www.iaset.us editor@iaset.us INVENTORY MANAGEMENT PRACTICES FOLLOWED IN COCONUT OIL MILLS IN WESTERN TAMIL NADU N. DEEPA 1 , V. M. INDUMATHI 2 & P. BALAJI 3 1,2 Assistant Professor, Department of Agricultural and Rural Management, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu, India 3 Assistant Professor (ARM), Department of Forest Produce and Utilization, FC & RI, Mettupalayam, Tamil Nadu Agricultural University, Tamil Nadu, India ABSTRACT The study sample consisted of 40 coconut oil mills in Western Tamil Nadu and the data collected for five-year period from 2009-10 to 2013-14. On inventory management, respondents were asked how frequently they prepared inventory budgets and reviewed their inventory levels. The study analyzed inventory management practices of coconut oil mills in Western Tamil Nadu. The results showed that the coefficient of variation of the inventory management practices in efficient category was lower than the inefficient category, which shows the consistency of inventory management practices adopted by efficient category oil mills. Thus, it is concluded that preparation of inventory budgets and review of inventory levels would help the oil millers to keep their short-term liquidity position at the required level, which would increase the financial performance. Nearly 54 per cent of the respondents in efficient category reviewed their inventory levels and about 50 per cent prepared inventory budgets, which helped them to avoid accumulation of funds in inventory. In inefficient category oil mills, practice on preparation of inventory budgets and review of level of inventory were at lower level. Hence, it is suggested that oil mills in inefficient should improve their practice on preparation of inventory budgets, which would help them to maintain the short-term liquidity position and to improve the financial performance. KEYWORDS: Agribusiness Sector, Coconut Oil Mills, Cash Management Practices, Western Tamil Nadu INTRODUCTION Inventory is a physical stock of raw material, work-in-progress and finished goods maintained by the firms for smooth running of a business. Inventories occupy a major and significant part of current assets of a company. On an average, inventories are approximately 60 per cent of the current assets of the company in India. Because of the large size of inventories maintained by firms, a considerable amount of funds were required to be committed. Unnecessary investment in inventory might be managed by efficient inventory management. Simple inventory planning and control techniques were used to reduce the company’s inventory at a considerable degree i.e. 10 to 20 per cent. The reduction in excessive inventory would carry a favorable impact on company’s profitability (Sekar and Geetha (2013). Proper inventory management enhances the competitive ability and market share of small manufacturing units. An appropriate inventory control technique ensures the reduction of storage and revenue cost. The important factors considered for inventory management are inventory stabilization, timely delivery of products on the agreed terms and conditions and discharged duties and responsibilities etc. (Vipul, 2013). Business economy and efficiency could be International Journal of Humanities and Social Sciences (IJHSS) ISSN(P): 2319-393X; ISSN(E): 2319-3948 Vol. 5, Issue 2, Feb - Mar 2016, 23-28 © IASET