CHAPTER 1: INTRODUCTION

(A brief summary about the project.)

CHAPTER 2: SUBJECT
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(Definition of the terms used, importance and other aspects of the subject or study)

VALUE CHAIN

A value chain is a set of activities that a firm operating in a specific industry performs in order to
deliver a valuable product (goods or service) for the market. The concept comes through business
management and was first described by Michael Porter in his 1985 best-seller , Competitive
Advantage: Creating and Sustaining Performance.

The idea of value chain is based on the process view of organizations, the idea of
seeing a manufacturing (or service) organization as a system , made up of subsystems each with
inputs, transformation processes and outputs. Inputs, transformation processes and output
involve the acquisition and consumption of resources – money, labour, materials, equipment,
buildings, land, administration and management. How value chain activities are carried out
determines costs and affects profits.

INVENTORY

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A term inventory refers to the stock of files of the products a firm is offering

for sale and the components that make up the product. In other words, inventory

composed of assets that will showed in future in the normal course of the business

operations. The assets which firms stores as inventory in anticipation of need are:-

● raw material
● work in process(semi-finished goods)
● finished goods

The raw material inventory contain items that are purchased by the firm

from other and are converted into finished goods through the manufacturing

process. They are an important input of the final products. The working process

inventory consists of items currently being used in the production process.

They are normally semi-finished goods that are at various stages of

production in a multi stage production process. A finished goods represented final or

completed product which are available for sale. The inventory of such goods consist of

items that have been produced but are yet be sold.

Inventory as a current asset, different from other current assets, because

only financial managers are not involved. Rather all the functional area finance, marketing,

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production and purchasing are involved. The views concerning the appropriate level of

inventory would differ among the different functional areas.

COST

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In production, research, retail, and accounting, a cost is the value of money that has been used up
to produce something or deliver a service, and hence is not available for use anymore. business,
the cost may be one of acquisition, in which case the amount of money expended to acquire it is
counted as cost. In this case, money is the input that is gone in order to acquire the thing. This
acquisition cost may be the sum of the cost of production as incurred by the original producer,
and further costs of transaction as incurred by the acquirer over and above the price paid to the
producer. Usually, the price also includes a mark-up for profit over the cost of production.

Manufacturing costs are those costs that are directly involved in manufacturing of products.
Examples of manufacturing costs include raw materials costs and charges related to workers.
Manufacturing cost is divided into three broad categories:

1. Direct materials cost.

2. Direct labour cost.
3. Manufacturing overhead cost.

Non-manufacturing costs are those costs that are not directly incurred in manufacturing
a product. Examples of such costs are salary of sales personnel and advertising expenses.
Generally non-manufacturing costs are further classified into two categories:

1. Selling and distribution costs.

2. Administrative costs.

CHAPTER 3: INDUSTRY PROFILE

(History, Growth, Prospects, etc.)
Manufacturing Industry

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Manufacturing is the process of transforming materials or components into finished products
that can be sold in the marketplace. Every physical product that you buy in a store or online is
manufactured somewhere. The manufacturing industry is one of the largest sectors of the U.S.
economy, employing more than 12 million workers. Today, technology is causing the
country’s economy to move towards offering services as opposed to producing goods.
However, it is becoming clear to economists that a healthy manufacturing industry is one of
the hallmark indicators of a healthy, thriving economy. And manufacturing intermingles with
nearly every area of the economy.

Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India,
Mr Narendra Modi, had launched the ‘Make in India’ program to place India on the world map
as a manufacturing hub and give global recognition to the Indian economy. India is expected to
become the fifth largest manufacturing country in the world by the end of year 2020*.
Government aims to achieve 25 per cent GDP share and 100 million new jobs in the sector by
2022.

Market Size
The Gross Value Added (GVA) at basic current prices from the manufacturing sector in India
grew at a CAGR of 4.29 per cent during FY12 and FY19 as per the annual national income
published by the Government of India. The sector’s Gross Value Added (GVA) at basic prices
based at current prices is estimated at US$ 403.47 billion in FY19PE. Quarterly GVA at Basic
Prices for Q1 2019-20 stood at Rs 697,824 crore (US$ 99.85 billion in Q2 FY20. Under the
Make in India initiative, the Government of India aims to increase the share of the manufacturing
sector to the gross domestic product (GDP) to 25 per cent by 2022, from 16 per cent, and to
create 100 million new jobs by 2022. Business conditions in the Indian manufacturing sector
continue to remain positive. The manufacturing component of the IIP stood at 130.1 during
April-October 2019 and grew 0.5 per cent year-on-year. India’s overall exports in April-
November 2019-20 are estimated to be US$ 353.96 billion.

Latest update: November, 2019

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Tile Industry
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In south India the German mission had played a vital role in developing the

roofing tile industry. In the present scenario ,roofing tile have become a vital

part of house construction activity. By end of sixties most of the houses used

roofing tiles of their houses. It is the decade of the country showed more interest

to concrete roofs. Later tile market was down. However it has again picked up

business as decorative roofing tiles, walls and floor tiles are in great demand

now. The demand has tile is thus improving when compared to previous years.

However some of the tiles manufacturing company have reached saturation

stage of sales. They have to make changes in their overall system of production and

distribution to enhance their sales.

History of tile industry

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 The stage of the modern factory system was setup by the missionaries and foreign

capitalist. The royal charter given system was setup by the queen of England in 1600 was

revised in 1833 by the British parliament to include provisions to grant entry of all

Europeans into India. The next year the German Basel mission sent three of its pioneer and

yang missionaries to India. Karl George Andreas's plebes a Basel missionary came into

India as a printer in 1850. Having found suitability to the clay deposits on the west coast

for tile manufacture, they went back to Germany to learn ceramics and type foundry and

to introduce them to India. He again came to India in 1863 and started the first tile factory

at Jeppo near Mangalore in 1865.

The German mission hers from Basel started a tile manufacturing company in

Mangalore in 1875 which was considered as the first mechanized tile and other clay

products are carried on handily crafts. The use of machines led to the large scale production

and expansion of tile industry.

Growth of tile industry

Tiles are thin, flat slab or block used structurally or deceptively in building.

Traditional tile have been made of glazed or unglazed fired clay, but modern

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tiles are also made of plastic, glass, asphalt, or asbestos cement. The tile

industry forms part of the ceramic group. The tile industry forms part of the

ceramic group. The terms ceramic is derived from the Greek word `Keramikod'

which itself owes its origin to Sanskrit. This term is also related to 'pottery'

which is `pidhory' in Sanskrit denoting vessels made of clay. Clay article used for

building construction and civil engineering are generally grouped into structural

clay products in which the bricks and tiles industry may also be included. The

origin of tiles is form the desire of mankind to have a permanent roof. Indians

knew the practice of making tiles from very ancient times but as an organised

industry , it is known only from the past 20th century in our country. Before the advent

of modern tiles the traditional 'forte' made by kulalas in their kulachakra were

popular.

The Industry in Kerala

In India Mangalore pattern Roofing Tile Factory was first established in 1965 by

Basel Mission (German machineries). They setup the first tile factory in Kerala in the year

1844 and it was named "Common Wealth Trust Ltd" or "COMTRUST". Hundreds of
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factories came into existence in south west coast of the country since the industry has

completed approximately one and quarter century of useful service to the country. The

numerous rivers and backwaters of Kerala provided cheap transport and so it is quite

naturel that a number of factories Calicut, Kollam, Trissur, Alappuzha and Kannur. The

abundance of clay is another factor which contributed for the expansion of tile industry.

Now a day's most of the unit has become sick. Entire industry is facing a recession. The

fall in demand and rising cost of production are the major causes of recession. A recent study
revealed that around 200 tile units are becoming sick every year.

Many of the units are struggling for their existence. The First Tile Factory in Kerala was

started in 1873 at Calicut by Basel Mission the pioneer tile manufacturing in India. In olden

days these industries was exporting their products to Singapore, Burma, Africa, countries and

Arabian countries. The tile industry in Kerala was highly labour intensive. It provided

employment opportunities to around 100000 peoples directly and the same indirectly in

the state of Kerala. The installed capacity is 100 criers tiles annum. Kerala enjoys an

important position in the manufacturing. There was a good demand for local as well as

export market.

CHAPTER 4: COMPANY PROFILE

(Inception, nature, board of directors, organisation charts, business operations, product/service
profile, market share, competitors, functional chart, future prospects, etc.)
JANATHA TILE WORKS LIMITED

The Janatha Tile Works Ltd situated on the bank of Kadalundipuzha River Moonniyur
panchayath at Malappuram District in Kerala. It is a small scale industry owned by its works.

The firm established in the year 1948 as a partnership firm owned and

managed by MR.MK Haji and his partners. M.K Haji is the found of Janatha Tile
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Works. In the year 1953 the company was registered under the Indian companies Act,

1913 in the name of Mamburam Clay Tile Works Pvt Ltd. There after it was sold to MR

Natraja Muthaliar, Bangalore. Later it was managed and owned by its workers and

registered as a public Ltd Company and the Companies Act 1956, in the year

The authorised share capital of the company is 35,00,000/— made up of 35,000 equity

shares of 100/— each. Out of these shares 21619 shares were issued to the public. A

major part of the shares are held by the company workers. Today there are about 94

permanent workers and 14 temporary workers directly working in the company. The

company is well established and has history of nearly 62 years.

The company mainly deals with clay tiles. Clay tile are one of the most

distinctive and decorative historic roofing materials because of their great variety of

shares colors, profile, pattern, and textures. Traditionally clay tiles were formed by hand

, and later by machine extrusion on of natural clay, textured or glazed with colour and

tired in high temperature kilns. The unique visual availability of clay tile roof often makes it

a prominent feature.

The promoters of the company were:-

1. C. Yangamoorthy Namboodiri pad.

2. V. K.Kandakuttv.

3. A.Balan Nair.

4. T.Balakrishnan.

5. C.Vasu.

6. K.Kunchappu.

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7. P.V Balan Nair

Board of Directors

The operations and the activities of the company managed and controlled by

Board of Directors, who are selected by the shareholders.

Mr.Karimbil Velayudhan was the present Chairman of the company. Present members of

Board of Directors are:-

● Mr. Karimbil Velayudhan (Chairman)

● Mr. C Venugopalan (Director)
● Mr. C.P Musthafa (Director)
● Mr. Achuthan.P.K (Director)
● Mr. K.P BabuRajan (Director)
● Mr. k Manoj Kumar (Director)
● Mr. Dharmarajan (Director)

CAPACITY OF THE UNIT AND ITS MACHINERY

The total capacity of the machinery is 140 lakh per annum. The machinery has been

set to extract suitable grades of products. The important machineries are using in this

factory are De-Airing pug mill, pressing machine , primary and Final Roller sets and

Mixture. All these are German technology.

WELL ESTABLISHED BRAND NAME

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 Janatha Tile Works Ltd is a well established company and has been existence for

the last 67 years. The company is marketing their product under the brand name of "GINI".

CORPORATE MISSION

"The Janatha Tile Works Ltd believes in growth through quality, innovation and

customer satisfaction. The corporate mission of Janatha Tile Works Ltd to achieve and

maintain customer satisfaction through sustained quality in the products and services at

all times."

VALUATION OF INVENTORY

Inventories are valued at cost or net realisable value whichever is lower. Items of

inventories are measured at lower cost or net realisable value after providing for

obsolescence, if any. Cost of inventory comprises of cost of purchase„ cost of conversion

& other assets incurred in bringing them to their respective present location &

condition. Cost of raw material, process chemicals, packing materials, trading & other

products are determined on FIFO basis.

OBJECTIVES OF JANATHA TILE WORKS LTD

● To manufacture and deal in article of clay and particularly roofing and flooring tiles,
burnt bricks, fire bricks, hurides, hollow blocks and other products of clay required for

building construction and house hold utility.

● To convert the whole or any part of the building new chimney and other properties

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belonging to the to the company for any purpose and in any manner and to make

such alteration and additions that may advantages for fly purpose of caring on the

business of the company.

● To acquire by purchase, lease or otherwise any land, clay yards and forests from
which the raw material requires by the company may be obtained.

● To purchase clay, firewood or any other goods and merchandise for carrying on the
business of the company.

● To own by purchase or otherwise, Motor Lorries, Motor vans other kinds of

vehicles to transport the raw materials and product of the company by land or

by water.

● To buy, manufacture and sell all kinds of materials required for a tile factory and to
turn the company's property to any purpose likely to benefit the company.

ORGANISATIONAL OUTLAY

Name : JANATHA TILE WORKS LTD

Location : Parakkadav, Moonniyoor

South malappuram dist. Kerala

Industrial category : manufacturing of high class roofing tiles

Status : small scale unit

Year of starting : 1948

Managing body : The organizational works

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Employees : 108 workers

Installed capacity : 13000/per day

Input used : clay and plastic mud

Working time : 8 am to 5 pm

Company objective : manufacturing of high class roofing tile and

other commodities

PRODUCTS PROFILE

● Roofing tiles
Quality roofing tiles, for all seasons protect from heavy rain, arrest extreme heat

and light, water light, dust proof, deep grooves, elegant and cheap for our R.C.C, lay tiles on

reapers to keep the house cool day and night.

● Ridges
● Wire Cut Bricks
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 ● Hollow Bricks
● Hourdi blocks

For partitioning, compound walls, Ceiling and Sanitary Slabs.

● Sky lights
For brightness in the darkness, useful to roofs of kitchens, passages etc.

● Potteries
Hanging type flower pots for flowery, gardens hanging round the bungalow.

CHAPTER 5: RESEARCH DESIGN

(a) Title of the Study, b) Statement of the Problem c) Objectives of the Study d) Scope of the
Study e) Sampling f) Methodology g) Limitations of the study )

Project title:
This project is titled as inventory, cost management in the value chain. As
we know, cost and cost management is such significant players in a business.
Whatever revenue we make out of business is not the profit we get. Reasonable
portion will be spent as cost of the firm. So , we always want to be so keen vigilant
towards spending. That should be in such sophisticated manner. Other wise the
whole revenue that we generate will be eaten up by the expenditure.
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 A business will be consisting of many functions and procedures of doing
the activities. This should be clearly structured and due care should be given. That
starts from the very first step of business. Generally, for a production firm
procurement of raw materials will be the first business function. There are also
research and evaluation costs involved much prior. So, from procurement of the
materials to the selling of goods to the end customer is the “value chain” of the
firm. Identifying this chain is very much important for any firm. Because, at every
point of business transactions , there will be a cost involved. An optimum level for
spending money at each level should be determined. The money that we spend at
each level are so important and that should be accountable.

There will be amble amount of money spending for the inventory and its
management. This is an inevitable part of the value chain. So, cost determination
and control for the inventory is much significant. This part will be including the
storage and management of all the inventories including raw materials, finished
goods and work-in-progress.

So, this title is so significant and relevant for a manufacturing firm. This is
aimed to study the value chain of the company and to study about the cost involved
in each level of value chain including inventory.

STATEMENT OF PROBLEM

As mentioned in the title of the project, it is objected to assess the cost

incurred in each stage of the value chain. This is a much relevant and significant
problem.

The value chain of a manufacturing firm precisely starts with the

procurement of materials. The materials can be brought from many suppliers.
There will be price and other things variance between the suppliers. A supplier is

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choosed on the basis of the price of the material, quality, timely supply, reliability,
credit period allowed, compliance redressal etc. The criteria will be sum of all
these parameters. The consideration will be , whether the money spending for the
material from a particular supplier is worthwhile and is it the cheap and best
alternative. That should be clearly evaluated and decisions should be made
accordingly.

Objective of the study

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 The first objective of the study is to understand the value chain of
“Janatha Tile Works Ltd.”. The value chain which shows the flow of
business in the organisation is such an important matter. That should be
thoroughly studied for better control of business. This project is objected to
review this value chain of the company. So, we will be spotting the key
players in the business cycle of Janatha. Because keeping an eye on each of
the player will enhance control over the business cycle of the company. This
will make the job of business control and regulation more easier. Also, we
will be having multiple parties to associate for the purpose of business. The
value chain will give a clear picture of available roots and hence a clue to
choose between the alternatives.

The value chain also give the picture of how the business is going
outside the company, that is to the end user. This should be clearly defined.
Because , once it doesn’t reaches the desired customers through proper
channel, that will adversely affect the company. The sales will not be proper
and required demand will not exist. So, for much reasons, the value chain is
so important.

When we talk about value chain, each stage will be incurring

some costs which will all together constitutes the total cost of the product.
The inventory is such an important and integral part of the business cycle.
So, the costs involved in each stage of value chain is to be identified in order
to achieve the organisational goals. The company should be cost effective
for achieving the goals. As mentioned above, the value chain will be giving
clues about the alternatives in which the firm can work. The cost associated
with each of these alternatives is a major criteria to choose among them.
Cost will the prime most factor in making important business decisions
including the make or buy decisions. So, its such significant to study on the
cost , cost reduction and control. So, this project is objected to study on the
costs involved in each stage of the value chain of Janatha Tile Works Ltd.

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 Inventory plays a major role in the value chain. It also involve
costs as well. The cost may consist of carriage, storage , handling costs etc.
This will be an inevitable part of the total cost. So, that should be dealt with
proper measures. This cost should be monitored and controlled. The cost
should be reduced to the minimum for increasing the cost efficiency hence
the profit of the company.

So, all together, the understanding about the value chain of Janatha
Tile Works Ltd. and the cost incurred in each stage of the value chain is the
prime objectives of the project. This cost identification and analysis is the
first step to enable cost control and cost reduction. This information will be
so useful for taking business decisions such make or buy decisions. This will
also give the clues about selecting between the alternatives. So, the study
will be providing information about the business flow of the company. By
these details of information we can get the best way of doing business in
order to get the maximum earnings.

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 Limitations

●Less availability of accurate data relating to cost.

There may be lack of adequate and accurate data. The data may
be available in a wage format. It will be very difficult to get desired
information from that. The method of costing followed by the company may
be inappropriate to analysed for the study.

●Lack of information about value chain.

The company may not prepare and follow a proper value chain.
Each stage may not be clearly defined and the alternatives may not be
clearly mentioned.

●Time constrain.

The time allowed is little constrained. The company may not be

available to provide the required information when and how required.

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CHAPTER 6: DATA ANALYSIS AND INTERPRETATION
(a) Data table (in figures), followed by Analysis b) Graphical representation followed by
Inference)

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CHAPTER 7: FINDINGS AND RECOMMENDATIONS
(The findings should be summarised and presented in a paragraph from, numbering each of the
finding. Find specific recommendation to each of the objective of the study. These
recommendations should be more specific and acceptable in nature. (Write the Findings and
Recommendations separately in the form of bullet points))

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CHAPTER 8: CONCLUSION
(The conclusion of the project should be given so as to justify the objectives of the study.)

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