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NILE LTD.

ABC ANALYSIS [Type the document subtitle]

Submitted to:

Prof. ALOK KUMAR

Submitted by:Nikita Khanduja

FMG 22B220177

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ABC Analysis

ABC analysis is a technique of exercising selective control also known asmanagement by exception; over inventory items. The technique is based onthe assumption that a firm should not exercise the same degree of control onitems which are more costly as composed to those items which are lesscostly. According to this approach the inventory items are divided into threecategories i.e., A, B and C.

Category A may include more costly items, while category B mayconsists of less costly items and category C of the least costly items.Therefore, ABC analysis concentrates on important items hence also known

as Control by Importance and Exception (CIE). This approach is also knownas Proportional Value Analysis (PVA). There is no definite procedure forclassifying the inventories as A, B and C categories. The method usuallyadopted is,

1. The quantity of each material expected to be used is estimated.2. The value of each of the above material is found out by multiplyingquantity with price.3. The items are arranged in the descending order of their valueirrespective of their quantities and give the ranks.4. Express the value for each item as a percentage of the aggregate usagevalue and obtain the cumulative percentage of annual usage values.5. Obtain the percentage value for each of the items. For n items, eachitem shall represent 100/n percent. Also obtain the cumulative values of the

percentages.6. Plot the curve using the cumulative computed in step 4 and step 5 on xand y axes respectively.7. Determine appropriate divisions for the A, B and C categories.

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In general, normal inventory item possess the following distribution pattern.

There are no fixed threshold for each class, different proportion can beapplied based on objective and criteria. ABC Analysis is similar tothe Pareto principle in that the 'A' items will typically account for a large

proportion of the overall value but a small percentage of number of items.Example of ABC class are A items 20% of the items accounts for 70% of the annual

consumption value of the items. B items - 30% of the items accounts for 25% of the annual

consumption value of the items. C items - 50% of the items accounts for 5% of the annual

consumption value of the items.Another recommended breakdown of ABC classes:1. "A" approximately 10% of items or 66.6% of value2. "B" approximately 20% of items or 23.3% of value3. "C" approximately 70% of items or 10.1% of value

http://en.wikipedia.org/wiki/Pareto_principlehttp://en.wikipedia.org/wiki/Pareto_principle

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Profile Of The Company

Introduction to NILE LTD:

Nile Limited was originally incorporated as a private limited company withthe name Navabharat Industrial Linings and Equipment Private Limited onMay 18, 1984 and was later converted to a public limited company with thename Navabharat Industrial Linings and Equipment Limited. The name ofthe Company was changed to its present name of NILE ltd. vide a fresh

certificate of incorporation dated September 16, 1994. Nile is a Public limited company and its shares are listed on the BombayStock Exchange (BSE). Nile has emerged as a leader in glass lining byachieving customer satisfaction by delivering quality products, with afervent desire to convert every customer relationship into a prospective

partnership. Nile's Glass Lining and pressure vessel division is located atIndustrial estate, Nacharam, Hyderabad with a covered area of 8700 sq.m.The totally integrated fabrication, machining and glass lining facilitiesensure timely delivery of quality products.

Nile's two Non-Ferrous plants are located One near Hyderabad, and anothernear Tirupati. The combined capacity of these two plants is 32000 tons perannum. Niles 2 MW Wind Farm is located at Ramagiri, Ananthapur district. The state-of-the-art CAD facilities and experienced engineers not onlyautomate the day-to-day engineering drawing requirements, but alsoinnovate and improve the versatility of the product. In addition to standardequipment, Nile designs and manufactures equipment for specific customerapplications or process performance improvement.

A Company with a difference - setting benchmarks:

Nile is an ISO 9001 certified Company manufacturing world class GlassLined Equipment, Pressure Vessels, Lead and Lead Alloys.

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Product range of the company includes:

Reactors

Reactors with Conical bottom

Reactor with Insulation

Receivers (Jacketed &Unjacketed)/ Storage Tanks

Conical Dryer

Agitated Nutsche Filters

Heat Exchangers /Condensers

Columns

Lead products

Pure Lead 99.97% purity

Lead Antimonial alloys

Lead Selenium alloys

Lead Calcium alloys

Lead Tin alloys

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ABC Analysis Of NILE

In the year 2011-2012 the total annual value of material is Rs. 201278053. Thematerials are divided into A category, B category and C category according to annualconsumption. The ABC Analysis table is as follows

cost annual per Annual

no. material description consumption unit Value 1 steel plates(12,14,18,20,25)mm 1002 44334 44444448 2 steel plates(8,16,22,32)mm 702 44319 31111113 3 steel plates(6,10,36,40,45,50,63,65)mm 301 44296 13333334 4

rods(80,100,122)dia

233

49496

11515178 5 Chemicals 59770 119 7087018

6 mechanical seal(60,80,100)mm 240 27116 6584928 7 rods(50,180,240,250)dia 127 49456 6281006 8 gear box(as-55,60,35,RR210DNC,110DNC) 23 23730 5600280 9 motors(3,7,5,10)hp 251 21376 5365376

10 accuators and variable frequency drive 98 49773 4877724 11 mildsteel seemless pipes 3680 955 3514400 12 electrodes(E7018) 10716 320 3429120 13 forgings(flanges) 102 31756 3239112 14 Rods 63 49397 3112011 15 packaging material 10738 286 3071068

16 standguard and stand drive 85 33474 2845339 17 mechanical seal(50,125)mm 80 34296 2743680 18 hardware 121943 20 2438862 19 paints 17043 137 2334891 20 gearbox(AS-80,90F) 34 67388 2291192 21 motors(5,15,20)hp 81 27577 2233737 22 forgings(nozzles) 752 2892 2174784 23 teflon items(gaskets) 1529 1200 1834803 24 electrodes(E7018-1) 4286 400 1714418 25 mechanical seal(40mm) 108 15125 1633500 26 others in boughtout(sight and light glasses,hoses) 270985 6 1625908 27 abbressive material(grit) 36 43000 1548000

28 imported general stores(ceramic crucibles) 29 53364 1547556 29 teflon items(dippipes/sparges) 240 6354 1524960 30 castings(valve bodies) 425 3570 1517250

others from general stores(oils, greases, hotmill jars, 31 handgloves,nosemasks, glasses,cap) 97289 15 1459335 32 gearbox(RR310DNC,510DNC) 90 15581 1402345 33 motors 25hp 28 46704 1307712 34 stainless steel seemless pipes 768 1525 1171200 35 castings(rods and plates) 3392 322 1092224

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36 electrodes(E316,316L,6013) 385 1500 1027500 37 tantalum 27 37516 1012932 38 teflon items(bushes/nozzles) 950 1040 988000 39 electrical items 5414 176 952864 40 imported chemicals 1515 610 924150 41 oxygen gas 6644 123 817212 42 flux wires 7620 90 685800 43 castings(nozzles) 885 770 681450 44 teflon items(gasket sheets) 500 1350 675000 45 diesel 13606 37 503422 46 imported tantalum 12 38560 462720 47 job bearing 812 500 406000 48 castings(sleeves) 40 9500 380000 49 bearings 1166 250 291500 50 LPG 131 2221 290951 51 teflon items(spray ball) 17 16256 276352 52 shafts 20 10412 208240 53 teflon items(spacers/seperators) 3072 56 172032 54 teflon items(tapes/'o' rings) 7702 22 169444 55 screws and rods 42 3718 156156 56 material handling 347 435 150945 57 grinding machines 12 10115 121380 58 abbressive material(sand) 30 4000 120000 59 grinding wheels 48 2284 109632 60 other in maintence(low value spares, lubricants) 1056 98 103488 61 hoses and pipes 159 523 83157 62 indegnous grind wheels and belts 1981 42 83202 63 blasting accessories 52 1502 78104 64 elements seperators 6 12147 72882 65 tool bit 33 2025 66825 66 argon gas 61 950 57950 67 imported boughtout(gear box) 1 41764 41764 68 measuring tapesand scales 103 365 37595 69 wind mill spares 4 4637 18548 70 others in tools(spanners,lowvalue jigggs,fixtures) 1226 22 26972 71 cutting accessories 28 574 16072

A Occupies 70% of Annual consumption, i.e., 70% of 201078053 = 140894637.

B- Occupies 20% of Annual consumption, i.e., 20% of 201078053 = 40255610.

C - Occupies 10% of Annual consumption, i.e., 10% of 201078053 = 20107805

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The following table shows the C items

cost annual per annual

no. material description consumption unit value 1 castings(valve bodies) 425 3570 1517250

others from general stores(oils, greases, hotmill jars, 2 handgloves,nosemasks, glasses,cap) 97289 15 1459335 3 gearbox(RR310DNC,510DNC) 90 15581 1402345 4 motors 25hp 28 46704 1307712 5 stainless steel seemless pipes 768 1525 1171200 6 castings(rods and plates) 3392 322 1092224 7 electrodes(E316,316L,6013) 385 1500 1027500 8 tantalum 27 37516 1012932 9 teflon items(bushes/nozzles) 950 1040 988000

10 electrical items 5414 176 952864 11 imported chemicals 1515 610 924150 12 oxygen gas 6644 123 817212 13 flux wires 7620 90 685800 14 castings(nozzles) 885 770 681450 15 teflon items(gasket sheets) 500 1350 675000

16 diesel 13606 37 503422 17 imported tantalum 12 38560 462720 18 job bearing 812 500 406000

19 castings(sleeves) 40 9500 380000 20 bearings 1166 250 291500 21 LPG 131 2221 290951 22 teflon items(spray ball) 17 16256 276352 23 shafts 20 10412 208240 24 teflon items(spacers/seperators) 3072 56 172032 25 teflon items(tapes/'o' rings) 7702 22 169444 26 screws and rods 42 3718 156156 27 material handling 347 435 150945 28 grinding machines 12 10115 121380 29 abbressive material(sand) 30 4000 120000 30 grinding wheels 48 2284 109632 31 other in maintence(low value spares, lubricants) 1056 98 103488 32 hoses and pipes 159 523 83157 33 indegnous grind wheels and belts 1981 42 83202 34 blasting accessories 52 1502 78104

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35 elements seperators 6 12147 72882 36 tool bit 33 2025 66825 37 argon gas 61 950 57950 38 imported boughtout(gear box) 1 41764 41764 39 measuring tapesand scales 103 365 37595 40 wind mill spares 4 4637 18548 41 others in tools(spanners,lowvalue jigggs,fixtures) 1226 22 26972 42 cutting accessories 28 574 16072

The

Following shows the share of the listed items in the total annual output.

The properties of the ABC Analysis which are following are proved through theABC Analysis.

A items 20% of the items accounts for 70% of the annual consumptionvalue of the items. B items - 30% of the items accounts for 25% of the annual consumption

value of the items. C items - 50% of the items accounts for 5% of the annual consumption

value of the items.

Share in total annual output

A Items

B Items

C Items

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The ABC analysis can be plotted as follows:

Thus the above constitutes of the overall ABC analysis of Nile.

0102030405060708090

100

C u m u l a t i v e

5 . 6

3 3 8 0 2 8 1 7

1 1

. 2 6 7 6 0 5 6 3

1 6

. 9 0 1 4 0 8 4 5

2 2

. 5 3 5 2 1 1 2 7

2 8

. 1 6 9 0 1 4 0 8

3 3

. 8 0 2 8 1 6 9

3 9

. 4 3 6 6 1 9 7 2

4 5

. 0 7 0 4 2 2 5 4

5 0

. 7 0 4 2 2 5 3 5

5 6

. 3 3 8 0 2 8 1 7

6 1

. 9 7 1 8 3 0 9 9

6 7

. 6 0 5 6 3 3 8

7 3

. 2 3 9 4 3 6 6 2

7 8

. 8 7 3 2 3 9 4 4

8 4

. 5 0 7 0 4 2 2 5

9 0

. 1 4 0 8 4 5 0 7

9 5

. 7 7 4 6 4 7 8 9

ABC Analysis

Cumulative (%)