General introduction

Paper in our Lives-

Printing, Maida and Entertainment
We read over 350 million magazines, 2 billion books, and 24 billion
newspapers a year all printed on paper. Children play with paper dolls, paper masks,
paper board games and paper kites. A tiket to a movie is made o!t o" paper, and so
are the ontainers and arryo!t trays "or poporn and drinks. #ven the batteries in $%
remote ontrol ontain paper, and dose the $% itsel".
At work and school
&ost o" !s e'pet to "ind paper in shools and b!siness, o!r desks are !s!ally
overed with it. $hanks to omp!ters, whih were one e'peted to make o!rs a
paperless soiety, we now generate even more paper than ever be"ore. And o!r
money, hek stok erti"iates, deeds o" ownership, birth erti"iates and marriage
lienses, all the do!ments whih govern o!r lives, are made o!t o" paper.
Packing
(ow wo!ld light b!lbs, water glasses, o" a new mirowave over be shipped
witho!t the orr!gated ontainers that protet them ) $he largest ategory o" paper
prod!ts today is the one we take most "or granted the paperboard. Corr!gated board
is !sed to ship *5 + o" all man!"at!red goods ,even paper- and is m!h lighter and
more reylable than the wooden raes o" yesterdays.
.rozen orange /!ie the ornerstone o" the Amerian break"ast wo!ld be less
onvenient witho!t the omposite "oil0lined an. And where wo!ld be the break"ast
witho!t ereal bo'es, o""ee "ilters, o" egg and milk artons ) #ven sa!sage asing
ontain paper 1 2n some ases yo!r o""eeake is baked, sold, reheated, and served in
its original paperboard bo'.
Construction
3aper is !sed to b!ild homes. 4ometimes it serves as a str!t!ral or deorative
omponent, as laminated kithen o!nter tops, ins!lation, gyps!m board, ao!stial
1
board, wallpaper, "looring, and shingles. 3aper is the baking material "or masking
tape, sandpaper and eletrial able wrap. And moreover when shelter is needed in an
emergeny, a whole ho!se o!t o" paperboard an be made.
With the above it an be observed that paper has evolved "rom /!st a writing
s!r"ae to a material that to!hes nearly every aspet o" li"e. Altho!gh it is "re5!ently
taken "or granted, it6s hard to imagine what the li"e might be like witho!t paper.
Papyrus
3apyr!s has played an important role in history. $he oldest written papyr!s
roll date bak 5000 years, and the word paper itsel" is derived "rom the 7reek and
8atin word papyr!s. $he ab!ndane and !tility o" papyr!s on the lower 9ile made it
an important symbol in #gyptian arhitet!re and religion, and the availability o"
papyr!s sheets "or reording in"ormation was an important asset to #gyptian r!lers.
Witho!t papyr!s, the o!rse o" &editerranean history and literat!re wo!ld have been
vastly di""erent.
$o make a sheet s!itable "or writing, the smooth triang!lar stalks o" the plant
were harvested and peeled and the pith was slied and po!nded together in strips. A
seond layer o" pith was then applied perpendi!lar to the "irst and po!nded to make a
"lat sheet, whih was then polished smooth with a stone, bone, or shell.
I!E"I# #$ PAPE% &
"he 'irth o( paper Making &
A: ;05 is o"ten ited as the year in whih papermaking was invented. 2n that
year, historial reords show that $64ai 8!n, an o""iial o" the 2mperial Co!rt,
reported the invention o" paper to the Chinese #mperor. <eent arhaeologial
investigations, however, plae the at!al invention o" papermaking some 200 years
earlier. Anient pape piees "rom the =!an5!anzhi r!ins o" :!nd!ang in China6s
northwest 7ans! provine apparently were make d!ring the period o" #mperor W!
who reigned between ;40 >C. Whether or not $64ai 8!n was the at!al inventor o"
paper, he deserves the plae o" owner he has been given in Chinese history "or his role
in developing a material that revol!tionized his ontrary.
$he "irst real advane in papermaking ame with the development o" a smooth
material "or the mold overing, whih made it possible "or the papermaker to "ree the
2
newly "ormed sheet and re!se the mode immediately. $his overing was made "rom
thin strips o" ro!nded bamboo stithed or laed together with silk, "la', or animal
hairs.
")E I*IA PAPE I*+,"%-
$he paper ind!stry in 2ndia is more than a ent!ry old. At present there are
over ?00 paper mills man!"at!ring a wide variety o" items re5!ired by the
ons!mers. $hese paper mills are man!"at!ring ind!strial grades, !lt!ral grades
and other speialty papers. $he paper ind!stry in 2ndia o!ld be lassi"ied into 3
ategories aording to the raw material ons!med namely wood based, Agro based
and Waste paper based.
While the n!mber o" wood based mills is aro!nd 20 and balane 5@0 mills are based
on non0onventional raw materials.
$he 7overnment o" 2ndian has rela'ed the r!les and reg!lations and also de
liensed the paper ind!stry to eno!rage investment into this setor and /oint vent!res
are allowed and some o" the /oint vent!res have also stated in 2ndia. $he paper
ind!stry in 2ndia is looking "or state o" art tehnologies to red!e its prod!tion ost
and to !pgrade the tehnology to meet the international standards. $he 7overnment,
o" 2ndia has beome opport!nity "or international players to market their prod!ts in
2ndia. $he ind!stry is poised "or a s!bstantial growth to meet the pro/et demand o"
?.A million tones. 2t is estimated that the paper ind!stry wo!ld be growing at the
present rate o" ?.5 + o" ompo!nded rate and wo!ld re5!ire @ million tons o" paper
by 20;0 "rom the e'isting prod!tion o" aro!nd 4 million tones.
3
A.I*+,"%- P%#$ILE
/./ )I,"#%ICAL 'AC0G%#+* #$ ")E PAPE% I*+,"%-
$he paper ind!stry o!pies an important plae, as paper an be p!t to many
!ses it ontrib!tes not only to eonomi development b!t also to !lt!ral
development. $he spread o" ed!ation and literay is bo!nd to inrease demand "or
paper.
3aper has a long history, beginning with the anient #gyptians and ontin!ing
to the present day. .or tho!sands o" years, hand made methods dominated and than,
d!ring the ;*
th
ent!ry, paper prod!tion beome ind!strialized. Briginally intended
p!rely "or writing and printing p!rposes, a wide variety o" paper grades and !ses are
available to the ons!mer.
$he word paper drives "orm the .renh word Cpapyr!sD and is a s!bstane
omposed o" "ibers interlaed into a ompat web, whih an than be maerated into
p!lp, dried and pressed. $oday, paper inl!des a wide range o" prod!ts with very
di""erent appliationE omm!niation, !lt!ral, ed!ational, artisti, hygieni and
sanitary, as well as "or storage and transportation o" all kinds o" goods. 2ts almost
impossible to imagine a li"e witho!t a paper.
$he art o" making paper was "irst disovered in hina, 2
nd
ent!ry >C. "rom
there it traveled slowly towards #!rope. $he end o" ;4
th
ent!ry gave birth e'istene
o" n!mber o" paper mills in 2taly, .rane and 7ermany. 2t was the year ;*3A, as in
that year :r.Charley established a paper mill at sram pore in FWest >engal6.
Gn"ort!nately, it was losed in a "ew years. 2n ;@?A, the royal paper mill was set !p
in West >engal again, >!t the time it was a bally. 2n ;@@; the !pper 2ndian opper
mills started operation at 8!k now. 4oon a"ter $itagh!r paper mills was established
at Cal!tta. $he opening o" the :ean paper mills at 3!ne and the >engal paper
mills at <amgan/ in ;@@A and in ;@@* "ollowed this respetively.
4
Gntil, ;@@0 paper ind!stry didn6t move towards on ommerial line. $he
prod!tion o" mahine made paper begin in ;@A0. When the bally mill was
established in west >engal the !nits o" paper ind!stry are owned private setor. Bnly
"o!r !nits, whih are "atoring newsprint, are owned by p!bli setor. Bnly "o!r
!nits, whih are "atoring newsprint, are owned by p!bli setor. :!ring the period
o" planed development the paper goes rise "rom 350000 tones in :eember ;*?0 to
over 2 million tones in :eember ;**2. $here are at present 340 !nits prod!ing
paper and paper board in the private setor whih is installed apaity o" 3,4 million
tones. $hese !nits are o" diverse, size, type and magnit!de. $here are abo!t 30 large
integrated mills well organized and well e5!ipped and there are abo!t 2A0 small !nits.
/.1 G%#2") #$ PAPE% I*+,"%- I I*IA
$here have been lients that disovery o" paper, 2ndia predated China, tho!gh
do not have any onl!sive evidene as yet. (owever, it is de"inite that, there was a
"lo!rishing hand made paper ind!stry d!ring the m!gh!l era.
$he paper ind!stry ontrib!tes a lot only to eonomi development b!t also to
!lt!ral development. $he spread o" ed!ation and literay in bo!nd to inrease
demand "or paper. $he "orest researh instit!te at :ehrad!n omes o!t with a
sol!tio*n. >amboo is a raw material "or p!lping. 2n ;*;3 there were A !nits
man!"at!ring aro!nd 25000 tones o" paper. $he raw material ons!med mainly
4abhi, grass, <agi, /!te imported spr!e and wood p!lp. $he "irst paper mills !sing
bamboo as raw material was started in ;*;@ in all the !nits, whih was s!bse5!ently
started between mid ;*20 and ;*?0, bamboo based. $he government o" 2ndia with
view to red!e dependene on "oreign o!ntries "or import o" newsprint set !p the
"atory at 9#3A with a apaity to prod!e 30 tones per ann!m in the year ;*5?.
5
$he "irst and seond world wars proved help"!l to the paper ind!stry, as paper
was great demand by protetion d!ty levied on imported papers. At the independene
there were less than 20 mills with a total ann!al prod!tion o" 0.;3A &9 tones.
$oday the ind!stries o!tp!t is over @500 &9 tones "orm more than 500 mills in 2ndia.
$he hallenge "or the 2ndian paper ind!stry to meet the ever inreasing
demand o" paper, board and newsprint rippled d!e to shortage o" "ibers in the o!nty.
$he "!t!re demand o" paper is e'peted to grow "rom 5.? &9 tones at present to *.5
&9 tones in 20;0 and ;3 &9 tones in 20;5. demand "or rHme wove paper is
e'peted to inrease by A to @ perent. :emand "or di""erent kinds o" oated paper
has inreased by @ perent in 2002, d!ple' board has reorded inrease by ?05
perent, Ira"t paper has registered a ? perent rise in demand and newsprint an
impressive ;0 perent.
2ndian paper ind!stry an be broadly lassi"ied into paper and paper boards
and newsprint. $he paper and paperboard segment onstit!te o" !lt!ral paper,
ind!strial paper, and speialty paper. We will be treating newsprint as a separate type
o" paper.
2n ;*@2 &ysore paper mills began its operation in the prod!tion o" newsprint
with a apaity to prod!e ;5000 tones per ann!m "ollowed by the (ind!stan
newsprint, kerala with apaity to prod!e @0000 tones per ann!m. 2n ;*@5 $amil
9ad! newsprint and paper limited begin its ommerial prod!tion with signi"iant
progress d!ring the s!essive 5 year plans. At!ally the last deade withnessed
phenomenal growth in the small paper setor.
9!mber o" paper mills, prod!tion apaity and prod!tion o" paperboards is
shown in table ;.;
6
"a3le /./ Number of paper mills, production capacity and production of
paper boards
YEAR NO.OF
MILLS
INSALLE! "A#A"IY IN
MILLION ONES
A$ERA%E
"A#A"IY IN
MILLION ONES
;*5005; ;A 0.;3A @050
;*A00A; 55 0.A?@ ;3500
;*@00@; ;3A ;.@;? ;;500
;**00*; 325 3.304 ;0000
;***000 40? ?.200 ;52A0
200;002 5*4 @.500 22000
At present there are 540 paper mills in 2ndia, with 300000 people
working in the ind!stry. #ven tho!gh inrease in demand o" paper at the rate
o" aro!nd A to @ perent. $he 2nd!stry is having slow growth in 2ndia. 4ome
2ndian paper mills are in!rring ontin!o!s losses in reent years bea!se o"
"ollowing reasons.
;. 4are availability o" raw materials.
2. 7overnment reg!lation and inrease in ta' rates.
3. .ast hange in tehnology.
4. $hreat by the p!bli to red!e poll!tion "rom the ompanies.
5. %ery sti"" ompetition et.
9ow the &3& has apaity to prod!e A5000 $3A o" 9ewsprint 3A000 $3A o"
vario!s papers.
/.4 LEA*IG PLA-E%, I PAPE% I*+,"%-
7
$he ma/or players in this setor with their respetive prod!tion apaity are
shown in table ;.2
$he p!bli setor !nits ,34Gs- ontrol a ma/or share o" domesti prod!tion
by s!pplying ?0 to ?5 perent o0" total ind!strial prod!tion. 3rivate setor players
have very small apaity in omparison to 34Gs.
/.5 $+"+%E P%#,PEC"+, #$ PAPE% I*+,"%-
$he ind!stry sho!ld be helped to optimize apaity !tilization thro!gh
innovation and modernization o" e'isting large mills. 2n this onnetion, the prie
"i'ed by the government "or the vario!s types o" paper were !nrealisti and did not
provide "or reasonable ret!rn on apital. As a res!lt the ind!stry was hard p!t to
plo!ghs book "!nds "or e'pansion and modernization with the removal and
distrib!tion ontrol on white printing in ;*@@, paper ind!stry was able to get
rem!nerative pries.
"a3le /.1 Leadin& #layers in #aper Industry
Company ame Capacity in Million "PA
$938 0.;@
(ind!stan 9ewsprint 0.;;
&3& 0.0*
9#3A 0.0*
<ama 9ewsprint 0.0?
,4o!reJ magazine o" &3&-
Bne o" the most serio!s problems "aed by the paper ind!stry is depletion o"
"ibers raw materials. >amboo ontin!o!s to be the main stay altho!gh some s!ess
has been ahieved in the !se o" mi'ed hard woods, bagasses and other agri!lt!ral
resid!e. As bamboo !ltivation is beoming an eonomial, reliane has to be plaed
8
on !nonventional raw material s!h as hard wood paper mills have to !ndertake
plantation "orestry in their s!rro!nding areas.
2n the reent years, the prod!tion o" papers and paper boards has reorded
moderate b!t st!dy progress. 2ndia is now sel"0s!""iient in the prod!tion o" most
varieties o" paper and paperboard. Bnly ertain variety o*" being imported.
(owever, ma/ority o" paper mills still !se o!tdated tehnology and mahines.
$o help in the ind!stry the government has taken vario!s meas!res, whih
inl!de e'erise rebate to small !nit6s addition to !stom d!ty, in the import o" paper
grade p!lp and wood hips o" stat!tory ontrol over prod!tion.
'.C#MPA- P%#$ILE
/.6 #%IGI #$ M-,#%E PAPE% MILL, L"*,')A*%A!A")I
9
$he history o" &ysore paper mills goes bak into the dreams o" visionaries
like shri Chama ra/ wodeyar, &ahara/a o" &ysore, laid the "o!ndation stone on the ;
st
April ;*3A at the bank o" river >hadra. $he "arsightedness o" the great engineer
>harat <atna 4ir & %ishveshwariah and then :ewan 4ir mirza 2smail beame the
so!re o" inspiration to start this ind!stry in a remote village alled >enkip!r, now
alled >hadravathi.
As the entire re5!ired in"rastr!t!re "ailitates were available in >hadravathi.
2t has beome easy to start the ompany on the bank o" river >hadra.
/.7 G%#2") A* *E!EL#PME" #$ ")E #%GAI8A"I#
$he ompany was inorporated in the year ;*3?, and started with a small
apaity o" 4000 metri tones per ann!m, with a share apital o" <s.25,00,000, ;0+
being ontrib!ted by the government o" &ysore. &ysore paper &ill was a small
ompany "ormed in the /oint setor. $he "irst 4000 tones o" writing and printing paper
prod!ed !nder the brand name C>24B9D where "o!nd to be immediately aeptable.
&3& 8$: is a 350 orers p!bli setor ompany, &3& ltd owns <s.@;5
orers worth o" land. $he ompany has abo!t 30?* permanent employees on its role.
&3& ltd has "o!r regional o""ie sit!ated at 9ew :elhi, Cal!tta, Chennai, and
&!mbai with its orporate o""ie at >angalore. 2t is the "irst largest single loation
integrated plant in the o!ntry man!"at!ring newsprint, !lt!ral verities o" paper and
s!gar. $he &ysore paper mills ltd has its owned "orestland o" 30,000 hetors "or
prod!ing the raw material re5!ired.
'e &ro(t' and de)elopment of or&ani*ation is s'o(n in t'e table+.,
*ate Particulars
10
20.05.;*3? 2norporated with an initial share apital o" <s. 25 lakhs.
Bbtained liense to prod!e 4000 mt. per ann!m o" writing and
printing paper.
0;.04.;*3A .o!ndation laid by (is (ighness 4ri Irishna <a/a Wodeyar
>ahad!r.
;*52 #'panded &an!"at!ring apaity to @000 $3A
;*?4 #'panded &an!"at!ring apaity to ;@000 $3A
;*A2 #'panded &an!"at!ring apaity to 24000 $3A
;3.0*.;*AA 2nd!strial 8iense was iss!ed "or inreasing &an!"at!ring "or
!lt!ral variety paper to 3A000 $3A and setting !p a 9ewsprint
plant to prod!e A5000 $3A 9ewsprint
;*AA $he &ysore paper mills ltd has beome 7ovt. ompany when the
state government has inreased its share holding in the ompany
to the e'tent o" 5?.2+.
;;.0A?.;*@; $rial prod!tion o" 9ewsprint ommened.
;*@2 2mplementation o" a "orestation 3ro/et in the 7overnment
alloated A5000 ares o" .orest area in a phased manner.
;*@3 2500 $C: s!gar pro/et implemented and the &3& ltd beome
the "irst largest single loation integrated plant in the o!ntry.
;;.02.;*@4 <eg!lar r!shing o" s!garane ommened
;**5 #'pansion o" s!gar mill 2500 $C:
2000 2nstalled with *0 &$ apaities o" modern >oilers and ;? &$
$7 to the mills to boost steam generation and inrease the sel"
generation o" power. $he ompany has vent!red to obtain 24B
*00; erti"iate to boost its image in the trade o" b!siness to meet
the global ompetition.
2004 24B ;4000 erti"iate ,"or poll!tion ontrol-
2n the ;*54, the prod!tion was do!bled to the apaity o" @000 tones per
ann!m by taking a loan o" <s.50,00,000 "orm the 2.C2 and loan was repaid aid o" the
shed!le. $he &ysore 3aper &ills took a big step "orward in its progress in the year
;*?2 by inreasing its progress in the year ;*?2 by inreasing its prod!tion apaity
per ann!m, by inreasing the share apital "rom 25,00,000 to ;,25,00,000, and ;0+
>eing ontrib!ted by the 7overnment o" &ysore.
$he prod!tion inreased to ;@000 &$ in ;*?4 and later to 24000 &$ in ;*A2
2nd!strial liense was iss!ed on ;3 4eptember ;*AA "or liensing the man!"at!ring to
the apaity "or !lt!ral paper to 30000 &$ per ann!m. 4etting a news print plant to
prod!e A5000 tones per ann!m. $he &ysore 3aper &ills >eome a 7overnment
11
ompany in 9ovember ;*AA when the state 7overnment inrease its share holding in
the ompany to 5?.2+.
Bne more milestone in the &3& history is adding newsprint to its prod!t
range, trail prod!tion o" newsprint ommened on ;; a!g!st ;*@;. 2n ;*@2 a
"orestation pro/et on the government allotted A5000 hetors o" "orest area was
ommened.
/.9 L#CA"I# A* LA-#+" #$ MPM
Location&
$he &ysore paper &ills limited is the premier paper prod!er in 2ndia. 2t is
loated at >hadravathi in 4himoga :istrit o" Iarnataka state. >hadravathi is a
developing ity towards 2?0 Im northwest o" >angalore ity. $he plant is sit!ated on
the banks o" river >hadra overing an area o" abo!t 3.@ 45!are Im. >hadravathi is
developed with the bea!ti"!l laid o!t township and niely b!ilt 5!arters and there is a
m!niipal orporation also.
Plant Layout&
3lant 8ayo!t is done well by arrangement o" di""erent mahinery6s in di""erent
departments like raw material department, hipper department et. $hese departments
are arranged aording to r!les and reg!lation o" plant layo!t. 2n this paper &ill, the
layo!t "ollowed is arrangement "or high o!tp!t rate, better working onditions and
better s!pervision !p to possible e'tent.
12
Cultural paper mill:PM-I,PM-II,PM-III;
$here are 3 paper mahines with a apaity o" 20,20,?0 &$K:ay. 9ormally
ra"t papers are man!"at!red on &ahine 9o.;E Where as Writing and 3rinting paper
are &an!"at!red on &ahine 9o 2 and 3.
.or man!"at!re o" paper, aptive hemial p!lps are !sed in the re5!ired
proportions. $he p!lp admi't!re is treated with vario!s additives s!h as dyes, sizing
hemials, loading material et, depending on the type o" end prod!t to be made.
$he ready stok is then taken to paper mahine and the paper made is res!lted on a
real and spool and a /!mbo roll are made. $he paper made th!s, will be either
onverted into smaller reels, or !t into sheet "orm o" re5!ired size as per the market
demand.
$he reels are paked and dispathed. $he sheets o" paper a"ter o!nting are
paked as reams. 2n the 3
rd
mahine online 5!ality ontrol system is installed to
ontrol the basis weight o" paper and indiate the moist!re.
Integrated ,ugar Mill
4!gar mill is also a part o" &ysore paper mill, whih was established in ;*@4.
4!gar ane is the raw material, whih is available in and aro!nd >hadravathi and
other in"rastr!t!re "ailities like water, steam power, hemials and workshops,
whih has both s!gar mill and paper mill in a single loation.
$he main advantage o" establishing these two di""erent plants in the same
loation is that bagasses, whih is the by0prod!t o" s!gar, instead o" b!rning it is
!sed as one o" the raw material "or paper making. 2t also red!ed the dependeny on
the "orest raw materials.
4!gar mill was started in ;*@4 with an r!shing apaity o" 2500 tones per
day. 4!gar mill is an integral part o" &ysore 3aper mills "or the s!pply o" bagasses as
the raw materials "or paper mill to man!"at!re the paper.
13
$he raw material !sed in preparation o" s!gar ane the s!gar ane m!st be
r!shed with in 4@ ho!rs "rom its !t "rom the "ield. $his s!gar ane is transported to
the &3& and d!mped in s!gar ane weighing bridge. .rom there it is !nloaded !sing
!nloading ranes. Aording to the demand, s!gar ane is "ed into "eeding tale. .rom
their s!gar ane is arried by ane arrier 9o.; and d!mped in ane !tter, whih r!ns
at a speed o" 5*2 <3&. $here are two !tters horizontal and vertial then thro!gh
onveyers it is send to rake elevators where it is thoro!ghly washed !sing water.
Cr!shing o" s!gar ane takes plae in "o!r stages a"ter the ompletion o"
r!shing, /!ie and bagasses are separated thro!gh /!ie mess. $he separated
bagasses enters horizontal bagasses onveyer and then inlined bagasses onveyer
"rom where it is d!mped into p!lp mills.
$he raw /!ie is passes thro!gh :4& sreen "or the removal o" "ibers. $his
sreened /!ie is passed into /!ie tank and then to /!ie weighting sale o" apaity
o" ? tones this /!ie is sent into primary /!ie heater where a temperat!re o" @0 to *5
degree Celsi!s is maintained hear water is vaporized to get onentrated /!ie this
/!ie is passed thro!gh /!ie saltpeter where milk o" lime is added to get good olor o"
s!gar is "or bleahing p!rpose. .rom hear the /!ie is sent to seondary /!ie heater
where a temperat!re o" aro!nd ;00 to ;05 degree Celsi!s is maintained. A"ter this
/!ie is passed into /!ie lari"ier where va!!m maintained. .orm here the lear
/!ie is separated and passed into evaporators. $here is "ive0step vaporization "rom
the m!d "ilters, m!d and /!ie are separated and the "iltered /!ie is sent to
evaporators. 2n evaporators, evaporation o" water takes plae and /!ie beomes thik
syr!p.
2n "o!rth evaporator, ;200 grams o" s!gar along with 450 ml alohol is added
whih helps in rystallization o" s!gar. Cylindrial type evaporators are !sed in
whih /!ie is passes inside the t!bes and steam is made to pass o!tside the t!bes, this
is indiret method o" evaporation. $his !ns!lphitor where 4 02 gas is taken in s!gar
s!lptor where 4 02 gas is passed "rom here it is taken to pan s!pply tanks and then to
rystallized. $here are aro!nd ten rystallizers it is s!bdivided into three mos5!eter a
14
b and thro!gh whih rystallized s!gar is passes into p!g mill and then entri"!gals
mahine, where "!rther p!ri"iation is done by the separation o" s!gar and bagasses,
the s!gar moves thro!gh hoppers where dry and heat air at a temperat!re ?5 degree
Celsi!s is passed. $here are three hoppers "rom here s!gar is sent to grades whih
separators di""erent size o" s!gars. 4!gar is lassi"ied into two sizes standard 30 ,40
30- and medi!m 30 ,&030- this s!gar is taken in s!gar bin and s!gar is in re5!ired
amo!nt is taken in the bags and the stithed bags are sent to godowns.
C. P%#*+C" P%#$ILE
15
$he prod!ts man!"at!red by &3& ltd are newsprint, !lt!ral paper ,i.e
writing, printing and paking paper and speialty paper-, s!gar and molasses.
$he "atory is sit!ated at >hadravathi with one mahine "or the man!"at!re o"
newsprint that is 3& 4 and three mahines "or the prod!tion o" !lt!ral varieties o"
paper they are 3& ;,2,3 and one s!gar mill !nit. 3& means paper &ahines.
/.E2, P%I"
&3& 8imited prod!es two types o" newsprint. $hey are
;. White news print
2. 3ink newsprint.
$he newsprint man!"at!red by &3& limited is s!pplied only to the registered
newspaper agenies and against spei"i orders.
9ewsprint is s!pplied in the "orm or vario!s reels and omes in di""erent sizes. $he
ommon sizes are A* ms, @; ms, @;.5 ms, ;?3 ms and 4; ms.
4ometimes, speial sizes are also prod!ed depending !pon the orders may ome in
sizes o" ;22 ms, A? ms and 3@ ms.
1.C+L"+%AL PAPE% &
$he !lt!ral variety o" paper are lassi"ied as "ollws
;. Writing paper
2. 3rinting paper
3. 3akaging and wrapping paper
4. 4peial paper
16
$he above said writing, printing and speial paper are lassi"ied into "ollowing
varieties.
a. Az!r laid J !sed "or ledger paper
b. Colo!r printing J !sed mainly "or printing ,pine, green yellow and bl!e-
. Gnleaded J low 5!ality printing paper
d. &7 ribbedJ &7K &. plain !sed "or envelope making
e. &7 3B4$#< J !sed to print lottery tikets and wedding ards
". &7 postal olo!rsJ !sed "or printing ards
g. &7 K &. white and olo!red over paper J !sed "or book over
h. &ysore bond
i. $ea label paper
/. $est book printing paper
k. 7reen tint L "or making notebooks
4.,+GA%
&3& prod!es an average o" 4.5 lakh bags o" s!gar per season in di""erent 5!alities
like 4 2*, 4 30, and & 30 grades as per 244 spei"iations.
As per the poliy o" government o" 2ndia by its ministry o" !stomer a""air every
s!gar ind!stry o!ght to !nmark its total prod!tion as detailed below.
17
;. @5+ o" the total prod!tion is apportioned as "ree sale s!gar entitled to
transated as per open market onditions.
2. <emaining ;5+ o" total prod!tion is earmarked as levy s!gar "or s!pply
!nder p!bli distrib!tion system.
Above reg!lation o" the government has been determined as per the &ahayana
ommittee report on s!gar trade poliy.
$%EE ,ALE ,+GA% &
$he ompany periodially invites the s!gar dealers, liense holders and all
"or open tender. 4!gar is sold on highest bidder basis.
$he "ree s!gar is sold at market prie pl!s e'ise d!ty at <s @5 per 5!intal.
LE!- ,ALE, ,+GA% &
2t is ontrolled ommodity. $his s!gar is to be sold at s!bsidized rate
!nder the p!bli distrib!tion sheme.
M#LA,,E, &
&olasses is nothing b!t the byprod!t obtained d!ring the proess o"
man!"at!ring o" s!gar. 2t is !sed mainly "or distillery p!rposes, inl!ded in
animal "oods and also in the prod!tion o" #thanol, whih is !sed as admi't!re
with the petrol.
A%EA #$ #PE%A"I#
18
$he &3& operated only in 2ndia.
#2E%,)IP
$he ompany has an a!thorized apital o" <s.;50 rores and a paid !p
apital o" ;20 rs. $he shares o" the opany are listed in the &!mbai 4tok
#'ange and there are abo!t ;A,000 shares holders thro!gh o!t the o!ntry.
While 7overnment o" Iarnataka holds ?5+ o" the share apital, 24+ is held
by 2:>2, other "inanial instit!tions @+ and the balane ;;+ by the general
p!bli.
C#MPE"A"#%,
>allarp!r 2nd!stries 8td., &aharashtra.
a- Mear o" starting ;**A
b- Ann!al apaity L ;.;0.00 tones per year
- 7rades o" paper L Writing, printing, paking and ind!strial paper
<ama 9ewsprint and 3aper 8td., 7!/arat
a- Mear o" starting L ;**?
b- Ann!al apaity L ;32000 $ones per year
- 7rade o" paper L 9ewsprint
$amil 9ad! 9ewsprint and 3aper 8td., $amil 9ad!
a- Mear o" starting L ;*@4
b- Ann!al apaity L ;@0 000 tones per year
- 7rades o" paper L 9ewsprint, 3rinting and writing
19
Andrapradesh 3aper &ills 8td., Andra 3radesh
a- Mear o" starting L ;*??
b- Ann!al apaity *@.5 L 00 tones per year
- 7rades o" paper L >ase 3aper, wedding and greeting ards.
$he West Coast 3aper &ills 8td., :andeli.
a- Mear o" starting L ;*5@
b- Ann!al apaity L ;5A.A50.00 metri tones per year.
- 7rades o" paper L writing and printing board inl!ding &2C< and
opier.
d- 2t is a private ompany.
I$%A,"%+C"+%AL $ACILI"- &
&3& CA&3G4J
&3& has got an estate area o" @;5 ares leased by government o" Iarnataka
o" whih 2?? ares is "atory area and 54* ares onstit!te township area.
CB8B9M J
$he olony has ;332 5!arters "or the workmen and ;*0 5!arters "or the sta""
ategory o" employees and 232 o""ier 5!arters. $he total available aommodation
in paper town is ;A54.
(B432$A8 J
20
A ombined ;? L bed hospital with ? medial o""iers is available "or
employees.
7G#4$ (BG4# J
A well L "!rnished g!estho!se having 2 rooms, A %23 rooms and 2 g!est
rooms is maintained by &3&.
(B4$#8 J
An o""ier6s hostel having 4? rooms "or aommodating management trainees,
stipendiary trainees, government., o""iials and ontrator6s loal representatives is
available in the amp!s, bahelors hostel is maintained by the ompany.
4C(BB8 J
$he ompany s!pports the "ollowing ed!ational instit!tions
a- 3aper town N!nior ollege
b- 3aper town #nglish 4hool
- 3aper town (igh 4hool
d- 3aper town 9!rsery 4hool
B$(#< .AC282$2#4 J
&3& s!pports the "ollowing "ailities in the olony to the employees.
;. &3& B""ier6s Cl!b
21
2. &3& gents rereation Cl!b and 7ymnasi!m
3. B""iers ladies Cl!b
4. %anitha 4ama/a
5. &3& sh!ttle badminton Cl!b
?. $ennis o!rt
A. &3& kalyanamantapa
@. 8ibrary K reading room
*. &3& o0operative soiety.
A2A%*, &
&3& has got 24B ;400; erti"iate "or poll!tion ontrol. And also 24B *00;
erti"iate "or 5!ality o" prod!t.
AC)IE!EME", &
A n!mber o" initiative have been taken to improve the per !nit energy
ons!mption o" papermaking. Conservation at generation and ons!ming pints has
res!lted in s!bstantial savings. Changing over to variable speed drive system,
operating at improved power "ator, seletion o" appropriate size o" motors,
improvement in ill!mination systems are a "ew e'amples o" vario!s meas!res that
have been s!ess"!lly implemented.
/.< 2#%0$L#2 M#*EL &
22
;. 3!rhase Brders
At the "irst stage the ompany reeives p!rhase order "rom its agents.
$hey are mentioning the prod!t grade, 5!ality, 5!antity et.
2.<elease <aw material to 3!lp &ill J
$he p!rhase department releases the raw materials to the p!lp mill
3. 3!lping proess J
2n this p!lping proess the raw material p!lping made in p!lper with
water. 2t will !nder go leaning o" p!lp, re"ining and addition o" re5!ired
hemials.
4. 3rod!tion 3roess J
$he p!lps are passes to the paper mahine and it passes thro!gh solid
press water removal. $hen it passes thro!gh :ryer mahine and it passed
hange alendar mahine ne't it passes to the online oating mahine.
5. 4ize C!tting J
$hen passes to the size !tting mahine in this mahine they !tting
the paper bands aording to the !stomer re5!irement.
?. .inishing Mard J
$he "inished yard paper boards are passes to the stores or "inishing
yard.
A. 3akaging J
23
$he ne't step is paking. $he !stomers pak the paper boards in
b!ndles as orders.
@. :o!mentation J
>e"ore delivering the paperboard to the !stomers it sho!ld be
do!mented in the stores ledger.
*. :ispathing J
A"ter do!mentation in proper ledger than the ne't proess is
dispathing the goods to !stomers.
/.= $+"+%E G%#2") A* P%#,PEC"+, &
&3& has got liense to prod!e li5!or
&3& is initiating new prod!t development
$est marketing o" 44 map litho is in progress.
&3& is planning to introd!e opier grade in the market shortly.
&3& plans to start distilleries to prod!e distil water.
24
1. MC0I,E->, 9-, M#*EL #$ #%GAI,A"I# ,"+*-
$he A04 "ramework was developed by the ons!ltant at the &kinsey
ompany, a very well know management onsisteny "irm in G4A, towards the end o"
;*A06s to diagnose the a!se o" organizational problem and to "orm!late programs "or
improvement developed the A04 "rame work.
A04 model o" the ompany is shown in "ig.2.;
&kinsey6s, ons!ltants all Fstrategy6 and Fstr!t!re6 as hardware o" the
organization and other 56s are the so"tware o" the organization.
1./ ,trategy
2t re"ers to set o" deisions and ations aimed at gaining a s!stainable
ompetitive advantage.
"he vision
&ysore paper &ills ommitted to deliver prod!ts and servie to satis"y the
needs o" the !stomers.
$o make ontin!o!s e""orts to improve 5!ality by ontin!o!s training.
$o ativity involve people to ontrib!te towards high prod!tivity thro!gh
team work and innovation.
25
$o onsio!sly work towards onservation o" reso!res and minimization o"
wastes o" all "orms.
Mission
C!stomer satis"ation
Consistent O!ality
Competitive prie
.ig.2.; &kinsey A04 &odel
26
A04 model o" the ompany is shown in "ig.2.;
Goals &
>ring down the regional imbalane in paper prod!tion in the state o"
Iarnataka.
&eet the national and regional demand "or paper and paperboard.
<ed!e the imports o" newsprint "rom the "oreign market.
&aking !se o" the bagasse, as on inp!t "or paper making whih is
readily available "rom its own so!re.
#3?ectives &
;. $o man!"at!re and deal in all kinds o" paper prod!ts.
2. $o man!"at!re and deal in all kinds o" s!gar and s!gar prod!ts
inl!ding alohol and spirit.
3. $o !ltivate and raise grass, timber, wood e!alypt!s, et.
4. $o meet soial responsibility.
5. $o provide employment opport!nities.
27
?. $o &eet the national and regional demand o" paper and paperboard.
A. 2nrease market share and red!e ost o" prod!tion.
@. 2nrease market share and red!e ost o" prod!tion.
*. <ed!e the imports o" newsprint "rom the "oreign market.
$he b!siness strategy emphasizes the "ollowingE
;. 2nrease their market shares.
2. <ed!ed ost o" prod!tion.
3. 2nrease ompany per"ormane.
4. $o meet soial responsibilities.
5. 3rod!e always 5!ality prod!t.
?. 3rovide employment opport!nity to the people o" the area.
A. &eet the national and regional demand o" paper and paperboard.
@. <ed!e the import o" news print "orm the "oreign market.
*. $o man!"at!re and deal in all kinds o" s!gar and s!gar prod!ts
inl!ding alohol and spirit.
1.1 ,tructure
$he design o" organizational str!t!re is a ritial task o" the top management
o" an organization. 2t is the skeleton o" the whole organizational and edi"ie.
28
Brganizational str!t!re re"ers to the relatively more d!rable organizational
arrangements and relationships. 2t presribes the "ormal relationships among vario!s
positions and ativities. Arrangements abo!t reporting relationships, how an
organizational member is to omm!niate with other members, what roles he is to
per"orm by members are all part o" the organizational str!t!re.
#rgani@ational structure per(orms three ma?or (unctions
2. 2t red!es e'ternal !nertainty thro!gh "oreasting, researh and planning in
the organization.
22. 2t red!es internal !nertainty arising o!t o" variable, !npreditable, random
h!man behavior within the organization thro!gh ontrol mehanisms.
222. 2t !ndertakes a wide veri"y o" ativities thro!gh devies s!h as
departmentalization, speialization, division o" 8abor o" delegation o"
a!thority.
2%. 2t enables the organization to keep its ativities oordinated and to have
"o!sed in the midst o" diversity in the p!rs!it its ob/etives.
2n &ysore paper &ills organization str!t!re is "le'ible eno!gh to o!nter any
balanes o" the e'ternal environment. $his ompany is also having regional o""ie at
>angalore and to takes any sit!ation in the e'ternal environment.
$he hairman and managing diretor ,C&:- is in a position to ontrol at the
ativities in the organization. .or taking the entire problem he meet the knowledge o"
abo!t both the tehnial and managerial knowledge.
29
$he diretor o" eah departments are responsible "or the ativities done in their
respetive departments and answerable and reporting to the C&:.
$he diretors o" the respetive department they will ome !nder the top level
management. Gnder these position 7eneral &anager, :ep!ty 7eneral &anager,
4enior &anager and Assistant &anager 3osition are present they6re ome !nder the
milled level management.
2n &ysore paper &ills eah department is interlinked with other departments the
eah department has to maintain a good ontrol with other departments.
#%GAI8A"I# ,"%+C"+%E #$ M-,#%E PAPE% MILL, L"*
30
SHARE HOLDERS
BOARD OF DIRECTORS
CHAIRMAN/MANAGING
DIRECTOR
DIRECTOR FINANCE
DIRECTOR FOREST
1.4 ,ystems
$he management believes in the !tilization o" !tting edge tehnology o"
deliver world0lass prod!ts and servies. $he ompany has made h!ge investments
in tehnologial reso!res to ens!re that prod!ts are s!perior and the servie delivery
in terms o" these prod!ts o""ering standard. $he system o" the &ysore 3aper &ill
limited ompany learly shows the "ormal proesses and proed!res !sed to manage
the organization, inl!ding the ontrol system, per"ormane management
meas!rement and reward systems, planning b!dgeting and in"ormation system. $hey
"ollow the bottom to top approah in deision making.
31
GENERAL MANAGER
MARKETING
GENERAL
MANAGER
PRODUCTION
AGMPB!
INCHARGE "#
AGM$PRODUCTION!
COMPAN%
SECRETAR%
GENERAL
MANAGER
H$R$D$&P
AGM$MAINT!
AGM HRD&P!
SENIOR MANAGER
CULTURAL PAPER
SENIOR MANAGER
NE'S PRINT
SENIOR MANAGER
MARKETING!
MANAGER
DEPUT% MANAGER
AGMFINANCE!
SER(ICE
MANAGER
1.5 ,tyle
$he management believes in an open organization. 2n &ysore 3aper &ills ltd.
$hey do not involve employees "or taking any deision. $he management will be
taking the deision itsel" may be in any area like prod!tion deision, marketing
deision. &anagement itsel" takes all "inane deisions.
#'ampleJ in "inane department i" any deision are to be taken only by the top
management.
2" any "inane re5!irement is needed or any approval needed relating to the
"inane matter, then "inane department will prepare the "oreasting report, the senior
"inane manager and the hairman is an important person to take any deision
regarding management.
1.6 ,ta((
4ta"" re5!irement is designed to ens!re that those on board have the primary "o!s
as !stomer servie with a high level o" prod!t and proess knowledge and operation
e'ellene. 2nd!tion and training program are designed to ond!t "or all employees
at reg!lar basis to ens!re that these levels are ontin!ally enhaned "eedbak "or
ontin!o!s improvement in soliited "rom all !nderstood. >eing a dynami
organization s!septible and the hanges are well !nderstood. >eing a dynami
organization to "re5!ent hange in poliy so as to s!it b!siness needs that re5!ire to
be a learning organization "!l"illed by the systems and proesses whih do!ment all
32
hanges and "eedbak reeived. :evelopment programmes are ond!ted by &3&
every year only "or the persons who are in the management adder. $his helps to
improve their skills and knowledge.
1.7 ,kills&
2n &ysore 3aper &ills 8td employees are to be rer!ited on the basis o" their
O!ali"iations. $raining "ailities be provided to be both employees both internal
and e'ternal. $here are 3 types o" labo!rs based on their skills they are
;- skilled labo!rs
2- semi0skilled labo!rs
3- !n0skilled labo!rs
1.9 ,hared values&
$he val!es shared by the n!mbers o" an organization. $he val!es shared by the
&3& &embers are
;.ontin!o!s innovation
2.#mpowrement o" working "ore
3.2nstalling a sense o" responsibility in eah employee.
4..o!s on and belie" in employees
5.opern !lt!re
?.Additionla bene"its given by the ompany to its employees
0Canteen .aility
33
0:earness allowanes
0(<A
04holarship "or 4CK4$ employees
0Gni"orms
0(ospital and medial bene"its
0(o!sing "aility
A.4pirit o" aepting Challenges
@.Conern "or per"ormane
*.:elivering O!ality servie.
;0.Company provides /obs "or handiaps also.
4. ,2#" AAL-,I, #$ C#MPA-
$he organization st!dy was a great learning e'periene and ertainly enabled
me "or systemati eval!ation o" the strength.
34
4WB$ analysis was d!e in the o!rse o" internship training in the ompany
"or simpli"ied p!rpose and easy re"erene on overall 4WB$ analysis o" the ompany
as "ollowsJ
,"%EG")
.irms has its own A5000 ares o" "orest, where #va, Aaia, 3ine are grown.
.irm is getting raw material 5!ikly "or in time prod!tion.
.irm is getting raw material heaply "or the prod!tion o" paper.
Company has e""iient and e'periened employees.
As &3& is loated on the banks o" river >hadra, it is getting ab!ndant water.
&a/or !stomers are ed!ational instit!te, Gniversity.
7ood marketing network in all so!th 2ndia.
$hey grow raw material plants within the premises whih red!e the ost o"
raw materials.
2EA0E,,
$here is a "re5!ent hange in the top management d!e to politial inter"erene
as it is a p!bli setor "irm.
Company has old and absol!te mahinery.
Company had mare labo!rs than it needed.
$here are so many idol workers.
$here are more wastages, reyling o" these wastages need more ost.
4ome o" the employees are engaged in mall praties.
35
#PP#%"+I"IE, A* ")%EA",
With liberalization and opening !p o" the eonomy, the paper ind!stry has
been thrown !p to ompetition "rom the mills within the o!ntry and also "rom
abroad. (igh ost o" energy and other inp!ts, parti!larly in &3& and "or the
ind!stry in general, has hampered the growth o" paper ind!stry. $he operations o" the
ompany are highly dependent on the newsprint market in parti!lar.
$here is no 7overnment s!pport "or newsprint ind!stry ever sine it was
plaed !nder B78 in ;**5. $he newsprint ind!stry laks d!ty protetion "rom
7overnment o" 2ndia where the import d!ty levied is only 5+ ompared to W$B
bo!nd rate o" 25+ and no anti0d!mping d!ty introd!ed despite its reommendation
by the designated a!thority.
&oreover, with the general global eonomi slow down, it is reported that the
total reven!e o" newspapers had ome down drastially with a onse5!ential impat
on the newsprint ind!stry. $he low per s!ess"!l in implementing proper systems in
internal ontrol to ens!re that all the assets and properties o" the ompany are
eonomially !tilized. $he internal ontrol system is devised in s!h a way that the
"inanial and other reords are reliable "or preparing "inanial statements and other
data6s "or maintaining ao!ntability o" assets.
$he reports o" both in ho!se internal a!dit and e'ternal a!ditors are reviewed
by the top management and also by the a!dit s!b0ommittee "rom time to time. $here
is sti"" ompete "rom the private ompanies &3& did not able to ompete against
these ompanies bea!se organizational !lt!re and behavior o" the employees. And
also delay in deision making and organizational str!t!re and hierarhy
36
PA%" II
5. I"%#*+C"I# "# $IACE &
$he 3rimary p!rpose o" any b!siness is to earn "or pro"it. $o earn pro"it the
b!siness has to render some servie. $o ahieve these ativities "inane "!ntion is an
essential element. $here"ore, "inane ativities play a vital role witho!t whih no
b!siness an e'ist.
.inane is the li"eblood o" b!siness. .inane is alloating into "i'ed assets and
!rrent assets. 2n !rrent assets, working apital has a vital role, whih onsists o"
management o" ash, management o" ao!nts reeivable and management o"
inventories. 2n all these, inventories have a signi"iant role in !rrent assets.
MEAIG #$ I!E"#%-
$he literary meaning o" the word F2nventory6 is stok o" goods. $o the "inane
manager, inventory onnotes the val!e o" raw materials, ons!mables, spares, work in
progress, "inished goods and srap in whih a ompany6s "!nds have been invested.
4ine these reso!res are idle when kept in stores, inventory is de"ined as an idle
reso!re o" any kind having an eonomi val!e. $he reso!re may be many types, "or
e'ample, men, materials, mahinery or money. When the reso!res involve materials
or goods in any stage o" ompletion, inventory is re"erred to as stok. (ene inventory
re"ers to the stoks that a b!siness "irm keeps to meet its "!t!re re5!irement o"
prod!tion and sales.
37
EE* "# )#L* I!E"#%-
$he 5!estion o" managing inventories arises only when the ompany holds
inventories. &aintaining inventories involves tying !p o" the ompanies "!nds and
invariane o" storage and holding ost. 2" it is e'pensive to maintain inventories, why
do ompany hold inventory) $he "ollowing are the reason "or holding inventoryE
/.P%#*+C"I# P%#CE,,A
(olding o" s!""iient inventories o" raw materials beomes neessary in times
o" sarity to prevent stoppage o" prod!tion proess. 3rod!tion o" omponents in
large bathes will be help"!l to red!e the set!p ost. $his wo!ld nat!rally, res!lt in
holding o" large stok o" materials.
1.$#% P%#PE% $L#2 #$ G##*,A
3!rhase prod!tion and sale are not ontin!o!s ativities. 4o, there is the
need to arry inventory so that the "!ntion o" p!rhase, prod!tion and sale an
proeed at their own optim!m pae or speed.
4.*I,C#+",A
8arge p!rhase o" materials an be made to take advantage o" diso!nts
o""ered on b!lk p!rhases, nat!rally, res!lts in holding o" inventories. 8arge orders
may also be plaed to !t down the ordering ost the ost o" heking and handling. A
ompany sho!ld maintain ade5!ate stok o" materials "or a ontin!o!s s!pply to the
"atory "or an !ninterr!pted prod!tion. 2t is not possible "or a ompany to pro!re
raw materials whenever it is needed. A time lag e'ists between demand "or materials
38
and its s!pply. Also there e'ists !nertainty in pro!ring raw materials bea!se o"
"ators s!h as strike, transport disr!ption or short s!pply. $here"ore, the organization
sho!ld maintain s!""iient stok o" raw materials and a given time to ens!re smooth
prod!tion.
A*!A"AGE, #$ )#L*IG I!E"#%-&
"he various advantages o( holding inventory are as (ollows&
;.OG2CI 4#<%2C#J
C!stomers desire a prompt "!l"illment o" orders. A "irm will have to make the
goods available "or sale. 2n the event o" its not being able to o""er 5!ik servie to
!stomers, then the !stomers are likely to get their orders e'e!ted by ompetitors.
2.:24CBG9$4J
A "irm an take the advantage o" diso!nts on the b!lk p!rhases orders with
their s!ppliers. A proper proportion will have to be maintain between the ost o"
maintaining inventories and the diso!nts that is likely to be gained.
3.<#:GC$2B9 29 B<:#< CB4$J
#ah order in!rs ertain ost i" the n!mber o" orders red!ed, it is possible to
eonomis on these osts.
4.#..2C2#9$ 3<B:GC$2B9 <G94J
2nventories help the "irm to make s!""iiently long r!ns, these there by ahieve
e""iient prod!tion r!n, and it is possible to red!e set!p osts.
5.3<B:GC$2B9 A7A294$ 4(B<A7#J
39
Ade5!ate inventories protet a "irm against the shortages that wo!ld res!lt in
prod!tion stoppages and onsiderable losses.
?.43#C2A8 C2<CG&4$A9C#4J
When there is a "lood or any limati obstales, aidents, strikes et, the
transportation is di""i!lt. 2n all these ases, s!pply o" raw materials is not proper
whih in t!rn e""ets the prod!tion proess. 2n this ir!mstanes keeping
inventories is vital and help"!l.
*I,A*!A"AGE, #$ )#L*IG I!E"#%-&
With the advantages o" holding inventory, ompany also "aes ertain
disadvantages. $hese disadvantages divided into risk and ost.
%I,0 #$ )#L*IG I!E"#%-&
;.3<2C# :#C829#J
$his risk is a!sed d!e to inrease in the market s!pply o" the prod!t,
introd!tion o" new ompetitive prod!t, prie, !tting by the ompetitors et
2.3<B:GC$ :#$#<2B<A$2B9J
$his risk is a!sed d!e to holding a prod!t "or two long period or improper
storage onditions. $his risk is mainly meant "or perishable goods only.
3.B>4B8#4C#9C#J
$his o!r d!e to hange in !stomer taste, new prod!t tehni5!e,
improvement in the prod!tion design, spei"iation et,.
40
*E$IA"I# #$ I!E"#%-&
4everal a!thors have de"ined the term inventory. $he most pop!lar o" them is
C$he term inventory inl!des the raw0materials, work0in0progress, "inished goods,
pakages, spares and other stoked in order to meet an !ne'peted demand or
distrib!tion in "!t!reD.
2nventory represents those items, whih are either stoked "or sale, or they are
in proess o" man!"at!ring or they are in the "orm o" materials, whih are yet to be
!tilized.
IMP#%"ACE #$ I!E"#%-&
2nventories onstit!te the largest omponent o" !rrent assets in many
organizations. 3oor management o" inventories there"ore may res!lt in b!siness
"ail!res. A stok0o!t reates an !npleasant sit!ation "or the organization. Conversely,
i" a "irm arries e'essive inventory, the added arrying ost may represent the
di""erene between pro"it and loss. #""iient inventory ontrol, there"ore, an
signi"iantly ontrib!te to the overall pro"it o" the organization.
C#," #$ )#L*IG I!E"#%-&
;.&A$#<2A8 CB4$J
41
$his inl!des a ost o" p!rhasing the raw materials, transportation and
handing harges and less any diso!nt allowed by the s!pplies o" goods.
2.B<:#<297 CB4$J
$his is a variable ost o" plaing an order "or goods. .ewer the orders, lower
will be the ordering ost "or the ompany.
3.CA<<<M297 CB4$J
$his inl!des the e'penses "or storing the goods. 2t omprises the ost o"
apital i.e. ost o" the money invested in the inventory the ost o" storage, the ost o"
deterioration o" items, ins!rane osts, salaries and stat!tory payments o" stores
personnel et.
"-PE, #$ I!E"#%IE,&
A man!"at!ring "irm generally arrying "ollowing types o" inventoriesJ
/.%A2-MA"E%IAL,&
<aw materials are those basi !n"abriated materials, whih have not
!ndergone any operation sine they are reeived "rom the s!ppliers.
2.'#+G)"-#+" PA%",&
$hese parts re"er to those "inished parts, s!b0assemblies whih are p!rhased
"rom o!tside as per the ompanies spei"iation.
A.2#%0 I P%#G%,, :2.I.P;I!E"#%IE,&
42
$his re"ers to the items or materials in partly ompleted ondition o"
man!"at!ring. #'ampleJ 4emi "inished prod!ts at vario!s stages o" man!"at!re.
'.$II,)E* G##*, I!E"#%-&
$hese re"ers to the ompleted prod!ts ready "or dispath.
C.MAI"AIACE, %EPAI%, A* #PE%A"IG ,"#%AGE&
9ormally, these inventories re"er to those items, whih do not "orm the part o"
the "inal prod!t b!t are ons!med in the prod!tion, proess, "or e'J Bil mahine
spares, grease, et.
*."##L, I!E"#%-&
2nl!des both standard tools and speial tools.
E.MI,CE,,AE#+, I!E"#%-&
$his inl!des o""ie stationary and other ons!mable stores.
#'BEC"I!E #$ I!E"#%- MAAGEME" &
Gs!ally, the ompany is "aed with the "ollowing on"liting ob/etives in the area o"
inventory management.
;. $o arry ma'im!m inventory in order to "ailitate e""iient and smooth
prod!tion and sales operations.
2. $o minimize investment in the 2nventory in the inventory in order to ma'imize
pro"itability. >oth over investment or !nder investment in inventories is
!ndesirable, as both involve ertain onse5!enes.
43
#ver investment J involves the "ollowing onse5!enes E
;. Gnneessary bloking o" "!nds in inventory, and hene loss o" pro"it.
2. #'essive storage and ins!rane ost.
3. <isk o" li5!idity. $he inventories one p!rhased and stored are normally
di""i!lt to dispose o" s!bse5!ently at the same val!e. 2n other words, the
val!e o" inventory red!es with the inreasing holding period.
+nder-investment J involves the "ollowing onse5!enes J
;. 2" s!""iient stok o" raw material and work0in0proess is not available, it may
res!lt into "re5!ent interr!ptions in prod!tion.
2. 2" s!""iient stok o" "inished goods is not available, it may not be possible "or
the ompany to serve the !stomers properly.
$h!s, the ob/etives o" the inventory management is to avoid the sit!ation o" over
investment as well as !nder investment. $he level o" the inventories sho!ld be
maintained at the ob/etive o" inventory management is to minimize the investment in
inventory witho!t adversely a""eting the prod!tion or sales operations.
44
6. *A"A C#LLEC"I# A* P%E,E"A"I#
$he reliability o" managerial deisions depends on the 5!ality o" data. $he
5!ality o" data an be e'pressed in terms o" its representative "eat!re o" the reality
whih an be ens!red by the !sage o" a "itting data olletion method.
As has been dis!ssed earlier, data an be lassi"ied into primary data and
seondary data. $he data whih are olleted "rom the "ield !nder the ontrol and
s!pervision o" an investigator is known as primary data. $his type o" data are
generally a"resh and olleted "or the "irst time.
P%IMA%- *A"A&
As stated earlier, primary data are !se"!l "or !rrent st!dies as well as "or
"!t!re st!dies. (ene, it sho!ld be olleted with !tmost are. $he di""erent methods
whih are !sed "or primary data olletion areE
Bbservation methods,
3ersonal interview,
$elephone interview and &ail s!rvey.
,EC#*A%- *A"A&
As stated earlier, seondary data are olleted "rom so!res whih have been
already reated "or the p!rpose o" "irst0time !se and "!t!re !ses.
,ources o( secondary data are as (ollowsA
4ales reords, marketing ativity, ost in"ormation, distrib!tor reports and
"eedbak, !stomer "eedbak.
45
$he data olleted "orm /o!rnals, magazines, government p!bliations, ann!al
reports o" ompanies, et., these data are alled as seondary data. 2n eah o" these
so!res o" data, the proess o" data olletion has already been done by the respetive
organizationKageny.
7. MA"E%IAL, I*E"IG A* P+%C)A,E
,-,"EM
A. >ill o" materials
Bn the basis o" shop instr!tion reeived "rom marketing department, the
prod!tion planning and servie department sho!ld prepare the bill o"
materials.
$he bill o" materials overs eah and every item o" materials re5!ired "or
man!"at!ring o" e5!ipmentKprod!tK goods and "!l"illment o" tehnial
re5!irements as presribed in the shop instr!tion order. $he bill o"
materials sho!ld be a!thorized by the planning &anager or $ehnial 2n
harge.
>. Gser department J
Gser department sho!ld plan the re5!irements o" vario!s ons!mables and
stores items in advane in ons!ltation with the prod!tion planning and
servie department.
$he !ser department raises the bill o" materials in advane, "or
ons!mables and other stores items and gets it signed by :epartmental
(ead and a!thorized by prod!tion &anger.
C. 3!rhase indent J
$he p!rhase indent sho!ld be originated by the stores department.
$he stores department sho!ld mention the stok position in bill o"
materials and "ind o!t the 5!antity to be p!rhased.
46
$he stores department prepares the p!rhase indent and gets it signed by
stores in harge and a!thorized by &aterials &anager.
2n respet o" ons!mables and raw materials o" low val!e and "or whih
neessary delegation o" responsibility has been done in "avo!r o" the stores
department a"ter onsidering stok level and omparing the same with re0
order level, i" neessary. 3!rhase indent an be originated by the stores
department and signed by the stores0in0harge and a!thorized by the
&aterials &anager.
$he p!rhase indent sho!ld be prepared in tripliate.
All p!rhase indents sho!ld be serially n!mbered, bearing re"erene
n!mber o" the bill o" materials, i" any.
P%ICIG #$ %ECEIP", &
3riing o" materials reeived is to be done on the basis o" s!pplier6s invoie.
$he ost o" materials may inl!de invoie prie less trade diso!nts pl!s
transportation or ha!lage harges, arriage inwards, ost o" loading and !nloading,
and handling osts.
$he "ollowing points be kept in mind while alloating the vario!s omm., i.e.,
!nalloable or ommon osts o" material reeiptsJ
$he invoie val!e aording to the rate o" di""erent varieties
.reight aording to weight.
4ales ta' on the basis o" val!e.
Bther harges like transportation, et., on the basis o" weight or vol!me.
ME")#*, #$ P%ICIG MA"E%IAL, I,,+E, &
A. Cost prie methods
47
,;- 4pei"i ost method J spei"i p!rhase "or spei"i order or /ob
,2- 2denti"iable ost method J 2denti"iation o" iss!es with the respetive lot
p!rhased.
>. $he at!al ost method
;. 4pei"i prie method.
Gnder the at!al ost method, the materials iss!ed are pries at their at!al
ost whih involves identi"iation o" eah p!rhase. $he identi"iation is
possible "or materials p!rhased "or a spei"i /ob.
2. .irst0 in "irst o!t method ,.2.B-
Gnder the .2.B prie method, stores are iss!ed in the strit order in whih
they were taken into stok. $he oldest stok is iss!ed "irst at its p!rhase prie,
then the ne't and so on. $his may res!lt in one iss!e o" stores being omposed o"
more than one prie. At the end o" the period, the materials in stok are pried at
last in pries, i.e., latest p!rhase prie.
2n the &3& they "ollow the .2.B method "or the iss!ing o" materials "or
the prod!tion department thro!gh this they provide the materials those "irst
omes that they give "irst.
3. 8ast in "irst o!t method ,82.B-
Gnder the 82.B prie method, stores iss!e in the reverse order to the .2.B
system. 2n other wards, materials reeived last are ass!med to be iss!ed "irst in
ao!nting terms and ost "lows, altho!gh physial iss!es may be di""erent. $his
has the e""et that materials are always iss!ed at or near to their !rrent market
prie, b!t the val!e o" stok remaining in stores is always al!lated at "irst 2 prie
i.e oldest p!rhase prie.
4. (ighest0in0"irst o!t method ,(2.B-
48
$his method is based on the ass!mption that it is advisable to maintain the
val!e o" inventory at the lowest possible prie. (ene, materials with highest
prie in the stok are iss!ed "irst, irrespetive o" the date o" p!rhase. $his
method is not pop!lar in pratie. 3eriod end val!ation o" inventory will be on a
onservative basis in the periods o" rising pries.
C. Average ost prie &ethodsJ
;. 4imple average prie method
Gnder this method, materials iss!ed are val!ed at average prie, whih is
al!lated by dividing the total o" all !nit rates by the n!mber o" p!rhases. 2n other
words,
Materials Issue price per +nit C "otal o( unit prices o( each purchaseD "otal
num3er o( Purchase
$his method is !se"!l, i" the materials are reeived in !ni"orm lots o" similar 5!antity
and when p!rhase prie dose not "l!t!ate onsiderably.
2. Weighted average 3rie J
$his is al!lated by dividing the total ost o" materials in stok and
new reeipts by the relative total 5!antity. $he iss!e prie is al!lated on
reeipt o" materials and this is applied !ntil the ne't lot o" materials is
reeived. $his method evens o!t the variations !nder "l!t!ating prie
onditions.
3. 3eriodi simple Average 3rie &ethod J
$his method is similar to the simple average prie method e'ept that
the average prie is al!lated at the end o" the predetermined and predeided
period, e.g. month, week, et.
4. 3eriodi weighted average prie &ethodJ
$his method is like weighted average prie method e'ept that the al!lations
o" iss!e are made periodially.
5. &oving simple Average 3rie &ethodJ
49
$he average prie is al!lated by dividing the s!m total o" simple average !nit
pries o" a given period by the n!mber o" pries d!ring that seleted period.
?. &oving Weighted average &ethodJ
Gnder this method, the iss!ed rate is al!lated by dividing the total o" the
periodi amo!nt by the periodi total 5!antity o" the periods
M2A C "otal amount o( the periods D "otal Euantity o( the periods
MA"E%IAL, C#"%#L&
&aterials need to be ontrolled bea!se materials and s!pplies generally
onstit!te one o" the important assets and ao!nt "or nearly between 40+ to @0+ o"
total ost in many ind!stries. $he main aim o" material ontrol is ahieving
ma'im!m e""iieny in prod!tion and sales with the least investment in the
inventory.
$he "ollowing are the tools and tehni5!es ommonly applied "or inventory ontrol J
4etting !p o" vario!s levels
#onomi Brder O!antity ,#BO-
A>C analysis
3erpet!al inventory reords and ontin!o!s stok taking
%#: analysis.
$he above tehni5!es are e'plained as "ollowsJ
A. $iFation o( inventory levels &
.i'ation o" inventory levels "ailities initiative proper ation in respet o"
the movement o" vario!s materials in time, so that the vario!s materials may
be ontrolled in a proper manner.
;. <eorder level J
2t indiates that level o" material stok at whih it is neessary to take
the steps "or pro!rement o" "!rther lots o" materials. $his level lies
between minim!m and the ma'im!m levels mathematially,
50
<eorder level P &a'im!m reord period Q &a'im!m !sage
2. &inim!m level
2t indiates the level below whih the at!al stok sho!ld not "all. 2" it
red!es, it may involve the risk o" non0availability o" materials and stok o!t
sit!ations whenever it is re5!ired.
2t an be deided by !sing the "ollowing "orm!la
&inim!m 8evel P <eorder level L ,Average rate o" ons!mption Q Average 8ead
time-
3. &a'im!m 8evel
2t indiates the ma'im!m 5!antity to be held in stok at any time.
&a'im!m 8evel P <eorder 8evel R <eorder 5!antity L ,&inim!m rate o"
ons!mption Q &inim!m lead time-
4. :anger 8evel
$his is the level "i'ed below minim!m stok level. 2" the stok reahes this
level, it indiates the need to take !p !rgent ation in respet o" getting the
s!pply.
:anger level P Average rate o" ons!mption Q 8ead time "or emergeny
p!rhases
5. Average level P &a'im!m 8evel R &inim!m 8evel K 2
B< P Bpening stok R Closing 4tok K 2
'. Economic #rder Guantity
2t is the "i'ed 5!antity o" material whih is ordered when the stok
omes down to a reorder level, so that ost o" p!rhasing is e5!al to ost o"
storage making the total inventory ost minim!m.
51
$here are vario!s ways o" determining the #BO, s!h as setting o!t a
tab!lation o" ost "or vario!s order 5!antities !ntil the minim!m ost is
determined or by "orm!la or by !sing a graph. $he most vonvenient way is
the "ollowing "orm!laJ
#BO P S 2 Q Cost o" plaing an order Q :emand "or the period
3!rhase prie per !nit Q ost o" storage as + o" total landed ost
2n &3& they were not "ollow the #BO tehni5!e o" material ontrol
bea!se the there is no ontin!o!s :emand "or the prod!ts it is d!e to
omp!tation "orm the other ompanies, some time ost o" p!rhase o"
materials is beome more than the ost o" storage or ost o" sales. 4o that the
aording to the demand only they prod!e the paper.
C. A'C analysis
2talian eonomist, %il"redo 3areto, has developed this onept, whih
an be applied "or seletive ontrol o" inventories "or ma'im!m ost
e""etiveness. $his is pop!larly known as always better ontrol or
3roportional parts val!e analysis.
52
A>C analysis is an analytial method o" inventory ontrol whih aims
at onentrating e""orts in those areas where attention is re5!ired most. 2t is
!s!ally observed, in pratie, that only a "ew n!mber o" items o" inventory
prove to be more important in terms o" amo!nt o" investment in inventory or
val!e o" ons!mption, while a very large n!mber o" items o" inventory
ao!nt "or a very meager amo!nt o" investment in inventory or val!e o"
ons!mption.
$his tehni5!e lassi"ies the vario!s inventory items aording to their
importane. $he importane o" the vario!s items may be divided on the basis
o" "ollowing "ators, i.e., ;- amo!nt o" investment in inventory, 2- val!e o"
material ons!mption, and 3- ritial nat!re o" the item.
2n &3& they "ollow the r!le o" A>C analysis thro!gh this they
ahieve target and also "!l"ill the demand "rom the e'ternal. $his is one o" the
important and !se"!l tehni5!e "or the organization "or the betterment in the
"i'ation o" the prie o" the prod!ts. $hey provide more onentration on
more val!able prod!ts in terms o" amo!nt o" investment in inventory or val!e
o" ons!mption.
G##*, I2A%*, $+C"I# MAIL- ICL+*E,&
,;- Colletion o" material where the same has to be olleted "rom 8orry
ompanies or railways "rom their godown or reeiving the same when they are
delivered at works.
,2- :o!mentation and getting the materials inspeted and
,3- Arranging "or laims, as re5!ired. $he above "!ntions are handled by
53
,a- 4hipping department
,b- 2nwarding and inspetion department o" stores and
,- >!lk material (andling stores.
,)IPPIG&
2tems o" materials pro!red are two ategories namely
,a- 4mall s!h as pakets, pakages, small tins et, whih are arried by 8orry
ontrators or by <ailways.
,b- >!lk &aterials arried by 8orries and railways in "!ll loads o" lorry or wagon.
2n the ase o" smalls, they are to be olleted "rom the lorry ompanies
godowns or "rom railway goods shed 8< ,8orry <eeipts- and << ,<ailway <eeipts-
reeived in &3& are passed on by p!rhasing to the shipping "or olletion.
4hipping :epartment arranges to ollet these smalls thro!gh olleting ontrators.
$hese ontrators ollet the materials and the same is handed over to <eeipt 4etion
o" 2n warding 4tores with an &C&,&aterial Colleted &emo- Anne'!re % is made
o!t giving the "ollowing in"ormation and sent to in warding stores &aterials olleted
are heked by shipping be"ore the materials are handed over to 2n warding 4tores.
2" at the time o" olletion it is observed that the pakages have been reeived
in damaged ondition and that there is likely0hood o" ontents being damaged or lost,
open delivery is demanded and a erti"iate to that e""et is obtained "rom the arriers.
A"ter determining the loss arising on ao!nt o" pakages being damaged provisional
laim ation is taken on against the 2ns!rane, wherever the materials have been
ins!red by &3& against $ransit 8oss. Alternately the laim is on the s!ppliers when
it is ..B.<. >hadravathi. 4hipping :epartment arranges "or 2ns!rane over against
the open general poliy the ompany has with 9ew 2ndia Ass!rane Co., wherever
p!rhase order provides "or the same. 2ns!rane over is arranged immediately a"ter
54
the reeipt o" 2.<K<< or reeipt o" the material itsel", whihever event happes earlier.
2t sometimes happens that the material wo!ld have been reeived long be"ore the
reeipt o" 8<K<< and hene the dem!rrage harges ar!e.
'+L0 ,+PPLIE,&
2n the ase o" >!lk &aterials s!h as lime stone, and "!rnae oil et, the
delivery by the arrier is at the &3& railways siding in the ase o" railways or at the
ompany6s gate in the ase o" lorries. >e"ore delivery is taken in respet o" the lorry
or the wagon, a weightment is made indiating the gross weight and a"ter !nloading
and ded!ting the tear weight o" the arriers, net weight o" the material reeived is
arrived at. >ased on the in"ormation on the weightment ard and other do!ments
available with the shipping, &2& is prepared and the same is handed over to >!lk
&aterial (andling 4tores making a notation on the &2& that the 5!antity and 5!ality
aknowledgement is s!b/et to inspetion.
Wherever e'ise d!ty has been paid by the s!pplier and where d!ty draw bak
an be obtained d!ty draw laim is lodged on "orm : L 3 with the e'ise a!thorities
stationed at &.3.& and this "orm : 03 at Anne'!re %2 together with the e'ise gate
pass is sent to ao!nts "or ao!nting o" d!ty draw bak.
:o!mentation o" materials reeived is done at two plaes
,;- 2nwarding 4tores and
,2- >!lk 4tores
I2A%*IG A* I,PEC"I# &
&2& ,&aterial 2nward &emo- is reeived "rom shipping with the material
ases are "irst heked o!twardly in 2nwards 4tores with re"erene to &2&. $he the
55
ases are opened and items heked with re"erene to delivery hallan and 3.B.
paking list or the invoie "or 5!antity reeived. Any disrepany is noted on the
invoie opy. $hen the material is o""ered "or inspetion to :y. &aterials
4!pdt,inspetion-. 7enerally, stok items are inspeted by :y. &aterials s!pdt. 2n
the ase o" arrived o" material and that the material be inspeted vode intimation and
inspetion <eport. Anne'!re %222. When material is passed thro!gh inspetion then
&22< is originated. .inal inspetion then &22< is only by :y. &aterials s!pdt
,2nspetion-. $ime allowed is only three days. Any delay by the :epartmental (ead
beyond three days in bro!ght to the notie o" &&K:&&.
*I,"%I'+"I# #$ MII%,&
;. Bn opy ,Ado- L &aterial Ao!nt ,Ao!nts-
2. Bn opy ,4tores reeipt setion- is retained and "iled in 3.B "ile.
3. &aster Copy is ret!rned by the holding stores with Control 9o
4. All other opies are sent by the holding stores diret to the departments
onerned.
CLAIM AC"I#&
2n the ase o" materials reeived in damaged ondition or short reeipts,
disrepanyKre/etion report, is raised and the same is addressed to s!ppliers with a
opy to Ao!nts and 4!pdt &aterials ,4hipping-. Where the goods have been
ins!red by &3& shipping department will take laim ation, otherwise p!rhase
department will take !p with the s!ppliers. Where the goods have been reeived in
good ondition b!t re/eted by inspetion, materials being not in on"ormity with the
spei"iation and shortage "o!nd a"ter the ases are opened, p!rhasing department
wo!ld take !p with s!ppliers.
56
<e/eted materials are disposed o" as per instr!tion "rom p!rhase
department. 2n the other words, they are ret!rned to s!ppliers or sent to salvage
stores, i" this s!pplier does not want it.
I,PEC"I#&
At present, a 4!pdt material ,2nspetion- is loated in the in warding and
inspetion stores. <o!tine inspetion is done by him. Where tehnial details are to
be heked the onerned department representative is being re5!ested to do the
inspetion. 2nstead, it is now proposed to have a "!ll0"ledged inspetion department,
attahed to in warding 4tores.
I,PEC"I# "AG&
A"ter inspetion, the inspeting a!thority shall "ill in the C2nspetion $agD, whih
ontains the "ollowing in"ormation ol!mns.
,a- &aterial Code 9o.
,b- &22< 9!mber and :ate
,- 9omenlat!re.
,d- 8oation 9!mber L given by (olding stores.
,e- O!antity aepted.
,"- 2nspetion signat!re and date.
$he material with the $ag and &22< is sent to onern holding stores. $he tag
serves the p!rpose o" easy identi"iation o" the material. 2n the absene o" >in Cards,
57
when only stok movement ards are maintained "ar away "rom the loation o" the
materials, it beomes easy to loate the material "rom the inspetion $ag. 2nspetion
tag sho!ld not be removed !ntil it is replaed by an inventory ard, when inventory is
taken at the time o" stok veri"iation.
$he proed!re o" do!mentation in >!lk &aterial handling 4tores is similar to the
proed!re "ollowed by 2n warding 4tores. 2nspetion o" the material is mainly
thro!gh laboratory tests. $he only di""erene is that &22< are raised immediately
a"ter the reeipt o" material and the &2&. $he &&2<s "rom this stores, tho!gh
originated in a series, annot be sent to the onerned departments in the same serial
order as the laboratory tests will not be in the same serial order, sine the time taken
"or eah $est di""ers "rom material to material. >esides some materials "o!nd to be
s!bstandard, will take more time be"ore the same is aepted or re/eted.
%E"+%A'LE C#"AIE%,&
Containers s!h as dr!ms, tins, reels, hlorine ylinders, pallets, other speial
paking o" material are available a"ter !npaking or emptying. &ost o" these paking
are not s!itable "or ompany6s !se. $hese paking are there"ore being sent to salvage
yard. (owever, some o" the ontainers are ret!rnable to s!ppliers. 2n the ase o"
hlorines ylinders, whih are largely !sed by &3& the ompany owns its own
ylinders. Asking s!ppliers to !se ompany ylinders, the ompany is getting a rebate
o" <s. 50 per ylinder and is also avoiding payment o" rent.
58
,AMPLE, %ECEI!E*&
Whether the samples reeived are "ree or payable, &22< has to be prepared,
indiating that the material is "ree or payable as the ase may be.
+%GE" P+%C)A,E&
&aterials !rgently pro!res are sometimes diretly reeived by shops or
o""ies. $his sho!ld be avoided. (owever when s!h an oasion arises s!h reeipt
sho!ld be overed by an &22<, and the iss!e by an 4<.
59
MA"E%IAL,
$he "!ntions o" the materials is divided into J
,;- 3!rhases and
,2- 4tores
P+%C)A,E *I!I,I#&
2ndigeno!s 3!rhaseJ
2n the ase o" non0stok items the re5!isition "or pro!ring a material omes "rom the
department in need o" the item L alled the 2ndentor thro!gh a do!ment alled
Cp!rhase <e5!isitionD. $he 2ndent may either ome thro!gh stores "rom the 2ndentor
a"ter veri"iation o" the availability o" the item in stores or to the p!rhase division
diretly who will send it to stores "or s!h veri"iation. $he stores 2n0harge, i"
erti"ies the non0availability o" the material is stores the p!rhase department, then
alls "or 5!otations "rom 50? s!ppliers. $he 5!otations are reeived and opened by
the 2nternal A!dit department and later sent to the p!rhase department a
CCB&3A<A$2%# 4$A$#&#9$D is prepared onsidering the prie 5!oted by all the
s!ppliers and the proposal is sent to the 2ndenter "or his reommendations.
Bn the basis o" the reommendation o" the 2ndentor and the omparative
statement the s!pplier is seleted and "inanial on!rrene is obtained "or
pro!rement o" the material. $hen the p!rhase department. 3roeeds with the
60
plaing o" the order with the s!pplier seleted thro!gh a Jp!rhase orderD,p.o-
spei"ying the terms and onditions. .or eg, i" the 5!otation reeived "rom the
s!pplier ontains a la!se0prie is #'0>angalore, it means the goods are ins!red !pto
>angalore and "rom there onwards the risk is to be borne by the b!yer. 2n s!h a ase
the 3.B sho!ld state abo!t the ins!rane over that is made "rom >angalore to
>hadravathi. $he 3.B sho!ld also spei"y abo!t the terms o" delivery and payment.
A opy o" the 3.B is sent to stores department.
2n the ase o" stok items the re5!isition omes diretly "rom the stores L
(olding setion one they hek L in with the Carde'D and see that ade5!ate stok is
not there.
Imports&
2n this ase also the proed!re is the same as in the ase o" pro!rement o"
indigeno!s items. $he re5!isition omes "rom the indentor and the 5!otations are
alled "or "rom overseas s!ppliers and then a omparative statement is prepared and
reommendations o" the indentor is alled "or and "inanial on!rrene is obtained to
pro!re the materials. :epending !pon the payment terms L whih may be ;00+
advane payment or thro!gh 8.C the 3!rhase order is plaed.
.or opening a letter o" redit ,8C- the "ollowing are re5!ired by the bank a
opy o" the 3.B., Aeptane o" the s!pplier to s!pply the material, :elaration by the
ompany inporting the material that it is not !nder <estrited or banned ategory o"
goods. $he 8.C details are in"ormed by the opening bank to the s!pplier6s bankers on
whih the goods are dispathed by the s!pplier. $he ompany appoints learing and
"orwarding agents who does the learane ativities by paying the !stoms d!ty and
"orward the goods "rom sea portK air port to >hadravathi.
,"#%E,&
61
$he "!ntion o" the stores at &.3.& is divided into shipping, stores0reeipts
and stores0holding. $he shipping division is responsible to arrange "or reeipt o" the
materials ordered "or. $he materials are reeived on door delivery basis or thro!gh
ontrators. Where the materials are o" s!h a nat!re that loading and !nloading is
di""i!lt the materials are delivered diretly by the s!ppliers at >hadravathi. 2n other
ases the 8orry reeipt is handed over to the ontrator who has been awarded the
ontrat o" olleting the materials "rom the transporter6s godown and delivering at
>hadravathi.
Bne the materials arrives at the shipping department, the materials along with
a material 2nward &emo ,&2&- is sent to the stores L reeipt setion. 2n the stores L
reeipt setion the materials is reeived with a opy o" the &2& whih ontains the
3.B.9B., the vehile 9o., lorry reeipt 9o and the 5!antity reeived.
$hen the indentor is alled in "or inspetion and when the material is "o!nd to
be B.I a C &aterial 2nspetion and 2nward <e0portD ,&22<- is prepared and along
with the materials aepted is sent to stores0(olding. $hen the 2ndentor in need o" the
material makes a C4tores re5!isitionD ,4<- and draws the material "rom stores L
(olding. 4ometimes, i" the indentor is !rgently in need o" the material inspeted and
"o!nd B.I., he draws the material "rom the stores L <eeipts setion by giving a
stores re5!isition.
$here a"ter, the &22< and 4< is sent to the stores0(olding "or entry into
Carde'D in the ase o" hemials and other b!lk materials the shipping setion sends
the materials along with the &2& "or reeipt and holding at the C>!lk &aterials CellD.
$he arde' is the do!ment whih shows the material reeived, iss!ed and in stok
and the loation o" stoking. $here is a separated arde' "or eah material.
62
2" the goods are "o!nd to be de"etive a"ter inspetion by the indentor, then a
C<e/etion reportD is prepared and sent to the shipping department "or making laims
"orm the C2ns!rane CompanyD. 2" the goods an be orreted internally then it is
done within the premises else it is sent to the s!pplier "or reti"iation and re0s!pply.
$he shipping department a"ter reeipt o" the re/etion report "rom stores0reeipt gets a
letter "rom the transporter as to the ondition o" the goods reeived and makes a laim
to the ins!rane ompany along with the stores re/etion report, transporter6s
erti"iate and a total laim statement "or the damage. Where the laim is in e'ess o"
<s.;0000K0 a s!rveyor is sent by the ins!rane ompany to assess the damage,
otherwise the laim is paid by the ins!rane ompany witho!t any s!rvey.
4tores department deals with more than 30000 items. 3resently right "rom the
stage o" p!rhase re5!isition omp!terization has started. 3revio!sly, there was no
lear0!t system o" identi"ying AK>KC lass items. With the omp!terization the
identi"iation will be made easier.
63
9. %ECEIP" A* I,,+E *#C+ME",
$his hapter deals with vario!s reeipts and iss!ed do!ments
%eceipt documents.
M%! :Material %eturned !oucher; A-
$his do!ment is !sed "or do!ment iss!ed "or reording o" "resh reeipts
against p!rhase order and "or ao!nting o" ret!rn o" materials previo!sly iss!ed on
loan. 4imilar to &22< two more "orms in !se are ,;- &22< "or reeipt o" li5!id
hlorine and a!sti soda and ,2- Cash 3!rhase ,4tores-.
M% :Material %eturned ote; H
$his do!ments is !sed "or reording o" reeipt o" materials ret!rned "rom the
departments or ontrators, being s!rpl!s to their re5!irement. $he materials also
inl!de !nservieable materials.
,! : ,tock !eri(ication ote;
$his do!ments is !sed "or the p!rpose o" stok veri"iation. Wherever an
item is "o!nd in e'ess o" the balane 5!antity as per the stok ontrol ard, this e'el
is taken to stok. $h!s this do!ment is !sed "or reording the reeipt o" e'ess stok
"o!nd on veri"iation.
,!% H :,tray !eri(ication %eport;
Whenever the stores themselves take stok o" materials and any e'ess "o!nd
d!e to vario!s reasons this do!ment iss!ed, similar to 4%9.
64
Issue !ouchers &
,.% : ,tores %eEuisition; L this do!ment is "or iss!ing materials re5!ired by the
department. $hese are originated and approved "or withdrawal by o""iers a!thorized
by management. 4imilar to 4< two more "orms in !se are ,;- material 2ndent Credit
4ales ,2- 4tationary &aterial 2ndent.
,! - this do!ment is !sed "or ao!nting o" shortages "o!nd on veri"iation.
,!% :,tray !eri(ication %eport; L this do!ment is !sed "or ao!nting o"
shortages or $rans"er to another material ode.
Cheking o" do!ments be"ore iss!e o" materials. 2ss!ing lerk has to hek
whether all the ol!mns o" the iss!e vo!hers have been "illed !p properly. $his
"ollowing drill sho!ld be "ollowed.
;. Chek whether all ol!mns have been a!thorized "or withdrawal by a
ompetent o""ier.
2. Chek whether all ol!mns have been "illed properly.
3. 9ote the loation o" the material "rom the stok ontrol ard and pik !p the
material.
4. #nter the 5!antity at!ally iss!ed in the C2ss!edD ol!mn or mark 9.4
indiating there is no stok, as the ase may be.
5. Bbtain the signat!re o" the indenters representative.
?. <et!rn the last opy o" 4< to the indenter.
A. 3ost the iss!e in the iss!e ol!mn o" the stok ontrol ard and strike balane.
@. .inally, post the Iarde' >alane and the line n!mber in 4.<
*. .ile seond opy serially a"ter obtaining the ontrol 9o.
;0. >alane Col!mns on :o!mentJ on all reeipt and iss!e
65
:o!ments !sed "or reording reeipt o" materials "rom the stores, there is need
"or two ol!mns, one "or balane whih is generally available and the other "or line
n!mber. 4imilarly these ol!mns are neessary on ,;- 4tok movement ards and the
material ledger in ao!nts.
$he p!rpose o" these ol!mns is as "ollows J a"ter posting the reeipt or iss!e
do!ment into the stok movement ard, the balane o" stok o" the item is str!k.
$his balane in the >inK<ak et. when the do!ment is posted independently in
material ao!nts the material ledger balane sho!ld agree with the balane indiated
by stores on the do!ment. Any disrepany o!ld immediately be reti"ied. $his
saves onsiderable time in reoniliation between the stok movement ard and the
material ledger.
3roviding line n!mber on the do!ments ens!res better ontrol. .or e'ample,
stok movement ard has @0 lines "or posting either reeipt or iss!es. $he movement
ards when got printed. $he n!mber ; to @0 o!ld be got also printed. When a
do!ment is posted say, it is posted on line 9o.* i" the line n!mber @ has already been
"illed !p. A"ter posting this line n!mber reeipt or iss!e sho!ld be indiated on the
onerned reeipt or iss!e do!ment.
When posting is done independently in material ao!nts the posting sho!ld be
o0n the same line. 2" it is other wise it only means that the do!ment posted by stores
has not been reeived in material ao!nts or a line n!mber has not been operated by
stores d!re to some reason. $his ens!res immediate reti"iation o" errors. 2" any
Advantages o" providing F>alane6 ol!mn and C8ine 9BD on all reeipt and iss!e
do!ments s!h as &22<, &<9, 4%9, 4< 4%< and also on stok movement ard and
material ledger ard areJ
;. $ime spent in reoniliation is saved to a great e'tent.
2. A!tomati reoniliation between the stok movement ard and the material leder
ard is provided.
66
3. A!tomati reoniliation between the stok movement ard and the material
ledger ard is provided.
4. 3hysial inventory an be taken with re"erene to stok movement ard or the
material ledger.
5. :isrepany between the physial balane o" stok and stok movement ard is
minimized.
67
ANN-AL #RO!-"ION
$he "ollowing table is shows abo!t the ann!al prod!tion in &etri $ones in the
&3&
M#A< 3<B:GC$2B9
200500? 2?54.32
200?00A 2A@4.5;
200A00@ 2@@*.5;
200@00* 30?0.32
200*0;0 ;A*A.35
68
3rod!tion ativity an be show in the "ollowing graph it is easy to !nderstand
the apaity o" prod!tion o" the paper in &3&.
Above graph is abo!t the ann!al prod!tion "rom the 200500? to 200@00*.
3rod!tion is grad!al inrease !p to the 200A00@ a"ter that prod!tion ativity is
deline to the ;A*A.35.&.$. it is may be d!e to ompetition or shortage o" raw
materials
$o inrease the prod!tion ativity they m!st take good strategy like 5!ality o"
the paper and good servie to the dealers and also 3rovide attrative diso!nt "or b!lk
69
p!rhase o" paper keep in to!h with the dealers. And also maintain reg!lar ontrat
with the raw material s!pplier "or the ontin!o!s prod!tion ativity
!IS#A".
70
-ear *ispatch
200500?
4@;2.A2
200?00A
45;0.@*
200A00@
33*?.02
200@00*
304@.33
200*0;0
224@.32
Above table tells abo!t the total ann!al dispath o" paper K "inished prod!ts it
an easily !nderstand by seeing the "ollowing graph. $his an be e'plained "rom the
year 20050200? to 200*020;0.
71
Above graph is pertaining to the total ann!al dispath o" the paper "rom the
200500? to 200*0;0. 2n this graph we an know abo!t the grad!al derease in the
dispath o" the paper "orm 45;0.@* &.$ to 224@.32 &.$. it is d!e to the orders or
demand "rom the !serKdealers or break down in the prod!tion mills and so on.
72
"losin& stoc/ of t'e last fi)e years
73
Mear Closing 4tok
200500?
2203.?;
200?00A
2A*4.3A
200A00@
A0?.A*
200@00*
;AA@.?0
200*0;0
5*52.5A
$his table shows the losing stok o" the year 200500? to 200*0;0 it is all
abo!t the stok at the end o" the "inanial year. $his table an be shown in the
"ollowing graph
Graph showing the closing stock o( the MPM o( last (ive year
74
We ome to the losing stok it is very important to take "!t!re deision
regarding the p!rhase o" the stokKraw material "or the prod!tion proess. $he
losing stok o" the previo!s year is beome the opening stok o" the ne't year. 2n the
year 200500? the losing stok is abo!t 2203.?;, in 200?00A it is 2A*4.3A it will raise
ompare to the previo!s year, in 200A00@ it is A0?.A* totally derease d!e to the more
prod!tion ativity, in 200@00* it is ;AA@.?0 and in 200*020;0 it is over all more than
the last "o!r years that is 5*52.5A bea!se low prod!tion ativity.
IN$ENORY $AL-E OF .E M#M
75
.B88BW297 $A>8# 4(BW4 $(# 29%#9$B<M %A8G# B.
$(# &3&
-EA%
I!E"#%-
!AL+E
:%s. in crores;
1II5-1II6 16.==
1II6-1II7 17.65
1II7-1II9 17.19
1II9-1II< 1<.<9
1II<-1II= 4/.54
$he above table is shows that the inventory val!es in &3& this an be
inreasing trend d!e to the e""iient management in the inventory, !p to date o"
materials in the stores and ontin!o!s a!dit. $his an be shown in the "ollowing
graph
76
$his graph shows the over view o" the inventory and its val!e in the &3&
"rom 2005 to 200*. 2t is inreasing year by year in 2005 it is 25.** and in the year
200* it is 3;.43. $he inreasing inventory a!ses more risky.
I. ANALYSIS OF FINANCIAL STATEMENT
I) *+ ,-./ -++-0)*12 )3 4--5 6.*))-0 .-"3.7 38 122 )#- ).10+1")*30 *0
155.35.*1)- 9334+: 6#*"# #-25 *0 "12";21)*0< )#- 5.38*) 107 "21.*8/*0< )#- 8*010"*12
53+*)*30 38 )#- "3=510/ 6*)# 515-. "30).32 +/+)-= 30- "10 7-)-") )#- 2-141<-
->).1,1<10) 107 =*+;+- 38 8*>-7 1++-)+$ T#- 8;0")*30 38 )#- 1""3;0)+ 7-51.)=-0) *+
)3 .-"3.7 )#- ,1.*3;+ ).10+1")*30 38 )#- "3=510/ *0 8*010"*12 )-.=+ 151.) 8.3= )#-
?;10)*)1)*,- .-"3.7+ 0-"-++1./ )3 9- =1*0)1*0-7$
77
A+ 5-. )#- 91210"- +#--) 107 5.38*) 107 23++ 1""3;0) 38 )#- "3=510/ )#-.-
*+ *0".-1+*0< *0 +12-+ 38 R+ 39405$45 214#+ *0 2008 107 RS$ 42490$72 214#+ *0 2009
107 )#- "3=510/ *+ 5.-+-0) 1"17-=*" /-1. *) #1+ )#- 5.38*) 38 R+$ 1632$93$ 9;) )#-
B1210"- 38 23++ 9.3;<#) 83.61.7 8.3= 5.-,*3;+ /-1. +#36+ )#1) )#- "3=510/ *+
<3*0< ;07-. 23++$
E,-0 *8 6- "3=51.- *) )3 )#- 5.-,*3;+ /-1. 23++ 61+ 4835$23*0 2008: 036 *)
+#36+ 3202$29 *0 2009$ I) +#36+ )#1) )#- 23++ #1+ 9--0 7-".-1+-7 1 9*) 107 )#-
"3=510/ #1+ *=5.3,-7 1 9*)$
P.38*) 107 L3++ A""3;0) 107 B1210"- S#--) 1.- +#360 9-236@
3<B.2$ A9: 8B44 ACCBG9$ .B< $(# M#A< #9:#: 3;
4$
&A<C(
200*
,<s. in 8akhs-
PARTICULARS S"#-7;2
-
F3. )#- /-1. -07-7
31$03$2009
F3. )#- /-1. -07-7
31$03$2008
A$INCOME
S12-+
L-++A E>"*+- D;)/ & C-++
42490$72
1142$74
39405$45
1570$97
78
O)#-. I0"3=-
(1.*1)*30 *0 S)3"4+
P.*3. P-.*37 A7B;+)=-0)
0-)! N3)- 4$09!
B$ECPENDITURE
R16 M1)-.*12 C30+;=-7
C#-=*"12 C30+;=-7
S)3.-+ C30+;=-7
R-51*. & M1*0)-010"-
P36-. 107 F;-2
L193. "#1.<-+
E=523/-- R-=;0-.1)*30
A7=*0*+).1)*30 107 O)#-.
E>5-0+-+
S-22*0< E>5-0+-+
3$01
3$02
3$03
3$04
3$05
3$06
9210$67
4641$05
903$47
1047$18
13680$67
1220$40
7042$33
771$61
778$17
41347$98
2771$36
259$08
D569$00
37834$48

3939$39
251$30
229$10
43809$42
39305$55

9864$00
4732$48
781$08
1230$04
10168$42
1521$94
8294$88
1092$00
887$42
42254$27
38572$26
79
C$ P.38*) 83. )#- /-1.
9-83.- I0)-.-+):
D-5.-"*1)*30 & T1>1)*30
D$ I0)-.-+)
E$ D-5.-"*1)*30
3$07
4503$87
1864$19
994$86

3682$01

2163$66
992$65
F$T1>1)*30DF.*0<- B-0-8*)
T1>
N-) P.38*) 83. )#- /-1.
A77A B1210"- 38 L3++ D!
9.3;<#) 83.61.7 8.3=
5.-,*3;+ /-1.
B1210"- 38 L3++ D! "1..*-7
)3 B1210"- S#--)
11$89
1632$93
D4835$23
19$58
506$12
D5341$36
D3202$29 D4835$23
80
>A8A9C# 4(##$ A4 A$ 3;
4$
&A<C( 200*
R+$ *0
L14#+!
PARTICULARS S"#-7;2
-
A+ 1) 31D03D2009 A+ 1) 31D03D2008
SOURCES OF FUNDS
A$ SHARE HOLDERS FUNDS
C15*)12
S#1.- A552*"1)*30 M30-/
R-+-.,- 107 S;.52;+
B$ LOAN FUNDS
S-";.-7 L310+
U0+-";.-7 L310+
T3)12 AEB!
APPLICATION OF FUNDSA
C$ FICED ASSETS
G.3++ B23"4
L-++A D-5.-"*1)*30
NET BLOCK
2$01
2$02

2$03
2$04

2$05
11889$34
0$00
590$11
11884$48
0$00
625$81
11323$58
11717$27
12479$45
23040$85

9922$75
11281$92
12515$15
21204$68
50574$36
37660$02
35520$30
50388$79
36643$06
33719$83
81
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2$06
12914$34
209$42
13745$73
45$78
13123$76 13791$51
B.3;<#) F3.61.7
D$ CAPTI(E FOREST
PLANTATION
E$ IN(ESTMENTS
F$ CURRENT ASSETS:
LOANS AND AD(ANCES
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2$08
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2$13
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5027$49
84$12
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5961$71
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4343$29
62$44
15340$51
3909$74
70$27
3328$17
8244$10
3995$24
13791$51
4621$31
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G$MISCELLANEOUS
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83
II. LEARNING EXPERIENCE
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Inowledge abo!t the "!ntioning o" the vario!s departments in the
organization.
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