A Study On

INVENTORY MANAGEMENT
With reference to

HINDUSTAN SHIPYARD LIMITED VISAKHAPATNAM

A project report submitted to Andhra University, Visakhapatnam in partial

fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
MD KHAJA KARIMUDDIN
(Regd No: 109250402032)

Under the guidance of

Mr.R.BASKAR
Assistant Professor

MAHARAJA`S POST GRADUATE COLLEGE

(Accredited with `A` Grade by NAAC)
(Affiliated to Andhra University, Visakhapatnam, recognized by AICTE, New Delhi)
Phool Baugh, Vizianagaram

2009-2011
 ACKNOWLEDGMENT

I am thankful to project guide Mr.R.Baskar (faculty), department of management studies,

M.R.P.G College, Vizianagaram for guiding and helping me in the completion of this
project.

I sincerely thank Shri.U.S.Prakash Rao Section Officer (Finance) and Staff of the
Accounts Department of M/s Hindustan Shipyard Limited for their interactive sessions
giving guidance and support despite their work schedule.
I also thank to the training department of M/s Hindustan Shipyard Limited for
permitted me to complete my industrial training work at Hindustan Shipyard Limited.

I express my profound sense of gratitude to Prof.P. SRINVAS SUBBA RAO Head

of the department, who had extended his valuable time and guidance to me in structuring of
the report.

I am grateful to K. HANUMANTH RAO garu of MAHARAJA`S POST GRAUATE

college, Vizainagaram for his endower and co-operation in doing the project study.
Place:
DATE (MD KHAZA KARIMUDDIN)
 CONTENTS
Chapter –I : INTRODUCTION
Introduction of the study
Need of the study
Objectives of the study
Methodology of the study
Limitations of the study
Frame work of the study
Chapter -II PROFILE OF THE ORGANISATION
History of shipyard
Major shipyards in INDIA
Growth of HSL
Mile Stone events of HSL
Chapter-III INVENTORY MANAGEMENT
Inventory Management
Types of inventories
Risk and cost of Holding Investment
Inventory Management Techniques
Chapter-IV: ANALYSIS OF INVENTORY MANAGEMENT
Inventory Management in Hindustan Shipyard Limited
An Overview
Inventory Norms
Inventory Various stores
Analysis and Interpretations (Graphs & Figures)
Chapter-V:
Summary
Suggestions
Findings
BIBLIOGRAPHY
 CHAPTER I

INTRODUCTION

Inventory is the most important asset in any company, from inventory revenues are
generated, profit margins are determined, the use of cash and production is determined and
competitive positioning is also established. Inventory allocation and mix present the
biggest risks and potential rewards for company performance.
Inventory management means keeping track of the goods which the company buys
or purchase, process and store as a part of their purchase, process and store as a part of their
business. The cost of buying or purchasing and holding inventory can be very high. It can
account for up to 80% of the final price of goods or services in some industries. Good
inventory management involves minimizing inventory costs. It will also help in
determining whether a company is working profitable or is it making a loss by keeping a
poor track of inventory a company can make a loss in some areas of operations without
even knowing it. Inventory management involves more than just record keeping as it
affects the operational structure of any business.
In the present scenario or situation of the business plays a major and vital role in the
development of the life of human beings. The growths of each and every human being or
common people depend upon the business and by this we can understand how mush
important it is to the human’s life.
In the ancient days, the business process used to take place by the exchange of
goods that is the goods which are needed urgently was taken from other business people by
giving our taken from other business people by giving our goods which are required for
them the business process of exchanging that is importing and exporting of goods and
services is done by means shipping because other transport such as trains and carriage air
crafts were not available at that time. As the world became globalization, shipping transport
plays or major source and vital role in the shipping industry. Business in this world has
taken a major role in the life of human beings. Progress and growth of every human being
depends upon the business by this we know how important it is. In the olden days business
was carried out by exchange of food import and export of goods and services from one
country to another country is done through ships.

Hindustan Shipyard Limited was the pioneer ship building industry situated in the
eastern coast of Visakhapatnam, harbor almost midway between Calcutta and Chennai. The
main activities of Hindustan Shipyard Limited are:
 Ship building
  Ship repair
 Off share platform construction.
Hindustan Shipyard Limited is a tailored made company. It makes products
according to the customer’s requirement or specifications. Inventories constitute the main
significant part of current assets in majority of companied in India an average; inventories
are approximately 60% of current assets in public limited companies in India. As large size
inventory are maintained by the firm’s, a considerable amount of funds in the firm is
neglected, the management of inventories will be jeopardizing in its long run profitability
and may ultimately. It is possible for a company to reduce its levels of inventories to a
considerable degree effect or production and sales by using simple inventories a favorable
impact on company’s profitability
MEANING AND DEFINITION OF INVENTORY MANAGEMENT
Management of Inventory:
Every enterprise needs inventory for smooth running of its activities. Its serves as a
link between production and distribution processes. The grater the time leg, the higher the
requirement for inventory, it also provides a caution for future price fluctuations.
The investment in inventories constitutes the most significant part of the
undertaken. Thus it is very essential to have proper control and management of inventories.
The purpose of inventory management is to ensure availability of materials insufficient
quantity as and when required and also to minimize investment in inventories. The
investment in inventory is very high inmost of the undertakings, engaged in manufacturing.
Wholesale and retail sale the amount of investment is sometimes more in inventory than in
other assets.
In India a study of 29 major industries has received that the average cost of
materials is 64 paisa and the cost of labor and overhead is 36 paisa in rupee about 90 % of
working capital invented inventories an efficient system of inventory management will
determine.
a) What is purchase?
b) How to purchase?
c) From where to purchase?
d) Where to store?
The purpose of inventory management is to keep the stock in such away that neither it is
over stocking nor under stoking. The over stocking means a reduction of liquidity and
staining of other production process. Under stoking will result in stoppage work the
investments in inventory should be kept in reasonable limits.
Nature of Inventory:
The dictionary meaning of inventory is “stock of goods or list of goods “in
accounting language, it may mean stock of finished goods only”.
1) Raw materials: Raw materials from a major input in the organisation. They are
required to carry out production activities uninterruptedly. The quantity raw materials
required will be determined by the rate of consumption and the time required for
replenishing the supplies. The factors like the availability of raw materials and
government regulations etc too affect the stock of raw materials.
2) Working process: The work in process is that stage of stocks which are in between
raw materials and finished goods. The raw materials enter the process of
manufacturing but they are yet to attain final shape of finished goods.
3) Finished goods: these are the goods which are ready for the consumers the stock of
finished goods provides a buffer between production and market.

Advantages of Inventory Management:

 Inventory allows customers to be served quickly and conveniently
 Inventory can be used so that a company can by in bulk which is usually
cheaper.
  Inventory allows operations to meet unexpected surges in demand.
 Inventory is insurance, if there is an expected interruptions in supply from
outside the operations are with in the operation.
 Inventory is insurance, if there is an unexpected interruption in supply from
outside the operations are with in the operation.
 Inventory allows different parts of the operations to decoupled, this means
that they can operate independently to suit there own constraints and convenience
while the stock of items between these absorbs short term difference between supply
and demand.

Disadvantages of Inventory Management:

 It is expensive.
 Keeping inventory mean the company has to find the gap between pain for the
stock to be produced and getting revenue by selling it. This known as working capital
there is also the cost of keeping the stock in warehouse or containers.
 Items can deteriorate while they are being kept clearly this is significant for the
food industry whose products have a limited life. However, it is also issue for any
other company because stock could be damaged while it is being stored.
 Products can become obsolescent while they are being stored fashion might
change or commercial rivals may introduce better products.
 Stock is confusing, large piles of inventory around the place need to be managed
they need to be counted, looked after and so on.
4) Finished goods: these are the goods which are ready for the consumers the stock of
finished goods provides a buffer between production and market.
 NEED AND SCOPE OF INVENTORY MANAGEMENT
1. To study the basic concepts of inventory management.
2. To study the detail description of how inventory management is being important in
companied.
3. To analyze the effect of inventory management in organization.
4. To study the step by step process of inventory management and its practical application
in organization.
5. It is the responsibility of the firm’s management to reduce the cost of inventory
management.
6. To know the areas flow where the high turn over can be achieved.
7. To access various techniques in order to analyze the inventory management in
organizations.
8. To study how supply continuity can be maintained.
9. To study how quality of purchases can be maintained.

Need to hold Inventory Management:

To question of managing inventories arises only when the company’s
holding inventories. Maintaining inventories involves typing up of the company funds
incurrence of storage and handling cost. If it is expensive to maintain inventories, than why
do companies hold inventories?
There are three general motives of holding inventories:
1. Transitive motive: - it emphasize need to maintain inventories to facilitate smooth
production and sales operations.
2. Precautionary motive: - It necessities holding of inventory to guard against the
risk of unpredictability changes in demand and supply force and other factors.
3. Speculative Motive: - It influences the decisions to increase and reduce inventory
level to take advantage of praise fluctuations. A company should maintain adequate
stock of materials for continuous supply to the factory for an uninterrupted
production. It is not possible for a company to produce raw materials when ever it is
needed. A time lag exists between demand for materials and its supply. Also there
exists uncertainty in procuring raw materials
 SIGNIFICANCE OF INVENTORY MANAGEMENT
Functions:
The following functions are specified of the inventory management.
1. To obtain that materials and suppliers in the required quantity at the lowest cost at
the proper time and to meet the continuous production programme.
2. To keep the inventories as low as possible consistent with the market conditions.
3. Forecast market and economics conditions of supply and availability of material.
4. Work with the potential suppliers for finding new material.
5. Product research and development.
6. Participation in the make or buy decision of the company.
7. Maintain proper records.
8. Ensure a continuous supply of material to uninterrupted production.
9. Minimize the company cost and time.
 OBJECTIVES OF THE STUDY
The following are the specified objectives of the inventory management.

1. To observe and understand the inventory management methods applied in HSL.

2. To apply low cost in inventory management techniques.
3. To give suggestion to increase inventory turnover ratio.
4. To suggest reduction in carrying cost & order cost.
 METHODOLOGY
The methodology of collecting data is an important part of the study. The
sources of data divided into two parts.
1. Primary data: - Information of the primary data for the study is collected by
personal interaction with the officers and persons of various levels who involved
into the inventory management of M/S Hindustan Shipyard Limited,
Visakhapatnam.
2. Secondary data: - The secondary data is required for the study of annual report
published by M/S Hindustan Shipyard Limited, Visakhapatnam. From 2000-2010
and also data required for the study is collected from magazines, news papers and
internet.
 LIMITATIONS OF THE STUDY
The limitations of the study are as follows:
1. The study is conducted with the limited data available and analysis was done
accordingly.
2. The study is conducted with the time period and analysis made accordingly.
3. As the data provided to using very limited and the department of matter is not
possible.
 FRAME WORK OF THE STUDY:

The study is organized into five chapters:

Chapter-1 : Gives the Introduction, Need, Objectives, Methodology of

the study

Chapter-2 : Gives the complete profile of HINDUSTAN SHIPYARD

LIMITED

Chapter-3 : concept of the inventory management

Chapter-4 : analysis of inventory management

Chapter-5 : Summary, Suggestions, Findings& Conclusion

CHAPTER II
 ORGANISATION PROFILE

History of Hindustan Shipyard Limited:

Hindustan Shipyard Limited established in 1941 by the grate visionary industrialist
Sethwalchand Hirachand, being strategically located on the east coast of India at the exact
geographical location of 17degrees 41. “ north latitude and 83 degrees 17” east longitude of
Visakhapatnam city in state of Andhra Pradesh Hindustan Shipyard Limited foundation
stone was laid in 1941 by late. Dr. Rajendra Prasad, the former President of India, on 21 st
June 1941 for Scandia steam Ship Company’s shipyard at Visakhapatnam. Hindustan
Shipyard Limited is the nations premier ship building limited is the nations premier ship
building, ship repair enterprise using sophisticated state of the shore and on shore structure
Hindustan Shipyard Limited is a public sector undertaking whose administration control is
with in the ministry of shipping and transport, Government of India.
The Skinner Steam Navigation Company Limited was registered in Bombay in
March 1919. Srinatoram Morarjee was the Chairmen and a member of the board of
directors, shri Watchband Hirachand was one of the directors also. The passenger or cargo
ship “SS Loyalty” sailed for Bombay to United Kingdom on 5 th April 1919 a well now ship
building export Mr. Kundsen was invited to visit India in 1920. He was to formulate the
project plan but died suddenly. This event resulted in project being shelved in 1921. In
1940 Scindia’s commissioned Alexander Gibband Partner’s Conden to investigate and
make recommendations on the shipyard project.
Even by 1948 Scindia’s found it difficult to run the shipyard with out financial
assistants from the government for payment of construction differential subsidy.
In 1949, the government of India sought the advice French ship building expert on
the development of the ship building industry in India. The expert on the development of
the shipbuilding in India would folly develop the shipyard at Visakhapatnam.
In 1949, there were 400 men employed and British engineers including Mr.
Camphor, the chief manager of shipyard.
 In March 1950, Government with the formation of eastern Shipping Corporation
entered the field of shipping; it was a joint venture with government holding 74% of the
capital and Scindia’s, 26% of the capital.
Scindia were appointed managing agent of eastern Shipping Corporation by 1950 in
the financial position of the yard position was so critical that large scale retrenchment and
given closure of the yard apprehended. So the Government of India placed on ordered of 43
ships in 1951. finally it was decided the government should go a held with the taken over
proposal a new company under corporate designation of Hindustan Shipyard Limited was
registered 21st January 1952 with the government holding 2/3 shares of the capital and
Scindia’s holding 1/3 shares and there after they also signed agreement state on 23rd
February 1952. Hindustan Shipyard Limited took possession of the Visakhapatnam yard on
1st march 1952.
It was a rare instance of private company, which initiated proposal and willingly
handed over industrial established by the government. The country moved into a
centralized planning buy the time the Visakhapatnam shipyard was taken over.
The draft outline first 5years plant was established in July 1951-52 and finally
approved plan was implemented in 1955-56. Even the draft outline provision was made
under the head “Large scale Industries” for assisting and acquiring the shipyard at
Visakhapatnam.
Major shipyards in india
Year of
S.No Name of the Yard Registration
Foundation
Hindus Shipyard Limited,
1 1941 1956
Visakhapatnam

2 Cochin Shipyard Limited, cochin 1970 1973

3 Hoogly Shipyard Limited. Culcutta 1901 1901

4 Mazgon Dock Limited 1901 1934

Garden Reach Shipbuilders and

5 1884 1931
Engineers, Culcutta

6 Goa Shipyard , Goa 1857 1967

QUALITY ASSURANCE AND POLICY

Hindustan Shipyard Limited is the first shipyard in the country to achieve the ISO
9001 quality accreditation certification awarded by Lioyds Requester of Quality Assurance,
London (LRQA).

Quality Policy:
The produce consistently quality to national and international standards intimate
for customers’ satisfaction at optimum.

ISO – 9001 Quality Policy:

To produce consistency quality product to national and international standards on
time for customers satisfaction at optimum cost.
GROWTH OF HINDUSTAN SHIPYARD LIMITED
The Hindustan Shipyard Limited emerged as an emblem of a Swedish spirit. In
spite of the fact that India shipping since independence has 18 fold and the country is on
the top in shipping tonnage among the developing countries. India still carries only about
20% of the total trade in India ships. It has to depend to a large extend on foreign shipyard
to meet its increasing demand of many types of vessels. Efforts to improve the ship
building capacity with in the country are continuing.
The Activity of the yard has been increased to achieve an output of 130000 DWT
(Dead Weight Tones) per annum. A building dock where in construction of ships up to
45000 DWT is possible at present with in the year government take over the Hindustan
Shipyard Limited realized that the ship construction should be supplemented with repair
work, ship repairing is on the few enviable industries when the customers bring the foreign
exchange reserving to the door steps.
Ship repair is the major income to the organisation. At present various countries has
been financing to the organisation out of its purchase and import 0 raw materials long term
loans extending to a period of 10-15 years by various Government development banks and
other private banks are supporting the operations of the organisation, subsidies customer
duty, rebates on importer of raw materials from foreign countries are available to the
organizations.
List of Subsidies in foreign countries are given below:
Japan:
 Scraping subsidy of 2480 per GRT (gross Rate Tonnage) of ocean going vessel.
 50-65% of the cost and the loan for 10 year at above 7% rate of interest by Japanese
developmental banks.
 Loan by private banks to 25-30% of building cost for 8-15 years at about 5% rate if
interest.
 Foreign purchase goes to 70% of cost price as loan from banks for 8.5 years at 8%
rate of interest and another 10% from shipyard.
United Kingdom:
 Subsidy of 17% on ship price by ship building intervention fund.
 Up to 50% subsidy for the re-organisation of shipyard.
 Custom duty reimbursement of 2%.
 Loans up 80% at 7% rate of interest for 8.5 years
Belgium:
 20-80% loans at 5% interest for 15 years for domestic purchases.
 80% loans at 8% interest for 8.5years for foreign purchases.
Netherland:
 11.5% of construction cost repaid by government over 5years.
 12% demolition subsidy to keep capacity at 50%.
 80% loans at 8% interest for 8.5 years for foreign purchases.
INDIAN SHIP BUILDING INDUSTRY
There are 28 SHIPYARD IN India, which includes 8 large shipyards which fall
under public sector control which offer a wide range of products and services Indian
shipyard are eligible for government subsidy for construction of ocean going vessels to
maintain competitive edge in international competition. The public sector shipyard under
the administrative control of the Ministry of Defense (MoD) is:

1. Are permitted to raise funds through external commercial Borrowing.

2. 30% subsidy for Indian shipyard from government for both Garden Reach
Shipbuilders and Engineers (GRSG).
3. Mazgaon Dock Limited (MBL).
4. Goa Shipyard Limited (GSL).

The public shipyard under the administrative control of the ministry of shipping is
5. Hindustan Shipyard Limited (HSL).
6. Cochin Shipyard Limited (CSL).
 7. Hoogly Dock & Port Engineer’s Limited (HDPE).
8. Central Island Water Transportation Limited (CIWTL).

Inventory Opportunities in Shipbuilding/ Ship Repair:

1. Facilities at par with 100% export oriented units for ship repairs industries.
2. Duty free import of raw materials components, consumables and spares for
shipyards constructing vessels under band for exports.
3. Indian shipping companies placing order on Indian shipyards domestic and exports
orders on ocean going vessels
Activities of Hindustan Shipyard Limited:
According to the 51st annual general meeting of the company held for the year
2001-2003. The division wise performance of the Hindustan Shipyard Limited is as
follows.
1. Ship Building:- Even since the shipyards first ship “S.S. JALAUSHA” an 8000
DWT steam ship was launched on 14th March 1948 by the prime minister of India ,
Pundit Jawaharlal Nehru, Hindustan Shipyard Limited has come along was in
building arrange zero ships. Numbering more than 114 aggregating to over 1
million dead weighted tonnages. The range varied from conventional bulk carries
tog general cargo and supply vessels, petrol vessels to highly sophisticated drill ship
for Iceland defence sectors from conventional merchant shipping ‘SAGAR
BHUSHAN’ a highly sophisticated and complex drill ship was constructed first
time in India for ONGC is just example for shipyards capability for hi-tech
products. Each assignment is taken up as a new challenge to meet the requisite
standard quality, time and cost constraints. Technology of graduation methods
improvement well coordinated input services and dedicated efforts made the proof
achievement of Hindustan Shipyard Limited possible.
2. Infrastructure of Ship building: - The Hindustan Shipyard Limited spreads over
an area of about 3, 00,000 square meters work shop and facilities are systematically
planned and functionally laid out to ensure unidirectional flow of material. The steal
processing material consists of a stock yard that holds 30,000 tones of steel. A
modern plat and certain pressure, self elevating trunks capable to handle flock up to
 250 tones are large pre fabrication cranes of adequate capability. Cutting, welding
and assembly of steel to any specification and handling with care and accordance by
upgrade their skills.
3. Ship Repair Division: - Hindustan Shipyard Limited established is full fledged
ship repair division with the commissioning of dry dock during the year 1931. It has
capability for handling vessels up to 70,000 DWT. The ship repair department has
accomplished intricate jobs on a variety of naval vessels including sub marines,
merchant ships, oil rigs, foreign & India flag vessels totaling about 1600ships.

Off share platform Division:- Hindustan Shipyard Limited stet up exclusive off shore
platform yard (OPF) adjacent to main ship building yard to construct well head platform
for ONGC. The OPE yard had facilities for fabrication of two platforms per year. The man
power exclusively trained for fabrication of platform was diverted to main yard to carry out
ship building ship repair works.
VISION, MISSION & OBJECTIVES
VISION:
To make Hindustan Shipyard limited “a world class shipyard” with modernization
and up graduation of in fractural facilities.
MISSION:
1. To operate a strong and efficient ship building ship repairs and ration fitting of
submarines to meet growing requirements of mercantile marine, oil and defense
sector with good management and improved efficiency.
2. To attain core competence in 873 EKM submarine refit and modernization.
3. To improve financial performance and profitability.
OBJECTIVES:
1. To incorporate best practices in all key activities of the yard such as production
efficiency, customer satisfaction, marketing, human resource, purchases and
planning.
2. Rationalization of man power by ultimate reduction of 1400 employees and 400
employees during 2004-05 through Voluntary Retirement Scheme (VRS) and
 redevelopment through training subject to release of funds for VRS by Government
of India.
3. To develop and improve the technological capabilities in the area of ship design and
ship construction and render ship building more viable.

AWARDS
NATIONAL SAFETY AWARDS
The shipyard had always being taking steps to ensure safety of the workers and center
State governerments have recoginized the succuss of the safety program.

For three years is succession 1970,1971 and 1973 the shipyard has been adjusted as winner
of “NATIONAL SAFETY” award for maintaining the lowest rate of accounts.
 MILESTONE ACHIEVEMENT OF HINDUSTAN SHIPYARD LIMITED

 1941 Dr. Rajendra Prasad, (the President of India) laid foundation stone on 21-06-
1941 for Scindia shipyard at Visakhapatnam.
 1942 keel for the stream ship “JALA USHA” laid on 22-06-1946.
 1947 first steam ship of 8000 DWT “JALA USHA” was launched by Sri Pundit
Jawaharlal Nehru. The Prime Minister of India on 14-03-1948.
 1952 major share of Scindia shipyard was take over by the Government of India
and named as Hindustan Shipyard limited.
 1953 switch over of the construction of steam ship to diesel ships.
 1958 completion of 100000 GRT with the delivery of Mr. JALA VEERA., the 23rd
vessel.
 1961 Hindustan Shipyard limited become fully owned government of India
enterprise in July 1961 launching of Mr. Dishware in moon light on 20-12 1961.
 1969 integrated development programs of Rs. 8.25 Crores were sanctioned.
 1971 commissioning of Hindustan Dry Dock for ship repair (ship up to 70000
DWT) was accommodated.
 1972 training ship “Rajendra Prasad” was handed over to Smt. Indira Gandhi the
then Prime minister of India.
 1976 commissioning of wet basin adjacent to dry dock for a float repairs.
 1983 lying to foundation stone for building dock on 28-08-1993 by Sri. Vijaya
Bhaskar Reddy then Minister for shipping and transport.
 1985 inauguration of shore platform construction yard by honorable Sri. Gnani Zail
Singh, the then President of India on 17-07-1985.
 1986 flagging of the first jacket built at up yard on 08-04-11986.
 1987 inauguration of new covered building dock for construction up to 50, 000
DWT by honorable Sri. Grain Zail Singh then the President of India in 15-04 1987.
 1988 flog of the first built on OPF yard on 03-01-1989.
 1989 constructed of the jacket in record time of 118 days.
 1992float out of the first vessel a 42, 750 DWT dead weight tonnage Bulker from
the building dock on 23-09-1992.
 1993 first time oil flown from southern region (Godavari Basin), through platform
built by Hindustan Shipyard limited.
 1996 delivery of Maharashtra a 42750 SWT (Bulker), on of the largest vessel built
by Hindustan Shipyard limited on 06-01-1996.
 1997 first ship building yard in the country to be awarded the “ISO 9001”.
 1998 delivery of Goa (a 42750 DWT Bulker) on the largest vessel built by
Hindustan Shipyard limited on 15-01-1998.
 1999 delivery of Mr. Swaraj Deep, (A & N Admn) 1200passenger cargo on 09-12-
1999.
 2001 Mr. Rangat (A & N Admn) 100 passenger cum - cargo vessel by on 16-10-
2001.
 2002 M. V Baratang (A & N Admn) 100 passenger cum – cargo vessel was built by
Hindustan Shipyard limited on 17-01-2002.
 2003 M. T “Toracol -11” Mormuzoa 45-L-B.Ptug was delivery on 31-03-2003.
 2004 M.T “Teal” (A & N Admn) 100 passenger by Hindustan Shipyard limited on
24-02-2004.
 2005 “BARGE” for Anand Administration 10*6*2 Mrs. barge by Hindustan
Shipyard limited on 16-02-2005.
 2006 M. V Strait Iceland for (A & N Admn) 100 passenger vessel and M. V. Jhansi
Rani for Visakhapatnam port trust for 50 tone B. P. Tug.
 2007 M. L. Nilambar for A&N administration 02-11-2006.
 2008 M.V.GOOD Princes for GML, Chennai on 23-01-08.
 2008 M.V.GOOD Pacific for GML, Chennai on 07-05-08.
 2008 M.V.KAVITA, For UTL Administration on 27-06-08.
  2009 M.V. JAL SUDHAK For VPT ON 27-04-09.
 2009 M.V GOOD Pilgrims for GML, Chennai on 10-08-09.
 2009 M.V Ishwari for New Bangalore Post Trust on 17-08-09.

Company profile
Hindustan Shipyard limited is central public sector undertaking wholly owned by
the Government of India under the administration control ministry of shipping Government
of India.
The yard is originally established by “WALCHAND GROUP”. A business of
erstwhile Bombay as “Scindia stream Navigation Company” and lator becomes fully
owned government of India enterprises in July 1961 under the corporate identity
“Hindustan Shipyard limited”.
The registered office of the company is located at Visakhapatnam, corporate policy
and all important matters and affairs are dealt with the board of directors.

The Board of Directors are:

1. Cmde. Naresh Kumar, VSM IN9 (Retd) Chairman&Managing Director
2. Shri. Rakesh Mahajan Director (finance & commercial),
Part time Director.
3. Shri. Genes Kumar, IAS
4. Vadm. N.N.Kumar, AVSM, VSM
5. Capt. P. V. K. Mohan

The board is constituted by the government of India with senior executive of port
trust were also appointed as directories. Direct see access, excellent infrastructure is killed
work force, rick experience, expertise gained over six decades in building 113 vessels
aggregating to over 1.25 million DWT, enable Hindustan Shipyard limited to offer the most
competent services for maritime sector in the entire region of south East Asia. Hindustan
Shipyard limited with over six decades of reputation has been leading the Indian ship
building industry and had built a wide spectrum of ships conforming to rules and
regulations of leading international classification societies. By making investments in
fostering talents and upgrading its technologies and facilities, the company is making
vigorous efforts for becoming a leader.
Hindustan Shipyard limited is the first building yard in India to be awarded ISO-
9001 quality accreditation by LRQA, London.
HUMAN RESOURCES
Professionalism with multi disciplinary interface in the present day characteristic
feature is the management of the Hindustan Shipyard limited supervisory cadres are
characterized by substantial draft oriented experience, knowledge of theory in a relevant
areas and leader ship qualities. As far as ship building trades man are concerned with its
rich depository or specialized as well as versatile skill.
The man power strength of Hindustan Shipyard limited as on 31-03-2005, 31-03-
20006 and as on 1-906 is given below.

Category 1st Sept 2006 31st March 2010

Officers 387 487

Staff 761 1015

Workmen 1739 1965

Total 2881 3467

 In addition to the regular employees, there are 71 employees engaged on contract
basis in staff category-12 in workmen category-59.
Quality Assurance ISO-9001 Certificate:-
Hindustan Shipyard limited is the first shipyard in the country to achieve the ISO
9001 quantity accreditation certificate awarded by LRCA London with accent placed on
quantity improvement in the construction.
During the year 2005-06 HSL company had not received any budgetary assistance
from the Government of India to operate the voluntary retirement scheme in the company.
In the financial restricting proposal submitted to the government of India, Hindustan
Shipyard limited company had projected a requirement of Rs. 128 Crores to operate the
voluntary retirement scheme and down size its strength. The Hindustan Shipyard limited
company has obtained alone of Rs. 60 Crores from the Indian Bank for the implementation
of VRS to be paid bank after Government funds for VRS obtained with their money the
company has given VRS to a total number of 619 employers comprising 150 officers 146
staff and 458 work man.
ACTIVITIES OF VARIOUS DEPARTMENTS
The main activities of the yard is construction of all types of vessels, ship repairs,
manufacturing and installation off share platforms and jackets, structural fabrication and
consultancy in the field of marine construction.

The yard is divided into three parts.

1. The main yard priority is to undertake all types of vessels and structural fabrication
works.
2. Dry Dock and ship repairs.
3. Off shore platform yard.
The main yard is divided into two units.
1. Hull construction department.
2. Fitting out department.
It assists three departments beside other administration departments such as
personal, purchases, finance, etc. The dry dock and ship repairs unit also got its own
departments such as hull department and fitting out departments. The off shore yard is a
separate unit by itself having self supporting department. However, all the units will be
under the administrative control of chairman and managing director. The organisation
structures of the yard are as follows:
1. Production Department.
2. Administration Department.
3. Service Department
1. Production Department:
The production department mainly consists the following departments.

 Hull Shop: It deals with the material preparation palates used for the construction of
the ship.
 Pre Fabrication Shop: It deals with ship parts like funnel, wheel house and engine
roots.
 Erection Department: Assembling the ship parts to make the complete the ship.
 Welding Department: It deals with attaching the parts complete the ship parts.
 Black Smith Department: It deals with rolling work, leader work and flooring.
 Sheet Metal Department: It Deals with air condition work.
 Rigging Department: Holding the ship repairs.
 Painting Department: Painting the ship with required colour.
 Electrical Department: To fix all the electrical equipment.
 Plumbing Department: Plumbing work to troopers.
 Engineering Department: Facilitating and assembling the main engine
2. Administrative Department:
The administrative department of consists of the following departments.
 Account Department.
 Personal Department.
 Internal Department.
 General Department.
Accounts Department:-
The following tare the sections in the accounts department.
  Cost Accounts: - Cost accounting deals with compilation of final accounts, budgets,
and cost reports to ministry, direct taxation that is central exercise, income tax and
sales tax.
 Bills Insurance: - Bills and insurance deals with payment of bills that is passing of
bills and insurance of material etc.
 Providend funds: - This takes car of the provident funds of the employers.
 Salaries Section: - Pay accounts section deals with the payment of wages, salaries
provident funds and voluntary retirement and up to 50,000 only.
Personal Department: -
 Staff cell: - Staff cell deals with the staff of the 958 members and workmen 2694
and officers on executive of 386 totally strength is 3589.
 Workmen Cell
 Executive Cell: - Management facilities acts which are present in Hindustan
Shipyard limited are: promotion, leave management, medical reimbursement
canteen, general administration, shifts, timekeeping etc.
 Internal Audit Department: - The department with the values of inventories and
bills of different braches of accounts are awaited annually.
 General Department: - This is responsible for the procurement of the stationary and
functional goods and other incidental items.
3. Service Department: -
The service department consists of the following sections.
 Design office: - Deals with the ship design and off design etc. Design office is also
called as drawing office.
 Production and Planning Department: - Deals with the way how to executive the
work and they design the flow charts of the works.
 Quality control Department: - Deals with the certification of Rs. 1, LRS works
relating to the ISO certification and inspection of materials and stores is also done
by this section.
 Purchase Department: - Deals with the purchases of all types of materials.
  General Stores: - They are those stores which will be coming to their store after the
inspection of materials and this generally maintains like material receipts, reports
and material requirements and bin cards etc.
 Clearance Department: - Deals with receipts to imported goods for clearance.
 Maintenance Department: - Deals with maintenance of machinery.
 Civil Engineering Department: - Deals with the construction of civil works and
maintenance of colony housing estates.
 Medical and Health Department: - Deals with medical aspects like giving medicine
to the sick employers and family etc.
 Security Department: - Deals with the Hindustan Shipyard limited security with the
supervisory safe guard organization

ORDER BOOK
Hindustan Shipyard Limited has order for construction of 9.66 standard pioneer
class equivalent ships. The value of the ship building orders is Rs. 1066 Crores as on 21st
Augest, 2009.
The order book is as follows:
Description of the
Owner Nos.
Vessel
6
Good earth Maritime Ltd. 53000 DWT Bulkers

IPVs Indian Coast

Indian Coast Guard 5
Guard
Visakhapatnam Port Trust 50 Ton Tugs 2
Submarine Repair
Indian Navy 1
Navy
 Total Ships on order excluding Submarine repair of Indian Navy 14

Problem Difficulties in securing the orders from the customers:

Shipping industry has been performing under an environment of stiff competition
both item of price and delivery schedule competitiveness. In order to have a
competitiveness edge, shipyard has to keep the cost of its products at the barest minimum
ensuring high standards of quality and strict adherence to delivery schedule. Hindustan
Shipyard limited is unable to have competitive edge and therefore unable to secure export
orders due to the following constraints.
1. Continued world wide recession.
2. Heavy Incidence of interest on borrowing from government and financial
institutions.
3. Lack of working capital.
4. Heavy incidence of local taxes such as sales taxes, exercises, duty, etc.
5. Lack of continuous up graduation of technology.
6. Absence of international marketing agent and modern in fracture facilities like
cranes computer aided systems etc
ORDERS FROM HOME AND FOREIGN COUNTRIES
Orders from Indian Navy: -
Hindustan Shipyard does not get dedicated ship construction works from the Indian
navy. However, the yard had over the year built INS Darshak, a survey vessel; INS
Darshak is an armoring vessel. T. S Rajendra a training ship; off shore petrol vessel Vizag.
INS sardar, INS saryu and INS Sujata and hulls of LST (L). INS Gharial and a few other
ships have given satisfactory services to the Indian navy. The shipyard has the capacity,
capability and knows how in fracture facilities for undertaking construction of various
naval ships and Hindustan Shipyard limited has been requesting naval headquarters for
placement of orders for construction of fleet tanker for the Indian Navy.
In the annual report (2001-02) it has been stated that the ministry of defense has
nominated Hindustan Shipyard limited on June 25, 2002 for undertaking repairs and
modernization of one 877 class submarines for Indian Navy (yard No: 01415). Hindustan
Shipyard limited has been asked to submit the draft contact including the conditions of
technical assistance of collaboration agreement with Russian Agency FSUD Roseboro
Export from the medium – Modernization of the subject submarine when asked about the
draft contract has been submitted by the company, the committee have been informed that
in drawn up for the up graduation of Hindustan Shipyard limited and preparation of MR-
CUM-Modernization of INS sindhukiriti, a 877EKM submarine, FSUE Rosoboron export
delegate , for defect survey these draft contracts were studies by Hindustan Shipyard
limited, the head quarters Eastern Navel command, the naval Dockyard, Visakhapatnam
and the submarine head quarters futures FSUE Rosoboron export visited Hindustan
Shipyard limited from 2nd March 2003 to 14th March 2003 to negotiate finalize the contract.

Government Policy on Ship Building Industry:

With the vigorous entry of countries like Korea and china info world market over
two or three decades ago, a chain reaction had set in and the process still continues. In the
final analysis, one sees a highly subsidized ship building industry over the world same
countries do not conceal the fact and publish information about their direct and indirect
subsidies. In some others, the industrialism assisted indirectly by visible and invisible
means.
The reasons for ship building industry are as follows:
1. Necessity to compensate ship building for higher local costs out side their in order
to put the domestic industry on an equal root in with foreign competitors.
2. Social and strategic importance of the industry.
3. To help the industry adjust itself to changing/changed market conditions.
4. To help an emerging industry in the early stages of development.
 Low productivity is on of the factors contributing to the cost of construction and
delayed delivery in the domestic ship building industry. Ship building industry has variety
of equipment and system depending upon the choice of the owners and safety regulations.
Oil tankers, general cargo vessels, bulk carriers, passengers vessels, port crafts hand mix
buckers, survey vessels, off shore petrol vessel, drill shifts, off shore supply vessel and
drilling platform for oil sector.

Foreign orders:-
In the case of Hindustan Shipyard limited the prices fixed for the ship produced are
not with in its control further, costs and prices do not have any meaningful relationship
because the market forces acting upon the cost and prices of ships are artificially pegged
down in many countries. In some countries like Japan, Korea and China quota very low
prices, which in many cases barely corer the cost of materials under the extra ordinary
circumstances prevailing all over the world in ship building and off shore construction, the
prices fixed for Hindustan Shipyard limited building build vessels and structure are o the
basis on international party price (IPP) or international competitive Bid (ICB) are
disproportionately low, leaving no room for bridging the gap between cost and price.
Ship building and off shore construction industries all over the world continue to be
adversely affected by the severe and prolonged depression which was triggered by the oil
crisis of 1973, profitability of the ship building industry was low. Until 1970 ship builders
were accustomed to fixed price contracts, which were based upon an estimated cushion for
inflation. When the inflation rose to unexpectedly higher levels, many ship builders were
standard without any margin.
Later, escalation clauses or a higher cushion for inflation were brief as all the
pervading depression engulfed the industry and the ship builders were compelled to accept
order at any price in order to get what ever work that could be found.
The very fact that ship building is subsidized in many countries much before 1973
is an indication of the negative profitability of the industry. The fact that a truly
multinational shipbuilding corporation has not so far come into existence over during the
boom period, is also an indication of the industries negligible profit making potential. If
ship building industry proved to be a profitable venture many exploited opportunities.
CHAPTER – III
 INVENTORY MANAGEMENT

Introduction:
Inventory in wider sense is defined as an idle source of all enterprises. However, it is
commonly used to indicate raw material in process, finished, packaging spares and other,
stocked in order to meet an expected demand and distribution in future. Even thought
inventory of material is an idle resource in the sense it is not meant for the most immediate
use, it is almost a necessary to maintain some inventories for the smooth functioning of the
organization.
The benefit of inventory can be best understand one imagines of an organisation is
working on inventories at all organisation on receiving a sales order would have to order
out the quality of materials required for computer this order wait fill the arriver and start
production.
One will think of various dis-advantage of this way of fluctuating customers would
invariable have to part every high price because of the price meal buy inch. The production
cost also be high because of facilities to take advantage of parching incase these is
excessive receiving at either receipts or at any of the manufacturing staged, long waiting be
inevitable to get French suppliers. The bad on the manufacturing shop vary from period
depending upon the order on hand in show a come punt would not be able to provide
satisfactory customers service and would fail to take advantage of economics in bulk
procurement and batch manufacturing and their would not be able to provide satisfactory
customers service and would fail to take advantage of economics in bulk procurement and
batch manufacturing and their would net stand long in completion both in the mater of
price and customers.
In many organizations materials from the largest used expenditure items analyze of
the financial start of large no of private and public sector organisation indicates that
materials accounts of nearly 60% of total expenditure exist in manufacturing companies are
raw materials, work in progress ( semi finished goods), and finished goods. Raw materials
are those basic input materials that are converted into finished products.
Working process inventories are semi- manufactured products that need more work
before they become finished work before they become finished products for sale finished
goods inventories are those completed manufactured products for sale, stock of raw
materials and work in processes facilities productions. This inventory serves as link
between the production and consumption of goods. A manufacturing firm will have
subsequently high level of all 3 kinds of inventories retail of whole sales, firms will have a
very high level of finished goods inventories and no raw materials and work in process
inventories, inventories constitute that most significant part of current assets of a large
majority of countries in India. For example an organization inventories are approximately
60% of current assets in public limited companies in India.

NATURE OF INVENTORIES
 Inventory is stock of the product a company is manufactured for sale and
components that make up the product. The carious forms in which inventories exist in a
manufacturing company are raw materials, work in progress and finished goods.
Raw materials are those basic inputs that concerted into finished products through
the manufactured process. Raw materials inventories those units which have been
purchased and stored for future production work process inventories are semi-
manufactured.

Products: They represent products the need more work before they become finished
productivities for sale. Finished goods inventories are those completely manufactured
products. Which are ready for sale stock of raw materials and work in process facilities
production while stock finished gods are required for smooth marketing operational? This
inventory serves as a link between the productions cycles products on the other hand
inventories of the consumer product companies will not be large become of short
production cycle and fast turn over.

Objectives of Inventory Management:

In the context of inventory management the firm is face with the problem of
meeting two confliction needs.
To maintain a large size of inventory for efficient and smooth production and sales
operations.
To maintain a minimum investment inventories to maximize profitability.
Both excessive and inadequate inventories are not desirable there are 2 danger
points with in which the firm should operate the objectives of inventories management
should be determined and maintain investment. The optimum level of inventory, the firm
should always avoid a situation of over investment or under investment.
The major danger of over investment is:
1. Unnecessary tie up of the firm funds and loss of profit.
2. Excessive carrying cost.
3. Risk of liquidity.
 The excessive level of inventories consumers funds of the firms which cannot be used
for any other purpose, this involve opportunities cost, the carrying cost such as the cost of
strong handling insurance, recording and inspection also increase in proportion to the
volume of inventory, these costs will impair the firms profitability further. Excessive
inventories carried out for ling period increases chance of loss of liquidity. This is possible
under constitution of inflation and scarcity; work in process is far more difficult to sell.
Similarly difficulties may be faces to dispose off finished goods inventories as time length.
The down word shifts in market and the seasonal factors may be because finished goods to
be sold at low price another danger of carrying excessive inventories is physical
determination of inventory while in shortage facilities these factors are within the control of
managing unnecessary in inventories in can be cut down maintain as inadequate level of
inventories is also dangerous.

The consequences of under investment are inventories are: -

1. Production hold upper.
2. Failure to meet delivery commitment.

Inadequate raw materials and work in process inventories will result in frequently
production interruption similarly it finished goods inventories are not sufficient to meet the
demand of customers regularly they may shift to a permanent loss to the firm.
An effective inventory management should be: -
1. Ensure continuous raw materials of facilities.
2. Uninterrupted production.
3. Maintain sufficient stock of raw materials in period of short supply and anticipated
price change.
4. Maintain sufficient finished goods inventory for smooth sale operation and efficient
customer service.
 5. Minimize the carrying cost and time.
6. Control investment in inventories and keep it at optimal level.

TYPES OF INVENTORIES
Raw materials: - To hold stock of raw materials, an organisation deploys its primary
production from manufacture stockiest.
Work in Progress:- Work in progress inventories are same manufacture products that need
move work before they become finished product for sale.
Finished Goods: - The stock of finished goods provide a between customers and demand
and manufacturing supplies.
Flabby Investment: - It comprises finished goods. Raw materials and stores held of poor
working capital management and inefficient distribution.
Profit Making Investment: - It represents stocks of raw material and finished goods for
realizing stock profit.
Safety Inventory: - Provides for failure in suppliers unexpected spent in demand etc
although there may be an insurance cover.
Normal Inventory: - Based on a production plan lead time of suppliers and economic
levels. Normal inventories fluctuate primarily with change in production plan.
Excessive Inventory: - Even an efficient management may be compelled to build up
excessive inventory for reasons beyond its control as in the case of strategic impact as a
measure of government price support of a commodity.

COMPONENTS OF INVENTORY MANAGEMENT

Inventory consists of two more components.
1. Raw Materials.
2. Work in Progress.
The raw material inventory should be related materials consumed and work in
progress to the cost of production, materials consumed can be found out as opening balance
of raw materials plus other manufacturing expanse plus opening balance and closing
balance of work in progress may be related to sales to know the efficiency with which the
firm converts raw materials into work process and work in process into finished goods.

Raw Materials Inventory Turnover Ratio:

The ratio indicates the efficiency of the firms raw materials consumed. It is
calculated by material consumed divided by average material inventory.
 Material Consumed
Raw Material inventory Turnovers Ratio =
Average Material Inventory
Work in progress turn over ratio
This is unable for the company in establishing the time gap between different stages
in a production cycle and the efficient with the production cycle gets completed. In case of
Hindustan Shipyard limited work in progress inventory turn over ratio has been fluctuating
over the year it is calculated form cost of production divided by average work in progress
inventory.

Cost of Production
Work in Progress Turnover Ratio =
Average work in progress

ADVANTAGES OF HOLDING INVENTORIES

Quick Services:
Customers desire a prompt fulfillment of orders. A girl will have to make the goods
available for sale. In the event of its not being able to office quick service to customers, the
latter is likely to get then orders executed by competition discount, affirm is in a position to
the advantage of trade discount by placing bulk orders with suppliers.
Reduction in order costs:
Each other increases certain cost if the number of orders is reduced it is possible to
economics on these costs or the procedure involves each other need not be repeated each
time.

Efficient Production Runs:

 Inventories help a firm to make sufficient long runs and these by achieve efficient
production which increase in the production run is possible to reduced the run it is possible
procedure the setup costs of operations.

Protection against Shortage:

Adequate inventory protect a firm against shortage that would result in production
stoppage and considerable losses.

INVENTORY MANAGEMENT CONTROL

In management inventories the fill objective should in consonance with the share
holder’s wealth maximization principle. To achieve this, the firm should determine the
optimum level of inventory make the firm feasible inefficient inventory control results and
some times may file up unnecessary stocks. This increases the level of investments and
makes the firm unprofitable. To manage inventories efficient answers should be sought to
the following to questions

1. How much should be ordered?

2. When should it be ordered?
 The first question is how much order relates to the problem if determining
economic order quantity and is answered with an analysis level of inventories the second
question when to order arises become of uncertainness and is a problem of determining the
order points.

INVENTORY MANAGEMENT TECHNIQUES

Economic Order Quantity: -
One of the major inventory management problems to be involved in how much
inventory should be ordered when inventory is replenished. If the firm is buying raw
materials it has to decide lots in which it has to be purchased are called order quantity
problems and the task of the firm is to determine the optimum or economic order quantity.
Determine are optimum inventory level involves two types of costs.

1. Order Cost: -
The term ordering is used in cases of raw materials include the entire costs of
acquiring raw materials, they include costs incurred in the following storing, ordering cost
increases in proportion to the number of orders place. The clerical and staff cost however
do not have to vary in proportion to the number of costs also inventories acquired the
higher the firm ordering cost in the other hand if the firm maintains large inventory levels.
They will be few orders places and ordering cost will be relatively with increasing size of
inventory.

2. Carrying Cost: -
Cost incurred for maintaining a given level of inventory are called carrying cost
they include storage, insurance taxes, determination and obsolesce. The storage cost
comprises cost of storage space incurred in recording providing special facility such as
fencing lines and racks.

The following table provides summary or ordering and carrying costs.

ORDERING COSTS CARRYING COSTS

Requiring Warehousing

Order Placing Handling

Transportation Clerical & Staff

Receiving, Inspecting &
Insurance
Storing
Clerical & Staff Deterioration & Obsolescence
 Carrying cost vary with inventory sizes. This behaviour is contrary to that of
ordering cost which declines with increase inventory size. The economic size of inventory
would thus depend on trade off between carrying costs and ordering costs.

ABC Analysis: -
ABC analysis is a basic analytical technique for inventory management which
enables. Top management to direct the effort where the result will be the height this tool is
popularly known “Always Better Control”. This analysis classifies the inventories
according to the importance of each component. All components are not off equal
importance. The firm should therefore classify inventories to identify which item should
receive major attention. The high value items are classified as “An” items and would be
under highest control. “B” items fall in between these two categories and require
reasonable attention of management. “C” items represent relatively lest value and should be
under simple control.

1. Category “A” generally a consists of 15-25% of inventory are of highest value.

2. Category “B” consists of 20-30% of annual usage value.
3. Category “C” consists of 40-60% inventory and accounts for 10-15% of annual
usage value.
4. The purpose of ABC analysis the object of carrying out ABC analysis is to develop
policy guide lines for selective control.
 CHAPTER – IV

INVENTORY MANAGEMENT IN HINDUSTAN SHIPYARD

LIMITED
An overview:
 Each item has a bin card posting are done manually at present monthly consumption
statement are prepared and circulated to all concerned prepared levels based on 3 years
history has been fixed an places his order correspondingly a min max system is being
operated and a min stock of6 months is aimed for B&C category item. Usually high value
items are ordered on the basis of EOQ quantities or as in the case of regular order are
placed and delivery schedule is given to these suppliers. The delivery may be daily or
weekly or monthly depending upon the quantity consumed. For instance hydrochloric acid
is delivered on daily basis. For B&C class items min-mix system is adhered to strictly
while as stated before B&C items are operated on nill stock basis. Usually C items are
ordered manually or capitalizing the spare parts received along with the equipment.
All the indents that are raised by user department come to the interruption similarly
if finished goods inventories are not sufficient to meet the demand of competition which
will amount to a permanent loss to the materials planning section. The indents are checked
for specifications substitute and availability and then cleared for necessary purchase action
capital items are not process through the material planning or maintenance sections but
directly by the process through operation plant executive after clearance by the finance and
the management the chairman reviews the approves budgets frequently and the consumed
departments responsible for adverse variance and questioned.
The follow up action is required to get the material as per the delivery scheduled
inspections department will inspections department will inspect the materials is technical
and quality aspects of the material is technical and quality aspects of the materials received
after receiving the material receipts reports (MRR) along with inspection report the
purchase department will advise the finance department to arrange the payment for the
materials received. If any irregularities in supplying of material the action are sought
according to the terms and conditions of the purchases order for and rejected materials the
purchase department will have to correspondence with the suppliers and make necessary
arrangement against the damaged materials.

FUNCTIONS OF THE INSPECTION DEPARTMENT

Sales The Hindustan shipyard limited materials inspection department is functioning
under the control division, which is directly reported to directly (technical). Inspection dept
is equipped with the technically known ledged group person to inspect the materials per the
requirement the incoming materials is received and brought the clearance department and
handed over the clearance owner. The store personal will change for the inspection of the
materials with co-ordination of the inspection department will inspect the materials
specification as per the purchases order technical specifications mentioned by used
department drawing and design office and the classification certifies if any
The following methods while inspecting
The materials are followed:
 Bulk like bolts and bulbs, paint & consumable etc are inspected at random only.
 For steal 100% verification is done for above 4.5 mm thickness inspection is done
at random only.
 For timbres 100% inspection is done.
 For pipes 100% inspection is done, inspection is conducted in the following areas.
 Quality as per specifications.
 Quality as per purchase order of suppliers packing list.
Purchase department: - For taking necessary arrangement adjustment on the basis of IR
purchases department will correspond the matter with the supplier’s relations adjustments,
short suppliers, etc and follow up actions as curtained.department: - For preparing

material receipt report (MRR) for the accepted quantity and accounting the
material.
Drawing office/user department/project: - Who raised the purchase indent for the
intimation about the procurement.
Account department: - For arranging the payment/adjustments for the accepted quantity
self office copy for record purpose.

FUNCTIONS OF STORE DEPARTMENT

In Hindustan shipyard limited, store department is sub-divided on the basis of
materials wise. The organization chart encloses here will give clear view about the total
stores organization in Hindustan shipyard limited. Normally the functioning of all stores is
similar. The main function is to maintain the proper stock levels of various stores items for
smooth run of the production schedule and at the same tie the store function should see the
huge amount of capital is not locked up in the form of inventories. The proper documents,
which are using for the materials in stores, are as follows.
Materials Receipt Report (MRR) : - This is normally prepared by the concerned stores on
the basis of inspection report MRR no, date, materials code, description code, unit of
measurement, quantity received, quantity accepted & P.O no suppliers, name of code, 1R
no & date etc, MRR will be prepared in 5 copies for.
Concerned stones: - Concerned for the stones is bin card.
Cost Accounts (Material Section): - Cost accounting the receipts in precise stores ledger
(PSL).
Accounts bills: - Accounts bill for arrangement the payment adjustments.
Purchase department: - For information and to take necessary follow up actions as per the
purchase order.
Material Requisition (MR): -
This is normally written in a prescribed format be the materials user department.
This is prepared and sent to stores department for issue of materials MR is having the
details of materials code, job number, and signature of the authorized drawer etc. After the
issue then materials the first 2 copies are taking by the stores department and sending the
third copy along with the issued materials to the user department. Store department will
enter the issued quantity on requisition and in bin cards. The original MR is sent to cost
account department for charging the issue to the work order.
Material Return Notes(MRN): - This is similar as material requisition written by the
user/production department the MRN is for returning the un-used materials to the store the
MRN is also containing all the details as MR but it is normally printed in different colors.
In Hindustan shipyard limited MR is pink/red color and MRN is yellow color.
FUNCTIONING OF MATERIALS ACOUNTING SECTIONS IN ACCOUNTING
DEPARTMENT
The materials accounting section is dealing with the maintenance of inventory
record with values. The main functions are as follows :Receive the MRR and enter in the
period stores ledger with providing the values on the basis of purchase orders. This is done
with the cooperation of data processing departments (computer) periodically i.e. for
monthly. The necessary receipts entries will be passed to make the receipt into the books of
accounts while considering the receipts clues there are come pre-determined rates as
applied for fright, insurance and material handling charges where ever necessary these pre-
determined rates are on the basis of last year actual.

Valuation of issues: - Receiving and consolidation of all the material, stores and arranging
for issue valuation with the help of data processing department (computer).
In Hindustan shipyard limited all the issues of all the stress expect bond stores are
values in weighted average systems. For bond stores the issues are based on the percentage
of competition report from production planning materials accounting system passing
necessary entries for consumption to make the issue into account.

Maintenance of Price Stored Ledgers: - Periodically Price stored ledgers are maintained
if any discrepancies noticed in accounting if receipts and issue adjusting the same after the
intimation received from the concerned stores.

Attending Perpetual Inventories Discrepancies: - If any discrepancies notice P.I Section,

the necessary physical adjustments are passed yearly.

INVENTORY NORMS
Maintain the inventory balance and intimating to the higher levels for taking
necessary steps wherever required intimating to the other level of management about the
non-moving insisting the non mobbing surplus materials with the entry about department
co-ordination the inventory control management is organization of Hindustan shipyard
limited. In order to supervise the dues of the funds are required to get from the borrowing
quickly management information report pertaining operating system, funds flow
statements, peak level balance sheets for the ensuring year in as much as only 10%
variance between actual and projected figures are allowed the information system will
ensure in disciplined and planned approached to credit planning for inventory control.
The maximum level of norms has been given as 4-10m weeks for raw materials
now to 5 weeks for semi finished goods, 3-8 weeks for accounts receivables, depending
upon the nature of industry. In a few cases the finished goods are account receivables has
been combined and variation allowed depending on location of factories, types of input etc,
the norms are to apply by the lending institutions with a flexible approach. Hindustan
shipyard limited is following the inventory norms of BPE since 1985 approves total
inventory norms is Rs. 1910 Lakhs. The following table is the break up to each store wise.

However the above norms are dated norms. These norms were firms for full

Machinery Equipment 100

Steel 550
General Stores 250
Timber Stores 20
Other Stores 90
Total 1010
capacity. Since the shop construction activity to reduce the norms to be evaluated a fresh. If
in a relationship between costs of goods expressing that how many times stocks is
purchased during this year. High inventory turn over is more profit for the organisation. It
means the efficient utilization of working capital and the stock inventory.
In French and non obsolete such company can operate on a small profit margin with
a large scale volume on low turn indicates a poor quality of marketing efficiency and poor
management of working capital. Executive inventory is also for low turn over resulting in
heavy loss due to obsolesce. The problem of spares and management which are different
from other classes are initially presented the categorized of spares provisioning of spares,
cost of spares, role of maintenance budget is brought in the content of solving the spare
parts problem.

INVENTORY OF VARIOUS STORES

The entire store organization is sub-divided into four stores as:
1. Bond Stores
2. Steel Stores
3. Timber Stores
4. General Stores
 Bond Stores: - Bond stores are dealing with all the imported materials and specific
materials particularly for ship construction activities. The materials consumption of bond
stories is contributing major share about 60% to 70% of the total materials cost not meant
for stocks. They are meant for immediate consumption this material tailor made items
according to the size and design of the ship. The imported materials are like man engine,
diesel generator sets, and electrical equipment.
Main shifts and propellers rader and communication equipment in Hindustan
shipyard limited premises there is a customers office to look after all the matters receipts
and issue of imported materials, customers vigilance is required on the ship building
materials store they area all exempted from customs duty they should used for specifies
purpose.
Steel Stores: - For the procurement of steel there are two indenting departments.
1. Drawing Design Office: - For the material for vessel construction higher
value and higher quality material such as “A” glass, plates and Sections the material
may be both indigenous and imported.
2. Steel Store: - For the materials of “B” class and ‘c’ class, lesser close items
such as flat etc. this type items is called as standard stock items for these items the
steel and stores is not only raise the purchases indent but fixed on the basis of
present and future consumption pattern out to total stores around 80% materials is
‘A’ category for which the design and drawing office will be purchased indent. For
procurement according to the ordered vessel. Remaining 205 materials is standard
stock items for which steel is identified by specific codifications as A, B, C & D
international standards. Specific graded steel is required for the construction of
ocean- going vessels and it should by at the grades certified by
1. LRS – Lioyds Register of Shipping.
2. ABS – American Bureau of Shipping.
Generally still it is received in standard size of thickness, length, breadth, but it is
accounting in weightiest i.e. in metric tones, the main supplies are sail and foreign counties
like Japan. Korea, etc… and same procured from local suppliers. If any rejected material
that material is kept separately, on the advice of purchase department drawing office that
material is handed over to the supplier by the steel stores.
Timber Stores: - Timber stores is dealing with procurement storing and issue of timer
material such as blue pine, teak sal wood, pin wood, staging plant, supporting board bale
wood stock and also for maintenance work as per the norms of drawing office estimates
and production department requirements. Timber stores are assisting the purchase
department in finalization of the tenders by study of the following:
Finalization of the tender by study of the following:
1. Quality.
2. Delivery Period.
3. Specification Size and Standards.
4. Sample…….etc…
General Stores: - The function of the general stores is sub divided into various groups
because it deals with various items of more those 40000 items. There are well organized
procedures for accounting of imported materials customs office pro available with in the
premiser of Hindustan shipyard limited to look after the matters of imported for ship
construction is accepted from the average cost method for inventory as well as for the
consumption of steel timber and general stores Bond stores material is accounted specific
accounting.
Receipt Section: - Receipt of all the materials of incoming from clearance
department from suppliers directly. Enter all the details in a separate register as per the
delivery chillness. Keep the materials at the earlier. Preparation of MRR for accepted
quantity as per the inspection report. Handling over the materials along with MRR to the
concerned group (store).regulating the rejected materials entered in a separate register and
kept them under safe conditions. Registered material is handed over to the suppliers on the
advice (rejected rerun advice) pf purchase department.
Group (Concerned stores): - The entire general stores activity stocking and issuing is
looking after by 10 groups. General stores items are also given 8 digit codes starting with 3,
4, 5, 6 & 7. The following table will give a clear idea of group and it is suffering areas.
Groups and its functioning areas:
The above all groups are engaged in maintaining the bin cards. Storing the materials
and issuing the materials to the user department. The bin balance is verified with the priced
stores ledgers periodically and if any discrepancies noticed that will be corrected by
intimating sections will pass necessary consumption statements group’s personnel are
extending their co-operation to conduct the physical stock verification of per capital
inventory section.

Group Dealing Materials

0.30 Group General stores
0.31 Group Cabin Hardware
0.32 Group Pipes and pipe fitting
Industrial consumable (gases and
0.33 Group
electrodes)
0.34 Group Bolts and Nuts
0.35 Group Oil and Paints
0.37 Group General consumables
0.38 Group Electrical consumables
0.40 Group Central tools
0.60 Group Canteen materials
0.70 Group Spares for plants and Machinery

Size of stroes
Hindustan shipyard limited is maintained in a board head and their sizes available
for the last 5 years for 1995-96 to 1999-2000 in the following statement.
Accumulation of Inventory:
The question of managing inventory areas only when the company accumulates on
inventory maintaining inventories involves typing important of the company funds and
strong and handling costs if it expiring to maintain inventories why do companies
accumulate of inventories.
“The transaction motive” emphasizes to the maintain inventories to fascinated smooth
production and sales operations.
“The pre cautionary motive” which emphasizes the need to maintain inventories to guard
against the risk of a predictable changing in demand suppliers force and other factor.
“The speculation Motive” which influences the decisions in increase or decrease inventory
levels to take advantage of price fluctuating at times the industry would like to accumulate
raw materials in anticipation of price rise ‘A’ category of moderate values with modern at
consumption of items but the quantity is more in consumption.
None Moving and Surplus Materials Analysis:
The Hindustan shipyard limited is the year period is considered as a period for non-
moving it any items are not consumed for more than 3 years than it is considered as non-
moving. Surplus material is the materials which is not having any requirement in present
raw consumption and in after consumption.
The following are the main reason for the surplus inventories in Hindustan shipyard
limited.
 Excess Procurement: - Normally steel and other consumable are procured at 5%
excess to the requirement to the production damages.
 Extra procurement of spares for general maintenance of plan and machinery
subsequently which is dated.
 Due to change of Design of the product (i.e. shop construction)
 Spare parts of out dated assets etc.
All the above surplus material is unused raw material the identification of surplus
material is the important part inventory control cell is adopting the following procedures
for reducing disposing the surplus and non-moving inventory.
Stage – I
Searching for alternative use/users keeping them in stock to meet the future
requirement this can be done with co-ordinates of design and drawing office/ship repairs
department.
Stage – II
By intimate to the other public sector understanding publicity.
Stage – III
 By calling public tender and auctions for disposal. Before calling public tender the
reserve prices are to be fixed for the surplus non-moving items by the experts committee
the fixed reserves prices are to be approved by the chairman and managing director.
Disposal Activities: -
Disposal activities are looking after by disposal sector which is under the control of
managing (material). The main activity of the disposal sections is to dispose the unwanted
materials co depending stores, scrap material and etc.:
PROBLEMS IN INVENTORY
Problems in procurement
Ship building material is tailor made items. Hence the lead time is differing from
items to items.
 Majority of the materials for ship building are imported and international
standardized material hence the procurement this may be more due to various
reports and involvement of various authority.
 Because of Hindustan shipyard limited is being a public sector the decisions making
of inventory is late through they are asset.

Problem in Storage:
 Regarding present of steel is keeping in open yard, ship building activities should
be carries out at the coast, the required steel is export to the nature and moisture is
reads to natural decay such as rust etc… (More decay due to salty atmosphere).
 It is required a periodic maintenance through scaled balding and anti corrosion
painting.
 Requiring imported machinery items those are to be maintained in air-condition
stores up till installation.
 The material is not available indigenously. It to be stored in water. Hence, separate
storage facilities are required.
  High grad electrodes (standard materials for ship building under ISO 9001) are to
be presented as standard temp.
 Materials like ‘rock wool lapin us’ is kept in a separate closed area away from other
materials.
 Huge materials in size like main engine, life boats etc… may not possible to store
under any stores. Hence, they are to be properly covered with fire proof trampoline
etc

Analysis of Investigation

Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Steel 489.71 5584.86 1199.58 1199.53 7864.16 8569.50
Store spears 969.46 999.30 1095.14 122.84 2507.47 2481.22
Timber 54.08 81.79 54.78 50.57 49.72 51.06
Ship equipment 0.22 0.22 - - - -
Loose Tools 4.9 9.05 10.14 14.95 - -
 Goods-in-Transit 299.83 967.31 8611.60 943.99 1502.60 6222.65
Other materials 4.01 7.71 7.84 591.46 - -
Steel cut price and
61.83 55.29 71.96 87.35 104.80 130.47
scrap
Work in process at
536.18 449.09 - - - -
cost
Work in process
2519.01 1399.61 4777.95 9437.94 13574.00 20006.08
atrible value
15828.9 13553.5
Total 4939.23 9554.23 25602.75 37460.98
9 4
Less:- Provision 318.00 318.42 291.28 347.81 247.53 245.67
15537.7 13205.7
Balance 4621.23 9235.81 25355.22 37215.31
1 3
The task if steel
stores & spares
equipment to 14.58 10.75 12.90 8.33 13.67 16.87
months
consumptions

18

16

14
Graph:
12

10

8 Stores & Spaeres Equipments

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation: -
As per the above table, it is clear that the inventory levels of Hindustan shipyard
limited showed a fluctuating trend. The spare parts level more or less remained constant.
The usage of loose tools showed a very erratic trend of increase and decrease in all the six
years of study. The inventory levels of steel also indicate a fluctuating trend and the usage
of timber has also indicated a fluctuating trend. One noticeable thing about inventory is the
decreasing level of scrap.

INVENTORY TURN OVER RATIO

The ratio indicates the efficiency of the firm of selling its product. It is calculated
by dividing the costs of goods sold by the average inventory.
The cost of goods sold is known then the inventory turn over ratio and can be
computed by dividing sales by average is turning into receivables through sales. This ratio
signifies the liquidity to inventory. It is used to measure and discover the possible in the
form of over stocking or over valuation.
Cost of good sold
Inventory Turn Over Ratio =
Inventory
 Inventory (in Inventory Turn
Year Sales (in Lakhs)
Lakhs) Over Ratio
2003-04 12719.94 4621.72 2.75

2004-05 23697.61 9235.81 2.57

2005-06 31084.25 15537.71 2.01

2006-07 38627.70 13205.73 2.92

2007-08 48976.63 25355.22 1.93

2008-09 46960.47 37215.31 1.26

3
Graph: Inventory Turn over Ratio
2.5

1.5
ITOR

0.5

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
As per the above table it is clear that the inventory levels of Hindustan Shipyard
Limited should a fluctuating trend. The spare parts more or less remained constant. The
usage of loose tools should a very erratic trend of increased and decreased in all the six
years of study if is clear that the stock has been utilized more efficiently to produce goods.
The ration has recorded the lowest values 1.261 during the year 2008-2009.the heighest
value 2.925 in the year 2006-2007.later it was down 1.931 in 2007-2008.later it decrease to
1 .261 in the year 2008-2009.because of the increase sales and increase in inventory the
inventory turn over ratio has fluctuating.

RAW MATERIALA INVENTORY TURNOVER RATIO:

The ratio indicates the efficiency of the firms raw materials consumed. It is
calculated by material consumed divided by average material inventory.

Material Consumed
Raw Material inventory Turnovers Ratio =
Average Material Inventory
 Material Raw Material
Inventory
Year Consumed Inventory
(in Lakhs)
(in Lakhes) Turnover Ratio
2003-04 4621.72 3802.53 0.82

2004-05 9235.81 10308.48 1.17

2005-06 15537.71 14453.49 0.93

2006-07 13205.73 19019.22 1.44

2007-08 25355.22 22255.48 0.88

2008-09 37215.31 26466.04 0.71

Graph: Raw Material Inventory Turnover Ratio

1.6

1.4

1.2

0.8
RMITOR
0.6

0.4

0.2

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation: -
The ratio is calculated to know the level of raw materials inventory held by the firm
on an average. This ratio indicates the efficiency with the firm converts raw materials into
work in process. It is clear from the above table that the raw material inventory turn over
ratio of Hindustan Shipyard Limited is very erratic trend of increase and decrease in all the
six years of study. Because of the increased and decreased in material consumed and
inventory.

Inventory
Days of Inventory Holding = *360
Sales

Years Days of Inventory Holding

2003-04 4621.72/12719.94*360= 131
2004-05 9235.81/23697.61*360= 140
2005-06 15537.71/31084.25*360= 180
 2006-07 13205.73/38627.70*360= 123
2007-08 25355.22/48976.63*360= 186
2008-09 37215.31/46960.47*360= 285

WORK IN PROGRESS TURN OVER RATIO

This is unable for the company in establishing the time gap between different stages
in a production cycle and the efficient with the production cycle gets completed. In case of
Hindustan Shipyard limited work in progress inventory turn over ratio has been fluctuating
over the year it is calculated form cost of production divided by average work in progress
inventory.

Cost of Production
Work in Progress Turnover Ratio =
 Average work in progress

Cost of Average work in

Work in Progress
Year Production (in Progress
Turnover Ratio
Lakhs) (in Lakhs)
17787.13 5.82
2003-04 3055.96

2004-05 24573.30 2048.69 11.99

2005-06 30647.70 4877.77 6.28

2006-07 46218.16 9437.97 4.90

2007-08 473318.55 13574.00 3.49

2008-09 55189.35 20006.08 2.76

12
Graph: Work in Progress Turnover Ratio

10

6 Work in Progress
Turnover Ratio

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
This ratio is calculated in know the level of work in process inventory hold by the
firm on an average. It indicates the efficiency with which the firm converts work in process
into finished goods from this ratio it can interpret that work in process is which in the year
2003 -2009 and then decreased considerably over the year. because the cost of goods are
increase high and average work in progress also increase because of that the work in
progress turn over ratio decreases in the years 2005 -2009 .

INVENTORY TO NET WORKING CAPITAL

The net working capital is the difference between the current assets and the current
liabilities. It may be either positive or negative. When it is positive current assets exceeds
current liabilities. When it is negative current liabilities exceeds current assets, raw
efficient performance. The ratio calculated from inventory divided by the net working
capital.

Net working Capital = Current Assets - Current Liabilities

 Inventory
Inventory to Networking Capital =
Net Working Capital

Current Assets Current Liabilities

Year
akhs) (in Lakhs)
2003-04 19226.08 30734.53
2004-05 33237.89 40700.31
2005-06 61900.32 68305.97
2006-07 80820.14 99141.96
2007-08 81871.99 93338.76
2008-09 76702.03 99993.07

Inventory Net Working Inventory to Net

Year
(in Lakhs) Capital Working Capital
2003-04 4621.72 -11508.47 -0.40

2004-05 9235.81 -7462.42 -1.24

2005-06 15537.71 -6405.65 -2.43

2006-07 13205.73 -18321.82 -0.72

2007-08 25355.22 -11466.77 -2.21

2008-09 37215.31 -23291.99 -1.60

Graph: Inventory to Net Working Capital

-0.5

-1

Inventory to Net Working

Capital
-1.5

-2

-2.5
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Interpretation:
With references to the table the ration is negative. Because the current liabilities are
more than the current assets. In the year 2003-2004 the ratio was 0.40% and it is increase to
0.84% in the year 2004-2005 and again it was increased by 1.19 % in the year 2005-
2006.and it was decreased by 1.71% in 2006-2007.later in the year 2007-2008 and again it
was increased to 1.49%and it was decreased 0.61% in the year 2008-2009.
SUNDERY DEBTORS AND TURNOVER RATIO
The percentage of sundry debtors to sales at the end of the last six years is
summarized.
Total
Sundry Debtors Turnover Ratio = *100
Sales

Consider Consider Percentage of

Year Total Sales
goods Doubtful debts to sales
2003-04 8054.86 1449.8 9504.66 12719.94 74.722

2004-05 14064.79 1305.03 15369.83 23697.61 64.818

2005-06 2313.49 1297.45 3610.94 31084.25 11.616

 2006-07 3654.86 1447.59 5102.45 38627.70 13.209

2007-08 4131.41 1533.76 5665.17 48976.63 11.967

2008-09 2432.78 2018.49 4451.27 46960.47 9.478

Graph: Percentage of Debts to sales

80

70

60

50

40
Persentage of Debts
to sale
30

20

10

0
2003- 2004- 2005- 2006- 2007- 2008-
04 05 06 07 08 09
Interpretation:
With reference to the above tables the sundry debtor’s turnover ratio has been
increasing gradually and the falling over the years. There was a continuously decreasing
during years 2004-2009. Because in the year 2003-2004 consider goods and consider
doubtful goods are low and also sales are in low so the percentage of debts to sales are
high. And latter the consider goods and consider doubtful goods and sales are increases
rapidly so the percentage of debts to sales are decreases gradually in the year 2003-2004
the ratio 74.722.it was decreased by 9.904 in the year 2004-2005.again it was decreased by
53.202 in 2005-2006.and in 2006-2007 it was increased by 1.593.in 2007-2008 it was
decreased to 1.242.in the last year 2008-2009 it was decreased by 2.489.

INVENTORY HOLDING PERIOD

The inventory holding period indicates of inventory and finished good into sales in a year.
In other words it holds average inventory for some months or days.
360
Inventory Holding Period =
Inventory Turnover Ratio (ITR)

Inventory Inventory Holding

Year
Turnover Ratio Period in Days
 2003-04 2.75 131

2004-05 2.57 140

2005-06 2.00 180

2006-07 2.92 123

2007-08 1.93 186

2008-09 1.26 286

Graph
300

250

200

150 Inventory Holding

Period

100

50

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
The above table and graph shows the comparative period of inventory holding of
the company. A fluctuating ratio can be observed.
 CHAPTER – V

SUMMARY

Hindustan Shipyard Limited, Visakhapatnam was established in 1941 in private

sector as Scindia’s steam ship navigation company its placements very favorable to ship
construction. It is established adjacent to the natural report to have important facilities of
the required materials. Hindustan Shipyard Limited launches its first vessel “JALA USHA”
in 1948.
After building eight ships of the ‘JALA’ series, Scandia’s the owner of Hindustan
Shipyard Limited found it difficult to run the ship yard without the financial assistance
from the government in 1948 for payment of construction different subsidy. Finally it was
decided that it would of ahead with the co-operation designation of the Hindustan Shipyard
Limited was registered on 21st January 1952 with the government holding is one third
scindia’s signed on as agree for the above sale on 23 rd February 1952. In July 1961 the
shares held by the scindia’s were also acquired by the Government of India because the
realized that it could not keep the industry going since then the its continuous to be fully
owned and controlled as government company.
Hindustan Shipyard Limited trust towards diversifications into other fields is
evident from its achievements are undertaking turkey projects for offshore requirements for
all sector audits capacity to meet the needs of on sore. Projects like process industries oil-
refineries, petrochemicals etc manufacture of selected equipment is associated with
specialist in the field is on the annual.
Hindustan Shipyard Limited is having a very good skilled labour force because
equally work generated in the past 50 years Hindustan Shipyard Limited could get the
Hindustan Shipyard Limited for the beginning is a non-profit organisation
but it was established only with national interest it was facing different types of problems
from its inception. Now ship building activities is indeed depression stage due to have
subsidy of offered the various countries like Japan, Korea etc… the internal shipping
price is not compatible by the India ship builders. To awake the situation the Indian
Government is also extended support to the Indian ship builders through peri passue clause
and subsidy.
Peri passue clause is the permission of the ship owner for acquiring at least one ship
form the Indian ship builders along with the import and the Government providers along
with the import and the Government provided subsidy at 30% on the international price of
every constructed ship in India.
From 1990 to 1994 this subsidy and pan passue clause were with drawn by the
Government due to the implementation of economics reforms with the internal pressure
(political against 20% subsidiary was provided form 1994 and revised to 30% it provides
by Hindustan Shipyard Limited is not in position to get the ordered at international process
since 1994.
Hindustan Shipyard Limited is offering with financial arises and working capital
storage. The capital of Hindustan Shipyard Limited is Rs. 12931.22 Crores, total losses is
Rs. 115545.70 Crores on 31-03-2004, by implementing voluntary retirement scheme
Hindustan Shipyard Limited is reduced the employers by observing that is 31-12-
2003 there are 3600 employers and there reduces as 3583 employees as on date. The heavy
investment rewired industries like ship building is always required the financial support
from the Government. Hindustan Shipyard Limited should be view with national interest
and with national unimportant but not with profit or losses. The word wide commerce not
closed or privatized because of its losses it may be of it is private sector. Hindustan
Shipyard Limited is the case traveled from private sector to public sector. Hence, the
government should take suitable stops to up life the implement the management techniques
to inventory to reduce the cost of standardized materials, Hindustan Shipyard Limited cost
of tailor made items regarding other standardized material, Hindustan Shipyard Limited is
adopted the various inventory control techniques such as ordering quantity (EOQ) fixing of
various level of maximum, minimum and reorder levels ABC analysis and perpetual
inventories to reduce thecosts of inventory and material costs. The entire stores
organization id sub-divided into 4 stores as:
1. Bond Stores

2. Steel stores

3. Timber stores

4. General stores

FINDINGS
The following are the findings of my study.
It is observed that the capacity utilization is increasing year -on-year.

Due to lack of orders the inventory levels are piling down.

The documentation in inventory management such as receipt issue or now done manually.

Hindustan Shipyard Limited is suffering with funds capacity from working capital.

Hindustan Shipyard Limited is suffering with sales tax on the constructed ships.
 SUGGESTIONS
To improve the returns on investments any business organisation has either to
increase it sales revenue or to reduce its capital investment. It is not easy to improve the
sales revenue as well as not easy to reduce the fixed capital investment. The reduction in
the working capital is the major source for increase the returns on investments and the
working capital management with in the ands of the management.
The following are the suggestions for improvement of performance of the
Hindustan Shipyard Limited.
To the Management of Hindustan Shipyard Limited:
It is observed that the capacity utilization is very low. Hence, the management may
search for other avenues for diversification optimally. Due to lack of orders the inventory
control for further losses way of obsolete and non moving inventory. Hence, it is required
to implement a suitable step to reduce the inventory.
 It is observed that the documentation of inventory management such as receipt issue
are not in annual it is required to implement a suitable step to reduce the inventory.
it is observed to that the documentation of inventory management such as receipt
issue are not to be done manually and hence it is required to implement the usage of
computer system to avoid duplication of work.
Management may concentrate to reduce the over head expenditure by using the cost
reduction method so as to reduce the losses.
To the Government:
Hindustan Shipyard Limited is suffering with lack of working capital. The
government may provide working capital to meet the day to day expenditure. Due to heavy
investments and losses the government may take necessary steps to merge.
Hindustan Shipyard Limited in SCL to utilize Hindustan Shipyard services for the
construction as well as repair activity of their own fleets.
Hindustan Shipyard Limited os suffering with sales tax on the constructed ships,
sales tax constructed to further losses, so
The government should take the good decision to activity is to be maintained with
the national interest subsidy for shipping should be maintained.

BIBLOGRAPHY
The study quotes valuable inputs of eminent authors and contains authentic
statement and photographs.
 Financial Management - I.M.Panday

 Fundamental of Financial Management - Prasanna Chandra

 Fundamental of Financial Text & Problems -M.Y.Khan&

 Annual reports of Hindustan Shipyard Limited for last five years

 Other printed leaflets of Hindustan Shipyard Limited

 General Articles about the shipbuilding industry

 Hindustan Shipyard Limited Website.