Iffco Kalol Unit

1. A PRESENTATION ON “ A comprehensive study of INVENTORY MANGEMENT SYSTEM AT IFFCO, KALOL”   Submitted to: ( Kalol Institute of Management) IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION   In Gujarat Technological University   UNDER THE GUIDANCE OF Asst. professor : Ms. AVNI PATEL     Presented by: RAVI SHARMA Enrolment No.: 117250592103 FARHAN GHANCHI Enrolment No.:117250592074 Batch : 2011-13

2. Flow of Presentation Industry Overview SWOT Analysis Aims and Objectives Sources of Data Sampling Technique And Sample Size Scope and Methodology Questionnaire Analysis Findings and Suggestion Conclusion

3. INDUSTRY OVERVIEW Introduction to the Fertilizer Industry of India: The Indian fertilizer industry is broadly divided into nitrogenous, phosphatic and potassic segments . In addition to these, nutrients are combined to produce several complex fertilizers. To express the nutrient constitution of fertilizers, the grade of a fertilizer is expressed as a set of three numbers in the order of percent of Nitrogen (N), Phosphate (P) and Potash (K).

4. COMPANY PROFILE The Indian Farmers Fertilizer Co-operative Limited (IFFCO) is one of the largest producers of fertilizer in India . The first plant of IFFCO was commissioned at Kalol in November 1974 to produce Ammonia . Urea plant was commissioned in January 1975, which began its commercial production on 1st April 1975. Kalol plant has a capacity of 300300 tones of ammonia and 396000 tones Urea per year. The Kandla plant was commissioned on 26th November 1974 The ammonia plant at Phulpur started its commercial production on 10th October 1980 The Aonla plant , fourth in the series, started commercial production in July 1988.

5. SWOT ANALYSIS STRENGTHS 1.Largest producer of fertilizers in the Country. 2.Five strategically located plants with cutting edge production technologies. 3.Most plants achieve capacity utilization in excess of 100% . 4.A large number of co-operative societies are associated with IFFCO (38,155 at present). 5.Vast Marketing and distribution network due to the high number of co-operatives associated with IFFCO. WEAKNESS 1.IFFCO has a bureaucratic organisational structure. 2.Organisational setup is very rigid. 3.Excessive sub-divisions.

6. SWOT ANALYSIS OPPORTUNITY GROWTH PLAN 1.Installation of Ammonia/Urea plants and also acquisition of fertilizer units. 2.Generation of Power 3.Production and Marketing of micro-nutrients, seeds, bio- fertilizers, pesticides etc. 4.Value addition to agri -products and marketing 5.Banking and Financial Services 6.Information Technology and IT enabled services 7.Establishments of Retail Chain in urban and semi-urban locations THREAT KRIBHCO Private Companies Govt. Of India influence. Government policies on Import of fertilizers.

7. RESEARCH METHODOLOGY OBJECTIVE To analysis the level of investment in inventory by IFFCO.  To study and analyze the policies and practices regarding inventories adopted by the unit. To observe the effectiveness of company’s inventory management system. To understand the different sections of company’s inventory management system.

8. RESEARCH METHODOLOGY DATA COLLECTION Primary data: Basic information collected from the company staff like accountants and officers. Moreover information gathered through practically preparing the data for Inventory. Secondary data: From the Balance Sheet of the company From Cost & Management Accountancy report From Internet

9. INVENTORY VALUATION Cost formulae for determining cost of inventories   Weighted Average Method

10. CLASSIFICATION OF MATERIALS AT IFFCO Naphtha Natural Gas (O.N.G.C.) RLNG

11. MATERIAL HANDLING Purchase section Knowledge of the materials Source of material- Vendors Reasonable price Stores section Main Store. Cement godown . Petrol Pump. Cable yard. Chemical godown . Paint godown .

12. Purchase Process

13. Purchase Process Cont..

14. Physical Verification of Materials Raw material & Packing materials Stores, Chemicals & Spare parts Finished Products

15. ABC Analysis for Physical Verification of Materials CATAGORIES VALUE(Rs.PER UNIT) QUANTUM OF VERIFICATION CATEGORY A Above Rs. 50000/- 100% CATEGORY B 10001 to 50000/- 70% CATEGORY C Below Rs. 10000/- 25%

16. OBJECTIVE OF INVENTORY CONTROL To provide the continuous flow of required materials& spares parts and components for efficient uninterrupted flow of production. To minimize the investment in inventories stock keeping in view operating requirements. To provide for efficient store of materials so that inventories are protected from losses by fire and threat and handling time and costs are kept at minimum. To keep surplus and absolute items to minimize uncertainty.. To maintain inventory against deterioration, obsolescence and unauthorized use. To ensure that finished goods are available for delivery to customers just to fulfill the order.

17. TECHNIQUES OF INVENTORY CONTROL:USED AT IFFCO Min-Max plan Order cycling system Fixation of various levels Use of control ratios Review of slow and non-moving items  The ABC Analysis

18. DATA Analysis

19. Use of Control Ratios YEAR 2007-08 2008-09 2009-10 2010-11 2011-12 Total INVENTORY 964.03 977.13 1413.95 1347.7 1264.71

20. Imbalance of raw material Year 2007-08 2008-09 2009-10 2010-11 2011-12 Raw Materials 595.41 551.27 950.8 823.39 718.66

21. Stores and spare parts at Iffco Kalol Year 2007-08 2008-09 2009-10 2010-11 2011-12 Stores and Spares 246.74 311.74 336.42 290.21 259.58

22. Inventory Turnover Ratio Inventory turnover ratio = COGS/ Avg.Inventory Rs . In Crore   2011-12 2010-11 2009-10 2008-09 COGS 15859.92 31496.75 11,336.77 9,578.09 Avg.Inventory 1516.805 1654.23 1930.52 1901.79 Ratio(Times) 10.46 19.04 5.87 5.04

23. Inventory Turnover

24. Power, fuel and Water

25. IFFCO performance during 2011-12.

26. Profit After Tax

27. SHARE CAPITAL

28. NET WORTH

29. Highest Production of Fertilizers

30. Highest Production of Urea

31. Findings (1) Reasons to prefer the plastic bag: Moisture control Reused and strong (2) They are using silos for the storage of finished goods in a case of uncertainty (strike, machine failure, transportation problem) (3) Total income in 2010-11 is highest with 33432.3 crore even though the production of the 2011-12 is highest. Main reason for above happening is high sale of fertilizer in 2010-11 and cost of inventory is low. (4) There is much more inbalance of Power , fuel and Water consumption because insufficient availability of Power , fuel and Water. (5) The inefficient management of inventory because fluctuating In Inventory Tornover Ratio as mentioned in graph.

32. Conclusion & RECOMMENDATION More effective exercise should be followed of vigilance against imbalance of raw material and work in progress which tends to limit the utility of stocks. To change in design to maximize use of standards parts and components, which are available off the shelf. Items which are in excess of the needed consumption can be considered as surplus items, such items are lying in inventory beyond 4 years. For the efficient Inventory Management the period for this should be Reduced More efforts should be made to completion of unfinished production jobs to get them in to sellable condition. The software holds all the transactions of the stocks. So software helps much in maintenance of stocks. IFFCO should use Inventory software to maintain the transactions of inventories and to manage the Inventory

33. Bibliography Website http://www.iffco.nic.in Books & Other Materials  IFFCO Company’s Annual Reports From 2007-08 to 2010-2011 Guidelines on identification, Obsolete, Surplus items. IFFCO Manual Doler , W. Donald; Lee Jr , Lamer; Burt, N David, Inventory purchasing& material management system Pandey I.M – Inventory Management ( Vikas Publications) + Valuation of Inventories AS-2 Indian Accounting Standards and GAPP by Dolphin, D’Souza (Snow White Publisher)

34. Thank You !!!