A STUDY ON THE FINANCES OF INDOWIND LIMITED

Submitted in partial fulfilment of the requirements

For the award of

BACHLOR OF BUSINESS ADMINISTRATION

By
NELVIN JOSE
2528122

DEPARTMENT OF MANAGEMENT STUDIES

SATHYABAMA UNIVERSITY
(Established under Section 3 of UGC Act 1956)
JEPPIAAR NAGAR, OLD MAMALLAPURAM ROAD
CHENNAI 600 119
APRIL 2008
 ACKNOWLEDGEMENT

It is my privilege to express my gratitude and respect to all those

who have guided me and inspired me during the course of the
project work. First and foremost, I express my sincere gratitude to
our beloved chancellor Thiru Jeppiaar, M.A, B.L, and also
heartfelt thanks to our Directors Thiru. Marie Johnson, B.E,
M.B.A., and Tmt. Mariazeena Johnson. B.E, M.B.A., for
providing me the necessary facilities for the completion of my
project. I also acknowledge our vice-chancellor Dr.V.S.R.K.
Mouly, B.E, M.Sc (Engg), PhD, and Registrar Dr. S.S.Rau
M.B.A, Ph.D for their constant support endorsement.
I am indebted to the Head of the Department,
Mr.GOPINATH for having been a constant source of support and
encouragement for the completion of the project. I also express my
sincere thanks to my internal guide Ms. KAVITHA for his
constant guidance and supervision during the period of my project
work.
I would like to express my sincere thanks to my external
guide Mr DINAKAR INDOWIND LIMITED for providing me
the necessary facilities for the completion of the project. Finally I
would like to thank my family members and friends for their
encouragement and support.
CHAPTER TITLE PAGE NO:

1 Introduction

2 Company profile

3 Product profile

4 Need for the study

5 Objective of the study

6 Scope and limitations of the

study
7 Review of literature

8 Research methodology

9 Analysys and interpretation

10 Findings

11 Suggestions and
recommendations
12 Conclusion

13 Bibliography

14 Appendix
 INTRODUCTION

Inventories are approximately 60% of current assets in public limited

companies in India and it constitutes the most significant part of the
current assets. Because of large inventories maintained by firms
considerable amount of funds is required to commit to them. If a firm
neglects the management of inventories in long run it will effect the
profitability. It is possible for a company to reduce its levels of
inventories by using simple inventory planning and control techniques.

Inventories may exist in various forms as stock of raw materials

awaiting production; as stock of partially completed product; as
finished goods; as goods in transit; as goods in warehouse distribution
points’ as goods in the retail store anticipating consumer demand. But
there are distinct cost generated by the existence of each of these types
of inventory.

Inventory carries its unique set of cost factors, namely,

 Procurement cost and/or set up cost.

 Inventory holding cost.

 Shortage or stock out cost and

 Inventory control or system cost.

Inventory classification:

Inventories may be classified as follows:

a. Raw inventories: They include raw material, parts components

and semi-finished products supplied by another firm and which
are raw items for the present industry.

b. In process inventories: They are semi-finished parts, work in

process and partially finished products formed at various stage of
production.

c. Finished inventories: They are the finished goods lying in

stockrooms and awaiting dispatch.

d. Indirect inventories: They are maintenance repairs, and operating

supplies which are consumed during the production process and
generally do not form part of the product itself (e.g. petroleum
products like petrol kerosene diesels, various oils and lubricants,
machinery and plant spares, tools jobs and fixtures etc)
Inventory control:

Inventory control is the means by which materials of the correct

quantity and quality is made available as and when required with due
regards to economy in storage, ordering costs and working capital.

It may also be defined “as the systematic location, storage and

recording of goods in such a way that desired degree of service can be
made to the operating shop at minimum ultimate cost”

INVENTORY MANAGEMENT

MEANING

The term inventory refers to the stockpile of the products a firm is

offering for sale and the components that make up the product.
Generally inventory consists of raw material, work-in-progress and
finished goods. There is a significant portion of large investment on
inventories from the sale value of assets. So inventory control is an
essential function on the part of management that will minimize the
overall cost of production and also minimizes the profit on sales.
DEFINITION

Inventory management is defined as “realizing the effect of

inventories on the functioning of any organization, and to deal with
all aspects of inventories such as functions connected with
receiving, buying, stocking and issuing of materials”

FUNCTIONS OF INVENTORY MANAGEMENT

 Reducing or controlling irregularities in supply.

 Buying or Producing in lots or batches.

 To meet seasonal or cyclical demand

 To take advantages of price discounts while buying items.

 To maintain continuity to operation in production process.

INVENTORY CONTROL

Inventory control is the process of deciding what and how much of

various items are to be kept in stock. It also determines the time and
quantity of various items to be procured. The basic objective of
inventory control is to reduce investment in inventories
FUNCTIONS OF INVENTORY CONTROL

 To run warehouse effectively. This includes layout, storing media

utilization of storage space, receiving and issuing procedures etc.

 To ensure timely available of inventories and avoid build up of

stock levels.

 Technical responsibility for the state of materials. This includes

methods of storing, maintenance procedures, studies of
deterioration and obsolescence.

 Stock control system. Physical verification (stock taking),

maintenance of recodes, ordering policies and procedures for the
purchase of goods.

 Maintenance of specified raw materials: general supplies work in

process and component parts in sufficient quantities to meet the
demand of production.

 Protecting the inventory form losses due to improper handling

and storing of good and unauthorized removal form stores.

 Pricing all materials supplied to the shops so as to estimate

material cost.
ADVANTAGES OF INVENTORY CONTROL:

• It creates buffer between input and output.

• It ensures against delays in deliveries.

• It allows for possible increase in output.

• It allows advantage of quantity discounts.

• It ensures against scarcity of materials in the market.

• It utilizes the benefit of price fluctuations,

• It avoids inventory build-up.

An effective inventory management should

• Ensure continuous supply of raw materials to facilitate

uninterrupted.

• Maintain sufficient finished goods inventory for smooth sales

operation and efficient customer service.
 • Minimize carrying cost

Forms of inventories:
The various forms in which inventories exist in manufacturing company
are

• Raw materials are those basic inputs that are converted into
finished product through manufacturing process.
• Work-in-process inventories are semi-finished products and need
mare work to become finished product for sale.

Finished goods inventories are those completely manufactured products

and ready for sale.
 Company profile

1. INDUSTRY OVERVIEW

World watch institute report “ The State of the world 1998" , on

progress towards a sustainable society has noted that renewable
energy production in the world is expanding rapidly. Wind
generation is the fastest growing energy source in this decade and is
expanding at 25% per year. The report recognizes India as a new
‘WIND SUPERPOWER’. With declining trend of cost an increase
in the scale of wind turbine manufacturing , wind promises to
become super power source globally in the first decades of this
millennium.

India is now the 4th largest wind power generator in the world after
Germany , Spain and USA. Five nations – Germany , USA ,
Denmark , India and Spain account for 71.2 % of the worlds
installed wind energy capacity.. Wind energy continues to be the
fastest growing renewable energy source with worldwide wind
power installed capacity reaching 78,728 MW as of May 2007..

Today , the capital cost of wind power projects is approx Rs 550 lacs
per MW , thereby reducing the cost of the energy generation vis-à-
vis conventional energy, taking into consideration the fiscal benefits
extended by Government of India..

As mentioned above the Indian government has introduced a

package of incentives, some of which include tax concessions such
as 80% accelerated depreciation , tax holidays for the power income
u/s 801A, soft loans .

Various financial incentives and benefits :

• 80% depreciation benefit in the first year

• Low operational and maintenance costs

• Zero input fuel cost

• Shorter payback duration

• Cost of power duration is very low after payback period

• Zero import duty on certain parts (as notified by MNRE from

time to time)

• Tax holidays for new power projects after 10 years

• Company being operational in a seller market, no marketing

related issues

The Indian Renewable Energy Development Agency (IREDA) is

playing a significant role in promoting Renewable Energy
Projects , in general and Wind energy projects in particular.
Renewable energy is expected to create maximum impact in
generation of electricity. Projections indicate that by the first
decade of the new century, it would be cost effective to generate
and supply renewable energy, aggregating to several thousand
megawatts , as the efficiencies in the power generation through
power generation through wind energy are increasing and the
costs are decreasing while the costs of

conventional power is increasing. Besides grid supply

augmentation renewable energy technologies offer possibilities of
distributed generation at or near points of use which can reduce
peaking loads and save on costly up-gradation and maintenance
of transmission and distribution networks growing demand.
There are no major technical barriers for large scale penetration
of wind power.

India has now gained significant technical and operational

experience and now is now on the threshold of ‘taking off’ in
wind power. It offers a viable option in the energy supply mix,
particularly in the context of the present constrains on
conventional sources . it also offers an attractive investment
 option to the private sector in the form of recently announced
policies and drive towards private sector power generation.

2. The Electricity industry

The Indian electricity market

As on may 31, 2007 India’s power supply system had an installed

generating capacity of around 1,34,000MW and thermal power
plants powered by coal, gas, naptha or oil for accounted for
approx 66% of total power generation capacity. Renewable
sources of energy accounts for around 7% of the power
generated, with Wind power having a share of around 5.29% . In
the same year , central government controlled entities accounted
for approx 34% of the total power generation capacity, the
various state electricity boards (“SEBs”) accounted for approx
52% while private sector utilities accounted for approx 14%.

The break up of the Total Installed Capacity for generation of

power from all the available sources for the country as a
whole as on 31May 07

Sector MW Proportio
n

State sector 69,347 52.09%

Central sector 45, 841 34.19%

Private sector 18, 389 13.72%

Total 1,34,077 100.00%

Fuel MW Proportion

Thermal 86,326 64.39

Coal 71,432 53.28
Gas 13,692 10.21
Oil 1,202 0.90

Hydro 33,486 24.98

Nuclear 4,120 3.07

Renewable 10,145 7.57

Wind 7093 5.29

Others 3045 2.27
Total 1,34,077 100.00
 All India Generating Installed Capacity

Thermal

sl
no. Region Hydro coal Gas Diesal Total Nuclear R.E.S@ Total

1 Northern 12671.15 12671.1 3323.19 14.99 21365.6 1180 1220.18 36437.01

2 Western 6678.5 22752.5 5820.72 17.48 28590.7 1840 2640.34 39749.54

3 Southern 10646.18 10646.1 15972.5 939.32 20498.1 1100 5899.33 38143.63

4 Eastern 2373.93 2373.9 14349.8 17.20 14557.0 0 227.81 17158.82

N.Easter
5 n 1116 330 771.5 142.74 1244.2 0 146.01 2506.25

6 Island 0 0 0 70.02 70.02 0 11.36 81.38

7 All India 33485.76 71432.3 13691.7 1201.7 86325.8 4120 10145.36 134076.6
 100,000
86,326

80,000

60,000

40,000 33,486

20,000
10,145
4,120
0
THERMAL HYRO NUCLEAR RENEWABLE

Global Wind Energy

Technology advances have resulted in larger and better quality

wind turbine generators with higher generation efficiencies at
lower costs wind power markets. According to the TERI Report
rapid wind power development has been driven by increasing
interest in green house gas reduction and the expanding global
power market. Furthermore , heightened environmental
awareness has resulted in increase demand for “green power” in
developed countries.

Many countries have adopted “Renewable Portfolio Standards”

which mandate a certain percentage of power generation to be
met from renewable sources of energy such as wind energy. All
over the world wind is generated electricity is treated
preferentially by means of production credits and incentives.
Internationally the cost of production of a kilowatt-hour of wind
power has fallen by 20% over the past 5 years

In World Energy Outlook 2004 the International Energy Agency

or IEA, estimates the global electricity demand to double
between 2002 and 2030, with demand for electricity likely to
increase at much faster pace in developing countries like India an
China. The IEA also estimates wind power’s share of total
electricity generation to grow 0.2% in 2002 to 3.0% in 2030 and
it will be the 2nd largest renewable source of electricity after
hydro power.

The number of countries with wind power installations grew to

over 61 countries by May 2007. large multi nationals such as
General Electric and Siemens have now entered the wind power
market through the acquisitions of existing wind turbine
manufactures.

Country MW %

Germany 20952 26.61

Spain 12500 15.88

USA 12376 15.72

India 7093 9.01

Denmark 3136 3.98

Others 22671 28.80

Total 78728 100.00

 Germany
Others
Germany
Spain
USA
India
Denmark
Denmark
Others
Spain
India

USA

The International Energy Agency (IEA) in its world energy

outlook 2004 estimates that the world electricity demand will
double between 2002 and 2030. Globally the power sector is
required to add an estimated 4800 GW of capacity to meet the
projected increase in electricity demand and to replace ageing
infrastructure. The IEA has estimated that this would require an
investment of US$10 trillion and more than US$ 5 trillion of that
amount will be required by developing countries alone.

Estimated Wind power potential in India

The wind power potential on macro level based data collected

from 10 states considering only 1% of land availability is around
45,195 MW

Gross potential MW
1 Andhra Pradesh 8275
2 Karnataka 6620
3 Tamil Nadu 3050
4 Kerala 875
Total for Southern 18,820
India
 1 Gujarat 9675
2 Maharashtra 3650
Rajasthan 5400
Total for Western 18,725
India

1 Orissa 1700
2 West Bengal 450
Total for Eastern 2,150
states

1 Madhya Pradesh 5500

Total for Central India 5,500

Total for India 45,195

Key Factors Driving the Rapid Development of wind energy

The key factors driving the growth of renewable energy and wind
energy are

• Recognition of the desire o address the human- induced

climate change through a reduction of greenhouse gas
emissions
• Competitive energy sources facing input price
• Desire by many countries to diversify the sources of their
energy supply
• Need to reduce the dependence on and depletion of non
renewable sources
• Vast improvement in wind power economics
Key Drivers For Wind Energy

Wind energy is clean: A single 750 kilowatt wind turbine , operated

for 1 year at a site with class 4 wind speeds (winds averaging 12.5-13.4
mph at 10 meters height), can be expected to displace a total of 1,179
tons (2.36 million pounds) of carbon dioxide , 6.9 tons of sulphur
dioxide and 4.3 tons of nitrogen oxide. More wind energy means less
smog, acid rain, and greenhouse gas emissions.

Wind energy means jobs: Wind energy brings jobs and income to
revitalize rural communities and bolster farm incomes against bad
weather. Worldwide, the wind and solar industries are likely to be one
of the biggest sources of new manufacturing jobs in the next country.

Wind energy is abundant: With today’s technology , wind energy

could provide electricity with turbines installed on less than 1 % land
area. And within that area less than 5% of the land would be occupied
by wind equipment- the remaining 95%could continue to be used for
farming or ranching.

Wind energy is inexhaustible: Unlike oil fields , fossil fuels etc

wind energy is renewable in nature.

Wind energy is domestic: It will never be subject to embargoes or

“price shocks” caused by international conflicts.

Wind energy is environmentally preferable: Traditional energy

sources carry a host of serious environmental baggage: air pollution and
acid rain ; the possibility of changing the earth’s climate; radioactive
waste disposal; oil spills; and more. Wind energy’s environmental
impacts are nill.

Wind Energy Development

A modern wind turbine is designed to generate high quality , network

compatible electricity for more than 20 years, with remote monitoring
and relatively low maintenance.

There have been three major trends in the development of wind turbines
in recent yrs
 • Larger capacity and taller turbines, increase in individual turbine
power output capacity over the last 25 years from 30KW
machines in 1980 to 5000KW machines in 2005.
• Increased efficiency: An overall efficiency increases of 2-3%
annually over the last 15 years.
• Investment costs have decreased: Significant technology
developments including size , together with economies of scale in
production have reduced the cost of wind energy generation by
approx 80% over past 25 years.

Currently design efforts are focussed on addressing grid compatibility,

further improvements to acoustic performance and the emerging
offshore market.

Indian Wind Energy Demand

The government of India identified the importance and potential of

wind power generation as early as 1983, when it commenced a national
wind power program to tap the then estimated potential of 45,000 MW.
The Government of India’s market- oriented approach subsequently led
to the commercial development of wind power technology in India. The
broad based national program concentrates on wind resource
assessment activities, establishment of new sites , involvement of
utilities and industry , growth of infrastructure capability for
manufacture , installation , operation and maintenance of WTGs and
policy support.
India has made steady progress in the development of wind power since
the inception of the national wind power and is the forth largest country
in the world with installations of 7093MW

State Generation (MU)

Andhra Pradesh
1740
Gujarat
1613
Karnataka
2291
Kerala
16
Madhya Pradesh
238
Maharashtra
3227
West Bengal
2
Tamil Nadu 15381
Rajasthan
93
Total 24,601

Key Drivers for the Growth of the Wind Energy Industry in India

The TERI report cites the following as the key drivers for the growth of
wind energy industry in India:
• Wind power is a renewable based power generation technology
which has demonstrated sufficiently low risk to gain the attention
of the financial community and independent power developers
for near – term projects. Significant technology advances have
occurred since the first wind power plant was installed in the
country in early eighties
• The short gestation period offers wind energy as a viable
alternative to conventional forms of power generation
• Industrial learning curve theory suggests that costs decrease by
20% each time the number of units produced doubles.
• So far as impacts on the power systems are concerned, it is an
established fact that additional of wind power results in a)
reduction in technical losses and b) strengthening of voltage
levels.

Therefore the initiatives taken by Govt of India and the various State
Govt in relation to the establishment of a supportive and stable policy
for investment in wind power have contributed to the recent growth the
Indian wind power industry. As a result India today is among the
world’s largest sustainable for renewable energy such as wind..
 BUSINESS OVERVIEW

Wind Farm Business

As early as 1995, we saw the opportunity to enter into alternative

energy. In particular, we studied and found wind power generation to be
an attractive investment that compliments our business model.

Why power generation

• Huge Electricity Demand Supply Gap in India

India’s economy has grown at a CAGR of 9.9% over the last 5 years.
Much of this growth has been powered by rapid industrialization and
rising affluence which has in turn, lead to sharp demand for energy.
Going forward the CEA expects electricity demand to increase by 75%
by the year 2012. As it is India has been a power deficit country for the
last 5 decades. As of March 2006 the energy shortage was
approximately 8.20% and the peak deficit was much higher at 12.28%.
India thus requires an immediate, clean and cost effective solution to
bridge the electricity demand supply gap.

Why renewable energies

• Conventional fossil fuel energies are prone to escalating

feedstock prices and are highly polluted

Globally demand for fossil fuels such as coal, gas and oil, which are the
conventional sources of energy have outstripped supply. Prices of
feedstock for thermal power generators that run on conventional
sources of fuel have been sharply escalating. The adverse environment
effects caused by the conventional energy production are also of key
global concern. The world is in need of alternative and renewable
sources of energy.

Rationale for wind energy

• Abundance of wind resources in India not yet tapped – wind

is inexhaustible

India is blessed with geographical and climate conditions that generate

significant wind resources. At a total installed wind power generation
capacity of 7093 MW as of May 2007, India ranks 4th globally, after
Germany , Spain and the USA. Against India’s total gross potential of
45,195MW the current installed capacity has tremendous room for
growth.

• Vastly improved cost economics over the last 25 years

As one of the oldest forms of alternative energy, wind power has proven
to be one of the most commercially viable. Realizing the significant
potential of wind energy wind turbine manufactures have been
dedicated much resources , time and effort in researching and
developing bigger and better wind turbine generators. In addition more
sophisticated wind resource assessment techniques have been
developed in order to harness wind energy for electricity generation
more efficiently and effectively. As a result there has been phenomenal
improvement and advancement in wind power technology over the last
25 years. For instance in the 1980s, sizes of commercial wind turbine
used to be a mere 50 KW in capacity with rotor diameters of some 15
meters. The current turbines are of 5000 KW in capacity with rotor
diameters of over 124 meters installed in Germany. Such improvement
in technology has substantially enhanced the cost effectiveness of wind
turbines significantly.

• Attractive legislative incentives

The Electricity Act 2003 which came into force in India in June 2003
consolidated and replaced a number of earlier electricity legislations.
The Act has introduced significant changes in industry structure and
provides an enabling framework for the accelerated and more efficient
development of the power sector. The main objective of the Act is to
provide “power for all”. It also recognizes the importance of renewable
energy and has placed emphasis through legislative changes on its
development. The Act mandates the provision of suitable measures or
connectivity and procurement of minimum percentage of power by
SEBs\ State Utilities from renewables. In addition it stipulates suitable
policy formulation and tariff setting by respective State govt’s to ensure
adequate returns to investors in renewable power infrastructure and a
high degree of certainty of the returns. The Act also brings clarity to the
roles of different organizations and provides for better financial
management of the state Electricity Boards.
 • Other incentives – the Kyoto protocol

India is a signatory to the Kyoto protocol an International treaty that

was adopted at COP 3 in Kyoto Japan on 11th December, 1997 to help
reduce greenhouse gas(GHG) emissions responsible for the global
warming. This protocol and new European Union Emission rules (EUR)
have created a market in which companies and Govt’s that reduce GHG
emissions levels can sell the ensuing emissions reduction\carbon credits
to countries that are exceeding their GHG emission quotas.

Our Business

We started developing wind farm in a small way by installing 1 no. of

225 KW Wind Electric Generator, in September 1995. Since then our
company has been expanding our wind farm capacity every year to
reach the present capacity of 16.825MW owned by us and 17.915MW
for others whose Operations and Maintenance is with our company. The
company is currently in process of implementing additional 9MW
capacity in Karnataka as mentioned in section ‘Objects of the issue’.

The current scope of operations of our company includes:

a) wind power generation

b) Turnkey operation for windmill projects
c) Operations & Maintenance of WEG’s

We offer ‘Green Power’ to our customers which include State

Electricity Boards and Corporates. Other than the above they are also
in business of providing O&M services for windmills.

We have been selling the power generated to TNEB and various

private corporate clients in Karnataka such as Hindustan Coca Cola
Beverages Private Limited, Karnataka Distillers Limited, United
Breweries Limited, H&R Johnson India Limited, Delphi Automotive
Systems Private Limited and Spicer India Limited. Under third party
sale the electricity revenues generated from the sale to SEBs.

Under turnkey projects, our Company provides total solution for

installation, operation and maintenance of windmills for third parties.
Our company has till date executed turnkey projects to the tune of
14,175 MW.

Other than the above we are also into business of providing O&M
services for windmills. The focus of the O&M services for windmills.
The focus of the O&M operations has a major thrust on keeping the
machine availability over 90%. This is done to ensure the machine to
generate optimum energy when the wind speed in the given area is
adequate. This existing state wise installed capacities are given below:

Product Year ended

2004 2005 2006 2007
Installed Installed Installed Installed
Capacity Capacity Capacity Capacity

Wind mills
owned by us 17.875MW 17.625MW 16.825MW 16.825MW

Karnataka 4.10MW 4.10MW 3.30MW 3.30MW

Tamil Nadu 13.525MW 13.525MW 13.525MW 13.525MW
Andhra 0.25MW - - -
Pradesh

Wind mills 5.125MW 6.625MW 17.915MW 17.915MW

operated &
maintained
by us

Wind Farm Concept

 The generation of electricity from wind energy in real sense, started
only from the beginning of this century and with the growing interest
reached to the stage of cost effectiveness, employing feasible light
weight blades, improved ailerons, teetering attachment, direct drive
transmission, increased height, aerodynamic designs, advanced
electronic control etc. the power producing windmill incorporating all
these features are now popularly called the Wind Electric
Generator(WEG). At windy sites the WEGs are generally installed in
a cluster and are connected to electric grid through suitable
transformers and switch gears. Such development of WEGs in a
cluster, generating electricity from wind is commonly known as
‘Wind farms or ‘Wind parks’. So the wind farm at a site may have a
number of wind electric generators with uniform or non uniform
designs or of different or same capabilities. Wind power projects
consist of a cluster of Wind Electric Generators\Wind Turbines\Wind
Energy Converters erected and connected together to electrical grid at
a site.

Wind Electric Generators

The WEG manufacturers have their own design of Wind Turbine. In

general, the wind machine consists of following major components:-

a) Tower (lattice or Tubular)

b) Nacelle
c) Rotor Blades
d) Gear Box & Transmission System
e) Generator / System
f) Yawing System
g) Microprocessor based control panel
h) Power & Grid System
i) Breaking / Control System

He wind turbines are available in a wide range from 225 KW capacities

to large machines of 5 Mega Watt(MW) capacities world wide. In India
Wind turbines of 225 KW to 1650 KW capacities are most popular as
they have proved to be commercially viable. The wind electric
generator is a simple machine which converts the mechanical energy
received from wind to electrical energy. Here the wind speed is the
prime
mover, which makes the rotor blades to rotate and converts the kinetic
energy of the wind into mechanical energy. The mechanical energy
developed by the rotor is transferred to the generator coupled to the
high speed shaft. Thus the generator is made to rotate at high speeds.
Through this rotation the generator converts the mechanical energy into
the electrical energy. This electrical energy produced from the WEG is
then transferred to the nearest grid, sub stations through the
transformers which step up the electrical voltage to minimize the
transmission losses in transmission system. The components of wind
turbines are designed to last for 20 years. The actual lifetime of a wind
turbine depends both in the quality of the turbine and the local climatic
conditions and maintenance.

Our Competitive Strengths

1. We are an existing profit making company with a good track

record or over a decade.

2. Our Company has qualified and experienced manpower in its

field of operations.
3. We derive benefit from the fact that our existing profects are
located in Tamil Nadu and Karnataka, which are high wind
zones.

Vision And Mission

Indowind Energy Limited is committed to the development and
promotion of Green PowerTM , generation in the country. Reflecting this
commitment, clear statements of Vision, Mission of company are as
follows:

Vision :

To excel in the generation of Green Power TM , as an alternative and

clean energy technology company, leveraging on the 6m resources,
through a satisfied and motivated workforce.

The corporate vision of the company is to be a major global player in

the renewable energy space using State of the Art Technology to set up
World class projects. Effective utilization of the 6 M resources viz. Man
, Machine, Material, Money, Market & Management to achieve the
objective. Providing a comfortable work environment with adequate
employee benefits by being a preferred employer.

Mission :

To emerge as a leading and sustainable company committed to

promotion and generation of “ Green Power TM ” through Renewable
Sources of Energy.

Mission is to be a pioneer in the IPP space, growing into an

environmentally clean energy company in the field of power generation,
by tapping new opportunities for growth.

STATEMENTS OF ASSETS AND LIABILITIES

SL.NO PARTICULARS 30.06.2003 30.06.2004 30.06.2005 30.06.2006 30.06.2007
A Fixed Assets
Gross Block 1,964.82 2,496.87 2,337.72 2,337.82 2,528.07
Less: Depreciation 377.82 480.53 518.59 596.59 697.77
Less: Revaluation
Reserve 640 640 200 60 60
NET BLOCK 947 1,376.34 1,619.13 1,583.23 1,770.30
Capital Work in
Progress 956.39 0 8.39 10.02 17.08
Capital advances 1,238.90 1,249.40 1,668.00 2,822.42 3,018.99

TOTAL 3,142.29 2,625.74 3,295.52 4,415.67 4,806.37

B Investment 91.17 69.06 1.25 1.25 271.91
Current Assets,
C Loans& Advances
Work in Progress 0 1,426.21 820.13 515.43 1,347.26
Sundry Debtors 332.59 221.77 253.76 773.59 817.18
Cash and Bank
Balances 77.25 59.94 27.87 211.81 88.21
Loans and Advances 3,389.80 1,022.28 672.75 936.73 853.07
Other Current Assets 170.02 155.71 212.71 223.29 271.55
Deferred Tax Assets 0.00 7.42 0 0 0

TOTAL 3,969.66 2,893.33 1,987.22 2,660.85 3,377.27

Liabilities and
D Provisions
Preference shares 1,600.00 1,400.00 400 400 400
Secured Loans 404.55 357.37 632.72 846.74 1,591.95
Unsecured Loans 131.78 728.10 246.65 170.16 0
Deferred Tax Liability 0 0 31.7 42.4 23.02
Current Liabilities &
Provisions 2,517.00 343.45 178.91 310.01 483.09

TOTAL 4,653.33 2,828.92 1,489.98 1,769.31 2,498.06

NET
E WORTH(A+B+C+D) 2,549.79 2,759.21 3,794.01 5,308.46 5,957.49
F Represented by
Equity Share Capital 753.00 1,506.00 2,536.78 3,645.68 3,645.68
Reserve & Surplus 2,436.79 1,899.37 1,471.63 1,748.16 2,406.14
Less: Revaluation
Reserve 640.00 640.00 200.00 60.00 60.00
Less: Miscellaneous 0.00 6.16 14.40 25.39 34.33
Expenses

NET WORTH 2,549.79 2,759.21 3,794.01 5,308.46 5,957.49

STATEMENT OF PROFIT AND LOSS

SL.NO PARTICULARS 30.06.2003 30.06.2004 30.06.2005 30.06.2006 30.06.2007
A INCOME
a) Power Income 568.11 525.59 787.13 764.30 772.09
b) Project Income 0 0 1,080 1,567.50 1,640
Total Income 568.11 525.59 1,867.13 2331.8 2412.09
Other Income 988.36 340.00 116.30 271.61 345.35

TOTAL 1,556.47 865.59 1,983.43 2,603.41 2,757.44

B Expenditure
Raw material expenses 0.00 0.00 778.59 1,095.86 1,231.18
Operating expenses 75.98 78 108.01 238.64 212.58
Personnel Expenses 31.67 40.76 48.57 35.65 45.06
Administrative expenses 64.59 88.19 88.83 140.1 128.88

TOTAL 172.24 206.95 1,024.00 1,510.25 1,617.70

Net profit before
C interest, depreciation 1,384.23 658.64 959.43 1,093.16 1,139.74
Depreciation 91.27 104.80 106.5 77.99 101.18
Interest & financial
charges 1,046.00 248.33 383.53 439.43 371.66
PROFIT/LOSS
BEFORE TAX 246.96 305.51 469.4 575.74 666.90
Provision for taxation
-Current Tax 6.83 5.23 16.04 14.13 28.30
-Deferred Tax 0.00 -7.42 39.12 10.71 -19.38
PROFIT/LOSS AFTER
D TAX 240.13 307.70 414.24 550.90 657.98
Extra ordinary items 0.00 0.00 0 0.00 0.00
PROFIT/LOSS AFTER
E EXTRA ITEMS
Less: dividend on
preference shares 66.00 0.00 0 0.00 0.00
Less: tax on dividend 7.26 0.00 0 0.00 0.00
Less: dividend on Equity
Shares 60.24 0.00 0.00 0.00 0.00
Less: tax on dividend 6.53 0.00 0.00 0.00 0.00
Profit available for
appropriation 100.10 307.70 414.24 550.90 657.98
less: transfer to capital
reserve 0.00 0.00 0.00 30.00 0.00
Balance b\f from last
year 0.00 0.00 0.00 0.00 0.00
Profit transferred to B\S 100.10 307.70 414.24 520.90 627.98

Significant Accounting Policies & notes to Accounts

1 Significant Accounting policy:

The accounts are prepared under the historical cost convention(except

for revaluation of certain fixed assets)and materially comply with the
mandatory accounting standards issued by the Institute of Chartered
Accountants of India. The significant accounting policies followed by
the company are as stated below:

A. FIXED ASSETS

Fixed assets are stated at a cost less depreciation and including

revaluation cost. The cost of comprises of purchase risk, imports duties
, levies and any directly attributable cost of bringing the assets to its
working condition for the intended use.

The Company treats Non Refundable Deposits for Wind Electric

Generators as Guarantee deposits since related assets are in its control,
earning income of power generation.

B. DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the

rate and in the manner prescribed in schedule X111 of the Companies
Act 1956 on cost including revaluation cost, less accumulated
depreciation.

C. INVESTMENTS

Investments are held by the company as long term asset. The market
fluctuation for the increase\decrease in the value of investments are not
accounted as the investments are held in unlisted companies. Company
treats key man insurance as investments.

D. INVENTORIES
Inventories are valued at cost, net realizable value in the case of unsold
power and in case of work- in – progress it is valued to the extent of its
completion including interest payments related to the projects.

E. REVENUE RECOGNITION

Revenue consists of sale of power, sale of WEG and other income..

Sale of power is recognised at the point of dispatch of electricity

generated from Plant and Stock points. Sale of WEG is recognized at
the point of sale of windmill less manufacturing expenses. Other
Income is recognized net off of related expenses including accrued
bonus on investments.

F. RETIREMENT BENEFITS

The Company has provided for retirement benefits to the employees

such as gratuity, Provident Fund and ESI. But in the case of gratuity,
only provision is made as per management’s estimate and has not
formulated any policy for investments of the said gratuity provision.

G. TAX ON INCOME

The company has provided Rs 28,30,165/- taking in to account the

profit for the period April to March 2007

H. FOREIGN CURRENCY TRANSATION

Foreign currency transactions are recorded at exchange rate prevailing

at the time of transaction. Exchange differences are not recognized
since payments are made in advance for purchases.

I. PROVISION, CONTINGENT LIABILITIES AND

CONTIGENT ASSETS

Provisions involving substantial degree of estimation in measurement

are recognised when there is a present obligation as a result of pass
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
SEGMENT REPORTING:
 Segment Reporting for the year 2003-2004
Segment Power Project Others Total
reporting

Segment 525.59 3679.86 192.15 4397.60

income

Segment 416.75 3532.01 52.56 4001.32

expense

Segment 108.84 147.85 139.59 396.28

results

Un allocable - - - 90.78
expense

Total profit - - - 305.50

Segment 4430.17 483.55 1743.32 6657.04

assets

Segment 472.37 - 1379.30 1851.67

liabilities

Segment Reporting for the year 2004-2005

Segment Power Project Others Total
reporting

Segment 787.13 1080.00 136.45 2003.57

income

Segment 584.41 784.11 66.45 1434.97

expense

Segment 202.72 295.89 69.99 568.60

results

Corporate 19.84 49.60 29.76 99.20

office exp

Total profit 182.88 46.89 40.23 469.41

Segment 3821.22 828.52 866.82 5516.56

assets

Segment 221.26 553.49 315.23 1089.99

liabilities

Segment Reporting for the year 2005-2006

Segment Power Project Others Total
reporting

Segment 764.30 1567.50 271.61 2603.41

income

Segment 93.67 1264.13 41.33 1958.10

expense

Segment 170.64 303.37 230.28 704.29

results

Corporate - - - 128.54
office exp

Total profit 170.64 303.37 230.38 575.75

Segment 5313.59 894.27 955.30 7163.16
assets

Segment 241.34 699.46 428.52 1369.32

liabilities

Segment Reporting for the year 2006-2007

Segment Power Project Others Total
reporting

Segment 77,208,567 164,000,000 34,535,603 275,744,170

income

Segment 66,108,642 125,379,473 5,371,510 196,859,625

expense

Segment 11,099,925 38,620,527 29,164,093 78,884,545

results

Corporate 12,194,528
office exp

Total profit 11,099,925 38,620,527 29,164,093 66,690,017

Segment 574,740,378 182,641,129 97,607,344 854,988,851
assets

Segment 46,032,521 150,791,775 12,981,888 209,806,184

liabilities

Cash flow statement

 30.06.03 30.06.04 30.06.05 30.06.06 30.06.07
A. Cash flow from
operations
Adjustments
add: depreciation 91.3 104.8 106.5 77.99 101.18
less: income from other
activities 188 305.9 69.99 242.77 345.35

operating profit before WC 150.3 104.39 505.9 410.96 422.73

WORKING CAPITAL
CHANGES
sundry debtors-
decrease\increase -114.45 110.82 -31.99 -519.83 -43.59
loans & advances -2969.11 2357.53 295.25 -269.93 30.71
increase\decrease in other
c. assets 305.8 445.58 -2.72 -4.63 4.69
increase\decrease in
gurantee deposit 122.64 -10.5 -418.6 -1154.42 -196.57
increase\decrease in
deferred tax _ -7.42 31.7 10.7 -19.38
current liability- -1577.2
increase\decrease 2396.26 3 -338.18 131.09 164.15
increase\decrease in other
current liability _ _ _ -41.06 -170.16
increase\decrease in current -1848.0
assets -258.86 427.62 -464.54 8 -230.15
(A)CASH FLOW FROM -1437.1
OPERATIONS -108.56 532.01 41.37 2 192.58
B. Cash flow from investing
activities
net income from other
activities 188 305.9 69.99 242.77 345.35
purchase\sale of fixed
assets -170.1 -532.09 26.65 70.18 -288.25
increase\decrease in capital
W-I-P -316.64 _ 157.69 163.07 -838.89
purchase\sale of
investments -6.1 22.03 67.81 _ -270.66
(B)CASH FLOW FROM -1052.4
INVESTING -304.84 -204.16 322.14 476.02 5

C.cash flow from financing

activities
proceed from issue of equity
shares _ -200 _ 94.2 _
proceed from share
premium _ _ _ 847.8 _
proceed from issue of
preference shares 500 _ _ 0 _
redemption of preference
shares -100 _ -500 0 _
proceeds from secured
loans 137.8 _ _ 214.02 745.21
repayment of secured loans _ -47.18 51.36 0 _
increase\decrease in
reserves _ _ _ 0 _
dividend & dividend
tax(paid) -140.1 91.93 61.3 0 _
misc expenses paid _ -6.1 -8.24 -11 -8.94

(C)Cash flow from financing

activities 397.7 -1 -395.58 1145.02 736.27

Net Increase in Cash

(A+B+C) -15.7 -17.36 -32.07 183.92 -123.6
opening cash& cash
equivalents 93 77.3 59.94 27.87 211.81
closing cash & cash
equivalents 7.3 59.94 27.87 211.81 88.21
 RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

• To reduce the overall cost of inventory by a minimum of 30%

• To fix the optimum stock level (Minimum Stock level) for various items.
• To analyze the inventory level of the company.
• Provide satisfactory service to customers.
• Eliminate wastages and handling cost.
• To find means of taking advantage of price fluctuations and buy
economically.

NEED FOR THE STUDY

 In Wheels India the annual expenditure for both direct materials like steel
and paint and indirect inventories like Raw materials, Components spares
and Consumables are 65% of the total expenditure.

 Even a small percentage of savings on inventory cost could improve the

profitability of the company.

 To look in the materials requirements and consumption and make

suggestions to reduce the total expenditure on materials by using methods
and techniques of inventory management.

SCOPE OF THE STUDY

The scope of the study is to identify the material requirement of the company
and controlling and managing the inventory level and also to suggest means of
improvement in the existing process if necessary.
 PERIOD OF THE STUDY

The study has been conducted for 3 months (January to March, 2007) including
data collection, data analysis and report preparation.

TOOLS OF THE STUDY

 ABC Analysis

 HML Analysis

 FSN Analysis

 SDE Analysis

 Economic Order Quantity

 Safety Stock

 Maximum Stock level

 METHODOLOGY

The methodology followed in this study involves techniques of ABC Analysis,

HML Analysis, FSN Analysis, SDE Analysis, Economic Order Quantity, Safety
Stock and Maximum Stock level. This study is completely based on the secondary
data obtained from Wheels India Limited.

LIMITATIONS OF THE STUDY

 Time has been a limiting factor and it has been difficult to analysis the
various aspects of inventories with the prescribed time.

 The ordering cost is constant (below one rupee) because the sales have been
done through a mail.

 The carrying cost also is constant since the company has to pay the bank
interest as 12% for the inventories, which they are buying from their
suppliers in bulk orders. Thus, it is applicable to take as 12%.

 There are no scarce items in SDE Analysis and also some of the items are
difficult to purchase and rest of the items will be easily available in the
market as it depends on the vendors.

 There will be high risk, if the company is not maintaining proper safety
stock level.

 The company should eliminate wastages so as to control the inventories

 INVENTORY MANAGEMENT TECHNIQUES

1). ECONOMIC ORDER QUANTITY (EOQ)

One of the major inventory management techniques that determine how many
inventories should be added when inventory is replenished. If the firm is buying
material, if has to decide lots in it has to be purchased on each replenishment. The
formula for calculating EOQ is as follows:

Analyses of cost of maintaining certain level of inventories are

 Ordering Cost

The term ordering cost refers to the entire costs of acquiring raw materials, they are
purchased ordering, Transporting, receiving, inspecting and storing. Ordering cost
increase in proportion to the number of orders placed. It consists of the following
points:

a) Rent for the space used by the purchasing department;

b) The salaries and wages of officers and staff in the purchasing

department;

c) The depreciation on the equipment and furniture used by the

department;
 Relationship between Cost and Quantity

d) The postage, telegram and telephone bills;

e) The stationery and other consumables required by the purchasing

department;

f) The entertainment charges incurred on receiving vendors;

g) Any travelling expenditure incurred;

h) Lawyers and court fees due to any legal matters arising out of
purchase.

Obviously, the more the number of orders placed in a period, the more would be the
stationery and postage consumed, more staff and officers would be required for
handling the work, more would be the space required for accommodating them and
so on. Thus, the total expenditure on purchasing or ordering would depend on the
number of orders placed.

 Carrying Cost

Carrying cost incurred for maintaining a given level of inventory. It includes

storage, insurance, taxes, deterioration and obsolescence.

Inventory carrying costs arise out of the following factors:

i. The loss of interest (or profits) on the money invested in the stocks of
materials

ii. The salaries and wages of the stores personnel employed t receive, store and
issue the materials.

iii. The rent for the stores.

iv. The depreciation and repairs cost for the stores facilities and handling
equipment.

v. Any loss of material through pilferage and deterioration.

vi. Materials rendered obsolete because of design changes or other factors,

vii. Taxes on inventories

viii. Stores insurance charges and Stationery and other consumables used by the
stores, etc
2). MAXIMUM STOCK LEVEL:

It is upper limit or maximum limit to which the inventory can be kept in the stores
at any time.

Factors essential for fixing the maximum level:

 Fixation of rate of consumption required for production

 Availability of storage space.

 Cost of storage.

 Availability of finance.

 Availability of quality of raw-materials.

 Cost of insurance.

 Economic Ordering Quantity (EOQ).

Formula for calculating maximum stock level is as follows:

Maximum stock level = Safety Stock (Minimum stock level) + Economic Order
Quantity (EOQ)

3). MINIMUM STOCK LEVEL:

It is the lower or minimum limit of the inventory, which must be kept in stores at
any time.

Factors essential for fixing the minimum level:

 Re-order level

 Normal consumption of materials.

 Nature of material

 Time gap between placing an order and receiving the goods.

4). LEAD TIME:

Lead-time is the time normally taken in replenishing inventory after the order has
been placed. Lead-time involves the time for the completion of some of the
following activities:

 Raising of a purchase requisition,

 Inquiries, tenders, quotations,

 Receiving quotations, tenders, their scrutiny and approval,

 Placement of order on a supplier

 Transportation and clearing

 Receipt of good at the company.

 Receiving inspection,
  Taking into stock.

Obviously, in order or receive supplies before the stock reaches zero level, it is
necessary to order the materials much in advance i.e. when the stock available in
sufficient to last during the lead-time.

5). SAFETY STOCK:

It is also known as Buffer or Reserve. It is well known from experience that neither
the annual consumption rate of a material nor its lead-time is constant throughout
the year. In some cases, a stock out would be experienced resulting into hampering
of production.

To guard mainly against these uncertainties in consumption rate and lead-time, an

extra stock is maintained all along and this is called as “Buffer Stock or Safety
Stock or Reserve”. This stock also comes handy in case of

a) Any excessive in-process rejections.

b) Rejections at the time of receipt or goods due to damages or
sub-standard quantity, etc.

Since Safety Stock is a part of inventory, it should be maintained just sufficient to

guard against the uncertainties and not too excessive.

Optimum Safety Stock:

If the Safety Stock maintained is inadequately low the inventory carrying Costs
would be
low but stock-outs will be frequently experienced and the stock out Costs would be
very high. Hence, it calls for inventory costs to arrive at an optimum safety stock.
Stock outs may give rise to the following losses:

 Customer dissatisfaction or customer loss,

 Loss of production,

 Loading machines or men,

 Emergency purchases at high priced,

 Extra transportation charges for speedier modes of transportation.

6). RE-ORDER POINT:

Economic Order Quantity determines the quantity of materials to be purchase.

Reorder point helps in determining the time at which the order should placed. The
reorder point is that the inventory level at which an order should placed. The
reorder point helps in inventory level at which the order should placed. The reorder
point is that the inventory level at which an order should be placed to replenish the
inventory to determine the reorder point under certainty, it should know the lead
time, average usage and economic order quantity.

The formula for re-order level is as follows:

Re-order level = Safety Stock + Normal lead Time Consumption.

7). ABC ANALYSIS

Concept
It is a selective inventory control; usually a firm has to maintain several types of
inventories. It is not desirable to keep the same degree of control on all items. The
firm should pay maximum attention to those items whose value is the highest.

The firm should, therefore classify inventories to identify which items should
receive the most effort in so controlling. The firm should be selective in its
approach is called the ABC analysis and tends to measure the significance of each
item of inventories in term of value.

Classification of items:

• High value items are classified as ‘A’ items and would be under the
tightest control.
 • ‘C’ items represent relatively least value an would be under simple
control.

• ‘B’ items, fall in between these two categories and require

reasonable attentions of management.

Steps involved in implementation of ABC analysis

 Classify the items of inventories, determine the expected use in units

and price per unit for each item.

 Determine the total value of each item by multiplying the expected

unit price.

 Rank the items in accordance with the total value, giving first rank to
the item with highest total value and so on.

 Compute the ratios of the numbers of units each item to total units of
all items and ratio of total value of each item to total value of all
items.

 Combine items on the basic of their relative value to form three

categories – A, B and C.

8). SDE ANALYSIS:

This analysis is based upon the availability position of an item. Especially, in

developing countries where certain items are scarce, this analysis is very useful.
S – Refers to Scarce items, especially imported items and those which are in short
supply.

D – Refers to difficult items, which are available in indigenous market but cannot
be procured easily. For example, items which have to come form far off cities or for
which reliable suppliers are difficult to find.
E – Refers to items which are easily available (mostly local items).

9). HML ANALYSIS:

This cost per item is considered for this analysis and all items are classified as High
Cost (H), Medium Cost (M), and Low Cost (L) items. This type of analysis is useful
for keeping control over consumption at departmental level, and for deciding the
frequency of physical verification.

10). FSN ANALYSIS:

Here the quantity and rates of consumption are analyzed to classify the items as –
Fast Moving (F), Slow Moving (S), and Non-Moving (N) items. The Fast and Slow
Moving classification help in arrangement of stocks in the stores and in deciding the
distribution and handling methods. It is found that many companies maintain huge
stocks of non-moving items and the number of such items runs well over a
thousand. The following steps are taken before disposal:

a) Circulate a list of non-moving to production, design and other

departments and classify these into:

• Items which can be used in future as such;

• Items which need modifications for use in future;
• Items that cannot be used.
b) The list of items that cannot be used should be sent to all similar
organizations and probable user for sale or exchange.
c) These items, if cannot be disposed off to similar organizations, they
should be put to open auction.
 CLASSIFICATION ON THE BASIS OF ABC ANALYSIS

A
Cum Cum B
DESCRIPTION STOCK stock % C

158785.3
1 SANDER DISC -ZIRKON - GR 36 2 158785.3 3.54 A
136302.6
2 RAJ HYDRA SUPER HL 68 (BULK) 8 295087.98 6.58 A
120220.9
3 CASTROL ILOFORM TDN 81 - N OIL 6 415308.94 9.26 A
MACH-SEAL P21-D34 R/B SIC 18 P13C VS
4 OB 110473.66 525782.6 11.73 A
13.7
5 GRAPHITE GREASE (GARONEX R) 92504.86 618287.46 9 A
6 GES PIEGEON RACK ACRYLIC DOOR- 81000 699287.46 15.6 A
SEASONED RUBBER WOOD PALLET 87 X
7 28 BASE 76293.56 775581.02 17.3 A
50 X1600MM ZIRKON BELT GR-36 18.9
8 (GRINDWELL) 74270.78 849851.8 6 A
CASTROL SUPER EDGE 7/SW 131B 20.5
9 GRADE OIL 70875.68 920727.48 4 A
ARMOURED JELLY FILLED TELEPHONE 21.9
10 CABLE 20 63720 984447.48 6 A
11 3.15 MM WELDING ELECTRODE - 90 (FOR 60241 1044688.5 23.3 A
GRINDING WHEEL 7 MM (180 X 7 X22.3 24.6
12 LONG 59877.2 1104565.7 4 A
25.9
13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 58219.74 1162785.4 4 A
27.2
14 SANDER DISC GR 36 (ZIRCON) 57879 1220664.4 3 A
RAJ CUT SUPER COOLANT OIL (EPSOL
15 SUPER 52326.88 1272991.3 28.4 A
 3.15 MM WELDING ELECTRODE 29.5
16 SUNBOND( 60 51388.08 1324379.4 4 A
ARMOURED JELLY FILLED TELEPHONE 30.5
17 CABLE 50 46000 1370379.4 7 A
VSM ABRASIVE BELT SIZE KK 815Y 50 31.5
18 X1600 44371.24 1414750.6 6 A
32.5
19 HIDRAW HD OIL 43845.3 1458595.9 4 A
33.4
20 RUSTILLO OIL DW 901 42555.15 1501151.1 8 A
42" X 42" WOODEN PALLET WITH 1 BASE
21 &1 41092.37 1542243.4 34.4 A
35.2
22 ALLEN SCREW 1.1/8"BSW X 5" 39970.63 1582214.1 9 A
36.1
23 G WHEEL 400X50X127 AA60 L7 127 39844.2 1622058.3 8 A
4.0 MM WELDING ELECTRODE SUN 37.0
24 BOND SS 38133.51 1660191.8 3 A
37.8
25 POLYESTER STRAPPING TAPE 16MM X 37752.9 1697944.7 7 A
38.7
26 RAJ HYDR SUPER HL68(BARREL) 37630.92 1735575.6 1 A
SEASONED RUB.WOOD PALLET 39.5
27 87"X31"-CAT 37615.25 1773190.9 5 A
40.3
28 VSM COATED BELT ZK713X SIZE 36131.58 1809322.4 6 A
41.1
29 TYRE 10.00 X 20-16PR 35956 1845278.4 6 A
41.9
30 SODIUM HYDRO SULPHITE 35803 1881081.4 6 A
EXCEL DEBURRING AND FINISHING 42.7
31 WHEEL 35762.8 1916844.2 6 A
PACKING STICKERS "DESPATCH 43.5
32 DETAILS" 35309.73 1952154 4 A
GRINDING WHEEL 450X50X203mm A46- 44.3
33 K5-V10 35124.7 1987278.7 3 A
34 12 " LEATHER GLOVES WITH CADA CUFF 35094.19 2022372.9 45.11 A
45.8
35 GUARD ST.GRINDER-Z. MODEL 34680.8 2057053.7 8 A
ABRASIVE BELT K 46.6
36 815Y50MM,WX1000MM 34492.89 2091546.5 5 A
2.5 MM WELDING ELECTRODE SUN 47.3
37 BOND SS 32528.46 2124075 8 A
SEASONED RUB.WOOD PALLET 87" X
38 29"-BASE 32270.5 2156345.5 48.1 A
48.7
39 COOLANT OIL 31161.44 2187506.9 9 A
49.4
40 STEEL SHOTS GR S 390 31151.77 2218658.7 9 A
 50.1
41 JOHNDHEER WOODEN PALLET 87" X 32" 29960 2248618.7 6 A
50.7
42 MAXTREAT-2902 28061.83 2276680.5 8 A
43 4" X 4"X 1/2",/3/8" MS ANGLE 27763.55 2304444.1 51.4 A
STRAPPING TAPE 16 X 1600 GREEN 52.0
44 COLOUR 27651.2 2332095.3 2 B
45 SERVO MESH SP 220 OIL 26110.8 2358206.1 52.6 B
53.1
46 STEEL SHOTS GR S 460 25390.5 2383596.6 7 B
STEEL STRIP IN BAND [ITW SIGNODE 53.7
47 3415 25278.58 2408875.2 3 B
54.2
48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 25183.24 2434058.4 9 B
54.8
49 SERVO SYSTEM 150 23666.71 2457725.1 2 B
55.3
50 6" S.S PIPE -SCH-40 23504.22 2481229.3 5 B
55.8
51 2.5 FERROSPEED SUNBOND – 135 (FOR 23015.44 2504244.8 6 B
NUT RUNNER - 10MM A/F X 50MM 56.3
52 L.(NON- 22660 2526904.8 6 B
56.8
53 OIL - MAGNA GC – 32 21582.99 2548487.8 5 B
57.3
54 HAMMER CHIPPING 21473.91 2569961.7 3 B
55 LT/LK ML 12 SPARE KIT 21440.28 2591402 57.8 B
58.2
56 CAUSTIC SODA (FLAKE) 21358.61 2612760.6 8 B
58.7
57 ROTARY BURR-K3 21174.62 2633935.2 5 B
59.2
58 COCONUT OIL 20850.05 2654785.2 2 B
59.6
59 SANDER DISK 7"-CARBORUNDUM GR36 20552 2675337.2 8 B
60.1
60 GUARD FOR ST.GRINDER 20530.39 2695867.6 3 B
METAL PALLET BASE CUST JAPAN TOP 60.5
61 COVER 20526.97 2716394.6 9 B
61.0
62 WHITE CLOTH 20351.31 2736745.9 5 B
3M FLOW STREAM BELT MOUNTED 61.4
63 SUPPLIED AIR 20110.36 2756856.3 9 B
ARMOURED JELLY FILLED TELEPHONE 61.9
64 CABLE 5 20000 2776856.3 4 B
62.3
65 CONTCT KIT FOR TEL.LA5- 19517 2796373.3 8 B
62.8
66 GLUE POWDER 19392 2815765.3 1 B
 63.2
67 MASKING TAPE 3" 19375.33 2835140.6 4 B
63.6
68 MOLYGRAPH STENOL 50 S 19319.65 2854460.3 7 B
SILVER WOOD PALLET FOR MWSD
69 WHEEL- 19134.57 2873594.8 64.1 B
64.5
70 WOODEN PALLET 48"X48" [SILVER OAK] 18797.84 2892392.7 2 B
64.9
71 SILICAGEL 18159.91 2910552.6 2 B
GRINDING WHEEL 180 X 7 X 22 GR.36 65.3
72 (SAK 18138.74 2928691.3 3 B
65.7
73 COOLANT OIL ITW WS600N 18103.04 2946794.4 3 B
66.1
74 RAJ ULTRAFORM HDD 140 18042.26 2964836.6 3 B
66.5
75 36MM T/S DRILL [ADDISSION MAKE] 18000.9 2982837.5 3 B
ARMOURED JELLY FILLED TELEPHONE 66.9
76 CABLE 10 18000 3000837.5 4 B
67.3
77 E 115 OERLIKON ELECTRODE 4MM 17575.14 3018412.7 3 B
67.7
78 RESIN 220 NA INDION 17506.5 3035919.2 2 B
TARPAULIN-HDPE - SIZE: 24 X 18, 150
79 GSM 17220 3053139.2 68.1 C
68.4
80 MACHINE GRADE STRETCH WRAP 17022.58 3070161.7 8 C
68.8
81 TYRE-7.00 X15 12PR 16917.5 3087079.2 6 C
69.2
82 FLEXICON HOSE ST.GLAND FOR PG 48 16825.09 3103904.3 4 C
69.6
83 E- OIL (FUEL ADDITIVE ) 16710.3 3120614.6 1 C
69.9
84 EP VALVE - V012 45 3P DS MO - 16632.94 3137247.6 8 C
70.3
85 FILDROP COOLITE-7 (MAK GLIT CHEM) 16324.02 3153571.6 4 C
70.7
86 WOOD PRIMER (20 LTS) 16245.98 3169817.6 1 C
71.0
87 CABLE ASSLY. 0120601547 16191 3186008.6 7 C
71.4
88 CHAIN DUPLEX 1.1/2"PITCH 16045.4 3202054 2 C
71.7
89 HEX H T BOLT & NUT M14 X 120MM 16036.73 3218090.7 8 C
VERTICAL SANDER HD CP865S, CODE 72.1
90 NO. 16009.03 3234099.7 4 C
91 LDPE SHEET VIRGIN 36" X 36" X 350G 15907.32 3250007 72.4 C
 9
ESCORTS U TYPE AIR HEATER 1.5 K W 72.8
92 230V 15849.31 3265856.4 5 C
73.1
93 EXTN ROD TYPE IN SIDE MICRO METER 15496 3281352.4 9 C
TAPER SHANK DRILL 54 MM X 200 MM 73.5
94 LONG 15293.18 3296645.5 3 C
73.8
95 WELDING ELECTRODE 3.15MM E115 15223.03 3311868.6 7 C
GRINDING WHEEL 304.8X25.4X25.4 A46- 74.2
96 Q5- 15162.75 3327031.3 1 C
74.5
97 INDION-7106 15069.43 3342100.7 5 C
74.8
98 RUBBER PAD 2" X 2" X 3MM THICK 14779.75 3356880.5 8 C
99 TROLLEY WHEEL PNO 30208 ZRA1 14457.84 3371338.3 75.2 C
10 75.5
0 WHEEL DISPATCH STRICKER CV 475 14393.87 3385732.2 2 C

ABC ANALYSIS

C
22%
A
43%

B
35%

Figure 1

INTERPRETATION:
 The above diagram shows that 43% of the cost value of inventories is A items
followed by 35% of the value of inventories are B items and the remaining 22% of
the value comes under C items of ABC Analysis

CLASSIFICATION OF HML ANALYSIS

Sl. H
No STOCK ITEM M
. DESCRIPTION QTY RATE STOCK L

1 SANDER DISC -ZIRKON - GR 36 3424 46.37 158785.3 L

2 RAJ HYDRA SUPER HL 68 (BULK) 2348 58.05 136302.7 L
3 CASTROL ILOFORM TDN 81 - N OIL 1050 114.5 120221 M
MACH-SEAL P21-D34 R/B SIC 18 P13C
4 VS OB 2 55236.83 110473.7 H
5 GRAPHITE GREASE (GARONEX R) 1040 88.9 92504.86 L
6 GES PIEGEON RACK ACRYLIC DOOR- 10 8100 81000 H
SEASONED RUBBER WOOD PALLET 87
7 X 28 BASE 88 866.97 76293.56 H
50 X1600MM ZIRKON BELT GR-36
8 (GRINDWELL) 1000 74.27 74270.78 M
CASTROL SUPER EDGE 7/SW 131B
9 GRADE OIL 630 112.5 70875.68 M
ARMOURED JELLY FILLED
10 TELEPHONE CABLE 20 531 120 63720 M
3.15 MM WELDING ELECTRODE - 90
11 (FOR 25 2409.64 60241 H
GRINDING WHEEL 7 MM (180 X 7 X22.3
12 LONG 552 108.47 59877.2 M
13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 840 69.31 58219.74 L
14 SANDER DISC GR 36 (ZIRCON) 1090 53.1 57879 L
RAJ CUT SUPER COOLANT OIL (EPSOL
15 SUPER 814 64.28 52326.88 L
3.15 MM WELDING ELECTRODE
16 SUNBOND( 60 232 221.5 51388.08 M
ARMOURED JELLY FILLED
17 TELEPHONE CABLE 50 200 230 46000 M
 VSM ABRASIVE BELT SIZE KK 815Y 50
18 X1600 200 221.86 44371.24 M
19 HIDRAW HD OIL 420 104.39 43845.3 M
20 RUSTILLO OIL DW 901 523.4 81.31 42555.15 L
42" X 42" WOODEN PALLET WITH 1
21 BASE & 1 46 893.31 41092.37 H
22 ALLEN SCREW 1.1/8"BSW X 5" 25 1598.83 39970.63 H
23 G WHEEL 400X50X127 AA60 L7 127 9 4427.13 39844.2 H
4.0 MM WELDING ELECTRODE SUN
24 BOND SS 169 225.64 38133.51 M
25 POLYESTER STRAPPING TAPE 16MM X 6 6292.15 37752.9 H
26 RAJ HYDR SUPER HL68(BARREL) 630 59.73 37630.92 L
SEASONED RUB.WOOD PALLET
27 87"X31"-CAT 32.67 1151.37 37615.25 H
28 VSM COATED BELT ZK713X SIZE 764 47.29 36131.58 L
29 TYRE 10.00 X 20-16PR 4 8989 35956 H
30 SODIUM HYDRO SULPHITE 500 71.61 35803 L
EXCEL DEBURRING AND FINISHING
31 WHEEL 116 308.3 35762.8 M
PACKING STICKERS "DESPATCH
32 DETAILS" 15976 2.21 35309.73 H
GRINDING WHEEL 450X50X203mm A46-
33 K5-V10 13 2701.9 35124.7 H
12 " LEATHER GLOVES WITH CADA
34 CUFF 1992 17.62 35094.19 L
35 GUARD ST.GRINDER-Z. MODEL 44 788.2 34680.8 H
ABRASIVE BELT K
36 815Y50MM,WX1000MM 200 172.46 34492.89 M
2.5 MM WELDING ELECTRODE SUN
37 BOND SS 106 306.87 32528.46 M
SEASONED RUB.WOOD PALLET 87" X
38 29"-BASE 36 896.4 32270.5 H
39 COOLANT OIL 430 72.47 31161.44 L
40 STEEL SHOTS GR S 390 1075.00 28.98 31151.77 L
JOHNDHEER WOODEN PALLET 87" X
41 32" 14 2140 29960 H
42 MAXTREAT-2902 35.00 801.77 28061.83 H
43 4" X 4"X 1/2",/3/8" MS ANGLE 11 2523.96 27763.55 H
STRAPPING TAPE 16 X 1600 GREEN
44 COLOUR 6 4608.53 27651.2 H
45 SERVO MESH SP 220 OIL 420 62.17 26110.8 L
46 STEEL SHOTS GR S 460 875.00 29.02 25390.5 L
STEEL STRIP IN BAND [ITW SIGNODE
47 3415 10 2527.86 25278.58 H
48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 420 59.96 25183.24 H
49 SERVO SYSTEM 150 420 56.35 23666.71 L
50 6" S.S PIPE -SCH-40 3 7834.74 23504.22 H
 HML ANALYSIS

25% 21%

20% 16%
13%
15%

10%

5%

0%
H M L

Figure 2

INTERPRETATION:

The above diagram shows that 21% of the items have high Cost, followed by 13%
of the value have Medium Cost and the remaining 16% of the value have Low cost
of inventories in HML analysis.
 CLASSIFICATION ON THE BASIS OF FSN ANALYSIS

Sl. F
No LAST S
. DESCRIPTION ISSUES N

12/31/200
1 SANDER DISC -ZIRKON - GR 36 6 F
12/31/200
2 RAJ HYDRA SUPER HL 68 (BULK) 6 F
12/29/200
3 CASTROL ILOFORM TDN 81 - N OIL 6 F
4 MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 2/1/2006 S
12/31/200
5 GRAPHITE GREASE (GARONEX R) 6 F
6 GES PIEGEON RACK ACRYLIC DOOR- 11/16/2006 N
12/21/200
7 SEASONED RUBBER WOOD PALLET 87 X 28 BASE 6 F
12/29/200
8 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 6 F
12/29/200
9 CASTROL SUPER EDGE 7/SW 131B GRADE OIL 6 F
10 ARMOURED JELLY FILLED TELEPHONE CABLE 20 N
11 3.15 MM WELDING ELECTRODE - 90 (FOR 12/5/2006 F
12/30/200
12 GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 6 F
12/26/200
13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 6 F
12/31/200
14 SANDER DISC GR 36 (ZIRCON) 6 F
12/30/200
15 RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 6 F
12/31/200
16 3.15 MM WELDING ELECTRODE SUNBOND( 60 6 F
17 ARMOURED JELLY FILLED TELEPHONE CABLE 50 N
12/23/200
18 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 6 F
19 HIDRAW HD OIL 3/1/2006 S
12/30/200
20 RUSTILLO OIL DW 901 6 F
12/30/200
21 42" X 42" WOODEN PALLET WITH 1 BASE & 1 6 F
22 ALLEN SCREW 1.1/8"BSW X 5" N
23 G WHEEL 400X50X127 AA60 L7 127 9/23/2006 F
 12/31/200
24 4.0 MM WELDING ELECTRODE SUN BOND SS 6 F
12/30/200
25 POLYESTER STRAPPING TAPE 16MM X 6 N
26 RAJ HYDR SUPER HL68(BARREL) 12/7/2006 F
12/29/200
27 SEASONED RUB.WOOD PALLET 87"X31"-CAT 6 F
12/30/200
28 VSM COATED BELT ZK713X SIZE 6 S
29 TYRE 10.00 X 20-16PR 10/9/2006 S
30 SODIUM HYDRO SULPHITE 12/11/2006 S
31 EXCEL DEBURRING AND FINISHING WHEEL 6/29/2000 S
12/27/200
32 PACKING STICKERS "DESPATCH DETAILS" 6 F
33 GRINDING WHEEL 450X50X203mm A46-K5-V10 7/1/1997 S
12/31/200
34 12 " LEATHER GLOVES WITH CADA CUFF 6 F
35 GUARD ST.GRINDER-Z. MODEL 11/11/2006 N
12/23/200
36 ABRASIVE BELT K 815Y50MM,WX1000MM 6 F
12/30/200
37 2.5 MM WELDING ELECTRODE SUN BOND SS 6 F
12/29/200
38 SEASONED RUB.WOOD PALLET 87" X 29"-BASE 6 N
12/31/200
39 COOLANT OIL 6 F
12/29/200
40 STEEL SHOTS GR S 390 6 F
12/29/200
41 JOHNDHEER WOODEN PALLET 87" X 32" 6 S
12/17/200
42 MAXTREAT-2902 6 N
12/19/200
43 4" X 4"X 1/2",/3/8" MS ANGLE 6 F
12/30/200
44 STRAPPING TAPE 16 X 1600 GREEN COLOUR 6 F
12/22/200
45 SERVO MESH SP 220 OIL 6 F
12/29/200
46 STEEL SHOTS GR S 460 6 S
12/28/200
47 STEEL STRIP IN BAND [ITW SIGNODE 3415 6 F
12/24/200
48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 6 S
49 SERVO SYSTEM 150 12/7/2006 N
50 6" S.S PIPE -SCH-40 4/2/2006 S
 FSN ANALYSIS

30%

25%

20%
30%
15%

10%
11% 9%
5%

0%
F S N

Figure 3

INTERPRETATION:

The above diagram shows that 30% of the items are Fast Moving and 11% of the
items are Slow Moving and the remaining 9% of the items are Non Moving in FSN
analysis.

CLASSFICATION ON THE BASIS OF SDE ANALYSIS

Sl. ITEM
No. DESCRIPTION RATE SDE

1 SANDER DISC -ZIRKON - GR 36 46.37 E

2 RAJ HYDRA SUPER HL 68 (BULK) 58.05 E
3 CASTROL ILOFORM TDN 81 - N OIL 114.5 E
4 MACH-SEAL P21-D34 R/B SIC 18 P13C VS OB 55236.83 D
5 GRAPHITE GREASE (GARONEX R) 88.9 D
6 GES PIEGEON RACK ACRYLIC DOOR- 8100 E
SEASONED RUBBER WOOD PALLET 87 X 28
7 BASE 866.97 E
8 50 X1600MM ZIRKON BELT GR-36 (GRINDWELL) 74.27 E
9 CASTROL SUPER EDGE 7/SW 131B GRADE OIL 112.5 D
10 ARMOURED JELLY FILLED TELEPHONE CABLE 120 E
 20
11 3.15 MM WELDING ELECTRODE - 90 (FOR 2409.64 E
12 GRINDING WHEEL 7 MM (180 X 7 X22.3 LONG 108.47 E
13 HYD.OIL ELFOLNA-DS 46 SUPERCLEAN 69.31 E
14 SANDER DISC GR 36 (ZIRCON) 53.1 E
15 RAJ CUT SUPER COOLANT OIL (EPSOL SUPER 64.28 E
16 3.15 MM WELDING ELECTRODE SUNBOND( 60 221.5 E
ARMOURED JELLY FILLED TELEPHONE CABLE
17 50 230 E
18 VSM ABRASIVE BELT SIZE KK 815Y 50 X1600 221.86 E
19 HIDRAW HD OIL 104.39 D
20 RUSTILLO OIL DW 901 81.31 E
21 42" X 42" WOODEN PALLET WITH 1 BASE & 1 893.31 E
22 ALLEN SCREW 1.1/8"BSW X 5" 1598.83 E
23 G WHEEL 400X50X127 AA60 L7 127 4427.13 E
24 4.0 MM WELDING ELECTRODE SUN BOND SS 225.64 E
25 POLYESTER STRAPPING TAPE 16MM X 6292.15 D
26 RAJ HYDR SUPER HL68(BARREL) 59.73 E
27 SEASONED RUB.WOOD PALLET 87"X31"-CAT 1151.37 E
28 VSM COATED BELT ZK713X SIZE 47.29 E
29 TYRE 10.00 X 20-16PR 8989 D
30 SODIUM HYDRO SULPHITE 71.61 E
31 EXCEL DEBURRING AND FINISHING WHEEL 308.3 D
32 PACKING STICKERS "DESPATCH DETAILS" 2.21 E
33 GRINDING WHEEL 450X50X203mm A46-K5-V10 2701.9 E
34 12 " LEATHER GLOVES WITH CADA CUFF 17.62 D
35 GUARD ST.GRINDER-Z. MODEL 788.2 D
36 ABRASIVE BELT K 815Y50MM,WX1000MM 172.46 E
37 2.5 MM WELDING ELECTRODE SUN BOND SS 306.87 E
38 SEASONED RUB.WOOD PALLET 87" X 29"-BASE 896.4 E
39 COOLANT OIL 72.47 E
40 STEEL SHOTS GR S 390 28.98 E
41 JOHNDHEER WOODEN PALLET 87" X 32" 2140 E
42 MAXTREAT-2902 801.77 E
43 4" X 4"X 1/2",/3/8" MS ANGLE 2523.96 D
44 STRAPPING TAPE 16 X 1600 GREEN COLOUR 4608.53 E
45 SERVO MESH SP 220 OIL 62.17 D
46 STEEL SHOTS GR S 460 29.02 E
47 STEEL STRIP IN BAND [ITW SIGNODE 3415 2527.86 E
48 RAJ HYDRA SUPER HL 46 EQ TO SERVO 59.96 E
49 SERVO SYSTEM 150 56.35 E
50 6" S.S PIPE -SCH-40 7834.74 E
 SDE ANALYSIS

50%
39%
40%

30%

20%
11%
10%
0%
0%
S D E

INTERPRETATION:

From the above table it has been analyzed that 33% of the item which are used by
company are difficult in purchase of raw materials but the remaining 53% of the
items are easily available.

ANN LT SS ROL MAX

DESCRIPTION CONS QTY

LATTICE MACH SEAL 1 45 1 1 1

RUBBER PALLET 1 5 1 1 1
SEASONED RUBBER WOOD PALLET 1 461 2 3 6 6
7.15MM WELDING ELECTRODE 337 2 2 4 4
42" X 42" WOODEN PALLET WITH 1 453 2 3 6 6
BASE
ALLEN SCREWS 1 10 1 1 1
GENERATOR\CONVERTOR 7 2 1 1 2
POLYESTER STRAPPING TAPE 41 2 1 1 2
NACELLE 10290 1 29 29 58
SEASONED RUBBER WOOD PALLET 2 1237.33 1 4 8 8
ROTOR BLADES 7 15 1 2 1
GRINDING WHEEL 1 1 6 9 7
GUARD ST.GRINDER 6 7 1 1 1
SEASONED RUBBER WOOD PALLET 3 1471 2 9 13 14
STEEL RODS 624 1 2 4 4
MICRO PROCESSOR 106 3 1 2 3
4"X4"X1/2",/3/8" MS ANGLE 20 3 1 2 2
STRAPPING TAPE 16 X 1600 GREEN 86 15 4 4 5
COLOUR
STEEL STRIP 521 1 2 3 4
METER 1 2 6 9 7
HAMMER CHIPPING 1 30 1 2 2
LT/LK ML 12 SPARE KIT 1 1 3 6 3
POLES 52 7 1 1 3
METAL PALLET 23 7 1 2 2
HUB 1 7 19 22 19

CALCULATION OF SAFETY STOCK (MINIMUM STOCK

LEVEL), RE-ORDER LEVEL, MAXIMUM STOCK LEVEL

1). LATTICE MACH-SEAL

SAFETY STOCK = (MAXIMUM LEAD TIME – NORMAL LEAD

TIME) x DAILY CONSUMPTION
= (90 – 45) x 1/365
= 0.123
Therefore Safety stock =1
 RE-ORDER LEVEL = SAFETY STOCK + NORMAL LEAD
TIME CONSUMPTION LEVEL x
ANNUAL CONSUMPTION

= 1 + (45 / 365) x 1
= 1.1
Therefore ROL =1

MAXIMUM STOCK LEVEL= SAFETY STOCK + EOQ

= 1+.017
= 1.017
Therefore Maximum stock =1

2). RUBBER PALLET

SAFETY STOCK = (10 – 5) x 1/365

= 0.123
=1

RE-ORDER LEVEL = 1 + (5 / 365) x 1

= 1.013
=1

MAXIMUM STOCK LEVEL = 1+.0021

= 1.0021
=1
3). SEASONED RUBBER WOOD PALLET 1

SAFETY STOCK = (4–25) x 461/365

= 2.52
=3

RE-ORDER LEVEL = 3 + (2 / 365) x 461

= 5.52
=6

MAXIMUM STOCK LEVEL = 3+2.98

= 5.98
=6

4). 7.15MM WELDING ELECTRODE

SAFETY STOCK = (4–2) x 337/365

= 1.84
=2

RE-ORDER LEVEL = 2 + (2 / 365) x 337

= 3.84
=4

MAXIMUM STOCK LEVEL = 2+1.53

= 3.53
=4
 5). 42”X42” WOODEN PALLET WITH 1 BASE

SAFETY STOCK = (4–2) x 453/365

= 2.84
=3

RE-ORDER LEVEL = 3 + (2 / 365) x 453

= 5.48
=6

MAXIMUM STOCK LEVEL = 3+2.93

= 5.93
=6

6).ALLEN SCREWS

SAFETY STOCK = (20–10) x 1/365

= 0.027
=1

RE-ORDER LEVEL = 1 + (10 / 365) x 1

= 1.027
=1

MAXIMUM STOCK LEVEL = 1+0.102

= 1.10
=1

7). GENERATOR\CONVERTOR

SAFETY STOCK = (4–2) x 7/365

= 0.038
=1
 RE-ORDER LEVEL = 1 + (2/365) x 7
= 1.038
=1

MAXIMUM STOCK LEVEL = 1+0.16

= 1.16
=2

8.) POLYETER STRAPPING TAPE

SAFETY STOCK = (4–2) x 41/365

= 0.224
=1

RE-ORDER LEVEL = 1 + (2/365) x 41

= 1.224
=1

MAXIMUM STOCK LEVEL = 1+0.19

= 1.19
=2

9). NACELLE

SAFETY STOCK = (2–1) x10290/365

= 28.19
= 29

RE-ORDER LEVEL = 29 + (1/365) x 10290

= 28.19
= 29
 MAXIMUM STOCK LEVEL = 29+28.19
= 57.19
= 58

10). SEASONED RUBBER WOOD PALLET 2

SAFETY STOCK = (2–1) x1237.33/365

= 3.38
=4

RE-ORDER LEVEL = 4 + (1/365) x 1237.33

= 7.38
=8

MAXIMUM STOCK LEVEL = 4+4.23

= 8.23
=8

11). ROTOR BLADES

SAFETY STOCK = (30–15) x7/365

= .285
=1

RE-ORDER LEVEL = 1 + (15/365) x 7

= 1.017
=1

MAXIMUM STOCK LEVEL = 1+0.114

= 1.114
=1
12). GRINDING WHEEL

SAFETY STOCK = (14–7) x6/365

= 0.115
=1

RE-ORDER LEVEL = 1+ (6/365) x6

= 1.12
=1
MAXIMUM STOCK LEVEL = 1+0.115
= 1.115
=1

13). GUARD ST.GRINDER

SAFETY STOCK = (2–1) x1/365

= 5.47
=6

RE-ORDER LEVEL = 6 + (1/365) x17

= 8.73
=9

MAXIMUM STOCK LEVEL = 6+0.079

= 6.079
=7

14). SEASONED RUBBER WOOD PALLET 3

SAFETY STOCK = 4–2) x1471/365

= 2 x 4.03
= 8.06
 =9

RE-ORDER LEVEL = 9+ (2/365) x1471

= 13.03
= 13

MAXIMUM STOCK LEVEL = 9+5.23

= 14.23
=14

15). STEEL RODS

SAFETY STOCK = (2–1) x624/365

= 1.70
=2

RE-ORDER LEVEL = 2+ (1/365) x624

= 3.70
=4

MAXIMUM STOCK LEVEL = 2+2.20

= 4.20
=4

16).MICRO PROCESSOR

SAFETY STOCK = (6–3) x106/365

= 0.87
=1

RE-ORDER LEVEL = 1+ (3/365) x106

= 1.29
=1
 MAXIMUM STOCK LEVEL = 1+1.5
= 2.5
=3

17). 4”X4”X1/2”,/3/8” MS ANGLE

SAFETY STOCK = (6–3) x20/365

= 0.164
=1

RE-ORDER LEVEL = 1+ (3/365) x20

= 1.054
=2

MAXIMUM STOCK LEVEL = 1+0.36

= 1.36
= 2

18). STRAPPING TAPE 16X1600 GREEN COLOUR

SAFETY STOCK = (30–15) x86/365

= 3.53
=4

RE-ORDER LEVEL = 4 (15/365) x86

= 4.23
=4

MAXIMUM STOCK LEVEL = 4+0.56

= 4.56
 =5

19). STEEL STRIP

SAFETY STOCK = (2–1) x521/365

= 1.5
=2

RE-ORDER LEVEL = 2 +(1/365) x521

= 3.43
=3

MAXIMUM STOCK LEVEL = 2+1.85

= 3.85
=4

20). METER

SAFETY STOCK = (4–2) x1/365

= 5.47
=6

RE-ORDER LEVEL = 6+ (2/365) x1

= 8.73
=9
MAXIMUM STOCK LEVEL = 6+0.046
= 6.046
=7

21). HAMMER CHIPPING

 SAFETY STOCK = (60–30) x1/365
= 0.082
=1

RE-ORDER LEVEL = 1+ (30/365) x1

= 1.082
=2

MAXIMUM STOCK LEVEL = 1+0.039

= 1.039
=2

22). LT/LK ML 12 SPARE KIT

SAFETY STOCK = (2–1) x1/365

= 2.73
=3

RE-ORDER LEVEL = 3 + (1/365) x1

= 5.73
=6

MAXIMUM STOCK LEVEL = 3+.039

= 3.039
=3

23). POLES

SAFETY STOCK = (14–7) x52/365

= .99
=1

RE-ORDER LEVEL = 1 + (7/365) x52

 = 1.142
=1

MAXIMUM STOCK LEVEL = 1+1.07

= 2.07
=3

24). METAL PALLET

SAFETY STOCK = (14–7) x23/365

= .44
=1

RE-ORDER LEVEL = 1 + (7/365) x23

= 1.063
=2

MAXIMUM STOCK LEVEL = 1+0.19

= 1.19
=2

25). HUB

SAFETY STOCK = (14–7) x1/365

= 19.11
=19

RE-ORDER LEVEL = 19 + (7/365) x1

= 21.73
= 22

MAXIMUM STOCK LEVEL = 19+0.03

 =19.03
=19

CLASSIFICATION ON THE BASIS OF ECONOMIC ORDER QUANTITY

E
ANNUAL UNIT O
DESCRIPTION CONS OC CC COST Q

55236.
LATTICE MACH SEAL 1 1 0.12 8 1
RUBBER PALLET 1 1 0.12 8100 1
SEASONED RUBBER WOOD PALLET 1 461 1 0.12 866.97 3
2409.6
7.15MM WELDING ELECTRODE 337 1 0.12 4 2
42" X 42" WOODEN PALLET WITH 1 BASE 453 1 0.12 893.31 3
1598.8
ALLEN SCREWS 1 1 0.12 3 1
4427.1
GENERATOR\CONVERTOR 7 1 0.12 3 1
POLYESTER STRAPPING TAPE 16 MM 41 1 0.12 6292.1 1
 5
NACELLE 10290 1 0.12 59.73 54
SEASONED RUBBER WOOD PALLET 2 1237.33 1 0.12 1151.37 4
ROTOR BLADES 7 1 0.12 8989 1
GRINDING WHEEL 1 1 0.12 2701.9 1
GUARD ST.GRINDER 6 1 0.12 788.2 1
SEASONED RUBBER WOOD PALLET 3 1471 1 0.12 896..4 5
STEEL RODS 624 1 0.12 801.77 2
2523.9
MICRO PROCESSOR 106 1 0.12 6 2
4608.5
4"X4"X1/2",/3/8" MS ANGLE 20 1 0.12 3 1
STRAPPING TAPE 16 X 1600 GREEN 2527.8
COLOUR 86 1 0.12 6 1
STEEL STRIP 521 1 0.12 10737 2
10720.
METER 1 1 0.12 1 1
HAMMER CHIPPING 1 1 0.12 10737 1
10720.
LT/LK ML 12 SPARE KIT 1 1 0.12 1 1
POLES 52 1 0.12 760.38 1
10263.
METAL PALLET 23 1 0.12 5 1
HUB 1 1 0.12 20110 1

CALCULATION OF ECONOMIC ORDER QUANTITY (EOQ)

1. LATTICE MACH-SEAL
2 Annual Consumption x Ordering Cost
Annual Consumption = 1 Unit Rate x Carrying Cost
Unit Rate = 55236.83

= 2x1x1
55236.83 x 0.12
EOQ =
= 2
6628.42

= 0.0174

= 1
2. RUBBER PALLET

Annual Consumption = 1

Unit rate = 8100

EOQ = 2x1x1
8100x 0.12

= 2
972

= 0.0021

= 1

3. SEASONED RUBBER WOOD PALLET 1

EOQ
= 2 x 461 x 1
866.97 x 0.12

= 922

== 104.0364
= 3
4. 7.15 MM WEILDING ELECTRODE

= 2 x 337 x 1
EOQ
2409.64 x 0.12
= 674
289.16
= 1.53
=2

5. 42” x 42” Wooden Pallet with 1 Base

= 2 x 453x 1
EOQ
893.31 x 0.12

= 903
107.197
= 2.93
=3

6. ALLEN SCREW

EOQ = 2x1x1
1598.83 x 0.12
= 2
191.86
= 0.1021
=1
7. GENERATOR\CONVERTOR

= 2x7x1
EOQ
4427.13 x 0.12

= 14
531.26
= 0.16
=1

8. POLYESTER STRAPPING TAPE 16MM

EOQ = 2x4x1
6292.15 x 0.12
= 28
755.06
= 0.19
=1

9. NACELLE

= 2 x 10290 x 1
EOQ
59.73 x 0.12

= 20580
7.168
= 53.58
= 54
10. SEASONED RUBBER WOOD PALLET 2

EOQ = 2 x 1237.33 x 1
1151.37 x 0.12

= 2476.66
138.164

= 4.23

=5

11. ROTOR BLADES

EOQ = 2x7x1
8989 x 0.12

= 14
1078.68

= 0.114

=1

12. GRINDING WHEEL

EOQ

= 2x1x1
2701.9 x 0.12

= 2
324.23

= 0.079

=1
13. GUARD ST. GRINDER

EOQ = 2x6x1
788.2 x 0.12

= 12
94.58

= 0.13

=1

14. SEASONED RUBBER WOOD PALLET 3

EOQ
= 2 x 1471 x 1
896.4 x 0.12

= 2942
107.75

= 5.23

=5

15. STEEL RODS

EOQ
= 2 x 624 x 1
2140 x 0.12

= 1248
256.8

= 2.20

=2

16. MICRO PROCESSOR

 EOQ
= 2 x 106 x 4
801.77 x 0.12

= 212
96.21

= 1.484

=2

17. 4” x 4” x ½” x 3/8” M.S. ANGLE

EOQ
= 2 x 20 x 1
2523.96 x 0.12

= 40
302.88

= 0.36

=1

18. STRAPPING TAPE 16 X 1600 GREEN COLOUR

EOQ
= 2 x 86 x 1
4608.53 x 0.12

= 176
553.02

=1

19. STEEL STRIP

 EOQ

= 2 x 521 x 1
2527.86 x 0.12

= 1042
303.34

=2
20. METER

EOQ
= 2x1x1
7834.74 x 0.12

= 2
940.17

= 0.046

=1

21. HAMMER CHIPPING

EOQ
= 2x1x1
10736.96 x 0.12

= 2
1288.4352

= 0.039

=1

22. LT/LK ML 12 SPARE KIT

 EOQ = 2x1x1
10720 x 0.12

= 2
1286.4

= 0.039

=1

23. POLES

EOQ
= 2 x 52 x 1
760.38 x 0.12

= 104
91.2456

= 0.067

=2

24. METAL PALLET

EOQ
= 2 x 23 x 1
10263.49 x 0.12

= 46
1231.6188

= 0.193

=1
25. HUB

EOQ
= 2x1x1
20110.36 x 0.12

= 2
2413.2432

= 0.0287

=1
 FINDINGS

 The ABC classifications says that there are 43 items of inventory under
category ‘A’, which can constitute 43% of the consumption value, there are
35 items under ‘B’ category items constitutes 35% of the total consumption
value and there are 22 items whose consumption is 22% of total
consumption classified as ‘c’ category items.

 Optimum levels for all inventory items are focused with the help of EOQ
calculations.

 From FSN analysis, it is found that there are good number of fast moving
items i.e. 30% and 11% of the items are slow moving and only 9% of the
items are non-moving.
 The ordering cost is constant (below one rupee) because the sales have been
done through a mail.

 The carrying cost also is constant since the company has to pay the bank
interest as 12% for the inventories, which they are buying from their
suppliers in bulk orders. Thus, it is applicable to take as 12%.

 There are no scarce items in SDE Analysis and also some of the items are
difficult to purchase and rest of the items will be easily available in the
market as it depends on the vendors.

 In case of HML analysis, 21% of the items are of high value, 13% of the
items are of medium values and the remaining 16% of the items have low
value.
 Indowind is maintaining more than one supplier for the consumables and
stores and spares. This gives a quick procurement and competitive pricing
for the required Inventories (materials).

SUGGESTIONS AND RECOMMENDATIONS

 Cost of inventory can be maintained by giving order to regular suppliers.

 Selecting appropriate inventory tools can reduce cost of inventory.

 There is much less importance to the inventory management techniques

(Economic Order Quantity). It is advisable to implement these inventory
management techniques in order prevent excess inventory levels.
 Inventory should be maintained as that of ABC classification. The standards
for the classification of the ABC analysis should be reviewed and must be
changed according to the recent Consumption value and Unit value.

 Indowind should order the stocks before the quantity of inventories reach
the minimum level.

 Controlling, maintaining and managing of inventories should be done at the

right time.

 Lead time period should be reduced because it affects the production

process.

 A proper production schedule should be maintained otherwise it might

result in inventory losses and time losses.

 Inventory losses may occur due to damage of mishandling while in storage

or in the production process. So one should put the inventory in a proper
place while in warehouse and should be handled properly while in the
production process.

 It is also suggested to Indowind that it should follows a standard line of

inventory management, like Standard Purchase Quantity, Standard
Purchased lead time, Standard Costs (such as Ordering Cost and Carrying
Costs) and Safety Stock. Therefore controlling of inventory management
operations will be very easy.
CONCLUSION

 The analysis reveals that cost of inventory can be maintained by giving

order to regular suppliers.

 To have an uninterrupted production buffer (safety) stock should be kept at

least at the minimum level.

 The overall performance of management of inventory of Indowind Limited

is good.
 BIBLOGRAPHY

BOOKS NAME AUTHOR

1. PRODUCTION MANAGEMENT - PANEER SELVAM

2. INVENTORY MANAGEMENT AND

WORKING CAPTITAL MANAGEMENT - P. GOPALA KRISHNAN.

3. MATERIALS MANAGEMENT - BUFFA

4. INVENTORY CONTROL - STAR & MILLER

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