A REPORT ON INVENTORY MANAGEMENT IN

SEW INFRASTRUCTURE LIMITEDProject Report Submitted to

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, KAKINADA

In partial fulfillment of the RequirementFor the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

RAJESWARI.M

(11761E0095)Under the guidance of

Dr.V.SREEHARI PROFESSOR

SCHOOL OF MANAGEMENT STUDIES

LAKIREDDY BALI REDDY COLLEGE OF ENGINEERING(Approved by AICTE. New Delhi Affiliated to J. N.T.U, Kakinada)

MYLAVARAM, KRISHNA DISTRICT

2012 – 2013

DECLARATION

I hereby declare that the project report entitled "A REPORT ON INVENTORY

MANAGEMENT IN SEW INFRASTRUCTURE LIMITED”, is a record of

independent research work and has been carried out by me during the period of my study

at LAKIREDDY BALIREDDY COLLEGE OF ENGINEERING, Mylavaram under

the guidance of Dr.V.SREEHARI professor in SCHOOL OF MANAGEMENT

STUDIES, and has not been submitted elsewhere for any degree either in part or whole.

Signature

(RAJESWARI.M)

LAKIREDDY BALI REDDY COLLEGE OF ENGINEERING (Approved by A.I.C.T.E, New Delhi &Affiliated to J. N.T.U, Kakinada)

L.B.Reddy Nagar, Mylavaram, Krishna Dist, A.P, India. PIN: 521230

________________________________________________________

Date: ----------CERTIFICATE

This is to certify that the project report entitled “A REPORT ON INVENTORY

MANAGEMENT IN SEW INFRASTRUCTURE LIMITED”, submitted by

RAJESWARI.M in partial fulfillment of the work award of the MASTER OF

BUSINESS ADMINISTRATION submitted to J.N.T.U, Kakinada has been completed

under my supervision and guidance.

This project has not been submitted earlier for the award of any degree or diploma

of J.N.T.U, Kakinada or any other university.

Dr. A. LAKSHMANA SWAMY., Dr.V.SREEHARI Ph.D.

M.SC., CAIIB, PGDBM. MBA., PH.D. Professor

Head of Department Project Guide

EXTERNAL EXAMINER INTERNAL EXAMINER

ACKNOWLEDGEMENT

I express my sincere gratitude to Mr. J.V.L.Satyanarayana, General Manager of

SEW Infrastructure Ltd, Hyderabad, for giving me the opportunity to do my project

at this prestigious company. I am extremely grateful to him for providing valuable

guidance and support for completing the report successfully.

I am thankful to our Director, Dr.L.S.S. Reddy for his encouragement in

accomplishing the project.

I would like to convey my respectable thanks to Dr.A.Lakshmana swamy, HOD,

Department of management studies, for extending his co-operation in the beginning of

the training program.

I owe my deep sense of gratitude to my minor project guide Dr.V.Sreehari professor

without whose regular guidance and constant encouragement at all stages, the study

would not have taken this form.

I am equally thankful to all my lecturers in the Department for their valuable support

during the course of the project.

Signature

(Rajeswari.M)

CONTENTS

Pg.No

CHAPTER-I INTRODUCTION

CHAPTER-II OBJECTIVES & RESEARCH METHODOLOGY

2.1 Need for the Study

2.2 Objectives of the study

2.3 Scope of the study

2.4 Research Design

2.5 Limitations of the studyCHAPTER-III PROFILES

3.1 Industry Profile

3.2 companies Profile CHAPTER-1V DATA ANALYSIS AND INTERPRETATION

CHAPTER -V Findings, Suggestions& Conclusion

Appendices Bibliography

INVENTORY MANAGEMENT

 

Material is a very important factor of a production. It includes physical commodities

used to manufacture the final product. It is the inventorial and does not get waste and

exhaust with the passage of time as labour is wasted with the passage of time whether in

used or not. The other feature of material is that, is firm, where as other elements of cost

like labour and other services can’t be easily varied once they are established. From this it

can be concluded that material is most flexible on controllable input. It is the first and

most important element of cost. Materials account for nearly 60% of the cost of

production which is clear from analysis of financial statements of a large number of

private and public sector organizations.

According to the Indian association of materials management of  64 paisa in

a rupee are spent on materials by Indian industries, 16 paisa on labour and the rest of 1

rupee of cost is spent on over heads. Importance of material control lies in the fact that

any saving made in the cost of materials will go a long way in reducing the cost of

production and improving the profitability of the concern. Studies by experts in this field

have highlighted the facts that if an organization can    affect 5% saving in material cost,

it would be as good as increasing the production or sales by about 36%. Proper control of

material is necessary from the time orders for purchasers of materials are placed with

suppliers until they have been consumed the object of material control is to attack

material cost on fronts, so that the cost of material may be reduced. In other words,

efforts are to be made to reduce the cost of materials when it is purchase, stored and used.

Before coming to the discussion of material control, we may clear that purchase

of materials will include both direct and indirect materials. Direct materials and indirect

material share both treated as stores items, where as stock of finished goods is not treated

as a stores item, direct and indirect materials purchased for stock purpose to be issued to

different jobs, works orders of departments as and when required. On the other hand,

finished goods are treated as stock. We may also refer to the commonly used term

“INVENTORY” which includes the stock not only of raw materials but also stores and

spares, work-in-progress and finished goods. The stock materials are only a part of the

inventory held by a manufacturing unit.

Every enterprise needs inventory for smooth running of its activities. It serves as a link

between production and distribution process. There is generally a time lag between the

recognition of a need and its fulfillment. The greater the time lag, the higher requirements

for inventory. It also provides a question for future price fluctuations. The investment in

inventories constitutes the most significant part of current assets/ Working capital most of

the undertaking.

Thus, it is very essential to have proper control and management of inventories.

The purpose of inventory management is to ensure availability of materials in sufficient

quantity as and when required and also to minimize investment in inventories.

MEANING AND NATURE OF INVENTORY:

In accounting language, inventory may mean the stock of finished goods only. In

manufacturing concern, it may include raw materials, work-in-process and stores etc.

Inventory includes the following things:

Raw Material:

Raw material form a major input into the organization. They are required to carry out

production activities uninterruptedly. The quantity of raw materials required will be

determined by the rate of consumption and the time required for replenishing the

supplies. The factories like the availability of raw materials and government regulations

etc, to affect the stock of raw materials.

Work in Progress:

The work in progress is that stage of stocks which are in between raw materials and

finished good. The quantum of work in progress depends up on the time taken in the

manufacturing process. Together the time taken in manufacturing, the more will be the

amount of work in progress.

Consumables:

These are the materials which are needed to smoother the process of production.

These materials do not directly enter production but they act as catalysts. Consumables

may be classified according to their consumption and critically. Generally, consumable

stores do not create any supply problem and firm a small part of production cost. There

can be instances where these materials may account for much value than the raw

materials. The fuel oil may form a substantial part of cost.

Finished goods:

These are the goods which are ready for he consumers. The stock of finished

goods provides a buffer between production and market. The purpose of maintaining

inventory is to ensure proper supply of goods to customers.

Spares:

The stocking policies of spares differ from industry to industry. Some industries

like transport will require more spares than the other concerns. The costly spare parts like

engines, maintenance spares etc are not discarded after use, rather they are kept in ready

position for further use. All decisions about spare are base of the financial cost of

inventory on such spares and the costs that may arise due to their non-availability.

BENEFITS OF HOLDING INVENTORIES:

Although holding inventories involves blocking of a firm's funds and the

costs of storage and handling, every business enterprise has to be maintain certain level of

inventories to facilitate uninterrupted production and smooth running of business.

In the absence of inventories a firm will have to make purchases as soon as

it receives order. It will mean loss of time and delays in execution of orders which

sometimes may causes loss of customers and business. A firm also needs to maintain

inventories to reduce ordering cost and avail quantity discounts etc.

There are three main purposes of holding inventories.

1.The transaction motive: which facilitates continuous production and timely execution

of sales orders.

2.The precautionary motive: Which necessitates the holding of inventories for meeting

the unpredictable changes in demand and supplies of materials.

3.The speculative motive: which induces to keep inventories for taking advantage of

price fluctuations, saving in re-ordering costs and quantity discounts.

RISK AND COSTS OF HOLDING INVENTORIES: The holding of inventories

involves blocking of a firm 's funds and concurrence of capital and other costs.

The various costs and risk involved in holding inventories are:

1.Capital Costs: Maintaining of inventories results in blocking of the firms financial

resources. The firm has therefore to arrange for additional funds to meet the cost of

inventories.

The fund may be arranged from own resources of firm outsiders. But in both the

case, the firm incurs a cost. In the former case, there is an opportunity cost of investment

while in the later case, the firm has to pay interest to the outsiders.

2.Storage and handling costs: Holding of inventories also involves cost on storage as

well as handling of materials. The storage of costs includes the rental of the go down,

insurance charges etc.

3.Risk of price decline: There is always a risk of reduction in the prices of inventories by

the suppliers in holding inventories. This may be due to increase market suppliers,

competition or general depression in the market.

4.Risk of obsolescence: The inventories may become obsolete due to improved

technology, change in requirements, change in customer tastes etc.

5.Risk determination in quality: The quality of materials may also deteriorate while the

inventories are kept.

Inventory management is concerned with the determination of optimum level

of investment for each components of inventory and the efficient use of components and

the operation of components and the operation of an effective control and review of

mechanism. The main objectives of inventory management are operational and financial.

The operational objective is that the materials and spares should be available in sufficient

quantity so that work is not disrupted for want of inventory.

The financial objective is that the materials and spares should be available in

sufficient quantity so that work is not disrupted for want of inventory.  The financial

objective means that investment in inventory should not remain idle and minimum

working capital be locked in it.

The following are the objectives of inventory management:

1. To ensure continuous supply of materials, spares and finished goods so that production

should not suffer at any time and the customers demand should also be met.

2. To avoid both over-stocking and under-stocking of inventory.

3.To maintain investment in inventories at the optimum level as required by the

operational and sales activities.

4. To keep material cost under control so that they contribute in reducing the cost of

production and over all costs.

5.To eliminate duplication in ordering or replenishing stocks .This is possible with the

help of centralizing purchases.

6. To minimize loses through deterioration, pilferages, wastages, and damages.

7. To ensure perpetual inventory control so that materials shown in stock ledgers should

be actually lying in the stores.

8 .To ensure right quality goods at reasonable prices. Suitable quality standards will

ensure proper quality of stocks. The price-analysis, the cost-analysis and value analysis

will ensure payment of proper prices.

9.To facilitate furnishing of date for short- term and long term planning and control of

inventory.

 TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT:

A proper inventory control not only helps in solving the actual problem of   liquidity but

also increase profits and causes substantial reduction in the working capital of the

concern.

Determination of stock levels:

Carrying of too much and too little of inventory is determined to the firm. If the inventory

level is too little, the firm will face frequent stock outs involving heavy

ordering cost and if the inventory level is too high it will be unnecessary tie up of capital.

An efficient inventory management requires should maintain an optimum level of

inventory where inventory costs are the minimum and at the same time there is no stock

out which may result in loss or shortage of production.

 Minimum stock level: It represents the quantity below its stock of item should not be

allowed to fall.

Lead-time: A purchase firm requires some time to process the order time is also required

by the supplying firm to execute the order. The time taken in processing the order and

then executing it is known as lead time.

Rate of consumption:

It is the average consumption of materials in the factory. The rate of consumption will be

decided on the basis of past experience and production plans.

 Nature of material:

The nature of material also affects the minimum level. If a material `is required for such

material.

Minimum stock level can be calculated with the help of following formula

Minimum stock level = Re ordering level -

(Normal consumption x normal re order period)

Re ordering level:

When the quantity of materials reaches at a certain figures then fresh order is sent to get

material again. The order is sent before the materials reach minimum stock level. Re

– ordering level is fixed between minimum level and maximum level.

Re-ordering level = Maximum consumption x Maximum Re-order period.

 Maximum Level:

It is the quantity of materials beyond which a firm should not exceed its stocks. If the

quantity exceeds maximum level limit then it will be overstocking. Overstocking will

mean blocking of more working capital, more space for storing the materials, more

wastage of materials and more chances of losses from obsolescence.

  Maximum Stock Level = Re-ordering Level + Re-order Quantity – (Minimum

consumption x Minimum Re-order period)

Danger Stock Level:

It is fixed below minimum stock level.  The danger stock level indicates emergence of

stock position and urgency of obtaining,   fresh supply at any cost.

Danger stock level = Average Rate of consumption x Emergency delivery time

Average stock level:

This stock level indicates the average stock held by the concern.

Average stock level = Minimum stock level + ½ x Re-order quantity.

Determination of safety stocks:

Safety stock is a buffered to meet some unanticipated increase in usage. The demand for

materials may fluctuate and delivery of inventory may also be delayed and in such a

situation the firm can face a problem of stock out.

In order to protect against the stock out arising out of usage fluctuation, firms usually

maintain some margin of safety stock. Two costs are involved in the determination of this

stock that is opportunity cost of stock outs and the carrying costs. 

If a firm maintains low level of safety frequent stock outs will occur resulting into the

larger opportunity costs. On the other hand, the larger quantity of safety stock involves

carrying costs.

 Economic Order Quantity (EOQ):

The quantity of material to be ordered at one time knows an economic ordering quantity.

This quantity is fixed in such a manner as to minimize the cost of ordering and carrying

costs.

Total cost off material = Acquisition cost + carrying costs + ordering cost.

Carrying cost: It is the cost of holding the materials in the store.

Ordering cost: It is the cost of placing order for the purchase of materials.

EOQ can be calculated with the help of the following formula

EOQ = 2 CO/I:

Where C = Consumption of the material in units during a year

O = Ordering Cost

I = Carrying cost or interest payment on the capital.

A-B-C Analysis: (Always better control analysis)

Under ABC analysis, the materials are divide into 3 categories viz.. A, B and C Almost

10%of the items contribute to 70% of value of consumption and this category is called 'A'

category. About 20% of the items contribute  about 20% of value of consumption and this

is knows as category 'B' materials. Category 'C' covers about 70% of items of materials

which contribute only 10% of value of consumption.

 JIT Analysis (Just in time):

The goal of just in time analysis is manufacturing is not new. The basic desire for

continued reduction material resources requirements is quiet common. The means by

which goal of JIT is now being accomplished is considered to be new.

The primary goal of JIT is to achieve zero inventories within an organization as well as

throughout entire supply chain. JIT the key theme is to work without buffer stock/with

minimal buffer stock.

Inventory Turnover ratio:

Inventory turnover ratios is calculated to indicate whether inventories have been used

efficiently or not. The inventory turnover ratio also knows as stock velocity is normally

calculated as sales/ average inventory of cost of goods sold/average Inventory conversion

period may also be calculated to find the average time taken for clearing the stocks.

Symbolically

Cost of goods sold

Inventory Turnover Ratio      =   -----------------------------------

Average inventory at cost

Days in a year

Inventory conversion period =  ---------------------------------

Inventory Turnover Ratio

Classification and codification of Inventories:

The inventories should first be classified and then code numbers should be assigned for

their identification. The identification of short names is useful for inventory management

not only for large concerns but also for small concerns. Lack of proper classification may

also lead to reduction in production. Generally, materials are classified accordingly to

their nature such as construction materials, consumable stocks, spares, lubricants etc,

after classification the materials are given code numbers. The coding may be done

alphabetically or numerically. The later method is generally used for coding.

The class of materials is assigned two digits and then two or three digits are assigned to

the categories of items divided into 15 groups. Two numbers will be category of materials

in that class. The third distinction is needed for the quality of goods and decimals are

used to note this factor.

Valuation of inventories- Methods of valuation:

1. FIFO method

2. LIFO method

3. Base Stock method

4. Weighted average price method.

CRITERIA FOR JUDGING THE INVENTORY SYSTEM:

While the overall objective of the inventory system is to minimize the cost to the firm at

the risk level acceptable to management, the more proximate criteria for judging the

inventory system are

Comprehensibility

Adaptability

Timeliness.

Areas of improvement:

Inventory management in India can be improved in various ways. Improvements could

be affected through.

Effective Computerization:

Computers should be used merely for accounting purposes but also for improving

decision making. Review of Classification: ABC & FSN classification must be

periodically reviewed.

Improved Co-ordination:

Better co-ordination among purchase, production, marketing and finance department will

help in achieving greater efficiency in inventory management.

Development of Long Term Relationships: Procedures for disposing obsolete/surplus

inventories must be simplified.

Adoption of Challenging Norms: Companies should set benchmarks with global

competitors and use ideas like JIT to improve inventory management.

Valuation of inventories – methods determination:

Although the prime consideration in the valuation of inventories is cost, there are a

number of generally accepted methods of determining the cost of inventories at the close

of an accounting period. The most commonly used methods are First-in-first-out (FIFO)

average, and Last-in-first-out (LIFO).

The selection of the method for determining cost of inventory valuation is important as it

has direct bearing on the cost of goods sold and consequently on profit. When a method is

selected, it must be used consistently and cannot be changed from year to year in order to

secure the most favorable profit for each year.

FIFO METHOD (FIRST-IN-FIRST-OUT METHOD):

Under this method it is assumed that the materials or goods first received are the first to

be issued or sold. Thus, according to this method the inventory on a particular date is

presumed to be composed of the items, which were acquired most recently.

Advantages:

The FIFO method has the following advantages:

1. It values stock nearer to current market prices since stock is presumed to be consisting

of the most recent purchases.

2. It is based on cost and, therefore, no unrealized profit enters into the financial accounts

of the company.

3. The method is realistic since it takes into account the normal procedure of utilizing or

selling those materials or goods, which have been longest in stock.

Disadvantages:

The method suffers from the following disadvantages

1. It involves complicated calculations and hence increases the possibility of clerical

errors.

2. Comparison between different jobs using the same type of material becomes

sometimes difficult. A job commenced a few minutes after another job may have to bear

an entirely different charge for materials because the first job completely exhausted the

supply of materials of the particular

The FIFO method of valuation of inventories is particularly suitable in the following

circumstances

The materials or goods are of a perishable nature.

The frequency of purchases is not large.

There is only moderate fluctuation in the prices of materials or goods purchased.

Materials are usually identifiable as belonging to a particular purchase lot.

 LIFO METHOD (LAST-IN-FIRST-OUT):

This method is based on the assumption that last time of material or goods

purchased are the first to be issued or sold. Thus, according to this method inventory

consists of items purchased at the earliest cost.

Advantages:

This method has the following advantage.

1. It takes into account the current market conditions while valuing  materials issued to

different jobs or calculating the cost of goods sold.

2. The method is based on cost and therefore no unrealized profit or loss is     made on

account of use of this method.

3. The method is most suitable for materials which are of a bulky and non-perishable

type.

BASE STOCK METHOD:

This method is based on the contention that each enterprise maintains at all time

a minimum quantity of materials or finished goods in its stock. This quantity is termed as

base stock. The base stock is deemed to have been create out of the first lost purchased,

therefore it is always valued at this price and is carried forward as a fixed asset.

Any quantity over and above the base sock is valued in accordance with any

other appropriate method. As this method aims at matching current costs to current sales,

the LIFO method will be most suitable for valuing stock of materials or finished good

other than base stock.

The base stock method has the advantage of charging out materials/goods at

actual cost. Its other merits or demerits will depend on the method which is used for

valuing materials other than the base stock.

WEIGHTED AVERAGE PRICE METHOD:

This method is based on the presumption that once the materials are put into a common

bin, they lose identity. Hence, the inventory consists of no specific batch of goods. The

inventory is thus priced on the basis of average prices paid for the good, weighted

according to the quantity purchased at each price. Weighted average price method is very

popular on account of its being based on the total quantity and value of materials

purchased besides reducing number of calculations. As a matter of fact the new average

price is to be calculated only when a fresh purchase of materials is made in place of

calculating it very now and then as is the case with FIFO, LIFO methods.

However, in case of this method different prices of materials are charged from

production particularly when the frequency of purchases and issues/sales is quite large

and the concern is following perpetual inventory system.

 Inventories valued at standard cost:

A very useful method of valuing inventories is at standard cost. With a standard

cost system there is no need for spending a great deal of time and money tracing unit cost

through perpetual inventory record.

Inventories valued at standard cost:

A very useful method of valuing inventories is at standard cost. With a

standard cost system there is no need for spending a great deal of time and

money tracing unit cost through perpetual inventory record.

ACQUIRING RAW MATERIALS FROM THE STORE ROOM:

Recognized need for

materials in

production

Stores requisition

Materials are sent to work place

Notifies storeroom

clerk of need

Requisition is recorded in

1. Requisition summary used to record

general ledger entry transferring R.M's

to WIP

2. Perpetual inventory records.

3. Departmental cost records used to

accumulate materials costs by

responsibility centers and to determine

costs for individual production process.

4. Job cost sheets used when

manufacturing is of a job shop variety

and costs must be kept by individual

jobs

Journal Entry:

To record total of requisition summary

Dr. Work in process

Cr. Raw materials inventory

The first step is the recognition of the fact that materials are needed for

production. Workers, foreman and production control personnel are

usually the people that recognize the need for material.

The store requisition is prepared in order to obtain materials from the

storeroom.

The stores requisition is the basic document behind general and subsidiary

ledger entries charging materials to work in process. The general Ledger

entry resulting from stores requisitions is simply a transfer of materials

from the raw materials inventory to the work in process inventory. Such an

entry is as follows:

Dr. Work in Process

Cr. Raw materials inventory.

Store Requisition:

The stores requisition is the document that is used to notify the stores

room that materials are to be released for production.

For control purposes it is best to have the foreman and /or specified

production control personnel requisition the materials.

In some plants the production control department may issue stores

requisition at the same time that production schedules are issued.

The foremen in such cases might be restricted only to the issuance of the

requisition for materials required in excess of estimated or standard

quantities.

This excess stores requisition is usually a distinct form which might

required a supervisor's signature as well as foreman's signature.

Waste of material can't be hidden for long when excess stores requisition

are used.

Inventory of Obsolescence:

Obsolescent inventories cannot be used or disposed off at values carried

on the books. Frequent reviews should be made of all inventories and

when obsolescence is indicated a request for revaluation should be

prepared for approval by management.

The difference between original and obsolete value should be recorded by

a charge to an operating account. Inventory obsolescence, and a credit to

inventory. If the material is scrapped, this will be for the full inventory of

the material.

If it is anticipated that the material can be sold at reduced value or used in

areas where it will be worthless than its original value, the entry would be

only for the amount of write down.

Some companies carry a salvage inventory and transfer to its materials

which may be sold or used at reduced value.

CHAPTER-II

OBJECTIVES AND RESEARCH METHODOLOGY

2.1 NEED FOR THE STUDY:

For the purpose of the study, SEW infrastructure Ltd. is selected, as being

it is a monopoly. Sponge iron manufacturing unit in the country at the time when

it was established in 1980 as a public sector unit, specially to meet raw materials

requirements of mini steel plants. It seems that one of the important problems

faced by public enterprises id ineffective control measures especially out dated

and unused inventory control measures. Therefore, it is felt quite appropriate to

make a micro study on inventory control methods and policies of the SEW

infrastructure Ltd. So as to find out the responsible factors that caused for high

inventory cost.

2.2 OBJECTIVES OF THE STUDY:

To understand the importance of infrastructure Industry in India.

To examine the Management of SEW infrastructure Ltd.

To study the Inventory Management in SEW infrastructure Ltd.

To identify the problems if any, and to provide appropriate suggestions

for the improvement of the Inventory management.

2.3 SCOPE OF THE STUDY:

It is the policy of the State University of New York College at Old Westbury (the College) to establish guidelines for inventory control over property purchased or assigned to the campus.

Property consists of assets, furniture, fixtures and equipment. The fundamental objective of this policy is to ensure that such items are properly recorded and valued in the inventory systems, and safeguarded against theft or loss.

2.4 RESEARCH METHODOLOGY:Methodology is a systematic procedure of collecting information in

order to analyse and verify a phenomenon. The collection is done through two principle sources viz.1.Primary data

2.Secondary data

1.Primary Data:

It is the information collected directly without any reference. In this study it was mainly through interviews with concerned officers and staff, either individually or collectively. Some of the information had been verified of supplemented conducting personal with observation.

The data includes: Interviews with SEW infrastructure Ltd. employees.

Organization chart has been drawn through observation.

2. Secondary data:

The secondary data was collected from already published source such as Pamphlets, annual reports, returns and international records.

The data includes:Methodology under study has been collected from the annual

reports of SEW infrastructure Ltd., in house magazines, Publications, books, Journals on Management and Websites.

2.5 LIMITATIONS OF THE STUDY:

The study was conducted with the data available and the analysis was

accordingly.

The analysis is made on the basis of secondary data.

Time is the main constraint in completing the study with in the

stipulated period allowed. It became difficult to analyze and study the

performance of SEW infrastructure Ltd.

The availability of data pertaining to 5 years is one of the constraints.

As there is more dependency on secondary data realistic conclusion

may not be possible to be made.

The study was conducted within the selected unit of SEW

infrastructure Ltd at Hyderabad.

CHAPTER-III

3.1 INDUSTRY PROFILE

The Construction industry of India is an important indicator of the development as it

creates investment opportunities across various related sectors. The construction industry

has contributed an estimated 3,84,282 crore to the national GDP in 2010-11 around

construction activities across all segments; medium sized companies specializing in niche

activities activities; and small and medium contractors who work on the subcontractor

basis and carry out the work in the field. The sector is labour-intensive and, including

indirect jobs, provides employment to more than 35 million people.

History:

The period from 1950 to mid 60’s witnessed the government playing an active role in the

development of these services and most of construction activities during this period were

carried out by state owned enterprises and supported by government departments. In the

first five-year plan, construction of civil works was allotted nearly 50 per cent of the total

capital outlay.

The first professional consultancy company, National Industrial Development

Corporation (NIDC), was set up in the public sector in 1954. Subsequently, many

architectural, design engineering and construction companies were set up in the public

sector (Indian Railways Construction Limited (IRCON), National Buildings Construction

Corporation (NBCC), Rail India Transportation and Engineering Services (RITES),

Engineers India Limited (EIL), etc.) and private sector (M N Dastur and Co., Hindustan

Construction Company (HCC), Ansals, etc.).

In India Construction has accounted for around 40 per cent of the development

investment during the past 50 years. Around 16 per cent of the nation's working

population depends on construction for its livelihood. The Indian construction industry

employs over 3 crore people and creates assets worth over 20,000 crore.

It contributes more than 5 per cent to the nation's GDP and 78 per cent to the gross capital

formation. Total capital expenditure of state and central govt. will be touching

8,02,087crores in 2011-12 from 1,43,587 crores .

The share of the Indian construction sector in total gross capital formation (GCF) came

down from 60 per cent in 1970-71 to 34 per cent in 1990-91. Thereafter, it increased to

48 per cent in 1993-94 and stood at 44 per cent in 1999-2000. In the 21st century, there

has been an increase in the share of the construction sector in GDP and capital formation.

GDP from Construction at factor cost (at current prices) increased to 1,74,571 crores in

2004-05 from

1,16,238 crores (10.39% of the total GDP) in 2000-01.

The main reason for this is the increasing emphasis on involving the private sector

infrastructure development through public-private partnerships and mechanisms like

build-operate-transfer (BOT), private sector investment has not reached the expected

levels.

The Indian construction industry comprises 200 firms in the corporate sector. In addition

to these firms, there are about 1,20,000 class A contractors registered with various

government construction bodies. There are thousands of small contractors, which

compete for small jobs or work as sub-contractors of prime or other contractors. Total

sales of construction industry have reached 42,885.38 crores in 2004 05 from 21,451.9

crores in 2000-01, almost 20% of which is a large contract for Benson & Hedges.

Future Challenges:

The Indian economy has witnessed considerable progress in the past few decades. Most

of the infrastructure development sectors moved forward, but not to the required extent of

increasing growth rate up to the tune of 8 to 10 per cent. The Union Government has

underlined the requirements of the construction industry.

With the present emphasis on creating physical infrastructure, massive investment is

planned in this sector. The Planning Commission has estimated that investment

requirement in infrastructure to the tune of about 14,50,000crore or US$320 billion

during the 11th Five Year Plan period.

This is a requirement of an immense magnitude. Budgetary sources cannot raise this

much resources. Public Private Partnerships (PPP) approach is best suited for finding the

resources. Better construction management is required for optimizing resources and

maximising productivity and efficiency.

Infrastructure:

Infrastructure is basic physical and organizational structures needed for the operation of

a society or enterprise, or the services and facilities necessary for an economy to function.

It can be generally defined as the set of interconnected structural elements that provide

framework supporting an entire structure of development. It is an important term for

judging a country or region's development.

The term typically refers to the technical structures that support a society, such as roads,

bridges, water supply, sewers, electrical grids, telecommunications, and so forth, and can

be defined as "the physical components of interrelated systems providing commodities

and services essential to enable, sustain, or enhance societal living conditions."

Viewed functionally, infrastructure facilitates the production of goods and services, and

also the distribution of finished products to markets, as well as basic social services such

as schools and hospitals; for example, roads enable the transport of raw materials to a

factory. In military parlance, the term refers to the buildings and permanent installations

necessary for the support, redeployment, and operation of military forces.

History of the term:

According to the Online Etymology Dictionary,[6] the word infrastructure has been used in

English since at least 1927, originally meaning "The installations that form the basis for

any operation or system".

Other sources, such as the Oxford English Dictionary, trace the word's origins to earlier

usage, originally applied in amssssilitary sense. The word was imported from French,

where it means subgrade, the native material underneath a constructed pavement or

railway. The word is a combination of the Latin prefix "infra", meaning "below", and

"structure". The military use of the term achieved currency in the United States after the

formation of NATO in the 1940s, and was then adopted by urban planners in its modern

civilian sense by 1970.

The term came to prominence in the United States in the 1980s following the publication

of America in Ruins, which initiated a public-policy discussion of the nation’s

"infrastructure crisis", purported to be caused by decades of inadequate investment and

poor maintenance of public works. This crisis discussion has contributed to the increase

in infrastructure asset management and maintenance planning in the US.

That public-policy discussion was hampered by lack of a precise definition for

infrastructure. A US National Research Council panel sought to clarify the situation by

adopting the term "public works infrastructure", referring to:

"... both specific functional modes – highways, streets, roads, and bridges; mass transit;

airports and airways; water supply and water resources; wastewater management; solid-

waste treatment and disposal; electric power generation and transmission;

telecommunications; and hazardous waste management – and the combined system these

modal elements comprise. A comprehension of infrastructure spans not only these public

works facilities, but also the operating procedures, management practices, and

development policies that interact together with societal demand and the physical world

to facilitate the transport of people and goods, provision of water for drinking and a

variety of other uses, safe disposal of society's waste products, provision of energy where

it is needed, and transmission of information within and between communities."

In Keynesian economics, the word infrastructure was exclusively used to describe public

assets that facilitate production, but not private assets of the same purpose. In post-

Keynesian times, however, the word has grown in popularity. It has been applied with

increasing generality to suggest the internal framework discernible in any technology

system or business organization.

"Hard" versus "soft" infrastructure:

In this article, "hard" infrastructure refers to the large physical networks necessary for the

functioning of a modern industrial nation, whereas "soft" infrastructure refers to all the

institutions which are required to maintain the economic, health, and cultural and social

standards of a country, such as the financial system, the education system, the health care

system, the system of government, and law enforcement, as well as emergency services.

The following list of hard infrastructure is limited to capital assets that serve the function

of conveyance or channeling of people, vehicles, fluids, energy, or information, and

which take the form either of a network or of a critical node used by vehicles, or used for

the transmission of electro-magnetic waves.

Infrastructure systems include both the fixed assets, and the control systems and software

required to operate, manage and monitor the systems, as well as any accessory buildings,

plants, or vehicles that are an essential part of the system. Also included are fleets of

vehicles operating according to schedules such as public transit buses and garbage

collection, as well as basic energy or communications facilities that are not usually part of

a physical network, such as oil refineries, radio, and television broadcasting facilities.

Transportation infrastructure:

Road and highway networks, including structures (bridges, tunnels, culverts,

retaining walls), signage and markings, electrical systems (street lighting and

traffic lights), edge treatments (curbs, sidewalks, landscaping), and specialized

facilities such as road maintenance depots and rest areas

Mass transit systems (Commuter rail systems, subways, tramways, trolleys, City

Bicycle Sharing system, City Car Sharing system and bus transportation)

Railways , including structures, terminal facilities (rail yards, train stations), level

crossings, signaling and communications systems

Canals and navigable waterways requiring continuous maintenance (dredging,

etc.)

Seaports and lighthouses

Airports , including air navigational systems

Bicycle paths and pedestrian walkways, including pedestrian bridges, pedestrian

underpasses and other specialized structures for cyclists and pedestrians

Ferries

For canals, railroads, highways, airways and pipelines see Grübler (1990), which

provides a detailed discussion of the history and importance of these major

infrastructures.

Energy infrastructure:

Electrical power network , including generation plants, electrical grid, substations,

and local distribution.

Natural gas pipelines, storage and distribution terminals, as well as the local

distribution network. Some definitions may include the gas wells, as well as the

fleets of ships and trucks transporting liquefied gas.

Petroleum pipelines, including associated storage and distribution terminals.

Some definitions may include the oil wells, refineries, as well as the fleets of

tanker ships and trucks.

Specialized coal handling facilities for washing, storing, and transporting coal.

Some definitions may include Coal mines.

Steam or hot water production and distribution networks for district heating

systems.

Electric vehicle networks for charging electric vehicles .

Coal mines, oil wells and natural gas wells may be classified as being part of the mining

and industrial sector of the economy, not part of infrastructure.

Water management infrastructure:

Drinking water supply , including the system of pipes, storage reservoirs, pumps,

valves, filtration and treatment equipment and meters, including buildings and

structures to house the equipment, used for the collection, treatment and

distribution of drinking water

Sewage collection, and disposal of waste water

Drainage systems (storm sewers, ditches, etc.)

Major irrigation systems (reservoirs, irrigation canals)

Major flood control systems (dikes, levees, major pumping stations and

floodgates)

Large-scale snow removal, including fleets of salt spreaders, snow plows, snow

blowers, dedicated dump trucks, sidewalk plows, the dispatching and routing

systems for these fleets, as well as fixed assets such as snow dumps, snow chutes,

snow melters

Coastal management , including structures such as seawalls, breakwaters, groynes,

floodgates, as well as the use of soft engineering techniques such as beach

nourishment, sand dune stabilization and the protection of mangrove forests and

coastal wetlands.

Communications infrastructure:

Postal service , including sorting facilities

Telephone networks (land lines) including telephone exchange systems

Mobile phone networks

Television and radio transmission stations, including the regulations and standards

governing broadcasting

Cable television physical networks including receiving stations and cable

distribution networks (does not include content providers or "networks" when

used in the sense of a specialized channel such as CNN or MTV)

The Internet, including the internet backbone, core routers and server farms, local

internet service providers as well as the protocols and other basic software

required for the system to function (does not include specific websites, although

may include some widely-used web-based services, such as social network

services and web search engines)

Communications satellites

Undersea cables

Major private, government or dedicated telecommunications networks, such as

those used for internal communication and monitoring by major infrastructure

companies, by governments, by the military or by emergency services, as well as

national research and education networks

Pneumatic tube mail distribution networks

Solid waste management:

Municipal garbage and recyclables collection

Solid waste landfills

Solid waste incinerators and plasma gasification facilities

Materials recovery facilities

Hazardous waste disposal facilities

Earth monitoring and measurement networks:

Meteorological monitoring networks

Tidal monitoring networks

Stream Gauge or fluviometric monitoring networks

Seismometer networks

Earth observation satellites

Geodetic benchmarks

Global Positioning System

Spatial Data Infrastructure

Types of soft infrastructure:

Soft infrastructure includes both physical assets such as highly specialized buildings and

equipment, as well as non-physical assets such as the body of rules and regulations

governing the various systems, the financing of these systems, as well as the systems and

organizations by which highly skilled and specialized professionals are trained, advance

in their careers by acquiring experience, and are disciplined if required by professional

associations (professional training, accreditation and discipline).

Unlike hard infrastructure, the essence of soft infrastructure is the delivery of specialized

services to people. Unlike much of the service sector of the economy, the delivery of

those services depend on highly developed systems and large specialized facilities or

institutions that share many of the characteristics of hard infrastructure.

Governance infrastructure:

The system of government and law enforcement, including the political,

legislative, law enforcement, justice and penal systems, as well as specialized

facilities (government offices, courthouses, prisons, etc.), and specialized systems

for collecting, storing and disseminating data, laws and regulation

Emergency services , such as police, fire protection, and ambulances, including

specialized vehicles, buildings, communications and dispatching systems

Military infrastructure, including military bases, arms depots, training facilities,

command centers, communication facilities, major weapons systems,

fortifications, specialized arms manufacturing, strategic reserves

Economic infrastructure:

The financial system, including the banking system, financial institutions, the

payment system, exchanges, the money supply, financial regulations, as well as

accounting standards and regulations

Major business logistics facilities and systems, including warehouses as well as

warehousing and shipping management systems

Manufacturing infrastructure, including industrial parks and special economic

zones, mines and processing plants for basic materials used as inputs in industry,

specialized energy, transportation and water infrastructure used by industry, plus

the public safety, zoning and environmental laws and regulations that govern and

limit industrial activity, and standards organizations

Agricultural , forestry and fisheries infrastructure, including specialized food and

livestock transportation and storage facilities, major feedlots, agricultural price

support systems (including agricultural insurance), agricultural health standards,

food inspection, experimental farms and agricultural research centers and schools,

the system of licensing and quota management, enforcement systems against

poaching, forest wardens, and fire fighting

Social infrastructure:

The health care system, including hospitals, the financing of health care, including

health insurance, the systems for regulation and testing of medications and

medical procedures, the system for training, inspection and professional discipline

of doctors and other medical professionals, public health monitoring and

regulations, as well as coordination of measures taken during public health

emergencies such as epidemics

The educational and research system, including elementary and secondary

schools, universities, specialized colleges, research institutions, the systems for

financing and accrediting educational institutions

Social welfare systems, including both government support and private charity for

the poor, for people in distress or victims of abuse

Cultural, sports and recreational infrastructure:

Sports and recreational infrastructure, such as parks, sports facilities, the system

of sports leagues and associations

Cultural infrastructure, such as concert halls, museums, libraries, theatres, studios,

and specialized training facilities

Business travel and tourism infrastructure, including both man-made and natural

attractions, convention centers, hotels, restaurants and other services that cater

mainly to tourists and business travellers, as well as the systems for informing and

attracting tourists, and travel insurance

Impact on economic development:

Main articles: Economic development and Public capital

Investment in infrastructure is part of the capital accumulation required for

economic development and may have an impact on socioeconomic measures of

welfare.[33] The causality of infrastructure and economic growth has always been

in debate. In developing nations, expansions in electric grids, roadways, and

railways show marked growth in economic development. However, the

relationship does not remain in advanced nations who witness more and more

lower rates on such infrastructure investments.

Nevertheless, infrastructure yields indirect benefits through the supply chain, land

values, small business growth, consumer sales, and social benefits of community

development and access to opportunity. The American Society of Civil Engineers

cite the many transformative projects that have shaped the growth of the United

States including the Transcontinental Railroad that connected major cities from

the Atlantic to Pacific coast; the Panama Canal that revolutionized shipment in

connected the two oceans in the Western hemisphere; the Interstate Highway

System that spawned the mobility of the masses; and still others that include the

Hoover Dam, Trans-Alaskan pipeline, and many bridges (the Golden Gate,

Brooklyn, and Bay Bridge).[34] All these efforts are testimony to the infrastructure

and economic development correlation.

Infrastructure in the developing world:

According to researchers at the Overseas Development Institute, the lack of

infrastructure in many developing countries represents one of the most significant

limitations to economic growth and achievement of the Millennium Development

Goals (MDGs). Infrastructure investments and maintenance can be very

expensive, especially in such as areas as landlocked, rural and sparsely populated

countries in Africa. It has been argued that infrastructure investments contributed

to more than half of Africa's improved growth performance between 1990 and

2005, and increased investment is necessary to maintain growth and tackle

poverty.[62] The returns to investment in infrastructure are very significant, with on

average thirty to forty percent returns for telecommunications (ICT) investments,

over forty percent for electricity generation, and eighty percent for roads

3.2 COMPANY PROFILE

In the year 1959,Sri. VallurupalliNageswaraRao founded 'Southern Engineering Works'

(SEW) in Vijayawada, A.P. India, with late Sri. Y. PurnachandraRao and Sri.Y.M.G.

NageswaraRao as co-founders to pursue civil engineering construction activities. The

first project SEW worked on, was the prestigious NagarjunaSagar Dam in Andhra

Pradesh. During the period of expansion, other partners joined the company and

contributed to the growth of the organization to its present status

In the year 1967, the seventh year since founding, SEW was awarded a Gold Medal by

the then Hon’ble Prime Minister of India Shrimati Indira Gandhi for the record progress

of stone masonry in a single day at NagarjunaSagar Dam.

With the experience gained at the NagarjunaSagar Dam, the company participated in the

building of other major dams of Tawa, Bargi, Bansagar, HasdeoBango, in Madhya

Pradesh &Srisailam and PriyadarshiniJurala in Andhra Pradesh. SEW attained

specialization in the construction of high dams due to the experience gained in the

opportunities available in the beginning years of its founding.

In the year 1983, the company was converted to a Private Limited Company with the

name SEWConstructions Ltd. Over the years, SEW Constructions Ltd., has

diversified into construction of

Lined Irrigation Canals

Hydel, Thermal and Gas based Power

Industrial, Commercial and Residential Buildings

Dams & Barrages

Lift Irrigation Schemes

Canal Structures

Roads and Bridges

Fabrication and Erection of Gates

Water Supply Projects

Transmission Line

Our Founders:

Sri. V. NageswaraRao

Chairman (Emeritus)

Philanthropist - Educationist - Community Leader

Sri. Y.M.G. NageswaraRao

Visionary - Philanthropist

Late Sri. Y. PurnachandraRao Humanitarian – Visionary.

Vision:

"To be a leader in the construction industry setting standards in technology, quality &

deliverables while ensuring growth of employees and creating value to share holders.”

Core Values:

We actively demonstrate our Core Values at all times because we are a customer and

employee oriented organization delivering maximum value to our stakeholders.

We always Do what we say

We do our BEST to EXCEL in everything

We RESPECT and COLLABORATE with each other to succeed

We continually CHANGE and INNOVATE to IMPROVE

We strive to ENRICH our STAKEHOLDERS and COMMUNITY

Our Strength:

Dependability is a cherished quality amidst uncertainties. SEW Infrastructure Ltd.,

earned several accolades for competence, dedication and quality.Having gained

experience of handling men and machinery, a fast pace for an impressive growth is now

set.

Specialising in the development of sustainable infrastructure, SEW diversified into allied

strategic business areas, which are wide ranging and impressive by any standards. A total

commitment to quality and time has earned SEW the reputation of a highly dependable

company.

Strong Technical and Management team to identify, develop and execute all types

of infrastructure projects.

Experienced and well equipped state of the art in house Design facility to execute

EPC projects.

Meeting and exceeding customer expectations of project completion dates and

quality

Proven qualification credentials to take up big size projects

Capability in bringing together Joint Venture Partners to take up mega projects of

high value.

OUR COMMITMENT:Environment Responsibility:

SEW is committed to safeguarding the environment. All our projects, whether it is a

hydroelectric project, a dam, a new road, or a new airport facility, has the potential to

affect people, flora and fauna and the surrounding land. Whether it is cement in the form

of concrete for the structure or fossil fuel in the form of electricity to provide energy,

environmental aspects play an important part in throughout the life cycle of a project.

Our goal always is to protect the environment during a project, and to build in safeguards

that will keep protecting it long after the project is complete.

Operating ecologically and using limited resources sparingly is a matter of course for

SEW. It is our objective to identify the environmental impact of all projects and activities

early on and to keep this to a minimum.

We make sure that every project we undertake meets or exceeds the national and local

governmental regulations for air, water and sound quality. We also take steps to mitigate

potential impact on nature at and near project sites. That includes creating new habitats

for animals and birds by planting trees to replace any that must be removed.

Our environment protection policies are certified to ISO 14001 on all projects across

SEW. These are integrated into the core business processes from site planning to waste

disposal.

Using the ISO 14001 as a guideline we have put in place a series of practices and

procedures to manage our commitment towards prevention of pollution and minimization

of other negative impacts on the environment.

Employee Safety:

At SEW Safety is of paramount importance to us, a value that is fundamental to our

culture. SEW has pursued zero incident programs on it's nationwide projects to heighten

the sense of safety consciousness in every job we do. We strictly enforce the use of all

safety equipment available to every worker on our sites. We have an extensive

deployment of impact, electrical and fire protection systems available to ALL workers on

EVERY project.

We believe that every accident, every injury, no matter how small, is preventable, and we

embed that philosophy into every SEW project through a combination of technical field

procedures and ongoing training programs.

Our dedication to safety helps keep workers safe, and it also pays off for our

stakeholders. Our operating costs go down and productivity goes up because less time is

lost to accidents and results in savings on insurance premiums.

The OHSAS 18001 standard for Occupational Health and Safety is used as a guideline to

develop our health and safety management systems.

SEW implemented a variety of programs and processes, to address the issues around

ergonomics, machine guarding and the use of personal protective equipment to achieve

greater protection and to prevent occupational injury and illness of employees,

contractors and visitors. All employees are committed to identifying and reporting safety

concerns and are involved in implementing solutions for any potential hazard.

We have developed formal safety management systems which are being implemented

across all projects. A task group to look at independent auditing performs periodic safety

inspections to ensure the internal standards on workplace safety are being followed.

Safety audit is a key element of safety management. We subject our safety management

systems to extensive internal audit scrutiny to ensure adherence to our best practices and

standards. All projects maintain programmes for internal audit and inspection, to monitor

implementation of operational controls.

The Project Safety Task Force, chaired by the Managing Director is established to

develop a company policy, review performance, launch new initiatives, and ensure good

practices are shared across all projects nationwide.

SEW has a setup a nationwide helpline in place for reporting of accidents and incidents of

all types (safety, health, environment, quality, security, complaints etc). This also helps

perform a common underlying case analysis and a powerful facility to track actions from

investigations, audit and risk assessment.

We also ask our subcontractors and partners to adopt our commitment to safety and

health for exceptional safety performance, even in hazardous work environments, severe

weather, and remote locations.

SEW provides a blanket insurance cover to all its employees employed on project sites to

cover the risk of personal accidents and emergency medical attention etc.

Safety programs:

SEW strives to be a leader in employee safety. We have extensively deployed safety

equipment and programs available ALL our workers on project sites. These include:

Light weight hard hats, eye and face protection, and improved tools and

equipment.

Full-body harness to fall protection of employees working at heights.

Injury prevention program of stretching exercises and training in lifting

techniques.

A worker-based safety program that puts the responsibility for changing and

eliminating

unsafe practices in their hands with support from project management.

An program to protect workers who work in underground tunneling areas.

Quality Commitment:

Quality objectives are established for all processes of the organization in line with

Quality Policy. Management Review meetings are conducted periodically at various

levels to ensure the effectiveness and adequacy of the Quality Management System.

Learning out of corrective & preventive actions provides opportunity for improvement.

Client Focus:

Processes are established for client communication on suggestions for improvements,

information on status and meetings. Client feedback is obtained once in three months by

the project in-charge. Areas of dissatisfaction / improvements, if any, are discussed in the

site management review meetings and corrective actions taken based on those inputs.

During the project execution, the client interaction is maintained on a continuous basis

and the requirements are met on a regular basis as per the documented “Project Quality

Plan”.

Quality Policy:

Our “Quality Policy”, is consistent with the SEW Vision & Core Values:

Shows commitment to comply with the requirements and continually improve the

effectiveness of the Quality Management System.

Provides a frame work for establishing and reviewing quality objectives.

Communicated and understood within the organization.

The policy is communicated to all by displaying at strategic locations and through

Quality manual, which is being distributed to all sections and intend being

circulated to all employees of SEW.

Reviewed for continuing suitability, once in two years.

QUALITY OBJECTIVES:

To incorporate state of the art technology in the areas of design, construction,

materials, processes and machinery.

Progressive wastage elimination.

Continuous training of all employees towards empowerment saving decision

making time.

To reduce impact on environment at the project site and to progressively achieve

pollution certification.

QUALITY MANAGEMENT SYSTEM:

SEW’s Quality Management System (QMS) is taking appropriate steps to

improve its effectiveness in accordance with the requirements of ISO 9001

requirements & guidelines.

Procedures are established to specify the methods and criteria for effective

operation, control and necessary resources and information to support the

operation and monitoring of these processes.

1. Procedure for monitoring, measuring and analysing of these processes and

to take necessary actions to achieve planned results and continual

improvement of these processes. It has also maintained relevant

procedures to identify and exercise required control over outsourced

processes, if any

2. The responsibilities and authorities for each function are defined. These

include planning, operations, control, review and monitoring and

corrective / preventive action as appropriate for respective functions.

Effectiveness of the Quality Management System is evaluated through

review meetings at various levels and course correction made accordingly.

The monthly meetings have pre-defined agenda. The information flow is

affected through the minutes of meetings to ensure that both operation and

control of these processes are effective and transparent.

3. Minute planning is done for each project site for the efficient management

of Human Resource, Plant & Machinery and other requirements. Well-

established systems exist for acquisition, monitoring & control of effective

utilization of the resources against annual targets set.

4. MIS is the tool used in organization for systematic data collection and

reporting. This data is used to analyse, reviewed and monitor region / sites

at different levels and collated by Management committees. Action plans

are developed and communicated to concerned persons for

implementation and improvement.

5. Persons responsible for implementation do so as per plan; results are

measured against targets set. Performance measurement aims at continual

improvement; inability to do so calls for review of processes to improve

effectiveness.

Wherever the processes are outsourced for some specific products (projects/contracts),

these are controlled in accordance with the documented Quality Management System.

Vocational Training:

Established a vocational training institute at Bachupally, Hyderabad, with facilities to

provide employment-oriented training to poor people.

During the Financial year 2008-09, about 400 unemployed youth, belonging to the

various parts of the country, have been trained in activities such as plumbing, electrical,

farm work carpentry, masonry with free boarding and lodging facilities on campus.

Higher Education:

Supporting VignanaJyothi an organization promoting the VNRCollege of Engineering &

Technology (named after our founder Sri. Vallurupalli NageswaraRao) among numerous

other schools and colleges.

MEDICAL CAMPS AND RED CROSS:

In addition to supporting the Red Cross Society of India, the SEW Charitable Trust as

conducted free medical camps in associations with hospitals such as the Asian Institute of

Gastro-Entrology, Hyderabad.

CULTURAL:

Supports the development and sustenance of Indian classical music, dance and other

cultural activities via South India Cultural Association (SICA).

SPORTS:

Promotes activities to identify talent and generate opportunities for the underprivileged

children in sports such as gymnastics and cricket by supporting the ‘Sports Coaching

Foundation’

Business Units:

It is our constant endeavour to upgrade our expertise and provide state of the art

infrastructure to clients. SEW has earned a reputation for its engineering and construction

excellence by providing multi-disciplinary, innovative and cost-effective solutions to

critical projects. Backed by years of excellent construction activity with a large fleet of

modern construction equipment and motivated pool of manpower with proven procedures

and work systems and unique databases, SEW is committed to provide quality

construction solutions to its clients. It has been an exciting journey with several

challenges, new milestones reached, many more peaks to conquer.

SEW has over five decades of rich experience in executing turnkey projects across

diverse fields

Tunnels

Pipelines & Utilities

Ports

Hydel Power

Metro Rail

Commercial Buildings

Highways & Bridges

Oil & Gas

Dams & Barrages

Lift Irrigation

Canals & Aqueducts

Thermal Power

Industrial Structures

Power Transmission

Property Development

BOT Portfolio

Tunnels:

The quantum of tunneling work in India has gone up manifold with the boom in the

development of hydroelectric projects.

Modern methods of tunnel driving have been adopted to achieve high rate of progress on

time bound projects.

In the eighties, progress of 75m per face per month was considered as a high rate of

progress. These days progress of at least 160m per face is the minimum progress desired

to deliver the overall project on time.

SEW employs Tunnel Boring Machines (TBMs) to achieve the high rate of progress

desired in the long reaches.

Another modern tunneling method used is the New Austrian Tunneling Method (NATM)

also known as Sequential Excavation Method (SEM) or Sprayed Concrete Lining (SCL)

often used in shallower tunnels. The surrounding rock or soil formations of the tunnel are

integrated into an overall ring-like support structure. The supporting formation becomes

part of the supporting structure.

SEW has extensive experience in tunneling and underground structures in varied terrain

conditions ranging from largest water transfer conduits to smallest micro tunnels.

In the earlier days, SEW earned a leading reputation in tunnel construction on the

AllainDuhangan Hydro Electric Project and the head regulator and approach channel for

Veligonda Project. More recently SEW has employed NATM at the Joretheng HEP in

Sikkim with tremendous success.

Sports:

India's ports play a vital role in its economic development. Given its vast expanse of

seafronts, over 95% by volume and 70% by value of the country's international trade is

carried on through maritime transport.

India has a total of 187 minor ports and 13 major ports spread across the nine maritime

states.

According to India's central government planning commission, the capacity of Indian

ports will have to be doubled to 2,300 million tonnes over the next five years to handle

the fast growing cargo traffic.

SEW has the asset mobilization potential and unique combination of strengths across all

areas of infrastructure construction to contribute to the nations demands.

Visakhapatnam Port Coal Handling Terminal

Construction of a fully mechanized coal terminal, (EQ-1A) including the berth, Wagon

Tippler, Stacker / Reclaimer, Ship Loader, Conveyor System and Railway works.

This will handle thermal and steam coal in compliance with stringent environmental

regulations

Hydel Power:

In 1887 at Darjeeling, the first hydropower station in India was commissioned. Since

then, there has been a continuous increase in the installed capacity of hydropower

stations. In 1991, Indian government formulated a policy to let private companies own

hydro power projects.

The government has identified hydropower benefits of 38,242MW. The government is

anticipating a hydro capacity addition of 16,553MW of which Central Sector will add

9,685MW, State Sector 3,605MW and Private Sector 3,263MW.

SEW has built many prestigious power projects in the nation such as Mahanadi Hydel

Power Projects, Rani Avanti BaiSagar Power Project, Tawa Hydro-Electric Power

Project and Samarlakota Power House.

Some of the other Hydel Power Projects executed by SEW are the MaheshwarHydel

Power Project, Chuzachen Hydro Electric Project and MyntduLeshka Hydro-Electric

Project.

Metro Rail:

Underground subway systems or metro rail systems, are among the fastest and cheapest

mode of urban transport. As cities grow in size, the number of vehicular trips on road

system goes up. This necessitates a pragmatic policy shift from private modes to public

transport once the level of traffic along any travel corridor in one direction exceeds

20,000 persons per hour. Introduction of a rail based (MRTS) Mass Rapid Transit System

is called for. Mass Rapid Transit System are capital intensive and have long gestation

period.

Commercial Buildings

SEW significantly expanded its capabilities in urban development consulting through a

joint venture partnership. SEW is a multi-disciplinary firm of consulting engineers,

surveyors, planners, landscape architects and urban designers.

SEW has the capability and industry recognised expertise to offer comprehensive services

in the design and documentation of commercial, residential, institutional and industrial

Buildings. Its collaborative team has experience in achieving innovative strategic and

statutory planning and urban design outcomes for a range of key government and private

sector clients. The team aims to provide its clients with creative solutions which are site

specific, achievable and sustainable.

Highways & Bridges:

With the liberalization of the economic policies, the Country is making rapid strides

towards developing the infrastructure facilities everywhere. More thrust is given to bring

the existing National Highways, State Highways and Roads in the rural area to the latest

standards by widening etc., which facilitates the faster movement of traffic more

economically. State of the art machinery is deployed in constructing the Highways at a

faster.

Oil and gas:

SEW has recently decided to foray into the complete spectrum of Oil & Gas

Infrastructure business. We are in the process of building organization and resources to

meet business needs. Aggressively bidding for projects related to Oil & Gas Business

Segments

Offshore Platform structures & Sub-sea pipelines.

Onshore Terminals, Storage facilities, Compressor Stations & Cross Country

Pipelines.

Refineries & Petrochemical plants.

UP STREAM :

Offshore structures & Subsea Pipelines

Engineering & Procurement

Fabrication of Platform and allied structures.

Load-out, Transportation, Installation, Hook-up & Comm. of Platforms, Risers &

other structures.

Laying of Sub-sea pipelines.

Revamping of Platforms.

MID STREAM :

Oil & Gas Receiving Terminals / LNG Terminals

o Civil & Structural work

o Fabrication of Storage tanks

o Mech. erection & piping

o Electrical & Instrumentation

Cross-country Pipelines

o Detail engineering

o Civil, Mech., Elect. & Instr. work in main line & SV stations

o Mechanical Completion, Testing & Commissioning.

DOWN STREAM :

Fabrication & erection of Structures & Equipment

Storage Tanks

LPG / POL Terminals

Off-sites & Utilities

Underground Storage Caverns

FABRICATION YARD :

SEW proposes to establish a fabrication yard on the east coast for fabrication of offshore

structures and process plant equipment.

Yard on the West Coast is also under consideration. Yard facilities include Jetty, and load

out facilities for heavy structures. Facilities will include: Piping shops, Stores, Testing

Labs, Workshops, Training Centre, and Offices

Dams & Barrages:

India has been declared to be the third in the world in Dam building after US and China.

Since Independence, more than 3,700 Dams were built to enrich the flood control system,

irrigation, hydroelectric Power and transport sectors.

NagarjunaSagar Dam is one of the earliest hydro-electric projects of India and a symbol

of modern India's architectural and technological triumphs over nature.

SEW made its debut in to the Infrastructure Industry through this prestigious construction

and won the Prime Ministers Gold medal for outstanding performance.

SEW is continuing to evaluate over the evolution of modern technology and has gained

its phenomenal method of executing the massive Dams and thus playing the lead role in

construction of major and minor Dams in India.

Lift Irrigation:

Irrigation is one of the most important means for food and fodder in India. Earlier, when

dry farming was the only means of food production and sustenance, the farmers depended

on the vagaries of nature for their survival. In this undulating landscape, Indian

government introduced "Lift Irrigation Scheme".

The importance of "Lift Irrigation Schemes" is unique and distinctive. In such schemes,

many farmers can come together and implement the scheme on private or co-operative

basis.

The capital costs for construction of such schemes are usually funded by the Government

or by international donors. To carry water by means of pumps from the source and to

distribute the water to the fields by means of suitable and proper distribution system are

the two main parts of large lift irrigation schemes. In "Irrigation Schedule System", the

water is supplied to all the blocks at the same time.

During the last three-and-a-half decades, the Andhra Pradesh Government has

constructed 1,068 Lift Irrigation Schemes (LIS).

SEW has provided spectrum of pipeline works to its many clients from the heavy

industrial sectors, in India. This array of pipeline works and solutions makes SEW an

ideal one-stop project construction solutions provider. Over the years SEW has executed

scores of challenging and prestigious pipeline works with sheer innovative

brilliance.SEW seamlessly walks the challenging path of engineering excellence with

conviction to deliver only innovative, high quality, reliable and on time pipeline laying

solutions. The company engineers design and develop radical pipeline solutions.

Canals & Aqueducts:

Canals are the most important element of any project providing the umbilical cord

between mother Earth and the farmer. SEW had perfected the art of providing this vital

link between the source and the farmland at a rapid pace with the large Earth moving

machinery and construction equipment at its command. The K.C. Canal Modernisation

work under the package ICB-14 was completed 9 months ahead of schedule.

Power Transmission:

SEW Builds, Owns and Operates the high-voltage electric transmission system that helps

to keep the lights on, business running and communities strong. The company has played

a major role in the complete preparation, analysis, design, construction management and

inspection of energy structures, high voltage transmission lines and distribution systems

across the country. We enjoy an excellent working relationship with the CLIENTs who

has entrusted us with much of the energy infrastructure development of India.

BOT Portfolio:Infrastructure Sector in India and Role of PPP

As continued growth of an economy depends on availability of quality infrastructure, the

Government of India envisages an investment of over US $ 1 trillion in the infrastructure

segment in the 12th Five Year Plan (2012-2017).

The investments are for sectors like telecommunications, power, water transport, road,

rail, air, water supply and irrigation.

As Government does not have the wherewithal to meet such massive investments to

provide the required infrastructure to sustain the planned growth, Public Private

Partnerships (PPPs) are the preferred mode where the regulatory and administrative

machinery of the Government and the financial resources and execution capabilities of

the private sector are harnessed for achieving the goal. Increasingly, various sectors are

adopting the PPP route to ensure delivery of quality infrastructure within a minimum

possible time frame.

SEW Group in PPP Segment

With a view to leveraging on the impeccable track record of over five decades in

execution of various infrastructure projects on or ahead of schedule and delivery

comparable to the best in the industry in terms of quality standards in the EPC space,

SEW Group has forayed into the BOT ownership space to leverage its execution

expertise and stay on the curve with the growth potential of the sector.

Currently, SEW Group owns 4 highways (totaling 1515 lane Kms) and 1 port terminal

(7.5 MTPA through put) project under transportation segment (with an asset size of

approximately USD 1 billion). Further, the Group also owns about 630 MW of hydro

licenses in North-eastern part of India, which are at various stages of development and

implementation.

Table No: 4.1

Raw-material turn over ratio = (Annual cost of goods sold/Average raw material inventory)

Year/Particulars Annual cost of goods sold

Average raw-material Inventory

Ratio

2007-200812,586.840 2,210.910 5.693

2008-200918,712 3,126.925 5.984

2009-201049,248.32 3,477.41 14.1624

2010-201157,374.09 3,848.120 14.910

2011-201246,019.51 4,615.21 9.9713

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above graph;

The raw material turnover ratio of the SEW Infrastructure Limited in 2007-

2008 was 5.693, it has been increased to 5.984, in the year2008-2009 and it

has been in increased to 14.1624, in the year 2009-2010.

The raw material turnover ratio had increased to 14.910, in the year 2010-

2011. At present the raw material turnover ratio of the company was 9.9713,

i.e. in the year 2011-2012.

Table No: 4.2

Stores and spares turnover ratio = (Annual cost of goods sold/Average stores and spares inventory)

Year/Particulars Cost of goods sold Average stores and spares inventory

Ratio

2007-200812,586.840 600.110 20.974

2008-200918,712 961.98 19.452

2009-201049,248.32 1358.9850 36.2390

2010-201157,374.09 1974.095 29.063

2011-201246,019.51 2615.17 17.5971

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above graph;

The stores and spares turn over ratio of the SEW Infrastructure Limited in 2007-

2008 was 20.974, it has been decreased to 19.452, in the year 2008-2009 and it

has been increased to 36.2390, in the year 2009-2010.

The stores and spares turnover ratio had decreased to 29.063, in the year 2010-

2011. At present the stores and spares turnover ratio of the company was 17.5971,

i.e. in the year 2011-2012.

Table No: 4.3

Work-in-progress turnover ratio = (Annual cost of goods sold/Average work-in-progress inventory)

Year/Particulars Cost of goods sold Average work-in-progress inventory

Ratio

2007-200812,586.840 463.605 27.150

2008-200918,712 5554.910 3.369

2009-201049,248.32 10996.090 4.479

2010-201157,374.09 7488.550 7.662

2011-201246,019.51 7734.060 5.950

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above graph;s

The Work-in-progress turnover ratio of the SEW Infrastructure Limited in

2007-2008 was 27.150, it has been decreased to 3.369, in the year2008-2009

and it has been increased to 4.479, in the year 2009-2010.

The Work-in-progress turnover ratio had increased to 7.662, in the year 2010-

2011. At present the Work-in-progress turnover ratio of the company was

5.950, i.e. in the year 2011-2012.

Table No: 4.4

Inventory turnover ratio = (Annual cost of goods sold/Average inventory)

Year/Particulars Annual cost of goods sold

Average inventory Ratio

2007-200812,586.840 3,486.510 3.610

2008-200918,712 9,743.370 1.920

2009-201049,248.32 13,397 3.6765

2010-201157,374.09 13,310.765 4.310

2011-201246,019.51 14,964.44 3.0753

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above Graph;

Inventory turnover is a ratio that indicates how many times a company's inventory is sold and put back over a period.

The Inventory turnover ratio of the SEW Infrastructure Limited in 2007-2008 was

3.610, it has been decreased to 1.920, in the year2008-2009 and it has been

increased to 3.6761, in the year 2009-2010.

The Inventory turnover ratio had increased to 4.310, in the year 2010-2011. At

present the Inventory turnover ratio of the company was 3.0753, i.e. in the year

2011-2012.

Table No: 4.5

Working capital turnover ratio = (Annual cost of goods sold/working capital)

Year/Particulars Cost of goods sold Average inventory Ratio

2007-200812,586.840 31,137.49 0.404

2008-200918,712 37,833.27 0.495

2009-201049,248.32 24,678.91 1.996

2010-201157,374.09 42,290.69 1.357

2011-201246,019.51 17,045.020 2.700

Source: compiled from the collected data of study.

Graphical representation

Interpretation

From the above Graph;

The Working capital turnover ratio of the SEW Infrastructure Limited in 2007-

2008 was 0.404, it has been increased to 0.495, in the year2008-2009 and it has

been increased to 1.996, in the year 2009-2010.

The Working capital turnover ratio had decreased to 1.357, in the year 2010-

2011. At present the Working capital turnover ratio of the company was 3.0753,

i.e. in the year 2011-2012.

Table No: 4.6

Inventory period = (Average inventory/Annual cost of goods sold)*365

Year/Particulars Average inventory Cost of goods sold Days

2007-20083,486.510 12,586.840 101.104

2008-20099,743.370 18,712 190.056

2009-201013,397 49,248.32 99.2908

2010-201113,310.765 57,374.09 84.6798

2011-201214,964.44 46,019.51 118.6892

Source: compiled from the collected data of study.

Graphical representation

s

Interpretation :

From the above Graph;

The Inventory period ratio of the SEW Infrastructure Limited in 2007-2008 was

101.104, it has been increased to 190.056, in the year2008-2009 and it has been

decreased to 99.2908, in the year 2009-2010.

The Inventory period ratio had decreased to 84.6798, in the year 2010-2011. At

present the Inventory period ratio of the company was 118.6892, i.e. in the year

2011-2012.

Table No: 4. 7

Days of inventory holding = (Average inventory/cost of goods sold)*180

Year/Particulars Average inventory Cost of goods sold Days

2007-20083,486.510 12,586.840 49.859

2008-20099,743.370 18,712.00 93.726

2009-201013,397 49,248.32 48.9653

2010-201113,310.765 57,374.09 41.7599

2011-201214,964.44 46,019.51 58.5317

Source: compiled from the collected data of study.

Graphical representation

s

Interpretation :

From the above Graph;

The Days of inventory holding ratio of the SEW Infrastructure Limited in 2007-

2008 was 49.859, it has been increased to 93.726, in the year2008-2009 and it has

been decreased to 48.9653, in the year 2009-2010.

The Days of inventory holding ratio had decreased to 41.7599, in the year 2010-

2011. At present the Days of inventory holding ratio of the company was 58.5317,

i.e. in the year 2011-2012.

Table No: 4.8

Current assets turnover ratio = (Annual cost of goods sold/current assets)

Year/Particulars Cost of goods sold Current assets Ratio

2007-200812,586.840 56,637.02 0.2222

2008-200918,712 73,426.12 0.2548

2009-201049,248.32 94,902.93 0.5189

2010-201157,374.09 1,28,047.06 0.4481

2011-201246,019.51 1,77,056.39 0.2599

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above Graph;

The Current assets turnover ratio of the SEW Infrastructure Limited in 2007-2008

was 0.2222, it has been increased to 0.2548, in the year2008-2009 and it has been

increased to 0.5189, in the year 2009-2010.

The Current assets turnover ratio had decreased to 0.4481, in the year 2010-2011.

At present the Current assets turnover ratio of the company was 0.2599, i.e. in the

year 2011-2012.

Table No: 4.9

Current liabilities turn over ratio = (Annual cost of goods sold/current liabilities)

Year/Particulars Cost of goods sold Current liabilities Ratio

2007-200812,586.840 25,499.53 0.4936

2008-200918,712 35,592.85 0.5257

2009-201049,248.32 65,27,8.93 0.7544

2010-201157,374.09 85,756.37 0.6690

2011-201246,019.51 82,706.40 0.5564

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above Graph;

The Current liabilities turnover ratio of the SEW Infrastructure Limited in 2007-

2008 was 0.4936, it has been increased to 0.5257, in the year2008-2009 and it has

been increased to 0.7544, in the year 2009-2010.

The Current liabilities turnover ratio had decreased to 0.6690, in the year 2010-

2011. At present the Current liabilities turnover ratio of the company was 0.5564,

i.e. in the year 2011-2012.

Table No: 4.10

Creditors turnover ratio = (credit purchases/Accounts payable)

Year/Particulars Credit purchases Accounts payable Ratio

2007-20087,445.72 1,501.23 4.9597

2008-20098,701.73 1,913.200 4.5483

2009-20107,198.31 2,494.858 2.8853

2010-201111,532.98 3,261.937 3.5356

2011-20126,730.60 3,324.002 2.0248

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above graph;

The Creditors turnover ratio of the SEW Infrastructure Limited in 2007-2008 was

4.9597, it has been decreased to 4.5483, in the year2008-2009 and it has been

decreased to 2.8853, in the year 2009-2010.

The Creditors turnover ratio had increased to 3.5356, in the year 2010-2011. At

present the Creditors turnover ratio of the company was 2.0246, i.e. in the year

2011-2012.

Table No: 4.11

Creditors conversion period = (Accounts payable /Credit purchases)

Year/Particulars Accounts payable Credit purchases Days

2007-20081,501.23 7,445.72 73.5840

2008-20091,913.200 8,701.73 80.2505

2009-20102,494.858 7,198.31 126.5051

2010-20113,261.937 11,532.98 103.2350

2011-20123,324.002 6,730.60 180.2604

Source: compiled from the collected data of study.

Graphical representation

Interpretation :

From the above graph;

The Creditors conversion period of the SEW Infrastructure Limited in 2007-2008

was 73.5840, it has been increased to 80.2505, in the year2008-2009 and it has

been increased to 126.5051, in the year 2009-2010.

The Creditors conversion period had decreased to 103.2350, in the year 2010-

2011. At present the Creditors conversion period of the company was 180.2604,

i.e. in the year 2011-2012.

FINDINGS:

Inventory turnover ratio is showing an increasing trend. It enables the organization to increase sales in relation to production.

The size of inventory is showing a decreasing trend. It proves that the organization is increased the maintenance of stock level in terms of inventory.

The size of the days of inventory holding is reduced to some extent and it had been increased in 2009. It proves that the organization is successfully handling the inventory up to 2009. And in 2009-10 it is not up to the standards.

Inventory conversion period is increased from 2007-08 to 2008-09 because of the introduction of sophisticated technology for production. Finally increasing the ICP from 2010-11 to 2011-12.

The percentage of raw material in inventory also shows an increasing trend from 2008-2009 to 2009-2010.

The percentage of stores and spares in inventory also shows an increasing trend from 2008-2009 to 2009-2010. It proves that the organization had reduced the maintenance of stock level in terms of inventory.

The percentage of work-in-progress shows an decreasing trend from 2007-2008 to 2008-2009.

In the year 2009-2010 the ratio has increased from 0.49 to 1.99.This is due to increase in current assets and decrease in current liabilities leads to increase of working capital.

During study period it is observed that the performance of APHMEL to manage Inventory is good.

SUGGESTIONS:

There is no particular method has been followed for valuing the particular type of inventories.

The company has to introduce some of the major inventory classification methods like XYZ analysis and FSN analysis for better control of inventories.

The valuation of inventories is entirely based on the both manual and computer valuation

Most of the times inventory is not sufficient at the time of production. The company has to maintain adequate level of inventory.

Bin cards are maintained in APHMEL to know the location of stock, its current stock available, the issues of receipts of materials etc.

The company should introduce stock verification system for all the materials. The company should introduce some of the major inventory FSN analysis for better

control of the inventory. As a whole the inventory management in the company is good. It proves that the

stores department and production department is performing efficiently in the organization.

CONCLUSION:

It is important to study the size of inventory management of any enterprise. It decides the need for the best owing attention in the management of this component. The composition of current assets is dominated by inventory. Some of the inventories are ordered on the basis of minimum stock reorder level. As a whole financial position of the company is good. It proves the management efficiency in the organization.

BIBILIOGRAPHY

Books:Finance management R.K.Sharma&K.Gupta

Finance management Khan& Jain

Finance management I.M.PANDY

Finance management Prasanna Chandra

(Theory & Practice)

Financial Accounting S.P.JAIN & K.L.NARANG

Production management Aswatappa

Booklets and publications on the progress of SEW INFRASTRUCTURE LIMITED

Journals:

Annual Audit Reports SEW infrastructure Limited.

Web Sites:

www.sewinfrastructure.com

www.officeonline sewinfrastructure.com

www.inventory management.com

www.inventory control.com

www.inventory methods.com