A PROJECT REPORT

ON
“INVENTORY CONTROL & STORE MANAGEMENT”
IN
NILACHAL IRON &POWER LTD
 Inventory management: conceptual
overview
• Inventories constitute the most significant part of Current
Asset of a large number of companies in Indian an average;
inventories are approximately 60% of the current assets in
Public Limited Companies in India. In manufacturing unit
usually about 20 to 30% of the total assets are in the form of
inventory & any effort in stock control will bring major
benefits for the enterprise.
• Nature of Inventories:
 Raw Material
 Work In Process
 Finished Goods
 Need to Hold Inventory
Basically there are three motives to hold inventories.
• Transaction Motive: Emphasizes the need to maintain
inventories to facilitate smooth production & sales
operation.
• Precautionary Motive: Necessities holding of
inventory to guard against the risk of unpredictable
changes in demand & supply forces & other factor.
• Speculative Motive: Influences the decision to
increase or reduce inventory levels to take advantage
of price fluctuations.
 Company Background

• Nilachal Iron & Power Ltd. (NIPL) was incorporated in May, 2002
for setting up a sponge iron manufacturing plant at Ratanpur,
Jharkhand. The plant commenced commercial production in April,
2005. In October 2007, NIPL was taken over by Jai Balaji Industries
Ltd. (JBIL) – the current promoter, the flagship company of Kolkata
based Jai Balaji group.
• Jai Balaji group, belonging to the Jajodia family of Kolkata, is an
established steel manufacturer in Secondary sector in eastern
India.
• NIPL is a closely held company. The Board of Directors of the
company comprises three members representing promoter and
one independent director. The day-to-day affairs of the company
are looked after by Shri Aditya Jajodia, the main promoter of the
group.
 Objective of the study
• Ensure a continuous supply of raw materials to
facilitate uninterrupted production.
• Maintain sufficient stocks of raw material in
period of short supply & anticipate price changes.
• Maintain sufficient finished goods inventory for
smooth sales operations & efficient customer
service.
• Minimize the carrying cost & time.
• Control investment in inventory & keep it at an
optimum level.
 Conclusion

• After completing the project I understand the inventory

control and store management policy of the Nilachal iron
and power ltd
• It has wide area for inventory, and it has a big area for
expansion of plant.
• The store was managed on the basis of bin system which
gives the exact figure inventory in the store.
• Among the competitor in this segment the final product
that is direct raw input is most demanded in the market.
• It has a big brand value of jai Balaji group.
• The employee of NIPL is well co-operative and supportive in
the nature. They share their own experience with me.
• Company has its own oil corporation which provides big
support to the company.
• Company believes in keeping the big inventory of raw
material so that the company can run in any type of
uncertainty like crisis of raw material.
• The company has not any management information system
.it works manually that is why the process of working not
fast.
• There is lack of professional in the organization.
• From this project report, it is clear that stores and inventory
management plays a major role in successful completion of
any infrastructure project and also accounts a major chunk
of profitability of the contractor.
 Suggestion
 
• Nilachal iron and power ltd must play prominent role
in financing which may result in raising level of income
and development.
•  
• Company should go for back ward integration. I.e. to
take the mines on the lease. so that the procurement
of raw material smoothly undergone.
•  
• Coal is always burning and it increases the wastage of
raw material so it should be controlled.
•  
• Company should develop the rail track up to inside the
premises of the company so that the cost of the
transportation can be decrease.
 
• Company should impose the management information
system to control the inventory.
 
• Nilachal should develop their managerial skill
particularly to identify the weaker section to reach the
benefit of the social economical objectives and also
improve the organizational effectiveness.
 Problems in Inventory Management:

• Selection of supplier/party/agency:
• Quantum Determination
• Proper Storing
• Store Control
 Pricing of Raw Material
• FIFO Method
• LIFO Method:
• Weighted Average Cost Method-Under this method, materials
issued are priced at the weighted average cost of materials in stock. To get an up-to-date
weighted average cost figure, a new weighted average cost is calculated each time a
delivery is received
• Standard Price Method-Under, this method a standard price is predetermined. When
materials are purchased the stock account is debited with the standard price. The
difference between the actual price & standard price is carried to variance account.
Materials issued are charged as per the standard price
• Current Price Method-According to this method, materials issued are priced at their
replacement or realizable price at the time of issue.
 Raw material inventory level

IRON ORE- 63 %
COAL -21%
DOLOMITE- 16%
 MONTHLY STOCK SUMMARY MAY 2010

PARTICULARS OPENING VALUE INWARD VALUE OUTWARD VALUE CLOSING VALUE

AUTOMOBILES 1,875.00 0.00 0.00 1,875.00

CIVIL 3,63,758.57 5,38,900.00 38,242.51 8,62,513.42

COAL WASHARI 65,04,320.61 7,97,207.00 10,74,896.79 62,26,520.73

CONSUMABLE 2,74,388.53 1,32,018.30 1,91,105.32 2,23,385.80

ELECTRICAL 41,67,835.71 79,752.02 2,17,474.25 40,15,494.65

FUEL & LUBR. 6,09,615.86 5,41,132.81 6,36,424.24 5,06,221.18

FUR. & FITTINGS 0.00 0.00 0.00 0.00

IRON & STEEL 7,47,006.69   29,068.53 7,17,697.30

IT DEPT. 950.50 2,705.00 3,547.50 108.00

KILN 100TPD PROJECT 2,06,68,363.78 1,36,59,922.93 45,55,425.87 2,97,73,328.33

MECHANICAL 7,73,154.47 20,65,235.45 1,31,79,604.20

14456080.09
OFFICE EQUIP. - 6,800.00 6,800.00 0.00
OLD & USABLE MAT. 1,79,272.94 22826.00 22826.00 1,76,177.04

PACKING MATERIAL 1,80,295.97 0.00 0.00 1,68,369.12

PLANT & MACHINERY 13,57,759.63 0.00 0.00 8,67,624.00

PRINT. & STATIONERY 29,697.35 9701.00 9701.00 25564.78

PROCESS 5,81,559.11 1,99,000.00 1,99,000.00 6,97,605.98

QUALITY CONTROL - 8509.84 8509.84 o.oo

RAILWAY 7,05,933.04     7,05,933.04

SAFTY MATERIALS 46,916.55 29023.00 29023.00 43607.22

TOOLS & TACKLES 6,48,401.78 23115.50 23115.50 6,59,584.97

GRAND TOTAL 51,524,838.92 1,68,23,767.87 1,68,23,767.87 5,88,48,245.53

 PLANT MAINT.

1000000
2000000
3000000
4000000
5000000
6000000
7000000

0
38,51,511.84

1,12,304.30
3,57,083.82
7,84,895.51
ADMIN. MAINT.

1,85,895.56
13,98,328.17
7,60,435.57
1,11,683.64
PROJECT

27,20,278.05
graph

21,05,184.7
1,88,014.46
19,07,455.80
10,59,810.50
1,53,602
31,05,758
32,48,658.88
1,64,766.47
60,77,523.94
Comparison of month wise consumption
THANK’S