Tcc Report-shyami 03

8/2/2019 Tcc Report-shyami 03

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INTRODUCTION

India is a country of scarce resources and it is primary responsibility

of each organization whether it is a public sector, private sector, or agovernment department to ensure optimum utilization of resources for

production of goods and services. Materials have come to occupy a

very vital and critical position in the resource position of the country.

Inventories account for a major portion of the capital locked up in any

organization. Reduction of inventories will affect the profitability of the

organization. The Indian economy is growing and the performance of

the manufacturing sector has regained its growth and it is indeed

encouraging. The increased demand for basic industrial chemicals such

as the chlor-alkali is a reflection of the growth rate in the national

economy.

Meaning of Inventory Management

Inventory management simply refers to management of inventory.

Inventory management maybe defined as the overall way a company

manages its inventory & uses its control system to manage the benefit

of carrying inventory against the cost. Although the finance

department does not itself manage the firms inventory, it has a

responsibility to ensure that the inventory is being managed effectively

and efficiently.

Objective of Inventory management

Any firm will like to hold higher levels of inventory. This will enable the

firm to be more flexible in supplying to the customers. Most of the

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customers may require immediate delivery. Higher inventories may

help meet their demands. Thus there is no chance of loss of sale. The

objectives of Inventory management may be summarized as follow:

To ensure that adequate inventories are available for

smooth operation.

To minimize investment of fund in the inventories.

To maximize the wealth of the share holders (ie. To

maximize profitability).

To avoid cash crisis.

To avoid both over-stocking & under stocking ofinventories.

To minimize losses on account of obsolescence, pilferage,

wastage etc.

To ensure right quality products at reasonable prices.

Types of Inventory

Raw material

A raw material is something that is acted upon or used by or by

human labour or industry, for use as a building material to create some

product or structure. Often the term is used to denote material that

came from nature and is in an unprocessed or minimally processed

state. Iron ore, logs, and crude oil, would be examples. A non-human

related raw material would include twigs and found objects as used by

birds to make nests.

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Work in Progress

Work that has not been completed but has already incurred a capital

investment from the company. This is usually recorded as an asset on

the balance sheet. Work in progress indicates any good that is not

considered to be a final product, but must still be accounted for

because funds have been invested toward its production. A work that

has been started but not yet completed. In manufacturing this can

refer to inventory that has been worked on such that it is no longer

viable as raw materials while not yet sellable as a finished product.

Finished goods

Completely manufactured products which ready for sale and delivery

to the marketplace.

Definition:Commodities that will not undergo further processing and

are ready for sale to the final demand user, either an individual

consumer or business firm. This includes unprocessed foods such as

eggs and fresh vegetables, as well as processed foods such as bakery

products and meats. This also includes durable goods such as

automobiles, household furniture and appliances, and Nondurable

goods such as apparel and home.

What is Inventory Control?

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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 produced. The basic objective of

inventory control is to reduce investment in inventories and ensuringthat production process does not suffer at the same time. To attain

various objectives, inventory control must

a) Determine items to be stocked

b) Determine when & how much to replenish

c) Keep suitable records

d) Weed out obsolete items

Objectives

The following are the inventory control:

To reduce financial investment in inventories

To facilitate production operations

To avoid losses from inventory obsolescence

To improve customer service

Inventory Are Kept In Organization For Reasons Mentioned

Below:

1. Raw Materials to provide for:

Economical bulk purchasing,

To enable production rate changes

To provide productive buffer against delays in transportation,

For seasonal fluctuations.

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2. Work-In-Process

To enable economical lot productions

To cater to the variety of products

Replacement for wastages

To maintain uniform production even though sales may vary

3. Finished Goods

For providing Off-Shelf Delivery

To allow stabilization of the level of production

For sales promotion

Techniques of inventory control

Economic Ordering Quantity

Optimum Production Quantity

Reorder level

ABC analysis

Inventory Turnover Ratio

Inventory Holding Period

Operating cycle

Safety stock

Codification

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Codification is one of the important processes in the inventory

department of TCC Ltd. It refers to giving proper codes to each raw

material for easy identification.

Codes are used for identifying raw materials. Further processing is

done using these codes. For any processing, for every details, all the

records like Receivable Request (RR), Purchase Order (PO), Material

Procurement request(MPR) etc. are using these codes instead of the

item name. Thus every details is included in a single code is a ten digit

number

NEED FOR THE STUDY

The study aims at assessing the efforts made by the study unit

by maintaining a sound inventory policy by adopting the EOQ . The re-

order level is analyzed to know that the firm places an order to

replenish the inventory.. Inventory turnover ratios were calculated to

minimize the investment in inventories, besides the study offers some

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valuable suggestions to the management of the study unit to improve

the existing receivable management system.

Inventory management tools and techniques are to be adopted as

inventory forms major part of the assets of the firm and large funds are

blocked in the form of assets, leading to high costs. This affects the

profitability of the firm. Hence efficient management and control of the

inventory is a must for improving efficiency and profitability of the

company

STATEMENT OF THE PROBLEM

Managing workers capital is synonymous with

controlling inventories. Good inventory management is good finance

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management. Active and gainful formulation of inventory policies

designed to speed up turnover, maximize return on investment.

Efficient management of inventory will ultimately result in the

maximization of the owners wealth.

Organizations have to tie up a need for larger percentage of

capital in raw materials and work in progress than in finished goods.

The former not only represents two-fold capital investment in finished

goods but also takes longer to convert it in to revenue via the medium

of sales. Inventory control is a science based out of ensuring that

enough inventory or stock is held by an organization to meet both the

internal and external demand commitments economically.

There can be disadvantage in holding either too much or too little

inventory. Therefore inventory control is primarily concerned with the

obtaining of a correct balance between these two extremes. The very

existence of inventory creates costs. Sometimes it is difficult to see

what value is received from cost incurred. Inventory management may

influence the decisions of the planning and executive personnel. It is a

matter of deep concern of those dealing with production, sales

forecasting, inventory planning, marketing, materials handling, finance

product designing engineering etc. In the light of the above, researcher

has made an attempt to study inventory management in Travancore

Cochin Chemicals Ltd.

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OBJECTIVES

To know effort made by the study unit to maintain a sound

inventory policy.

To analyze the various inventory policies through various

methods & techniques of inventory control.

To know whether the study unit maintains a sufficient large size

of inventory for efficient & smooth production & sales operation.

To find out EOQ and Reorder level.

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LIMITATIONS

The management of the study unit was not willing to disclose all

the information available with them. Hence it was not possible to

make deep study.

The study was confined to a single unit. Hence the finding of the

study can not be generalized.

Time factor was one of the limitations of the study. It was difficult

to collect all the information in a short span of time. So the scope

of the study was limited.

The findings of the study could be misleading when there are

some errors in the financial statement from where the data was

collected.

Accurate data was not available for calculations.

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INDUSTRY PROFILE

As we enter the new millennium, several chemical industries set up

in the past few decades will be subjected to design technological

changes and associated economic constraints. Additions of larger,

more automated, highly sophisticated and complex components will

become necessary. Issues of life estimation and extinction on existing

plants have to be addressed to overcome the loss in production and toconserve raw materials. As new plants are constructed and existing

plants are modernized and automated, every possible effort is needed

to cut cost and increase efficiency, and in this way increases profit.

Maintenance of components becomes increasingly expensive and

complex due to several advances that have taken place by way of

modernization. As a consequence maintenance is increasingly more

critical for the plant is less tolerable and reliability and safety of the

equipment become increasingly important.

Materials, techniques and methodologies that offer greater benefits in

the way of higher output, efficiency, improved availability, increased

safety and lower maintenance are being constantly incorporated in

strategic life cycle management of several chemical plants. Monitoring

the condition of the operating chemical plant is at increasing

importance with growing awareness of the need to obtain the best

financial return by demanding the highest level of reliability of

components. Reliability is the ability of the component to perform the

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required function under the stated condition in the stated period of

time. It is difficult to separate reliability and maintenance, as there are

no components which are perfectly healthy under the plant operating

conditions.

Every component in the plant undergoes some kind of corrosion, wear,

fracture, cracking, surface degrading, etc. during service. Both

reliability and profitability can be achieved by careful attention to a few

most important factors, viz. material selection and design, fabrication

and quality control, operation and maintenance, condition monitoring,

failure analysis, life prediction and life extension. Judicious and current

technology-weighed attention to these factors leads to achieving

greater reliability and profitability of chemical.

Chemical industry overview

India ranks twelfth in the world for production of chemicalsby volume. Indias chemicals industry contributes about 3 per cent to

the nations Gross Domestic Product (GDP). The industry has a

turnover of about US$ 30 billion, and accounts for about 14 per cent in

the general Index of Industrial Production (IIP) and 17.6 per cent in the

manufacturing sector. It also accounts for about 13-14 per cent of total

exports and 8-9 per cent of total imports of the country. The industry

is mostly concentrated in western India, which accounts for 45-50 per

cent of the total industry size. The Indian chemicals industry comprises

both small and large-scale units. While the fiscal concessions granted

to the small sector in mid-eighties led to the establishment of a large

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number of units in the Small Scale Industries (SSI) sector, the industry

is currently in the midst of major restructuring and consolidation.

With the shift in emphasis on product innovation, branch building and

environmental friendliness, this industry is increasingly moving

towards greater customer orientation.

Overview

One of the fastest growing sectors of Indian economy.

Chemical Industry in India is fragmented and dispersed - multi

product and multi faceted.

Chemicals are sold directly to large customers and through

distribution channels.

Distribution channels mostly consist of stockiest and dealers

spread all over India addressing small segments and retail

market.

Major Segments

Chemical Industry is highly heterogeneous with following

major sectors:

Petrochemicals

Inorganic Chemicals

Organic Chemicals

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Fine and specialties

Bulk Drugs

Agrochemicals

Paints and Dyes

Chemical Industry Structure

Highly fragmented and widely dispersed.

Western India accounts for 45-50% of total Indian chemical

Industry.

Large players in bulk chemicals. Both large and small players inFine and Specialty chemicals.

Presence of many multinational companies also.

Foreign trade

India was a net importer of chemicals in early 1990s, but has now

become a net exporter due to reduction in Imports because of

implementation of many large scale petrochemical plants like Reliance

etc. and also because of tremendous growth of exports in sectors like

bulk drugs and pharmacy, pesticides, dyes and intermediates.

Exports by the basic chemical sector in 1995-96 surpassed the target

of Rs 6,742 crore by reaching a figure of Rs 7,979.30 crore andshowing a massive growth of 24% over the preceding year's figure of

Rs 6,403.90 crore. During 1994-95 exports totalled Rs 6,403.90 crore

against the target of Rs 5,504.60 crore, while in the preceding year

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shipments reached Rs 4,904.40 crore against the target of Rs 4,584.00

crore. The drugs and pharmaceuticals and the organic/inorganic/agro-

chemicals contributed as much as 63% of total exports. This has been

a Herculean task, which has been achieved by competing with bigmultinational corporations of the world. Turnover for the year ended

1998-99 is close to Rs.15, 000 crores.

Challenges faced by chemical industries

The chemical industry has fundamentally changed the way we live-

from the cars we drive, to the houses in which we live, to the everyday

conveniences that we take for granted. But for the chemical industry

past success does not guarantee future results. Chemical companies

face numerous challenges. Local and national tax requirements, often

managed across multiple territories, are increasingly complex and

under continuous review. New regulations have resulted in additional

obligations with respect to internal controls and management

certifications. As costs rise, managements are trying to figure out how

to get most out of IT and people investments. At the same time, in

search of profitable growth, chemical companies are pursuing

emerging markets seeking in partners and shedding non-core product

lines.

Chlor alkali industry in the world

During the 1970s caustic soda was manufactured by utilizing the

mercury cell technology but this technology consumes lot of electrical

energy and there was also the problem of mercury pollution. It was

during the same period due to the Mina Meta disease resulting from

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mercury pollution, the Japan govt. issued a direction to all caustic soda

plants to change over from mercury cell technology to other

technology under a time bound program. This paved the way for

development of Ion Exchange Membrane (IEM) technology. Thistechnology apart from totally avoiding mercury, consumes30% less

electrical energy compared to the mercury cell.

Global scenario

In the global scenario the increased production of paper, aluminum,

soap, detergent naturally led to the increased requirement of caustic

soda. In the world scenario the green peace movement is seeking the

phase of chlorine usage, especially the CFC compounds. This has led to

the closing down of some of the chlorine industry in Europe and North

American countries.

This led to an increase in international price of caustic soda. The

caustic soda which was sold for $50 per ton has grown up to $300 per

ton now. The international markets are operating in the context of

demand and supply prevailing from the time to time. Situation of

surplus and shortage are cyclical as a result of which international

prices tend to be highly volatile. Predatory pricing is common and drop

in import duty often followed by a steep drop in price of the chemical.

Though the demand for chorine is growing fast and the caustic soda is

not promising. Hence the units in the gulf and western countries are

selling caustic soda at a cheaper price.

Major countries producing Caustic Soda

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1. USA 4. Germany 7.

Canada

2. China 5. France 8.

India

3. Japan 6. Russia

National scenario

In India caustic soda is produced by electrolysis process. The

manufacturing of caustic soda is started during 1940s in the country.

The growth was rather slow in the 1960s and thereafter growth picked

up substantially. Today there are about 38 chlor alkali units in India.

Major south Indian Chlor-alkali units are:

Chemplast, Tamil Nadu

Chem Fab alkalis ltd, Pondicherry

Tamil Nadu petrochemicals ltd, Chennai

Andhra sugars, Andhra Pradesh

DCW, Tamil Nadu

Solaris Ltd, Karwar, Karnataka

TCC Ltd, Kerala

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State scenario

Caustic soda is one of the basic inorganic chemicals manufactured

from common salt. Caustic soda, chlorine, hydrochloric acid and

sodium hypochlorite are the products in Kerala, In the state, chemical

industry only a few companies are engaged in the production of caustic

soda, chlorine, hydrochloric acid. TCC is the only Chlor-alkali industrial

unit and has a production capacity of 175tpd.there are many small

scale industries in the state which consumes caustic soda for the

production of soaps, detergents, plastics, textiles etc.

Though the average rate of 4% the capacity has been increased by

nearly 7% in the view of the high transportation cost and hazardous

nature of chemicals transported. The caustic soda industry in the state

is more localized and the units have come nearer the consuming

Centre. With the high transportation cost it is not possible to export

caustic soda in large volume. Most of the units in the state are running

on outdated technology. Chlorine is the basic material required for

water purification without which the govt. is unable to supply drinking

water to public.

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COMPANY PROFILE

The Travancore-Cochin Chemicals Ltd., popularly known as TCC was

established in 1950. The idea of establishing the unit was conceived by

M/s Sheshasayee Brothers the then Managing Agents of FACT. After

the Second World War the Sheshasayee brothers were under financial

crisis and were unable to make huge investments for modernization.

They approached for the help of Divan of Travancore Cochin and he

took over the bulk of shares, and named the company as Travancore

Mettur Chemicals. The venture was started as partnership concern in

the name Travancore Mettur Chemicals with FACT and MCIC (Mettur

Chemicals and Industrial Corporation) as partners.

After the formation of the state of Kerala, with the State Government

contributing the major share of equity and the company was then

named as TRAVANCORE COCHIN CHEMICALS LTD .it was incorporated

in the year 1951 as a Public Limited Company(under Indian companies

act 1931). M/s Sheshasayee Brothers continued to be the managing

agents for the next 10 years.

Commercial production of Caustic Soda from the first plant of 20 tpd

capacity was started in 1954 January. TCC is the first unit in India to

manufacture Rayon grade Caustic Soda.

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TCC is situated at Udyogamandal in Cochin industrial belt, the factory

and the registered office is located 20 km from the Cochin international

airport and 15 km from the Ernakulum railway station. Incorporated in

1951, TCC is one of the oldest Chlor-alkali units in the sub continent.Today TCC is having a production capacity of 57750 tons caustic soda

per annum. The company supports a large number of industrial units of

strategic importance by supplying basic chemicals with continuous

effort for up gradation of technology and professional management.

The market is spread over southern and western India. The company

has a good track record of profitable operation and healthy industrial

relations.

About the company

TCC is one of the oldest Chlor alkali units in India. The main product

manufactured in TCC is caustic soda in the form of both lye and flake.

And various other products such as liquid chlorine, hydrochloric acid,

sodium hypochlorite are the by-products which are made to further

process for its final consumption. A wide range of industries like

mineral processing, paper, textiles, petrochemicals, oil refining,

pesticides, water treatment etc. uses these products.

Stages of Growth

1956 - A continuous Caustic Fusion Plant 20 tpd (tones per day) for

producing Caustic Soda flakes.

1958 - Chlorine Liquefaction Plant

1960 - Capacity enhanced to 30 tpd further to 40 tpd.

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o Established new plant for manufacture of Sodium

Hydrosulphate with 3 tpd capacity.

1967 - 7 tpd Sodium Hydrosulphate

60 tpd Caustic Fusion Plant

4 tpd Iron free Sodium Sulphate

1975 - Added another 100 tpd Caustic Soda Membrane Unit

thereby increased the production capacity 200 tpd own Water

Treatment Plant.

1988- Many of the old unit was dismantled

1997 - 100 tpd Caustic Soda manufacturing unit using Membrane

technology capacity 125tpd.

1998- New CCF Plant in place of existing 60 tpd.

2005 -Addition 25 tpd

2006 Addition 25 tpd

At present total installed capacity is 175 tpd and Caustic Fusion

plant is 100 tpd.

TCC at present

TCC is the only Chlor alkali units in Kerala. In India there are 38 chlor-

alkali units. It is known as the mother industry as it provides its

finished product not for final consumption but for a further production.

The various customers for TCC are the industries such as Hindustan

newsprint ltd (HNL), Fertilizers and chemicals Travancore ltd (FACT)

which uses the provided chemicals for its productions. The company

has helped in attracting user industries to Kerala in the past, due to the

assurance in availability of raw materials.

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Production

The major raw material of TCC is common salt and electricity. Common

salt is brought from Tuticorin and Kutch. The electricity is supplied by

KSEB. The electricity bill of TCC comes to about Rs.150000 per day.

TCC uses the third generation technology of cell membrane.

Plant capacity

TCC has 2 plants-

Firstly AGC, Japan with 150 capacity tons per day. Secondly there are 2

UDAY plants each with a capacity of 25tons per day.

Currently the total capacity of TCC is 175 tons per day

Industries served by TCC

Caustic soda: soap, paper, textiles, fertilizers, drugs &

pharmaceuticals, petroleum, chemical.

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Chlorine: paper, textile, water purification, drug & pharmaceuticals,

minerals processing, sugar, rubber

Commercial HCL acid: fertilizers, engineering, minerals processing,

starch, plastics.

Mission

1. Cost efficiency in all operation

2. Regular up gradation in technology used in processing.

TCC is committed supply quality chemicals at competitive prices to

customers.

Customer satisfaction, Concern for environment and Safety are the

priorities.

TCC intend to achieve

Utmost level of conservation of all resources including energy

Cost effectiveness in all our operations Regular upgrading of technologies used in processing

Compliance with laws and statutory regulations.

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Corporate objective of TCC

To maintain optimum level of efficiency so as to serve

optimum return on investment.

To produce and market chemicals such as caustic soda, liquid

chlorine and hydrochloric acid economically and in eco friendly

manner.

To continuously improve the plant and operational safety and

to confirm statutory pollution standard.

To maximize profits from the projects taken up.

To ensure corporate growth by expansion.

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Achievements

Moving with the times, TCC keeps up its technology regularly updated

and continue to be the competitive strength in the Chlor-alkali

industry. With expanded plants and higher production capacity, TCC

has come out to be the profitable public sector undertaking. Over the

years we have achieved recognition and awards for the remarkable

performance in the industry with regard to production, productivity,energy conservation and environmental protection.

1981 - Best Performance Award for Safety in the State from

Directorate of Factories & Boilers, Government of Kerala

1988-89 - Best Pollution Control Award under group "Heavy

Inorganic Industries" in Kerala, from Kerala State Pollution Control

Board

1989 - Award for Best Performance in Safety in India under

"Chemical Industries" group from National Safety Council.

1989-90 - Prize for Productivity from Kerala State Productivity

Council.

1993 - Best Performance award for Energy Conservation in the

State of Kerala under group "Chemical & Fertilizers above 3000

KVA" from Government of Kerala.

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1994-95 - Best Performance award for the Productivity in the

State of Kerala under group "Large Industries" from Kerala State

Productivity Council.

1995-96 - Best Performance award for Productivity in the State ofKerala under group "Large Industries" from Kerala State

Productivity Council.

1998 - Best performance award for Energy Conservation in the

State of Kerala under group "Major Industries" from Energy

Management Centre, Govt.of Kerala.

1998 - Performance award for Energy Conservation under group

"Chlor-alkali Sector". Ministry of Power, Government of India.

2003 - Kerala State Energy Conservation Award (2000) in the

category of Large Scale Industry

2005 - National Energy Conservation Award "Chlor-alkali Sector"

2006- Kerala state conservation award

2009 Kerala state pollution control award(3rd price)

Eco clean (sodium hypo chloride): Recently TCC have come out

with a product of its own brand name, Eco clean.

Its a new product that TCC has launched.

Strong disinfectant and cleansing agent.

More powerful than ordinary bleaching powder

Anti bacterial, germicide and algaecide

Leaves behind no residues on application

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Does not contain phenol compound

Quality policy

TCC is committed to enhance customer satisfaction by providing

products and related services complying with a continually improving

Quality Management System.

Health & safety policy

TCC is committed to provide every one of its employees and the

related public an accident-free and healthy environment in its

efforts to manufacture high quality products at competitive

prices. The company will comply with all statutory requirements

in this regard.

The company will provide a work environment in which identified

hazards are controlled, if elimination is not feasible and will

provide personal protective equipments wherever necessary.

Accident prevention is the direct responsibility of the Line

Management and will be an important criterion for performance

appraisal. Line Management will ensure that all safety measures

are incorporated in the operating and maintenance procedures as

well as in any process technology changes in the

plant/infrastructure.

Consideration of health and safety will be given proper weight age

in selection and deployment of the personnel.

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The company will ensure that health and safety aspects are given

due consideration in decision regarding purchase of plant

equipments, machinery and materials.

Every employee of the company shall perform his/her job adoptingSafe and proper work methods and using appropriate Safety

equipments understanding that their career advancement is

linked with SAFE performance.

Contractors, sub-contract workers, transporters and visitors

entering the factory shall be required to observe health and

safety practices of the company in all their activities.

All contract jobs will be carried only through the laid down

procedures with appropriate supervision.

The company will carry out safety audits, risk assessment studies,

emergency mock drills, periodic assessment of health of its

employees as well as status of environment, and implement

remedial measures.

Employee, consumer and public awareness where necessary, will

be imparted with the required education, training and retraining

on Safety and health aspects related to the process and products.

The company will include a resume of its health and Safety

performance in its annual Reports.

Energy policy

Travancore-Cochin Chemicals, Udyogamandal is committed to

conservation of energy by all possible means

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To accomplish the mission, they strive for:

Technological up gradation to reduce specific energy consumption

Conducting energy conservation studies including energy audit

and adopting the apt measures for conserving energy

Contacting other organizations and enriching our experiences on

energy conservation

Using renewable energy sources to the extent possible

Disseminating knowledge and information on energy conservation

to our employees

Low energy fuels also to be tried depending upon feasibility.

Eco preserve

We are well aware of the responsibility that manufacturing industries

bear towards environment. Conserving the resources of environment

from pollution and preserving healthy living conditions are important

concerns at TCC. Our commitment is to sustain the toxic-free

environment observing statutory stipulations and legal regulation.TCC

believes in pollution prevention rather than pollution control. Our

activities comprise awareness programs among the employees,

customers, contractors and all those who are associated with us. Our

endeavor is to minimize hazardous emission and waste and to reduce

the impact of the manufacturing activities. TCC aims to achieve zero

effluent discharge by the end of this year.

Customers

Hindustan Lever Limited-Cochin, Kerala

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Indian Rare Earths Ltd-Udyogamandal, Kerala

Tamil Nadu Paper Mills Limited Pugalur,Tamilnadu

Pigments India Ltd., Chalakudy, Kerala

Indian Oil Corporation, Ernakulam, Kerala

Mysore paper Mills Ltd., Bhadravathy, Karnataka

Fertilizers & Chemicals Travancore Ltd., Ernakulam,

Kerala

Travancore Titanium Products Ltd., Trivandrum, Kerala

Kerala Minerals & Metals Ltd., Kollam, Kerala

Hindustan Zinc Ltd (All Units) Hindalco. Ltd -Ernakulam, Kerala

Hindustan Newsprint Limited, Kottayam, Kerala

Kerala Chemicals & Proteins Ltd., Cochin , Kerala

Hindustan Organic Chemicals Ltd., Ambalamugal,

Kerala

Kerala Water Authority Trivandrum, Kerala

Hindustan Insecticides Ltd., Udyogamandal, Kerala

Cochin Minerals & Rutiles Ltd., Aluva, Kerala

National Thermal Power Corporation (All Units)

Binani Zinc Limited, Edayar, Kerala

Steel Authority of India Limited, (All Units)

Karnataka Soaps & Detergents, Mysore, Karnataka

Nuclear Fuel Corporation Hyderabad, Andhra Pradesh

Kudramukh Iron Ore Ltd., Mangalore, Karnataka

GTN Textiles Hyderabad, Andhra Pradesh

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Kochi Refineries Ltd., Ernakulam, Kerala

Competitors of TCC

TCC is the only chlor-alkali unit under public sector in India and it is the

only chlor-alkali unit in Kerala. Some of the major competitors are:

Chemfab, Pondicherry

DCW ltd,Mumbai

Grassim industries,nagda,m.p

Gujarat alkalis and chemicals

Gujarat heavy chemicals

Hukumchand jute and industries, Kolkata

Indian pharmaceuticals corporation, gujrat

Indian rayon and industries, Mumbai

Kothari petrochemicals ,Chennai

Saurashtra chemicals,Gujrat

Tamil nadu petro chemicals

Sree Rayalaseema alkalies and allied chemicals, Karnataka

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PRODUCT PROFILE

1. Caustic Soda Lye

Caustic Soda is considered to be the main product of TCC LTD. TCC is

the first rayon grade caustic soda manufacturer. Caustic soda is

available in both lye and in the forms of flakes. Caustic soda lye is the

liquid form that consists to about 32-40 % of the products. It is majorly

manufactured for export.

Caustic Soda Lye from Membrane Cells, A clear colourless, odourlessand soapy liquid.

Sodium carbonate as Na2CO3 % by mass (Max): 0.12

Chloride as NaCl % by mass (Max): 0.01

Iron by mass : 0.60

Sodium hydroxide as NaOH % by mass: 47-50

Sodium Carbonate as Na2CO3 % by mass (Max): 0.18

Chloride as NaCl % by mass: 0.015

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Iron by mass: 1.00

QUANTITY (MT)/ANNUM: 57750

Nature of Hazard : Corrosive: Causes severe damage to eyes and

skin

Protective Devices : Goggles, Plastic or Rubber Gloves, Apron, Boots

First Aid: If substance has got in to eyes, immediately wash out with

plenty of water for at least 15 minutes.

2. Caustic soda flakes

Caustic soda flake is another form that is solid in nature. It is thus

packed and sold in bags. Caustic soda is used in industries such as

soap, paper, textiles, fertilizers, drugs & pharmaceuticals, petroleum,

chemical.

White deliquescent solid in flakes form.

Sodium hydroxide as NaOH % by mass (Min): 99.50

Sodium Carbonate as Na2CO3 % by mass (Max): 0.40

Chloride as NaCl % by mass (Max):0.10

Iron by mass (Max):20


3. Liquid chlorine

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Chlorine in manufactured in both liquid and gaseous form. Chlorine is a

by product of TCC. Chlorine another basic chemical is used for the

manufacture of plastics, various organic & inorganic chemicals, petro-

chemicals, textile & paper, insecticides, pharmaceuticals etc. It is thetraditional water purification agent. Chlorine and chlorine compounds

in pharmaceutical industry has saved billions of life since its discovery

and use.

A greenish yellow gas with characteristic pungent smell. Liquid chlorine

is amber in colour and is one and half times as heavy as water

Chlorine % by vol (Min):99.8

Moisture ppm by mass (Max): 150


First Aid: If substance has got in to eyes immediately wash out with

plenty of water Remove contaminated clothing and drench affected

skin with plenty of water.

4. Hydrochloric acid

It is a combination of chlorine and hydrogen. The product is supplied to

industries such as fertilizers, engineering, minerals processing, starch,

and plastics. Hydrochloric Acid produced by TCC is of high purity and

finds application in number of chemical industries such as mineral

processing, gelatin, food industry, water treatment etc.

Hydrochloric Acid is clear colourless liquid

Hydrochloric acid as HCl % by mass 28.50

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Iron by mass 2 5

Free chlorine by mass (Max.) 50

First Aid: If the substance has got into the eyes, immediately wash

out with plenty of water for at least 15 minutes. Remove

contaminated clothing immediately and wash affected skin with plenty

of water. Seek medical treatment when any one has symptoms

apparently due to inhalation or contact with skin or eyes.

5. Sodium hypochlorite

Sodium Hypochlorite finds its use in bleaching and disinfectant

applications and also for extraction of rare earth materials.

Sodium Hypochlorite (Industrial)

Pale yellowish green clear liquid

Available Chlorine gpl (Min):110

Excess Alkalinity as NaOH gpl (Min):10 15


6 .Sodium Hypochlorite (Domestic)

Sodium Hypochlorite for domestic application is marketed under the

brand name "Eco clean".

A powerful disinfectant, which also acts as:

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Antibacterial

Fungicide

Algae Resistant

Mosquito Repellent

Disinfectant

Applications: Best recommended for operation Theatres of Hospitals,

Drainage and Toilets cleaning for hospitals, corporations,

Municipalities, Panchayats and other public and private sanitationpurposes.

Found effective for cleaning of swimming pools, water theme parks,

fish processing/Agro processing. Not recommended for fish ponds and

fish nurseries.

Products and production capacity

Products quantity per annum

Caustic soda lye 57750 tons

Caustic soda flakes 33000 tons

Liquid chlorine 23760 tons

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Common hydrogen 127442 tons

Sodium hypochlorite 15000 tons

PRODUCT USED AS INDUSTRY Caustic soda A chemical for dissolving out

extraneous matter from wood for

preparing pure cellulose

Rayon and

rayon pulp

Chemical for preparing pure

cellulose by dissolving out

extraneous matter

Paper, news

paper

Saponification Soaps

In bleaching, dying etc. TextilesFor processing of monetize and

refining of bauxite

Mineral process,

rare earth

mining processReagent for the production of

organic compounds

Chemical, drugs

and

pharmaceuticalsFor the production of hydrolytic

hydrogen in oil industry

Vanaspathi

For the production of electrolytic

hydrogen for ammonia synthesisAs a purification agent Heavy

chemicalsCleaning agent engineering

For refining petroleum fraction Petroleum

refiningHydrochlori

c acid

For the production of ammonium

chlorideIn monetize processing and the

separation of rare earth metals

Minerals

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For hydrolyzing starch into sugar Starch industry

For the production of PVC pipes plastics

As a cleaning agent Engineering

Chlorine For producing insecticides insecticides

In purifying drinking water Water

purificationFor the production of chloramines

and its organic derivatives

Insecticides

For bleaching Paper, pulp and

textileAs bleaching agent Sugar

For the production of neoprene

and chlorinated rubber

Rubber industry

ORGANISATION CHART

38

Managing

Production Administratio

SalesMaterialPersonalFinance

SenioraccountsDeputyfinanceDeputyfinanceDirectorfinance


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DEPARTMENTS

Finance department

Travancore Cochin Chemicals ltd. has an efficient finance department

headed by the finance manager and he is assisted by deputy manager,

finance. Finance manager is responsible for shaping the fortunes of thecompany, preparing budgets, raising funds, keeping different accounts

etc.TCC is having management information system to assist the

finance dept. the finance dept. is divided into different sections like

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general account, costing bills, establishment and provident fund

accounts sections each having its own functions.

Functions

1. Purchase bills passing and payment to suppliers.

2. Sales invoice records.

3. Debt collection

4. Budgeting and costing

5. Statutory auditing

6. Finance control

7. Handle audit and taxes

8. Sales accounting

9. Generation and utilization of funds

10. Treasury operation

Deputy finance manager

Deputy finance manager control the costing process. Various cost such

as material cost and production cost are assessed. Fixed capital and

working capital are also planned. A comparative study on budgeting

control is made. The various areas under DFM are:

AOGA: The main area coming under this section is finalization of

accounts, preparation of P&L a/c and balance sheet. Different

vouchers, journals and ledgers are also maintained under this area.

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Bank, cash, payroll etc. Also comes under this. Based on these, ratio

analysis is made.

AOEDP

This area deals with hardware and software programs of computer.

Any problem with computers is analyzed with this dept.

AOBILLS

Under this, first a quotation is collected from various companies. If it is

accepted, purchase order contains the specifications, date, place etc.

Then the products are received in the stores. Receiving report is given.Income, sales tax and VAT is maintained in this section.

Senior account officer

The SAO deals with sales accounting. He also maintains the account of

sundry debtors, sales tax, VAT also come under this category. Every

activities of sales tax are done here. The qualification of SAO is either

M.COM or CA.

Finance manager

The function of finance manager is to have an overall control of above

depts. The various sections under finance dept. are explained below.

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General account section

In this section a large number of general accounts are maintained.

These include:

1. General journal in which the transaction are entered first.

2. Standard journal in which all recurring items are entered.(salary,

wages, excise duty)

3. Cashbook in all cash receipts and payments are recorded

4. Sundry creditors and sundry debtors ledger

5. Bank book in which all bank payments and receipts are entered

6. Subsidiary ledger which include individual account maintained

by each dept.

A trial balance is prepared every 4 months. Balance sheet is prepared

annually for financial year from April 1st to mar 31st.

Bill section

In this sectional payments for purchase are recorded. This includes B/P

to suppliers and contractors. In case a supplier demands an advance, it

is paid and properly accounted. Sundry creditors ledger and supplier

account are kept in this section. At the end of the year, the accounts

are ratified and sent to the general accounts section. In this section,

separate cost records are maintained and kept. A cost audit isconducted internally as well as by the govt. nominees.

Costing section

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Budgeting and budgetary control is the main function of costing

section where both revenue and capital section budget are prepared.

Capital expenditure is prepared based on the total cost incurred for all

items in all debts. Revenue budget is prepared based on the estimatesof production, sales and expenditure. The balance sheet with total

assets and liabilities is prepared and total cash flow is found.

Activities of costing section

1. Assessing monthly performance.

2. Preparation of various analysis statements.

3. Preparing and issuing reports for alkali manufacturing

association.

4. Presenting monthly information about the performance of

company to the govt.

5. Preparation of monthly consumption statement of raw materials.

1. Costing: this dept. deal with all activities related to the control and

maintenance of details with regard to production

43

General

accounts

Marketin

g

Time office

&

BillsCosting Finance

FINANCE


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2. Bills: all activities related to payments and maintenance of vouchers

is carried in bills section.

3. Time office & establishments: details with regard to the employees

attendance, salary, advances, increments, bonus etc. are maintained

here.

4. Marketing accounts: maintenance of accounts with regard to sales,

taxes are done here.

5. General accounts: preparation of final accounts such as trading a/c,

P&L a/c and balance sheet is made here.

6. Finance: activities related to payment, cheque clearance, presenting

cheques, cash flows are controlled here.

RESEARCH METHODOLOGY

The Title of the Study

The title of the study is A study on the Inventory Management in

Travancore Cochin Chemicals Ltd., Cochin.

Methods of Data Collection

The study is mainly based on secondary sources of data. The

secondary data were collected from the profit and loss account and

balance sheet of the study unit. The other information needed for the

study were collected from the books, journals, periodicals and other

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published document kept in the study unit to collect the relevant

information required for this study.

Research Design

In this project, descriptive type research design is used. It means that

this project thoroughly analyses all the detail about this particular

topic.

Analytical Tools

To analyze the inventory management of the Travancore Cochin

Chemicals Ltd, the researcher analyzed the following techniques ofinventory control, being applied at the company to reach at logical

conclusion about the efficacy of inventory control.

1. Economic Order Quantity

2. Re-order Level

3. Inventory Turnover Ratios

4. Inventory Holding Period

Tools of Projection of Findings

Tabulation

Percentages

Ratios

Percentage bar chart

Period of the study

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The period of the study devoted to period of 30 days, that is from

January 20, 2011 to February 20, 2011 .

DATA ANALYSIS AND INTERPRETATION

After collecting the data by using various methods, the next step is topresent them in a systematic manner. This is because raw data itself

will not convey their full meaning. Data when arranged in a systematic

manner will bring out their underlying characteristics so that they can

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be easily understood by the readers. The term analysis refers to the

computation of certain measures along with searching.

Analysis of data involves a number of closely related operationsthat are performed with the purpose of summarizing the collected data

and organizing these in such a manner that they will yield answers to

the research questions.

Interpretation helps one to understand what the given research

finding really means and what the underlying abstract principle is of

which the research finding is just one concrete level of empirical

observation. It helps us to understand the concrete observation, but

one instant of the operation of theory on principle and on this basis to

draw inferences about things seemingly quite unrelated to it.

1. Analysis of Inventory Management

1.1. Inventory to current asset ratio.

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Inventory to current asset ratio reveals how much the contribution of

inventory to the current asset in the organization. This helps to decide

in advance the amount required to be invested in the inventory.

Inventory to Current Asset Ratio= (Inventory/ Current Asset) X 100

Table showing inventory to current asset ratio

Year

Inventory

(Rs. InLakhs)

Current

Asset

(Rs. In

Lakhs)

Inventory

to Current

Asset Ratio

2004-05 644 2588 25

2005-06 967 3576 27

2006-07 1044 3717 28

2007-08 1018 3457 29

2008-09 1504 3636 41

Chart showing inventory to current asset ratio

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Interpretation.

From the above graph we can see that Inventory to current asset ratio

has been increasing for last five years. This means the contribution of

inventory to the current asset in the organization is increasing year byyear. The inventory has decreased in the current year, it is mainly

due to the increase in the cost of common salt which is one of the

major raw materials of TCC Ltd. but the decrease in current asset is

due to the other factors that constitute current asset. We can see that

the company has tried to maintain above 25% of ratio in every year

which is satisfactory for the company.

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I.2. Inventory Turnover Ratio

The inventory turnover ratio measures the number of times a company

sells its inventory during the year. A high inventory turnover ratio

indicated that the product is selling well.

Formula to calculate inventory turnover ratio:

Inventory Turnover Ratio = cost of goods sold / average inventory.

Average Stock = (Opening Stock + Closing Stock) / 2

The inventory turnover ratio should be done by inventory categories or

by individual product. This ratio, which is arrived at by dividing cost of

goods sold by inventory (finished goods), indicates the rapidity with

which a company is able to convert its output into revenues, by way of

sales. Companies in the perishables business tend to have a high

inventory turnover ratio while those that deal in goods with a long-shelf

life tend to have a low inventory turnover ratio.

The inventory turnover ratio could be further broken down into finished

goods turnover ratio, work-in-progress turnover ratio and raw materialsturnover ratio.

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Table showing Inventory Turnover Ratio

Year Cost of

Goods

Sold (Rs.

In Lakhs)

Average

Inventory

(Rs. In

Lakhs)

Inventor

y

Turnover

Ratio

2004-

20055777 136.39 42.36

2005-

20067256 102.12 71.05

2006-

20078151 208.29 39.13

2007- 6950 301.21 23.07

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2008

2008-

20098457 270.48 31.27

Total 36591 1018.49 206.88

Chart showing Inventory Turnover Ratio

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Interpretation:

Average inventory turnover ratio is 50.37%. The ratio shows a

fluctuating trend. It goes on increasing & decreasing year after year.

From the average ratio it is clear that the companys utilization ofinventories in generating sales is good. But the companys efficiency in

turning its inventories to sales is fluctuating.

2. Inventory Structure Analysis

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This section analysis the structure of inventory held by the company

during the period of study under the heads raw materials, work in

progress and finished goods.

2.1. Raw materials turn over ratio

This can be calculated using the following formula

Raw material turn over ratio = sales/ Raw material

Table showing raw material Turnover Ratio

Year Sales

(Rs. In

Lakhs)

Raw

Material

(Rs. In

Lakhs)

Raw

Materials

Turn Over

Ratio

04-05 9123.33 1032 8.59

05-06 8868.57 1594 6.82

06-07 10877.30 1648 7.48

07-08 12320.67 1253 7.49

08-09 9390.60 2035 5.93

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Chart showing raw material Turnover Ratio

0

1

2

3

4

5

6

7

8

9

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Raw Materials Turn Over Ratio

Interpretation

It is clear from the above graph that the raw material turnover ratio is

showing a fluctuating trend in all the years understudy. There is slight

variation from each years raw material turnover ratio. This is mainly

because of the fluctuating trend in sales and raw materials consumed.

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2.2. Finished goods turn over ratio.

This can be calculated using the following formula

Finished Goods Turn Over Ratio =Sales / Finished

Goods

Table showing Finished Goods Turnover Ratio

Year

Sales

(Rs. In

Lakhs)

Finished

Goods

(Rs. In

Lakhs)

Finished

Goods Turn

Over Ratio

04-05 8869 96 92

05-06 10877 109 100

06-07 12320 308 40

07-08 9385 294 32

08-09 12061 247 49

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Chart showing Finished Goods Turnover Ratio

Interpretation.

In finished goods turnover ratio also we can see fluctuations. The

period from 03-04 to 05-06, shows an upward movement. But after

that the ratio starts declining. Since raw material concerned is less, the

finished goods inventory would also be decreased.

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3. INVENTORY HOLDING PERIOD

3.1Raw material holding period

It can be calculated by using this formula

RM holding period = (RM inventory/RM consumed) x

360

RM inventory = Open stock + Clos stock of RM

2

Table showing raw materials holding period

Year RM Inventory RM consumed RM holding

period04-05 136 1032 4705-06 102 1594 2306-07 208.29 1648 4507-08 301.21 1253 86.5408-09 270.48 2035 47.85

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Chart showing raw materials holding period

Interpretation

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The table showing a fluctuating trend in RM holding period. RM holding

period is less in 2005-06.it is very high in 2007-08.the graph indicates

the in efficient performance in material handling and over stocking of

raw materials.

3.2. WIP conversion period

It iscalculated by using this formula

Avg WIP / Cost of production

Table showing WIP conversion period

Year Avg WIP Cost of

production

WIP holding

period04-05 970 5696 6205-06 1429 7269 72

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06-07 472 8350 2107-08 6 6937 0.3208-09 26 8409 1.13

Chart showing WIP conversion period

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Interpretation

The graph showing a decreasing trend in WIP holding period after the

year 2005-2006 up to the current year. The table is clearly pointing the

efficiently used and the investment in WIP is within the proper limit

4. Finished Good conversion period

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Finished good conversion period indicates the relation between

the finished goods inventory and the Cost of Goods Sold. It

indicates whether the investment in inventory is efficiently used

or not. Therefor it explains whether the investment in inventorieswith in the proper limit or not. The ratio is calculated as

FG conversion period = inventory of finished goods X 365

COGS

The table showing finished good conversion period

Year FG Inventory COGS FG conversion

period04-05 136 5777 8.605-06 102 7256 506-07 208 8151 9

07-08 301 6950 1608-09 271 8457 12

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Char showing finished good turnover ratio

Interpretation

The graph showing a varying trend in FG conversion period. The FG

conversion period is less in the year 2005-06 and more in 2007-08.

The current year showing an increased value for the F G Conversion

period when comparing with the previous years 2004-05, 2005-06 and

2006-07. From this we can understand that TCCis maintaining

excessive inventory. It also shows that the FG of TCC contains inferior

quality goods, stock of unusable goods and obsolete goods. It also

reflects the dull business and the management should take some stepsto push up the sales

64

0

2

4

6

8

10

12

14

16

2004-05 2005-06 2006-07 2007-08 2008-09

Column2


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5. Reorder Level

This is the level at which order is placed for further supply of materials.

When the stock of material reaches this level, the store keeper should

initiate action for the purchase of materials. Reorder level is fixed some

where between minimum level & maximum level. It must be fixed in

such a way that the store representing the difference between

reordering level & minimum level should be sufficient to meet

demands of production till new materials arrive.

The reorder point for replenishment of stock occurs when the level of

inventory drops down to zero. In view of instantaneous replenishment

of stock the level of inventory jumps to the original level from zero

level.

In real life situations one never encounters a zero lead time. There is

always a time lag from the date of placing an order for material and

the date on which materials are received. As a result the reorder point

is always higher than zero, and if the firm places the order when the

inventory reaches the reorder point, the new goods will arrive before

the firm runs out of goods to sell. The decision on how much stock to

hold is generally referred to as the order point problem, that is, how

low should the inventory be depleted before it is reordered. The twofactors that determine the appropriate order point are the delivery

time stock which is the Inventory needed during the lead time (i.e., the

difference between the order date and the receipt of the inventory

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ordered) and the safety stock which is the minimum level of inventory

that is held as a protection against shortages due to fluctuations in

demand.

Reorder Point = Normal consumption during lead-time + Safety Stock.

Several factors determine how much delivery time stock and safety

stock should be held. In summary, the efficiency of a replenishment

system affects how much delivery time is needed. Since the delivery

time stock is the expected inventory usage between ordering and

receiving inventory, efficient replenishment of inventory would reduce

the need for delivery time stock. And the determination of level of

safety stock involves a basic trade-off between the risk of stock-out,

resulting in possible customer dissatisfaction and lost sales, and the

increased costs associated with carrying additional inventory. Another

method of calculating reorder level involves the calculation of usage

rate per day, lead time which is the amount of time between placing an

order and receiving the goods and the safety stock level expressed in

terms of several days' sales.

Reorder level = Average daily usage rate X lead-time in days.

From the above formula it can be easily reduced that an order for

replenishment of materials be made when the level of inventory is just

adequate to meet the needs of production during lead-time. Here

reorder level of main five materials in corresponding years are

calculated. They are:

common salt

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alum

barium carbonate

flocculent

soda ash

Table showing reorder level

Year Avg.

Consumpti

on (in MT)

Lead

Time

(in

days)

Reorder

Level (in

MT)

04-05 96124 235 22589140

05-06 83807 241 20197487

06-07 92225 250 23056250

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07-08 101428 270 27385560

08-09 74434 281 20915954

Chart showing reorder level

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Interpretation

The average consumption of main five raw materials has been taken

here for calculation. Reorder level of these raw materials shows a

varying trend. It falls, rise and then falls. It is clear from the abovegraph that it shows same pattern of movement. Reorder level in the

current year is less due to the decline in average consumption as

compared to previous year. It is because of the problem faced by the

company regarding cost and production capacity.

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6. ECONOMIC ORDERING QUANTITY

The economic order quantity can be defined as the quantity which is

most economical to order at a time. In other words, it is the ordering

quantity which minimizes the total cost of inventory. The total cost of

inventory comprises ordering cost & caring cost. Ordering cost is those

cost which are relating to acquisition of materials. These include the

cost of placing a purchase order. Carrying cost refers to cost of holding

or carrying the stock in storage (i.e. storage cost). EOQ is that quantity

at which the total inventory cost is minimum i.e. the ordering cost &

carrying cost are equal.

Underlying assumptions

1. The ordering cost is constant.

2. The rate of demand is constant

70

EOQ

TC

CC

OC

EOQ


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3. The lead time is fixed

4. The purchase price of the item is constant i.e. no discount is

available

5. The replenishment is made instantaneously; the whole batch isdelivered at once.

EOQ is the quantity to order, so that ordering cost + carrying cost finds

its minimum.

EOQ= 2 CO / I

C = Annual consumption

O = Cost per order

I = Inventory carrying cost / unit

In EOQ ordering cost and carrying cost finds minimum

Ordering cost carrying cost

Low

high

High low

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When ordering cost moves from low to high then the carrying cost will

move from high to low. So EOQ can determine the optimal level of

quantity which makes the minimum total cost.

Here EOQ of main five raw materials are calculated.

Raw materials are:

Common salt

Alum

Barium carbonate

Flocculent

Soda ash

EOQ of Common Salt

Table no.6.1

Year Qty Order cost Carrying

cost

EOQ

2004-05 81609 1200 49 19992005-06 90309 1250 136 12882006-07 99393 1250 126 1404

2007-08 72669 1300 108 13222008-09 81465 1300 134 1257

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Chart No.6.1

Interpretation

The graph shows that EOQ of common salt is varying in every year

because of its increased consumption and increased trend of ordering

cost. The average EOQ of common salt is 1454 which are higher than

other raw materials in inventory because of its higher consumption

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EOQ of Aluminum Sulphate

Table No.6.2


cost

EOQ

2004-05 2 1200 61 8.872005-06 3.1 1250 100 8.622006-07 7.025 1250 171 13.252007-08 11.50 1300 162 13.612008-09 6 1300 86 21.99

Chart No.6.2

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Interpretation

The table shows EOQ of alum is increasing in every year because of its

increased consumption and increasing trend of ordering cost and

varying trend of carrying cost

EOQ of Barium Carbonite

Table No.6.3


cost

EOQ

2004-05 644.45 1200 124 111.682005-06 673.5 1250 98 131.082006-07 724.5 1250 118 123.89

2007-08 617.58 1300 93 131.392008-09 486.23 1300 104 110.25

Chart No.6.3

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Interpretation

The graph shows the EOQ of Barium Carbonite is varying in every year

because of its varying consumption and increasing trend of ordering cost and

varying trend of carrying cost. We can see an alternative increasing and

decreasing trend of EOQ of barium carbonite

EOQ of Flocculent

Table No.6.4


cost

EOQ

2004-05 1125 1200 116 152.562005-06 875 1250 100 147.90

2006-07 850 1250 111 138.362007-08 800 1300 59 187.762008-09 710 1300 140 114.83

Chart No.6.4

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Interpretation

The graph shows EOQ of flocculent is varying in every year because of its

varying consumption and increasing trend of ordering cost and varying trend

of carrying cost. Because of less carrying cost, increased consumption and

increased ordering cost, the EOQ of Flocculent is higher in the year 2007-08

EOQ of Soda Ash

Table No.6.5

Year Qty Ordering

cost

Carrying

cost

EOQ

2004-05 426.3 1200 133 87.7

2005-06 364.15 1250 98 96.38

2006-07 453.65 1250 107 102.95

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2007-08 335.36 1300 93 96.82

2008-09 440.62 1300 91 112.20

Chart No.6.5

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Interpretation

The above table shows the EOQ of soda ash is varying in every year

because of its varying consumption and increasing trend of ordering

cost and varying trend of carrying cost

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FINDINGS

Here the calculations had been made on inventory turn over

ratio, inventory structure analysis, inventory holding period,reorder level, EOQ . Every calculation shows fluctuations

Inventory to current asset ratio shows a fluctuating trend. The

fluctuations may be due to the changing trend of inventory and

current assets.

Most of the administration works are manually and this will cause

the delay in recording

The sections having the full data about the items, the stock

checking is done from the computer screens print outs and

sorting is done manually and recording. The sections without

the complete data are very difficult to updating and stock

checking

The codification is following in a good manner and this is

simplifying the identification work of items

There are very limited number of employees in the inventory

control department

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SUGGESTIONS

Increase the number of employees in the inventory department

TCC should have to follow theoretical approach in inventory

department

The departments related with the inventories should be automated

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CONCLUSION

The norms following in inventory control by TCC is not that much

effective to give a good profit to the firm. The current year annual

report shows more than 50% loss in the firm which may be due to the

inefficient inventory control. Companys utilization of inventory in

generating sales is good. But all the factors are fluctuating. So proper

maintenance of inventory should be taken into consideration, as it

helps to reducing the wastage and in sales promotion. Because every

firm will like to hold higher level of inventory for the future. This will

enable the firm to be more flexible in supplying to the customer. Most

of the customers require immediate delivery. Higher inventory will

help to meet their demand and also there is no chance for the loss of

sale will help in customer satisfaction and can earn more and more

profit.

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BIBLIOGRAPHY

ONLINE REFERENCE

www.tccltd.com

www.google.com

OTHER REFERENCE

Principles of inventory management john A Muckstadt, Amar Sapra

Essentials of inventory management Max Muller

TCCL ANNUALREPORT 2008-2009

ANNUAL ACCOUNTS 2008-2009

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