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A

Synopsis

For

Summer Training Work

OnInventory Management of NTPC (Kahalgaon) Ltd.

To be completed atNATIONAL THERMAL POWER CORPORATION LTD.

KAHALGAON-BHAGALPUR (BIHAR)

SUBMITTED TO

MANAGEMENT PROGRAMME

Deptt. of Applied Economics & Commerce

Patna University, Patna

In the partial fulfillment of the degree of

MASTER OF BUSINESS ADMINISTRATION (FINANCE)Under the supervision of: Submitted by:

Dr. B.N. Pandey Sumant Kumar Jha

Director, Mgt. Programme Roll No. 11

Deptt. of A.E. & Commerce MBA(Finance)

Patna University, Patna Session: 2009-11

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Topic:-

Inventory Management of NTPC (Kahalgaon) Ltd.

Rationale behind the Study:-

The basic responsibility of the financial manager is to make sure the

firms cash flows are managed efficiently. A concern has to make cash

outflows in the acquisition of fixed assets, current assets and fictitious

assets. There is not much scope of cost control in the acquisition of fixed

assets because it is of permanent nature and acquired in the concern for a

longer period. But current assets are purchased on the basis of the

requirement of the operational cycle and smooth functioning of the

organization for the maximum period of one year only if other things in

the economy remain normal. In order to minimise cash requirements

inventory should be turned over as quickly as possible, avoiding stock-

outs that might result in closing down the production line or lead to a

loss of sale. Inventory of the organization should be much adequate andsufficient to satisfy production and sales demands. This is the area in

which an organization can develop better expertise in optimising cost

control which ultimately maximizes owners wealth. This is the key area

under which tactical and strategical decision are taken for the purchase

of raw materials, sale of scraps, waste and by-products stores control and

supply chain management operating for full utilization of plant and

machinery to get additional demands but reducing cost of that product.

Hence Inventory Management brings important bearings on the

minds of the financial manager to do better for collectting maximum

revenue for the concern. That is why this area of Financial Management

has been taken for the purpose of study.

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INRODUCTION:-

An inventory is a supply and stock of something. According to

accounting standard 2, Inventory is a tangible property which is held in

the concern for the following purposes:-

1. For sale in the ordinary course of business.2. In the process of manufacture for such a sale.3. For consumption in the process of production of goods and

services for sale including maintenance, supplies and consumables

other than machinery spares.

In this sense inventory includes :-

(i) Stock of raw materials.(ii) Stock of Work-in-Progress or Semi finished products.(iii) Stock of Finished goods.(iv) Loose Tools, Stores and Spare parts.(v) Waste or By-products.Purpose of holding Inventory:-

(i) Avoiding lost sales.(ii) Benefits of quantity discounts.(iii) Reduction in ordering costs.(iv) Achieving efficient production runs.(v) Reduction in risk of production shortages.

NTPC is a basically a power generating company which is the majorelectricity producer in the country. Now NTPC is a MAHARATNA

COMPANY. NTPC, India's largest power company, was set up in 1975

to accelerate power development in India. NTPC has current generating

capacity of 31,704 MW. NTPC has embarked on plans to become a

50,000 MV by 2012 and 75,000 MW Company by 2017.

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Objectives of the Study:-

(a) To know the optimum level of inventory required for theconcern.

(b) To know the Pros/Cons of existing Inventory ManagementSystem.

(c) To know the trade-off between costs and benefits associatedwith the level of inventory.

(d) To know the investments of funds in inventory.Scope of the Study:-

Operating responsibility of managing inventory in a firm is outsidethe province of finance manager and well within the realign of the none

finances managers. So Purchase and production managers have to play

more important role in formulating and implementing policies pertaining

to acquisition of raw materials and production managers play crucial

role in work-in-progress policies.

Hypothesis of the Study:-

(a) Concern fails to maintain the minimum level of inventorydue to unavailability of coal in time.

(b) Weighted average cost of inventory is not appropriate for theconcern.

(c) Concern fails to utilize full capacity of the plant &machinery due to inadequate level of inventory.

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Methodology of the Study:-

Methodology for this purpose means collection of data for the purpose

of study. The data will be collected through both primary as well as

secondary sources.

Collection of Primary data: The primary data will be collected

through interview,questionnaire and personal observations.

Collection of secondary data:- The secondary data will be

collected through NTPC website, its bulletins, its annual reports and

books section and the booksavailable on financial management.

Limitation of the Study:-

(a) The time allowed for this purpose does not allow doingextreme research in this area.

(b) Physical verification of each and every asset for the purposeof inventory may or may not be possible.

(c) Concern is very large and therefore there may be a possibilityto select a few relevant persons to complete the task.

(d) Employees way of co-operation.

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Plan of work

Proposed chapters:-

Chapter I: Introduction

Chapter II: Organizational Profile

Chapter III: Inventory Management A general concept.

Chapter IV: Analytical study of Inventory management of NTPC Ltd.

Chapter V: Conclusion and Suggestions.

Annexure

Bibliography

Questionnaires

Signature of the Supervisor Signature of the Candidate

For Approval

Director, Management Programme

Deptt. Of A.E. & Commerce

Patna University, Patna