A study on INVENTORY MANAGEMENT in SOUTH EASTERN COALFIELDS LTD, Bilaspur
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In our present day economy, finance is defined as the provision of money at the time when it is required. Finance may be defined as the art and sciences of managing money. Finance holds key to all human activity. No business activity can ever be pursued without financial support.
A proper financial analysis must be used to analyze a firm past performance and asses its present financial strengths for making the better future plans. The financial resources of every organization are always scarce and therefore require proper planning and control in order to achieve the best out of funds available.
Capital is essential for the setting up and smooth running of any business. Investments made on fixed assets will yield excess cash inflows apart from the payback amount and is spread over a longer period of time. Hence the cash inflows (or) benefits associated are not immediate but are expected in future.
The job of financial management is to reconcile the conflicting viewpoints of various functional areas regarding the appropriate inventory levels in order to fulfill the overall objective of maximizing the owner’s wealth. Thus inventory management like the management of other current assets should be related to the overall objective of the firm.
An efficient inventory management requires that a firm should maintain an optimum level of inventory, where inventory costs are the minimum and at the same time there is no stock out which may result in loss of sale or stoppages of production. Determination of safety stocks, ordering systems of inventory, Economics Order Quantity (EOQ), ABC Analysis, VED Analysis, XYZ Analysis.
NEED FOR THE STUDY
The need and importance of inventory varies in directly proportion to the idle time cost of men and machinery and urgency of requirement.
If men and machinery in the factory could, wait and so could customer, materials would not lie in want for them and no inventories need to be carried, but it is highly un economical to keep man and machinery waiting and the requirements of modern life are so urgent that they cannot wait for materials to arrive after the need for them may arisen. Hence the organization needs to carry the inventories.
The study enables the back drop zeal to know the facts which contributed the success of SECL and to know the financial performance in general and efficient management of its inventory inspired me to take up the study of it “Financial Performance through Inventory Management”.
System with regard to the inventories. However management of inventories involves two basic problems:
1. Maintaining sufficient large size of inventory for efficient and smooth production and sales operation.
2. Maintaining minimum investment in inventories to minimize the direct in costs associated with holding inventories to maximize the profitability.
SCOPE OF THE STUDY
The scope of the present study is limited to the aspects concerning inventory management in South Eastern Coalfield Limited. The present study purchase, store functions and the efficiency of many in acquiring materials and utilizing them to minimize cost of materials and maximize profits. The study is also undertaken to evaluate the company’s present financial performance with the special regard to the value of inventory maintained and to know the influence of inventory levels on the sales turnover.
The scope also includes the study of various methods adopted by the company in order to maintain the quality of its inventory. Finally, to assesss that various steps adopted by the company to maintain and control its inventory position.
The scope of inventory management is very wide that various techniques of inventory control management like EOQ (Economic order quantity) model, ABC Analysis have been undertaken.
OBJECTIVES OF THE STUDY
To keep investment inventory at optimum level.
Maintaining sufficient stock of raw materials in periods of short supply.
Maintaining sufficient stocks of finished goods for smooth sales operations.
To make responsible suggestions, if any, for better performance of the organization.
To minimize carrying cost of inventory and ordering costs by using different methods.
Ensuring a continuous supply of materials to production department facilitating uninterrupted production.
For comparing the actual position with standards to endure the management to take appropriate steps, if there is any deviation.
To study the inventory positions of the company form financial reports and analyze performance in South East Coalfield limited.
METHODOLOGY OF THE STUDY
The analysis of the project was based on the available information. Any information about the topic is called the data. The data was gathered from various sources i.e., Primary and Secondary sources.
Types of Data:
1. Primary Data
2. Secondary Data
Any information which is collected afresh and for the first time is called primary data. The primary data happen to be original in character. The information is gathered from concerned employees. The employees and manager of the financial department have provided the information needed for the study.
Information which has already been collected by somebody else or some other agency with definite purpose and which has already been processed is called secondary data. The secondary data for the study have been gathered from the balance sheets, profit and loss accounts, annual reports and other books and manuals of the South eastern coalfield limited.