WORKING CAPITAL MANAGEMENT

AT
BINDALPAPER LIMITED. DWARKAPURI
MUZAFFARNAGAR (U.P.)

Submitted By:ARUN KUMAR

Roll No .0924970007

In the partial fulfillment Awarded of Degree of

Master of Business Administration

SHRI RAM COLLEGE OF MANAGEMENT

MUZAFFARNAGAR

Certificate By College

Certificate By Company

ACKNOWLEDGEMENT
We take this opportunity to express our deep gratitude to the management of BINDAL PAPERS LIMITED,
DWARKAPURI, MUZAFFARNAGAR (U.P.) for providing us the opportunity to get an exposure of heir

esteemed unit. We are sincerely thankful to the HR Deptt. Which co-ordinate our training and WE especially
express our thanks to Mr. Chander Mohan Negi (HRD), Mr. Praveen, Mr. Deepak, Mr. Nitin, Mr. Kamal, Mr.
Ram Singh, Mr. Bijendra Garg for their continued help and guidance during our stay here.
We wish to express our sincere gratitude to HOD & personnel of Account Office where we had detailed
interaction & inspiring guidance and motivation from them.

Last but not the least we express our deep gratitude to our respected Mr. Pradeep Kumar Sir, for sending us to
such a large integrated pulp & paper industry for summer training and giving us a chance to acquire an
experience of my life time.
We also express our sincere indebtness to our parents and family members for providing their continued
moral support during our training period.

ARUN KUMAR

DECLARATION
I Hereby Declare that the Summer Training Project entitled WORKING CAPITAL submitted in partial
fulfillment of 'POST GRADUATE DIPLOMA IN MANAGEMENT' is of my original work and not
submitted for the award of any other Degree, Diploma, Fellowship or other similar TITLE or PRIZE.

ARUN KUMAR
ROLL NO-0924970007

PREFACE

This is more than one factor at work, while which can ensure the true completion of the project. It is not an idea
held on certain topic that matter, but it is complete knowledge attaining process and therefore requires an in
depth knowledge of the topic of the project.
The project includes an overview of working capital management in BINDAL PAPER LIMITED.,
DWARKAPURI (M.NAGAR)

The varies and varied aspects of the problems has logically discussed and systematically presented in a simple
language.

ARUN KUMAR
ROLL NO-0924970007

TABLE OF CONTENT:-

S.NO

CONTENTS

PAGE NO
PART-A

EXECUTIVE SUMMERY
2

1-6

COMPANY PROFILE

7
Part B

INTRODUCTION ABOUT TOPIC

4

RESEARCH & METHODOLOGY

8-59
60-64

5.a

ANALYSIS & INTERPRETATION

65-89

BALANCE SHEET
5.b

ANALYSIS OF FINANCIAL STATEMENTS

6

SUMMERY OF FINDINGS

90-92

7
93

CONCLUSIONS
8

94

RECOMMENDATION
APPENDIX

95-102

BIBLIOGRAPHY
QUESTIONNAIRE

PART A
EXECUTIVE SUMMERY

Bindal Papers Ltd.

Bindal Papers Ltd. is part of the highly dynamic and rapidly growing Bindal Group whose annual revenues exceed
Rs.10 Billion(US $ 200 Million). The Group has a diversified Business Portfolio in Manufacturing of Packaging
grades of paper and paperboards, tissue papers, iron & steel, besides trading of commodities the Group enjoys a
strong Leadership position in the Kraft/ Liner board segment.

The Groups fundamental business philosophy is dictated by the ever growing needs of the customer for Quality
products, backed by a robust Service Culture and competitive Costs. In each product category Bindals
manufacturing facilities enjoy the highest operating efficiencies, thus resulting in more competitive cost structure.
The surpluses generated by the Group are reinvested in the core paper business - thereby ensuring continuing
growth and rising market share.

In this perspective Bindals identified a significant Investment opportunity in the high end Printing and Writing
Paper sector by setting up a modern Greenfield plant in Muzaffarnagar ,UP with a manufacturing capacity of
1,00,000 TPY. This is expected to generate incremental revenues(for the group) of over Rs.4000 million or around
US$80 Million per year. More importantly, the Group will participate in the fast growing High Bright SS Maplitho
Paper (uncoated woodfree paper)and Branded Copier Paper(cut-size) segments, making it a one-stop-shop paper

group, enabling customers to source the widest range of papers and boards.
At Bindal Papers, we have introduced a work culture that imbibes the best Values and Practices. This facilitates in
providing customers value added services and more than that a unique experience. The objective is clearly to help
customers maximise their productivity, minimise their costs and derive highest value addition in their end products.

The technology installed is absolutely contemporary ,in sync with the markets emerging requirements of high
value, internationally competitive papers. Backing this is an excellent network of distributors who offer customised
services

and

solutions

and

workforce

that

is

both

talented

and

dedicated.

The Companys Sales and Marketing is headquartered in New Delhi which clearly results in closer and more
personalised service, being in the heart of the countrys biggest and fastest growing market .In addition a regional
marketing office in Mumbai will serve the needs of customers in Western India, while further offices are in the

process of being set up. The Team of sales and marketing professionals has the right blend of experience and youth
who

will

service

the

customers

with

utmost

passion

and

humility.

Promoters: Bindal family, led by the dynamic and Visionary Chairman Shri Rakesh Kumar

Company Profile

TAR Paper mills ltd., unit of the top Indian corporate conglomerate B.K.Birla groups of companies
is one of companies is the leading integrated pulp and paper plants. Established in the year 1938 at
Saharanpur (U.P.) the company after expansion and modernization, presently operates four fiber

lines at the following installed capacities:

 Rayon grade pulp

31320 TPA

Writing and Printing Papers (wood)

37250 TPA

Writing and Printing Papers(Bagasse) :

Writing and Printing Papers (DIP)

84600 TPA
:

75960 TPA

VISION:

Our vision for the millennium remains manufacturing of international quality products at optimum cost in
consistence with the physical and psychological environment best suitable for customers and stakeholders.

Concrete vision elements :

Product quality

Safety and Environment

Satisfaction of customer and stakeholders
Cost Effectiveness
Energy conservation

With the emergence of the open market economy which lead to reduced tariff barriers and the promulgation of
free Trade Agreement with thriving neighboring economies, the competitiveness of the Indian paper industry
has come to sharp focus on the front of costs and quality. The industry has been in turbulent state since the
economy was opened and the paper import was allowed under Open General License scheme.

Faced with various issues and changes like, availability of fibrous raw materials, technological
obsolescence, cost, quality and environment, the industry has taken steady steps to enhance its competitiveness
by way of addressing these issues. The demand for paper, paperboards, and news print has been rising in the
recent past and the domestic market has been registering growth rate of around 6% against the world average of
about 2.8%.

The present paper highlights the status of the Indian paper industry with respect to key market indicators. Data
has been presented for production, import, export, demand and consumption of paper, paper boards and
newsprint covering technological status of the Indian paper industry. Discussions have been made on the basis
of issues related to raw materials scenario keeping in view the present and future demand.

Present status and profitability: The pulp and paper industry presents an incoherent picture today, with mills of
various sizes struggling to survive side by side, unlike the Western counterparts where the have a capacity of
100000 tones per machine per annum has become a norm here in India we have a mill capacity of 10000 tones
per annum. The total size of Indian paper industry in terms of volume is approximately 5.7 million tones and the
growth rate of the industry is about 5% to 6% per annum. Exports from India account for mere 3% of the

industry volume. While the per capita consumption has increased it is 5kg. This is very low as compared to the
rest of the world average of 46kg. The per capita consumption of China, Iran, Egypt and Thailand are at 26kg,
16 kg, 13 kg and 5.5 kg respectively.

WORLD WISE DISTRIBUTION

DISTRIBUTION OF MILLS

NO.OF UNITS

CAPACITY of 5.7million/annum

Above 100000

11

23

50000-100000

10

12

20000-50000

29

15

10000-20000

85

15

Below 10000

348

35

TOTAL

483

100

STRUCTURE OF INDIAN PAPER INDUSTRY

There are around 700 pulp and paper mills in India producing nearly 6.8million tones of paper and newsprints
out of which 5.8 million tones account for paper and paper boards and the remaining in news print. The mills in
the country can be classified into three categories. Mills that have integrated, largely forest based operations
produce over 100 TPD are classified as large mills. These mills are 33 in number and account for 36% of the
total production. Medium sized mills that have capacity between 50-100 TPD using agro based raw materials

they are 165 in number. These account for 29% of the total production. The mills up to 50 tones uses waste
paper as fiber base these are 510 in number and account to about 35% of the total production. In past few years
many mills which where using renewable crop residue as fiber base have now shifted to recycled fiber in the
face of the CREP norms, which stipulated the Chemical Recovery for the mills.

PART B

INTRODUCTION ABOUT THE TOPIC

WORKING CAPITAL MANAGEMENT:-

Working capital management is an important aspect of financial management. In business, money is required
for fixed and working capital. Fixed assets include building, plant and machinery, furniture and fitting etc. Fixed
assets are required to be retained in the consumer for a long period and yield returns over the life of such assets.
Working capital, on the other hand is required fir the efficient and effective use of fixed assets. The main
objective of working capital management is to determine the optimum amount of working capital required.

The various topics discussed in management of working capital are:

I.

Definition of working capital

II.

Types of working capital

III.

Need for working capital

IV.

Financing of working capital

V.

Factors determining working capital

VI.

Adequacy of working capital

VII. Advantage of adequacy of working capital

DEFINITION OF WORKING CAPITAL

There are 2 concept of working capital:
1. Gross working capital
2. Net working capital

(I) Gross Working Capital Concept:

According to this concept working capital means gross working capital, which is the total of all the current
assets of the business.

Gross Working Capital = Total Current Assets

Definitions favoring this concept are:
1. Working capital means total of current assets.

---Mead, Mallott and Field

2. Any acquisitions of funds which increase the current assets increase working capital, for they are one
and the same.

---Bonneville and Dewey

(II) Net Working Capital concept:

According to this concept, working capital means net working capital, which is the excess of current assets
over current liabilities.

Net working capital = current assets - current liabilities

Definitions favoring this concept are:

1. It has ordinarily been defined as the excess of current assets over current liabilities.

2.

The most common definition of net working capital is the differences of firms current assets and
current liabilities.

As discussed net working capital is the excess of current assets over current liabilities. If current assets are equal
to current liabilities, net working capital will be zero and if current liabilities are more than current assets, net
working capital will be negative.

Current assets mean those assets which are converted into cash within a short period of time not exceeding one
year, e.g. cash, bank balance, debtors, bills, receivable, stock, accrued income etc.
Current liabilities means those liabilities which have to be paid within a short period of time in no case
exceeding one year, e.g. creditors, bills payable, outstanding expenses, short term loans etc.

NEED FOR WORKING CAPITAL

For this purpose working capital is needed which shall be involved from the purchase of raw materials to the
realization of cash. The time period, which is required to convert raw materials to the realization of cash? The
time period, which is required to convert raw materials into finished goods and then into cash is known as

operating cycle or cash cycle. The time need for working capital can also be explained with the help of
operating cycle. Operating cycle of a manufacturing concern involves 5 phases:

Conversion of cash into raw material

Conversion of raw material into work in progress

Conversion of work in progress into finished goods

Conversion of finished goods into debtors by credit sales

Conversion of finished goods into cash by realizing cash from them

Operating Cycle

Thus the operating cycle starts from cash, finishes at cash and then again restarts from cash. Net for working
capitals depends upon period of operating cycle. Greater the period more will be the need for working capital.
Period of operating cycle in a manufacturing concern is greater than period of operating cycle in a trading
concern because in training units cash is directly converted into finished goods.

Because of the time involved in an operating cycle there is a need of working capital in the form of current
assets. Firms have to keep adequate stock of raw materials to avoid risk of non-availability of raw materials.
Similarly, concerns must have adequate stock of finished goods to meet the demand in market on continuous
basis and to avoid being out of stock..

In addition to all these, concerns have to necessarily keep cash to pay the manufacturing expenses etc. and to
meet the contingencies.

CASH
Debtors and
bills
receivables

Raw
Materials

Finished goods

Work- in Progress

THE INDIAN PAPER INDUSTRY

INDUSTRY TYPE

SALES

OF NO. OF MILLS

OPERATION

PRODUCTION
SHARE%

(TONS PER DAY)

Large

integrated 101-800

wood based
Medium agro based

33

36

165

29

510

35

708

100

(Avg. 300)
50-100
(Avg. 60)

Small waste paper

5-50
(Avg. 15)

Total

ANNUAL POTENTIAL OF AGRO BASED FIBRES IN INDIA

Agro residue

Availability (Million tones)

Wheat straw

22

Rice straw

15

Bagasse

12

Jute, Mesta

Total

51

Name of company

Capacity(million tones)

Ballarpur Industries Ltd.(BILT)

0.45

ITC Bhadrachalam

0.23

Tamil Nadu Paper Ltd.(TNPL)

0.20

Hindustan Paper Company

0.20

Bindal Paper Ltd.

0.19

JK Paper Ltd.

0.15

Rama Newsprint Ltd.(RNPL)

0.13

TOP 7 PLAYERS IN THE INDUSTRY

4 MAJOR CATEGORIES OF PRODUCT

Name of the Product

% Share

Industrial Paper

45

Writing Paper

37

Specialty

1.8

Newsprint

RECYCLED WASTE PAPER

The use of waste paper has made a significant progress in last few years. While in 1970, the production of paper
based on waste was merely 5%, amounting to 37000 tons and it was increased to 6.5 lakhs tones in the year
1994-95, contributing to 26% of the total production. This share of waste paper was further increased to 2
million tones in the year 2005-06, contributing to about 34% of the total production. Being produced from
nearly 510 numbers of small, medium and large producing units with an installed capacity of 58.3 lakh tones.

The outlook for the use of recycled paper is bright in the industry despite the fact that the recovery rate is low
and the fiber quality is poor. This necessitates the incorporation of the imported waste paper of long fiber origin
to achieve satisfactory quality. The recycled waste paper based mills therefore have been continuously urging
the government for certain concessions and incentives like
Abolition of custom duty on waste paper.

 Abolition of sales tax on sales of waste paper.

Zero custom duty for equipment and machines for the recycled waste paper.

COUNTRY

PER

CAPITA RECOVERY RATE

CONSUMPTION(KG)

USA

354

45.5

GERMANY

215

73.3

U.K

215

40.6

FRANCE

153

51.3

JAPAN

243

56.3

SWEDEN

257

63

CHINA

30

31

INDIA

20

Waste paper recovery and trading are still is unorganized in India and low recovery is attributed to: Unorganized collection of the waste paper, which is confined only to the major towns and that to a limited
extent.
Segregation is not carried out at the selection, resulting in contamination.
Absence of facilities for selection, sorting and bailing

PAPER INDUSTRY AT A GLANCE

Globalization has become the most important message for the development of the industrial sector in India
which means the industries have to become both competitive and cost effective. During 2001 BILT acquired
two large units: Sinar Mas (coated papers-80000 tones per annum) and Servall (specialty coated board unit75000 tones per annum) taking the group close to 0.45 million tones per annum.

Similarly, JK Corp, which had two units, one at Orissa state (90000tones pre annum) and another
century at gujrat (60000 tones per annum) both for production of quality Map litho and copier papers, has
merged both the units and is now known as JK Papers Ltd. Companies like BILT, JK Industries, ITC
Bhadrachalam, Star paper mills Ltd. have focused their attention in expansion of the paper industry. Their aim is
to merge the potentially profitable units and expand the existing units. These companies are also looking for

strategic alliance overseas in view of controlling the quality raw material at an affordable cost on long term
agreements, or foe the introduction of the modern high yielding forestry techniques. A number of small and
medium sectors are been closed in their inability to compete in the market. Quiet a number of units based on
agro residues are facing closure because of population and some of them are converting their mills into recycled
fiber and manufacturing the cheaper grade of paper and they are supplying it to the niche market. During the

next few years the industry will be seeing some upheaval in restructuring, acquisitions and mergers. The paper
industry is highly capital incentive with a low turnover ratio. The debt equity ratio desired is 1.5:1. Since no
grassroots capacity is planed, optimization in efficiency is the route taken by the industry. The future for the
efficient mills looks to be good.

Company Policy:-

We at Century Pulp and Paper are committed to strengthen our position as market leader in manufacturing of
writing and printing paper and rayon grade pulp by developing a company wide culture thatpromotes :

Customer delight
Quality, Environment, Safety and Information Security initiatives

Environment friendly, Safe and Energy efficient operation

Nearly 2250 people are working as a team to achieve the objective of the organization. There is an excellent
harmony between the employees union and the management.

The company has established a strong brand image in the domestic and overseas market with excellent quality
of its products and services and caters to diversify sectors like note books & excellent diaries, continuous
stationary, copier, envelops, offsets printing , security papers, industrial papers and viscose filament yarn &
cellophane paper.

The company has been awarded golden status by DFGT, govt. of India as golden star trading house at the
corporate level. The unit is ISO 9001: 2008, ISO 14001: 2004, OHSAS 18001: 2007 and ISMS (ISO 27001:
2005) certified unit. The Bagasse Based Papers are eco labeled.

RAW MATERIALS:Companies main raw materials are:

1.Eucalyptus
2.Poplar
3.Bamboo
4.Bagasse

5.Waste Papers

COMPANIES MARKETING POLICY:Companies marketing policy is targeted to meet customers need and satisfaction. Presently
the company is also exporting its Paper to various countries. The head office of the

Company is at Kolkata.

Major Countries Exported :

Major countries to which Star has exported during the year 1999-2005 are UAE, Singapore,
Sri Lanka, Egypt, Bangladesh, Nepal & Myanmar.

Countries Exporting Currently :

SPM is currently exporting to UAE, Singapore, Sri Lanka, Egypt, Bangladesh & Nepal,
Myanmar, Malaysia, South Africa, Malta, Tanzania and Austria.

Seeking Export Enquiries :

SPM is currently seeking export enquiries from all over. The company wholehearted
welcomes innovative ideas and productive schemes.

SPM PRODUCTS
SPM range of products includes finest varieties of :-

1.Writing & Printing Paper

2.Industrial Papers
3.Speciality Papers
4.Security Papers From diversified range of raw materials.
Star parchment, NCR base , overlay tissue, wax match tissue, Star index, MICR cheque paper, buff pulp board,
Railway bond, azure laid(ivory), MF cover (UV fiber), SS map litho, super white map litho, super shine

printing, base paper for coating, sticker base paper, copier paper 75 GSM, (eco-mark) are some of the varieties
that have wide range of applications.
SPM also manufactures high quality dissolving Rayon Grade Pulp, raw material for viscose filament yarn/staple
fiber and bleached Hardwood Paper Grade Pulp.

SPM has following Production Units:-

RAYON GRADE PULP/PAPER GRADE PULP:This fiber line manufactures wood pulp with Eucalyptus & poplar furnish for dissolving grade as well as Paper
grade application. Star is the one of the leading suppliers to Rayon Industry for Viscose filament Yarn

manufacture. The pulp also finds application as filler in Melamine Formaldehyde/Urea, Formaldehyde for
making melmo ware/electrical switches.

WRITING & PRINTING PAPER (WOOD BASED):-

The integrated plant incorporate Eucalyptus & Bamboo furnish to produce papers ranging from 40 to 210 GSM.
The plant is equipped with two paper machines with a total capacity of 110 TDP & manufactures some of the
finest qualities of specialty papers.

BAGASSE - BASED PAPERS:-

The plant incorporates modern, state of the art machinery & technology & is based on a completely
environment-friendly concept. The salient features are a unique Bleaching sequence with Chlorine-Di-Oxide;
Oxygen enriched extraction stage along with Enzyme Pre-Bleaching, biotechnology application that the
company has pioneered to implement; and a comprehensive computer-aided control system. The High-Speed

Paper machine is equipped with firm press for on-line coating application. The product range includes fine
varieties of Writing & Printing Papers of 53-130 GSM including Copier.

RECYCLED FIBER BASED PAPERS:-

A secondary Fiber based plant manufacturing writing printing paper. DIP plant is equipped with 2-stage
floatation and 2-stage bleaching. Latest technology incorporated in this plant facilitates production of finest
paper quality in this category. The product range includes writing and printing papers of 52-130 GSM.

TISSUE PLANT:-

Prime Grade Tissue Plant of 100 TPD with Hi-speed Machine (2000 mpm) supplied by Metso is equipped with
latest technology to produce finest quality in this category. The Product range will include Facial, Napkin,
Toilet, C-Fold, and kitchen Towel etc. in the range 13-40 GSM.

COMMITMENT TO QUALITY & SERVICE:At star, Quality is an all pervasive commitment. We strive to continually improve the quality of our products
and services, which have been, affirmed in the form of ISO 9001:2008 certifications to the company for its
Quality Management system. The company has been responsive to the changing market requirement and has
developed new Quality Products to care to the varying end uses.

CARE FOR ENVIRONMENT:Preserving and Protecting the Environment is a top priority at Star. We always sensitive to our bio-diversity of
the soil, water and Air around us. SPM power plant maintains an efficient system for reducing air emissions.
Electrostatic Precipitators have been installed to remove particulates form recovery boilers, coal fired boilers
and lime kiln flue gases.

In strict adherence to the standards & guidelines, the effluents are treated in a modern ETP, which is recognized
as a model plant for its efficiency & performance.
Companys adoption of a systematic approach to the environment matters including waste minimization, water
recycling & re-use programs of by products has facilitated the company in getting the ISO-14001:2004
certification for its Environment Management System.

Companys friendship with Environment has also reflected in its Bagasse based paper being licensed for Eco
labeling, a distinct honor to be attained.

POWER BLOCK:-

Power house has 7 coal fired Boilers & three Turbines. The turbines are of 6.8 MW BHEL TG Set (Extraction
Back pressure), 21 MW TDK TG Set (Double Extraction Condensing type) & 16 MW BHEL Turbine.
5 Boilers are fluidized Bed Boilers out of which 3 F.B.C. Boilers are of 23T/hr, 47 ata, 420 0c each & 2 F.B.C.
Boilers are of 50 T/hr, 63 ata, 4800C each, 1 Boiler is Spreader Stoker coal fired Boiler of 25T/hr, 47ata, 4200C
& 1 Boiler is Pith Boiler of 60T/hr, 66 ata, 4850C.

CARING OF THE COMMUNITY:Star cares for the community at large & strives to be a good corporate & social citizen. We actively contribute to
the community development of the areas in our surroundings & regularly conduct medical camps, undertake
construction work of schools, drinking water facilities, self-employment schemes etc.

MARCHING AHEAD:-

The company has embarked on a prestigious expansion program to install a modern fiber line (ECF) and
multilayered board plant along with a new Turbine & Chemical Recovery Boiler.

AWARDS & HIGHLIGHTS

National Energy Conservation Award in Pulp & paper Sector for the year 2004, 2006, & 2008 by Govt. of
India at New Delhi.

National Award for Excellence in Energy Management for the year 2007 & 2008 by CII.
National Safety award for outstanding performance in industrial Safety for the performance year 2006 by Govt.
of India, as runner up on 17th Sep 2008 at New Delhi.
IPMA Environment Award Ist prize for Enviornment Conservation in 2006 for the year 2005-06.

Energy Conservation Award for the year 2002 & 2004 by Indian Paper Makers Association.
Excellent Award to SKYLARK Quality Circle in National Conservation on Quality Circle (NCQC08) held at
Vadodara in Nov08.

Based on the Environment Management & Cleaner Technology Adopted, CPP was selected as a Model Unit
in the field of Waste Minimization Audit by CPCB/NPC.
Awarded Eco Labeling for copier Paper from Bagasse & some of the varieties of writing & Printing Paper
from Bagasse.

PROCESS DESCRIPTION:-

The company has four streets of production viz. WPP, Bagasse & Recycled fiber & R.G.P. Streets. A wide
variety of writing and printing paper is manufactured in WPP Bagasse & Recycled fiber streets and Rayon
grade is manufactured in R.G.P. Street.
The main steps in manufacturing paper / Rayon Grade pulp are as follows:

 Chipping of the logs of Bamboo, Eucalyptus / Poplar in WPP street and eucalyptus in RGP street to
about 1 size chips and strong in chips silo.
Bagasse unloading, handing depithing, pile building, reclaiming and washing in Bagasse Street.

 Cooking Sulphate Process; In WPP & RGP Streets, Vertical batch digesters (for chips cooking) & in
Bagasse street, Continuous Tube type Digester (for Bagasse fiber cooking) are in operation. The cooking
process is carried out at preset temperature and pressure in presence of cooking chemicals for specified
cooking period.

 Removal of knots /uncooked /partially cooked portion of the material obtained from Digesters on
knotters.
Washing of pulp in Brown stock Washers to remove Spent Chemicals & Organic Matter.
Screening & Cleaning of the pulp to remove impurities.

 Bleaching of the Pulp based on the latest technology to attain final Pulp brightness as per requirement.
Sizing & Loading of pulp stock in the stock preparation section to achieve desired qualities in final
product.

 Paper sheet formation in Paper Machines (WPP & Bagasse Streets) equipped for on-line quality
products.

WORKING CAPITAL :
Meaning of Working Capital
Capital required for a business can be classified under 2 main categories via,
1) Fixed Capital
2) Working Capital

FINDINGS OF THE STUDY

On an average, this companys return on capital employed ratio is

Maintained at a satisfactory level.

 An increase in the current ratio indicates that the company is strengthening

its liquidity position. As the company current ratio is increasing rapidly and
it is much greater than the conventional norm (2:1) but it is prolific for the
Company to maintain an optimum level of liquidity to earn a maximum

Return on investment.

During the study period, the liquid ratio is found fluctuating every year. Companys quick ratio is less
than ideal ratio (1:1) in previous year which indicate that company had liquidity problem But in Current
year company has no liquidity problem because it is more than an ideal ratio.

 The fixed assets ratio indicates that the working capital of this company is funded by long-term funds
which indicate efficient funds management.

 The company working capital turnover ratio is decreasing which indicates that the company is not using
its working capital efficiently.

The firm average collection period is slightly increasing as compare to previous year. It shows that the
firm has Liberal Credit policy. These changes in policy are due to competitors credit policy

 The company debtor turnover ratio is decreasing year to year. This shows that company is not utilizing
its debtors efficiently. Now their credit policy becomes liberal as compare to previous year.
In 2009 the company has higher inventory turnover ratio as compare to previous year. This shows that
the companys inventory management technique is efficient as compare to last year.

SUGGESTIONS OF THE STUDY

On the basis of the analyses and observations, a few suggestions as below:
The company is a profit seeking one; it has to commit all of its resources to achieve its goal as it is
trying to enhance the value of its own and thereby to its shareholders. To achieve this, profitability,

liquidity and solvency position are crucial elements to be monitored carefully, thereby the trade off can
be reached.

Company should also take finite steps to:

1.Improve operational efficiency by way of increase in production and reduction in consumptions like steam,
power, raw material, chemicals, packing material, stores & spaces etc.
2.Aggressively implement restructuring of internal cost framework.

3.Drastically reduce operational capital expenditure.

4.Defer non-essential capacity expenditure and capacity expansion.
5.Put on hold any plans for acquisitions unless considered strategically critical.
6.Reduce unproductive expenditure/ overheads like telephone, travelling expenditures.
7.Reduce the repairs and maintenance expenditure, building repairs and machinery repairs etc.
8.Defer non essential capital expenditure.
9.The entire inventory like raw material, stores & spares, packing material, chemicals, felt; wire etc. to be
reduced kept at minimum level.
10.Sales department must see that finished goods stock is kept at minimum level with best realization.

CONCLUSION
Working capital is very essential for success of a business and, therefore, needs efficient management and
control. Each of the components of the working capital needs proper management to optimize profit.

The study reveals that the liquidity position of this company is comparatively goodinyear 2008-09 as compare
to previous years.
The ratios reveal that the companys ability in managing the current assets is found inadequate which require
generation of more sales. On the whole, it can be concluded that the companys overall working capital
management is not at desired level and we have made the realistic recommendation for the improvement in

operational and managerial efficiency of the company as to maintain and increase further by effective utilization
and control of all the assets.

LIMITATIONS OF THE STUDY

1.This study is limited to two years.
2.The study is restricted to the application of ratio analysis

3.This study is limited to only one company

4.The data of this study has been primarily taken from published annual reports only.

RECOMMENDATION

C.S.T

Central Sales Tax.

 S.P.M.

Star paper mills limited

CSO

corporate social responsibility.

GSM

Gram square meter.

 L.S.T

Local Sales Tax.

MT

Metric tones

 PM IV

Paper machine number four

WPP

Writing and Printing Paper.

BIBLIOGRAPHY:
Text Books:
Bhalla V.K., Financial Management, 1999, Sultan Chand & Sons Publications , New Delhi.
Kothari C.R. Research Methodology Method & Techniques Wishwa Prakashan , Daryaganj , New
Delhi-110 002

 Gupta S. P. Financial Management, 2003, Sahitya Bhawan Publications, New Delhi.

Journals & Magazines:
Business Today
Companys annual report
Companys published journals

Web Sites:

www.Starpapermills.com
www.google.com
www.yahoo.com
www.indianexpress.com
www.wikipedia.org

QUESTIONNAIRE

1. Are you satisfy with the FM Policies of the S.P.M?

A. Yes (60%)
B. No

(30%)

C. Not to say (10%)

2. Are you satisfied with the employees welfare schemes provided by the S.P.M?
A. Yes

(70%)

B. No

(25%)

C. Not to say (5%)

3. What are you say about Library Facilities in S.P.M? Is it beneficialA. Yes (50%)
A. No (50%)

4. How would you rate books of library?

A. Very useful (30%)
B. Useful (40%)
C. Ordinary (30%)

5 . What do you say about Medical facilities provided by S.P.M? Is it up to mark-

A. Yes (95%)
B. No

(5%)

6. Are you satisfied with the sports and others co- curricular activities in S.P.M?

A. Yes (80%)
B. No (20%)

7.Please Fill the Matrix Given below-

S. No.

Great thing about the facilities being provided here

Area of
improvement

1.
2.
3.

Library
Education
Medical

4.
5.

Club
General

8. Any Suggestion---------------------------------------------------------------------------------------------------------------------