A STUDY ON

“INVENTORY MANAGEMENT
WITH REFERENCE TO
SREE SATYANARAYANA SPINNING MILLS LTD., TANUKU”

A project Report submitted to

School of Management Studies, JNTUK

In partial fulfillment for the award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

MULLAPUDI NARENDRA

(Regd No.19021E0067)

Under the Esteemed Guidance of

SRI. S.V.N. KUMAR
M.Tech, M.B.A, M.L.

SCHOOL OF MANAGEMENT STUDIES

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA

Kakinada-533003(A.P) India
2019-2021
 A STUDY ON
“INVENTORY MANAGEMENT
WITH REFERENCE TO
SREE SATYANARAYANA SPINNING MILLS LTD., TANUKU”

A project Report submitted to

School of Management Studies, JNTUK

In partial fulfillment for the award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

MULLAPUDI NARENDRA

(Regd No.19021E0067)

Under the Esteemed Guidance of

SRI. S.V.N. KUMAR
M.Tech, M.B.A, M.L.

SCHOOL OF MANAGEMENT STUDIES

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA

Kakinada-533003(A.P) India
2019-2021
 DECLARATION

I, MULLAPUDI NARENDRA student of School of Management Studies, JNTUK, Kakinada

hereby declare that the project report entitled “A STUDY ON INVENTORY MANAGEMENT

With Reference to SREE SATYANARAYANA SPINNING MILLS LTD., TANUKU” has been

submitted by me, in partial fulfillment of the requirement for the award of the Degree MASTER OF

BUSINESS ADMINISTRATION by JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

KAKINADA. During the year 2021.

This project work is original and has not been submitted to any other University for the award

of any Degree or Diploma.

PLACE: KAKINADA MULLAPUDI NARENDRA

DATE: Regd NO. 19021E0067

Plagiarism Report
19021E0067
 School of Management Studies
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA
Kakinada – 533003(A.P) INDIA

Certificate

This is to certify that the project work entitled “INVENTORY

MANAGEMENT” at “SREE SATYANARAYANA SPINNING MILLS Ltd.,

TANUKU” is a bonafide work of Mr. MULLAPUDI NARENDRA submitted in

partial fulfillment of the requirement for the award of the Degree Master of Business

Administration by JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

KAKINADA. During the year 2021.

Project Guide Director, SMS

External Examiner
 ACKNOWLEDGEMENTS

I express my deep sense of gratitude with profound happiness to the following personalities
who lend the esteemed encouragement in completing my project successfully.

Firstly, I would like to express my sincere thanks to Dr. A. KRISHNA MOHAN, B.Tech,
M.Tech, MBA, Ph. D, Director school of management studies for giving me an opportunity to take up
this project.

I take this opportunity to place on record my grateful thanks to my project guide S. V. N.

KUMAR, M.Tech, M.B.A, M.L for his timely guidance and support throughout the preparation of my
project.

Finally, I would like to express my deep sense of gratitude to all my respected faculty and my
beloved parents without whose support and encouragement. I would not have finished this work. I also
express my sincere thanks to friends and well-wishers too who helped me in preparing the project
work and made me to present it with in time.

MULLAPUDI NARENDRA
Regd no. 19021E0067
 TABLE OF CONTENTS

SL.NO TOPIC PAGE NO

1. • INTRODUCTION
• NEED FOR THESTUDY
• SCOPE OF THE STUDY 01 - 10
• OBJECTIVES OF THESTUDY
• LIMITATIONS OF THESTUDY

2. • REVIEW OF LITERATURE
• RESEARCH GAP
• STATEMENT OF THEPROBLEM 11 - 23
• METHODOLOGY OF THESTUDY

3. • INDUSTRY PROFILE 24 - 37
• COMPANY PROFILE

4. • DATA ANALYSIS AND INTERPRETATION 38 - 57

5. • FINDINGS OF THESTUDY
• SUGGESTIONS FROM THESTUDY 58 - 60
• CONCLUSION OF THESTUDY

6. • BIBLIOGRAPHY
• ANNEXURE
 CHAPTER-I

➢ INTRODUCTION
➢ NEED FOR THE STUDY
➢ OBJECTIVES OF THE STUDY
➢ SCOPE OF THE STUDY
➢ LIMITATIONS OF THE STUDY
 INTRODUCTION

Financial management refers to the organization's strategic planning, organization, management

and control of financial undertakings. It also includes the application of management principles
to an organization's financial assets and also plays an important role in tax management.
Consider the targets concerned:

• Maintaining the organization's sufficient funding supply;

• Ensure good returns on investments from the company's shareholders;

• Funds use optimally and efficiently;

• Create real and secure investment opportunities.

There are also certain elements in financial management. These comprise:

• Financial planning: this is the process for calculating and then determining the allocation of the
amount of capital required for an organization. A financial plan contains some key goals,
namely:

o The amount of capital required to be determined;

o Capital structure determination; o

o The financial policies and regulations of the organization are framed.

• Financial control: one of the key financial management activities. The main role of the
organization is to evaluate whether an organization meets or not its goals. The following
questions have been answered by financial control:

• Having competently utilized the assets of the organization?

· Are assets secure in the organization?

· Are management acting in the organization's best financial interests and key stakeholders?

• Financial decision-making: this involves organizational investment and financing. This

Department decides on how the organization should raise funding, sell new shares, or distribute
the profit.

A finance manager is responsible for the financial management department of every company.
The following functions include: This department has many

• Calculation of the required capital: the financing manager shall calculate the amount of funds
required by the organization. This depends on the company's policy on expected costs and
profits. In order to increase the profitability of the organization, the amount required has to be
estimated.

• Capital structure formation: Once the capital amount required by the company is estimated, the
capital structure must be created. This includes short-term and long-term debt equity analysis.
The amount of capital owned by the company and the amount to be raised via outside sources
depend on this.

• Capital investment: every organization or company needs to invest money to raise more capital
and earn regular income. The financial manager must therefore invest the funds of the
organization in safe and profitable enterprises.

• Assignment of profit: after a good amount of net profit has been gained, it is the responsibility
of the financing manager to allocate it efficiently. That could include keeping a portion of net
profit for contingency, innovation or growth purposes, while making another portion of profit
available to shareholders for dividends.

• Effective money management: the company's money is also effectively managed by this
department. Maintaining inventories, meeting the liabilities, and acquisition of any equipment
and materials is required for different purposes within the firm, such as the payment of payments
and bills.
• Financial control: The financial manager not only plans, organizes and receives funds but also,
short-term and long-term, controls and analyzes the financial situation of the firm. This can be
done through financial instruments such as financial forecasting, ratio analysis, management of
risks and cost and profit management.

FUNCTIONS OF FINANCIAL MANAGER

FINANCING DIVIDEND
DECISION DESICIONS

INVESTING WORKING
DESICION CAPITAL
MANAGEMENT

INVENTORY RECEIVABLES CASH

MANAGEMENT MANAGEMENT MANAGEMENT
INVENTORY MANAGEMENT

Inventory management refers to the ordering process, storage and inventory use of a
company. This includes the management and processing of materials of raw materials,
components and finished products.

Therefore, the management of stocks is necessary in order to avoid serious losses due to
leakage, robbery and waste because neglect of inventory management can endanger long-term
organizational profitability and ultimate priority can fall.

The decrease in excess stocks has a beneficial effect on the profitability of a company.

In fact, the financial manager can be quite vigilant in functional fields. In general, the
problem of inventory management is one of keeping adequate supply for a particular financial
investment in order to meet an accepted distribution or demand pattern.

A study on inventory management helps to identify need of raw material and

maintenance of inventories in a company and how they are being managed. For proper utilization
of raw material and to maintain the work – in – process and finished goods, the inventory
management is required.

This refers to the stock levels of inventory and movement of goods. Therefore, it is
necessary for every Company to run successfully of its affairs and more over the management
should pay attention in exercising proper control over inventories.

Therefore, the study on inventory management in a manufacturing company like SREE

SATYANARAYANA SPINNING MILLS Ltd has its own importance. The assets that SREE
SATYANARAYANA SPINNING MILLS Ltd. stores as inventory in anticipation of need are,

➢ RAW MATERIAL
➢ WORK-IN-PROCESS
➢ FINISHED GOODS
 ➢ PACKING MATERIALS

The term stock refers to the inventory of the goods that the company provides and thus
the parts that structure the goods. In other words, the inventory consists of assets sold in the
course of ordinary business transactions in future.

The inventory of raw materials contains items bought for the process of manufacture.
They are an important contribution to the ultimate product. In the production process, the work-
in-process inventory consists of things which are currently used.

Normally they are partially or semi-finished goods at different stages of the production
process. Finished goods represent finished or finished products that can be sold by jar. The stock
of such products is made of products to be sold but produced.

Inventory is different from current assets because not only financial managers but
functional areas managers are different from current assets. This includes financing, marketing,
production and purchasing. There would be different views on the acceptable inventory level
between functional areas.

The job of financial managers is to reconcile the conflicting views on acceptable stock
levels of different functional areas in order to meet the overall aim of maximizing the wealth of
the owner. As a result, inventory management should be associated with the general objective of
the company, as should the management of other current assets.

The main part of the current assets of an outsized majority of Indian companies
comprises inventories. Meanwhile, stocks account for roughly 60% of current publicly limited
assets in India. Give them a considerable amount of funds due to the large inventory size
maintained by companies. In order to avoid unnecessary investments, it is therefore necessary to
handle inventories efficiently and effectively.
 A company which neglects inventory management will endanger its long-term
profitability and ultimately fail. A company can cut its inventory levels to a significant extent.
The decrease in "excessive" stocks has a positive impact on the profitability of the company.

Inventory control techniques:

➢ ABC analysis
➢ EOQ analysis
➢ HML analysis
➢ FSN analysis
➢ Two bin system
➢ MRP analysis
➢ VED analysis
➢ SED analysis.

EOQ Analysis (ECONOMIC ORDER QUANTITY):

The consumption of the optimal if the order is normal is a strategic factor in inventory
management. Decision on the extent to which the inventory agreement makes a significant
difference.

The amount to buy should not be small or large, as the cost of purchasing and handling is very
high.

Economic order quantity:

A = Annual consumption
O = Orderings cost
C = Carrying cost
Here
EOQ = economic ordering quantity
The quantity of the economic order is the size of the lot that has been bought economically. This
is the material quantity that can be bought at minimal cost.
The cost per purchase order can be calculated as:

Cost per purchase order = Total cost for ordering

Total number of orders
The cost of the inventory, which includes the storage of materials. Often these costs are
calculated by calculating the following costs:
➢ Interest rate
➢ Obsolescence cost
➢ Overhead cost
➢ Insurance cost.
 NEED FOR THE STUDY

Each business enterprise needs an inventory management system in this competitive

world to determine what to order, how much to order and how much to purchase and store the
cost as little as possible without affecting the output and sale.

All other functions are related to inventory management in every organization. Raw
material inventory and supplies to sustain production are necessary.

A stock management system can help manage inventory and stock, track precisely where
the assets are and what they value. In addition, the system analyzes company inventory
requirements and can automate your order.

Effective inventory management will not allow keeping money blocked and it will load
to smooth performance of the industry and also leads to its economic function and profitability.

In S.S.S.M LTD., number of inventory components are using, but proper way of
management techniques is not adopted. So, that the study is very important for future purpose.
 OBJECTIVES OF THE STUDY

1. To study the supply of raw materials and stock holding in organisation with EOQ
application.

2. To study the overstocking and under-stocking of inventory with ratios.

3. To maintain minimum working capital as required for operational and sales activities.

4. To minimize the loss through wastages and damages with inventory management
process.

5. To calculate inventory turnover ratios for knowing the operational and sales efficiency.
 SCOPE OF THE STUDY

➢ The survey is based on the S.S.S.M.LTD inventory data.

➢ The study is based for a period of 2015-2020 on the company's financial statements.
➢ This study focuses on materials and assists the company in planning what is to be
ordered, when ordered and how much is to be ordered.
➢ This study is limited to EOQ and certain inventory-related ratios.
➢ For S.S.S.S.M.LTD, inventory administration is important. By making the products
available easily, the company can satisfy or exceed customers expectations.
 LIMITATIONS OF THE STUDY

➢ As part of the company policy, the majority of information has been maintained confidential and
as such is not passed on.
➢ It is also not possible to compare S.S.S.M.LTD performance with other organizations due to
difference in capacity, facilities, and environment in which it is working.
➢ The study is limited only to 5 years data.
➢ The Inventory management study is done with the help of only EOQ and RATIO analysis
remaining applications are not taken into consideration.
➢ However, the study of inventory performance of S.S.S.M.LTD was successfully done by placing
increased emphasis in the management of inventories, which is a powerful financial analysis tool.
 CHAPTER-II

➢ REVIEW OF LITERATURE

➢ RESEARCH GAP

➢ STATEMENT OF THE PROBLEM

➢ METHODOLOGY OF THE STUDY

 REVIEW OF LITERATURE

1. A study on Inventory Control and Management Techniques by Manthan

Pagare, Santosh Kumar Yadav, Rupesh Mahale, Mathendra Pawar,
PankajPatil, Dinesh Bhadane, published on 1 January, 2016:
International Journal of Science Technology & Management (Vol:05, Issue
No.:01)

Introduction:

The word stock refers to products or resources used by a company for manufacturing and
selling purposes. It also includes the subject which is used to facilitate manufacturing.

There are three fundamental types of raw, advanced, and finished inventory resources. The
raw materials are the products that companies purchase for manufacturing of finished products.
All items currently in the production process are working in progress. In fact, they are partially
made by people. Completed goods are the items that were already shaped but still not sold.
Inventory management is important in the sense that it enables the following key issues to be
addressed:

The company must maintain sufficient stock to produce and sell horizontally. Inventory
investment should not be either too much or not enough. It ought to be best.
The main objective of inventory management is to maintain the optimal level of inventory.
➢ Raw materials
➢ Work in process
➢ Finished goods
➢ Stores and Supply
Problem statement:

In order to establish inventory performance and location and recognize the potential
and flaw for evaluating company profitability, inventory management is undertaken with a focus
on inventory management. The most important part of the resources of Indian major corporations
constitutes inventory. Inventory Bhavani is a double-edged sword that is usually a company asset
and, if not a worm, it is liable properly. In order to overcome unnecessary investments and
identify the difficult challenges involved in the Inventory Management process, it is therefore
extremely important to deal with inventories resourcefully and efficiently.

Objectives:

➢ To study inventory management tools and techniques to study inventory management

control measures.
➢ To examine the inventory management demand forecast.
➢ To study how in inventory management ABC and aging schedules are implemented.
➢ Identifying inventory management stock levels.
➢ To study inventory assessment methods.

Conclusion:

We need to understand in any business, whether large or small, that it is very important
to care about our inventory. If the concept of good stock management is not understood by us as
managers, then we need to learn about it and its applications. The inventory management of a
company is one reason for failure. We can start from here and there are numerous ways to
combat failure. New technologies can assist us in maintaining and monitoring our inventory. It's
learning, implementation, and evaluation that we can do.
2. A study on Inventory Control techniques in Apparel Industry by
K.Prabhakumari, S.Jagadeeswaran, published on February, 2018:
International Journal of Research & Review (Vol:05, Issue No.:02)

Introduction:

The main object of the production system is the conversion by value added process of
raw materials into useful products. Different other resources are used to support this activity.
When the various elements of primary costs are closely examined, material costs dominate
another cost. In the case of a company with a certain number of facilities, the materials required
for production are normally procured and stored in raw material warehouses, then transferred to
the factory. In addition, each functional head of material department will try to optimize the
operation of its own function and store raw matter in storage mainly to smooth the production
process in advance. But all should seek the common purpose of providing materials with
minimum total costs to improve the way the organization works.

Objectives of the study:

➢ Analysis of the ratios of various inventory materials.

➢ Analysis of material classification in stock.
➢ To propose an economic order quantity for order reduction and inventory transport costs
➢ To propose possible improvements

Scope of the study:

In inventory management the researcher tried to find efficiency; the amount of day
necessary for stock clearance and the material requirement planning was also suggested. The
remaining stock value analysis and the forecast of stock consumption and weighted average
prices at the end of the financial year had been done.
 This research would enable the company to avoid future shortages, buy materials in
advance and improve its stock according to EOQ at the most economical price.

Limitations of the study:

➢ Time was a factor that was limited.

➢ Limited secondary data are available only in inventory control techniques (e.g., ratio
analysis, ABC analysis, EOQ analysis and VED analysis).

Research Methodology:

For 45 days, the study was confined to cement plants. Research is a systematic effort to
learn. It can be called the knowledge search.
3. Use and Application of Selective Inventory Control Techniques of Spares
for a Chemical Processing Plant by Sanjeevy C, Ciby Thomas, published on
10 October, 2014:
International Journal of Engineering Research & Technology (Vol:03, Issue
No.:10)

Introduction:

This study is carried out in the chemical industry of the district of Ernakulum, Travancore
Cochin Chemicals Limited. The company has been involved in chemical processing for more
than 60 years. In the production of many manufacturing materials, the chemical industry plays a
vital role. It manufactures chemicals that directly benefit people. The chlorine and alkali industry
in India is driven by the demand for caustic soda and is seen as a by-product. Today in India,
chemical processing industries face certain challenges which in the era of globalization will be
addressed to their survival. Inventory is often the major existing asset of one company and the
only major contributor to the demands of working capital. If inventory is managed properly,
working capital needs are reduced and cash is increased, thereby increasing the chances of the
organization thriving and growing. In that analysis the inventory management problem of the
chemical company has been systematically identified and suggestions are recommended that the
inventory management system be improved.

Objectives:

➢ To study the existing inventory control of spares.

➢ To identify appropriate selective inventory control tool
➢ To study and model selective inventory control of spares.
➢ To analyze the three-dimensional approach for multi-selective inventory control.
➢ To suggest optimum re-order level and re-order quantity using simulation.
Research Methodology:
The talks with the manager (shops and inventory management) are initial and Clear the
doubts and study the existing inventory maintenance system from officials. Officials For the
above sources, data are collected. Data from ERP and survey of questionnaires. Also, secondary
data are collected by handouts, registers.

Future scope of the study:

For items in one single plant, this analysis was carried out. It can also be applied to other
plants. For other inventory types, such as raw technology for stock management, a similar
analysis can be applied to make material realistic. Inventory control systems will be improved
with information-sharing programs and technologies. The advantage of using a general
programming language is that it offers more flexibility to model more complex systems.

Conclusion:

The paper explains how spares from the chlorine alkaline industry are being used and
used for selective inventory control techniques. In Ernakulum District, the study was carried out
in a chemical industry. In the processing of chemical products many changes in technology have
occurred. The literature shows that many old industries of chemical processing face severe
inventory issues. The main problems arise because of the lack in stock management system of
new technologies. As the technology is old, there are large inventory issues. The present study
demonstrates that a systematic approach was adopted to identify the chemical company's
inventory management problems, and few proposals to improve the existing inventory
management system are recommended. The computer program calculates the probabilistic
demand and lead times for a certain level of reorder. Thus, we can calculate future demand and
lead times uncertainty with the optimum order quantity and minimal total cost using this process.
4. A review on Inventory Management Control Techniques: ABC - XYZ
analysis by Bijal Pandya, Hemant Thakkar, published on March, 2016:

Introduction:

Inventory management involves the development and management of the inventory level
of raw materials, inventories of the work-in-process, and completed products to ensure adequate
supplies and minimum stock costs. The management of inventories is important to make the
organization efficient and effective. The organization meets the various costs of the inventory
including holder costs, ordering costs and deficiency costs. Each increase due to lack of an
inventory control system will negatively affect the company's profitability. Thus, by appropriate
inventory control, organizations can save much of their total inventory investment. Controlling
inventories is not always connected directly to financial stocks savings, but it also increases the
flow of production and also improves the corporate image, saving jobs and simplifying and
transparency processes.

Objectives of Inventory Control:

➢ To keep inventory size to be efficient and easy to manufacture and sell.

➢ To keep minimum inventory investments in order to maximize profitability.
➢ It offers adequate protection from fluctuating demand.
➢ Proper and efficient inventory control also minimizes risk and obsolescence
uncertainty.
➢ Reduce material costs that can increase an organization's profit.

Research Methodology:

The ABC and XYZ analysis methods of inventory control are used in various areas with
the goal of reducing inventory costs and better management of inventories of goods that can also
be used for the storage of finished goods. Management of inventories is the accurate monitoring
of the inventory of all materials. Different types of inventory analysis techniques are available.
The techniques ABC and XYZ are developed from this.

Conclusion:

Inventory management for manufacturing companies is an important technique. The

review of the research papers shows that timely inventory flows are essential to any
organization's success and growth. Certain conclusions are drawn from different case
studies:

➢ ABC analysis is the technique to identify items that have the most impact on the
overall inventory costs of the organization. ABC is an inventory model very easy
and many researchers recommended because it also takes into account material
consumption.
➢ Management of inventory means several benefits, including control of materials
of dead stock, acquisition of the required amounts, reduced lead time, improved
procurement procedures for materials, improved space management and a better
manipulation of inventories.
➢ If there are more demand fluctuations and consumption of products, XYZ analysis
is preferable. However, the combined ABC and XYZ study results better in the
management of stocks.
5. Inventory Management in Paper Industry - A Comparative Study in SPML
and International Paper APPML by Dr. Yellaswamy Ambati, published on 01
November, 2016:
International Journal of Research in Commerce & Management (Vol:07,
Issue No.:11)

Introduction:
Inventory is an important part of the working capital of any company. The word "stock"
or list of goods is used to mean the inventory dictionary. Inventory The word stock refers to the
inventory of a company's product for sale. In a raw materials, process work, finished goods and
shops, raw materials can be used to manipulate the goods which need further processing in order
to shape the finished goods. The finished products are ready for sale. Depending on the nature of
a business, the classification of the stocks and the levels involved will vary. Steel for instance is
a finished product for a steel industry, but a raw material for the engine manufacturer. Because
inventories account for approximately 50 percent to 60 percent of current assets, inventory
management is vital for successful operational capital management. Efficient and effective
inventory management is therefore necessary.

Objectives of the study:

An analysis of stock management in the paper industry is the main objective of the study
and comprises:

1. To study the components of inventory in select companies

2. To analyze the inventory conversion period in select companies and
3. To evaluate the impact of inventory on profits of select companies.
Research Methodology:

The study is based on secondary information. Secondary data were gathered from
previous studies/reports on selected paper units, annual reports of selected companies, textbooks,
newspapers, journals, daily newspapers, websites, etc. Data collected on inventory management
in the paper industry have been systematically processed, tabled and analyzed using different
statistical methods such as percentages, averages, proportions and other related actions.

Findings of the study:

➢ Smalls and unanticipated demand for products during seasonal periods could cause the
stock of raw materials, chemicals or stores in SPML to accumulate.
➢ The main inventory components in International Paper APPML include chemicals, stores
and replacement parts and raw material. The piled-up inventory requires immediate
attention and control since these two components form 65% of the overall inventory
together. Consequently, it is advisable to use appropriate inventory control techniques
such as maximum, minimum or dangerous levels of orders so that production schedules
do not interrupt.
➢ The two Paper Industry sample units indicate that Gross Working Capital was an
inventory. In the paper industry, the average inventory was 39%. It therefore seeks to
have proper inventory control in order to increase profitability and productivity.
➢ In comparison with SPML, the international paper APPML makes far better use of
working capital. The pathetic position of SPML was understood and longterm funds to
meet short-term commitments, due to negative net working capital in three-year periods
(2007-08,2010-11 and 2011-2012).
 RESEARCH GAP

Finance is one of the fundamental foundations of all kinds of economic activities in a

modern-oriented economy. Primary for decision-making, the financial statements are prepared.
Each business will therefore be interested in knowing its performance in the inventory. The
above studies do not focus on the inventory analysis of any spinning industry.

Therefore, the study focuses on crucial research gap and the study is concerned to fill gap
of Inventory management using EOQ and Ratios in Sree Satyanarayana Spinning mills Limited.
 STATEMENT OF THE PROBLEM

The management of inventories in any organization is crucial, the management of

inventories involves the development and management of raw materials stock levels, inventory
and finished products so as to ensure adequate supplies and minimize stock costs.

Inventory management is important for making the business efficient and effective, but
the Inventory management was neglected by Sree Satyanarayana Spinning Mills LTD.
 METHODOLOGY OF THE STUDY

The present project took cover of five years from 2015-2020. The project work is based
on the data collected from secondary sources.

There are two types of techniques:

* Primary data

* Secondary data

Primary data:

Primary data means original data gathered explicitly for the purpose. The data that have
been collected directly firsthand experience. The primary data was collected by conducting
interviews to the various department heads, officers and also with help of internal magazines and
books.

Secondary data:

Apart from primary data the secondary data which is collected from past records and
from other parties. This had already passed through statistical process. The secondary data is
gathered from various sources like

1. Books

2. Journals

3. Websites
 CHAPTER-III

➢ PROFILE OF THE INDUSTRY

➢ PROFILE OF THE COMPANY
 PROFILE OF THE SPINNING INDUSTRY

Textiles are one of India's oldest and most prominent industries. For the last three
centuries it has come out of India. In the industrial economy of India it occupies the key position.
There were 1846 cotton mills in the country at the end of March 2001 (1565 spinning mills and
281 composite mills).

The industry currently provides nearly 1.8 million workers with direct employment. This
also provides indirect employment to other individuals, such as cotton producers, processors,
manufacturers, power weavers and shopkeepers and towelers, which alone are estimated at 5
million, and to numerous clothes dealers and shopkeepers.

It has a history over the centuries and is one of the oldest industries. In countries where
India holds a share of 25% of the global yarn market, it occupies a unique position. Their use of
cotton, wool and silk and their demands of machines, dyes, chemicals and Synthetic Fibers have
an influence on agriculture. The industry thus has an important role to play in the country's
economic prosperity and in providing the entire populace with essential commodities.

There are three different categories in the organized sector of the cotton textile industry.
They are
Towards Spinners
Composite Fabrics and Course
Fine and super fine molds.

Spinning mills usually have small sizes. Ground and medium mixed mills cannot adjust
the prices of raw materials and wages to increase.

Many of them therefore became unnecessary units and lost. The composite fine and super
fine mills use cotton from other countries. Their stock restrictions are not applicable and
therefore their production is stable. India was a manufacturing country and a fine cotton export to
all civilized countries.

The first cotton mill in India was setup by Cowaszee Nanabhoy Davar in 1854 with an
English man (Sir William Fairbaim) as a partner. It was Bombay Spinning and Weaving
Company, which laid the foundation for a strong and growing textile industry at Tardeo
(Bombay) and soon after in other regions of India. The “Bombay mills owner association”
formed in India in the year 1875 by Dinshaw Maneckji.

The mills were producing nearly 4000 million meters and hand looms accounted for 130
million meters. The mill sector employed nearly 7 lack workers and thus the largest organized
industry in the country.

In the early sixties, the industry faced a major crisis of independence. Until then the
market had been more or less sold and most of the mills carried out responsible projects.
However, some factors contributed to a very large market depression and factories began to lose.
The result was that in 1967 the spindle quantity came down for 88.2% to 73%. Textile
became a post potable item. On the other hand, while the purchasing power of the people went
down, the cost of the production of the textile increased.

As the cloth prices began to go up, the government felt the need for the production of a
cheap and durable cloth for the weaker sections of the people, consequently the controlled cloth
scheme was introduced in 1964. States such as Bihar, Orissa, A.P, and Kerala have all
established spinning mills, many of them in cooperative sector.

The growth of cotton spinning sector, in terms of capacity received an impetus in 1991
with the deli sensing spindle age. Installed spindle capacity has been rising steadily since then. In
1991, the spindle capacity installed was around 26.27 million and the capacity went up to 30
million in 1995. The total spindles installed by 2018 are estimated up to 50 million.
 However, adverse factors as the South East Asian crisis, worldwide economic slowdown,
and increased costs hit the spinning industry, which eclipsed the benefit from the expanded
capacity. The phenomenal rise in the 1994-99seasons added a new dimension to the economics
of spinning sector.

All these were reflected in stagnant production. Cotton spun yarn production declined
from 2214 million kg in 1997-98 to 2022 million kg in 1998-99 but recovered to2226 million kg
in 2000-01. Spindle capacity utilization, which was 76% in 1991-92, had gone up to 86% in
1996-97; fell to 79% in 1998-99 before bouncing back to 85% in 2000-01.

The share spinning capacity of south Indian mill in all India capacity is estimated to be
around 50%. As on March 2002 the spinning capacity of southern mills was 19.53 million
spindles, while the power loom sector had consumed nearly 42% of the total cotton yarn
produced, handlooms consumed around 23% and remaining was exported.

The non-quota countries represent a major share of the export of cotton yarn. While it
started with fine count, wide range of counts being exported now. In 1991, exports to quota
countries were 31.62 million kg and to non-quota countries is 89.49 million kg. In 2001, those
were 43.83 million kg and 43.16 million kg respectively.

Thus, the percentage of exports to quota countries came down from around 265 in 1991
to about 9% in 2001.during 1994-2002, some of the major destinations for Indian cotton yarn
exports had been South Korea, Bangladesh, and Hong Kong. According to report on “achieving
break through growth in cotton textile export” India has a large and modern spinning industry
and major portion of its capacity is in the organized sector.

The cotton spinning units could capitalize on the growth in yarn imports expected in key
Asian destinations.

According to the chairman of southern India mills association (SIMA) M

SENTHILKUMAR, there has been a revival is to be sustained, certain issues need to be
addressed. The cost of almost all components, power, raw material, transport, and labor gone up
during the last five years.

The total cost of the production of cotton yarn in ring spinning in 1995 was about Rs
178.4 per kg. It had shot up to Rs 232.66 per kg. In order to make available raw cotton of good
quality at responsible price, the thrust is on “integrated cotton framing”.

THE TEXTILE COMMISSIONER ORGANISATION:

The functions of the organization are many and diverse to advise the government and
planning commission on the targets of production for the various 5-year plans to scrutinize
proposals from mills.

It can also recommend new installations for licensing to exercise control over the pattern
of production to ensure adequate supplies of raw materials to the industry to make
recommendations to government in this regard to collect and publish all relevant statistical data
relation to production, stocks, imports and exports etc. in short one might say that the textile
commissioner is the administrative authority for implementation of government policies with
regard all textile industry.

Cotton textile industry being the largest in India has spread all part of the country. It is
mostly localized in the states of Maharashtra and Gujarat.

Cotton textile industry has also spread to further for the states like Madhya Pradesh,
Bihar, Kerala, Andhra Pradesh, Uttar Pradesh and Tamilnadu.
PROFILE OF THE SREE SATYANARAYANA SPINNING MILLS LTD

SREE SATYANARAYANA SPINNING MILLS LTD is established in 23rd JULY

1962. It was originally incorporated as private ltd company on above date. Subsequently it's
converted to public ltd company on 9th APRIL 1966. The company entered in to commercial
production initially with an installed capacity of 5,504spindles.

They are yarn cone and hanks. They are produced. The company has occasionally
expanded its spindles. The company now has about 29,120 spindles and 336 rotors in its spindle
capacitance. Furthermore, we have registered with the government of India to start another
25,000 spindles unit as and when the finances are available.

The company with 10,50,100 numbers of shares with each share as Rs 10/-. The present
turnover is 24 Crores. The company is paying 20% of salary for past 10 years to the workers.
The company is declaring dividends continuously for the past 5 years at the rate of 100%. The
company has barrows substantial amounts from IDBI for the modernization and expansion of the
company. The same was paid back. Now the company is borrowing from State Bank of India.

The promoter directors are Mr. MULLAPUDI HARISCHANDRA PRASAD and Y.

NARAYANARAO CHOWDARY. The company is now running with around 450 workers
within the factory and running in triple shifts on all 7 days of every week. This mill helps the
agricultural poor to urge employment by paying them decent wages compared to other sectors.

The company is continuously under modernization and replacing all the machinery. Thus,
the corporate has now introduced combers and producing combed yarn also. The company has
special internal control department and a laboratory equipped to get a top-quality product.

The industry produces yarn from cotton. They are two types of yarn.

* Cone form- used for weaving on power looms

* Hank form- used for handlooms.
The company markets its yarn in domestic markets and also exports some portion
through dealers. In domestic market, its product is sold in BOMBAY, CHENNAI, and A.P
through consignment agents. There exports markets are SRILANKA, BANGLADESH and
MALAYSIA. Raw cotton is available from Guntur and Bellari. They are using different counts
such as 10, 20, 40, 60, 80, 100 and 120.They are different varieties of cotton.

They are

} Long stable varieties

DCH-32

MCU-5

Varalakshmi

LK

V-797

} Medium and short stable varieties

JAYADHAR

LRA

The company is in loss for the first 13 years and now these in profits and paying
dividends to shareholders. There is no separate department for marketing. The accounts
department undergoes marketing activities. Procurement of raw materials is completed through
brokers i.e., with the existence of third-party agency. The major contributors are
* N.V. EICHER&CO, COIMBATORE

* CALIEKOTAWALA, MUMBAI.

80% of procurement is completed through the above firms and various firms contribute
the remaining.

Marketing of the finished products, i.e., yarn is done through various consignment agents.
Few of them are

* K. VEERESHKUMAR and CO

* RADHIKE TEXTILES, ITCHALAKARANJI

* SURAJMULGOWRICENTER, MUMBAI

And marketing of finished product is directly from mill to mill various mills that procure
yarn directly are premiere mills, Mafatlal industries, Virudhnagar textile industries, loyal textile
mills, Bombay dyeing and manufacturing co.

PREPARATION PROCESS
Preparation of yarn cotton is completed through the subsequent process.

* Blow room
* Carding
* Preparatory
* Spinning
* Winding
Considering the subsequent factors does the acquisition of cotton.

* Staple length
* Fineness
* Strength
* Moisture content
* Trash
Purchased cotton has got to undergo the subsequent stages for becoming yarn, which is
employed by textile industries.

Blow room:

It is the first phase of the process. Cotton purchased is undergo bloom room machine
where dust and wastage i.e., trash content in the cotton is removed. The purified cotton is formed
in to sheets and is rolled like cylinders or drums. The main objective of the bloom room is to
separate the waste content in the cotton.

Carding:

Cotton, which is within the sort of cylinders, is further purified and is formed within the
shape of threads. Each drum obtained from the space is formed in to string.

Preparatory:

The cotton obtained from carding, which is in the form of threads, is grouped together.
Different threads obtained from carding department are grouped lap formers, combers, and
drawing.

Spinning:
 The cotton obtained from preparatory department is formed in to fine threads of lesser
width through spinning. The thread of lesser width called as yarn, which is obtained from
spinning.

Winding:

Winding is that the method during which the yarn is formed in to packages of various
shapes like conical and bails etc.

DEPARTMENTATION

For all production activities, the plant engineer is liable. The role of the plant engineer is
to rectify mechanical defects, to create machinery that functions properly and that production
activities are maintained and coordinated.

The plant engineer maintains its duties, which include the responsible department and
thus the supervisor. Each section of the production is examined by the responsible section and is
reported to the plant engineer.

PRODUCTS MANUFACTURED:

The mills provide quality cotton yarn and blended small stuff. Both the facilities are well
received within the Indian market, also, as received within the international markets the
corporate is providing counted yarn.

It is supplying 75 percent of the yarn in the cane power supply looms of Bombay and
other places and 25 percent of the yarn in the hank to weavers in our state. The yarn is well
received within the marketplace for the manufacturing of sarees, dhotis and other fabrics.
 The percentage of capacity utilization is 95 per cent leading to more production and
better utilization manpower. The labour is intensive. The company imports technology. It
imports its technology from LMW (Lakshmi Machinery Work) Coimbatore. This company is
total pollution free. As it a textile industry, there will be some sound pollution from it.

SREE SATYANARAYANA SPINNING MILLS L.T.D, TANUKU

MILL REPORT

General Information
Name of the Mill: SREE SATYANAYANA SPINNING MILLS L.T.D
Situated at: Venkatarayapuram, Tanuku.
Date of Establishment: 1964
Area covered by the mill: 7 crores
Starting spindle: 5504
Present spindle: 43200
Production material: 100% cotton
Total No. of operators: 360
Total No. of staff: 22
Percentage of permanent operators: 83.3
Percentage of trained operators: 16.6
SREE SATYANARAYANA SPINNING LIMITED

FLOW CHART OF SPINNING

PROCESS OF MANUFACTURING

BLOW ROOM:

In this process cotton is opened into small lint’s, removed impurities like trash, sand
leaves and seeds and cleared cotton is collected in the form of a sheet tangled fiber rolled into
laps. The process involves several continuous operations and the product is measure at the
scutchers, which is the last operation the lap’s produced have to meet predetermined weight per
unit length.

CARDING:

In carding the fiber which is in the lap from is brought into alignment and arranged in
silver form. In this process some impurities still lying in the laps and arranged in silver from. In
this process some impurities still lying in the and certain number of short fibers are removed.
The finished product of this process is delivers in the form of silver which is collected in cans.

DRAWING:

In this process parallelization and improved blending of fibers are achieved by drafting.
Several slivers are reduced to the thickness of 1 sliver.

COMBERS:

The card cans are fed to liver lap machine and are made into lap from. The laps thus
produced from sliver lap are fed to Ribbon lap machine. The lap produced in Ribbon lap
machine are fed to coming machine wherein short fibers are removed from the cotton material
resulting better quality cotton sliver.
SIMPLEX:

The purpose of this process is to attenuate the sliver into thinner and thinner stand to
achieve the desired ultimate yarn. Now, the Cotton is fully cleaned thoroughly blended and
having its individual fibers aligned parallel to each other. It is thus made suitable for spinning to
yarn.

SPINNING:

Simplex Material is fed to ringrames and the material is further drawn thinner, So, as to
get the final count required. The required twist is inserted by the rotation of spindles and the yarn
thus produced is wound on the bobbins.

REELING:

This is a process of unwinding yarn from cops or bobbins and rewinding on to a

revolving reel within the sort of Hank.

AUTO CONE WINDING & CHEESE WINDING:

In this process, the ring bobbin yarn is wound on to Cones or Cheeses.

DOUBLING:

In this process, two or more single yarn are spiraled uniformly about each other by
delivering through a pair of rollers and twisting them together by means of revolving spindles.
Yarn is plied combined to obtain greater smoothness, increased uniformly.

SINGEING:
 In this process, the fine threads of the cone yarn are sing to give a smooth finish, resulting
in increase of yarn strength.

YARN CONDENSING SYSTEM:

Cones are put in YCS to give smoothness to yarn. R.O. water is used in this process.
Major cost element is power consumption. No chemicals are used in the process.

BUNDLING:

The Hanks are bundled with a uniform weight of 2.27 kgs, and 4.54 kgs, each depending
on count of the yarn.
 CHAPTER-IV

➢ DATA ANALYSIS & INTERPRETATION

 DATA ANALYSIS AND INTERPRETATION
AT S.S.S.M.LTD
CURRENT ASSETS &CURRENT LIABILITIES

CURRENT ASSETS CURRENT LIABILITIES

DEPOSITS FROM CONTRACTS AND

INVENTORIES
OTHERS

CASH AND BANK ADVANCE FROM CUSTOMERS

BALANCE AND OTHERS

LOANS & ADVANCES OTHERS LIABILITIES

INTEREST ACCURED BUT NOT DUE ON

1.LOANS
2.OTHERS LOANS

PROVISIONS
 ECONOMIC ORDER QUANTITY (EOQ)

A = Annual consumption

O = Orderings cost per order per annum

C = Carrying cost per kg

Table – 4.13:

CALCULATION OF ECONOMIC ORDER QUANTITY FROM 2016-20

YEAR ANNUAL ORDERING CARRYING EOQ

CONSUMPTION COST COST
(in kg’s) (in Rs.) (in Rs.) (in kg’s)

2015-16 8,78,037 326.16 0.55 32,270.48

2016-17 9,67,242 303.66 0.50 34,276.10

2017-18 11,62,170 360.92 0.62 36,784.04

2018-19 11,62,977 337.43 0.58 36,785.65

2019-20 12,00,969 329.80 0.56 37,610.77

Chart – 4.8:

Economic Order Quantity

39,000.00
38,000.00
37,000.00
36,000.00
35,000.00
Quantity

34,000.00
33,000.00
32,000.00
31,000.00
30,000.00
29,000.00
2015-16 2016-17 2017-18 2018-19 2019-20
Years

INTERPRETATION:

Economic order quantity of is during the period of 2015-2016 to 2019 to 2020. In the year

2019-20, 37,610.77 kg’s of EOQ, is the highest economic order quantity. Lowest economic order

quantity in the year 2015-16 is 32,270.48 kg’s.

 CURRENT RATIO

Current Ratio:

A measure of the company's kurz-term solvency is the current ratio. This ratio indicates

the commitment of the Company to fulfill its short liabilities. The current ratio is calculated by

current liabilities as a dividing current asset.

CURRENT ASSETS
CURRENT RATIO =-------------------------------------
CURRENTLIABILITIES

Table – 4.1:

CALCULATION OF CURRENT RATIO FROM 2016-20

YEAR CURRENT CURRENT

CURRENTRATIO
ASSETS LIABILITIES

2015-16 10,69,22,723 3,46,35,683 3.087

2016-17 14,75,78,985 5,58,60,135 2.64

2017-18 12,08,28,113 5,42,47,381 2.23

2018-19 12,75,96,220 4,60,23,017 2.77

2019-20 14,59,57,585 5,42,40,331 2.69

Chart – 4.1:

CURRENT RATIO
3.5
3.087
3 2.77 2.69
2.64
2.5 2.23

2
Ratio

1.5

0.5

0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

Interpretation of the Current Ratio:

The current ratio discloses current assets and liability information that is available from 2015-16
to 2019-20. In 2015–2016 the current ratio was 3,087, and in 2017–18 the lowest current ratio
was 2.23.
 RAW MATERIALS TURNOVER RATIO

RAW MATERIALS TURNOVER RATIO

ANNUAL CONSUMPTION OF RAW MATERIALS

= ----------------------------------------------------------------------------
AVERAGE RAWMATERIAL

I. Annual consumption of raw material in is:

Particulars:

Opening stock

+ purchase

Deduct:

(-) Closing stock

(-) Material stores consumed at cites

(-) Material disposed

(-) Recoveries on other accounts

II. Calculation of average raw materials

Opening raw materials + Closing raw materials

= -----------------------------------------------------------------
2

Table-4.2:

CALCULATION OF AVERAGE RAW MATERIAL FROM 2016-20

Opening raw Closing raw Average raw

Year
materials materials materials
2015-16 4,61,33,003 3,08,03,023 3,84,68,013

2016-17 3,08,03,023 3,40,59,913 3,24,31,468

2017-18 3,40,59,913 2,54,71,693 2,97,65,803

2018-19 2,54,71,693 1,30,39,586 1,92,55,640

2019-20 1,30,39,586 1,63,07,823 1,46,73,704

Table – 4.3:

CALCULATION OF RAW MATERIALS TURNOVER RATIO:

Annual consumption of Average raw Raw material

Year Raw material materials Turnover ratio

2015-16 7,34,29,736 3,84,68,013 1.91

2016-17 10,48,61,883 3,24,31,468 3.23

2017-18 9,81,04,482 2,97,65,803 3.30

2018-19 9,90,28,171 1,92,55,640 5.14

2019-20 10,37,06,189 1,46,73,704 7.07

Chart – 4.2:

Raw material Turnover ratio

8
7.07
7
6
5.14
5
Ratio

4 3.23 3.3
3
1.91
2
1
0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

Interpretation of the Raw materials turnover ratio:

Raw materials turnover ratio discloses the information related to annual consumption of

Raw materials and average raw materials of is during the period of 2015-16 to 2019-20. The raw

materials turnover ratio highest in the year 2019-20 that is 7.07 and lowest turnover ratio in the

year 2015-16 that is 1.91.

 FINISHED GOODS TURNOVER RATIO

FINISHED GOODS TURNOVER RATIO

COST OF GOODS SOLD

= -------------------------------------------------------------
AVERAGE FINISHED GOODS INVENTORY

1.Cost of goods sold

= Sales - gross profit

(Or)

Sales + gross loss

Table – 4.4:

CALCULATION OF COST OF GOODS SOLD FROM 2016-20

Gross
Year Sales Cost of goods sold
Profit/(loss)

2015-16 23,70,85,484 4,94,83,653 18,76,01,831

2016-17 24,01,02,660 2,51,75,059 21,49,27,601

2017-18 23,89,36,001 1,13,26,066 22,76,09,935

2018-19 20,13,91,072 1,60,74,602 18,53,16,470

2019-20 33,25,50,002 6,92,56,915 26,32,93,087

2.Average finished goods

Opening finished goods + Closing finished goods

= ------------------------------------------------------------------
2

Table – 4.5:

CALCULATION OF AVERAGE FINISHED GOODS FROM 2016-20

Opening finished Closing finished Average finished

Year
Goods Goods Goods
2015-16 30,13,953 81,33,593 55,73,773

2016-17 81,33,593 1,63,71,080 1,22,52,337

2017-18 1,63,71,080 2,27,00,327 1,95,35,704

2018-19 2,27,00,327 5,19,55,687 3,73,28,007

2019-20 5,19,55,687 1,38,96,421 3,29,26,054

3. Finished goods turnover ratio

Cost of goods sold
= -------------------------------
Average finished goods
Table – 4.6:

CALCULATION OF FINISHED GOODS TURNOVER RATIO

Average finished Finished goods

Year Cost of goods sold
goods turnover ratio
2015-16 18,76,01,831 55,73,773 33.65

2016-17 21,49,27,601 1,22,52,337 17.54

2017-18 22,76,09,935 1,95,35,704 11.65

2018-19 18,53,16,470 3,73,28,007 4.96

2019-20 26,32,93,087 3,29,26,054 8.00

Chart -4.3:

Finished goods turnover ratio

40
33.65
35
30
25
Ratio

20 17.54

15 11.65
10 8
4.96
5
0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

Interpretation of the finished goods turnover ratio:

The turnover ratio of finished goods reveals information on the costs of goods sold and the

average inventory of finished goods is between 2015-16 and 2019-20. It is 33.65 in 2015-16 and

4.96 in 2018-19. In 2015-16, the ratio is higher.

 WORKING CAPITAL TURNOVER RATIOS

WORKING CAPITAL TURNOVER RATIO

COST OF GOODS SOLD

= -----------------------------------------------------
AVERAGE NET WORKING CAPITAL

1.Networking capital = Current assets- Current liabilities

Table – 4.7:

CALCULATION OF NETWORKING CAPITAL FROM 2016-20

Current
Year Current liabilities Net working capital
Assets
2015-16 10,69,22,723 3,46,35,638 7,22,87,085

2016-17 14,75,78,985 5,58,60,135 9,17,18,850

2017-18 12,08,28,113 5,42,47,381 6,65,80,732

2018-19 12,75,96,220 4,60,23,017 8,15,73,203

2019-20 14,59,57,585 5,42,40,331 9,17,17,254

2.Average net working capital

Previous year working capital + Current year working capital

= ------------------------------------------------------------------------------------
2
Table – 4.8:

CALCULATION OF AVERAGE NET WORKING CAPITAL

Previous year Current year Avg Networking

Year
working capital working capital capital
2015-16 5,55,60,809 7,22,87,085 6,39,23,947

2016-17 7,22,87,085 9,17,18,850 8,20,02,968

2017-18 9,17,18,850 6,65,80,732 7,91,49,791

2018-19 6,65,80,732 8,15,73,203 7,40,76,968

2019-20 8,15,73,203 9,17,17,254 8,66,45,230

3. Working capital turnover ratio

Table – 4.9:

CALCULATION OF WORKING CAPITAL TURNOVER RATIO

Average net
Working capital
Year Cost of goods sold working
Turnover ratio
Capital

2015-16 18,76,01,831 6,39,23,947 2.93

2016-17 21,49,27,601 8,20,02,968 2.62

2017-18 22,76,09,935 7,91,49,791 2.87

2018-19 18,53,16,470 7,40,76,968 2.50

2019-20 26,32,93,087 8,66,45,230 3.04

Chart – 4.4:

Working capital Turnover ratio

3.5
2.93 3.04
3 2.87
2.62 2.5
2.5
2
Ratio

1.5
1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20
Year

Interpretation of the Working capital turnover ratio:

In the 2015-2016 to 2019-20 years, the working capital turnover ratio reveals information on the
cost of the goods sold and the average network capital.
The roll-out rate is 3.04 for work capital in 2019-20, and the lowest is 2.50. The roll-over rate is
2.50.
 COST OF GOODS SOLD RATIO

COST OF GOODS SOLD RATIO

COST OF GOODS SOLD

= -------------------------------------
NET SALES

Table – 4.10:

CALCULATION OF COST OF GOODS SOLD RATIO FROM 2016-20

Cost of goods sold

Year Cost of goods sold Sales
ratio

2015-16 18,76,01,831 23,70,85,484 0.79

2016-17 21,49,27,601 24,01,02,660 0.89

2017-18 22,76,09,935 23,89,36,001 0.95

2018-19 18,53,16,470 20,13,91,072 0.92

2019-20 26,32,93,087 33,25,50,002 0.79

Chart – 4.5:

Cost of goods sold ratio

1 0.95 0.92
0.89
0.9
0.79 0.79
0.8
0.7
0.6
Ratio

0.5
0.4
0.3
0.2
0.1
0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

Interpretation of the Cost of Goods Sold Ratio:

The cost of goods sold ratio reveals the cost of goods sold and for the years 2015-16 to

2019-20 the total sales are.

In 2017-18, the cost for sold goods is 0.95 and the lowest in 2015-16 is 0.79. The ratio is 0.91.
 INVENTORY TURNOVER RATIO

This is calculated by removing closing stocks and production costs and purchases from

the opening stock. Inventories opening and closing are denominated on average. This ratio shows

the number of replacements during the inventory or stock over the year. It measures the

relationship between sold goods and stock.

Inventory turnover ratio:

Cost of goods sold

Stock turnover ratio = --------------------------
Average inventory

Opening stock + Closing stock

Average inventory = --------------------------------------
2

Table – 4.11:

CALCULATION OF INVENTORY TURNOVER RATIO FROM 2016-20

Inventory turnover
Year Cost of goods sold Average inventory
ratio
2015-16 18,76,01,831 1,61,69,740 11.60

2016-17 21,49,27,601 3,49,34,692 6.15

2017-18 22,76,09,935 4,10,14,162 5.55

2018-19 18,53,16,470 4,59,56,062 4.03

2019-20 26,32,93,087 3,93,23,092 6.69

Chart – 4.6:

Inventory Turnover Ratio

14
11.6
12

10

8 6.69
Ratio

6.15
5.55
6
4.03
4

0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

Interpretation of the Inventory turnover ratio:

The inventory turnover ratio divulges the cost of products sold and the
average inventory is between 2015-16 and 2019-2020. This is the highest value in the year 2015-
2016 at 11.60. In 2018-2019, the lowest value is 4.03.
 SALES TO INVENTORY RATIO

SALES
SALES TO INVENTORY RATIO = ------------------------------
TOTAL INVENTORY

Table – 4.12:

CALCULATION OF SALES TO INVENTORY RATIO FROM 2016-20

Year Sales Total Inventory Sales to

Inventory

2015-16 28,27,58,149 6,17,76,717 4.58

2016-17 23,70,85,484 5,69,68,223 4.16

2017-18 24,01,02,660 8,82,49,822 2.72

2018-19 23,89,36,001 6,52,17,785 3.66

2019-20 20,13,91,072 7,66,65,507 2.63

Chart – 4.7:

Sales To Inventory Ratio

5 4.58
4.5 4.16
4 3.66
3.5
3 2.72 2.63
Ratio

2.5
2
1.5
1
0.5
0
2015-16 2016-17 2017-18 2018-19 2019-20
Years

INTERPRETATION:
Sales to Inventory ratio disclose the information related to sales and total inventory of
S.S.S.M.LTD during the period of 2015-16 to 2019-20 in the year 2015-16 is 4.58, that is highest
value. Lowest value in the year 2019-20 is 2.63.
 CHAPTER-V

➢ FINDINGS
➢ SUGGESITIONS
➢ CONCLUSION
 FINDINGS

➢ Economic order quantity increases gradually, along with the increase in Annual

consumption of raw material.

➢ Carrying cost and ordering cost are also increased along with the EOQ, up to 2017-18,

after that the costs are reduced, but not to the level of costs associated with inventory in

the year 2015-16.

➢ Cost of goods sold to sales ratio is higher in the year 2017-18, i.e., 0.95, but it comes

down to 0.79 in the year 2019-20, which was the ratio in 2015-16.

➢ The current ratio is above 2.25, in every year that covers under the study. The current

ratio exceeds 3 in the year 2015-16. The standard norm for current ratio is 2:1.

➢ Raw material turnover ratio is good in the year 2018-19 and 2019-20, prior to that from

2015-18 Raw material turnover ratio is below 5. A good inventory turnover ratio is

between 5 to 10.
 SUGGESTIONS

➢ The company needs to reduce the cost of inventory by reducing carrying cost associated

with inventory by following Economic order quantity.

➢ The company needs to improve current ratio in order to acquire the standard norm of the

current ratio 2:1.

➢ As the firm has much cost of goods sold. So, it is better to reduce the manufacturing costs

as much as possible.
 CONCLUSION

This study includes correct observation of the company's inventory management. Better

management of inventories can solve all inventories problems and help the company tackle them

through proper techniques and controls. This will reduce the huge problems of money investment

and will lead to such circumstances being avoided.

The inventory changed physical assets promptly, which the company sold or was a dead stock. If

there is a shortage, it gives way to the production process. Inventory management means several

benefits, such as the purchase of necessary quantities, reduced lead time, better procurement,

better space management, and better material handling of inventory.

 ANNEXURE
➢ BIBLIOGRAPHY
➢ BALANCE SHEETS
 BIBLIOGRAPHY

S.NO AUTHOR BOOK NAME EDITION PUBLISHER

1 I. M. PANDAY FINANCIAL EIGHTH VIKAS
MANAGEMENT

2 M.Y. KHAN FINANCIAL SIXTH VIKAS

MANAGEMENT

3 PRASANNA FINANCIAL SIXTH TATA MC

CHANDRA MANAGEMENT GRAW HILL

4 S.N. FINANCIAL FORTH VIKAS

MAHESHWARI ACCOUNTING

WEBSITES:
➢ www.sssmills.com

➢ www.ijrcm.org.in

➢ www.ijert.org

➢ www.ijstm.com

➢ www.ijrrjournal.com

➢ www.gooogle.com

➢ www.studyfinance.com

➢ www.scribd.com
 Sree Satyanarayana Spinning Mills Ltd.
Balance Sheet as at 31st March, 2016.
LIABILITIES Schedules No. As at 31-03-2016 Rs. As at 31-03-2015 Rs.
1. Shareholders
Fund
a) Capital 1 1050100 1050100
b) Reserves & Surplus 2 81432797 74429062
82482897 75479162
2.Loan Fund:
a) Secured loans 3 37325112 33166262
b) Unsecured loans 4 6180000 3976000
43505112 37142262
3.Deferred Tax
Liability (Net) See Note
No.2)
Deferred Tax Liability 5474166 6420876
Less: Deferred Tax 202307 123407
Asset
5271859 6297469
Total 131259868 118918893
ASSETS
1.Fixed Assets 5
a) Gross Block 61151188 60293132
b) Less: Depreciation 38111325 37983230
c)Net block 23039863 22309902
2.Investments 6 52659200 21700
3.Current assets, loans
and advances
a) Inventories 7 61776717 90354338
b) Sundry debtors 8 6922453 12941695
c)Cash and Bank 9 4235628 6363704
balances
d)Other current assets 10 447288 327314
e) Loans and Advances 11 15991287 18903755
89373373 128890806
Less: Current Liabilities
and Provisions
a) Liabilities 12 24736620 16885611
b) Provisions 13 9075948 15417904
33812568 32303515
Net Current Assets 55560805 96587291
Total 131259868 118918893
 Sree Satyanarayana Spinning Mills Ltd.
Balance Sheet as at 31st March,2017.
LIABILITIES Schedules No. As at 31-03-2017 Rs. As at 31-03-2016 Rs.
1. Shareholders
Fund
a) Capital 1 1050100 1050100
b) Reserves & Surplus 2 111693108 81432797
112743208 82482897
2.Loan Fund:
a) Secured loans 3 20715178 37325112
b) Unsecured loans 4 8346000 6180000
290611178 43505112
3.Deferred Tax
Liability (Net) See Note
No.2)
Deferred Tax Liability 5055117 5474166
Less: Deferred Tax 429242 202307
Asset
4625875 5271859
Total 146430261 131259868
ASSETS
1.Fixed Assets 5
a) Gross Block 61598623 61151188
b) Less: Depreciation 40092902 38111325
c)Net block 21505721 23039863
2.Investments 6 52637500 52659200
3.Current assets, loans
and advances
a) Inventories 7 56968223 61776717
b) Sundry debtors 8 13211013 6922453
c)Cash and Bank 9 8300769 4235628
balances
d)Other current assets 10 557463 447288
e) Loans and Advances 11 27885255 15991287
106922723 89373373
Less: Current Liabilities
and Provisions
a) Liabilities 12 14520906 24736620
b) Provisions 13 20114777 9075948
34635683 33812568
Net Current Assets 72287040 55560805
Total 146430261 131259868
 Sree Satyanarayana Spinning Mills Ltd.
Balance Sheet as at 31st March,2018.
LIABILITIES Schedules No. As at 31-03-2018 Rs. As at 31-03-2017 Rs.
1. Shareholders
Fund
a) Capital 1 1050100 1050100
b) Reserves & Surplus 2 125531343 111693108
126581443 112743208
2.Loan Fund:
a) Secured loans 3 24239491 20715178
b) Unsecured loans 4 9182000 8346000
33421491 29061178
3.Deferred Tax
Liability (Net) See Note
No.2)
Deferred Tax Liability 4710954 5055117
Less: Deferred Tax 643300 429242
Asset
4067654 4625875
Total 164070588 146430261
ASSETS
1.Fixed Assets 5
a) Gross Block 61598623 61598623
b) Less: Depreciation 41884385 40092902
c)Net block 19714238 21505721
2.Investments 6 52637500 52637500
3.Current assets, loans
and advances
a) Inventories 7 88249822 56968223
b) Sundry debtors 8 10345424 13111013
c)Cash and Bank 9 4009652 8300769
balances
d)Other current assets 10 262173 557463
e) Loans and Advances 11 44711914 27885255
147578985 106922723
Less: Current Liabilities
and Provisions
a) Liabilities 12 26619990 14520906
b) Provisions 13 29240145 20114777
55860135 34635683
Net Current Assets 91718850 72287040
Total 164070588 146430261
 Sree Satyanarayana Spinning Mills Ltd.
Balance Sheet as at 31st March,2019.
LIABILITIES Schedules No. As at 31-03-2019 Rs. As at 31-03-2018 Rs.
1. Shareholders
Fund
a) Capital 1 1050100 1050100
b) Reserves & Surplus 2 110852027 125531343
111902127 126581443
2.Loan Fund:
a) Secured loans 3 18463399 24239491
b) Unsecured loans 4 10459000 9182000
28922399 33421491
3.Deferred Tax 4067654
Liability (Net) See Note
No.2)
Total 140824526 164070588
ASSETS
1.Fixed Assets 5
a) Gross Block 61465805 61598623
b) Less: Depreciation 43059448 41884385
c)Net block 18406357 19714238
2.Investments 6 52637500 52637500
3.Current assets, loans 3199937
and advances
a) Inventories 7 65217785 88249822
b) Sundry debtors 8 19245481 10345424
c)Cash and Bank 9 8758692 4009652
balances
d)Other current assets 10 468286 262173
e) Loans and Advances 11 27137869 44711914
120828113 147578985
Less: Current Liabilities
and Provisions
a) Liabilities 12 31021555 26619990
b) Provisions 13 23225826 29240145
54247381 55860135
Net Current Assets 66580732 91718850
Total 140824526 164070588
 Sree Satyanarayana Spinning Mills Ltd.
Balance Sheet as at 31st March,2020.
LIABILITIES Schedules No. As at 31-03-2020 Rs. As at 31-03-2019 Rs.
1. Shareholders
Fund
a) Capital 1 1050100 1050100
b) Reserves & Surplus 2 118991930 110852027
120042030 111902127
2.Loan Fund:
a) Secured loans 3 2239196 18463399
b) Unsecured loans 4 9799000 10459000
32191196 28922399
Total 152233226 140824526
ASSETS
1.Fixed Assets 5
a) Gross Block 61465806 61465805
b) Less: Depreciation 44361515 43059448
c)Net block 17104294 18406357
2.Investments 6 52637500 52637500
3.Current assets, loans 918229 3199937
and advances
a) Inventories 7 76665507 65217785
b) Sundry debtors 8 17035660 19245481
c) Cash and Bank 9 3366329 8758692
balances
d) Other current assets 10 556229 468286
e) Loans and Advances 11 29972495 27137869
127596220 120828113
Less: Current Liabilities
and Provisions
a) Liabilities 12 25062519 31021555
b) Provisions 13 20960498 23225826
46023017 54247381
Net Current Assets 81573203 66580732
Total 152233226 140824526