Ppt on inventory in RIL

8/4/2019 Ppt on inventory in RIL

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PRESENTATION ON

INVENTORY MANAGEMENT ANALYSISUNDERTAKEN AT

RIL-HMD

Supervised by Submitted by :

Mr.Ajay Gaur Pooja Malik

Head of accounts dept. 104682276262

RIL-HMD MBA(Finance)


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INTRODUCTION


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ABOUT RIL-HMD

RIL-Hoshiarpur Manufacturing Division is one of

polyester manufacturing sites of RIL which is largest

private sector company of India on all major financialparameters such as profits, sales and net worth.

RIL-HMD was established in 1987 by JCT with capacity

of 70 TPD to produce PSF and PET chips with Zimmer,

A. G. German technology. A major expansion was done

in 1995 by installing another 70 TPD to produce PSF,

POY, and PET chips.


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PRODUCT PROFILE

All the products are being produced on large scale. The brand

used for the product is RECRON. The total production capacity

of whole of the plant is 351 TPD (Tons Per Day).

P ro d u c t /P la n C a p a c ity C o m m is io n e d y

P S F-I 24 0T P D (sp ec ia l ly

co n ju ca t e f ib e r r e c

1 9 8 9

P S F-II 2 4 0 T P D 1 9 9 5

P O Y 3 0 T P D 1 9 9 5

P F F 3 0 T P D 2 0 0 4

C H IP S 3 0 0 T P D


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INTRODUCTION TO INVENTORY

MANAGEMENT

Inventory management is considereding:What ?

How ?

How much?

Where?when?


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TYPES OF INVENTORY

Inventory may take the form of:

Work inprocess

Work in

process

Finished

goods

Raw

Materials

Work inprocess

Custome

r

Vendors


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BASIC INVENTORY DECISIONS

These decisions have to do with the timing of orders for the item and the size of

orders for the item.

Basic Inventory Decisions

How much? When?

Lot sizing decision

Determination of the

quantity to be ordered.

Lot timing decision

Determination of the timing

for the orders.


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SCOPE,OBJECTIVES AND

LIMITATIONS


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SCOPE OF THE STUDY

The various following areas are covered in the study:

Receipt section

Storage and preservation section

Issue section

Waste and scrap

Inventory control techniques


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OBJECTIVES OF THE STUDY

The main objective of this project is to study the inventory

management and control Practices in RIL-HMD.

The objectives of my study are:

To understand the meaning and importance of inventory

management and control system in an organization.

To study the various tools and techniques of inventory

control used by RIL-HMD.


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LIMITATIONS OF THE STUDYLess Time

Lack of information

More use of secondary data:

The study was limited only to one firm in the industry.

It consumes more time.

The analysis is based on figures present in the internal

records only.


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RESEARCH METHODOLOGY


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RESEARCH METHODOLOGYThe main objectives of my study are to understand the

meaning and importance of inventory management and

control system in RIL,Hoshiarpur.During analyzing of

inventory,following types of inventories are determined:

raw materials inventory

Work in progress inventory

Finished goods inventory

Supplies inventory.


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The methodology adopted by me is as follows:-TYPE OF RESEARCH : Descriptive.

SAMPLING PLAN

SAMPLE PLACE : RIL-HMD which is a group

company of RELIANCE INDUSTRIES LIMITED.

SAMPLE SIZE: Three years financial reports(2008-

2011)

SOURCES OF DATA COLLECTION:

There are mainly two methods of collecting data:

Primary data Collection

Secondary data Collection


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DATA PRESENTATION ANALYSIS AND

INTERPRETATION

Data is presented through :

Charts

Tables

Diagrams


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Inventory Management And

Control System In Ril

Classification Of StoresCentral stores

Chemical stores

Bulk chemicals

Scrap Yard


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Classification of materials:CODE MATERIALS

SPAR SPARES

CACHCHEMICALA&

CATALYSTS

PAMAPACKAGING

MATERIAL

FTRM

FINISHED

TRADABLE RAW

MATERIALS

LABC LAB CHEMICALS


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Ril Maintains Its Inventories By Classifying Them Into-P A R T I C U N o . o f I C o n t r o

C a t e g o r y A 4 8 0 S t r i c t / T i g h

C a t e g o r y B 9 7 0 M o d e r a t e

C a t e g o r y C 3 0 0 0 M i n i m u m


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Typeof inventory Comprisesof:

Rawmaterial MEG -Mono Ethylene

GlycolPTA -Pure Terephatalic

Acid

Titaniumdioxide, and

Antimonyoxide

WorkinProgress materialsthat areinthe

processof manufacturing

andlieseparatelyinthe

factorypremises

FinishedGoods finisheditemsthat liein

thewarehouse, readyto

bedispatched. RILsells

itsgoodsunder thebrand

nameRECRON.

Storesandspares starters

bearings

engineeringspares

filters, seal oil

o-ring

cuttingrings

Piston

impellers


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METHODS OF ISSUE OF MATERIALS

There are many methods of material issues, the

following are those methods which are used in RIL.

FIRST IN FIRST OUT (FIFO)

LAST IN FIRST OUT(LIFO)

RIL have big stores and here normally FIFO (First in

First Out) method is adopted for Issue of various

materials


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Codification:In RIL, various codes are allotted to different types of

materials for its proper identification. If the material is

of same nature but it is different from the other in

respect to its length, sizes etc then different bins are

allotted with different code numbers for keeping such

material so that the required material can be issued

when it is demanded by the consuming department


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CODINGOF PURCHASEREQUISITION

PLANT DISCIPLINE DESCRIPTION

AI01 AFL -ACT Accounts

AI01 AFL -ADM Personal Administration

AI01 AFL -CLA Chemical lab.

AI01 AFL -CVL Civil Department

AI01 AFL -ELE Electrical Department

AI01 AFL -FLN Fibre Line Department

AI01 AFL -INS Instrumentation Department

AI01 AFL -ITD Information&TechnologyDepartment .

AI01 AFL -MEC Mechanical Department

AI01 AFL -MKT Marketing Department

AI01 AFL -PEQ Processing Quality

control Department

AI01 AFL -POL POLYDepartment

AI01 AFL -POY POYDepartment

AI01 AFL -PPL Pilot Department

AI01 AFL -PUR Purchase Department

AI01 AFL -SAF Safety Department

AI01 AFL -SPG Spinning Department

AI01 AFL -STR Stores Department

AI01 AFL -TLA Textile Department

AI01 AFL -UTL Utilities


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STORES PROCEDURE IN RIL

INDENTING


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RECEIPT, VERIFICATION AND INSPECTION


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STORAGE WAREHOUSE AND DISPTCH

The major objective of warehouse and dispatch

is the proper handling and storage of PSF,

POY and CHIPS to protect them from damage

and deterioration during handling, maintenance

and storage and to dispatch and deliver thegoods in compliance of dispatch orders to the

entire satisfaction of the customers


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DATA ANALYSIS AND INTERPRETATION


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STATEMENT OF STOCK OF MATERIALS AS ON 31.03.2011

Table : INVENTORY STRUCTURE IN RIL-HMD

D E S C R IP T IO 2 0 0 8-0 9 (A m o u n

in L a k h s )

2 0 0 9-1 0 (A m o u n

in L a k h s )

2 0 1 0-11 (A m o u n

in L a k h s )

R a w m a te r ia l 2 5 2 6 .2 5 1 2 2 8 .6 5 2 3 2 4 .8 5

S to re s & S p a re 2 6 5 .5 8 2 4 0 .8 5 2 7 0 .5 4

In s u ra n c e s p a r 5 8 .6 8 5 0 .2 9 6 0 .5 8

W o rk inp rog re ss 3 5 8 .5 8 2 9 6 .2 5 3 5 4 .8 5

F in ish e d g o o d 1 6 2 3 .2 0 1 0 2 2 .0 4 1 4 7 1 .4 5

T O T A L 4 8 3 2 .2 9 2 8 3 8 .0 8 4 4 8 2 .2 7


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Fig:INVENTORY STRUCTURE IN RIL-HMD


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Figure : Amount of raw material in total inventory


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Figure :Value of stores and spares in total inventory


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Figure : Value of WIP in total inventory


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Figure: Value of Finished goods in total inventory


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Figure : Comparison of Three years total inventory


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Table : Statement Of Inventory To Current Assets

D es cr ip t io 20 08-09(Am o un t

l a k h s )

2 0 0 9-1 0(A m o u n t

i n l a k h s )

2 0 1 0-1 1(A m o u n t

l a k h s )

In ve n to r C u rre n t

A s s e t

In ve n to r C u rre n

A s s e t

In v e n to ry C u r re n t

A s s e t

4 8 3 2 .2 9 6 0 6 0 .9 2 8 3 8 .0 8 4 1 4 0 .4 4 4 8 2 .2 7 7 0 3 7 .2

% A g e o f

c u r r e n t

A s s e ts .

7 9 . 7 2

6 8 . 5 5

6 3 . 6 9


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Fig: Inventory To Current Assets


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Table : STATEMENT OF PRODUCTION As On

31/03/2011

P R O D U C 2 0 0 8-0 9( i n M 2 0 0 9-1 0( i n M 2 0 1 0-1 1( i n M

P r o d u c D i s p a P r o d u c D i s p a P r o d u D i s p a

P S F / P F 8 1 3 9 3 8 1 5 0 5 5 6 1 9 5 6 6 6 7 0 9 9 7 6 9 7 7

P O Y 1 1 0 1 8 1 1 0 3 1 9 8 8 3 9 9 0 1 1 1 0 9 0 1 0 7 9

C H I P S 1 1 9 6 6 1 2 0 4 1 0 7 9 9 1 0 3 2 8 3 4 7 7 8 6 1 T O T A L 1 0 4 3 7 1 0 4 5 7 6 3 0 1 7 6 89 4 9 0 4 3 4 8 8 4 3


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Fig: Production Of Psf /Pff


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Fig: Production Of Poy


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Fig: Production Of Chips


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Fig:TOTAL PRODUCTION AND DISPATCH


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Table : Statement Of Inventory Holding/Inventory

Turnover In Months

D E S C R IP T IO 2 0 0 8-0 9 2 0 0 9-1 0 2 0Z1 0-1 1

C o s t o f g o o d s

( in l a c s )

6 0 4 5 0 .7 2 4 5 7 1 9 .4 1 5 2 9 3 2 .5 8

A v e ra g e in v e n

( in l a c s )

5 1 9 6 .2 1 3 8 3 5 .1 8 3 6 6 0 .1 8

I n v e n t o r y

T u r n o v e r R a t

1 1 .6 3 1 1 .9 2 1 4 .4 6


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Fig :. Inventory Holding/Inventory Turnover In

Months


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Table :Showing Working Capital Turnover Ratio

For The Period Of Three Years

Y E A R C O G S N E T W O R K

C A P I T A L

W C

T U R N O V E

R A T I O

2 0 0 8-0 9 6 0 4 5 0 . 7 2 3 2 4 2 . 8 9 1 8 . 6 4

2 0 0 9-1 0 4 5 7 1 9 . 4 1 2 7 3 0 . 4 5 1 6 . 7 4

2 0 1 0-1 1 5 29 3 2 . 5 8 4 9 3 2 . 1 7 1 0 . 7 3


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Fig. Showing Working Capital Turnover Ratio For

The Period Of Three Years


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ABC ANALYSIS

P AR T I C U L A R V A L U E P E R C EQ U A N T I T

P E R C E N T

I T E M A 7 0 1 0

I T E M B 2 0 2 0

I T E M C 1 0 7 0

T O A L 1 0 0 1 0 0


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ITEM CLASSIFICATION BY ABC


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FSN ANALYSIS:


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FINDINGSRIL strictly keeps a control on all its items in the stores

by setting certain authorization levels .

Inventory level is maintained on reorder level

RIL has been carrying out various Inventory Control

techniques like ABC, XYZ but they do not use VED

Analysis which is equally important.

RIL has been maintaining different levels to control

inventory.


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All the work is coordinated through SAP System. All thefunctions in the stores like other departments work on

SAP-System Application Program with mappings

designed especially for all types of items. This systemhas been recently installed in all the departments of RIL.

Another Technique i.e. Economic Order Quantity

(EOQ), which determines How much to Order, is not

being used in RIL.


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After the installation of the SAP system, working in the

organization has improved tremendously.

In RIL the stores department is located in the central

place.The location of stores department in RIL has beenselected by taking into account the various factors.

The drums of MEG and FO are kept openly there in the

stores department and at the times of rain, they have toface a problem of damage to these drums of raw

materials.


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In RIL, in order to achieve the object of a good store layout

the store is divided into different sections.

For keeping the materials, bins with proper numbers orcodes are allotted to them for their identification.

Separate space is provided for keeping different types of

materials.

Separate section is there for chemicals, tools and spare

parts, paints, stationery etc.


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Small items such as nails, screws, nuts bolts etc. are

stored in small but closed bins. Heavy weight or material

not affected by rainwater, sunlight, air etc. is kept in the

open yard.

Inventories constitute the most significant part of the

current assets in the RIL, Hoshiarpur complex. Because of

the large size of inventories maintained by the plant, a

considerable amount of funds is required to be committed

to them , which in addition involves certain crucial

planning and decision-making.


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SUGGESTIONS

In RIL, VED Analysis is not used as an inventory control

tool .They must use it.

They should explore the Practical applicabilities /

possibilities to introduce EOQ model. This will facilitate

a lot in exercising the better control over the inventory.

The drums of MEG should not be kept openly to

safeguard them from damage and wastage. More sheds

should be provided to keep such material safely.


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In RIL there are two different departments i.e. Purchase

department and Stores department. It is strongly felt that

with the integration of these two areas i.e. Procurement and

Storage; they can save a lot in lead-time communication,

manpower and can avoid duplicacy of work too. So with this

the work load on the employees will also be reduced to

some extent.


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CONCLUSIONAfter the overall study on the Inventory Control System

in RIL, I have concluded that

there is proper management of inventory in the stores.

The surplus stock available in the stores is properly

utilized.

The main focus of issue department is to control the

wastage to a minimum extent.


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Efficient inventory management can take the

company to new heights and inefficient

inventory management can ruin the company.


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Ppt on inventory in RIL