123 inventory hmt machine tools
TRANSCRIPT
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1" In#est!ent Decision: "hese decisions relate to the selection of assets in
which funds will be invested by a firm. "he investment of funds in a pro/ect
has to be made after careful assessment of the various pro/ects through capital
budgeting.
' firm’s investment decision involves capital
e0penditure. "hey are# therefore referred as 1capital budgeting decision’. '
capital budgeting decision involves the decision of allocation of capital to long
term assets that would yield benefits in the future. "wo important aspects of
investment decisions are*
a. 2valuation of the prospective profitability of new investment# and
b. "he measurement of a cut3off rate against the future returns of new
investment could be compared.
$" Financin Decision: t is the second important function to be performed by
finance manager. 4roadly he5she must decide when# where from and how to
ac)uire funds to meet the firm’s investment needs.
"he financial manager needs to possess a good
$nowledge of the sources of available funds and their respective costs and
needs to ensure that the company has to a sound capital structure# i.e.# a proper
balance between e)uity capital and debt.
%" Di#idend Decision: t is the third financial function performed by the
financial manager. "he financial manager must decide whether the firm should
distribute all profits or retain them or distribute a portion and retain the
balance. "he proportion or profits distributed as dividends is called the
1dividend3payout ratio’ and the retained portion of profits is $nown as the1retention ratio’.
&" 'i(uidit) Decision: nvestment in current assets affects the firm’s
profitability and li)uidity. 6urrent assets should be managed efficiently for
safeguarding the firm against the ris$ of li)uidity. (a$e of li)uidity in e0treme
conditions can lead to the firm’s insolvency. f the firm does not invest
sufficient funds in current assets# it may become illi)uid and therefore ris$y.
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O*+ECTI,E OF THE TUD.
• "o $now the overall effectiveness of inventory management in H!" (td.
• "o study the methods of inventory control in H!"
• "o $now how the procurement of material is done.
• "o study the inventory valuation in H!".
• "o suggest a remedial measure for better decision ma$ing by the organization.
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COPE OF THE TUD.
"he nventory !anagement discipline encompasses all system and data networ$
elements from the mainframe to the server level throughout the enterprise.
Financial and technical product information must be available through the
nventory System# as needed to support the functional responsibilities of
personnel within the finance and contracts management departments.
'sset criticality must be included with asset descriptive and financial
information# so that the 7ecovery !anagement department is supplied with the
information it re)uires. 7ecovery actions must be implemented to safeguard
critical assets.
'sset status must be included in the nventory !anagement system# so that the
components8 can be serviced in adherence to legal# environmental# business# and
industry re)uirements.
"he Standards and 9rocedures !anual section relating to nventory !anagement
must be created and published. "his section must describe the process by which
assets are identified# entered into the inventory !anagement System# trac$ed#
and finally deleted"
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'IMITATION OF THE TUD.
"hough the pro/ect would be completed successfully a few limitations
are e0pected. Since the procedures and policies of the company do not allow
disclosing of all financial information of the pro/ect has to be completed with the
available data collected with ma0imum effort.
"ime is main constraint in completing the study with in the stipulated period
allowed.
t has become difficult to analyze all the documents in detail within si0 wee$s.
6onfidentiality of the information is also a limited factor.
"he analysis is made on the basis of secondary data only.
's there is a more dependency on secondary data realistic conclusions may
not be possible to be made.
"he 'vailable of data is only pertaining to five years is one of the constraint.
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REEARCH METHODO'O/.
Met0odolo):
!ethodology is a systematic procedure of collecting information in order to
analyze and verify a phenomenon. !ethodology plays a vital role in the analysis of
the study. t refers to the way adopted for collecting the facts and information
formally presented for drawing inference.
ources of Data:
"he data that is necessary for doing this pro/ect is collected through the two
types of data*
+. 9rimary data
,. Secondary data
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Pri!ar) Data:
"he primary data is the first hand information collected a fresh. t deals with
the original information. "he primary data for this is collected through personal
interviews and discussion with the concerned personnel in the organization# mainly
from finance department.
econdar) Data:
Secondary data is that which already e0ists# it is collected from the secondary
sources viz.# and company’s annual reports# published records# company manuals and
the theoretical concepts were complied and scrutinized for the relevance to the study
from various reference boo$s.
NEED FOR THE TUD.
nventory is needed to regulate the flow of raw materials and wor$ in progress
for purchasing and finished goods for sale. nventory does not earn interest# and is
e0pensive to store# insure# protect and stoc$ out costs. "herefore# inventory should b
held so as to hold enough to operate but not too much. "he inventories are needed for
the following reasons.
1" A#oidin 'osses of ales
f the firm is not having enough stoc$ of finished goods it will result in the
loss of sales normally# unless the product is being made to order as per the specific
re)uirement of the customer. n most cases# however# firm must be in a position to
deliver goods on demand.
$" /ainin (uantit) Discounts
Suppliers of raw materials usually offer )uality discounts if purchase are made
in bul$. "hese discounts will reduce the cost of goods increase the profit when it is
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sales. "hus# the firm would li$e to purchase raw materials in )uantities greater than
their re)uirements.
%"Reducin Orderin Cost
2ach time a firm places an ordered= it incurs certain e0penses# which are called
as ordering cost. Forms have to be filled# approvals have to be obtained# and goods
that arrive must be accepted# inspected# and counted. (ater# an invoice must be
processed and payment made. "he greater the number of orders greater is the
ordering cost.
&"Ac0ie#in efficient Production Runs
2ach time a firm organized wor$s and machine to produce an item# startup
costs are incurred. "hese are then absorbed as production begins. Fre)uent setups
will result in high startup costs= larger runs involve lower costs.
"Reducin ris2 of 3roduction s0ortaes
>nce the production process starts all the re)uired raw materials# components
etc# should be made available to the production department without any delay.
CHAPTER $
PROFI'E OF AUTOMO*I'E INDURT.
H!" (imited# the pioneer in !achine "ools ndustry in ndia and
manufacturers of a diversified range of products has incorporated ?H!"
!'6H2 ">>(S (!"2%@ as its fully owned subsidiary on Ath 'ugust +AAA.
• ?H!" !'6H2 ">>(S (!"2%@ BH!"3!"(8 is a !ulti3unit# !ulti
location# !ulti technology 6ompany manufacturing a wide variety of
?S"'"23>F3"H23'7"@ !achine "ools.
• 6omprehensive 6ustomer Support services including 'pplication
2ngineering# 6ustomer "raining and after sales service.
• "he best of products in terms of technology# productivity and cost effectiveness
• 'll manufacturing units of H!" !achine "ools are S>ACC+ certified.
D
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NATURE OF *UINE CARRIED:
H!" limited# the pioneer in machine tools industry in ndia and
manufacturers of a diversified range of products has incorporated ?H!" !'6H2
">>(S (!"2%@ as it’s fully owned subsidiary on Ath
'ugust +AAA.
?H!" !'6H2 ">>(S (!"2%@ BH!"3!"(8 is a multi3unit# multi3
location# multi "echnology 6ompany manufacturing a wide variety of ?S"'"23>F3
"H23'7"@ machine "ools. H!"3!"( has its manufacturing units at five locations
with each unit specialized in a particular family of !achines. "he sales and service
networ$ is spread across the length and breadth of the country. 's leading
manufacturer of !achine "ools in ndia# H!"3!"( provides the best of products in
terms of technology# productivity and cost effectiveness.
,IION4 MIION AND 5UA'IT. PO'IC.
Cor3orate ,ision
• "o be a leading E(>4'( 2E227E 6>E(>!27'"2 Focused on
6S">!27 %2(EH" in our fields of 2ndeavour.
Cor3orate Mission
• "o establish ourselves as one of the world’s premier companies in the
engineering field having strong international competitiveness.
• "o achieve mar$et leadership in ndia through ensuring customer satisfaction
by supplying internationally competitive products and services.
• "o achieve sustained growth in the earnings of the group on behalf of
shareholders.
5ualit) Polic)
• "o maintain 5UA'IT. 'EADERHIP in all our PRODUCT 6
ER,ICE
• TOTA' CUTOMER ATIFACTION through Guality Eoods and
Services
A
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• COMMITMENT of management to Guality
• "o create a CU'TURE amongst all 2mployees towards TOTA' 5UA'IT.
CONCEPT
• TOTA' 5UA'IT. through PERFORMANCE 'EADERHIP
CHAPTER %
COMPAN. PROFI'E
*AC7/ROUND AND INCEPTION OF THE COMPAN.
H.!.". is one of the leading public sector companies# in ndia# H!" &
4angalore plant was inaugurated in +A:- by PANDIT +A8AHAR'A' NEHRU= it
+C
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has +; manufacturing units spread over +C states# , divisions and ,A#CCC employees
in +C different states.
%7.S.!.9atil started H!" limited as a Hindustan !achine "ools (imited on
<th
February +A:- in technical and financial collaboration with the DER'I7ON
MACHINE TOO' 8OR7 of Switzerland. "he first product produced by H!"
was lathe on ;th>ctober +A:-."hen the government of ndia bought the shares held by
%erli$on thereby transforming H!" as a Eovernment underta$ing
INTRODUCTION OF MACHINE TOO' 'IMITED
H!" (imited# the pioneer in !achine "ools ndustry in ndia and
manufacturers of a diversified range of products has incorporated ?H!"
!'6H2 ">>(S (!"2%@ as its fully owned subsidiary on Ath 'ugust +AAA.
• ?H!" !'6H2 ">>(S (!"2%@ BH!"3!"(8 is a !ulti3unit# !ulti
location# !ulti technology 6ompany manufacturing a wide variety of
?S"'"23>F3"H23'7"@ !achine "ools.
• 6omprehensive 6ustomer Support services including 'pplication
2ngineering# 6ustomer "raining and after sales service.
• "he best of products in terms of technology# productivity and cost effectiveness
• 'll manufacturing units of H!" !achine "ools are S>ACC+ certified.
NATURE OF *UINE CARRIED:
H!" limited# the pioneer in machine tools industry in ndia and
manufacturers of a diversified range of products has incorporated ?H!" !'6H2
">>(S (!"2%@ as it’s fully owned subsidiary on Ath 'ugust +AAA.
?H!" !'6H2 ">>(S (!"2%@ BH!"3!"(8 is a multi3unit# multi3
location# multi "echnology 6ompany manufacturing a wide variety of ?S"'"23>F3
"H23'7"@ machine "ools. H!"3!"( has its manufacturing units at five locations
with each unit specialized in a particular family of !achines. "he sales and service
networ$ is spread across the length and breadth of the country. 's leading
manufacturer of !achine "ools in ndia# H!"3!"( provides the best of products in
terms of technology# productivity and cost effectiveness.
++
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,IION4 MIION AND 5UA'IT. PO'IC.
Cor3orate ,ision
• "o be a leading E(>4'( 2E227E 6>E(>!27'"2 Focused on
6S">!27 %2(EH" in our fields of 2ndeavour.
Cor3orate Mission
• "o establish ourselves as one of the world’s premier companies in the
engineering field having strong international competitiveness.
• "o achieve mar$et leadership in ndia through ensuring customer satisfaction
by supplying internationally competitive products and services.
• "o achieve sustained growth in the earnings of the group on behalf of
shareholders.
5ualit) Polic)
• "o maintain 5UA'IT. 'EADERHIP in all our PRODUCT 6
ER,ICE
• TOTA' CUTOMER ATIFACTION through Guality Eoods and
Services
• COMMITMENT of management to Guality
• "o create a CU'TURE amongst all 2mployees towards TOTA' 5UA'IT.
CONCEPT
• TOTA' 5UA'IT. through PERFORMANCE 'EADERHIP
+,
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1"% PRODUCT PROFI'E:
+-
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Our *usiness Do!ain
HMT PRODUCT
+
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TRACTOR
*EARIN/ 8ATCHE
+:
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H!" is synonymous withe0cellence in precision engineering in ndia. H!" is
built on a strong foundation of technical $now how ac)uitted from world leaders in
machine tools# such as >72(I># !'76H#E(% !2S"27# (22 4227#
7> 427'%# F7"J W2!27 92E'7%. "oday H!" !achine "ools e0pertise
has been developed to such an e0tent that H!" can design and develop any $ind of
machines. From simple lathe to multi station transfer lines# from stand alone 66
machine to fle0ible manufacturing systems BF!S8 leading to factory automation
H!"’s broad range of machine tools covers.
Eeneral purpose machines and 66 machines are produced to meet the
application needs of every engineering industry.
+. 6omputer etwor$ing 6ontrol B668 machines.
,. "urning machines.
-. !illing machines.
. %rilling machines.
:. Erinding machines.
;. 4oring machines.
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A. >ther products*
• !etal forming.
• %ie costing and plastic machinery.
• 9rinting machines.
• Food processing machines.
• "ractors.
• Guartz watches.
• 4earings.
• 9rKcising ball screw.
• 7econdition.
+
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OR/ANI9ATION TRUCTURE OF PRODUCTION DEPARTMENT
/eneral Manaer
+oint /eneral Manaer
De3ut) /eneral Manaer
Assistant /eneral Manaer
Manaer
De3ut) Manaer
Fore!en
u3er#isor
+unior u3erior
8or2er
+A
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CUTOMER OF HMT
• H'(
• 4H2(
• 7'(W'LS
• SH9 4(%E %S"72S
• 62!2" %S"72S
• E227'( 2E227E %S"72S
• 4'M'M '">S
• "VS
COMPETITOR OF HMT
• !67>!2"76S3"7E 62"72& E7%E !'6H2S.
• 927SH2%3 EH'J 4'% E7%E !'6H2S.
• H26 BH2'VL 2E227E 6>79>7'">3 H2'VL %"L ('"H2.
• '62 %2SE27S '" 4'E'(>72 3 "7E 62"27# !'6HE
62"27S.
• (!W "7E '% %7(( "'9 62"27S.
• "'( 92 S9'!.
• ML>"H "7E 62"27& !'6HE 62"27.
• 'SI'7 !67>3 !LS>72 "7E 62"27S.
• W%'3 4'E'(>723 S9'!.
• I7(>SI'7 3 !LS>72.
,C
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,+
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CHAPTER &
THEORITICA' FRAME8OR7 :
MEANIN/ OF IN,ENTOR. MANA/EMENT
nventory management means safeguarding the company’s property in the form of
inventories and maintaining it at the optimum level# considering the operating
re)uirements and financial resources of the business. nventory management
emphasizes control over for each item of inventory. "he reduction in ?an e0cessive
inventory. i.e. 20cesses above the optimum level carries a favourable impact on
company’s profitability# line wise maintaining inventory below optimum level
negatively affects the company’s profitability. Hence# inventory management should
be comprehensive enough to cover the flow of materials starting from the point when
for the purchase# up to the stage when the finished products are sold.
2fficient inventory management reduces levels of inventories to a considerable
degree without effect on production and sales by using simple inventory planning and
control techni)ues. 'n understanding neglecting the management of inventory will be
/eopardizing its long run profitability and survival.
S.I. Iuchal ?Eood inventory management is good financial management@.
nventory comprises stoc$ of raw materials = wor$ in process# finished
products# stores and components.
? Mohn H'!9">@ treats inventories# the ma/or element in the ?Wo$ing
capital@ Bappro0imately ;CN of current assests8 of many business underta$ing in
india.
,,
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FUNCTION OF IN,ENTOR. MANA /EMENT
"he necessity of holding inventory is due to the following functions of
inventory*
3eciali>ation
' firm can either produce all the re)uired variety products at a plant at one
(ocations# or# produce different products at separate plant locations. (ocating
Separately will enable the firm to select the location of each different product
!anufacturing plant based on the particular re)uirements of that product# thus
'chieving specialization efficiencies li$e geographical facilities and economies of
scale. "his specialization approach creates inventory at diverse locations. 'lso#
9ipeline inventories are created due to transport lin$age re)uired between %ifferent
manufacturing plants and with distribution warehouses.
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IN,ENTOR. CONTRO' TECHNI5UE
2ffective inventory management re)uires an effective control for inventories.
20cess inventory holding leads to e0cessive carrying cost on account of interest of
interest# storage and handling changes# insurance# record $eeping# inspection and the
ris$ of deterioration in )uality and thus adversely affects the profitability of the
organization. 2ven through the optimum level of inventory varies from industry to
industry# it is generally considered that the value of inventory as a percentage of
annual consumption may not e0ceed -- percent and the value of finished goods to net
sales may be about one month’s sales. !anaging inventory levels in an ongoing
balance between the costs of carrying e0tra inventory# versus the revenue losses
incurred by not having enough inventories available. ' proper inventory control nothelps in solving the acute problem of li)uidity but also increases profits and causes
substantial reduction in the wor$ing capital of the concern. "he following are the
important tools and techni)ues of inventory management and control.
A"*"C" ANA'.I : Al?a)s @etter control;
'n '46 analysis offers an important solution to be problem of a scientific
planning and control of inventories and is on important techni)ue of inventory
management. t is based up on the value of different items constituting inventory. t
may be concerned with several items# raw materials# factory and office supplies#
machine tools and handling e)uipments. "he idea underlying on '46 analysis is in
recognition of the principle that some items of inventory are more important than
other. "he '46 techni)ues enables the enterprise to $eep its investment low avoid
stoc$ out of critical items. ts ob/ective is to reduce the minimum stoc$ as well as the
wor$ing stoc$. '46 analysis underlines a very important principal ?Vital few trivial
many@ statistics reveal that /ust a handful of times account for bul$ of the annual
e0penditure on materials. "hese few items called ?'@ items are numerous in numbers#
and their contribution is less significant.'46 analysis trends to segregate all items
into categories# '# 4 and 6 based on their annual usage. "he categorization so made
enable us to pay the right amount of attention and minimum of effort and
e0penditures.
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A"*"C C'AIFICATION*
"he following steps have been underta$en to implement '46 analysis.
• "he price per unit for each purchased item is obtained.
• "he total consumption value is determined by multiplying consumption
)uantity by its unit price.
• "he consumption value is arrived by the above calculations for each of the
items.
• "he items are ran$ed in accordance with the total consumption value# giving
first ran$ to the item with highest total value. "he items are arranged in the
order of decreasing annual consumption value.
• "he ratio of total value of all items is determined.
• "he list of value is divided into three groups# namely# '3high value# 43medium
value# and 63low value. n ma$ing that division# a graph with y3a0is as
?cumulative percentage of value of inventory@# and 03a0is as ?percentage of
inventory items@ can be used.
F""N C'AIFICATION:
"his classification is based on the pattern of issues from stores and is useful in
controlling obsolescence. "o carry out FS analysis# the data of receipt or the last
date of issue# whichever is later# is ta$en to determine the number of months# which
have lapsed since the last transaction# the items are usually grouped in period of +,
month. t is found that many companies maintain huge stoc$s of non3moving items.
•
f the item is ordered in all C3+, months# the item is classified as fast3moving.
• f the item is ordered in all +,3;C months# the item is classified as slow3
moving.
• f the item is ordered in all above ;C months# the item is classified as on3
moving.
n H!" (td# inventories that are lying in stores for more than : years are
considered as non3moving items. "o verify the items# stoc$ verification has to be done
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by the stores department and result must be given to the inventory control department
for reconciliation.
-.+ NEED FOR THE TUD.
• "o maintain a buffer for doing different operations
• "o avoid a mista$es between supply and demand
• "o need un e0pected demand.
• "o have a smooth running of production.
• "o avoid a ideal time due to la$h of inventory.
• "o ma$e on time delivery.
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%"% O*+ECTI,E OF THE TUD.
"he main ob/ectives of inventory management are*
• nvestment in inventory li$e any other current asset involves a trade3
off. "he investment in inventory should stri$e a balanced between
efficient and smooth production or sales operation and profitability.
"his is so because both e0cessive and inade)uate inventories are not
desirable.
• 20cessive investments in inventory would ensure that there are no
shortages in production or sales operation.
• "o $eep material cost under control so that they contribute in reducing
cost of production and overall cost.
• "o avoid both over stoc$ing and under stoc$ing of inventory.
• "o minimize losses through deterioration# wastages and demand.
• "o maintain investment in inventory at the optimum level as re)uired
by operational and sales activity.
• "o facilitate of data for short term and long term planning and control
of inventory.
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CHAPTER-&
DATA ANA'.I AND INTERPRETATION
A*C ANA'.I
C'AIFICATION OF ITEM:
'46 classification is based on value
• +CN in number and
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Polices ado3ted @) A< class ite!s:
1'’ class items account for bul$ of the annual usage value# hence it is re)uired
for at most attention of senior level in administration and is responsible for
regular reviewing of these items.
"he inventory control department maintains up3to3date and accurate records* t
will be sent more fre)uently to the top management.
"he inventory is at minimum level.
"he purchase department maintains better vendor relations confiding with
V7! BVendor 7elation !anagement8.
"he concept of first in and first out is adopted.
Polices ado3ted @) *< class ite!s:
"he policies for these items are intermediate between 1'’ and 16’ items.
"hese items are ordered more fre)uently than 1'’ class items.
Stoc$ and issue cards are maintained.
Polices ado3ted @) C< class ite!s:
Since the items are too much value is less# the policies are aimed at reducing the
ordering and stoc$ $eeping wor$ to an e0tent possible and ensuring the availability
at all times by stoc$ing liberal )uantities.
(iberal )uantities are $ept in stoc$# since it does not involve much capital tie up.
4ul$ purchase is done to ta$e advantage of )uantity discounts.
For ordering these items# a combination of review period system and ,3bit system is
maintained.
,A
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A*C ANA'.I
T)3e Guantity 7ate nventory
Value B7s8
7an$ing 9ercentage 6umulative
1 A: DC;A
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1$ 'u0iliary materials +,D -+#-:#: :; +D#,-#+C,
2lectrical parts +
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'O8 MO,IN/ IN,ENTOR.
Type Description !"!-""
Count ,alue
+- 'ccessories -: 3!>VE "2!S@# non3moving items list
-,
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will be prepared the end of the year and the material register for !arch is printed.
"he surplus committee declares at last either the item to surplus 5 obsolete.
'fter the approval# the stoc$ items will be transferred to salvage stores and
stoc$ transfer will not be received in material account section to remove the value
from the respective inventory accounts to the obsolescence.
NON-MO,IN/ IN,ENTOR.
Type Description !""-" #slow$ !"-"%
Count ,alue Count ,alue
+- 'ccessories - -
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Reason for Non-!o#in in#entor)
• 6hange in design of the e)uipment
• "he sale order may be cancelled
• 6hange in the production pal
COMPONENT OF IN,ENTOR.
'll efforts of the management to control inventories should aim at maintaining
various components of inventory at economic levels and in proper proportions.
n H!" !achine "ools (td# nventory is divided into the following
categories.
• 7aw material and components
•
Stores and maintenance spare parts
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• "ools and nstruments
• Wor$ in progress
• Stoc$ in trade
• !aterial and components in transit
• Scrap
"able showing the N change in components of inventory from ,C+C
Co!3onents of In#entor) $1
-:
In#entor) $1
,alue Rs; G
Ra? !aterial and co!3onents DD,A,,- ,+.
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"able showing the N change in components of inventory from ,C+C and ,C++
In#entor) $11 $1$
ValueB7s8 N ValueB7s8 N
Ra? !aterial and co!3onents A#:,#;-#,A -+.A
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Inter3retation:
From the above# we can say that the components of inventory fluctuating
during the study period. f we study the composition of inventory in H!"
!achine tools ltd the ma/or portion of its total inventory consist of wor$ in progress and components and stoc$ in trade.
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Co!3onents of In#entor) $11
Co!3onents of In#entor) $1$
Co!3onents of In#entor) $1%
-D
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I9E AND /RO8TH OF IN,ENTOR.
"he size of inventory and growth shows of the company. "he effective
regulation of inventory calls for the maintenance of inappropriate level of inventory.
'll though
nventory is necessary to run a plant efficiently the e0cess of inventory serves
no purpose and also affects the profitability of the firm.
Erowth rate of inventory shows the ratio of current 'sset as it is a part
of current 'sset reflects on current ratio establishes relationship between the current
asset and current liabilities. "he ability of a company to meet its short3term
commitment is normally assessed by comparing current asset whit current liabilities.
Ta@le s0o?in G Increase in in#entor) 6 ales fro! $1 to $1%
.ear In#entor) Rs; ales Rs; G Increase in
in#entor)
G Increase in
sales
$1 C#;-#-#+-
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nventory turnover or stoc$ turnover ratio is the indicates the number of times
the stoc$ is turnover Bi.e.# sold8 during the year. n other words# it is relation between
the stoc$ and cost of goods sold. "his ratio indicates whether investments in inventory
are efficiently used or not.
' high inventory turnover ratio indicates bris$ sales. "he ratio is a measure to
discover the possible trouble in form of over stoc$ing or over valuation. ' low
inventory turnover ratio results in bloc$ing of funds in inventory# which may
ultimately result in losses due to inventory becoming absolute# or deteriorating in
)uality.
"he ratio is e0pressed as* O Annual sales A#erae stoc2 of In#entor)
TA*'E NO : &"1
.earAnnual sales
Rs;
A#erae stoc2 of
In#entor)Rs;ITR
$1
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Inter3retation:
From the above graph > .+# it is 6leary shows that the inventory turnover
ratio fluctuating year over year. nventory turnover ratio has a declining trend from
,C+C3,.+-#,C++3+.#,C+,3+.:#,C+-3,.+ which indicates that inventory utilizedefficiently without bloc$ing of inventors in stoc$ and ma$ing them obsolete.
$" Ra? Material turno#er ratio:
,
INVEN!"# $"N!VE" "%I!
2&13
1&4 1&5
2&1
0
0&5
1
1&5
22&5
2010 2011 2012 2013
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7aw !aterial turnover ratio shows the ratio of turnover of inventory based
raw material consumed and average inventory. 7aw material is those basic inputs that
are converted into finished product through the production process. 7aw material
inventories are those units which have been purchased are stored for future
productions. "his ratio shows the number of times the raw materials were replaced
during a fiscal year.
"he ratio is e0pressed as*
Annual consu!3tion of ra? !aterials a#erae ra? !aterials
TA*'E NO : &"$
.earMaterial
consu!edRs;
A#erae stoc2 of ra?
!aterialRs;RMTR
$1 ,:#D-#:#:+,
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Inter3retation:
From the above graph no .,# raw material ratio has shown a decline in
previous two years,C++3,.:-#,C+,3,.-- giving a good sign of effective use of raw
materials for the production process.
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%" 8or2 in Proress turno#er ratio
Wor$ in progress goods are those which are in the process of production in the
manufacturing unit. "hey are also called as semi finished goods.
"he ratio is e0pressed as*
Cost of co!3leted ?or2s a#erae ?or2in 3roress
TA*'E NO : &"%
.ear Cost co!3leted
?or2s Rs;
A#erae stoc2 of 8IP
Rs;
8IPTR
$1 ;#+#CC#CCC +D#-#A:#AAC -.A
$11 ;,#A;#CC#CCC +
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Inter3retation: From the above graph no .- it is clear that wor$ in progress ratio
has declined in previous year but it is high when compared to ,C+C3-.A.also this ratio
was in the year ,C++3-.:- and ,C+,3-.,D.
;
,or- in .rogre** t+rnover ratio
3&49 3&52
3&28
1&7
0
0&5
1
1&5
2
2&5
33&5
4
2010 2011 2012 2013
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&" Finis0ed oods turno#er ratio*
Finished goods are those which are read for delivery to the customers# but
lying in the inventory due to some delay of sales. "his ratio indicates the average
finished goods turnover in one fiscal year.
t is e0pressed as*
Cost of oods sold a#erae finis0ed oods in#entor).
TA*'E NO : &"&
.ear Cost of oods
soldRs;
A#erae stoc2 of
finis0ed oods
in#entor)Rs;
F/TR
$1 ,+#
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Inter3retation:
From the above graph no . it shows that this ratio# throughout the period of
study showed fluctuating trend ,C++3.A,#,C+-3C.: which shows that finished goods
are deign in the inventory depending on sales.
" In#entor) to ?or2in ca3ital ratio:
D
/ini*hed good* t+rnover ratio
2&52
4&924&03
0&5
0
1
2
3
4
5
6
2010 2011 2012 2013
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nventory to wor$ing capital is the li)uidity ratio# which helps to measure the
short term solvency of the company. "his ratio indicates that the proposition of the
wor$ing capital tied up in the inventories. 's we $now that inventory is a current asset
and component of wor$ing capital# this ratio shows the percentage of inventory in
wor$ing capital.
"he ratio is e0pressed as*
In#entor) ?or2in ca3ital
TA*'E NO : &"
.ears In#entor)Rs; 8or2in ca3ital Rs; I TO 8CR
$1 C#;-#-#+- +D#D#DC#:AC ,.+A
$11 ,A#DC#C+#-
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Inter3retation:
From the above graph no .: it can be observed that inventory carries steep
ratio in last few years when compared to ,C+C3,.+A#,C++3,.A#&,C+-3-.,A figures
giving a positive indication of inventory.
B" In#entor) 0oldin 3eriod:
:C
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nventory holding period should be minimum. umber a day for which
inventory is holding is calculated by the following formula.
nventory holding period O in#entor) annual sales %B da)s
TA*'E NO : &"B
.ear In#entor)Rs; Annual sales Rs; IHPDa)s;
$1 C#;-#-#+-
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Inter3retation:
's we $now that H9 should be minimum. Here in the above graph no .; it
shows that H!" !achine tools ltd is holding inventories for longer period in the
previous year ,C+C3,CD#,C++3+:#,C+,3,A-#,C+-3,C, "his is due to decline in sales
and other reason li$e change in design# order being cancelled etc.
CHAPTER-
:,
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FINDIN/4U//ETION4CONC'UION.
"1 FINDIN/
"he growing competition and technological developments in this sector are
having inevitable effects on the ndian machine tool industry as a whole. "he H!"
machine tool limited is facing typical problems in the emerging globalization scenario
as under*
• H!" machine tool has a regular system for determining unserviceable or
damaged stores# raw materials and finished goods.
• "he unit has maintained proper records showing full particulars including
)uantitative details and situations of fi0ed assets.
• !aterials are classified as 1'’ 14’ and 16’ class items.
•
"he unit has maintained good relationship with the employer and employees.
• "he unit has maintained up to date records and submitted to respective
authorities.
• nventory has been physically verified during the year by the management.
• "he technology is not advanced. "his is one of the reasons for low
productivity.
• !ost of the machines are obsolete. "hus production process is costly and time
consuming.
:-
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"$ U//ETION
• "he company should ma$e efforts in ma$ing the whole use of installed and
licensed capacity.
• "he company should fi0 competitive prices for the productions in order to
compete in the global mar$et.
• "he company should adopt modern costing systems# balance scorecard
concept etc.
• "he company inventory management is at moderate level. Hence effective
steps have to be ta$en to see that the inventory management is made more
efficient so that capital is bloc$ed in inventory can be used for wor$ing capital
re)uired.
• !a/or part of revenue earned is spent on payment of interest* therefore
measures should be ta$en to reduce the amount of credit.
• Since the company is incurring loss for the past few years# the management
should ta$e measures to bring such a situation under control in order to
flourish in the near future.
• "he material cost is high in the company# thus the company should ma$e
efforts to buy the materials at reasonable price.
• "he company should update its technology so that it can beat the competitor’s
price and also produce higher )uality products.
• "he company has to concentrate much on credit policy for speedy collections
of accounts receivable.
:
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"% CONC'UION
H!" is a very popular name among every ndian# because of its innovation of
technology )uality assurance durability affordability to its people or customer. H!"
has created the brand image that symbolizes machine tools to a manufacturer# tractors
to a farmer and watches to millions of people in ndia.
n the changed mar$et condition the organization needs to focus on the
customer satisfaction# in reaching out this goal are conclusion basis the management
has to constantly upgrade technology product profile internal wor$ process and plantand machinery in the end ultimately it is the employees who will change the
performance of the company. "herefore motivation must find priority.
::
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HMT Mac0ine Tools 'td HMT Profit and 'oss Ac
Dr Cr
Particulars Schedule
As AT
31.03.2010
As At
31.03.2011
Earnings
Sales 6.1 74,91,45,908
48,00,30,182
Less: Excise duty 3,60,42,110 4,61,82,011
Net Sales 48,33,73,733
43,38,48,171
Transfer t !lant 6.2 11,87,853 21,57,460
"t#er inc$e 6.3 4,98,03,739 10,45,13,464
%#ar&es 'ec(ered 53,33,938 33,98,792
)nter factry Transfers %r 1,19,06,192 87,11,211
*ccretin+ -iscretin t.)!+/nis#ed
Stc+Scra
6.4 5,14,47,965
5,59,19,864
Total 0,01,7,4!0
60,8,48,!62
"ess# $%T&$'N&S
aterials 7.1 20,15,83,439
23,27,93,494
!ersnnel 7.2 29,61,58,730
29,98,76,973
-ereciatin 2,49,78,777 1,74,30,105
"t#er Exenses 7.3 10,67,36,654
9,42,76,334
)nterest 7.4 2,14,43,408 15,48,942
%#ar&es aid 3,23,76,377 2,93,02,958
'S c$ensatin .+ 0 2,91,33,719
:;
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Less: Exenses allcated t sdne fr internal use
6.2 42,60,624 20,18,410
Total 67,!0,16,763
71,62,84,!
!r/t +lss efre rirerid adust$ents and extrardinary ite$s
17,88,59,273
10,77,35,633
Less: rir erid adust$ents 7. 11,43,051 1,35,69,643
*dd: extra rdinary ite$s E") 7.6 0 4,68,12,125
!r/t +lss efre tax 18,00,02,32
4
7,44,93,151
Less: r(isin fr frin&e
ene/ts
0 24,94,135
!r/t +lss efre tax
Transferred T ac#ine Tl-irectrate *+c
(18,00,02,3
24
(7,6!,87,28
6
Mac0ine Tools 'td *alance 0eet
Particulars As AT
31.03.2010
As AT
31.03.2011
L"*S
Secured 1;1 11,25,09,194
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T"T*L 82,89,67,421
>)?E- *SSETS
@rss Alc 2;1 83,52,15,972
Less: -ereciatin 73,43,44,879ET AL"%B 10,08,71,093
ac#inery C EDui$ent in Transit 1,972
%aital .r in !r&ress 0
%
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HMT Mac0ine Tools 'td
HMT Profit and 'oss Ac
Dr Cr
Particulars Schedu
le
As AT
31.03.2011
As At
31.03.2012
Earnings
Sales 6.1 48,00,30,182
51,94,15,843
Less: Excise duty 8,27,03,710
Net Sales 66,64,42,1!8
71,10,4!,820
Transfer t !lant 6.2
"t#er inc$e 6.3 4,69,87,145 11,32,10,940%#ar&es 'ec(ered 19,70,219 1,30,97,778
)nter factry Transfers %r 30,84,179 47,52,771
*ccretin+ -iscretin t.)!+/nis#ed
Stc+Scra
6.4 11,39,26,82
3
3,61,00,539
Total 60,4,6,!18
80,60,10,770
"ess# $%T&$'N&S
aterials 7.1 23,27,68,231
25,83,54,512
!ersnnel 7.2 31,63,28,487
32,14,35,107
-ereciatin 1,49,58,672 1,62,11,663
"t#er Exenses 7.3 7,08,57,861 18,36,07,030
)nterest 7.4 13,72,467 4,11,69,468
%#ar&es aid 3,14,11,816 3,93,21,342
'S c$ensatin .+ 7,06,43,865 24,65,44,105
Less: Exenses allcated t 6.2 40,11,465 24,74,537
:A
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s dne fr internal use
Total 74,01,2!,!34
1,10,41,68,6!0
!r/t +lss efre rir
erid adust$ents andextra rdinary ite$s
13,55,73,016
29,81,57,920
Less: rir eridadust$ents
7. 50,11,629 4,85,725
*dd: extra rdinary ite$sE")
7.6 0 13,78,00,534
!r/t +lss efre tax 14,05,84,63
8
0
Less: r(isin fr frin&e
ene/ts
23,10,234 64,597
19,85,968
!r/t +lss efre tax
Transferred T ac#ine Tl-irectrate *+c
14,28,94,87
2
16,28,93,676
HMT Mac0ine Tools 'td
;C
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*alance 0eet
Dr Cr
;+
Particulars As AT
31.03.2011
As AT
31.03.2012
Earnings
Sales 6.1 51,94,15,843
Less: Excise duty
Net Sales 7!,!!,13,006
Transfer t !lant 6.2 0"t#er inc$e 6.3 3,44,60,770
%#ar&es 'ec(ered 1,96,28,884
)nter factry Transfers %r 0
*ccretin+ -iscretin t.)!+/nis#ed
Stc+Scra
6.4 5,55,094
Total 8,4,7,74
"ess# $%T&$'N&S
aterials 7.1 29,28,69,759
!ersnnel 7.2 42,54,08,432
-ereciatin 2,28,81,252
"t#er Exenses 7.3 20,68,12,263
)nterest 7.4 7,70,17,273
%#ar&es aid 4,59,51,966
'S c$ensatin .+ 5,13,59,006
Less: Exenses allcated t sdne fr internal use 6.2 3015056
Total 111!2848!
!r/t +lss efre rirerid adust$ents and extrardinary ite$s
264727141
Less: rir erid adust$ents 7. 14,21,860
*dd: extra rdinary ite$s E") 7.6 1,28,31,83,889
!r/t +lss efre tax
Less: r(isin fr frin&e ene/ts 0
!r/t +lss efre tax
Transferred T ac#ine Tl-irectrate *+c
1,01,70,34,888
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HMT Mac0ine Tools 'td
HMT Profit and 'oss Ac
Dr Cr
Particulars Schedu
le
As AT
31.03.2012
As AT
31.03.2013
Earnings
Sales 6.1 51,94,15,843
51,76,09,558
Less: Excise duty 4,01,41,768
3,60,42,110
Net Sales 47,74,67,7!0
48,33,73,733
Transfer t !lant 6.2 0 11,87,853"t#er inc$e 6.3 4,73,52,33
24,98,03,739
%#ar&es 'ec(ered 52,65,526 53,33,938
)nter factry Transfers %r 1,19,06,192
*ccretin+ -iscretin t.)!+/nis#ed
Stc+Scra
6.4 6,37,33,52
8
5,14,47,965
Total 46,63,2,1
20
0,01,7,4
!0"ess# $%T&$'N&S
aterials 7.1 21,08,36,787
20,15,83,439
!ersnnel 7.2 38,34,70,776
29,61,58,730
-ereciatin 3,19,48,656
2,49,78,777
"t#er Exenses 7.3 7,66,13,61
1
10,67,36,65
4)nterest 7.4 2,10,08,94 2,14,43,408
;,
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5
%#ar&es aid 3,70,13,394
3,23,76,377
'S c$ensatin .+ 0 0
Less: Exenses allcated t sdne fr internal use
6.2 7,62,729 42,60,624
Total 76,01,2!,440
67,!0,16,763
!r/t +lss efre rirerid adust$ents and extrardinary ite$s
29,37,77,3
20
17,88,59,27
3
Less: rir erid adust$ents 7. 13,24,453 11,43,051
*dd: extra rdinary ite$s E") 7.6 0 0
!r/t +lss efre tax 2,951,01,7
73
18,00,02,32
4
Less: r(isin fr frin&e ene/ts 0 0
!r/t +lss efre tax
Transferred T ac#ine Tl-irectrate *+c
(2!,1,01,7
73
(18,00,02,3
24
;-
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"oans 5 Ad;ances 3. 17,71,7,66
17,72,40,78
4!,!!,02,610
62,71,26,!17
"ess# +%99ENT "'A'"'T'ES 5P9$:'S'$N
+urrent lia/9E?
0 0
T$TA" 13,!7,4,868
38,4,12,146
*I*'IO/RAPH.
;:
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• "P /UPTHA 1; Jtatistical !et0odsK4sult0an c0and and co ne? del0i"
• I"M PANDE. 1;4 ?Financial !anagement@ Vi$as 9ublishing Home 9vt (td#
ew %elhi.
• M"."7HAN 6 P7 +AIN 1;# ?!anagement 'ccounting@# "ata !6 Eraw
Hill 9ublishing 6ompany (td# Himalaya 9ublishing House# !umbai.
8E*ITE:
• www.hmtindia.com
• www.hmtmachinetools.com
http://www.hmtindia.com/http://www.hmtmachinetools.com/http://www.hmtindia.com/http://www.hmtmachinetools.com/