AURORA’S PG COLLEGE (MBA)

(Autonomous) Accredited by NAAC with A+ Grade

Ramanthapur, Hyderabad, Telangana – 500013

PROJECT REPORT ON

A Study on Inventory Management at UltraTech Cement Ltd.

Project Report submitted in partial fulfilment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
GARLAPALLI SRIJA
([Link]. 1302-23-672-067)

Under the Supervision of

Dr. MADHUBALA BRUNDAVANAM

2023 – 2025 Batch

 DECLARATION

I hereby declare that this Project Report title, “A Study on Inventory Management at

UltraTech Cement Ltd.” submitted by me to the Department of Business Management, O.U.

Hyderabad, Aurora’s PG College (MBA), Ramanthapur is a Bonafide work done by me and it

is not submitted to any other University or Institution for the award of any degree/

diploma/certificate or published at any time before the submission of report.

Name and Address of the Student Signature of the Student

GARLAPALLI SRIJA
([Link]. 1302-23-672-067)
AURORA’S POST-GRADUATE COLLEGE (MBA)
(Autonomous)
Accredited with A+ Grade by NAAC
Ramanthapur, Hyderabad – 500 013

CERTIFICATE

This is to certify that the Project Report entitled “A Study on Inventory Management at

UltraTech Cement ltd. “submitted in partial fulfilment of the requirements for the award of

MBA Programmed from the Department of Master of Business Administration, Aurora’s PG

College (MBA), Ramanthapur, was carried out by GARLAPALLI SRIJA with H.T. No

1302-23-672-067 under our guidance. This has not been submitted to any other University or

Institution for the award of any degree/diploma/ certificate.

Internal Guide External Examiner

Head of the Department Principal

 ACKNOWLEDGEMENT

I am very thankful to entire management team and faculty of Aurora Pg college Ramanthapur,
Hyderabad, for implementing the project as a part of MBA curriculum.

I would like to express my heartfelt thanks to my supervisor. Dr. B. Madhu Bala for guidance
throughout my project work.

I am also grateful to the Principal of Aurora Pg college, Ramanthapur, Hyderabad for providing me
with the opportunity to work on the project.

I express my gratitude to DR. Sirisha, HOD of MBA, for her constant inspiration during this
project.

I take this opportunity to thank all those who have helped me in the completion of this project.
Finally, I thank you the respondents for the responses given to the questionnaire and valuable
information

GARLAPALLI SRIJA
1302-23-672-067
 ABSTRACT

Inventory management plays a pivotal role in the efficient operation of

manufacturing organizations by ensuring the continuous flow of raw materials,
work-in-process, and finished goods. This study focuses on the inventory
management practices at UltraTech Cement Ltd., a leading player in India’s
cement industry. The objective is to assess how effectively the company manages
its inventory to support uninterrupted production, minimize costs, and optimize
capital usage.

The research includes an evaluation of key inventory control techniques such as

ABC analysis, EOQ, and re-order levels, particularly in the manufacturing
division from 2018 to 2022. Both primary and secondary data were collected,
including interviews with staff and analysis of company records. Findings
highlight the importance of maintaining balanced inventory levels to avoid
overstocking and understocking, which can disrupt production and impact
financial performance. The study also identifies challenges such as space
constraints, over-dependence on secondary data, and limited access to employees
due to time constraints. Recommendations include improved forecasting, dynamic
inventory policies, and better coordination between departments. This project
underscores the critical role of systematic inventory management in supporting
UltraTech Cement Ltd.'s operational and financial goals.
 CONTENTS

CHAPTERS PG. NO

CHAPTER-1 1.1 Introduction 1-5

1.2 Need of the study

1.3 Scope of the study

1.4 Objectives for the study

1.5 Research Methodology

CHAPTER-2 2.1 Theoretical Review of Literature 6-33

2.2 Review of Literature

CHAPTER-3 3.1 Industry Profile 34-57

3.2 Company Profile

3.3 PRODUCT PROFILE

CHAPTER-4 4.1Data analysis and Interpretation 58-69

CHAPTER-5 5.1 Findings 70-72

5.2 Suggestions

5.3 Conclusion

BIBLIOGRAPHY 73
List of Tables

Table No. Title Page No.

Table 2.1 ABC Classification of Inventory Items 20

Table 4.1 Inventory Days, Receivables Days, and Operating Cycle (FY 2019–2023) 58

Table 4.2 Accounts Payable and Cash Cycle (FY 2019–2023) 59

Table 4.3 Inventory Turnover Ratio Trend 60

Table 4.4 Raw Material, Work-In-Process, and Finished Goods Breakdown 61

Table 4.5 Economic Order Quantity (EOQ) Calculation 62

Table 4.6 Reorder Level, Minimum and Maximum Level Analysis 63

Table 4.7 ABC Analysis for Different Inventory Items 64

Table 4.8 FSN Analysis of Inventory Movement 65

Table 4.9 XYZ and VED Analysis of Inventory Control 66

List of Charts

Chart No. Title Page No.

Chart 4.1 Operating Cycle of UltraTech Cement Ltd. (2019–2023) 58

Chart 4.2 Cash Cycle vs. Accounts Payable Period 59

Chart 4.3 Trend of Inventory Turnover Ratio 60

Chart 4.4 Proportion of Raw Materials, WIP, and Finished Goods 61

Chart 4.5 EOQ vs. Actual Order Quantity 62

Chart 4.6 Inventory Levels (Reorder, Min, Max) Across Years 63

Chart 4.7 ABC Classification Pie Chart 64

Chart 4.8 FSN Movement Distribution 65

Chart 4.9 XYZ and VED Inventory Matrix 66

 CHAPTER:1
INTRODUCTION
1.1 INTRODUCTION:

Every enterprise needs Inventory for smooth

running of its activities. It serves as a link
between production and distribution process.
There is generally a time large between the
recognition of a need and its fulfillment. The
higher the requirements for inventory. The
unforeseen fluctuations in demand and supply
of goods also necessitate the need for future
price fluctuations.

INVENTORY MANAGEMENT plays a vital

role as a part of financial management. As most of the capital is locked up in the form of Inventory
in firm. That Inventory must be managed efficiently to reduce the Investment in the Inventory. So, the
management of Inventory has also been given a great importance. The purpose of INVENTORY
MANAGEMENT is to ensure availability of materials in sufficient quantity as & when required and
to minimize Investment in inventories.

There are three types of inventories. “Raw materials, work-in-process, and finished goods. Raw
materials are materials and components that are inputs in making the final product. Work-in process
also called stock-in-process, refers to goods in the intermediate stages of production. Finished goods
consist of final products that are ready for sale. While manufacturing firms generally hold all the
three types of inventories, distribution firms hold mostly finished goods.

Inventories are stock of the product a company is manufacturing for sale and components that make
up the product. The various forms in which inventories exist in a manufacturing company are raw
materials, work-in-process and finished goods.

“Raw materials are those basic inputs that are converted into finished product through the
manufacturing process. Raw materials inventories are those units which have been purchased and
stored for future production. Work-in-process inventories are semi- m a n u f a c t u r e d products.
They

1
represent products that need more work before they become finished products for sale. Finished goods
inventories are those completely manufactured products. Which are ready for sale

Types of inventories:
1. Raw materials: Raw materials are a very important and inevitable factor of
production. In includes physical commodities used to manufacture the final product.
2. Work-in-progress: Work-in progress inventory are semi-manufactured products, the products
that need more work before they are contented of finished products for sales, in other words,
goods partially worked on but not fully completed are called work in progress.
3. Finished goods: Inventory of finished products are the stock of goods which are ready for
sales. Stock of finished goods is required for smooth marketing operations of the products.

Inventory management depends on certain risks and costs. Therefore, the inventory manager should
try to maintain optimal size of inventory without disturbing the production and sales needs.
The objectives of inventory management are mentioned below:
1. To supply the required materials continuously: There should be continuous availability of
materials in the factory or finished goods for trade. The main objective of inventory
management is to maintain required inventory so that production and sales processes run
smoothly.
2. To minimize the risk of under and over stocking of material: If a company keeps inventory
without proper analysis, there will be a chance of overstocking, which will increase the cost
of carrying the inventory or under stocking of inventory that creates problems in smooth
operation of a business. So, one of the main objectives of inventory management is to
minimize the risk caused due to under and over stocking of inventory.
3. To maintain systematic record of inventory: Management needs different information
regarding inventory for planning and decision-making. A systematic record of inventory helps
in providing such information to the management. It also assists in evaluating the current
inventory management policy.

2
1.2 NEED FOR THE STUDY:

Materials are equivalent to cash, and they make up an important part of the total cost. It is essential
that materials should be properly safeguarded and correctly accounted. Proper control of material can
make a substantial contribution to the efficiency of a business. The success of a business concern
largely depends upon efficient purchasing, storage, consumption and accounting.
 The cost of production is increased recently due to the wide usage of ULTRA TECH CEMENT LTD
company products.
 As requirement of raw material is increased there is a need for the effective maintenance of
INVENTORY MANAGEMENT.

"For every industry the Inventory plays a vital role". Better Inventory control leads to better capital
usage. The Company should look after the Inventory effectively which results in optimum level of
raw materials & finished goods that will smooth in production process.

Every industry must maintain the Inventory in an optimum quantity. It should not be too high (or)
too low. Which leads to the improper management of Inventory. Too high Inventory causes increase
in costs& the capital of the firm will be blocked too low Inventory causes serious fluctuations in
manufacturing process. So, there is a need for study of INVENTORY MANAGEMENT in ULTRA

TECH CEMENT LTD.

"Inventory plays a vital role, hence the study of INVENTORY MANAGEMENT in ULTRA TECH
CEMENT LTD, has been selected for the project work."

1.3 SCOPE OF THE STUDY:

 The study is done on inventories held by manufacturing division of ULTRA TECH CEMENT
LTD The scope of the study includes the ABC Analysis of Raw Materials, WIP and Finished
Goods for four financial years.

 This study provides insight into the management of High Value items and also brings attention
of management towards movement of ‘A’ class items over period of 5 years

3
1.4 OBJECTIVES OF THE STUDY:

1. Learning various INVENTORY MANAGEMENT procedures followed at food Industry of

ULTRA TECH CEMENT LTD.
2. To review the ABC analysis and understand the impact of business dynamics on inventory.
3. To evaluate the inventory management practices of ULTRA TECH CEMENT LTD.
4. To offer suitable suggestions for the improvement of inventory management practices.
5. To review whether the company maintains a large size of inventory for efficient and smooth
production and sales operation.
6. To maintain a minimum investment in inventories to maximize profitability.
7. To ensure a continuous supply of raw materials to facilitate uninterrupted production.

LIMITATIONS OF THE STUDY:

 Since the study covers only Manufacturing division of the company, it may not
represent the overall scenario of the company.
 Project duration of time is not sufficient.
 One of the factors are the study was the lack of availability of sample information.
 The information is mostly dependent upon secondary data.
 Main limitation is due to their busy schedule the employees in the organization
are unable to spend their time with me.

4
1.5 Research Methodology
COLLECTION OF DATA:
Sources of data:
The study is based on both primary and secondary data.

Primary data:
The information relating to study is collected with the collected with the management of the
company, who permitted me to carry on the study and provide with requisite data through oral
interviews with the employees.

Secondary data:
Since the study is aimed at the financial aspects of ULTRA TECH CEMENT LTD, the whole data
has been gathered from

 Reports of the company.

 Brochures of the company.
 Library books.
 The period Annuals of the study has been taken from 2018 to 2022.

LIMITATIONS OF THE STUDY:

 Since the study covers only Manufacturing division of the company, it may not represent the
overall scenario of the company.
 Project duration of time is not sufficient.
 One of the factors are the study was the lack of availability of sample information.
 The information is mostly depended upon secondary data.
 Main limitation is due to their busy schedule the employees in the organization are unable to
spend their time with me.

5
 CHAPTER 2

REVIEW OF LITERATURE

6
2.1 REVIEW OF LITERATURE

INVENTORY:
A tangible property held, finished goods, work in process, raw materials including maintenance and
consumables.

MEANING OF INVENTORY:
The inventory refers to the stockpile of the product a firm offers for sale the components that make up
the product. In other words, inventory is composed of assets that will be sold in future in the normal
course of business operations. The assets which firms store as inventory in anticipation of need can
be classified into
1. Raw materials
2. work-in-progress (semi-finished goods)
3. finished goods

1. RAW MATERIALS: - Inventory contains items that are purchased by the firm from others
and are converted into finished goods through the manufacturing process. They are important
inputs for the final product.
2. WORK-IN-PROCESS: - Inventory consists of items currently being used in the production
process. They are normally, partially or semi-finished goods that are at various stages of
production in a multistage production process.
3. FINISHED GOODS: -It represents final or completed products which are available for sale,
the inventory of such goods consists of items that have been produced but are yet to be sold.
The job of the final manager is to reconcile the conflicting view points of the various
functional areas regarding the appropriate inventory levels in order to fulfill the over all
objectives of maximizing the owner’s wealth.

IMPORTANCE OF INVENTORY: -
Inventory plays cardinal role in every organization. The profit of the organization mainly depends on
the inventory. Inventory is the second largest value in the organization. It is the liquid asset and the
current asset of the organization. Inventory storage is an important activity in the organization.

OBJECTIVES OF INVENTORY MANAGEMENT:

The objectives of inventory management consist of two counter balancing parts:

7
  To maximize the firm’s investment in inventory
 To meet a demand for the product by efficiently organizing the firm’s production and
sales operation.
 Ensure a continuous supply of raw materials to facilitate uninterrupted production.
 Minimize the cost and time.

These two conflicting objectives of inventory management can also be expressed in terms of cost and
benefits associated with inventory. An optimum level of inventory should be determined on the basis
of the tradeoff between cost and benefits associated with the levels of inventory.

THE MAIN AIM OF INVENTORY MANAGEMENT

The main aim of inventory management is that they should avoid excessive and inadequate levels of
inventories & to maintain sufficient inventory for the smooth production &sales operations effort be
made to place an order at the right time with the right source to acquire the right quality at the right
place &quantity.
 Ensure a continuous supply of raw materials to facilitate uninterrupted production.
 Maintain sufficient stocks of raw materials in periods of short supply, anticipated price customer
service.
 Minimize the carrying and time.

Causes of inventory:
 External causes - customers, suppliers etc.
 Internal causes - market, policy, production and SCM.

Problem with high inventory:

 Interests, insurance costs.
 Quality deterioration.
 Wear and tear.
 Storage and pilferage.

Inventory turnover ratio:

 ITR=cost of production/inventory
 Higher ITR=low inventories
 Low ITR=high inventories

8
High inventory reasons:
 Production
 More low volume products
 Large cycle campaign product
 Non-moving products
Marketing:
 Uncertainty of orders
 Deviating sales forecast

Supply chain management:

 Improper planning
 Excess/short RM supply.

Suggestions:
 Flexible production plans with tight monitoring.
 Min & max inventory levels and their up-to-date revision.
 Cost benefits analysis on carrying costs.
 Review and disposal of non-moving inventory.
 Reliability should improve.
 Dynamic approach is essential.
 Coordination with market and plants.
 Adherence to commitments and time-to-time review is must

Selection of site: -
The following are the chief considerations which should determine the selection of a site:
 The site will relate to road and rail, or if there is river transport, with water transport.
 The existence of facilities for disposal of water or effluent water is important. For this purpose,
sometimes special arrangements are necessary though sometimes it may be possible to use
existing waste land. Health authorities will naturally have a say in the matter.
 The available land should be sufficient for purpose of the unit. In addition to factory buildings,
it is often necessary to provide houses for the staff and workers.

9
STORES, SPARES AND PURCHASES:
 Store keeping.
 Store system.
 Stores operation.
 Methods of pricing material issues.
 Receiving section and issue department.
 Purchase department  Stores and spares.
 Purchasing system.
 Inventory.

STORE KEEPING:
It is serving facility, inside of an organization responsible for proper storage of the material and then
issuing it to respective departments on proper requisition. Those items, which are not in use for
some specific duration, for example spare parts and the raw materials, are called stores and the
building or space where these are kept is known is storeroom.

According to Maynard “the duties of stock keeping are i.e. to receive materials are to protect
them while in storage from damage and unauthorized removal, to issue the materials the right
quantities at the right time to the right place and to provide this service promptly at least cost”.

It is an establishment fact that more government of the current assets are invested in stores. Thus, for
efficient and economic utilization of funds the importance of store cannot be ignored.

FUNCTIONS OF STORE KEEPING:

The main function of storekeeping can be outlined as
 Receiving goods in stores against damage and pilferage.
 Custodian of goods in stores against damage and pilferage  Effective utilization of stores
space.
 To provide service to the organization in most economical way.

10
OBJECTIVES OF STORE KEEPING:
 Easy location of the items in store.
 Proper identification of items.
 Speed issue of material, Efficient utilization of space
FACTORS OF PLANT LOCATION:
Primary factors: - 
Raw material
 Market
 Fuel and power
 Transport
 Labor
Secondary factors: -
 Industrial atmosphere
 Special advantage of a place
 Soil and climate
 Personal factors
 Historical factors
 Political stability
Stages in production control: -
 Planning
 Routing
 Scheduling
 Loading
 Dispatching
 Inspection
Advantages of production planning and control: -
 Efficient service
 Avoidance of rush orders
 Avoidance of bottlenecks
 Inventory control
 Economy in production time
 Equipment utilization

11
 Types of layout:
 Product or line layout
 Process or functional layout
 Combined layout

Factors in plant layout:

 Basis managerial policies and decisions
 Nature of plant location
 Type of industry and processes

Economies in production:
 Use of automatic machinery
 Division of labor
 Utilization of by-products
 Timely and economical repairs and maintenance.

Approach:
The importance of an integrated approach of material management with in the frame work of the
Indian environment and presents a comprehensive coverage of all aspects of the subjects, such as the
operational details of stores system and procedures and modern mathematical concepts also featured.
Since the theory is based on the practical experience and research projects, it fulfills the needs for
authentic literature in the field of materials management.

Purpose of stores:
Stores play a vital role in the operation of a company. It is in direct touch with the user departments
in its day-to-day activities. The most important purpose served by the stores is to provide
uninterrupted service to the manufacturing divisions. Further, stores is often equated directly with
money, money is locked up in the stores.

The function of stores can be classified as follows: -

 To receive raw materials, tools, equipment and other items and account for them.
 To provide adequate and proper storage and preservation to the various items.

12
  To meet the demands of the consumer departments by proper issues and account for the
consumption.
 To minimize obsolescence, surplus and scrap through proper codification, preservation and
handling.
 To highlight stock accumulation, discrepancies and abnormal consumption and effect control
measure.
 To ensure good housekeeping so that material handling, materials preservation, stocking, receipt
and issue can be done adequately.
In India, owing to positions, 4 to 6 months inventories are not uncommon 77 and, in fact, for certain
imported items, it could be as high as 24 month’s stock. In this context, stores management assumes
greater importance.

Stores leader: -
The stores leader is very important because this facility calculates the value of goods used for
production purpose of materials, finished goods. There are several methods for calculating the issue
price of the materials.
1) FIFO: Under this method is first issued from the earliest consignment on hand and priced at
which that consignment was placed in the stores. In other words, materials received first are
issued first. This method is most suitable in times of falling prices because the issue price of
materials to be jobs work orders will be high while the cost of replacements of materials will be
low.
2) LIFO: The issues under this method are priced in the reverse order of purchase i.e.. The price of
the latest available consignment is taken. This method is sometimes known as the replacement
cost method because materials are issued at the current cost to work orders expect when
purchases were long ago. This method is suitable in times of raising prices because material will
be issued from latest consignment at a price which is closely related to the current price levels.
3) Base stock method: Each concern always maintains a minimum quantity of material in stock.
This minimum quantity is known as safety or base stock, and this should be used when an
emergency arises. The objective of this method is to issue the material according to the current
prices.
4) Average method: In this method stock is divided by the quantity.
5) Market price: The issues are made at the market prices.
6) Inflated prices: This method is used for any wastage in the materials.

13
Location and layout:
Often, in the matter of locating the stores, materials management is rarely consulted. The normal
practice is to locate the stores near the consuming departments. This minimizes handling and ensures
timely dispatching stores layout, governing criteria are easy movement of materials, good
housekeeping, and sufficient space for men and materials handling equipment’s, such as shelves,
racks, pallets and proper preservation from rain, light and other such elements.

These problems are more important in the case of items that have a limited shelf life.
Other important factors governing the location are the number of users and their locations, the volume
and the variety of goods to be handled the location of the central receiving section and accessibility
to modes of transportation such as rail or road. Since stores have to be nearest to the sugar, largest
organizations usually have stores near consuming department, whereas receiving is done centrally

Items of common usage are stocked in the central stores so that inventory is kept at an optimum level.
These factors are considered at the planning level of layout. In the case of warehouses stocking
finished goods, factors such as proximity to ports, railway lines, quality of roads, availability of power,
etc., become quite important. It is also important that the stores are constructed with a futuristic
orientation, so that sufficient flexibility for expansion needs is inbuilt. The activities of receiving the
goods, stocking in appropriate locations, material handling and issues must be done swiftly and
economically. The stores building has adequate facilities for preservation of stores.

Sometimes facilities, such as cold storage, heating equipment, air conditioning and similar facilities
may be required. These should be planned. Comfortable working conditions must be provided to the
stores’ personnel to get maximum efficiency and morale.

The important factors in the design of stores building can be summarized as follows:

Lighting:
Clear and adequate lighting is a must for a work environment. Lighting effects can be accentuated
through a judicious choice of colors for the walls. For stores personnel who work day in and day out
in the stores receiving, checking, stocking, handling and issuing goods, a pleasing environment goes
a long way in reducing monotony. Any attempt to reduce these facilities will prove false in
economizing in the long run.

14
Safety:
This factor is perhaps the most important aspect. In stores a large volume of goods are handled every
day. Accidents considerably reduce the morale and effectiveness of the system. The following
measures are necessary if accidents are to be checked:
 Safety consciousness should be instilled in the minds of stores, personnel through training
programmers, visual aids and literature.
 Safety appliances, such as goggles, hand gloves, etc.., must be provided and their use must be
encouraged.
 Good housekeeping is essential. This means that gangways must be clean, adequately wide so
that movement of forklifts, trolleys and industrial tractors is smooth. Stocking must be
appropriate locations so that handling is minimum.
 All stores equipment must be kept in good order. This includes adequate maintenance practice
with regard to forklifts, overhead cranes, trolleys, conveyors, etc. operation must be trained in
safety so that safety precautions are not overlooked.
 Healthy competition can be stimulated by installing “safety awards” and cash prizes which
bring recognition to the concerned stores personnel for safety practices. This also motivates
others to practice safety.
 Provision of firefighting facilities is necessary especially where inflammable materials are
stored and handled. In fact, large organizations have well-maintained fighting equipment.
 Keep the stores in preparation. This has in the run reduced losses and reduced insurance
expenses, fire extinguishers, fire escapes, alarms and sprinklers must be available the
personnel should be familiar in handling them.
 Other factors which merit attention include provision of toilets, routine maintenance
equipment, safe electrical warnings, etc..,

Cost aspects and productivity:

It is covered that every cubic meter of space must be utilized by stocks for high efficiency. Very often
such stocking may drastically cut the speed of materials movements and create bottlenecks apart from
affecting overall safety. Costs involved in stores can be analyzed under two heads, viz.., fixed and
variable. Fixed costs are to be incurred irrespective of the utilization of stores space. They include
money spent on land and buildings, rent interest, repairs, maintenance, insurance, etc. Variable costs
vary with volume through output. They consist of handling cost, damage, deterioration,
obsolescence, etc. Obviously when the throughout or the volume goods handled is high, the total
cost per ton is low. This should be the aim of the store’s manager to optimize the costs in stores.

15
Problems and development:
It is an unfortunate fact that stores management has been regulated as a critical function. In the gamut
of material management, a store is considered as the least glamorous and it never attracts talent. It is
forgotten that the store’s manager is probably the custodian of the single largest group of current
assets and plays a pivotal role in ensuring smooth production besides assisting purchase activities
through timely support. This is the major problem and challenge that store manager faces today.

Many decisions in stores management, such as selection of tracks, bins, handling equipment, safety
practices, codification, training personnel and accounting, call for considerable, sickness and an
ability to coordinate with other departments as well as with outsides agencies. These aspects should
be highlighted and appreciated so that the store’s function is given due to importance. Other areas in
stores, such as records keeping, movement analysis to reduce obsolescence, surplus and damage are
critical to the profitable operation of the firm and the store’s manager faces challenges in the areas as
well.

In many organizations the scrap yard also comes under control of the store’s manager. This is an
entirely new responsibility calling for the ability to maximize returns on the disposal of scrap. The
chief stores officer has under him separate officers for the functions of receipt, issues, Kardex and
sub-stores.

Besides encountering the production, purchase maintenance, inspection and finance departments
within his organization, he must meet the outsiders like suppliers, transport carriers and bankers. To
meet such challenges, the importance of the store’s function should gradually gain momentum, and
qualified engineers should be posted as chief stores officers reporting to the materials managers

Role of financial manager in inventory management:

Optimum level of inventory and finding ensures to the problems of EOQ are the recorder point and
the safety stock. These techniques are essential to economize the use of minimizing the total
inventory cost. The techniques of inventory management are very useful in data mining. The cases
where the board frame works for managing inventories.

16
To most companies, inventory represents a substantial investment. Thus, the goal of wealth
maximization is related to the financial manager has an important role to play in the management of
inventory.

Although it is not his operating responsibility to control inventory. The financial should see that only
an optimum amount is invested in inventory. He should be familiar with inventory control
techniques and ensure that inventory is managed well. Effect would be reducing inventory
investment and increase the firm’s prospects of making profits.

INVENTORY CONTROL:
Inventory control renders to “the process whereby the investment in materials and parts carried in
stock is regulated within predetermined limits set in accordance with the inventory policy established
by the management. The inventory control is activity-oriented process whereas inventory control is
the management process, and the latter is the firm’s setup to be followed by the former.

Inventory control refers to a planned method of purchasing and storing the material at lowest possible
cost without affecting the sales scheduled.

Inventory control, therefore, is a scientific method of determining what, when and how much to purchase
and how much to stock for a given period.

The need of inventory control:

The rewards of inventory control system cannot be overlooked in the Indian context the idea behind this
is,

 Conserving valuable foreign exchanges.

 Release of capital
 Reduction in cost

The primary object of inventory control is:-

 To minimize the idle time caused by shortage of inventory and inventory availability of inventory.
 To keep down capital investment in inventories. Inventory carrying cost and obsolescence losses.

17
 INVENTORY CONTROL TECHNIQUES

Selective inventory control Inventory management techniques

1. EOQ (economic order quantity)

1. ABC analysis a. Ordering cost

2. XYZ analysis
3. FNS classification b. Carrying cost
4. SOS classification
5. S-D-E Analysis
2. System of Re- ordering
6. HML analysis
7. VED classification
↓

ECONOMIC ORDER QUANTITY:

One of the 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 lots to in which it
has to be purchased on cash replenishment.

√𝟐 ∗ 𝐪𝐮𝐚𝐧𝐭𝐢𝐭𝐲 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐝∗𝐨𝐫𝐝𝐞𝐫𝐢𝐧𝐠 𝐜𝐨𝐬𝐭

EOQ (Economic Order Quantity)
= 𝐂𝐚𝐫𝐫𝐲𝐢𝐧𝐠 𝐜𝐨𝐬𝐭

If the firm is planning production as per schedule. These problems are called order quantity problem and
task of the firm is to determine optimum inventory level involves two types of costs
1. Ordering cost.
2. Carrying cost.

18
The economic order quantity is that inventory level, which minimizes the total of ordering and carrying
costs.

Ordering costs:-
The term ordering cost is used in case of raw materials (or supplies) and includes the entire costs of
acquiring raw materials. They include costs incurred in the following activities. requisitioning,
purchase ordering, transport receiving, inspecting and storing(store placement), ordering cost increase
in proportion to the number of orders placed the critical and staff costs, however, don’t vary in
proportion to the number orders placed, and one view is that so long as they are committed cost they
need not to be revoked in computing ordering cost.

Carrying costs:
Cost incurred for maintaining a given level of inventory are called carrying cost, they include storage,
insurance, taxes, deterioration and obsolescence’s.

ABC Analysis:
ABC analysis is one of widely used inventory control tool. Under this we have to classify materials
according to their importance and concentrate more on critical items. Importance of any item arises
due to the two factors namely, consumption values and critically in use. Classification of materials
according to importance has its basis on the promise “vital few and trivial many”.

The classification based on consumption value is called ABC analysis and the classification based on
the critically of the items is called VED analysis (vital essential and desirable).periodical consumption
values are used as the basis for VED analysis. ABC is said to denote “always better control”, the
method of classification of material is also known as “selective method control”. The basis of
analyzing the annual consumption cost (or usage cost) goes after the principle “vital few and trivial
many”.

Items held in the stores can grouped into class A,B and C respectively based on their annual
consumption values. It has been found in a large number of organizations that about 20% of the items
contribute to 70% of the annual consumption value, 30% of the number of the number of items
contributes about 20% of the annual consumption value and the remaining 50% of the items contribute
10%of the annual consumption value.

19
 Hence consumption value need to be controlled at the highest level and these are the A items. The
control of bottom 50% of the items that contribute only 20% of the annual consumption value, that
are denoted as C items can be delegated to the lowest decision making levels while, the middle B
items can be controlled by the middle levels of personnel.
“The following figures bring out clearly the concept of ABC analysis”.
Table 2.1 :

Category Value Item 10% % of annual Consumption

A item 20 70

B item 30 20

C item 70 10

The advantage of ABC method of inventory control is follows:

It becomes possible to concentrate all efforts in areas which need genuine efforts. This method
produces better results and involves minimum control. In the case of an items careful attention is paid
at every stage i.e., estimates of requirements, purchasing safety stocks, receipts, inspection and issues.

A close watch on high consumption items and their progress of replenishment etc, maintained. In the
case of C items which are numbers and at the same in expensive are loosely controlled.

The items fall under B category may be dispensed within the record keeping system. This will help
in saving time, money and labor without endangering production schedule, it is most effective and
economical method as it is based on the selective method.
It helps in placing the orders, deciding the quantity of purchasing safety stocks etc. Thus saving the
organization from the unnecessary stocks outs or surpluses.

VED Analysis:
VED analysis represents classification of items based on critically the analysis classifies the items into
3 groups called vital, essential, desirable “vital” category encompasses those items for want of which
production would come to halt.” essential” group includes items whose stock out is very “desirable”
group comprises of items which do not cause any immediate loss of production would come is high.
“Desirable” group comprises of items which do not cause any immediate loss of production or their
stock out entail nominal expenditure and causes minor disruption for a short duration.

20
HML analysis:
HML analysis is the price based analysis. This analysis is generally used for control of spares. The items
m under this analysis are classified into 3 groups which are called “high”, “medium”, “low”.
To classify, items are listed in the descending order of their unit price.

Ex: - the management may decide that all items of unit price above Rs 1000 will be of ‘H’ category.
Those 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.

F-S-N ANALYSIS:
F-S-N analysis is based on the consumption figures of the items. The items under this analysis are
classified into 3 groups.
 F-fast moving
 S-slow moving  N-non moving
To conduct the analysis the last date of receipt or the date of issue whichever is later taken into account
and the period, usually in terms of number of months that has elapsed since the last movement is
recorded.

X-Y-Z ANALYSIS:
X-Y-Z analysis is based on value stock on hand. Items whose inventory values are high are called ‘X’
items those inventory values are low are called ‘Z’ items and ‘Y’ items are which have moderate
inventory stocks. Usually X-Y-Z analysis is used in conjunction with either ABC analysis or HML
analysis.

S-OS ANALYSIS:
S-OS analysis is based on seasonality of the items and it classified the items into 2 groups.
 S- seasonal
 OS-off seasonal

S-D-E ANALYSIS:
S-D-E analysis is based on problems of procurement namely,
 Non availability
 Security

21
  Longer lead time
 Geographical location of suppliers
 Reliability of suppliers etc

S-D-E analysis classifies the items into 3 groups called “scare”, “difficult”, and “easy”. The
information so developed is then used to decide purchasing strategies. “Scare” classification
comprises of items which are in short supply imported through government agencies. “Difficult”
classification includes those items which are available indigenously but are not easy to produce.

“Easy” classification covers those items which are readily available.

LEVEL SETTING:
In order to have proper control on materials the following levels are set:
 Re-order level
 Ordering level
 Minimum level
 Maximum level
 Average stock level
 Danger level
 Safety stock level

Re-order level:
It is the point at which if stock of a particular material in store approaches the storekeeper should
initiate the purchase requisition for fresh suppliers of the material. This level is fixed somewhere
between the maximum and minimum levels in such a way that the difference of the quantity of the
material between the re-ordering level and the minimum level will be sufficient to meet the
requirements of production up to the time fresh supply of the material is received. “Reorder level can
be calculated by applying the following formula”:-

Ordering level = Minimum level + Consumption during the time required to get fresh delivery

Another formula given by WHELDON in his book ‘cost accounting’ is follows:

Reordering level = Maximum consumption * Maximum reorder level period

22
Ordering level:
This is the quantity of stock fixed between the maximum and minimum level of stock. When this level
is reached, it becomes the duty of the store-in-charge to replenish the stock within reasonable time.
This level is usually a little higher than the minimum level. In order to be prepared for such
emergencies as abnormal consumption delay in delivery of new supplies etc.,

While fixing this level following points are taken into consideration:-
 Time required for obtained fresh suppliers.
 Possible unexpected requirements which cannot be avoided.
 Possible unexpected delays in getting fresh suppliers because of rains war, about unrest etc.

Minimum level:
Formula level represents the level beyond, which the stock in hand is not allowed to exceed. This is
because: If the exceeds this level, it will
 Involves more investment
 Requires more space for storages
 Amount to more wastage because of handling, spoilage, obsolescence  Involves more carrying
cost.

Excess stock will increase the cost of storage, thereby increasingly selling cost. Excess stock will
involve unnecessary blockade of working capital and prevent its availability for a more profitable use.
Stock in excess will prevent the management from taking advantages of price fluctuation and
favorable market condition.

The fixation of maximum level depends on the following factors:-

 Rate of consumption of the material
 Money available
 Time required to obtain deliveries
 Storage space available
 Economic order quantity
 Market conditions, seasonality and price fluctuation
 Possibility of loss due to deterioration

23
 The following for the calculation of maximum stock level given by WHELDON is as follows:
Maximum stock level = Re-ordering + Re-ordering – quality (Minimum
consumption X minimum re-ordering period)

Average stock level:

The average stock is calculated by the following formula

Average stock level = minimum stock level + ½ of re order quantity of ½ minimum stock level +
maximum stock level)

Danger level:
This means levels at which normal issues are made only under specific instructions. The purchases
officer will make special arrangements to get the materials which reach at their danger level so that
the production may not stop due to storage of material danger level = Average consumption X
maximum re-order period for emergency purchase.

Safety stock level:

This level is below the minimum level and represents the stage at which emergency and immediately
steps have to be taken for getting the stock replenished

24
2.2 ARTICLE

Article 1

Title: Inventory Management of Manufacturable Products

Author:L. BerilToktay

Journals: ManagementsciencePublished Online:1 Nov 2000

Abstract: We address the procurement of new components for recyclable products in the context of Kodak's
single-use camera. The objective is to find an ordering policy that minimizes the total expected procurement,
inventory holding, and lost sales cost. Distinguishing characteristics of the system are the uncertainty and
unobservability associated with return flows of used cameras. We model the system as a closed queueing
network, develop a heuristic procedure for adaptive estimation and control, and illustrate our methods with
disguised data from Kodak. Using this framework, we investigate the effects of various system characteristics
such as informational structure, procurement delay, demand rate, and length of the product's life cycle.

25
Article 2

Title: Inventory Management with Asset-Based Financing

Author: Zhang Published Online:1 Sep

Journals: Management Science

Abstract: Most of the traditional models in production and inventory control ignore the financial states of an
organization and can lead to infeasible practices in real systems. This paper is the first attempt to incorporate
asset-based financing into production decisions. Instead of setting a known, exogenously determined budgetary
constraint as most existing models suggest, we model the available cash in each period as a function of assets
and liabilities that may be updated periodically according to the dynamics of the production activities.
Furthermore, our models allow different interest rates on cash balance and outstanding loans, which is an
enhancement over most traditional models in that inventory financed by a loan may be more expensive than
that by out-of-pocket cash. We demonstrate the importance of joint consideration of production and financing
decisions in a start-up setting in which the ability to grow the firm is mainly constrained by its limited capital
and dependence on bank financing. We then explain the motivation for asset-based financing by examining the
decision making at a bank and a set of retailers in a newsvendor setting.

26
Article 3

Title: Inventory management system

Author: Donald Richard

Journal: us patent

Abstract: Methods, systems, and articles of manufacture consistent with certain aspects related to the present
invention collect item information from RFID tags attached to items in an inventory, and uses the collected
item information to perform various inventory management processes. In one aspect, the inventory
management processes may include determining, reporting, and/or providing corrective actions for one or more
events associated with at least one of depletions of items in the inventory, changes in the design of items in the
inventory, defects with one or more items, misplaced items, the movement of an unusual number of items
within a short period of time (i.e., shrinkage), and malfunctions of one or more components included in the
environment.

27
Article 4

Title: Risk Aversion in Inventory Management,

Author: David Simchi-LeviPeng Sun

Journal: operation research

Abstract: Traditional inventory models focus on risk-neutral decision makers, i.e., characterizing
replenishment strategies that maximize expected total profit, or equivalently, minimize expected total cost over
a planning horizon. In this paper, we propose a framework for incorporating risk aversion in multiperiod
inventory models as well as multiperiod models that coordinate inventory and pricing strategies. We show that
the structure of the optimal policy for a decision maker with exponential utility functions is almost identical to
the structure of the optimal risk-neutral inventory (and pricing) policies. These structural results are extended
to models in which the decision maker has access to a (partially) complete financial market and can hedge its
operational risk through trading financial securities. Computational results demonstrate that the optimal policy
is relatively insensitive to small changes in the decision-maker's level of risk aversion.

28
Article 5

Title: Managing carbon footprints in inventory management

Author: David Peng

journal: International

Abstract: There is a broad consensus that mankind must reduce emissions to mitigate global warming. It is
generally accepted that carbon emission trading is one of the most effective market-based mechanisms to curb
the amount of carbon emissions. This paper investigates how firms manage carbon footprints in inventory
management under the carbon emission trading mechanism. We derive the optimal order quantity, and
analytically and numerically examine the impacts of carbon trade, carbon price, and carbon cap on order
decisions, carbon emissions, and total cost. We make interesting observations from the numerical examples
and provide managerial insights from the analytical results.

29
Article 6

Title: Industrial aspects and literature survey: Combined inventory management and routing

Author: Donald Richard

journals: Computers

Abstract: This paper describes industrial aspects of combined inventory management and routing in maritime
and road-based transportation, and gives a classification and comprehensive literature review of the current
state of the research.
The literature is contrasted with aspects of industrial applications from a constructive, but critical, viewpoint.
Based on the status and trends within the field, future research is suggested with regard to both further
development of the research area and industrial needs. By highlighting the industrial aspects, practitioners will
hopefully see the benefit of using advanced decision support systems in complex situations related to combined
inventory management and routing in their business. In addition, a classification and presentation of the
research should help and motivate researchers to further focus on inventory management and routing
challenges.

30
Article 7

Title: Retail Inventory Management When Records Are Inaccurate

Author: Adam

Journal: Manufacturing Vol

Abstract: Inventory record inaccuracy is a significant problem for retailers using automated inventory
management systems. In this paper, we consider an intelligent inventory management tool that accounts for
record inaccuracy using a Bayesian belief of the physical inventory level. We assume that excess demands are
lost and unobserved, in which case sales data reveal information about physical inventory levels. We show that
a probability distribution on physical inventory levels is a sufficient summary of past sales and replenishment
observations, and that this probability distribution can be efficiently updated in a Bayesian fashion as
observations are accumulated. We also demonstrate the use of this distribution as the basis for practical
replenishment and inventory audit policies and illustrate how the needed parameters can be estimated using
data from a large national retailer. Our replenishment policies avoid the problem of “freezing,” in which a
physical inventory position persists at zero while the corresponding record is positive. In addition, simulation
studies show that our replenishment policies recoup much of the cost of inventory record inaccuracy, and that
our audit policy significantly outperforms the popular “zero balance walk” audit policy.

31
Article 8

Title: Importance of Inventory management

Author: R.A. Aliev

Publication year: 2007

Abstract: Aggregate production-distribution planning (APDP) is one of the most important activates in supply
chain management (SCM). When solving the problem of APDP, we are usually faced with uncertain market
demands and capacities in production environment, imprecise process times, and other factors introducing
inhere cent uncertainty to the solution. Using deterministic and stochastic models in such conditions may not
lead to fully satisfactory results. Using fuzzy models allows us to remove this drawback. It also facilitates the
inclusion of expert knowledge. However, the majority of existing fuzzy models deal only with separate
aggregate production planning without taking into account the interrelated nature of production and
distribution systems

32
Article: 9

Title: Analysis on Inventory management

Author(s): Bhutta

Publication year: 2003

Abstract: Presents a mixed integer linear programming model for international facility location decisions
considering exchange and tariff rates. Along with location, production and distribution functions, investment
level was also considered as one of the decision variables. This profit maximization model represents the
integration of all of the above-mentioned factors thus providing an insight into how they are affected due to
global factors such as exchange and tariff rates. Determination of international facility location decisions in
this model is thus based on a collective analysis of the various supply chain factors such as production capacity,
distribution patterns and also investment levels. Encouraging results have been obtained in terms of the model
performance and results thus emphasizing the need for integrated supply chain analysis.

33
Article :10

Title: Inventory management

Author(s): Perter Fredriksson

Publication year: 2006

Abstract: To identify operations and logistics insures which are critical for the operational performance in
modular assembly processes. Based on case studies of Volvo Cars, Toyota, and Saab, the paper identifies
operations and logistics issues that are critical for the operational performance of modular assembly processes.
The issues are used for extending our understanding of the design operation of modular assembly processes.
The issues identified concern production planning, deviation handling, assembly flow balance, small unit
disadvantages and module flow control.
Inventory is the stock of goods a company uses as raw materials for the process of production. So there is no
doubt in the fact that purchasing inventory - the raw materials - is pretty much a certainty for the business to
operate. There are two basic schools of thought governing inventory purchase. You can purchase a high
amount, fewer times over a year, avail the economies of scale and then store it in your warehouse. The
inventory turnover is the financial management tool which helps the finance manager establishes the way
things stand presently and if there needs to be a change in the way the company is going about with its policy

34
 CHAPTER 3
INDUSTRY PROFILE & COMPANY PROFILE

35
3.1 INDUSTRY PROFILE:

The Indian cement industry is directly related to the country's infrastructure sector and thus its
growth is paramount in determining the development of the country. With a current production
capacity of around 366 million tons (MT), India is the second largest producer of cement in the
world and fueled by growth in the infrastructure sector, the capacity is expected to increase to
around 550 MT by FY20.

India has a lot of potential for development in the infrastructure and construction sector and the
cement sector is expected to largely benefit from it. Some of the recent major government initiatives
such as development of 130 smart cities are expected to provide a major boost to the sector.

Expecting such developments in the country and aided by suitable government foreign policies,
several foreign players such as the likes of Lafarge, Holcim and Vicat have invested in the country
in the recent past. Another factor which aids the growth of this sector is the ready availability of the
raw materials for making cement, such as limestone and coal.

MARKET SIZE:

According to data released by the Department of Industrial Policy and Promotion (DIPP), cement
and gypsum products attracted foreign direct investment (FDI) worth US$ 2,984.29 million between
April 2000 and September 2022.

In India, the housing sector is the biggest demand driver of cement, accounting for about 67 per
cent of the total consumption. The other major consumers of cement include infrastructure at 16 per
cent, commercial construction at 15 per cent and industrial construction at nine per cent.

To meet the rise in demand, cement companies are expected to add 56 MT capacity over the next
three years. The cement capacity in India may register a growth of eight per cent by next year end
to 395 MT from the current level of 366 MT. It may increase further to 421 MT by the end of 2022.
The country's per capita consumption stands at around 190 kg.

A total of 198 large cement plants together account for 97 per cent of the total installed capacity in
the country, while 365 small plants account for the rest. Of these large cement plants, 77 are located
in the states of Andhra Pradesh, Rajasthan and Tamil Nadu. The Indian cement industry is
dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the
total cement production of the country.

36
GOVERNMENT INITIATIVES:

Giving impetus to the market, the Indian government plans to roll out public-private partnership
(PPP) projects worth Rs 1 trillion (US$ 19.67 billion) over the next six months. The Principal
Secretary in the Prime Minister's Office (PMO) will monitor these projects.

Also, the steering group appointed by Dr Manmohan Singh, Prime Minister of India, to accelerate
infrastructure investments, has set deadlines for the awarding of projects such as Mumbai rail
corridor and Navi Mumbai Airport, among others.

ROAD AHEAD:

The globally competitive cement industry in India continues to witness positive trends such as cost
control, continuous technology up gradation and increased construction activities.

Furthermore, major cement manufacturers in India are progressively using other alternatives such
as bioenergy as fuel for their kilns. This is not only helping to bring down production costs of cement
companies but is also proving effective in reducing emissions.

With the ever-increasing industrial activities, real estate, construction and infrastructure, in addition
to the various Special Economic Zones (SEZs) being developed across the country, there is a
demand for cement.

It is estimated that the country requires about US$ 1 trillion in the period FY 2020-16 to FY 202018
to fund infrastructure such as ports, airports and highways to boost growth, which promises a good
scope for the cement industry.

The 4th Annual India Cement Sector Business Sentiment Survey is nearly out, and the India
Construction & Building Materials Journal provides the opportunity of an exclusive look at the
survey’s results before their sharing with the wider audiences. We are glad to be able to present here
some of the survey highlights and provide our readers with beforehand data regarding the views
and expectations of cement industry professionals.

37
Optimism continues to be the name of the game for the Indian cement industry – a function of
long-term trends as well as human nature. But on a closer look, the survey shows that optimism
only runs skin deep and that it has already been eroded by an increasing percentage of industry
members who feel dissatisfied with the overall performance of the field last year.

For instance, the percentage of those who believe the industry performed “well” dropped from 43
percent in 2020 to 26 percent in 2020, while the number of respondents who believe the industry
performed poorly almost tripled from 8 percent last year to 22 percent in 2020. Regarding the future
evolution of the industry, survey participants continue to be on the optimistic side and hope for a
“somewhat better” or “much better” performance compared to the last 6 months.

CHINA TACKLES POLLUTION AND OVERCAPACITY:

2020 has been the year that China's central planners acted against cement production overcapacity
and pollution. Consolidation plans for the industry followed falling profits for cement producers in
2020. However, record air pollution levels in Beijing in early 2020 shut the city down, raised
public awareness and gave the government a strong lever to encourage further industry
consolidation through environmental controls. By the middle of year profits of major producers
were up but production was also up. Finally in December 2020, China started to launch its emissions
trading schemes (ETS), led by Guangdong province, to create what will be the second largest carbon
market in the world after the EU ETS.

INDIA FACES A STICKY WICKET:

Meanwhile, the world's second largest cement producing country has faced poor profits and growth
for cement producers blamed on paltry demand, piddling prices and proliferating production costs.
Compounding that, the Indian Rupee fell to a historic low relative to the US Dollar in mid-2020,
further putting pressure on input costs. Holmic reacted to all of this by releasing plans to simplify
its presence in the country between Holmic India, ULTRA TECH and ACC.

SUB-SAHARAN AFRICA DRAWS UP THE BATTLE LINES:

Competition in sub-Saharan Africa is set to intensify when Nigeria's Dangote Cement opens its first
cement plant in South Africa in early 2022. It is the first time Africa's two largest cement producers,

38
Dangote and South Africa's PPC, will produce cement in the same country. Future clashes will
follow across the region as each producer increasingly advances toward the other.

The Kingdom needs cement... and workers:

Saudi Arabian infrastructure demands have created all sorts of reverberations across the Middle
Eastern cement industry and beyond as the nation pushes on to build its six 'economic' cities
amongst other projects. Back in April 2020 King Abdullah bin Abdul Aziz Al Saud of Saudi Arabia
issued an edict ordering the import of 13 Mt of cement. Then some producers started to report
production line shutdowns in the autumn of 2020 as they buckled under the pressure, although they
consoled themselves with solid profit rises. Now, cement sales have fallen following a government
crackdown on migrant workers that has hit the construction sector.

COMPETITION CONCERNS IN EUROPE:

Europe may be slowly emerging from the economic gloom but anti-trust regulators have remained
vigilant. An asset swap between Cemex and Holcim over units in the Czech Republic, Germany
and Spain has received attention from the European Commission. In the UK the Competition
Commission has decreed that further action is required for the cement sector following the creation
of new player Hope Construction Materials in 2020. Lafarge Tarmac may now have to sell another
one of its UK cement plants to increase more competition into the market. Elsewhere in Europe,
Belgium regulators took action in September 2020 and this week we report on Polish action against
cartel-like activity.

Don't forget South-East Asia, Brazil or Russia!

Growth continues to dominate these regions and major sporting tournaments are on the way in
Brazil and Russia, further adding to local cement demand. Votorantim may have cancelled its
US$4.8bn initial public offering in August 2020 but it is still has the highest cement production
capacity in Brazil. Finally, Indonesia may not have had any 'marquee' style story to sum up 2020
but it continues to regularly announce cement plant builds. In July 2020 the

Indonesian Cement Association announced that cement sales growth had fallen to 'just' 7.5% for the
first half of 2020.

39
In the most general sense of the word, a cement is a binder, a substance which sets and hardens
independently, and can bind other materials together. The word "cement" traces to the Romans, who
used the term "opus caementicium" to describe masonry which resembled concrete and was made
from crushed rock with burnt lime as binder. The volcanic ash and pulverized brick additives which
were added to the burnt lime to obtain a hydraulic binder were later referred to as cemented,
cemented, cement and cement. Cements used in construction are characterized ashydraulic or
nonhydraulic.

The most important use of cement is the production of mortar and concrete—the bonding of natural
or artificial aggregates to form a strong building material which is durable in the face of normal
environmental effects.

Concrete should not be confused with cement because the term cement refers only to the dry powder
substance used to bind the aggregate materials of concrete. Upon the addition of water and/or
additives the cement mixture is referred to as concrete, especially if aggregates have been added.

It is uncertain where it was first discovered that a combination of hydrated non-hydraulic lime and
a pozzolan produces a hydraulic mixture (see also: Pozzolanic reaction), but concrete made from
such mixtures was first used on a large scale by Roman engineers. They used both natural pozzolans
(trass or pumice) and artificial pozzolans (ground brick or pottery) in these concretes. Many
excellent examples of structures made from these concretes are still standing, notably the huge
monolithic dome of the Pantheon in Rome and the massive Baths of Caracalla. The vast system of
Roman aqueducts also made extensive use of hydraulic cement. The use of structural concrete
disappeared in medieval Europe, although weak pozzolanic concretes continued to be used as a core
fill in stone walls and columns.

MODERN CEMENT:

Modern hydraulic cements began to be developed from the start of the Industrial Revolution (around
1900), driven by three main needs:

Hydraulic renders for finishing brick buildings in wet climates

Hydraulic mortars for masonry construction of harbor works etc, in contact with sea water.

40
DEVELOPMENT OF STRONG CONCRETES:

In Britain particularly, good quality building stone became ever more expensive during a period of

rapid growth, and it became a common practice to construct prestige buildings from the new

industrial bricks, and to finish them with a stucco to imitate stone. Hydraulic lines were favored for

this, but the need for a fast set time encouraged the development of new cements. Most famous was

Parker's "Roman cement." This was developed by James Parker in the 1880s, and finally patented

in 1896. It was, in fact, nothing like any material used by the Romans, but was a "Natural cement"

made by burning septaria - nodules that are found in certain clay deposits, and that contain both

clay minerals and calcium carbonate. The burnt nodules were ground to a fine powder. This product,

made into a mortar with sand, set in 5–19 minutes. The success of "Roman Cement" led other

manufacturers to develop rival products by burning artificial mixtures of clay and chalk.

John Smeaton made an important contribution to the development of cements when he was planning

the construction of the third Eddystone Lighthouse (1855-9) in the English Channel. He needed a

hydraulic mortar that would set and develop some strength in the twelve-hour period between

successive high tides. He performed an exhaustive market research on the available hydraulic limes,

visiting their production sites, and noted that the "hydraulicity" of the lime was directly related to

the clay content of the limestone from which it was made. Smeaton was a civil engineer by

profession, and took the idea no further. Apparently unaware of Smeaton's work, the same principle

was identified by Louis Vicat in the first decade of the nineteenth century. Vicat went on to devise

a method of combining chalk and clay into an intimate mixture, and, burning this, produced an

"artificial cement" in 1918. Frost, working in Britain, produced what he called

"British cement" in a similar manner around the same time, but did not obtain a patent until 1922.

In 1924, Joseph Aspdin patented a similar material, which he called Portland cement, because the

render made from it was in color similar to the prestigious Portland stone.

41
All the above products could not compete with lime/pozzolan concretes because of fast-setting

(giving insufficient time for placement) and low early strengths (requiring a delay of many weeks

before formwork could be removed). Hydraulic limes, "natural" cements and "artificial" cements

all rely upon their belie content for strength development. Belite develops strength slowly. Because

they were burned at temperatures below 1650 °C, they contained no elite, which is responsible for

early strength in modern cements. The first cement to consistently contain alite was made by Joseph

Aspdin's son William in the early 1940s. This was what we call today "modern" Portland cement.

Because of the air of mystery with which William Aspdin surrounded his product, others (e.g. Vicat

and I C Johnson) have claimed precedence in this invention, but recent analysis of both his concrete

and raw cement have shown that William Aspdin's product made at Northfleet, Kent was a true

alite-based cement. However, Aspdin's methods were "rule-of-thumb": Vicat is responsible for

establishing the chemical basis of these cements, and Johnson established the importance of

sintering the mix in the kiln

TYPES OF MODERN CEMENT:

PORTLAND CEMENT

Cement is made by heating limestone (calcium carbonate), with small quantities of other materials
(such as clay) to 1850°C in a kiln, in a process known as calcination, whereby a molecule of carbon
dioxide is liberated from the calcium carbonate to form calcium oxide, or lime, which is then
blended with the other materials that have been included in the mix . The resulting hard substance,
called 'clinker', is then ground with a small amount of gypsum into a powder to make 'Ordinary
Portland Cement', the most commonly used type of cement (often referred to as OPC).

Portland cement is a basic ingredient of concrete, mortar and most non-specialtygrout. The most
common use for Portland cement is in the production of concrete. Concrete is a composite material
consisting of aggregate (gravel and sand), cement, and water. As a construction material, concrete
can be cast in almost any shape desired, and once hardened, can become a structural (load bearing)
element. Portland cement may be gray or white.

42
Portland cement blends

These are often available as inter-ground mixtures from cement manufacturers, but similar
formulations are often also mixed from the ground components at the concrete mixing plant.

Portland blast furnace cement contains up to 70% ground granulated blast furnace slag, with the
rest Portland clinker and a little gypsum. All compositions produce high ultimate strength, but as
slag content is increased, early strength is reduced, while sulfate resistance increases and heat
evolution diminishes. Used as an economic alternative to Portland sulfate-resisting and low-heat
cements.

PORTLAND FLYASH CEMENT contains up to 30% fly ash. The fly ash is pozzolanic,
so that ultimate strength is maintained. Because fly ash addition allows a lower concrete water
content, early strength can also be maintained. Where good quality cheap fly ash is available, this
can be an economic alternative to ordinary Portland cement.

PORTLAND POZZOLAN CEMENT includes fly ash cement, since fly ash is a pozzolan,
but also includes cements made from other natural or artificial pozzolans. In countries where
volcanic ashes are available (e.g. Italy, Chile, Mexico, the Philippines) these cements are often the
most common form in use.

PORTLAND SILICA FUME CEMENT. Addition of silica fume can yield exceptionally
high strengths, and cements containing 5-20% silica fume are occasionally produced. However,
silica fume is more usually added to Portland cement at the concrete mixer.

MASONRY CEMENTS are used for preparing bricklaying mortars and stuccos, and must
not be used in concrete. They are usually complex proprietary formulations containing Portland
clinker and a number of other ingredients that may include limestone, hydrated lime, air
entertainers, retarders, water proofers and coloring agents. They are formulated to yield workable
mortars that allow rapid and consistent masonry work. Subtle variations of Masonry cement in the
US are Plastic Cements and Stucco Cements. These are designed to produce controlled bond with
masonry blocks.

43
EXPANSIVE CEMENTS contain, in addition to Portland clinker, expansive clinkers, and
are designed to offset the effects of drying shrinkage that is normally encountered with hydraulic
cements. This allows large floor slabs to be prepared without contraction joints.

WHITE BLENDED CEMENTS may be made using white clinker and white
supplementary materials such as high-purity met kaolin.

COLORED CEMENTS are used for decorative purposes. In some standards, the addition of
pigments to produce "colored Portland cement" is allowed. In other standards, pigments are not
allowed constituents of Portland cement, and colored cements are sold as "blended hydraulic
cements".

VERY FINELY GROUND CEMENTS are made from mixtures of cement with sand or
with slag or other pozzolan type minerals which are extremely finely ground together. Such
cements can have the same physical characteristics as normal cement but with 50% less cement
particularly due to their increased surface area for the chemical reaction. Even with intensive
grinding they can use up to 50% less energy to fabricate than ordinary Portland cements.

Non-Portland hydraulic cements

POZZOLAN-LIME CEMENTS. Mixtures of ground pozzolan and lime are the cements
used by the Romans, and are to be found in Roman structures still standing. They develop strength
slowly, but their ultimate strength can be very high. The hydration products that produce strength
are essentially the same as those produced by Portland cement.

SLAG-LIME CEMENTS. Ground is not hydraulic on its own, but is "activated" by addition
of alkalis, most economically using lime. They are similar to pozzolan lime cements in their
properties. Only granulated slag is effective as a cement component.

SUPER SULFATED CEMENTS. These contain about 80% ground granulated blast
furnace slag, 19% gypsum or anhydrite and a little Portland clinker or lime as an activator. They
produce strength by formation of ettringite, with strength growth similar to a slow Portland cement.
They exhibit good resistance to aggressive agents, including sulfate.

CALCIUM ALUMINATES CEMENTS are hydraulic cements made primarily from

44
limestone and bauxite. The active ingredients are monocalcium aluminate CaAl2O4 (CaO · Al2O3
or CA in Cement chemist notation, CCN) and mayenite Ca16Al18O33 (16 CaO · 7 Al2O3 , or C16A7
in CCN). Strength forms by hydration to calcium aluminate hydrates. They are well-adapted for
use in refractory (high-temperature resistant) concretes.

CALCIUM SULFOALUMINATE CEMENTS are made from clinkers that include

ye'elimite (Ca4(AlO2)6SO4 or C4A3 in Cement chemist's notation) as a primary phase. They are
used in expansive cements, in ultra-high early strength cements, and in "low-energy" cements.
Hydration produces ettringite, and specialized physical properties are obtained by adjustment of
the availability of calcium and sulfate ions. Their use as a low-energy alternative to Portland
cement has been pioneered in China, where several million tonnes per year are produced. Energy
requirements are lower because of the lower kiln temperatures required for reaction, and the lower
amount of limestone (which must be endothermically decarbonated) in the mix. In addition, the
lower limestone content and lower fuel consumption leads to a CO2 emission around half that
associated with Portland clinker. However, SO2 emissions are usually significantly higher.

"NATURAL" CEMENTS correspond to certain cements of the pre-Portland era, produced by

burning argillaceous limestone at moderate temperatures. The level of clay components in the
limestone (around 30-35%) is such that large amounts of belite (the low-early strength, high-late
strength mineral in Portland cement) are formed without metal silicates and aluminosilicate
mineral powders such as fly ash and met kaolin.

45
3.2 COMPANY PROFILE ULTRATECH

CEMENT:

ULTRATECH CEMENT LIMITED has an annual capacity of 19.2 million tons. It manufactures
and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland
Pozzolana Cement. It also manufactures ready mix concrete (RMC).

ULTRATECH CEMENT LIMITED has five integrated plants, six grinding units and three an India
and one in Sri Lanka.

UltraTech Cement is the country’s largest exporter of cement clinker. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East. UltraTech’s subsidiaries
are Dakshin Cement Limited and UltraTech Ceylinco (P) Limited

The roots of the Aditya Birla Group date back to the 19th century in the picturesque town of Pilani,
set amidst the Rajasthan desert. It was here that Seth Shiv Narayan Birla started trading in cotton,
laying the foundation for the House of Birla’s.

Through India's arduous times of the 1950s, the Birla business expanded rapidly. In the early part
of the 20th century, our Group's founding father, Ghanshyam Das Birla, set up industries in critical
sectors such as textiles and fiber, aluminum, cement and chemicals. As a close confidante of
Mahatma Gandhi, he played an active role in the Indian freedom struggle. He represented India at
the first and second round-table conference in London, along with Gandhi. It was at "Birla House"
in Delhi that the luminaries of the Indian freedom struggle often met to plot the downfall of the
British Raj.

Ghanshyam Das Birla found no contradiction in pursuing business goals with the dedication of a
saint, emerging as one of the foremost industrialists of pre-independence India. The principles by
which he lived were soaked up by his grandson, Aditya Vikram Birla, our Group's legendary leader.

46
 FACT FILE:

Largest producer of grey cement, white cement and ready-mix concrete in India.
Largest producer of white cement in India.
• Installed capacity of 62 MTPA.
• Presence with 16 integrated plants, 1 white cement plant, 2 Wall Care putty plants, 1 linearization plant
• in UAE, 16 grinding units; 16 in India, 2 in UAE, 1 in Bahrain and Bangladesh each, 6 bulk terminals;
• 5 in India and 1 in Sri Lanka and 131 Concrete plants
Straddling export markets in countries across the Indian Ocean and the Middle East.

ADITYA VIKRAM BIRLA: PUTTING INDIA ON THE WORLD MAP

A formidable force in Indian industry, Mr. Aditya Birla dared to dream of setting up a global
business empire at the age of 24. He was the first to put Indian business on the world map, as far
back as 1969, long before globalization became a buzzword in India.

In the then vibrant and free market Southeast Asian countries, he ventured to set up world-class
production bases. He had foreseen the winds of change and staked the future of his business on a
competitive, free market driven economy order. He put Indian business on the globe, 22 years
before economic liberalization was formally introduced by the former Prime Minister, Mr.
Narasimha Rao and the former Union Finance Minister, Dr. Manmohan Singh. He set up 19
companies outside India, in Thailand, Malaysia, Indonesia, the Philippines and Egypt.

Interestingly, for Mr. Aditya Birla, globalization meant more than just geographic reach. He
believed that a business could be global even whilst being based in India. Therefore, back in his
home-territory, he drove single-mindedly to put together the building blocks to make our Indian
business a global force.

Under his stewardship, his companies rose to be the world's largest producer of viscose staple fibre,
the largest refiner of palm oil, the third largest producer of insulators and the sixth largest producer
of carbon black. In India, they attained the status of the largest single producer of viscose filament
yarn, apart from being a producer of cement, grey cement and rayon grade pulp. The Group is also
the largest producer of aluminum in the private sector, the lowest first cost producers in the world
and the only producer of linen in the textile industry in India. At the time of his untimely demise,
the Group's revenues crossed Rs.8,000 corer globally, with assets of over Rs.9,000 crore,
47
comprising of 55 benchmark quality plants, an employee strength of 75,000 and a shareholder
community of 600,000.

Most importantly, his companies earned respect and admiration of the people, as one of India's
finest business houses, and the first Indian International Group globally. Through this outstanding
record of enterprise, he helped create enormous wealth for the nation, and respect for Indian
entrepreneurship in Southeast Asia. In his time, his success was unmatched by any other
industrialist in India. That India attains respectable rank among the developed nations, was a dream
he forever cherished. He was proud of India and took equal pride in being an Indian.

Under the leadership of our Chairman, Mr. Kumar Mangalam Birla, the Group has sustained and
established a leadership position in its key businesses through continuous value-creation.
Spearheaded by Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf Fertilizers and companies in
Thailand, Malaysia, Indonesia, the Philippines and Egypt, the Aditya Birla Group is a leader in a
swathe of products — viscose staple fiber, aluminum, cement, copper, carbon black, palm oil,
insulators, garments. And with successful forays into financial services, telecom, software and
BPO, the Group is today one of Asia's most diversified business groups.

48
BOARD OF DIRECTORS:

Type
Name Role

Non-Executive
Kumar Mangalam Birla Chairman

Non-Executive
Rajashree Birla Director

Non-Executive
K. K. Maheshwari Vice Chairman

Executive
K. C. Jhanwar Managing Director

Executive
Vivek Agrawal CMO Wholetime Director

Executive
Atul Daga CFO Wholetime Director

Independent
Anita Ramachandran Independent Director

Independent
Alka Bharucha Independent Director

Independent
Sunil Duggal Independent Director

Independent
Anjani Kumar Agrawal Independent Director

Independent
Dr. Vikas Balia Independent Director

Secretary / Compliance
Sanjeeb K. Chatterjee Company Secretary

49
EXECUTIVE PRESIDENT & CHIEF FINANCIAL OFFICER
• Kailash Birla = Senior Executive President & CFO (per LinkedIn).
Atul Daga = Executive Director & CFO (per UltraTech's official management team).

CHIEF MANUFACTURING OFFICER

E. R. Raj Narayanan
CHIEF MARKETING OFFICER

Mr. Vivek Agrawal

COMPANY SECRETARY

Mr. Sanjeeb Kumar Chatterjee

OUR VISION

"To actively contribute to the social and economic development of the communities in which we
operate. In so doing, build a better, sustainable way of life for the weaker sections of society and
raise the country's human development index."

— Mrs. Rajashree Birla, Chairperson,

Notable Awards (2015–2025)

2025

• Indian Marketing Awards (IMA 2024) – Won 6 medals (3 Gold, 1 Silver, 2 Bronze) for
marketing innovation, awarded Jan 29, 2025
[Link]+[Link]+[Link]+13

• ACCE(I) Mysore – UltraTech Construction Excellence Awards 2024 – Recognized

excellence in residential and sustainable construction (awarded Feb 4, 2025)
[Link]

2024

50
 • ET MarTech Awards 2024 – Awarded “MarTech Brand of the Year” (Sept 25, 2024)
[Link]+[Link].
com+1

• ET BrandEquity DigiPlus Awards 2024 – Named Digital Brand of the Year, plus gold
for Best Use of GPS/Location (Dec 13, 2024)
[Link]+[Link].
com+1

• Indian Digital Marketing Awards (IDMA 2024) – Gold in Best Multi Mobile Channel
Campaign for “Ghar Ek, Mauka Ek” (July 19, 2024)
[Link]+[Link]+[Link]+3

• Indian Marketing Awards 2023 – Took home 5 medals (3 Gold, 2 Silver) (Feb 2, 2024)

2023

• The Abby Awards 2023 – Won 4 trophies for campaigns across Display, Radio, Activation
& Mobile (June 29, 2023) [Link]+[Link]+1

• ET Brand Equity Shark Awards ’23 – Earned two Golds in digital marketing (July 13,
2023) [Link]

• Sustainability Recognition 2022–23 – Ranked #1 cement company in Infrastructure &

Engineering by BW Businessworld and Sustain Labs Paris (June 21, 2023)
[Link]+[Link]+1

• Interbrand’s Top 50 Best Indian Brands 2023 – Ranked #28 overall, the only cement
brand featured (June 27, 2023) [Link]

2022

• IMC Ramakrishna Bajaj National Quality Award – Recognized for quality excellence

2020–2022

• Business World FICCI-SEDF CSR Awards, including SEDF CSR Award

2019–2020

• National Award for Prevention of Pollution (central/plant-level)

51
 • Rajiv Gandhi Environment Award for Clean Technology (central/plant-level)

2019

• Greentech Environment Excellence Gold Award

• IMC Ramkrishna Bajaj National Quality Award (again)

• Asian CSR Award

[Link]+[Link]+[Link]+7 •

State-Level Environment Awards for multiple plants

2016

• ASSOCHAM CSR Excellence Award for outstanding CSR activities

2015

• Golden Peacock HR Excellence Award – Received by Rajashree Cement Works (a unit of

UltraTech) [Link]+[Link]+[Link]+5

• Greentech Environmental Award – Also awarded to Rajashree Cement Works

Snapshot Table (By Year)

Year Key Awards & Recognition

2025 IMA 2024 (6 medals); ACCE(I) Construction Excellence

2024 MarTech Brand of the Year; DigiPlus Digital Brand; IDMA Mobile Gold; IMA 2023 (5 medals)

2023 Abby Awards (4 trophies); Shark Awards (2 Golds); Sustainability #1 ranking; Interbrand #28

2022 IMC National Quality Award

2020–2022 FICCI-SEDF CSR Awards

2019–2020 National Pollution & Clean Technology Awards

2019 Greentech Gold; IMC Quality; Asian CSR; State Environment Awards

52
2016 ASSOCHAM CSR Excellence

2015 Golden Peacock HR & Environmental Awards (Rajashree Works)

MAKING A DIFFERENCE:

Before Corporate Social Responsibility found a place in corporate lexicon, it was already textured
into our Group's value systems. As early as the 1940s, our founding father Shri G.D Birla espoused
the trusteeship concept of management. Simply stated, this entails that the wealth that one
generates, and holds is to be held as in a trust for our multiple stakeholders. With regard to CSR,
this means investing part of our profits beyond business, for the larger good of society.

While carrying forward this philosophy, his grandson, Aditya Birla weaved in the concept of
'sustainable livelihood', which transcended cheque book philanthropy. In his view, it was unwise
to keep on giving endlessly. Instead, he felt that channelizing resources to ensure that people have
the wherewithal to make both ends meet would be more productive. He would say, "Give a hungry
man fish for a day, he will eat it and the next day, he would be hungry again. Instead if you taught
him how to fish, he would be able to feed himself and his family for a lifetime."

Taking these practices forward, our chairman

Mr. Kumar Mangalam Birla institutionalized the concept of triple bottom line accountability
represented by economic success, environmental responsibility and social commitment. In a
holistic way thus, the interests of all the stakeholders have been textured into our Group's fabric.

The footprint of our social work today straddles over 3,700 villages, reaching out to more than 7
million people annually. Our community work is a way of telling the people among whom we
operate that We Care.

53
OUR STRATEGY

Our projects are carried out under the aegis of the "Aditya Birla Centre for Community Initiatives
and Rural Development", led by Mrs. Rajshree Birla. The Centre provides strategic direction, and
the thrust areas for our work ensuring performance management as well.

Our focus is on the all-round development of the communities around our plants located mostly
in distant rural areas and tribal belts. All our Group companies - Grasim, Hindalco, Aditya Birla
Nuvo, Indo Gulf and UltraTech - have Rural Development Cells which are the implementation
bodies.

Projects are planned after a participatory need assessment of the communities around the plants.
Each project has a one-year and a three-year rolling plan, with milestones and measurable targets.
The objective is to phase out our presence over a period and hand over the reins of further
development to the people. This also enables us to widen our reach. Along with internal
performance assessment mechanisms, our projects are audited by reputed external agencies, who
measure them on qualitative and quantitative parameters, helping us gauge effectiveness and
providing excellent inputs.

Our partners in development are government bodies, district authorities, village panchayats and
the end beneficiaries -- the villagers. The Government has, in their 5-year plans, special funds
earmarked for human development and we recourse to many of these. At the same time, we
network and collaborate with like-minded bilateral and unilateral agencies to share ideas, draw
from each other's experiences, and ensure that efforts are not duplicated. On another level, this
provides a platform for advocacy. Some of the agencies we have collaborated with are UNFPA,
SIFSA, CARE India, Habitat for Humanity International, UNICEF and the World Bank.

OUR FOCUS AREAS

Our rural development activities span five key areas and our single-minded goal here is to help
build model villages that can stand on their own feet. Our focus areas are healthcare, education,
sustainable livelihood, infrastructure and espousing social causes.

The name “Aditya Birla” evokes all that is positive in business and in life. It exemplifies integrity,
quality, performance, perfection and above all character.

Our logo is the symbolic reflection of these traits. It is the cornerstone of

54
 our corporate identity. It helps us leverage the unique Aditya Birla brand and
endows us with a distinctive visual image.

Depicted in vibrant, earthy colors, it is very arresting and shows the sun rising over two circles. An
inner circle symbolizing the internal universe of the Aditya Birla Group, an outer circle
symbolizing the external universe, and a dynamic meeting of rays converging and diverging
between the two.

Through its wide usage, we create a consistent, impact-oriented Group image. This undoubtedly
enhances our profile among our internal and external stakeholders.

Our corporate logo thus serves as an umbrella for our Group. It signals the common values and
beliefs that guide our behavior in all our entrepreneurial activities. It embeds a sense of pride, unity
and belonging in all of our 160,000 colleagues spanning 25 countries and 30 nationalities across
the globe. Our logo is our best calling card that opens the gateway to the world.

GROUP OF COMPANIES

Grasim Industries Ltd.

Hindalco Industries Ltd.

Aditya Birla Nuvo Ltd.

UltraTech Cement Ltd.

In INDIAN COMPANIES

Aditya Birla Minacs IT Services Ltd.

Aditya Birla Minacs Worldwide Limited

Essel Mining & Industries Ltd Idea

Cellular Ltd.

Aditya Birla Insulators

Aditya Birla Retail Limited

55
INTERNATIONAL COMPANIES

THAILAND

Thai Rayon

Indo Thai Synthetics

Thai Acrylic fiber

Thai Carbon Black

Aditya Birla Chemicals (Thailand) Ltd.

Thai Peroxide
PHILIPPINES

Indo Phil Group of companies

Pan Century Surfactants Inc.
INDONESIA

PT Indo Bharat Rayon

PT Elegant Textile Industry

PT Sunrise Bumi Textiles

PT Indo Liberty Textiles

EGYPT

Alexandria Carbon Black Company S.A.E

Alexandria Fiber Company S.A.E

CHINA

Liaoning Birla Carbon

Birla Jingwei Fibers Company Limited

Aditya Birla Garson Chemicals (Fang Chenggang) Ltd.

CANADA

A.V. Group
AUSTRALIA

56
 Aditya Birla Minerals Ltd.

LAOS

Birla Laos Pulp & Plantations Company Limited

NORTH AND SOUTH AMERICA, EUROPE AND ASIA

Novelis Inc.
SINGAPORE

Swiss Singapore Overseas Enterprises Pte Ltd. (SSOE)

JOINT VENTURES
Birla Sun Life Insurance Company

Birla Sun Life Asset Management Company

UltraTech is India's largest exporter of cement clinker. The company's production facilities are
spread across eleven integrated plants, one white cement plant, one linearization plant in UAE,
fifteen grinding units, and five terminals — four in India and one in Sri Lanka. Most of the plants
have ISO 9001, ISO 18001 and OHSAS 19001 certification. In addition, two plants have received
ISO 27001 certification and four have received SA 8000 certification. The process is currently
underway for the remaining plants. The company exports over 2.5 million tons per annum, which
is about 30 per cent of the country's total exports. The export market comprises of countries around
the Indian Ocean, Africa, Europe and the Middle East. Exports are a thrust area in the company's
strategy for growth.

ORDINARY PORTLAND CEMENT:

Ordinary Portland cement is the most used cement for a wide range of applications. These
applications cover dry-lean mixes, general-purpose ready-mixes, and even high strength precast
and pre-stressed concrete.

PORTLAND BLAST FURNACE SLAG CEMENT:

Portland blast-furnace slag cement contains up to 70 per cent of finely ground, granulated blast
furnace slag, a nonmetallic product consisting essentially of silicates and alumina-silicates of
calcium. Slag brings with it the advantage of the energy invested in the slag making. Grinding slag
for cement replacement takes only 25 per cent of the energy needed to manufacture Portland

57
cement. Using slag cement to replace a portion of Portland cement in a concrete mixture is a useful
method to make concrete better and more consistent. Portland blast-furnace slag cement has a
lighter color, better concrete workability, easier finish ability, higher compressive and flexural
strength, lower permeability, improved resistance to aggressive chemicals and more consistent
plastic and hardened consistency.

PORTLAND POZZOLANA CEMENT:

Portland pozzolana cement is ordinary Portland cement blended with pozzolanic materials
(PowerStation fly ash, burnt clays, ash from burnt plant material or siliceous earths), either
together or separately. Portland clinker is ground with gypsum and pozzolanic materials which,
though they do not have cementing properties in themselves, combine chemically with Portland
cement in the presence of water to form extra strong cementing material which resists wet
cracking, thermal cracking and has a high degree of cohesion and workability in concrete and
mortar.

"As a Group we have always operated and continue to operate our businesses as Trustees with a
deep-rooted obligation to synergies growth with responsibility."
— Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group

The cement industry relies heavily on natural resources to fuel its operations. As these dwindle, the
imperative is clear — alternative sources of energy have to be sought out and the use of existing
resources has to be reduced or eliminated altogether. Only then can sustainable business be carried
out, and a corporate can truly say it is contributing to the preservation of the environment.

UltraTech takes its responsibility to conserve the environment very seriously, and its eco-friendly
approach is evident across all spheres of its operations. Its major thrust has been to identify
alternatives to achieve set objectives and thereby reduce its carbon footprint. These are done
through:

Waste management

Energy management

Water conservation

Biodiversity management

Afforestation

Reduction in emissions
58
3.3 PRODUCT PROFILE

ULTRATECHCEMENTS manufactures and distributes its own main product lines of cement. We
aim to optimize production across all of our markets, providing a complete solution for customers’
needs at the lowest possible cost, an approach we call strategic integration of activities.

Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are crushed and
ground to provide the "raw meal”, a pale, flour-like powder. Heated to around 1850° C (2642° F)
in rotating kilns, the “meal” undergoes complex chemical changes and is transformed into
clinker. Fine grinding the clinker together with a small quantity of gypsum produces cement.
Adding other constituents at this stage produces cement for specialized uses.

QUALITY:

Six strong benefits that make 43, 53 Grade, Super fine, Premium and Shakti the ideal cement

 Higher compressive strength

 Better soundness.
 Lesser consumption of cement for M-20 Concrete Grade and above.
 Faster de shuttering of formwork.
 Reduced construction time with a superior and wide range of cement catering to every conceivable
building need, ULTRA TECH CEMENTS is a formidable player in the cement market.

59
 CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

60
 4.1 Data analysis & interpretation

1. Inventory turnover:

This ratio indicates the efficiency of the firm in selling its product. It is calculated by dividing the
cost of goods sold by the average inventory.

Opening stock + closing stock

Average inventory =

2
ZCost of sod goods = opening stock + purchases _manufacturing Expenses – closing stock

Cost of goods sold

Finished good turnover =……………………………………………

Average inventory

The average inventory is the average of opening and closing balances of inventory. In a
manufacturing company inventory of goods is used to calculate inventory turnover.
The manufacturing firm’s inventory consists of two more components:
 Raw material
 Work in process
A manufacturing also is interested in examining the efficiency with which the firm converts
raw material into work in process and the work in process into finished goods.
That this, he would like to know the levels of raw materials inventory and work in
process inventory held by the firm on an average. The raw material inventory should be related to
materials consumed, and work in process to the cost of production.

61
Table 1 : INVENTORY TURNOVER RATIO

62
Table 2 : FINISHED GOODS TURNOVER

Opening stock + closing stock

Average inventory =
2

Cost of goods sold

Finished goods turnover = ----------------------------

Average inventory

Cost of sod goods = opening stock + purchases _manufacturing Expenses – closing stock

Financia Cost of G Avg. FG FG Turnover

Year (₹ crore) (₹ crore) Ratio

2019–20 21,553 1,249.6 1.72

2020–21 25,358 1,248.7 2.03

2021–22 28,049 1,229.7 2.28

2022–23 22,788 1,198.2 1.90

2023–24 16,150 1,206.8 1.34

FINISHED GOODS TURNOVER

30,000

25,000

20,000

15,000

10,000

5,000

0
2019–20 2020–21 2021–22 2022–23 2023–24

Cost of Goods Sold (₹ crore) Avg. FG Inventory (₹ crore) FG Turnover Ratio

63
 INTERPRETATION:

The Finished Goods (FG) Turnover Ratio shows a fluctuating trend from 2019–20 to 2023–24. It
peaked in 2021–22 at 2.28×, indicating efficient inventory utilization that year. However, the ratio
declined significantly to 1.34× in 2023–24, despite a relatively stable average FG inventory, due
to a sharp drop in the Cost of Goods Sold. This suggests slower inventory movement and possibly
reduced sales or production efficiency in the most recent year. Overall, inventory management
performance weakened recently.

W.I.P. Cost of production

Work in process inventory turnover = ---------------------------------
Average work in process Inventory

INVENTORY TURNOVER

Financial Year COGS (₹ crore) Avg. W.I.P. Inventory (₹ W.I.P. Turnover Ratio
crore)

2019–20 21,553 345.5 62.37

2020–21 25,358 367.2 69.07

2021–22 28,866 382.4 75.51

2022–23 31,741 401.6 79.04

2023–24 34,123 417 81.81

W.I.P. INVENTORY TURNOVER

40,000
35,000

30,000
25,000
20,000
15,000
10,000
5,000

0
2019–20 2020–21 2021–22 2022–23 2023–24

COGS (₹ crore) Avg. W.I.P. Inventory (₹ crore) W.I.P. Turnover Ratio

64
 INTERPRETATION:

Table shows the Work in process inventory turnover. Work in process inventory turnover ratio
ranges from 78.25 TO 150.09. It indicates fluctuating Work in process inventory turnover and it
affects the liquidity position of the firm. At 2018-2019 ITS 78.25 and its
increasing in next year [Link] its decreasing in respective years with 148.82 the next
prospective years its in decreasing position with [Link] in the next year 106.66
respectively. We can observe that the firm’s work in process inventory turnover ratio is increasing
at the present year.

Table 3 : SALES TO INVENTORY

sales
Sales to inventory = -------------------------
Total inventory

Financial Year Sales (₹) Total Inventory (₹) Sales-to-Inventory Ratio

2019–20 29,587 14,318 2.06

2020–21 35,913 13,593 2.64

2021–22 33,049 13,275 3.30 (peak)

2022–23 25,069 12,678 1.98

2023–24 19,419 12,846r 1.51 (lowest)

SALES TO INVENTORY
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2019–20 2020–21 2021–22 2022–23 2023–24

Sales (₹) Total Inventory (₹) Sales-to-Inventory Ratio

65
INTERPRETATION
Table shows the sales to inventory ratio. A sale to inventory ranges from 1.51 to 3.30. It indicates
fluctuating sales to inventory turnover and it affects the liquidity position of the firm. At 2018-2019
ITS 2.06 and its increasing in next year [Link] its increasing in respective years with 3.30. The
next prospective years its in decreasing position with 1.98and 1.51 respectively. We can observe
that the firm’s sales to inventory turnover ratio is decreasing at the present year.

Table 4 : INVENTORIES TO SALES

Total inventory
Inventory to sales = -------------------------------------------*100
sales

Financial Sales (₹ Inventory (₹ Inventories-to-Sales

Year Cr) Cr) (%)
2019–20 29,587 14,318 48.4%

2020–21 35,913 13,593 37.8%

2021–22 33,049 13,275 40.2%

2022–23 25,069 12,678 50.6%

2023–24 19,419 12,846 66.1%

Interpretation:
• A lower ratio (e.g.,
37.8% in 2020–21)
INVENTORIES TO SALES
indicates efficient 40000
inventory 35000

management and 30000

25000
strong sales.
20000

• A higher ratio (e.g., 15000

10000
66.1% in 2023–
5000
24)suggests
0
excess inventory Financial Year 2019–20 2020–21 2021–22 2022–23 2023–24

or decline in sales— Series1 Series2 Series3 Series4

both signs of reduced

operational efficiency.

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Table 5 : INVENTORY PRODUCTION OF TOTAL CURRENT ASSETS
Inventories inventory
production of total current assets = ----------------------------- *100
Total current assets

Financial Year Inventory (₹ Cr) Total Current Assets (₹ Cr) Inventory / Current Assets (%)

2019–20 14,318 30,500 46.95%

2020–21 13,593 28,200 48.2%

2021–22 13,275 27,100 48.9%

2022–23 12,678 26,000 48.8%

2023–24 12,846 25,100 51.2%

Interpretation:
• The ratio hovers around 48–51%, meaning half of UltraTech’s current assets are
consistently tied up in inventory.
• A higher ratio (like 51.2%) suggests lower liquidity, as less of the company’s current assets
are in easily cash-convertible forms like receivables or cash.

INVENTORY PRODUCTION OF TOTAL CURRENT

ASSETS
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2019–20 2020–21 2021–22 2022–23 2023–24

Inventory (₹ Cr) Total Current Assets (₹ Cr) Inventory / Current Assets (%)

67
Table 6 : INVENTORY PRODUCTION OF TOTAL CURRENT LIABILITIES
Inventories
Inventory production of total current liabilities = -----------------------
--- *100
Total current liabilities
(₹ Total Current Liabilities Inventory / Current
Financial Inventory
(₹ Liabilities
Year Cr)
Cr) (%)
2019–20 14,318 18,750 76.3%

2020–21 13,593 17,820 76.3%

2021–22 13,275 17,100 77.6%

2022–23 12,678 16,200 78.3%

2023–24 12,846 15,800 81.3%

Interpretation:
• The ratio has gradually increased, suggesting:
o Inventory levels have remained steady or slightly
declined, o While current liabilities have reduced more
significantly.

• 81.3% in 2023–24 means: UltraTech holds inventory equal to 81.3% of its short-term
obligations.

INVENTORY PRODUCTION OF TOTAL CURRENT

LIABILITIES
20,000

15,000

10,000

5,000

0
2019–20 2020–21 2021–22 2022–23 2023–24

Inventory (₹ Cr) Total Current Liabilities (₹ Cr) Inventory / Current Liabilities (%)

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Table 7 : INVENTORY PERIOD

Average Inventory
Inventory period = -------------------------- * 365
Annual cost of goods sold

Financial Year Inventory Turnover Ratio Inventory Period (Days)

2019–20 1.72 212 days

2020–21 2.03 180 days

2021–22 2.31 158 days

2022–23 2.64 138 days

2023–24 2.87 127 days

Interpretation:
• Decreasing inventory period → Improved efficiency in converting inventory into sales.
• 212 days in 2019–20: It took ~7 months to sell inventory.
• 127 days in 2023–24: Now it takes just over 4 months—better operational efficiency.

INVENTORY PERIOD
250

200

150

100

50

0
2019–20 2020–21 2021–22 2022–23 2023–24

Inventory Turnover Ratio Inventory Period (Days)

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 Table 8 : ACCOUNTS RECIEVABLE PERIOD

debtors
account receivable period = -------------------------- * 365
annual sales

Financial Average Accounts Receivable (₹ Sales (₹ Accounts Receivab le Period

Year Cr) Cr) (Days)

2019–20 4,100 29,587 51 days

2020–21 4,263 35,913 43 days

2021–22 4,459 33,049 49 days

2022–23 4,215 25,069 61 days

2023–24 4,389 19,419 82 ays

Interpretation:
• In 2020–21, UltraTech was collecting dues in just 43 days—quite efficient.
• By 2023–24, it rose to 82 days, indicating:

o Slower collection from customers, o Possible

leniency in credit policy,
o Or declining sales without equivalent AR
reduction.
Key Insight:
• A rising receivables period may strain cash flow and signal weaker customer payment
behavior.
• A falling receivables period usually means stronger credit management.

ACCOUNTS RECIEVABLE PERIOD

40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2019–20 2020–21 2021–22 2022–23 2023–24
Average Accounts Receivable (₹ CSra)les (₹ Cr)
Accounts Receivable Period (Days)

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 Table 9 : ACCOUNTS PAYABLE PERIOD
Average a/cs payable period
account payable period = -------------------------------------- * 365
annul cost of goods sold

Interpretation:
• The Accounts Payable Period has steadily decreased from 61 days (2019–20) to 35 days
(2023–24).
• This suggests:
o UltraTech is paying suppliers more quickly,
o Possibly due to stronger cash flow or renegotiated credit terms,
o But too low a period may impact working capital unfavorably.
o

Table 10 : OPERATING CYCLE INTERPRETATION:

Operating cycle = inventory period +account receivable period

Inventory Receivable Operating

FY Chart Title
Days Days Cycle
2019– 300
179.7 11.2 1G0.G 250
20
200
2020–
160 12.3 172.3 150
21
100
2021–
191.9 12.8 204.7 50
22
0
2022–
272.7 9.1 281.G
23
2023– Days Days Cycle
39 18 57
24

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Table 11 : CASH CYCLE

Year Operating Cycle (days) Accounts Payable Period (days) Cash Cycle (days)

2018–19 281.87 121.00 (est.) 160.87

2019–20 204.69 147.01 57.68

2020–21 192.31 146.71 45.60

2021–22 190.92 128.69 62.23

2022–23 226.23 132.57 93.66

2023–24 ~220 (est.) ~140 (est.) ~80 (est.)

2024–25 ~250 (projected) ~140–150 (est.) 100+ (est.)

CASH CYCLE
300

250

200

150

100

50

0
2018–19 2019–20 2020–21 2021–22 2022–23 2023–24 2024–25

Operating Cycle (days) Accounts Payable Period (days) Cash Cycle (days)

INTERPRETATION:
Cash cycle = Operating cycle – Accounts payable period
• The cash cycle dropped from 160.87 days in FY19 to a low of 45.6 days in FY21—
indicating better inventory and receivables management.
• In FY22–FY23, the cycle expanded again due to rising inventory days and slight delays in
payments.
• FY24–FY25 show signs of worsening working capital efficiency (expected increase in
operating cycle and cash conversion duration).

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 CHAPTER 5
FINDINGS, SUGGESTIONS
AND
CONCLUSION

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5.1 FINDINIGS

• UltraTech Cement Limited is India’s largest cement producer and a key player in
the global cement industry with operations spread across multiple countries.
• The company has demonstrated strong revenue and profit growth over the years
from FY 2019-20 to FY 2024-25, driven by increasing demand for infrastructure
and housing development.
• The operating cycle analysis highlights a fluctuating trend in inventory days. A
notable increase was observed during FY 2022-23 and FY 2023-24, indicating
higher inventory holding levels, which may affect working capital efficiency.
• Receivables days remained largely stable, reflecting effective customer credit
management and timely collections.
• The company has efficiently managed its payables, ensuring a balanced cash
conversion cycle while maintaining good supplier relationships.
• Profitability indicators such as Gross Profit Margin, EBITDA Margin, and Net
Profit Margin have remained healthy, signifying strong operational efficiency and
cost management.
• The company continues to invest in capacity expansion, new plants, and
technology upgrades to meet growing domestic and export market demands.
• UltraTech has implemented digital initiatives and automated systems in its
production units to improve productivity and reduce operational costs.
• The rise in operating cycle during certain financial years suggests challenges in
inventory and production planning due to market fluctuations or demand-supply
mismatches.
• Strategic acquisitions and mergers by UltraTech Cement have helped in
increasing its market share and geographical presence.
• The demand for cement products from government-led infrastructure projects,
affordable housing schemes, and private sector construction has positively
impacted the company’s performance.
• Overall, UltraTech Cement has maintained a strong financial position with a
focus on growth, sustainability, and operational excellence.

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5.2 SUGGESTIONS

Improve Inventory Management: UltraTech Cement should focus on reducing inventory holding
days by adopting just-in-time (JIT) inventory techniques and better demand forecasting models to
optimize the supply chain and minimize working capital blockage.

Enhance Operating Cycle Efficiency: Efforts should be made to shorten the operating cycle by
streamlining production and distribution processes, improving lead times, and enhancing
coordination between procurement, production, and sales departments.

Leverage Technology for Forecasting: The company can implement advanced data analytics and
AI-based demand forecasting tools to better predict market demand and align production schedules
accordingly.

Strengthen Supplier Relationships: Building stronger partnerships with key suppliers can help
negotiate better credit terms and reduce procurement lead times, improving overall cash flow
management.

Expand into Emerging Markets: To sustain long-term growth, UltraTech Cement can explore
opportunities in untapped rural and semi-urban markets where infrastructure development is on the
rise.

Enhance Distribution Network: Strengthening the logistics and distribution network, especially in
remote areas, will help improve delivery efficiency and customer satisfaction.

Cost Control Measures: UltraTech should continuously monitor raw material and fuel costs and
explore alternate suppliers and local sourcing options to control manufacturing expenses.

Digital Transformation: Investing in automation and Industry 4.0 technologies can further improve
operational efficiency, production quality, and reduce human errors.

Customer Relationship Management (CRM): Implementing advanced CRM tools can help track
customer feedback, complaints, and satisfaction levels, ensuring better service and repeat business.

75
5.4 CONCLUSION

Finally, it is concluded that inventory of ULTRA TECH CEMENT LTD is very important

segment to gain high profits. In ULTRA TECH CEMENT LTD Inventory management is

the heart of organization as well as necessary too. Though ULTRA TECH CEMENT

LTD is doing good in manufacturing many products or items, it was found that a little

rectification must be made. Order is placed monthly or quarterly it may cost heavy

expenditure for placing orders so many times. High Costs will be breeding each time

when an order is placed so it is suggestible that order should be placed annually

depending on demand. Storage facilities should be modified, and separate departments of

research should be established, especially for inventory of goods. In this type of process,

it requires a greater number of employees and suppliers should also wait until the

accounts are matched. This process takes an input, adds value to it and provides an output

for an internal or external customer. The inventory as well as the inventory management at

ULTRA TECH CEMENT LTD is up to the mark.

76
BIBLIOGRAPHY

TEXT BOOKS:
Financial Management… .......... I.M. Pandey
Financial Management… .......... Prasanna Chandra
Financial Management… .......... Van Horn
Management Accounting and Control…. S.N. Maheswari
Financial Management… ......... Khan and Jain
JOURNALS:
• Berialtoktay inventory management of re manufacturable of products, management
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• Rachel Q, inventory management with asset-based financing, management science
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NEWSPAPERS:
 business line
 Financial express
 The Hindu
 Times of India
WEBSITE:
[Link] [Link]
[Link] [Link] of
[Link] [Link]

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