Birla corporation limited inventory analysis

2. BIRLA CORPORATION
LIMITED
• Birla Corporation Limited is the flagship Company of the M.P. Birla
Group. Incorporated as Birla Jute Manufacturing Company Limited in
1919, it was Late Mr. Madhav Prasad Birla who gave shape to it.
• Under the Chairmanship of Mrs. Priyamvada Birla, the Company
crossed the Rs. 1300 - crore turnover mark and the name was changed to
Birla Corporation Limited in 1998.

3. • The Cement Division of Birla Corporation Limited has seven plants, two each at M.P. ,Rajasthan,West
Bengal and one at Raebareli (U.P)
• The cement is marketed under the brand names of Birla Cement SAMRAT, Birla Cement
KHAJURAHO, Birla Cement CHETAK and Birla Premium Cement
• The Division exports large quantities of cement to Nepal, under the brand names of Birla Cement
Samrat, Birla Cement Khajuraho and Birla Cement.
• All our cement plants are ISO 9001:2000 Certificated, covering the entire range of production and
marketing.
• Birla Cement Works (BCW) & Chittor Cement Works (CCW). have received the IS/ISO : 14001
Certification for "Environmental Management System".
• BCL has regularly been receiving CAPEXIL awards for cement exports since the last more than 15
years.
• Promoters : Mr. Harsh V. Lodha Chairman, Mr. Pracheta Majumdar Whole-time Director designated as
Chief Management Advisor, Mr. Vikram Swarup, Mr. Anand Bordia, Mr. B B Tandon, Mr. D N Ghosh
Mr Deepak Nayyar, Mr. B R Nahar Managing Director
Product
.
Installed Capacity
Production (2009-2010)
Cement
6.46 Mill. Tons.
5.69 Mill. Tons

4. INVENTORY ANALYSIS

6. • Inventories of Stores & Spare Parts, Raw Materials, Process Stock and Finished Goods
are valued at lower of cost or net realisable value.
• For the purpose of ascertainment of cost, annual weighted average method is followed.
• Inventories, (other than Machinery Spares not in regular use) are valued 'At Cost or Net
Realisable Value, whichever is lower'.
• Net Realisable Value is the estimated selling price in the ordinary course of business less
estimated cost of completion and the estimated cost necessary to make the sale. Stores
and spare parts etc. are valued 'At Cost'.
• Machinery Spares not in regular use are written off over the estimated useful life of the
respective assets.Excise Duty & Cess on stocks are shown separately in (Increase) /
Decrease in Stocks.

7. INVENTORY TURNOVER RATIO
• Inventory Turnover Ratio is one of the efficiency ratios and measures the number of times,
on average, the inventory is sold and replaced during the fiscal year.
• Inventory Turnover Ratio formula is:
• Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales.
Its purpose is to measure the liquidity of the inventory.
• Inventory Turnover Ratio is figured as "turnover times".
• Average inventory should be used for inventory level to minimize the effect of
seasonality.
• This ratio should be compared against industry averages.

8. • A low inventory turnover ratio is a signal of inefficiency, since inventory usually
has a rate of return of zero.
• It also implies either poor sales or excess inventory. A low turnover rate can indicate
poor liquidity, possible overstocking, and obsolescence,
• but it may also reflect a planned inventory buildup in the case of material shortages
or in anticipation of rapidly rising prices.
• A high inventory turnover ratio implies either strong sales or ineffective buying
(the company buys too often in small quantities,therefore the buying price is higher).
• A high inventory turnover ratio can indicate better liquidity,
• but it can also indicate a shortage or inadequate inventory levels, which may lead to
a loss in business.
• High inventory levels are usual unhealthy because they represent an investment with
a rate of return of zero. It also opens the company up to trouble if the prices begin to
fall.

11. OBSERVATION & CONCLUSION
•Inventory Turnover Is One Measure Of A Company's Performance And Financial Health.
•The Formula To Use To Determine Inventory Turnover Ratio Is The Cost Of Goods Sold
During A Period Divided By The Inventory On Hand (Ending Inventory) For The Period.
•Inventory Turnover Is An Indicator Of The Demand For The Company’s Products.
• If Inventory Turnover Is High, It Means That The Company’s Product Is In Demand.
• It Could Also Mean The Company Initiated An Effective Advertising Campaign Or Sales
Promotion That Caused A Boost In Sales.
•In Any Case, It Demonstrates That The Company Is Efficiently Moving Inventory In The
Course Of Business.

12. Cash Flow Analysis
Name of
the
Company
Cash flow
method
Net Income
(Crores)
Cash flow
from
operating
activities
(Rs. in
Crores)
Cash flow from
investing
activities(Rs. in
Crores)
Cash flow
from
financing
activities (Rs.
in Crores)
UltraTech
Cement
Ltd.
Indirect
method
Rs 3867.21
Rs 3637.31
(Rs.4407.01)
Rs 714.86
Rs.1,464.82
Rs. (509.43)
Rs. (488.36)
Rs. 79.10
Rs. 846.33
Rs.161.40
(Rs. 110.53)
Rs. (61.82)
Ambuja
Cement
Indirect
Method
Indirect
JK Lakshmi Method
Cement
Rs. 1,895.68
Rs.1,857.74
Rs.251.69
Rs. 332.27
Binanai
Cement
Indirect
Method
Rs.2056.68
Rs. 1726.07
Birla corp.
ltd.
Indirect
Method
Rs.350.71
RS. 195.89

13. Thank you !