Inventory Management

INVENTORY MANAGEMENT
INTRODUCTION
INVENTORY
MEANING:
The dictionary meaning of the word inventory is stock of goods. In financial parlance inventory is defined as the some of raw materials, fuel, lubricants, spares point of time. The operations defined would be the amount of all the above to be stocked for the smooth running of plant. For a marketing manager the inventory is finished goods required for smooth distribution through different channels.
DEFINITION OF INVENTORY:
Several authors have defined the term inventory. The most popular of them are, The term inventory includes raw-materials, work-in-progress, finished packaging spares and other stocked in order to meet an unexpected demand or distribution in the further
BENEFITS OF HOLDING INVENTORY:

It enables the firm to undertake continuous production and reduce the setup costs associated with the state of production. It enables the firm to avoid losses arising on account of loosing the customers for non-supply of goods in time It enables the firm to reduce variable costs associated with planning small orders frequently.
Dept of commerce (MFA) Gulbarga university Gulbarga.
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It enables the firm to drive the advantage of bulk buying such as competitive price, higher rates of discount, benefit of lower prices against anticipated or announced price-rise avoidance of unexpected shortage, etc. It enables the firm to avoid scarcity of goods meant for either production or sale. Adequate stock of finished goods received either from purchases or from production serves to bridge the gap between purchases or production and actual sale.
It also serves as a competitive marketing tool to meet customer demand as it can supply goods to its customers immediately. If it is not able to do so, its customers are likely to go its rivals. Inventory therefore ensures continued patronage of customers. Inventory in general means stock of goods. It covers the stock of raw
materials; components and spare parts work in process or semi finished goods and finished goods. Inventories constitute the most significant part of current asset of a large majority of the loss in India. On the average, inventories are approximately 60% of the current asset in public companies in India. Because of the large size of inventories maintained by firms, a considerable amount of fund is required to be committed in them Inventory can be reviewed as idle resources of any kind having an economic value. They are those goods, which are procured, stored and used for the day to day functioning of an organization.
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TYPES OF INVENTORY:
Inventory can be classified according to their different use and point of entry in the operations as raw material, consumables, bought out components, work in progress, finished goods, packing materials and spares.
Raw material inventory:

These are the major inventory from the bulk, which gets converted into output; any break in supply will keep the production line idle. The function of this is to act as a buffer between procurement and manufacturing such as internal lead-time for purchase of suppliers lead time, vendors relation availability of material, etc.
Work in progress:
The inventory is considered as buffer within the manufacturing sub system, which consists of group of machine or assembly line that is it decouples the successive manufacturing operations, the rate of production at each work center is different. So, to maintain continuous flow of material this inventory is maintained. The size of inventory is dependent on the production cycle time, percentage of machine utilization, make or buy policy of company, etc.
Finished goods inventory:

This the stock of completed products ready for shipment. This inventory acts as buffer between production and manufacturing departments. The purpose of this inventory is to assure a free flowing supply to the customer. Marketing department controls this inventory. The size of the inventory depends on the
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ability of marketing departments to push the products, delivery in schedule, and the self-life and ware housing capacity.
Material for maintenance and repairs:

These are the stock of materials meant for consumption for maintenance and repairs of the plant and do not form part of production, E.g., lubricating oil, soap, and spare parts. Consumption pattern will differ from that of raw materials. The levels of the above four kinds of inventories differ depending upon the nature of the business. For example a manufacturing firm will have all the four kinds of inventories. But a retailer or wholesaler will have a high level of inventories of finished goods but they will have no inventories of raw materials, spares, maintenance supplies and stores and goods in progress. Further depending upon the nature of the business inventories may be durable or nondurable, valuable or inexpensive, perishable or non-perishable etc. Inventory control has been attracting the attention of managers in India for a long time. But with the credit squeeze measures announced by the government of India and the consideration of the recommendations of the committee for inventories top management is deeply a concern with developing suitable norms for inventory control. In this context research has shown the engineering oriented public sector undertaking carry more inventory than the other categories.
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FACTORS INFLUENCING INVENTORY:

There are both internal and external factors, which influence decisionmaking on inventory in an organization.
External factors: Market conditions:

Market condition can be viewed in two angles. First, there is a dynamic nature of prices and availability. Secondly, there is a time lag between the placing an order and obtaining material. Government regulations: Various rules, regulations and policies of government will affect the holding of inventory in companies.
Credit availability:
Inventory represents the blocked up working capital. If the organization is suffering shortage of funds, only credit terms of suppliers determine the inventory position.
Internal factors: Relevant cost:

Inventory management faces the problem in balancing various costs involved so as to minimize the total cost.
Lead-Time:
There is a direct relationship between lead-time and inventory. During lead-time there will have to be required inventory held in stock. If consumption rate is abnormal during lead-time there should be sufficient stock to cope with the situation.
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Scrap:
All manufacturing processes will generate scrap. Hence, the stock of scrap also plays its role in the inventory management.
NEED TO HOLD INVENTORY:

The question of managing inventory arises only when the company holds inventory. Maintaining inventory involves blocking up the companys funds and incurrence of storage and handling cost. If it is expensive there are three general motives for holding inventory.
Transaction motive:
Emphasizes the need to maintain inventory to facilitate smooth production and sales operation.
Precautionary motive:
Necessitates holding inventory to guard against the risk of unpredictable changes in demand and supply forces and factors.
Speculative motive:
Influences the decision to increase or reduce inventory levels to take advantage of price fluctuation.
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INVENTORY MANAGEMENT CONCEPT:

Inventory management is very important area of production management and plays a vital role in the economic operations of concern. It has been defined in a variety of ways and most of the definitions stress the importance of control element in achieving cost effectiveness, irrespective of range of particular discipline which the functional fields in meeting the needs of individual situation. According to Prichard and Eagle, inventory management can be defined as the sum total of those activities necessary for the acquisition, storage, disposal or use of inventory. Inventory management in a fact is an integral part of production planning and control, which according to Charles A Keopke may be defined as, the coordination of a series of function according to a plan which will economically utilize plant facilities and regulate the orderly movement of goods through their entire manufacturing cycle, from the procurement of all materials to the shipping of finished goods at a pre-determined rate. The scope of inventory management is not restricted to technique of regulating the movement of inventory and it rather converts the entire range of functions, which affects the flow, conservation, quality and cost of delivery. It can be inferred from the above definitions of inventory management that there are two guiding principles in inventory management. o Adequate inventory has to be maintained to avoid stock out and causing consequent production held up and customer dissatisfaction. o Excessive investment in inventory items must be avoided as it increases the carrying cost and results in loss of profit.
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In view of these principles it may be inferred that for a manufacturing concern, Inventory management is the significant aspect of production and financial planning and control.
IMPORTANT BENEFITS OF OPTIMUM INVENTORY MANAGEMENT:

It provides check against the loss of material through carelessness or pilferage. Inventory management ensures adequate supply of materials, stores, spares, etc, minimizes the stock out and shortage and avoids costly interruptions in operation. It reduces the length of manufacturing cycle to the minimum. It facilitates purchasing at economic ordering quantities (EOQ) through measurement of requirements on the basis of recorded experience. It creates buffers between input and output. It utilizes the benefits of price fluctuations. It ensures against scarcity of materials in the market. It ensures against the delay in deliveries.
MAJOR DANGERS OF OVER INVESTMENT IN INVENTORY:

Blocking of firm funds in inventory. Excessive carrying costs. Risk of liquidity. The excessive level of inventories the finds of the firm, which cannot be used for any other purpose. The carrying cost such as the cost of storage, handling insurance, recording and inspection also increases in proportion to
Dept of commerce (MFA) Gulbarga university Gulbarga. Page 8
the volume of inventory excessive inventories carried for a long period brings down the liquidity of the firm.
PROBLEM OF INADEQUATE INVENTORIES:

Inadequate raw-materials and work in progress will result in stopping of production. If the finished goods inventories are sufficient to meet the demands of the customers may shift to order competitors, which will amount to a permanent loss to the firm. An effective inventory management should avoid both extreme situation namely over investment and under investment in inventories.
NORMS OF INVENTORY:
Either the top management or the material management department could set the dorms (limit) for inventory. The top management usually sets monetary limits for investment then has to allocate this investment to the various items and ensure the smooth operations of the company. It would be worthwhile if the inventory norms are set by the management by objective concept. This concept expects the top management to set the inventory norms in consultation with the material department. The norms thus evoked should be specific and quantified the achievement of the target set is the responsibility of the material department.
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RESEARCH DESIGN
TITLE OF THE STUDY:

The title of study is INVENTORY MANAGEMENT with reference to the JSW Steel ltd Bellary, Karnataka.
STATEMENT OF PROBLEM:
Inventories constitute most significant part of assets of large majority of the company in India. Inventory a double edged sword is usually an asset of an organization, if not used properly it will become liability. It is therefore absolutely very important to manage inventories efficiently and effectively in order to overcome unnecessary investment.
OBJECTIVE OF THE STUDY:

The main objectives of the study are: To study the historical background of JINDAL STEEL LTD. To evaluate the existing inventory management with reference to norms of the company. To analyze the inventory turnover period and turnover ratios of the company. To study the scope for improving material management. To analyze the functions, procedures in inventory management. Final report of the company.
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DATA COLLECTION METHOD:

To collect data for project, inventory management at JSW STEEL LTD, used both primary and secondary data collection methods. DATA COLLECTION METHODS
Primary data
Secondary data
PRIMARY DATA:
The data which are collected from the discussion with executives and stores officers. Primary data are that, which are collected freshly and for first and thus happens to be original in character. The methods of primary data collection are: Observation method. Personal interview.
SECONDARY DATA:
The data which have been collected from some one else and which have already been passed through statistical process. The secondary data sources are: Record of the company. Annual reports. News papers and text books. Website: www.jsw steel ltd.in
FIELD WORK:
This is undertaken individually to collect various information regarding the study by visiting following section.
o STORES DEPARTMENT:
Information regarding stocking of materials receipts and issues to work shop, inventory control in JINDAL STEEL LTD
o ACCOUNTS DEPARTMENT:
Remaining all information was obtained from accounts department through personal interviews with section officials
.
TOLLS FOR DATA COLLECTION:

Data base. Plan of analysis. Graphical presentation.
SCOPE OF THE STUDY:

The scope of this study spread over five years of period 2010-2011 and encompasses importance of inventories efficiency of conversion of inventories into cost, growth rate of inventories versus that of assets, analysis of general material management of the company and overall inventories of JSW STEEL LTD.
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LIMITATION OF THE STUDY:

The time factor is the main constraint, as per time is allotted to complete project was not enough to study in depth. The information, which was required, was not revealed by the organization. Interaction with all related officials was not possible. The study covered a wide concept hence wide collection and coverage of information was not easily possible.
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NDUSTRY PROFILE INTRODUCTION:

Steel has been part of some of the greatest achievement in history. Nearly 15 years ago steel sparked off the industrial revolution, the steel industry has an important role to pay in the development of any industrial nation. It is a critical intermediate for industry, and the strength of construction.
Steel is a product of a capital intensive and complex industry that requires national attention for its development. The demand of steel is basically a derived demand; growth in the industry is dependent on the level of activity of the steel consuming industries specifically the construction, automotive, appliances and other consumer durable. India is the 6th largest steel producer of iron-ore, and the 9th largest industry is equipped to meet over 90% of the countrys total requirements of steel, with imports restricted preliminary to a small sophisticated high level addition products.
Jindal organization is faster growing group with enviable business trend record and a strong market presence in India today. Jindal was established by OMPRAKASH JINDAL in the year 1952 with a small making steel pipes bends and sockets at Liluah near Kolkata. OMPRAKASH JINDAL has developed into a multifaceted organization and is one of the largest steel producers in India. The steel industry being a core sector, tracks the overall economic growth in the long term. Also, the growth of the steel industry is dependent on the development of steel consuming.
COMPANY PROFILE:
BACKGROUND AND INCEPTION OF THE COMPANY

JSW is ranked 4th amongst the top Indian business houses in terms of sales and profit the Rs. 19700 Crs. Jindal organization is faster growing group with enviable business trend record and a strong market presence in India today. Jindal has recognized in India and Asia pacific region. It is the 4 th largest sales turnover in the private sector after reliance, Tatas and Aditya Birla groups.
Jindal was established in 1972 by OMPRAKASH JINDAL. The group has grown from a single unit making steel pipes bends and sockets at Liluar near Calcutta (present day Kolkata) to the present multi location, multi product giant from the mining of iron ore/coal/chrome-ore to the manufacturing of value added steel products it has a preeminent position in the flat steel segment in India and is today more than 20000 people are working in the organization.
Jindal Vijay Agar Steel Ltd. This plant is located at Tornagallu in the Bellary-Hospet area the heart of high grade iron-ore belt; spread over 3700
acres of land. The plant is 340 kms from Bangalore and well connected to Goa and Chennai ports.
The steel industry bring them on the threshold of adopting new technology we took a lead in adopting the latest technology of steel making as COREX developed by vest alpine of Austria. The JVSL was the first Greenfield project to save COREX as a mainstream facility.
The other who had it as a part of brown field expansion was ISCOR of south Africa and POSCO of South Korea. Mining of iron ore to the manufacturing of value added steel products Jindal has a preeminent position in the flat steel segment in India as is on its way to be a major global player, with its overseas manufacturing and marketing alliances with other world leaders. Where there is a challenge there is Jindal If it is Jindal, it must be first class
NATURE OF THE BUSINESS CARRIED:

Indias only fully integrating stainless steel plant Until the mid 70s huge chunks of Indias stainless steel requirements were met by imports the challenge was to produce high quality stainless steel at less than world steel prices. In 1979-80 the Jindal were successful in using Argon Oxygen Decarburization Converter, a state of art technology development in house.
A process integrating of the different stages in the manufacturing of stainless steel was successfully done. As a result everything from the conversion
of raw material in the billets and slabs, to hot rolling to strip and plates, as well as cold rolling was done in house.
Since then, Jindal strips ltd (JSL) has forged ahead and has become Indias largest stainless steel produce in the countries private sector with a capacity of 2 lakh. Indias only integrated private sector galvanized steel producer In 1982, a decision was taken to increase the product mix under the dannes of Jindal. Iron and steel co ltd a plant acquired at Tarapur to produce slabs and addendum to this, a facility was set up at Vasind to manufacture hot rolls, plates, JISCO has burgeoned in to leading cold roller and a largest producer and exporter of galvanized steel and high value steel product in the country, JISCO has a production capacity of 4lakh MT in galvanized products.
FERRO CHROME: ANOTHER BREAKTHROUGH IN JINDAL:

Ferro-Chrome an essential ingredient in manufacture of stainless steel was, until recently was imported from other countries. In 1987, Jindal Ferro Alloys Ltd; at Vishakhapatnam was the first to manufacture Ferro-Chrome 100% In house technology, which was conceived marginalize the monopoly of outside suppliers. To establish a synchrony and to develop a market base, JFAAL has been recently merged with JSL as autonomous division, INDIAS ONLY INTEGRATED GREEN FIELD STEEL PROJECT.
JSW, a green field integrated steel plant with integrated steel plant with integrated steel plant with a capacity of 1.60 million ton per annum of hot rolled
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coils. JSW has collaborated with voest Alpine of Australia, which will provide a unique advantage in manufacturing and technology.
OTHER SIGNIFICANT BREAKTHROUGH:

Jindal have also pioneered Indias first continuous slab casting machine and Indias first hot stickle mill to produce hot rolled stainless steel coils. Jindals are the people to have developed the Indian private sectors, first DD (deep drawing) and EDD(extra deep drawing)grade mill steel wide strips. The process of DD and EDD grades of steel involves a consistent adeptness and knowledge; it calls for a technology of higher order.
Jindals are also pioneers in India to use the newly introduced process of COREX c-2000 module, developed by voest Alpin, Australia to manufacturing pig iron. Jindal breakthroughs are almost limitless; it has become axiomatic to say
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JSW VISION, MISSION AND VALUES VISION:

TRANSFORM STEEL DOMAIN THROUGH INNOVATIONS
JINDALS 5 YEARS VISION:

Value and groom people for innovating the future Continuous improvement in the value chain for cost stewardship Nurture lasting customer relationship by anticipating their needs and delivering beyond expectation Catalyst for growth of Indias steel and power industries. Out of the box marketing of value added branded products for domestic and global markets. Inspire community growth with utmost care for the environment in areas in which we operate. To achieve a turnover of rs20000 Crs by march 2009
MISSION:
JSW corporate mission guide the approach to the work and environment, which transforms the way we deliver our products and services. MAXIMIZE CUSTOMER SATISFACTION AND SHAREHOLDERS VALUE THROUGH HRD. With our young thinking, we promise to innovate the future by driving with leadership and a crystal clear focus while differentiating the benefit of our deliverables to all stakeholders
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CORE VALUES:
Attitude- crystal clear
Behavior-drive with leadership
Creativity-differentiate the benefit
Delivery- innovate the futu
OWNERSHIP PATTERN: Categories

Promoters NRI FII OCB IFI IMF Banks
No of Holders
11372 18152 7 12 7 26 6
No of Shares
776995188 53218087 3426012 567200 38990003 7813900 12301824
% of Holding
60.19 4.12 0.27 0.04 3.02 0.61 0.95
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Employees Body Corporate Public Trust Total
4179 3119 831847 6
1026100 102879988 291408341 2371357
8.08 7.97 22.57 0.18
868733
1290998000
100
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COMPETITORS INFORMATION:
1. STEEL AUTHORITY OF INDIA LIMITED (SAIL): It is contemplating cost reduction through cutting operating expenses, Purchasing expenses, social infrastructure expenses, inventory carrying costs etc. The company is aiming at reducing its main power from a level of 170000 to 100000 in next 3-4 years through a combination of natural attribution and VRS schemes. SAIL is redeploying its surplus assets within its own units to productive use. 2. RASTRIYA ISPAT NIGAM LIMITED (RINL): The Company has taken number of restricting majors to improve financial performance of the plant with govt. assistance.
3. TATA STEEL CO. (TISCO): It is amongst the lowest cost steel producers of HR coils in the World and their vision is to become lowest cost steel producer of the world in neat future. Based on the platform of low cost raw materials and a modern plant the company targets to produce HR coils at costs below OSD 170 /ton, The labor productivity is still poor and in absence of safety net, it is difficult to play off redundant labor.
3. ESSAR STEEL:
It uses power from its own captive plant and uses 70% lump are to achieve cost reduction. The company is planning of installing a pallet plant for reducing cost of production and achieving economy of operation besides continuous. Uninterrupted supply of long turn metallic needs. It has introduced construct system of labor instead of permanent employs.
4. LLOYDS STEEL INDUSTRIES LTD:

The Company entered into an agreement with western coalfields ltd, (WCL) for opening an underground mine exclusively for the use of Lloyds steel. The demand for steel also expected to go up with automobile sector, which is a major user segment showing sign of revival. The government at the centre is accepted to provide much needed political stability and is also excepted to increase spending on infrastructure activities there by increasing the demand for steel. A.B. Vajpayee has assured the steel industry protection against any unfair measures in global market. The government should develop adequate part facilities.
5. NATIONAL MINERAL DEVELOPMENT CORPORATION (NMDC):

The demand for steel is expected to go with automobile sector, which is a major user segment showing signs of revival. The government at the center is accepted to provide much needed political stability and is also expected to increase spending on infrastructure activities, thereby increasing the demand for measure in global market. The government should adequate part facilities.
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PRODUCTS PROFILE
Location Vijay nagar Works Product Slabs / Billets HR Coils CR Galvanized Rolled Long F.Y. 2008-09 F.Y. 2009-10 3.079 2.519 0.344 0.022 5.224 3.399 0.735 0.034 0.595
JSW INFRASTRUCTURAL FACILITIES

Separate building for every department Canteen facilities Waste recycling systems In plant hospital: sanjeevani hospital in collaboration with Apollo hospitals OPG center for training o Separate infrastructure to produce power for the own consumption of the factory Hi-Fi restaurants for the people who live in the township Shopping complex in township Jindal Education and Medical Trust DAV Jindal Vidya Mandir Jindal Adarsha Vidyalaya Sharamasadhana Vocational Training Centre Narl Vikas Kendra Jindal Sanjeevani Hospital Health and Education Initiatives
Community Initiatives Infrastructure Development 1.Roads 2.Garbage disposal Jindal Squash Academy Vijayanagar Sports Club Jindal Swimming Academy Art, Culture and Heritage Initiatives Sports initiatives Jindal Art Foundations 1. Jindal Art Creative Centre 2. The Art News Magazine of India 3. Hampi Foundations Apart from its quest to excel in its business activities, JSW has strong commitment to social action as a part of its corporate social responsibility. So, corporate social responsibility at JSW as been taken up with great commitment and imagination. Following the tradition of the Jindal organization, JSW provides housing colonies, medical benefit, recreational and other facilities for its employees. Such trend setting efforts have not been confined to the plant but also for to the communities, especially in the area of education, health, sports, and culture and infrastructure facilities. The township architecture inspired by Hampi, the erstwhile capital of Vijayanagar Empire is equipped with all the modern facilities for the well being of the employees.
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ACHIEVEMENT AND AWARDS:

JSW Steel was conferred the following awards, which are a testimony of its excellence in manufacturing processes and adherence to operational practices and care for environment.
2010-2011 JSW Energy Wins Business Leadership Award: JSW Energy has received the NDTV Profit Business Leadership Awards 2010 under the 'Power 'Industry vertical Vice chairman of JSW Energy N K Jain received the award from the Union Finance Minister Pranab Mukherjee on September 1, 2010 at the Trident Hotel in Mumbai. 2009-10 Karnataka Chapter Safety Award 2009: Unnatha Suraksha Puraskara, a trophy and certificate was presented for outstanding safety performance and management systems in Metals category of industries during 200608, by National Safety Council, Karnataka Chapter, on 09-09-2009.at Bengaluru.
2008- 2009
Greentech safety award 2007: gold award in metal and mining sector for outstanding achievement in safety management by greentech foundation ( 10 April 2008, Mumbai)
G 3 awards for good green governance 2007 : JSW steel received winners trophy in the manufacturing category by SRISHTI, New Delhi (22 April 2008)
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TERI corporate environmental award 2008: certificate of appreciation for efforts towards environmental management and innovative amongst corporation with a turnover above Rs 500 corers (31st May 2008)
CII national energy management award 2008: gold award in metal and mining sector for outstanding achievement in environment management (6 Sept 2008, Goa)
CII-EXIM award 2008: commendation certificate for significant achievement towards business excellence (on 6 November 2008 at Bangalore)
National sustainability award 2008: first prize for excellent performance in integrated steel plant operations (14 November 2008, New Delhi).
CII-ITC sustainability awards 2008: commendation certificate for significant achievement on the journey towards sustainable development
INDIVIDUAL & TEAM RECOGNITIONS
IIM platinum medal won by Dr SK Gupta, director for his outstanding contribution to the metallurgical profession, education research at national metallurgists day ( NMD) celebrations on 14
November, 2008. This award was instituted by the Indian institute of metals.
Young metallurgist of the year award: jointly shared by K.P.Mrunmay and Mr. Promod Kumar Gupta of R&D and SS department. This award is given to young metallurgists to encourage research in the field of metallurgy, on 14 November 2008, at NMD celebrations, New Delhi.
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ICCQC 2008, BANGLADESH
Tungabhadra team won extra- ordinary category award at recently concluded international chapter convention on quality circles 2008, at Dhaka in Bangladesh. The ICCQC competition was held from 23rd September, and the theme selected was- improving the performance of the Double Deck Roller Screen. Team members
NCQC 2008, BARODA
Swayam QC team from coke ovens won excellent category, and Genius QC team from BOF CCP won distinction category, during national convention on quality circles at Baroda on 10 November 2008.
2007-2008
CII-ITC Sustainability Award: Commendation Certificate for Significant Achievement in Economic, Environment and Social Performance. (on 12th Dec 2007 at New Delhi) CII-Exim Bank Award: Commendation Certificate for Significant Achievement towards Business Excellence. (on 1st Nov 2007, at Bangalore)
TERI Corporate Social Responsibility Award: Certificate of Appreciation in Recognition of Corporate Leadership for Good Corporate Citizenship and Sustainable Initiatives amongst Corporations with a turnover of above 500 core rupees.
IMC Ramakrishna Bajaj National Quality Award: Special Award for Performance Excellence in the Manufacturing Category. (on 21st Mar 2008, at Mumbai)
Gold Award in Metal and Mining Sector: for Outstanding Achievement in Safety Management by Greentech Foundation.
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RECOGNITIONS BY EMPLOYEES OR TEAMS:
Tungabhadra Quality Circle Team won Gold Medal at ICCQC-2007, at Beijing (Oct'2007)
Mr. J. K. Tandon, Director (Projects) received the National Metallurgist Award, at 45th National Metallurgists Day, 2007..
Young Metallurgist of the Year Award was jointly won by Mr. D. Satish Kumar, Asst. Mgr (R&D and SS), and Mr. T. Rajendra, Mgr (SMS-1) at 45th National Metallurgists Day, 2007. The prestigious IIM Steel Eighties Award for Meritorious Contribution for Advancement of Steel Technology' for the year 2007 was awarded to Dr. Madhu Ranjan, AVP (R&D and SS).
2006- 2007
National Sustainability Award: Second Prize amongst the Integrated Steel Plants Category by Indian Institute of Metals. CII Award for Business Excellence: Commendation Certificate for Significant Achievement towards Business Excellence.
India Manufacturing Excellence Award: Corporate Gold Award in Metals Category by Frost & Sullivan.
Gold Award in Metal and Mining Sector: for Outstanding Achievement in Environment Management by Greentech Foundation.
JSW Steel has won the "CIO 100 - Giant 100 Honoree 2006" (IT Award). The Athyunnatha Suraksha Puraskara of National Safety Council Karnataka Chapter for the year 2005.
DMA Erehwan HR Innovative Awards: Second Place. IMC Ramkrishna Bajaj National Quality Award: Commendation Certificate.
Gold Award in Metal Sector for Outstanding Achievement in Environment Management by Greentech Foundation.
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JSW steel presented maximum number of papers (30) in the NMD- ATM 2006 and won the following: 1st prize in oral presentation in mineral section 1st prize in oral presentation in process section 2nd prize in metallographic 2nd prize in poster competition
2005- 2006
India Manufacturing Excellence Award: Platinum Award in Metals Category by Frost & Sullivan.
Rockwell Jury Award for Excellence. CII-EXIM Bank Award: Commendation Certificate for Significant Achievement towards Business Excellence. Gold award in metal sector for outstanding achievement in environment management by greentech foundation.
2004- 2005
National quality award (shared with Tata steel) from Indian institute of metals for best quality management practices amongst integrated steel plants of the country. NASSCOM best IT user award for manufacturing sector. National award for excellence in energy management by CII. National award for excellence in water management by CII..
2003- 2004
Silver award in metal sector- for outstanding management practices in safety and health by green tech foundation. CII EXIM bank award- commendation certificate for strong commitment to TQM.
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WORK FLOW MODEL:

Raw Material Handling System
Beneficiation System
Inspection
Pellet and Sinter Making
Coke Oven and Cement Plant
Corex and Blast Furnace
Basic Oxygen Furnace
Quality Checking
Continuous Costing
Hot Spring Mill
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BOARD OF DIRECTORS;
Mrs. Savitri Devi Jindal Chairperson
Mr. Sajjan Jindal Vice Chairman & Managing Director
Mr. Seshagiri Rao M.V.S. Jt. Managing Director & Group CFO
Dr. Vinod Nowal Director & CEO
Mr. Jayant Acharya Director (Commercial & Marketing)
Mr.M. Maheshwar Rao Nominee Director of KSIIDC
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3.3 GROUP COMPANY PROFILE
O.P. Jindal
P.R. Jindal
Sajjan Jindal
Ratan Jindal
Naveen .Jindal
Jindal Saw Ltd
JSW Steel
Jindal Stainless Ltd
Jindal Steel & Power Ltd
Saw Pipes Inc
Southern Iron & Steel Co. Ltd
PTE Jindal Stainless Ltd
Jindal Thermal Power co. Ltd
Jindal Stainless Steelways Ltd
Vijayanagar Minerals Pvt Ltd
Jindal Praxair Oxygen Co. Ltd
South West Port Ltd
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MCKINSEYS 7sFRAME WORK

The 7S framework was first mentioned in The Art of Japanese Management, by Richard Pascal and Anthony Athos in 1981. The model describes 7 factors to organize a company in a holistic and effective way. Together these factors determine the way in which a corporation operates. Managers should take into account all these 7 factors, to be sure of successful implementation of a strategy whether large or small. They are all interdependent, so if one fails to pay proper attention to one of them, this may affect all others as well. On top of that, the relative importance of each factor may vary over time. The 7S model is better known as McKinneys 7S Framework because Tom Peters & Robert Waterman who have developed this model while they were working in McKinneys& Co. at that time.
This model starts on the premise that an organization is not just structure but consists of 7 elements. The Hard Ss 1. Structure 2. Strategy 3. Systems The Soft Ss 1. Style 2. Staff 3. Skills 4. Shared values
STRUCTURE
The organizational structure refers to formal hierarchical relationships and positional arrangements it deals with how members communication with others, how information flows what roles he performs, rules and procedures existing to guide the activities of members as part of organization . it reference to type of organization say autocratic, flat structured, democratic etc, with reference to the JSW it has goods mentor, disciplined relationship, encouragement, help and guidance.
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THE FOLLOWING CHART SHOWS THE ORGANIZATION STRUCTURE OF THE COMPANY.
SKILL:
Skills are capabilities of organization as a whole. Skills which describe the organization as a part of its character is, core competence like in JSW HAS MANUFACTURING skills, research and development etc the skill, which JSW possess are assertive decision making, business knowledge, leadership knowledge leadership, attitude adaptability courageous and dynamism. however the skill requirement varies from job to job, recruitment and selection process :carries JSW hand picks the best engineering , and managerial talent from the countrys reputed business houses, campus selection, placement agencies and advertisement and database .
TRAINING AND DEVELOPMANT: OBJECTIVE:

TO bridge the gap between exiting and desired the skills. Training in JSW is aimed at the development of knowledge, skills, attitude, and teamwork.
Internal training is given when an outside agency or a specialist comes to train the employees.
External training is given when the employees are sent to any management consultancy firm. Kirloskar institute of training is one of such institute. On the job training is given as induction programs. however jsw dont make any job analysis and formal job description. induction programs are done to familiarize the new comers and compulsory safety training is given to all employees of jsw. apart from this managerial training, behavioral, technical, multi-skill training is given.
STYLE:
According to McKineys patterns of actions are taken by top management. In JSW THERE ARE 66 quality circles where the employees can suggest any improvements in systems. There is grass root level participation. Suggestion are implemented either interdepartmental communications, mutual understandings, or by top level analysis, where huge investments are involved.
Even the policies decisions are taken with consultancy of respective persons. Employees taken casual decisions and their immediate head give the feedback. From the above facts we can say that JSW has a participative management style.
STRATEGY:
It includes basic purposes, missions, objectives, goals and major actions plans and policies. In JSW, every department has its own strategies and policies.
Marketing strategies: focusing on selected major customers in terms of their locations, segments, potential demands etc, customizing of product so that the best advantage by using JSW product in terms of yield, lower costs, etc.
Pricing strategies: JSW is into industrial goods segment where sales are made according to customer specification. Hence not much of publicity and market leadership techniques are required.
Price fixation: It differs for exports and a domestic market according to the industry analysis made at international market current price is around $570pt. Credit terms: JSW has certain credit terms like letter credit and payment toward the letter credit
Payment period: JSW allows period of 15 days to a month as a payment period to its customers.
Promotional strategies: the production is done on the basis of customer order; therefore the organization has not engaging in advertising activity. But as a promotional tool it is giving is Quick delivery. Better customer relation. Direct marketing.
SYSTEMS
It refers to all rules, regulations and procedures both formal and informal. It includes production plans, control systems capital budgeting, cost accounting procedures, valuation methods recruitment training and development plans in JSW, every department has a got their own management information system.
HUMAN RESOURCE INFORMATION SYSTEM

There is HR package which stores all employee profile such as employee ID, code no, joining date, place of posting , name, personal profile, bank name, A/C NO, grade department, designation, pay scale and history.
PERFORMANCE APPRAISAL SYSTEM

The criteria used for appraisal is Main: business perspective and customer focus, result oriented and cost consciousness. Others : job knowledge, customer satisfaction, human relations, safety orientation, clarity in communication , taking initiative to task done innovations , quality and quality consideration etc.
QUALITY SYSTEM
Every production department has quality packages. They have their own targets and grades JSW have laboratory, research and development and testing facilities. For example pellet plant is the supplier of corex dept. so corex checks the quality specification while purchasing from pellet plant. Hence there is a value chain.
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QUALITY POLICY
Company has developed the quality manual covering requirement standards prepared with reference to quality systems.
Level1- system manual. Level2.-system producers Level3.-work instructions and master parameter sheets Level4.-formats and records Vendor rating is done on quality and delivery time. Commercial departments collects information on supplier and trail order is placed.
STAFF:
Staffing is a process of procurement required to achieve organizational goals. It also refers to selection, placement, training and development. Diploma holders 33.46%, Engineers 25.29%, Graduates and post-graduates 13.12%, ITIs 9.16%,CA/CS/ICWAs 1.67%, MBAs 1.87%, Others 15.43%
SHARED VALUES:
It refers to superior subordinates goals. Values shared by the members.
Core values: trust, relationship, challenge and foster ownership.
Other values: concern for employees, customer satisfaction, commitment to society, creating shareholders wealth.
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SWOT ANALYSIS OF JSW: STRENGHTS:

JSW has reputation in steel market. This is the result of long experience of around 3 decades in the steel industry. Major strength of JSW lies with the prices. JSW enjoys reduction in cost due to very low cost of power (generated by COREX gas) State of art & technology, the Corex process makes it a low cost production of steel in the industry. Excellent work force well-qualified and highly experienced Employees. Production quality is the strength of the JSW. Well planned Infrastructure for inward & outward by rail & Roads as base foundation for future growth. Cost effective & compact rail network system. Well designed yard for receipt dispatches with inter- connectivity. Multi entry / exit to the yard for greater flexibility. Support from the state Government. It is a continuous process and large scale production is undertaken. Future demand for steel industry.
WEAKNESS:
Raw materials receipts through Goa port due to capacity constraints, railways network is not likely to support. Krishnapatnam port movement is not smooth. Challenge in handling 52 MTPA cargos at signal location. Over dependence on Railway for movement of materials. With increasing intensity of operations, tippler performance would become a serious concern.
OPPORTUNITY
Capacity expansion plan of IR network are well co-ordinate with overall expansion plan of JSW. A special incentive from India Railways to Steel Industries is under Consideration. Located in the center of Bellary- Hospet region, a high grade iron belt. Easy access to the major parts of Goa, Chennai and Mumbai. JSW has a good reputation in the steel market. This is the result of long experience of around 3 decades in the steel industry.
THREAT:
IR has not taken any initiative for DFC to develop their network serving JSW plant. Foreign companies like Mittal Steel and posco entering the Indian steel market. Dumping of metal from countries like Korea is another major threat. Inordinate delay in construction of the world already sanctioned by the Railways & which is in progress. User to create their own infrastructure for smooth inward/outward movement. Availability of Railways wagon for outward movement. Priority for Iron ore export affecting wagon, supply, rolling stock and locomotive. Poor road conditions & weak bridges between Hospet Bellar
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MEANING OF INVENTORY MANAGEMENT:

Inventory management covers a much wider field. The Inventory management is concerned with the entire range of functions, which effaced the flow, conversion and utilization, the quality and the costs of materials. It is that aspect, which is concerned with the activities, involved in the acquisition and storage of all material directly and indirectly employed in the production of the finished products. These activities includes material planning, programming functions such as customer service requirements, etc, viewed in that perspective inventory management is broad in scope and effects a great number of activities in organization. Because of these numbers inter-relationship inventory management stresses the need for integrated information flow and decision making as it relates to inventory policies and overall systems. Inventory control on the other hand is defined in a narrow sense than inventory management and pertains primarily to the administration of established policies, systems and procedures. For example, the actual steps taken to maintain the stock levels or stock records refer to inventory control.
TYPE OF PRODUCT:
Among the factors influencing inventory management and control the type of product is fundamental. If the materials used in the manufacture of the product have a high unit value. When purchased, a much closer control is usually in order. If the material is used in the product is in a short supply or is auctioned by the government, this may influence the purchase of this material and stock maintained.
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The manufacture of standard products as compare to custom-made items still influence inventories. Material needed to manufacture a standard product is easy to obtain and close control on the stock is not necessary. Material required to product made to order items needs strict control to ensure that no item is cost in the process of manufacture such materials and tools are of special and expensive type and a loss of any small part will hold up the production.
TYPE OF MANAUFACTURE:
Beside type of product, type of manufacture also influence inventory management and control where continuous manufacture is employed at the rate of production is the key factor. Here inventory control is of major important and in reality controls the production of the product. The economic advantage in this type of manufacture is the uninterrupted operation of the machines and assembly lines in the plant. Intermittent on the other hand permits greater flexibility in the control of material.
VOLUME:
The volume of product to be made as represented by the rate of production may have little effect on the complexity of the inventory problem. Literally, millions of braces bases for light bulbs are manufactured even involving the control of only two principal items of raw-material inventory. On the other hand, the manufacture of large locomotive involves the planning and control of thousands of items in inventory. Both the inventory problem and the difficulty of controlling production increase in difficulty with the number of component parts of the product and not with the quantity of products to be made.
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THE OTHER FACTORS ARE:

The objective of the company as they relate to inventories and the level of services to be provided to customers. The qualification of staff personnel who will design and co-ordinate the implementation of the system. The qualification of personnel who will be responsible for managing the system on a continuing basis. The nature and size of inventories and their relationship to the other functions in the company such as manufacturing, finance, marketing, etc The capability of present and future data processing equipment. The potential saving that might be anticipated from improved control of inventories. The present method for controlling inventories and for making inventory decisions. The degree of commitment by management personnel to the development of more effective inventory management system and the result anticipate from such a system.
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BENEFITS OF INVENTORY MANAGEMENT:
Proper management and control of inventories will result in the following benefits to an organization. Inventory control ensures an adequate supply of material stores etc minimizes stock-out and shortages and avoids costly interruptions in operations. It keeps down investment in inventories, inventory carrying costs and obsolescence losses to the minimum. It facilitates economical purchasing through the measurement of requirement on the basis of recorded experience. It eliminates duplication in ordering or in replenishing stocks by centralizing the sources from which purchases requisitions emanate. It permits a better utilization of avoidable stocks by facilitating interdepartment transfers with in a company. It provides a check against the loss of material through carelessness or pilferage. It facilitates cost allocating activities by producing a means for allocating material cost to products departments or other operating accounts. It enables management to make cost and consumption comparison between operations and periods. It serves as a means for identifying and disposal of inactive and obsolete items of stores.
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STEPS INVOLVED IN THE PROCESS:
OPTIMUM INVENTORY LEVELS:

Determination of inventory that an organization should bold is a significant but difficult task. Too much of inventory result in locking up of working capital accompanied by increased carrying costs (but reducing ordering cost). Excess inventories however guarantee uninterrupted supply of materials and components, to meet customers demand. Too less of inventory releases working capital for alternative used and includes carrying cost (increasing ordering cost) but there is risk of stock out costs. All these and other related factors must determine a level of inventory, which an organization should hold. An interesting aspect is that the level of inventories is not static what is the optimum level today may not be so tomorrow. Hence, inventory management must plan for the review of the stock often.
DEGREE OF CONTROL:
The second aspect of inventory management is to decide just how much control is needed to realize the objectives of inventory management the difficulty is best overcome by classification of inventory on the bases of value popularly called ABC, VED, FSN analysis and other methods is useful in deciding the degree of control. More importance should be given to items of high consumption.
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PLANNING AND DESIGN OF THE INVENTORY SYSTEM:
In inventory system provides the organizational structure and the operating policies for maintaining and controlling goods to be inventoried. The system is responsible for ordering and receipt of goods, tinning the order placements, and keeping track of what has been ordered, how much and from when. Further, the system must provide follow up to enable the answering of such questions as, has the vendor received the order? Has it been shipped? Are the procedures established for recording or returning undesirable merchandise?
ORGANIZATIONAL ARRANGEMENT:
The best aspect of inventory management and control is to determine an organizational structure to handle inventory. Organizationally speaking inventory control function is assigned to materials management or production planning and control. Attaching inventory control to material management activity is feasible in organizations were integrated material management is in practice. There is strong justification for such an arrangement as inventory control is part of material activity and all material functions must be integrated into one group. Assigning inventory control function to production planning and control however has advantages. Production planning and control department will be in a better position to plan its production schedule with the knowledge of inventory under its control. Besides, the production planning and control department will be able to issue timely requisitions for replenishment of stocks used in the production operation. And logically speaking it is the production department, which is the user of inventories, and the same department must be held responsible for controlling them.
Actually the nature of a firms production operation its product and the type of market in which it operates determine the preference for assigning inventory function to production. An engineering oriented company producing specialized technical products on a job shop basis might well choose to emphasize production. Considerations as long as an analysis of total cost justify such a decision. Hence, inventory may report to the production divisions on the other hand, a mass producer of electric motors might well find itself in just the opposite situation and be compelled by relative cost considerations to integrate inventory control with purchasing.
Whatever the consideration, it may be pointed out that any inventory control system is not one set goes automatic type but needs to be rest from time to time as the conditions such as lead time, consumption pattern, etc keep changing.
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TECHNIQUES OF INVENTORY CONTROL:

ABC classification. HML classification. VED classification. SDE classification. FSN classification. Level setting. Two bin systems. Material requirement planning. Physiques verification of stock. Just in time technique. a. Cost price methods : i. Specific price ii. First in, first out (FIFO) iii. Last in, first out (LIFO) iv. Highest in, first out (HIFO) v. Base stock price. b. Average price methods: i. Simple average ii. Weighted average iii. Periodic simple average iv. Periodic weighted average v. Moving simple average vi. Moving weighted average c. Current price methods : i. Replacement price ii. Next in, first out (NIFO)
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ABC ALWAYS BETTER CONTROL CLASSIFICATION:

One of the widely used techniques of control of inventories is ABC analysis. The objective of ABC control is to vary the expenses associated with maintaining appropriate control according to the potential savings associated with a proper level of such control. ABC analysis consists of the classification of the material into categories A, B and C on the basis of their value. Items of high value and comparative less in number are included in A category. Generally, they account for above 70% of the total value and about 15% of the total number. Items of low value be large in number are included in C category. Generally, they account for above 70% of the total value and about 60% of the total number. Items of moderate value and moderate in number are included in B category. They account about 20% of the total value and 25% of the total number. Items of A category are subject to strict with regard to purchase storage and use. Items of B category are not subject to much control. The objective of this analysis is to reduce the investment of inventory the cost of inventory and also loss of inventory.ABC ALWAYS BATTER CONTROL Classification is as follows.
ITEM Category A B C
Total Inventory 70 20 10
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HML HIGH MEDIUM LOW CLASSIFICATION:

The high, medium and low classification follows the same procedure as adopted in ABC classification only difference in this HML classification unit value is the cretin and not the consumption value. The items of inventory should be listed in descending order of unit value and it is up to the management to fix limits for the three categories. The HML analysis is useful for keeping control over consumption at department levels, for descending frequency of physical verification and for controlling purchases.
VED VITAL ESSENTIAL DESIRABLE CLASSIFICATION:

While in ABC classification inventories are classified on the basis of their consumption value and in HML analysis and value is the basis, criticality of inventories is the basis for vital, essential and desirable categorization. The V and D analysis is done to determine the artificially of an item and its effect on production and other services. It is specially used for classification of spare part. If a part is vital it is given V classification, if it is essential than it is given E classification and if it is not so essential the part is given D classification. For V items a large stock of inventory is generally maintained, while for D items minimum stock is enough.
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SDE SCARCE, DIFFICULT AND EASY TO OBTAIN CLASSIFICATION:
The SDE analysis 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 supply D refers to difficult items which are available indigenously but are difficult items to produce. Items, which have to come from distant places or for reliable suppliers are difficult to come by fall into D category, E refers to items which are easy to acquire and which are available in the local markets. The SED classification based on problem faced in procurement is vital to lead time analysis and is deciding on purchasing strategies.
FSN FAST MOVING, SLOW MOVING AND NON-MOVING:

FSN classification is based on the pattern of issue from stores and useful in controlling obsolescence. To carry out FSN analysis the date of receipt or the last date of issue whichever is later is taken to determine the number of months, which have moved since the last transaction. The items are usually grouped in period of 12 months. FSN analysis is helpful in identifying cutoff items, which need to be moved regularly and surplus items, which have to be examined further. Non material moving items may be examined further and their disposal can be considered.
LEVEL SETTING:
Setting up of inventory levels, such as maximum level, minimum level, re-order level, danger level and average level. The above level are calculated when a storekeeper should place an indent for fresh stock and also to avoid
average stocking of any material. At the same time to ensure follow-up sufficient materials to production process. The main purpose of fixing the levels is to control the investment on inventories. Minimum level: this is the limit below, which the stock should not be allowed to fall. It is fixed on the basis of average consumption and average lead time. The main purpose of fixing this level is to ensure adequate check for continuous production and sales.
Minimum level=re-order level-[normal consumption*normal reorder period] Maximum level: this is the limit or level beyond which the stock of an item should not exceed. This level is fixed for avoiding over stocking of materials and its associated risks. Maximum level=EOQ (reorder quantity) (Minimum consumption * minimum reorder period) Re-order level: it is the point fixed between maximum and minimum level at which the storekeeper has to initiate action to obtain fresh supplies of materials. This point will usually be slightly higher than the minimum stock `to cover such emergencies is abnormal usage or unexpected delay in supply. Re-ordering levels depend on lead time, rate of consumption and economic order quantity. Reorder period. level= maximum consumption*maximum reorder
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Danger level: it is the level below the minimum level when the stock reaches this danger level urgent action for purchase is necessary. As normal lead-time is not available it is necessary to resort to unorthodox purchase procedure resulting in higher purchase cost.
Danger level= minimum consumption*emergency reorder period.
Average stock level: =
Maximum level +minimum level 2
ECONOMIC ORDER QUANTITY (EOQ):
The EOQ is the optimum or the most favorable quantity which should be purchased each time the purchases are to be made. The EOQ is one where the cost of carrying inventory is equal or almost equal to the cost of not carrying the inventory. Also EOQ level, the total of these costs are minimum. The cost of not carrying adequate inventory arises because of frequent placing of order at short intervals. This includes cost, such as extra purchasing, handling and transportation cost. The cost of carrying the inventory, an ordering cost change in the reverse order. The cost of placing order decrease as the size of order increase since with the bigger size of order, the number of order will be lower. However, simultaneously the cost of carrying the inventory will go up because purchases have been in large quantities. It may be possible to have a point which provides the lowest total and this point is known as EOQ. EOQ= (2AO/C) Where A= annual consumption to units O= ordering cost per order C= carrying cost per unit per annum.
TWO BIN SYSTEM:

It is mainly adapted to control O group inventories. In the two bin system stock of each item is separated into two bins. One bin contains stock just enough to last from the date of placing new order unit is received in inventory. The other bin contains a certain quantity of stock that will be sufficient to satisfy probable demand during the period of replenishment stock first issued the first bin, when the first bin is empty an order of replenishment is made and the stock in the second bin utilized until the ordered material is received.
MATERIAL REQUIREMENT PLANNING:

It is fairly recent technique that has been introduced to control inventories, it is based on computer technology, and material requirement planning mainly helps in ensuring arrival of materials exactly when it is needed for production. At the same time it reduces the length of the materials are held in inventory. Material requirement plans and control goods on order and helps in determining, when and what specific materials will needed to meet the previously production schedules.
JUST-IN-TIME (JIT):
The concept JIT means that virtually no inventories are held at any stage of production and that exact number of units is brought to each successive stages of production at the right time. It is called zero inventories. the just in time inventory system while conceptually very difficult to implement because it involves a significant change in total production and management system.
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USE OF BIN CARDS AND STORES LEDGER BIN CARDS:

Bin is a place, rack or cupboard where materials are stored. Each bin shall have a card to show the position of stock in the bin. It is known as bin card. A bin card gives bin number, description, code number of materials and different levels of materials. It is ruled in columns to depict stock received, goods received note number, materials issue, materials requisition numbers, balance of stock on and remarks. The bin card thus indicates ready stock position of an item at any moment; entries are made usually by stores personnel.
INVENTORY VALUATION:
Several methods are used for valuation of inventories, those are:
STORE LEDGER:
Stores ledger contains the same columns, which a bin card has, but in addition the amount of columns for pricing receipts and issues of materials are provided. Stores ledger shows, at any time. The value on band, the ledger is maintained in stores as well as cost office to provide a crosscheck on the stores personnel. Entries in the store ledger are supported by goods received note, materials requisition, etc.
FIRST IN FIRST OUT (FIFO) method:

Under this method, materials are issued at the prices of materials in the order in which they are received. Thus the prices of materials which come first, will go out first for production. As a result, closing inventory reflects the latest value. When the prices of materials show declining trend the closing stock is valued at lowest cost and vice versa. But seldom has this happened, in the real situation.
LAST IN FIRST OUT (LIFO) method:

Under this method, materials that are issued are priced at the rate of latest arrival of materials. In other words, the materials are issued at the rates in the reverse order of the materials received. Accordingly, whenever the issue is made it is priced at the rate of the latest consignment received. As, a result, the materials that go into production are coasted at the latest cost of materials and closing stock at the end of a period is represented by the earliest purchase price. This method is suitable when the prices are rising because the coast of material consumed represents the latest increased price, and the closing stock represents, earlier low price. This is his line with the conservative policy. This is the method adopted for cost accounting purpose to record in stores ledger. But in stores, materials are issued in accordance with their plan and
schedule(preferably, in the order of receipts) and this may not be in tune with what is recorded in the stores ledger account maintained in cost accounting section.
SIMPLE AVERAGE METHOD:

Under this method, the materials are issued from the stores to production centers at the simple average price of materials available in the stores. Every time when the issue is made, the average rate of all the rates of the materials available for dispatch is calculated. A rate has to be considered for averaging purpose, even if a small quantity at a rate is existing in the stores in the stores. In other words, price of material which is exhausted, i.e., already issued, completely, is not considered while calculating average price. However, materials are exhausted in the first in first out order. This method is suitable when uniform quantities are purchased and the prices are heavily fluctuating. But when the quantities are different, discrepancy arises in the value of stock. This difference is adjusted to costing P &L A/c at the end of each period. The main advantage is that it is difficult to keep track of materials exhausted
WEIGHTED AVERAGE PRICE METHOD:

Under this method, materials are issued at the weighted average price which is calculated by considering both the quantity and price. It is calculated as below. Weighted average price = W1P1+W2P2+W3P3+. W1+W2+W3+. Where, W1,W2,W3 are the various quantities in stores, P1,P2,P3 are the respective rates of these quantities. This is a good measure because both quantity and price are considered and therefore, discrepancy due to price will not arise. In other words, entire material cost is recovered by production units. This method is useful when the prices and quantities fluctuate heavily .
DOCUMENTS FOR FINISHED GOODS: STORES REQUISITION NOTE:

It is also called material requisition note. When production or department requires materials from the stores it raises a requisition, which is an order on the stores for the material required for execution of the work order. This note is signed by the department in charge of the concerned departments. Any person who requires materials from stores must submit stores requisition note. The store keeper should only issue material from stores against such a properly authorized requisition and this will be entered in the bin card or stores ledger.
GOODS RECEIPT NOTE (GRN):

When the receipt department receives the material, the goods received note is given by the concerned department, which signifies the receipt of the goods by the department.
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DATA ANALYSIS
MEANING OF RATIOS:
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements, so that the strength and weakness of a firm as well as its historical performance and current financial conditions can be defined. Ratio analysis or ratio technique is one of the tools available to a financial analyst for the analysis of financial statement and ratio is statistical yardstick that provides a measure of relationship between two accounting figures. Ratio analysis is the technique of calculation of a number of accounting ratios from the data or figures found in the financial statements. The comparison of these accounting ratios of the previous year or of other concerned of the same industry provides indispensable help to the financial manager
TURN OVER RATIOS:

Turn over ratios, also referred to as activity ratios or assets management ratios. Measure how efficiently the assets are employed by a firm. These ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold, and levels of various assets. The important turnover ratios are: inventory turnover ratio, average collection period, receivables turnover ratio, fixed assets turnover ratio and total assets turnover ratio.
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INVENTORY TURNOVER RATIO:

This ratio indicates the number of times inventory is replaced during the year. It measures the relationship between the cost of goods sold and the inventory level. The ratio can be compared in two ways
Sales
COGS
Inventory turnover ratio = ----------------------------or -------------------------Closing inventory Average inventory
Particulars/years Sales Average Inventory Inventory turnover ratio
2007-08 12629 1549.16 8.15
2008-09 15179 2051.42 7.39
2009-10 19457 2318.50 8.39
2010-11 25131 3362.10 7.47
12000 10000 8000 6000 4000 2000 0 1549.16 8.15 2007-08 Sales 2051.42 7.39 2008-09 2318.5 8.39 2009-10
11420
8554.36 6679.36 6180.1
3362.1
7.47 2010-11
Average Inventory
Inventory turnover ratio
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INTERPRETATION:
The above table and graph shows that the inventory turnover ratio is 8.15 times in the year 2007-08. In the year 2008-09 inventory turnover ratio
decreased to 7.39 times and which has been increased to 8.39 times in the year 2009-10. This ratio indicates how fast the inventory is converted into sales. Here high ratio implies good inventory management. In the year 2007-08 was higher ratio maintained a good inventory management but in coming year 200809 decrease compared to 2007-08 now its maintained good inventory
management. In the year 2009-10 is increased to 8.39 but 2010-11 it has been decreased 7.47 times compare to 2009-10.
INVENTORY TO CURRENT ASSETS
ICA=
Average Inventory Current Assets
Year Average Inventory Current Assets Ratio
2008-09 2051.42
2009-10 2318.50
2010-11 3362.09
4631.64 0.44
5559.52 0.41
10188.37 0.33
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12000 10000 8000 5559.52 6000 4000 2000 0 2008-09 Average Inventory 2009-10 Current Assets 4631.64
10188.37
3362.09 2051.42 0.44 2318.5 0.41 2010-11 Ratio 0.33
INTERPRETATION
The above graph shows that an Inventory to current assets in JSW Steel. In the year 2008-09 it was 0.44.in the year 2009-10 was 0.41 and in the year of 201011 is 0.33 .the Inventory to current assets ratio should be less then the companys liquidity will be good. the Inventory will be considered as a companys current assets, in JSW steel ltd the inventory was good in the year of 2008-09. but it has been decreased to0.33 in the year of 2010-11.
INVENTORY TO WORKINH CAPITAL

W C =Current Assets - Current Liabilities. Year Average inventory Net working capital Ratio -0.7012 -1.1249 3.2380 -2925.57 -2062.37 124.04 2008-09 2051.42 2009-10 2318.50 2010-11 3362.09
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INVENTORY TO WORKINH CAPITAL
4000 3000 2051.42 2000 1000 0.7012 0 2008-09 -1000 -2000 -3000 -2925.57 Average inventory Net working capital 2009-10 -1.1249
3362.09 2318.5
124.04 3.238 2010-11
-2062.37
Ratio
INTERPRETATION:
The above graph shows that the inventory to working capital in JSW steel ltd, in the year 2008-09 the working capital was -2925.57 in the year of 2009-10 was 2062.37 and in year of 2010-11 is 124.04.it shows the company utilizing an Inventory with the working capital, in JSW the ratio is utilizing the good inventory with less working capital. in the current year only the utilization of working capital is more then last two years.
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INVENTORY HOLDING PERIOD:
IHP=
360 day
Inventory Turnover Ratio
Years Days Inventory Turnover Ratio Inventory Holding Period
2008-09 360 7.39 49
2009-10 360 8.39 43
2010-11 360 7.47 48
400 350 300 250 200 150 100 50 0
360
360
360
49 7.39 2008-09 Days 8.39 2009-10 Inventory Turnover Ratio
43 7.47 2010-11 Inventory Holding Period
48
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INTERPRETATION:
The above table and graph shows that the Inventory Holding Period in JSW steel, in the year 2008-09 it was 48.71 in the year 2009-10 it was 42.90 and in the year 2010-11 is 48.19 days. here the inventory holding period should be less then only it shows the good inventory holding period. among above three years the inventory holding period is good in 2009-10. DEBTOR TURNOVER RATIO:
This ratio indicates the relationship between debtors and sales. It indicates the number of times the debts are collected in a year.
Debtors here mean the average debtors and bills receivable. Sales here mean net credit sales returns.
Credit sale Debtor turnover ratio =------------------------------Average debtors
particulars credit sales
2008-09 8,594.44 243.21
2009-10 13,163.24 563.25 23.37
2010-11 11,202.48 838.65 13.35
average debtors debtor turnover ratio
35.34
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Debtor turnover ratio:

14,000.00 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 credit sales average debtors 2009-10 2010-11 debtor turnover ratio 563.25 243.21 838.65 23.37 35.34 13.35 13,163.24 11,202.48 8,594.44
2008-09
STATEMENT OF RAW MATERIAL Raw Materials Product Name Coke & Coal Iron Ore Lumps Others Coils (Hot Rolled) Zinc & Other Alloys MS Slab / Ingot Scrap Total Source : Asian CERC Money control.com
------------------ in Rs. Cr. -----------------Unit Metric Tones Metric Tones Not Reported Metric Tones Metric Tones Metric Tones Metric Tones Quantity 7,803,364 12,972,111 NA 158,138 41,152 29,128 NA
Mar 2011 Value 8,328.21 3,707.80 2,121.87 563.11 446.33 75.44 0.00 15242.76
STATEMENT OF RAW MATERIAL IN 2011
14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 Coke & Coal Iron Ore Lumps Others Coils (Hot Rolled) Zinc & Other Alloys MS Slab / Ingot Scrap Total 0 2,121.87 8,328.21 3,707.80 0 0 0 563.11 0 446.33 0 75.44 0 0 15242.76
------------------ in Rs. Cr. ------------------ Unit Mar 2011 Value
------------------ in Rs. Cr. ------------------ Quantity
STATEMENT OF FINISHED PRODUCTS
---------------------- in Rs. Cr. -------------Product Name Unit Installed Capacity Production Quantity Sales Quantit y Hot Rolled Metric 6,700,00 4,787,770 2,922,93 3 2,200,00 1,134,004 1,055,23
Mar 2011 Sales Value
10,486.3
Coils/Plates/Sheets Tonnes Rolled Product Metric Tonnes Coils & Sheets (Galvanised) Metric Tonnes 900,000 908,498
3,769.24
709,851
3,348.04
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Coils (Cold Rolled) Others Aluminum Color Coated Sheets/Coils Billets & Blooms
Metric Tones Metric Tones
1,825,000
1,669,884.
782,543
3,319.60
NA 232,000
NA 159,583.00
NA 152,307.
1,394.78 870.41
Metric Tones
2,500,00
1,384,107
205,613.
687.88
M S/S S Slabs
Metric Tones
6,800,00
5,042,838
138,177.
511.08
Hot Rolled Steel Plates Other (Traded) Miscellaneous Total
Metric Tones -
320,000
151,739
132,428.
503.43
NA NA
NA NA
1,301.00 NA
201.30 38.67 25130.76
Source : Asian CERC & Money control.com
6000000 5000000 4000000 3000000 2000000 1000000 0 Mar 2011 ---------------------- in Rs. Cr. --------------
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MUMBAI: Sajjan Jindal led JSW Steel today reported a growth of 29.88 per cent in its consolidated net profit at Rs 793.63 Cr for the quarter ended March 31, 2011. The company had posted a net profit of Rs 611.02 Cr during the same period last fiscal. The net sales of the company stood at Rs 7,209.35 Cr, up 32.49 per cent during the January-March quarter vis-a-vis Rs 5,441.30 Cr in the corresponding period of 2009-2010, it said in a filing to the Bombay Stock Exchange. During the quarter, consolidated revenues from steel segment rose by 33.26 per cent to Rs 7,423.49, while its power business reported a growth of over 11 per cent at Rs 289.36 Cr.
INVENTORY VALUATION AT JSW STEEL LTD.

Under JSW Steel ltd the inventories are valued at lower of cost and net realizable all costs of purchase, cost of convection, and other cost incurred in bringing the inventories. and the cost t is determined by weighted average cost mentod in jsw steel ltd . Under this method, materials are issued at the weighted average price which is calculated by considering both the quantity and price This is a good measure because both quantity and price are considered and therefore, discrepancy due to price will not arise. In other words, entire material cost is recovered by production units. This method is useful when the prices and quantities fluctuate heavily Advantages: a) Easy to calculate and operate. b) When prices fluctuate considerably, it smooths out the fluctuations. c ) Closing stock value is acceptable..This method is suitable where wide fluctuation of prices occur, as it evens out prices over the accounting period.
FINDINGS:
The study on inventory management at JSW STEEL LTD disclosed very important facts which are given below. A proper inventory management is very useful in controlling cost, as a small amount can make large difference The stock undertaking is done once in three months. The company is maintaining the inventory level appropriate with the demand. The company is not blocking up its work in progress to a level extend. The documentation of a company is much elaborated and time consuming. The inventory to current assets ratio shows that good performance to the company. It does not classify raw-materials as slow, medium or fast moving, hence fails to identify and dispose the slow or non moving materials. The modern technique of material management and inventory control such as standardization, codification, classification, etc are not given much of importance. Company maintains FIFO method, which is easy to account for but is not accurate as other methods such as weighted average method.
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CONCLUSION:
The demand for the STEEL IS changing everyday the trend which has occurred before a day may be old for the next day. Everyday every organization has to face the changes in all the areas of their business. The organization has to accept these uncertainties and should cope up with that change to survive in the competitive and changing world. The change in the market directly affects the inventories. The demand for the product may fall today and rise tomorrow. If the organization has to cope with rising and falling demand it has to maintain balanced relationship with demand and supply, this task is effectively done by the inventory management by maintaining adequate stock in the organization. FINAL REPORT OF INVENTORY 2010-2011 Particular 200910 Raw material Production Work-in-process Finished goods Traded goods Total 1278 411 114 781 0.13 2585 1895.59 600.31 263.74 1378.77 -4138 1553 60 617 189 150 597 2010-11 Change Change in % 48 % 46% 132% 76%
According to above table the JSW Steel company is following very effective inventory management techniques; The company has maintained a good amount of stock in the form of finished goods, by comparing lest year performance of the company is batter then last year. In 2011/current year growth is more then 60 % it shows progress of company.
SUGGESTIONS:
The inventory to current assets ratio shows a good performance to the company and also to maintain the same in the future also. The study reveals that the reduction of inventories is not sufficient on the part of the company for some items. The least he company can do is to ensure that the undertaking is not overburdened with avoidable excessive stocks. In the year 2009-10 the stock turnover ratio has showed some improvement, but in the past years it doesnt maintain the standard ratio, so it has to improve in the future days. Publish an inventory statement to guide all the employees in the company. As training in materials management can help all the staffs in all level in materials organization to carry out their responsibilities with such more understanding and in greater capacities, it is necessary to train them in discipline. This will drop cost consciousness in the individuals. As inventory appears too complex to control. It can be controlled through hard work, dedication, very close attention to the details and continuous self-criticism of previously made decisions. The documentation of the company is very elaborate and it should be reflected by centralized purchasing which would reduce the paper work involved in purchase by other department. Investment in the inventory, which to a greater extend on their number that can be reduced through variety reduction. This leads to the reduction of the manufacturing cost, saving in purchase cost, and reduction in inventory investment, effective advertising and reduction in labor cost, lower process rejection and improvement in quality.
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ANNEXURE
Profit & Loss account ------------------- in Rs. Cr. ------------------Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
12 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 5,709.85 Mar '07 8,318.38 Mar '08 11,430.64 Mar '09 13,958.64 Mar '10 19,207.84 Mar '11 103.39 0.00 146.99 0.00 170.58 0.00 138.95 0.00 200.40 0.00 572.82 639.26 717.74 724.63 819.68 4,377.23 393.10 175.47 87.84 6,560.14 532.43 273.98 165.58 9,386.47 673.07 288.75 194.03 11,415.86 1,014.82 365.20 299.18 15,995.19 1,181.52 534.47 476.58 9,337.34 742.31 8,595.03 110.60 -66.54 8,639.09 12,628.91 1,237.86 11,391.05 309.91 283.56 11,984.52 15,179.29 1,172.70 14,006.59 -608.47 285.22 13,683.34 19,456.64 1,289.18 18,167.46 474.25 64.74 18,706.45 25,130.76 2,031.91 23,098.85 199.05 747.37 24,045.27
12 mths
12 mths
12 mths
12 mths
12 mths
Operating Profit PBDIT Interest
2,818.64 2,929.24 406.81
3,356.23 3,666.14 494.84
2,861.17 2,252.70 836.82
4,273.56 4,747.81 900.26
4,638.38 4,837.43 850.92
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PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 1,639.79 77.09 125.00 322.80 1,870.49 90.84 140.00 394.99 1,870.49 22.96 10.00 410.07 1,870.49 106.59 95.00 504.00 2,231.17 88.87 122.50 735.80 639.33 1,292.00 1,332.62 27.90 204.98 33.49 722.77 1,728.19 1,758.24 29.06 261.87 49.44 306.52 458.50 2,044.17 28.99 18.71 8.11 797.43 2,022.74 2,542.78 28.92 177.70 34.31 759.02 2,010.67 3,212.65 27.90 273.32 48.87 2,522.43 498.23 109.02 1,915.18 16.15 1,931.33 3,171.30 687.18 0.00 2,484.12 -33.16 2,450.96 1,415.88 827.66 0.00 588.22 176.80 765.02 3,847.55 1,123.41 0.00 2,724.14 96.03 2,820.17 3,986.51 1,378.71 0.00 2,607.80 161.89 2,769.69
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Balance Sheet
Mar '07 12 mths Mar '08 12 mths
------------------- in Rs. Cr. -------------------
Mar '09 12 mths
Mar '10 12 mths
Mar '11 12 mths
Sources Of Funds
Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 504.04 225.01 21.76 279.03 5,068.25 0.00 5,594.05 3,632.50 540.53 4,173.03 9,767.08 Mar '07 12 mths 537.01 248.08 0.00 288.93 7,140.24 0.00 7,677.25 5,497.08 2,049.45 7,546.53 15,223.78 Mar '08 12 mths 537.01 248.08 0.00 288.93 7,422.24 0.00 7,959.25 8,214.61 3,058.02 11,272.63 19,231.88 Mar '09 12 mths 527.11 248.08 0.00 279.03 9,179.23 0.00 9,706.34 8,987.51 2,597.59 11,585.10 21,291.44 Mar '10 12 mths 563.18 284.15 529.38 279.03 16,132.71 0.00 17,225.27 7,675.82 4,275.52 11,951.34 29,176.61 Mar '11 12 mths
Application Of Funds
Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions 10,512.76 2,323.66 8,189.10 2,002.93 192.94 1,011.35 245.16 165.96 1,422.47 1,008.75 171.84 2,603.06 0.00 3,340.60 75.22 3,415.82 13,952.32 2,996.83 10,955.49 5,612.43 923.53 1,549.16 337.39 205.78 2,092.33 997.26 133.44 3,223.03 0.00 5,054.69 436.01 5,490.70 16,896.75 3,810.31 13,086.44 9,242.06 1,250.11 2,051.42 398.14 207.91 2,657.47 1,980.02 212.05 4,849.54 0.00 9,115.34 80.93 9,196.27 21,795.58 4,929.44 16,866.14 6,684.27 1,768.35 2,585.77 563.25 117.40 3,266.42 2,216.05 169.71 5,652.18 0.00 9,415.28 264.22 9,679.50 27,407.35 6,305.20 21,102.15 6,169.05 4,098.81 4,138.41 838.65 136.26 5,113.32 3,324.43 1,750.62 10,188.37 0.00 11,984.37 397.40 12,381.77
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Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) -812.76 194.87 9,767.08 5,362.37 322.80 -2,267.67 0.00 15,223.78 11,145.95 394.99 -4,346.73 0.00 19,231.88 8,170.64 410.07 -4,027.32 0.00 21,291.44 6,990.48 504.00 -2,193.40 0.00 29,176.61 8,870.90 735.80
Souece:www.google.co.in www.moneycontrol.com www.jswsteel.co.in
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REFERENCE: Purchasing and Material Management Doppler and Lee Elements of Financial Management- Dr. S.N. Mahaswari Financial Management- I.M. Pandey Financial Management Khan and Jain
WEBSITES: www.google.co.in www.moneycontrol.com www.jswsteel.co.in
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INVENTORY MANAGEMENT

BENEFITS OF HOLDING INVENTORY:

Dept of commerce (MFA) Gulbarga university Gulbarga.

Dept of commerce (MFA) Gulbarga university Gulbarga.

Raw material inventory:

Finished goods inventory:

Dept of commerce (MFA) Gulbarga university Gulbarga.

Material for maintenance and repairs:

Dept of commerce (MFA) Gulbarga university Gulbarga.

FACTORS INFLUENCING INVENTORY:

External factors: Market conditions:

Internal factors: Relevant cost:

Dept of commerce (MFA) Gulbarga university Gulbarga.

NEED TO HOLD INVENTORY:

Dept of commerce (MFA) Gulbarga university Gulbarga.