ASUMMER INTERNSHIP PROJECT REPORT

ON“Inventory management and control”

AtGujarat Narmada Valley Fertilizers Company Limited

SUBMITTED TOINSTITUTE OF TECHNOLOGY AND MANAGEMENT UNIVERSE

IN PARTIAL FULFILLMENT OF THEREQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ASMINISTRATIONIn

Gujarat Technological UniversityUNDER THE GUIDANCE OF

Faculty Guide Company Guide PROF. MOBIN SHAIKH Mr. D.C.JADEJA

Assistance Professor Manager

SUBMITTED BYCHAUHAN ANKIT ASHOKKUMAR

Batch: 2011-13, Enrollment No.:118220592005 MBA SEMESTER II 

INSTITUTE OF TECHNOLOGY AND MANAGEMENT UNIVERSE VADODARAAUGUST, 2012

HISTORY & DEVELOPMENT OF GNFC

Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC) is a joint sector enterprise promoted by the Government of Gujarat and the Gujarat State Fertilizer Company Ltd. (GSFC). It was set up in a bharuch, Gujarat in 1976 in on the resources of the natural wealth of the land as well as the industrial rich reserves of the area.

GNFC started its manufacturing and making operation by setting up in 1982, one of complexes. Over the next few years, GNFC successfully commissioned in the world’s largest single-stream ammonia-urea fertilizer different project – in field as diverse as chemicals, fertilizer and electronics.

GNFC today has extended its profile much beyond fertilizer through a process of horizontal integration. Chemical, Energy-sector, Electronic, Telecommunications and Information Technology from ambitious and challenging additions to its corporate portfolio. GNFC has an enterprising, strategic view towards expansion and diversification.

ORGANISATION STRUCTURE OF GNFC:

Board of Directors

Chairman & Managing Director

General Manager

Additional General Manager

Chief Manager

Senior manager

Manager

Officer

Staff

ACHIEVEMENTS OF GNFC:

Set up the world's largest single stream, fuel oil based Ammonia - Urea plant  All fertilizers under the brand name of Narmada, along with extensive support activities,

have been well accepted by the country's farmer community.  India's largest producer of Formic Acid, Acetic acid and Methanol.  India's only manufacturer of Glacial Acetic Acid through the cutting-edge Methanol

route.  India's largest single stream plant of Aniline.  The only manufacturer of Toluene Di-isocyanate in South East Asia.  Record capacity utilizations in all plants, defying the vintage through cleverly

innovative maintenance measures. Development of the first indigenous, eco-friendly technology for H2S removal,

CATSOL, a much awarded product of the Company's R&D labs.

KEY PRODUCT OF GNFC: Fertilizer: Urea: Ammonium Nitrophophate: Calcium Ammonium Nitrate:   Chemicals: Methanol: Formic Acid: Acetic Acid: Concentrated Nitric Acid: Weak Nitric Acid:   Information Technology: Commercial certifying authority: Networking and software solution: GNFC Info tower: Data center creation and implementations: VSAT, International Gateway and ISP:

SOCIAL COMMITMENT OF GNFC: A Club House, Tennis Court, Swimming pool and an open air theater provide

recreations for GNFC personnel. GNFC also provides a hospital facility with modern systems and equipment,

and a temple. GNFC runs a school in the township of Narmadanagar, and has also sponsored

a College for Science, Technology and Commerce. GNFC is linked to the success of the farmers. It interacts with them on selection

of seeds, on correct application of fertilizers, on scientific farming methods and on land and water management.

ENVIRONMENT MANAGEMENT: GNFC has developed and implemented Environment Management System (EMS) as

per 1S0:14001-1996 for its Fertilizers, Chemicals and supporting services at Bharuch, Gujarat with expert guidance from M/s EQMS India Pvt. ltd, Delhi.

GNFC has so far spent Rs.800 million on installation of pollutants control equipments. GNFC management is dedicated for allocating various resources for continual environmental improvement.

Some major benefits achieved so far through EMS implementation are listed below: Conservation in energy consumption Reduction in water consumption Reduction in lube oil consumption Increase in recovery of used lube oil Increase in revenue from scrap sale due to better segregation Improved housekeeping in the complex Increase in the awareness for environmental responsibility at all levels in the organization

INVENTORY MANAGEMENT: “Inventory” is a list for goods and materials, or those goods and materials themselves,

held available in stock by a business. “Management of the inventories” is with the primary objective of determining,

controlling stock levels within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and costs.

Inventory management in GNFC:GNFC is maintaining inventories successfully. There are total 1,40,000 items in inventory and currently the total investment in inventory is more than 463 cr. GNFC maintain some inventories different ways like use of SAP system.

CLASSIFICATION OF INVENTORY IN GNFC:

57%

12%

11%

10%

10%

Classification of Inventory

Mechanical sparesCatayst and chemical sparesElectrical itemsInstrumentation itemsOther miscellaneous items

INVENTORY MANAGEMENT Objective of the study: To find out the composition of inventory. To study of the various inventories ratio. To analysis of inventory management techniques used in the company. To study an analysis the inventory management system and control practices at GNFC ltd. The objectives of the report are concerned with an ideal inventory management. Scope of study: To prepare a project report I have taken the help of GNFC ltd., as a base. I had taken the help of 5year balance sheet (2006 to 2011) I had also taken some other financial statement for the analysis related to the inventory

management Analysis of inventory management includes the study of the composition of inventory,

inventory ratio and different techniques. The report is also showing that if company requirement of the different inventory in the last 5

year are also closely related to the sales of the company.

RESEARCH METHODOLOGY:

Methods of Data Collection: The data is collected from the respected persons of the company. The

communication was informal in nature.

Secondary Data:The data was analyzed from the balance sheet, various tables, graphs, chart, referred some of the reports and other companies report.

RESEARCH APPROACH AND TOOLS OF ANALYSIS:

For the analysis of the report and the study of the objectives I have used many tools for analyses:

Total investment in inventory ratio. Total inventory turnover ratio. Inventory to current assets ratio. Raw material turnover ratio. Work in process turnover ratio. Finished goods turnover ratio.

TOTAL INVESTMENT IN INVENTORY OF GNFC:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

463.53405.03

430.76386 388.47

Inventory (in cr. )

TOTAL INVENTORY TURNOVER RATIO:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

5.72 5.696.34

7.666.88

Total turnover ratio

INVENTORY TO CURRENT ASSETS RATIO:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

18.08%

18.72%

19.26%

16.92%

18.56%

Inventory to C.A ratio

RAW MATERIAL TURNOVER RATIO:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

25.4428.73

42.51

53.72

42.29

Total R.M Turnover Ratio

WORK-IN –PROCESS TURNOVER RATIO:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

166.19

214.05

95.6

147.3129.18

Total W.I.P turnover ratio

FINISHED GOODS TURNOVER RATIO:

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007

62.28

32.7725.06 25.72 26.8

Total F.G turnover

TECHNIQUES OF THE INVENTORY MANAGEMENT:

Codification system Classification of inventory ABC Classification EOQ FSN Classification HML Classification Zero inventories Determination of inventory levelso Minimum stock level.o Maximum stock level.o Re-order level

FINDINGThe analyses of the inventory management the main finding of the company are below: It is managing its inventory with all the advanced techniques. So, that there can be put control

over inventory conversion period. The total inventory turnover ratio is high in the year 2007-08 its 7.66. it is highest inventory

turnover ratio in last 5 years. In the 5 year financial data, 2008-2009 is higher inventory includes in the current assets which

19.26%. Raw material turnover is high in the 2007-2008 which is 53.72times during the year. Work in process turnover is high in the 2009-2010 which is 214.05 times during the year. Finished goods turnover is higher in last financial year 2010-2011 which is 62.28 time during the

year. So, the total inventory is the low of maximum level. And the total inventory is high of the

company is good times. But the raw material turn over and work in process is high. It is not goods of the company. The

30 days credit limit from suppliers to lengthen the purchase deferral period. The company uses the many techniques for control of the analysis inventory management. It is

alert of the control of inventory management.

CONCLUSION:

  Raw Material Conversion Period for the company is increased by 6 days in 2009-

2010 as compared to previous year is not a good sign. But in 2010-211 it is decreased by 1 day and its 23 days.

Finished Goods Conversion Period in 2008-2009 is highest which 81days which has increased by 33 days as compared to previous year. But in 2009-2010 it reduce by 9 day but its more. So company has to control in finished goods conversion.

Since its beginning the company has to incur loss due to damage of machine E-501 and due to which they had loss of production. So they have to keep this machine in stock.

Most of the employees in the organization are not aware about how to use SAP software. So, 1st gives the training of their employees about how to use SAP system.