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A PROJECT REPORT

ON

INVENTORY CONTROL & STORE MANAGEMENTIN

NILACHAL IRON &POWER LTD


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Inventory management: conceptual

overview Inventories constitute the most significant part of Current

Asset of a large number of companies in Indian an average;

inventories are approximately 60% of the current assets in

Public Limited Companies in India. In manufacturing unit

usually about 20 to 30% of the total assets are in the form of

inventory & any effort in stock control will bring major

benefits for the enterprise.

Nature of Inventories:

Raw Material

Work In Process

Finished Goods


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Need to Hold Inventory

Basically there are three motives to hold inventories.

Transaction Motive: Emphasizes the need to maintaininventories to facilitate smooth production & sales

operation. Precautionary Motive: Necessities holding of inventory

to guard against the risk of unpredictable changes indemand & supply forces & other factor.

Speculative Motive: Influences the decision to increaseor reduce inventory levels to take advantage of pricefluctuations.


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Company Background

Nilachal Iron & Power Ltd. (NIPL) was incorporated in May, 2002 forsetting up a sponge iron manufacturing plant at Ratanpur,Jharkhand. The plant commenced commercial production in April,2005. In October 2007, NIPL was taken over by Jai Balaji IndustriesLtd. (JBIL) the current promoter, the flagship company of Kolkata

based Jai Balaji group. Jai Balaji group, belonging to the Jajodia family ofKolkata, is an

established steel manufacturer in Secondary sector in easternIndia.

NIPL is a closely held company. The Board of Directors of thecompany comprises three members representing promoter and one

independent director. The day-to-day affairs of the company arelooked after by Shri Aditya Jajodia, the main promoter of the group.


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Objective of the study

Ensure a continuous supply of raw materials tofacilitate uninterrupted production.

Maintain sufficient stocks of raw material in

period of short supply & anticipate price changes. Maintain sufficient finished goods inventory for

smooth sales operations & efficient customerservice.

Minimize the carrying cost & time.

Control investment in inventory & keep it at anoptimum level.


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Conclusion

After completing the project I understand the inventorycontrol and store management policy of the Nilachal ironand power ltd

It has wide area for inventory, and it has a big area for

expansion of plant. The store was managed on the basis of bin system which

gives the exact figure inventory in the store.

Among the competitor in this segment the final productthat is direct raw input is most demanded in the market.

It has a big brand value of jai Balaji group. The employee of NIPL is well co-operative and supportive in

the nature. They share their own experience with me.


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Company has its own oil corporation which provides bigsupport to the company.

Company believes in keeping the big inventory of rawmaterial so that the company can run in any type of

uncertainty like crisis of raw material. The company has not any management information system

.it works manually that is why the process of working notfast.

There is lack of professional in the organization.

From this project report, it is clear that stores and inventorymanagement plays a major role in successful completion ofany infrastructure project and also accounts a major chunkof profitability of the contractor.


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Suggestion

Nilachal iron and power ltd must play prominent role infinancing which may result in raising level of incomeand development.

Company should go for back ward integration. I.e. totake the mines on the lease. so that the procurementof raw material smoothly undergone.

Coal is always burning and it increases the wastage ofraw material so it should be controlled.


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Company should develop the rail track up to inside thepremises of the company so that the cost of thetransportation can be decrease.

Company should impose the management informationsystem to control the inventory.

Nilachal should develop their managerial skillparticularly to identify the weaker section to reach thebenefit of the social economical objectives and alsoimprove the organizational effectiveness.


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Problems in Inventory Management:

Selection of supplier/party/agency:

Quantum Determination

Proper Storing Store Control


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Pricing of Raw Material

FIFO Method

LIFO Method:

Weighted Average Cost Method-Under this method, materialsissued are priced at the weighted average cost of materials in stock. To get an up-to-date

weighted average cost figure, a new weighted average cost is calculated each time adelivery is received

Standard Price Method-Under, this method a standard price is predetermined. When

materials are purchased the stock account is debited with the standard price. The

difference between the actual price & standard price is carried to variance account.

Materials issued are charged as per the standard price

Current Price Method-According to this method, materials issued are priced at theirreplacement or realizable price at the time of issue.


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Raw material inventory level

IRON ORE- 63 %

COAL -21%

DOLOMITE- 16%


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MONTHLY STOCK SUMMARY MAY 2010

PARTICULARS OPENING VALUE INWARD VALUE OUTWARD VALUE CLOSING VALUE

AUTOMOBILES 1,875.00 0.00 0.00 1,875.00

CIVIL 3,63,758.57 5,38,900.00 38,242.51 8,62,513.42

COAL WASHARI 65,04,320.61 7,97,207.00 10,74,896.79 62,26,520.73

CONSUMABLE 2,74,388.53 1,32,018.30 1,91,105.32 2,23,385.80

ELECTRICAL 41,67,835.71 79,752.02 2,17,474.25 40,15,494.65

FUEL & LUBR. 6,09,615.86 5,41,132.81 6,36,424.24 5,06,221.18

FUR. & FITTINGS 0.00 0.00 0.00 0.00

IRON & STEEL 7,47,006.69 29,068.53 7,17,697.30

IT DEPT. 950.50 2,705.00 3,547.50 108.00

KILN 100TPD PROJECT 2,06,68,363.78 1,36,59,922.93 45,55,425.87 2,97,73,328.33

MECHANICAL

14456080.09

7,73,154.47 20,65,235.45 1,31,79,604.20

OFFICE EQUIP. - 6,800.00 6,800.00 0.00


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OLD & USABLE MAT. 1,79,272.94 22826.00 22826.00 1,76,177.04

PACKING MATERIAL 1,80,295.97 0.00 0.00 1,68,369.12

PLANT & MACHINERY 13,57,759.63 0.00 0.00 8,67,624.00

PRINT. & STATIONERY 29,697.35 9701.00 9701.00 25564.78

PROCESS 5,81,559.11 1,99,000.00 1,99,000.00 6,97,605.98

QUALITY CONTROL - 8509.84 8509.84 o.oo

RAILWAY 7,05,933.04 7,05,933.04

SAFTY MATERIALS 46,916.55 29023.00 29023.00 43607.22

TOOLS & TACKLES 6,48,401.78 23115.50 23115.50 6,59,584.97

GRAND TOTAL 51,524,838.92 1,68,23,767.87 1,68,23,767.87 5,88,48,245.53


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Co

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graph

38,51,511.84

1,12,304.303,57,083.82

7,84,895.51

1,85,895.56

13,98,328.17

7,60,435.571,11,683.64

27,20,278.05

21,05,184.71,88,014.46

19,07,455.80

10,59,810.501,53,602

31,05,758

32,48,658.88

1 64 766 47

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

DEC'09

JAN'10

FEB'10

MARCH'10

APRIL'10

MAY'10

PLANTMAINT.

ADMIN.MAINT.

PROJECT


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