PRESENTED BY
M. GOPALA KRISHNA

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ABSTRACT
The ongoing economic reforms in the country have opened have new vistas by the encouragement being given Big industrial houses by motivating them to expand their market for the past protected economy. Medium scale industries by forcing them to face the competition from big industrial houses and others. Small-scale industries by relaxing all the government protection by way of grant etc.MNC’s (multinational companies) by providing opportunities to them by brining the expertise in the world market. Export oriented units by devaluating the Indian rupee in 1991 and exports more profitable. Inviting foreign industrial houses to set-up their shops in India by providing various opportunities like FIPB (foreign investment promotion board) under the chairman-ship of principal secretary to the prime minister. By creating more lucrative avenues to NRIs.All the above-mentioned factors provide a great future for a student\management, particularly in the field of finance because he\she is essential for any organization, either at the inception stage or for an established firm. The financial management student will play a positive role before a firm is established because he has to provide details of the market, their financial status, the scope for growth, liaison with bank for capital investments, etc. For an established firm he\she plays a vital role to enable the management (Board of directors) to know the financial status and growth position of the firm from time to time.
I have chosen Sri Dhanalakshmi Cotton and Rice Mill Pvt Ltd ,one of cotton production unit established at Mangalpally (Village) R.R Dist , A.P which is under profitable steps, achieving recorded quality products and noted exports.
INTRODUCTION
Inventory Management involves the control of assets being produced for the purposes of sale in the normal course of the company's operations. The goal of effective inventory management is to minimize the total costs - direct and indirect - that are associated with holding inventories. However, the importance of inventory management to thcompany depends upon the extent of investment in inventory.
The task of inventory planning can be highly complex in manufacturing environments. At the same time, it rests on fundamental principles. The system used for inventory must tie into the operations of the firm. Inventory planning and management must be responsive to the needs of the firm. The firm should design systems, including reports that allow it to make proper business decisions.
Inventory Management deserves separate mention beyond other phases of accounting due to its importance to operations.
Inventory as a current asset, differs from other current assets because only financial managers are not involved. Rather all the functional areas, finance, marketing, production and purchasing are involved. The views concerning the appropriate level of inventory would differ among the different functional areas.
The job of the financial manager is to reconcile the conflicting view points of the various functional areas regarding the appropriate inventory levels in order to fulfill the overall objective of maximizing the owners wealth. Thus inventory management, like the management of other current assets, should be related to the overall objective of the firm. Inventories generally represent a very significant proportion of total assets.hence importance of inventory management cannot be overemphasized.
With Inventory, you have two conflicting goals: minimize the amount of money tied up in product and never be out of product when you receive an order. You need to know exactly what you have, where it is, what you're likely to need to fill orders, where you get it, how long it takes to get it, current costs and pricing, how many turns you get out of which items, how much it's all really worth.
Effective Inventory Management enables an organization to meet or exceed customers' expectations of product availability while maximizing net profits or minimizing costs.
Capital is essential for the setting up and smooth running of any business. The capital required for a business may be classified into:
• Fixed capital
• Working capital
Fixed capital
Capital required for acquisition of long-term assets, which are called “Fixed assets” is termed as “fixed capital”. The amounts invested in these assets get blocked up for a long period. Examples are land, buildings, plant, machinery, furniture etc. These assets are purchased to facilitate production and sale. They are not expected to be converted into cash.
Working Capital
Working capital may be regarded as the lifeblood of a business. Its effective provisions can do much ensure the success of a business. Its inefficient management can lead to not only loss of profits but also to the downfall of a business. A study of working capital is of major importance to internal and external analysis because of its close relationship with the current day-to-day operations of a business. Every to create production facilities through purchase of fixed assets, such as plants, machinery’s, land, building etc, and investment in these assets represents that part of firm’s capital which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw material, payment of wages, and other day-to-day expenses etc. These funds are known as Working Capital.
Working Capital refers so that part of firm’s capital, which is required for financing short-term or current assets, such as cash, marketable securities, debtors, Inventories, bills receivables etc. These assets of this type are relatively temporary in nature. Unfortunately there is much disagreement among financers, accounts, economics and businessman as to the exact meaning of the term “Working Capital”, However, Working Capital is also known as revolving of circulating capital of short-term capital.
Objectives of study
1. To present the conceptual theoretical framework relating to inventory management.
2. To conduct a study on existing practices of inventory management in the company.
3. To determine the inventory status of the company and analyze them.
4. To study the Inventory valuation methods of company.
5. To make pertinent suggestions for the effective management of inventory of Sri Dhanalakshmi Cottons Pvt. Ltd.
Need of study
This study on inventory management is needed by the firms for
1. To avoid excessive and inadequate levels of inventories in the company.
2. To gain the customer satisfaction through short time delivery.
3. To maintain sufficient inventory in the company for the smooth production and sales operations.
4. For running the business operations of the company in smooth and efficient manner.