A STUDY ON INVENTORY MANAGEMENT OF THE TITAN

INDUSTRY LTD

A PROJECT REPORT

Submitted to the
SRM SCHOOL OF MANAGEMENT

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By
HEMRAJSHARMA.H
(Reg.No: 3511210713)

Under the guidance of

Dr. R.KRISHNARAJ
Assistant.professor

SRM SCHOOL OF MANAGEMENT

SRM UNIVERSITY
KATTANKULATHUR 603 203
MAY 2014
SRM School of Management
SRM University
SRM Nagar, Kattankulathur-603203,
Kancheepuram District, Tamil Nadu.

BONAFIDE CERTIFICATE

Certified that this project report titled as “A STUDY ON INVENTORY

MANAGEMENT OF THE TITAN INDUSTRY LTD” is the Bonafide work
of HEMRAJSHARMA.H, Reg. No: 3511210713 who carried out the research under my
supervision. Certified further, that to the best of my knowledge the work reported herein
does not from part of any other project report or dissertation on the basis of which a
degree or award was conferred on an earlier occasion on this or any other candidate.

Submitted for the viva-voce examination held on -----------------------

-------------------------------- -----------------------------
Dr. R.KRISHNARAJ Dr. JAYSHREE SURESH
(Project Guide) (Dean, MBA)

------------------------------------
External Examiner
( HEMRAJSHARMA.H)
(Reg. No: 3511210713)
SRM School of Management
SRM University
SRMNagar, Kattankulathur-603203,
Kancheepuram District, Tamil Nadu.

DECLARATION

I hereby declare that the project report entitled “A STUDY ON INVENTORY

MANAGEMENT OF THE TITAN INDUSTRY LTD” submitted to SRM School of
Management in partial fulfillment of the requirement for the award of the Degree of Master
of Business Administration, is a record of the original research work done under the
supervision and guidance of Dr. R.KRISHNARAJ, SRM School of Management, SRM
University, Chennai and that it has not formed the basis for the award of any degree /
associate ship / fellowship of other similar title to any candidate of any university.

Signature: HEMRAJSHARMA.H
Date: 3511210713
 ACKNOWLEDGEMENT

I hereby convey my thanks to all those who made it possible for me to complete this
project, by extending their support and continuous co-operation.

I would like to acknowledge the consistent encouragement extended

byDr.JAYSHREESURESH, Dean SRM school of Management. I would also like to thank
my faculty members and my guide Dr.R.KRISHNARAJ.

My sincere gratitude to my project guide Mr.S.FELIX, Assistance General Manager, for

“TITAN INDUSTRY LTD (JEWLLERY DIVISION)” whose constant guidance, efforts,
heartfelt support, suggestions and consideration helped me in the successful completion of
this project.

I also extend my humble thanks to all staff members of Titan industry ltd ,for their full
hearted support and assistance during my stay at Titan industry.

Finally I would like to thank all my friends and staff members without whom this project
work would not have been successfully completed.
 ABSTRACT

The study is about Tanishq Jewellery in Hosur and to

understand the financial aspects of inventory management system.
Though the study chiefly focused on the financial inventory control, it
was also invaluable to know about its presence in the jewellery
market segment in India.

The study was made after having a brief knowledge on financial

analysis of titan industries ltd for a 5 year period from 05-10.
This Included financial statement like profit and loss statement,
the measure of reserves and surplus etc. for the study of ABC
analysis, it involved the use of various costing methods like FIFO
(First In First Out), LIFO (Last In First Out).

The data was stored, tabulated and analyzed using the available
financial statements and the amount of sales turnover the company
was able to achieve over a 5 year period.

Also, it was quite helpful in getting to know the different brand

names and exotic collections of Tanishq Jewellery, each of which
have a high market value. The different metals used and its properties
were also studied.
 CONTENTS

PAGE
CHAPTER TITLE
No.
LIST OF TABLES
LIST OF CHARTS
1 INTRODUCTION
1.1Industry profile 1
1.2 Industry profile 2
1.3 Company profile 6
1.4 Review of literature 12
1.5 Objective of the study 16
1.6 Need for the study 17
1.7 Limitation of the study 18
2 RESEARCH METHODOLOGY
2.1 Research design 19
2.2 Scope of the study 20
2.3 Statistical tool applied 21
3 DATA ANALYSIS AND INTERPRETATION
3.1 Ratio analysis 22
3.3 Calculation of ABC analysis 42
4 FINDINGS AND SUGGESTIONS
4.1 Findings 50
4.2 Suggestions 51
4.3 Conclusion 52
BIBLIOGRAPHY 53
 LIST OF TABLES

TABLE TITLE PAGE

No. No.
1 Inventory turnover ratio 22

2 Inventory turnover period 24

3 Inventory to working capital ratio 26
4 Raw materials to inventory turnover 28
5 Inventory to sales ratio 30
6 Debtors turnover ratio 32
7 Debtors turn over period 34
8 Creditors to purchase 36
9 Fixed asset turnover ratio 38
10 Capital turnover ratio 40
 LIST OF CHARTS

CHART TITLE PAGE

No. No.
1 Inventory turnover ratio 23

2 Inventory turnover period 25

3 Inventory to working capital ratio 27

4 Raw materials to inventory turnover 29

5 Inventory to sales ratio 31
6 Debtors turnover ratio 33
7 Debtors turn over period 35
8 Creditors to purchase 37
9 Fixed asset turnover ratio 39
10 Capital turnover ratio 41
11
12
13
 Chapter 1

1.1 Introduction

• Inventory management is the active control program which

allows the management of sales, purchases and payments.

• Inventory management software helps create invoices, purchase

orders, receiving lists, payment receipts and can print bar coded
labels.

• An inventory management software system configured to your

warehouse, retail or product line will help to create revenue for
your company.

• The Inventory Management will control operating costs and

provide better understanding.

• We are your source for inventory management information,

inventory management software and tools.

1
 1.2 Industry profile

• Tanishq Titan’s flagship line of jewellery is today a

resounding success with discerning customers. Tanishq has
performed exceedingly well and has set standards, in what
could best be described as a largely unorganized and
unscrupulous jewellery market.

• The growth of the brand has once again been a testament to

our customer focus. Tanishq is today a hallmark of trust, an
island of purity. It is a certified division under the ISO
9001:2000 Quality Management System Standards.
Established to addresses the urban market, its growth has
transformed Titan into the largest integrated jewellery
manufacturer and outsourcing company of India.

• Tanishq is India's fastest growing jewellery brand with a

premium range of jewellery, studded with diamonds or
colored gems in 18-karat gold, 22-karat pure gold and
platinum jewellery. We are now one of India's largest
specialty retailers and are transforming India’s jewellery
market with a pan - India presence. Titan felt a need and
created a means to offer elegant gold jewellery to smaller
towns and rural markets. The recent launch of a retail
initiative - Gold plus caters to the need.

• Both brands contributed to over Rs.450 million USD, and are

still flourishing. Truly a phenomenon in itself, Tanishq is our
pioneering Indian brand storming a market of over 300, 000
independent jewelers. The brand is evolving faster than the

2
 market and is either leading or closing gaps between
competitors in urban markets where we have a presence.

• The trust connotations that the Tata - Titan association

evokes, never fails to attract increasing numbers of jewellery
seekers to the fledgling designer brand. Titan ensures that
they are spoilt for choice, transparency and a great shopping
experience with Tanishq, the jewel of its crown.

• Tanishq is a trustworthy, popular jewellery brand from

India’s largest integrated jewellery manufacturer.

• Zoya, by Tanishq is a chain of luxury jewellery boutiques

which targets elite, discerning ladies seeking designer wear
of international standards. Zoya is a best-in-class shopping
experience. Stores offer exquisite, artistically styled
masterpieces, studded in diamonds, apart from traditional,
fusion polki and kundan jewelry. There are magnificent
designs to choose from, all in ultra-premium luxury, these
outlets showcase luxury unsurpassed.

• Zoya creations are world-class in terms of quality and have

been crafted in India and abroad. It boasts the finest quality
in India and is on par with the best in the world. Zoya stores
are located in GK I, M Block - Delhi and Warden Road -
Mumbai.

3
TANISHQ

Tanishq, India's largest, most trusted and fastest growing

jewellery brand, offers traditional as well as trendy designs in gold,
diamond and platinum. With retail sales of over Rs. 3000 crores
last financial year, Tanishq has delivered value to its customers
and shareholders.

Backed by in-depth research in the jewellery space, the

production and sourcing units of Tanishq create exquisite designs
with faultless finish. Located at Hosur (Tamil Nadu) and Dehradun
(Uttarakhand)) the 1, 35,000 sq. ft. manufacturing unit is equipped
with the latest and most up-to-date technology and tools. The unit
also complies with the labour and environmental standards.

Stringent quality standards ensure that every product at

Tanishq is crafted to perfection with unmatched finish. With
innovations like the karatmeter - the only non-destructive means to
check the purity of gold - Tanishq introduced technology-backed
challenge in the category completely governed by individual trust.
The brand propagates ethical practices and provides the customer a
certification of purity of material and reselling policies. Following
the line of ethical practice further, adequate policies are in place
for the artisans who create the jewelry.

Tanishq has a Golden Harvest savings scheme which is a

unique Jewellery purchase scheme, leading to an easy purchase of
Tanishq jewellery of your choice. With this scheme you can buy
for more than what you save because Tanishq will add a special
bonus at the end of the scheme.

4
GOLDPLUS

Titan Industries’ GoldPlus is designed for the jewellery

preferences of the semi-urban and rural Indian customer. With a
presence in 29 towns spread across 6 states, GoldPlus is the largest
jewellery retail chain in Tamil Nadu.

In addition to gold jewellery, the brand also offers impressive

designs embellished with diamonds, American diamonds (Cubic
Zirconia) and other precious stones. The GoldPlus jewellery
comes with the assurance of purest 22-karat (916) and 18-karat
(750) gold and premium craftsmanship. Every GoldPlus product is
endorsed by a certificate that states the purity of the gold and the
quality of diamonds used in the article.

The elaborate and intense quality checks during the

manufacturing process ensure the purity of gold and a perfect
finish. The gold is purchased in the form of bars from only those
banks that are certified by Reserve Bank of India (RBI). Using this
gold, jewellery is crafted in Titan Industries’ manufacturing units
in Hosur, Tamil Nadu where highly skilled artisans create
traditional and modern design

5
 1.3 Company profile

Titan Industries is the organization that brought about a

paradigm shift in the Indian watch market when it introduced its
futuristic quartz technology, complemented by international
styling. With India's two most recognized and loved brands Titan
and Tanishq to its credit, Titan Industries is the fifth largest
integrated watch manufacturer in the world.

The success story began in 1984 with a joint venture between

the Tata Group and the Tamil Nadu Industrial Development
Corporation. Presenting Titan quartz watches that sported an
international look, Titan Industries transformed the Indian watch
market. After Sonata, a value brand of functionally styled watches
at affordable prices, Titan Industries reached out to the youth
segment with Fastrack, its third brand, trendy and chic. The
company has sold 100 million watches world over and
manufactures 12 million watches every year.

With a license for premium fashion watches of global brands,

Titan Industries repeated its pioneering act and brought
international brands into Indian market. Tommy Hilfiger, Hugo
Boss and f c u k as well as the Swiss made watch – Xylys owe
their presence in Indian market to Titan Industries.

Entering the largely fragmented Indian jewellery market with

no known brands in 1995, Titan Industries launched Tanishq,
India’s most trusted and fastest growing jewellery brand. Gold
Plus, the later addition, focuses on the preferences of semi-urban

6
and rural India. Completing the jewellery portfolio is Zoya, the
latest retail chain in the luxury segment.

Titan Industries has also made its foray into eyewear,

launching Fastrack eyewear and sunglasses, as well as prescription
eyewear. The organization has leveraged its manufacturing
competencies and branched into precision engineering products
and machine building.

With over 665 retail stores across a carpet area of over 8,

10,072 sq. ft. Titan Industries has India’s largest retail network.
The company has over 311 exclusive ‘World of Titan' showrooms
and over 650 after-sales-service centers. Titan Industries is also the
largest jewellery retailer in India with over 120 Tanishq boutiques
and Zoya stores, over 29 Gold Plus stores and over 150 Titan Eye+
stores. The company has two exclusive design studios for watches
and jewellery

Backed by 4,934 employees, two exclusive design studios for

watches and jewellery, 11 manufacturing units, and innumerable
admirers’ world over, Titan Industries continues to grow and sets
new standards for innovation and quality. The organization is all
geared to repeat the Titan and Tanishq success story with each new
offering.

7
Products profile:

Titan Industries, best known as India's pioneering

manufacturer of quartz watches, has also etched a niche for itself in
some of the most competitive spaces in the fashion industry such
as jewellery and eyewear. Precision engineering is another area of
specialization that Titan Industries is proud of.

Watches: Being the world's fifth largest integrated watch

manufacturer, Titan Industries has created and sold more than a
110 million pieces the world over.

With a production rate of over 12 million watches per annum and a

customer base of over 100 million, Titan Industries owns
manufacturing and assembly operation centers in Hosur in
Karnataka, Dehradun, Roorkee and Pant Nagar in
Uttaranchal, Baddi in Himachal Pradesh, and an Electronic Circuit
Boards (ECB) plant in Goa.

Capturing the important market segments and the changing fashion

trends, Titan Industries has brought forth four core watch brands:
• Titan is designed for the mid-premium segment
• Fastrack is crafted to fit the trendy fashion space with a focus on
the youth
• Sonata is created for the mass market and has emerged as India’s
largest watch brand
• Xylys is fashioned for the premium market, aiming at the high-
end connoisseur and new-age achiever

8
 The Titan brand architecture comprises several sub-brands,
each of which is a market leader in own space. Notable among
them are: Titan Edge, Titan Raga, Nebula, Heritage and several
other collections like WWF, Zoop, Orion, Purple, Obaku and the
Automatic series. The Titan portfolio owns over 60% of the
domestic market share in the organized watch market.

Titan Industries’ pride possession, a world-class design

studio for watches and accessories, is the place where some of the
most coveted creations have been conceptualized.

Exclusive World of Titan and Fastrack showrooms and over

12,000 outlets in more than 2,554 cities in India make these much-
sought-after watches available to the buyers. The watches are also
offered internationally in 30 countries, with a special focus on the
Middle East and Asia Pacific regions. The after-sales service, a
benchmarked operation with a large network of exclusive service
centers spread across the country, is one of the operation units with
the fastest turnaround time in the world.

Jewellery: Following the suit of time products, Titan Industries’

Tanishq has been India’s largest, fastest growing and most popular
jewellery brand.

Tanishq offers a premium range of innovatively created gold

jewellery with an aesthetic use of diamonds and precious, semi-
precious stones in various hues. Arresting designs in 22kt pure
gold as well as platinum are among the most admired products on
the company’s list. Gold Plus the recent retail plain gold jewellery
offering is specifically created for semi urban and rural Indian
market. The brand offers gold jewellery, as well as unique designs

9
crafted with diamonds, American diamonds and other precious
stones.
Tanishq has been dealing with various kinds of jewellery
under different brand names and collections. Some of the jewellery
items in which they offer is in,
ƒ Platinum
ƒ Gold
ƒ White gold
ƒ Diamond

Titan Industries boasts of 120 Tanishq boutiques, 2 Zoya

stores and 29 Gold Plus stores in India. The enchanting jewellery
patterns that are part of these brands originate in the well-equipped
exclusive jewellery design studio of Titan Industries.
Tanishq boasts of highly successful jewellery collections such as:
ƒ Aria
ƒ Hoopla
ƒ Diva
ƒ Aamra
ƒ Aarka
ƒ Solo
ƒ Paheli

10
Eye wear: Titan Eye+ of Titan Industries offers sunglasses under
its Fastrack brand. Prescription eyewear such as lenses and contact
lenses is also part of the range. Titan Eye+ offers frames,
sunglasses, and accessories of Titan Industries’ in-house brands as
well as other premium brands.

Precision Engineering: The Precision Engineering division of

Titan Industries supplies precision components to the aviation and
the automotive industry. As an Original Equipment Manufacturer
(OEM), the company makes dashboard clocks for car
manufacturers in Europe and America.

Equipped with best certifications such as AS 9100B for the

aerospace segment, TS 16949 for the automotive segment and the
coveted Ford Q1 status - the highest supplier recognition from
Ford – Titan Industries also offers fully integrated automation
solutions.

The diverse product range includes pointers dashboards

clusters like fuel gauge, temperature gauge, gear shift indicators,
clocks for automobiles and any kind of injection molded plastic
parts, electromechanical assemblies for automobiles, all kinds of
pressed and turned parts for automobiles . The tooling sector of
precision engineering division manufactures all kinds of press tool,
molds,Jigs and fixtures for various industries.

11
 1.4 Review of literature

What Does Inventory Mean?

The raw materials, work-in-process goods and completely

finished goods that are considered to be the portion of a business's
assets those are ready or will be ready for sale. Inventory
represents one of the most important assets that most businesses
possess, because the turnover of inventory represents one of
the primary sources of revenue generation and subsequent earnings
for the company's shareholders/owners.

Possessing a high amount of inventory for long periods of

time is not usually good for a business because of inventory
storage, obsolescence and spoilage costs. However, possessing too
little inventory isn't good either, because the business runs the risk
of losing out on potential sales and potential market share as well.

Inventory management forecasts and strategies, such as a

just-in-time inventory system, can help minimize inventory costs
because goods are created or received as inventory only when
needed.

12
Manage Inventory:

• Counting, organizing, and managing inventory is unlikely to

be any worker's favorite job; nevertheless, good retail
inventory management helps maximize profits and eliminate
waste.
• An inventory manager is also able to dedicate his or her time
to managing inventory, allowing other warehouse workers to
concentrate on other important duties.

Asset Inventory

• A fixed asset inventory can also reduce theft, which in turn

will reduce insurance premiums. Asset inventory
management software can be used to assist with the inventory
process.
• In general, this kind of audit is part of a “service oriented
architecture” for software and hardware, where having a plan
for IT tracking can really benefit a business or organization.
Companies that do IT asset inventories may identify certain
IT systems for eventual audit and efficiency research.

Retail Inventory

• Counting, organizing, and managing inventory is unlikely to

be any worker's favorite job; nevertheless, good retail
inventory management helps maximize profits and eliminate
waste. There are several basic things a good owner or
manager can do to improve retail inventory management,
including hiring a great team, creating efficient processes,
and incorporating review.

13
 • The retail inventory method is a technique companies can use
to accurately manage their individual components and
finished merchandise. Often considered a version of cost
accounting, the retail inventory method is a procedure in
which similar products are pooled together in order to
estimate an average percentage of cost-to-retail price.
Barcode Inventory

• This can be more efficient and cost effective than waiting

until an item has stopped functioning completely, since at
this stage an item might need to be replaced, drastically
increasing cost. Barcode inventory management systems
need to be updated from time to time to keep up with new
demands.
• The stickers can then be used to inventory and track the
marked assets. This process is called barcode asset
management. Barcode asset management is achieved using
an interactive computerized database.
Inventory Accounting

• The company may also have other parts, such as stereo

systems, which may be added later on to a "completed" car to
fulfill a custom order. One issue that is particularly important
with inventory accounting is that the price of buying
components or stock may change over time.
• Merchandise inventory is an accounting term referring to the
sellable goods a company has on hand and can sell to
consumers. Sometimes referred to as just inventory, it is
considered to be a type of asset.

14
Inventory Services

• This is helpful in determining which employees are using the

software, where there has been growth because of software
deployment and which departments need upgraded software
to continue growth. Inventory services also help the company
management know that all software is in compliance with
license and usage laws.
• At the same time, an equitable service level requires that
ordering is arranged to ensure that replacements to that
inventory are received in a timely manner, and that no
interruption in the production process takes place as the result
of a lack of available inventory. At its core, service level is
all about making the most prudent use of available resources
so that the goals of the company are realized.

15
1.5 OBJECTIVE OF THE STUDY
• To identify and track all data processing assets in an
Inventory System Repository.

• To define the process by which assets are identified and

maintained in the Inventory System.

• To provide Inventory System access to all necessary

personnel (data entry, update and deletion).

• To provide a full range of reports that will satisfy

informational requirements.

• To document the Inventory Management System within the

Standards and Procedures Manual.

• To provide training to personnel responsible for supporting

the Inventory Management System.

16
1.6 NEED OF THE STUDY

Inventory Management is an enterprise-wide discipline concerned

with the identification and tracking of Information Services (IS)
hardware and software assets. Its three main areas of concern are:

ƒ Acquisition.
ƒ Redeployment.
ƒ Termination

Acquisition procedures are established to assist personnel in

procurement of software and hardware products. Its main purpose
is to ensure that proper justifications are performed and that
financial guidelines are followed. Acquisitions require “Purchase
Orders” to track and authorize the purchase, while the actual
installation of equipment is performed by the Infrastructure or
Facilities Management Department.

Redeployment procedures are responsible for ensuring that assets

are tracked when moved from one location to another and that
budgetary considerations are adjusted as needed. Should a product
be moved in from its original owner, then the Inventory System is
updated to reflect the new location and owner. In this case, the old
product is deleted from the original owner's budget and added to
the new owner's budget.

Termination is responsible for deleting the asset from the

inventory when it is discontinued, or replaced. The owner's budget
will be updated to reflect the asset termination and the asset will no
longer be listed when location reports are generated.

17
1.7 LIMITATIONS OF THE STUDY

• Secondary data itself was the major limitations

• The study has been conducted with the help of secondary

data.

• The study was conducted only at Hosur branch.

• Only five accounting years were taken into consideration for

analysis.

• The period for study is for 5 years only so it is not possible to

find life time performance of the company.

• The study is made exclusively on the financial aspects of the

company.

18
 CHAPTER 2

Research Methodology

2.1RESEARCH DESIGN

The objective of Inventory Management is to manage the

physical and logical properties of resources and their relationship,
while ensuring that service level commitments are achieved. This
process will:

• Ensure efficient and timely identification of vital corporate

assets.

• Assist in managing the enterprise-wide inventory.

• Provide a common repository for asset protection.

• Plan and control the proliferation of assets across the

enterprise.

19
2.2 SCOPE OF THE STUDY

• The Inventory Management discipline encompasses all

system and data network elements from the mainframe to the
server level throughout the enterprise.

• All mainframe and data network based hardware and

software assets must be identified and entered into the
Inventory System. Any changes to these environments must
be reflected in the Inventory System.

• Financial and technical product information must be

available through the Inventory System, as needed to support
the functional responsibilities of personnel within the finance
and contracts management departments.

• Asset criticality must be included with asset descriptive and

financial information, so that the Recovery Management
department is supplied with the information it requires.
Recovery actions must be implemented to safeguard critical
assets.

Aim of the research

The aim of the study is to analyze the inventory
management with reference to Titan Industries Ltd Jewellery
division.

20
Research area
The area of study covers the inventory
management, investment in inventor at Titan Industries Ltd
Jewellery.

Research unit
Titan Industries Ltd Jewellery. (Hosur).

Research approach
Analytical study.

Research period
Two month.

Data sources:

Secondary data:
Company profile, the annual company report and
the data’s which were given by the staff members of the
accounting and costing departments were the major sources of
collecting the details about the project study.

2.3 STATISTICAL TOOLS

1. Ratio analysis
2. activity ratio
3. ABC analysis
4. EOQ

21
 CHAPTER 3

DATA INTERPRETATION

1. Inventory turnover ratio

Formula:

Inventory turnover ratio = Cost of goods sold

Average inventory

Table 1

Year Cost of goods Average Inventory

sold inventory turnover ratio
08-09 78957.56 32488.35 2.43
09-10 129029.88 52593.84 2.45
10-11 202515.4 84928.64 2.38
11-12 275633.58 111189.11 2.47
12-13 349747.39 127151.16 2.75

22
 1. Inventory turnover ratio

Chart no: 1

2.8
2.7
2.6
2.5
2.4
2.3
2.2
2.1
inventory turnover ratio

Inference:

The above table shows an increasing trend in the inventory

turnover ratio. A high turn over ratio indicates that the inventory is
sold fast. A ratio of 12-13 is considered satisfactory.

23
 2.Inventory turnover period

Formula:

Inventory turnover period = no of days in a year

Inventory turnover ratio

Table 2

Year No of days in a year Turnover period in

days

08-09 365 150.2

09-10 365 148.98
10-11 366 150.61
11-12 365 147.77
12-13 365 132.73

24
 2. Inventory turnover period

Chart no: 2

155
150
145
140
135
130
125
120
Turnover period in days

Inference:

The above table shows an increasing trend in the inventory

turnover ratio. So the inventory turnover period is decreasing.

25
 3.Inventory to working capital

Formula:

Inventory to networking capital ratio = inventory

Net working capital

Net working capital = C.A –C.L

Table 3

Year Inventory Net working Inventory to

capital net working
capital
08-09 37637.06 16937.43 2.22
09-10 67748.23 28340.84 2.49
10-11 102109.05 36365.55 2.8
11-12 120269.17 42247.45 2.84
12-13 134033.15 47106.78 2.84

26
 3.Inventory to working capital

Chart no: 3

2.5

1.5

0.5

0
Inventory to net working capital

Inference:

The above table shows an increasing trend in the inventory to

net working capital ratio, because of the decreased in the net
working capital ratio. This ratio mentions that what extent
inventory affects the capital of the company.

27
 4. Raw material to inventory

Formula:

Raw material inventory turnover ratio = Material consumed

Average inventory

Mat consumed = raw mat + fin. goods.

Table 4

Year Material Inventory Ratio

consumed
08-09 98162 37439.44 2.62
09-10 162064.88 67748.23 2.39
10-11 243179.19 102109.05 2.38
11-12 294085.83 120269.17 2.44
12-13 356105.14 134033.15 2.65

28
 4. Raw material to inventory

2.7
2.65
2.6
2.55
2.5
2.45
2.4
2.35
2.3
2.25
2.2
Ratio

Inference:

The above table shows a increasing trend in the raw materials

inventory turnover ratio, because of the increase in the materials consumed.

29
 5. Inventory to sales

Formula:

Inventory to sales = Inventory

Sales

Table 5

Year Inventory sales Ratio

08-09 37637 144261.4 0.26
09-10 67748.23 209346.1 0.32
10-11 102109.05 299551.8 0.34
11-12 120269.17 380863.6 0.31
12-13 134033.15 468628.02 0.28

30
 5. Inventory to sales

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
Ratio

Inference;

The above table shows the decreasing trend in the ratio.

There is a sudden increase in the ratio in two years i.e. 09-10& 10-
11 due to increase in inventory. A rising inventory sales ratio
means that inventories are rising faster than sales.

31
 6.Debtors turnover ratio

Formula:

Debtors turnover ratio = total sales

Debtors

Table 6

Year Total sales Closing Debtors

debtors turnover
Ratio
08-09 143981.66 9013.56 15.973
09-10 209064.92 9205.63 22.74
10-11 299374.51 9645.31 31.05
11-12 380337.57 10622.16 35.855
12-13 467442.17 9360.76 49.936

32
 6.Debtors turnover ratio

60

50

40

30

20

10

0
Debtors turnover Ratio

Inference:

In the above table the year 12-13 shows the higher

turnover ratio. So the industry has better liquidity with debtors.

33
 7.Debtors turnover period

Formula:

Debtors turnover period = no.of.days in a year

Debtors’ turnover period

Table 7

Year No.of.days Debtors turnover

period
08-09 365 22.759
09-10 365 26.05
10-11 366 11.787
11-12 365 10.179
12-13 365 7.29

34
 7.Debtors turnover period

30

25

20

15

10

0
Debtors turnover period

Inference:

Increase in inventory turnover ratio will automatically

decrease the debtor’s turnover period. The settlement made by the
debtors is within short period which shows the strict collection
planning by the company.

35
 8. Creditors to purchase

Formula:

Creditors to purchase = creditors

Purchase

Table 8

Year creditors purchase Crs to

purchase
08-09 29323.47 5790.53 5.064
09-10 45861.85 10415.39 4.403
10-11 65765.36 18137.14 3.626
11-12 69670.65 24509.05 2.842
12-13 72217.21 28871.26 2.501

36
 8. Creditors to purchase

0
Crs to purchase

Inference:

Credit holding of the record showing the decreasing

face from the year 10-11. The decreasing fig shows the industry
credit worthiness with the vendors.

37
 9.Fixed asset turnover ratio

Formula:

Fixed asset turnover ratio = sales

Fixed asset

Table 9

Year Sales Fixed asset Fixed asset

turnover
08-09 143981.66 18068.07 7.968
09-10 209064.92 25529.65 8.189
10-11 299374.51 27246.09 10.98
11-12 380337.57 27447.85 13.856
12-13 467442.17 26263.08 17.789

38
 9.Fixed asset turnover ratio

20
18
16
14
12
10
8
6
4
2
0
Fixed asset turnover

Inference:

The above table shows the relationship of sale with

fixed asset. The increasing ratio indicates ratio that the sales
increase the asset of the company.

39
 10 Capital turnover ratio

Formula:

Capital turnover ratio = sales

Capital employed

Table 10

Year Sales Capital Capital

employed turnover ratio
08-09 143981.66 115670.56 1.243
09-10 209064.92 148997.88 1.403
10-11 299374.51 198739.58 1.506
11-12 380337.57 222255.99 1.711
12-13 467442.17 263372.78 1.755

40
 10 Capital turnover ratio

2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Capital turnover ratio

Inference:

The above table indicates the raise in capital turn over

throughout the end of each financial year. Increase in capital
turnover denotes that company is earning more through sales.

41
 Calculation of ABC Analysis of the year 2009

Componen unit % o Cumulat Unit Total cost % of Cumulati

ts total ive % price total ve%

Gold 7.5 0.53 0.53 813 6097.50 31.09 31.09

Stone 0.9 0.06 0.60 15000 13500 68.84 99.94
Silver 0.6 0.04 0.64 15 9 0.05 99.98
Copper 5 0.35 0.99 0.26 1.30 0.01 99.99
Consumabl 0.1 0.01 1.00 20 2 0.01 100.00
es
Total 14.1 1.00 19609.80 100

Assumption:

Taken 18 kt studded finished products as sample to do this

analysis.
Product weighing 10 grams.
A Category - stones
B Category – gold
C Category – silver, copper, cons.

42
 Calculation of ABC Analysis of the year 2010

Componen unit % o Cumulat Unit Total cost % of Cumulati

ts total ive % price total ve%

Gold 7.5 0.53 0.53 955 7162.50 30.64 30.64

Stone 0.9 0.06 0.60 18000 16200 69.29 99.93
Silver 0.6 0.04 0.64 20 12 0.05 99.98
Copper 5 0.35 0.99 0.47 2.35 0.01 99.99
Consumabl 0.1 0.01 1.00 30 3 0.01 100.00
es
Total 14.1 1.00 23379.85 100

Assumption:

Taken 18 kt studded finished products as sample to do this

analysis.
Product weighing 10 grams.
A Category - stones
B Category – gold
C Category – silver, copper, cons.

43
 Calculation of ABC Analysis of the year 2011

Componen unit % o Cumulat Unit Total cost % of Cumulati

ts total ive % price total ve%

Gold 7.5 0.53 0.53 1288 9660.00 34.90 34.90

Stone 0.9 0.06 0.60 20000 18000 65.03 99.92
Silver 0.6 0.04 0.64 25 15 0.05 99.98
Copper 5 0.35 0.99 0.5 2.50 0.01 99.99
Consumabl 0.1 0.01 1.00 40 4 0.01 100.00
es
Total 14.1 1.00 27681.50 100

Assumption:

Taken 18 kt studded finished products as sample to do this

analysis.
Product weighing 10 grams.
A Category - stones
B Category – gold
C Category – silver, copper, cons.

44
 Calculation of ABC Analysis of the year 2012

Componen unit % o Cumulat Unit Total cost % of Cumulati

ts total ive % price total ve%

Gold 7.5 0.53 0.53 1568 11760 37.24 37.24

Stone 0.9 0.06 0.60 22000 19800 62.70 99.93
Silver 0.6 0.04 0.64 22 13.20 0.04 99.98
Copper 5 0.35 0.99 0.52 2.60 0.01 99.99
Consumabl 0.1 0.01 1.00 50 5 0.01 100.00
es
Total 14.1 1.00 31580.80 100

Assumption:

Taken 18 kt studded finished products as sample to do this

analysis.
Product weighing 10 grams.
A Category - stones
B Category – gold
C Category – silver, copper, cons.

45
 Calculation of ABC Analysis of the year 2013

Componen unit % o Cumulat Unit Total cost % of Cumulati

ts total ive % price total ve%

Gold 7.5 0.53 0.53 1703 12772.5 36.19 31.19

Stone 0.9 0.06 0.60 25000 22500 63.74 99.93
Silver 0.6 0.04 0.64 27 16.2 0.05 99.98
Copper 5 0.35 0.99 0.54 2.7 0.01 99.99
Consumabl 0.1 0.01 1.00 60 6 0.01 100.00
es
Total 14.1 1.00 35297.4 100

Assumption:

Taken 18 kt studded finished products as sample to do this

analysis.
Product weighing 10 grams.
A Category - stones
B Category – gold
C Category – silver, copper, c

46
 Economic order quantity

Meaning:

It is not a stock level. It is a quantity when the stock

reaches the minimum level. Reorder quantity is such that when it is
added to the minimum stock. It should not excess the maximum
level.

Formula:

EOQ = √2AB
CS

Where,
A = annual consumption
B =buying cost per order
C = cost per unit
S = storage of carrying cost

Particulars 08-09 09-10 10-11 11-12 12-13

Annual 7869 10703 15681 15484 15698
consumption
Buying cost 0.066 0.079 0.070 0.075 0.0833
per order
Carrying 0.94 1.25 1.40 1.72 2.15
cost

47
 Profit & Loss A/C for the Titan industries Ltd

|Consolidated
Rs in crores
Particulars Mar-13 Mar-12 Mar-11 Mar-10 Mar-09 Mar-06
INCOME :
Sales Turnover 6,711.71 4,805.09 3,926.09 3,098.19 2,181.69 1,509.91
Excise Duty 49.97 28.70 44.34 85.55 84.50 68.19
Net Sales 6,661.74 4,776.39 3,881.75 3,012.64 2,097.19 1,441.72
Other Income 56.08 11.86 27.25 84.69 9.30 7.16
Stock Adjustments 500.28 111.66 178.67 297.89 246.22 72.58
Total Income 7,218.10 4,899.91 4,087.67 3,395.22 2,352.71 1,521.46
EXPENDITURE :
Raw Materials 5,220.76 3,499.59 2,870.39 2,389.92 1,586.68 955.33
Power & Fuel Cost 21.29 17.47 16.11 13.90 11.55 10.02
Employee Cost 390.37 272.83 231.68 185.90 154.49 108.13
Other Manufacturing Expenses 93.83 68.57 80.82 49.36 42.37 31.10

Selling and Administration 714.84 498.07 436.11 324.89 273.13 197.59

Expenses
Miscellaneous Expenses 135.51 136.60 150.90 175.38 102.82 84.07

Less: Pre-operative Expenses 0.19 0.04 0.09 0.02 0.52 0.89

Capitalised
Total Expenditure 6,576.41 4,493.09 3,785.92 3,139.33 2,170.52 1,385.35
Operating Profit 641.69 406.82 301.75 255.89 182.19 136.11
Interest 8.21 25.42 29.43 23.85 24.95 29.57
Gross Profit 633.48 381.40 272.32 232.04 157.24 106.54
Depreciation 34.48 60.08 41.76 29.73 25.59 19.66
Profit Before Tax 599.00 321.32 230.56 202.31 131.65 86.88
Tax 171.82 84.42 73.92 41.06 37.15 15.82
Fringe Benefit tax 0.00 0.00 4.21 3.71 3.24 NA
Deferred Tax -3.24 -13.42 -6.53 7.27 -2.86 -5.57
Reported Net Profit 430.42 250.32 158.96 150.27 94.12 73.62
Extraordinary Items -1.30 -2.36 -8.12 -19.54 -18.20 -21.92

48
Adjusted Net Profit 431.72 252.68 167.08 169.81 112.32 95.54
Adjst. below Net Profit 0.00 0.00 0.00 0.00 0.00 0.00

P & L Balance brought forward 272.92 211.03 218.55 130.93 77.50 29.62
Statutory Appropriations 0.00 0.00 0.00 0.00 0.00 0.00
Appropriations 270.72 188.43 166.48 62.65 40.69 25.74
P & L Balance carried down 432.62 272.92 211.03 218.55 130.93 77.50
Dividend 110.97 66.58 44.39 35.51 22.19 13.32
Preference Dividend 0.00 0.00 0.00 0.00 0.39 2.72
Equity Dividend % 250.00 150.00 100.00 80.00 50.00 30.00
Earnings Per Share-Unit Curr 92.91 53.90 34.11 32.49 20.25 16.24
Earnings Per Share(Adj)-Unit 4.65 2.70 1.71 1.62 1.01 0.81
Curr
Book Value-Unit Curr 230.99 163.19 124.18 98.26 73.76 45.55

49
 CHAPTER 4

4.1 Findings

¾ Purchasing takes place based on the credit payment.

¾ Quantity of gold to be purchased is decided by corporate

office along with the associates.

¾ Storage system is maintained by ABC analysis. The

continuous verification is done as soon as the single piece is
bought by the customers.

¾ The inventory ratio of the company has been increasing year

by year which is good for the company.

¾ The inventory ratio has been decreased down in the 10-11 but
the industry can uplift slightly in the next year i.e. 11-12.

¾ The year 12-13 shows rapid growth in inventory holding the

demand for the gold have been increased even under the high
cost.

¾ Safety is the main watch word as the inventory holds

precious jewels and stones.

50
 4.2 Suggestions

• The company has to minimize in inventory conversion

periods by strict adherence to production norms.

• The company has to pay adequate attention to production

policy & review it constantly. Because inventory not only
affected the working capital but also profitability.

• Increase the number of motivational and training

programmes.

• Maintaining a stock under higher level of safety control.

• Increasing inventory turnover.

• Keeping stock based on the requirement.

• Having an adequate inventory on hand will help them to meet

more demand made by the customer.

51
 4.3 Conclusions

• The inventory ratio of the company from the year 08-13 is

increasing because the cost goods sold is very high and
closing inventory shows low, hence it is good for the
company.

• Inventory management is one of the basic functions of every

business. An average manufacturing organizations in India
has more than 60% of its current assets invested in the
inventories.

• Therefore by following proper inventory management

principles the company can certainly reduce the costs of
inventory.

• There is a good market for these industries, as the demand for

the gold and jewels increases day by day with the customers.

• Company need to involve themselves in introducing more

marketing techniques in order to gain more customers as
advent of popular jewellery shops is increasing in Hosur.

• More and more jewellery designs are expected by customers

with more number of beneficial saving schemes.

52
 Bibliography

BOOKS

¾ I.Pandey .(2006) FINANCIAL MANAGEMENT, New

Delhi: Vikas publishing sultan chand & sons.

¾ Chandra prasannt.(2010) FINANCIAL MANAGEMENT,

New Delhi, TATA McGraw hill publishing company limited.

¾ R.K Sharma & shashi K.Gupta.(2008) MANAGEMENT

ACCOUNTING. New Delhi Kalyani publishers, sixth
edition.

WEBSITES:

www.tanishq.co.in

www.titanworld.com

www.titan.co.in

53