Nel

A STUDY ON THE FINANCES OF INDOWIND LIMITED Submitted in partial fulfilment of the requirements For the award of

BACHLOR OF BUSINESS ADMINISTRATION By

NELVIN JOSE 2528122

DEPARTMENT OF MANAGEMENT STUDIES

SATHYABAMA UNIVERSITY (Established under Section 3 of UGC Act 1956)

JEPPIAAR NAGAR, OLD MAMALLAPURAM ROAD CHENNAI 600 119 APRIL 2008

ACKNOWLEDGEMENT It is my privilege to express my gratitude and respect to all those who have guided me and inspired me during the course of the project work. First and foremost, I express my sincere gratitude to our beloved chancellor Thiru Jeppiaar, M.A, B.L, and also heartfelt thanks to our Directors Thiru. Marie Johnson, B.E, M.B.A., and Tmt. Mariazeena Johnson. B.E, M.B.A., for providing me the necessary facilities for the completion of my project. I also acknowledge our vice-chancellor Dr.V.S.R.K. Mouly, B.E, M.Sc (Engg), PhD, and Registrar Dr. S.S.Rau M.B.A, Ph.D for their constant support endorsement. I am indebted to the Head of the Department, Mr.GOPINATH for having been a constant source of support and encouragement for the completion of the project. I also express my sincere thanks to my internal guide Ms. KAVITHA for his constant guidance and supervision during the period of my project work. I would like to express my sincere thanks to my external guide Mr DINAKAR INDOWIND LIMITED for providing me the necessary facilities for the completion of the project. Finally I would like to thank my family members and friends for their encouragement and support.

CHAPTER

TITLE

1

Introduction

2

Company profile

3

Product profile

4

Need for the study

5

Objective of the study

6 7

Scope and limitations of the study Review of literature

8

Research methodology

9

Analysys and interpretation

10

Findings

11 12

Suggestions and recommendations Conclusion

13

Bibliography

14

Appendix

PAGE NO:

INTRODUCTION Inventories are approximately 60% of current assets in public limited companies in India and it constitutes the most significant part of the current assets. Because of large inventories maintained by firms considerable amount of funds is required to commit to them. If a firm neglects the management of inventories in long run it will effect the profitability. It is possible for a company to reduce its levels of inventories by using simple inventory planning and control techniques. Inventories may exist in various forms as stock of raw materials awaiting production; as stock of partially completed product; as finished goods; as goods in transit; as goods in warehouse distribution points’ as goods in the retail store anticipating consumer demand. But there are distinct cost generated by the existence of each of these types of inventory.

Inventory carries its unique set of cost factors, namely,  Procurement cost and/or set up cost.  Inventory holding cost.  Shortage or stock out cost and  Inventory control or system cost.

Inventory classification: Inventories may be classified as follows: a. Raw inventories: They include raw material, parts components and semi-finished products supplied by another firm and which are raw items for the present industry. b. In process inventories: They are semi-finished parts, work in process and partially finished products formed at various stage of production. c. Finished inventories: They are the finished goods lying in stockrooms and awaiting dispatch. d. Indirect inventories: They are maintenance repairs, and operating supplies which are consumed during the production process and generally do not form part of the product itself (e.g. petroleum products like petrol kerosene diesels, various oils and lubricants, machinery and plant spares, tools jobs and fixtures etc)

Inventory control: Inventory control is the means by which materials of the correct quantity and quality is made available as and when required with due regards to economy in storage, ordering costs and working capital. It may also be defined “as the systematic location, storage and recording of goods in such a way that desired degree of service can be made to the operating shop at minimum ultimate cost”

INVENTORY MANAGEMENT MEANING The term inventory refers to the stockpile of the products a firm is offering for sale and the components that make up the product. Generally inventory consists of raw material, work-in-progress and finished goods. There is a significant portion of large investment on inventories from the sale value of assets. So inventory control is an essential function on the part of management that will minimize the overall cost of production and also minimizes the profit on sales.

DEFINITION Inventory management is defined as “realizing the effect of inventories on the functioning of any organization, and to deal with all aspects of inventories such as functions connected with receiving, buying, stocking and issuing of materials” FUNCTIONS OF INVENTORY MANAGEMENT  Reducing or controlling irregularities in supply.  Buying or Producing in lots or batches.  To meet seasonal or cyclical demand  To take advantages of price discounts while buying items.  To maintain continuity to operation in production process.

INVENTORY CONTROL Inventory control is the process of deciding what and how much of various items are to be kept in stock. It also determines the time and quantity of various items to be procured. The basic objective of inventory control is to reduce investment in inventories

FUNCTIONS OF INVENTORY CONTROL  To run warehouse effectively. This includes layout, storing media utilization of storage space, receiving and issuing procedures etc.  To ensure timely available of inventories and avoid build up of stock levels.  Technical responsibility for the state of materials. This includes methods of storing, maintenance procedures, studies of deterioration and obsolescence.  Stock control system. Physical verification (stock taking), maintenance of recodes, ordering policies and procedures for the purchase of goods.  Maintenance of specified raw materials: general supplies work in process and component parts in sufficient quantities to meet the demand of production.  Protecting the inventory form losses due to improper handling and storing of good and unauthorized removal form stores.  Pricing all materials supplied to the shops so as to estimate material cost.

ADVANTAGES OF INVENTORY CONTROL: • It creates buffer between input and output. • It ensures against delays in deliveries. • It allows for possible increase in output. • It allows advantage of quantity discounts. • It ensures against scarcity of materials in the market. • It utilizes the benefit of price fluctuations, • It avoids inventory build-up.

An effective inventory management should

•

Ensure continuous supply of raw materials to facilitate uninterrupted.

• Maintain sufficient finished goods inventory for smooth sales operation and efficient customer service.

• Minimize carrying cost Forms of inventories: The various forms in which inventories exist in manufacturing company are •

Raw materials are those basic inputs that are converted into finished product through manufacturing process.

• Work-in-process inventories are semi-finished products and need mare work to become finished product for sale. Finished goods inventories are those completely manufactured products and ready for sale.

Company profile 1. INDUSTRY OVERVIEW World watch institute report “ The State of the world 1998" , on progress towards a sustainable society has noted that renewable energy production in the world is expanding rapidly. Wind generation is the fastest growing energy source in this decade and is expanding at 25% per year. The report recognizes India as a new ‘WIND SUPERPOWER’. With declining trend of cost an increase in the scale of wind turbine manufacturing , wind promises to become super power source globally in the first decades of this millennium. India is now the 4th largest wind power generator in the world after Germany , Spain and USA. Five nations – Germany , USA , Denmark , India and Spain account for 71.2 % of the worlds installed wind energy capacity.. Wind energy continues to be the fastest growing renewable energy source with worldwide wind power installed capacity reaching 78,728 MW as of May 2007.. Today , the capital cost of wind power projects is approx Rs 550 lacs per MW , thereby reducing the cost of the energy generation vis-àvis conventional energy, taking into consideration the fiscal benefits extended by Government of India.. As mentioned above the Indian government has introduced a package of incentives, some of which include tax concessions such as 80% accelerated depreciation , tax holidays for the power income u/s 801A, soft loans . Various financial incentives and benefits : • 80% depreciation benefit in the first year

• Low operational and maintenance costs • Zero input fuel cost • Shorter payback duration • Cost of power duration is very low after payback period • Zero import duty on certain parts (as notified by MNRE from time to time) • Tax holidays for new power projects after 10 years • Company being operational in a seller market, no marketing related issues The Indian Renewable Energy Development Agency (IREDA) is playing a significant role in promoting Renewable Energy Projects , in general and Wind energy projects in particular. Renewable energy is expected to create maximum impact in generation of electricity. Projections indicate that by the first decade of the new century, it would be cost effective to generate and supply renewable energy, aggregating to several thousand megawatts , as the efficiencies in the power generation through power generation through wind energy are increasing and the costs are decreasing while the costs of conventional power is increasing. Besides grid supply augmentation renewable energy technologies offer possibilities of distributed generation at or near points of use which can reduce peaking loads and save on costly up-gradation and maintenance of transmission and distribution networks growing demand. There are no major technical barriers for large scale penetration of wind power. India has now gained significant technical and operational experience and now is now on the threshold of ‘taking off’ in wind power. It offers a viable option in the energy supply mix, particularly in the context of the present constrains on conventional sources . it also offers an attractive investment

option to the private sector in the form of recently announced policies and drive towards private sector power generation. 2. The Electricity industry The Indian electricity market As on may 31, 2007 India’s power supply system had an installed generating capacity of around 1,34,000MW and thermal power plants powered by coal, gas, naptha or oil for accounted for approx 66% of total power generation capacity. Renewable sources of energy accounts for around 7% of the power generated, with Wind power having a share of around 5.29% . In the same year , central government controlled entities accounted for approx 34% of the total power generation capacity, the various state electricity boards (“SEBs”) accounted for approx 52% while private sector utilities accounted for approx 14%.

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

MW

Proportio n

State sector

69,347

52.09%

Central sector

45, 841

34.19%

Private sector

18, 389

13.72%

Total

1,34,077

100.00%

Fuel

MW

Thermal Coal Gas Oil

86,326 71,432 13,692 1,202

Proportion 64.39 53.28 10.21 0.90

Hydro Nuclear

33,486 4,120

24.98 3.07

Renewable

10,145

7.57

Wind Others Total

7093 3045 1,34,077

5.29 2.27 100.00

All India Generating Installed Capacity

Thermal sl no. Region

1 Northern

2 Western

3 Southern

Hydro

coal

Diesal

Total

12671.15 12671.1 3323.19 14.99

21365.6

1180

1220.18 36437.01

6678.5 22752.5 5820.72 17.48 28590.7

1840

2640.34 39749.54

10646.18 10646.1 15972.5 939.32 20498.1

1100

5899.33 38143.63

4 Eastern

2373.93 2373.9

N.Easter 5 n

1116 330

6 Island

7 All India

0 0

Gas

Nuclear R.E.S@

Total

14349.8 17.20

14557.0

0

227.81 17158.82

771.5

142.74

1244.2

0

146.01

2506.25

0

70.02

70.02

0

11.36

81.38

33485.76 71432.3 13691.7 1201.7 86325.8

4120 10145.36 134076.6

100,000 86,326 80,000 60,000 40,000

33,486

20,000 4,120

10,145

0 THERMAL

HYRO

NUCLEAR

RENEWABLE

Global Wind Energy

Technology advances have resulted in larger and better quality wind turbine generators with higher generation efficiencies at lower costs wind power markets. According to the TERI Report rapid wind power development has been driven by increasing interest in green house gas reduction and the expanding global power market. Furthermore , heightened environmental awareness has resulted in increase demand for “green power” in developed countries. Many countries have adopted “Renewable Portfolio Standards” which mandate a certain percentage of power generation to be met from renewable sources of energy such as wind energy. All over the world wind is generated electricity is treated preferentially by means of production credits and incentives. Internationally the cost of production of a kilowatt-hour of wind power has fallen by 20% over the past 5 years In World Energy Outlook 2004 the International Energy Agency or IEA, estimates the global electricity demand to double between 2002 and 2030, with demand for electricity likely to increase at much faster pace in developing countries like India an China. The IEA also estimates wind power’s share of total

electricity generation to grow 0.2% in 2002 to 3.0% in 2030 and it will be the 2nd largest renewable source of electricity after hydro power. The number of countries with wind power installations grew to over 61 countries by May 2007. large multi nationals such as General Electric and Siemens have now entered the wind power market through the acquisitions of existing wind turbine manufactures. Country

MW

%

Germany

20952

26.61

Spain

12500

15.88

USA

12376

15.72

India

7093

9.01

Denmark

3136

3.98

Others

22671

28.80

Total

78728

100.00

Germany

Others

Germany Spain USA India Denmark

Denmark Spain

Others

India USA

The International Energy Agency (IEA) in its world energy outlook 2004 estimates that the world electricity demand will double between 2002 and 2030. Globally the power sector is required to add an estimated 4800 GW of capacity to meet the projected increase in electricity demand and to replace ageing infrastructure. The IEA has estimated that this would require an investment of US$10 trillion and more than US$ 5 trillion of that amount will be required by developing countries alone. Estimated Wind power potential in India The wind power potential on macro level based data collected from 10 states considering only 1% of land availability is around 45,195 MW

Gross potential MW 1 Andhra Pradesh 8275 2 Karnataka 6620 3 Tamil Nadu 3050 4 Kerala 875 Total for Southern 18,820 India

1 2

Gujarat Maharashtra Rajasthan Total for India

9675 3650 5400 Western 18,725

1 Orissa 2 West Bengal Total for states

1700 450 Eastern 2,150

1 Madhya Pradesh Total for Central India

5500 5,500

Total for India

45,195

Key Factors Driving the Rapid Development of wind energy The key factors driving the growth of renewable energy and wind energy are • Recognition of the desire o address the human- induced climate change through a reduction of greenhouse gas emissions • Competitive energy sources facing input price • Desire by many countries to diversify the sources of their energy supply • Need to reduce the dependence on and depletion of non renewable sources • Vast improvement in wind power economics

Key Drivers For Wind Energy Wind energy is clean: A single 750 kilowatt wind turbine , operated for 1 year at a site with class 4 wind speeds (winds averaging 12.5-13.4 mph at 10 meters height), can be expected to displace a total of 1,179 tons (2.36 million pounds) of carbon dioxide , 6.9 tons of sulphur dioxide and 4.3 tons of nitrogen oxide. More wind energy means less smog, acid rain, and greenhouse gas emissions. Wind energy means jobs: Wind energy brings jobs and income to revitalize rural communities and bolster farm incomes against bad weather. Worldwide, the wind and solar industries are likely to be one of the biggest sources of new manufacturing jobs in the next country. Wind energy is abundant: With today’s technology , wind energy could provide electricity with turbines installed on less than 1 % land area. And within that area less than 5% of the land would be occupied by wind equipment- the remaining 95%could continue to be used for farming or ranching. Wind energy is inexhaustible: Unlike oil fields , fossil fuels etc wind energy is renewable in nature. Wind energy is domestic: It will never be subject to embargoes or “price shocks” caused by international conflicts. Wind energy is environmentally preferable: Traditional energy sources carry a host of serious environmental baggage: air pollution and acid rain ; the possibility of changing the earth’s climate; radioactive waste disposal; oil spills; and more. Wind energy’s environmental impacts are nill. Wind Energy Development A modern wind turbine is designed to generate high quality , network compatible electricity for more than 20 years, with remote monitoring and relatively low maintenance. There have been three major trends in the development of wind turbines in recent yrs

• Larger capacity and taller turbines, increase in individual turbine power output capacity over the last 25 years from 30KW machines in 1980 to 5000KW machines in 2005. • Increased efficiency: An overall efficiency increases of 2-3% annually over the last 15 years. • Investment costs have decreased: Significant technology developments including size , together with economies of scale in production have reduced the cost of wind energy generation by approx 80% over past 25 years. Currently design efforts are focussed on addressing grid compatibility, further improvements to acoustic performance and the emerging offshore market. Indian Wind Energy Demand The government of India identified the importance and potential of wind power generation as early as 1983, when it commenced a national wind power program to tap the then estimated potential of 45,000 MW. The Government of India’s market- oriented approach subsequently led to the commercial development of wind power technology in India. The broad based national program concentrates on wind resource assessment activities, establishment of new sites , involvement of utilities and industry , growth of infrastructure capability for manufacture , installation , operation and maintenance of WTGs and policy support. India has made steady progress in the development of wind power since the inception of the national wind power and is the forth largest country in the world with installations of 7093MW State Andhra Pradesh

Generation (MU) 1740

Gujarat 1613 Karnataka 2291 Kerala 16 Madhya Pradesh 238

Maharashtra 3227 West Bengal Tamil Nadu Rajasthan Total

2 15381 93 24,601

Key Drivers for the Growth of the Wind Energy Industry in India The TERI report cites the following as the key drivers for the growth of wind energy industry in India: • Wind power is a renewable based power generation technology which has demonstrated sufficiently low risk to gain the attention of the financial community and independent power developers for near – term projects. Significant technology advances have occurred since the first wind power plant was installed in the country in early eighties • The short gestation period offers wind energy as a viable alternative to conventional forms of power generation • Industrial learning curve theory suggests that costs decrease by 20% each time the number of units produced doubles. • So far as impacts on the power systems are concerned, it is an established fact that additional of wind power results in a) reduction in technical losses and b) strengthening of voltage levels. Therefore the initiatives taken by Govt of India and the various State Govt in relation to the establishment of a supportive and stable policy for investment in wind power have contributed to the recent growth the Indian wind power industry. As a result India today is among the world’s largest sustainable for renewable energy such as wind..

BUSINESS OVERVIEW Wind Farm Business As early as 1995, we saw the opportunity to enter into alternative energy. In particular, we studied and found wind power generation to be an attractive investment that compliments our business model. Why power generation • Huge Electricity Demand Supply Gap in India India’s economy has grown at a CAGR of 9.9% over the last 5 years. Much of this growth has been powered by rapid industrialization and rising affluence which has in turn, lead to sharp demand for energy. Going forward the CEA expects electricity demand to increase by 75% by the year 2012. As it is India has been a power deficit country for the last 5 decades. As of March 2006 the energy shortage was approximately 8.20% and the peak deficit was much higher at 12.28%. India thus requires an immediate, clean and cost effective solution to bridge the electricity demand supply gap. Why renewable energies • Conventional fossil fuel energies are prone to escalating feedstock prices and are highly polluted Globally demand for fossil fuels such as coal, gas and oil, which are the conventional sources of energy have outstripped supply. Prices of feedstock for thermal power generators that run on conventional sources of fuel have been sharply escalating. The adverse environment effects caused by the conventional energy production are also of key global concern. The world is in need of alternative and renewable sources of energy. Rationale for wind energy • Abundance of wind resources in India not yet tapped – wind is inexhaustible India is blessed with geographical and climate conditions that generate significant wind resources. At a total installed wind power generation

capacity of 7093 MW as of May 2007, India ranks 4th globally, after Germany , Spain and the USA. Against India’s total gross potential of 45,195MW the current installed capacity has tremendous room for growth. • Vastly improved cost economics over the last 25 years As one of the oldest forms of alternative energy, wind power has proven to be one of the most commercially viable. Realizing the significant potential of wind energy wind turbine manufactures have been dedicated much resources , time and effort in researching and developing bigger and better wind turbine generators. In addition more sophisticated wind resource assessment techniques have been developed in order to harness wind energy for electricity generation more efficiently and effectively. As a result there has been phenomenal improvement and advancement in wind power technology over the last 25 years. For instance in the 1980s, sizes of commercial wind turbine used to be a mere 50 KW in capacity with rotor diameters of some 15 meters. The current turbines are of 5000 KW in capacity with rotor diameters of over 124 meters installed in Germany. Such improvement in technology has substantially enhanced the cost effectiveness of wind turbines significantly. • Attractive legislative incentives The Electricity Act 2003 which came into force in India in June 2003 consolidated and replaced a number of earlier electricity legislations. The Act has introduced significant changes in industry structure and provides an enabling framework for the accelerated and more efficient development of the power sector. The main objective of the Act is to provide “power for all”. It also recognizes the importance of renewable energy and has placed emphasis through legislative changes on its development. The Act mandates the provision of suitable measures or connectivity and procurement of minimum percentage of power by SEBs\ State Utilities from renewables. In addition it stipulates suitable policy formulation and tariff setting by respective State govt’s to ensure adequate returns to investors in renewable power infrastructure and a high degree of certainty of the returns. The Act also brings clarity to the roles of different organizations and provides for better financial management of the state Electricity Boards.

• Other incentives – the Kyoto protocol India is a signatory to the Kyoto protocol an International treaty that was adopted at COP 3 in Kyoto Japan on 11th December, 1997 to help reduce greenhouse gas(GHG) emissions responsible for the global warming. This protocol and new European Union Emission rules (EUR) have created a market in which companies and Govt’s that reduce GHG emissions levels can sell the ensuing emissions reduction\carbon credits to countries that are exceeding their GHG emission quotas. Our Business We started developing wind farm in a small way by installing 1 no. of 225 KW Wind Electric Generator, in September 1995. Since then our company has been expanding our wind farm capacity every year to reach the present capacity of 16.825MW owned by us and 17.915MW for others whose Operations and Maintenance is with our company. The company is currently in process of implementing additional 9MW capacity in Karnataka as mentioned in section ‘Objects of the issue’. The current scope of operations of our company includes: a) wind power generation b) Turnkey operation for windmill projects c) Operations & Maintenance of WEG’s We offer ‘Green Power’ to our customers which include State Electricity Boards and Corporates. Other than the above they are also in business of providing O&M services for windmills. We have been selling the power generated to TNEB and various private corporate clients in Karnataka such as Hindustan Coca Cola Beverages Private Limited, Karnataka Distillers Limited, United Breweries Limited, H&R Johnson India Limited, Delphi Automotive Systems Private Limited and Spicer India Limited. Under third party sale the electricity revenues generated from the sale to SEBs. Under turnkey projects, our Company provides total solution for installation, operation and maintenance of windmills for third parties.

Our company has till date executed turnkey projects to the tune of 14,175 MW. Other than the above we are also into business of providing O&M services for windmills. The focus of the O&M services for windmills. The focus of the O&M operations has a major thrust on keeping the machine availability over 90%. This is done to ensure the machine to generate optimum energy when the wind speed in the given area is adequate. This existing state wise installed capacities are given below: Product 2004 Installed Capacity

Wind mills owned by us 17.875MW

Year ended 2005 2006 Installed Installed Capacity Capacity

2007 Installed Capacity

17.625MW

16.825MW

16.825MW

Karnataka Tamil Nadu Andhra Pradesh

4.10MW 13.525MW 0.25MW

4.10MW 13.525MW -

3.30MW 13.525MW -

3.30MW 13.525MW -

Wind mills operated & maintained by us

5.125MW

6.625MW

17.915MW

17.915MW

Wind Farm Concept

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

Wind Electric Generators The WEG manufacturers have their own design of Wind Turbine. In general, the wind machine consists of following major components:a) b) c) d) e) f) g) h) i)

Tower (lattice or Tubular) Nacelle Rotor Blades Gear Box & Transmission System Generator / System Yawing System Microprocessor based control panel Power & Grid System Breaking / Control System

He wind turbines are available in a wide range from 225 KW capacities to large machines of 5 Mega Watt(MW) capacities world wide. In India Wind turbines of 225 KW to 1650 KW capacities are most popular as they have proved to be commercially viable. The wind electric generator is a simple machine which converts the mechanical energy

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

Our Competitive Strengths 1. We are an existing profit making company with a good track record or over a decade. 2. Our Company has qualified and experienced manpower in its field of operations. 3. We derive benefit from the fact that our existing profects are located in Tamil Nadu and Karnataka, which are high wind zones.

Vision And Mission

Indowind Energy Limited is committed to the development and promotion of Green PowerTM , generation in the country. Reflecting this commitment, clear statements of Vision, Mission of company are as follows: Vision : To excel in the generation of Green Power TM , as an alternative and clean energy technology company, leveraging on the 6m resources, through a satisfied and motivated workforce. The corporate vision of the company is to be a major global player in the renewable energy space using State of the Art Technology to set up World class projects. Effective utilization of the 6 M resources viz. Man , Machine, Material, Money, Market & Management to achieve the objective. Providing a comfortable work environment with adequate employee benefits by being a preferred employer.

Mission : To emerge as a leading and sustainable company committed to promotion and generation of “ Green Power TM ” through Renewable Sources of Energy. Mission is to be a pioneer in the IPP space, growing into an environmentally clean energy company in the field of power generation, by tapping new opportunities for growth.

STATEMENTS OF ASSETS AND LIABILITIES

SL.NO PARTICULARS A Fixed Assets Gross Block Less: Depreciation Less: Revaluation Reserve NET BLOCK Capital Work in Progress Capital advances

B C

D

E F

30.06.2003 30.06.2004 30.06.2005 30.06.2006 30.06.2007 1,964.82 377.82

2,496.87 480.53

2,337.72 518.59

2,337.82 596.59

2,528.07 697.77

640 947

640 1,376.34

200 1,619.13

60 1,583.23

60 1,770.30

956.39 1,238.90

0 1,249.40

8.39 1,668.00

10.02 2,822.42

17.08 3,018.99

TOTAL Investment Current Assets, Loans& Advances Work in Progress Sundry Debtors Cash and Bank Balances Loans and Advances Other Current Assets Deferred Tax Assets

3,142.29 91.17

2,625.74 69.06

3,295.52 1.25

4,415.67 1.25

4,806.37 271.91

0 332.59

1,426.21 221.77

820.13 253.76

515.43 773.59

1,347.26 817.18

77.25 3,389.80 170.02 0.00

59.94 1,022.28 155.71 7.42

27.87 672.75 212.71 0

211.81 936.73 223.29 0

88.21 853.07 271.55 0

TOTAL Liabilities and Provisions Preference shares Secured Loans Unsecured Loans Deferred Tax Liability Current Liabilities & Provisions

3,969.66

2,893.33

1,987.22

2,660.85

3,377.27

1,600.00 404.55 131.78 0

1,400.00 357.37 728.10 0

400 632.72 246.65 31.7

400 846.74 170.16 42.4

400 1,591.95 0 23.02

2,517.00

343.45

178.91

310.01

483.09

TOTAL NET WORTH(A+B+C+D) Represented by Equity Share Capital Reserve & Surplus Less: Revaluation Reserve Less: Miscellaneous

4,653.33

2,828.92

1,489.98

1,769.31

2,498.06

2,549.79

2,759.21

3,794.01

5,308.46

5,957.49

753.00 2,436.79

1,506.00 1,899.37

2,536.78 1,471.63

3,645.68 1,748.16

3,645.68 2,406.14

640.00 0.00

640.00 6.16

200.00 14.40

60.00 25.39

60.00 34.33

Expenses

NET WORTH

2,549.79

STATEMENT OF PROFIT AND LOSS

2,759.21

3,794.01

5,308.46

5,957.49

SL.NO A

B

C

D E

PARTICULARS INCOME a) Power Income b) Project Income Total Income Other Income

30.06.2003

30.06.2004

30.06.2005

30.06.2006

30.06.2007

568.11 0 568.11 988.36

525.59 0 525.59 340.00

787.13 1,080 1,867.13 116.30

764.30 1,567.50 2331.8 271.61

772.09 1,640 2412.09 345.35

TOTAL Expenditure Raw material expenses Operating expenses Personnel Expenses Administrative expenses

1,556.47

865.59

1,983.43

2,603.41

2,757.44

0.00 75.98 31.67 64.59

0.00 78 40.76 88.19

778.59 108.01 48.57 88.83

1,095.86 238.64 35.65 140.1

1,231.18 212.58 45.06 128.88

TOTAL Net profit before interest, depreciation Depreciation Interest & financial charges PROFIT/LOSS BEFORE TAX Provision for taxation -Current Tax -Deferred Tax PROFIT/LOSS AFTER TAX Extra ordinary items PROFIT/LOSS AFTER EXTRA ITEMS Less: dividend on preference shares Less: tax on dividend Less: dividend on Equity Shares Less: tax on dividend Profit available for appropriation less: transfer to capital reserve Balance b\f from last year Profit transferred to B\S

172.24

206.95

1,024.00

1,510.25

1,617.70

1,384.23 91.27

658.64 104.80

959.43 106.5

1,093.16 77.99

1,139.74 101.18

1,046.00

248.33

383.53

439.43

371.66

246.96

305.51

469.4

575.74

666.90

6.83 0.00

5.23 -7.42

16.04 39.12

14.13 10.71

28.30 -19.38

240.13 0.00

307.70 0.00

414.24 0

550.90 0.00

657.98 0.00

66.00 7.26

0.00 0.00

0 0

0.00 0.00

0.00 0.00

60.24 6.53

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

100.10

307.70

414.24

550.90

657.98

0.00

0.00

0.00

30.00

0.00

0.00 100.10

0.00 307.70

0.00 414.24

0.00 520.90

0.00 627.98

Significant Accounting Policies & notes to Accounts

1 Significant Accounting policy: The accounts are prepared under the historical cost convention(except for revaluation of certain fixed assets)and materially comply with the mandatory accounting standards issued by the Institute of Chartered Accountants of India. The significant accounting policies followed by the company are as stated below:

A. FIXED ASSETS Fixed assets are stated at a cost less depreciation and including revaluation cost. The cost of comprises of purchase risk, imports duties , levies and any directly attributable cost of bringing the assets to its working condition for the intended use. The Company treats Non Refundable Deposits for Wind Electric Generators as Guarantee deposits since related assets are in its control, earning income of power generation. B. DEPRECIATION Depreciation on fixed assets is provided on straight line method at the rate and in the manner prescribed in schedule X111 of the Companies Act 1956 on cost including revaluation cost, less accumulated depreciation. C. INVESTMENTS Investments are held by the company as long term asset. The market fluctuation for the increase\decrease in the value of investments are not accounted as the investments are held in unlisted companies. Company treats key man insurance as investments.

D. INVENTORIES

Inventories are valued at cost, net realizable value in the case of unsold power and in case of work- in – progress it is valued to the extent of its completion including interest payments related to the projects. E. REVENUE RECOGNITION Revenue consists of sale of power, sale of WEG and other income.. Sale of power is recognised at the point of dispatch of electricity generated from Plant and Stock points. Sale of WEG is recognized at the point of sale of windmill less manufacturing expenses. Other Income is recognized net off of related expenses including accrued bonus on investments. F. RETIREMENT BENEFITS The Company has provided for retirement benefits to the employees such as gratuity, Provident Fund and ESI. But in the case of gratuity, only provision is made as per management’s estimate and has not formulated any policy for investments of the said gratuity provision. G. TAX ON INCOME The company has provided Rs 28,30,165/- taking in to account the profit for the period April to March 2007 H. FOREIGN CURRENCY TRANSATION Foreign currency transactions are recorded at exchange rate prevailing at the time of transaction. Exchange differences are not recognized since payments are made in advance for purchases. I. PROVISION, CONTINGENT LIABILITIES AND CONTIGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of pass events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. SEGMENT REPORTING:

Segment Reporting for the year 2003-2004 Segment reporting

Power

Project

Others

Total

Segment income

525.59

3679.86

192.15

4397.60

Segment expense

416.75

3532.01

52.56

4001.32

Segment results

108.84

147.85

139.59

396.28

Un allocable expense

-

-

-

90.78

Total profit

-

-

-

305.50

Segment assets

4430.17

483.55

1743.32

6657.04

Segment liabilities

472.37

-

1379.30

1851.67

Segment Reporting for the year 2004-2005

Segment reporting

Power

Project

Others

Total

Segment income

787.13

1080.00

136.45

2003.57

Segment expense

584.41

784.11

66.45

1434.97

Segment results

202.72

295.89

69.99

568.60

Corporate office exp

19.84

49.60

29.76

99.20

Total profit

182.88

46.89

40.23

469.41

Segment assets

3821.22

828.52

866.82

5516.56

Segment liabilities

221.26

553.49

315.23

1089.99

Segment Reporting for the year 2005-2006

Segment reporting

Power

Project

Others

Total

Segment income

764.30

1567.50

271.61

2603.41

Segment expense

93.67

1264.13

41.33

1958.10

Segment results

170.64

303.37

230.28

704.29

Corporate office exp

-

-

-

128.54

Total profit

170.64

303.37

230.38

575.75

Segment assets

5313.59

894.27

955.30

7163.16

Segment liabilities

241.34

699.46

428.52

1369.32

Segment Reporting for the year 2006-2007

Segment reporting

Power

Project

Others

Total

Segment income

77,208,567

164,000,000

34,535,603

275,744,170

Segment expense

66,108,642

125,379,473

5,371,510

196,859,625

Segment results

11,099,925

38,620,527

29,164,093

78,884,545

Corporate office exp

12,194,528

Total profit

11,099,925

38,620,527

29,164,093

66,690,017

Segment assets

574,740,378

182,641,129

97,607,344

854,988,851

Segment liabilities

46,032,521

150,791,775

12,981,888

209,806,184

Cash flow statement

30.06.03 30.06.04 30.06.05 30.06.06 30.06.07 A. Cash flow from operations Adjustments add: depreciation less: income from other activities

91.3

104.8

106.5

77.99

101.18

188

305.9

69.99

242.77

345.35

150.3

104.39

505.9

410.96

422.73

-114.45

110.82

-31.99

-519.83

-43.59

loans & advances -2969.11 2357.53 295.25 -269.93 increase\decrease in other c. assets 305.8 445.58 -2.72 -4.63 increase\decrease in gurantee deposit 122.64 -10.5 -418.6 -1154.42 increase\decrease in deferred tax _ -7.42 31.7 10.7 current liability-1577.2 increase\decrease 2396.26 3 -338.18 131.09 increase\decrease in other current liability _ _ _ -41.06 increase\decrease in current -1848.0 assets -258.86 427.62 -464.54 8 (A)CASH FLOW FROM -1437.1 OPERATIONS -108.56 532.01 41.37 2 B. Cash flow from investing activities net income from other activities 188 305.9 69.99 242.77 purchase\sale of fixed assets -170.1 -532.09 26.65 70.18 increase\decrease in capital W-I-P -316.64 _ 157.69 163.07 purchase\sale of investments -6.1 22.03 67.81 _

30.71

operating profit before WC WORKING CAPITAL CHANGES sundry debtorsdecrease\increase

4.69 -196.57 -19.38 164.15 -170.16 -230.15 192.58

345.35 -288.25 -838.89 -270.66

(B)CASH FLOW FROM INVESTING

C.cash flow from financing activities proceed from issue of equity shares proceed from share premium proceed from issue of preference shares redemption of preference shares proceeds from secured loans

-304.84

_ _

_

847.8 _

500 _

_

0 _ -500

137.8 _

misc expenses paid

_

476.02

94.2 _

-100 _

_

Net Increase in Cash (A+B+C) opening cash& cash equivalents closing cash & cash equivalents

322.14

-200 _

_

repayment of secured loans increase\decrease in reserves dividend & dividend tax(paid)

(C)Cash flow from financing activities

-204.16

-1052.4 5

_ -47.18

_

_ -140.1

0 _ 214.02

51.36 _

745.21

0 _ 0 _

91.93

61.3

0 _

-6.1

-8.24

-11

-8.94

397.7

-1

-395.58

1145.02

736.27

-15.7

-17.36

-32.07

183.92

-123.6

93

77.3

59.94

27.87

211.81

7.3

59.94

27.87

211.81

88.21

RESEARCH METHODOLOGY OBJECTIVES OF THE STUDY •

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

•

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

•

To analyze the inventory level of the company.

•

Provide satisfactory service to customers.

•

Eliminate wastages and handling cost.

•

To find means of taking advantage of price fluctuations and buy economically. NEED FOR THE STUDY

 In Wheels India the annual expenditure for both direct materials like steel and paint and indirect inventories like Raw materials, Components spares and Consumables are 65% of the total expenditure.  Even a small percentage of savings on inventory cost could improve the profitability of the company.  To look in the materials requirements and consumption and make suggestions to reduce the total expenditure on materials by using methods and techniques of inventory management. SCOPE OF THE STUDY The scope of the study is to identify the material requirement of the company and controlling and managing the inventory level and also to suggest means of improvement in the existing process if necessary.

PERIOD OF THE STUDY The study has been conducted for 3 months (January to March, 2007) including data collection, data analysis and report preparation. TOOLS OF THE STUDY  ABC Analysis  HML Analysis  FSN Analysis  SDE Analysis  Economic Order Quantity  Safety Stock  Maximum Stock level

METHODOLOGY The methodology followed in this study involves techniques of ABC Analysis, HML Analysis, FSN Analysis, SDE Analysis, Economic Order Quantity, Safety Stock and Maximum Stock level. This study is completely based on the secondary data obtained from Wheels India Limited. LIMITATIONS OF THE STUDY  Time has been a limiting factor and it has been difficult to analysis the various aspects of inventories with the prescribed time.  The ordering cost is constant (below one rupee) because the sales have been done through a mail.  The carrying cost also is constant since the company has to pay the bank interest as 12% for the inventories, which they are buying from their suppliers in bulk orders. Thus, it is applicable to take as 12%.  There are no scarce items in SDE Analysis and also some of the items are difficult to purchase and rest of the items will be easily available in the market as it depends on the vendors.  There will be high risk, if the company is not maintaining proper safety stock level.  The company should eliminate wastages so as to control the inventories

INVENTORY MANAGEMENT TECHNIQUES 1). ECONOMIC ORDER QUANTITY (EOQ) One of the major inventory management techniques that determine how many inventories should be added when inventory is replenished. If the firm is buying material, if has to decide lots in it has to be purchased on each replenishment. The formula for calculating EOQ is as follows:

Analyses of cost of maintaining certain level of inventories are  Ordering Cost The term ordering cost refers to the entire costs of acquiring raw materials, they are purchased ordering, Transporting, receiving, inspecting and storing. Ordering cost increase in proportion to the number of orders placed. It consists of the following points: a) Rent for the space used by the purchasing department; b) The salaries and wages of officers and staff in the purchasing department; c) The depreciation on the equipment and furniture used by the department;

Relationship between Cost and Quantity

d) The postage, telegram and telephone bills; e) The stationery and other consumables required by the purchasing department; f) The entertainment charges incurred on receiving vendors; g) Any travelling expenditure incurred; h) Lawyers and court fees due to any legal matters arising out of purchase. Obviously, the more the number of orders placed in a period, the more would be the stationery and postage consumed, more staff and officers would be required for

handling the work, more would be the space required for accommodating them and so on. Thus, the total expenditure on purchasing or ordering would depend on the number of orders placed.  Carrying Cost Carrying cost incurred for maintaining a given level of inventory. It includes storage, insurance, taxes, deterioration and obsolescence. Inventory carrying costs arise out of the following factors: i.

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

ii.

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

iii.

The rent for the stores.

iv.

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

v.

Any loss of material through pilferage and deterioration.

vi.

Materials rendered obsolete because of design changes or other factors,

vii.

Taxes on inventories

viii.

Stores insurance charges and Stationery and other consumables used by the stores, etc

2). MAXIMUM STOCK LEVEL:

It is upper limit or maximum limit to which the inventory can be kept in the stores at any time. Factors essential for fixing the maximum level:  Fixation of rate of consumption required for production  Availability of storage space.  Cost of storage.  Availability of finance.  Availability of quality of raw-materials.  Cost of insurance.  Economic Ordering Quantity (EOQ).

Formula for calculating maximum stock level is as follows:

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

3). MINIMUM STOCK LEVEL:

It is the lower or minimum limit of the inventory, which must be kept in stores at any time. Factors essential for fixing the minimum level:  Re-order level  Normal consumption of materials.  Nature of material  Time gap between placing an order and receiving the goods. 4). LEAD TIME:

Lead-time is the time normally taken in replenishing inventory after the order has been placed. Lead-time involves the time for the completion of some of the following activities:  Raising of a purchase requisition,  Inquiries, tenders, quotations,  Receiving quotations, tenders, their scrutiny and approval,  Placement of order on a supplier  Transportation and clearing  Receipt of good at the company.  Receiving inspection,

 Taking into stock. Obviously, in order or receive supplies before the stock reaches zero level, it is necessary to order the materials much in advance i.e. when the stock available in sufficient to last during the lead-time. 5). SAFETY STOCK: It is also known as Buffer or Reserve. It is well known from experience that neither the annual consumption rate of a material nor its lead-time is constant throughout the year. In some cases, a stock out would be experienced resulting into hampering of production. To guard mainly against these uncertainties in consumption rate and lead-time, an extra stock is maintained all along and this is called as “Buffer Stock or Safety Stock or Reserve”. This stock also comes handy in case of a) Any excessive in-process rejections. b)

Rejections at the time of receipt or goods due to damages or sub-standard quantity, etc.

Since Safety Stock is a part of inventory, it should be maintained just sufficient to guard against the uncertainties and not too excessive.

Optimum Safety Stock: If the Safety Stock maintained is inadequately low the inventory carrying Costs would be low but stock-outs will be frequently experienced and the stock out Costs would be very high. Hence, it calls for inventory costs to arrive at an optimum safety stock.

Stock outs may give rise to the following losses:  Customer dissatisfaction or customer loss,  Loss of production,  Loading machines or men,  Emergency purchases at high priced,  Extra transportation charges for speedier modes of transportation. 6). RE-ORDER POINT: Economic Order Quantity determines the quantity of materials to be purchase. Reorder point helps in determining the time at which the order should placed. The reorder point is that the inventory level at which an order should placed. The reorder point helps in inventory level at which the order should placed. The reorder point is that the inventory level at which an order should be placed to replenish the inventory to determine the reorder point under certainty, it should know the lead time, average usage and economic order quantity. The formula for re-order level is as follows: Re-order level = Safety Stock + Normal lead Time Consumption. 7). ABC ANALYSIS Concept

It is a selective inventory control; usually a firm has to maintain several types of inventories. It is not desirable to keep the same degree of control on all items. The firm should pay maximum attention to those items whose value is the highest.

The firm should, therefore classify inventories to identify which items should receive the most effort in so controlling. The firm should be selective in its approach is called the ABC analysis and tends to measure the significance of each item of inventories in term of value.

Classification of items: •

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

•

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

•

‘B’ items, fall in between these two categories and require reasonable attentions of management.

Steps involved in implementation of ABC analysis  Classify the items of inventories, determine the expected use in units and price per unit for each item.  Determine the total value of each item by multiplying the expected unit price.  Rank the items in accordance with the total value, giving first rank to the item with highest total value and so on.  Compute the ratios of the numbers of units each item to total units of all items and ratio of total value of each item to total value of all items.  Combine items on the basic of their relative value to form three categories – A, B and C.

8). SDE ANALYSIS: This analysis is based upon the availability position of an item. Especially, in developing countries where certain items are scarce, this analysis is very useful.

S – Refers to Scarce items, especially imported items and those which are in short supply. D – Refers to difficult items, which are available in indigenous market but cannot be procured easily. For example, items which have to come form far off cities or for which reliable suppliers are difficult to find. E – Refers to items which are easily available (mostly local items).

9). HML ANALYSIS: This cost per item is considered for this analysis and all items are classified as High Cost (H), Medium Cost (M), and Low Cost (L) items. This type of analysis is useful for keeping control over consumption at departmental level, and for deciding the frequency of physical verification. 10). FSN ANALYSIS: Here the quantity and rates of consumption are analyzed to classify the items as – Fast Moving (F), Slow Moving (S), and Non-Moving (N) items. The Fast and Slow Moving classification help in arrangement of stocks in the stores and in deciding the distribution and handling methods. It is found that many companies maintain huge stocks of non-moving items and the number of such items runs well over a thousand. The following steps are taken before disposal:

a) Circulate a list of non-moving to production, design and other departments and classify these into: •

Items which can be used in future as such;

•

Items which need modifications for use in future;

•

Items that cannot be used.

b) The list of items that cannot be used should be sent to all similar organizations and probable user for sale or exchange. c) These items, if cannot be disposed off to similar organizations, they should be put to open auction.

CLASSIFICATION ON THE BASIS OF ABC ANALYSIS

Cum stock

Cum %

A B C

158785.3

3.54

A

295087.98

6.58

A

415308.94

9.26

A

110473.66

525782.6

92504.86 81000

618287.46 699287.46

76293.56

775581.02

74270.78

849851.8

70875.68

920727.48

63720 60241

984447.48 1044688.5

12

GRAPHITE GREASE (GARONEX R) GES PIEGEON RACK ACRYLIC DOORSEASONED RUBBER WOOD PALLET 87 X 28 BASE 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) CASTROL SUPER EDGE 7/SW 131B GRADE OIL ARMOURED JELLY FILLED TELEPHONE CABLE 20 3.15 MM WELDING ELECTRODE - 90 (FOR GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG

11.73 A 13.7 9 A 15.6 A

59877.2

1104565.7

13

HYD.OIL ELFOLNA-DS 46 SUPERCLEAN

58219.74

1162785.4

14

SANDER DISC GR 36 (ZIRCON) RAJ CUT SUPER COOLANT OIL (EPSOL SUPER

57879 52326.88

DESCRIPTION

1

SANDER DISC -ZIRKON - GR 36

2

RAJ HYDRA SUPER HL 68 (BULK)

3

CASTROL ILOFORM TDN 81 - N OIL MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB

4 5 6 7 8 9 10 11

15

STOCK 158785.3 2 136302.6 8 120220.9 6

A

1220664.4

17.3 18.9 6 20.5 4 21.9 6 23.3 24.6 4 25.9 4 27.2 3

1272991.3

28.4

A

A A A A A A A

18

3.15 MM WELDING ELECTRODE SUNBOND( 60 ARMOURED JELLY FILLED TELEPHONE CABLE 50 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600

19

HIDRAW HD OIL

43845.3

1458595.9

20

42555.15

1501151.1

21

RUSTILLO OIL DW 901 42" X 42" WOODEN PALLET WITH 1 BASE &1

41092.37

1542243.4

22

ALLEN SCREW 1.1/8"BSW X 5"

39970.63

1582214.1

23

39844.2

1622058.3

24

G WHEEL 400X50X127 AA60 L7 127 4.0 MM WELDING ELECTRODE SUN BOND SS

38133.51

1660191.8

25

POLYESTER STRAPPING TAPE 16MM X

37752.9

1697944.7

26

37630.92

1735575.6

27

RAJ HYDR SUPER HL68(BARREL) SEASONED RUB.WOOD PALLET 87"X31"-CAT

37615.25

1773190.9

28

VSM COATED BELT ZK713X SIZE

36131.58

1809322.4

29

TYRE 10.00 X 20-16PR

35956

1845278.4

30

SODIUM HYDRO SULPHITE EXCEL DEBURRING AND FINISHING WHEEL PACKING STICKERS "DESPATCH DETAILS" GRINDING WHEEL 450X50X203mm A46K5-V10 12 " LEATHER GLOVES WITH CADA CUFF

35803

1881081.4

35762.8

1916844.2

35309.73

1952154

35124.7 35094.19

1987278.7 2022372.9

34680.8

2057053.7

34492.89

2091546.5

32528.46

2124075

32270.5

2156345.5

16 17

31 32 33 34 35

51388.08

1324379.4

46000

1370379.4

44371.24

1414750.6

38

GUARD ST.GRINDER-Z. MODEL ABRASIVE BELT K 815Y50MM,WX1000MM 2.5 MM WELDING ELECTRODE SUN BOND SS SEASONED RUB.WOOD PALLET 87" X 29"-BASE

39

COOLANT OIL

31161.44

2187506.9

40

STEEL SHOTS GR S 390

31151.77

2218658.7

36 37

29.5 4 30.5 7 31.5 6 32.5 4 33.4 8

A A A A A

34.4 35.2 9 36.1 8 37.0 3 37.8 7 38.7 1 39.5 5 40.3 6 41.1 6 41.9 6 42.7 6 43.5 4 44.3 3 45.11 45.8 8 46.6 5 47.3 8

A

48.1 48.7 9 49.4 9

A

A A A A A A A A A A A A A A A A

A A

41

JOHNDHEER WOODEN PALLET 87" X 32"

29960

2248618.7

42 43

MAXTREAT-2902 4" X 4"X 1/2",/3/8" MS ANGLE STRAPPING TAPE 16 X 1600 GREEN COLOUR SERVO MESH SP 220 OIL

28061.83 27763.55

2276680.5 2304444.1

27651.2 26110.8

2332095.3 2358206.1

25390.5

2383596.6

47

STEEL SHOTS GR S 460 STEEL STRIP IN BAND [ITW SIGNODE 3415

25278.58

2408875.2

48

RAJ HYDRA SUPER HL 46 EQ TO SERVO

25183.24

2434058.4

49

SERVO SYSTEM 150

23666.71

2457725.1

50

6" S.S PIPE -SCH-40

23504.22

2481229.3

51

23015.44

2504244.8

52

2.5 FERROSPEED SUNBOND – 135 (FOR NUT RUNNER - 10MM A/F X 50MM L.(NON-

22660

2526904.8

53

OIL - MAGNA GC – 32

21582.99

2548487.8

54 55

HAMMER CHIPPING LT/LK ML 12 SPARE KIT

21473.91 21440.28

2569961.7 2591402

56

CAUSTIC SODA (FLAKE)

21358.61

2612760.6

57

ROTARY BURR-K3

21174.62

2633935.2

58

COCONUT OIL

20850.05

2654785.2

59

SANDER DISK 7"-CARBORUNDUM GR36

20552

2675337.2

60

GUARD FOR ST.GRINDER METAL PALLET BASE CUST JAPAN TOP COVER

20530.39

2695867.6

20526.97

2716394.6

20351.31

2736745.9

20110.36

2756856.3

64

WHITE CLOTH 3M FLOW STREAM BELT MOUNTED SUPPLIED AIR ARMOURED JELLY FILLED TELEPHONE CABLE 5

20000

2776856.3

65

CONTCT KIT FOR TEL.LA5-

19517

2796373.3

66

GLUE POWDER

19392

2815765.3

44 45 46

61 62 63

50.1 6 50.7 8 51.4 52.0 2 52.6 53.1 7 53.7 3 54.2 9 54.8 2 55.3 5 55.8 6 56.3 6 56.8 5 57.3 3 57.8 58.2 8 58.7 5 59.2 2 59.6 8 60.1 3 60.5 9 61.0 5 61.4 9 61.9 4 62.3 8 62.8 1

A A A B B B B B B B B B B B B B B B B B B B B B B B

67

MASKING TAPE 3"

19375.33

2835140.6

68

19319.65

2854460.3

69

MOLYGRAPH STENOL 50 S SILVER WOOD PALLET FOR MWSD WHEEL-

19134.57

2873594.8

70

WOODEN PALLET 48"X48" [SILVER OAK]

18797.84

2892392.7

71

18159.91

2910552.6

72

SILICAGEL GRINDING WHEEL 180 X 7 X 22 GR.36 (SAK

18138.74

2928691.3

73

COOLANT OIL ITW WS600N

18103.04

2946794.4

74

RAJ ULTRAFORM HDD 140

18042.26

2964836.6

75

18000.9

2982837.5

76

36MM T/S DRILL [ADDISSION MAKE] ARMOURED JELLY FILLED TELEPHONE CABLE 10

18000

3000837.5

77

E 115 OERLIKON ELECTRODE 4MM

17575.14

3018412.7

78

17506.5

3035919.2

79

RESIN 220 NA INDION TARPAULIN-HDPE - SIZE: 24 X 18, 150 GSM

17220

3053139.2

80

MACHINE GRADE STRETCH WRAP

17022.58

3070161.7

81

TYRE-7.00 X15 12PR

16917.5

3087079.2

82

FLEXICON HOSE ST.GLAND FOR PG 48

16825.09

3103904.3

83

E- OIL (FUEL ADDITIVE )

16710.3

3120614.6

84

EP VALVE - V012 45 3P DS MO -

16632.94

3137247.6

85

FILDROP COOLITE-7 (MAK GLIT CHEM)

16324.02

3153571.6

86

WOOD PRIMER (20 LTS)

16245.98

3169817.6

87

CABLE ASSLY. 0120601547

16191

3186008.6

88

CHAIN DUPLEX 1.1/2"PITCH

16045.4

3202054

89

HEX H T BOLT & NUT M14 X 120MM VERTICAL SANDER HD CP865S, CODE NO. LDPE SHEET VIRGIN 36" X 36" X 350G

16036.73

3218090.7

16009.03 15907.32

3234099.7 3250007

90 91

63.2 4 63.6 7

B B

64.1 64.5 2 64.9 2 65.3 3 65.7 3 66.1 3 66.5 3 66.9 4 67.3 3 67.7 2

B

68.1 68.4 8 68.8 6 69.2 4 69.6 1 69.9 8 70.3 4 70.7 1 71.0 7 71.4 2 71.7 8 72.1 4 72.4

C

B B B B B B B B B

C C C C C C C C C C C C

92

ESCORTS U TYPE AIR HEATER 1.5 K W 230V

15849.31

3265856.4

15496

3281352.4

15293.18

3296645.5

15223.03

3311868.6

96

WELDING ELECTRODE 3.15MM E115 GRINDING WHEEL 304.8X25.4X25.4 A46Q5-

15162.75

3327031.3

97

INDION-7106

15069.43

3342100.7

98 99 10 0

RUBBER PAD 2" X 2" X 3MM THICK TROLLEY WHEEL PNO 30208 ZRA1

14779.75 14457.84

3356880.5 3371338.3

WHEEL DISPATCH STRICKER CV 475

14393.87

3385732.2

93 94 95

EXTN ROD TYPE IN SIDE MICRO METER TAPER SHANK DRILL 54 MM X 200 MM LONG

ABC ANALYSIS

C 22% A 43%

B 35%

Figure 1

INTERPRETATION:

9 72.8 5 73.1 9 73.5 3 73.8 7 74.2 1 74.5 5 74.8 8 75.2 75.5 2

C C C C C C C C C

The above diagram shows that 43% of the cost value of inventories is A items followed by 35% of the value of inventories are B items and the remaining 22% of the value comes under C items of ABC Analysis

CLASSIFICATION OF HML ANALYSIS Sl. No . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

DESCRIPTION SANDER DISC -ZIRKON - GR 36 RAJ HYDRA SUPER HL 68 (BULK) CASTROL ILOFORM TDN 81 - N OIL MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB GRAPHITE GREASE (GARONEX R) GES PIEGEON RACK ACRYLIC DOORSEASONED RUBBER WOOD PALLET 87 X 28 BASE 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) CASTROL SUPER EDGE 7/SW 131B GRADE OIL ARMOURED JELLY FILLED TELEPHONE CABLE 20 3.15 MM WELDING ELECTRODE - 90 (FOR GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG HYD.OIL ELFOLNA-DS 46 SUPERCLEAN SANDER DISC GR 36 (ZIRCON) RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 3.15 MM WELDING ELECTRODE SUNBOND( 60 ARMOURED JELLY FILLED TELEPHONE CABLE 50

STOCK QTY

ITEM RATE

STOCK

H M L

3424 2348 1050

46.37 58.05 114.5

158785.3 136302.7 120221

L L M

2 1040 10

55236.83 88.9 8100

110473.7 92504.86 81000

H L H

88

866.97

76293.56

H

1000

74.27

74270.78

M

630

112.5

70875.68

M

531

120

63720

M

25

2409.64

60241

H

552 840 1090

108.47 69.31 53.1

59877.2 58219.74 57879

M L L

814

64.28

52326.88

L

232

221.5

51388.08

M

200

230

46000

M

18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 HIDRAW HD OIL RUSTILLO OIL DW 901 42" X 42" WOODEN PALLET WITH 1 BASE & 1 ALLEN SCREW 1.1/8"BSW X 5" G WHEEL 400X50X127 AA60 L7 127 4.0 MM WELDING ELECTRODE SUN BOND SS POLYESTER STRAPPING TAPE 16MM X RAJ HYDR SUPER HL68(BARREL) SEASONED RUB.WOOD PALLET 87"X31"-CAT VSM COATED BELT ZK713X SIZE TYRE 10.00 X 20-16PR SODIUM HYDRO SULPHITE EXCEL DEBURRING AND FINISHING WHEEL PACKING STICKERS "DESPATCH DETAILS" GRINDING WHEEL 450X50X203mm A46K5-V10 12 " LEATHER GLOVES WITH CADA CUFF GUARD ST.GRINDER-Z. MODEL ABRASIVE BELT K 815Y50MM,WX1000MM 2.5 MM WELDING ELECTRODE SUN BOND SS SEASONED RUB.WOOD PALLET 87" X 29"-BASE COOLANT OIL STEEL SHOTS GR S 390 JOHNDHEER WOODEN PALLET 87" X 32" MAXTREAT-2902 4" X 4"X 1/2",/3/8" MS ANGLE STRAPPING TAPE 16 X 1600 GREEN COLOUR SERVO MESH SP 220 OIL STEEL SHOTS GR S 460 STEEL STRIP IN BAND [ITW SIGNODE 3415 RAJ HYDRA SUPER HL 46 EQ TO SERVO SERVO SYSTEM 150 6" S.S PIPE -SCH-40

200 420 523.4

221.86 104.39 81.31

44371.24 43845.3 42555.15

M M L

46 25 9

893.31 1598.83 4427.13

41092.37 39970.63 39844.2

H H H

169 6 630

225.64 6292.15 59.73

38133.51 37752.9 37630.92

M H L

32.67 764 4 500

1151.37 47.29 8989 71.61

37615.25 36131.58 35956 35803

H L H L

116

308.3

35762.8

M

15976

2.21

35309.73

H

13

2701.9

35124.7

H

1992 44

17.62 788.2

35094.19 34680.8

L H

200

172.46

34492.89

M

106

306.87

32528.46

M

36 430 1075.00

896.4 72.47 28.98

32270.5 31161.44 31151.77

H L L

14 35.00 11

2140 801.77 2523.96

29960 28061.83 27763.55

H H H

6 420 875.00

4608.53 62.17 29.02

27651.2 26110.8 25390.5

H L L

10 420 420 3

2527.86 59.96 56.35 7834.74

25278.58 25183.24 23666.71 23504.22

H H L H

HML ANALYSIS

25%

21%

20%

16% 13%

15% 10% 5% 0%

H

M

L

Figure 2

INTERPRETATION: The above diagram shows that 21% of the items have high Cost, followed by 13% of the value have Medium Cost and the remaining 16% of the value have Low cost of inventories in HML analysis.

CLASSIFICATION ON THE BASIS OF FSN ANALYSIS Sl. No .

DESCRIPTION

1

SANDER DISC -ZIRKON - GR 36

2

RAJ HYDRA SUPER HL 68 (BULK)

3 4

CASTROL ILOFORM TDN 81 - N OIL MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB

5 6

GRAPHITE GREASE (GARONEX R) GES PIEGEON RACK ACRYLIC DOOR-

7

SEASONED RUBBER WOOD PALLET 87 X 28 BASE

8

50 X1600MM ZIRKON BELT GR-36 (GRINDWELL)

9 10 11

CASTROL SUPER EDGE 7/SW 131B GRADE OIL ARMOURED JELLY FILLED TELEPHONE CABLE 20 3.15 MM WELDING ELECTRODE - 90 (FOR

12

GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG

13

HYD.OIL ELFOLNA-DS 46 SUPERCLEAN

14

SANDER DISC GR 36 (ZIRCON)

15

RAJ CUT SUPER COOLANT OIL (EPSOL SUPER

16 17

3.15 MM WELDING ELECTRODE SUNBOND( 60 ARMOURED JELLY FILLED TELEPHONE CABLE 50

18 19

VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 HIDRAW HD OIL

20

RUSTILLO OIL DW 901

21 22 23

42" X 42" WOODEN PALLET WITH 1 BASE & 1 ALLEN SCREW 1.1/8"BSW X 5" G WHEEL 400X50X127 AA60 L7 127

LAST ISSUES 12/31/200 6 12/31/200 6 12/29/200 6 2/1/2006 12/31/200 6 11/16/2006 12/21/200 6 12/29/200 6 12/29/200 6 12/5/2006 12/30/200 6 12/26/200 6 12/31/200 6 12/30/200 6 12/31/200 6 12/23/200 6 3/1/2006 12/30/200 6 12/30/200 6 9/23/2006

F S N

F F F S F N F F F N F F F F F F N F S F F N F

24

4.0 MM WELDING ELECTRODE SUN BOND SS

25 26

POLYESTER STRAPPING TAPE 16MM X RAJ HYDR SUPER HL68(BARREL)

27

SEASONED RUB.WOOD PALLET 87"X31"-CAT

28 29 30 31

VSM COATED BELT ZK713X SIZE TYRE 10.00 X 20-16PR SODIUM HYDRO SULPHITE EXCEL DEBURRING AND FINISHING WHEEL

32 33

PACKING STICKERS "DESPATCH DETAILS" GRINDING WHEEL 450X50X203mm A46-K5-V10

34 35

12 " LEATHER GLOVES WITH CADA CUFF GUARD ST.GRINDER-Z. MODEL

36

ABRASIVE BELT K 815Y50MM,WX1000MM

37

2.5 MM WELDING ELECTRODE SUN BOND SS

38

SEASONED RUB.WOOD PALLET 87" X 29"-BASE

39

COOLANT OIL

40

STEEL SHOTS GR S 390

41

JOHNDHEER WOODEN PALLET 87" X 32"

42

MAXTREAT-2902

43

4" X 4"X 1/2",/3/8" MS ANGLE

44

STRAPPING TAPE 16 X 1600 GREEN COLOUR

45

SERVO MESH SP 220 OIL

46

STEEL SHOTS GR S 460

47

STEEL STRIP IN BAND [ITW SIGNODE 3415

48 49 50

RAJ HYDRA SUPER HL 46 EQ TO SERVO SERVO SYSTEM 150 6" S.S PIPE -SCH-40

12/31/200 6 12/30/200 6 12/7/2006 12/29/200 6 12/30/200 6 10/9/2006 12/11/2006 6/29/2000 12/27/200 6 7/1/1997 12/31/200 6 11/11/2006 12/23/200 6 12/30/200 6 12/29/200 6 12/31/200 6 12/29/200 6 12/29/200 6 12/17/200 6 12/19/200 6 12/30/200 6 12/22/200 6 12/29/200 6 12/28/200 6 12/24/200 6 12/7/2006 4/2/2006

F N F F S S S S F S F N F F N F F S N F F F S F S N S

FSN ANALYSIS

30% 25% 20% 15%

30%

10%

11%

5% 0%

F

S

9%

N

Figure 3

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

CLASSFICATION ON THE BASIS OF SDE ANALYSIS Sl. No. 1 2 3 4 5 6 7 8 9 10

DESCRIPTION SANDER DISC -ZIRKON - GR 36 RAJ HYDRA SUPER HL 68 (BULK) CASTROL ILOFORM TDN 81 - N OIL MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB GRAPHITE GREASE (GARONEX R) GES PIEGEON RACK ACRYLIC DOORSEASONED RUBBER WOOD PALLET 87 X 28 BASE 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) CASTROL SUPER EDGE 7/SW 131B GRADE OIL ARMOURED JELLY FILLED TELEPHONE CABLE

ITEM RATE

SDE

46.37 58.05 114.5 55236.83 88.9 8100

E E E D D E

866.97 74.27 112.5 120

E E D E

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

20 3.15 MM WELDING ELECTRODE - 90 (FOR GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG HYD.OIL ELFOLNA-DS 46 SUPERCLEAN SANDER DISC GR 36 (ZIRCON) RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 3.15 MM WELDING ELECTRODE SUNBOND( 60 ARMOURED JELLY FILLED TELEPHONE CABLE 50 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 HIDRAW HD OIL RUSTILLO OIL DW 901 42" X 42" WOODEN PALLET WITH 1 BASE & 1 ALLEN SCREW 1.1/8"BSW X 5" G WHEEL 400X50X127 AA60 L7 127 4.0 MM WELDING ELECTRODE SUN BOND SS POLYESTER STRAPPING TAPE 16MM X RAJ HYDR SUPER HL68(BARREL) SEASONED RUB.WOOD PALLET 87"X31"-CAT VSM COATED BELT ZK713X SIZE TYRE 10.00 X 20-16PR SODIUM HYDRO SULPHITE EXCEL DEBURRING AND FINISHING WHEEL PACKING STICKERS "DESPATCH DETAILS" GRINDING WHEEL 450X50X203mm A46-K5-V10 12 " LEATHER GLOVES WITH CADA CUFF GUARD ST.GRINDER-Z. MODEL ABRASIVE BELT K 815Y50MM,WX1000MM 2.5 MM WELDING ELECTRODE SUN BOND SS SEASONED RUB.WOOD PALLET 87" X 29"-BASE COOLANT OIL STEEL SHOTS GR S 390 JOHNDHEER WOODEN PALLET 87" X 32" MAXTREAT-2902 4" X 4"X 1/2",/3/8" MS ANGLE STRAPPING TAPE 16 X 1600 GREEN COLOUR SERVO MESH SP 220 OIL STEEL SHOTS GR S 460 STEEL STRIP IN BAND [ITW SIGNODE 3415 RAJ HYDRA SUPER HL 46 EQ TO SERVO SERVO SYSTEM 150 6" S.S PIPE -SCH-40

2409.64 108.47 69.31 53.1 64.28 221.5

E E E E E E

230 221.86 104.39 81.31 893.31 1598.83 4427.13 225.64 6292.15 59.73 1151.37 47.29 8989 71.61 308.3 2.21 2701.9 17.62 788.2 172.46 306.87 896.4 72.47 28.98 2140 801.77 2523.96 4608.53 62.17 29.02 2527.86 59.96 56.35 7834.74

E E D E E E E E D E E E D E D E E D D E E E E E E E D E D E E E E E

SDE ANALYSIS

50%

39%

40% 30% 20%

11%

10% 0%

0% S

D

E

INTERPRETATION: From the above table it has been analyzed that 33% of the item which are used by company are difficult in purchase of raw materials but the remaining 53% of the items are easily available.

DESCRIPTION LATTICE MACH SEAL RUBBER PALLET SEASONED RUBBER WOOD PALLET 1 7.15MM WELDING ELECTRODE 42" X 42" WOODEN PALLET WITH 1 BASE ALLEN SCREWS GENERATOR\CONVERTOR POLYESTER STRAPPING TAPE NACELLE SEASONED RUBBER WOOD PALLET 2 ROTOR BLADES GRINDING WHEEL GUARD ST.GRINDER

ANN CONS

LT

SS

ROL

MAX QTY

1 1 461 337 453

45 5 2 2 2

1 1 3 2 3

1 1 6 4 6

1 1 6 4 6

1 7 41 10290 1237.33 7 1 6

10 2 2 1 1 15 1 7

1 1 1 29 4 1 6 1

1 1 1 29 8 2 9 1

1 2 2 58 8 1 7 1

SEASONED RUBBER WOOD PALLET 3 STEEL RODS MICRO PROCESSOR 4"X4"X1/2",/3/8" MS ANGLE STRAPPING TAPE 16 X 1600 GREEN COLOUR STEEL STRIP METER HAMMER CHIPPING LT/LK ML 12 SPARE KIT POLES METAL PALLET HUB

1471 624 106 20 86

2 1 3 3 15

9 2 1 1 4

13 4 2 2 4

14 4 3 2 5

521 1 1 1 52 23 1

1 2 30 1 7 7 7

2 6 1 3 1 1 19

3 9 2 6 1 2 22

4 7 2 3 3 2 19

CALCULATION OF SAFETY STOCK (MINIMUM STOCK LEVEL), RE-ORDER LEVEL, MAXIMUM STOCK LEVEL

1). LATTICE MACH-SEAL

SAFETY STOCK

= (MAXIMUM LEAD TIME – NORMAL LEAD TIME) x

DAILY CONSUMPTION

= (90 – 45) x 1/365 = 0.123 Therefore Safety stock

=1

RE-ORDER LEVEL

= SAFETY STOCK + NORMAL LEAD TIME

CONSUMPTION LEVEL x

ANNUAL CONSUMPTION = 1 + (45 / 365) x 1 = 1.1 Therefore ROL

=1

MAXIMUM STOCK LEVEL= SAFETY STOCK + EOQ = 1+.017 = 1.017 Therefore Maximum stock

=1

2). RUBBER PALLET SAFETY STOCK

= (10 – 5) x 1/365 = 0.123 =1

RE-ORDER LEVEL

= 1 + (5 / 365) x 1 = 1.013 =1

MAXIMUM STOCK LEVEL

= 1+.0021 = 1.0021 =1

3). SEASONED RUBBER WOOD PALLET 1 SAFETY STOCK

= (4–25) x 461/365 = 2.52 =3

RE-ORDER LEVEL

= 3 + (2 / 365) x 461 = 5.52 =6

MAXIMUM STOCK LEVEL

= 3+2.98 = 5.98 =6

4). 7.15MM WELDING ELECTRODE SAFETY STOCK

= (4–2) x 337/365 = 1.84 =2

RE-ORDER LEVEL

= 2 + (2 / 365) x 337 = 3.84 =4

MAXIMUM STOCK LEVEL

= 2+1.53 = 3.53 =4

5). 42”X42” WOODEN PALLET WITH 1 BASE SAFETY STOCK

= (4–2) x 453/365 = 2.84 =3

RE-ORDER LEVEL

= 3 + (2 / 365) x 453 = 5.48 =6

MAXIMUM STOCK LEVEL

= 3+2.93 = 5.93 =6

6).ALLEN SCREWS SAFETY STOCK

= (20–10) x 1/365 = 0.027 =1

RE-ORDER LEVEL

= 1 + (10 / 365) x 1 = 1.027 =1

MAXIMUM STOCK LEVEL

= 1+0.102 = 1.10 =1

7). GENERATOR\CONVERTOR SAFETY STOCK

= (4–2) x 7/365 = 0.038 =1

RE-ORDER LEVEL

= 1 + (2/365) x 7 = 1.038 =1

MAXIMUM STOCK LEVEL

= 1+0.16 = 1.16 =2

8.) POLYETER STRAPPING TAPE SAFETY STOCK

= (4–2) x 41/365 = 0.224 =1

RE-ORDER LEVEL

= 1 + (2/365) x 41 = 1.224 =1

MAXIMUM STOCK LEVEL

= 1+0.19 = 1.19 =2

9). NACELLE SAFETY STOCK

= (2–1) x10290/365 = 28.19 = 29

RE-ORDER LEVEL

= 29 + (1/365) x 10290 = 28.19 = 29

MAXIMUM STOCK LEVEL

= 29+28.19 = 57.19 = 58

10). SEASONED RUBBER WOOD PALLET 2 SAFETY STOCK

= (2–1) x1237.33/365 = 3.38 =4

RE-ORDER LEVEL

= 4 + (1/365) x 1237.33 = 7.38 =8

MAXIMUM STOCK LEVEL

= 4+4.23 = 8.23 =8

11). ROTOR BLADES SAFETY STOCK

= (30–15) x7/365 = .285 =1

RE-ORDER LEVEL

= 1 + (15/365) x 7 = 1.017 =1

MAXIMUM STOCK LEVEL

= 1+0.114 = 1.114 =1

12). GRINDING WHEEL SAFETY STOCK

= (14–7) x6/365 = 0.115 =1

RE-ORDER LEVEL

= 1+ (6/365) x6 = 1.12 =1

MAXIMUM STOCK LEVEL

= 1+0.115 = 1.115 =1

13). GUARD ST.GRINDER SAFETY STOCK

= (2–1) x1/365 = 5.47 =6

RE-ORDER LEVEL

= 6 + (1/365) x17 = 8.73 =9

MAXIMUM STOCK LEVEL

= 6+0.079 = 6.079 =7

14). SEASONED RUBBER WOOD PALLET 3 SAFETY STOCK

= 4–2) x1471/365 = 2 x 4.03 = 8.06

=9 RE-ORDER LEVEL

= 9+ (2/365) x1471 = 13.03 = 13

MAXIMUM STOCK LEVEL

= 9+5.23 = 14.23 =14

15). STEEL RODS SAFETY STOCK

= (2–1) x624/365 = 1.70 =2

RE-ORDER LEVEL

= 2+ (1/365) x624 = 3.70 =4

MAXIMUM STOCK LEVEL

= 2+2.20 = 4.20 =4

16).MICRO PROCESSOR SAFETY STOCK

= (6–3) x106/365 = 0.87 =1

RE-ORDER LEVEL

= 1+ (3/365) x106 = 1.29 =1

MAXIMUM STOCK LEVEL

= 1+1.5 = 2.5 =3

17). 4”X4”X1/2”,/3/8” MS ANGLE SAFETY STOCK

= (6–3) x20/365 = 0.164 =1

RE-ORDER LEVEL

= 1+ (3/365) x20 = 1.054 =2

MAXIMUM STOCK LEVEL

= 1+0.36 = 1.36 = 2

18). STRAPPING TAPE 16X1600 GREEN COLOUR SAFETY STOCK

= (30–15) x86/365 = 3.53 =4

RE-ORDER LEVEL

= 4 (15/365) x86 = 4.23 =4

MAXIMUM STOCK LEVEL

= 4+0.56 = 4.56

=5 19). STEEL STRIP SAFETY STOCK

= (2–1) x521/365 = 1.5 =2

RE-ORDER LEVEL

= 2 +(1/365) x521 = 3.43 =3

MAXIMUM STOCK LEVEL

= 2+1.85 = 3.85 =4

20). METER SAFETY STOCK

= (4–2) x1/365 = 5.47 =6

RE-ORDER LEVEL

= 6+ (2/365) x1 = 8.73 =9

MAXIMUM STOCK LEVEL

= 6+0.046 = 6.046 =7

21). HAMMER CHIPPING

SAFETY STOCK

= (60–30) x1/365 = 0.082 =1

RE-ORDER LEVEL

= 1+ (30/365) x1 = 1.082 =2

MAXIMUM STOCK LEVEL

= 1+0.039 = 1.039 =2

22). LT/LK ML 12 SPARE KIT SAFETY STOCK

= (2–1) x1/365 = 2.73 =3

RE-ORDER LEVEL

= 3 + (1/365) x1 = 5.73 =6

MAXIMUM STOCK LEVEL

= 3+.039 = 3.039 =3

23). POLES SAFETY STOCK

= (14–7) x52/365 = .99 =1

RE-ORDER LEVEL

= 1 + (7/365) x52

= 1.142 =1 MAXIMUM STOCK LEVEL

= 1+1.07 = 2.07 =3

24). METAL PALLET SAFETY STOCK

= (14–7) x23/365 = .44 =1

RE-ORDER LEVEL

= 1 + (7/365) x23 = 1.063 =2

MAXIMUM STOCK LEVEL

= 1+0.19 = 1.19 =2

25). HUB SAFETY STOCK

= (14–7) x1/365 = 19.11 =19

RE-ORDER LEVEL

= 19 + (7/365) x1 = 21.73 = 22

MAXIMUM STOCK LEVEL

= 19+0.03

=19.03 =19

CLASSIFICATION ON THE BASIS OF ECONOMIC ORDER QUANTITY

ANNUAL CONS

OC

CC

LATTICE MACH SEAL RUBBER PALLET SEASONED RUBBER WOOD PALLET 1

1 1 461

1 1 1

0.12 0.12 0.12

7.15MM WELDING ELECTRODE 42" X 42" WOODEN PALLET WITH 1 BASE

337 453

1 1

0.12 0.12

ALLEN SCREWS

1

1

0.12

GENERATOR\CONVERTOR POLYESTER STRAPPING TAPE 16 MM

7 41

1 1

0.12 0.12

DESCRIPTION

UNIT COST

55236. 8 8100 866.97 2409.6 4 893.31 1598.8 3 4427.1 3 6292.1

E O Q

1 1 3 2 3 1 1 1

NACELLE SEASONED RUBBER WOOD PALLET 2 ROTOR BLADES GRINDING WHEEL GUARD ST.GRINDER SEASONED RUBBER WOOD PALLET 3 STEEL RODS

10290 1237.33 7 1 6 1471 624

1 1 1 1 1 1 1

0.12 0.12 0.12 0.12 0.12 0.12 0.12

MICRO PROCESSOR

106

1

0.12

4"X4"X1/2",/3/8" MS ANGLE STRAPPING TAPE 16 X 1600 GREEN COLOUR STEEL STRIP

20

1

0.12

86 521

1 1

0.12 0.12

METER HAMMER CHIPPING

1 1

1 1

0.12 0.12

LT/LK ML 12 SPARE KIT POLES

1 52

1 1

0.12 0.12

METAL PALLET HUB

23 1

1 1

0.12 0.12

5 59.73 1151.37 8989 2701.9 788.2 896..4 801.77 2523.9 6 4608.5 3 2527.8 6 10737 10720. 1 10737 10720. 1 760.38 10263. 5 20110

CALCULATION OF ECONOMIC ORDER QUANTITY (EOQ)

1. LATTICE MACH-SEAL 2 Annual Consumption x Ordering Cost Annual Consumption = 1 Unit Rate x Carrying Cost Unit Rate = 55236.83 =

2x1x1 55236.83 x 0.12

EOQ = =

2 6628.42

=

0.0174

=

1

54 4 1 1 1 5 2 2 1 1 2 1 1 1 1 1 1

2. RUBBER PALLET Annual Consumption =

1

Unit rate

=

8100

EOQ =

2x1x1 8100x 0.12 2 972

=

= 0.0021 = 1

3. SEASONED RUBBER WOOD PALLET 1 EOQ =

2 x 461 x 1 866.97 x 0.12

=

922

== 104.0364 = 3

4. 7.15 MM WEILDING ELECTRODE =

EOQ

2 x 337 x 1 2409.64 x 0.12

=

674 289.16

= 1.53 =2

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

EOQ

=

2 x 453x 1 893.31 x 0.12

=

903 107.197

= 2.93 =3

6. ALLEN SCREW

EOQ

=

2x1x1 1598.83 x 0.12

=

2 191.86

= 0.1021 =1

7. GENERATOR\CONVERTOR

EOQ

=

2x7x1 4427.13 x 0.12

=

14 531.26

= 0.16 =1

8. POLYESTER STRAPPING TAPE 16MM

EOQ

=

2x4x1 6292.15 x 0.12

=

28 755.06

= 0.19 =1

9. NACELLE

EOQ

=

2 x 10290 x 1 59.73 x 0.12

=

20580 7.168

= 53.58 = 54

10. SEASONED RUBBER WOOD PALLET 2

EOQ

=

2 x 1237.33 x 1 1151.37 x 0.12

=

2476.66 138.164

= 4.23 =5 11. ROTOR BLADES

EOQ

=

2x7x1 8989 x 0.12

=

14 1078.68

= 0.114 =1

12. GRINDING WHEEL EOQ =

2x1x1 2701.9 x 0.12

=

2 324.23

= 0.079 =1

13. GUARD ST. GRINDER EOQ

=

2x6x1 788.2 x 0.12

=

12 94.58

= 0.13 =1 14. SEASONED RUBBER WOOD PALLET 3

EOQ

=

2 x 1471 x 1 896.4 x 0.12

=

2942 107.75

= 5.23 =5

15. STEEL RODS EOQ =

2 x 624 x 1 2140 x 0.12

=

1248 256.8

= 2.20 =2 16. MICRO PROCESSOR

EOQ =

2 x 106 x 4 801.77 x 0.12

=

212 96.21

= 1.484 =2 17. 4” x 4” x ½” x 3/8” M.S. ANGLE EOQ =

2 x 20 x 1 2523.96 x 0.12

=

40 302.88

= 0.36 =1

18. STRAPPING TAPE 16 X 1600 GREEN COLOUR

EOQ

=

2 x 86 x 1 4608.53 x 0.12

=

176 553.02

=1

19. STEEL STRIP

EOQ =

2 x 521 x 1 2527.86 x 0.12

=

1042 303.34

=2 20. METER

EOQ =

2x1x1 7834.74 x 0.12

=

2 940.17

= 0.046 =1

21. HAMMER CHIPPING EOQ =

2x1x1 10736.96 x 0.12

=

2 1288.4352

= 0.039 =1

22. LT/LK ML 12 SPARE KIT

EOQ

=

2x1x1 10720 x 0.12

=

2 1286.4

= 0.039 =1 23. POLES

EOQ =

2 x 52 x 1 760.38 x 0.12

=

104 91.2456

= 0.067 =2 24. METAL PALLET

EOQ

=

2 x 23 x 1 10263.49 x 0.12

=

46 1231.6188

= 0.193 =1

25. HUB

EOQ

=

2x1x1 20110.36 x 0.12

=

2 2413.2432

= 0.0287 =1

FINDINGS

 The ABC classifications says that there are 43 items of inventory under category ‘A’, which can constitute 43% of the consumption value, there are 35 items under ‘B’ category items constitutes 35% of the total consumption value and there are 22 items whose consumption is 22% of total consumption classified as ‘c’ category items.



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



From FSN analysis, it is found that there are good number of fast moving items i.e. 30% and 11% of the items are slow moving and only 9% of the items are non-moving.



The ordering cost is constant (below one rupee) because the sales have been done through a mail.



The carrying cost also is constant since the company has to pay the bank interest as 12% for the inventories, which they are buying from their suppliers in bulk orders. Thus, it is applicable to take as 12%.



There are no scarce items in SDE Analysis and also some of the items are difficult to purchase and rest of the items will be easily available in the market as it depends on the vendors.



In case of HML analysis, 21% of the items are of high value, 13% of the items are of medium values and the remaining 16% of the items have low value.



Indowind is maintaining more than one supplier for the consumables and stores and spares. This gives a quick procurement and competitive pricing for the required Inventories (materials).

SUGGESTIONS AND RECOMMENDATIONS

 Cost of inventory can be maintained by giving order to regular suppliers.  Selecting appropriate inventory tools can reduce cost of inventory.  There is much less importance to the inventory management techniques (Economic Order Quantity). It is advisable to implement these inventory management techniques in order prevent excess inventory levels.

 Inventory should be maintained as that of ABC classification. The standards for the classification of the ABC analysis should be reviewed and must be changed according to the recent Consumption value and Unit value.  Indowind should order the stocks before the quantity of inventories reach the minimum level.  Controlling, maintaining and managing of inventories should be done at the right time.  Lead time period should be reduced because it affects the production process.



A proper production schedule should be maintained otherwise it might result in inventory losses and time losses.

 Inventory losses may occur due to damage of mishandling while in storage or in the production process. So one should put the inventory in a proper place while in warehouse and should be handled properly while in the production process.  It is also suggested to Indowind that it should follows a standard line of inventory management, like Standard Purchase Quantity, Standard Purchased lead time, Standard Costs (such as Ordering Cost and Carrying Costs) and Safety Stock. Therefore controlling of inventory management operations will be very easy.

CONCLUSION

 The analysis reveals that cost of inventory can be maintained by giving order to regular suppliers.  To have an uninterrupted production buffer (safety) stock should be kept at least at the minimum level.  The overall performance of management of inventory of Indowind Limited is good.

BIBLOGRAPHY

BOOKS NAME 1. PRODUCTION MANAGEMENT

AUTHOR - PANEER SELVAM

2. INVENTORY MANAGEMENT AND WORKING CAPTITAL MANAGEMENT

- P. GOPALA KRISHNAN.

3. MATERIALS MANAGEMENT

- BUFFA

4. INVENTORY CONTROL

WEBSITE

- STAR & MILLER

www.wheelsindia.com