kbd sugars
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Introduction to inventory management
Financial management is the managerial activity which is concern with the planning
and controlling of the firm’s financial resources. Though it was a branch of economics till
1890 as a separate activity or discipline. It is of recent origin still it as no unique body of
knowledge of its own. And draws heavily on economics for its theoretical concepts even
today.
The subject of financial management is of immense to both academician and
practicing managers. It is of great interest to academicians the subject is still developing and
there are still certain areas when controversies exist for which unanimous solutions have been
reached as yet.
In financial management the working capital management plays a major role. The
working capital management will be effectively managed by inventory management. In my
present chapter the inventory management will be discussed in these topics, importance of
inventory management, nature of inventories, need to hold inventories, cost of holding
inventories, other characteristics of inventory situations, types of inventory, economic order
quantity, techniques of inventory management.
Meaning of inventory managementInventory management means safeguarding the company property in the form of
inventories and maintaining it at the optimum level, considering the operating requirements
and financial resources of the business. Inventory management emphasizes control over
purchases, storage, consumption of materials and determining the optimum level for each
item of investments.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Importance of Inventory Management
Inventory management is concerned with keeping enough products on hand to avoid
running out while at the same time maintaining a small enough inventory balance to allow for
a reasonable return on investment. Proper inventory management is important to the
financial health of the corporation; being out of stock forces customers turn to competitors or
results in a loss of sales. Excessive level of inventory however, results in large carrying
costs, including the cost of capital tied up in inventory warehouse fees, insurance etc.
A major problem with managing inventory is that the demand for a corporation’s
product is to a degree uncertain. The supply of the raw materials used in its production
process is also somewhat uncertain. In addition the corporations own production contains
some degree of uncertainty due to possible equipment breakdowns and labor difficulties.
Because of these possibilities, inventory acts as a shock absorber between product
demand and product supply. If product demand is greater than expected, inventory can be
depleted with out losing sales until production can be stepped up enough to select the
unexpected demand.
However inventory is difficult to manage because it crosses so many lines of
responsibility. The purchasing manager is responsible for supplies of raw material and would
like to avoid shortages and to purchases in bulk order take advantages of quantity discounts.
The production manager is responsible for uninterrupted production and wants to
have enough raw materials and work in process, inventory on hand to avoid disruption in the
production process. The marketing manager is responsible for selling the product and wants
to minimize the chances of running out of inventory. The financial manager is concerned
about achieving an appropriate overall rate of return. Funds invested in an inventory are idle
and do not earn a return.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Nature of Inventories
Inventories are stock of the product a company is manufacturing for sale and
components that make up the product. The various forms in which inventories that exist in
manufacturing company are
Raw materials
Work-in-process
Finished goods
Raw materials
These are those basic inputs that are converted into finished product through the
manufacturing process. Raw materials inventories are those units which have been purchased
and stored for future production.
Work-in-process
These inventories are semi-manufacture products. They represent products that need
more work before they became finished for sale.
Finished goods
These inventories are those completely manufactured products which are ready for sale.
Stocks of raw materials and work-in-process facilitate production while stock of finished
goods is required for smooth marketing operations. Thus, inventories serve as link between
the production and consumption of goods.
Need to hold inventories
Maintaining of inventories involves trying up the companies and incurrence of storage
and handling cost. There are three general motives for holding inventories.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Transaction motive
It emphasizes the need to maintaining inventories to facilitate smooth production and
sales operation.
Precautionary motive
It necessitates the holding of inventories to guard against risk of unpredictable
changes in demand and supply force and other factors.
Speculative inventories
It influences the decision to increase or reduce inventory level to take advantage of
price fluctuations.
The firm should always avoid a situation of over investment or under investment in
inventories.
The major dangers of over investment in inventories are
i. Unnecessary tie up of the funds and loss of profits.
ii. Excessive carrying cost.
iii. The risk of liquidity.
The consequences of under investment in inventories are
i. Production hold-ups
ii. Failure to meet delivery commitments. Inadequate raw materials.
iii. Work-in-process will result in frequent in production interrupts.
An efficient inventory management should
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Ensure a continuous supply of raw materials to facilitate uninterrupted production.
Maintain sufficient supply of raw materials in periods of short supply and
anticipate price changes.
Maintain sufficient finished goods inventory for smooth sales operation and efficient
customer service.
Minimize the transportation cost on time.
Control investment in inventories and keep it at an optimum level
Cost of holding inventories
The determination of inventory cost is essentially an income measurement problem, a
means where by there is rational orderly, systematic interpretation of the effect on the
economic progress of the company of expenditures involved acquiring goods or in
maintaining and operating productive facilities. Ability to quantify and develop rigorous
models of most managerial problems is dependent on the determination behavior of relevant
costs. The practical application of such models is also dependent on ability to obtain the cost
data. Relevant inventory costs which change with level of inventory are listed below.
Ordering costs
Every order is placed for stock replenishment, certain cost are involved. The ordering
cost may vary, dependent upon type item.
This cost of ordering includes
Paper work cost, typing and dispatching order.
Follow-up costs the follow-up required ensure timely supplies include the travel cost
for purchases follow-up, telephone telex and postal bills.
Cost involved in receiving the order inception, checking and handling to the stores.
Any set up cost of machines if charged by supplier, either directly indicated in
quotations or assessed thought quotations for various quantities.
The salaries and wages to the purchase department are relevant for consideration if
the purchasing function is carried out at the same level with existing staff.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
There are certain costs that remain the same regardless of the size of the lot purchased or
requisitioned. This would be retailer ordering from the distributor, from the distributor
ordering from a factory warehouse, for the factory warehouse ordering a new production
run from the factory, and for the factory ordering raw materials from vendors. These
kinds’ of costs are called preparation or set up costs.
If we are ordering to replenish supplies at one stock point from another stock point,
our interest is in the incremental clerical costs of preparing orders, following these orders.
Expediting them when necessary, etc, a large segment of the total cost of the ordering
function is fixed, regardless of the number orders issued. Even then it may be difficult
determined satisfactorily the incremental cost, which results from one more order.
Quantity discounts and handling and transport cost are other factors, which vary lot sizes.
Preparation cost are the incremental costs of planning production, writing production orders,
setting machines and controlling the flow orders through the factory. Material handling cost
in the plant have an effect on production lot sizes in much the same way that freight costs
may effect purchase lot sizes.
Besides the preparation costs of production, there are some other production costs,
which have a direct bearing on inventory models, however. These are over time
premiums and the incremental cost of changing production levels, such as hiring, training,
and separation costs.
Carrying costs
Carrying costs constitutes all the costs of holding items in inventory for a given period of
time. They are expressed either in rupees per period or as percentage of the inventory value
per period.
Components of these costs include the following
Storage and handling cost.
Obsolescence and deterioration costs
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Insurance
Taxes
The cost of the funds invested in inventories
Storage and handling costs include the cost of warehouse space.
Obsolescence costs represent the decline in inventory value caused by style changes
that make the existing product less salcable.
Deterioration costs represent the decline in value caused by changes in the physical
quality of the inventory such as spoilage and breakage.
Another element of carrying cost is the cost of insuring the inventory against losses
due to theft, fire and natural disaster. In addition, a company must pay any personal property
taxes required by local and state government on the value of its inventories.
Like ordering costs, inventory-carrying costs contain both fixed and variable
components. Most carrying costs vary with inventory level, but a certain portion of them-
such as warehouse rent and depreciation on inventory handling equipment- are relatively
fixed over the short run, inventory model such as EOQ model treat the entire carrying cost as
variable.
Stock out costs
Stocks out costs are incurred when ever a business is unable to fill orders because the
demand for an item is greater than the amount currently available in inventory. When a stock
out in raw materials occur, for example, stock out costs include the expenses of placing
special orders (back ordering) and delays. A stock out in work in progress inventory results
in additional costs of rescheduling and speeding production with in the plant, and it also may
result in reduce production costs if work stoppages occur. Final, a stock out in finished goods
inventory may result in the immediate loss of profits of customers decide to purchase the
product from the competitor and in potential long-term losses if customers decide to order
from other companies in the future.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Other characteristics of inventory situations
Besides the various types of costs involved, there are other characteristics of the
situation that vary among types of inventory and must be captured if the decision model is to
be an accurate representation of the physical circumstances.
Lead times
Obtaining inventory usually requires a lag from the initiation of the process until the
inventory starts to arrive. This lead-time may be a few minutes or it may be many months,
and depends in part on whether the firm is producing goods for its inventory or is ordering
these goods from another firm. To produce goods for its own use, the firm must schedule, set
up and adjust manufacturing equipment.
Sources and levels of risk
Uncertainties play a significant role in inventory situations. Uncertainties usually involve
lead times and demand times and demand levels, but situations where other variables are
uncertain also occur. Where are substantial uncertainties and where the costs of stock out are
important Strategies for addressing risk must be formulated?
Static versus dynamic problems
Inventory problems are usually divided into two types based on the characteristics of
the goods involved. In static inventory problems, the goods have one-period life; there can
be carrying over of goods from one period to the next. Inventory situations where decisions
involve the number of news papers to print, the number of greeting cards to purchase or the
number of calendars to produce are static inventory problems. In dynamic inventory
problems, the goods have value beyond the initial period; they do not lose their value
completely over time.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Replenishment rate
Once goods start to be received from a vendor or from the firms own production
processes, there are differences among goods in the rate at which they are received. Small
orders from vendors are likely to by receive all at once. For example, assume that a firm has
placed in order for 10 cases of paper towels. For such a small order the rate of replenishment
is infinite; the firm’s inventories well go up 10 cases in a very short time as the goods are
quickly unloaded.
For large order from vendors, or for inventory produced with in the firm, the
replenishment rate may be slower.
Types of inventory
Inventories can be classified into five basic types on the basis of their production.
These various types of inventories cannot be identified and segregated within the
organization. These five types are
1. Management inventory
They are needed because of the time required to move stocks from one place to
another place.
2. Lot size Inventories
These are as a result of buying materials in quantities larger than the immediate
requirement, with a view to minimizing cost of transportation, buying, receipt and handling
and to obtaining quantity discount.
3. Fluctuation Inventories
These are carried to ensure ready suppliers to consumer even when these are irregular and
unpredictable fluctuations in their demand
.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4. Anticipation inventories
These are usually maintained to meet a predictable but changing pattern of future
demand.
5. Cycle Inventories
These result from managements attempt to minimize the total cost of carrying and
ordering inventory. They arise from ordering in batches or lots, rather from needed basis.
Inventories can be further classified into production inventories maintenance repair
and operation (MRO) inventories, in-process inventories and finished goods inventories.
Production inventory consists of raw materials parts and components which are used
in the production process forming parts of the final product.
Maintenance, repair and operation supplies which are used in the production of goods
or services but do not become part of the product.
In-process inventories are semi-finished materials, parts and assemblies found at
various stages in the production operation.
Finished goods inventory consists of completed products ready for sale.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2.1 INDUSTRIAL PROFILE
Sugarcane is one of the important crop for the INDIAN FARMER. Sugar &jaggery
are the main products that we get from Sugarcane, other products are baggage for industrial
use like Molasses for Distillery, Filter Cake, Mud,Organic Manure & green leaves with tops
for cattle feed are also available as by products, because of its multi uses sugarcane has
played crucial feed role in Indian economy with Rs. 20,000 Cores TURNOVER & WITH
450 SUGAR MILLS PROVIDING assistance to 45 million sugarcane farmer and 2 million
workmen directly and indirectly.
In A.P sugar industry is an important Agro-based industry, occupying the second
position next to textile industry. The annual cultivated area is about 1.99 lakh hectares with a
yield of 149.45 lacks of tons during 96-97. At present, there are 36 sugar factories in the state
and 50% of them are in co-operative sector. The co-operative sugar units in the states have
been suffering due to lack of adequate cane irrigation facilities, working capital, by-product
utilization, excessive employment etc.,….
In AP sugar industry is an important agro based industry occupying the
SECOND position next to textile industry. The annual cultivated area is about 1.99 LAKHS
hectares with a yield of 149.45 LAKHS of tones during 1996-1997. At present there are 36
sugar factories in the state and 50% of them are in co-operative sector. Actually the work
sugar derived from a Sanskrit word “SHAKRA”.
India was the world’s largest producer of sugar cane occupies a very pride
place in the world. In India, the cultivation of sugar cane is 10000 miles tons. The average
yield, being 56 tons per acre of total land is occupied by sugar cane cultivation. Sugarcane is
grown in almost all part of India, expect in colder regions and extreme north Jammu &
Kashmir, HimachalPradesh.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2.2 COMPANY PROFILE
INTRODUTION
KARNATAKA BEWARIES DISTILLERIES SUGARS AND INDUSTRIES
LIMITED PROFILE
The irrigation in chittoor district mostly depends on open wells. Recharge of water
in the wells depends in ground water level and rainfall. However, rainfall depends in
monsoon which is uncertain. The soils in district are almost suitable fir sugarcane cultivation.
The formers also having good knowledge of growing sugarcane. In good olden days, total
quantity of sugarcane produced in the district was converted as jaggery by ganugas (bullock
crushers) and power crushers. The jaggery making was very difficult to the small farmers due
to lack of crushers and unfavorable prices. The big farmers also faced difficulty to crush the
cane for long period.
The jaggery made in the district was brought to the chittoor and pakala which are
the market places with railway transpiration. There was lit of exploitation of farmers by the
jaggery mundi owners by advancing the money with high interest rates, commission and also
not properly weightment. The price fluctuation created by the traders was also a reason for
poor realization, but there was no other choice to the formers.
NAME : K.B.D SUGARS AND DISTILLERIES
LOCATION AND ADDRESS : MUDIPAPANAPALLI (VILLAGE)
SUGALIMITTA (POST)
PUNGANUR – 517 247
CHITTOOR (DT), A.P
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2.3 BRIEF HISTORY ABOUT THE COMPANY
The company was originally incorporated on 16th day of October, 1984 under the
name of SREE TELUGU SUGARS LIMITED. Subsequently the name of the company was
changed to SREE VANNI SUGARS AND INDUSTRES LIMITED on the 5 th day of April,
1990. Again subsequently the name of the company was changed to KBD SUGARS &
DISTILLERIES LTD on the 1st march, 2005.
The company was initially promoted by Sri T. Surya Chandra rao, managing
director and Sri S. Gokul; executive directors commence its commercial production from 01st
July, 1992.
In the initial years if performance of the company was much below the break even
levels. Due to poor performance, the company accumulated substantial cash loses and also
defaulted in meeting the terms loan comities AIFIs. In these circumstances, the promoters
have inducted Sri D.K. Audikesavulu as a co-promoter in order to facilitate the company to
meet the cost overrun of the project and also provide for the short fall in the margins for
working capital. Sri Gokul has since come out of the board and left the company.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2.4 MAIN OBJECTS OF THE COMPANY
Sellers, Distributors, Super Stockists and Traders of Sugars and its derivatives,
molasses biases and all materials and substances arising as By products and waste
products as manufacture of sugar.
To carry in the business as manufacturers, producers, brewers, Blenders, dealer's
distillers, stock lists and traders of rectified spirit, ethyl. Alcohol, gasohol, acetic acid,
acetone anhydride, vinyl acetate, polymers, plastics, polyvinyl chloride, liquors and
all products made there from.
To carry on the business as manufacturers, producers, packers, Dealers, stock lists
and traders of furfural, bulk drugs, pharmaceutical and medical preparations,
made out of By-products of sugar or their derivatives.
To carry in the business as manufacturers, dealers, distributors, stock lists and
traders of biogases pulp, paper pulp and pulp made out agricultural Residues or
other fibrous materials, paper, newsprint, paper boards, mill boards, stew boards,
cites paper of all kinds, paper bags, febrile boxescartons, corrugate containers,
wrapping and packing materials.
To carry on the business as planters, growers, cultivators, farmers and producers of
sugarcane, sugar beet.
To generate electrical power by conventional, non- conventional methods, including
coal, gas Lignite. naphtha oil , bio-mass, biogases, waste thermal solar, hydel, geo-
hyderl, minor tidal waves any to promote, own acquire, construct, establish, maintain,
improve, manage operate, alter carry on, control. Take in hire / lease, power plants,
cogeneration plants, energy conversion projects power houses, transmissions and
distribution system for generation, transmission and supply of electrical energy to the
state electricity board, state govt., appropriate authorities, agricultural, household
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
industrial, commercial, and any other consumer for industrial purpose in Indian and
else where specified by the state / central govt. local authority in state electricity
board and any other competent authorities by entering into necessary agreements.
PRESENT BOARD OF DIRECTORS
NAME DESIGNATION
SRI.D.K.AUDIKESAVULU CHAIRMAN & MANAGING DIRECTOR
SRI.D.A.SRINIVAS DIRECTOR
SRI.L.SURYA CHANDRA ROA DIRECTOR
SRI.N.V.VARADA RAJULU DIRECTOR
SRI.RAMACHANDRAIAH DIRECTOR
M.G.G.NAIDU DIRECTOR
SRI.P.L.SANJEEVA REDDYDIRECTOR
(Nominee for IREDA)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2.5 PRODUCTION PROCESS
White plantation sugar manufacturing from sugarcane is a continuous process
involving several stages viz., clarification, concentrating, and crystallization and oaring.
In order to extract juice from cane, the practice is to crush the cane in a random of
a 3-roller mill. In order to extract as much juices possible, water is added to the crushed mass,
which further dilutes whatever left over juice. This extracted juice is termed as “mixed juice”.
This will be in the both diluted and undiluted form. This mixed juice is weighted in a
weighing scale and sent for processing.
The weighted mixed juice is heated in “juice heaters” in 2stages. In the first stage
and heating the juice is heated from about 35c-70c. This heated juice is mixed with milk of
lime and sulphur-dioxide, in a vessel, which are called “clarifying agents”.
In the second stage of heating which is heated from about 70c-103c.
These clarifying agents combined with various impurities to form ‘precipitation’
and the precipitations are allowed to settle down leaving ‘clear juice’. The juice retention
time is about 3hours. The clear juice is further boiled in a set of tubular vessels known as
‘evaporators’.
This concentrated juice is now called syrup which contains 60% solids, by weight.
It contains several coloring matters, which have to be eliminated by neutralized before the
final stage of concentration. For this process the syrup is ‘sulfated’ again with SO2 gas. This
clarification process is known as ‘double sulphitation’.
This sulfate syrup is sent to ‘pan floor’ where the final stages of boiling is the
first stage where syrup other high purity materials are boiled to build up what is called as
‘massecuite’ i.e., mixture of sugar crystals and molasses. Massecuite is subjected to cooling
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
in crystallizes from where it is taken ‘centrifuging’ I.e., method used to separate sugar
crystals are nothing but pure ‘source’ and the dried graded and bagged. The molasses
obtained are taken back for the subsequent stages of boiling.
In the second stage the massecuite (that is centrifuged) is cured again continuous
in centrifugal machines which leads to sugar.
In the third stage Massecuite is built-up with low purity materials and boiled
heavily and then this massecuite is cooled much longer when compared to the other 2
massecuites in order to allow maximum exhaustion of source content.
The sugar obtained is mixed with water and ‘Mango’ is prepared. The molasses
obtained in final molasses from which no further exhaustion of sugar is possible is out for
storage.
2.6 SALES
The government of India, commission of Andhra Pradesh, controls sugar sales of
KBD sugars and Distilleries Limited. So there is no as such projected sales target.
2.7 MANPOWER
The KBD sugars unit has workers strength of 450 and staff of about 90.the unit
also has few Housing Colonies accommodating few of his workers.
2.8 POLLUTION CONTROL
The company has installed the required equipment to prevent water and air
pollution as per the standards laid by the AP pollution Control Board. Necessary steps have
also been taken such as plantation of trees, sapling and seedlings in and around factory area
and in the colony, to protect the environment ecology.
2.9 RESEARCH AND DEVELOPMENT
The company has been attempting cultivation of various varieties of sugarcane in
the notified area to identify the variety, which is more suitable to the existing agro-climatic
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
conditions, continuous effort are also being made in this direction to grow sugarcane variety
which gives higher sugarcane yield and higher recovery in the notified area.
2.10 DEPARTMENTATION
1. WARE HOUSE –
In the department the field product is brought and prepared for dispatch.
2. ENGINEERING DEPARTMENT-
In this department spare part are made and old parts are repaired.
3. CANING DEPARTMENTS-
In this department account is maintained for the amount of raw material brought in by the framers to the factory to the factory premises.
4.Research and the Development-
The functions of this department are inspection and testing. It ensures quality from input finished product.
5. PLANNING DEPARTMENT-
Planning department is linked with marketing and technical department. This department plans all the specifications, finalize the rates and prepare purchase order as and when required.
6. MARKETING DEPARTMENT-
This department is the backbone of the entire company. It looks after the marketing aspects of the company.
7. ACCOUNTS AND FINANCE DEPARTMENT -
This department looks after the company’s financial aspects and makes the wages and salaries of staff and workers.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
8. HUMAN RESOURCES DEVELOPMENT-
This department is reasonable for formulating, implementing, administering, monitoring and reviewing periodically the personal and HRD policies and practices considered conductive to the overall development of the employees as well as the organization.
ORGANISATION CHART OF
KBD SUGARS AND DISTILLERIES LIMITED
CEO
VP
MARK
ETING
DEPAR
T MENT
VP
R&D
DEPART
MENT
VP
FINANCIAL
DEPART
MENT
VP
MIS
DEPART
MENT
VP
ACCOUNTS
DEPART
MENT
VP
ENGIN
EERING
DEPART
MENT
VP
HR
DEPART
MENT
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
3 REVIEW OF LITERATURE
Inventory Management is concerned with keeping enough product on hand to avoid
running out while at the same time maintaining a small enough inventory balance to allow for
a reasonable return on investment. Proper inventory management is important to the
financial health of the corporation. Excessive level of inventory, results in large inventory
carrying cost, including the cost of capital tied up in inventory warehouse fees, insurance etc.
Inventory is needed for the definite consumption demand of materials, and to take
care of the uncertainty involved in the usage or availability of the materials. Some times
other authors described as the “decoupling function” of the inventory of materials is
maintained at the different stages of production.
The inventory taking care of the normal consumption requirements i.e., “depending
upon the average consumption rates and average lead times for procurement/manufacture of
the material, inventories are kept at the appropriate times” is called the “normal inventory”
and the inventory taking care of “a production process, however continuous it maybe, is
bound to have some interruptions; it may also have imbalances in the consumption and
production rates of the materials at different stages.
These interruptions and imbalances make it necessary to keep stocks of inventory
between the different stages of the operations” the aspect of this uncertainty is called the
“safety stock” or “buffer stock” of inventory
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Techniques of inventory management
1) ABC analyses
The ABC method is an analytical method of stock control which aims at
concentrating efforts on those items where attention is needed most. It is based on the
premise that a small number of the items in inventory may typically represent the bulk money
value of the total materials used in production process. While a relatively large number of
items may represent a small portion of the money value of stores used and that small number
of items should be subject to the greatest degree of continuous control.
Under this system, the materials stocked may be classified into a number of categories
according to their importance i.e., their value and frequency of replenishment during a period.
The first category, we may call it the group of ‘A’ items, may consist of only a small
percentage of total items handled but its combined value may be a large portion of the total
stock value.
The second category, naming it as group of ‘B’ items, may be relatively less
important. In the third category consisting of ‘C’ items, all the remaining items of stock may
be included which are quite large in numberbut their value is not high.
Categories of ABC analysis
In ABC analysis the items are classified in three main categories based on their
respective consumption value.
1. Category ‘A’ items:
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
The items, which are most costly and valuable, are classified as ‘A’ nearly 10% of the
total number of items stored will account for 70% of total value of all items stocked.
2. Category ‘B’ items:
The items having average consumption value are classified as ‘B’ nearly20% of total
number of items will account for 20% of total value. Statistical sampling is general
useful to control them.
3. Category ‘C’ items:
The items having low consumption value are put in category “C” nearly 70% of total
number as items will account for 10% total value. Generally these items are slow and
non-moving items in the stores, which are frequently used for production process but
with more quality.
2) VED classification
This analysis is based on criticality of inventory, it is used to determine the criticality
of the item and its effect on production and other services .it is specially used for
classification of spare parts. If a part is vital, it is given V classification. if essential ,then it is
given E classification and if it is not essential the part is given D classification for V
items, a large stock of inventory is generally maintained ,these item have immediate effect
on production more attention paid for this items
3) ECONOMIC ORDER QUANTITY
The economic order quantity is that inventory level, which minimizes the total of
ordering cost and carrying costs.
It is the question, how much to order the quantity when inventory is replenished. If
the firm is buying raw materials, the question is to purchase the quantity of; each
replenishment and if it has to plan for production run, it is how much production to schedule.
It may be solved through EOQ.
COST OF HOLDING INVENTORIES
The determination of inventory costs is essentially an income measurement problem,
a means whereby there is a rational, orderly, systematic interpretation of the effect on the
economic progress of the company of expenditures involved in acquiring goods or in
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
maintaining and operating productive facilitates. Ability to quantify and develop rigors
models of most managerial problems is dependent on the determination of the behavior of
relevant costs. The practical application of such models is also dependent on ability to obtain
the cost data. Relevant inventory costs which change with the level of inventory are listed
below.
Ordering cost:
Every timer an order is placed for stock replenishment, certain costs are involved. The
ordering cost may vary, dependent upon the type of item. However, an estimate of ordering
cost can be obtained for a given range of items.
1. Paper work costs, typing and dispatching an order.
2. Follow –up costs-the follow-up required to ensure timely to ensure timely supplies
include the travel cost for purchase follow—up, telephone, telex and postal bills.
3. Cost involved in receiving the order inspection, checking and handling to the stores.
4. Any set up cost of machines if charged by the supplier, either directly indicated in
quotations or assessed through quotations for various quantities.
5. The salaries wages to the purchase department are relevant for consideration if the
purchasing function is carried out at the same decreases significantly, obviously a
proportional amount of personnel will be transferred to other departments.
Carrying Costs:
Carrying costs constitute all the costs of holing items in inventory for a given period
of time. They are expressed either in rupees per unit per period or as a percentage of the
inventory value per period. Components of this cost include the following.
1. Storage and Handling costs: It includes the cost of warehouse space.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2. Obsolescence and deterioration costs:”Obsolescence costs” represent the decline in
inventory value caused by technological or style changes that make the existing
product less salable. “Deterioration costs” represent the decline in value caused by
changes in the physical quality of the inventory, such as spoilage and breakage.
3. Insurance: The inventory against losses due to the theft, fire, and natural disaster.
4. Taxes: A company must pay any “personal property taxes and business taxes”
required by local and state governments on the value of its inventory.
5. The cost of funds invested in inventories: It is measured by the “required rate of
return” on these funds. Because inventory investments are likely to be of “average
risk” the overall weighted cost of capital should be used to measure the cost of these
funds.
6. Storage and Handling costs: It includes the cost of warehouse space.
7. Obsolescence and deterioration costs:”Obsolescence costs” represent the decline in
inventory value caused by technological or style changes that make the existing
product less salable. “Deterioration costs” represent the decline in value caused by
changes in the physical quality of the inventory, such as spoilage and breakage.
8. Insurance: The inventory against losses due to the theft, fire, and natural disaster.
9. Taxes: A company must pay any “personal property taxes and business taxes”
required by local and state governments on the value of its inventory.
10. The cost of funds invested in inventories: It is measured by the” required rate of
return” on these funds. Because inventory investments are likely to be of “average risk”
the overall weighted cost of capital should be used to measure the cost of these funds.
EOQ for an item is arrived on the following assumptions
1. Demand is continuous at a constant rate.
2. The process continues infinity.
3. No constraints are imposed on quantities ordered, storage capacity, budget etc.,
4. Replenishment is instantaneous.
5. All costs are time invariant.
6. Units are not available.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
EOQ for an item is arrived by the following formula
EOQ=
Where
EOQ=economic order quantity
Co=cost of ordering an order
AD= annual consumption of an item
CH=cost of carrying one unit/year
4) HML classification
The high .and medium and low (HML) classification follows the same procedure as is
adopted in ABC classification. Only difference is that in HML, the classification unit
value is the criterion and not the annual consumption value. The item of inventory should be
listed to the descending order of unit value and it is up to the management to fix limits for the
three categories. For example, the the management may decided that all units with unit value
of Rs.2000 and above will be H items, Rs 1000 to 2000 M items and less than Rs. 1000, l
items. The HML analyses is useful for keeping control over consumption at department levels
for deciding the frequency of physical , and for controlling purchases.
5) SDE classification
The SDE classification is based upon the availability of items and is very useful in
the context of scarcity of supply. In this analysis, S refers to scarce items, generally imported,
and those which are in short. D refers to difficult items, which are available indigenously but
are difficult items to procure. Items which have to comeform distance places or for which
reliable suppliers are difficult to come by, fall in to D category. E refers to items which are
easy to acquire and which are available in the local strategies
The SDE classification. Based on problems faced in procurement, is vital to the lead-
time analyses and in deciding on purchases strategies.
6) MINIMUM-MAXIMUM TECHNIQUE
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
The minimum –maximum system is often used in connection with manual
inventory control system. The minimum quantity is established in the same way as any re-
order point. The maximum is the minimum quantity plus the optimum lot –size. In practice, a
requisition is initiated when, a withdrawal reduces the inventory below the minimum level,
and the order quantity is the maximum minus the inventory status after the withdrawal. If the
final withdrawal reduce the stock the stock substantially below the minimum level, the order
quantity will be higher than the calculated EOQ. The effectiveness of a minimum system is
determined by the method and precision with which the minimum and maximum parameters
are established
7) TWO BIN SYSTEM
One of the oldest systems of inventory control is the two-bin system, which is mainly
adopted to control C group inventories. In the two –bin system. Stock of each item is
separated in to two bins. One bin contained stock; just enough to last from the date a new
order is placed until it is received in inventory. The other bin contains a quantity of stock.
Enough to satisfy probable demand during the period of replenishment.to start with , the
stock is issued from the first bin. When the first bin is empty, an order for replenishment is
placed, and the stock in the second bin is utilized until the order material is received
Such a method is appropriate to ideal conditions in which the rate of consumption is fairly
constant and for items. The lead-time of which is fairly established and regular
Although the system itself possesses a high degree of automacy, in practice, we need to allow
for variation in the rate of consumption as well as lead-time. However, for such a system, the
most desirable quantity to re-order is the EOQ. Since the quantity to re-order is fixed in
advance, intiation of replenishment action can be delegated to the lower staff and there is
need to take physical count of inventory levels.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4.1 STATEMENT OF THE PROBLEM
This is a study on the Inventory Management and Valuation. A major problem with
managing inventory is that the demand for corporation’s products is to degree of uncertainty.
The statement of the inventory management is concerned with keeping enough products on
hand avoid running out while at the same time maintaining as small enough inventory
balance to allow for a reasonable return on investment. Inventory is difficult to manage
because it crosses so many lines of responsibility. The supply of the raw materials used in its
production process is also some what uncertain. In addition the corporations on production
contain some degree of uncertainty due to possible equipment breakdowns and labour
difficulties.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4.2 OBJECTIVE OF THE STUDY
To classify the raw material for the better control
To recommend proper inventory management
To suggest suitable measures to improve the inventory management system
To study the effective utilization of inventory
To maintained large size of inventory of raw materials and work in process for
efficient and smooth production and finished goods for uninterrupted sales operation
To maintain a minimum investment in inventory to maximize profitability
To study which item is having the high percentage of usage in the processing of
finished goods.
To study the major raw materials being used in chittoor co- operative sugar limited
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4.3 LIMITATIONS OF THE STUDY
The information used primarily from historical annual reports available to the public and
same does not indicate the current situation of the firm.
Detailed analysis could not be carried for the project work because of the limited time
span.
Since financial matters are sensitive in nature the same could not be acquired easily
The study is based on the data given by the finance department which has its own
limitations.
The information is collected only the secondary data
An extensive analysis was not possible is short of time
The study may not be detailed in all respect
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4.4 RESEARCH DESIGN
The Term research design is defined as “the ways and methods that are followed in
analyzing the data available”
In the above statement it is quite clear that in order to find out the actual position of
the company the various methods of analysis should be made. The data collected from the
company is analyzed through the following methods.
Data Collection
For this research work the data were collected from primary source as well as
secondary source.
a) Primary source
Primary data was collected from personal interview and through observation and direct
contact in finance deportment
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
b) Secondary source
Secondary data was collected from Journals, Company broachers and Internet,
and annual reports.
4.5 Statistical tools
Correlation method
Using the correlation analysis we can find whether there is any relationship between the
variables. Correlation and regression analysis show how to determine the nature and strength of
the relationship between variables. The correlation analysis is used to determine the degree of
the relationship between the variables.
Correlation formula:
∑XY - (∑X) (∑Y)
-------------
N
R = ------------------------------------------------
√ ∑X 2 - ∑(X) 2 √ ∑Y 2 - ∑(Y) 2
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
-------------- -----------
N N
4.6 NEED FOR THE STUDY
To reduce the wastage
To avoid shortage of material
To avoid lack of material
To manage inventory effectively
To meet unexpected demands of material
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
4.7 SCOPE OF THE STUDY
The present study aims at the following
Highlight the need for and nature of inventory.
Underline need for investing in current assets and elaborate the concept of
inventory management.
Focus on the need for analyzing investment in inventory.
Discuss the process of managing inventory.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Data analysis & interpretationABC ANALYSIS ON THE YEAR 2007-2008
ITEMS QTYQTY
VALUEVALUE % CUMLATIVE%
ABC
ANALYSIS
Lime 45800 1.6 73280 45.49 45.49 A
Sulpher 5906 6 35436 21.99 67.48 A
Desclant 165 74 12210 7.57 75.05 B
Sugarin 72 149 10728 5.65 81.7 B
Sodium hexmeter 95 74 7030 4.36 86.06 B
Seed slary 69 97 6693 4.15 90.21 C
Colourrepitint 42 130 5460 3.389 93.59 C
Antifoam agent oil 81 39 3159 1.96 95.55 C
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Idrosulpet soda 150 21 3150 1.955 97.514 C
Magnoflock 8 378.75 3030 1.88 99.44 C
Viscosity reducer 14 65 910 0.56 100.00 C
TABLE 5.1. SHOWING THE ABC ANALYSIS FOR MATERIAL & COMPONENTS
(Sources: annual reports and stores department of the KBDSDL)
CHART 5.1 SHOWING THE ABC ANALYSIS
A B C ANALYSIS
01234567
A B C
CATEGORY
INFERENCE
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S NO ABC ANALYSIS TOTAL
1 A 2
2 B 3
3 C 6
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Above table showing the details for stores differential that material are classified
in A B C. Above 21.99% material given A. than above the 4.36% to below 21.99%
material value is B. than below 4.36% material adding value is C.
ABC ANALYSIS ON THE YEAR 2008-2009
ITEM QTYQTY
VALUEVALUE % CUMLATIVE%
ABC
ANALYSIS
Lime 55600 1.6 898960 41.7 41.7 A
Sulpher 10675 6 64050 30.1 71.8 A
Desclant 200 75 1500 7.04 78.84 B
Sugarin 80 150 12000 5.64 84.48 B
Sodium hexmeter 105 75 7875 3.71 88.19 B
Seed slary 75 97 7275 3.42 91.61 B
Colourrepitint 45 140 6300 2.96 94.57 C
magnoflock 10 380 3800 1.8 96.37 C
Idrosulpet soda 160 21 3360 1.6 97.97 C
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Antifoam agent oil 83 39 3237 1.52 99.49 C
Viscosity reducer 15 66 990 0.51 100 C
TABLE 4.2 SHOWING THE ABC ANALYSIS FOR MATERIAL & COMPONENTS
S NO ABC ANALYSIS TOTAL
1 A 2
2 B 4
3 C 5
(Sources: annual reports and stores department of the KBDSDL)
CHART 5.2 SHOWING THE ABC ANALYSIS
A B C ANALLYSIS
0123456
A B C
CATEGORY
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
INFERENCE
Above table showing the details for stores differential that material are
classified in A B C. Above 30.1 % material given A. than above the 3.42% to below 30.1%
material value is B. than below 3.42% material adding value is C.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
ABC ANALYSIS ON THE YEAR 2009-2010
ITEM QTYQTY
VALUEVALUE % CUMLATIVE%
ABC
ANALYSIS
Desclant 4506 75 337950 48.06 48.06 A
Lime 85500 1.6 136822 19.5 67.56 A
Sulpher 15675 6.2 97185 13.1 80.66 B
magnoflock 72 380 27360 3.9 84.56 B
Sugarin 1600 150 24000 3.5 88.06 B
Sodium hexmeter 277 77.5 21467.5 3.15 91.21 C
Antifoam agent oil 490 39.5 19355 2.8 94.01 C
Seed slary 153 98 14994 2.5 96.51 C
Colourrepitint 96 150 12480 1.9 98.41 C
Idrosulpet soda 320 22 7040 1.2 99.61 C
Viscosity reducer 40 66 2640 0.39 100 C
TABLE 5.3 SHOWING THE ABC ANALYSIS FOR MATERIAL & COMPONENTS
S NO ABC ANALYSIS TOTAL
1 A 2
2 B 3
3 C 6
(Sources: annual reports and stores department of the KBDSDL)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.3 SHOWING THE ABC ANALYSIS
A B C ANALYSIS
01234567
A B C
CATEGORY
INFERENCE
Above table showing the details for stores differential that material are
classified in A B C. Above 19.5% material given A. than above the 3.15% to below 19.5%
material value is B. than below 3.15% material adding value is C
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
ABC ANALYSIS ON THE YEAR 2010-2011
ITEM QTYQTY
VALUEVALUE % CUMULATIVE %
ABC
ANALYSIS
Desclant 9904 77.9624 772139.6 28.1 28.1 A
Lime 391050 1.6576 648204.5 23.57 51.5 A
Sulpher 67150 6.543 439362.5 15.97 67.47 A
Seed slary 1850 98 181300 6.6 74.07 B
Sodium hexmeter 1950 76.5 149175 5.42 79.49 B
Sugarin 950 155 147250 5.35 84.84 B
Idrosulpet soda 5050 23 116150 4.22 89.06 B
magnoflock 280 386 108080 3.93 92.29 C
Colourrepitint 750 129 96750 3.52 96.51 C
Antifoam agent oil 1310 40.0786 52502.9 1.91 98.42 C
Viscosity reducer 600 65 3900 1.41 100 C
TABLE 5.4 SHOWING THE ABC ANALYSIS FOR MATERIAL & COMPONENTS
S NO ABC ANALYSIS TOTAL
1 A 3
2 B 4
3 C 4
(Sources: annual reports and stores department of the KBDSDL)
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.4 SHOWING THE ABC ANALYSIS
A B C ANALYSIS
0
1
2
3
4
5
A B C
CATEGORY
INFERENCE
Above table showing the details for stores differential that material are
classified in A B C. Above 15.97% material given A. than above the 3.93% to below 15.97%
material value is B. than below 3.93% material adding value is C.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
ABC ANALYSIS ON THE YEAR 2011-2012
ITEM QTYQTY
VALUEVALUE % CUMULATIVE %
ABC
ANALYSIS
Desclant 18005 75 1350375 36.82 36.82 A
Lime 554520 1.6634 922388.6 25.15 61.97 A
Sulpher 69460 6.56 455657.6 12.42 74.26 B
Sugarin 1900 152 288800 7.87 82.26 B
Sodium hexmeter 1700 77.5 131750 3.59 85.85 B
Seed slary 1325 99 131175 3.57 89.42 B
Viscosity reducer 1400 67 93800 2.55 91.91 C
Idrosulpet soda 3565 24 85560 2.33 94.3 C
Colourrepitint 633 130 82290 2.24 96.54 C
Antifoam agent oil 1829 39.7 72611.3 1.97 98.58 C
magnoflock 136 385 52360 1.43 100 C
TABLE 5.5 SHOWING THE ABC ANALYSIS FOR MATERIAL & COMPONENTS
(Sources: annual reports and stores department of the KBDSDL)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
S NO ABC ANALYSIS TOTAL
1 A 2
2 B 4
3 C 5
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.5 SHOWING THE ABC ANALYSIS
A B C ANALYSIS
0123456
A B C
CATEGORY
INFERENCE
Above table showing the details for stores differential that material are
classified in A B C. Above 25.15% material given A. than above the 3.57% to below25.15 %
material value is B. than below 3.57% material adding value is C.
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
High and medium and low classification
To classification on the raw material in the bases of the quantity value above 100 Rs
is high and 50 to 100 are medium and below 50 are low
THE CLASSIFICATION HIGH AND MEDIUM AND LOW ON THE YEAR 2009-2010
ITEM QTYQTY
VALUEVALUE CLASSIFICATION
Desclant 4506 75 337950 M
Lime 85500 1.6 136822 L
Sulpher 15675 6.2 97185 L
magnoflock 72 380 27360 H
Sugarin 1600 150 24000 H
Sodium hexmeter 277 77.5 21467.5 M
Antifoam agent oil 490 39.5 19355 L
Seed slary 153 98 14994 M
Colourrepitint 96 150 12480 H
Idrosulpet soda 320 22 7040 L
Viscosity reducer 40 66 2640 M
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
TABLE 5.6 SHOWING MATERIALS &COMPONENTS
S NO H M L CLASSIFICATION TOTAL
1 H 3
2 M 4
3 L 4
(Sources: annual reports and stores department of the KBDSDL)
CHART 4.6 SHOWING THE H ML CLASSIFICATION
H M L CLASSIFICATION
00.5
11.5
22.5
33.5
44.5
H M L
INFERENCE
The above table showing the detailed for stores material differentiation
the material classified in high and medium and low the above quantity value is 100Rs is high
classification and above 50Rs to 100Rs is medium and below 50Rs is low her high
classification of material is low consumption and low classification of materials is high
consumption and medium classification of raw material is consumption is medium
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
THE CLASSIFICATION HIGH AND MEDIUM AND LOW ON THE YEAR 2010-2011
ITEM QTY QTY VALUE VALUE CLASSIFICATION
Desclant 4506 75 337950 M
Lime 85500 1.6 136822 L
Sulpher 15675 6.2 97185 L
Magnoflock 72 380 27360 H
Sugarin 1600 150 24000 H
Sodium hexmeter 277 77.5 21467.5 M
Antifoam agent oil 490 39.5 19355 L
Seed slary 153 98 14994 M
Colourrepitint 96 150 12480 H
Idrosulpet soda 320 22 7040 L
Viscosity reducer 40 66 2640 M
TABLE 5.7 SHOWING MATERIALS &COMPONENTS
S NO H M L CLASSIFICATION TOTAL
1 H 3
2 M 4
3 L 4
(Sources: annual reports and stores department of the KBDSDL)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.7 SHOWING THE H ML CLASSIFICATION
H M L CLASSIFICATION
00.5
11.5
22.5
33.5
44.5
H M L
INFERENCE
The above table showing the detailed for stores material differentiation
the material classified in high and medium and low the above quantity value is 100Rs is high
classification and above 50Rs to 100Rs is medium and below 50Rs is low her high
classification of material is low consumption and low classification of materials is high
consumption and medium classification of raw material is consumption is medium
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
THE CLASSIFICATION HIGH AND MEDIUM AND LOW ON THE YEAR 2011-2012
ITEM QTY QTY VALUE VALUE CLASSIFICATION
Desclant 4506 75 337950 M
Lime 85500 1.6 136822 L
Sulpher 15675 6.2 97185 L
magnoflock 72 380 27360 H
Sugarin 1600 150 24000 H
Sodium hexmeter 277 77.5 21467.5 M
Antifoam agent oil 490 39.5 19355 L
Seed slary 153 98 14994 M
Colourrepitint 96 150 12480 H
Idrosulpet soda 320 22 7040 L
Viscosity reducer 40 66 2640 M
TABLE 5.8 SHOWING MATERIALS &COMPONENTS
S NO H M L CLASSIFICATION TOTAL
1 H 3
2 M 4
3 L 4
(Sources: annual reports and stores department of the KBDSDL)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.8 SHOWING THE H ML CLASSIFICATION
H M L CLASSIFICATION
00.5
11.5
22.5
33.5
44.5
H M L
INFERENCE
The above table showing the detailed for stores material differentiation
the material classified in high and medium and low the above quantity value is 100Rs is high
classification and above 50Rs to 100Rs is medium and below 50Rs is low her high
classification of material is low consumption and low classification of materials is high
consumption and medium classification of raw material is consumption is medium
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
TABLE 5.9 SHOWING INVENTORY TURNOVER RATIOS:
It denotes the speed at which the inventory will be converted into sales, thereby
contributing for the profits of the concern. When all other factors remain constant, greater the
turnover of inventory more will be efficiency of its management. This ratio is calculated as
follows:
.
YEARCOST OF GOODS
SOLDAVERAGE STOCK
RATIO
IN %
2005-2006 16,82,44,220 23,41,47,888 0.71
2006-2007 3,26,16,707 13,75,97,979 0.23
2007-2008 11,52,46,375 8,30,65,437 1.38
2008-2009 25,75,46,899 18,24,64,927 1.41
2009-2010 38,10,97,458 26,42,10,401 1.44
2010-2011 44,38,68,320 26,57,05,437 1.67
(Sources: annual reports of the KBDSDL)
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.9 SHOWING THE INVENTORY TURN OVER RATIO
INFERNCE: -
The inventory turnover ratio indicates the efficiency of the firm in producing and
selling its products. A low inventory turnover implies excessive inventory levels than
required for production. The company have high ratio of inventory except in the 2003-04 i.e.
0.23 it is not good. That is all stock stored in gowdons.
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INVENTORY TURNOVER RATIO
00.20.40.60.811.21.41.61.8
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
YEARS
RATIO
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
TABLE 5.10 SHOWING THE RAW MATERIAL TO INVENTORY TURNOVER RATIO
Raw material to inventory ratio = raw materials / inventory
YEAR RAW MATERIALS INVENTORY Ratio in %
2007-08 20474.2 219662803.7 0.0093207412008-09 20474.2 96849740.27 0.02114017200910 20474.2 110043159.00 0.0186056092010-11 20474.2 304641449.5 0.0067207532011-12 20474.2 281582198.3 0.0072711272013-14 20474.2 332338380 0.006160649
Sources: annual reports of the KBDSDL)
CHART 5.10 SHOWING RAW MATERIAL IN TO INVENTORY RATIO
INFRENCE
From the analysis of above data it is infers that the raw material quantum is constant is each
and every year. But the % of raw material to inventory a little up and down movements in
each and every year. Due to changes in variable expenditure in production point
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RAW MATERIAL TO INVENTORY RATIO
0
0.005
0.01
0.015
0.02
0.025
2008-09 2009-10 2010-11 2011-122012-13 2013-14
YEARS
PERCENTAGE
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
TABLE 5.11 SHOWING DAYS IS INVENTORY
The number of days inventory is also knows as average inventory period and
inventory holding period. A high number of days inventory indicates that there is a lach of
demand for the product being sold. A low day in inventory ratio may indicated that the
company is not keeping enough stock on hand to meet demands
Number of day inventory = 365days / inventory turnover ratio
Table showing the inventory turn over days
YEARCOSTOF
GOODS SOLD
AVERAGE
INVENTORY
RATIO IN
%
TURNOVER
DAYS
2007-08 168244220 234147888 0.71 53
2008-09 32616707 137597979 0.23 68
200910 115246375 83065437 1.38 79
2010-11 257546899 182464927 1.41 112
2011-12 381097458 264210401 1.44 150
2013-14 443868320 265705437 1.67 135
Sources: annual reports of the KBDSDL)
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INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
CHART 5.11 SHOWING THE INVENTORY IN DAY
Z
\
INFERENCE
The inventory turn over ratio trend over a period for six years was analllyzed
and it was found the inventory turn over ratio has fluctuated every year. And has increased in
the following year from 2003to 2007 this shows that an idle turnover ratio was maintained
and this is considered as positive indicator of operating efficiency and good from the point of
the view of liquidity. The average inventory turn over days will come around days 99.5
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY TURNOVER DAYS
0
50
100
150
200
2008-09 2009-10 2010-11 2011-122012-13 2013-14YEARS
DAY
S
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
TABLE 5.12 SHOWING THE INVENTORY TO CURREN ASSET TURNOVER RATIO
Inventory to current ratio = inventory / current assets
YEAR INVENORY CURRENT ASSETS RATIO IN %
2007-08 219662803.70 226868511 96.82
2008-09 96849740.27 114579993 84.53
200910 110043159.00 131888616 83.4
2010-11 304641449.50 313864100 97.1
2011-12 281582198.30 301353353 93.44
2013-14 314228729.9 332338380 94.6
Sources: annual reports of the KBDSDL)
CHART 5.12 SHOWING THE INVENTORY TO CURRENT RATIO
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY TO CURRENT TURNOVER RATIO
75
80
85
90
95
100
2008-09 2009-102010-11 2011-12 2012-1312013-14YEARS
PERC
ENTA
GE
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
INFERENCE
From the analysis of inventory to current assets ratio it is infers that the ratio of
inventory to current assets is 2010 is, 2011, and 2012. Respectively it is increased is
inventory position in current assets
TABLE 5.13 SHOWING THE INVENTORY TO FIXED ASSETS TURNOVER RATIO
Inventory to fixed assets ratio = inventory / fixed assets
YEAR INVENORY FIXED ASSETS RATIO IN %
2007-08 219662803.70 115561613 190.1
2008-09 96849740.27 115561613 84.49
200910 110043159.00 115955117 94.9
2010-11 304641449.50 118336877 257.4
2011-12 281582198.30 128679423 218.8
2013-14 314228729.9 130066672 241.5
Sources: annual reports of the KBDSDL)
CHART 5.13 SHOWING THE INVENTOY TO FIXED ASSETS RATIO
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
INFERENCE
From the analysis of above data it is infers that the ratio of inventory to fixed assets it
is decreasing from 2009 to 2010 in 2011 it increased to 257.4% in 2011 is decreased to
218.8% and in 2012 it is increased to 241.5%
TABLE 5.14 FINDING THE CO RELATIONSHIP BETWEN PURCHASES AND SALES
YEAR SALES PURCHASES
2007-08 201486573.36 117582913
2008-09 130517436 118292431
200910 96920394 109672342
2010-11 124629656 147368921
2011-12 369059519 345673267
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY TO FIXED ASSETS RATIO
0
50
100
150
200
250
300
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14YEARS
PERCENTAGE
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
2013-14 359736526 290573567
AIM
To determine whether there is co- relationship between purchases of raw material and
sales-
YEARSALES IN
CROSS
PURCHASES
IN CROSSX 2 Y 2 XY
2007-08 20.148 11.75 405.6 138.06 236.64
2008-09 13.05 11.82 170.30 139.71 154.25
200910 09.92 10.96 98.40 120.12 10.08
2010-11 12.46 14.73 155.25 216.97 183.53
2011-12 36.90 34.65 1361.61 1200.65 1278.58
2013-14 35.97 29.05 1293.84 843.90 1044.92
N=6 ∑X=119.44 ∑Y=122.96 ∑(X)2=3484.35 ∑(Y)2=2659.66 ∑XY=2908.008
FORMULA
∑XY - (∑X) (∑Y)
-------------
N
R = ------------------------------------------------
√ ∑X 2 - ∑(X) 2√ ∑Y 2 - ∑(Y) 2
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
-------------- -----------
N N
2908.8 – (119.4) (112.96)
---------------------
6
R = --------------------------------------------------------------------
√ 3484.35 – (119.44) 2 √ 2659.41- (112.16)2
----------- ----------
6 6
659.35
R = -----------------
734.5
R = 0.89
CONCLUSION
There is high positive co- relation between sales and purchases of raw
material
6.1 FINDINGS
From the above analysis it is found that the inventory turnover ratio going on
increasing from 2004-05 is 0.23% to in 2008-09 is 1.67%, it leads to the gross profit
ratio going on decreasing
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
As analysis of the above data it is found that the inventory to current assets ratio is
2004,us 96.82% in 2005 is 84.53% , in 2006 is 83.4% ,in 2007 is 97.1%, in 2008 is
98.44% and is 2009 is 94.6%
As analysis of the above date it is found that the ratio of inventory to fixed assets in
2004 is 190.1% , in 2005 is 83.49%, in 2006 is 94.9% , in 2007 is 257.4% , in 2008 is
218.8% and in 2009 is 241.5%
From high and medium and low classification method mainly three raw material
items were classified high but it is utilization has is lees , remaining four materials
were classified as both medium and low classification but low classification items are
consumption is very high.
The inventory turnover ratio indicates that conversion of the inventory of the cash is
very fast through the study. It is increasing trend.
The inventory tern over ratio has been increasing for the year 2005-06 to 2007-08
Show it is shows the effective and efficiency of the company inventory management
system
Lime and sulper is having the high percentage usage in process of finished goods
The major raw material being used in chittoor co-operative sugar ltd are lime and
sulpher and descalnt
The purchase of raw material are having highly positive correlation sales of finished
goods
6.2 SUGGESTIONS
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
I suggested that , there is increasing in the inventory turnover ratio, so it may has to
control its cost of production point for the enjoying of high Gross profit ratio
I suggested that, the organization may have to control cost, for increasing raw material to
inventory ratio
I suggested that the organization may have too increase gradually the ratio of inventory to
fixed asset
I suggested that, the organization may have to maintain sufficient portion of cash in
current assets, becos3e is high ratio of inventory to current assets
From the study A B C analysis of raw material the company was good show the company
may be use these method for the their proper utilization and control of raw material
Inventory should be given in accordance the change of technology
Regular feedback should be taken from the inventory management
Implementation of the inventory should be emphasized
Regular inventory must be further updating and modification
The finance department has to maintain the same procedure to develop inventory
management
The company has to concentrate on research and development so that it can use the
inventory efficiently and reduce wastages
Company it should strive for “getting the right goods to the place at the right time for the
least cost”.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
6.3 CONCLUSION
Sugar Industry needs inventory for smooth running of its activities. It serves as a link
between production and distribution processes. There is generally a time lag between the
recognition of a need and its fulfillment. The unforeseen fluctuations in demand and supply
of goods also necessitate the need for inventory. It also provides cushion for future poses
fluctuations.
The investment in inventories constitutes the cost of significant part of current
assets/working capital in most of the undertakings. Thus, it is very essential to have proper
control as and when required and to minimize investment in inventors.
The Chittoor Co-operative Sugars Ltd maintain high closing balances of inventory it
leads to over expenditure so company should control over expenditure to maximize profits.
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
BIBLIOGRAPHY
I. M. PANDEY (2005), “financial management”, ninth edition vikas
publishing house pvt ltd.
S. N. MAHESWARI (2006), “financial and management accounting”,
fifth edition, sultan chand and sons, New Delhi.
C. R. KOTHARI, “research methodology and techniques”. Second
edition, new Agency international pvt ltd.
BAKER. R .P & HOW WELL. A.C, “the preparation of reports”, New York
Ronald press.
S.P. GUPTHA (1995), “statistical methods, “sultan chand and, co New Delhi.
P.RAMMURTY (2005), “production and operation management”, new
agency international pvt ltd.
AHUJA H.L, “economic environment of business, macroeconomic
analysis“, chand&company ltd, New Delhi, 2005.
(Sources: annual reports and stores department of the KBDSDL)
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
WEB SITES
WWW. Google.com
WWW.KbdSugar ltd .com
E mail [email protected]
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
COMPARATIVE BALANCE SHEET OFK B D SUGARS AND DISTILLERIES LIMITED
FOR THE YEAR 31/3/2010LIABILITIES AMOUNT ASSETS AMOUNT
1.SHARE HOLDER’S
FUNDS
SHARE CAPITAL
2.RESERVES &
SURPLUS
3.LOAN FUNDS
SECURED LOANS
UNSECURED LOANS
4.CURRENT
LIABILITIES
TOTAL
274407700
1500000
244421413
88199664
608528777
68061237
1.FIXED ASSETS
NET BLOCK
CAPITAL WORK IN
PROGRESS
2.CURRENT
ASSETS,LOANS &
ADVANCES
INVENTORIES
SUNDRY DEBTORS
CASH & BANK
BALANCES
LOANS & ADVANCES
3.DEFFERED TAX
ASSET
4.MISCELLANEOUS
EXP
5.PROFIT & LOSS
ACCOUNT
TOTAL
322683298
8983008
88530984
10025086
13412400
73222916
40812113
0
118920210
676590014 676590014
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/3/2010
DESCRIPTION FOR THE YEAR ENDED 31-3-09
SUGAR
DIVISION
POWER
DIVISION
TOTAL
INCOME
SALES & OTHER INCOME
INCREASE/(DECREASE) IN STOCKS
EXPENDITURE
CONSUMPTION OF RAW MATERIAL
MANUFACTURING EXPENCES
SALARIES,WAGES & OTHER BENEFITS
INTEREST & FINANCIAL CHARGES
DUTIES & TAXES
ADMINISTRATIVE EXPENCES
PRELIMINARY & SHARE ISSUE EXP WRITTEN
OFF
DEPRECIATION
LOSS FOR THE YEAR
PRIOR PERIOD ITEMS NET
LOSS FOR THE YEAR
DEFFERED TAX ASSET
LOSS BROUGHT FORWARD FROM PREVIOUS
YEAR
LOSS CARRIED TO BALANCE SHEET
EARNINGS PER SHARE-BASIC&DILUTE
296377872
-170752644
125625228
46349476
11974752
18335701
29218972
5476000
8444611
332628
18402399
138534539
12909311
426331
12482980
13731589
102254414
101005805
0.03
18949010
0
18949010
15177716
7994118
1596470
13057684
0
124184
0
5182109
43132281
24183271
0
24183271
10343222
4074270
17914320
-0.58
315326882
-170752644
144574238
61527193
19968870
19932171
42276656
5476000
8568795
332628
23584508
181666820
37092582
426331
36666251
24074810
106328684
118920125
-0.54
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
COMPARATIVE BALANCE SHEET OF
K B D SUGARS AND DISTILLERIES LIMITED
FOR THE YEAR 31/3/2011
LIABILITIES AMOUNT ASSETS AMOUNT
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
1.SHARE HOLDER’S
FUNDS
SHARE CAPITAL
2.RESERVES &
SURPLUS
3.LOAN FUNDS
SECURED LOANS
UNSECURED LOANS
4.DIFFERED TAX
LIABILITY
5.CURRENT
LIABILITIES
ADD:DIFFERENCE BETWEEN ASSETS & LIABILITIES
TOTAL
13084210
262823490
177589768134789487
85017925
11358435
684663315
102225919
1.FIXED ASSETS
NET BLOCK
CAPITAL WORK IN
PROGRESS
2.CURRENT
ASSETS,LOANS &
ADVANCES
INVENTORIES
SUNDRY DEBTORS
CASH & BANK
BALANCES
LOANS & ADVANCES
3.DEFFERED TAX
ASSET
4.MISCELLANEOUS
EXP
5.PROFIT & LOSS
ACCOUNT
TOTAL
2992341509096115
1754475698068939
2214356
74538394
0
489704
217800007
786889234 786889234
K B D SUGARS AND DISTILLERIES LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/3/2011
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
DESCRIPTION FOR THE YEAR ENDED 31-3-10
SUGAR
DIVISION
POWER
DIVISION
TOTAL
INCOME
SALES & OTHER INCOME
INCREASE/(DECREASE) IN STOCKS
EXPENDITURE
CONSUMPTION OF RAW MATERIAL
MANUFACTURING EXPENCES
SALARIES,WAGES & OTHER BENEFITS
INTEREST & FINANCIAL CHARGES
DUTIES & TAXES
ADMINISTRATIVE EXPENCES
PRELIMINARY & SHARE ISSUE EXP WRITTEN
OFF
DEPRECIATION
PROFIT/LOSS FOR THE YEAR
PRIOR PERIOD ITEMS NET
PROFIT/LOSS FOR THE YEAR
LESS:PROVISIONS FOR TAXATION
FRINGE BENEFIT TAX
DEFFERED TAX ASSET
LOSS BROUGHT FORWARD FROM PREVIOUS
YEAR
LOSS CARRIED TO BALANCE SHEET
EARNINGS PER SHARE-BASIC&DILUTE
222441131
93221682
315662813
252209073
15498727
22257579
-9471186
0
8125551
0
18422468
307042212
8620601
0
8620601
0
0
8620601
174203111
165582510
-0.36
3792156
0
3792156
2295073
3804721
66548
14739604
0
93238
0
5275531
26274715
-22482559
0
-22482559
0
0
-22482559
29734938
52217497
0.94
226233287
93221682
319454969
254504145
19303448
22324127
5268418
0
8218789
0
23697999
333316927
-13861958
0
-13861958
0
0
0
-13861958
203938049
217800007
0.58
COMPARATIVE BALANCE SHEET OF
K B D SUGARS AND DISTILLERIES LIMITED
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
FOR THE YEAR 31/3/2011
LIABILITIES AMOUNT ASSETS AMOUNT
1.SHARE HOLDER’S
FUNDS
SHARE CAPITAL
2.RESERVES &
SURPLUS
3.LOAN FUNDS
SECURED LOANS
UNSECURED LOANS
4.DIFFERED TAX
LIABILITY
5.CURRENT
LIABILITIES
TOTAL
0
-20659974
253408846
105914487
0
362236043
1.FIXED ASSETS
NET BLOCK
CAPITAL WORK IN
PROGRESS
2.CURRENT
ASSETS,LOANS &
ADVANCES
INVENTORIES
SUNDRY DEBTORS
CASH & BANK
BALANCES
LOANS & ADVANCES
3.MISCELLANEOUS
EXP
TOTAL
28402428012520913
3032381118256619
2907579
89584620
367278
700899402 70089401
K B D SUGARS AND DISTILLERIES LIMITED
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/3/2012
DESCRIPTION FOR THE YEAR ENDED 31-3-10
SUGAR
DIVISION
POWER
DIVISION
TOTAL
INCOME
SALES & OTHER INCOME
INCREASE/(DECREASE) IN STOCKS
EXPENDITURE
CONSUMPTION OF RAW MATERIAL
MANUFACTURING EXPENCES
SALARIES,WAGES & OTHER BENEFITS
INTEREST & FINANCIAL CHARGES
DUTIES & TAXES
ADMINISTRATIVE EXPENCES
DEPRECIATION
PROFIT/LOSS FOR THE YEAR
PRIOR PERIOD ITEMS NET
PROFIT/LOSS FOR THE YEAR
DEFFERED TAX ASSET
LOSS BROUGHT FORWARD FROM PREVIOUS
YEAR
LOSS CARRIED TO BALANCE SHEET
318251683
107701016
425952699
301448545
40338565
23300302
9463676
29444670
9852517
18529737
432378012
(6425313)
0
(6425313)
0
0
6425313
2805097
0
2805097
1716287
26021
75531
9862397
0
83991
5275531
17039758
(14234661)
0
(14234661)
0
0
14234661
321056780
107701016
428757796
303164832
40364585
23375833
19326073
29444670
9936508
23805268
449417770
(20659974)
0
(20659974)
0
0
20659974
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
COMPARATIVE BALANCE SHEET OF
K B D SUGARS AND DISTILLERIES LIMITED
FOR THE YEAR 31/3/2012
LIABILITIES
AMOUNT
ASSETS AMOUNT
1.SHARE
HOLDER’S FUNDS
SHARE CAPITAL
2.RESERVES &
SURPLUS
3.LOAN FUNDS
SECURED LOANS
UNSECURED LOANS
4.DIFFERED TAX
LIABILITY
5.CURRENT
LIABILITIES
ADD:DIFFERENCE BETWEEN ASSETS & LIABILITIES
TOTAL
0
-78641650
365142945
68289487
0
467143647
59998
1.FIXED ASSETS
NET BLOCK
CAPITAL WORK IN
PROGRESS
2.CURRENT
ASSETS,LOANS &
ADVANCES
INVENTORIES
SUNDRY DEBTORS
CASH & BANK
BALANCES
LOANS & ADVANCES
3.MISCELLANEOUS
EXP
TOTAL
277254924
4309183
37567689284767625067311
150964503
244852
821934429 821994427
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
K B D SUGARS AND DISTILLERIES LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/3/2012
DESCRIPTION FOR THE YEAR ENDED 31-3-10
SUGAR
DIVISION
POWER
DIVISION
TOTAL
INCOME
SALES & OTHER INCOME
INCREASE/(DECREASE) IN STOCKS
EXPENDITURE
CONSUMPTION OF RAW MATERIAL
MANUFACTURING EXPENCES
SALARIES,WAGES & OTHER BENEFITS
INTEREST & FINANCIAL CHARGES
DUTIES & TAXES
ADMINISTRATIVE EXPENCES
DEPRECIATION
PROFIT/LOSS FOR THE YEAR
PRIOR PERIOD ITEMS NET
PROFIT/LOSS FOR THE YEAR
DEFFERED TAX ASSET
LOSS BROUGHT FORWARD FROM PREVIOUS
YEAR
LOSS CARRIED TO BALANCE SHEET
438997392
74444167
513441560
391334724
57600161
31543420
28185073
48400517
8759405
19181903
585005203
(71563643)
0
(71563643)
0
0
71563643
7394652
0
7394652
101786
224679
81853
8788747
0
0
5275594
14472659
(7078007)
0
(7078007)
0
0
7078007
446392044
74444167
520836212
391436510
57824840
31625273
36973820
48400517
8759405
24457497
599477862
(78641650)
0
(78641650)
0
0
78641650
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
COMPARATIVE BALANCE SHEET OF
K B D SUGARS AND DISTILLERIES LIMITED
FOR THE YEAR 31/3/2013
LIABILITIES AMOUNT ASSETS AMOUNT
1.SHARE HOLDER’S
FUNDS
SHARE CAPITAL
2.RESERVES &
SURPLUS
3.LOAN FUNDS
SECURED LOANS
UNSECURED LOANS
4.DIFFERED TAX
LIABILITY
5.CURRENT
LIABILITIES
ADD:DIFFERENCE BETWEEN ASSETS & LIABILITIES
TOTAL
0
-51120343
292832366
110248323
0
257973323
1.FIXED ASSETS
NET BLOCK
CAPITAL WORK IN
PROGRESS
2.CURRENT
ASSETS,LOANS &
ADVANCES
INVENTORIES
SUNDRY DEBTORS
CASH & BANK
BALANCES
LOANS & ADVANCES
3.MISCELLANEOUS
EXP
TOTAL
286606280
5027508
1563062467348982
8755709
14566518
122426
609933669 6009933669
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
K B D SUGARS AND DISTILLERIES LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31/3/2012
DESCRIPTION FOR THE YEAR ENDED 31-3-11
SUGAR
DIVISION
POWER
DIVISION
TOTAL
INCOME
SALES
LESS:EXCISE DUTY
OTHER INCOME
INCREASE/(DECREASE) IN STOCKS
EXPENDITURE
CONSUMPTION OF RAW MATERIAL
MANUFACTURING EXPENCES
SALARIES,WAGES & OTHER BENEFITS
INTEREST & FINANCIAL CHARGES
ADMINISTRATIVE EXPENCES
DEPRECIATION
PROFIT/LOSS FOR THE YEAR
PRIOR PERIOD ITEMS NET
PROFIT/LOSS FOR THE YEAR
DEFFERED TAX ASSET
LOSS BROUGHT FORWARD FROM PREVIOUS
YEAR
LOSS CARRIED TO BALANCE SHEET
401903062
27168636
374734427
26118647
-217914213
182938861
103459245
36428063
30564298
27376162
8847793
20407054
227082615
(44143754)
0
(44143754)
0
0
44143754
6086520
0
6086520
0
0
6086520
0
23650
133901
7594511
34834
5276213
13063109
(6976589)
0
(6976589)
0
0
6976589
407989582
27168636
380820947
26118647
-217914213
189025381
103459245
36451713
30698199
34970673
8882627
25683267
240145724
(51120343)
0
(51120343)
0
0
51120343
SRI RAMA KRISHNA PG COLLEGE NANDYAL
INVENTORY MANAGEMENT KBD SUGARS & DISTILLERIES LTD
Source: annual published reports of KBD sugars
SRI RAMA KRISHNA PG COLLEGE NANDYAL