For The Partial Fulfillment Of Masters in Business Administration

UNDER THE GUIDENCE OF:

Mr Bahadur Bhim Kumar Singh

SUBMITTED BY:

Shilpi Kumari
Exam Roll No: 1522335018
Session: 2021-2023

Sachchidanand Sinha, College, Aurangabad

(NAAC ACCREDITED CONSTITUENT UNIT OF MAGADH UNIVERSITY)

1
 APPROVAL

This is to certify that Shilpi Kumari, student of M.B.A Semester bearing Roll no. 1522335018,

of Sachchidanand Sinha College has successfully completed the project for the partial fulfillment

of Masters in Business Administration session- 2017-2020.

She has undergone six weeks 'project on " CENTRAL COALFIELD LIMITED" RANCHI on the

topic ' A study of Inventory Management '.

 ________________________ __________________________

Coordinator (Dept. of M.B.A) Internal Supervisor (Dept. of M.B.A)

 ________________________________ External Supervisor

2
 DECLARATION

I hereby declare that the project report entitled “A STUDY OF INVENTORY MANAGEMENT
AT CENTRAL COALFIELDS LIMITED (CCL)’’ is a record of independent research work
submitted by me to Sachchidanand Sinha college, Aurangabad, for developing the real time
experience as well as award the degree of Masters in Business Administration and has been
carried out during the period of my study at SACHCHIDANAND SINHA COLLEGE,
AURANGABAD, Under the guidance of, Mr. BAHADUR BHIM KUMAR SINGH,
Department of MBA.

SHILPI KUMARI

SESSION: 2021-2023

EXAM ROLL NO: 1522335018

3
 ACKNOWLEDGEMENT

‘’Acknowledgement is an art, one can write glib stanzas without meaning a word, on the other
hand one can make a simple expression of gratitude’’

I express my sincere gratitude to my company guide Mr. Ajay Deep Wadhwa, Finance Manager
of C.C.L, Project for his able guidance, continuous support and cooperation throughout my
project, without which the present work would not have been possible.

I would like to express my special thanks gratitude to Mr ARVIND KUMAR our principal.

I express our profound thanks to Mr. BAHADUR BHIM KUMAR SINGH project guide, for
her consistent encouragement and give suggestion in completing this project, without his effort
the completion of this project would be practically impossible.

At last but not least gratitude goes to all of my friends who directly or indirectly helped me to
complete this project report.

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 PREFACE

Inventory management is an important aspect of any successful business. It is the process of

overseeing and controlling the flow of the inventory units a business uses in the production or
manufacture of goods for sale or distribution.

Inventories are usually made up of a combination of goods, raw materials and finished product,
and effective management of these items is essential to ensure optimal stock levels and to
maximize the earning potential of the company. It also allows the business to prevent any
inventory associated losses.

In this, I define clearly what I want to measure and employ adequate method for measuring it.

The study contains certain limitations because enough data was not available but all the efforts
have been made to collect the relevant information through the source available.

The company is highly dependent on external debts, which bring in inflexibility in company’s
operation. But still the company is in stronger position because the profits have increased with
sales.

5
 TABLE OF CONTENTS

S. No Particulars Page No

1. CHAPTER I

 Introduction to Central Coalfields Limited

9-10
 Structure of CIL 11
 CCL Infrastructure 12-13
 Vision, Mission & Objective of CCL 14
15
 Mining Methods
16-18
 Achievements of CCL

2. CHAPTER 2

19-20
 Working capital
21-22
 Classification of Working Capital
 Factors determining the Working Capital
23-24
requirements

3. CHAPTER 3
Research Methodology 25

4. CHAPTER 4
Working Capital Management in CCL

26-29
 Cash Management
30
 Debtors Management
31-52
 Inventory Management

5. CHAPTER 5
SWOT Analysis 53

6
 6. CHAPTER 6
54
 Findings
55
 Conclusion
56
 Suggestion 57
 Questionnaire 58
 Bibliography

OBJECTIVES OF THE STUDY

Study of the working capital management is important because unless the working capital is
managed effectively, monitored efficiently planed properly and reviewed periodically at regular
interval store move bottle necks if any the company cannot earn profits and increase its turnover.
With this primary objective of the study, the following further objectives are framed for a depth
analysis.

1. To study the working capital management of Central Coalfields Limited.

2. To study the liquidity position through various working capital related ratios.

3. To study the working capital components such as debtors management, cash management,
Inventory position.

4. To estimate the working capital requirement of Central Coalfields Limited.

SCOPE & LIMITATIONS OF THE STUDY

Scope of the Study

The scope of the study is identified after and during the study is conducted. The study of working
capital is based on tools like trend Analysis, Ratio Analysis, working capital leverage, operating

7
cycle etc. Further the study is based on last 3 years Annual Reports of CCL. And even factors like
competitor’s analysis, industry analysis were not considered while preparing this project.

Limitations of the Study

Following limitations were encountered while preparing this project:

1. Limited Data:-This project has completed with annual reports; it just constitutes one
part of data collection i.e. secondary. There were limitations for primary data collection
because of confidentiality.

2. Limited Period:-This project is based on five year annual reports. Conclusions and
recommendations are based on such limited data. The trend of last three year may or may
not reflect the real working capital position of the company. Also being a public sector sit
was difficult to get access to various data.

3. Limited Area:-Also it was difficult to collect the data regarding the competitors and
their financial information. Industry figures were also difficult to get.

INTRODUCTION OF
CENTRAL COALFIELDS LIMITED

8
 CHAPTER 1
INTRODUCTION
CENTRAL COALFIELDS LIMITED

9
C.C.L is a subsidiary company of coal India limited under ministry of coal and mines government
of India. C.C.L is one of the 8 coal production subsidiaries of coal India limited under ministry of
coal and mines. Company is governed by a board of directors consisting of 5 full time directors
and 6 part time directors. Full time directors are responsible for specific functions of operation,
project & planning, finance and personnel. India is third largest country in the production of coal.
C.C.L means Central Coalfields Limited.

HISTORICAL BACKGROUND
Coal Mining first started in India in the year 1815. The private Railway Companies started
mining activities in the year 1850. The Railway Board Nationalized the coal mining in 1925.The
Railway collieries were transferred to the Coal Board in the year 1944.

In 1774 Warren Hastings initiates commercial coal mining at Raniganj (West Bengal) in 1815-
1820 First Shaft Mine opened at Raniganj 1835 Carr, Tagore & Company takes over the Raniganj
Coal Mines 1843 Bengal Coal Company takes over Raniganj Coal Mines and others is first Joint
Stock Coal Company in India.

STRUCTURE OF CIL

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 HIGHLIGHTS OF C.C.L

Central Coalfields Limited has been on the coal map the country as a public sector on October,
1956, under different names. In the beginning it was known as National Coal Development
Corporation, then Central Division of Coalmines Authority, and finally under its present
nomenclatures at Ranchi, Jharkhand. The Central Coalfield Limited is one of the subsidiaries of
coal India Limited registered under the Company’s Act 1956 in the year 1975.

The mining and extraction of coal is entrusted to a public sector organization Coal India Limited.
The Company is divided into eight subsidiaries and Central Coalfield Limited is one of them. The
company presently known as CCL has a history of more than three decades. Pursuant to the
Industrial Policy Resolution of 1956, accompany was formed by the names of M/S Hindustan
Collieries Private Limited, on 5 September, 1956. The name was changed to the National Coal
Development Corporation.

CCL INFRASTRUCTURE

 NUMBER OF MINES–

C.C.L. currently has 63 mines of which 26 are underground and 37 are opencast mines.

 WASHERIES–

CCL have 4 Coking Coal washeries and 3 Non Coking Coal Washeries.
 Coking Coal washeries:- Kathara, Sawang, Rajrappa, Kedla
 Non Coking Coal washeries:- Piparwar, Gidi, Kargali

 WORKSHOPS-

The workshop infrastructure is in place for the Open cast Coal Mining Projects as briefed
below:-

A. Project/Unit workshop at every project for daily, periodic, scheduled maintenance

requirements, running break down maintenance and replacement of spares and sub-
assemblies.

B. 3 Regional Repair Shops at Jarangdih, Tapin North and Dakra for a group of Mines which

11
 cater for over hauling of sub-assemblies of HEMM, System repairs of equipment and other
major repairs beyond the scope of project/unit workshops.

C. A Central Workshop located at Barkakana with full infrastructural facilities to refurbish

equipment of various mines under planned capital repair, repair and maintenance of major
float assemblies like Engines, Transmissions, DC/AC Motors and Generators of Shovels
and Drills, manufacturing of shaft, bushes, gear cutting, fabrication of steel structures and
castings.

 RAILWAY SIDINGS-

28 sidings from which coal is dispatched to various customers located all over India.

 POWER SUPPLY

A. DVC is main source of power supply for CCL.

B. There is 10nos.33kv/11Kv, 6.6Kv Sub-stations in CCL (40MVA, 25MVA,

20MVA and 10 MVA capacities).

C. Total connected demand is 119MVA from DVC and CCL is also taking power from

BSEB where demand is 11MVA.

D. Rajrappa, Piparwar, N.K., Kathara, Kargali, Dhori, Hazaribaghand Kuju (through

BSEB) are getting power from DVC.

E. Average energy consumption is 575 million KWH.

F. Power cost under control through energy conservation measures (Capacitors,

Rationalization of distribution systems etc).

G. Adequate power supply availability is ensured for uninterrupted production.

 ROAD-

A. Approach Road – (Double lane road connecting highway to mine site, serving
general purpose which is of 250 kms length).

B. Heavy duty coal transport Road - (Express highway to facilitate coal dispatch to
facilitate plants, rail head and con-send. Total it’s 240 kms in length in which 140
kms is operational and 100 kms is under-construction).

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 C. Haulage Road - (Road for heavy earth moving machinery for mining purpose
carriage way width up-to 45 Meters. Total surface HAUL road is of length 100 kms
and inside mine is 225 kms in length).

 MEDICAL-

A. Two central hospitals at Ranchi and Nai Sarai equipped with all modern
facilities fortesting, diagnosis and treatment.

B. Regional Hospitals at Kargali, Dhori, Katahara, Rajhara (Daltonganj), Dakra and

Kedla.

C. Hospitals/dispensaries for immediate medical aid a teach Project (Colliery)

VISION, MISSION AND OBJECTIVES OF CCL

Vision Of CCL
To emerge as a National player in the Primary Energy Sector, Committed to provide energy
Security to the Country, by attaining environmentally and Socially Sustainable Growth, through
best practices from Mine to Market.

Mission Of CCL

The Mission of Central Coalfields Limited (CCL) is to produce and market the planned quantity
of Coal and Coal products efficiently and economically in Eco-Friendly manner, with due regard
to Safety, Conservation and Quality.

Objectives Of CCL
 To optimize generation of internal resources by improving productivity of resources, prevent
wastage and to mobilize adequate external resources to meet investment need.

 To maintain high standards of Safety and strive for an accident free mining of Coal.

 To lay emphasis on a forestation, protection of Environment and control of Pollution.

13
 To undertake detailed exploration and plan for new Projects to meet the future Coal demand.

 To modernize existing Mines.

 To Develop technical know-how and organizational capability of Coal mining as well as Coal
beneficiation and undertake, wherever necessary, applied research and development work
related to Scientific exploration for greater extraction of Coal.

 To improve the quality of life of employees and to discharge the corporate obligations to
Society at large and the community around the Coalfields in particular.

 To provide adequate number of skilled manpower to run the operations and impart technical
and managerial training for up gradation of skill.

 To improve consumer satisfaction.

 To enhance the CSR activities specifically in the field of Health, Sanitation and Drinking
Water in the Surrounding villages.

Production:-

CCL annual production is about 48 Mt. And its target is to achieve 50Mt, in the FY
2010-11. The business of CCL is to mine Coal and sell it to the customers. The mining
methods adopted for various customer of CCL are as follow:

MINING METHODS

1. Opencast: Generally opencast mine of the company employees operating method with
solve and Dumper combination for mining. In one of the mines namely Piparwar OCP,
mobile in pit crushing and conveying system with a pithead coal preparation plant has been
commissioned.
2. Underground: Underground Mines of the Company employs intermediate technology
with LHD/SDL and conventional manual method for mining.

TECHNOLOGY

A. Opencast: Shovel-Dumper combination Mobile In pit Crushing & Conveying System.

B. Underground: Intermediate technology with Load Haul Dumpers and Side Discharge
Loader.

PROJECTS:-

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The following projects have been taken up by C.C.L:
 Magadh open coal.
 Ashok expansion opencoal.
 North urimali open coal.
 Karo open coal.
 Konar open coal.
 Amarpali open coal.

SAFETY ISSUES IN C.C.L :-

Safety of the man-power of C.C.L. comes under the top priorities of management. The
work in mines of C.C.L .is carried out as per the provision laid in the coal mines
regulation 1957 under the mines act 1952 as per the permission and guidance of director
general of mines safety. C.C.L. has 3-tire system of safety committee.

ACHIEVEMENTS OF C.C.L

YEAR WORKS ACCOMPLISHED

 1815 Coal mining started in India.

 1850 Private railways coal mining started by Railway board.
 1925 First nationalization of of coal mining by railway.
 1944 Railways collieries transferred to coal board under coal commissioner.
 1956 National Coal Development Corporation Limited.
 (N.C.D.C.) formed as the first public sector coal company under central government with
11 states railways collieries and annual production of 3.11 million tones.
 1959 First coal washery at kargali setup.
 1971 Nationalization of non-coking coal mines B.C.C.L formed
 1973 Nationalization of non-coking coal mines –C.M.A.L Formed and N.C.D.C become
central division of C.M.A.L.
 1975 Coal India Limited formed as holding company for Coal. Entire Coal industry
under public sector.

Re-organized under CIL’S central Umbrella NCDC

YEAR WORKS ACCOMPLISHED

15
 2005 11 Areas, 69 mines, 07 washeries, 1 central work- shop, 5 regional workshops 3 of
which are ISO- 9001 certified, Central hospital in Gandhi Nagar is also ISO-9001
Certified.
 2006 Recorded highest profit of Rs. 1165 crores in the history of C.C.L. and for the first
time paid Rs. 291.40 crores as dividend.
 2007 Registered a profit of Rs. 1020 crores.
 2008 Registered a profit of Rs. 1035 crores.
 2009 Registered a profit of Rs. 738 crores.
 2010 Receipt by our company of a composite score of 1.47 and rating as Excellent.
 1986 Reorganization of CCL, Singrauli and Talehar area.

Administration Hierarchy of C.C.L

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MAJOR COALARIES OF C.C.L

 BARKASAYAL
 ARGADA
 NORTH KARANPUARA
 RAJHARA
 PIPARWAR
 RAJRAPA
 KUJU
 HAZARIBAG
 BOKARO & KARGALI
 DHORI
 KATHARA
.

ENVIRONMENT

Eco-friendly mining techniques concept are being followed to keep our environment safe. CCL is
adopting concurrent reclamation for projects like Piparwar, Ashoka, KDH and Parej East OCP. In
other projects de-coaled area is reclaimed through internal dumping and subsequently planted.

Plantation is also being done on external dumps. A green belt is also created around quarry, CHPs
etc. by planting rows of trees to arrest fugitive dust as well as the noise. In addition to this, regular
water spraying on haul roads by mobile water sprinklers being done to suppress air pollution. In
some of the fields fixed water sprinkles are also provided.

17
 Company is providing domestic gas to our workmen in lieu of coal to avoid air pollution. Not
only this regular monitoring of ambient air and water, quality of each mines are being carried out
to check environment.

CHAPTER II

WORKING CAPITAL

Capital required for a business can be classified under two main categories via.

1. Fixed Capital
2. Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-day
operations. Long-terms funds are required to create production facilities through purchase of fixed
assets such as plant & machinery, land, building, furniture, etc. Investments in these assets
represent that part of firm’s capital which is blocked on permanent or fixed basis and is called
fixed capital.

Funds are also needed for short-term purposes for the purchase of raw material, payment of
wages and other day–to-day expenses etc. These funds are known as working capital. In simple
words, working capital refers to that part of the firm’s capital which is required for financing
short-term or current assets such as cash, marketable securities, debtors & inventories.

Funds, thus, invested in current assets keep revolving fast and are being constantly converted into
cash and the cash flows out again in exchange for other current assets. Hence, it is also known as
revolving or circulating capital or short term capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:-

1. Gross working capital

2. Net working capital

18
The gross working capital is the capital invested in the total current asset soft he enterprises
current assets are those assets which can convert into cash within a short period normally one
accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables
3) Sundry debtors
4) Short term loans and advances.
5) Inventories of stock as:-
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6) Temporary investment of surplus funds.
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.

In a narrow sense, the term working capital refers to the net working. Net working capital is the
excess of current assets over current liability, or, say:

NET WORKING CAPITAL = NET CURRENT ASSETS – NET CURRENT LIABILITIES

Net working capital can be positive or negative. When the current assets exceeds the current
liabilities are more than the current assets. Current liabilities are those liabilities, which are
intended to be paid in the ordinary course of business within a short period of normally one
accounting year out of the current assets or the income business.

CONSTITUENTS OF CURRENT LIABILITIES

i) Accrued or outstanding expenses.

ii) Short-term loans, advances and deposits.
iii) Dividend payable.
iv) Bank overdraft.
v) Provision for taxation, if it does not amt. to app. Of profit.
vi) Bills payable.
vii) Sundry creditors.

The gross working capital concept is financial or going concern concept whereas networking
capital is an accounting concept of working capital. Both the concepts have their own merits.
The gross concept is sometimes preferred to the concept of working capital for the following
reasons:-

 It enables the enterprise to provide correct amount of working capital at correct time.

 Very management is more interested in total current assets with which it has to operate then

19
 the source from where it is made available.

 It take into consideration of the fact every increase in the funds of the enterprise would
increase its working capital.

 This concept is also useful in determining the rate of return on investments in working
capital. The net working capital concept, however, is also important for following reasons.

 It is qualitative concept, which indicates the firm’s ability to meet to its operating expenses
and short-term liabilities.

 It indicates the margin of protection available to the short-term creditors.

 It suggests the need of financing apart of working capital requirement out of the permanent
sources of funds.

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

1. On the basis of concept.
2. On the basis of time.
On the basis of concept working capital can be classified as gross working capital and net working
capital. On the basis of time, working capital may be classified as:
A. Permanent or fixed working capital.
B. Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective
utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has
to maintain a minimum level of raw material, work- in-process, finished goods and cash balance.
This minimum level of current assets is called permanent or fixed working capital as this part of
working is permanently blocked in current assets. As the business grow the requirements of
working capital also increases due to increase in current assets.
TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is required to meet
the seasonal demands and some special exigencies. Variable working capital can further be
classified as seasonal working capital and special working capital. The capital required to meet the
seasonal need of the enterprise is called seasonal working capital. Special working capital is that
part of working capital which is required to meet special exigencies such as launching of
extensive marketing for conducting research, etc.
Temporary working capital differs from permanent working capital in the sense that is required
for short periods and cannot be permanently employed gainfully in the business.

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IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL

1. SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the

solvency of the business by providing uninterrupted of production.

2. GOODWILL: Sufficient amount of working capital enables a firm to make prompt

payments and makes & maintain the goodwill.

3. EASY LOANS: Adequate working capital leads to high solvency and credit standing can
arrange loans from banks and other on easy and favorable terms.

4. CASH DISCOUNTS: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.

5. REGULAR SUPPLY OF RAW MATERIALS: Sufficient working capital ensures

regular supply of raw material and continuous production.

6. REGULAR PAYMENT OF SALARIES ,WAGES AND OTHER DAY TO DAY

COMMITMENTS: It leads to the satisfaction of the employees and raises the morale of
its employees, increases their efficiency, reduces wastage and costs and enhances
production and profits.

7. EXPLOITATION OF FAVORABLE MARKET CONDITIONS: If a firm is having

adequate working capital then it can exploit the favorable market conditions such as
purchasing its requirements in bulk when the prices are lower and holdings its inventories
for higher prices.

8. ABILITY TO FACE CRISES: A concern can face the situation during the depression.

9. QUICK AND REGULAR RETURN ON INVESTMENTS : Sufficient working capital

enables a concern to pay quick and regular of dividends to its invest or sand gains
confidence of the invest or sand can raise more funds in future.

10. HIGH MORALE: Adequate working capital brings an environment of securities,

confidence, high morale which results in overall efficiency in a business.

EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its business
operations. It should have neither redundant excess working capital nor in adequate or shortages
of working capital. Both excess as well as short working capital positions are bad for any
business. However it is the inadequate working capital which is more dangerous from the point of
view of the firm.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING

CAPITAL

21
  Excessive working capital means ideal funds which earn no profit for the firm and
business can not earn the required rate of return on its investments.
 Redundant working capital leads to unnecessary purchasing and accumulation of
inventories.
 Excessive working capital implies excessive debtors and defective credit policy which
causes higher incidence of bad debts.
 It may reduce the overall efficiency of the business.
 If a firm is having excessive working capital then the relations with banks and other
financial institution may not be maintained.
 Due to lower rate of return on investments, the values of shares may also fall.
 The redundant working capital gives rise to speculative transactions.

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital arises due to
the time gap between production and realization of cash from sales. There is an operating Cycle
involved in sales and realization of cash. There are time gaps in purchase of raw material and
production; production and sales; and realization of cash. Thus working capital is needed for
the following purposes:

 For the purpose of raw material, components and spares.

 To pay wages and salaries.
 To incur day-to-day expenses and overload costs such as office expenses.
 To meet the selling costs as packing, advertising, etc.
 To provide credit facilities to the customer.
 To maintain the inventories of the raw material, work-in-progress, stores & spares and
finished stock.
For studying the need of working capital in a business, one has to study the business under varying
circumstances such as a new concern requires a lot of funds to meet its initial requirements such as
promotion and formation etc. These expenses are called preliminary Expenses and are capitalized.
The amount needed for working capital depends upon the size of the company and ambitions of its
promoters. Greater the size of the business unit, generally larger will be the requirements of the
working capital. The requirement of the working capital goes on increasing with the growth and
expensing of the Business till it gains maturity. At maturity the amount of working capital required
is called normal working capital. There are others factors also influence the need of working
capital in a business.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: The requirements of working is very limited in public utility

undertakings such as electricity, water supply and railways because they offer cash sale
only and supply services not products ,and no funds are tied up in inventories and
receivables. On the other hand the trading and financial firms requires less investment in
fixed assets but have to invest large amount of working capital along with fixed
investments.

22
 2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of
working capital.

3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating

inventories it will require higher working capital.

4. LENGTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw material
and other supplieshavetobecarriedforalongerintheprocesswithprogressiveincrementoflabor
and service costs before the final product is obtained. So working capital is directly
proportional to the length of the manufacturing process.

5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger
working capital than in slack season.

6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one
cycle determines the requirements of working capital. Longer the cycle larger is the
requirement of working capital.

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the question

of working capital and the velocity or speed with which the sales are affected. A firm
having a high rate of stock turnover will needs lower amount of working capital as
compared to a firm having a low rate of turnover.

8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its
product services on cash requires lesser amount of working capital and vice-versa.

9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need
for larger amount of working capital due to rise in sales, rise in prices, optimistic
expansion of business, etc. On the contrary in time of depression, the business contracts,
sales decline, difficulties are faced in collection from debtor and the firm may have a large
amt. of working capital.

10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large
amount of working capital.

11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning
capacity than other due to quality of their products, monopoly conditions, etc. Such firms
may generate cash profits from operations and contribute to their working capital. The
dividend policy also affects the requirement of working capital. A firm maintaining a
steady high rate of cash dividend irrespective of its profits needs working capital than the
firm that retains larger part of its profits and does not pay so high rate of cash dividend.

12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital
requirements. Generally rise in prices leads to increase in working capital.

Working capital level changes due to following three basic reasons:-

i) Changes in level of sales or operating expenses- This include long term trend
change, cyclical change in economy and change in seasonality in sales activity.

23
 ii) Policy changes- This is initiated by management. The various policies may be
conservative policy, hedging policy and trade-off policy.

iii) Changes in technology- if a new technological development occur then it shortens the
operating cycle and hence it reduces the working capital requirement.

CHAPTER III
RESEARCH METHODOLOGY

Introduction

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a researcher in studying his problem along with the logic behind
them. It is important for research to know not only the research method but also know
methodology. ”The procedures by which researcher go about their work of describing, explaining
and predicting phenomenon are called methodology.”
Methods comprise the procedures used for generating, collecting and evaluating data. All this
means that it is necessary for the researcher to design his methodology for his problem as the same
may differ from problem to problem.
Data collection is important step in any project and success of any project will be largely depend
upon now much accurate you will be able to collect and how much time, money and effort will be
required to collect that necessary data, this is also important step. Data collection plays an
important role in research work. Without proper data available for analysis you cannot do the
research work accurately.

Types Of Data Collection

There are two types of data collection methods available.
1. Primary data collection

2. Secondary data collection

Primary Data collection Method

The primary data is that data which is collected fresh or first hand, and for first time which is
original in nature. Primary data can collect through personal interview, questionnaire etc. to
support the secondary data.

Secondary Data Collection Method

24
The secondary data are those which have already collected and stored. Secondary data easily get
those secondary data from records, journals, annual reports of the company etc. It will save the
time, money and efforts to collect the data. Secondary data also made available through trade
magazines, balance sheets, books etc.

This project is based on primary data collected through personal interview of head of account
department, head of SQC department and other concerned staff member of finance department.

CHAPTER IV
WORKING CAPITAL MANAGEMENT IN C.C.L
In CCL working capital management is done on three ingredients:

1. Cash management
2. Debtors management
3. Inventory management

CASH MANAGEMENT IN C.C.L

Efficient cash management processes are pre-requisites to execute payments, collect receivables
and manage liquidity. Managing the channels of collections, payments and accounting
information efficiently becomes imperative with growth in business transaction volumes. This
includes enabling greater connectivity to internal corporate systems, expanding the scope of cash
management services to include “full-cycle” processes (i.e., from purchase order to reconciliation)
via ecommerce, or cash management services targeted at the needs of specific customer segments.
Cash management is concerned with the managing of:-

 Cash flow – Inside the firm and Out of the firm

 Cash flow – Within the firm &
 Cash balances held by the firm at a point of time by financing deficit or investing surplus
funds.

Cash is money that is easily accessible either in the bank or in the business. Cash on hand or in the
bank is needed to pay suppliers, to pay the rent, and to meet the pay roll. Profit is the amount of
money you expect to make if all customers paid on time and if your expenses were spread out
evenly over the time period being measured. However, it is not your day-to-day reality. Cash is
what you must have to keep the doors of your business open.

Positive Cash Flow

If the cash coming into the business is more than the cash going out of the business, the company
has a positive cash flow. A positive cash flow is very good and the only concern here is managing
the excess cash prudently.

Negative Cash Flow

25
If the cash going out of the business is more than the cash coming into the business, the company
has a negative cash flow. A negative cash flow can be caused by a number of problems that result
in a shortage of cash, such as too much or obsolete inventory, or poor collections on accounts
receivable. If the company doesn't have money in the bank or can't borrow additional cash at this
point, it may be in serious trouble.

Objective
The information about the cash flows of an entity is useful in providing users of financial
statements with a basis to assess the ability of the entity to generate cash and cash equivalents, and
the needs of the entity to utilize those cash flows.

The objective of this Standard is to provide information about the historical changes in cash and
cash equivalents of an entity during the reporting period from its operating, investing and
financing activities.
The objective of this Standard is to require the provision of information about the historical
changes in cash and cash equivalents of an entity by means of a statement of cash flows which
classifies cash flows during the period from operating, investing and financing activities.

Scope
An entity shall prepare a statement of cash flows in accordance with the requirements of this
Standard and shall present it as an integral part of its financial statements for each period for
which financial statements are presented.

The users of an entity’s financial statements are interested in how the entity generates and uses its
cash and cash equivalents.

All entities need cash for essentially the same reasons however different their principal revenue
producing activities might be.

They need cash to conduct their operations, to pay their obligations and to provide return to their
investors. Accordingly, this Standard requires entities to present a statement of cash flows.

Suggestions for improvement

 CCL has not faced any kind of liquidity crunch in past five years. This indicates that CCL
maintain a sufficient cash balance. However CCL has WCDL (working capital demand
limit) with SBI along with CIL against hypothecated of current assets. If any surplus arises
in CCL then this surplus fund is deposited with varying period of maturity of fixed
deposit. Listed bank are decided by the board of directors of CCL. They decided any bank
on the basis of net worth of that bank.

 There is no bank loan in respect of CCL to fulfill their working capital need. This shows
that CCL has enough cash balance to fulfill its day-to-day requirement of cash. CCL has
taken a loan from World Bank to fulfill their fixed capital requirement.

26
 Benefits of cash flow information:-

 A statement of cash flows, when used in conjunction with the rest of the financial
statements, provides information that enables users to evaluate the changes in net assets of
an entity, its financial structure (including its liquidity and solvency) and its ability to
affect the amounts and timing of cash flows in order to adapt to changing circumstances
and opportunities.

 Cash flow information is useful in assessing the ability of the entity to generate cash and
cash equivalents and enables users to develop models to assess and compare the present
value of the future cash flows of different entities. It also enhances the comparability of
the reporting of operating performance by different entities because it eliminates the
effects of using different accounting treatments for the same transactions and events.
 Historical cash flow information is often used as an indicator of the amount, timing and
certainty of future cash flows. It is also useful in checking the accuracy of past
assessments of future cash flows and in examining the relationship between profitability
and net cash flow and the impact of changing prices.
 An entity presents cash flows from operating, investing and financing activities in a
manner which is most appropriate to its business. The classification by activity provides
information that allows users to assess the impact of those activities on the financial
position of the entity and the amount of its cash and cash equivalents.

CENTRAL COALFIELDS LIMITED, RANCHI

Monthly cash flow statement (Fund)

AMOUNT
OPERATING ACTIVITIES IN LAKHS
Opening Balance 52495.19
Realisation-Rail Sale 6773.29
Realisation-E-auction/Road Sale 2658.33
Remittance Received-From KOLKATA 14000
Remittance Received-From HQ 200
Remittance Received-From AREA 420
Sales & Wages 7182
Pension 6
Overtime Special 212
LTC/LLTC 3
Normal 192
Death case 34
LCS 5
Non claimable from LIC 3
Quarterly Bonus 1
Ex. Gratia 20
Leave Encashment 59
PRP 6
Explosive 120

27
Petrol & Diesel 152
Spares for HEMM-Area PI 2
Spares for HEMM 25
Spares for E&M 12
Consumable for HEMM 161
Other Consumables 4
Power JSEB/WBSEB 2
Other Contractors- Mining 6
Other Contractors- Civil (Resi. Bldgs) 114
Other Contractors- Civil (Wel.Bldgs) 4
Outsourcing – Contractual OBR 298
Outsourcing – Coal 14
Purchase Repair – HEMM 9
Purchase Repair - E&M 21
Transportation – Coal 392
Medical Reimbursement 26
Cost of Medicine/Surgical Equipment 2
Ex Emp Medical Benefits 1
Misc. Expenses 101
Travelling Allowance 27
Telephone/Fax/Mart 4
Salary to Pvt. Sec. Sec. Guards 228
Royalty 2825.68
Sales Tax-Jharkhand 32
Professional Tax 14
TDS-Employees 23
Service Tax 281
Clean Energy Cess 1682
Central Excise Duty 325
Refund of Sec. Dep/E.Money 28
Cheque Issued Against Cancellation 21
TOTAL OPERATING ACTIVITY 91226.49

FINANCING ACTIVITIES

Bank Loan Against FD -5450.09

TOTAL FINANCING ACTIVITIES -5450.09

INVESTING ACTIVITIES
MINES DEVELOPMENT 8
TOTAL INVESTING ACTIVITIES 8
TOTAL CASH INFLOW 85784.40

OPENING BALANCE 52495.19

TOTAL CASH INFLOW 85784.4
TOTAL CASH OUTFLOW -14687.68
CLOSING BALANCE 1,23,591.89

28
Here, C.C.L uses the direct method for preparing cash flow statement .

DEBTORS MANAGEMENT

The basic objectives of the debtor’s management are to optimize the return on investment on the
assets. Its main aim is to promote sales and profit until that point is reached where the return on
investment is further funding of debtors is less than the cost of funds raised to finance that
additional credit.

When a firm makes sale of goods and services and does not receive payment, it grants trade credit
and creates Debtors accounts, which would be collected in the future. These represent the
extension of credit on an open account by the firm to its customers, as the substantial amount is
tied up in trade debtors it needs careful analysis and proper management.

 Size of Investment in Debtors:

Investment in debtors A/c is a major part of their assets in most of business enterprises. Debtors
A/c is one of the major components of working capital. The financial executives should pay due
attention to the management of debtors, so that each rupee invested in debtors may contribute to
the net worth of the organization.

 The Basic Problem of Debtors Management:

The basic problem of debtor’s management is the balancing of profitability & liquidity. Soft credit
terms attract sales and so the longer the time a company allows to pay to its customers the greater
the sales and higher the profits.

The longer period of credit the greater the risk, the greater level of debt and greater the strain on
the liquidity of the company.

PAYMENT ACCORDING TO FUEL SUPPLY AGREEMENT

The Purchaser shall make advance payment for a month in three (3), first (1st) installment on the
first (1st) day of the month, second (2nd) installment on the eleventh (11th) day of the month and
the third (3th) installment on the twenty first (21th) day of the month. Each of these payment
installments shall cover the As Delivered Price of Coal for the Coal quantities that is one-ninth
(1/9th) of the QQ concerned. Further, each of these installments shall take into account the
weighted average of Contract Prices of Grades based on actual supplies of immediately available
previous month. However, the third (3rd) installment shall also include the adjustment amount
with regard to the actual quantity of Coal delivered and the quality of Coal analyzed vis-versa is
the advance payment made for the previous month.

29
INVENTORY MANAGEMENT

Inventory is a list for goods and materials, or those goods and materials themselves, held available
in stock by a business. It is also used for a list of the contents of a household and for a list for
testamentary purposes of the possessions of someone who has died. In accounting inventory is
considered an asset.

Inventories to small business owners is one of the more visible and tangible aspects of doing
business. Raw materials, goods in progress, finished goods all represent various forms of
inventories. Each type represents the money tied up until the inventory leaves the company as
purchased products. Likewise, the merchandise stocks in the retail outlet contribute to profit only
when their sale puts money into the cash register. In a literal sense inventory refers to the stocks
of anything necessary to do business. These stocks represent a large portion of the business
investment and must be well managed in order to maximize profit. In fact, many small businesses
cannot absorb the types of losses arising from poor inventory management. Unless inventories are
controlled they are inefficient, unreliable and costly.

So, inventories are the physical stock of items that any organization keeps in hand for the efficient
running of its activities. The meaning inventory is stock of goods. In accounting language, it may
include:

 RAW MATERIALS- They are required to carry out production activities uninterruptly.
 WORK-IN-PROGRESS- It is a stage of stocks between raw materials and finished
goods.
 CONSUMABLES- These are needed to smoothen the process of production.
 FINISHED GOODS- These are the goods which are ready for the consumers
 SPARES- They form a part of inventories.

There are three basic reasons for keeping an inventory:

 Time-The time lags present in the supply chain, from supplier to use rate very stage,
requires that you maintain certain amount of inventory to use in this "lead time".

 Uncertainty-Inventories are maintained as buffers to meet uncertainties in demand supply

and movements of goods.

 Economies of scale- Ideal condition of "one unit at a time at a place where user need sit,
when he needs it "principle tends to incur lots of costs in terms of logistics. So bulk
buying, movement and storing brings in economies of scale, thus inventory.

All these stock reasons can apply to any owner or product stage.

Buffer Stock is held in individual work stations against the possibility that the upstream work
station may be a little delayed in long set up or change-overtime. This stock is then used while
that change-over is happening. Special terms used in dealing with inventory

 Stock Keeping Unit (SKU) is a unique combination of all the components that are

30
 assembled into the purchasable item. Therefore any change in the packaging or product is
a new SKU. This level of detailed specification assists in managing inventory.

 Stock out means running out of the inventory of an SKU.

 "New old stock "(sometimes abbreviated NOS) is a term used in business refers to
merchandise being offered for sale which was manufactured long ago but that has never
been used. Such merchandise may not be produced anymore, and the new old stock may
represent the only market source of a particular item at the present time.

The accountant often discuss inventory in terms of goods for sale, organizations, manufacturers,
service providers and not for profits also have inventories (fixtures, furniture, Supplies) that they
do not intend to sell. Manufacturers, distributors, and wholesalers inventory tends to cluster in
warehouses.

Retailer inventory may exist in a warehouse or in a shop or store accessible to customers.

Inventories not intended for sale to customers or to clients may be held in any premises an
organization uses. Stock ties up cash and if uncontrolled it will be impossible to know the actual
level of stocks and therefore impossible to control them. While the reasons for holding stock are
covered earlier, most manufacturing organizations usually divide their "goods for sale" inventory
into:

 Raw materials- materials and components scheduled for use in making a product.
 Work-in-process- materials and components that have begun their transformation to
finished goods.
 Finished goods – goods ready for sale to customers.
 Goods for resale- returned goods that are salable.

PURPOSE FOR HOLDING INVENTORY

As we all know that huge fund is required to maintain a certain level of inventory, so the question
is if it is expensive to maintain inventory, why do firms hold inventories? A company should
maintain adequate stock of material for a continuous supply to the factory for an uninterrupted
production.

Sometime it is not possible for the company to procure raw material whenever it is needed. Also
there exists uncertainty in procuring raw material in time in many occasions. The procurement of
material may be delayed because of such factors as, transport, disruption, short supply, strike etc.
Therefore, the firm should maintain sufficient stock of raw materials at a given time to stream line
production.

Measurement of inventories
Inventories should be values at the lower of cost and net realizable value. The closing balances of
inventories are calculated on the basis of market value and production value.
Thus there are three general purposes for holding inventories:

1. Transaction motive
2. Precautionary motive

31
 3. Speculative motive

1. TRANSACTIONS MOTIVE: It emphasizes the need to maintain inventories to facilitate

smooth production and sales operation.

2. PRECAUTIONARY MOTIVE: It necessitates holding of inventories to guard against

the risk of unpredictable change in demand and supply forces and factors.

3. SPECULATIVE MOTIVE: It influences the decision to increase or deduce inventory

level to take advantage of price fluctuations.

OBJECTIVES OF INVENTORY MANAGEMENT

The objective of inventory management is to maintain sufficient inventory for the smooth
production and sales operations and to avoid excessive and inadequate levels of inventory.
Some other objectives are as below:

 Ensure a continuous supply of raw material to facilitate uninterrupted production.

 Maintained sufficient stock of raw material in period of short supply and anticipate price
changes.
 Maintain sufficient finished goods inventory for smooth sales operation and efficient
customer service.
 Minimize the carrying cost and time and Control investment in inventories and keep it at
an optimum level.

Accounting standard (AS)-2 (valuation of inventories)

Accounting standard-2 valuation of inventories is a measurement standard having for reaching Implication
on the financial statement. AS-2 is applicable to all enterprises, irrespective of the Size and nature of the
business.

OBJECTIVES OF AS-2
The objective of this standard is to formulate the method of computation of cost of inventories/Stock,
determine the value of closing stock/inventory at which the inventory is to be shown in balance Sheet till it
is not sold and recognized as revenue. This statement deals with the determines of Such value, including
the ascertainment of cost of inventories and any write-down there- off to net realizable value.

Definitions:
The following terms are used in this statement with the meanings specified:

 Inventories are assets

 Held for sale in the ordinary course of business,

 In the process of production for such sale or

 In the form of materials or supplies to be consumed in the production Process or in the

rendering of services.

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AS-2 in CCL:
On the comparison of AS-2 in CCL we know that the company is following the terms of AS-
2.The valuation of inventories on closing balance is calculated on the basis of market value and
production Value whichever is less.

INVENTORY MANAGEMENT IN C.C.L

Inventory is a list for goods and materials, or those goods and materials themselves,
held available in stock by a business. It is also used for a list of the contents of a
household and for a list for testamentary purposes of the possessions of someone who
has died. In accounting inventory is considered an asset. Inventory management is
primarily about specifying the size and placement of stocked goods.

Inventory management is required at different locations within a facility or within

multiple locations of a supply network to protect the regular and planned course of
production against the random disturbance of running out of materials or goods.

The scope of inventory management also concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management, inventory
forecasting, inventory valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space for inventory, quality
management, replenishment, returns and defective goods and demand forecasting.

Balancing these competing requirements leads to optimal inventory levels, which is

an on-going process as the business needs shift and react to the wider environment.

There are three basic reasons for keeping an inventory:

1. Time - The time lags present in the supply chain, from supplier to user at
every stage, requires that you maintain certain amount of inventory to use in
this "lead time".

2. Uncertainty - Inventories are maintained as buffers to meet uncertainties in

demand, supply and movements of goods.

3. Economies of scale - Ideal condition of "one unit at a time at a place where

user needs it, when he needs it" principle tends to incur lots of costs in terms of
logistics. So bulk buying, movement and storing brings in economies of scale,
thus inventory.

MATERIAL BUDGET IN C.C.L

In CCL the department follow the hierarchical system of budget planning.

33
NOTE: Material budget has to be approved by CIL. A particular purchase rule has to
be followed according to purchase policy. A so a particular material coding has to be
followed.

STOCK OF COAL

It consists of:

1. Raw coal

2. Soft coke

3. Hard coke

4. Washed coal

5. Middling/slurry

6. Magnetite

7. Coal tar and by-product Presently CCL has: Washeries, medium coking
coal washeries, 3 non coking coal washeries.

Requirements of inventory control

Inventory control requirements are as follows: —

1. Proper co-ordination of all departments involved viz., finance, purchasing,

receiving, inspection, storage, accounting and payment.

2. Determining purchase procedure to see that purchases are made, after making
suitable enquiries, at the most favourable terms to the firm.

3. Use of standard forms for placing the order, noting receipt of goods, authorizing
issue of the inventory etc.

4. Preparation of budgets concerning inventory, supplies and equipment to ensure

economy in purchasing and use of inventory.

34
 5. Operation of a system of internal check so that all transactions involving inventory,
supplies and equipment purchases are properly approved and automatically
checked.

6. Storage of all inventory and supplies in a well designated location with proper
safeguards.

7. Operation of a system of perpetual inventory together with continuous stock

checking so that it is possible to determine at any time the amount and value of
each kind of inventory in stock.

8. Operation of a system of stores control and issue so that there will be delivery of
inventory upon requisition to departments in the right amount at the time they are
needed.

9. Development of system of controlling accounts and subsidiary records which

exhibit summary and detailed inventory costs at the stage of inventory receipt and
consumption.

10. Regular reports of inventory purchased, issue from stock, inventory balances,
obsolete stock, goods returned to vendors, and spoiled or defective units.

FUNCTIONS OF INVENTORIES

There are 5 basic inventory types defined by function

 Fluctuation
 Anticipation
 Lot-size
 Transportation
 Hedge

FLUCTUATION INVENTORIES-

These are inventories carried because the quantity and timing of sales and production cannot be
predicted accurately. Orders may average 100 units per week for a given item but there will be
weeks when sales are as high as 300 or 400 units. Material may usually be received in stock 3
weeks after it was ordered from the factory but it may occasionally take 6 weeks.

These fluctuations in demand and supply may be covered by reserve stock or safety stock, the
common name for fluctuation inventories. Fluctuation inventories exist in work centres when the
flow of work through these work centres cannot be completely balanced. Fluctuation inventories,
called stabilization stocks may be provided in the production plan so that the production levels do
not have to change in order to meet the random variations in demand.

ANTICIPATION INVENTORIES-

35
These are inventories built up in advance of a peak selling season a marketing promotion program
or a plant shutdown period. Basically, anticipation inventories store worker and machine hours for
future needs and limit changes in production rate.

LOT- SIZE INVENTORIES-

It is frequently impossible or impractical to manufacture or purchase items at the same time as are
needed at that moment. The resulting inventory is the lot-size inventory. The set up time is a
major factor in determining the amount of such inventory.

TRANSPORTATION INVENTORIES-

These exist because material must be moved from one place to another. Inventory on a truck being
delivered to a warehouse may be in transit as long as 10 days. While the inventory is in transit, it
cannot serve a useful function for plants or customers- it exists solely because of transportation
time.

HEDGE (or speculative) INVENTORIES-

Companies using large quantities of basic minerals (such as coal, petroleum, silver or cement) or
commodities (such as wool, grains or animal products) that are characterized by fluctuating prices
can realize significant savings by purchasing large quantities, called hedge inventories, when
prices are low.

Also, buying extra quantities at an existing lower price will reduce material costs of items
scheduled for a price rise later. The important factors in such transactions, include price trends,
obsolescence risks and handling commodity.

ELEMENTS OF INVENTORY COSTS

 Procurement cost
 Carrying cost
 Stock-out cost

INVENTORY PROCUREMENT COST

Cost of order processing- i.e., use of stationary and services, cost of staff etc.
Cost of transmission of an order- i.e., cost of postage and follow up messages through
telephone, fax etc.
 Cost of transportation- i.e., freight, transit, insurance, protective packaging etc.
 Cost of invoice pricing- i.e., checking approval, book entries and payment procedures
 Cost of goods receiving, handling, inspecting and entry in the stock register/ computer.
 Cost of final feeding of data in logistics information system
.
INVENTORY CARRYING COST

 Space for rent for the storage of goods.

 Cost of working capital locked in the inventory.
 Cost of insurance of goods.

36
  Cost of spoilage in the quality of goods in storage, breakages in handling.
 Cost of deterioration due to passes of time and change in weather.
 Cost of obsolescence of goods or depreciation.

STOCK OUT COST

Internal shortages due to

 Lost production
 Delay in completion date

External shortages resulting in

 Back order cost

 Loss of potential sale thus loss of present profit
 Future profit cost due to loss of corporate image.

INVENTORY MANAGEMENT TECHNIQUES

There are various ways or we can say there are various techniques for the management of the
inventory system. So after the elements of the inventory management let’s have a glance over the
various techniques of the inventory management.

Main techniques in selective inventory control

1. EOQ Analysis
2. ABC Analysis
3. JIT Analysis
4. FSDN Analysis
5. HML Analysis
6. XYZ Analysis

There are two basic questions relating to inventory management.

 What should be the size of the order?
 At what level should the order be placed ?

The first question relates to the problem of ordering economic order quantity (EOQ) and is
answered with an analysis of costs of maintaining certain level of inventories. The second
question arises because of uncertainty and is a problem of determining the reorder point.
The ordering costs increase with the number of orders, thus the more frequently inventory is
acquired; the higher the firm’s ordering costs. On the other hand, if the firm maintains large
inventory laves, there will be few orders placed and ordering costs will be relatively small but the
carrying costs of inventories increases heavily. The economic size of inventory would thus depend
on trade-off between carrying costs and ordering costs.

1. EOQ MODEL

37
The basic assumptions of EOQ model are following:

• The forecast usage/demand for a given period usually one year, is known.
• The usage/demand is even throughout the period.
• Inventory orders can be replenished immediately there is no delay in placing and receiving
orders.
• There are only two distinguishable costs associated with inventory costs, ordering costs
and carrying costs.
• The cost per order is constant regardless of the size of the order placed.
• The cost of carrying inventory is fixed percentage of the average value of inventory.

Given these assumptions, EOQ model ignores purchasing costs and stock out costs.

For determining the EOQ formula we shall use the following symbols:

A = annual demand/usage,
Q = quantity ordered,
O = cost per order,
C = carrying costs per unit.

Given the above assumptions and symbols, the total costs of ordering and
carrying inventories are equal to

TC = (QC/2) + (AO/Q)

In the equation, the first term on the right hand side is the carrying cost, obtained as
the product of average value of inventory holding and the carrying cost per unit. The
second term on the right hand side is the ordering costs, obtained as the product of
the number of orders and the cost per order. The total cost of ordering and carrying is
minimized when

Q= 2AO
C

GRAPHICAL APPROACH OF EOQ MODEL

The economic order quantity can also be found graphically. Figure illustrates the EOQ function.
In figure costs –carrying costs and ordering costs and total costs – are plotted on vertical axis and
horizontal axis is used to represent the order size. We note that total carrying cost increases as the
order size increases, because on an average a larger inventory level will be maintained and
ordering costs decline with increase in order size because larger order size means a less number of
orders.

38
 The behaviour of total costs line is noticeable since it is a sum of the two types of costs, which
behave differently with order size. The total costs decline in first instance, but they start rising
when the decrease in average ordering cost is more than offset by the increase in carrying costs.
The EOQ occurs at the point QOPT where the total cost is Minimum.

Thus the firm’s operating profit is maximized at point QOPT. It should be noted that the total
costs of inventory are fairly intensive to moderate changes in order size. It may be appropriate to
say, therefore, that there is an economic order range, not a point. To determine this range, the
order size may be changed by some percentage and the impact on total costs may be studied.
If the total costs do not change very significantly, the firm can change EOQ within
the range without any loss.

RE-ORDER POINT:
Yet the answer should be sought to the second question, when to order? This is a problem of
determining the reorder point. The reorder point is that inventory level at which an order should
be placed to replenish the inventory. To determine the reorder point under certainty, we should
know:

a. Lead time
b. Average usage and
c. EOQ

Lead time is the time normally taken in replenishing inventory after the order has been placed. By
certainty, we mean that usage and lead time do not fluctuate. Under such a situation, reorder point
is simply that inventory level which will be maintained for consumption during the lead time.
That is Re-order point= Lead time X Average usage.

ABC ANALYSIS:

39
 A. significant few items few in number contributing high proportion of value of inventories

B. Not few, not too many neither very cheap nor very costly

C. Insignificant many relatively large no. of items normally inexpensive

‘A’ category of items can be controlled effectively by using a regular system which ensures
neither over-stocking nor shortage of materials for production. Such a system plans its total
material requirements by making budgets. The stocks of materials are controlled by fixing certain
levels like maximum level, minimum level and re-order level. A reduction in inventory
management costs is achieved by determining economic order quantities after taking into account
ordering cost and carrying cost. To avoid shortage and to minimize heavy investment in
inventories, the techniques of value analysis, variety reduction, standardization etc., may be used.
In the case of ‘B’ category of items, as the sum involved is moderate, the same degree of control
as applied in ‘A’ category of items is not warranted. The orders for the items, belonging to this
category may be placed after reviewing their situation periodically. For ‘C’ category of items,
there is no need of exercising constant control. Orders for items in this group may be placed either
after six months or once in a year, after ascertaining consumption requirements. In this case the
objective is to economize on ordering and handling costs.

This analysis can more be explained through some examples. Through seeing some of the
mechanism of the ABC analysis the inventory management system can be more appropriately be
understandable.
Mechanism of ABC
E.g.:
Group % of items (number) % of costs
A 8 %( 160) 75 %( 7, 50,000)
B 25 %( 500) 20 %( 2, 00,000)
C 67 %( 1340) 5 %( 50,000)
TOTAL 2,000 items Rs. 10, 00,000

Control mechanism of ABC

A B C
ITEM

Safety stock No or very low Low High

Follow up Maximum Periodic Expediting
exceptionally
Value analysis Rigorous Moderate Minimum

Handled by Senior officials Middle level Fully delegated

managers

Advantages of ABC Analysis

40
 1. Strict control is exercised
2. Investment in inventory is reduced
3. Storage cost is reduced
4. Management time is saved

Just in time inventory:

• Because of larger carrying cost of inventory in the Stores & Godowns, manufacturers now
interested in just in time purchasing.

• JIT purchasing is the purchase of material or goods in such a way that delivery of
purchased items is assured before their use or demand.

Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product
should be manufactured. Demand-pull enables a firm to produce only what is required, in the
correct quantity and at the correct time.

This means that stock levels of raw materials, components, work in progress and finished goods
can be kept to a minimum. This requires a carefully planned scheduling and flow of resources
through the production process. Modern manufacturing firms use sophisticated production
scheduling software to plan production for each period of time, which includes ordering the
correct stock. Information is exchanged with suppliers and customers through EDI (Electronic
Data Interchange) to help ensure that every detail is correct. Supplies are delivered right to the
production line only when they are needed.

For example, a car manufacturing plant might receive exactly the right number and type of tyres
for one day’s production, and the supplier would be expected to deliver them to the correct
loading bay on the production line within a very narrow time slot.

Advantages of JIT

1. Investment in inventory is reduced.

2. Carrying cost is reduced.

3. A reduction in number of suppliers to deal with is possible.

4. Minimum possible wastage

Disadvantages of JIT

1. There is little room for mistakes as minimal stock is kept for re-working faulty product.

2. Production is very reliant on suppliers and if stock is not delivered on time, the whole
production schedule can be delayed.

3. There is no spare finished product available to meet unexpected orders, because all
Products are made to meet actual orders. However, JIT is a very responsive method of
production.

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FNSD Analysis:
FNSD analysis divides the items of stores into 4 categories in the descending order of importance
of their usage rate.

'F' stands for fast moving items and stocks of such items are consumed in a short span of time.
Stocks of fast moving items must be observed constantly and replenishment orders be placed in
time to avoid stock-out situations.

'N' means normal moving items and such items are exhausted over a period of a war or so. The
order levels and quantities for such items should be on the basis of a new estimate of future
demand to minimize the risks of a surplus stock.

'S' indicates slow moving items, existing stock of which would last for two years or more at the
current rate of usage but it is still expected to be used up. Slow moving stock must be reviewed
very carefully before any replenishment orders are placed.

'D' stands for dead stock and for its existing stock no further demand can be foreseen. Dead stock
figures in the inventory represents money spent that cannot be realized but it occupies useful
space. Hence, once such items are identified, efforts must be made to find all alternative uses for
it. Otherwise, it must be disposed off.

Age of inventory indicates duration of inventory in organization. It shows moving position of

inventory during the year. If age of inventory is minimum it means, the turnover position of that
particular item of inventory is satisfactory. If the age of any particular item of inventory, it
indicates the slow moving of stock which may be due to lower demand for the product,
inefficiency in shocking policy, excessive stocking etc. The excessive investment in stocks means,
high investment is locked-up in inventory leads to lower profitability of the firm due to excess
carrying costs.

HML ANALYSIS:
The HML analysis is similar to the ABC analysis, except for the fact that instead of consumption
value of items their unit’s values are considered. Items are classified on the basis of their unit
value into:

H= High value items

M= Medium value items
L= Low value items

The items under this analysis are classified into three groups that are called “high”, “medium” and
“low”. To classify, the items are listed in the descending order of their unit price. The
management for deciding three categories then fixes the cut-off-lines. For example, the
management may decide that all items of unit price above Rs. 1000/-will of ‘H’ category, those

42
with unit price between Rs. 100/- to Rs.1000/- will be of ‘M’ category and those having unit price
below Rs. 100/- will be of ‘L’ category.

HML analysis helps to

 Assess storage and security requirements

 To keep control over consumption at the departmental head level
 Determine the frequency of stock verification
 To evolve buying policies to control purchase
 To delegate authorities to different buyers to make petty cash purchase.

XYZ Classification:

XYZ analysis is one of the basic supply chain techniques, often used to determine the inventory
valuation inside the stores. It's also strategic as it intends to enable the Inventory manager in
exercising maximum control over the highest stocked item, in terms of stock value.

A system of categorization, with similarities to Pareto analysis, the method usually categorizes
inventory into three bands with each band having a different management control associated.
Although different criteria may be applied to each category the typical method of “scoring” an
inventory item is that of annual stock value of said item (qty in stock X cost of item) with the
result then ranked and then scored (X, Y or Z).

Bandings may be specific to the industry but typically follow a 70%, 90%, 100% banding in that
X class items represent 70% of the stock value (although they may account for 20% number
wise), Y class items fall between 70% and 90% of the annual stock value with C class the
remaining. In practical terms the complex high cost materials typically fall into the X class items,
with the consumable based on the closing inventory value of different items. Such classification is
done every year at the time of annual stock taking. Items having highest inventory valuation are
classified as X, while with low investment are termed as Z. Other items are the y items whose
inventory value is neither too high not too low.

X class items which are critically important and require close monitoring and tight control – while
this may account for large value these will typically comprise a small percentage of the overall
inventory count.

Y classes are of lower criticality requiring standard controls and periodic reviews of usage.

Z class require the least controls, are sometimes issues as “free stock” or forward holding.

SIC LEDGER:

As stated earlier, ABC Analysis uses the usable value of the items for classification. In UMIL,
these items are categorized as under:

Category A – Closely monitored statistical inventory control (SIC) items.

Annual consumption value of Rs.1.5 lakhs and above

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Category B – General or moderately monitored item.

Annual consumption value between Rs.25, 000-1,50,000

Category C –Very loosely monitored.

Annual consumption value less than Rs. 25,000

As per the procurement policy (minimum order quantity) for the above mentioned items it can
be summarized as follows:

A= one-month average inventory.

B= four -months average inventory.
C= twelve-month average inventory.

INVENTORY TURNOVER RATIO

Financial inventory has these two basic formulas which relate to the accounting period:

 Cost of Beginning Inventory at the start of the period + inventory Purchases within
the period + cost of Production within the period = Cost of Goods

 Cost of goods − cost of ending inventory at the end of the period = Cost of Goods
Sold

The benefit of these formulae is that the first absorbs all overheads of production and
raw material costs in to a value of inventory for reporting. The second formula then
creates the new start point for the next period and gives a figure to be subtracted from
sales price to determine some form of sales margin figure.

Manufacturing management is more interested in inventory turnover ratio or average

days to sell inventory since it tells them something about relative inventory levels.

 Inventory turnover ratio (also known as inventory turns) = cost of goods

sold / Average Inventory= Cost of Goods Sold / ((Beginning Inventory +
Ending Inventory) / 2)

INVERSELY,
 Average Days to Sell Inventory = Number of Days a Year / Inventory
Turn Over Ratio= 365 days a year / Inventory Turn Over Ratio

This ratio estimates how many times the inventory turns over a year.

44
This number tells us how much cash/goods are tied up waiting for the process and is
a critical measure of process reliability and effectiveness.

So a factory with two inventory turns has six months’ stock on hand which generally
not a good figure (depending upon industry) whereas a factory that moves from six
turns to twelve turns has probably improved effectiveness by 100%. This
improvement will have some negative results in the financial reporting since the
'value' now stored in the factory as inventory is reduced.

INVENTORY TURNOVER 2004-05

2005-06
Axis Title

2006-07
2007-08
2008-09

The above graph indicates the Inventory Turnover Ratio of SWASTIK FRUITS during the years
2004-09. In this graph we can see that the Inventory Turnover Ratio during the year 2006-07 rose
from 8.46 to 10.04, but then it was followed by steep decline to 5.3 in the year 2007-08. The
adverse trend of the Inventory .Turnover Ratio may be attributed to the accumulation of inventory
and slow sale of products due to global recessionary movement. The company very soon came out
of the situation and with its efficient inventory management system increased its turnover from
5.3 to 13.97.

VALUATION METHOD USED IN CCL

Earlier FIFO (first in first out) method was used in valuation but now Weighted Average Method
is used in CCL.

In CCL the difference between book stock and measured stock should not more than 5 i.e. Book
Stock- Measured Stock = ±5

The inventory management followed in CCL follows ABC analysis method

ABC analysis is based on Pareto Analysis, also known as the "80/20" rule. The 80/20 comes from
Pareto's finding that 20 percent of the populace possessed 80 percent of the wealth. From an
inventory perspective it can restated thusly: approximately 20 percent of all inventory items
represent 80 percent of inventory costs. Therefore, a firm can control 80 percent of its inventory
costs by monitoring and controlling 20 percent of its inventory. But, it has to be the correct 20
percent.

The top 20 percent of the firm's most costly items are termed "A" items (this should
approximately represent 80 percent of total inventory costs). Items that are extremely inexpensive
or have low demand are termed "C" items, with "B" items falling in between A and C items. The
percentages may vary with each firm, but B items usually represent about 30 percent of the total
inventory items and 15 percent of the costs.

45
C items generally constitute 50 percent of all inventory items but only around 5 percent of the
costs.

By classifying each inventory item as an A, B or C the firm can determine the resources (time,
effort and money) to dedicate to each item. Usually this means that the firm monitors A items
very closely but can check on B and C items on a periodic basis (for example, monthly for B
items and quarterly for C items).

PURCHASING
Centralized purchase: centralized purchase is done through Headquarter. Decentralized purchase:
Decentralized purchase is done through Area.

A. CENTRALISED

PROCESS OF ORDER:

1. Requirement: First there is a requirement and then the mgr prepare a budget

2. Budgeting: After preparing the budget it is forwarded to the CIL Headquarter

3. Headquarter: After the budget, it is analyzed by the management

4. Analysis: After the analysis the budget is accepted by the management Approval by CIL

Approval budget funds are then sent to different area for distribution.

5. Distribution: This is a process of procuring fund the CIL Head Office for the heavy
machines and spares and large.

6. Amount of fund required: This is not applied for minor inventory such as e.g. nut &bolt,
brushed, oil and lubricants.

B. DECENTERALIZED

PROCESS OF INVENTORY:

1. Area manager
Area manager is allotted with some amount of funds

2. Allotted quota
The allotted quota for pretty purchase in daily requirement

3. Small committee
A committee is formed to look after such petty expenses Local purchases

46
Benefits of decentralized process:
1) Short process
2) Allotted process
3) No need of budget (time saving)
4) Easy availability

Points should be considered on purchases of inventory

 Right Quality
 Right Quantity
 Right Price
 Right Time
 Right Source

Mainly the purchase is done through Tender

 Advertisement Tender (over 10 lakhs)

 National Tender
 Global Tender
 Limited Tender (less than 10 lakhs)
 Single Tender (specific brand)
 Rate contract
 Committee purchase

Purchasing can be done at centralized level or area wise or local purchases.

Local purchases are financed by project officers. All items are divided into centralized and
decentralized items; centralized items can’t be purchased at local or area level. For HEMM
(Heavy Earth Moving Machine) a separate budget is made and for the rest of items a different
budget is made. Indents are sending from every region regarding materials required to purchase
to the Ranchi head office and on the base of which purchase order is made. CCL also issues
tenders to invite application from different suppliers. Most of the purchasing is done on credit
while local purchasing is done on cash basis.

PURCHASE PROCEDURE

1. Material requisite document have to be prepared.

2. Source of materials has to be identified.

3. Various types of tenders have to be processed which are as follow

a. Global tenders- these are filled for the materials which are available from various sources
at national or international level. The material requirement is advertised and then the
tenders quoting the best option is selected.

b. Local tenders- these are advertised for materials and equipment which are provided by
various vendors but at local or regional level.

47
 A. Limited tenders- these are prepared for machines and equipments which charges less
than 10 lakhs.

B. Single tenders- it is prepared for the equipments which require special sanction.

Other types of contracts involved in purchase are as follow:-

1. RATE CONTRACT- In this contract is agreed upon for equipments and materials at
fixed rate for a fixed period of time mainly for 1 or 2 year. In CCL the fixed duration is
mainly for 6 months. This contract prepared with the help of tenders.

2. DEPO AGREEMENT- It is also a type of rate contract but in this the original
manufacturer of equipment is contacted and informed to be ready with particular rate of
particular component at particular. This agreement has to be agreed upon by board of
directors.

WASTE/UNSUSED MATERIALS

CCL use to send notice to all subsidiary companies of CIL about the unused material so that who
so ever require the material can take it from CCL.

ASSETS VERIFICATION

Verification is done by Audit Process i.e. Physical verification method is used in CCL. In CCL the
difference between book stock and measured stock should not more than 5 i.e. Book Stock-
Measured Stock = ±5.

PROCESS OF TENDER:
There are basically two sides of every tender at C.C.L:-

Technical Bid: technical bid includes all the technical aspect of purchase, e.g. size, shape, quality,
quantity etc.

Financial Bid: financial bid includes the cost of purchase.

Purchasing can be done at centralized level or areas wise or local purchases.

48
 INVENTORY OF CCL LAST (5) YEAR

AS AT 31- AS AT AS AT AS AT AS AT
03-19 31-03-18 31-03-17 31-03-16 31-03-15

STOCK OF COAL 1,229.85 1,206.37 1,925.17 1,314.27 1,178.54

COAL UNDER _ _ _ _ _
DEVELOPMENT
1,229.85 1,206.37 1,314.27 1,178.54
LESS: PROVISION _ _ 0.65 _
STOCK OF COAL (NET) 1,206.37 1,313.62 1,178.54
STOCK OF STORES & 110.39 133.5 208.04 210.68 206.66
SPARES (AT COST)
STORES IN TRANSIT 8.76 4.42 1.53 3.16 1.25
119.15 137.92 209.57 213.84 207.91
LESS:PROVISION 44.79 41.30 41.04
164.78
NET STOCKS OF STORES 172.52 166.87
& SPARE(AT COST)
WORKSHOP JOBS:
WORK IN PROGRESS & 3.59 2.7
FINISHED GOODS
LESS:PROVISION _ _

NET STOCK OF 3.59 2.7

WORKSHOP JOBS

WORK IN PROGRESS & 4.08 4.12 0.67 0.99 0.97

FINISHED GOODS

STOCK OF MEDICINE OF 0.58 0.82 0.58 0.52 0.35

CENTRAL HOSPITAL
PROSPECTING & 1.71 1.71
DEVELOPMENT
TOTAL 1,353.66 1,349.23 2,090.62 1,493.60 1,351.14

Conclusion:-

After analyzing the chart we find that compared to 2015-16 there has been an increase of 11.46%
in net stock of coal.

In 2016-17 there is a decrease of -8.16% in the net stock of coal.

In 2016-17, there is an increase of 3.40% in the net stock of stores and spares.

49
In 2016-17, there is an increase of 32.97% in the net stock of workshop jobs.

In 2015-16, there is an increase of 2.06% in work in progress and finished goods.

In 2016-17, there is a decrease of -32.32% in work in progress & finished goods.

In 2018-19, there is a decrease of -0.97% in work in progress & finished goods.

In 2015-16, there is an increase of 48.58% in the stock of medicine of central hospital.

In 2016-17, there is an increase of 11.53% in the stock of medicine of central hospital.

In 2017-18, there is an increase of 41.37% in the stock of medicine of central hospital.

In 2018-19, there is a decrease of -29.26% in the stock of medicine of central hospital.

At last after analyzing the data, we can see that there is an increase in inventories in 2018-19 by
0.33% and also there is an increase of the production in 2018-19 by 1.40%. This shows that there
was an increase in demand in the year 2018-19 which resulted in increase in production and hence
the increase in inventories shows a positive effect for CCL.

So we conclude that CCL has a proper and efficient management of its inventories and avoids the
wastages of raw materials & also it keeps check on the purchase of raw materials so that excess
raw materials are not purchased and left idle.

50
 CHAPTER V

SWOT ANALYSIS

STRENGTHS

1. Monopoly in market regarding its product i.e. coal which is a requirement of many
industries.
2. Good customer relation with minimum effort requirement.
3. No advertisement required.
4. Self financing of working capital
5. Profit since last five years
6. Efficient management of working capital
7. Application of advanced techniques of mining.
8. New methods to settle disputes.

WEAKNESSES

1. Malpractices followed by officials appointed for quality verification in disputes settlement

.
2. Have to supply products to customers like JSEB in spite of their large dues as they have to
operate in that state.
3. Being a central government owned company have to follow rules set up by government as
in case of use of surplus funds that it has to deposit in selected banks
4. A long procedure have to be followed for any change to be brought in company
5. Failure to restrict disputed debts regarding quality and quantity due to theft during
transportation and stowing problem as discussed in report
6. Improper utilization of surplus cash for profit of firm
7. Short term relation with vendors which is less profitable for firm

OPPORTUNITIES

1. New ways of profitable disposal of surplus funds as per guidelines discussed in 197
meeting of CIL Range of new customers
2. It is a subsidiary of largest coal producing company in world so has to face negligible
competition
3. Being a government owned company it enjoys various subsidies and other helps.
4. Issue of 10% share as IPO brought a public owned company characteristic to this company
which will be profitable for both public and Company.
5. Disputed debts settlement by new securitization scheme.

THREATS

1. Theft problem during transportation

2. Disputed dues
3. Less developed methods of coal mining and quality inspection method than other countries
4. Lack of advanced methods of inventory Management.

CHAPTER VI

51
 FINDINGS

 CCL supplies coal to different parties with the help of standing linkage committee which
has its head office in Kolkata. The job of SLC is to decide which colliery would supply
coal to which party, on which date & by how much quantity. Thus, with the help of this
system mines supply coal to different parties.

 It parties do not clear their disputes, then CCL black list those parties for certain period.

 A black listed company cannot supply good to any subsidiary company of coal India
limited (CIL).

 CCL used to supply coal to BSEB (Bihar State Electricity Board) but supply of coal has
been stopped for last few years due to delay in payments by BSEB.

 If goods are damaged during the guarantee period, then CCL is not responsible for the
payment to the supplier because that party would no longer considered as a creditors.

 If any equipment or machinery fails to meet the quality standard then CCL rejects the
goods & does not make payment. If the supplier does not take away their goods from CCL
compound within one month then CCL charges ground rent charge at a certain rate which
is a source of miscellaneous income for CCL.

 Any delay in the delivery of goods by the supplier results in reduction in payment amount
which is 5% per week. The reduction is limited to 10% but in worst cases it may reach up
to 15%.

 CCL mainly follow cash flow projection and budget for cash planning & control. Cash
flow projection is also used to determine the optimum cash balance of CCL.

 CCL has not faced any kind of liquidity crunch in last 5 years. This indicates that CCL
maintains a sufficient cash balance.

 There is no bank loan in respect of CCL to fulfill its working capital needs this shows that
CCL has enough cash balance to fulfill its day to day requirements of cash.

 CCL had taken a loan from the World Bank to fulfill its fixed capital requirements.

 Being a PSU the customer of CCL are decided beforehand and therefore any competition
among customer regarding better price is avoided which reduces the margin of profit for
CCL.

CONCLUSION

Central Coalfields Limited, one of the subsidiaries of coal India limited is a Mini Ratna
organizations of coal India limited.

52
During the tenure of my project regarding the subject matter at C.C.L I have come to appreciate
the fact that it is a well-managed organization in term of working capital management for the field
of coal mining. The organization has great potential to run the coal mines in an effective manner.
All the employees of the organization are very supportive and the organization has high level of
financial skills to meet the interest of its creditors and employees.

But they need do some amendments in term of its depository policy, since they deposit the access
amount or they make their investments, mainly in form of Fixed Deposit into the banks, so the
return on their investments is comparatively less than other companies.

Finally I conclude that being a government organization CCL’s performance has been pretty
satisfactory and within no time it will achieve great heights.

SUGGESTIONS

For Cash Management

 The firm must always maintain a certain balance for the purpose of safety. Sometime very

53
 heavy demands may suddenly be placed on the firm and unless the firm is able to meet
those demands quickly.

 Each month there must be a regular and full bank reconciliation statement explaining
exactly why the balances as per cash book and the bank differ.

 Firm should try to prepare the invoice documents immediately after the dispatch of goods
and should mail them to the clients at the earliest.

 Collection can be accelerated by reducing the lag between the time a customer pays the
bill and the cheque is collected and the funds made available or the firm use.

 The firm should ensure that there is proper demarcation between the duties of the
individuals who receive cash and those who record the receipt of cash so that mis-
appropriation of cash is prevented.

For Inventory Management

 Better coordination among various department namely purchase, marketing and finance
will help in achieving greater efficiency in inventory management.

 Procedures for disposing obsolete and surplus inventories must be simplified.

 CCL should set benchmark with global competitors and use ideas like JIT to improve
inventory management.

 It should develop long term relationship with vendors. This would help in improving
quality & quantity of inventory.

 The firm should try to strike a trade-off between the ordering and carrying cost of
inventories so that the minimized and the profitability is maximized.

For Debtors Management

 There must be proper mutual understanding between the supplier (CCL) and its customer
regarding credit period & timely payment.

 The purchase department fails to procure the material on time therefore the lead time
needs to be reviewed once again.

 Keep Vendors Happy, Keep Inventory Low.

QUESTIONNAIRE

1. What is CCL?
2. What are the vision, mission and objectives of CCL?
3. What is working capital?
4. How many types of working capital?
5. Describe working capital in CCL.

54
 6. What is inventory management?
7. What are the types of inventory management?
8. Describe inventory management technique.
9. Is inventory management important for CCL? If “yes” then give some point.
10. Give some conclusions about CCL.

Bibliography

Websites:
www.centralcoalfields.in
www.wikipedia.com
WWW.CCL.GOV.IN

55
WWW.Workingcapital.com

Reference:

I. I.M. Pandey - Financial Management Vikas Publishing House Pvt. Ltd. - Ninth
Edition 2006
II. M.Y. Khan and P.K. Jain, Financial management – Vikas Publishing house ltd.,
New Delhi.
III. K.V. Smith- management of Working Capital- Mc-Grow-Hill New York
IV. SatishInamdar- Principles of Financial Management-Everest Publishing House

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