Inventory Management in Sugar Industry of Kumaon Region of Uttarakhand

Inventory constitutes a major portion of the working capital and constitutes the most significant part of current assets of a large majority of companies in India. On an average, inventories are approximately 60% of current assets in public limited companies in India. Because of the large size of inventories maintained by firms, a considerable amount of fund is required to be committed to them. It is, therefore, absolutely imperative to manage inventories efficiency and effectively in order to avoid unnecessary investment. A firm neglecting the management of inventories will be jeopardizing its long run profitability and may fail ultimately. In a manufacturing unit usually about 20 to 30% of the total assets are in the form of inventory and its efficient management should ultimately result in the maximization of the owners wealth Factors influencing inventories are lead time, cost of holding inventory, re-order point, stock, variety reduction, material planning, service level, obsolete inventory and scrap & quality discounts. The study reveals that it seems that there is no consistent relationship between turnover and current ratio and their relationship cannot be judged. Analysis of inventory conversion period reveals that the lesser the number of days more quickly the inventory is sold. In this study it is clear that there is no satisfactory inventory control system relating to stores inventory. The sugar mills should try to increase the production so as to get economics of large scale production. In order to increase the profitability of the companies, it is suggested to control the cost of goods sold and operating expenses. The management should try to adopt cost reduction techniques in their firms to get over this critical situation. There is no accountability because no one is held responsible for a failure in achieving targets. For overcoming this kind of problem responsibility centre should be created.