nel

A STUDY ON THE FINANCES OF INDOWIND LIMITED

Submitted in partial fulfilment of the requirements

For the award of

BACHLOR OF BUSINESS ADMINISTRATION

By

NELVIN JOSE

2528122

DEPARTMENT OF MANAGEMENT STUDIES

SATHYABAMA UNIVERSITY

(Established under Section 3 of UGC Act 1956)

JEPPIAAR NAGAR, OLD MAMALLAPURAM ROAD

CHENNAI 600 119

APRIL 2008

ACKNOWLEDGEMENT

It is my privilege to express my gratitude and respect to all those

who have guided me and inspired me during the course of the

project work. First and foremost, I express my sincere gratitude to

our beloved chancellor Thiru Jeppiaar, M.A, B.L, and also

heartfelt thanks to our Directors Thiru. Marie Johnson, B.E,

M.B.A., and Tmt. Mariazeena Johnson. B.E, M.B.A., for

providing me the necessary facilities for the completion of my

project. I also acknowledge our vice-chancellor Dr.V.S.R.K.

Mouly, B.E, M.Sc (Engg), PhD, and Registrar Dr. S.S.Rau

M.B.A, Ph.D for their constant support endorsement.

I am indebted to the Head of the Department,

Mr.GOPINATH for having been a constant source of support and

encouragement for the completion of the project. I also express my

sincere thanks to my internal guide Ms. KAVITHA for his

constant guidance and supervision during the period of my project

work.

I would like to express my sincere thanks to my external

guide Mr DINAKAR INDOWIND LIMITED for providing me

the necessary facilities for the completion of the project. Finally I

would like to thank my family members and friends for their

encouragement and support.

CHAPTER TITLE PAGE NO:

1 Introduction

2 Company profile

3 Product profile

4 Need for the study

5 Objective of the study

6 Scope and limitations of the study

7 Review of literature

8 Research methodology

9 Analysys and interpretation

10 Findings

11 Suggestions and recommendations

12 Conclusion

13 Bibliography

14 Appendix

INTRODUCTION

Inventories are approximately 60% of current assets in public limited

companies in India and it constitutes the most significant part of the

current assets. Because of large inventories maintained by firms

considerable amount of funds is required to commit to them. If a firm

neglects the management of inventories in long run it will effect the

profitability. It is possible for a company to reduce its levels of

inventories by using simple inventory planning and control techniques.

Inventories may exist in various forms as stock of raw materials

awaiting production; as stock of partially completed product; as

finished goods; as goods in transit; as goods in warehouse distribution

points’ as goods in the retail store anticipating consumer demand. But

there are distinct cost generated by the existence of each of these types

of inventory.

Inventory carries its unique set of cost factors, namely,

Procurement cost and/or set up cost.

Inventory holding cost.

Shortage or stock out cost and

Inventory control or system cost.

Inventory classification:

Inventories may be classified as follows:

a. Raw inventories: They include raw material, parts

components and semi-finished products supplied by another firm and

which are raw items for the present industry.

b. In process inventories: They are semi-finished parts, work in

process and partially finished products formed at various stage of

production.

c. Finished inventories: They are the finished goods lying in

stockrooms and awaiting dispatch.

d. Indirect inventories: They are maintenance repairs, and

operating supplies which are consumed during the production process

and generally do not form part of the product itself (e.g. petroleum

products like petrol kerosene diesels, various oils and lubricants,

machinery and plant spares, tools jobs and fixtures etc)

Inventory control:

Inventory control is the means by which materials of the correct

quantity and quality is made available as and when required with due

regards to economy in storage, ordering costs and working capital.

It may also be defined “as the systematic location, storage and

recording of goods in such a way that desired degree of service can be

made to the operating shop at minimum ultimate cost”

INVENTORY MANAGEMENT

MEANING

The term inventory refers to the stockpile of the products a firm is

offering for sale and the components that make up the product.

Generally inventory consists of raw material, work-in-progress and

finished goods. There is a significant portion of large investment on

inventories from the sale value of assets. So inventory control is an

essential function on the part of management that will minimize the

overall cost of production and also minimizes the profit on sales.

DEFINITION

Inventory management is defined as “realizing the effect of

inventories on the functioning of any organization, and to deal with

all aspects of inventories such as functions connected with

receiving, buying, stocking and issuing of materials”

FUNCTIONS OF INVENTORY MANAGEMENT

Reducing or controlling irregularities in supply.

Buying or Producing in lots or batches.

To meet seasonal or cyclical demand

To take advantages of price discounts while buying items.

To maintain continuity to operation in production process.

INVENTORY CONTROL

Inventory control is the process of deciding what and how much of

various items are to be kept in stock. It also determines the time and

quantity of various items to be procured. The basic objective of

inventory control is to reduce investment in inventories

FUNCTIONS OF INVENTORY CONTROL

To run warehouse effectively. This includes layout, storing media

utilization of storage space, receiving and issuing procedures etc.

To ensure timely available of inventories and avoid build up of

stock levels.

Technical responsibility for the state of materials. This includes

methods of storing, maintenance procedures, studies of

deterioration and obsolescence.

Stock control system. Physical verification (stock taking),

maintenance of recodes, ordering policies and procedures for the

purchase of goods.

Maintenance of specified raw materials: general supplies work in

process and component parts in sufficient quantities to meet the

demand of production.

Protecting the inventory form losses due to improper handling

and storing of good and unauthorized removal form stores.

Pricing all materials supplied to the shops so as to estimate

material cost.

ADVANTAGES OF INVENTORY CONTROL:

It creates buffer between input and output.

It ensures against delays in deliveries.

It allows for possible increase in output.

It allows advantage of quantity discounts.

It ensures against scarcity of materials in the market.

It utilizes the benefit of price fluctuations,

It avoids inventory build-up.

An effective inventory management should

Ensure continuous supply of raw materials to facilitate

uninterrupted.

Maintain sufficient finished goods inventory for smooth sales

operation and efficient customer service.

Minimize carrying cost

Forms of inventories:

The various forms in which inventories exist in manufacturing company

are

Raw materials are those basic inputs that are converted into

finished product through manufacturing process.

Work-in-process inventories are semi-finished products and need

mare work to become finished product for sale.

Finished goods inventories are those completely manufactured products

and ready for sale.

Company profile

1. INDUSTRY OVERVIEW

World watch institute report “ The State of the world 1998" , on progress towards a sustainable society has noted that renewable energy production in the world is expanding rapidly. Wind generation is the fastest growing energy source in this decade and is expanding at 25% per year. The report recognizes India as a new ‘WIND SUPERPOWER’. With declining trend of cost an increase in the scale of wind turbine manufacturing , wind promises to become super power source globally in the first decades of this millennium.

India is now the 4th largest wind power generator in the world after Germany , Spain and USA. Five nations – Germany , USA , Denmark , India and Spain account for 71.2 % of the worlds installed wind energy capacity.. Wind energy continues to be the fastest growing renewable energy source with worldwide wind power installed capacity reaching 78,728 MW as of May 2007..

Today , the capital cost of wind power projects is approx Rs 550 lacs per MW , thereby reducing the cost of the energy generation vis-à-vis conventional energy, taking into consideration the fiscal benefits extended by Government of India..

As mentioned above the Indian government has introduced a package of incentives, some of which include tax concessions such as 80% accelerated depreciation , tax holidays for the power income u/s 801A, soft loans .

Various financial incentives and benefits :

80% depreciation benefit in the first year Low operational and maintenance costs Zero input fuel cost

Shorter payback duration

Cost of power duration is very low after payback period

Zero import duty on certain parts (as notified by MNRE from time to time)

Tax holidays for new power projects after 10 years

Company being operational in a seller market, no marketing related issues

The Indian Renewable Energy Development Agency (IREDA) is playing a significant role in promoting Renewable Energy Projects , in general and Wind energy projects in particular. Renewable energy is expected to create maximum impact in generation of electricity. Projections indicate that by the first decade of the new century, it would be cost effective to generate and supply renewable energy, aggregating to several thousand megawatts , as the efficiencies in the power generation through power generation through wind energy are increasing and the costs are decreasing while the costs of

conventional power is increasing. Besides grid supply augmentation renewable energy technologies offer possibilities of distributed generation at or near points of use which can reduce peaking loads and save on costly up-gradation and maintenance of transmission and distribution networks growing demand. There are no major technical barriers for large scale penetration of wind power.

India has now gained significant technical and operational experience and now is now on the threshold of ‘taking off’ in wind power. It offers a viable option in the energy supply mix, particularly in the context of the present constrains on conventional sources . it also offers an attractive investment option to the private sector in the form of recently announced policies and drive towards private sector power generation.

2. The Electricity industry

The Indian electricity market

As on may 31, 2007 India’s power supply system had an installed generating capacity of around 1,34,000MW and thermal power plants powered by coal, gas, naptha or oil for accounted for approx 66% of total power generation capacity. Renewable sources of energy accounts for around 7% of the power generated, with Wind power having a share of around 5.29% . In the same year , central government controlled entities accounted for approx 34% of the total power generation capacity, the various state electricity boards (“SEBs”) accounted for approx 52% while private sector utilities accounted for approx 14%.

The break up of the Total Installed Capacity for generation of power from all the available sources for the country as a whole as on 31May 07

Sector MW Proportion

State sector 69,347 52.09%

Central sector 45, 841 34.19%

Private sector 18, 389 13.72%

Total 1,34,077 100.00%

Fuel MW Proportion

Thermal Coal Gas Oil

86,32671,43213,6921,202

64.39 53.28 10.21 0.90

HydroNuclear

Renewable

Wind Others

33,486 4,120

10,145

7093 3045

24.98 3.07

7.57

5.29 2.27

Total 1,34,077 100.00

All India Generating Installed Capacity

Thermal

sl no. Region Hydro coal Gas Diesal Total Nuclear R.E.S@ Total

1 Northern 12671.15 12671.1 3323.19 14.99 21365.6 1180 1220.18 36437.01

mailto:R.E.S@

2 Western 6678.5 22752.5 5820.72 17.48 28590.7 1840 2640.34 39749.54

3 Southern 10646.18 10646.1 15972.5 939.32 20498.1 1100 5899.33 38143.63

4 Eastern 2373.93 2373.9 14349.8 17.20 14557.0 0 227.81 17158.82

5 N.Eastern 1116 330 771.5 142.74 1244.2 0 146.01 2506.25

6 Island 0 0 0 70.02 70.02 0 11.36 81.38

7 All India 33485.76 71432.3 13691.7 1201.7 86325.8 4120 10145.36 134076.6

86,326

33,486

4,12010,145

0

20,000

40,000

60,000

80,000

100,000

THERMAL HYRO NUCLEAR RENEWABLE

Global Wind Energy

Technology advances have resulted in larger and better quality wind turbine generators with higher generation efficiencies at lower costs wind power markets. According to the TERI Report

rapid wind power development has been driven by increasing interest in green house gas reduction and the expanding global power market. Furthermore , heightened environmental awareness has resulted in increase demand for “green power” in developed countries.

Many countries have adopted “Renewable Portfolio Standards” which mandate a certain percentage of power generation to be met from renewable sources of energy such as wind energy. All over the world wind is generated electricity is treated preferentially by means of production credits and incentives. Internationally the cost of production of a kilowatt-hour of wind power has fallen by 20% over the past 5 years

In World Energy Outlook 2004 the International Energy Agency or IEA, estimates the global electricity demand to double between 2002 and 2030, with demand for electricity likely to increase at much faster pace in developing countries like India an China. The IEA also estimates wind power’s share of total electricity generation to grow 0.2% in 2002 to 3.0% in 2030 and it will be the 2nd largest renewable source of electricity after hydro power.

The number of countries with wind power installations grew to over 61 countries by May 2007. large multi nationals such as General Electric and Siemens have now entered the wind power market through the acquisitions of existing wind turbine manufactures.

Country MW %

Germany

Spain

USA

India

Denmark

20952

12500

12376

7093

3136

26.61

15.88

15.72

9.01

3.98

Others 22671 28.80

Total 78728 100.00

Germany

Spain

USA

India

Denmark

Others

Germany

Spain

USA

India

Denmark

Others

The International Energy Agency (IEA) in its world energy outlook 2004 estimates that the world electricity demand will double between 2002 and 2030. Globally the power sector is required to add an estimated 4800 GW of capacity to meet the projected increase in electricity demand and to replace ageing infrastructure. The IEA has estimated that this would require an investment of US$10 trillion and more than US$ 5 trillion of that amount will be required by developing countries alone.

Estimated Wind power potential in India

The wind power potential on macro level based data collected from 10 states considering only 1% of land availability is around 45,195 MW

Gross potential MW

1 Andhra Pradesh 82752 Karnataka 66203 Tamil Nadu 30504 Kerala 875 Total for Southern India 18,820

1 Gujarat 96752 Maharashtra 3650

Rajasthan 5400Total for Western India 18,725

1 Orissa 17002 West Bengal 450Total for Eastern states 2,150

1 Madhya Pradesh 5500Total for Central India 5,500

Total for India 45,195

Key Factors Driving the Rapid Development of wind energy

The key factors driving the growth of renewable energy and wind energy are

Recognition of the desire o address the human- induced climate change through a reduction of greenhouse gas emissions

Competitive energy sources facing input price Desire by many countries to diversify the sources of their

energy supply Need to reduce the dependence on and depletion of non

renewable sources Vast improvement in wind power economics

Key Drivers For Wind Energy

Wind energy is clean: A single 750 kilowatt wind turbine , operated for 1 year at a site with class 4 wind speeds (winds averaging 12.5-13.4 mph at 10 meters height), can be expected to displace a total of 1,179 tons (2.36 million pounds) of carbon dioxide , 6.9 tons of sulphur dioxide and 4.3 tons of nitrogen oxide. More wind energy means less smog, acid rain, and greenhouse gas emissions.

Wind energy means jobs: Wind energy brings jobs and income to revitalize rural communities and bolster farm incomes against bad weather. Worldwide, the wind and solar industries are likely to be one of the biggest sources of new manufacturing jobs in the next country.

Wind energy is abundant: With today’s technology , wind energy could provide electricity with turbines installed on less than 1 % land area. And within that area less than 5% of the land would be occupied by wind equipment- the remaining 95%could continue to be used for farming or ranching.

Wind energy is inexhaustible: Unlike oil fields , fossil fuels etc wind energy is renewable in nature.

Wind energy is domestic: It will never be subject to embargoes or “price shocks” caused by international conflicts.

Wind energy is environmentally preferable: Traditional energy sources carry a host of serious environmental baggage: air pollution and acid rain ; the possibility of changing the earth’s climate; radioactive waste disposal; oil spills; and more. Wind energy’s environmental impacts are nill.

Wind Energy Development

A modern wind turbine is designed to generate high quality , network compatible electricity for more than 20 years, with remote monitoring and relatively low maintenance.

There have been three major trends in the development of wind turbines in recent yrs

Larger capacity and taller turbines, increase in individual turbine power output capacity over the last 25 years from 30KW machines in 1980 to 5000KW machines in 2005.

Increased efficiency: An overall efficiency increases of 2-3% annually over the last 15 years.

Investment costs have decreased: Significant technology developments including size , together with economies of scale in production have reduced the cost of wind energy generation by approx 80% over past 25 years.

Currently design efforts are focussed on addressing grid compatibility, further improvements to acoustic performance and the emerging offshore market.

Indian Wind Energy Demand

The government of India identified the importance and potential of wind power generation as early as 1983, when it commenced a national wind power program to tap the then estimated potential of 45,000 MW. The Government of India’s market- oriented approach subsequently led to the commercial development of wind power technology in India. The broad based national program concentrates on wind resource assessment activities, establishment of new sites , involvement of utilities and industry , growth of infrastructure capability for manufacture , installation , operation and maintenance of WTGs and policy support.India has made steady progress in the development of wind power since the inception of the national wind power and is the forth largest country in the world with installations of 7093MW

State Generation (MU)Andhra Pradesh

1740Gujarat

1613Karnataka

2291Kerala

16Madhya Pradesh

238Maharashtra

3227West Bengal

2Tamil Nadu 15381 Rajasthan

93Total 24,601

Key Drivers for the Growth of the Wind Energy Industry in India The TERI report cites the following as the key drivers for the growth of wind energy industry in India:

Wind power is a renewable based power generation technology which has demonstrated sufficiently low risk to gain the attention of the financial community and independent power developers for near – term projects. Significant technology advances have occurred since the first wind power plant was installed in the country in early eighties

The short gestation period offers wind energy as a viable alternative to conventional forms of power generation

Industrial learning curve theory suggests that costs decrease by 20% each time the number of units produced doubles.

So far as impacts on the power systems are concerned, it is an established fact that additional of wind power results in a) reduction in technical losses and b) strengthening of voltage levels.

Therefore the initiatives taken by Govt of India and the various State Govt in relation to the establishment of a supportive and stable policy for investment in wind power have contributed to the recent growth the Indian wind power industry. As a result India today is among the world’s largest sustainable for renewable energy such as wind..

BUSINESS OVERVIEW

Wind Farm Business

As early as 1995, we saw the opportunity to enter into alternative energy. In particular, we studied and found wind power generation to be an attractive investment that compliments our business model.

Why power generation

Huge Electricity Demand Supply Gap in IndiaIndia’s economy has grown at a CAGR of 9.9% over the last 5 years. Much of this growth has been powered by rapid industrialization and rising affluence which has in turn, lead to sharp demand for energy. Going forward the CEA expects electricity demand to increase by 75% by the year 2012. As it is India has been a power deficit country for the last 5 decades. As of March 2006 the energy shortage was approximately 8.20% and the peak deficit was much higher at 12.28%. India thus requires an immediate, clean and cost effective solution to bridge the electricity demand supply gap.

Why renewable energies

Conventional fossil fuel energies are prone to escalating feedstock prices and are highly polluted

Globally demand for fossil fuels such as coal, gas and oil, which are the conventional sources of energy have outstripped supply. Prices of feedstock for thermal power generators that run on conventional sources of fuel have been sharply escalating. The adverse environment effects caused by the conventional energy production are also of key global concern. The world is in need of alternative and renewable sources of energy.

Rationale for wind energy

Abundance of wind resources in India not yet tapped – wind is inexhaustible

India is blessed with geographical and climate conditions that generate significant wind resources. At a total installed wind power generation capacity of 7093 MW as of May 2007, India ranks 4th globally, after Germany , Spain and the USA. Against India’s total gross potential of

45,195MW the current installed capacity has tremendous room for growth.

Vastly improved cost economics over the last 25 years

As one of the oldest forms of alternative energy, wind power has proven to be one of the most commercially viable. Realizing the significant potential of wind energy wind turbine manufactures have been dedicated much resources , time and effort in researching and developing bigger and better wind turbine generators. In addition more sophisticated wind resource assessment techniques have been developed in order to harness wind energy for electricity generation more efficiently and effectively. As a result there has been phenomenal improvement and advancement in wind power technology over the last 25 years. For instance in the 1980s, sizes of commercial wind turbine used to be a mere 50 KW in capacity with rotor diameters of some 15 meters. The current turbines are of 5000 KW in capacity with rotor diameters of over 124 meters installed in Germany. Such improvement in technology has substantially enhanced the cost effectiveness of wind turbines significantly.

Attractive legislative incentives

The Electricity Act 2003 which came into force in India in June 2003 consolidated and replaced a number of earlier electricity legislations. The Act has introduced significant changes in industry structure and provides an enabling framework for the accelerated and more efficient development of the power sector. The main objective of the Act is to provide “power for all”. It also recognizes the importance of renewable energy and has placed emphasis through legislative changes on its development. The Act mandates the provision of suitable measures or connectivity and procurement of minimum percentage of power by SEBs\ State Utilities from renewables. In addition it stipulates suitable policy formulation and tariff setting by respective State govt’s to ensure adequate returns to investors in renewable power infrastructure and a high degree of certainty of the returns. The Act also brings clarity to the roles of different organizations and provides for better financial management of the state Electricity Boards.

Other incentives – the Kyoto protocol

India is a signatory to the Kyoto protocol an International treaty that was adopted at COP 3 in Kyoto Japan on 11th December, 1997 to help reduce greenhouse gas(GHG) emissions responsible for the global warming. This protocol and new European Union Emission rules (EUR) have created a market in which companies and Govt’s that reduce GHG emissions levels can sell the ensuing emissions reduction\carbon credits to countries that are exceeding their GHG emission quotas.

Our Business

We started developing wind farm in a small way by installing 1 no. of 225 KW Wind Electric Generator, in September 1995. Since then our company has been expanding our wind farm capacity every year to reach the present capacity of 16.825MW owned by us and 17.915MW for others whose Operations and Maintenance is with our company. The company is currently in process of implementing additional 9MW capacity in Karnataka as mentioned in section ‘Objects of the issue’.

The current scope of operations of our company includes:

a) wind power generationb) Turnkey operation for windmill projectsc) Operations & Maintenance of WEG’s

We offer ‘Green Power’ to our customers which include State Electricity Boards and Corporates. Other than the above they are also in business of providing O&M services for windmills.

We have been selling the power generated to TNEB and various private corporate clients in Karnataka such as Hindustan Coca Cola Beverages Private Limited, Karnataka Distillers Limited, United Breweries Limited, H&R Johnson India Limited, Delphi Automotive Systems Private Limited and Spicer India Limited. Under third party sale the electricity revenues generated from the sale to SEBs.

Under turnkey projects, our Company provides total solution for installation, operation and maintenance of windmills for third parties. Our company has till date executed turnkey projects to the tune of 14,175 MW.

Other than the above we are also into business of providing O&M services for windmills. The focus of the O&M services for windmills. The focus of the O&M operations has a major thrust on keeping the machine availability over 90%. This is done to ensure the machine to generate optimum energy when the wind speed in the given area is adequate. This existing state wise installed capacities are given below:

Product Year ended

2004 2005 2006 2007Installed Capacity

Installed Capacity

Installed Capacity

Installed Capacity

Wind mills owned by us 17.875MW 17.625MW 16.825MW 16.825MW

Karnataka 4.10MW 4.10MW 3.30MW 3.30MWTamil Nadu 13.525MW 13.525MW 13.525MW 13.525MWAndhra Pradesh

0.25MW - - -

Wind mills operated & maintained by us

5.125MW 6.625MW 17.915MW 17.915MW

Wind Farm Concept

The generation of electricity from wind energy in real sense, started only from the beginning of this century and with the growing interest

reached to the stage of cost effectiveness, employing feasible light weight blades, improved ailerons, teetering attachment, direct drive transmission, increased height, aerodynamic designs, advanced electronic control etc. the power producing windmill incorporating all these features are now popularly called the Wind Electric Generator(WEG). At windy sites the WEGs are generally installed in a cluster and are connected to electric grid through suitable transformers and switch gears. Such development of WEGs in a cluster, generating electricity from wind is commonly known as ‘Wind farms or ‘Wind parks’. So the wind farm at a site may have a number of wind electric generators with uniform or non uniform designs or of different or same capabilities. Wind power projects consist of a cluster of Wind Electric Generators\Wind Turbines\Wind Energy Converters erected and connected together to electrical grid at a site.

Wind Electric Generators

The WEG manufacturers have their own design of Wind Turbine. In general, the wind machine consists of following major components:-

a) Tower (lattice or Tubular)b) Nacellec) Rotor Bladesd) Gear Box & Transmission Systeme) Generator / Systemf) Yawing Systemg) Microprocessor based control panelh) Power & Grid Systemi) Breaking / Control System

He wind turbines are available in a wide range from 225 KW capacities to large machines of 5 Mega Watt(MW) capacities world wide. In India Wind turbines of 225 KW to 1650 KW capacities are most popular as they have proved to be commercially viable. The wind electric generator is a simple machine which converts the mechanical energy received from wind to electrical energy. Here the wind speed is the prime mover, which makes the rotor blades to rotate and converts the kinetic energy of the wind into mechanical energy. The mechanical energy

developed by the rotor is transferred to the generator coupled to the high speed shaft. Thus the generator is made to rotate at high speeds. Through this rotation the generator converts the mechanical energy into the electrical energy. This electrical energy produced from the WEG is then transferred to the nearest grid, sub stations through the transformers which step up the electrical voltage to minimize the transmission losses in transmission system. The components of wind turbines are designed to last for 20 years. The actual lifetime of a wind turbine depends both in the quality of the turbine and the local climatic conditions and maintenance.

Our Competitive Strengths

1. We are an existing profit making company with a good track record or over a decade.

2. Our Company has qualified and experienced manpower in its field of operations.

3. We derive benefit from the fact that our existing profects are located in Tamil Nadu and Karnataka, which are high wind zones.

Vision And Mission

Indowind Energy Limited is committed to the development and promotion of Green PowerTM , generation in the country. Reflecting this commitment, clear statements of Vision, Mission of company are as follows:

Vision :

To excel in the generation of Green Power TM , as an alternative and clean energy technology company, leveraging on the 6m resources, through a satisfied and motivated workforce.

The corporate vision of the company is to be a major global player in the renewable energy space using State of the Art Technology to set up World class projects. Effective utilization of the 6 M resources viz. Man , Machine, Material, Money, Market & Management to achieve the objective. Providing a comfortable work environment with adequate employee benefits by being a preferred employer.

Mission :

To emerge as a leading and sustainable company committed to promotion and generation of “ Green Power TM ” through Renewable Sources of Energy.

Mission is to be a pioneer in the IPP space, growing into an environmentally clean energy company in the field of power generation, by tapping new opportunities for growth.

STATEMENTS OF ASSETS AND LIABILITIES

SL.NO PARTICULARS 30.06.2003 30.06.2004 30.06.2005 30.06.2006 30.06.2007 A Fixed Assets

Gross Block 1,964.82 2,496.87 2,337.72 2,337.82 2,528.07Less: Depreciation 377.82 480.53 518.59 596.59 697.77Less: Revaluation Reserve 640 640 200 60 60NET BLOCK 947 1,376.34 1,619.13 1,583.23 1,770.30Capital Work in Progress 956.39 0 8.39 10.02 17.08Capital advances 1,238.90 1,249.40 1,668.00 2,822.42 3,018.99

TOTAL 3,142.29 2,625.74 3,295.52 4,415.67 4,806.37 B Investment 91.17 69.06 1.25 1.25 271.91

CCurrent Assets, Loans& AdvancesWork in Progress 0 1,426.21 820.13 515.43 1,347.26Sundry Debtors 332.59 221.77 253.76 773.59 817.18Cash and Bank Balances 77.25 59.94 27.87 211.81 88.21Loans and Advances 3,389.80 1,022.28 672.75 936.73 853.07Other Current Assets 170.02 155.71 212.71 223.29 271.55Deferred Tax Assets 0.00 7.42 0 0 0

TOTAL 3,969.66 2,893.33 1,987.22 2,660.85 3,377.27

DLiabilities and ProvisionsPreference shares 1,600.00 1,400.00 400 400 400Secured Loans 404.55 357.37 632.72 846.74 1,591.95Unsecured Loans 131.78 728.10 246.65 170.16 0Deferred Tax Liability 0 0 31.7 42.4 23.02Current Liabilities & Provisions 2,517.00 343.45 178.91 310.01 483.09

TOTAL 4,653.33 2,828.92 1,489.98 1,769.31 2,498.06

ENET WORTH(A+B+C+D) 2,549.79 2,759.21 3,794.01 5,308.46 5,957.49

F Represented byEquity Share Capital 753.00 1,506.00 2,536.78 3,645.68 3,645.68Reserve & Surplus 2,436.79 1,899.37 1,471.63 1,748.16 2,406.14Less: Revaluation Reserve 640.00 640.00 200.00 60.00 60.00Less: Miscellaneous Expenses 0.00 6.16 14.40 25.39 34.33

NET WORTH 2,549.79 2,759.21 3,794.01 5,308.46 5,957.49

STATEMENT OF PROFIT AND LOSS

SL.NO PARTICULARS 30.06.2003 30.06.2004 30.06.2005 30.06.2006 30.06.2007 A INCOME

a) Power Income 568.11 525.59 787.13 764.30 772.09b) Project Income 0 0 1,080 1,567.50 1,640Total Income 568.11 525.59 1,867.13 2331.8 2412.09Other Income 988.36 340.00 116.30 271.61 345.35

TOTAL 1,556.47 865.59 1,983.43 2,603.41 2,757.44 B Expenditure

Raw material expenses 0.00 0.00 778.59 1,095.86 1,231.18Operating expenses 75.98 78 108.01 238.64 212.58Personnel Expenses 31.67 40.76 48.57 35.65 45.06Administrative expenses 64.59 88.19 88.83 140.1 128.88

TOTAL 172.24 206.95 1,024.00 1,510.25 1,617.70

CNet profit before interest, depreciation 1,384.23 658.64 959.43 1,093.16 1,139.74Depreciation 91.27 104.80 106.5 77.99 101.18Interest & financial charges 1,046.00 248.33 383.53 439.43 371.66PROFIT/LOSS BEFORE TAX 246.96 305.51 469.4 575.74 666.90Provision for taxation

-Current Tax 6.83 5.23 16.04 14.13 28.30-Deferred Tax 0.00 -7.42 39.12 10.71 -19.38

DPROFIT/LOSS AFTER TAX 240.13 307.70 414.24 550.90 657.98Extra ordinary items 0.00 0.00 0 0.00 0.00

EPROFIT/LOSS AFTER EXTRA ITEMSLess: dividend on preference shares 66.00 0.00 0 0.00 0.00Less: tax on dividend 7.26 0.00 0 0.00 0.00Less: dividend on Equity Shares 60.24 0.00 0.00 0.00 0.00Less: tax on dividend 6.53 0.00 0.00 0.00 0.00Profit available for appropriation 100.10 307.70 414.24 550.90 657.98less: transfer to capital reserve 0.00 0.00 0.00 30.00 0.00Balance b\f from last year 0.00 0.00 0.00 0.00 0.00Profit transferred to B\S 100.10 307.70 414.24 520.90 627.98

Significant Accounting Policies & notes to Accounts

1 Significant Accounting policy:

The accounts are prepared under the historical cost convention(except for revaluation of certain fixed assets)and materially comply with the

mandatory accounting standards issued by the Institute of Chartered Accountants of India. The significant accounting policies followed by the company are as stated below:

A. FIXED ASSETS

Fixed assets are stated at a cost less depreciation and including revaluation cost. The cost of comprises of purchase risk, imports duties , levies and any directly attributable cost of bringing the assets to its working condition for the intended use.

The Company treats Non Refundable Deposits for Wind Electric Generators as Guarantee deposits since related assets are in its control, earning income of power generation.

B. DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rate and in the manner prescribed in schedule X111 of the Companies Act 1956 on cost including revaluation cost, less accumulated depreciation.

C. INVESTMENTS

Investments are held by the company as long term asset. The market fluctuation for the increase\decrease in the value of investments are not accounted as the investments are held in unlisted companies. Company treats key man insurance as investments.

D. INVENTORIES

Inventories are valued at cost, net realizable value in the case of unsold power and in case of work- in – progress it is valued to the extent of its completion including interest payments related to the projects.

E. REVENUE RECOGNITION

Revenue consists of sale of power, sale of WEG and other income..

Sale of power is recognised at the point of dispatch of electricity generated from Plant and Stock points. Sale of WEG is recognized at the point of sale of windmill less manufacturing expenses. Other Income is recognized net off of related expenses including accrued bonus on investments.

F. RETIREMENT BENEFITS

The Company has provided for retirement benefits to the employees such as gratuity, Provident Fund and ESI. But in the case of gratuity, only provision is made as per management’s estimate and has not formulated any policy for investments of the said gratuity provision.

G. TAX ON INCOME

The company has provided Rs 28,30,165/- taking in to account the profit for the period April to March 2007

H. FOREIGN CURRENCY TRANSATION

Foreign currency transactions are recorded at exchange rate prevailing at the time of transaction. Exchange differences are not recognized since payments are made in advance for purchases.

I. PROVISION, CONTINGENT LIABILITIES AND CONTIGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of pass events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. SEGMENT REPORTING:

Segment Reporting for the year 2003-2004

Segment reporting

Power Project Others Total

Segment income

525.59 3679.86 192.15 4397.60

Segment expense

416.75 3532.01 52.56 4001.32

Segment results

108.84 147.85 139.59 396.28

Un allocable expense

- - - 90.78

Total profit - - - 305.50

Segment assets

4430.17 483.55 1743.32 6657.04

Segment liabilities

472.37 - 1379.30 1851.67


Segment reporting


Segment income

787.13 1080.00 136.45 2003.57

Segment expense

584.41 784.11 66.45 1434.97

Segment results

202.72 295.89 69.99 568.60

Corporate office exp

19.84 49.60 29.76 99.20

Total profit 182.88 46.89 40.23 469.41

Segment assets

3821.22 828.52 866.82 5516.56

Segment liabilities

221.26 553.49 315.23 1089.99


Segment reporting


Segment income

764.30 1567.50 271.61 2603.41

Segment expense

93.67 1264.13 41.33 1958.10

Segment results

170.64 303.37 230.28 704.29


- - - 128.54

Total profit 170.64 303.37 230.38 575.75

Segment assets

5313.59 894.27 955.30 7163.16

Segment liabilities

241.34 699.46 428.52 1369.32


Segment reporting


Segment income

77,208,567 164,000,000 34,535,603 275,744,170

Segment expense

66,108,642 125,379,473 5,371,510 196,859,625

Segment results

11,099,925 38,620,527 29,164,093 78,884,545


12,194,528

Total profit 11,099,925 38,620,527 29,164,093 66,690,017

Segment assets

574,740,378 182,641,129 97,607,344 854,988,851

Segment liabilities

46,032,521 150,791,775 12,981,888 209,806,184

Cash flow statement

30.06.03 30.06.04 30.06.05 30.06.06 30.06.07

A. Cash flow from

operations

Adjustments

add: depreciation 91.3 104.8 106.5 77.99 101.18less: income from other activities 188 305.9 69.99 242.77 345.35

operating profit before WC 150.3 104.39 505.9 410.96 422.73WORKING CAPITAL CHANGESsundry debtors- decrease\increase -114.45 110.82 -31.99 -519.83 -43.59

loans & advances-

2969.11 2357.53 295.25 -269.93 30.71increase\decrease in other c. assets 305.8 445.58 -2.72 -4.63 4.69increase\decrease in gurantee deposit 122.64 -10.5 -418.6

-1154.42 -196.57

increase\decrease in deferred tax _ -7.42 31.7 10.7 -19.38current liability- increase\decrease 2396.26

-1577.23 -338.18 131.09 164.15

increase\decrease in other current liability _ _ _ -41.06 -170.16increase\decrease in current assets -258.86 427.62 -464.54

-1848.08 -230.15

(A)CASH FLOW FROM OPERATIONS -108.56 532.01 41.37

-1437.12 192.58

B. Cash flow from investing activitiesnet income from other activities 188 305.9 69.99 242.77 345.35purchase\sale of fixed assets -170.1 -532.09 26.65 70.18 -288.25increase\decrease in capital W-I-P -316.64 _ 157.69 163.07 -838.89purchase\sale of investments -6.1 22.03 67.81 _ -270.66(B)CASH FLOW FROM INVESTING -304.84 -204.16 322.14 476.02

-1052.45

C.cash flow from financing

activitiesproceed from issue of equity shares _ -200 _ 94.2 _proceed from share premium _ _ _ 847.8 _proceed from issue of preference shares 500 _ _ 0 _redemption of preference shares -100 _ -500 0 _proceeds from secured loans 137.8 _ _ 214.02 745.21

repayment of secured loans _ -47.18 51.36 0 _increase\decrease in reserves _ _ _ 0 _dividend & dividend tax(paid) -140.1 91.93 61.3 0 _

misc expenses paid _ -6.1 -8.24 -11 -8.94

(C)Cash flow from financing activities 397.7 -1 -395.58 1145.02 736.27

Net Increase in Cash (A+B+C) -15.7 -17.36 -32.07 183.92 -123.6opening cash& cash equivalents 93 77.3 59.94 27.87 211.81closing cash & cash equivalents 7.3 59.94 27.87 211.81 88.21

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

To reduce the overall cost of inventory by a minimum of 30%

To fix the optimum stock level (Minimum Stock level) for various items.

To analyze the inventory level of the company.

Provide satisfactory service to customers.

Eliminate wastages and handling cost.

To find means of taking advantage of price fluctuations and buy

economically.

NEED FOR THE STUDY

In Wheels India the annual expenditure for both direct materials like steel

and paint and indirect inventories like Raw materials, Components spares

and Consumables are 65% of the total expenditure.

Even a small percentage of savings on inventory cost could improve the

profitability of the company.

To look in the materials requirements and consumption and make

suggestions to reduce the total expenditure on materials by using methods

and techniques of inventory management.

SCOPE OF THE STUDY

The scope of the study is to identify the material requirement of the company

and controlling and managing the inventory level and also to suggest means of

improvement in the existing process if necessary.

PERIOD OF THE STUDY

The study has been conducted for 3 months (January to March, 2007) including

data collection, data analysis and report preparation.

TOOLS OF THE STUDY

ABC Analysis

HML Analysis

FSN Analysis

SDE Analysis

Economic Order Quantity

Safety Stock

Maximum Stock level

METHODOLOGY

The methodology followed in this study involves techniques of ABC Analysis,

HML Analysis, FSN Analysis, SDE Analysis, Economic Order Quantity, Safety

Stock and Maximum Stock level. This study is completely based on the secondary

data obtained from Wheels India Limited.

LIMITATIONS OF THE STUDY

Time has been a limiting factor and it has been difficult to analysis the

various aspects of inventories with the prescribed time.

The ordering cost is constant (below one rupee) because the sales have

been done through a mail.

The carrying cost also is constant since the company has to pay the bank

interest as 12% for the inventories, which they are buying from their

suppliers in bulk orders. Thus, it is applicable to take as 12%.

There are no scarce items in SDE Analysis and also some of the items

are difficult to purchase and rest of the items will be easily available in the

market as it depends on the vendors.

There will be high risk, if the company is not maintaining proper safety

stock level.

The company should eliminate wastages so as to control the inventories

INVENTORY MANAGEMENT TECHNIQUES

1). ECONOMIC ORDER QUANTITY (EOQ)

One of the major inventory management techniques that determine how many

inventories should be added when inventory is replenished. If the firm is buying

material, if has to decide lots in it has to be purchased on each replenishment. The

formula for calculating EOQ is as follows:

Analyses of cost of maintaining certain level of inventories are

Ordering Cost

The term ordering cost refers to the entire costs of acquiring raw materials, they are

purchased ordering, Transporting, receiving, inspecting and storing. Ordering cost

increase in proportion to the number of orders placed. It consists of the following

points:

a) Rent for the space used by the purchasing department;

b) The salaries and wages of officers and staff in the purchasing

department;

c) The depreciation on the equipment and furniture used by the

department;

Relationship between Cost and Quantity

d) The postage, telegram and telephone bills;

e) The stationery and other consumables required by the purchasing

department;

f) The entertainment charges incurred on receiving vendors;

g) Any travelling expenditure incurred;

h) Lawyers and court fees due to any legal matters arising out of

purchase.

Obviously, the more the number of orders placed in a period, the more would be the

stationery and postage consumed, more staff and officers would be required for

handling the work, more would be the space required for accommodating them and

so on. Thus, the total expenditure on purchasing or ordering would depend on the

number of orders placed.

Carrying Cost

Carrying cost incurred for maintaining a given level of inventory. It includes

storage, insurance, taxes, deterioration and obsolescence.

Inventory carrying costs arise out of the following factors:

i. The loss of interest (or profits) on the money invested in the stocks of

materials

ii. The salaries and wages of the stores personnel employed t receive, store and

issue the materials.

iii. The rent for the stores.

iv. The depreciation and repairs cost for the stores facilities and handling

equipment.

v. Any loss of material through pilferage and deterioration.

vi. Materials rendered obsolete because of design changes or other factors,

vii. Taxes on inventories

viii. Stores insurance charges and Stationery and other consumables used by the

stores, etc

2). MAXIMUM STOCK LEVEL:

It is upper limit or maximum limit to which the inventory can be kept in the stores

at any time.

Factors essential for fixing the maximum level:

Fixation of rate of consumption required for production

Availability of storage space.

Cost of storage.

Availability of finance.

Availability of quality of raw-materials.

Cost of insurance.

Economic Ordering Quantity (EOQ).

Formula for calculating maximum stock level is as follows:

Maximum stock level = Safety Stock (Minimum stock level) + Economic Order

Quantity (EOQ)

3). MINIMUM STOCK LEVEL:

It is the lower or minimum limit of the inventory, which must be kept in stores at

any time.

Factors essential for fixing the minimum level:

Re-order level

Normal consumption of materials.

Nature of material

Time gap between placing an order and receiving the goods.

4). LEAD TIME:

Lead-time is the time normally taken in replenishing inventory after the order has

been placed. Lead-time involves the time for the completion of some of the

following activities:

Raising of a purchase requisition,

Inquiries, tenders, quotations,

Receiving quotations, tenders, their scrutiny and approval,

Placement of order on a supplier

Transportation and clearing

Receipt of good at the company.

Receiving inspection,

Taking into stock.

Obviously, in order or receive supplies before the stock reaches zero level, it is

necessary to order the materials much in advance i.e. when the stock available in

sufficient to last during the lead-time.

5). SAFETY STOCK:

It is also known as Buffer or Reserve. It is well known from experience that neither

the annual consumption rate of a material nor its lead-time is constant throughout

the year. In some cases, a stock out would be experienced resulting into hampering

of production.

To guard mainly against these uncertainties in consumption rate and lead-time, an

extra stock is maintained all along and this is called as “Buffer Stock or Safety

Stock or Reserve”. This stock also comes handy in case of

a) Any excessive in-process rejections.

b) Rejections at the time of receipt or goods due to damages or

sub-standard quantity, etc.

Since Safety Stock is a part of inventory, it should be maintained just sufficient to

guard against the uncertainties and not too excessive.

Optimum Safety Stock:

If the Safety Stock maintained is inadequately low the inventory carrying Costs

would be

low but stock-outs will be frequently experienced and the stock out Costs would be

very high. Hence, it calls for inventory costs to arrive at an optimum safety stock.

Stock outs may give rise to the following losses:

Customer dissatisfaction or customer loss,

Loss of production,

Loading machines or men,

Emergency purchases at high priced,

Extra transportation charges for speedier modes of transportation.

6). RE-ORDER POINT:

Economic Order Quantity determines the quantity of materials to be purchase.

Reorder point helps in determining the time at which the order should placed. The

reorder point is that the inventory level at which an order should placed. The

reorder point helps in inventory level at which the order should placed. The reorder

point is that the inventory level at which an order should be placed to replenish the

inventory to determine the reorder point under certainty, it should know the lead

time, average usage and economic order quantity.

The formula for re-order level is as follows:

Re-order level = Safety Stock + Normal lead Time Consumption.

7). ABC ANALYSIS

Concept

It is a selective inventory control; usually a firm has to maintain several types of

inventories. It is not desirable to keep the same degree of control on all items. The

firm should pay maximum attention to those items whose value is the highest.

The firm should, therefore classify inventories to identify which items should

receive the most effort in so controlling. The firm should be selective in its

approach is called the ABC analysis and tends to measure the significance of each

item of inventories in term of value.

Classification of items:

High value items are classified as ‘A’ items and would be under the

tightest control.

‘C’ items represent relatively least value an would be under simple

control.

‘B’ items, fall in between these two categories and require

reasonable attentions of management.

Steps involved in implementation of ABC analysis

Classify the items of inventories, determine the expected use in units

and price per unit for each item.

Determine the total value of each item by multiplying the expected

unit price.

Rank the items in accordance with the total value, giving first rank to

the item with highest total value and so on.

Compute the ratios of the numbers of units each item to total units of

all items and ratio of total value of each item to total value of all

items.

Combine items on the basic of their relative value to form three

categories – A, B and C.

8). SDE ANALYSIS:

This analysis is based upon the availability position of an item. Especially, in

developing countries where certain items are scarce, this analysis is very useful.

S – Refers to Scarce items, especially imported items and those which are in short

supply.

D – Refers to difficult items, which are available in indigenous market but cannot

be procured easily. For example, items which have to come form far off cities or for

which reliable suppliers are difficult to find.

E – Refers to items which are easily available (mostly local items).

9). HML ANALYSIS:

This cost per item is considered for this analysis and all items are classified as High

Cost (H), Medium Cost (M), and Low Cost (L) items. This type of analysis is useful

for keeping control over consumption at departmental level, and for deciding the

frequency of physical verification.

10). FSN ANALYSIS:

Here the quantity and rates of consumption are analyzed to classify the items as –

Fast Moving (F), Slow Moving (S), and Non-Moving (N) items. The Fast and Slow

Moving classification help in arrangement of stocks in the stores and in deciding the

distribution and handling methods. It is found that many companies maintain huge

stocks of non-moving items and the number of such items runs well over a

thousand. The following steps are taken before disposal:

a) Circulate a list of non-moving to production, design and other

departments and classify these into:

Items which can be used in future as such;

Items which need modifications for use in future;

Items that cannot be used.

b) The list of items that cannot be used should be sent to all similar

organizations and probable user for sale or exchange.

c) These items, if cannot be disposed off to similar organizations, they

should be put to open auction.

CLASSIFICATION ON THE BASIS OF ABC ANALYSIS

DESCRIPTION STOCKCum stock

Cum %

ABC

1 SANDER DISC -ZIRKON - GR 36 158785.32 158785.3 3.54 A2 RAJ HYDRA SUPER HL 68 (BULK) 136302.68 295087.98 6.58 A3 CASTROL ILOFORM TDN 81 - N OIL 120220.96 415308.94 9.26 A

4MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 110473.66 525782.6 11.73 A

5 GRAPHITE GREASE (GARONEX R) 92504.86 618287.46 13.79 A6 GES PIEGEON RACK ACRYLIC DOOR- 81000 699287.46 15.6 A

7SEASONED RUBBER WOOD PALLET 87 X 28 BASE 76293.56 775581.02 17.3 A

850 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 74270.78 849851.8 18.96 A

9CASTROL SUPER EDGE 7/SW 131B GRADE OIL 70875.68 920727.48 20.54 A

10ARMOURED JELLY FILLED TELEPHONE CABLE 20 63720 984447.48 21.96 A

11 3.15 MM WELDING ELECTRODE - 90 (FOR 60241 1044688.5 23.3 A

12GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 59877.2 1104565.7 24.64 A

13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 58219.74 1162785.4 25.94 A14 SANDER DISC GR 36 (ZIRCON) 57879 1220664.4 27.23 A

15RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 52326.88 1272991.3 28.4 A

163.15 MM WELDING ELECTRODE SUNBOND( 60 51388.08 1324379.4 29.54 A

17ARMOURED JELLY FILLED TELEPHONE CABLE 50 46000 1370379.4 30.57 A

18VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 44371.24 1414750.6 31.56 A

19 HIDRAW HD OIL 43845.3 1458595.9 32.54 A20 RUSTILLO OIL DW 901 42555.15 1501151.1 33.48 A

2142" X 42" WOODEN PALLET WITH 1 BASE & 1 41092.37 1542243.4 34.4 A

22 ALLEN SCREW 1.1/8"BSW X 5" 39970.63 1582214.1 35.29 A23 G WHEEL 400X50X127 AA60 L7 127 39844.2 1622058.3 36.18 A

244.0 MM WELDING ELECTRODE SUN BOND SS 38133.51 1660191.8 37.03 A

25 POLYESTER STRAPPING TAPE 16MM X 37752.9 1697944.7 37.87 A26 RAJ HYDR SUPER HL68(BARREL) 37630.92 1735575.6 38.71 A

27SEASONED RUB.WOOD PALLET 87"X31"-CAT 37615.25 1773190.9 39.55 A

28 VSM COATED BELT ZK713X SIZE 36131.58 1809322.4 40.36 A29 TYRE 10.00 X 20-16PR 35956 1845278.4 41.16 A30 SODIUM HYDRO SULPHITE 35803 1881081.4 41.96 A

31EXCEL DEBURRING AND FINISHING WHEEL 35762.8 1916844.2 42.76 A

32PACKING STICKERS "DESPATCH DETAILS" 35309.73 1952154 43.54 A

33GRINDING WHEEL 450X50X203mm A46-K5-V10 35124.7 1987278.7 44.33 A

3412 " LEATHER GLOVES WITH CADA CUFF 35094.19 2022372.9 45.11 A

35 GUARD ST.GRINDER-Z. MODEL 34680.8 2057053.7 45.88 A

36ABRASIVE BELT K 815Y50MM,WX1000MM 34492.89 2091546.5 46.65 A

372.5 MM WELDING ELECTRODE SUN BOND SS 32528.46 2124075 47.38 A

38SEASONED RUB.WOOD PALLET 87" X 29"-BASE 32270.5 2156345.5 48.1 A

39 COOLANT OIL 31161.44 2187506.9 48.79 A40 STEEL SHOTS GR S 390 31151.77 2218658.7 49.49 A41 JOHNDHEER WOODEN PALLET 87" X 32" 29960 2248618.7 50.16 A42 MAXTREAT-2902 28061.83 2276680.5 50.78 A43 4" X 4"X 1/2",/3/8" MS ANGLE 27763.55 2304444.1 51.4 A

44STRAPPING TAPE 16 X 1600 GREEN COLOUR 27651.2 2332095.3 52.02 B

45 SERVO MESH SP 220 OIL 26110.8 2358206.1 52.6 B46 STEEL SHOTS GR S 460 25390.5 2383596.6 53.17 B

47STEEL STRIP IN BAND [ITW SIGNODE 3415 25278.58 2408875.2 53.73 B

48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 25183.24 2434058.4 54.29 B49 SERVO SYSTEM 150 23666.71 2457725.1 54.82 B50 6" S.S PIPE -SCH-40 23504.22 2481229.3 55.35 B51 2.5 FERROSPEED SUNBOND – 135 (FOR 23015.44 2504244.8 55.86 B

52NUT RUNNER - 10MM A/F X 50MM L.(NON- 22660 2526904.8 56.36 B

53 OIL - MAGNA GC – 32 21582.99 2548487.8 56.85 B54 HAMMER CHIPPING 21473.91 2569961.7 57.33 B55 LT/LK ML 12 SPARE KIT 21440.28 2591402 57.8 B56 CAUSTIC SODA (FLAKE) 21358.61 2612760.6 58.28 B57 ROTARY BURR-K3 21174.62 2633935.2 58.75 B58 COCONUT OIL 20850.05 2654785.2 59.22 B59 SANDER DISK 7"-CARBORUNDUM GR36 20552 2675337.2 59.68 B60 GUARD FOR ST.GRINDER 20530.39 2695867.6 60.13 B61 METAL PALLET BASE CUST JAPAN TOP 20526.97 2716394.6 60.59 B

COVER62 WHITE CLOTH 20351.31 2736745.9 61.05 B

633M FLOW STREAM BELT MOUNTED SUPPLIED AIR 20110.36 2756856.3 61.49 B

64ARMOURED JELLY FILLED TELEPHONE CABLE 5 20000 2776856.3 61.94 B

65 CONTCT KIT FOR TEL.LA5- 19517 2796373.3 62.38 B66 GLUE POWDER 19392 2815765.3 62.81 B67 MASKING TAPE 3" 19375.33 2835140.6 63.24 B68 MOLYGRAPH STENOL 50 S 19319.65 2854460.3 63.67 B

69SILVER WOOD PALLET FOR MWSD WHEEL- 19134.57 2873594.8 64.1 B

70 WOODEN PALLET 48"X48" [SILVER OAK] 18797.84 2892392.7 64.52 B71 SILICAGEL 18159.91 2910552.6 64.92 B

72GRINDING WHEEL 180 X 7 X 22 GR.36 (SAK 18138.74 2928691.3 65.33 B

73 COOLANT OIL ITW WS600N 18103.04 2946794.4 65.73 B74 RAJ ULTRAFORM HDD 140 18042.26 2964836.6 66.13 B75 36MM T/S DRILL [ADDISSION MAKE] 18000.9 2982837.5 66.53 B

76ARMOURED JELLY FILLED TELEPHONE CABLE 10 18000 3000837.5 66.94 B

77 E 115 OERLIKON ELECTRODE 4MM 17575.14 3018412.7 67.33 B78 RESIN 220 NA INDION 17506.5 3035919.2 67.72 B

79TARPAULIN-HDPE - SIZE: 24 X 18, 150 GSM 17220 3053139.2 68.1 C

80 MACHINE GRADE STRETCH WRAP 17022.58 3070161.7 68.48 C81 TYRE-7.00 X15 12PR 16917.5 3087079.2 68.86 C82 FLEXICON HOSE ST.GLAND FOR PG 48 16825.09 3103904.3 69.24 C83 E- OIL (FUEL ADDITIVE ) 16710.3 3120614.6 69.61 C84 EP VALVE - V012 45 3P DS MO - 16632.94 3137247.6 69.98 C85 FILDROP COOLITE-7 (MAK GLIT CHEM) 16324.02 3153571.6 70.34 C86 WOOD PRIMER (20 LTS) 16245.98 3169817.6 70.71 C87 CABLE ASSLY. 0120601547 16191 3186008.6 71.07 C88 CHAIN DUPLEX 1.1/2"PITCH 16045.4 3202054 71.42 C89 HEX H T BOLT & NUT M14 X 120MM 16036.73 3218090.7 71.78 C

90VERTICAL SANDER HD CP865S, CODE NO. 16009.03 3234099.7 72.14 C

91 LDPE SHEET VIRGIN 36" X 36" X 350G 15907.32 3250007 72.49 C

92ESCORTS U TYPE AIR HEATER 1.5 K W 230V 15849.31 3265856.4 72.85 C

93 EXTN ROD TYPE IN SIDE MICRO METER 15496 3281352.4 73.19 C

94TAPER SHANK DRILL 54 MM X 200 MM LONG 15293.18 3296645.5 73.53 C

95 WELDING ELECTRODE 3.15MM E115 15223.03 3311868.6 73.87 C

96GRINDING WHEEL 304.8X25.4X25.4 A46-Q5- 15162.75 3327031.3 74.21 C

97 INDION-7106 15069.43 3342100.7 74.55 C98 RUBBER PAD 2" X 2" X 3MM THICK 14779.75 3356880.5 74.88 C99 TROLLEY WHEEL PNO 30208 ZRA1 14457.84 3371338.3 75.2 C100 WHEEL DISPATCH STRICKER CV 475 14393.87 3385732.2 75.52 C

ABC ANALYSIS

A43%

B35%

C22%

Figure 1

INTERPRETATION:

The above diagram shows that 43% of the cost value of inventories is A items

followed by 35% of the value of inventories are B items and the remaining 22% of

the value comes under C items of ABC Analysis

CLASSIFICATION OF HML ANALYSIS

Sl. No. DESCRIPTION

STOCK QTY

ITEM RATE STOCK

HML

1 SANDER DISC -ZIRKON - GR 36 3424 46.37 158785.3 L2 RAJ HYDRA SUPER HL 68 (BULK) 2348 58.05 136302.7 L3 CASTROL ILOFORM TDN 81 - N OIL 1050 114.5 120221 M

4MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 2 55236.83 110473.7 H

5 GRAPHITE GREASE (GARONEX R) 1040 88.9 92504.86 L6 GES PIEGEON RACK ACRYLIC DOOR- 10 8100 81000 H

7SEASONED RUBBER WOOD PALLET 87 X 28 BASE 88 866.97 76293.56 H

850 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 1000 74.27 74270.78 M

9CASTROL SUPER EDGE 7/SW 131B GRADE OIL 630 112.5 70875.68 M

10ARMOURED JELLY FILLED TELEPHONE CABLE 20 531 120 63720 M

113.15 MM WELDING ELECTRODE - 90 (FOR 25 2409.64 60241 H

12GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 552 108.47 59877.2 M

13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 840 69.31 58219.74 L14 SANDER DISC GR 36 (ZIRCON) 1090 53.1 57879 L

15RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 814 64.28 52326.88 L

163.15 MM WELDING ELECTRODE SUNBOND( 60 232 221.5 51388.08 M

17ARMOURED JELLY FILLED TELEPHONE CABLE 50 200 230 46000 M

18VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 200 221.86 44371.24 M

19 HIDRAW HD OIL 420 104.39 43845.3 M20 RUSTILLO OIL DW 901 523.4 81.31 42555.15 L

2142" X 42" WOODEN PALLET WITH 1 BASE & 1 46 893.31 41092.37 H

22 ALLEN SCREW 1.1/8"BSW X 5" 25 1598.83 39970.63 H23 G WHEEL 400X50X127 AA60 L7 127 9 4427.13 39844.2 H

244.0 MM WELDING ELECTRODE SUN BOND SS 169 225.64 38133.51 M

25 POLYESTER STRAPPING TAPE 16MM X 6 6292.15 37752.9 H26 RAJ HYDR SUPER HL68(BARREL) 630 59.73 37630.92 L

27SEASONED RUB.WOOD PALLET 87"X31"-CAT 32.67 1151.37 37615.25 H

28 VSM COATED BELT ZK713X SIZE 764 47.29 36131.58 L29 TYRE 10.00 X 20-16PR 4 8989 35956 H

30 SODIUM HYDRO SULPHITE 500 71.61 35803 L

31EXCEL DEBURRING AND FINISHING WHEEL 116 308.3 35762.8 M

32PACKING STICKERS "DESPATCH DETAILS" 15976 2.21 35309.73 H

33GRINDING WHEEL 450X50X203mm A46-K5-V10 13 2701.9 35124.7 H

3412 " LEATHER GLOVES WITH CADA CUFF 1992 17.62 35094.19 L

35 GUARD ST.GRINDER-Z. MODEL 44 788.2 34680.8 H

36ABRASIVE BELT K 815Y50MM,WX1000MM 200 172.46 34492.89 M

372.5 MM WELDING ELECTRODE SUN BOND SS 106 306.87 32528.46 M

38SEASONED RUB.WOOD PALLET 87" X 29"-BASE 36 896.4 32270.5 H

39 COOLANT OIL 430 72.47 31161.44 L40 STEEL SHOTS GR S 390 1075.00 28.98 31151.77 L

41JOHNDHEER WOODEN PALLET 87" X 32" 14 2140 29960 H

42 MAXTREAT-2902 35.00 801.77 28061.83 H43 4" X 4"X 1/2",/3/8" MS ANGLE 11 2523.96 27763.55 H

44STRAPPING TAPE 16 X 1600 GREEN COLOUR 6 4608.53 27651.2 H

45 SERVO MESH SP 220 OIL 420 62.17 26110.8 L46 STEEL SHOTS GR S 460 875.00 29.02 25390.5 L

47STEEL STRIP IN BAND [ITW SIGNODE 3415 10 2527.86 25278.58 H

48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 420 59.96 25183.24 H49 SERVO SYSTEM 150 420 56.35 23666.71 L50 6" S.S PIPE -SCH-40 3 7834.74 23504.22 H

21%

13%

16%

0%

5%

10%

15%

20%

25%

H M L

HML ANALYSIS

Figure 2

INTERPRETATION:

The above diagram shows that 21% of the items have high Cost, followed by 13%

of the value have Medium Cost and the remaining 16% of the value have Low cost

of inventories in HML analysis.

CLASSIFICATION ON THE BASIS OF FSN ANALYSIS

Sl. No. DESCRIPTION

LAST ISSUES

FSN

1 SANDER DISC -ZIRKON - GR 36 12/31/2006 F2 RAJ HYDRA SUPER HL 68 (BULK) 12/31/2006 F3 CASTROL ILOFORM TDN 81 - N OIL 12/29/2006 F4 MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 2/1/2006 S5 GRAPHITE GREASE (GARONEX R) 12/31/2006 F6 GES PIEGEON RACK ACRYLIC DOOR- 11/16/2006 N7 SEASONED RUBBER WOOD PALLET 87 X 28 BASE 12/21/2006 F8 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 12/29/2006 F9 CASTROL SUPER EDGE 7/SW 131B GRADE OIL 12/29/2006 F10 ARMOURED JELLY FILLED TELEPHONE CABLE 20 N11 3.15 MM WELDING ELECTRODE - 90 (FOR 12/5/2006 F12 GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 12/30/2006 F13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 12/26/2006 F14 SANDER DISC GR 36 (ZIRCON) 12/31/2006 F15 RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 12/30/2006 F16 3.15 MM WELDING ELECTRODE SUNBOND( 60 12/31/2006 F17 ARMOURED JELLY FILLED TELEPHONE CABLE 50 N18 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 12/23/2006 F19 HIDRAW HD OIL 3/1/2006 S20 RUSTILLO OIL DW 901 12/30/2006 F21 42" X 42" WOODEN PALLET WITH 1 BASE & 1 12/30/2006 F22 ALLEN SCREW 1.1/8"BSW X 5" N23 G WHEEL 400X50X127 AA60 L7 127 9/23/2006 F24 4.0 MM WELDING ELECTRODE SUN BOND SS 12/31/2006 F25 POLYESTER STRAPPING TAPE 16MM X 12/30/2006 N26 RAJ HYDR SUPER HL68(BARREL) 12/7/2006 F27 SEASONED RUB.WOOD PALLET 87"X31"-CAT 12/29/2006 F28 VSM COATED BELT ZK713X SIZE 12/30/2006 S29 TYRE 10.00 X 20-16PR 10/9/2006 S30 SODIUM HYDRO SULPHITE 12/11/2006 S31 EXCEL DEBURRING AND FINISHING WHEEL 6/29/2000 S32 PACKING STICKERS "DESPATCH DETAILS" 12/27/2006 F33 GRINDING WHEEL 450X50X203mm A46-K5-V10 7/1/1997 S34 12 " LEATHER GLOVES WITH CADA CUFF 12/31/2006 F35 GUARD ST.GRINDER-Z. MODEL 11/11/2006 N36 ABRASIVE BELT K 815Y50MM,WX1000MM 12/23/2006 F37 2.5 MM WELDING ELECTRODE SUN BOND SS 12/30/2006 F38 SEASONED RUB.WOOD PALLET 87" X 29"-BASE 12/29/2006 N

39 COOLANT OIL 12/31/2006 F40 STEEL SHOTS GR S 390 12/29/2006 F41 JOHNDHEER WOODEN PALLET 87" X 32" 12/29/2006 S42 MAXTREAT-2902 12/17/2006 N43 4" X 4"X 1/2",/3/8" MS ANGLE 12/19/2006 F44 STRAPPING TAPE 16 X 1600 GREEN COLOUR 12/30/2006 F45 SERVO MESH SP 220 OIL 12/22/2006 F46 STEEL SHOTS GR S 460 12/29/2006 S47 STEEL STRIP IN BAND [ITW SIGNODE 3415 12/28/2006 F48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 12/24/2006 S49 SERVO SYSTEM 150 12/7/2006 N50 6" S.S PIPE -SCH-40 4/2/2006 S

30%

11% 9%

0%

5%

10%

15%

20%

25%

30%

F S N

FSN ANALYSIS

Figure 3

INTERPRETATION:

The above diagram shows that 30% of the items are Fast Moving and 11% of the items are Slow Moving and the remaining 9% of the items are Non Moving in FSN analysis.

CLASSFICATION ON THE BASIS OF SDE ANALYSIS

Sl. No. DESCRIPTION

ITEM RATE SDE

1 SANDER DISC -ZIRKON - GR 36 46.37 E2 RAJ HYDRA SUPER HL 68 (BULK) 58.05 E3 CASTROL ILOFORM TDN 81 - N OIL 114.5 E4 MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 55236.83 D5 GRAPHITE GREASE (GARONEX R) 88.9 D6 GES PIEGEON RACK ACRYLIC DOOR- 8100 E

7SEASONED RUBBER WOOD PALLET 87 X 28 BASE 866.97 E

8 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 74.27 E9 CASTROL SUPER EDGE 7/SW 131B GRADE OIL 112.5 D

10ARMOURED JELLY FILLED TELEPHONE CABLE 20 120 E

11 3.15 MM WELDING ELECTRODE - 90 (FOR 2409.64 E12 GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 108.47 E13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 69.31 E14 SANDER DISC GR 36 (ZIRCON) 53.1 E15 RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 64.28 E16 3.15 MM WELDING ELECTRODE SUNBOND( 60 221.5 E

17ARMOURED JELLY FILLED TELEPHONE CABLE 50 230 E

18 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 221.86 E19 HIDRAW HD OIL 104.39 D20 RUSTILLO OIL DW 901 81.31 E21 42" X 42" WOODEN PALLET WITH 1 BASE & 1 893.31 E22 ALLEN SCREW 1.1/8"BSW X 5" 1598.83 E23 G WHEEL 400X50X127 AA60 L7 127 4427.13 E24 4.0 MM WELDING ELECTRODE SUN BOND SS 225.64 E25 POLYESTER STRAPPING TAPE 16MM X 6292.15 D26 RAJ HYDR SUPER HL68(BARREL) 59.73 E27 SEASONED RUB.WOOD PALLET 87"X31"-CAT 1151.37 E28 VSM COATED BELT ZK713X SIZE 47.29 E29 TYRE 10.00 X 20-16PR 8989 D30 SODIUM HYDRO SULPHITE 71.61 E31 EXCEL DEBURRING AND FINISHING WHEEL 308.3 D32 PACKING STICKERS "DESPATCH DETAILS" 2.21 E33 GRINDING WHEEL 450X50X203mm A46-K5-V10 2701.9 E34 12 " LEATHER GLOVES WITH CADA CUFF 17.62 D35 GUARD ST.GRINDER-Z. MODEL 788.2 D36 ABRASIVE BELT K 815Y50MM,WX1000MM 172.46 E37 2.5 MM WELDING ELECTRODE SUN BOND SS 306.87 E38 SEASONED RUB.WOOD PALLET 87" X 29"-BASE 896.4 E

39 COOLANT OIL 72.47 E40 STEEL SHOTS GR S 390 28.98 E41 JOHNDHEER WOODEN PALLET 87" X 32" 2140 E42 MAXTREAT-2902 801.77 E43 4" X 4"X 1/2",/3/8" MS ANGLE 2523.96 D44 STRAPPING TAPE 16 X 1600 GREEN COLOUR 4608.53 E45 SERVO MESH SP 220 OIL 62.17 D46 STEEL SHOTS GR S 460 29.02 E47 STEEL STRIP IN BAND [ITW SIGNODE 3415 2527.86 E48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 59.96 E49 SERVO SYSTEM 150 56.35 E50 6" S.S PIPE -SCH-40 7834.74 E

0%

11%

39%

0%

10%

20%

30%

40%

50%

S D E

SDE ANALYSIS

INTERPRETATION:

From the above table it has been analyzed that 33% of the item which are used by

company are difficult in purchase of raw materials but the remaining 53% of the

items are easily available.

DESCRIPTIONANN

CONSLT SS ROL MAX

QTY

LATTICE MACH SEAL 1 45 1 1 1RUBBER PALLET 1 5 1 1 1SEASONED RUBBER WOOD PALLET 1 461 2 3 6 67.15MM WELDING ELECTRODE 337 2 2 4 442" X 42" WOODEN PALLET WITH 1 BASE

453 2 3 6 6

ALLEN SCREWS 1 10 1 1 1GENERATOR\CONVERTOR 7 2 1 1 2POLYESTER STRAPPING TAPE 41 2 1 1 2NACELLE 10290 1 29 29 58SEASONED RUBBER WOOD PALLET 2 1237.33 1 4 8 8ROTOR BLADES 7 15 1 2 1GRINDING WHEEL 1 1 6 9 7GUARD ST.GRINDER 6 7 1 1 1SEASONED RUBBER WOOD PALLET 3 1471 2 9 13 14STEEL RODS 624 1 2 4 4MICRO PROCESSOR 106 3 1 2 34"X4"X1/2",/3/8" MS ANGLE 20 3 1 2 2STRAPPING TAPE 16 X 1600 GREEN COLOUR

86 15 4 4 5

STEEL STRIP 521 1 2 3 4METER 1 2 6 9 7HAMMER CHIPPING 1 30 1 2 2 LT/LK ML 12 SPARE KIT 1 1 3 6 3POLES 52 7 1 1 3METAL PALLET 23 7 1 2 2HUB 1 7 19 22 19

CALCULATION OF SAFETY STOCK (MINIMUM STOCK

LEVEL), RE-ORDER LEVEL, MAXIMUM STOCK LEVEL

1). LATTICE MACH-SEAL

SAFETY STOCK = (MAXIMUM LEAD TIME – NORMAL

LEAD TIME) x DAILY

CONSUMPTION

= (90 – 45) x 1/365

= 0.123

Therefore Safety stock = 1

RE-ORDER LEVEL = SAFETY STOCK + NORMAL LEAD

TIME CONSUMPTION LEVEL x

ANNUAL CONSUMPTION

= 1 + (45 / 365) x 1

= 1.1

Therefore ROL = 1

MAXIMUM STOCK LEVEL= SAFETY STOCK + EOQ

= 1+.017

= 1.017

Therefore Maximum stock =1

2). RUBBER PALLET

SAFETY STOCK = (10 – 5) x 1/365

= 0.123

= 1

RE-ORDER LEVEL = 1 + (5 / 365) x 1

= 1.013

= 1

MAXIMUM STOCK LEVEL = 1+.0021

= 1.0021

= 1

3). SEASONED RUBBER WOOD PALLET 1

SAFETY STOCK = (4–25) x 461/365

= 2.52

= 3

RE-ORDER LEVEL = 3 + (2 / 365) x 461

= 5.52

= 6

MAXIMUM STOCK LEVEL = 3+2.98

= 5.98

= 6

4). 7.15MM WELDING ELECTRODE

SAFETY STOCK = (4–2) x 337/365

= 1.84

= 2

RE-ORDER LEVEL = 2 + (2 / 365) x 337

= 3.84

= 4


= 3.53

= 4

5). 42”X42” WOODEN PALLET WITH 1 BASE


= 2.84

= 3

RE-ORDER LEVEL = 3 + (2 / 365) x 453

= 5.48

= 6


= 5.93

=6

6).ALLEN SCREWS


= 0.027

= 1

RE-ORDER LEVEL = 1 + (10 / 365) x 1

= 1.027

= 1


= 1.10

= 1

7). GENERATOR\CONVERTOR


= 0.038

= 1

RE-ORDER LEVEL = 1 + (2/365) x 7

= 1.038

= 1


= 1.16

= 2

8.) POLYETER STRAPPING TAPE


= 0.224

= 1

RE-ORDER LEVEL = 1 + (2/365) x 41

= 1.224

= 1


= 1.19

= 2

9). NACELLE

SAFETY STOCK = (2–1) x10290/365

= 28.19

= 29

RE-ORDER LEVEL = 29 + (1/365) x 10290

= 28.19

= 29


= 57.19

= 58


SAFETY STOCK = (2–1) x1237.33/365

= 3.38

= 4

RE-ORDER LEVEL = 4 + (1/365) x 1237.33

= 7.38

= 8


= 8.23

= 8

11). ROTOR BLADES

SAFETY STOCK = (30–15) x7/365

= .285

= 1

RE-ORDER LEVEL = 1 + (15/365) x 7

= 1.017

= 1


= 1.114

= 1

12). GRINDING WHEEL


= 0.115

= 1

RE-ORDER LEVEL = 1+ (6/365) x6

= 1.12

= 1


= 1.115

= 1

13). GUARD ST.GRINDER


= 5.47

= 6

RE-ORDER LEVEL = 6 + (1/365) x17

= 8.73

= 9


= 6.079

= 7


SAFETY STOCK = 4–2) x1471/365

= 2 x 4.03

= 8.06

= 9

RE-ORDER LEVEL = 9+ (2/365) x1471

= 13.03

= 13


= 14.23

=14

15). STEEL RODS


= 1.70

= 2


= 3.70

= 4


= 4.20

= 4

16).MICRO PROCESSOR


= 0.87

= 1


= 1.29

= 1


= 2.5

= 3

17). 4”X4”X1/2”,/3/8” MS ANGLE


= 0.164

= 1


= 1.054

= 2


= 1.36

= 2

18). STRAPPING TAPE 16X1600 GREEN COLOUR


= 3.53

= 4

RE-ORDER LEVEL = 4 (15/365) x86

= 4.23

= 4


= 4.56

=5

19). STEEL STRIP


= 1.5

= 2

RE-ORDER LEVEL = 2 +(1/365) x521

= 3.43

= 3


= 3.85

= 4

20). METER


= 5.47

= 6


= 8.73

= 9


= 6.046

=7

21). HAMMER CHIPPING


= 0.082

= 1


= 1.082

= 2


= 1.039

= 2

22). LT/LK ML 12 SPARE KIT


= 2.73

=3


= 5.73

= 6

MAXIMUM STOCK LEVEL = 3+.039

= 3.039

= 3

23). POLES


= .99

=1


= 1.142

= 1


= 2.07

= 3

24). METAL PALLET


= .44

=1


= 1.063

= 2


= 1.19

= 2

25). HUB


= 19.11

=19


= 21.73

= 22


=19.03

=19

CLASSIFICATION ON THE BASIS OF ECONOMIC ORDER QUANTITY

DESCRIPTIONANNUAL

CONS O C CCUNIT COST

EOQ

LATTICE MACH SEAL 1 1 0.12 55236.8 1RUBBER PALLET 1 1 0.12 8100 1SEASONED RUBBER WOOD PALLET 1 461 1 0.12 866.97 37.15MM WELDING ELECTRODE 337 1 0.12 2409.64 242" X 42" WOODEN PALLET WITH 1 BASE 453 1 0.12 893.31 3ALLEN SCREWS 1 1 0.12 1598.83 1GENERATOR\CONVERTOR 7 1 0.12 4427.13 1POLYESTER STRAPPING TAPE 16 MM 41 1 0.12 6292.15 1NACELLE 10290 1 0.12 59.73 54SEASONED RUBBER WOOD PALLET 2 1237.33 1 0.12 1151.37 4ROTOR BLADES 7 1 0.12 8989 1GRINDING WHEEL 1 1 0.12 2701.9 1GUARD ST.GRINDER 6 1 0.12 788.2 1SEASONED RUBBER WOOD PALLET 3 1471 1 0.12 896..4 5STEEL RODS 624 1 0.12 801.77 2MICRO PROCESSOR 106 1 0.12 2523.96 24"X4"X1/2",/3/8" MS ANGLE 20 1 0.12 4608.53 1STRAPPING TAPE 16 X 1600 GREEN COLOUR 86 1 0.12 2527.86 1STEEL STRIP 521 1 0.12 10737 2METER 1 1 0.12 10720.1 1HAMMER CHIPPING 1 1 0.12 10737 1 LT/LK ML 12 SPARE KIT 1 1 0.12 10720.1 1POLES 52 1 0.12 760.38 1METAL PALLET 23 1 0.12 10263.5 1HUB 1 1 0.12 20110 1

CALCULATION OF ECONOMIC ORDER QUANTITY (EOQ)

1. LATTICE MACH-SEAL

Annual Consumption = 1 Unit Rate = 55236.83

EOQ =

2. RUBBER PALLET

Annual Consumption = 1

Unit rate = 8100

EOQ =

=

3. SEASONED RUBBER WOOD PALLET 1

EOQ

2 Annual Consumption x Ordering CostUnit Rate x Carrying Cost

= 2 x 1 x 155236.83 x 0.12

= 2 6628.42

= 0.0174

= 1

2 x 1 x 1 8100x 0.12

2 972

= 0.0021

= 1

= 2 x 461 x 1

866.97 x 0.12

= 922

104.0364

= 3

= 2.98

= 3

==

4. 7.15 MM WEILDING ELECTRODE

EOQ

5. 42” x 42” Wooden Pallet with 1 Base

EOQ

6. ALLEN SCREW

= 2 x 337 x 1

2409.64 x 0.12

= 674

289.16

= 1.53

= 2

= 2 x 453x 1

893.31 x 0.12

= 903

107.197

= 2.93

= 3

= 2 x 1 x 1

1598.83 x 0.12

= 2

191.86

= 0.1021

= 1

EOQ

7. GENERATOR\CONVERTOR

EOQ

8. POLYESTER STRAPPING TAPE 16MM

EOQ

9. NACELLE

EOQ

= 2 x 7 x 1

4427.13 x 0.12

= 14

531.26

= 0.16

= 1

= 2 x 4 x 1

6292.15 x 0.12

= 28

755.06

= 0.19

= 1

= 2 x 10290 x 1

59.73 x 0.12

= 20580

7.168

= 53.58

= 54


EOQ

11. ROTOR BLADES

EOQ

12. GRINDING WHEEL

EOQ

= 2 x 1237.33 x 11151.37 x 0.12

= 2476.66138.164

= 4.23

= 5

= 2 x 7 x 1 8989 x 0.12

= 14 1078.68

= 0.114

= 1

= 2 x 1 x 1 2701.9 x 0.12

= 2 324.23

= 0.079

= 1

13. GUARD ST. GRINDER

EOQ


EOQ

15. STEEL RODS

EOQ

= 2 x 6 x 1 788.2 x 0.12

= 12 94.58

= 0.13

= 1

= 2 x 1471 x 1

896.4 x 0.12

= 2942

107.75

= 5.23

= 5

= 2 x 624 x 1

2140 x 0.12

= 1248

256.8

= 2.20

= 2

16. MICRO PROCESSOR

EOQ

17. 4” x 4” x ½” x 3/8” M.S. ANGLE

EOQ

18. STRAPPING TAPE 16 X 1600 GREEN COLOUR

EOQ

= 2 x 106 x 4

801.77 x 0.12

= 212

96.21

= 1.484

= 2

= 2 x 20 x 1

2523.96 x 0.12

= 40

302.88

= 0.36

= 1

= 2 x 86 x 1

4608.53 x 0.12

= 176

553.02

= 1

19. STEEL STRIP

EOQ

20. METER

EOQ

21. HAMMER CHIPPING

EOQ

= 2 x 521 x 1

2527.86 x 0.12

= 1042

303.34

= 2

= 2 x 1 x 1

7834.74 x 0.12

= 2

940.17

= 0.046

= 1

= 2 x 1 x 1

10736.96 x 0.12

= 2

1288.4352

= 0.039

= 1

22. LT/LK ML 12 SPARE KIT

EOQ

23. POLES

EOQ

24. METAL PALLET

EOQ

= 2 x 1 x 1

10720 x 0.12

= 2

1286.4

= 0.039

= 1

= 2 x 52 x 1

760.38 x 0.12

= 104

91.2456

= 0.067

= 2

= 2 x 23 x 1

10263.49 x 0.12

= 46

1231.6188

= 0.193

= 1

25. HUB

EOQ = 2 x 1 x 1

20110.36 x 0.12

= 2

2413.2432

= 0.0287

= 1

FINDINGS

The ABC classifications says that there are 43 items of inventory under

category ‘A’, which can constitute 43% of the consumption value, there are

35 items under ‘B’ category items constitutes 35% of the total consumption

value and there are 22 items whose consumption is 22% of total

consumption classified as ‘c’ category items.

Optimum levels for all inventory items are focused with the help of EOQ

calculations.

From FSN analysis, it is found that there are good number of fast moving

items i.e. 30% and 11% of the items are slow moving and only 9% of the

items are non-moving.

The ordering cost is constant (below one rupee) because the sales have been

done through a mail.

The carrying cost also is constant since the company has to pay the bank

interest as 12% for the inventories, which they are buying from their

suppliers in bulk orders. Thus, it is applicable to take as 12%.

There are no scarce items in SDE Analysis and also some of the items are

difficult to purchase and rest of the items will be easily available in the

market as it depends on the vendors.

In case of HML analysis, 21% of the items are of high value, 13% of the

items are of medium values and the remaining 16% of the items have low

value.

Indowind is maintaining more than one supplier for the consumables and

stores and spares. This gives a quick procurement and competitive pricing

for the required Inventories (materials).

SUGGESTIONS AND RECOMMENDATIONS

Cost of inventory can be maintained by giving order to regular suppliers.

Selecting appropriate inventory tools can reduce cost of inventory.

There is much less importance to the inventory management techniques

(Economic Order Quantity). It is advisable to implement these inventory

management techniques in order prevent excess inventory levels.

Inventory should be maintained as that of ABC classification. The standards

for the classification of the ABC analysis should be reviewed and must be

changed according to the recent Consumption value and Unit value.

Indowind should order the stocks before the quantity of inventories reach

the minimum level.

Controlling, maintaining and managing of inventories should be done at the

right time.

Lead time period should be reduced because it affects the production

process.

A proper production schedule should be maintained otherwise it might

result in inventory losses and time losses.

Inventory losses may occur due to damage of mishandling while in storage

or in the production process. So one should put the inventory in a proper

place while in warehouse and should be handled properly while in the

production process.

It is also suggested to Indowind that it should follows a standard line of

inventory management, like Standard Purchase Quantity, Standard

Purchased lead time, Standard Costs (such as Ordering Cost and Carrying

Costs) and Safety Stock. Therefore controlling of inventory management

operations will be very easy.

CONCLUSION

The analysis reveals that cost of inventory can be maintained by giving

order to regular suppliers.

To have an uninterrupted production buffer (safety) stock should be kept at

least at the minimum level.

The overall performance of management of inventory of Indowind Limited

is good.

BIBLOGRAPHY

BOOKS NAME AUTHOR

1. PRODUCTION MANAGEMENT - PANEER SELVAM

2. INVENTORY MANAGEMENT AND

WORKING CAPTITAL MANAGEMENT - P. GOPALA KRISHNAN.

3. MATERIALS MANAGEMENT - BUFFA

4. INVENTORY CONTROL - STAR & MILLER

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Documents

raw inventories

management of inventories

process inventories

levels of inventories

large inventories

system cost

distinct cost

inventory control