Manju Final Project

INVENTORY MANAGEMENT
EXECUTIVE SUMMARY
1. INDUSTRY PROFILE
An electrical battery is one or more electrochemical cells that
convert stored chemical energy into electrical energy. The invention of the first battery in
1800 by Alessandro Volta. Batteries have become a common power source for many
household and industrial applications. According to a 2005 estimate, the worldwide battery
industry generates US$48 billion in sales each year, with 6% annual growth. Battery
market rising from $20.3 billion in global revenues in 2010 to $30.5 billion by 2015.
There are two types of batteries:
1) Primary batteries
2) Secondary batteries
Major battery manufacturing industries in India:

1. Exide industries
2. Standard batteries
3. Amco batteries
4. Tudor India
5. Amara raja batteries
2. COMPANY PROFILE
Amara raja batteries limited (ABBL) incorporated under the
companys act 1956 in 13 Feb. 1985, and converted into public limited company on 6
September 1990.
The chairman and managing director of the company is Sri.Galla Ram
Chandra Naidu. The company is setting up to Rs.1920 lakhs plant is in 185 acres in
karakambadi village in Tirupathi. The company is engaged in the business of
manufacturing of acid storage batteries. ARBL comprises of two major divisions viz.
Madanapalle Institute of Technology and Science, Madanapalle.
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1. Industrial Battery Division (IBD)
2. Automotive Battery Division (ABD)
Products:
AMARON HI-WAY(FOR TURCKS)
AMARON HARVEST(FOR TRACTORS)
AMARON HIGH LIFE(FOR GENERATORS)
AMARON SHIELD (FOR INVERTERS)
AMARA RAJA GENPRO (FOR CARS, 3 WHEELERS)
QUANTA (F0R UPS BATTERIES)
Amara raja Group of companies:

1. Amara Raja Batteries Limited (ARBL), Karakambadi, Tirupati.
2. Amara Raja Power System Pvt. Ltd. (ARPSL), Karakambadi, Tirupati.
3. Harsha Electronics Pvt. Ltd. (HEPL), Karakambadi, Tirupati.
4. Mangal Electro System Pvt. Ltd. (MESPL), Petimitta, Chittoor Dist.
5. Amara Raja Electronics Pvt. Ltd. (AREPL), Dighavamagham, Chittoor Dist
Introduction to Battery Manufacturing Process in ARBL:

The manufacturing process involved in production of valve regulated lead acid storage
batteries is mentioned below.
a. Grid Casting
b. Plate Production
c. Pasting
d. Assembling
e. Formation
f. Dispatching
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3. TOPIC INTRODUCTION
Meaning of inventory
Inventory is a tangible property held for sale, or materials used in a production

process to make a product.
The dictionary meaning of inventory is stock of goods or a list of goods.
Inventory measured by rupee constitutes the major element in the working

capital
Components of Inventory
Components of inventory
Raw materials
Work in progress
Finished goods
Inventory management
The amount of investment is sometimes more in inventory than in other assets. About
major part of working capital invested in inventories.
A proper purchasing handling, storing and accounting should form a part of
inventory management. An efficient system of inventory management will determine,
What to purchase
How much to purchase
From where to purchase, and Where to store.
Importance Of Inventory Management
Inventory helps in smooth and efficient running of business.
Inventories provide service to the customers immediately.
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Due to absence of stock, the company may have to pay high prices
because of piece-wise purchasing. Maintaining of inventory may earn
price discount because of bulk purchasing.
4. RESEARCH METHODOLOGY
Statement of the problem
A study on inventory Management at AMARARAJA BATTERIES
LIMITED is undertaken in order to know the inventory performance and position of the
company and to know the strength and weakness and to assess the profitability of the
company. Inventory a double edged sword is usually an asset of an organization; if it is 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 and
To identify the problems/challenges involved in the Inventory Management process at
AMARARAJA BATTERIES LIMITED.
Need for the Study
Every organization needs inventory for smooth running of its activities. It
serves as a link between production and distribution processes. The investment in
inventories constitutes the most significant part of current assets or working capital in most
of the organizations. The purpose of inventory management is to ensure availability of
materials in sufficient quantity as and when required and also to minimize investment on
inventories. So, in order to understand the nature of inventory management of the
organization, I undertook this research, to study the inventory controls for ARBL.
Objectives of the Study
To know the existing system of Inventory Management of ARBL.
To know ordering and carrying cost for most important raw materials of ARBL.
To know the inventory turnover of the ARBL
To classify the various components based on its value
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Tools and Techniques
EOQ (Economic Order Quantity)
Stock levels
Inventory Turnover Ratios
ABC Analysis
VED Analysis
Sources of Data:
Primary data:
The primary data is collected by the direct contact with the purchase and stores
departments.
Secondary data
The secondary data that is required for the study is collected from the
schedules, past notes, budgets, through company websites and other statements
provided by Finance Department of AMARARAJA BATTERIES LIMITED.
Scope of the study
The study includes EOQ, ABC and inventory turnover ratios of raw materials for
the five financial years.
The results of the study are applicable to the inventory of ARBL, IBD-Division,
Karakambadi.
Limitations
1. Current year data was not provided by AMARARAJA BATTERIES
LIMITED.
2. The entire data depends on secondary data.
3. Time of study is less to make a detailed analysis.
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Findings
The year of 2008-09 where the value also increased while compared to in the year
of 2010-11 in the classified items are B and C.
The A class items where eventually reduced when compared to 2008-09.
As the procurement of the orders is not according to the requirement of the orders
received, a major part of the inventory is held up as non-moving.
The company is not following a proper policy for ordering of the materials,
whenever customer orders they are placing of order.
The store department depreciation is increased during the year 2006-07 and 2007-08.
They calculated depreciation on dead items also this is affected to coming loss,
Variance and uncertainties in lead time.
Suggestions
The company has to concentrate more on Research and Development so that it can
keep abreast with the latest developments.
The company has to eliminate dead inventory and this has resulted in decrease
profits.
Company should strive for getting the right goods to the right places at the right
time for the least cost.
Company has to position inventory items according to risk and opportunity.
Company has to distinguish between bottleneck items, critical items (high risk, high
opportunity)-Product mix.
Conclusion
The company can reduce ordering cost by the following proper inventory management
technique.
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INDUSTRY PROFILE
A battery is an electro chemical device in which the free energy of chemical
reaction is converted into the electrical energy contained in the active materials is
converted into electrical by means of electrochemical oxidation reduction reactions.
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a
physical stock of goods kept for the purpose of future affairs. The term is generally used to
indicate raw materials in process, finished products, packing, spares and others - stocked in
order to meet expected demand or distribution in the future.
INTRODUCTION TO BATTERY MANUFACTURING PROCESS

The manufacturing process involved in production of maintenance free valve
regulated lead acid storage batteries is explained below.
g. Grid Casting
h. Plate Production
i. Pasting
j. Assembling
k. Formation
l. Dispatch
a. Grid Casting
Positive and negative grids required for batteries are made from different
alloys. Besides providing the necessary support to hold the active material together, the
grids serve as a conductor of current required for the electro chemical reaction that takes
place at the active material/electrolyte interface in the battery.
Girds are obtained by pouring molten lead alloy in to special water cooled grid
moulds. Casting is done on sophisticated automatic casting machines which control the
parameters within narrow tolerance to produce consistently good quality grids.
b. Plate Production
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The lead oxide produced by the Barton process is mixed with water, sulphuric acid
and special additives like synthetic flock and expanders. The paste mixing is done in a tub
mixture. Dry lead oxide along with the additives is added to the tub. Distilled water is first
dispensed into the tub when it is in rotation. After a fixed quantity of water addition,
sulphuric acid is slowly dispensed into the tub at a slower rate to avoid temperature rise in
the mixer.
The lead oxide along with the water and acid from a thick and crunchy paste.
This paste is then moved and sent to the pasting section.
The pasting is done on an automatic pasting machine. The paste is dumped into a
hopper which is located at the grid feeding end of the pasting machine. Grids are
automatically fed into the machine by a mechanical feeder. The quantity of paste dispersed
through the hopper is mechanically adjusted and a pasted plated comes out on a conveyor
belt at he other end of the pasting machine.
From the pasting machine, the plates are passed through a flash drier which
removes surface moisture from the plates. Drying is accomplished by recirculation of
heated air, next sent to the curing operation. In this process, the plates are maintained at a
specified temperature and relative humidity. Curing for positive plate is done in an oven at
a temperature f around 80-90C. The negative plates are cured in a humidity room at a
lower temperature.
c.
Assembling
The process of assembly is different for power plus and power stack. Plates are
first stacked into groups with the negative and positive plates alternating with the glass
absorbent separator interspread between the plates. These separators are wrapped around
individual plates.
The stacked plates are next burned together in a group burning machine. In the case
of smaller batteries, this operation is done on a cast on strap machine. The groups of plates
with separator is inverted into a mould wherein a strap and the inter cell posts are cast
separately and placed on the burning mixture. The positive and negative straps are burned
manually using an oxyacetylene torch.
The completed elements are then introduced into cell jars or battery monoblock
containers. Minimodule batteries pass through the intercell welding stage wherein adjacent
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elements in the battery are interconnected by welding the respective lead posts through a
hole in the partition of the plastic. The welding is accomplished by a two-stage process.
The welding electrodes will press on the lead alloy posts in the first stage. Under the
pressure the lead extrudes through the hole in the partition of the container. When the two
posts make contact, a very high welding current is passed which fuses and welds the two
parts. The weld is next tested on a shear tester. This internal cell welding operation is not
necessary for the large single cell units. These cells are connected externally to suit various
configurations by using lead plated copper connectors.
The batteries next pass through the process of a cover sealing on a heat sealing
machine. Here, a plastic cover is heat sealed onto the plastic container. The sealing is
accomplished by melting the bottom surfaces of the cover and top surface of the container
with the help of heating plates and then pressing the two parts together allowing the molten
plastic to fuse together and form a leak proof joint. Batteries are further checked on a leak
tester to confirm the soundness of the sealing operation. This test consists of pressurizing
the cell or battery and immersing in a water tank then batteries are subjected to Formation.
d. Formation
The assembled batteries are filled with a specified grades and quantity of sulphuric
acid and left on stand to enable the absorbent separators to soak. Then electricity is passed
through the grids for formation. During the formation, the active material on the positive
plate is converted into lead oxide and is converted into spongy lead on the negative plate.
Time of formation and charging current depends on the size and the number of the plates.
After formation, the batteries are cleaned and the resealable vent plugs are fixed.
Finished operations like labeling, stamping final cleaning and inspection are being carried
out before packing. The mini-modules can be kept on mild steel racks or inside the system
as per the requirement.
e.
Dispatch
After completing the battery manufacturing, packed and labeled to that battery
and transport to the various places.
f. Pasting
Among all the stages, we are mainly concentrating on the pasting of the plates. In
pasting process we have some stages:
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The main aim of this process is to improve the life, performance and storage
capacity of the battery. We achieve this by doing the process of curing and drying of the
plates at some constant temperature.
Curing Process:
TEMPERATURE
For
curing
the
plates, we need to
maintain
the HUMIDITY
Temperature
and
value
for
46C
some
DURATION
100%
16hrs
Constant
Humidity at some set
duration of time.
Intermediate Drying Process:
TEMPERATURE
49C
HUMIDITY
50%
DURATION
8hrs
Dry Cycling:
This is the final process where we maintain 0% Humidity and 80C temperature to
eliminate the moisture.
Madanapalle Institute of Technology and Science, Madanapalle. Page 10
How Battery Works:

When your place the in your cars ignition and turn the ignition switch ON a
signal sent to the battery. Upon receiving the signal, the battery takes energy that it has
been strong in chemicals form and releases it as electricity power is used in crank the
engine. The batteries also release energy to power the cars light and other accessories. It is
the only device, which can store electrical energy in the form of chemical energy, and
science it is called as a storage battery.
Sealed Maintenance Free (SMF) battery:

Sealed maintenance free (SMF) batteries technology is leading the battery industry
in the recent years in automobile industry and battery sector around the globe.
SMF batteries come under the rechargeable battery category so it can be used a
number of times the life of a battery. SMF batteries are more compact then the wet type
batteries. It can be at any position, these batteries are very popular for portable power
requirements and space constraint applications.
The replacement market, on the other hand, is much longer. The replacement
market is characterized by the presence of large unorganized sector, which constitutes
around 55-60% of the total replacement market. This is possible due to low capital entry
barrier. These players have the advantage of inapplicability of exercise duties and sales tax.
Industrial Batteries:
Industrial batteries can be basically classified into main categories:
Automotive Batteries
Stationary Batteries
The automotive batteries are used in electric vehicles and forklifts. The stationary
batteries used in Telecom, Railway and power industries have registered a growth in excess
of 20% and this trend in likely to be continuing in the next 5 years.
The industrial segment is highly technology is an important factor land is vital for
brand reference. The total demand for the industrial battery segment is met by indigenous
production with a small saves of about 10% of by imports. The demand for industries has
grown slowly & steadily.
Recycling of Batteries:
Battery acid is recycled neutralizing it into water of converting it to sodium soleplate
for laundry manufacturing. Cleaning the battery cases, melting the plastics and reforming it
into pellets recycle plastic. Lead, which makes up 50% of every battery, is melted, poured
into slabs and purified.
Prospectus of SMF/VRLA Batteries in India:

The following factors are influencing demand of VRLA Technology batteries:
Entry of multinationals in telecom industry.
DOTS policy decision to upgrade the overall technology base.
Constraints in the use of conventional battery in radio paging and cellular segments.
Telecom:
The government policy to increase the capacity from 10 million lines by 2006
increased the demand for storage batteries considerably. The value added services like
radio paging and cellular will increase the demand for storage batteries in future
considerably.
Railway:
In railways, the estimated demand is based on the annual post production which comes to
2500 numbers by railways itself and 1000 numbers more by various other segments, plus
replacements demand and annual requirements for railway electrification.
Power Sector:
In power sector the estimated 90 private power projects which are expected to produce
40000 MV with approximate capital outlay of Rs.1, 40, 000 cores would keep the industry
figured brighter in the coming years. The demand for VRLA batteries is in creased due to
its performance over the conventional batteries. So it is more acceptable to the consumers.
Value Regulator Lead Acid Batteries:

In the recent years in automobiles industry and battery sector around the globe
VRLA batteries have become the preferred choice in various applications such as
uninterrupted power supply, emergency lights, security systems and weighting scales.
VRLA batteries are leak-proof, explosion resistant and having life duration
of 15-20 years. These batteries with stand the environment conditions due to high
technology, in built in the batteries. Each cell is housed in power coated steel tray making
them convenient to transport and installation. So transits damages are minimized in case of
these batteries.
General manufacturing process of a battery in ARBL
COMPANY PROFILE
Amara Raja Batteries Ltd
Amara Raja Batteries Ltd incorporated under the Companies act
1956 in February 1985, and converted into public limited company on 6th
September 1990.
Amara Raja Batteries Ltd is established by Mr. Rama Chandra N. Galla & the
Chairman of Amara Raja Batteries LTD; He is a post graduate engineer with over 16 years
experience in power systems as an electrical engineer in Nuclear and conventional source
power generating stations across the USA. He holds an M.S. Degree in system science
from Michigan state university. Ramachandra Galla worked in various capacities such as
Sr. Electrical Engineer, Electrical Project Engineer, and Sr. Electrical Project Engineer for
Sergeant & Lundy, Chicago, USA. He was involved in various Nuclear power plant
projects.
Amara Raja is having a technological Joint Venture with Johnson Controls INC
(JCI), USA in the year 1991 who owns 26% stake in the company. JCI is a Leading battery
manufacture in USA. Johnson Controls is a Fortune 500 company and also the largest
manufacturer of lead acid batteries in North America and a leading global supplier to major
automobile manufacturers and industrial customers.
Amara Raja has its Registered Office and Head Office at Karakambadi near
Tirupati in A.P. Karakambadi is located at an approximate distance of 12 kms from
Tirupati. The manufacturing campus at Karakambadi is one of the most beautifully
landscaped campuses and boasts of state of the art manufacturing facilities.
Amara Raja has demonstrated its commitment to offer optimum system solution of
the highest quality and has become the largest supplier of standby power systems to core
India utilities such as the Indian Railways, Department of Telecommunications, Electricity
Boards and major power generations companies.
About Johnson Controls

Johnson controls inc. ranking 136th among the fortune 500 companies in the
world a largest battery manufacturer in North America and second largest in the world.
Forbes magazine praised it as Americas Best Technology Users. It had won the General
Motors Supplied of the Year award as well as the Manufacturing Excellence award by
National Association of Manufacturers. Being a leader in Auto Battery Market it become
the OEM (Original Equipment Manufacturer) Supplier to Daimler Chrysler, Ford, Honda,
Nissan and Toyota. Its after market includes Auto Zone, Interstate Battery, Sears and WallMart.
Amara Raja has demonstrated its commitment to offer optimum system solutions of
the highest quality its and has become the largest supplier of standby power systems to core
Indian utilities such as the Indian Railways, Department of Telecommunications, Extensive
plans have been charted out for the future, wherein the company undertaken to become the
most preferred supplier for power back-up systems.
Amara Raja has offered time tested world-class technology and processes
developed on International standards be it high integrity VRLA systems like Power Stack
and Power Plus of the recently launched high performance UPS battery KOMBAT &
AMARON HI-LIFE automotive batteries that are the products of the collaborative batteries
efforts of engineers at Johnson patrols Inc. and Amara Raja.
Amara Raja has offered time tested world-class technology and processes developed on
international standards be it high integrity VRLA systems like power stack and power plus
or the recently launched high performance UPS battery KOMBA T & AMARON HILIFE automotive batteries that are the products of the collaborative batteries efforts of
engineers Johnson controls Inc. ARBL comprises of two major divisions viz.,
I.
II.
Industrial Battery Division (IBD)

Automotive Battery Division (ABD)
I. Industrial Battery Division (IBD)
Amara Raja has become the benchmark in the manufacture of Industrial
batteries. India as one of the largest and fastest growing markets for Industrial batteries in
the world and Amara Raja is leading in the front with an 80% market share for standby
VRLA batteries. It is also having the facility for producing plastic components required for
Industrial batteries. ARBL is the first company in India to manufacture VRLA batteries
(SMF). The company has set-up Rs.1920 Lakhs plant in 18 acres in Karakambadi village,
Renigunta Mandal. The project site is notified under B category.
Capacity: The capacity of IBD is 75 million ah.
Customer Base:
Telecom:
Our Batteries power almost half of BSNL / MTNL exchanges.
70% of the Private Basic Service providers' exchanges (Siemens)
More than 70% of the Cellular service providers' exchange (Nokia, Eric son)
Telecom customers include:
All ITI (Indian Technology Institutions) plants for In-house and switch requirements.
BSNL / MTNL
All NT Switch OEMs viz., Lucent, Alcatel, Siemens, Nokia, Ericsson etc.,
All C-DOT switch OEMs viz. BEL, BHEL, CGL, UTL, etc.
All private Basic and Cellular service providers And all Network Integrators
Power Control
We provide Back-Up critical installations in Power generating Units and provide

back-up power for transmission and distribution sub-stations like:
Raichur Thermal Power station
North Chennai Thermal Power station3. ARBL is an approved
vendor for NTPC
(National Thermal Power Corporation Ltd) / NHPC (National Hydro Power

Corporation) and Power Grid Corporation
Oil & Gas
ARBL provides integrated solutions for renewable energy back-up power for ONGC's
offshore platforms. The island of Lakshadweep is powered through Amara Raja Power
Systems. Also provide back-up power for low power transmitters for Doordarshan.
Motive Power
ARBL is the country's first manufacturer of maintenance-free traction batteries
used
in Forklifts and Pallet trucks.
Our Customers:
APC (American Power Control), Siemens (All type of power Supply Products) Eg: Switch
Boards, Alstom (Power Projects) E.g.: Metro Line Delhi, Compton Greaves etc (Power
Products).
Defense
ARBL introduced new technologies for back-up power in Defense, Police and
Paramilitary communication systems.
UPS & EPABX:

ARBL is the preferred suppliers for all leading UPS back-up manufacturers like APC,
Numeric (India), DB Power, APLab, and Electronics & Controls etc. Our UPS
batteries
are the fastest growing battery brand since its launch in July 2002 with
a nation-wide footprint of Sales and Service points and over 300, 000 batteries in use at
over 10,000 customer sites.
Railways
ARBL pioneered the use of maintenance-free batteries in the Indian Railways. Over 50
% of Indian Railways' II and III Tier self-generation Air-conditioned coaches are powered
by ARBL. Over 40% of Railway's Signaling and Telecom power supply solutions are
provided by ARBL.
Competitors
The major competitors for Amara Raja Batteries products are Exide Industries Ltd.,
Hyderabad Batteries LTD., and GNB.
II. AUTOMOTIVE BATTERY DIVISION (ABD)
ARBL has inaugurated its automotive plant at Karakambadi in Tirupati on
September 24th 2001 this plant is part of the most completely integrated battery
manufacturing facility in India with all critical components, including plastics sourced in
house from existing facilities in site. In this project Amara Raja strategic alliance partners
Johnson controls, USA have closely worked with their Indian components required for
automotive batteries.
CAPACITY:
With an existing production capacity of 5 lakh units of automotive batteries the new
Greenfield plant will now be able to produce 3.5 million Batteries per annum. This is the
first phase in the enhancement of Amara Raja production which the company has invested
Rs.75 crores. In the next phase at an additional cost of Rs.25 Crores. Production capacity
will increase to 5 million units estimated to complete around 1 year. After that ARBL will
become the single largest facility for battery manufacture in Asia.
PRODUCTS: Some of the products of ABD are
Amaron Highlife
Amaron Harvest
Amaron Shield
Amaron Hi-way
Customers
ARBL has prestigious OEM (Original Equipment manufacture) clients like
FORD general motors, Daewoo motors, Mercedes Benz Daimler CHRYSLER, Maruti
Udyog ltd premier Auto Ltd., and recently acquired a preferential supplier alliance with
Ashok Leyland, Hindustan motors, Telco, Mahindra & Mahindra and Swaraz Mazda,
Hyundai.
Competitors:
Exide industries
Standard batteries
Amco batteries
Tudor India
Amara raja batteries
Hyderabad batteries
AMARA RAJA GROUP OF COMPANIES

1. Amara Raja Batteries Limited (ARBL0), Karakambadi, Tirupati.
2. Amara Raja Power System Pvt. Ltd. (ARPSL), Karakambadi, Tirupati.
3. Harsha Electronics Pvt. Ltd. (HEPL), Karakambadi, Tirupati.
4, Mangal Electro System Pvt. Ltd. (MESPL), Petimitta, Chittoor Dist.
5. Amara Raja Electronics Pvt. Ltd. (AREPL), Dighavamagham, Chittoor Dist.
Mile Stones of Amara Raja Batteries Ltd:
1985
DEC - Foundation stone laid for Amara Raja.
1992 MAY - Designed & implemented the most advanced battery manufacturing facility in
India
1997 FEB - Received the ISO 9001 certification
1997
DEC - Commissioned own plastics & tool room sections
1997 DEC - Joint venture with Johnson Controls

1999 MAY - Received QS 9000 certification
2000 JAN - Launched Amaron automotive batteries
2001 APRIL- launched the new corporate logo
2001 SEP - Awarded the ISO 14001 certification New Corporate Logo launched
2002 MAY
- Commissioned phase 1of new automotive battery plant, with capacity of
2million
2002 JULY - Launched Quanta UPS batteries
2002 AUG - Launched Amaron Hiway and Harvest batteries
2004 MAR - Received Ford World Excellence Award
2004 SEPT - Launched Amaron PRO, GO and FRESH automotive batteries
2004 OCT - OE agreement with Maruti Udyog Ltd.
2005 JUN
2005
- OE agreement with Hyundai motors.
- NK series Limited edition batteries Launch

ARBLs Future Plans
Maximizing the exports
Emerge as global player
Constant up gradation of products.
Stream of new models.
Constant stress on improving productivity.
Awards for Amara Raja Batteries ltd
Automotive Product of the year 2000 by Overdrive
Creative Advertiser of the year '02 by ABBY
Ford "World Excellence Award"
Ford Q1 Award
ISO-9001 in 1997RWTUV
QS 9000 in 1999RWTUV
ISO/TS 16949 in 2004RWTUV
Quality benchmarks
Best Business Practices as per JCI
ISO 14001 in 2002RWTUV
Part of the world's largest battery manufacturing alliance - Johnson Controls Inc., USA
Largest manufacturer of standby VRLA batteries in South Asia
Pioneered the widely used VRLA batteries for industrial application in India
Amara Raja Batteries Ltds Strengths:
Proven technology from GNB and Johnson Control Inc being a pioneer
Strong and well organized customer base.
Full-organized infrastructure in place.
Manufacturing facilities perceived as a benchmark in India.
Complete range of VRLA batteries.
MISSION AND VISION
Mission
Mission, mantra, way of thinking, philosophy, what we live for call it what you want,
you'll
find
it
below.
Introduce
yourself
to
the
way
we
think.
"To transform our spheres of influence and to improve the quality of life by
building institutions that provide better access to better opportunities, goods and services to
more peopleall the time.
Vision-2025
Through the amararaja way and through ensuring progressive partnership we will be a
global leader in. batteries and battery technologies and dominant player in Indian Ocean.
INTRODUCTION
1.1 Introduction
Management must be concerned with all aspects of the firms operations including
production of goods, delivery of services, sales, marketing activities and supporting
functions such as personal training and data processing to handle these responsibilities
most firms make extensive use of financial data and reports. As businesses become larger
and more complex finance assumed the responsibility of dealing with problems and
decisions associate with managing firms assets.
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a physical
stock of goods kept dept for the purpose of future affairs. The term is generally used to
indicate raw materials in process, finished products, packing, spares and others stocked in
order to meet expected demand or distribution in the future.
Inventories constitute the major element in the working capital of many business
enterprises. Inventories constitute the most significant part of current assets of large
majority of companies in India. On an average, inventories are approximately 60 % of
current assets in public limited companies in India. Because of the large size of inventories
maintained by firms, a considerable amount of funds is required to be committed to them.
It is impossible for a company reduces its levels of inventories to a considerable degree,
e.g., 10- 20 %, without any adverse effect on production and sales, by using simple
inventory planning and control techniques. The reduction in excessive inventories carries a
favorable impact on a companys profitability.
Meaning of inventory
Inventory is a tangible property held for sale, or materials used in a production process
to make a product.
The dictionary meaning of inventory is stock of goods or a list of goods.

Meaning of Inventory management
Inventory management involves the control of assets being produced for the
purpose of sale in the normal course of the companys operations.
Definition of Inventory
The term inventory has been defined by The American institute of Accountants,
As the aggregate of those items of tangible personal property which are held for sale
in the ordinary course of business, process of production for sales control currently
consumed in the production of goods or service to be available for sale.
Definition of inventory management:Good planning is good inventory management and good inventory management is
good financial management.
-S. K. Kuchal
Inventory is a list for goods and materials, or those goods and materials
themselves, held available in stock by a business. It is also used for a list of the contents of
a household and for a list for testamentary purposes of the possessions of someone who has
died.
Nature of Inventories
Inventories are stock of the product a company is manufacturing for sale and
components that make a product. The various forms in which inventories exist in a
manufacturing company are: raw materials, work in process & finished goods.
Raw Materials:
Raw materials are those basic inputs that are converted into finished product
through the manufacturing process. Raw materials inventories are those units which have
been purchased and stored for future productions.
Work-in-process:
Work-in-process inventories are semi-manufactured products. They represent
products that need more work before they become finished products for sale.
Finished Goods:
Finished goods inventories are those completely manufactured products which are
ready for sale. Stocks of raw materials and work-in-process facility production, while stock
of finished goods is required for smooth marketing operations. Thus, inventories serve as a
link between the production and consumption of goods.
Importance of Inventory
Sufficient inventory for production sale process.
Proper determination of profit
True financial position
Methods of inventory valuation
FIFO
LIFO
HIFO
BASE STOCK METHOD
INFLATED PRICE METHOD
SPECIFIC IDENTIFICATION METHOD
AVERAGE COST
MARKET PRICE
The ARBL using the FIFO method for physical issue and weighted average method for
valuation.
Inventory Management Techniques
In managing inventories, the firms objective should be in consonance with the
shareholders wealth maximization principle. To achieve this, the firm should determine the
optimum level of inventory. Efficiently controlled inventories make the firm flexible.
Inefficient inventory control results in unbalanced inventory and inflexibility the firm may
sometimes run out of stock and sometimes may pile up unnecessary stocks. This increases
the level of investment and makes the firm unprofitable. Some of the techniques are as
follows:
EOQ (Economic order quantity)
The economic order quantity is that inventory level, which minimizes the total of ordering
costs and carrying costs. It is the question, how much to order the quantity when inventory
is replenished. If the firm buying raw materials, this is to purchase the quantity of each
replacement and if it has to plan for production run, it is how much production to schedule.
It may be solved through EOQ.
EOQ = 2AO / C
Where
A = Quantity required
O = Ordering cost
C = Carrying cost
ABC Analysis (Activity Based Control)

This is one of the widely used techniques to identify various items of
inventory for the purpose of inventory control. It is very effective and useful tool for
classifying monitoring and control of inventories a firm should not keep same degree of
control on all the items of inventories. It is based on paretols law. It is also known as
selectivity inventory control. The firm should put maximum control on those items whose
value is the highest with the comparison of other two items the technique concentrated on
important items and is also known as control by importance and exception.Under ABC
analysis the materials are divided into three categories A, B, C.
Past experience have shown that 15 % of the items contributes to 70 % of value of
consumption and this category is called A.
About 30 % of the items to contribute to 20 % of value of consumption and this category
are called B.
Category C covers about 55 % of items materials which contribute only 10 % of value of
consumption.
FSN Analysis (fast, slow, non moving)

Fast moving, slow moving & non moving classification is based on the pattern
of issues from stores and is useful in controlling obsolescence. Date of receipt or last date
of issue, whichever is later is taken to determine the no. of months which have lapsed since
the last transaction. The items are usually grouped in periods of 12 months it has to avoid
investments in non moving or slow items. It is also useful in facilitating timely control.
For analysis, the issues of items in past two or three years are considered. If there are no
issues of an item during the period, it is N items, then up to certain limit, say 10 15
issues in the period, the item is S item. The items exceeding such limit of no. of issues
during the period are F items.
The period of consideration & the limiting no. of issues vary from organization to
organization.
VED Analysis
VED: Vital, Essential & Desirable classification VED classification is based on
the criticality of the inventories.

A vital item its storage makes cause havoc & stops the work in organization. They are
stocked adequately to ensure smooth operations.
Essential items here, responsible risk can be taken. If not available, the plant does not
stop; but the efficiency of operations is adversely affected due to expediting expanses.
They should be sufficiently stocked to ensure regular flow of work.
Desirable items its non availability does not stop the work because they can be easily
purchased from the market as & when needed. They may be stocked very low or not
stocked.
Ratio Analysis
The ratio analysis is one of the most powerful tools of financial analysis. It is
the process of establishing and interpreting various ratios. It is with the help of ratios that
the inventory management can be analyzed. More clearly and decision made from such
analysis. Following ratios are used in the study.
INVENTORY MANAGEMENT CONCEPT & CONTEXT
Inventory Management
The amount of investment is sometimes more in inventory than in other assets. About
90% part of working capital invested in inventories.
A proper planning of purchasing, handling, storing and accounting should form a part of
inventory management. An efficient system of inventory management will determine,
What to purchase
How much to purchase
From where to purchase, and
Where to store.
Components of Inventory
Components of inventory
Raw
materials
Work in
progress
Finished
products
Stores and
spares
Raw materials: Raw materials are those inputs that are converted into finished goods
through a manufacturing or conversion process. These form a major input for
manufacturing a product.
Work In Progress: Work in progress is a stage of stocks between raw materials and
finished goods. Work in progress inventories are semi-finished products. They represent
products that need to under go some other process to become finished goods.
Finished Products: Finished products are those products, which are completely
manufactured and ready for sale. The stock of finished goods provides a buffer between
production and market.
Stores And Spares: Stores and spares inventory are purchased and stored for the purpose of
maintenance of machinery.
Need to Hold Inventories
They are three general motives for holding inventories.
Transaction motive:
Transaction motive includes production of goods and sale of goods. Transaction
motives facilities uninterrupted production and delivery of order at a given time.
Precautionary motive:
This motive necessitates the holding of inventories for unexpected changes in demand
and supply factors.
Speculative motive:
This compels to hold some inventories to take the advantage of changes in prices and
getting quantity discounts.
Importance Of Inventory Management
Inventory helps in smooth and efficient running of business.
Inventories provide service to the customers immediately.
Due to absence of stock, the company may have to pay high prices because of piecewise purchasing. Maintaining of inventory may earn price discount because of bulk
purchasing.
Inventory also acts as buffer stock when raw materials are received late and so many
sales orders are likely to be rejected.
Inventory also reduces product costs because there is an additional advantage of

batching and long smooth running production runs.
Types of Inventory
Movement inventories
Buffer inventories
Anticipation inventories
Decoupling inventories
Cyclic inventories
Movement Inventories
Movement inventories are also called transit (or) pipeline inventories.
Their existence owes to the fact that transportation time is involved n transferring
substantial amount of resources. An industrial town by trains, Then the coal, while in the
transit cannot provide any service to the customers for power generation.
Buffer Inventories
Buffer inventories are held to protect against the uncertainties of demand and supply. An
organization generally knows the average demand for various items that it needs. The
actual demand may not exactly match the average and could hell exceed it. To meet with
this kind of situation inventories may be held in excess of the average for expected
demand. Similarly the average delivery time may be known. But unpredictable events
could cause the actual delivery time to be more than the average. Thus excess stock might
be kept in order to meet demand during the time for which the delivery is delayed. These
inventories which are in excess of those necessary just to meet the average demand, held
for protecting against the fluctuations in demand and lead-time are known as safety
stocks.
Anticipation Inventories
Anticipation inventories are held for the reason that a future demand for the product is
anticipated. Production of specialized crackers well before Dewily, Umbrellas and

raincoats before rains, fans while summers are approaching.
Decoupling Inventories
The Decoupling inventory is to be decoupled (or) disengage, different parts of the
production system. Different machines and people normally work at different rates some
slower and faster.
A machine, for example might be producing half the output of the machine on which the
item being handled is to be processed. The next inventories in between the various
machines are held in order to disengage the processing on those machines in the absence of
such inventories, different machines and people cannot work simultaneously on a
continuous basis. When such inventories are held, then even if a machine breakdowns, the
work on others would not stop.
Cycle Inventories
Cycle inventories are held for the reason that purchases are usually made in lots rater than
for the exact amounts which may be needed at a point of time. If purchases are made
exactly as and when the item is required, there would be no cycle inventories.
But practically, purchases are made in lots, the reason being that if purchases are made
frequently and in small numbers then the cost involved in obtaining the items would be
very large.
Meaning of Inventory Control:
Inventory control is a system, which ensures the provisions of the required quality of
inventories of required quality at the required time with the minimum amount investment.
Thus the function of inventory control is to obtain the maximum inventory turn over with
sufficient stock to meet all requirements.
Purpose of Inventory Control:
The need of controlling inventory is expressed as below.
To improve customer services.
Permits purchase and transaction economics.
Transportation economics.
Hedge against price fluctuations.
Production economics.
Hedge against demand uncertainties.
Protects against demand and lead time uncertainties.
Factors Influencing Inventory Control:

To control the inventory
How much to buy at one time?
When top buy this quantity?

Following four fundamentals factors govern for these questions.
Requirements break down time wise.
Quantity in stock or on order.
Procurement time or lead time.

o
Obsolescence.
Factors to be considered when establishing the Control Levels:
Average consumption or production requirements
Reordering periods-the time between raising an order and receiving delivery of

goods.
Storage space available
Market conditions
Likely life of stock-bearing in mind the possibility of loss through determination or

obsolescence and
The cost of placing orders including generating and checking the necessary paper
work as well as physical checking and handling procures.
The key issue for a business is to identify the fast and slow movers with the objectives of
establishing optimum stock levels for each category and, therefore minimize the cash tied
up in stocks. Control policies should include designating responsibility for raising and
authorizing orders, signing delivery notes and authorizing payment of invoices.
Stores (or Material) Records
The bin cards an the stores ledger are the two important stores records that are generally
kept for making a record of the various items of stores.
a) Bin Card. A bin card makes a recode of the receipt and issue of material and is
kept for each item of stores carried. Quantity of stores received is entered in the
receipt column and the quantity of stores issued is recorded in the issue column
of the bin card and a balance of the quantity of stores is taken after every receipt
or issue, so that the balance at any time can readily seen. These cards are
maintained by the storekeeper and the storekeeper is answerable for any
difference between the physical stock and the balance shown in the bin card.
These cards are used not only for recording receipts and issues of stores but also
assist the storekeeper to control the stock. For each item of stores, minimum
quantity, maximum quantity and ordering quantity are stated on the card. By
seeing the bin card, the storekeeper can send the material requisition for the
purchase of material in time.
A bin card is also known a bin tag or stock card and is usually hung up or placed
in shelf, rack or bin where the material has been kept. Bin cards can also be in the form of
loose sheets which can be maintained in a ledger kept in the stores.
b) Double Bin System. Some concerns divide the bin, rack or shelf (where
material has been kept) in two parts, namely, the smaller part to store the
quantity equal to the minimum quality and the other part to store the remaining
quantity. The quantity in the smaller part is not issued so long as the quantity is
available in the other part. This system helps in exercising stores control in an
effective way as it facilitates physical verification and services as a signal when
it becomes necessary to use the quantity kept in the smaller part.
Stores Ledger.
This ledger is kept in the costing department and is identical with the bin card except that
receipts, issues and balances are shown along with their money values. This contains an
account for every item of stores and makes a record of the receipts, issues and the balances,
both in quantity and value.
Bin Card vs. Stores Ledger. The difference between a bin card and the stores ledger can
be summarized as follows:
Bin Card
1. A record of quantities only.
Stores Ledger
1. A record of both quantities and values.
2. Maintained by the storekeeper.
2. Maintained by the Costing department.
3. Normally posted just before the 3. Always posted after the transaction takes
transaction takes place.
place.
4. Each transaction is individually posted.
4. Transactions may be summarized
Other Factors Involved In Inventory Analysis:
Demand:
Demand is the number of units required per period and may be either known
exactly or known exactly or known in terms of probabilities or be completely unknown.
Further if the demand is known, it may be either fixed or variable per unit time. Problems
in which demand is known and fixed are called deterministic problems whereas those
problems in which demand is assumed to be random variables are called stochastic or
probabilistic problems.
Lead Time:
The time gap between placing of an order and its actual arrival in the inventory of
an item demands upon the length of its lead time. The longer the lead time the higher is the
average inventory. Lead time has two components namely.
Administrative lead time-from initiation of procurement action until the placing of an

order.
Delivery leads time-placing of an order until the delivery of the ordered materials.
Order Cycle:
The time period between placements of two successive orders is referred to an order cycle.
They may be placed on the basis of the following two types of inventory review systems.
Stock Levels
For efficient material control and to avoid overstocking and under stoking of
materials, an important requirement is to decide upon various levels of materials these
levels are maximum level, minimum level and re-order level. By making action on the
basis of these levels, each item of material will automatically be held with in appropriate
limits of control. These levels are not permanent but need revision according to the changes
in the factors which determine these levels.
Factors:
The following factors help in the fixation of these levels.
Rate of consumption of materials.
Lead the time, i.e., time lag.
Storage capacity.
Availability of funds investment in inventories.
Cost of storage.
Risk of loss due to deterioration theft fire etc.
Seasonal factors- certain materials are cheaply available during certain seasons.
Fluctuations in market prices.
Insurance costs. Maximum Level:

The maximum stock level is that quantity of materials above which the stock of any
item should not generally be allowed to go up. This maximum level may be exceeding in
certain special cases. For instance, if a particular lot is purchased at a reasonably low price,
the maximum level is crossed. This level is fixed after taking into account such factors as:
Rate of consumption of material.
Amount of capital needed and available.
Storage space available.
Incidence of insurance costs which may be important for some
Costs of storing above normal stock.
Risk of obsolescence and deterioration and
Re-order quantity.
materials.
Danger Level:
It is that level below which stock not be allowed to except under emergency
conditions. When stock reaches this level urgent action for purchases is initiated. Danger
level = Average consumption *Maximum re-order period for emergency
purchases.
Danger level is below the minimum level. But some firms prefer to fix the danger level
above the minimum level and below the re-order level. However fixing danger level below
the minimum level is meant for taking corrective action where as fixing it above the
minimum level is for preventive action.
The formula for computing maximum level is follows:
Maximum level= Re-order level + Re-order quantity-(Minimum Consumption* Minimum
re-order period)
Minimum Level:
The minimum level is that level of stock below it should be normally be allowed to fall.
This is essentially a safety stock and will not normally be touched. In case of nay item
falling below this level, there is danger of stoppage in production and, therefore,
management should give top priority to the acquisition of new supplies. This level is fixed
after the consideration if the following factors.
Rate of consumption, and
The time required under top priority to acquire enough supplies to avoid a stoppage
in production.
Minimum Level = Re-order level (Normal Consumption* Normal reorder period).
Re-order Level:
This is that level of materials at which a new order for materials is to be placed. In
other words this is the level at which a purchase requisition is made out. It is fixed after the
consideration of the following factors.
Rate of consumption.
Minimum level.
Delivery time.
Variation in delivery time.

Re-order level = (Maximum Consumption * Maximum re-order period).
Average stock level:

Average stock level = Minimum level + (1/2 of Re-order quantity).
Average stock level = (1/2) * (Minimum level + Maximum level).
Methods of Materials Issue:
First In First Out (FIFO):

The materials which are received first are issued first and therefore there flow of
cost of materials should also be in the same order. Issues are priced at the same basis until
the first batch received is used up after which the price of the next batch received becomes
the issue price. Upon this batches being fully used for pricing and so on. In other words,
the materials issued are priced at the oldest cost price listed in the store ledge account and
consequently the materials in hand are valued at the price of the latest purchase. In Amara
Raja batteries they are First in First Out method for issuing of raw materials from stores to
the production/manufacturing unit.
Last In First Out (LIFO):
The latest receipts of materials are issued first for production and the earlier receipts
are issued last. It uses the price of the last batch received for al the issues until all units
from this batch have been issued after witch the price of the previous batch received
becomes the issue price. Usually however, a new delivery is received before the first batch
in fully used, in which case the new delivery price becomes the last in price and is used for
pricing issues until either the batch exhausted or a new delivery is received.
Highest In First Out (HIFO):

In this method, issues are always valued at the highest price of the receipt. This rate
continues either until the material at that high price is exhausted, after which the next
highest price is used a until a new batch of materials is received at a rate which is higher
than the previous high rate. Closing stock under this method airwaves remains at the
minimum cost. This method however has not been widely adopted.
Tools and Techniques / Controls of Inventory Management

Financial manager should aim at determination of optimum inventory level
based on costs and benefits to maximize shareholders wealth.
Inventory management problems can be handling by mathematical
techniques. The major problem areas are, classification problem to determine the type of
control required, order quantity problem, and order point problem, determination of safety
stocks. But these are more suitable parts of production and operation management.
Financial manager needs to be familiar with these techniques because of inventory
management involves financial costs use of particular technique depends on the
convenience of the company. These inventory control techniques may be used by to
provide maximum customer service at a minimum cost. Some of inventory control
techniques are
ABC Analysis
EOQ
FSN
Ratio analysis
ABC Analysis is an important factor in controlling the inventory. It is very effective and
useful tool for classifying monitoring and control of inventories. The firm should not keep
same degree of control on all the items of inventory. It is based on paretols law; It is also
known as selective inventory control. The firm should put maximum control on those items
whose value is the highest, with the comparison of the other two items. The technique
concentrates on important items and also known as control by importance and exception
usually a firm has to maintain several types of inventories for proper control of they firm
should have to classify inventories in the instance of their relative value. Hence it is also
known as proportional value analysis.
Under ABC Analysis the materials are divided into three categories like A,B,C 10%
of the items contributes to 70% of value consumption this category is called A Category.
About 20% of the items contribute to 20% of value of consumption this is known as
category B materials category C Covers about 70% of items of materials which
contribute only 10% of value of consumption.
A-B-C Analysis helps to concentrate more efforts on category A. An attention
should be paid in estimating requirements purchasing, maintaining safety stock and
properly storing of A category materials. These items are kept under a constant review so
that a substantial material cost may be controlled.
The control of C items may be relaxed and these stocks be purchased for the year.
A little more attention should be given towards B Category items and their purchase
should be undertaken at quarterly (or) half yearly.
Table 2.1.1: Classification of A, B &C items
Class
A
B
C
No. of items
10
20
70
Value of items (x)

70
20
10
Economic Order Quantity

EOQ is an important factor in controlling the inventory. It is a quantity of inventory which
can reasonably be ordered economically at a time. It is also known as standard order
quantity.
Ordering cost, and carrying costs are taken in to consideration ordering cost are basically
the cost of getting an item of inventory and it includes the cost of placing an order carrying
includes cost of storage facilities.
Meaning of EOQ:
Economic Order Quantity refers to that level of inventory at which the total cost of
inventory is minimum. The total inventory cost comprising ordering and carrying cost.
Shortage costs are excluded in adding total cost of inventory due to the difficulty in
computation of shortage cost EOQ also known as Economic lot size.
Assumptions
Demand for the product is constant and uniform throughout the period.
Head time is constant
Price per unit of product is constant
Inventory holding cost is based on average inventory
Ordering costs are constant
All demands for the product will be satisfied.

EOQ formula
EOQ can be obtained by adopting two methods.
Trail and error approach
Simple mathematical formula.

The formula is
EOQ = 2AO
C
Where, A
= Annual usage
= Carrying cost per unit
= Ordering cost per unit
The above formula will not be sufficient to determine EOQ when more complex cost
equations are involved.
EOQ applicable both the single items and to any group of stock items with similar
holding and ordering costs. Its use causes the sum of the two costs to be lower than under
any other system of replenishment.
FSN Classification
Under this technique inventory is classified based on movement of inventories from stores.
FSN stands for fast moving (F), slow moving(S), and Non-moving (N). This technique
particularly involved in inventory useful for avoiding obsolescence. Whether a particular
inventory is fast moving or not the date of receipt or last date of issue, whichever is later, is
taken, which have lapsed since the last transaction.
The items are usually grouped in periods of 12 months. Active moving inventory need to
be reviewed regularly and surplus items. Which have to be examined further Non-moving
items may be examined further and their disposal can be considered.
Ratio Analysis
The ratio analysis is one of the most powerful tools of financial analysis. It is
the process of establishing and interpreting various ratios. It is with the help of ratios that
the inventory management can be analyzed. More clearly and decision made from such
analysis. Following ratios are used in the study.
1) Inventory Turnover Ratio
a) Raw Materials Turnover Ratio
b) Work-In-Progress Turnover Ratio
c) Finished Goods Turnover Ratio
2) Raw Material Holding Period
3) Work-In-Progress Holding Period
4) Finished Goods Holding Period
5) Inventory Holding Period
1) Inventory Turnover Ratio: inventory turnover ratio is a ratio that establishes the
relationship between cost of sales and average inventory. It indicates whether the
investment in inventory is within proper limit or not.
Cost of goods sold
Inventory Turnover Ratio = -------------------------------------Average inventory
Opening stock + Closing stock
Average inventory = ----------------------------------------2
a) Raw Materials Turnover Ratio
Cost of Materials Consumed
Raw Materials Turnover Ratio = ----------------------------------------Average stock of raw materials
b) Work-In-Progress Turnover Ratio

Cost of goods manufacture
Work In Progress Turnover Ratio = -----------------------------------------Average stock of work in progress
c) Finished Goods Turnover Ratio

Cost of goods sold
Finished Goods Turnover Ratio = ------------------------------Average Stock of finished goods
2) Raw Materials Holding Period
Days in a year
Raw Materials Holding Period = ---------------------------------------Raw Materials Turnover Ratio
3) Work-In-Progress Holding Period
Days in a year
Work-In-Progress Holding Period = ------------------------------------------Work-In-Progress Turnover Ratio
4) Finished Goods Holding Period
Days in a year
Finished Goods Holding Period = -----------------------------------------Finished Goods Turnover Ratio
5) Inventory Holding Period

Days in a year
Inventory Holding Period = ------------------------------------------Inventory Turnover Ratio
DATA ANALYSIS
&
INTERPRETATION
A. ABC ANALYSIS:
TABLE 4.1 ABC Classifications for the year (2006-2007)
Class
A
B
C
Value
16803152
8785515
5276050
30864717
% of value
Cumulative
54
29
17
%
54
83
100
Items
102
151
327
GRAPH 4.1 Graphical Representation of ABC analysis
INTERPRETATION:
In the year 2006-07 , there Are 102 items which constitutes their
value of 54%, in the total value which comes under Acategory.151 items which
constitutes 29% in the total value which comes under B category and 327 items which
constitutes 17% in the total value which comes under C category.
TABLE 4.2 ABC classification for the year (2007-2008)

Items
Class
A
B
C
Value
67963606
6330760
1538254
75832620
%
90
8
2
cumulative %
90
98
100
69
124
385
INTERPRETATION:
TABLE 4.3 ABC classifications for the year (2008-2009)

cumulative
Items
Class
Value
73880742
91
91
92
6858300
99
176
862667
100
310
81601709

INTERPRETATION:
TABLE 4.4 ABC classifications for the year (2009-2010)
class
value
cumulative %
375515268 96
96
12049495
99
3935710
100
Items
10
36
532
391500473
GRAP
H
4.4
Graphical Representation of ABC analysis

INTERPRETATION:
In the year 2009-10 , there Are 10 items which constitutes their value of 96%, in the total
value which comes under Acategory.36 items which constitutes 3% in the total value
which comes under B category and 532 items which constitutes 1% in the total value
which comes under C category.
TABLE 4.5 ABC classification for the year (2010-2011)
Class
Value
% of value
A
B
C
61,060,681
52,913,629
28,444,509
42.87403
37.15354
19.97244
Total
142,418,819
100
Cumulative
%
42.87403
80.02756
100
Items
7
65
1378
1450
INTERPRETATION:
In the year 2010-11 , there Are 7 items which constitutes their value
of 42.87% in the total value which comes under Acategory.65 items which constitutes
37.15% in the total value which comes under B category and 1378 items which
constitutes 19.97% in the total value which comes under C category.
B. Ratio analysis:
4.6 Raw material turnover ratio
PERIOD
RAW
MATERIAL AVERAGE
CONSUMED (Rs)
RAW RATIO VALUE
MATERIAL (Rs)
2006-07
3937812454
226333146
17.39
2007-08
2008-09
2009-10
7794794675
8453055263
986258975
466270075
475934324
523129488
16.71
17.76
18.85
2010-11
10983459834
5691548818
19.30
4.6. Graphical Representation of Raw material turnover ratio
RAW MATERIAL TURNOVER RATIO

20
19
18
RATIO VALUE
17
RAW MATERIAL
16
15
PERIOD
INTERPRETATION:
In the above data indicates that raw material turnover ratio is 17.39 times in the year
2006-07 and it is decreased 16.71 in the year 2007-08.then it is increase to 17.76 in the
year 2008-09, again it is increased to 18.85 in the year 2009-10 again it is increased to
19.30 in the year 2010-11.it can be conclude that raw material turnover ratio has improved
even with increased requirement of raw material and business volatilities.
4.7 WORK-IN-PROCESS TURNOVER RATIO
PERIOD
2006-07
2007-08
COST
OF AVERAGE
RATIO
PRODUCTION WORK-IN-
VALUE
(Rs)
4780617871
9236956058
18.89
19.32
PROCESS (Rs)
253103985
478121242
2008-09
2009-10
9928113854
10878654391
581208251
6233285677
17.08
17.45
2010-11
12656892562
6758236514
18.73
4.7Graphical Representation of work in process turnover ratio

WORK-IN-PROCESS TURNOVER RATIO
Ratio Value
20
19.5
19
18.5
18
17.5
17
16.5
16
15.5
RATIO VALUE
Years
INTERPRETATION:
In the above data indicates that work-in-process ratio is 19.32 times in the year 2007-08
and it is decreased to 17.80 in the year 2008-09. Then it is increase to 17.45 in the year
2009-2010, again it is increased to 18.73 in the year 2010-11. We can conclude that Workin-progress turnover ratio has improved in the year 2010-11 compare to previous.
4.8 FINISED GOODS TURNOVER RATIO
PERIOD
COST
OF AVERAGE
RATIO
GOODS SOLD FINISED
VALUE
2006-2007
(Rs)
5958016404
GOODS (Rs)
120859398
49.29
2007-2008
10833256904
277797726
38.99
2008-2009
2009-2010
2010-2011
13177230047
13945268712
14256394874
389043563
3890413563
3956897412
33.87
35.85
36.03
4.8Graphical Representation of finished goods turnover Ratio

FINISED GOODS TURNOVER RATIO
Ratio Value
60
50
40
30
20
10
0
RATIO VALUE
Years
INTERPRETATION:
In the above data indicates that finished goods turnover ratio is 49.29 times in the year
2006-07 and it is decreased 38.99 in the year 2007-2008.then it is decrease to 33.87 in the
year 2008-09, again it is increased to 35.85 in the year 2009-10, again it is increased to
36.03 in the year 2010-11.it can be conclude that finished goods turnover ratio has
improved even with increased requirement of finished goods and business volatilities.
4.9 INVENTORY TURNOVER RATIO
PERIOD
NET
SALES AVERAGE
RATIO
2006-2007
(Rs)
5958016404
INVENTORY(Rs) VALUE
746837818
7.97
2007-2008
10833256904
1432524560
7.56
2008-2009
13177230047
1775802189
7.42
2009-2010
73541240054
6032190010
12.19
2010-2011
92190112510
7186720010
12.82
4.9 Graphical Representation of Inventory turnover Ratio

INTERPRETATION:
In the above data indicates that inventory turnover ratio is 7.97 times in the year 2006-07
and it is decreased 7.56 in the year 2007-08. Then it is decrease to 17.42 in the year 200809. It is increased to 12.19 in the year 2009-2010 again it is increased to 12.82 in the year
2010-11. It can be conclude that inventory turnover ratio has improved even with increased
requirement of inventory and business volatilities.
COMPARISION OF TURNOVER RATIOS:
4.10 STATEMENT SHOWING COMPARISION OF TURNOVER RATIOS
TURNOVER
2006 07 2007 - 08
2008 - 09
2009 - 10
2010 - 11
RATIO
Raw material
17.39
16.71
17.76
18.85
19.30
Work-in-process 18.89
19.32
17.08
17.45
18.73
Finised goods
49.29
38.99
33.87
35.85
36.03
Inventory
7.97
7.56
7.42
12.19
12.82
INTERPRETATION:
In the above data indicates the inventory turnover ratio is Decreased some extent
increased to year by year like 2006-07, 2007-08 and 2008-09.But it is increase in the year
2009-10 and 2010-11. Inventory turnover ratio is declined for year by year. That is
company production is also declined subsequently sales are also declined.
4.11 RAW MATERIALS HOLDING PERIOD
PERIOD
NO.OF DAYS
RAW MATERIAL HOLDING

TURNOVER
PERIOD
2006-2007
365
RATIO
17.39
(In days)
20.98
2007-2008
365
16.71
21.84
2008-2009
365
17.76
20.55
2009-2010
365
18.85
19.36
2010-2011
365
19.30
18.91
RAW MATERIAL HOLDING PERIOD
HOLDING PERIOD
23
22
21
20
19
18
17
RAW MATERIAL
PERIOD
INTERPRETATION:
The above table indicates that the raw material holding period for the
financial year 2006-07 is 21 days, for 2007-08 is 22 days for 2008-09 is 21 days for 200910 is 19 days and the financial year 2010-11 is 19 days.
4.12 WORK-IN-PROCESS HOLDING PERIOD
PERIOD
NO.OF
WORK-IN-PROCESS
HOLDING
DAYS
TURNOVER RATIO
PERIOD
2006-07
365
18.89
19.32
2007-08
365
19.32
18.89
2008-09
365
17.08
21.37
2009-10
365
17.45
20.91
2010-11
365
18.73
19.48
WORK-IN-PROCESS HOLDING PERIOD
Holdng period
22
21.5
21
20.5
20
19.5
19
18.5
18
17.5
HOLDING PERIOD
Years
INTERPRETATION:
The above table indicates that the work-in-process holding period for the financial year
2006-07 is 19.32 days, for 2007-08 is 18.89 days for 2008-09 is 21.39 days for 2009-10 is
20.91 days and the financial year 2010-11 is 19.48 days.
4.13 FINISED GOODS HOLDING PERIOD
PERIOD
NO.OF DAYS
FINISED
HOLDING
GOODS
PERIOD
TURNOVER
2006-07
365
RATIO
49.29
2007-08
365
35.99
10.14
2008-09
365
33.87
10.77
2009-10
365
35.85
10.18
2010-11
365
33.03
11.05
7.40
FINISED GOODS HOLDING PERIOD

12
10
8
6
Holding Period
HOLDING PERIOD
2
0
Years
INTERPRETATION:
The above table indicates that the finished goods holding period for the financial
year 2006-07 is 7.4 days, for 2007-08 is 9.36 days for 2008-09 is 10.77 days for
2009-10
is 10.18 days and the financial year 2010-11 is 10.13 days.

4.14INVENTORY HOLDING PERIOD
PERIOD
2006-07
2007-08
2008-09
2009-10
2010-11
NO.OF
INVENTORY
HOLDING
DAYS
TURNOVER
PERIOD
365
365
365
365
365
RATIO
7.97
7.56
7.42
12.19
12.82
45.79
48.28
49.19
29.94
28.47
INTERPRETATION:
The above table indicates that the Inventory holding period for the financial year
2006-07 is 45.79 days, for 2007-08 is 48.28 days for 2008-09 is 49.19 days for 2009-10 is
29.94 days and the financial year 2010-11 is 28.47days.
4.15COMPARISION OF HOLDING PERIOD
HOLDING
2006-07
2007-08
2008-09
2009-10
2010-11
PERIOD
RAW
20.98
21.84
20.55
19.36
18.91
MATERIAL
WORK-IN-
19.32
18.89
21.37
20.91
19.48
PROCESS
FINISED
7.40
10.14
10.77
10.18
11.05
GOODS
INVENTORY
7.97
7.56
7.42
12.19
12.82
INTERPRETATION:
The above table indicates the raw material, work-in-process, finished goods and
inventory holding period is little change to year by year like 2006-07, 2007-08, 2008-09,
2009-10 and 2010-11 respectively.
C.EOQ Analysis
4.16 ECONOMIC ORDER QUANTITY ON YEAR (2006-07)
Description
Annual
total
carrying
consumption
Ordering
cost
76,216,320
cost
26800
11.78
588889.4
FRPPCPV0 DARK GREY
75,391,463
22000
10.012
575608.24
COLOUR
1775-6CL WINDOW GREY
19,118,160
26800
12.65
284616.57
11,267,376
20200
9.56
218209.23
10,889,934
28600
6.5
309566.5
Deg.C
26Ah PPCP SILVER
9,767,363
10600
1.08
138468.39
COVER
42Ah PPCP SILVER
7,627,955
10600
2.78
241184.61
COVER
Rubber sleeve for
5,646,620
9520
3.56
173781.18
20X2mm connector
BLACK MASTER
3,169,636
22600
10.45
117088.91
BATCH
BARIUM SULPHATE
PVC Shim Roll 175(W) x
2,291,535
2,161,964
16000
19600
4.56
2.2
126810.67
196270.9
9075-6CL WINDOW
EOQ
GREY TRAY
TRAY
PRESSURE RELIEF
VALVE VENT SEAL(PS)
SULPHURIC
ACID(CP)1.245 @27
0.3(T)
.
INTERPRETATION:
In the year 2006-07 indigeneous items like windows grey trey, dark grey color are
having high EOQ. Sulphuric acid is slightly increased. So that you can see the EOQ for all
items.
17 ECONOMIC ORDER QUANTITY ON YEAR (2007-08)4.
Description
Consumption
total
carrying EOQ
Value
Ordering cost
of
cost (Rs)
24000
(Rs)
11.78
206,976.03
DARK 8,441,492.87
20000
10.01
183,663.38
GREY COLOUR
1775-6CL
WINDOW 5,628,480.00
22600
12.65
141,814.13
GREY TRAY
SULPHURIC
1,646,499.10
19800
9.56
82,584.66
RELIEF 1,313,875.91
25400
6.50
101,333.33
SILVER 699,216.96
9200
1.08
109,144.79
COVER
PVC Shim Roll 175(W) 562,956.30
8400
2.78
58,326.97
x 0.3(T)
26Ah PPCP
SILVER 478.00
7650
3.56
1,433.29
MASTER 2,042.47
20100
10.45
2,803.06
13000
15000
4.56
2.20
7,687.23
6,461.77
9075-6CL
WINDOW 10,531,424.00
GREY TRAY
FRPPCPV0
ACID(CP)1.245
Deg.C
PRESSURE
VALVE
SEAL(PS)
42Ah PPCP
COVER
BLACK
@27
VENT
BATCH
BARIUM SULPHATE
10,364.11
Rubber
sleeve
for 3,062.00
20X2mm connector
Economic 4. 18 Graphical Representation Order Quantity
ECONOMIC ORDER QUANTITY ON YEAR(2007-2008)

250,000.00
200,000.00
150,000.00
100,000.00
50,000.00
ORDERS
EOQ
0.00
MATERIALS
Interpretation:
In the year 2007-08 graph you can see that window grey trey, sulphuric acid,were used in a
lot as compared to 2006-07 the window grey trey carrying cost was as same. Where it
shows effect on increase in consumption of rawmaterial, this inturn results in increase in
EOQ. Total inventory cost will be increased.
Description
Annual
consumption
total
carrying
Ordering
cost(Rs)
EOQ
FRPPCPV0 DARK
cost(Rs)
10,715,683.29
25,000.00
11.78
213266.3
GREY COLOUR
1775-6CL WINDOW
10,219,086.68
18,000.00
10.01
191708
GREY TRAY
9075-6CL WINDOW
6,811,081.47
21,200.00
12.65
151093.5
GREY TRAY
PRESSURE RELIEF
1,131,695.10
18,000.00
9.56
65281.03
SEAL(PS)
26Ah PPCP SILVER
636,410.18
21,400.00
6.50
64734.19
COVER
42Ah PPCP SILVER
623,422.81
8,500.00
1.08
99061.27
COVER
PVC Shim Roll 175(W)
616,506.38
7,500.00
2.78
57675.58
x 0.3(T)
BARIUM SULPHATE
BLACK MASTER
505,350.78
250,111.23
8,500.00
19,000.00
3.56
10.45
49124.21
30157.82
BATCH
SULPHURIC
137,294.77
15,000.00
4.56
30054.1
123,520
19000
2.20
14606.5
VALVE VENT
4. 20
ACID(CP)1.245 @27
Deg.C
Rubber sleeve for
20X2mm connector
Graphical Representation of Economic Order Quantity
Interpretation:
In the year 2008-09 graph you can see that window grey trey, sulphuric acid,were
same in a lot as compared to 2007-08 the window grey trey was as same.as there was no
change in cosumption value, and ordering cost, there is no change in EOQ value. The effect
of EOQ is same as 2007-2008.

DESCRIPTION ANNUAL
1775-6CL
ORDERIN
CARRYIN
EOQ
COSUMPTIO
N
11652891
COST(Rs)
28500
COST(Rs)
12.56
229963.7861
10256365
21600
11.25
198455.1375
WINDOW
GREY TRAY
9075-6CL
WINDOW
GREY TRAY
FRPPCPV0
8811052
22500
13.5
171377.2836
2250653
20145
9.65
96936.9270
VENT SEAL(PS)
26Ah
PPCP 837520
23212
7.55
71762.1425
SILVER COVER
42Ah
PPCP 725623
9600
2.05
82438.3335
SILVER COVER
PVC Shim Roll 698452
8654
2.82
65473.7434
175(W) x 0.3(T)
BARIUM
582695
9200
3.25
57436.4880
SULPHATE
BLACK
365840
22450
10.85
38909.3428
125612
16250
5.5
27244.3155
DARK
GREY
COLOUR
PRESSURE
RELIEF VALVE
MASTER
BATCH
SULPHURIC
ACID(CP)1.245
@27 Deg.C
INTERPRETATION
In the year 2009-10 indigeneous items like windows grey trey, dark grey color are
increased a lot such that sulphuric acid.was slightly increased. As the usage of raw
materials increased, consumption value will automatically increased, all this will show
effect on increase in EOQ value, so that inventory cost will increses.
DESCRIPTION
ANNUAL
ORDERING CARRYIN
CONSUMPTION COST(Rs)
EOQ
G
COST(Rs)
Frppcpv0 dark grey 12562385
23560
14.25
201011.0250
color
Pressure relief valve 10632546
21545
10.5
208887.3944
vent seal(ps)
1775-6cl
window 9563251
29500
13.5
204438.1296
grey tray
9075-6cl
23560
12.12
182463.0704
grey tray
42Ah PPCP SILVER 956425
12365
4.05
76420.5231
COVER
26Ah PPCP SILVER 912362
20450
8.65
65680.6126
COVER
Barium sulphate
653245
10236
4.85
52510.6403
Black master batch
465213
21560
11.85
41143.9631
9560
3.96
59201.6148
15630
6.55
32815.0614
PVC
window 8563421
Shim
Roll 725896
175(W) x 0.3(T)
Sulphuric
acid(cp)1.245
225631
@27
Deg.C
INTERPRETATION
In the year 2010-11 indigeneous items like windows grey trey, frppcpvo dark gray
colour are increased a lot such that sulphuric acid.was slightly increased. So that you can
see that EOQ has increased a lot.it shows effect on increase in consumption value, where it
increses inventory cost of raw materials.
Comparing the EOQ of all the years:

Description
2006-07
2007-08
9075-6CL
588889.4
206,976.03 213266.3 198455.13
WINDOW
2008-09
2009-10
2010-2011
182463.0704
GREY
TRAY
FRPPCPV0 DARK 575608.24 183,663.38 191708
171377.28
201011.0250
GREY COLOUR
1775-6CL
284616.57 141,814.13 151093.5
229963.786
204438.1296
218209.23 82,584.66
65281.03
96936.9270
208887.3944
101,333.33 64734.18
27244.3155
32815.0614
PPCP 138468.39 109,144.79 99061.27
71762.1425
65680.6126
82438.3335
76420.5231
WINDOW
GREY
TRAY
PRESSURE
RELIEF
VALVE
VENT SEAL(PS)
SULPHURIC
309566.5
ACID(CP)1.245
@27 Deg.C
26Ah
SILVER COVER
42Ah
PPCP 241184.61
58,326.97
57675.58
SILVER COVER
Rubber sleeve for 173781.18 1,433.29
49124.21
20X2mm connector
BLACK MASTER 117088.91
2,803.06
30157.82
38909.3428
41143.9631
126810.67 7,687.23
15663.98
57436.4880
52510.6403
65473.7434
59201.6148
BATCH
BARIUM
SULPHATE
PVC Shim
Roll 196270.9
6,461.77
175(W) x 0.3(T)
Graphical Representation
INTERPRETATION:
If you see the comparison of all the years you can find that window grey trey was imported
a lot from out and the cost we spent on that particular item was more than any other item. It
shows its effect on total consumption value of EOQ.
FINDINGS
The ABC analysis increase for the year of 2006-2011 where the A category increase
lot while comparing to B and C class items.
The Raw material turnover ratio is comparing to 2006-2007 Ratio is 17.39% times
and they again increased to 19.30% in the year of 2010-2011.
The work in process turnover Ratio is while comparing to past data in year of 200708 at value 19.32% and the year of 2010-11 is value decreased to 18.73%.
Finished goods turnover Ratio is the year of 2006-2007 indicates 49.29% and 20102011 increase to 36.03%.
Inventory turnover Ratio in the year 2006-2007 is 7.97% times and 2010-2011 is the
value increase to 12.82%
Comparison of turnover Ratio is inventory turnover decrease some extend but the
year is 2006-2009 increase and the again increase in the year is 2009-2011 so the
company production is also decline subsequently sales are decrease.
The comparison of holding periods the above indicates all the Ratios are investment
holding periods, the period of 2006-2011 little changes respectively.
The EOQ analyses in the year of 2010-2011 indigenous items like window grey trey
are increase lot of such the sulpharic acid so it affects increase in consumption value.
SUGGESTIONS
The company has to concentrate more on Research and Development so that it can
keep abreast with the latest developments.
The company has to eliminate dead inventory and this has resulted in decrease
profits.
Company should strive for getting the right goods to the right places at the right
time for the least cost.
Company has to position inventory items according to risk and opportunity.
Company has to distinguish between bottleneck items, critical items (high risk, high
opportunity)-Product mix.
The company to take the care of the production level they should maintain the
following terms are,
Reducing cost
Improving quality
Improving performance
Improve delivery
Adding flexibility
Increase innovations
CONCLUSION
The company can reduce ordering cost by the following proper inventory
management.
JIT is not about automation. It not only eliminates waste but also helps for controlling
inventory by providing the environment to perfect and simplify the processes. It is
collection of techniques used to improve operations. It can be a new production system that
is used to produce goods and services.
When the JIT principles are implemented successfully, significant competitive advantages
are realized, JIT principles can be applied to all parts of an organization; order taking,
purchasing, operations, distribution, sales, accounting, design, etc..,
ELIMINATION OF WASTE
JIT usually identifies seven prominent types of waste to be eliminated:
Waste from over production.
Waste of waiting/idle time.
Transportation waste.
Inventory waste
Processing waste
Waste of motion
Waste from products defects.

Where the JIT concept is implemented?
Transfer of plastic moulds from plastic manufacturing unit to automotive battery division.
Transfer of finished components from Mangle Precision Products to industrial battery
division.
BIBLIOGRAPHY
I M Pandey; Financial Management , Ninth Edition-2004, Vikas Publishing

House Pvt Ltd, New Delhi.
Dr. Pradip Kumar Sinha; Financial Management- Tools and Techniques, EXCEL
BOOKS, New Delhi.
S N Maheswari & S K Maheswari ; Financial Accounting , Fourth Revised &

Enlarged Edition 2005, Vikas Publishing House Pvt Ltd, New Delhi.
M Y Khan & P K Jain; Financial Management-Text problems and Cases, Fifth

Edition, Tata McGraw-hill Publishing Company Limited, New Delhi.
Sudhindra Bhatt; Financial Management, Second Edition, EXCEL BOOKS,

New Delhi.
Website Sources: www.amararaja.co.in.
Google search.

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INVENTORY MANAGEMENT

Major battery manufacturing industries in India:

Madanapalle Institute of Technology and Science, Madanapalle.

AMARON HI-WAY(FOR TURCKS)

AMARON HARVEST(FOR TRACTORS)

AMARON HIGH LIFE(FOR GENERATORS)

AMARON SHIELD (FOR INVERTERS)

AMARA RAJA GENPRO (FOR CARS, 3 WHEELERS)

QUANTA (F0R UPS BATTERIES)

Amara raja Group of companies:

Introduction to Battery Manufacturing Process in ARBL:

Madanapalle Institute of Technology and Science, Madanapalle.

Inventory is a tangible property held for sale, or materials used in a production

The dictionary meaning of inventory is stock of goods or a list of goods.

Inventory measured by rupee constitutes the major element in the working

How much to purchase

From where to purchase, and Where to store.

Importance Of Inventory Management

Inventory helps in smooth and efficient running of business.

Inventories provide service to the customers immediately.

Madanapalle Institute of Technology and Science, Madanapalle.

Objectives of the Study

To know the existing system of Inventory Management of ARBL.

To know the inventory turnover of the ARBL

To classify the various components based on its value

Madanapalle Institute of Technology and Science, Madanapalle.

Tools and Techniques

EOQ (Economic Order Quantity)

Inventory Turnover Ratios

Scope of the study

Madanapalle Institute of Technology and Science, Madanapalle.

Company has to position inventory items according to risk and opportunity.

Madanapalle Institute of Technology and Science, Madanapalle.

INTRODUCTION TO BATTERY MANUFACTURING PROCESS

Madanapalle Institute of Technology and Science, Madanapalle.

Intermediate Drying Process:

How Battery Works:

Sealed Maintenance Free (SMF) battery:

Prospectus of SMF/VRLA Batteries in India:

Entry of multinationals in telecom industry.

DOTS policy decision to upgrade the overall technology base.

Value Regulator Lead Acid Batteries:

Madanapalle Institute of Technology and Science, Madanapalle. Page 13

Madanapalle Institute of Technology and Science, Madanapalle. Page 14

About Johnson Controls

Industrial Battery Division (IBD)

Our Batteries power almost half of BSNL / MTNL exchanges.

70% of the Private Basic Service providers' exchanges (Siemens)

Telecom customers include:

We provide Back-Up critical installations in Power generating Units and provide

Raichur Thermal Power station

North Chennai Thermal Power station3. ARBL is an approved

vendor for NTPC

(National Thermal Power Corporation Ltd) / NHPC (National Hydro Power

in Forklifts and Pallet trucks.

UPS & EPABX:

Amara raja batteries

Madanapalle Institute of Technology and Science, Madanapalle. Page 18

AMARA RAJA GROUP OF COMPANIES

DEC - Foundation stone laid for Amara Raja.

DEC - Commissioned own plastics & tool room sections

1997 DEC - Joint venture with Johnson Controls

- Commissioned phase 1of new automotive battery plant, with capacity of

- OE agreement with Hyundai motors.