to provide additional employment to 25 million
people by 2016.
India: The Global Auto Hub
The amount of cumulative foreign direct investment (FDI) inflow into the automobile
industry during April 2000 to November 2012 was worth US$ 7,518 million, amounting to 4
per cent of the total FDI inflows (in terms of US$), as per data published by Department of
Industrial Policy and Promotion (DIPP), Ministry of Commerce.
The Indian automobile and auto components industry can be expected to surpass China's
growth path by 2021, according to a research report by Espirito Santo Securities.
Supportive government policies, positive business environment, availability of reasonably
priced talented workforce and stable outlook for the industry has made India a global hub for
the international manufacturers to set up their facilities in the country. The auto components
manufacturers are also reaping the benefits.
Auto components manufacturer, Uno Minda of N K Minda Group and AMS
Corporation of Korea are entering into a technical licence agreement for design,
manufacture and sale of automotive lamps in India
SKF has signed contracts with Audi for the delivery of SKF components. The
contracts, estimated at about SEK 1 billion (US$ 150.73 billion), include the delivery
of four different versions of wheel bearing units for the wheel ends and a range of
bearings for the new double clutch transmission
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Sungwoo Gestamp Hitech ( Chennai ) Limited., (SGH) is a Joint Venture between :
SUNGWOO Hi-Tech Co.Ltd,south korea (51%). GESTAMP automotive span,(49%).
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Gestamp Group :
GESTAMP is a Technology and Engineering company. GESTAMP, through its joint
ventures with global partners undertakes designing and development of components and
systems, to address the needs of Indian Automobile customers as also to meet the needs of
global partners and customers.
Sungwoo Hi-tech:
Established in 1977 in Korea, it is a leading supplier of Stampings and Assemblies for
automobile manufacturers of Korea. Sungwoo Hi-tech also designs and manufactures Tools,
D Sungwoo Hi-tech:
-3. SGH General Status
1) Type of Firm : J/V (SW (50%)+G/tamp(50%) )
2) Established : July. 1997
3) Address : Tamilnadu. Chennai
GroundGround
(sqm)(sqm)
BuildingBuilding
(sqm)(sqm)KoreanKorean
IndianIndian
StaffStaff WorkerWorker
60,00060,000 37,58237,582 66 165165 1,6001,600
4) Investment
TOTALTOTAL BuildingBuilding M/CM/C D/MD/M RemarksRemarks
2,4302,430 290290 1,3501,350 790790
5) Sales
Discrip Discrip 08 Year08 Year 09 Year09 Year 10 Year10 Year RemarksRemarks
SalesSales 4,700 4,700 4,5104,510 43204320
SGH MILESTONE AND CERTIFICATION:
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COMPANY VISION:
To become a global solution provider of metal parts to automobile customers. This will be
achieved by :
Manufacture of quality sheet metal parts (Stampings and Assemblies).
Design & Manufacture of technically superior tools and dies
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1.3 PRODUCT PROFILE
MAIN
PRODUCT
MAIN PRODUCTIONS
MODELMODEL SUB ASSEMBLIES SUPPLIEDSUB ASSEMBLIES SUPPLIED
SANTRO (EMXI)SANTRO (EMXI) 3838
ACCENT (LCI)ACCENT (LCI) 3535
VERNA (MCI)VERNA (MCI) 3535
GETZ (TBF)GETZ (TBF) 1818
i10 (PA)i10 (PA) 3232
i20 (PB)i20 (PB) 44
FLUIDIC VERNA (RBI)FLUIDIC VERNA (RBI)
EON (HA)EON (HA)
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FACTORY & LINE STATUS
LINE PRODUCT DISPLAY AREA DEPARTMENT WISE PERFOMANCE DISPLAY
SHOPPING ENTRANCE AREA WIELD SHOP GANGWAY
SHIFT TIMING
T/GATE ASS’Y
RAIL ASS’Y RR BPR
RR FLR COMPL
REINF SIDE OTR
CTR FLR COMPLFRT S/MBR COMPLRAIL ASS’Y FRT BPR
COWL UNDER COVER
HOOD ASS’Y
DASH COMPLSIDE INRP/TRAY CTR
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SHIFT IN OUTGeneral shift 08.00 am 06.00pm
“ A” Shift 08.00am 04.30pm“ B” Shift 04.30pm 01.00am“ C” Shift 01.00am 08.00am
STAFF, WORKMEN & TRAINEES
S. no Particulars No.of.person1 Staff 1612 Workmen 2843 Diploma apprentices 2004 Act. Apprentices 1405 Company Trainee 956 On the job trainee 3007 Flexi. Contract 1908 Contract labour 550
TOTAL 1920
PRODUCTION STATUS:
Model Production Item
E/MXI TBI LCI MCI PA PB TOTAL
14 13 23 20 12 4 86
CAPACITY: (IN THOUSANDS)
Description 08 Year 09 Year 10 Year
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Capacity 550 600 600
QUALITY STATUS:
Active (09 Year)Active (09 Year) Target (10 Year)Target (10 Year)
30 PPM30 PPM 20 PPM20 PPM
DIE MAINTANENCE SHOP:
High Pressure Die washing;
Die Maintenance is equipped with hot and cold water high pressure jet Die washing
machine.
Protects the die from unwanted impurities sticking on to the dies.
Improved panel quality.
As per P.M. schedule the dies are washed periodically.
STORES
Die Maintenance is equipped with separate stores to cater its needs.
Optimum stock level and inventory control is totally computerized.
Direct import of Die Maintenance Spare
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DIE MAINTANENCE SHOP:
Kihueng KMB U7
Universal Milling Machine DRO controlled
Working table 2700 x 750
Max Perm Load 4 tons
Long travel 2000 mm
Cross travel 1000 mm
No. of speeds 18
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Radial Drilling BR 624
Batliboi
Heavy Duty :60 mm
Electro Hydraulic Camping: In solid steel
Working Table : 1570 x 980
Maximum Spindle Stroke: 400 mm
Spindle Speed : 50 – 1600 rpm
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Sungwoo Offers:
World Class Facility for sheet metal stampings and assemblies with Korean know-
how
Proven track record with Hyundai Motors India and others
A company with values driven by the TATA group
Participation in new programmes for sheet metal assemblies
Engineering and programme management skills and experience
Strategic partnership with dedicated capacities
-
10.0020.0030.0040.00
50.0060.0070.00
19992000
20012002
20032004
20052006
2007
S ales US D Million
S ales US DMillion
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1.4 ABOUT THE TOPIC
Inventory management is the active control program which allows the management of sales,
purchases and payments. Inventory management software helps create invoices, purchase
orders, receiving lists, payment receipts and can print bar coded labels. An inventory
management software system configured to your warehouse, retail or product line will help to
create revenue for your company. The Inventory Management will control operating costs
and provide better understanding. We are your source for inventory management information,
inventory management software and tools.
A complete Inventory Management Control system contains the following components:
Inventory Management Definition
Inventory Management Terms
Inventory Management Purposes
Definition and Objectives for Inventory Management
Organizational Hierarchy of Inventory Management
Inventory Management Planning
Inventory Management Controls for Inventory
Determining Inventory Management Stock Levels
Inventory management is the process of efficiently overseeing the constant flow of units into
and out of an existing inventory. This process usually involves controlling the transfer in of
units in order to prevent the inventory from becoming too high, or dwindling to levels that
could put the operation of the company into jeopardy. Competent inventory management also
seeks to control the costs associated with the inventory, both from the perspective of the total
value of the goods included and the tax burden generated by the cumulative value of the
inventory.
Inventory management is not limited to documenting the delivery of raw materials and the
movement of those materials into operational process. The movement of those materials as
they go through the various stages of the operation is also important.
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Typically known as a goods or work in progress inventory, tracking materials as they are
used to create finished goods also helps to identify the need to adjust ordering amounts before
the raw materials inventory gets dangerously low or is inflated to an unfavorable level.
Finally, inventory management has to do with keeping accurate records of finished goods
that are ready for shipment. This often means posting the production of newly completed
goods to the inventory totals as well as subtracting the most recent shipments of finished
goods to buyers. When the company has a return policy in place, there is usually a sub-
category contained in the finished goods inventory to account for any returned goods that are
reclassified as refurbished or second grade quality. Accurately maintaining figures on the
finished goods inventory makes it possible to quickly convey information to sales personnel
as to what is available and ready for shipment at any given time.
Inventory Managment must tie together the following objectives ,to ensure that there is
continuity between functions :
Company’s Strategic Goals
Sales Forecasting
Sales & Operations Planning
Production & Materials Requirement Planning.
Inventory is defined as the blocked Working Capital of an organization in the form of
materials. As this is the blocked Working Capital of organization, ideally it should be zero.
But we are maintaining Inventory. This Inventory is maintained to take care of fluctuations in
demand and lead time. In some cases it is maintained to take care of increasing price
tendency of commodities or rebate in bulk buying.
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1.5 REVIEW OF LITERATURE
Brent D. Williams, (Department of Marketing and Logistics, Sam M. Walton College of
Business, University of Arkansas, Fayetteville, Arkansas, USA), (2008) "A review of
inventory management research in major logistics journals: Themes and future directions",
International Journal of Logistics Management, The, Volume. 19 Iss: 2, page number.212 –
232. Keyword: Inventory management, Research, Supply chain management. Emerald Group
Publishing Limited, The purpose of this paper is to provide a review of inventory
management articles published in major logistics outlets, identify themes from the literature
and provide future direction for inventory management research to be published in logistics
journals.
Travis Tokar, (The Ohio State University, Fisher College of Business, Marketing
and Logistics, Columbus, Ohio, USA).A review of inventory management research in
major logistics journals: Themes and future directions. The Volume. 19, page.212 – 232.
First, logistics researchers have focused considerable attention on integrating traditional
logistics decisions, such as transportation and warehousing, with inventory management
decisions, using traditional inventory control models. Second, logistics researchers have more
recently focused on examining inventory management through collaborative models.
Vollman, berry and whybark (1997) noted that a key management issue is
determining the inventory control system performance while addressing the utility of
manufacturing inventory systems. They also indicated that in manufacturing industry
performance is measured by such factors as inventory carrying costs and inventory turnover.
Geoff relph and gail bradbear (2003) stated about on the measure of inventory in
terms of annual usage and average inventory. As the part of analysis the inventory turnover
ratio and ABC (Stock classification) are used for planning and controlling the inventory and
basic steps for managing the inventory are discussed in order to achieve the objectives of cost
control.
Mr. wolfe bagby explain inventory as managing inventory to meet profit goals,
shortening the cash cycle, avoiding inventory shortage, avoid excessive carrying costs for
unused inventory, improving, improving profitability by decreasing cash conversion.
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1.6 NEED FOR THE STUDY
The question of managing inventory arises only when the company holds inventory.
Maintaining inventories involves tying up of the company’s fund and incurrence of storage
and handling cost. It is expensive to maintain inventories
In the context of inventory management the firm is faced with the problem of
Meeting two conflicting needs
To maintain a large size of inventories of raw material and work in progress for
efficient and smooth production and of finished goods for uninterrupted sales
operation.
To maintain a minimum investment in inventories to maximize profitability
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1.7 SCOPE OF THE STUDY
The main aim of inventory management is better understanding of firm’s position and
performance. The financial analysis refers to the process of determining financial strength
and weakness of the firm by establishing strategic relationship the terms of the balance sheet
and profit and loss account.
The financial statement provides the basis data for financial analysis of ratio analysis. This
study helps the management to know about the real reasons of profit or loss and the
suggestion given will be useful for the management for the future growth of the origination.
To give plan to the company what to order, when to order and how much to order.
It is useful for deciding operating policy & volume of inventory.
It helps to develop the policies for the executives in inventory.
It helps the company what items goods are categorized.
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CHAPTER 2
RESEARCH OBJECTIVES
PRIMARY OBJECTIVES:
To analysis the financial performance on Sungwoo Gestamp hi-tech (Chennai)
pvt limited.
SECONDARY OBJECTIVES:
To analysis the investment made in inventories.
To measure the ABC analysis of the Sungwoo Gestamp Hi-tech (Chennai) Pvt.
Limited.
To identify the stock level for various components.
To examine the impact of stock out situation with the user department.
To study the supply of raw materials for the purpose of production.
To make the suggestion and recommendation on the basis of the study to
improve the inventory management of the company.
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CHAPTER 3
RESEARCH METHODOLOGY
MEANING
Research is an academic activity and such the term should be used in a technical sense
According to Clifford woody research comprises defining and redefining problems.
Formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.
RESEARCH DESIGN
A research design is the arrangement of conditions for collection analysis of data in a manner
that aims to combine relevance to research purpose with economy in procedure. It constitutes
the blueprint for the collection, measurement and analysis of data. This research study is
mainly based on analytical in nature
3.2 ANALYTICAL RESEARCH
The research design carried out is analytical research design. This research will mainly deal
on facts or information already available, and analyze them to make a critical evaluation of
the material and finding a solution to the problem. It makes use of the data that is already
available and analyses these to evaluate and make discoveries. Analytical research takes
information that has been gathered and looks at what it shows such as trends. The analytical
research is mainly done based on the secondary data which is already in the balance sheet of
Sungwoo.
3.3 SOURCES OF DATA
The data is collected from the available source like ANNUALREPORT of the company
including the BALANCESHEET/ and company website (www.sgh.co.in.)
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3.4 METHOD OF DATA COLLECTION
The research is confirmed to the information available based on the secondary data only.
SECONDARY DATA
The data is collected from the available source like ANNUALREPORT of the
company including the BALANCESHEET/ and company website (www.sgh.co.in.)
STATISTICAL TOOL TO BE USED:
RATIO ANALYSIS
CORRELATION
TREND ANALYSIS
ABC ANALYSIS
LINEAR REGRESSION ANALYSIS
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CHAPTER 4
LIMITATIONS OF THE STUDY
The report is based only on the financial statement published by Sungwoo Gestamp
Hi-tech (Chennai) Pvt limited.
The report is specified to SGH and is not to the automobile company as a whole.
The differentiation of certain concept is not possible
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CHAPTER 5
DATA ANALYSIS AND INTREPRETATION
2.6.1 RATIO ANALYSIS:
Ratio analysis is widely used tool of financial analysis. Ratios are relationships
expressed in mathematical terms between figures which are connected with each in some
manner.
It is defined as the systematic use of ratios to interpret the financial statements so that the
strengths and weaknesses of a firm as well as its historical performance and current financial
condition can be determined. This relationship can be expressed as Percentages, Fractions and
proportion of numbers.
MEANING OF RATIOS:
Ratios are relationship expressed in mathematical terms between figures, which are
connected with each other in some manner. Obviously, no purpose will be served by comparing
two sets of figures, which are not at all connected with each other. Moreover, absolute figures
are also unfit for comparison.
The following ratios are calculated:
1. Current ratio
2. Quick ratio / Liquid ratio
3. Net working capital ratio
4. Total debt ratio
5. Proprietary ratio
6. Current assets turnover ratio
7. Total assets turnover ratio
2.6.2 STATISTICAL ANALYSIS
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CORRELATION
Karl Pearson’s coefficient of correlation is the most widely used method of measuring
the degree of relationship between two variables. Karl Pearson’s coefficient of correlation
formula comes below
∑XY
∑(X) 2 ∑ ( Y) 2
The correlation analysis studies the joint variation of two or more variables for
determining the amount of correlation between two or more variables. Karl Pearson’s
coefficient of correlation ( or simple correlation) is the most widely used method of
measuring the degree of relationship between two variables. This coefficient assumes the
following.
That there is linear relationship between two variables.
That the variables are casually related which means that one of the variables is
independent and the other one is dependent; and
A large number of independent causes are operating in both variables so as to produce
a normal distribution.
Karl Pearson’s coefficient of correlation is also known as the product moment correlation.
The value of ‘r’ lies between +1. Positive values of r indicate positive correlation between the
two variables (i.e., changes in both variables take place in the statement direction), whereas
negative values of ‘r’ indicates negative correlation i.e., changes in the two variables taking
place in the opposite directions. A zero value of ‘r’ indicates that there is no association
between the two variables. When r = (+) 1, it indicates perfect positive correlation and when
it is (-)1, it indicates perfect negative correlation, meaning thereby that variations in
independent variable (X) explain 100% of the variations in the dependent (Y). We can also
say that for a unit change in independent variable, if there happens to be a constant change in
the dependent variable in the same direction, then correlation will be termed as perfect
positive.
But if such change occurs in the opposite direction, the correlation will be termed as
perfect negative. The value of ‘r’ nearer to +1 to -1 indicates high degree of correlation
between the two variables.
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2.6.3 TREND ANALYSIS
trend analysis determines the direction upwards or downloads and involves the computation
of the percentage relationship that each statement item bears to the same item in the base
year. Return values alone a linear trend and fits a straight line and predicts the future values.
The line of the trend analysis equation is Y= a + b x
Where A = ∑y
-----------
N
Where B = ∑y
______
∑X2
2.6.4 LINEAR REGRESSION ANALYSIS METHOD
Regression means dependence and involves estimating the values of a dependent
variable Y, from independent variables X.
Y = a + b x
Where a = y – b x ;
Sxy – n xy
B = _____________
Sx2 – nx2
2.6.5 ABC ANALYSIS
Selective inventory control indicates that there are variations in the method of
inventory for different items and this difference should be on a selective basis. ABC analysis
is an effective inventory control system should classify inventories according to their value so
that the most valuable items may be paid greater attention regarding their safety and care as
compared to others. Hence it is desirable to classify the production and supply items, both
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purchased and manufactured, depending upon their importance, ABC analysis is also known
as “Always Better Control”
CONTROL POLICY FOR A CLASS ITEMS:
Since these items account for 70% of the value, they should be ordered more
frequently to reduce the capital locked up at a time in inventories. There should be many A
items for which the consumption varies considerably from time to time during the year. For
such, items the expected future consumption should be estimated in advance and that should
be procured on a planned basis. So that the required qualities arrive a little before they are
required for consumption. Of course, small extra stock could be carried throughout to meet
any eventualities. Annual or 6 monthly contracts with scheduled deliveries are welcome for A
items.
Since these items are to be stocked as less as possible purchasing department should
make maximum efforts to expedite the delivery of these items.
CONTROL POLICY FOR B CLASS ITEMS:
Order quantities, recorder points and safety stocks should be fixed for B items and
revisions once a year is adequate. Annual or 6 monthly contracts with scheduled deliveries
can be used to advantage for B items. Stock and issues record are necessary to be maintained.
These items should be frequency.
CONTROL POLICY FOR C CLASS ITEMS:
Liberal quantities can be kept in stock since in case if C items it does not involve
much capital tie-up. Annual or 6 monthly orders should be placed to reduce paper work in the
purchasing department and also to take advantage of quantity discount for bulk purchases.
For ordering C items a combination of review period system and two-bin system is
suggested.
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CURRENT RATIO
Current ratio is a widely used indicator of company’s ability to pay its debts in the short-term.
It is the relationships between current assets and current liabilities. Current assets are those
assets which can be easily converted into cash within a short period of time or within an
operating cycle generally one year. Current liabilities are those which are payable within a
short period of time generally one year.
Current assets
Current ratio = ___________________
Current liabilities
TABLE NO: 2.6.1.1
Table showing the current ratio for the year 2007-2011
YEAR CURRENT
ASSET
CURRENT
LIABILITIES
CURRENT
RATIO
2007 1681.75 1865.97 0.90127
2008 1644.30 2196.49 0.74860
2009 2374.91 2207.29 1.07887
2010 2849.22 3002.68 0.94889
2011 3573.64 3505.26 1.01950
Source: secondary data
INTERPRETATION
The above table shows that the current ratios of SGH gradually increase and decreased
during period of 2007-2011. For the next years the current ratio of SGH was decreased. So it
is inferred that after 2007,the current ratio of SGH has been decreased.
Page 35
CHART NO: 2.6.1.1
CURRENT RATIO 2007-2011
2007 2008 2009 2010 20110
0.2
0.4
0.6
0.8
1
1.2
0.90127
0.748600000000013
1.07887
0.9488900000000111.01949999999997
Page 36
QUICK RATIO (OR) ACID TEST RATIO
This ratio is also termed as “Acid Test Ratios” and Liquidity Ratio”. This ratio is ascertained
by comparing the liquid assets to current liabilities. Prepaid expenses and stock are not taken
as quick assets. Bank overdraft is not taken as quick liability.
Quick Ratio = Current Assets – inventories
Current Liabilities
TABLE NO: 2.6.1.2
Table showing the quick ratio for the year 2007-2011
YEAR QUICK
ASSET
CURRENT
LIABILITIES
QUICK
RATIO
2007 611.43 1865.97 0.3276
2008 420.39 2196.49 0.1913
2009 1044.9 2207.29 0.4733
2010 1210.9 3002.68 0.4032
2011 1364.7 3505.26 0.3893
Source: secondary data
INTERPRETATION
From the above table shows that quick ratio of SGH 0.3276 in 2007. In 2008, 0.1913 of
quick ratio of has been decreased. In 2009, the quick or acid test ratio has been increased. In
2010, the quick ratio 0.4032 has been decreased. In 2011, the quick ratio 0.3893 has been
decreased.
The quick ratio of the SGH has been decreased
Page 37
CHART NO: 2.6.1.2
Chart showing the Quick ratio 2007-2011
2007 2008 2009 2010 20110
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.327600000000005
0.1913
0.473300000000003
0.4032 0.389300000000008
QUICK RATIO
Page 38
NET WORKING CAPITAL RATIO
Net Working Capital = Net Working Capital
Net Assets
TABLE NO: 2.6.1.3
Table showing the Net working capital ratio 2007-2011
YEAR NET WORKING CAPITAL
NET ASSET NET WORKING CAPITAL
RATIO2007 1894.58 574.72 3.2965
2008 2148.98 217.66 9.8730
2009 3473.89 720.32 4.8227
2010 3656.30 736.17 4.9666
2011 3962.96 365.22 10.850
Source: secondary data
INTERPRETATION
From the above table shows that net working capital of SGH 3.2965 IN 2007. In 2008,
9.8730 of net working capital has been increased. In 2009, 4.8227 the net working capital has
been decreased. In 2010, 4.9666 the net working capital has been increased. In 2011, 10.850
the net working capital has been increased.
The net working capital ratio of the SGH has been increased.
Page 39
CHART NO: 2.6.1.3
CHART SHOWING THE NET WORKING CAPITAL RATIO 2007-2011
200710%
200829%
200914%
201015%
201132%
NET WORKING CAPITAL RATIO
Page 40
TOTAL DEBT RATIO
The total debt-equity ratio is establish a relationship between the long-term funds raised from
outsiders and total long-term funds available in the business. It is calculated as;
Total debt
Total debt ratio = _______________
Total assets
TABLE NO: 2.6.1.4
Table showing the total debt ratio for the year 2007-2011
YEAR TOTAL DEBT TOTAL ASSETS TOTAL DEBT RATIO
2007 640.4 2534.97 0.2526
2008 887.5 3036.48 0.2922
2009 1961.98 5435.87 0.3609
2010 2280.45 5936.76 0.3841
2011 2658.19 6621.14 0.4014
Source: secondary data
INTERPRETATION
The above table shows that the total debt ratio was decreased during the period of 2007,and
2008. After 2009 the total assets ratio has been increased for every year (2010, 2011).
The total debt ratio of the SGH has been increased.
Page 41
CHART NO: 2.6.1.4
Chart showing the total debt ratio 2007-2010
2007
2008
2009
2010
2011
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45
0.2526
0.2922
0.360900000000003
0.384100000000001
0.4014
TOTAL DEBT RATIO
Page 42
PROPRIETARY RATIO
Proprietary ratio shows the relationship between shareholders’ fund to total assets of
the concern. The shareholders’ funds are equity share capital, preference share capital,
undistributed profits reserves and surpluses. If it is calculated as;
Share holders equity
Proprietary ratio = _____________________
Total assets
TABLE NO: 2.6.1.5
The table showing the proprietary ratio for the year 2007-2011
YEAR SHARE HOLDERS
EQUITY
TOTAL ASSETS PROPRIETARY
RATIO
2007 132.39 2534.97 0.0522
2008 133.03 3036.48 0.0438
2009 133.03 5435.87 0.0244
2010 133.03 5936.76 0.0224
2011 133.03 6621.14 0.0200
Source: secondary data
INTERPRETATION
The above table shows that the proprietary ratio has been increased in the year of 2007 and
2008. For the next year 2009 has been decreased. In 2011 has been very poor performance in
the every year of proprietary ratio.
The proprietary ratio of the SGH has been much decreased.
Page 43
CHART NO: 2.6.1.5
Chart showing the proprietary ratio 2007-2011
200732%
200827%
200915%
201014%
201112%
PROPRIETARY RATIO
Page 44
CURRENT ASSETS TURNOVER RATIO:
The current assets turnover ratio is a relationship between the sales and current assets. It is
calculated as;
Sales
Current assets turnover = _______________________
Current assets
TABLE NO: 2.6.1.6
The table showing the current assets turnover ratio for the year 2007-2011
YEAR SALES CURRENT ASSETS CURRENT ASSETS
TURNOVER RATIO
2007 7358.88 1681.75 4.3757
2008 7972.52 1644.30 4.8485
2009 6168.99 2374.91 2.5975
2010 7436.18 2849.22 2.6099
2011 11407.15 3573.64 3.1920
Source: secondary data
INTERPRETATION
The above table shows that the current assets turnover ratio has been increased in the year of
2007 and 2008. For the next year 2009 and 2010 has been decreased. In 2011 has been
increased in the every year of current assets turnover ratio.
The current assets turnover ratio of the SGH has been much increased.
Page 45
CHART NO: 2.6.1.6
Chart showing the current assets turnover ratio 2007-2011
200725%
200828%2009
15%
201015%
201118%
Current Assets Turnover Ratio
Page 46
TOTAL ASSETS TURNOVER RATIO:
The total asset turnover ratio is refers to the relationship between the sales and total assets. If
it is calculated as;
Sales
Total assets turnover = ________________________
Total assets
TABLE NO: 2.6.1.7
Chart showing the total assets turnover ratio 2007-2011
YEAR SALES TOTAL ASSETS TOTAL ASSETS TURNOVER RATIO
2007 7358.88 574.72 12.80
2008 7972.52 217.66 36.62
2009 6168.99 720.32 8.56
2010 7436.18 736.17 10.10
2011 11407.15 365.22 31.23
Source: secondary data
INTERPRETATION:
The above table shows that the total assets turnover ratio was increased during the period of
2007 and and 2008. After 2009 the total assets ratio has been decreased, And increased the
total assets turnover ratio for every year (2010, 2011).
The total assets turnover ratio of the SGH has been increased.
Page 47
CHART NO: 2.6.1.7
CHART SHOWING THE TOTAL ASSETS TURNOVER RATIO 2007-2011
200759%2008
23%
200910%
20109%
Total Assets Turnover Ratio
Page 48
CORRELATION BETWEEN INVENTORIES AND CURRENT LIABILITIES
The following table below shows the relationship between inventories and current liabilities.
It is used as a measure to determine how much of the company is related inventories to
current liabilities. For a good position the company inventories and Cost level should be
good.
TABLE NO: 2.6.2.1
Correlation between inventories & current liabilities
YEAR Inventory
X
Current
liabilities
Y
XY (X)2 (Y)2
2007 1070.32 1865.97 19971.8 11455.8 34818.4
2008 1223.91 2196.49 26883 14979.5 48245.6
2009 1330.01 2207.29 29357.1 17689.2 48721.2
2010 1638.24 3002.68 49191.1 26838.3 90160.8
2011 2208.90 3505.26 77427.6 48792.3 122868.4
∑XY=2028.3 ∑(X)2=1197.5 ∑(Y)2=3448.1
Source: Secondary Data
r= ∑XY
∑(X) 2 ∑ ( Y) 2
r= 2028.3
(1197.5)2(3448.1)2
r= 0.998 The above table depicts that the correlation between total inventories and current
liabilities is high i.e., r = 0.998. Therefore ‘r’ is said to be positive (+ve correlation is good
for the company).
Page 49
CORRELATION BETWEEN INVENTORIES AND FIXED DEPOSITS
The following table below shows the relationship between inventories and fixed deposits It is
used as a measure to determine how much of the company is related inventories to current
liabilities. For a good position the company inventories and fixed deposits should be good.
TABLE NO: 2.6.2.2
Correlation between Inventories & Fixed deposits
YEAR Inventory
X
Fixed deposits
Y
XY (X)2 (Y)2
2007 1070.32 346.39 3707.48 11455.8 1199.8
2008 1223.91 406.82 4979.11 14979.5 1655.0
2009 1330.01 115 1529.51 17689.2 13225
2010 1638.24 330.01 5406.35 26838.3 1089.0
2011 2208.90 0 0 48792.3 0
∑XY=15622.4 ∑(X)2=1197.5 ∑(Y)2=17168.8
Source: Comparative Balance Sheet and Annual Cost Report
r= ∑XY
∑(X) 2 ∑ ( Y) 2
r= 15622.4
(1197.5)2(17168.8)2
r= 0.718 The above table depicts that the correlation between total inventories and fixed
deposits is high i.e., r = 0.718. Therefore ‘r’ is said to be positive (positive correlation is the
good for the company(SGH)).
Page 50
CORRELATION BETWEEN INVENTORIES AND LOANS & ADVANCES
The following table below shows the relationship between inventories and loans & advance It
is used as a measure to determine how much of the company is related inventories to loans &
advance. For a good position the company inventories and loans & advance should be good.
TABLE NO: 2.6.2.3
Correlation between Inventories & Loans & Advance
YEAR Inventory
(X)
Loans &
advance (Y)
XY (X)2 (Y)2
2007 1070.32 2544.92 27238.7 11455.8 64766.1
2008 1223.91 2759.38 33772.3 14979.5 76141.7
2009 1330.01 3195.69 42502.9 17689.2 102124.3
2010 1638.24 4107.54 67291.3 26838.3 168718.8
2011 2208.90 4360.81 96325.9 48792.3 190166.6
∑XY=2671.3 ∑(X)2=1197.5 ∑(Y)2= 6019.1
Source: Secondary Data
r= ∑XY
∑(X) 2 ∑ ( Y) 2
r= 2671.3
(1197.5)2(6019.1)2
Page 51
r= 0.037 The above table depicts that the correlation between total inventories and loans &
advance is high i.e., r = 0.037. Therefore ‘r’ is said to be positive (positive correlation is the
good for the company).
CORRELATION BETWEEN INVENTORIES AND SUNDRY DEBTORS
The following table below shows the relationship between inventories and sundry debtors. It
is used as a measure to determine how much of the company is related inventories to sundry
debtors. For a good position the company inventories and sundry debtors should be good.
TABLE NO: 2.6.2.4
Correlation between Inventories & Sundry Debtors
YEAR Inventory
(X)
Sundry
debtors (Y)
XY (X)2 (Y)2
2007 1070.32 522.88 5596.4 11455.8 2734.0
2008 1223.91 375.84 4599.9 14979.5 1412.5
2009 1330.01 957.97 12741.0 17689.2 9177.0
Page 52
2010 1638.24 1022.06 16743.7 26838.3 10446.0
2011 2208.90 1185.21 26180.1 48792.3 14047.2
∑XY=658.61 ∑(X)2=1197.5 ∑(Y)2= 378.16
Source: Secondary Data
r= ∑XY
∑(X) 2 ∑ ( Y) 2
r= 658.61
(1197.5)2(378.16)2
r= 0.9787 The above table depicts that the correlation between total inventories and sundry
debtors is high i.e., r = 0.9787. Therefore ‘r’ is said to be positive (positive correlation is the
good for the company).
CORRELATION BETWEEN INVENTORIES AND RESERVES
The following table below shows the relationship between inventories and reserves. It is used
as a measure to determine how much of the company is related inventories to reserves. For a
good position the company inventories and reserves should be good.
Page 53
TABLE NO: 2.6.2.5
Correlation between Inventories & Reserves
YEAR Inventory
(X)
Reserves
(Y)
XY (X)2 (Y)2
2007 1070.32 1739.23 18615.3 11455.8 30249.2
2008 1223.91 1993.57 24399.5 14979.5 39743.2
2009 1330.01 1976.00 26280.9 17689.2 39045.7
2010 1638.24 2190.10 35879.0 26838.3 47965.3
2011 2208.90 2523.65 55744.9 48792.3 63688.0
∑XY=1609.1 ∑(X)2=1197.5 ∑(Y)2=2206.9
Source: Secondary Data
r= ∑XY
∑(X) 2 ∑ ( Y) 2
r= 1609.1
(1197.5)2(2206.9)2
r= 0.9898 The above table depicts that the correlation between total inventories and reserves
is high i.e., r = 0.9898. Therefore ‘r’ is said to be positive (positive correlation is the good for
the company).
Page 54
TABLE NO: 2.6.3.1
TABLE SHOWING THE TREND ANALYSIS OF TOTAL ASSETS FOR FUTURE
YEARS
YEAR TOTAL
ASSETS(X) (x2) XY
2007 2534.97 -2 4 -5069.94
2008 3036.48 -1 1 -3036.48
2009 5435.87 0 0 0
2010 5936.76 1 1 5936.76
2011 6621.14 2 4 13242.2
TOTAL 23565.22 0 10 11072.54
Source: Secondary Data
The line of equation of trend analysis is Y= a + b x
In the year of 2012 is
= 4713.04 + 1104.2 (3)
= 8025.64
In the year of 2013 is
= 4713.04 + 1104.2 (4)
= 9129.84
= 11338.24
Page 55
In the year of 2014 is
= 4713.04 + 1104.2 (5)
= 10234.04
In the year of 2015 is
= 4713.04 + 1104.2 (6)
In the year of 2016 is
= 4713.04 + 1104.2 (7)
= 12442.44
INTER PRETATION:
It is clear from the above table that the trend analysis is calculated for cost of Sungwoo
gestamp hi- tech (chennai) pvt ltd. The trend analysis is predicted for the 2012-2016 in which
the cost is expected to increase from 8025.64 to 12442.44.
Past year amount 6621.14 and expected amount from this analysis is 8025.64
Page 56
CHART NO: 2.6.3.1
TABLE SHOWING THE TREND ANALYSIS OF TOTAL ASSETS FOR FUTURE YEARS
Page 57
201216%
201318%
201420%
201522%
201624%
Page 58
TABLE NO.2.6.3.2
TABLE SHOWING THE TREND ANALYSIS OF INVENTORIES FOR FUTURE
YEARS
YEAR INVENTORIES (X) (x2) XY
2007 1070.32 -2 4 -2140.64
2008 1223.91 -1 1 -1223.91
2009 1330.01 0 0 0
2010 1638.24 1 1 1638.24
2011 2208.90 2 4 4417.8
TOTAL 7471.38 0 10 2691.49
Source: Secondary Data
The line of equation of trend analysis is Y= a + b x
In the year of 2012 is
= 1494.2 + 747.13 (3)
= 3735.59
In the year of 2013 is
= 1494.2 + 747.13(4)
= 4482.72
In the year of 2014 is
= 1494.2 + 747.13(5)
= 5229.85
In the year of 2015 is
= 1494.2 + 747.13(6)
= 5976.98
Page 59
In the year of 2016 is
= 1494.2 + 747.13(7)
= 6724.11
INTER PRETATION:
It is clear from the above table that the trend analysis is calculated for cost of Sungwoo
gestamp hi- tech (chennai) pvt ltd. The trend analysis is predicted for the 2012-2016 in which
the cost is expected to increase from 3735.59 to 6724.11.
Past year amount 2208.90 and expected amount from this analysis is 3735.59.
Page 60
CHART NO: 2.6.3.2
CHART SHOWING THE TREND ANALYSIS OF INVENTORIES FOR FUTURE
YEARS
2012
2013
2014
2015
2016
0 1000 2000 3000 4000 5000 6000 7000
3735.59
4482.72
5229.85
5976.98
6724.11
Inventories
Page 61
TABLE NO: 2.6.4.1
LINEAR REGRESSION ANALYSIS
Year Inventories
( Y)
X
X=x-2009
X2 XY
2007 1070.32 -2 4 -2140.64
2008 1223.91 -1 1 -1223.91
2009 1330.01 0 0 0
2010 1638.24 1 1 1638.24
2011 2208.90 2 4 4417.8
TOTAL(S) 7471.38 0 10 2691.49
Source: Secondary Data
X = S x / n
X = 0 / 5 = 0
Y = S y / n
Y = 7471.38 / 5 = 1494.27
Page 62
b = sxy – n x y / Sx2 – nx2
b = 2691.49 – 5 * 0 * 7471.38 / 10 – 5 * 0
= 269.149
a = y – b x
= 1494.27 – 269.149 * 0
= 1494.27
The forecast of inventory for the year 2012 is computed by substituting x = 2012 in the above
equation.
Y = a + b x = 1494.27 + 269.149 x
= 1494.27 + 269.149 (x – 2009)
= 1494.27 + 269.149 (2012 – 2009)
= 1494.27 + 269.149 (3)
= 1494.27 + 807.447
= 2301.71
Therefore inventory year 2012 will be approximately Rs. 2301.71
Page 63
TABLE 2.6.5.1
ABC ANALYSIS OF CONSUMPTION REPORT FOR THE YEAR 2007
Part
no
Part
name
Price/unit Unit/year
Annual
consumption
Rs/year
Cumulative value
of annual
consumption(Rs.
)
Class
J050 Dash
complete
19529.88 8000 180918180 180918180
A
J000 RR FLR 20102.02 9000 156239040 337157220
Page 64
complete
J200 RR FLR
complete
19652.13 4000 108874845 446032065
B
J200 QTR
compl, LH
19852.25 440 80362255 526394320
J000 QTR
compl,RH
20120.07 2000 78608520 605002840
J001 RR FLR
complete
19100.85 5700 51189516 656192356
C
X000 HOOD 19452.43 1600 40240140 696432496
X050 Sun roof
reinf
18959.08 2700 30779104 727211600
X000 Roof FR 19236.94 1600 31123888 758335488
X000 Fuel filler 19600.55 4100 8734990 767070748
Source: Secondary Data
INTERPRETATION:
The classification of ABC analysis is shown as follows:
“A” class items- Dash complete and RR FLR complete.
“B” class items- RR complete.QTR compl, KH and QTR compl, LH
“C” class items- RR FLR complete, HOOD, Sun Roof Reinf, ROOF FR, Fuel filler
Page 65
CHART NO 2.6. 5.1
GRAPH SHOWING ABC ANALYSIS REPORT FO SGH FOR THE YEAR 2007-2011
Dash RR FLR 5 RR FLR 3 QTR LH QTR RH RR FLR HOOD Sun roof ROOF FR Fuel filler18000
18500
19000
19500
20000
20500
A class
A class
B class
B class
B class
C class
C class
C class
C class
C class
ABC Analysis
Page 66
TABLE 2.6.5.2
ABC ANALYSIS OF CONSUMPTION REPORT FOR THE YEAR 2008
Part
no
Part
name
Price/unit Unit/year
Annual
consumption
Rs/year
Cumulative value
of annual
consumption(Rs.
)
Class
J050 Dash
complete
20931.81 3000 104961850 104961850
A
J000 RR FLR
complete
20100.45 1000 83409640 188371490
J200 RR FLR
complete
19862.48 700 62795430 251166920 B
J200 QTR
compl, LH
19785.25 400 20100450 271267370
C
J000 QTR
compl,RH
20125.12 300 20042320 291309690
J001 RR FLR
complete
20015.22 500 13903736 305213426
X000 HOOD 19952.27 200 7914100 313127526
X050 Sun roof
reinf
20042.32 1000 6037536 319165062
X000 Roof FR 20852.41 4000 3990454 323155516
X000 Fuel filler 20992.37 5000 10006110 333161626
Source: Secondary Data
INTERPRETATION:
Page 67
The classification of ABC analysis is shown as follows:
“A” class items- Dash complete and RR FLR complete.
“B” class items- RR complete,
“C” class items- QTR compl, LH and QTR compl, RH RR FLR complete, HOOD,
Sun Roof Reinf, ROOF FR, Fuel filler
CHART NO 2.6.5.2
GRAPH SHOWING ABC ANALYSIS REPORT FO SGH FOR THE YEAR 2007-2011
Page 68
DASH RR FLR 5 RR FLR 3 QTR LH QTR RH RR FLR HOOD Sun roof ROOF Fuel filler19000
19500
20000
20500
21000
21500
20931.8099999999
20100.45
19862.4819785.25
20125.1220015.22
19952.2720042.32
20852.41
20992.37
ABC analysis
Page 69
TABLE 2.6.5.3
ABC ANALYSIS OF CONSUMPTION REPORT FOR THE YEAR 2009
Source: Secondary Data
INTERPRETATION:
The classification of ABC analysis is shown as follows:
“B” class items- Dash complete and RR FLR complete. RR complete, QTR compl,
LH and QTR compl, RH
“C” class items- RR FLR complete, HOOD, Sun Roof Reinf, ROOF FR, Fuel fill
Part
no
Part
name
Price/unit Unit/year
Annual
consumption
Rs/year
Cumulative value
of annual
consumption(Rs.
)
Class
J050 Dash
complete
19039.41 1000 25510836 25510836
B
J000 RR FLR
complete
19945.45 1100 23047020 48557856
J200 RR FLR
complete
19500.85 900 2193995 70497851
J200 QTR
compl, LH
18959.78 700 19039410 89537261
J000 QTR
compl,RH
18900.36 600 17550765 107088016
J001 RR FLR
complete
19205.85 1200 13387584 120475610
C
X000 HOOD 19623.72 1300 13271846 133747456
X050 Sun roof
reinf
19125.12 700 12379829 146127284
X000 Roof FR 18656.62 450 11340216 157467500
X000 Fuel filler 19045.89 650 8395479 165862979
Page 70
CHART NO 2.6.5.3
GRAPH SHOWING ABC ANALYSIS REPORT FO SGH FOR THE YEAR 2007-2011
DASH RR FLR 5 RR FLR 3 QTR,LH QTR,RH RR FLR HOOD Sun roof ROOF Fuel filler18000
18200
18400
18600
18800
19000
19200
19400
19600
19800
20000
B class
B class
B class
B classB class
C class
C class
C class
C class
C class
Page 71
TABLE 2.6.5.4
ABC ANALYSIS OF CONSUMPTION REPORT FOR THE YEAR 2010
Part
no
Part
name
Price/unit Unit/year
Annual
consumption
Rs/year
Cumulative value
of annual
consumption(Rs.
)
Class
J050 Dash
complete
24759.49 1148.00 36865522 36865522
A
J000 RR FLR
complete
25100.25 1441.63 33654903 70520425
J200 RR FLR
complete
24855.15 1238.10 30773161 101293586
J200 QTR
compl, LH
24220.45 1522.07 19354972 120648558
B
J000 QTR
compl,RH
23999.96 1402.29 3618527 124267085
C
J001 RR FLR
complete
24520.45 798.34 8803153 133070238
X000 HOOD 22895.81 972 5581754 13851992
X050 Sun roof 25080.21 351 1389653 140041645
Page 72
reinf
X000 Roof FR 23853.65 234 2842389 142884034
X000 Fuel filler 23959.54 58 2225472 145109506
Source: Secondary Data
INTERPRETATION:
The classification of ABC analysis is shown as follows:
“A” class items- Dash complete and RR FLR complete, RR complete.
“B” class items- QTR compl, LH
C” class items- QTR compl, RH RR FLR complete, HOOD,
Sun Roof Reinf, ROOF FR, Fuel filler
CHART NO 2.6.5.4
GRAPH SHOWING ABC ANALYSIS REPORT FO SGH FOR THE YEAR 2007-2011
Page 73
DASH RR FLR 5 RR FLR 3 QTR LH QTR RH RR FLR HOOD Sun roof Roof FR Fuel filler21500
22000
22500
23000
23500
24000
24500
25000
25500
C class
B class
A class
A class
A class
B class
Cclass
C class
C classC class
ABC analysis
Page 74
TABLE NO: 2.6.5.5
ABC ANALYSIS OF CONSUMPTION REPORT FOR THE YEAR 2011
Part
no
Part
name
Price/unit Unit/year
Annual
consumption
Rs/year
Cumulative value
of annual
consumption(Rs.
)
Class
J050 Dash
complete
34692.83 2300 221437739 221437739 A
J000 RR FLR
complete
33495.63 5805 194442132 415879871
J200 RR FLR
complete
34500.32 1494 114403851 530383722 B
J200 QTR
compl, LH
33900.45 6532 79793509 610077231
J000 QTR
compl,RH
35100.22 750 77676637 687753868
J001 RR FLR
complete
33850.24 250 51543478 739297346 C
X000 HOOD 34290.85 315 30151882 769449228
X050 Sun roof
reinf
35265.36 855 26325165 795774393
X000 Roof FR 34522.95 2250 10801617 806576010
X000 Fuel filler 34252.65 3340 8462560 815038570
Source: Secondary Data
INTERPRETATION:
The classification of ABC analysis is shown as follows:
A” class items- Dash complete and RR FLR complete, RR complete.
B” class items- QTR compl, LH and QTR compl, RH
C” class items- RR FLR complete, HOOD,
Sun Roof Reinf, ROOF FR, Fuel filler
Page 75
CHART NO: 2.6.5.5
GRAPH SHOWING ABC ANALYSIS REPORT FO SGH FOR THE YEAR 2007-2011
Page 76
DASHA class RR FLR
5A class
RR FLR 3
B class
QTR,LHB class
QTR,RHB class
RR FLRC class
HOODC class
Sun roof
C class
ROOFC CLASS
Fuel fillerC class
ABC analysis
Page 77
CHAPTER 6
FINDINGS
The overall performance of the years 2007 is high as compared to the previous year.
Overall the current ratio of SGH has been decreased.
Most of the quick ratio of the SGH has been decreased.
The net working capital ratio of the SGH has been increased.
The total debt ratio of the SGH has been increased.
The proprietary ratio of the SGH has been much decreased.
Current assets turnover ration of the company has been increased.
The total assets turnover ratio of the SGH has been increased.
Overall the performance of the inventories positive correlation is good for the
company
Correlation between inventories and fixed deposits is also positive correlation.
So it is good for the company.
Inventories and loans & advances are positive correlation.
The correlation of the inventories and sundry debtors is also positive
correlation. So the inventory and sundry debtors’ level is good for the
company.
Inventories and reserves, correlation of the company is positive relation. So it
is good for the company.
Trend analysis for total assets of the company is past year amount from this
year amount will be increased in the future year, it is good for the company.
Trend analysis for inventories of the company is past year amount from this
year amount will be increased in the future year, it is good for the company.
Linear regression analysis for the inventory will be increased.
Page 78
“A” CLASS ITEMS- Dash complete, RR FLR complete, RR FLR complete.
“B” CLASS ITEMS- QTR complete LH, QTR complete RH.
“ C” CLASS ITEMS- RR FLR complete, HOOD, SUN Roof REINF, ROOF
FUEL filler.
Overall the inventory percentage is least during the 2008,2009 because only a
small portion of inventory has been invested.
The year 2011 has highest investment in inventory.