1. A
PROJECT REPORT
ON
“INVENTORY CONTROL
OF PADMESH BEVERAGES,
A LICENSEE OF PARLE AGRO- AN EMPERICAL STUDY”
SUBMITTED BY- GUIDED BY:
Neha Sharma Ms. Gauri Sahu
MBA(3RD Semester) Faculty Guide
Specialization: Finance AIMS

2. WHAT LIES AHEAD……
1. COMPANY PROFILE
2. OBJECTIVE OF THE STUDY
3. RESEARCH AND METHODOLOGY
4. INTRODUCTION TO INVENTORY CONTROL
5. DATAANALYSIS AND INTERPRETATION
6. FACTS AND FINDINGS
7. RECOMMENDATIONS
8. CONCLUSION

3. COMPANY PROFILE OF PADMESH BEVERAGES
• Name of firm: Padmesh Beverages- a licensee of Parle Agro
• Business type: Manufacturing firm
• Established : 2003
• Initial installed capacity of plant : 15,00,000 cases (9 million litres)
• Present capacity: 15.85 million litres.
• Products manufactured: Frooti, Appy, Appy Fizz, Bailley etc
• Padmesh Beverages was one of the first in setting up fruit based industry
in organised sector in the north-east.

4. OBJECTIVE OF THE STUDY
 To examine the inventory turnover ratio of Padmesh Beverages-a
licensee of Parle Agro.
 To analyze the tools and techniques of inventory management in the
organization.
 To determine the Economic Order Quantity (EOQ) of the product
(Frooti) manufactured by Padmesh Beverages.
 To study the inventory valuation method followed by Padmesh
Beverages- licensee of Parle Agro.
 To study the effect of layout used by Padmesh Beverages on
inventory management.

5. RESEARCH AND METHODOLOGY
•Research design: Descriptive research design was adopted for
the study considering the objectives of the study.
•Area of study: Padmesh Beverages- licensee of Parle Agro was
selected as the area of study.
•Sources of data: The entire study was based on primary as well
as secondary data.
Secondary Data: Internet, books, etc were thoroughly used
for secondary data.
Primary Data: Primary data were collected by personal
interview with the officials of Padmesh Beverages- licensee of
Parle Agro.

6. •Research tool: Data were collected with the help of interaction with the
owners, plant manager, staffs and executives of Padmesh Beverages-
licensee of Parle Agro and also with the formulas by calculating EOQ,
Inventory turnover ratio and Re-order level.
ELEMENT: executives and the staffs of the organisation are the
element of this survey.
UNIT: the officials and their organisation are taken as the sampling
units.
EXTENT: The study has been conducted in Guwahati, Assam.

7. INTRODUCTION TO INVENTORY CONTROL
INVENTORY CONTROL :
Inventory control is the coordination and supervision of
the supply, storage, distribution, and recording of materials to
maintain quantities adequate for current needs without excessive
oversupply or loss.
In other words, Inventory control can be defined as the
sum total of those activities necessary for the acquisition, storage,
sale, disposal or use of inventories

8. CLASSIFICATION OF INVENTORIES USED IN
THE ORGANISATION
Direct inventories: are those items that play a direct role in the
in the manufacturing of goods and services. Direct inventories
include:
DIRECT
INVENTORIES
RAW
MATERIALS
WORK IN
PROGRESS
FINISHED
GOODS

9. DATA ANALYSIS AND INTERPRETATION
1. INVENTORY TURNOVER RATIO OF PADMESH BEVERAGES:
Inventory turnover ratio with respect to Padmesh Beverages for the year
2011-2012.
INVENTORY RATIO
INVENTORIES CLOSING STOCK
RAW-MATERIAL 6,06,25,355.66
STOCK-IN-PROCESS 6,38,971.60
FINISHED GOODS 1,93,98,435
TOTAL INVENTORIES 8,06,62,762.26
SALES UPTO MARCH, 2012 = 33, 86, 60,114.28

10. Calculation of inventory turnover ratio
INVENTORY TURNOVER =
RATIO
NET SALES
AVERAGE INVENTORY
Average inventory =
(Opening Stock + Closing Stock)
2
(96728125.64 + 80662762.26)
=
2
= 88695443.95
INVENTORY TURNOVER =
RATIO
33, 86, 60,114.28
88695443.95
= 3.82 (approx)

11. 2. ECONOMIC ORDER QUANTITY (EOQ) OF FROOTI:
ECONOMIC ORDER QUANTITY OF FROOTI MANUFACTURED BY PADMESH
BEVERAGES:
FOR FROOTI
ORDERING COST(PER CASE)
Quantity Amount (Rs )
200ml 273
500ml 488
1200ml 528
1.5 litre 414
CARRYING COST= Rs 2/ case
EOQ =

12. HERE,
•A = Demand for the year
•Cp = Cost to place a single order
•Ch = Cost to hold one unit inventory for a year
• * = ×
EOQ FOR 200 ML:
EOQ = √ (2 x 1500000 x 273) / 2
= 20236.10 cases
EOQ FOR 500 ML:
EOQ = √ (2 x 1500000 x 488) / 2
= 27055.49 cases
EOQ FOR 1200 ML:
EOQ = √ (2 x 1500000 x 528)/2
= 28142.49 cases

13. EOQ FOR 1.5 Litres:
EOQ = √ (2 x 1500000 x 414)/ 2
= 24919.87 cases

14. 3.VALUATION METHOD BY
PADMESH BEVERAGES:
The valuation method of inventory management used by
Padmesh Beverages, a licensee of Parle Agro is the First-in-
first-out (FIFO) method.
First-in-first-out (FIFO): for perishable and non-perishable
materials:
First-in-first-out system supposes to be followed after products
are issued. This means the materials are used by ranking as
order, on the other hand the most perishable are used first and
the least perishable are used last than the stock will always be
fresh.

15. 4. LAYOUT USED BY PADMESH BEVERAGES AND ITS
EFFECT ON INVENTORY MANAGEMENT:
The type of layout used by Padmesh Beverages is Product Layout or Line
Layout.
Product Layout: A Product Layout is a part of the manufacturing process which
allows for the repetitive assembly of highly standardized products. When a
manufacturing operation utilized product layout, production work can be layout
in a straight line with labour and equipment subdivided in a smooth line.

16. 5 RE-ORDER OF PADMESH BEVERAGES,
A LICENSEE OF PARLE AGRO:
CALCULATION: Re-order level maintained by Padmesh Beverages for
the year 2011-2012.
Re-order level= Average consumption x (lead time + safety stock)
HERE,
TOTAL CONSUMPTION = 15, 00,000
LEAD TIME= 15 days
SAFETY STOCK= 7500 (6% of total consumption).
AVERAGE CONSUMPTION=
Total consumption
12

17. 15,00,000
12
=
= 1,25,000 units
The re-order below is calculated on the basis of average consumption:
Re-order level= average consumption x (lead time + safety stock)
=
(1,25,000 x 15) + 7500
= (18,75,000 + 7500)
= 18,82,500 units

18. FINDINGS
As per the analysis done the inventory turnover ratio of 2011-2012 of
the organization is 3.82 (approx) which is quite low and not touching the
satisfactory level.
According to the analysis done for the Economic Order Quantity it’s
found that the carrying cost is very low compared to the ordering cost.
And thus the EOQ for every bottle is high. Thus the company prefers to
keep a high stock.
The First in first out method of valuation of inventory is considered to
be the best method for a beverage manufacturing unit as some goods
which are of perishable nature need to be sold out first.
The layout used by Padmesh Beverages (i.e. product layout) doesn’t
have excess of ill-effects on the inventories.
The re-order level is that level of materials at which a new order for
supply of materials is to be placed. This reorder level of the firm is
18,82,500 units.

19. RECOMMENDATIONS
 As the turnover is not satisfactory for the year 2011-2012. Therefore it’s better to
reduce the amount of inventory that the organization purchases at one time.
 The organization shouldn’t keep huge number of inventory at their disposal. It
will lead to a low turnover and that indicates you have a lot of money tied up in
stock for long periods of time, which is not good for cash flow.
 As it is a beverage manufacturing unit, the FIFO, valuation method used by the
organization is perfect and they should continue with the same.
 Padmesh Beverages shouldn’t change their layout process as this layout will help
reducing the cost of Padmesh beverages as it is quite cost effective and also through
the use of product layout the production is faster which ultimately reduces the lead
time.
 In certain circumstances (e.g. Variable demand, ordering cost etc) the EOQ
calculations may not be accurate. Therefore the organization has to be very
cautious while calculating or analyzing the re-order level of the stocks.

20. CONCLUSION
If the organizational goal is to make the business more profitable, it must
increase efficiency and reduce costs. As a manufacturing firm, inventory is the
largest investment which is made. The Careful classification of the inventory, and
continuing analysis of those classifications, can play a vital role in maintaining
cost at the efficient levels which had been established as an organizational goal.
Payroll is an immediate expense of any business. The time investment is done in
inventory management it will pay immediate and long-term dividends by
reducing the amount of time the employees spend performing their tasks.
Inventory control is a constant requirement of doing business successfully. The
procedures for pulling, receiving, and replenishing stock should be established,
with considerations made for a particular organizational environment. These
procedures should be enforced as law in the company: inventory accuracy is
developed only through adherence to consistent practices and procedures.
Inventory management involves more than immediate and reactionary decisions
that affect the business. Inventory management requires that the firm establish
and enforce procedures that will serve as tools in utilizing the system on a daily
basis in the most efficient manner to produce most profits for the company.

21. Thank you!
For
Your
Kind
Attention