WOKING CAPITAL MANAGEMENT OF JK PAPER

A project submitted to the Gitam institute of management, Gitam University, Visakhapatnam in partial fulfillment of the requirements for the Award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

Mr. NILAKANTHA SAHANI

(Roll No- 1225111162) Under the guidance of

Prof. shaik shamshuddin

DEPARTMENT OF MANAGEMENT STUDIES GITAM Institute of Management

GITAM UNIVERSITY VISAKHAPATNAM

2010-2012

CERTIFICATE BY GUIDE
This is to certify that the summer training project report titled WORKING CAPITAL MANAGEMENT OF JK PAPER being submitted by Mr. NILAKANTHA SAHANI as partial fulfillment of the requirement of the MBA course is a bonafied work carried out by the student at our institute .

This summer project study in his original work and has not been submitted to any other university institute.

Project Guide Prof. Shaik shamshuddin Date:

CERTIFICATE

This is to certify that Mr. NILAKANTHA SAHANI, Regd. No. 1225111162 pursuing final year MBA (Finance & Marketing) from GITAM INSTITUTE OF MANAGEMENT, GITAM University, Visakhapatnam has undergone practical project training entitled Study on Working Capital Management at JK Paper Limited, Jaykaypur for a period of 45 days during 02.05.12 to 12.06.12.

His conduct and performance during the above period were found satisfactory. I wish him all success in future.

For JK PAPER MILL Mr Sunil Ku Das(C.A) Senior manager (ACCOUNTS)

ACKNOWLEDGEMENT

I wish to express my gratitude to Prof. K.SIVA RAMA KRISHNA, Dean &principal of GITAM Institute of Management, GITAM UNIVERSITY, Visakhapatnam for his encouragement in my project. Its a great pleasure for me to express gratitude to my project guide Prof. shaik shamsuddin, without whose guidance and encouragement this could not have been completed. My heartful thanks are to Mr SUNIL DAS head of finance department Of jk paper

industry,Jaykaypur,Raygada. For his constant guidance, advice and support for the successful completion of the project. I wish to express my gratitude to all the faculty members of Gitam Institute of Management, GITAM University, Visakhapatnam, for their encouragement in my project.

I like to thank my friends who helped me to develop this project and my deep gratitude to my family members for their constant support and encouragement.

Date: Place:

NILAKANTHA SAHANI

DECLARATION

I Mr. NILAKANTHA SAHANI hereby declare that the project report entitled A study of working capital management of jk paper industry is original piece of work done and submitted by me towards partial fulfillment of my Master of Business Administration(MBA), GITAM Institute of Management, GITAM University. Visakhapatnam.

Date:
Place:

Mr. Nilakantha Sahani

Sr. No.

Content

Page No.

1.

INTRODUCTION

2.

NEED FOR THE STUDY

3.

OBJECTIVE OF THE STUDY

4.

METHODOLOGY

5.

LIMITATION OF THE STUDY

6.

INDUSTRIAL PROFILE

7.

COMPANY PROFILE

8. 9. 10. 11.

THEORITICAL FRAMEWORK OF THE STUDY TABULATION AND ANALYSIS FINDINGS AND SUGGESTIONS ANNEXURES AND BIBLIOGRAPHY

CHAPTER-1

Introduction: Working capital is otherwise known as net current asset, i.e. the excess of current assets over current liabilities. Every org. has to carry in one form or the other. So efficient management of working capital is important from the point of view of both liquidity and profitability. Poor management of working capital results in to blocking of funds in idle assets resulting in reduction of liquidity and ability to invest in profitable activities. Working capital consists of investment in current assets, which includes, inventory, receivables, cash & bank etc. compensating the current liability side, which consists of creditors, loans & advances, bills payable etc. The working capital management refers to the management of current assets and current liabilities. The need for working management arises from the following two i) Existence of working capital in any org. The fixed sets, which usually require a large chunk of funds, can be optimally used, when they are supported by sufficient working capital. Working capital involves investment of funds in the capital of the firm, if the level is not properly maintained and management, then it my result in unnecessary blocking of scare resources of the firm that is the funds of the firm.

ii)

Working capital management is managing the problems related to current assets, current liabilities and the interrelationship that exits among them. The close interaction among working capital components implies that efficient management of one component cannot be undertaken with out simultaneous of other components. The total capital management is based up on the current assets cycle, which is better known as working capital cycle. The total cycle is illustrated in the following diag.

PREFERABLE OF GROSS WORKING CAPITAL: It enables the enterprises to provide correct amount of working capital at the right time. Every management is more interested in the totals current asset with which it has to operate the sources from where it is made available. The gross concept takes into consideration the fact that the every increase in the funds if the enterprises would increase its working capital. The gross Working Capital concept of Working Capital is more useful in determining the rate of return on investments in Working Capital.

USES OF NET WORKING CAPITAL: It is qualitative concept, which indicates the firms ability to meet its operating expenses and short-term liability. It indicates the margin of protection available to the short-term creditors i.e. the excess of current asset over current liability.

 It suggests the needs for financing and part of the Working Capital

requirements out of permanent source of funds.

So as per the uses of the capital concept of the net Working Capital is more preferable to calculate the Working Capital needs. The net Working Capital most probably use in the sole trader, partnership and business companies.

CHAPTER-2

NEED OF STUDY
Working capital constitutes part of the Lafarge's investment in a department. Associated with this is an opportunity cost to the Lafarge. (Money invested in one area may "cost" opportunities for investment in other areas.) If a department is operating with more working capital than is necessary, this over-investment represents an unnecessary cost to the Lafarge. From a department's point of view, excess working capital means operating inefficiencies. In addition, unnecessary working capital increases the amount of the capital charge which departments are required.

To know the current position of working capital of Jk paper ltd. To know about the current assets of the company. To get the information about the current liabilities of the company. To analyze the companys current position in respect of meeting immediate cash requirements. To get the information of credit sales and credit purchase. To analyze inventory of the company in form of raw materials, work-inprogress and finished goods. To compare the position of jk paper ltd. in terms of working capital.

OBJECTIVES OF STUDY
Study of the working capital management is important because unless the Working Capital is managed effectively, monitored efficiently, planned properly and reviewed periodically at regular intervals to remove bottlenecks if any, the company cannot earn profits and increase its turnover. The objectives are: To study the working capital management of jk paper industry. To study the optimum level of current assets and current liabilities of the company To study the liquidity position through various working capital related Ratios. To study the working capital components such as receivables accounts, cash management To estimate the working capital requirements of jk paper industry. To study the operating and cash cycle of the company.

SCOPE OF STUDY
The study is confined to the management of working capital in JK paper Ltd. The main aim of the study is to study the working capital management system. Analytical study on the current financial scenario and future potential of jk paper industry To analyze and appraise the financial performance of jk industry during the Period. To make necessary recommendation on the basic of the findings of the study. To read the daily transactions.

RESEARCH DESIGN
Data Collection Method The information for the study has been obtained from Secondary Source of Data. Secondary Source of Data The secondary data is secured from annual reports, financial reports, balance sheet and profit and loss account. What we got from the organization like financial records and other information journals of the organizations also some other information through financial books. For collection of data, I have consulted the following secondary data:

Annual Reports Files and Records of plant Internet Financial data provided by Accounts Department

DATA TABULATION The data is tabulated under different heads of current assets and current liabilities. The table shows the amount of money allocated for different current assets and current liabilities. The table contains information of working capital for two consecutive years i.e. 2009,2010,2011.

ANALYSIS METHOD
As the information is taken for two consecutive years, comparative study of all the aspects of working capital i.e. current assets and current liabilities is done. It is seen whether there is a change in working capital or not. The analysis is done through: Schedule The schedule is showing the information of all the current assets, current liabilities and working capital of two years. Graph The graph is showing the difference between current assets, current liabilities and working capital between 2009 and 2010. Fund Flow Statement The Fund Flow Statement is a statement the total current assets and current liabilities. It also shows whether they have increased or decreased. It is basically prepared to see the changes in working capital and if it changed then in what amount. Ratio Analysis It shows relationship between different aspects of finance in mathematical terms. The used are:

Working Capital Turnover Ratio Stock Turnover Ratio Current Ratio Liquid Ratio Cash to Current Asset Ratio Cash to Working Capital Ratio

LIMITATIONS OF SYUDY Total costs incurred on material, wages and overheads. The length of time for which raw materials are to remain in stores before they are issued for production. The length of the production cycle or work-in-process, i.e., the time taken for conversion of raw material into finished goods. The average period of credit allowed to customers. The amount of cash required paying day-to-day expenses of the business. The average amount of cash required making advance payments, if any. The average credit period expected to be allowed by suppliers. Time lag in the payment of wages and other expenses.

CHAPTER-3

INDUSTRY PROFILE:The industry profile includes what is paper, introduction to paper, classification of paper, growth of paper industry, about Indian paper industry, consumption of paper in India, paper industry in the global perspective, globalization and its impact on Indian paper industry.

WHAT IS PAPER:Paper has played a vital role in the development of mankind, since time is immemorial, as
a means of communication, as the most versatile material for packaging of goods, as a medium of preserving knowledge for progeny. Paper is defined as A mat of cellulose fibers arranged in crisscross fashion with hydrogen bond and other forces.

INTRODUCTION:Paper is derived from the word papyrus. Today, paper includes a wide range of products with very different application: communication, cultural, educational, artistic, hygienic, and sanitary as well as storage and transport of all kinds of goods. Its almost impossible to imagine a life without paper There is a degree of consensus that the art of making paper was first discovered in China and its origin in that country is traced back to 2nd century. In about A.D 105 Tsai Lun, an official attached to imperial court of china, created a sheet of paper using mulberry and other best fibers along with fishnets, old rags and hemp waste. (2nd Century B.C) Chinese considered paper a key invention and kept this a closely guarded secret for over Five Centuries until the technology slowly made it way westward. The Arabs captured Chinese city containing a paper mill in the early 700s and from this started their own paper making industry. (Early 700s) Invention of printing in 1450s brought a vastly increased demand for paper. Paper was first made in England in 1496. The first U.S.A.Mill was built in 1690, the Rittent House Mill, German town, Pennsylvania.

CLASSIFICATION OF PAPER
TYPE
Posters Cream wove

END USE
Beddi leaves, School books, bank slips etc. Offset Duplicating Printing Cyclostyling Photocopying Annual reports Letter heads Multicolored printing Labels Beedi labels, napkins, etc Accounting Bank Drawing books for artist and Architects

Cultural paper

Map litho Super printing Bond paper Art paper Chromo paper Tissue paper Ledger paper Cartridge Paper

Packing paper

Duplex Board Pulp Board /straw board Kraft paper Micro Paper

Consumer Goods Filter Cigarettes packers etc Corrugated packing Cheques and Drafts

Glamine paper Specialty paper Cellophane Paper Grease Proof Vegetable parchment Base Boards

Waxed paper for Biscuits Wrapping (colored) Wrapping Wrapping for butter Tetra packs

GROWTH OF THE PAPER INDUSTRY:

Paper Industry is one of the oldest industries established in India. Before the advent of machine made paper a sizable handmade paper manufacture flourished in India. The earliest efforts of mechanizing this industry in our country dates back to the beginning of 19th century. In India, the first paper machine was installed in 1812 at Sorampet (west Bengal). Over the decades there was rapid growth in the number of Pulp & paper mills from 17 in the early 1950s to 250 Mills in 1980s. The domestic output of paper and paperboards grew from 1, 35,000mts in 1951 to 15, 00,000mts in 1985. What followed then is a virtual doubling of capacities and production was around 25 Lakhs tons annum and the no, of mills increased to over 350 in the organized sector.

Figures speak of a production of 28-lakh tons from 375 organized mills. Future projections indicate that by the year 2005 A.D., India requires about 59-lakh tons per annum of paper and board and there after the growth accelerates.

The paper industry in India is more than a century old. The industry is predominately in the private sector. There are about 406 paper mills in India with a total installed capacity of around 6.2 million tones.

CONSUMPTION OF PAPER IN INDIA:

The per capita consumption of paper in India is at an average low level of about 3 kg at present. This is one of the lowest in Asia, where the average annual consumption is around 18kgs per head. On the assumption, consumption of paper will move up to 5kgs by 2005 AD.

DEMAND FORECAST FOR PAPER & BOARD IN INDIA

1993 Population(Million) Per Capita Consumption(kg) 901.46 3.20

2000 102.36 4.40 4.50

2005 111.0 5.20 5.80

2010 119.32 6.20 7.35

Paper and Board demand (millions 2.92 Tones) SOURCE : In paper International

CAPACITIES AND NUMBER OF PAPER MILLS

CAPACITY
upto-5000 5001-10000 10001-20000 20001-33000 33001-50000 140 112 88 32 19

NUMBER OF MILLS %
Small Scale units " " Medium Scale Units " 34,5 27,6 21,6 7,9 4,7

50001and Above 15

Large Scale Units

3,7

Source: Indian press service News Bulletin

LIST OF STATE WISE INDIAN PAPER INDUSTRY _____________________________________________________

STATES

NO.OF PAPER MILLS

______________________________________________________ ANDHRA PRADESH ASSAM BIHAR GUJARAT HARAYANA HIMACHAL PRADESH JAMMU & KASHMIR KARNATAKA KERALA MADHYA PRADESH MAHARASTRA NAGALAND 22 02 04 68 15 06 01 14 05 21 71 01

ORISSA PONDICHERRY PUNJAB RAJASTHAN TAMIL NADU UTTAR PRADESH WEST BENGAL

09 01 37 07 31 16 26

_____________________________________________ TOTAL 594

______________________________________________

PAPER INDUSTRY IN THE GLOBAL PERSPECITIVE:Indias per capita consumption per annum as compared to other countries.
COUNTRY USA JAPAN AUSTRALIA HONG KONG TAIWAN NEW ZEALAND SINGAPORE CONSUMPTION 351kg 235kg 158kg 148kg 141kg 110kg 91kg

KOREA MALAYSIA CHINA PHILIPPINESS INDIA

89kg 69kg 47kg 12kg 6kg

MAJOR PLACE IN PAPER INDUSTRY

1. FIVE UNITS OF BALLARPUR INDUSTRIES LTD.

PLACE i. ii. iii. iv. v. Illure, Maharashtra Ballarpur, Maharastra Daulatabad, Orissa Yamuna nagar Gaganpur, Orissa

INSTALLED CAPACITY 40,000 TPA 1,10,000 TPA 22,000 TPA 53,868 TPA 33,000 TPA

2. Century Paper Mill, Lalkua, Uttar Pradesh

Installed Capacity 1, 20,600 tons per annum 3. N. Ganja Group, Vapi, Gujarat Installed Capacity 43,500 tons per annum 4. Hindustan News Print Ltd., News Print Nagar, Kerala

Installed Capacity 1, 00,000 tones per annum 5. Hindustan Paper Corporation ltd., Panchgram, Assam Installed Capacity 1, 00,000 tones per annum 6. Hindusthan Paper Corporation ltd., Nagaon Paper Mills Ltd., Khagajnagar, Assam. Installed Capacity 1, 00,000 ton per annum 7. ITC Bhadrachalam Paper Board Ltd., Sarapaka, AP. Installed Capacity 2, 12,000 tones per annum 8. Napa Ltd., Napa Nagar, M.P. Installed Capacity- 88,000 tons per annum 9. Orient Paper Mills, Amali, M.P. Installed Capacity- 85,000 tons per annum 10. Pudumjee Pulp and Paper Mills Ltd., Pune, Maharashtra. Installed Capacity 48,000 tons per annum 11. Satia Paper Mills Ltd., Rupana, Punjab. Installed Capacity 40,000 tons per annum 12. Sehasayee Paper and Board Ltd., Erode, Tamil Nadu Installed Capacity 60,000 tons per annum 13. Star Paper Mills Ltd., Saharanpur, Up Installed Capacity 1, 80,000 tones per annum 14. The Andhra Paper Mills Ltd., Rajahmundry, A.P. Installed Capacity 98,500 tons per annum

15. The Mysore Paper Mills Ltd., Karnataka. Installed Capacity 1, 05, 000 tons per annum 16. Titlaghar Paper Mills Ltd., Titlaghar, West Bengal. Installed Capacity 66,000 tons per annum 17. The Sirpur Paper Mills Ltd., Sirpur, Kaghaznagar, A.P. Installed Capacity 71,000 tons per annum

GLOBALISATION AND ITS IMPACT ON INDIAN PAPER INDUSTRY:India has 16% of the total population but consumes only 1.2% of the total paper produced in the world. Its per capita consumption is very low around 3.7kg head year. The installed capacity of the industry is 4.2 million 9 tons of paper and 6, 50,000 tones of newsprint. Even though there are 380 mills registered, only few mills are large with capacity of 50,000 to 9 tons per year ranging from 100 to 600 tons per day. Indian paper industry has potential but it cannot meet growth in demand unless constraints are overcome. Demand should reach 8kg per head by 2010. Several mills have closed down and others are running below the capacity. Most mills are in losses for the year ended march 1998. Since 1995 reduction of import duty on paper, 15% to 20% paper import (especially newsprint) has raised sharply. Frequent industry requests for restoring higher duties and imposition of anti-dumping have not been acted upon. In 1995-96 mills typically kept 6-7 days production on head. Inventories often exceeded 30 days output. In 1998, several small and medium sized milled creased for 3-4 months due to depressed demand. Major Mills like JK Corporations, century, orients and Brajraj Nagar had been closed during November 1998 due to labour problems.

21st CENTURY

The new millennium progress in computer science which will effect in our daily life. Does this mean that the paper era will come to an end? The answer is most definitely "No". The new techniques take this industry to next step. The advance technology helps the paper industry to their progress.

INDIAN PAPER INDUSTRY

Indians were using Copper plates, Iron plates and for the purpose of writing, before paper came into existence. Papermaking entered our country through Arabs as an art. This art was restricted to Muslim families as a secret, at that time, who were mainly based and lived Kashmir & Punjab named Kagazius. Nothing can be said about the first paper mills in India. But it was said that, William Warvaty, in 1812 started the first paper mills at sarampur, with the help of Kagazius. In 1832 four machines were installed and introduced in India. Royal Black Paper Mills stated at Hubli in 1870s and was merged in Teleghar Paper Mills. Later the remaining Paper Mills are established one by one. The per Capita Paper Consumption in India is only 3.62; it is inclusive of Newsprint paper consumption. According to this it is clear that, we are much backward in paper consumption that compared to the some developed countries. Paper Industry supplies various types of Paper, Paper Boards and Specialty Paper to a number of End users, which includes Government, Education, Companies, Packing, Printing, News Paper and Magazines etc. use of paper and paper product is intimately linked with the cultural and Economic Development of a country. The demand for paper depends on a number of intangible factors such as

Population, National Income, Growth of Literacy spread of Education, Standard of Living and Industrial production.

DEVELOPMENT OF PAPER INDUSTRY IN INDIA:Paper industry in India is the 15th largest paper industry in the world. It provides employment to nearly 1.5million people and contributes Rs 25 billion to the government's kitty. The government regards the paper industry as one of the 35 high priority industries of the country. The Indian pulp and paper industry at present is very well developed and established. Now, the paper industry is categorized as forest-based, agro-based and others (waste paper, secondary fibre, bast fibers and market pulp). Provides employment to nearly 1.5million people and contributes Rs. 25 billion to the government's kitty. The government regards the paper industry as one of the 35 high priority industries of the country. The Indian pulp and paper industry at present is very well developed and established. Now, the paper industry is categorized as forest-based, agro-based and others (waste paper, secondary fiber, best fibers and market pulp). THE TITAGHUR PAPER MILLS was established in 1881 in Bengal. It was the first successful factory in India. But actually manufacturing of paper gained momentum with the establishment of ROYAL BASE PAPER MILL Hooghly. Later this mill was merged with TITLAGHUR paper mill. From then onwards, the paper production has been rising to meet the rising demands of the nation.

In 1931 new machinery and equipment was introduced for the manufacture of paper from bamboo. Papers made from bamboo were protected or were tax free in the periods 1925 and 1932 under the British Government. Paper appears to have been exported to neighboring countries in the periods 1937-1939. In 1951, there were 17 paper mills, and today there are about 515 units engaged in the manufacture of paper and paperboards and newsprint in India. The pulp & paper industries in India have been categorized into large-scale and small-scale. Those paper industries, which have capacity above 24,000 tons per annum, are designated as large-scale paper industries. India is self-sufficient in manufacture of most varieties of paper and paperboards. Import is confined only to certain specialty papers.

GOVERNMENT ACTION TO PAPER INDUSTRY

Indian paper industry has been de-licensed under the Industries (Development & Regulation) Act, 1951 with effect from 17th July, 1997. The interested entrepreneurs are now required to file an Industrial Entrepreneurs' Memorandum (IEM) with the Secretariat for Industrial Assistance (SIA) for setting up a new paper unit or substantial expansion of the existing unit in permissible locations. Foreign Direct Investment (FDI) up to 100% is allowed on automatic route on all activities except those requiring industrial licenses where prior governmental approval is required. Growth of paper industry in India has been constrained due to high cost of production caused by inadequate availability and high cost of raw materials, power cost and concentration of mills in one particular area. Government has taken several policy measures to remove the bottlenecks of availability of raw materials and infrastructure development.

Following measures need to be taken by govt. to make Indian paper industry more competitive: 1. Improvements of key ports, roads and railways and communication facilities. 2. Revision of forest policy is required for wood based paper industry so that plantation can be raised by industry, cooperatives of farmers, and state government. Degraded forest land should be made available to the industry for raising plantations. 3. Import duty on waste paper should be reduced.

4. Duty free imports of new & second hand machinery/equipment should be allowed for technology up gradation. Our current consumption @ per capita of 8.5 kg is about 8.5 million tones per year. Our growth rate is 8% per year. India`s production is made from 40% of hardwood and bamboo fibre, 30% from agro waste and 30% from recycled fibre.

GOVERNMENT HELP:
1. Removal of import duty on waste paper. 2. Increase of import duty to at least 40% on paper. 3. Duty on IWC to be for the coast of modernization and expansion to Attract fresh investment.

MARKET SHARE:

In this heavy competition of paper industry JK Paper is striving at 6th position with an annual capacity of more than 200000 tons. The following picture shows the market share of leading players in the industry.

MAJOR PAPER INDUSTRY LOCATION IN DIFFERENT STATE OF INDIA

OVERVIEW OF J K ORGANIZATION
During the latter half of the 18th Century, Sri Binodia Ram Singhania of village Singhana, which lies in the Shekavati region of Rajasthan, migrated to Uttar Pradesh. The family settled down in Kanpur and slowly spread its roots there. JK Organization was born under the leadership of LalaKamlapatji and his father LalaJuggilalji. The foundation of JK Organization was laid when the nation was passing through turbulent times. It was the time when Indians were discriminated against, in their own home land. Born on 7th November, 1884, LalaKamlapatji, the worthy son of LalaJuggilalSinghania, had the determination to fight against this discrimination and a vision to make Indian Business self reliant. With this inspiration, he set up the 1st Cotton in Northern India i.e., JK Cotton Spinning Mill in 1921, exclusively using Indian Capital, Management and Labour. After this, many other enterprises were started by him. JK Jute Mills Co. Ltd., JK Iron & Steel Co. Ltd., JK Oil Mills, JK Cotton Manufacturers, JK Hosiery, KamlapatMotilal Sugar Mills, Kamla Ice Factory an empire was being created. Keeping alive the spirit of entrepreneurship, the three sons of LalaKamlapatSinghania i.e., Sir PadampatSinghania, LalaKailashpatSinghania and LalaLakshmipatSinghania established a number of industries across India and further consolidated the existing businesses. They were the pioneers in setting up a Mini steel plant in 1924, and first Indian Jute Mill in Uttar Pradesh in 1929. Moving ahead, 1938 saw the inception of a Mill in Bhopal, converting wheat straw in to straw boards, which later became the foundation of JK Paper Ltd. Producing top quality paper and boards. 1944 witnessed the beginning of the first plant in India, manufacturing Aluminum from Indian Bauxite and a variety of end products, including aluminum extrusion foils and ACSR products. In 1952, JK Steel pioneered the manufacture of Jute Bailing hoops, Steel Wires & Wire ropes, Electric Hoists and Material Handling Equipment etc.

Venturing into other areas, JK acquired Raymond Woolen Mills in 1944 and turned it around. Today the brand Raymond is well known in the country and the world over as a hallmark for impeccable quality and styling. It diversified into manufacture of readymade garments and steel engineers files, as the second largest manufacturer in the World.1977 was yet another landmark year for JK Organization as the conglomerate entered into the business of producing tyres, which was till then the domain of multi-nationals. JK Tyre commenced production in its ultra modern manufacturing unit in Kankroli, Rajasthan, in technical collaboration with General Tyre Company of USA and pioneered the launching of steel belted radial car tyres for the first time in India. Today, JKs radial is the cutting edge technology in the Industry. Under the visionary leadership of Sri Hari Shankar Singhania, President, JK Organization, ably supported by his brothers, the Organization has shown continuous and exemplary growth in diversified fields of industry. The group had achieved a lead position in major businesses over the years.

JK GROUPS

SIGNIFICANCE OF THE EMBLEM

 The Hand and Hammer of JK Organization came into use in the beginning of 1943. This symbol was chosen by Late LalaLakshmipatSinghania, third son of Late LalaKamlapatSinghania, the founder of JK Organization. The circle denotes industry. 24 teeth in the circle symbolizes round the- clock activity. The hand and hammer signify labour and tool. The hard grip of the hand stands for the strength and workmanship. This emblem signifies the strong belief of the organization in the capability of its employees. The Group employs over 1200Managers, 3,000 Engineers besides a large contingent of workmen with various skills. All the plants work at high efficiency and productivity levels using latest state-of-the-art technologies and equipment procured from India& abroad. The success of the companies is based on innovative ideas and techniques, continuous Research & Development, as also on its wide and effective marketing network of over 150 distributors and retailers and 3000 dealers and service centers, operating pan India.

SOCIAL CONSCIOUSNESS & CORPORATE SOCIAL RESPONSIBILITY

The JK Organization believes in taking the Nation forward by improving the quality of life of its citizens by continuously working in the sphere of education, health care, religious upliftment, sports etc. JKs contribution to society has been carried forward as an abiding commitment. Identifying with social issues and contributing to the Society has been a philosophy, which has been carried on from the founding fathers. Various institutions set up by the group throughout India in diverse fields of social welfare stand testimony to this philosophy.

CONCERN FOR ENVIRONMENT

In the pursuit of maintaining the environment and ecology, the group had already taken steps to reduce carbon-di-oxide emissions by replacing fossil fuel biomass. Group has a total commitment of more than five decades of planting trees and creating green factories by installing state-of-art equipment for preventing pollution and controlling harmful emissions.

CORE VALUES OF JK ORGANISATION

A. Caring for people. B. Integrity including intellectual honesty, openness, fairness and trust. C. Commitment to excellence.

GLOBALISATION AND ITS IMPACT ON INDIAN PAPER INDUSTRY. India has 16% of the total population but consumes only 1.2% of the total paper produced in the world. Its per capita consumption is very low around 3.7 kg head year. The installed capacity of the industry of the industry is 4.2 million tones of paper and 650 tones of newsprint. Even though there is 380 mills are registered, only few mills are large with capacity of 50,000 tones per year ranging from 100 to 600 tones per day. Indian paper industry has potential but it cannot meet growth in demand unless major constraints are overcome Demand should reach 8 kg head by 2010. Several mills have closed down and others are running below the capacity. Most mills were in losses for the year-ended march 1998. Since 1995 reduction of import duty on paper 15% to 20% paper import (especially newsprint) has raised sharply. Frequently industry requests for restoring higher duties and imposition of antidumping have not been acted upon.

In 1995 96 mills typically kept 6 7 days production on hand. Inventories often exceeded 30 days output. In 1998 several small and medium sized milled ceased for 3 4 month due to depressed demand. Major Mills like JK Paper Mills, Century, Orients and Brajrar Nagar had been closed during November 1998 due to labour problems.

GOVERNMENTS HELPS
1. Removal of import duty on waste paper. 2. Increase of import duty to at least 40% on paper. 3. Duty on IWC to be for the coast of modernization and expansion to attract fresh investment.

CHAPTER-7

PAPER MILLS, JAYKAYPUR

ABOUT JAYKAYPUR
J.K.Paper Mills rose from the east - in a place called Chandili, a small unknown village on the river Nagavalli, in the erstwhile Koraput district of Orissa located on the slopes of the Eastern Ghat Plateau in the Southern part of Orissa bordering the state of Andhra Pradesh and its geographical position 83-25 East longitude and 19 10 North Latitude. Its average height above the mean sea level is 758 feet. This village, which has presently come-up as a self contained township of Jaykaypur, was pregnant with natures best gift to mankind enveloped with thick jungles and mountains. The township has a population of about 40,000 and has a self-sufficient marketing complex, including Employees Multipurpose Co-operative Society, a sub-post & Telegraph Office, a Branch Post Office, a Police Out post and has two Banks viz., State Bank of India and Indian Overseas Bank & ATMs (SBI & AXIS). All most 100% accommodation. Quarters occupied by various Categories of Employees. The Township has two Schools namely LPS Public School affiliated to CBSE and LPS School affiliated to Orissa State Syllabus and places of worship of all major faiths. Singapur Road Railway Station (SPRD) on the Raipur- Waltair Section of south eastern Railway Station and is at a distance of 2 kms KM from the Mills and all passenger and Express trains halt here. The nearest town Rayagada, which is the district headquarters and is located at distance of about 10 kms from the Mills. Rayagada District has a predominance of Tribal population. Therefore, the villages in and around the Mills are inhabited mostly who are mostly under privileged class of society, who too are assimilating the industrial culture and are thus coming into the national mainstream.

ABOUT J K PAPER MILLS

JK Paper is an independent company of the JK Organization, a leading Indian conglomerate with diversified business interest. JK Paper was among the first in India to set up integrated manufacturing facilities of international standards and recorded a turnover of Rs2,40,000 tons per year. The Companys world class pulp mill is the largest in the country and occupies a place of pride in the Indian Pulp & Paper Industry.

The companys commitment to continuously raise quality benchmarks resulted in JK Paper Mills becoming the first integrated pulp and paper plant in India to receive the ISO 9001 certification & the first paper industry in Asia who is awarded TPM Excellence, and now aiming at attaining the TPM Consistence Award.. Currently, the group ranks amongst Indias top Industrial Houses with assets in excess of

Rs 50 billion. The Group has diverse business operations in India and abroad, automotive tyres and tubes, cement, sugar, audio magnetic tapes, dairy and other agri-products. It employs nearly 17,000 people and has over 2,90,000 public shareholders across its major public limited companies. JK Paper has one of the strongest distribution networks in the paper industry and has a national reach through its 4 regional offices, 13 warehouses, 95 wholesalers and over 1,600 dealers. The company exports paper to several countries including, Sri Lanka, Bangladesh and several West Asian nations. Branded copier paper accounts for nearly 50% of the exports.

WHAT JK ORGANIZATION STANDS FOR Dynamic and successful Business Organization A Socially valued enterprises

 Business Integrity

A View of J K Paper Mills, Jaykaypur, Rayagada

J K Paper Mills is the Industrys Change Agent and benchmark, thanks to the indomitable spirit of its people.

History:-The

success of and the experience gained in straw board factory at Bhopal, stimulated J.K. Organization to start a paper mill in its drive for further expansion and diversification of its activities. Accordingly J.K Agents (P) Ltd took a decision in 1954 to set up a paper production unit, to cater the growing needs of paper in the country. After a

country wide survey by an expert team, the southern part of Orissa was selected for locating the paper mill and to utilize the vast unutilized forest resources. In 1951 the govt of Orissa gave permission to start a paper mill, with an annual capacity to 18,000 tonnes, for the manufacturer of high grade writing and printing paper.

Areas: -The mill is spread over to an area of 540 acres which includes the township of
Jaykaypurthat has sprouted around the mill.

Plant Erection: -In May 1960, the foundation stone of the mill was laid by Sir Padma
potSinghania, Director of J.K. Organization. Erection works of the plant started in the 2nd week of Jan, 1962 and was completed in a record time of 8 months by Oct, 1962. The J.K paper mill was commissioned on 18th Oct 1962 and production started immediately. Therefore in 1962 a most modern integrated pulp and paper having its own bamboo forest, was set up in the backward area of Rayagada in Orissa by the straw products ltd. With an initial capacity to produce 18,000 tons of quality writing and printing papers and paper boards. Since then J.K Paper mill has not looked back and is galloping ahead today with an annual 2, 40,000 tones.

Available Resources:-The

favorable geographical conditions and other facilities like abundant supply of the basic raw materials, namely the Bamboos, from the nearby forests of kaput, natural resources of water supply from the Nagarali, convenient transport facilities, availability of labor from the nearby villages. Supply of coal from Talcher and cheap supply of electricity from Machkund, favored the establishment of paper mill in Jaykaypur. & Hardwood are the basic raw materials used in the mills. After nationalization of Bamboo forests in Orissa in 1988, the mills are purchasing bamboo from Orissa Forest Development Corporation. However substantial quality of bamboo & hard wood are also purchased from other states. The use of unconventional raw materials is being progressively stepped up.

Raw Materials Used:-Bamboo

Chemicals Used:-The

principal chemicals used are Sodium sulphate, caustic soda, Chlorine, line, alum, talcum powder, starch, coal, rosin, dispersal, sodium sulphide, dyes and various colons along with various auxiliary chemicals . Since its inception, JK Paper Mills has strived for excellence and consistently set high standards in quality, productivity, conservation of energy and water, industrial safety as well as pollution control and environment protection which are indicated by achievements like:

Manufacture of surface sized Map litho for the first time in the country with indigenous raw material Capacity utilization of 120% First Paper Mill in India to get ISO 9001 and ISO 14001 Adjudged First Greenest Paper Mill in India in 1999 Most modern and largest pulp mill in the country First Paper Mill not only in India but also in South-East Asia to have received TPM Excellence Award from Japanese Institute of Plant Maintenance, Japan

J K PAPER MILLS PHILOSOPHY

JK Paper Mills believe that leadership is not merely a matter of size. With leadership, comes the responsibility to drive growth in all its possible dimensions. Leadership demands transformation. And to that extent, leadership shapes the very quality of growth. At JK Paper Mills, holistic growth that has shaped its operations in the present as well as influenced their investments in the future - in world-class technologies for enhancing customer experience, besides enabling to fulfill social responsibilities. At JK Paper Mills, technology up-gradation has meant more than just better business sense. JK Paper Mills have moved beyond enhanced productivity, wider product range and better value, to investing in and nurturing a future ready organization that is driven by its two core growth engines Customers and Environment. JKPMs investments are focused on continuous and consistent up-gradation of processes, people and nature. Be it converting wastelands into productive plantations to produce worldclass pulp, or scouting for and mentoring professionals who can drive the technology movement at JK Paper Mills.

VISION
To be a dynamic benchmark and leader in the Indian paper industry

MISSION
To achieve growth and leadership through the JK brand equity, customer obsession, technological innovation and cost leadership, with a clear focus on environment, while continuously enhancing shareholder value.

STRATEGIC OBJECTIVES
Sustained growth-optimising production potential in least possible time. Leadership in niche market and customer oriented marketing. Internationalisation of business. Cost competitiveness with international bench-marking.

QUALITY POLICY:To Provide 'customer delight' - both internal and external - through our products and services at lowest cost by continuous improvement in processes, productivity, quality and management systems.

TPM POLICY (TOTAL PRODUCTIVE MAINTENANCE)

In our continuous pursuit for organizational excellence we are committed to: 1. Customer delight by providing world class product & service 2. Be a dynamic intellectual and leader in Pulp & Paper industry through process innovation in the entire business chain. 3. Develop pride for all state holders including society around. 4. Build a culture of intellectual honesty and professional integrity.

Environmental Policy:JK Paper Mills, Rayagada, Orissa (India) are committed to: Comply with applicable Environmental Legislations Prevention of Pollution Continual improvement in environmental performances

It shall improve the Environmental Performance by:1. 2. 3. 4. 5. 6. A forestation through social and farm forestry supported by clonal technology Cleaner technologies and processes Reducing pollutants in discharged water Reducing particulate emissions Solid waste management Conservation of resources

SAFETY AND HEALTH POLICY

We are committed to: Adhere legislation and government regulations related to safety and health in manufacturing activity. Foster safety and health awareness among its employees through preventable measures, continuous development, awareness and improvement in the work environment.

INDUSTRIAL RELATIONS:The mill has a ling glorious history of cordial Industrial relation. Internal leadership has been developed in the Trade Unions who take up the cause of labour while deeming their commitment to the production and productivity at Mills. The Management has also been taking various steps including training to the union leaders about the rights, responsibilities and obligations of the workers and the roles and responsibilities of the Union Leaders.The Management has always been giving adequate thrust to human relations; which is the bedrock of industrial relations. Our welfare concept is not limited to factory or to the welfare provisions prescribed under the statues but spread to the family members of employees.

Energy Conservation
Energy Conversation Awards (for Excellent Performance) from Indian Paper Makers Association (IMA) and National Productivity Council (NPC) in 1988-89, 1991-92, 1992-93 and 1993-94. Trophy (second Position) Awarded by Ministry of Power, Government of India in 1996.

MAJOR DEPARTMENTS IN JK PAPER MILLS

1. Pulp Mill 2. Stock Preparation 3. Paper Machine 4. Paper Finishing House 5. Finishing House 6. Soda Recovery 7. Quality control a) Central laboratory b) Pulp Paper Laboratory and Pollution control 8. Mechanical Engineering 9. Electrical Engineering 10. Instrumentation 11. Planning & Designing

12. Power House 13. Civil Department 14. Technology Development 15. HRD & Personal 16.Township& Transport 17. Works office 18. Accounts

19. Stores & Yard 20. Sales & Stock 21. Security 22. Dispensary 23. Safety & Management Services

JK CORE VALUES:
Integrity Trust Caring for people Commitment to excellence

LEADERSHIP IN BRANDS:
The secret of success of the J K Paper Mills is attributed to its policy for sustained efforts for quality, new product development and continuous offering of value added products to customers. JK Paper Mills has been consistently consolidating its leadership position in the Indian Paper Industry by continuously focusing on quality up gradation and productivity increase. Beyond this, JK Paper Mills has been investing continuously in Branding of its products, resulting in almost half of its revenues coming from branded products. Not only has the Company retained its dominant leadership in the branded paper market but has been introducing premium new brands like - JK Copier, JK Excel Bond, JK Bond, JK Savannah, JK Copier Plus, JK Easy Copier, Photo Vista and Sparkle year after year in International quality consumer friendly packs. Both JK Copier and JK Easy Copier are the countrys two largest paper brands.

SOME OF JKPM BRANDS

JK COPIER

COPIER +

EASYCOPIER

EXCEL

EXCEL
BOND

PHOTO VISTA

SPARKLE

JKBOND

CEDAR

SAVANNTH
VISTA SAVANNTH VISTA SPARKLE

BOND

CEDAR

JK Copier

Features
Compatible with all types of photocopying systems Suitable for both side printing Trouble free Performance in any type of printing machine Superior photo imaging Crisp image formation Ideal for Quality Photocopying, Assignments Suitable for any job on Office printer, Inkjet and LaserJet

JK EXCEL BOND Features

Watermarked Bond paper Superfine Ultra white Excellent Stiffness Compatible with all type of Inkjet/ LaserJet Printers

CEDAR

Features

Presents ultra sharp text & real-life color images on color copier, laser & inkjet printers
Customized to give the most professional & premium impressions Perfect for pre-print applications

JK PHOTO VISTA Features

Higher color gamut volume at severe conditions (30 degrees C, 80% RH) Higher color density on all printers Long lasting colures least color change even at severe conditions Comparable to US and European benchmarks Only paper with true 9600 DPI Universally compatible Water resistant Instant dry

JK Savannah

Features
Buff coloured paper Laid mark in the paper but not on the surface Excellent Stiffness Longer Shelf life Compatible with Inkjet & Laser printers

SPARKLE COPIER

Features
Trouble free Double side photocopying Sparkling white paper Minimum wear & tear to machines A Value for money product

JK PAPER & ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

J K Paper Mills strives to create and improve healthy environment by volunteering its resources to the extent it can reasonably afford and thereby to enrich the quality of life of the Community in the vicinity by sustainable initiatives. J K Paper Mills is actively engaged in contributing in the field of various peripheral developmental activities in and around Jaykaypur i.e., Education, Health Care, Safe Drinking Water and Development of Roads, Relief during Natural Calamities, Sociocultural Activities, Games & Sports and Social Forestry:

EDUCATION
2 fully fledged schools at Jaykaypur, Rayagada (Orissa). 2800 children is the strength of the students at present, which include children of Company employees as well as from the community of nearby villages. Adult literacy programmed for local community. Night schools for adults, which are being run by unemployed youths from the villages.

FINANCIAL ASSISTANCE FOR School construction & Furnishing Providing educational aids & school uniform, text books, black boards etc. Scholarship to students. Schools for mentally challenged with residential care facilities.

HEALTH
JKPM has its own dispensary, which, in addition to the employees, also attends to residents of the communities in the vicinity. Health awareness program me, doctors and renowned experts are invited to organize camps for awareness and also for cardiology, gynecology, dental, eye and family planning programmers in collaboration with Government hospitals, local clubs etc.

SPORTS AND OTHER RECREATIONAL ACTIVITIES

Games and sports are promoted among the village youth through local tournaments.

ENVIRONMENT
JK Paper Mills ensures that not only are its effluents well within the notified parameters but it also takes proactive measures to continuously improve them further. The Company has signed a voluntary Charter on Corporate Responsibility for Environment Protection (CREP) with Ministry of Environment & Forests and is investing in the required facilities for environment protection. Projects for conservation of energy and water are regularly taken up at both Mills.

Treated effluent water is being used for irrigation purpose.

INFRASTRUCTURE:Infrastructure development projects like building approach roads to nearby villages, providing pipe water supply, construction of Water storage tank, Town Gate. Police Chowki, etc. are regularly taken up around J K Paper Mills.

ANCILLARY DEVELOPMENT
Realizing that apart from development programmers, the communities also need source of livelihood, the Company is promoting various ancillary industries like alum, carton, core pipe, dry board, fly ash bricks and other industries in the vicinity of the Mills, generating local employment opportunities.

ASSISTANCE FOR NATURAL CALAMITIES

JK has always been in the forefront of meeting the challenges of natural calamities. Be it the recent flood in Surat, drought or super-cyclone in Orissa or the Gujarat Earthquake, or other tragedies like tsunami elsewhere. Apart from cash contributions by the Organization, employees have also contributed generously from their salaries. Additionally, immediate relief material in terms of medicines, blankets, tents etc. have also been sent to the relief camps for distribution. JKPM opened a special nursery at Bhubaneswar to enable new plants to be planted in places where super-cyclone had uprooted the existing trees.

AN EVERGREEN VISION
Responsible paper making demands a holistic environmental vision and J K Paper Mills see trees as not just a critical raw material resource but also the means to transform the lives of the rural community while also promoting a greener India.

Today, J K Paper Mills high tech farm forestry movement is 55,000 hectares vast and has become a Peoples Movement involving thousands of farmers across Orissa, Andhra Pradesh, Chhattisgarh, West Bengal, Gujarat and Maharashtra. Along with environmental benefits, distribution of high yield Clonal plants developed at JKPMs in-house R & D Centre has helped farmers to substantially increase the returns from their farms. Teams from the Company travel across the rural hinterland encouraging, educating and advising farmers about the merits of farm forestry and the latest farming techniques.

Advanced research in high-yield saplings has resulted in enhancing raw material availability and quality, greening of surroundings and generating nearly 40 million man-days of employment among the rural masses. It has put JK Paper ahead, both in terms of product quality and cost competitiveness.

What sets eco-commitment apart is J K Papers unique corporate vision to protect the environmental through process innovations rather than end-of-process treatments. Thus, J K Papers environmental friendly practices are designed to go beyond our operational requirements and work towards ensuring a better and greener tomorrow for the society as a whole.

COMMUNITY DEVELOPMENT PROGRAMME

To enhance the livelihood of the community in the periphery villages of JK Paper Mills To improve the health status of the community To build the capabilities of the community to access different services provided by government and other institutions

THE SPRIT OF PEOPLE

J.K Paper Mills today continues to be the Industrys Change Agent and benchmark, thanks to the indomitable spirit of its people. Leadership, at all levels in the organization has enabled J K Paper Mills to scale new heights in various facets of the Business.Be it brands, quality of products and services, technology and innovative strategies, people management practices, J K Paper Millsstands out as an undisputed leader.

J K Paper Mills have invested substantially in continuous improvement of processes and human skills. This effort involves identifying the grooming individuals, who can drive the technology movement at J K Paper, through time-tested practices such as Quality Circles a dynamic shop floor level participative management system. JishuHozen Circles within the TPM (Total Productive Maintenance) best practices, Suggestion Scheme, Exemplary Work Award and several TPM related Awards. On the process front, the Company has adopted an ERP (Enterprise Resource Planning) system to ensure seamless flow of information and enhance managerial efficiency. This also aids J K Paper Mills personnel in ultimately enhancing Customer Satisfaction. The companys commitment to continuously raise quality benchmarks resulted in JK Paper Mills becoming the first integrated pulp and paper plant in India to receive the ISO 9001 certification & is now aiming at attaining the TPM Award. Currently, the group ranks amongst Indias top Industrial Houses with assets in excess of Rs 50 billion. The Group has diverse business operations in India and abroad, automotive tyres and tubes, cement, sugar, audio magnetic tapes, dairy and other agri-products. It employs nearly 17,000 people and has over 2, 90,000 public shareholders across its major public limited companies. JK Paper has one of the strongest distribution networks in the paper industry and has a national reach through its 4 regional offices, 13 warehouses, 150 wholesalers and over 3000, dealers. The company exports paper to several countries including, Sri Lanka, Bangladesh and several West Asian nations. Branded copier paper accounts for nearly 50% of the exports. The companys strategy continues to be to offer more and more value added products, continuously modernize and upgrade its plants for achieving better efficiencies, improved quality of products and internationally recognized environmental standards.

PRODUCTION CAPACITIES A Installed capacity (paper) Actual production achieved in the year 2002-2003 Pulp production capacity Market pulp production capacity (ADMT) Actual production in the year 2002-2003 (ADMT) 13,617 tons per annum Central Pulp Mills JK Paper Mills

47,000 tons per annum 90,000 tons per annum 51,740 tons 1,06,521 tons

44,000 tons per annum 1,00,000 tons per annum 15,290 tons per annum

ACHIEVEMENTS

The various achievements of J.K. Paper Mills: Only integrated mill in India to achieve less than 100- meter cube of water consumption per ton of paper. Highest chemical recovery (more than 95%). Excellent fiber recovery system (more than 95%) Absorbable Organic Halide (AOX) level 0.5 to 1 kg per ton of paper, so far the best in the country and comparable with international levels. Highly efficient Electro Static Precipitators (ESP) in all the boilers.

 Pioneer in Social and Farm Forestry. Supplied in excess of 90 million saplings and covered over 27,000 hectares under plantation. Stood 2nd all over India and was awarded 3 leaves Award by CSE Awarded outstanding Performance by State Safety Council, Govt. of Orissa for Safety, Health, and Hygiene & Environment Management.

CHAPTER-05

INTRODUCTION OF THE TOPIC FINANCIAL MANAGEMENT

Finance is the study of funds management. The general areas of finance are business finance, personal finance(private finance), and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts

of time, money, risk and how they are interrelated. It also deals with how money is spent and budgeted.

Managerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance (Small and Medium Enterprises). It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock. Financial capital is provided by shareholders of an initial public offering (as opposed to shareholders in the secondary market), creditors, who often in the form of bonds, and the firm operations. The balance between these elements forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit and operations. Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management in choosing a portfolio one has to decide what, how much and when to invest. To do this, a company must:

Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations; Identify the appropriate strategy: active v. passive hedging strategy Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting profession However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm. The financial aspect of the company includes a lot of things such as:

1. Inventory Management 2. Cash Management 3. Working Capital Management 4. Receivables Management 5. Capital Structure 6. Capital Budgeting Decisions 7. Investment Decisions 8. International Financial Management

Except above topics it includes many other aspects. As whole organization depends upon money it is very necessary to take every decision carefully. Because of decision making process it takes into consideration so many aspects. Financial management is that managerial activity which is concerned with the planning and controlling of firms financial resource. It was a branch of economics till 1890, and as a separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own, and draws heavily on economics for its theoretical concepts even today. Among all the areas of study I have selected Working Capital Management as the topic of study for Minor Project..

WORKING CAPITAL MANAGEMENT

Every business concern should have adequate funds to meet out day to day expenses and to finance current assets, debtors, receivables and inventories. The funds tied up in the current assets are known as working capital funds. A company has to tie up money to fund its stocks, credit sales and other current assets, but this is offset by its ability to fund this from current liabilities, liabilities such as purchases on credit. If a company buys on credit it does not have to tie up (as much) money in its stocks. In some businesses (such as grocery retail) working capital can even be negative. A business that buys on credit and sells for cash is being partly funded by its suppliers. The working capital management involves deciding upon the amount and composition of current assets and how to finance these assets. The finance manager must ensure that the appropriate sources of funds are used to finance working capital it should also see that short term liabilities of business are met well in time.

There are number of principles for effective working capital management:

Principal of risk variation Principal of cost of capital Principal of equity position Principal of maturity of payment

Finance managers spend a major part of their time in arranging short term financing, negotiating favorable credit terms, controlling the movement of cash, administering accounts receivables and monitoring the investments in inventories. In fact, finance managers have to spend a great deal of time in managing current assets and current liabilities. Two most significant short-term sources of finance for working capital are: trade credit and bank borrowing. Trade credit refers to the credit that a customer gets from suppliers of goods in the normal course of business. Trade credit is mostly an informal arrangement, and is granted on an open account basis. Bank borrowing is the next important source of working capital finance. Two other short-term sources of working capital finance which have recently developed in India are:

Factoring of Receivables Commercial Papers

CONCEPTS OF WORKING CAPITAL MANAGEMENT

Classifications of working capitals are

Gross Working Capital

Cash and short-term assets expected to be converted to cash within a year. Businesses use the calculation of gross working capital to measure cash flow. Gross working capital does not account for current liabilities, but is simply the measure of total cash and cash equivalent on hand. Gross working capital tends not to add much to the business' assets, but helps keep it running on a day-today basis.

Net Working Capital

Net Working Capital (which is also known as Working Capital or the initials NWC) is a measurement of the operating liquidity available for a company to use in developing and growing its business. The working capital can be calculated very simply by subtracting a companys total current liabilities from its total current assets.

Net Working Capital = Current Assets-Current LiabilitiesPermanent Working Capital: Permanent or fixed Working Capital is the minimum amount, which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current and in generally speaking it is the amount, which is required minimum amount continuously to the overprize for the maintaining the daily transactions. It means every company maintains a minimum level of raw material, work-in-process, finished goods and cash balances, for which a certain quantity of money is required. The permanent

Working Capital is differing if the current asset is increase or decrease. As per business transaction involved the current asset is required the capital.

Temporary working capital

Temporary Working Capital is the amount of Working Capital, which is required to meet the seasonal demands, and some special the exigencies special exigencies means launching of extensive marketing companies for conduction research etc.
But at any industry no such capital is required to make a reserve for seasonal and special exigencies. A certain amount of Working Capital is kept as reserve for the maintenance purpose. As theory say it dividends into different area but in at any industry no such things are made

COMPONENTS OF WORKING CAPITAL

CURRENT ASSETS
Current assets are the assets that can be converted into cash within one year. It includes cash in hand, cash at bank, stock, short term investment, debtors, etc. Inventory Inventory constitutes a major portion of current assets. Profitability of business depends upon the turnover of the working capital, which is mainly dependent upon the turnover of inventory. The inventory can be further classified into following categories: Raw Material Raw material is the basic material required for processing and

production. Raw material available in the stock should be just enough to cope up the production needs of the business and the production should not suffer because of stock out position.

Work-In-Process Goods Work-in-process inventory in case of manufacturing concerns is inevitable because in a manufacturing process the product will be made only after following definite production cycle. In any sphere of production there will be a large number of a units in different conditions of completion, some in respect of which work has just begun, some on which work is almost near completion and rest at various stages of manufacturing. Finished Goods Each firm should maintain proper level of finished goods. If a firm keeps inadequate stock of finished goods it wont be in a position to meet out certain demands of the customer and the opportunity of earning profit may be lost. M-R-O Inventory These are materials required for maintenance repairs and operation supplies. They form an important class of inventories by themselves. Some items are needed day to day while some are needed once in a year.

Receivables
Accounts receivables represent the amount due from its customers to whom the company has extended the credit. Today receivables play an important role in the making large turnover of firm concerned.

Cash

Cash is the basic need of each business firm. Day to day operation of a business

firm largely depends upon cash because it is a form of liquid assets available for payment of cash dividends and in the event of liquidations; cash becomes the final means by which claims are discharged

Short Term Investment Short Term Investments are the investments which are
only for the period of less than or equal to one year. They may consist of government securities, bonds, shares etc. They can be converted into cash in very short period.

CURRENT LIABILITIES
Current liabilities are the liabilities which are to be paid wit in one year. These includes creditors, short term loans, bills payable, etc. Creditors The major part of the purchase is on credit basis than cash payments. Creditors are the people to whom we have to pay within in a short period. Payables As far as payable is concerned it is very tight in some fields of operation whereas it is very flexible in other fields also.

WORKING CAPITAL FORCASTING TECHNIQUES

1.

Percent of Sales Method

In this method, working capital is determined as a certain percent of forecasted sales. This method is simple and easy for estimated of the working capital. The drawback is assumption of linear relationship between sales and working capital. Forecasted value of variable=Past ratio of this variable to sale x Forecasted sales

2.

Cash Cycle and Operating Cycle Method

The cash cycle reflects the average duration of the firms cash as invested in inventory and accounts receivables, both of which are non-earning assets. The

operating cycle on the other hand begins when the firm has purchased the items on credit due to which its account payables increase. 3.

Regression Analysis Method

In the working capital management regression analysis method helps in making estimation after establishing the average relationship in the past year between sales and working capital and its various components

TOOLS FOR MEASURING WORKING CAPITAL

There are two major tools for measuring & analyzing the working capital of a firm:

FUND FLOW ANALYSIS

This technique helps to analyze the variation in working capital contents between two balance sheet date. Fund flow analysis shows how much funds have been obtained from different sources to finance working capital and how they have been utilized. Information regarding the financing and investment activities of an enterprise and the changes in the financial position for the period of time is essential for financial statement, used by owners as well as creditors for making business decisions. This technique can be used only by the internal administration in its control of working capital.

RATIO ANALYSIS
It is the basic technique used for judging the liquidity position of a firm. The techniques of ratio analysis for analyzing working capital are getting acceptance in accounting and mathematical world.

Ratio analysis can be used by management in the business as against its operations, the extent of liquidity present in its asset structure as well as financial structure with which working capital is being used in the business. In other words, management can employ ratio to analyze namely three facets of working capital management efficiency, liquidity and its structural health

RATIO ANALYSIS

Accounting ratios are relationship expressed in mathematical terms

between figures which are connected with each other in some manner.

Types of ratios are:

PROFITABILITY RATIO Profitability refers to the ability of the business to earn profit. It consists of Gross Profit Ratio, Net Profit Ratio and Operating Ratio

TURNOVER RATIO Turnover ratios are related to sales. It also shows whether the total capital, working capital, fixed assets and stock of business are profitably used. It consists of Capital Turnover Ratio, Working Capital Turnover Ratio, Fixed Asset Turnover Ratio, Stock Turnover Ratio, Debtors Turnover Ratio and Creditors Turnover Ratio.

LIQUIDITY RATIO Liquidity ratios are calculated to measure the short term financial soundness of the business. The ratio assesses the capacity of the company to repay its short term liability. It consists of Current Ratio and Liquid ratio.

SOLVENCY RATIO The term solvency ratio has been used to mean long term financial position of the business. Solvency ratios also measure the relationship between external equities and internal equities. It consists of Debt Equity Ratio, Total Debts Ratio, Fixed Assets Ratio, Capital Gearing Ratio and Proprietary Ratio.

CHAPTER-06

INTRODUCTION:

Every business needs funds for two purposes for its establishment and to carry out its day-to-day operations. Long-term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land, building, furniture, etc. investment in theses assets represent that part of the JKPM capital, which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purpose for the purchase of raw materials, payment of wages and other day-to-day expenses, etc. These funds are known as working capital. In simple words, working capital refers to that part of the JKPMs capital, which is required for financing short term or current assets such as cash, marketable securities, debtors and inventories. Funds, thus,. Invested in current assets keep revolving fast and are being constantly converted into cash and this cash flow out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short-term capital.

OBJECTIVES OF STUDY

To understand the working capital management system of J.K paper mill. To know the position of current assets and current liabilities of J.k paper mill LIMITATIONS OF SYUDY Only four years data are available due to the changeover of J.k paper mill, from J.k corp. ltd. to J.k paper ltd. More dependence of published data rather than actual data, because financial data are confidential in nature. Major activities like procurement of capital items, A class inventory is under control of Head office. Working capital budget is prepared at Head office; mill is not involved in such budget preparation.

METHODS OF STUDY This study has been conducted on the basis of data collected from different sources such as Accounts Dept., stores Dept., industrial engineering Dept. and from annual report. This study is based on the published data i.e. the annual report as the financial data are confidential in nature. The source of financial data has been divided in to two such as: PRIMARY DATA: Accounts dept., sales dept., stores dept., industrial engineering dept. SECONDARY DATA: Annual report, website. Books on the subject
Published reports relevant to subject Files and records of plant

Financial data provided by the Account Department

These are the basic details about current assets and current liabilities of j.k paper mill along its calculated gross and net working capital. Along with its graphical representation

CONCEPTS OF WORKING CAPITAL MANAGEMENT

1.Gross working capital 2.net working capital 3.operating cycle.

Cash and short-term assets expected to be converted to cash within a year. Businesses use the calculation of gross working capital to measure cash flow. Gross working capital does not account for current liabilities, but is simply the measure of total cash and cash equivalent on hand. Gross working capital tends not to add much

to the business' assets, but helps keep it running on a day-to-day basis. the table describe details of gross working capital.

GROSS WORKING CAPITAL(1 LAKH=0.1 MILLION)

PARTICULAR

inventores sundary debtor cash and bank balance Loans and advances T.G.W.C

2006-07 96.41 107.24 4.83 176.8 385.28

2007-08 120.34 110.87 3.5 131.74 366.47

2008-09 117.11 107.15 34.22 162.24 420.72

2009-10 126.89 104.49 7.87 160.98 400.23

2010-11 127.53 107.87 30.89 171.78 438.07

inventores

sundary debtor

cash and bank balance

Loans and advances

176.8 4.83 107.24 96.41 2006-07

131.74 3.5 110.87 120.34 2007-08

162.24 34.22 107.15 117.11 2008-09

160.98 7.87 104.49 126.89 2009-10

171.78 30.89 107.87 127.53 2010-11

PARTICULAR

T.G.W.C

2006-07 385.28

2007-08 366.47

2008-09 420.72

2009-10 400.23

2010-11 438.07

2010-11 22%

2006-07 19% 2007-08 18% 2008-09 21%

2009-10 20%

Interpretation
The table describe details of total gross working capital .in here we calculated the 5year data of gross working capital. in 2006-07 the total gross working capital is 19%, in 2007-10it decline to 18%,in 2008-09 it increase to 21%,in 2009-10 it decrease in 20%,in 2010-11 again it increase slidely. in the above data we know that in 2010-11 it increase highly as comparison to others.

NET WORKING CPITAL

(1 LAKH=0.1 MILLION)
PARTICULAR CURRENT ASETS 2000607 96.41 107.24 4.83 176.8 385.28 2007-08 120.34 110.87 3.5 41.7 131.74 408.15 2008-09 117.11 107.15 34.22 162.24 420.72 2009-10 126.89 104.49 7.87 160.98 400.23 2010-11 127.53 107.87 30.89 171.78 438.07

inventores sundary debtor cash and bank balance other current asset loans and advance TOTALCURRENT ASSETS

CURENT LIABILITIES Current Liabilities TOTAL CURRENT LIAB

NET WORKING CAPITAL

177.65 177.65 207.63

171.09 171.09 237.06

152.95 152.95 267.77

184.31 184.31 215.92

204.47 204.47 233.6

100% 207.63 80% 60% 40% 385.28 20% 0% 20006-07 2007-08 2008-09 2009-10 2010-11 408.15 420.72 400.23 438.07 177.65 171.09 152.95 184.31 204.47 237.06 267.77 215.92 233.6

TOTALCURRENT ASSETS

TOTAL CURRENT LIAB

NET WORKING CAPITAL

PARTICULAR NET WORKING CAPITAL

20006-07 2007-08 2008-09 2009-10 2010-11 207.63 237.06 267.77 215.92 233.6

PERCENTAGE OF NET WORKING CAPITAL

2010-11 20% 2009-10 19% 2008-09 23% 20006-07 18% 2007-08 20%

Interpretation
The table describe the percentage of net working capital in 2006-11 up to 5 years. first year in 2006-07 the percentage of of net working capital is 18%,in 2007-08 it pretty much increase to 20%,in 2008-09 again it increase rapidly to 23%,but in 2009-10 it slide decline to 19%& at last in 2010-11 it again decline to 20%.in the above table in 2008-09 the percentage of net working capital is increase as comparison to other years.

R.M.C PERIOD (1 LAKH=0.1 MILLION) YEAR 2006-07 2007-08 2008-09 2009-10 2010-11

R.M.I 4,803.42 5334,87 3322.07 3160.02 3174.2

R.M.C DAY R.M.C 33,421.13 360 71.2 28,678.95 360 68.39 7485.5 360 40.6 15.977.08 360 66.96 28,143.37 360 43.97

R.M.C.P= rawmaterialinventory/rawmaterials consumption*360

45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 R.M.C DAY R.M.C R.M.I

2006-07 71.2 360 33,421.13 4,803.42

2007-08 68.39 360 28,678.95 0

2008-09 40.6 360 7485.5 3322.07

2009-10 66.96 360 0 3160.02

2010-11 43.97 360 28,143.37 3174.2

RAW MATERIAL CONVERSATION PERIOD YEAR

2006-07 2007-08 2008-09 2009-10 2010-11

R.M.C
71.2 68.39 40.6 66.96 43.97

R.M.C
R.M.C

71.2

68.39 40.6

66.96 43.97

2006-07

2007-08

2008-09

2009-10

2010-11

Interpretation
The table describe 5 years data of raw material conversation period . in 2006-07 it increase in 71.2 but in 2007-08 it decline to 68.39,again in 2008-09 it decline rapidly up to 2010-11.in 2006-07 the R.M.C period is increase highly but in 2007-11 it decling .but now a days it improving.

WORK-IN PROGRESS CONVERSATION PERIOD Work in progress conversion period (WIPCP)is the average time taken to complete semi finished work or work-in-process.it is given by the following formula such as W.I.P.C.P=Work in-progress inventory/cost of production*360

WORK IN PROCESS CONVERSION PERIOD (1 LAKH=0.1 MILLION)

PARTICULAR
R.M.C ADD:direct expenses deprecation total cost ADD:O.S W.I.P LESS:closing stock

2006-07 2007-08
15977.08 8048 3517 27542.08 710.06 17485.5 8988 41806 68279 710.06 801.42

2008-09
28143.37 9980 48574 86697.37 801.42 1113.17

2009-10
28678.95 1198 54821 84697.95 1113.17 835.72

2010-11
33427.13 1301 55836 88564.13 835.72 890.67

cost of production

26832 68188.1 86385.6 84995.4

88509.18

YEAR
2006-07 2007-08 2008-09 2009-10 2010-11
10 9 8 7 6 5 4 3 2 1 0 2006-07 2007-08 4.23 9.52

W.I.P.C.P
9.52 4.23 4.63 3.54 3.62

4.63

3.54

3.62

2008-09 W.I.P.C.P

2009-10

2010-11

Interpretation
The table describe work-in-process conversation period in 2006-11 of jk paper industry. In 2006-07 its rate is increase 9.52,in 2007-08 W.I.P.C.P its 4.23 it is decline slowly. In 2008-09 again it is decline 4.63.still it declined up to 2011.but it i now a days it try to increase $try to give best performance. so it quite clear that only in 2006-07 its increase &up to 2007-11 to decline rapidly ,but still now a day it try to improving.

FINISH GOOD CONVERSATION PERIOD Finished goods conversion period(F.G.C.P) is the average time taken to sell the finished goods. F.G.C.P can be calculated as follows Finised goods conversion period =finished goods inventory/cost of good sold.360 In here cost of good sold=sales-gross profit

PARTICULAR
sales Gross profit Cost of good sold finised good inventory

2006-07 2007-08
88462 13500 75,142 221879 93255 15788 77,467 225351

2008-09 2009-10
126834 18224 108,610 327150 129957 24546 105,411 265310

2010-11
143297 26577 116,720 155199

F.G.C.P

121.91

123.75

119.51

143.03

270.74

PARTICULAR F.G.C.P

2006-07 2007-08 2008-09 2009-10 2010-11 121.91 123.75 119.51 143.03 270.74

300 250 200 150 100 50 0 2006-07 2007-08 2008-09 F.G.C.P 2009-10 2010-11 121.91 123.75 119.51 143.03 270.74

Interpretation
The table describe finished good conversation period in 2006-11.in 2006-07 it s increase 121.91,in 2007-08 it slide increase 123.75,in 2008-09 again it 2008-09 it decline,in 2009-10 it increase in 143.03& at last in 2010-11 again it increase rate is 270.74.soit quit clear that in 2010-11 it increase rapidly & getting highest profit in the business.

INVENTORY CONVERSATION PERIOD

the inventory conversation is the sum of raw material conversation period ,work in-progress conversation period& finished goods conversion period. ICP=RMCP+WIPCP+FGCP

INVENTORY CONVERSION PERIOD (1 LAKH=0.1 MILLION)

YEAR R.M.C.P W.I.P.C.P F.G.C.P I.C.P

2006-07 2007-08 2008-09 2009-10 2010-11

71.2 68.39 40.6 66.96 43.97

9.54 4.23 4.63 3.54 3.62

121.94 123.75 119.51 143.03 210.74

202.65 196.37 164.74 213.53 318.33

700 600 500 400 300 200 100 0 121.94 9.54 71.2 2006-07 123.75 4.23 68.39 2007-08 R.M.C.P 119.51 4.63 40.6 2008-09 W.I.P.C.P F.G.C.P 143.03 3.54 66.96 2009-10 I.C.P 210.74 3.62 43.97 2010-11 202.65 196.37 164.74 213.53 318.33

YEAR
2006-07 2007-08 2008-09 2009-10 2010-11

I.C.P
202.65 196.37 164.74 213.53 318.33

I.C.P
350 300 250 200 150 100 50 0 I.C.P 2006-07 202.65 2007-08 196.37 2008-09 164.74 2009-10 213.53 2010-11 318.33

Interpretation
The table describe inventory conversion period in the last 5 years.in 200607 it is 202.65,in 2007-08 it decline to 196.37,again it is decrease to 164.74,in2009-10.

2010-11 it increase rate is 213.53& the last year again it increase to 318.33.so the above data we know that in 2010-11 it increase highly. in 2008-09 it decline but remaining years it increase rapidly. But now in present year it pretty much improve.

DEBTORS CONVERSION PERIOD Debtors conversion period(DCP)is the average line taken to convert debtors into cash.DCP represents the average collection period .it is calculated as follows Debtors conversion period=debtors/credit sales*360

DEBTOR CONVERSATION PERIOD (1 LAKH=0.1MILLION) YEAR DEBTOR SALES DAYS 2006-07 10724 84462 360 2007-08 11087 93255 360 2008-09 10715 126834 360 2009-10 10449 129957 360 2010-11 10787 143297 360

D.C.P 45.7 42.8 30.14 28.94 27.09

50 45 40 35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 D.C.P 2009-10 2010-11 45.7 42.8 30.14 28.94 27.09

YEAR

D.C.P

2006-07 2007-08 2008-09 2009-10 2010-11

45.7 42.8 30.14 28.94 27.09

50 45 40 35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 D.C.P 2009-10 2010-11 45.7 42.8 30.14 28.94 27.09

Interpretation
The table describe the D.C.P of last 5 year.
2006-07 it improve to 45.7,in but in 2007-08it slide decline to 42.8,in 2008-09 again it decline rapidly. In 2009-10 it decline rate is 28.94 &in 2010-11 it decline to 27.09.so we know that only 2006-07 it increase highest position and reaming years it decline. But now a day it try to improve and try to get more & more in the business.

GROSS OPERATING CYCLE

The firms gross operating cycle(GOC)can be determined as inventory(ICP)[plus debtors conversation period(DCP).thus ,GOC is given as follows Gross operating cycle=inventory conversion period+debtors conversion period

GROSS OPERATING CYCLE(1 lakh=0.1 million)

YEAR 2006-07 2007-08 2008-09 2009-10 2010-11
800 700 600 500 400 300 200 100 0 2006-07 2007-08 I.C.P 2008-09 D.C.P G.O.P 2009-10 2010-11 45.7 202.65 42.8 196.37 248.35 239.17 194.88 28.94 30.14 164.74 213.53 318.33 242.47 345.42

I.C.P 202.65 196.37 164.74 213.53 318.33

D.C.P G.O.P 45.7 248.35 42.8 239.17 30.14 194.88 28.94 242.47 27.09 345.42

27.09

YEAR
2006-07 2007-08 2008-09 2009-10 2010-11

G.O.P
248.35 239.17 194.88 242.47 345.42

G.O.P
400 350 300 250 200 150 100 50 0 G.O.P 2006-07 248.35 2007-08 239.17 2008-09 194.88 2009-10 242.47 2010-11 345.42

Interpretation
the table describe the gross operating cycle of past 5 years of jk paper industry. In 2006-07 it increase intate is 248.35.in 2007-08 again it increase rapidly,itincrease to 239.17.but in 2008-09 it decline to 194.88&in 2009-10 it increase rate is 242.47& at last in 2010-11 again it increase to 345.42.in here know that in 2010-11 the GOC period is high as comparison to other in 2006-07&2007-08 it increase but in 2008-09 it slide decreased .but no problem again it increase in 2010-11.so in we know that the firm GOP position is so high as comparison to other& here the firm got more &more profit .

CREDITORS DEFERRAL PERIOD

Creditors (payable) deferral credit period (CDP)is the average time taken by the firmin paying its suppliers(creditors).CDP given as below creditor deferral period =creditor/credit purchase*360 in here credit purchase =R.C+ Closing stock-opening stock

CREDIT PURCHASE(I lakh=0.1 million)

YEAR 2006-07 2007-08 2008-09 2009-10 2010-11 R.C 15977.08 17485.501 28143,37 28678.95 33427.13 C.STOCK OPENING STOCK 3160.02 3322.07 3160.02 3174.2 3322.07 5334.87 3174.2 4803.41 5334.87 CREDIT PURCHASE 19137.1 17677.55 27995.5 30839.62 32895.67

CREDITORS DEFERRAL PERIOD

YEAR 20006-07 2007-08 2008-09 2009-10 2010-11 CREDITOR CREDIT PURCHASE 7520.94 19137.1 10926.38 17677.55 11478.08 27995.5 11571.13 30839.62 14158.34 32895.67 DAY C.D.P 360 141.48 360 222.52 360 147.59 360 135.07 360 154.94

CREDITOR DEFERRAL PERIOD

50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 C.D.P DAY CREDIT PURCHASE CREDITOR

20006-07 141.48 360 19137.1 7520.94

2007-08 222.52 360 17677.55 10926.38

2008-09 147.59 360 27995.5 11478.08

2009-10 135.07 360 30839.62 11571.13

2010-11 154.94 360 32895.67 14158.34

YEAR C.D.P 2000607 141.48 2007-08 222.52 2008-09 147.59 2009-10 135.07 2010-11 154.94

C.D.P
19% 18% 20006-07 17% 28% 18% 2007-08 2008-09 2009-10 2010-11

Interpretation
the table describe the credit defer ral period of past 5 years of jk paper industry. In 2006-07 it increase in
18%,again in2007-08 it increase rapidly at 28%,in

2008-09 it decline in 18%,in 2009-10 it slidely decline ,in the last year it increase in 19%.in here we know that the 1st year the company starting increase his CDP .in 2007-08 it increase rapidly but the remaining 2 year it decline and again the last year it increase slidely.in here we know that the companys CDP is decline so they getting more more profit.

CASH CONVERSION OR NET OPERATING CYCLE Net operating cycle(NOC) is the ifferent between gross operating cycle &payable deferral credit period. Net operating cycle=gross operating cycle-creditors deferral period

NET OPERATING CYCLE (1 lakh=(in o.1 million) YEAR 2006-07 2007-08 2008-09 2009-10 2010-11
800 700 600 500 400 300 200 100 0 2006-07 2007-08 G.O.C 2008-09 C.D.P N.O.C 2009-10 2010-11 248.35 239.17 194.88 242.27 106.87 141.48 16.65 222.52 47.29 147.59 135.07 345.42 107.04 190.48 154.94

G.O.C C.D.P N.O.C 248.35 141.48 106.87 239.17 222.52 16.65 194.88 147.59 47.29 242.27 135.07 107.04 345.42 154.94 190.48

YEAR 2006-07 2007-08 2008-09 2009-10 2010-11

N.O.C 106.87 16.65 47.29 107.04 190.48

N.O.C
250 200 150 100 50 0 N.O.C

2006-07 106.87

2007-08 16.65

2008-09 47.29

2009-10 107.04

2010-11 190.48

Interpretation
in here the table describe the net operating cycle of jk paper up to 2006-11.in 2006-07 it increase in 106.87,but in 2007-08 it decline to 16.65,again 2008-09 it decline in 47.29 but in 2009-10 it increase rapidly in 107.04 again in 2010-11 it increase in 190.48.in here the first increase rapidly than decline in 2 years than again it improve rapidly in 2009-11.it getting highest value in 2010-11.& here the company getting more &more profit and their goals &objectives.

TOOLS FOR MEASURING WORKING CAPITAL

There are two major tools for measuring & analyzing the working capital of a firm. 1.cash flow statement 2.ratio analysis

Cash Flow Statement

INTRODUCTION:Cash flow statement is a statement which describes the inflows (sources) and outflows (uses) of cash and cash equivalents in an enterprise during a specified period of time. Such a statement enumerates net effects of the various business transactions on cash and its Equivalents and takes into account receipts and disbursements of cash. Cash flow statement summaries the causes of changes in cash position of a business enterpri8se between buts of two balance sheets. According to As-3 (Revised), an enterprise should prepare of a cash flow statement and should present it for each period for w3hich financial statements are prepared. 1. Cash Comprise cash on hand and demand deposits with banks. 2. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to and in significant risk of changes in value. Cash equivalents are held for the purpose of meeting shortterm cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent, it must be readily convertible to a known amount of cash and be subject to and insignificant risk of changes in value. Therefore, an investment normally qualifies as cash equivalents only when it has a short. Maturity, of say, three months or laws from the date of acquision. Investments in shares are excluded from cash equivalents unless they are in substance, cash equivalent. 3. Cash flow is inflows and outflows of cash and cash equivalents. Flows of cash is said to have taken place when any transaction makes changes in the amount of cash equivalents available before happening of the transactions . If the increase of cash

and to equivalents, it is called an inflow (source) and if it results in the decrease of total cash, it is known as outflow of cash.

FUNDS FLOW:SCHDULE CHANGE IN WORKING CAPITAL (IN 1Crore.=10 million)

PRTICULAR
CURRENT ASSETS *Inventories *Sundry debtors *Cash & Bank

2009-2010 AMOUNT

2010-2011 AMOUNT

EFFECT ON WORKING CAPITAL

INCREASE (Rs.) DECREASE (Rs.)

126.89 104.49 7.89

127.53 107.87 23.02

0.64 3.38 23.02

TOTAL CURRENT ASSETS CURRENT LIABITIES

239.25

266.29

*Current liabilities

184.47

204.47

20.16

TOTAL CURRENT LIABILITES TOTAL Net increase in working capital

184.47 54.94 6.88

204.47 61.82 6.88

61.82

61.82
Applications
Deferred Tax Loan (cr.) Net block Investment

27.04

27.04

Statement of Source and Application of funds

Sources
March 2011)
Issue of share capital Miscellaneous assets

(for the year ended of 31st

Amount
113.15 0.67

Amount
6.16 9.85 37.97 40.82 10.8 6.88 1.34 113.82

Loans and advances Net increases in working capital Funds used in operation
113.82

Funds used in operation= 1.34 million

Funds used in operation =1.34 millions

Ratio Analysis: Adequacy of working capital can be judge through its efficiency to ensure sufficient liquidity in the operation of the company.
a. Current Ratio

Current Assets Current Ratio = -------------------------Current Liabilities

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

CURRENT ASSETS 355.44 385.28 408.15 400.23 438.07

CURRENT LIABILITIES 126.36 177.65 171.09 184.31 204.47

CURRENT RATIO 2.81 2.17 2.38 2.17 2.14

CURRENT RATIO
3 2.5 RATIO 2 1.5 1 0.5 0

2.81

2.17

2.38

2.17

2.14

2006-07

2007-08

2008-09
YEAR

2009-10

2010-11

Interpretation A high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. Low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. The general rule of thumb expresses that current ratio should be 2:1.The diagram represents two axis one axis represents ratios and another axis represents years. in here 2006-07 current ratio is 2.81%,the chart describe in 2007-08 current ratios is2.17%,in 2002-09 the current ratio is 2.38%,in 2009-10 describe the current ratio is 2.17% &in 2010-11 describe the current ratio is 2.14.it quit decrease as comparison to 2006.in here we know that it pretty much decrease in the last five years.

b. QUICK OR ACID TEST OR LIQUID RATIO

Liquid Assets Quick/Acid Test/Liquid Ratio= ------------------------------

Current Liabilities

year
2006-07 2007-08 2008-09 2009-10 2010-11
2.5 2 1.5 1 0.5 0

LIQUID ASSETS 265.84 288.87 287.81 273.34 310.54

CURRENT LIABILITIES

LIQUID RATIO

126.36 177.65 171.09 184.31 204.47

2.10 1.62 1.68 1.48 1.51

2.1 1.62 1.68 1.48 1.33

2006-07

2007-08

2008-09

2009-10

2010-11

Series1

InterpretationA high acid test ratio is an indication that the firm is liquid and has the ability to meet its current liabilities. A low quick ratio represents that the firms liquidity position is not good. As a rule of thumb quick ratio of 1:1 is considered satisfactory .The the describe two axis one is year another is year. in here the table represent the data about 5 years. In2006-07 it increase in 2.1,in 2007-08 it quit decrease in 1.62,in 2008-09 the decline rate is 1.68,in 2009-10 the decline rate is1.48,at last in 2010-11 the increase slidly 1.51.so it quite clear that it increase only 2006-07 only and reaming 4 year it slide decline.

c. ABSOLUTE LIQUID RATIO OR CASH RATIO

Absolute Liquid Assets Absolute Liquid Ratio= ---------------------------------Current Liabilities YEAR ABSOLUTE LIQUID ASSETS 148.85 181.63 176.94 7.87 30.89 CURRENT LIABILITIES 126.36 177.65 171.09 184.31 204.47 Absolute Liquid Ratio 1.17 1.02 1.03 0.04 0.15

2006-07 2007-08 2008-09 2009-10 2010-11

CASH RATIO
Series 1

1.17

1.02

1.03

2006-07

2007-08

2008-09

0.04 2009-10

0.15 2010-11

InterpretationThe rule of thumb says that the absolute liquid ratio should be0.5:1 or 1:2.In here the chart describe the 5 year data of absolute ratio. In 2006-07 it increase in 1.17,in 20008 I it decline 1.02,in 2008-09 the decline rate is 1.03,in 2009-10 it decline0.4 and least in 2010-11 oit decline at 0.15. From the above chart it is found that in the year 2005 the ratio is higher than other year. In 2006-11 it pretty much decrease.

4-PROPRIETARY RATIO OR EQUITY RATIO

Shareholders Funds Equity Ratio= -----------------------------------

Total Assets

YEAR 2006-07 2007-08 2008-09 2009-10 2010-11

SHAREHOLDE RS FUNDS 379.21 392.58 408.86 475.74 588.9

TOTAL ASSETS 1352.45 1376.59 1366.14 1342.56 1459.19

EQUITY RATIO 0.28% 0.28% 0.29% 0.35% 0.40%

EQUITY RATIO
0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00%

0.40% 0.35% 0.28% 0.28% 0.29%

RATIO

2006-07

2007-08

2008-09
YEAR

2009-10

2010-11

InterpretationThis ratio indicates the extent to which the assets of the company can be lost without affecting the interest of creditors of the company. Higher the equity ratio betters the solvency position. In 2011, equity ratio is highest than other years. Same year shareholders fund is increasing. It decreases in 2007 & slightly increasing in 2008. In 2009-10 it is increasing . J K Paper the equity ratio is satisfactory .

5-INVENTORY TURNOVER OR STOCK TURNOVER RATIO

Cost of Goods Sold/net sales Inventory Turnover Ratio= -------------------------------------------Average Inventory at Cost

YEAR

NET SALES

AVERAGE INVENTORIES 96.41 168.54 178.89 180.55 190.65

INVENTORY TURNOVER RATIO 6.88 4.48 6.02 6.12 6.45

2006-07 2007-08 2008-09 2009-10 2010-11

663.75 756.41 1077.18 1105.53 1230.72

Days in a year Inventory Conversion Period= ------------------------------------Inventory turnover ratio YEAR NO.OF DAYS IN A YEAR 365 365 365 365 365 INVENTORY TURNOVER RATIO 6.88 4.48 6.02 6.12 6.45 INVENTORY CONVERSION PERIOD 53 DAYS 81 DAYS 61 DAYS 60 DAYS 57 DAYS

2006-07 2007-08 2008-09 2009-10 2010-11

INVENTORY TURNOVER RATIO

8 6 4 2 0 6.88 4.48 6.02 6.12 6.45 RATIO

2006-07
Interpretation-

2007-08

2008-09
YEAR

2009-10

2010-11

A high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold; the lesser amount of money is required to finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. The above chart shows a decline trend. The inventory turnover ratio is high in the year 2006-07. From the next year it is decline. still it improving in 2010-11 it improving. The company should prepare a good policy for the maintenance of inventory now it is satisfactory.

InterpretationThe inventory conversion period is between 40 to 65 days, which is not satisfactory. The conversion period tell that how quickly the stock converts into cash. The J K PAPER MILL should proper utilize the resources for better results.

8-DEBTORS TURNOVER RATIO

Net Credit Annual Sales Debtors Turnover Ratio= -------------------------------------------Average Trade Debtors

YEAR

TOTAL SALES

AVERAGE

DEBTORS

TRDAE DEBTORS 2006-07 2007-08 2008-09 2009-10 2010-11 844.62 932.55 1268.34 1299.57 1432.97 107.24 110.87 107.15 104.49 107.87

TURNOVER RATIO 7.87 8.41 11.83 12.43 13.28

No. of working Days Average Collection Period= -------------------------------------

Debtors Turnover Ratio

YEAR

NO. OF WORKING DAYS 365 365 365 365 365

DEBTORS TURNOVER RATIO 7.87 8.41 11.83 12.43 13.28

AVERAGE COLLECTION PERIOD 46 DAYS 43 DAYS 31 DAYS 29 DAYS 27DAYS

2006-07 2007-08 2008-09 2009-10 2010-11

DEBTORS TURNOVER RATIO

14 12 10 8 6 4 2 0

11.83
7.87 8.41

12.43

13.28

RATIO

2006-07

2007-08

2008-09
YEAR

2009-10

2010-11

InterpretationGenerally the higher the value of debtors turnover, the more efficient is the management of debtors/sales or more liquidity is the debtors. Similarly low debtors turnover implies inefficient management of debtors/sales and less liquidity debtors. In 2008 we have seen that average collection period is increase. It is not good for the company. If the average collection period is increased than debt will be increased. In the year 2009-10 still again it improve.& in 2010-11 again it improve rapidly , debtor turnover ratio is good. From the above chart it is clear that JK Paper mills debtors turnover ratio is above the performance.

Interpretation of average collection periodThe ratio represents the average no. of days for which a firm has to wait before its receivables are converted into cash. The shorter the average collection period the better for the firm as it implies quick payment of debtors. Higher collection period implies as inefficient collection performance. The average collection period is lies between 55 to 70 days. Here J K papers management is properly collects the amount in time. They have to prepare a good policy for their improvement.

7-WORKING CAPITAL TURNOVER RATIO

Cost of sales WORKING CAPITAL TURNOVER RATIO= --------------------------------------Average Working Capital

YEAR

SALES OR COST OF SALES

AVERAGE WORKING CAPITAL 207.63 222.34 252.41 241.84 224.76

WORKING CAPITAL TURNOVER RATIO 4.06 4.11 5.02 5.37 6.37

2006-07 2007-08 2008-09 2009-10 2010-11

844.62 932.55 1268.34 1299.57 1432.97

WORKING CAPITAL TURNOVER RATIO

7

6.37 5.02 4.06 4.11 5.37

6
5 RATIO 4 3 2 1 0

2006-07

2007-08

2008-09
YEAR

2009-10

2010-11

Interpretation A higher ratio indicates efficient utilization of working capital and a low ratio indicates the inefficiency. A very high ratio is not a good situation for any firm.From the above chart it is clear that the working capital turnover ratio was on the decline in 2008 then in the year 2009-10it is very high . working capital turnover ratio very good.

CHAPTER-07

ANALYSIS
J.K Paper mills are maintaining good quality and its ability to meet short-term obligations is high. The efficiency in managing debtors has been increased when compared to pervious years. J.K Paper mills are maintaining a good inventory control system. The inventory holding period has been decreased from previous years which shows the increase in efficiency in managing inventory. Its suppliers provide J.K Paper mills with good credit facility. It getting more & more profit as comparision to other years. and it maintain a good brand image in todays business world.

BALANCE SHEET ON THE J.K PAPERS LIMITED

IN RS. CRORE(10MILLONS)

DETAILS
CAPITAL RESERVE AND SURPLUS

31-MAR-07 78.96 300.25 379.21 595.49 107.29 702.78 95.2 1177.19

31-MAR-08 78.96 313.62 392.58 583.54 137.78 721.32 94.28 1208.18

31-MAR-09 78.56 330.3 408.86 565.41 132.45 695.89 109.94 1,214.66

31-MAR-10 78.35 397.39 475.74 392.16 156.06 548.21 134.56 1,158.51

31-MAR-11 78.24 510.66 588.9 412.4 125.96 538.36 128.4 1,255.66

LOAN-:
SECURED LOAN UNSECURED LOAN DEFERRED TAX LIABILITY

TOTAL APPLICATION FUNDS FIXED ASSETS GROSS BLOCK

LESS DEPRECATION

NET BLOCK
CAPITAL WORKING IN PROGRESS INVESTMENT

1071.2 375.17 696.03 256.57 961.6 5.57 96.41 107.24 4.83 176.8 385.28 177.65 207.63 2.39 1,177.19

1367.52 418.06 949.46 16.23 965.69 2.75 120.34 110.87 3.5 41.7 131.74 408.15 171.09 237.06 0.68 1,208.18

1,413.45 484.74 928.71 13.96 942.67 2.75 117.11 107.15 34.22 162.24 420.72 152.95 267.77 1.47 1,214.66

1,428.79 549.21 879.58 20.8 900.38 41.95 126.89 104.49 7.87 160.98 400.23 184.31 215.92 0.27 1,158.51

1,455.41 610.95 844.46 93.89 938.35 82.77 127.53 107.87 30.89 171.78 438.07 204.47 233.6 0.94 1,225.66

CURRENT ASSETS
INVENTORIES SUNDRY DEBTOR CASH AND BANK BALANCE OTHER CURRENT ASSET LOANS AND ADVANCE LESS:CURRENT LIABILITIES

NET CURRENT ASSET MISCELLANEOUS ASSET TOTAL

BALANCE SHEET CHAT ON 2007-2011

21%

19%

31st mar2007 31st mar2008 31st Mar2009 20%

20%

31st Mar2010 31st Mar2011

20%

Interpretation
The diagram describe the balance sheet of 2007-11 of j k paper ltd. it describe the details financial strength of company. In 2007 it 1,177.19 &the percentage rate is 19, in 2008 it 1,208.18& the percentage rate is 20 it slide improving as comparison to 2007.in 2008 it 1,214.66 & the percentage rate is 20.in 2010 it 1,158.51& the percentage rate of this year is as wall same as comparison to the past three year. But in 2011 still it increasing 1,2225.66 & the percentage rate is 21.in the above discussion we know that the company financial position still improving day by day.

PROFIT AND LOSS ACCOUNT ON J.K PAPER

IN RS. CRORE(10MILLONS)

DETAILS INCOME SALES LESS-- DISCOUNT LESS-- EXCISE DUTY NET SALES OTHER INCOME
INCREASE/(DECREASE) IN STOCK

2006-07 844.62 96.1 748.52 84.77 663.75 1.37 665.12 5.74 670.86 80.47 425.98 29.41 535.86 135 33.8 101.2 46.87 54.33

2007-08 932.55 93.92 838.63 82.22 756.41 4.31 760.72 -0.87 759.85 89.88 485.09 27 601.97 157.88 35.72 122.16 50.47 71.96 5.02 1.51 -5.02 70.18 24.27 45.91 54.74

2008-09

2009-10 1299.57 149.68 1149.89 44.36 1105.53 2.77 1108.3 -8.95 1099.35 119.7 689.92 44.85 853.89 245.46 48.49 196.97 48.49 126.93 23.57 -12.29 115.65 24.62 91.03 111.95

2010-11 1432.97 152.59 1280.38 49.66 1230.72 5.11 1235.83 -10.47 1225.36 130.01 787.53 42.05 959.59 265.77 45.7 220.07 45.7 148.45 43.66 104.79 -1.63 106.42 174.51

1268.34 126.1 1142.24 65.06 1077.18 4.92 1082.1 6.97 1089.07 99.79 764.18 42.86 906.83 182.24 58.47 123.77 69.69 54.08 5.99 1.21 -6.79 53.67 15.66 38.01 93.9

TOTAL INCOME EXPENDITURE EMPLOYEES MATERIALS AND MANUFACTURES

OTHER EXPENSE

TOTAL EXPENDITURE PROFIT BEFORE INTERST LESS-- FINANCIAL CHARGE & INTEREST LESS-- EXCEPTIONAL ITEM LESS--TRANSFORM GENERAL RESERVES PROFIT BEFORE DEPRECATION LESS-- DEPRECATION PROFIT BEFORE TAX

LESS-- PROVISION FOR CURRENT TAX 4.61 LESS-- PROVISION FOR FRINGE BENEFIT TAX 0.87 LESS-- MAT CREDIT ENTITLEMENT -4.61 PROFIT BEFORE DEFFRRED TAX PROVISION FOR DEFERRED TAX PROFIT AFTER TAX DEBENTURE REDEMPTION RESERVE SURPLUS BROUGHT FORWARD 53.46 19.94 35.92 4.85 35.85

TOTAL APPROPRIATIONS

76.22

100.65

131.91

202.98

280.93

DEBENTURE REDEMPTION RESERVE 0.35 DEBENTURE REDEMPTION RESERVE WRITTEN BACK 1.43 CAPITAL REDEMPTION RESERVE GENERAL RESERVE DIVIDEND
3 14.65 2.05

0.35 0.76 5 17.74 3.02 73.78 100.65 201.3

0.4 3.5 13.73 2.33 111.95 131.91

0.21 10 15.66 2.6 174.5 1 202.9 8

22.94 -22.94 0.11 11 17.6 2.92 249.3 280.93

CO-OPERATE DIVIDEND TAX 54.74 SURPLUS CARRIED TO BALANCE SHEET 76.22

152.44

EARNINGS PER SHARE (RS.) BASIC DILLED

5.35 5.3 5.85 5.68 4.86 4.74 11.64 11.33 13.62 13.62

3000 2500 265.77 2000 1500 135 1000 500 670.86 0 2006-07 2007-08 Series1 2008-09 Series2 Series3 2009-10 2010-11 535.86 157.88 601.97 1089.07 1099.35 1225.36 182.24 906.83 245.46 959.59 853.89

759.85

Interpretation
The table describe the financial strength and profit & loss account of the company .in here we calculate the 5 years data up to 2006-11 .in here we calculate the net profit so we subtract the total income total expenses than only we get the total profit .so in 2006-07 the total income is 670.86-total expenditure is 535.86.than we can find the total profit 135.in the same wise we calculate the all things in 2007-08 we got 157.88 profit ,in 2008-09 we got 182.24 profit ,in 2009-10 we got 245.46 profit.

FINANCIAL POSITION ON J.K.PAPER MILLS

IN RS. CRORE(10MILLONS)

DETAILS GROSSS SALES PROFIT BEFORE INTERST & DEPRECATION Less-- Interest & Financial Charge Exceptional Transform From General Reserves PROFIT BEFORE DEPRECATION &TAX LESS--Deprecation PROFIT BEFORE TAX Less--provision for current t provision for fringe benefit tax MAT Credit Entitlement PROFIT BEFORE DEFFRRED TAX Less--provision for deferred tax Add--PROFIRT AFTER TAX Debenture Redemption Reserve Surplus brought forward Total amount available for appropriation Debenture redemption reserve Debenture redemption reserve written base

2007-08 749.31 116.24 35.46 6.93 6.93 80.78 45.86 34.92 6.13 0.99 -6.13 33.93 0.78 34.72 2.44 73.78 110.93

2008-09 1268.34 182.94 58.74 Nill Nill 123.77 69.69 54.08 5.99 1.21 -6.79 53.67 15.66 38.01 Nill 93.9 131.91

2009-10 1299.57 245.46 48.49 Nill Nill 196.97 48.49 126.93 23.57 Nill 12.29 115.65 24.62 91.03 Nill 111.95 202.98

2010-11 1432.97 265.77 45.7 Nill Nill 220.07 45.7 148.45 43.66 Nill Nill 104.79 -1.63 106.42 Nill 174.51 280.93

22.94 -22.94

Capital redemption reserve General reserve Dividend Co-operate dividend tax Surplus carried to balance sheet TOTAL 3.25 11.78 2 93.9 110.93

0.4 3.5 13.73 2.33 111.95 131.91

0.21 10 15.66 2.6 174.51 202.98

0.11 11 17.6 2.92 249.3 280.93

FINANCIAL POSITION ON J.K.PAPERS

2007-08 265.77 245.46 182.94 116.24 220.07 196.97 123.77 80.78 54.08 34.92 148.45 126.93 2008-09 2009-10 2010-11 280.93

202.98 131.91 106.42 110.93 91.03 38.01 34.72

PBI&DT

PBDT

PBT

PAT

TOTAL

Interpretation
The table describes the financial position j.k papers. in here we just calculate the 4 year data among 2007 to 2011.in here we know that the gross sale of the company up to 2007-11 is 749.31,1268.34,1299.57,1432.97.&in here we know the all details like in2007-08 the PBI&DT is 116.24,PBDT is 80.78,PBT is 34.92,PAT is 34.72 & the total amount is 110.93.same wise in 2008-09 the PBI&DT is 182.94,PBDT is 123.77,PBT is 54.08,PAT is 98.01 & the overall total is 131.91.in 2009-10 the PBI&DT is 245.46,PBT is 196.97,PBT is 126.93,PAT is 91.03 & the total amount is 202.98.In 2010-11 the last year the PBI&DT is 265.77,PBDT is220.07,PBT is148.45,PAT is 106.42& total is 280.93.in here we know that the company financial strength improving day by day rapidly.as you know known that the company s strength is pretty much improving.

COMPARATIVE INCOME STATEMENT

IN RS. CRORE(10MILLONS)

PARTICULARS

31-03-2010
AMOUNT TOTAL AMOUNT

31-03-2011
TOTAL AMOUNT AMOUNT

INCREASES/( DECREASES)

% INCRAESE/( DECREASES

AMOUNT

AMOUNT

SALES LessDiscount

1299.57 149.68 1149.89

1432.97 152.59 1280.38 49.66 1230.72 10.47 1220.25 5.11 1,097.93 1225.36

133.4 2.91 130.49 5.2 125.19 1.52 123.67 3.76 127.43

10.26 1.94 11.35 11.72 11.32 16.98 11.28 278.51 11.6

less-- excise duty NET SALES LessStock

44.36 1105.53 8.95 1096.58

Direct income GROSSS PROFIT(A) EXPENDITURE Employees Materials& Manufactures Other expenses TOTAL EXPENDITURE:(B) NET PROFIT ( A-B)

1.35

119.7 689.92 44.85

130.01 787.53 42.05

10.31 97.61 (-2.8)

8.61 14.14 (-6.24)

854.47

959.59

105.12

12.3

SUGGESTIONS: Some items are included in both IRP items and regular items. This will lead to duplication of items. It should be avoided. The present warehouse is insufficient to keep inventory to meet the orders. The size of warehouse should be increased. JK Paper is giving less concentration on local market. They should try to meet the demand of local market. The pricing strategy adopted by the JK Paper is not appropriate for price war. The price should charge low to some of its brand. They should concentrate on direct transportation. For that backward integration of transportation is suggested.

CHAPTER-08

CONCLUSION
The study of working capital behavior occupies an important place in financial management. It has never received so much attention as in recent years. The management of working capital is a continuing function, which involves control of the day-to-day ebb and flow of financial resources circulating in the enterprise. Working Capital Management is concerned with short-term financial discussion and in order to determine the credit and other requirements, bankers, financial institutions government agencies and tax authoritys effective working capital Management is required. The size of working capital required by a firm has a much closed linkage with its capacity utilization. The capacity of business enterprises to earn profits depends largely on its ability to manage efficiently its working capital. In a period of rising capital costs and scare funds. The working capital is one of the more important areas requiring management review. The transmutation of a company working capital into income and profits and back into working capital is one of the most vital aspects of business operation and a proper relationship must be maintained between the working capital and fixed capital of an enterprises if operations are to run smoothly. We will hardly find a business firm, which does not require an amount of working capital.

BIBILOGRAPHY

Panday I.M., Financial Management, Ninth Edition, Vikas Publication, 2005. Chandra Prasanna, Financial Management, Fifth Edition, Tata McGraw-Hill Publication, 2001 Khan & Jain, Financial Management, Third Edition, Tata McGraw-Hill Publication, 2001. Sharma & Gupta, Management Accounting, Kalayani Publication, 2004. http// : www.jkpaper.com Oct 07, 2007. Induction manual of JK Paper Mills Brochures and Booklet of JK Paper Mills