FINAL YEAR PROJECT 2022

A PROJECT REPORT
ON
“Inventory management
Of
SFP Sons Pvt. Ltd”
Submitted
To
Panchayat Degree College, Bargarh

Submitted by: Guided by:-

Santosh Kumar Muduli Bhanu Prakash das,
University Roll No. - S04519COM035. HOD of commerce
College Roll No. – BC-19-032
 ACKNOWLEDGEMENT

Primarily I would thank GOD for being able to complete this project with
success. Then I would like to thank my Prof. Bhanu Prakash Das, whose valuable
guidance has been the ones that helped me patch this project and make it full proof
success, his suggestions and his instructions has served as the major contributor
towards the completion of the project.

Santosh Kumar Muduli

Roll No. S04519COM035
Place: BARGARH
 DECLARATION

This is to certify that the Dissertation titled “INVENTORY MANAGEMENT

OF SFP SONS PVT. LTD” submitted for the award of the Bachelor degree of
Commerce to the Sambalpur University, Jyoti Vihar, Burla, Sambalpur embodies the
result of the Bonafide research carried out by Santosh Kumar Muduli under my
guidance and supervision. No part of the report has been submitted for any other
degree or diploma.

Date: 07-05-2022. Signature

Place: Bargarh. Bhanu Prakash Das
 CONTENTS

Serial No. Title Of The Chapter Page No.

1 Introduction 1-1

2 Literature Review 2-2

3 Company Profile 3-5

4 Research Methodology 6-7

5 Data Analysis & 8-10

Interpretation

6 Comparative Statement 11-13

Analysis

7 Ratio Analysis 14-23

8 Findings 24

9 Suggestions 25

10 Conclusion 26

11 References 27
 Introduction To Inventory Management :-

Inventory management simply means the methods you use to organize, store and replace
inventory, to keep an adequate supply of goods while minimizing costs. Each location where Goods
are kept will require different methods of inventory management. Keeping an inventory,or stock of
goods, is a necessity in retail. Customers often prefer to physically touch what they are considering
purchasing, so you must have items on hand. In addition, most customers prefer to have it now,
rather than wait for something to be ordered from a distributor. Every minute that is spent down
because the supply of raw materials was interrupted costs the company unplanned Expenses.

Inventory is the physical stoke of goods maintained in an organization for its smooth sunning.
In accounting language it may mean stock of finished goods only. In a manufacturing concern, it
may includes raw materials, work-in-progress and stores etc. In the form of materials or supplies to
be consumed in the production process or in the rendering of services.

Defination of inventory management :-

Inventory management may be define as ,It is an approach for keeping track of the flow of
inventory. It starts right from the procurement of goods and its warehousing and continues to the
outflow of the raw material or stock to reach the manufacturing units or to the market, respectively.The
process can be carried out manually or by using an automated system.

Inventory management is an approach for keeping track of the flow of inventory. It starts right from the
procurement of goods and its warehousing and continues to the outflow of the raw material or stock to
reach the manufacturing units or to the market, respectively. The process can be carried out manually or
by using an automated system.

Techniques of Inventory Management:-

Managing inventory can be a daunting task, and if it isn’t done properly it could cost
company thausands of dolars. Inventory management grows more and more complicated with increase
in sales volume and diversification of product assortment.

1) STOCK REVIEW :

2) ABS ANALYSIS :

3) VED ANALYSIS :

4) JUST IN TIME :

5) VENDORS MANAGED INVENTORY :

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LITERATURE REVIEW :-

Bern at de William year (2008):-This study tells that the main focus of the inventory
management is on the transportation and warehousing.The decision taken by management depends on
the treditional method of Inventory control madels.The traditional method of Inventory Management is
how much use full in these days the author tell about it. He is also saying that ghe treditional method is
not a cast reducing ,it is so much expensive.But the managing the inventory is most important work for
any manufacturing unit.

Jon Schreibfeder (1992):-He said that it is easy to turn cash into inventory, the challenge
is to Turn inventory back into cash. In early 1990’s many distributor recognize that they needed help
controlling and managing their largest asset inventory. In response to this need several companies
developed comprehensive inventory management modules and systems. These new package include
many new features designed to help distributors Effectively managed warehouse stock. But after
implementing this many distributors do Not feel that they have gained control of their inventory.

Asfaque Ahmed (October 12, 2004):-He said that most of the manufacturing company
vendors have planning And scheduling product which assume either infinite production capacity for
calculating Quantities of row material and work in progress (WIP) requirements or infinite Quantities
of raw material and WIP materials for calculating production capacity. There Are many problems with
this approach and how to avoid these by making sure that the Product you are buying indeed takes into
account finite quantities of required materials as Well as finite capacities of work centers in your
manufacturing facilities.

D.Hoopman (April 7, 2003):-In this article he said that inventory optimization recognize
that different industry have different inventory profiles and requirements. Research has indicated that
solutions are priced in a large range from tens of thousands of dollars to millions of dollars. In this
niche market sector price is definitely not an indicator of the quality of solution, ROI and usability are
paramount.

Silver, Edward A (Dec22 2002):-This article considers the context of a population of

items for which the assumption underlying the EOQ derivation holds reasonably well. however as is
frequently the cash in practices there is an aggregate constraint that applies to the population as a
whole. Two common forms of constraints are:
1) The existence of budget to be allocated among the stocks of the items and
2) A purchasing production facility having the capability to process at most a certain number of
replenishment per year. Because of the constraint the individual

Replenishment quantities cannot be selected independently.

Delaunay C , Sahin E (2007):-A lots of work has been done but now if we want to go
ahead we must have good visibility upon this field of research. That is why we are focused on frame
work for an exhaustive review on the problem of supply chain management with inventory
inaccuracies. The author said that their aim in this work is also to present the most important criterion
that allow a distinction between the different type of managing the inventory

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 COMPANY PROFILE

SFP SON’S (INDIA) PVT LTD :

SOMABHAI FULABHAI PATEL (INDIA) PVT LTD

Type – Private

Status – Active

Product – Cosmetics, Beauty Supply & Personal Care Products, Manufacturing

Founded – 1992

Headquarters – Headquarters are in A-24, MEPZ-Special Economic Zone, Tambaram, Chennai,

Tamil Nadu, India

Area served – All over India

Key people - Mr. Dinesh S. Patel (Managing Director)

Revenue - $8 Million

Operating income – Rs.100 cr.-500 cr.

Address- Plot no.a-24, mep-2, special economic zone tambaram, chennai-chennai-45 Chennai, Tamil
Nadu 600045, IN.

No. Of employees – 43 employees

Official website – www.sfpsons.com

SFP SON’S (INDIA) PVT LTD :

SOMABHAI FULABHAI PATEL (SFP) SON’S PVT LTD Established in 1992 is one of
the leading manufacturers of perfumes and cosmetics in India. SFP is located in Special Economic
Zone, Chennai and was formerly known as S. F. Patel & Sons (India).SFP manufactures wide range of
over 1000+ products under its own brands ‘Ahsan’, ‘Tara’, ‘Taibah’, ‘Malaki’, ‘Salaam’, ‘Silent
Valley’ and ‘Crazy Moments’. These products are widely available in more than 20 countries. Product
range includes Attars (concentrated perfume oils), Spray Perfumes (EDT, EDP, colognes and body
mists), Perfume Gels, Creams and Gels for Hair and body, Cleansing lotion, Shower gels, Shampoos,
Hair Oil and Talcum powders.
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 SFP is a ISO 9001 certified company and is committed to manufacture quality products. All
products manufactured are skin friendly and abide by all international standards laid down by
governing bodies like IFRA, FDA et al.

SFP factory is spread over 100,000 sq. ft area andemployees over 400+ people. It houses a well
equipped R & D laboratory and highly qualified team to develop and manufacture high quality
products. It has a sound infrastructure and modern facilities which helps every activity and product of
SFP fulfill its brand promise and mantra –

“BRINGING FRANGRANCE TO LIFE”

SFP processes are managed and controlled through SAP. The SFP team is skilled, trained
and equipped to meet and deliver all customer expectations.

Company mission, delivers the quality product with protection of environment and protect the health of
customer.

SFP aims at attaining, commanding market position in supply of perfumery and cosmetic product by
meeting the needs and expectation of customers and enhancing their satisfaction.

Management :-
SFP was started by its present Managing Director Mr. Dinesh S. Patel an entrepreneur with dream
and vision to make SFP a globally leading Company in perfumes and Cosmetics industry. He believes
hard work, commitment and passion combined can enrich every individual's life.

R & D Lab:-
SFP has well equipped laboratory and research section, equipped to carry out in-house
development and testing required as per laid down standards. Latest GC, refract meters, SG meter, Ph
meters, Viscometers and other Instruments are manned by trained personnel.SFP is committed to
quality through its strict quality control methods. Using latest technology every component and product
are tested as per international standards at all stages of manufacturing to ensure high quality perfumes
and cosmetics.

BLENDING:-
SFP also blends some of its Own fragrances. It has 8 nos of blending tanks of capacity 1 ton with
cooling lines. It has DM Water plant and a RO water plant. SFP has two tanks for alcohol storage
which can hold 50000 liters.

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COSMETIC MANUFACTURING :-
Cosmetic products manufacturing is done is well equipped modern facilities. This plant has oil phase
vessel, water phase vessel and a main homogenizing vessel of capacity 1 ton. SFP also has 50 liter plant

to cater to smaller needs.

FILLING AND PACKING :-

Production facilities are well laid down with separate buildings for Attars, Sprays, Creams and
Gels, Hair oils and Talcum powder. A total of 12 production lines have a capacity to fill and pack
120,000 units every day per shift.

WAREHOUSE :-
The newly constructed ware house has area of over 20000 sq. ft and is well arranged to monitor
and move material with ease. All products are bar-coded for efficient identification. SFP is well
connected by road, sea and air to have excellent supply chain.

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TRAINING :-
SFP Training Centre provides trainings to all its employees on regular basis. The training is
totally based on skill and personality development to drive individuals and the company forward.

SHOWROOM :-
The showroom within the factory premises Displays a range of products. It also displays
Packaging material components. Here customers Can select items of their choice for their market.

MARKETING :-

 SFP has organized tie-up in Dubai to fee the market in U.A.E. and distribution of the premium
attars to African countries like, Sudan, Egypt,Somalia, Nigeria, Ghana, Uganda, Zambia, South
Africa, Libya, Algeria, Mauritania,morocco, Chad, and Cameroon.
 In Saudi Arabia the company is having distribution tie-ups in Jeddah, Riyadh, Mecca,Medina,
etc.
 Also the company is having distribution outlets in Kuwait, Muscat, Bahrain, Doha-
Qatar,Lebanon, Jordan, Syria, Iran, Iraq, and Afghanistan.
 The company is also having export market in Sri Lanka, Singapore, Malaysia,
Indonesia,Thailand, Myanmar and Bangladesh.
 In the west the company is having market in Atlanta, New York, New Jersey, Chicago,Las
Angeles, London, Spain, and France.
 In India there are 750 distributors throughout the country.
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 OBJECTIVE OF STUDY :-

Primary objective:-

To analyze that the existing inventory management system in SFP

SONS India pvt.ltd.

Secondary objective:-
1. To verify the mismatch between the order and receipt of mate
2. To find out the impact of inventory on working capital.
3. To find out minimum stock level, how much stock should be order.

Research methodology:-

Research methodology is the way to systematically solve the research problem.Objective of

research study is to analysis of inventory of SFP Sons and analyzing of inventory, we determining
following inventories-

1. Raw materials inventory,

2. Work in progress inventory,
3. Packaging material inventory &
4. Finished goods inventory

In this section of inventories, we should analyze the annual investment in inventories,Valuation

of inventory after closing balance of items in inventory. In this manner, we calculate reorder point,
safety stock levels, minimum & maximum levels of inventory.

Working hypothesis of the objective is that inventories are the stock piles of goods in an
organization. SFP invests about 40% of total assets inventory should be analyzed their records.

The analysis of inventory according to their data is available in the company. The data
collection of inventory for analysis is by the direct store department. I went to the all inventories as raw
material, work in progress inventory, finished goods inventory by the proper observation of data’s of
the company.

The particular method for data collection used direct interview with assistants and telephone
interview with friends to known about annual investment of inventories and other important data.

Method of data collection:

In analysis of inventory of SFP, We collect the data by the different sources. We collect the
primary and secondary data.

Primary Data:
Primary data or fresh data are those data that are originated very first time With the help of
11
primary data we formulated the research objectives. Primary data are the accurate, attainable, reliable
and useful data.

1. Inventory control techniques used by the company

2. Inventory systems as perpetual and periodic systems.
3. Stock levels etc.
4. Company’s website

Secondary Data :
The secondary data are those data that are already in presence for specific purpose, we use the
secondary data about inventory to look old records of the company .For the daily information about the
items are show the MRN, ledger register and daily issue slip of materials, the purchase register and
other documentary evidence used for the findings.In the analysis of inventory, the secondary data
provided is not sufficient then we collected primary data.

INVENTORY MANAGEMENT TECHNIQUES :

In managing inventories, the firm’s objective should be in consonance with the wealth
maximization principle. To achieve this, the firm should determine the optimum level of investment in
inventory. To deal with the problems of inventory management effectively ,

It becomes necessary to be conversant with the different techniques of inventory

control.Although the concepts involved in inventory management are production-oriented and are not
strictly financial it is important that the financial manager understand them since they have certain
built-in financial costs. The different techniques of inventory control may be summarized as follows:

1. ABC ANALYSIS :-

ABC Analysis is a basic analytical management tool which enables top

management to place the effort where the result will be greatest. This
technique,popularly known as always better control or the alphabetical approach, has
universal applications in many areas of managing the inventory.

The technique tries to analyze the distribution of any characteristic by Money value of
importance in order to determine its priority.

The annual consumption analysis of any organization would indicate that a handful of
top high value items less than 10% of total number will account for a substantial portion
of about 75% of the total consumption value and these few vital item are called A class
items which need careful attention of the materials manager. Similarly a large number of
bottom items over 70% of total number called the trival many account only for about
10% of the consumption value and are known as the ‘C’ class. The items that lie
between the top and bottom are called the ‘B’ category item.

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ECONOMIC ORDER QUANTITY TECHNIQUE

One of the major inventory management problems to be resolved is how much

inventory should be added when inventory is replenished. If the firm is buying raw
materials, it has to decide lost in which it has to be purchased on replenishment. If the
firm is planning a production run, the issue is how much production to schedule (or how
much to make). These problems are called order quantity problems, and the task of the
firm is to determine the optimum or economic order quantity(or economic lot size).
Determining an optimum inventory level involves two type of costs: (a)ordering costs
and (b) carrying costs: The economic order quantity is that inventory level that minimize
the total of ordering and carrying costs.

EOQ = 2(annual usage in unit)(order cost)

Annual carrying cost per unit

VED ANALYSIS:

The VED analysis is used generally for spare parts. The requirement and
urgency of spare parts is different from that of materials. A-B-C analysis may not be
properly used for spare parts. The demand for spares depends upon the performance of
the plant and machinery. Spare parts are classified as: Vital (V), Essential (E) and
Desirable (D). The vital spares are a must for running the concern smoothly and these
must be stored adequately. The non-availability of vital spares will cause havoc in the
concern. The E types of spares are also necessary but their stocks may be kept at low
figures. The stocking of D types of spares may be avoided at times. If the lead time of
these spares is less, then stocking of these spares can be avoided.

INVENTORY TURNOVER RATIO : (ITR):

In accounting, the Inventory turnover is an equation that measures the number of times
inventory is sold or used over in a period such as a year. The equation equals the cost of goods sold
divided by the average inventory. Inventory turnover is also known as inventory turns, stock turn, stock
turns, turns, and stock turnover.

ITR = Cost of goods sold

Average inventory

INVENTORY MANAGEMENT SYSTEM IN SFP SONS INDIA PVT.LTD. :

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 The procurement of inventory is totally depends on order/demand. In first step
they get the order from customer then they write a form that form called indent form by
hand writing .After getting order they will send the order to purchase department for
buying of Raw material and Packaging material. Every time that causes the delay of
delivery of goods to the customer. After receiving the raw materials from supplier they
check the quality, because quality is more important for them. In whole production
process 4-5 times they will check the quality and after that quality check seal on product.

FINDINGS :

 Company is maintaining zero safety stock it cause production loss.

 The inventory turnover is in decreasing order in 2008-09 it is 3, but in 2009-
2010 it is 2.4.
 By ABC Analysis we can say that there is a little difference between A B & C
class items , So every product is important for company.
 There is positive correlation between sales to inventory.
 The percentage of raw material from total inventory is 23.94% in 2009 and
19.73% at 2010
 The percentage of finished goods, semi finished good, packaging material from
total Inventory is 34% ,5%,37% in 2009 but in 2010 40%, 4%, 34%
 Company’s aim to achieve more sale it may require huge amount of inventory in
future.
 Company is concentrating on domestic market and first time they achieve the
target of 10 Crore, that is good sign of establishment of domestic market.

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