INTRODUCTION

Finance is the lifeblood of business and plays an important role in any organization. The dictionary meaning of finance is money affairs or the art of managing or administrating the public money. Hence the name financial management could be Referred to as money management. The function of finance is not only arranging funds for the business organization but also it includes planning, forecasting of cash flows, both receipts and payments, rising of funds, allocation of funds and financial control.

Financial Management
Entails planning for the future of a person or a business enterprise to ensure a positive cash flow. It includes the administration and maintenance of financial assets. Besides, financial management covers the process of identifying and managing risks. The primary concern of financial management is the assessment rather than the techniques of financial quantification. A financial manager looks at the available data to judge the performance of enterprises. Managerialfinance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance. Some experts refer to financial management as the science of money management. The primary usage of this term is in the world of financing business activities. However, financial management is important at all levels of human existence because every entity needs to look after its finances.

Financial Management Levels

Broadly speaking, the process of financial management takes place at two levels. At the individual level, financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to make up for the impact of taxation and inflation. Else, they spend it on discretionary items. They need to be able to take the financial decisions that are intended to benefit them in the long run and help them achieve their financial goals. From an organizational point of view, the process of financial management is associated with financial planning and financial control. Financial planning seeks to quantify various
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financial resources available and plan the size and timing of expenditures. Financial control refers to monitoring cash flow. Inflow is the amount of money coming into a particular company, while outflow is a record of the expenditure being made by the company. At the corporate level, the main aim of the process of managing finances is to achieve the various goals a company sets at a given point of time. Businesses also seek to generate substantial amounts of profits, following a particular set of financial processes. Financial managers aim to boost the levels of resources at their disposal. Besides, they control the functioning on money put in by external investors. Providing investors with sufficient amount of returns on their investments is one of the goals that every company tries to achieve. Efficient financial management ensures that this becomes possible. Financial management is broadly concerned with the acquisition and use of funds by a business firm. The important tasks of financial management are as follows:

A) Financial Analysis, Planning and Control

Analysis of financial condition and performance Profit planning Financial Forecasting Financial Control

B) Financing
Identification of sources of finance and determination ofFinancing mix. Cultivating sources of funds and raising funds Disposition of profits between dividends and retained Earnings.

C) Investing
Management of current Assets Capital Budgeting

Importance of Financial Management:

Finance is the lifeblood and nerve center of a business, which is very essential to smooth running of it. Right from the beginning i.e., conceiving an idea to do business, finance is needed to promote or establish the business, acquire the fixed assets for expansion of the existing one.

Some important functions of Financial Management:

Financial planning and successful promotion of an enterprise. Acquisition of funds as and when required at the minimum possible cost. Proper use and allocation decisions. Improving the profitability through financial control. Increasing the wealth of the investor and the nation Promoting the mobilizing individual and corporate saving.

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

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

Financial Management is the operational activity of a business that is responsible of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations. Joseph and Messie

OBJECTIVES OF THE STUDY

The objectives of the study To study the methods and Techniques of inventory control and management adopted by the company.

To assess the performance of materials and inventory control section of company To analyze the efficiency of inventory management company

To have an overview of the purchase and stores department contribution to inventory control and maintenance.

To study the profile and general management of company.

To have an insight into the companys future plans and diversification strategies.

To assess company over all financial performance.

To study the inventory control management of the company.

THEORETICAL FRAMEWORK

Introduction:
Inventory management is very important in an organization in order to have a Smooth move of it. The term inventory refers to the stockpile of the products a fire is offering for sale and the components that make up the product. In other words, inventory is composed of assets that will be sold in future in the normal course of business operations. Inventory as a current asset differ from other assets because only financial managers are not involved, rather all functional areas finance, and marketing, production and purchasing are involved. The view concerning the appropriate level of inventory would differ among the different functional areas. The job of the financial manager is to reconcile the conflicting viewpoints of the various functional areas regarding the appropriate inventory level in order to fulfill the overall objective of maximizing the owners wealth. Thus, inventory management should be related to the overall objective of the firm. The basic responsibility of the financial manager is to make sure the firms cash flows are manager efficiently. Efficient management of inventory should ultimately result in the maximization of owners wealth.

Although our discussion of inventory management will focus on the finance perspective it is important to understand that good inventory management is vital to the success of virually all firms. In fact inventory is the key to being a top player in many industries today including both retailing and manufacturing because of its importance, managers at all levels, and in all functional areas, are involved management. Inventory management activities can range from ensuring that there is an adequate selection of different sizes of clothing available in a retail store to stocking necessary replacement parts for commercial Aircraft.

Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many
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locations of a supply network to precede the regular and planned course of production and stock of materials.

The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods, and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment.

Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment techniques, report actual and projected inventory status and handle all functions related to the tracking and management of material. This would include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances. It also may include ABC analysis, lot tracking, cycle counting support, etc. Management of the inventories, with the primary objective of determining/controlling stock levels within the physical distribution system, functions to balance the need for product availability against the need for minimizing stock holding and handling costs.

MEANING OF INVENTORY MANAGEMENT:

Inventory Management means planning, procurement, holding and accounting and distribution of these and materials. Inventories are approximately 60% of current assets in India. In industries using agricultural raw materials the percentage is still higher. Thus, a large part of working capital is invested in inventories. The management of inventories is therefore necessary is therefore necessary to avoid heavy loss due to leakage, theft and wastage because neglecting the management of
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inventories may jeopardize. The long on profitability of the concern may fall ultimately. The reduction in excessive inventories carries a favorable impact on a companys profitability. The financial manager actually is a kind of watchdog over functional areas. Broadly speaking the inventory management problem is one of maintaining for a given financial investment an adequate supply of something in order to meet an accepted distribution or pattern of demand. Infant, the very existence of inventory creates costs. Sometimes it is difficult to see what value is received from costs incurred. Inventory management may be diffident as the sum total of those activities, which are necessary for the acquisition, storage sale and disposal, or use o management. It is a subject. Which merits the attention of the toplevel management and the decisions of the planning and executive personnel.

Objectives of inventory management:

In the contest of inventory management the firm is faced with the problem of meeting to conflicting needs.

To meet the demand for the product by efficiently organizing the production the production and sales operations. Control investment in inventories and keep it at an optimum level. To minimize investments in inventory. To ensure against delays in deliveries. To utilize the advantage of price fluctuations. To take advantage of quality discount control.

The inventory management includes the following aspects Maximum Minimum

Establishing timing schedules, procedures and lot of sizes for new orders.Ascertain minimum safety levels.Co-coordinating sales, Production and inventory policies. Providing proper storage facilities. These objectives can express in terms of cost and benefit associated with inventory. Inventories provide benefits to the extent that they facilitate the smooth functioning of the firm.

Need to hold inventories:

Maintaining inventories involves tying up of companys funds and incurrence of storage and handling costs. There are three general motives for holding inventories. Transitive motive emphasizes the need to maintain inventories to facilitate smooth production and sales operations. Precautionary motive, necessities holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors. Speculative motive influences the decision to increase or reduce. Inventory levels to take advantage of price fluctuations.

Different Types of Inventories:

An inventory is an idle resource that possesses economic value. It is an item that is stored or reserved for meeting future demand such items may be materials, machines, money, or even human beings. Inventories are stock of product a company is manufacturing for sale and components that make up the product. Inventories are composed in to:

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 Raw materials Work in Progress Finished goods Consumables Bought out Components Packing materials Spare Parts

Raw Materials:
Raw materials are those items purchase to be processed and are the major input into an organization and from the bulk, which gets converted into output. The function of raw materials is to act as a buffer between procurement and manufacturing. There are 2 important factors: Internal Factors: Production Technology Criticality of the item External Factors: Lead time (administrative and suppliers) Vendors relations Availability of materials Government Policy Seasonally Credit situation and govt. restriction

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Consumables:
These are the materials which act as catalyst in the production process and not directly found in the end product. These enable the production process to function smoothly. The inventory level of these consumables can be fixed based on the past consumption.

Bought Components:
Organization especially those in consumer goods and engineering industry do not always produce 100% of their out put from raw materials. At times they find it cheaper and more convenient to buy from regular vendors. This enables them to concentrates more on critical parts and assembly. The important factors that influence the bought components are:

Make or buy decisions Source development Vendor relations

Make or buy decisions must be taken through tech economic analysis. Source Development is laborious and time consuming more if the unit is located in backward area or region. Vendor relations are built up over the years depending upon quality, regularity or supply and financial transactions. Usually vendors operate at much smaller level.

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Work in Progress:
The process inventories exist so long as we have been considering inventory as buffer between two or three subsystems, work in progress acts as a buffer with in manufacturing sub-system. There can be group of machines, which can be termed as work centers. The raw materials will have to go through a combination of operations before it takes shape as a salvable product. The rate of production at each production center depend upon the technology, while the production executive tries his best to balance lines, there is certain break downs which will effects down stream productions. To over come this work-in-progress inventories is stored as work centers.

Finished goods:
Finished goods are those goods available for delivery to consumer, finished goods act as buffer between production and marketing department. The input in quite predictable but output depend upon the behavior of market. The purpose of this inventory is to assure a constant supply in distribution channels.

Some of the factors that contribute to high finished goods inventory. Errors caused in forecasting Eagerness to satisfy the customers Economic batch production Multiply stock points Imports Distribution system

Packing materials:
Packing materials does not add to the value of the product. It protects what it sells and sells what is protects. Hence this cost comes out of one profits. Some consider
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packing material as consumable, the difference being that these are consumables for marketing subsystem to give a face lift to the product.

Spare Parts:
Spare parts are the important inventory. Their consumption pattern differ from raw materials, consumables or finished goods conversely stocking policies are different.Many problems occur in case of these spares, some are:

Determination of level inventory for placing replenishment order and the quality to be ordered.

The extent of delay in supplies and the extent of variations in demand which inventory should be able to withstand.

Some spares are thus classified into: Capital Spares Insurance Spares Routable Spares Maintenance Spares Over hauling Spares

Capital spares and insurance spares are those spares of the machine, which have nearly equal life of the machine. Characteristics of these spares are. These are held as contingency against any break down Their consumption is very low The procurement lead time is very high Normally these spares are procured along with original equipment.
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Maintenance spares are those which have definite requirement compared to capital and insurance spares. These are required for the replacement of the old parts caused due to replacement of wear and tear, they are fast moving and are repetitive. Ratable spares are costly so they are not usually scrapped but they are prepared and stored for use. The demand for such a spare part for any single machine is low but for group of machines is high. Queuing theory is practiced to control routable spares. Over hauling spars include those items which are specially needed during regular overhaul. These items are like valves, couplings etc. the strategy that adopted to control these spares are based on past consumption. Therefore initial provisioning either when starting a new industry or machinery is problematic.

The reasons for keeping stock:

There are three basic reasons for keeping an inventory: 1. Time - The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amounts of inventory to use in this lead time. However, in practice, inventory is to be maintained for consumption during 'variations in lead time'. Lead time itself can be addressed by ordering that many days in advance. 2. Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply and movements of goods. 3. Economies of scale - Ideal condition of "one unit at a time at a place where a user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory. All these stock reasons can apply to any owner or product

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PHASES OF INVENTORY MANAGEMENT: Maintaining continuity of production or operation buy enduring continuous supply of standardized raw material etc., To take enough care to avail of the concessions available in purchasing materials. Enduring that materials of requisite specification and quantity have been received in good condition. Establishing thing schedules, procedures for new orders. Formulating inventory receipts issue and storage procedures and proper recording of all transactions.

Cost of holding inventory:

Inventory cost Carrying cost Ordering cost Costs of running cost Stock out cost Ordering, shipping and receiving costs

Inventory cost:
The goal of inventory management is to provide at the lowest total cost the inventories required to sustained efficient, first step in operations the inventory management is to identify all the costs involved in purchasing and Maintaining inventories.

Carrying cost:
Carrying cost generally raise indirect proportion to the average Amount of inventory carried. Inventories carried in turn, depend on the frequency With which orders are placed to illustrate if a firm sells units per year, and if it Places Equalized orders N times per year, and then S/N units will be purchased with each order.
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Ordering cost:
Carrying cost is generally entirely variable and thus raising direct proportion to the average size of inventories. Ordering costs are often fixed for example the costs of the placing and receiving an order-inter office memos, run and taking delivery are essentially fixed regardless of the size of an order.

Stock-out-costs:
They are invisible yet very important Costs which a company has To incur if there is a stock-out resulting in a loss of production these costs are in the Form of loss of profit on lost production loss of goodwill, adverse impact on future Orders and temporary adverse, effects on machinery because of lack of use etc.

Benefits of holding inventory:

The basic function of inventory is to act as a buffer to decouple or uncouple the various activities of a firm so that all do not have to be purchased at exactly the same rate the key activities are:

1. Purchasing 2. Production and 3. Selling

Since inventory enables uncoupling of the key activities of a firm, each of them can be operated at the most efficient rate. This has several beneficial effects on the firms operation. The term uncoupling means these interrelated activities can be carried out independently.

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Benefits in purchasing:
If the purchasing of raw materials and other goods is not tied to production/sales i.e a firm can, e independently to ensure that most efficient purchase, several advantages would be available. In the first place, a firm can purchase larger quantities than is warranted by usage in production or the sales levels. This will enable it to avail discounts that are available on bulk purchases moreover it will lower the ordering costs as fewer acquisitions would be made. There will, thus, be a significant serving in costs. Second, firms can purchase goods in anticipation of announced price increases. This will lead to a decline in the cost of production. Inventory will thus serve as a hedge against price increases as well ass shortage of raw materials. This is a highly desirable inventory strategy.

Benefits in production:
Finished goods inventory serves to uncouple production and sales. This enables production at a rate different that of sales. That is production can be carried as a rate higher or lower than the sales rate. This would be a special advantage to firms with a seasonal sales pattern. In this case the sales rate will be higher than the production rate during a part of the year and lower during the off season. The choice before the firm is either to produce at a level to meet the actual demand i.e., higher production during peak season lower production during off season, produce continuously throughout the year and build up inventory which will be sold during the period of seasonal demand. The former involves discontinuity in the production schedule while the latter ensures level production.

Benefits in sales:
The maintenance of inventory also helps a firm to enhance its sales efforts. if there are no Inventories of (finished goods the level of sales will depend upon the level of current production. A firm will not be able to meet demand instantaneously. This will be a lag depending upon the production process. if the firm has inventory, actual sales will not
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have to depend on lengthy Manufacturing process. thus, inventory serves to bridge the gap between the current production and actual sales. a related aspect is inventory serves as a competitive marking tool to meet customer demands.

Inventory control:
The aim of production activity is the timely manufacture of desired product of specified quality in proper quantity at least possible cost. To achieve production goals, the production manager must simultaneously attempt to maintain stable operations, provide customers with adequate service and keep investment in stock and equipment at reasonable levels. Beyond the problems of planning, scheduling and expecting production and problems of inventory and distribution management, there are certain questions that business must face: Where shall we maintain, how much stock? Who will be responsible for it? Why do we have inventories? What effects the inventory balances we maintain?

The basic problem of inventory policy is to strike a balance operation savings and the costs and capital requirements associated with larger stocks business management now has wide range of range of techniques for attacking production control and inventory control.

Control system approach:

Control over inventories means goggling range and intermediate planning of Production operations. a comprehensive and integrated control system, including production Planning, scheduling and control must be closely coordinated with other planning such as cash Planning, capital budgeting and sales forecasting. the essentials of inventory control are: Long range planning, to budget capital for facilities and inventory investment Intermediate policy making and planning as a basis for short-term scheduling Short-term
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scheduling of work assignments to keep facilities and men employed and stock Balanced in view of demand for output as it actually materializes.

Factors influencing inventory:

There are various factors both inertial and external which have influence on Inventory. Internal conditions start right from forecasting a requirement such that required Materials are made available only a right time. External conditions including supplies lag time, Environmental conditions, govt rules and regulations, credit availability, market conditions etc, all Factors which have influence on the inventory could be summed up in to following categories: Lead time Relevant costs Ordering costs Inventory carrying Costs under Stocking costs over Stocking costs Service level Obsolete inventory Scrap.

LEADTIME: Lead-time is defined as the period that elapses between the recognition need and its fulfillment. in any industrial network one has to follow the following broad pattern before ordering item and making it available. Forecast the requirement Equation the exact quantity Selection of sources of supply
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Negotiation of rates Annual ordering Follow up with supplies Receiving materials Inspection of materials Proper warehousing Preservation of material Proper issues and recording Payment of suppliers recording Payment of suppliers bills

The above steps show the total ordering cycle. But a material is not available to use is inspected and given to store. The whole cycle could be classified into four lead-time categories; Internal lead-time External lead-time Transportation lead-time Inspection lead-time

Internal lead-time:
Internal lead time, which is known as administrative lead-time starts from identifying the need for till all order is placed for that time. Requirement for an item has to be first identified before it erred. It may take a long time before an actual need is finalized.

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The first activity is location of: which can be done by data bank, magazines etc. The next activity is negotiating the terms and ions of supply thirdly, placing an order with the trite source. Internal lead-time ceases once order reaches the supplier and confirms it.

External lead-time:
Which is also known as manufacturing lead time, depends on the business and the taken to manufacture and dispatch a product.

Transportation lead-time:
It is the period from the time a manufacturer dispatches the goods to the time receipt of goods at stores of the purchaser.

Inspection lead time:

It is the one where materials that comes to the stores, has to be checked to find out whether they are supplied as per the requirement of the organization and as per the stipulated orders.

Relevant costs:
There are several factors, which are affected by the conditions of. Excessive or insufficient inventories. it is for many reasons stocked inventory will be useless that we. High cost. In general the cost of inventories will be under these classifications as:

Ordering cost(U) Inventory cost(I) Under stocking cost(KU) Over stocking(KO)

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Ordering cost is the one in which, each order that is placed on the supplier costs Money, since lot of executive time, stationary, salary and may be less in those of cash purchases. Ordering costs is the sum resultant of costs of fulfilling various activities that go into finalizing an order. The cost of ordering (U) will include costs due to:

Stationery, typing, dispatching of orders Salaries and wages Receiving and inspection costs Cost of source development

The cost per purchase order can be calculated as

Total cost included on above leads Cost per purchase order = Total number of orders.

Inventory carrying cost is the costs which involves in the storage of materials. this cost can be calculated computing the following costs:

Interest rate Obsolescence cost Over head costs Insurance costs

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Under stocking costs (KU), are due to demand of an item and not being provided for Production, if an inventory is not made available to production there would be loss of Production, sales, good will. Computation of KU is very problematic.

Over stocking cost (KO), is the cost which incurs high expenditure. it involves loss of utilizing Companys valuable fund. Over standing cost is therefore a cost basically arising due to Opportunity lost due to the investment in the inventory for a longer period.

Service level:
Service level is a relation between under stocking cost and over-stocking cost of keeping an inventory and being used, or keeping an inventory and demand for that item arising leading to stock out. KU Service level = KU+KO

Obsolete inventory:
Inventory that is purchased and stored and which is of no importance for the organization is termed as obsolete inventory. These can be due to anyone of the following reasons. Technology change Changes in product line Changes in machines Changes in design and layouts Overbuying

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Scrap:
When utilizing the input it is not possible to utilize 100% area, so certain Scrap generation is inevitable. Manufacturing process itself generates scrap. One may generate scrap in the form of packing items, gunny bags, papers, which has resale value. Inventory control techniques: ABC analysis EOQ analysis HML analysis FSN analysis Two bin system MRP analysis VED analysis SED analysis MAX analysis (MAX-MIN).

ABC analysis (always better control):

Where there are a large number of items in the inventory, it becomes essential to have an efficient control over all items of stores. How ever comparatively greater care should be given to the higher values. The movement of certain service concern may consist of a small number Of items a minor portion of inventory value. The modern technique for collecting the Inventory is a value item analysis popularly known as ABC analysis that attempts to relate how the inventory value is concentrated among the individual items. This analysis is based on praetors law, which states that a fewer item of high Usage having high investment value should be paid more than a bulk of items having low Usage value and having a low investment in capital.

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Category-A, which includes the most important item which represents about 60 to 70% of stores but constitute only 10 to 15% of items. Category-B, which includes less important items representing an Investment value of 20 to 25% and constitutes a similar % of items. Category-C, which consists of the least important items of stores and Constitutes 60 to 70% of stores item representing only a capital investment between 10 to 15%.

Steps in ABC analysis:

1. The money value of the items of materials chosen should be calculated by multiplying the quality of each item with the price.

2. The item should be re-arranged in the descending order of their values irrespective of their qualities.

3. A running total of all values and items will then be taken and the figure so obtained should be converted into % of gross total.

4. It will be found that a small number of first item may amount to large % of the total value of items. The management then will have to take a decision as to the % of the total value, which have to be converted by A, B and C categories.

Advantages of ABC analysis:

It ensures closer control on costly items in large amount of capital invested. Helps in developing a scientific method of controlling inventories HI.

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Parameters for ABC classes of items in inventory: Class A B C Control very close medium loose Lot size small medium medium buffer stock very small moderate large

EOQ analysis (economic order quantity):

A strategic factor in the inventory management is the consumption of the optimum of normal purchase order. Decision about how much to order has great significance in inventory agreement. The quantity to be purchased neither should neither be small nor big because costs of buying and fling material are very high. Economic order quantity = root 2D co/cs D=demand is the period. Co=cost placing an order. Cs=storage cost 0 carrying cost. (OR) Q SQUARE (Q2) = 2

{C} {P} EOQ = 2FS CP ( OR) 2AO C

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Here EOQ=economic ordering quantity (or) the optimal quantity to be ordered each time an order is placed.

A=annual consumption O=ordinary cost C= carrying costs P= purchase price the firm must pay per unit of inventory.

Economic order quantity is the size of the lot to be purchased which is economically die. This is the quantity of the material, which can be purchased with minimum casts.

HML analysis:
This analysis is based on cost of items. H, M and L alphabets represent items having highest cost, medium cost and lower cost.

FSN analysis:

Under this analysis the quality and rate of consumption are to be taken in to consideration. Here F stands for fast moving items; S stands for slow moving items and N for non-moving items.

Two-bin-system:

Under this system all inventory items are grouped under two categories. In the first group, a sufficient supply is kept to meet the current requirement over a designed period
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of time. In the second group or bin, a safety stock is maintained to meet the requirement of inventory at times when stock in the first bin is exhausted and reordering occurs.

MRP analysis:
Material requirement planning is a computer based inventory and production schedule system that considers all that go into completing an order for large for shop situations where many products are manufactured in periodic lots via several processing steps.

VED analysis:
The VED analysis is used generally for spare parts. The requirements and urgency of is different from that of materials. spare parts are classified as vital (V), essential (E), & desirable(D).

SED analysis:
This analysis is based on the availability of materials and is useful where items are scarily available. S stands for scarce items ,D for difficult items and E stands for easily available in the market.

PURCHASING:
Purchasing is the first phase of materials management .it means procurement of goods and services from same external agencies. The objective of purchase department is to arrange the supply of materials, spare arts and services of semi finished goods, required by the organization to produce the desired products from agency or source outside the organization.

DEFINITION:
According to Alford and beauty, purchasing is the procuring of materials, supplies, machines tools and services required for equipment, maintenance and operation of manufacturing plant.

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OBJECTIVES:

Purchase of satisfactory material To control the quantity of material Proper negotiations with suppliers Control proper use of materials Coordination with other departments

STORES CONTROL

Stores keeping:
It is servicing facility, inside an organization responsible for proper storage of the material and then issuing it to respective departments on proper requisition. Those items which are not in use for some specific duration. According to Maynard, the duties of store keeping are (i.e.) to receive materials, to protect them while in storage from damage and unauthorized removal to issue the materials in the right quantities, at the right time to the right place and these services promptly and at least cost.

Receiving:
The item order by purchase department is receive by this section. The supplier delivers the items along with order documents to receiving section of stores department. The materials when received from the supplier are under the temporary custody of receiving department. The materials are usually accompanied with one or both of the following documents. 1. Advice of dispatch, which is sent by the supplier dispatch of materials from his premises.

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2. Delivery note of packing note (challenge), which is received from the carries, that transport and deliver the materials.

3. On receipt, the materials are checked with reference to the copy of the purchase order in possession of receiving department. The quantity received is verified with the quantity on order the quality specified on the purchase order is checked in inspection department.

Valuation of materials received:

The general rule is that the invoice price as billed by the supplier should be accounted for in the ledger. Certain problems regarding the accounting of receipts are specified as: Cash discount, is a discount allowed by the supplier if payments of bills are made with in the period specified. Trade and quantity discount is the amount of those discounts is already deducted from the invoice price no difficulty arises in their accounting.

Stores section:
This is a place where all materials received by the stores department are kept with protection against deterioration and pilferage. They are stored in such a way that their location is easily identified at the time of issue. The various stores operations are Location in stores section Layout of stores section Stores equipment Materials handling facilities Identification of stores.

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STORAGE CONTROL & METHODS OF PRICING ISSUES:

The stores procedure mainly consists of stores control and issue control.

Stores control:
After the materials on order are received, checked and approved, the stores keeper takes them on charge. He is responsible for placing him materials in their appropriate places inside the store and for ensuring that they are maintained in good condition during storage till required for utilization in production. The control during this stage may be called storage control.

Issue control:
Materials when required for consumption are issued to the departments concerned as per authorized quality and under proper authority. The issues are priced and the values there of charged to the costs of the products. Any surplus is returned by the departments to the store and is properly account.

Classification & Codification of Materials:

For the purpose of identification and for convenience in storage and issue, each item of stores is given a distinct name. Similar items are classified under sub-groups and a number of subgroups are classified under main or major groups. Classification of stores should be accompanied with a suitable system of codification. Codification is the procedure for assigning symbols, for each item in accordance with a proper arrangement.

Codification has following advantages:

Ease in identification of stores Writing full names and particulars of materials on documents is dispensed with so that clerical work is reduced In mechanized accounting, codification is essential
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Quoting symbols along with nomenclature ensures clarity Ensures secrecy

Three methods of codification are: Numeric Alphabetic Alphabetic and numeric

Perpetual Inventory System:

It is also known as automatic inventory .the control of materials while in storage is affected through what is known as perpetual inventory. The two main functions of perpetual inventory system are: Recording stores receipts and issue so as to determine at any time the stock in hand, in quantity or value or both with out the need for physical count of stock. Continuous verification of physical stock with reference to the balance recorded in the stores records at any frequency, as convents for the management.

IMPORTANCE OF INVENTORY MANAGEMENT:

Importance of inventory management considers two companies. 1. WAL-MART 2. BOEING

TO WAL-MART:
The worlds largest retailer, inventory control is its business. Wall-mart can not succeed if its stores do not have the items that its customer wants at the time they want them and at the price to make a sale. To ensure that its customers are satisfied, wal-mart uses a sophisticated point of sale inventory management system to record each sale and to automatically reduce that items inventory balance.
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TO BOEING:
The worlds largest commercial aircraft manufacture, inventory management means something totally different. In manufacturing the inventory system is integrated with production systems, so firms must strive for joint inventory production efficiency Boeing which was flying high in the airline expansion years. Where is Boeing to find savings of this magnitude? To start it is closely examining its inventory and production systems.

ACCOUNTING FOR INVENTORY:

When finished goods are sold, the firm must assign a cost of goods sold. The cost of goods sold appears on the income statement as an expense for the period and the balance sheet inventory account is reduced by a like amount. Four methods can be used to value the cost of goods sold, and hence to value remaining inventory: 1. Specific identification 2. First-in-first out (FIFO) 3. Last-in last out (LIFO) 4. Weighted average.

1. Specific identification:

Under specific identification a unique cost is attached to each item in inventory. Then when an item is sold the inventory value is reduced by that specific amount. This method is only when the items are high cost and move relatively slowly, such as would be the case for an automobile dealer.

34

2. First-in-first out(FIFO):
In the FIFO method the units sold during a given period are assumed to be the first units. That was placed in inventory. As a result, the cost of goods sold is based on the cost of the order. Inventory items and the remaining inventory consist of the newer goods

3. Last-in last out (LIFO):

LIFO is the opposite of FIFO .the cost of goods is based on the last units placed in inventory while the remaining inventory consists of the first goods placed in inventory.

4.Weighted average:

The weighted average method involves the computation of the weighted average. Units cost of goods available for sale. From inventory, and this average cost is then applied to the goods sold to determine the cost of goods sold.

OTHERS TOPICS IN INVENTORY MANAGEMENT

1. Inventory Control System:

Inventory control system runs the gamut from very simple to extremely complex, depending on the firm and the nature of its inventories.

a) Computerized Systems:
Large companies employ computerized inventory control system. The computer starts with an inventory count in memory as with drawls are made they are recorded by the computer, and the inventory balance is revised.

35

3. Just- in time inventories:

A relatively new approach to inventory control called just- in-time is being used by more and more firms throughout the world. Toyota, which pioneered the concepts, provides a good example. just-in-time system are also being adopted by smaller firms infact, some production experts say that small, companies are better positioned than large ones to use just-in-time methods.

3. Out-sourcing:
Another important development related to inventories is out-sourcing which is the practice of purchasing components rather then making them in house. it would be increasing its use of out-sourcing is often combined with just-in-time systems to reduce inventory levels.

INTROUDCUTION TO INVENTORY MANAGEMENT:-

Inventory includes raw material, work-in-progress and finished goods in case of manufacturing unit. Raw materials and work-in-progress inventories are need for smooth production .inventory management is essential for production oriented companies minimize the cost and to utilize funds properly.

Nature of inventory:
Managing working capital is synonymous with controlling inventories .Grog inventory management is good finance management. Even where funds are plentiful. the finance officer shield is prepared to participate actively and gainfully in the formulation of inventory policies deigned to speed up turn over and maximum return on investment . The assets which firms store as inventory in anticipation of need can be classified into

36

1. Raw materials. 2. Work-in-progress (semi finished goods) 3. Finished goods

Raw materials:
Inventory contains items that are purchased by the firm from others and converted into finished goods through the manufacturing (production) process. They are the important inputs for the final product.

Work in-progress:
Inventory consists of items currently being used in the production process. They are normally, partially or semi-finished goods that are at various stages of production in a multi-stage production process.

Finished goods:
It represents final or completed products, which are available for sale. The inventory of such goods consists of items that have been produced but are yet to be sold. The job of the financial manager is to reconcile the confecting view points of the various functional areas regarding the appropriate inventory levels in order to fulfill the overall objective of maximizing the owners wealth. JURISDICTION OF INVENTORY: The production materials inventory consists of several groups and inventory the jurisdiction is as shown below. MATERIALS DEPARTMENT: Purchased raw materials Purchased finished components

37

PRODUCTION CONTROL: Plant manufactures raw materials Work-in-progress in machine shop, sub-assembly and assembly. Plant manufactured finished components

INVENTORYMANAGEMENT-UNDER-UNCERTAIN CONDITIONS: Lead time Stock out

Lead out:
The time between order placement and order arrival

Stock out:
Running out of inventory.

Work in-progress:
Inventory consists of items currently being used in the production process. They are normally, partially or semi-finished goods that are at various stages of production in multi-stage production process.

Finished goods:
It represents final or completed products, which are available for sale. The inventory of such goods consists of items that have been produced but are yet to be sold. The job of the financial manager is to reconcile the confecting viewpoints of the various functional areas regarding the appropriate inventory levels in order to fulfill the over all objective of maximizing the owners wealth.

38

Purpose and use of stores manual:

1. To instruct stores personally in the application of standard practices and procedures necessary to effectively carryout and operation.

2. To assist personal engaged in the stores function, to attain a higher degree of proficiency in operations in operations and monitoring.

Key control areas:

1. Scrap management 2. Inventory controlling 3. Receipts and inspection 4. Transportation (a) incoming (b) outgoing 5. Custody 6. Automatic replenishment of stock 7. Disposable of absolute and non moving items 8. Physical stock verification items annually

The different types of receipts/modules/documents:

1. Material receipt reports (MRR) 2. Material issue voucher (MIV) 3. Material adjustment voucher (MAV) 4. Material return voucher (MRV) 5. Material disturbance receipt (MDR).

39

ANALYSIS OF INVENTORY MANAGEMENT: WITH RATIOS AT G.S.O.P.L

CURRENT ASSETS INVENTORIES

CURRENT LIABILITIES DEPOSITS FROM CONTRACTS AND OTHERS

CASH AND BANK BALANCE LOANS AND ADVANCES

ADVANCE FROM CUSTOMERS AND OTHERS OTHERS LIABILITIES INTEREST ACCURED BUT NOT DUE ON 1.LOANS 2.OTHERS LOANS PROVISIONS

RAW MATERIALS TURNOVER RATIO:

ANNUAL CONSUMPTION OF RAW MATERIALS AVERAGE RA MATERIAL INVENTORY

40

1. Annual consumption of raw material in GSOPL,

Particulars

Opening stock

+ Purchases

Deduct:-

(-) Closing stock

(-) Material stores consumed at cites

Material disposed

Recoveries on other accounts

41

II. Calculation of average raw materials:

Year

Opening raw materials

Closing raw materials

Opening + closing 1/2

2006-07 2007-08 2008-09 2009-10 2010-11

7239.50 1887.97 6346.42 7456.51 5504.20

1887.97 6346.42 7456.51 5504.2 6867.30

4563.73 4117.19 6901.46 6480.35 6185.25

III. Calculation of raw materials turnover ratio:

Year

Annual consumption and Raw material

Average raw materials

Turnover ratio

2006-07 2007-08 2008-09 2009-10

35987.76 53282.54 58153.39 49701.21

4563.73 4117.19 6901.46 6480.35

7.88 12.94 8.42 7.67

42

2010-11

43857.84

6185.75

7.09

RAW MATERIAL TURNOVER RATIO 12.94 14 12 10 8 6 4 2 0 2006-07 2007-08 2008-09 2009-10 2010-11 7.88 8.42 7.67 7.09

Interpretation:
Raw materials turn over ratio discloses the information related to annual consumption of Raw materials and average raw materials of G.S.O.P.L during the period of 2006-07 to 2011. The raw materials turnover ratio highest in the year 2007-08 that is 12.94 and lowest turnover ratio in the year 2010-2011 that is 7.09. In the year there is a low annual consumption and it picks a highest average raw materials in the year 2007. In the year 2006 it was 7.88 and in the year 2007 was 12.94 and in the year 2008 was 8.42 and in the year 2009 was 7.67 and in the year 2010 was 7.09 is recorded. FINISHED GOODS TURNOVER RATIO:

Cost of goods sold

43

Average finished goods invent

1. Cost of goods sold=sales-gross profit.

Year

Sales 56,08,92,177 55,99,75,507 72,49,15,434 73,25,59,689 61,02,88,560

Gross profit 4,56,34,656 1,80,80,464 1,46,77,824 1,17,44,709 1,02,97,911

Cost of goods sold 51,52,57,521 54,18,95,043 71,02,37,610 72,08,14,980 59,99,90,649

2006-07 2007-08 2008-09 2009-10 2010-11

2. Average finished goods:

= opening finished goods + closing finished goods 2 Year Opening finished Goods 2006-07 2007-08 2008-09 2009-10 2010-11 6,81,09,510 3,91,42,339 16,48,19,339 18,28,46,258 10,57,08,540 Closing finished Goods 3,91,42,339 16,48,19,339 18,28,46,258 10,57,08,540 7,77,19,870 Average finished Goods 5,36,25,925 10,19,81,108 17,38,33,067 14,42,77,399 9,17,14,205

44

3.Finished goods turnover ratio:

Year 2006-07 2007-08 2008-09 2009-10 2010-11 Cost of goods sold 51,52,57,521 54,18,95,043 71,02,37,610 72,08,14,980 59,99,90,649 Average finished goods 5,36,25,925 10,19,81,108 17,38,33,067 14,42,77,399 9,17,14,205 Finished goods ratio 9.60 5.31 4.08 4.99 6.54

FINISHED GOODS TURNOVER RATIO 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2006-07 2007-08 2008-09 2009-10 2010-11 5.31 4.08 4.99 9.60

6.54

45

INTERPRETATION: Finished turnover discloses the information related to cost of goods sold and average finished goods inventory of G.S.O.P.L during the period 2006-07 to 2011. It is highest in the year 2006 that is 9.60 because here highest cost of goods sold and lowest average finished goods. In the year 2008 the ratio is 4.08 it is lowest because here is lowest cost of goods sold. In the year 2006 was 9.60 and 2007 was 5.31 and 2008 was 4.08 and 2009 was 4.99 and 2010 was 6.54 ratios were recorded.

COST OF GOODS SOLD RATIO

COST OF GOODS SOLD NET SALE

Year

Cost of goods sold

Sales

Cost of goods sold ratio

2006-07 2007-08 2008-09 2009-10 2010-11

51,52,57,521 54,18,95,043 71,02,37,610 72,08,14,980 59,99,90,649

56,08,92,177 55,99,75,507 72,49,15,434 73,25,59,689 61,02,88,560

0.91 0.96 0.97 0.98 0.98

46

COST OF GOODS SOLD RATIO 1 0.98 0.98 0.96 0.96 0.94 0.92 0.9 0.88 0.86 2006-07 2007-08 2008-09 2009-10 2010-11 0.91 0.97 0.98

INTERPRETATION: Cost of goods sold ratio discloses the information related to cost of goods sold and net Sales of G.S.O.PL. During the period of 2005-2006 to 2008 .in the year 2009 & 2010 it score a highest Ratio i.e 0.98. In the year 2006-2007 is 0.91, in the year 2007-08 is 0.96, in the year 2008-2009 is 0.97 in the year 2009-2010 is 0.98 and in the year 2010-2011 is 0.98 were Recorded. INVENTORY TURNOVER RATIO: This is calculated by subtracting closing stock from the opening stock and Manufacturing costs and purchases. the denominator is the average of the opening and closing Inventories. This ratio indicates the number of times inventory or stock is replaced during the year. It measure the relationship between goods sold and inventory level. The ratio can be employed in Two ways.
47

Cost of goods sold

Stock turnover ratio= Average inventory

Averageinvestment =opeinginvestment+closing investment

2

Inventory turnover ratio

Year Cost of goods sold Average inventory Ratio

2006-07 2007-08 2008-09 2009-10 2010-11

51,52,57,521 54,18,95,043 71,02,37,610 72,08,14,980 59,99,90,649

5,36,25,925 10,19,81,108 17,38,33,069 14,42,77,399 9,17,14,205

9.60 5.31 4.08 4.99 6.54

48

XYZ Analysis for Stock for the Year 2005-06

X No of No Department Mechanical 1 2 3 4 5 (Mech-Mspar) Bearings Hard Lube Tools Electrical 6 (Elec+Int) Instrumentation 7 8 9 10 11 12 (Inspar+Inst) Civil(Const) Safety Operations(Chem.) Lab spares Lspar EDP 183 14 11 3 0 3 40.70 4.59 1.35 1.13 0 0.20 188 24.83 262 37 39 7 41 142.7 15.68 3.29 3.83 1.32 Items Value

Y No of Items Value

Z No of Items Value No of Items

Total

Value

584 48 50 6 57

40.9 4.63 0.96 1.30 0.39

2563 138 158 10 126

20.64 2.28 0.48 0.68 0.19

3049 223 247 23 224

203.95 22.59 4.73 5.81 1.90

299

7.16

686

3.57

1173

35.66

283 15 11 4 0 2

11.66 1.45 0.45 0.48 0 0.07

761 40 26 3 0 3

5.83 0.69 0.21 0.18 0 0.03

1227 69 48 10 0 8

58.19 6.73 2.01 1.79 0 0.30

49

13 14 15 16

Documentation Security and Fire HSD(811602140) General Miscellaneous

3 3 1 8

0.14 1.02 2.27 0.94

8 4 0 10

0.05 0.48 0 0.3

17 18 0 29

0.02 0.18 0 0.14

28 25 1 47

0.21 1.68 2.27 1.38

17 18 19

(P&A Items) PP Thread De- Foamer Total

7 1 1 812

0.26 1.56 0.27 246.13

8 0 0 1389

0.08 0 0 70.36

14 0 0 4592

0.04 0 0 34.92

29 1 1 6793

0.38 1.56 0.27 351.41

50

INVENTORY TURNOVER RATIO 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2006-07 2007-08 2008-09 2009-10 2010-11 5.31 4.08 4.99 9.60

6.54

Interpretation:
Inventory turnover ratio discloses the information related to cost of goods sold and Average inventory of G.S.O.P.L during the period of 2006-2006 to 2009-2010 in the year 2006-2007 is 9.60, this is the highest value. Lowest value in the year 2008-2009 is 4.08.

In the year 2006-2007 is 9.60 in the year 2007-2008 is 5.31, in the Year 2008-2009 is 4.08 in the year 2009-2010 is 4.99 and in the year 2010-2011 is 6.54 were recorded.

51

XYZ Analysis for Stock for the year 2006-07

X No of S.no Department Mechanical 1 2 3 4 5 (Mech-Mspar) Bearings Hard Lube Tools Electrical 6 (Elec+Int) Instrumentation 7 8 9 10 11 (Inspar+Inst) Civil(Const) Safety Operations(Chem.) Lab spares Lspar 135 19 9 2 0 23.698 3.773 2.373 1.094 0.000 183 15 12 2 0 152 17.477 212 208 8 42 6 17 91.316 4.278 2.317 2.493 0.579 429 11 56 5 25 Items Value No of items

Y No of Value Items

Z No of Value Items

Total

Value

26.137 1.431 0.667 0.975 0.168

1653 41 141 6 51

13.059 0.651 0.338 0.424 0.086

2290 60 239 17 93

130.512 6.359 3.332 3.892 0.833

5.015

509

2.502

873

24.994

6.759 1.120 0.677 0.351 0.000

444 42 28 6 0

3.402 0.550 0.366 0.241 0.000

762 76 49 10 0

33.858 5.443 3.416 1.685 0.000

52

12 13 14 15 16

EDP Documentation Security and Fire HSD(811602140) General Miscellaneous

4 0 3 4

0.318 0.000 0.545 0.416

3 1 3 6

0.138 0.041 0.247 0.149

5 3 14 1 25

0.056 0.007 0.113 2.536 0.071

12 4 20 1 35

0.512 0.048 0.905 2.536 0.636

17

(P&A Items) PP Thread and Fraw

0.407

11

0.138

17

0.063

36

0.608

18

(810201107) Total

1 618

6.467 157.550

974

44.011

2986

24.484

1 4578

6.467 226.024

53

XYZ Analysis for Stock for the year 2007-08

X No of S.no Department Mechanical 1 2 3 4 5 (Mech-Mspar) Bearings Hard Lube Tools Electrical 6 (Elec+Int) Instrumentation 7 8 9 10 11 12 13 (Inspar+Inst) Civil(spares) Safety Operations(Chem.) Lab spares EDP Documentation 132 4 12 1 0 4 1 25.513 1.103 2.348 0.689 0.000 0.258 0.003 191 5 13 3 0 2 1 131 18.476 201 218 8 42 5 22 101.276 3.868 2.914 2.234 0.654 436 13 49 3 25 Items Value No of items

Y No of Value Items

Z No of Value Items

Total

Value

29.025 1.092 0.848 0.555 0.189

1764 36 148 6 45

14.481 0.602 0.429 0.469 0.097

2418 57 239 14 92

21.721 0.963 0.729 0.844 0.203

5.278

508

2.650

840

4.505

7.323 0.143 0.672 0.225 0.00 0.082 0.002

480 14 28 4 0 5 1

3.660 0.193 0.355 0.115 0.000 0.053 0.002

803 23 53 8 0 11 3

6.588 0.289 0.71 0.23 0.000 0.108 0.006

54

14 15 16

Security and Fire HSD(811602140) General Miscellaneous

3 0

0.493 0.000

4 5

0.190 8.761

13 1 57

0.076 2.388 1.043

20 1 62

0.114 2.388 1.251

17

(P&A Items) PP Thread and Fraw

0.259

0.082

14

0.044

31

0.101

18 19

(810201107) De- Foamer Total

1 10 602

0.570 167.158

12 972

0.570 55.405

14 3138

0.274 26.930

1 36 4712

5.193 0.685 249.493

55

XYZ Analysis for Stock for the year 2008-09

X No of S.no Depatment Mechanical 1 2 3 4 5 (Mech-Mspar) Bearings Hard Lube Tools Electrical 6 (Elec+Int) Instrumentation 7 8 9 10 11 12 13 (Inspar+Inst) Civil(Const) Safety Operations(Chem.) Lab spares Lspar EDP Documentation 134 4 14 3 0 2 0 22.814 1.277 3.332 1.383 0.000 0.133 0.000 170 5 15 2 0 2 1 141 16.180 199 232 16 25 4 18 102.220 0.825 3.602 3.470 0.358 426 16 41 3 20 Items Value No of items

Y No of Value Items

Z No of Value Items

Total

Value

29.244 .533 1.027 1.092 0.103

1716 58 145 6 36

14.624 1.297 0.518 0.626 0.055

2374 90 211 13 74

146.088 12.655 5.147 5.189 0.515

4.615

482

2.324

822

23.118

6.537 0.456 0.941 0.399 0.000 0.082 0.057

424 9 31 4 1 3 3

3.264 0.230 0.496 0.278 0.025 0.034 0.007

728 18 60 9 1 7 4

32.615 1.962 4.769 2.060 0.025 0.248 0.064

56

14 15 16

Security and Fire HSD(811602140) General Miscellaneous

4 1 12

0.322 1.948 1.541

5 12

0.123 0.448

13 42

0.053 0.230

22 1 66

0.498 1.948 2.219

17

(P&A Items) PP Thread and Fraw

0.302

0.093

15

0.047

30

0.442

18 19

(810201107) De- Foamer Total

1 13 630

7.087 2.128 176.922

12 938

0.610 48.358

17 3005

0.237 24.434

1 42 4573

7.087 3.065 249.714

XYZ Analysis of the company:

Inventory holding of each project will be analyzed with reference to value of the holdings against each item. So according to the stock as on march 09 there were around 4,573 spares which were worth about 2.50 crores so after XYZ analysis around 630 items of worth around 1.76 crores were classified as X class. Similarly there are around 938 items in Y class which contributes to a value of 2.4 crores. Similarly according to the stock as on march 08 under X class there were 630 items worth of around 1.76 crores where as there were 938 Y class items contributing to A value of around 4.38 crores and 3005 Z class items. This contributed to 2.44 crores.

57

First in first out:

Some items get expired beyond a particular time limit. So these items are to be used before they get expired so such items are controlled using FIFO for effective utilization company utilizes this technique for almost all the spares available in the stock.

58

FINDINGS

The financial position of the G.S.O.P.L. is finding as follows 1. The company is maintaining sufficient stock of meeting smooth production process. 2. The firm is not utilizing its capacity.

3. Inventory turnover G.S.O.P.L was study during the year from 2005-2006 to 20092011. The ratio was gradually decreased from 31.8 to 4.08, but increased in 2009 up to 4.99. 4. Raw materials turnover ratio was more than 7.52 expect in the year 2005-06. Highest Ratio in the year 2006-2008 is 12.94 highest annual consumption of raw materials in the Year of 2007-2008. 5. Finished goods turnover highest ratio in the year 2005-06 and highest cost of goods sold in the year 2005-2006 and lowest cost of goods sold in the year 20072008. 6. G.S.O.P.L. was satisfactory because here highest ratio in the Year 2007-2008 is 12.65 and lowest ratio in the year 2009-2010 is 4.59.

59

SUGGESTIONS

The following suggestions may be considered for the better improvement of the financial status of the firm namely G.S.O.P.L. 1. The company needs to reduce the cost of production by reducing carrying cost associated with inventory.

2.

The firm would have to use its total utilizing capacity.

3.

As the firm has much cost of goods sold. so, it is better to reduce the manufacturing costs as much as possible

4.

It is better to undertake sales promotion the improvement of demand in other oil products

5.

It is advisable to concentrate on direct selling because it will reduce distribute and transportation expenses.

6.

The company should about uniform credit facilities to all brokers and kind if discrimination must be shown between any two brokers.

60

CONCLUSION

From the analysis that was presented in the previous chapter the following conclusions have been drawn. The Indian economy agriculture is the primary sector and plays a dominate role. Nearly 70% of our population on agriculture due to this reason G.S.O.P.L. Decided to develop oil palm Plants and oil seeds production .edible oil is on the essential need to food products. G.S.O.P.L is a flagship company in Andhra Pradesh for the production of edible oils. 1. Cost of goods ratio was more in the year 2006-2007 because here highest cost of goods Sold and lowest cost of goods sold in the year 2009-2010. 2. The inventory turnover ratio seems in the year 2005-2006 is 9.60 high but after at the Turnover ratio decreased from in the year 2006-2007 is 5.31, in the year 2007-2008 also decreased is 4.08 and in the year 2008-2009 & 2009-2010 the turnover ratio gradually increased.

61