SUMMER TRAINING PROJECT REPORT

At
SATIA PULP AND PAPER MILLS LTD, RUPANA, SRI MUKTSAR SAHIB,
PUNJAB.
(FROM 5TH JUNE 2019 TO 22ND JULY 2019)

SUBMITTED TO:
UIET PANJAB UNIVERSITY, CHANDIGARH

GUIDED BY:
FACULTIES OF B.E MECHANICAL.

SUBMITTED BY:
ANMOLDEEP SINGH
 DECLARATION

I here declare that this project is entirely done my own research

work with the help of employees and website of the company and is not
copied from any other sources.

I hereby would also like to declare that all the information provided
here are true and authentic and is not provided artificially.

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 PREFACE

It is a great pleasure to come forward with such a project that

has fulfilled the needs of our learning desires and has made us closer

to the subject.

In this project i have tried to cover all the major constituents of

an ideal project. I do know that, I am still unpolished stone, which is

still to be converted onto diamond but as per the requirements of our

syllabi, I have paid utmost attention to the application part rather than

on theoretical part.

I have also tried to avoid any kind of discrepancy of the matter

in the project. However, if there be any suggestions for the up

gradation from our teachers, I am ready to welcome them.

At the end I co-cordially thank Mr. RASESH KUMAR for their

strong guidance and support.

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 ACKNOWLEDGEMENT

I am very grateful to all those who have co-operated with us in

completing our project report. Without them this project report could
not been completed as easily as it had.

I am heartily indebted to all the employees of the Satia pulp and

paper Mills Limited, especially Mr. P. R. Mallaya who is the finance
manager of the company. Mr. Mallaya has supported us during the
entire training session and provided us all the needed information that
can help us in completing the project report. Besides him all the
employees of the Satia pulp and paper mills Limited co-operated with us
and helped us as much they could.

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 CONTENTS
Sr no. Particulars
1. Objectives of the project
2. Introduction of the firm & details
3. Organizational structure
4. No. of departments
5. Production department
6. Quality control department
7. Finance department
8. Marketing and sales department
9. Human resource department
10. Conclusion
11. Suggestion
12. Annexture

OBJECTIVES OF THE PROJECT

TO GAIN THE PRACTICAL KNOWLEDGE.
TO LEARN ABOUT THE PROFESSIONAL ATMOSPHERE.
TO ADOPT THE PROFESSIONAL BEHAVIOUR.

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 TO LEARN HOW TO INNOVATE YOUR IDEAS AND FULFILL
THE MAIN OBJECTIVE OF THE ORGANISATION AND ALSO
THE PERSONAL GOALS.
TO BECOME A HUMAN ASSET.

INTRODUCTION OF THE COMPANY

Satia Pulp & Paper Mills Limited is a Public Limited Company

first incorporated as a private limited Company in August, 1984, vide
certificate of incorporation number 11-74945 of 1984 August, 1984
issued by the Registrar of Companies, PUNJAB. The Company was
subsequently converted into a public limited Company vide certificate
of change of name dated 15 th March, 1985 issued by ROC, PUNJAB. The
object of the Company, is to carry on the business of manufacturers and
dealers of newsprint. It was to this end the Company set up a 16,500
TPA newsprint plant at RUPANA, PUNJAB.

MISSION OF THE COMPANY

For Achieving Market Leadership in Paper Products.
Sourcing World—class Raw Material from Internationally
Reputed Manufacturers.
To enter the new phase of challenge driven by
commissioning of additional capacity.
Creating strong R & D department to develop new kind of
qualitative paper.
To ensure customers success, provide specially designed
process by which the customer receives quality products,
on time and adequate quantity

HISTORY OF THE COMPANY

Satia group is closely held public ltd company. The management of
the Company vests with the Board of Directors headed by Dr. Ajay Satia.
Dr. Shri R.K. BHANDARI, Managing Director, looks after the day-to-day

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activities of the Company including procurement, production, marketing
and finance. He is assisted by other directors as well as by a team of
qualified and experienced professionals in key responsibility areas.
The Company is having Associate Concern namely, Satia Paper Mills
limited.

Satia pulp and paper mills Limited supplies to all major and leading
newspapers in India as newsprint is the major segment of the industry
where as substantial demand and supply exist.

Raw material for newsprint is imported from USA, EUROPE and

Latin American companies. The Company lead ahead of its competitors.

Plant performance
The Company initially started this unit with an installed capacity of
16500 TPA. Subsequently looking to the newsprint demand and supply in
the domestic market and to remain competitive with the other newsprint
manufacturer, the Company has made investments regularly in the
existing plant in due course of business. The Company has borrowed term
loans from IDBI, GIIC and SBI time to time for their expansion project to
increase the installed capacity of the plant as well as to produce better
quality of newsprint.The Company has concentrated on quality and
quantity. The Company has increased the installed capacity of the plant
from 16500 TPA to 18000 TPA in the year 1985-1990, 19800 TPA in the
year 1990-2000, 24750 TPA in the year 2000-2010, 26400 TPA in the year
2011-2012 and 29700 TPA in the year 2012-2017 to 2017-2018 and 33250
TPA in 2018-19. Currently, the installed capacity of the plant is 36000
TPA.

LOCATION OF OFFICES,BRANCHES AND FACTORIES

REGISTERED OFFICE AND MANUFACTURING CENTER:

VILLAGE RUPANA, SRI MUKTSAR SAHIB, PUNJAB.

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RUPANA PUNJAB:152032
PUNJAB(INDIA)
TEL(01633)2620001.
E-MAIL:
SATIAPPAPER@GMAIL.COM

LOCATION OF THE PLANT

PLANT ADDRESS:
VILLAGE RUPANA, SRI MUKTSAR SAHIB , PUNJAB.
RUPANA,PUNJAB-152032
PUNJAB(INDIA)
TEL(01633)263585

PLANTS LOCATION IN PUNJAB HAS FOLLOWING ADVANTAGES:

 ON NATIONAL HIGHWAY.
 ADVANCED INFRASTRUCTURE
 WATRE FILTERATION PLANT SO WASTE OF WATER IS
CONTROLLED.

ORGANISATIONAL STRUCTURE
OF SATIA PAPER MILLS LTD.

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BOARD OF DIRECTORS
 PRODUCTION MANAGER PERSONNEL INCHARGEDESPATCH CLERK

SUPERVISORS STORES
NO OF DEPARTMENTS
SR NAMES OF THE DEPARTMENTS.
NO.
MACHINE OPERATOR ACCOUNT MANAGER

WORKERS ACCOUNTS ASSISTANT

1. Production department

LABORATORY INCHARGE COMPUTER OPERATOR

2. Quality control

ASSISTANTS CASHIER
3. Finance department

TELEPHONE OPERATOR
4. Marketing and sales department

5. Human resource department

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 PRODUCTION
DEPARTMENT

PLANS OF PRODUCTION

 PRODUCTION PLAN OUT OF SALES PLAN

In SATIA PULP due to tough competition and other factors, they
everyday do production planning. General Manager of production
department, Quality Control head of SATIA PULP have meeting and
also production planning.

 MATERIAL REQUIREMENT PLAN AND PURCHASE

On the basis of the orders mentioned in the previous point, production
department issues raw material from stores.
For example, if 100kg of a particular raw material is required by
production department, stores will give it if it’s available otherwise it
would place orders to its supplier of raw material.

ANALYSIS OF PLANT LOCATION

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The main factor affecting plant location is its sequence. Here in SATIA
PULP the finished product i.e. paper roll are send for newsprint in the
press printing.
Sequencing and transportation, these are the major factors affecting
location of the plant.

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 PRODUCTION PROCEDURE

Sorting

RM loaded to pulp
mill

Chemicals added
Screening

Dying process

Refining

Fan pump

Ready for final

process

Wire

Dryer

Rewinder

final product

QC

DISPATCH

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 TYPES AND CLASSES OF MATERIAL HANDLING EQUIPMENTS.
“controlled movement of material from receipt, through storage and
production and up to the shipment of finished products is known to be
MATERIAL HANDLING”
The equipment used for this purpose is called material handling
equipments.
In SATIA PULP the following materials are used
1. CLASSIFICATION ON THE BASIS OF FORM OF MATERAIAL:
According to classy there can be three broad categories:
 For solid materials
o Lifts
o Conveyer belts
o Drum trolleys

 For liquid materials

o Pipes
o Tanks

 for gaseous materials

o pipe lines
2.CLASSIFICATION ON THE BASIS OF PATH
 variable path
o drum trolleys
 fixed path
o pipe lines
o conveyer
o lifts
3.CLASSIFICATION ON THE BASIS OF AUTOMATION
 Semi automatic handling system
o Conveyer belts
o Lifts
 Manual system
o Hand carts

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 INVENTORY CONTROL SYSTEM
SATIA PULP follows a very simple inventory control system process.
ABC analysis:-
The purpose of ABC analysis for which SATIA PULP follows this analysis
is because of the lab test and different types of papers.
They sum up the materials rate amount, freight and C.S. and get the
value of the material.

STORES DEPARTMENTS MATERIAL RECEIPT AND ISSUE PROCESS

For the stores department the most important document is the G.R.N.
i.e. Goods Received Note.
It contains the most of the information like,
 Supplier’s name
 Supplier’s challen no.
 Material received
 Quantity received
 Approved quantity
 L.R. number
 Vehicle number
 Time of arrival of material
 Purchase order date
MATERIAL RECEIPT PROCESS
As the goods enter the company premises G.R.N. is prepared.P.O. i.e.
purchase order is compulsory to receive the material. The material
entered is kept on weighing machine and verified whether the qty is
okay, it is then unloaded in stores.G.M. is informed about the receipt
of material.
MATERIAL ISSUE PROCESS
Material issue process is simple in SATIA PULP. The plant which
needs any material, be it RM , they give a requisition slip to the
inventory department. On the basis of the requisition slip inventory
department allocates material to the concern department according

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 to REQ.NO i.e. requisition number. As the material is issued on the
port as all the material comes through ship.

DOCUMENT RELATED TO RECEIPT AND ISSUE OF MATERIAL

The document related are as follows:
 Gate register number
 Store inspection by concerned department.
 GRN being prepared by stores.
 GRN being passed by concerned authority.

MAINTENANCE PLANNING SYSTEM

Maintenance is well planned in Satia pulp. This department consists of
main head and workers.
It works at three levels. they are as follows:-
1.REGULAR MAINTENANCE:-
This level consists of maintaining machines at a regular period of time. It
includes checking of bearings, belts and other such parts. this activity is
done periodically.
2. PREVENTIVE MEASURES:-
It is an activity where parts of machines are repaired or replaced before
they are actually gets damaged and result into some large and serve
losses. For example :- welding of any part before it is damaged
completely.
3.BREAK DOWN:-
If any plant machinery undergoes breakdown, the plant in charge or
production head will inform maintenance department through break-
down slip. After receiving the slip, maintenance department head would
send his workers to breakdown area. In the breakdown slip following
details are filled:
Machine details, timings of breakdown, nature of breakdown.

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QUALITY CONTROL
DEPARTMENT

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 QUALITY CONTROL SYSTEM
QC is mostly done of three levels. In Satia pulp, the quality of the
material is checked at RM level, work-in-process level and finished goods
level.
1.RAW MATERIAL:-
For controlling the quality of the material, it starts testing the RMthe
company uses for manufacturing its goods. After purchase dept. receives
the RM ordered previously, it prepares G.R.I.N., Showing amount of
goods i.e. RM entered in the company.
This is stored in the warehouse making store head aware of the details of
the material.
The store head prepares format of RM, G.R.I.N. and is forwarded to the
QC dept.
As QC dept. receives RM, G.R.I.N. it takes a sample of the RM from store
for testing purpose.
Each RM has to posses certain specifications. The presence and absence
of each specification is monitored while QC dept. does testing.
The RM used are mixed waste, old news papers, over issued newspapers,
magazines. The RM is imported from foreign country like European,
Latin and U.S.A.

2.WORK-IN-PROCESS MATERIAL:-
In Satia pulp everyday, production head, QC head, and unit head have
meeting and decide the product to be manufactured for that day. The
different types of chemicals are used to remove the printed ink on the
paper like hydrogen peroxide, bleaching powder, diesel, washing powder.
In QC dept, premix sheet is prepared, which includes :
 Number of RM required for the product
 Name of the RM
This premix sheet is sent to the prod. Dept. and according to the details
stated prod. Dept. order’s RM from stores and prod. Starts.

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As and when required, prod. Dept. sends work-in-process samples to QC
dept. for testing. Here also different tests are applied for different goods
and its different grades.
After testing QC MEMO is prepared where the result of the test are
mentioned. It also states if any specifications are missing in the product.
If there is any drawback, it is also marked in QC MEMO. This is sent to
the prod. Dept. they make the modifications in its manufacturing and do
further production.
3.FINISHED GOODS
After final product is manufactured, it is also tested by QC dept. in the
final product same specification as in semi-finished product are required
only few additional mechanical properties are required like:
 Tensile strength
 Cross bracking strength
 Electrical strength surface
 Volume strength
 Shrinkage is detected
After testing these properties in the final product QC dept. verbally
informs prod. Dept. about the reliability of the products and get “daily
production deposition slip” from the prod. Dept.

This slip specifies the following:-

 Grade
 Bags*kgs
 Total qty
 Batch no.
 Remarks
Now finally, when the product is forwarded to the prod. Dept. after being
approved and then the final product is forwarded to dispatch dept.
And their the final product is packed and dispatched according to sizes
and different qty.
DOCUMENTS KEPT IN QC DEPT
 goods receipt no.

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 goods received inspection report
 premix sheet
 QC MEMO
 Daily production deposition slip
 Certificate of product conformity

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 FINANCE
DEPARTMENT

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 FINANCIAL POSITION OF THE FIRM ON THE BASIS OF KEY WORKING
CAPITAL RATIOS
Ratio Formulae Result Interpretation

For imported stock:

Average Stock
X 365/
On average, company turns over the value
Cost of =[(833*+2210*)/2]
= 96 of its entire stock every 96 and 42 days.
Goods 5800* X (365)
days
Sold

Stock For indigenous stock: Obsolete stock, slow moving lines will
Turnover extend overall stock turnover days. Faster
(in days) Average Stock production, fewer product lines, just in
X 365/ time ordering will reduce average days.
Cost of =[(644*+223*)/2]
= 42
Goods 3768* X (365)
days
Sold

*THE AMOUNT GIVEN IS IN

LAKH

It takes company on average 53 days to

collect monies due to the company. One or
Debtors x 365/ more large or slow debts can drag out the
Sales =1115* x 365* average days. Effective debtor
Receivables
7661* = 53 management will minimize the days.
Ratio
days
(in days)

*THE AMOUNT GIVEN IS IN

LAKH

Payables Creditors X 365/ = 100 On average, company pays to its suppliers

Ratio Cost of Sales = 1904* X 365 days every 100 days. If company negotiates
(in days) (Or Purchases) 6960* better credit terms this will increase. If
company pays earlier, say, to get a
discount this will decline. If company
*THE AMOUNT GIVEN IS IN simply defers paying its suppliers (without

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 agreement) this will also increase - but
company’s reputation, the quality of
LAKH
service and any flexibility provided by its
suppliers may suffer.
Current Assets are assets that the company
can readily turn in to cash or will do so
within 12 months in the course of
business. Current Liabilities are amount
Total Current Assets/ company is due to pay within the coming
Total Current = 4754* 12 months. For example, 1.5 times means
Liabilities 2611* that company should be able to lay its
Current = 1.82 hands on Rs1.50 for every Rs1.00
Ratio Times company owe. Less than 1 times e.g. 0.75
means that company could have liquidity
*THE AMOUNT GIVEN IS IN problems and be under pressure to
LAKH generate sufficient cash to meet oncoming
demands. But the ratio shows that
company is in good position.

(Total Current Assets -

Inventory)/ = 4754*-2677*
This figure takes account of the fact that it
Total Current 2611* = 0.79
Quick Ratio may take time to convert inventory into
Liabilities Times
cash.
*(THE AMOUNT GIVEN IS
IN LAKH)

(Inventory + Receivables
- Payables)/
Working 25 % This percentage means that working
Sales =2677*+1115*- 1904*
Capital of capital needs are not so high relative to
7661*
Ratio Sales company’s sales.
*(THE AMOUNT GIVEN IS
IN LAKH)

The following, ratios are important measures of working capital

utilization.

WORKING CAPITAL RATIOS SHOWING LIQUIDITY OF THE FIRM

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The Current Ratio:

The current ratio is also known as the working capital ratio and is
normally presented as a real ratio. That is, the working capital ratio looks
like this:

Current Assets: Current Liabilities = x: y e.g. 1.82: 1

So here is the information to help us work out The SATIA pulp and paper
mill’s current ratio.

Consolidated Balance Sheet 31 March 2019 31 March 2018

  In lakh In lakh
Total Current Assets 4,754 3,115
Creditors: 1,904 1,064

Current Ratio For The SATIA pulp and paper mill’

31 March Current Assets: Current Liabilities 475,378,554: 1.82: 1
2019 261,172,653
31 March Current Assets: Current Liabilities 311,525,549: 2.08: 1
2018 149,242,328

We got the ratio 1.82: 1 for the year ended 31 March 2019 was to divide
the current assets by the current liabilities and that gives us:

Current assets 475,378,554

= = 1.82
Current liabilities 261,172,653

So we automatically know that the ratio is 1.82: 1

The same with the year before:

Current assets 311,525,549

= = 2.08
Current liabilities 149,242,328

So these ratios shows that company’s liquidity position was superior in

2018as compare to 2019.Although in 2018 company’s liquidity position is
not bad or we can say its very good because the ratio 1.82:1 shows that
the company is able to lay its hands on Rs1.80 for every Rs1.00 company
owe. It means that company can generate sufficient cash to meet
oncoming demands.

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These are the additional information, which help in the analysis.

Current assets 2019 2018

In lakh In lakh
Stock 2,677 1,146
Debtors due within one year 1,115 1,110
Cash at bank and in hand 27 22
Loans and advances 695 638
Total Current Assets 4,754 3,115
Creditors: Amounts falling due within one year 1,904 1,064
Provision for taxation 369 282
Other liabilities 338 146
2,611 1,492
Total liabilities

Net current assets (liabilities) 2,143 1,623

The Acid Test Ratio:

The acid test ratio is also known as the liquid or the quick ratio. The idea
behind this ratio is that stocks are sometimes a problem because they can
be difficult to sell or use. That is, even though a supermarket has
thousands of people walking through its doors every day, there are still
items on its shelves that don't sell as quickly as the supermarket would
like. Similarly, there are some items that will sell very well.

Nevertheless, there are some businesses whose stocks will sell or be used
slowly and if those businesses needed to sell some of their stocks to try to
cover an emergency, they would be disappointed. Engineering companies
can have their materials in stock for as much as 9 months to a year; a
greengrocer should have his stocks for no longer than 4 or 5 days - a good
greengrocer anyway.

We'll look at the stock turnover ratio in detail later but here's the acid test
ratio for The SATIA pulp and paper mill.

Acid Test Ratio = (Current Assets - Stocks): Current Liabilities

We can take the figures we need from the current ratio section and then
do the calculations. Here are the acid test ratios for the year ended 31
March 2001:

Acid Test Ratio For The SATIA pulp and paper mill.

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31 March Current Assets - Stocks: Current 4754*-2677*: 2611* 0.79:
2019 Liabilities 1

31 March Current Assets - Stocks: Current 3115*-2145*: 1492* 0.65:

2018 Liabilities 1

NOTE: *THE AMOUNT GIVEN IS IN LAKH

We need to put the current and acid test ratios side-by-side to help us to
understand what is happening to the business:

Comparison Current Acid Test

2018 1.82: 1 0.79: 1
2019 2.07: 1 0.65: 1

The fact that the differences between the current and acid test ratios are
too large tells us that the SATIA pulp and paper mill stocks are too large.
The stocks are worth around Rs. 2,677 lakh in 2019,BUTsince current
assets are Rs.4,754 lakh, that's a huge level of stock holdings. But yes the
difference between the current ratio and acid test ratio in 2019is lower as
compare to 2018,so this is a good indication for the company.

Additionally, the acid test ratio has increased over the two-year period,
meaning that the SATIA pulp and paper mill has a stronger liquidity
position than it had before. Normally that is a good thing.

Bottom of Form

Return on Working Capital:

. Consolidated Profit and Loss Account 31 March 2019 31 March 2018

  In lakh In lakh
Profit before interest and taxation 729 657
Total Fixed Assets 4,500 4,200
Net current assets (liabilities) 2,143 1,623

ROWC For The SATIA pulp and paper mill.

31 March 2019 Profit before Interest and 729* = 34 %

Tax 2143*

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 Working Capital
31 March 2018 Profit before Interest and 657* = 41%
Tax 1623*
Working Capital

NOTE: *THE AMOUNT GIVEN IS IN LAKH

These are the additional information, which help in the analysis.

Current assets 2019 2018

In lakh In lakh
Stock 2,677 1,146
Debtors due within one year 1,115 1,110
Cash at bank and in hand 27 22
Loans and advances 695 638
Total Current Assets 4,754 3,115
Creditors: Amounts falling due within one year 1,904 1,064
Provision for taxation 369 282
Other liabilities 338 146
2,611 1,492
Total liabilities

Net current assets (liabilities) 2,143 1,623

There has been a decline in ROWC in 2019as compare to 2018.Although

this difference is not too large but still company should do check on its
working capital and all the expenses.

Return on Capital Employed Ratio:

The Return on Capital Employed ratio (ROCE) tells us how much profit the
company earns from the investments the shareholders have made in the
company. Think of it this way: if we had a savings account with a bank
and we'd been paid, say, Rs.25 interest at the end of a year; and we had
saved Rs.500, we could work out the rate of interest we had earned:

Interest earned 25 1 100

Rate of interest = * 100 = * 100 = * 100 = = 5%
Amount saved 500 20 20

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So, we have earned 5% interest on our savings.

Imagine now that instead of talking about a savings account, we were

talking about a company and the profit for the year and its capital
employed had been Rs.25 and Rs.500 respectively then the ROCE for that
company would be 5% too.

Profit for the Year 25 1 100

ROCE = * 100 = * 100 = * 100 = = 5%
Equity Shareholders' Funds 500 20 20

We have used the Equity Shareholders' Funds instead of Capital Employed.

In fact, they are different names for the same thing! We could call the
ratio the Return on Shareholders' Funds (ROSF) just as easily if we
wanted, but generations of accountants consider it as ROCE.

In accounting, there can be different definitions of what certain terms

mean. The use of the term 'capital employed' can mean different things. It
can, for example, include bank loans and overdrafts since these are funds
employed within the firm.

There is the Calculation of ROCE for the SATIA pulp and paper mill now;
and here are the figures:

The SATIA pulp and paper mill 31 March 2019 31 March 2018
  In lakh In lakh
Profit for the financial period 728.81 654.14
Equity shareholders' funds 2,837.45 2,463.33

For 2019

Profit for the Year 728.81

ROCE = * 100 = * 100 =25.71%
Equity Shareholders' Funds 2837.45

For 2018

Profit for the Year 654.14

ROCE = * 100 = * 100 =26.55%
Equity Shareholders' Funds 2463.33

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So the percentage shows that return on capital employed is almost similar
for both the year 2018and 2019.

ROCE for the year 2019is almost 26% that’s a good percentage by all
standards. This is a good result as it shows that the business is effectively
earning around 26% on the (investment) funds that the shareholders have
invested in the SATIA pulp and paper mill.

Working Capital Management II:

What we are about to study - stock, debtors and creditors control - are all
part of working capital management in the same way that a discussion of
liquidity was part of working capital management.

We know that working capital is concerned with the ability of a business

to be able to pay its way. The three ratios we are concerned with now are
concerned with spending and saving money in the right places. Too much
stock and we waste money on buying it and keeping it. Too much money
loaned to our debtors and it's money we can't use for something else, such
as buying machinery, paying our creditors or even investing it. Too much
money in the form of creditors and we might have a problem that no one
else will give us credit for anything else because they think we can't afford
it, and, if we suddenly have a cash problem, we might not be able to pay
our creditors.

Working capital management is concerned with the control aspects of the

issues.

Stock Turnover: stock control:

In principle, the lower the investment in stocks the better. Apart from
buffer stocks that businesses sometimes need in case of shortages of
supply and strategic stocks in case of war, sudden changes in demand and
so on, modern stock control theory tells us to minimize our investment in
stocks.

The formula for this ratio is:

    Average Stocks 
Stock Turnover =
(Cost of Sales/365)

The SATIA pulp and paper mill Consolidated 31 March 31 March

Profit and Loss Account 2019 2018
  In lakh In lakh

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Cost of sales 6960 6810
Stock 2677 1146

Stock Turnover Ratio for the SATIA pulp and paper mill
31 March 2019 2677* 140 days
6960* / 365
31 March 2018 1146* 61 days
6810* / 365

NOTE: *THE AMOUNT GIVEN IS IN LAKH

 Firstly, the result of this calculation is that the answer is instantly

in terms of the number of days, on average, that the stocks are held
in the business.
 Secondly, we use the cost of sales figure because stocks are bought
and shown in the profit and loss account and the balance sheet at
cost; so we need to compare like with like.
 Thirdly, we only have two years' worth of stock information, so we
can't use the average stock for both years, as we should do
according to the formula.

This ratio has increased from 61 days to 140 days because investment in
stock has increased 57% over the two years and that is probably not a
good thing. This shows that the company needs 140 days to sell inventory
it means that so mush cash is tied up in inventory which is not a good
sign for the company because If there's less stock to worry about, lower
investment in stocks meaning that the money they used to have tied up
in the stock room is now free to spend somewhere else. But now large
amount of investment is done in inventory, company should do check
upon it.

Debtors' Turnover Ratio:

In the same way that stock control is a vital aspect of working capital
management, so too is debtors' control. Many businesses need to sell their
goods on credit, otherwise they might find it difficult to survive if their
competitors provide such credit facilities; this could mean losing
customers to the opposition.

Nevertheless, since company does provide credit, it must do so as

optimally as possible. It doesn't necessarily mean the best possible, but
the best possible under the circumstances.

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There are good reasons why the company allows people to pay on credit
even though literally it doesn't make sense! If the company allow people
time to pay their bills, they are more likely to buy from it than from
another business that doesn't give credit.

The length of credit period allowed is also a factor that can help a
potential customer decide whether to buy from your company or not: the
longer the better, of course.

Why is credit control so important? For the SATIA pulp and paper mill
total amount owing by debtors was Rs.1115lakh at the end of 31 March
2019,which as a percentage of total assets, is 12.09%. That's a lot of
money in absolute terms.

What we need to know, though, is how the company is controlling these

debtors. We can do that by looking at their debtors' turnover ratios for the
two years, firstly.

SATIA pulp and paper mill 31 Mar 2019 31 Mar 2018

  In lakh In lakh
Turnover 7,661 7,372
Debtors due within one year 1,115 1,110

The formula for debtors' turnover is:

    Average Debtors 
Debtors' Turnover =
Credit Sales/365

We have to assume, by the way, that all sales are credit sales unless we
know which sales are for cash.

The calculations:

Debtors Turnover Ratio for the SATIA pulp and paper mill
31 March 2019 1,115 53 days
7,661 ÷ 365
31 March 2018 1,110 56 days
7,372 ÷ 365

30
Firstly, the ratio seems to have good by going from 56 to 53 days over the
two years; but we can not say that this ratio is good because it means
that, on average, the SATIA pulp and paper mill debtors are taking one and
a half months or we can say two months to pay their accounts.

Creditors' Turnover Ratio:

Creditors are the businesses or people who provide goods and services in
credit terms. That is, they allow the company time to pay rather than
paying in cash.

Creditors will need to optimize their credit control policies in exactly the
same way that the company did when it was assessing its debtors'
turnover ratio - after all, if you are my debtor I am your creditor!

Company takes credit but it needs to control how much it should, how
often and for how long. There are the calculations for SATIA pulp and
paper mill:

The formula for this ratio is:

    Average Creditors 
Creditors' Turnover =
(Cost of Sales/365)

As with the stock turnover ratio, creditor values relate to the costs of raw
materials, goods and services, which is why we use the cost of sales, figure
in the denominator.

SATIA pulp and paper mill 2019 2018

  In lakh In lakh
Cost of sales 6,960 6,810
Creditors: Amounts falling due within one year 1,904 1,064

Creditors Turnover Ratio for the SATIA pulp and paper mill
31 March 2019 1,904 100 days
6,960 ÷ 365

31
 31 March 2018 1,064 57 days
6,810 ÷ 365

We interpret this ratio in exactly the same way as the debtors' turnover
ratio. Having found that debtors are taking somewhere between 45 and 60
days to pay their accounts, notice that the business is taking over three
months credit for itself in 2019and about two months' credit in 2018.

The ratio has drastically increased by going 57 to 100 over the two years
which shows that the company now takes three months to pay its
accounts as compare to two months in 2018.Its good but company should
take it in mind that with the increasing number of Days, Company’s
reputation, the quality of service and any flexibility provided by its
suppliers may suffer.

CASH BUDGET FOR THE SATIA PULP AND PAPER MILL

Net Cash Inflows

2019 2018
(In lakh) (In lakh)

Sales 7,661 7,372

Other incomes 42 24

Total payments 1,904 1,063

Net CF 5,799 6,333

Net Cash Inflows:

2019 2018
(In lakh) (In lakh)

Cash at start 27 22

Net CF 5,799 6,333

Cumulative
Cash 5,826 6,355

CALCULATION OF CASH CONVERSION CYCLE FOR

32
 THE SATIA PULP AND PAPER MILL

Cash conversion cycle = Inventory conversion period (in days) + Debtors’

conversion period (in days) - Creditors’ deferral period (in days)

Where

Inventory conversion period = Raw material conversion period (RMCP) +

Work-in-progress conversion period (WIPCP) + Finished goods conversion
period (FGCP)

Raw material conversion period (RMCP) = 1795/(4920/360)= 131 days.

Work-in-progress conversion period (WIPCP)=637/(6424/360)=36 days.

Finished goods conversion period (FGCP)=76.45 /(6565/360)=4 days.

Hence

Inventory conversion period=131+36+4=171 days

Debtors’ conversion period=1115/(7661/360)=52 days.

Creditors’ deferral period=1904/(6960/360)=100 days.

Cash conversion cycle=171+52-100=123 days.

Note: THE ENTIRE AMOUNT GIVEN IS IN LAKHS.

SALES TURNOVER COMPARATIVE

OF 2018 AND 2019.

YEAR SALES TURNOVER

(In crores)
2018 92

2019 82

33
 SALES SCENARIO
SALES
TURNOVER, 1,
1000000000 SALES
920000000
TURNOVER, 2,
900000000 820000000
800000000
700000000
600000000
YEAR
SALES

500000000
SALES TURNOVER
400000000
300000000
200000000
100000000
YEAR, 1, 2008 YEAR, 2, 2009
0
1 2
YEAR

COMPARATIVE BALANCE SHEET OF THE YEAR 2018 AND 2019

PARTICULARS 2019 2018 ABSOLUTE IN PERCENTAGE

SOURCES OF FUNDS
SHARE HOLDERS (in (in
FUND crores) crores)
Share capital 11 11 0 100
Reserves and surplus 17.38 18.85 (1.47) 7.79

34
 Total 28.38 29.85 (1.47) 4.92
LOAN FUND
Secured loans 16.93 2.29 14.64 639.3
Unsecured loans 12.65 4.69 7.96 169.7
Total 29.58 6.98 22.6 323.7
APPLICATION OF
FUND
Gross block 43.96 46.58 (2.62) 5.62
Less: depreciation 15.44 17.53 (2.09) 11.92
Net block 28.52 29.05 (0.53) 1.82
Investments 51.39 50 1.39 2.78
Land 2.76 2.76 0 100
Tax 54.34 11.04 43.3 392.2
Current assets 4.754 3.115 1.639 52.61
Less : current 2.611 1.492 1.119 75
liabilities
Net current assets 2.143 1.623 0.52 32.03

GRAPHICAL REPRESENTATION

OF THE COMPARATIVE BALANCE SHEET

OF THE YEAR 2019 AND 2018

35
800000000

700000000

600000000

500000000
Series1
400000000
Series2
300000000

200000000

100000000

0
YEAR LIABILITIES ASSETS

36
 MARKETING

AND SALES

DEPARTMENT

TYPES AND CLASSIFICATION OF PRODUCTS

37
SATIA PULP & PAPER LTD is a non-marketing organization as they are
manufacturer of inters mediate media in the country. They have a dealers
network. They export their products to Sri lankans and china.

The company is manufacturing the Newsprint-Medium Grade Paper and

the company sells Newsprint directly to Newspapers as well as through
dealers. The company is having very good marketing and distribution
network all over the India. The company is supplying Newsprint to all the
major and leader newspapers in India. The demand of the product is very
good and market is very potential. Newsprint is the only major segment of
the paper industry where a substantial demand and supply gap exists. The
company has never found any difficulty to supply the entire products in
the Indian market.

Satia pulp & PAPER LTD. Is leading manufacturer of crafts paper, writing
& printing paper & newsprint.

NEWS PRINT IS MAINLY DIVIDED INTO THREE CATEGORIES:

 PRIME

 SUPER DELUX

 SPECIAL SUPER DELUX

As we are mainly concerned with newsprint, our focus is to study the

newsprint unit of the organization.

CATEGORY OF NEWSPRINT

1.PRIME:- it’s the most used paper category by the local and small print
media centers. It’s the lowest in quality, cheaper in price & light shaded.
It uses mixed & ONP(old news paper).

2.SUPERDELUX:betterthanthe above category. Its brighter in shade, its

price is more than prime. It uses special onip as raw material.

3.SPECIAL SUPER DELUX:- It’s made of the most superior quality. It’s
costlier than the above mentioned category. It’s best in every aspect and
brightest of all. It also uses special onip as raw material.

38
 SALES PROCEDURE

SATIA PULP & PAPER LTD. It’s a dealers network organization. They deal
directly with their customers. The dealers send indent or orders to the
sales department.

The indent consist of the following information:-

 Grade

 Quantity

 Rate

 Date

 Mode of payment

 Mode of dispatch

 Transporter’s name

 Freight, etc.

All this information is entered in the computer system and production

according to the indent is manufactured with required qty. if the
production is carried out in required rate then invoice is prepared.

An invoice contains invoice no.,party name, mode of payment, mode of

dispatch etc.

If the Rate is not valid order is rejected.

39
 MARKETING CHANNEL

SATIA PULP & PAPER LTD. Deals with consumer products. Therefore, only
one marketing channel exists.

MANUFACTURER

DEALERS

CUSTOMER

FINAL CONSUMER

DOCUMENTS OF SALES:-

 INDENT

 INVOICE

 GATE PASS

 FORM 45(SALES TAX)

TAXES APPLICABLE ON SALES

40
As far as newsprint is concerned they have to pay 0.125% CESS i.e.
central excise secondary sess to be paid.

And after the earthquake they have to pay education (cess) on the basic
value of 0.125%. Basic value +cess+2% sales tax, if the product is carried
to the other states. And if it is within the boundaries of the state than 5%
PUNJAB state vat is charged. 2% is against the sea form or else 5% tax is
to be paid. 0.15% transit insurance is paid.

Freight charges, sales bills, challan no., excise invoice is a must used
document in manufacturing industry.turnover of 50 lacs or more than
commercial invoice is prepared. It goes with transporters during loading.

PURCHASE PROCEDURE

Purchase procedure is done only from the approved supplier. All suppliers
supplying prior to the system effective data are deemed to be evaluated.
The type and extend of control applied on the suppliers is based on the
suppliers performance and the effect of the supplied product on the
quality of final product.

The criteria for the selection of new suppliers are:-

 Previous experience

 Customers’ recommendations.

 Data source available on internet.

The inclusion of such supplier’s is based on their clearance of the product

being as per raw material sheet and commercial terms as per the
requirement by the firm.

The re-evaluation of the supplier is done on the basis of the quality

performance of the supplier. The quality rating is calculated on a monthly
basis.

PURCHASING INFORMATION:-

Purchasing information is gives to the suppliers through the purchase

order, i.e. P.O. It contains the details such as:

 Specifications

 Price

 Quantity

41
  Packing

 Delivery date

 Mode of transportation

 Credit

 Quality system requirement. If any

 Verification of purchased product.

The QC DEPT. does the verification of the purchased product to ensure

that all the requirements are incorporated in the product as per
specification in the p.o.

DIFFERENT DOCUMENT OF PURCHASING:

 Purchase order

 Purchase register

 Indents

CUSTOMER’S LIST

SR.NO. NAMES

1 The Sandesh ltd.

2 Divya bhaskar

3 Dainik Bhaskar

4 Jagaran group

5 Lokmat etc.

6 Bombay samachar

SUPPLIER’S LIST OF

SATIA PULP & PAPER LTD.

42
SR.NO. CATEGORY NAMES
INDIGENOUS

RAW MATERIAL
1. Mayur paper mart
2. Paras papers
CHEMICALS
1. Agarwal coal corporation
2. Maheswari builders
3. G.M.D.C
4. Kemoax corporation
5. Nikhil epec chemicals
6. Satia chemicals
STORES &
SPARES, WIRES &
FABRICS.
1. Paper international
2. V.G. recycling group
3. Gautam enterprises

PRICE LIST

PRODUCT PRICES

NAMES (PER METRIC TONNE)

Prime 21000 Rs/-

Super deluxe 22500 Rs/-

43
Special super deluxe 26000 Rs/-

44
 HUMAN RESOURCE

DEPARTMENT

HUMAN RESOURCE PLANNING

In SATIA PULP & PAPER LTD. Human resource planning is a outcome of

four steps.

They are as follows:-

45
 1. Determining job specifications

2. Analyzing job responsibility and workload.

3. Forecasting human resource demand & supply.

4. Finalize the no. of personnel required with eligibility.

Thus in this way human resource planning process is completed.

Let us know right now what are the total no of employees working in the
firm.

CATEGORY NO. OF EMPLOYEES

Staff 71

workers 185

Contract labours 350

TOTAL 606

RECRUITMENT PROCEDURE

The recruitment procedure in SATIA PULP & PAPER LTD. Comprises of the
following few steps:

Recruitment process starts when the head or manager of the concern

dept. reveals that there is a vacancy for a particular job.

When the head reveals a vacancy, the first step in this direction of
employing people is requisition of workers for the vacancy arises. This
requisition should clearly state the following:

 Name and specification of the job.

 Jorate of pay

46
  Time bounded ness i.e. full time or part time.

 Temporary or permanent

 Age limit

 Sex

 Special qualification and skills required.

Thus by preparing such form the company gets the detailed information
about kind of employee to be advertised and recruited.

SOURCES OF RECRUITMENT

In SATIA PULP & PAPER LTD. They firstly make a study of the vacancy
with regard to its urgency and need and decide whether it should be
fulfilled through internal or external source.

1. Internal source:- Internal sources include

promoting or transferring a person who is
already working with the firm.

2. External source:- The various external

sources include:

 Advertisement

 Labour contractors

 Personal sources

 Placement agencies

 Gate recruitment

After gathering a pool off employees from the above-mentioned sources

they collect their biodata and carry on with their selection process.

SELECTION PROCEDURE

Selection is the process of picking individuals with requisite qualification

and competence to fill jobs in the firm.

47
The selection procedure comprises of the following steps:-

1. General interview

2. Application blank

3. Depth interview

4. Medical test

PROMOTION, DEMOTION & INCREMENT POLICIES

 PROMOTION AND INCREMENTS

SATIA PULP & PAPER LTD. Promotes an employee in merit basis. Every
month they evaluate the performance of the employees by giving targets.
The employee fulfilling the target gets appropriate promotion. The
promotion also depends upon sincerity, regularity and performance.

Same rules are applied for increment purpose.

 DEMOTION

In SATIA LTD. If any employee is not able to perform as per management

targets, management will not provide any increment or opportunity for
future advancement.

INDUCTION & TRAINING

In SATIA LTD. When a new employee is placed, he has to spent three days
in each department to understand the overall function and methods of the
organization and staff.

Here, qualification and experience of an employee is compared with

existing nature of the job and the requirement of training is identified by
the department heads and to personal head and training is planned.

After getting trained, three months evaluation is carried out. This is done
to check the improvement of work.

The probation time period is 6 months for middle level employees.

METHODS OF TRAINING

48
Here, on the job methods are being implemented.

They are as follows:-

VESTIBULE
TRANING

TRAINING
FULFILLMENT

SEMINARS
CONDUCTED BY ASSOCIATIONS

WAGES AND SALARY ADMINISTRATION

SATIA industries is a large industry, thus proper administration of wage

and salary is important. Here the company follows “punch card system”.

In this system each employee is provided with a particular card and has to
punch his or her card as they enter and exit the company premises. It is
done at the entrance in the security room.

There are three types of leaves allowed:

49
 1. P.L.(Privilege leave) :There are 30 P.L. for
staff members and 15 for workers.

2. C.L.(Causal leave) :There are 10 paid holidays per year.

3. S.L.(Sick leave) :There are 7 S.L. for each employee.

Against each employees absence he has to submit leave forms. Also, wage
and salary distribution is with conformity with government rules.

According to details available from time keepers with the help of the
punch card system, initially discussed, wage and salary is calculated as
per the working hours of the employees.

Thus company follows TIME WAGE SYSTEM.

They consider overtime offered and leaves taken and based on punch
cards information, company prepares salary sheet and wages and salary is
distributed among the employees.

On the recommendation of department head in terms of facility or

increments is a motivational tool of the firm.

The daily wages paid to a worker irrespective of gender and skills are
106.5 RS/- Per head in SATIA PULP & PAPER LTD.

Therefore, the monthly wages are 3200 RS p.m.

COMPENSATION STRUCTURE

PARTICULARS PERCENTAGE OF ALLOWANCES

BASIC _

HRA 10%

CONVEYANCE 10%

MEDICAL 5%

PF 12%

50
ESIF 6.5%

BONUS 8.33%

ESIF stands for employees state insurance fund.

WELFARE ACTIVITIES

The following services are being provided to SATIA LTD. Employees:-

 ACCOMODATION FACILITY.

 SAFETY FACILITY such as gumboots, masks, apron for lab

technicians etc.

 MEDICAL FACILITY as the employees are provided with group

medical insurance and yearly medical checkup for all employees is
mandatory.

 REST ROOMS

 PURE & COLD DRINKING WATER.

 LUNCHROOM for staff and workers.

 ADEQUATE LIGHT AND VENTILATION FACILITY.

 UNIFORMS to workers at production area.

These facilities are provided to workers at lower cost than the actual
cost.

51
 CONCLUSION

 The working capital management of the company is good. Its

working capital is:

Current Assets- Current Liabilities

475,378,554- 261,172,654= 214205900

Which shows that company has good amount of working capital,

which can be very useful for the company in meeting its oncoming
demands. And it has sufficient cash flow to satisfy both maturing
short-term debt and upcoming operational expenses.

 The cash conversion cycle of the company is 123 days, which

shows that company’s policy for converting current assets into cash is
fine. But it should be somewhat careful about the inventory management
because much cash is tied up in inventory. And By holding excessive
inventory, the firm is increasing its costs, which reduces its ROE.
Moreover, this additional working capital must be financed, so EVA is also
lowered.

52
  The cash budget of the company shows that company remains
sufficient amount of cash with its hand so that it can be used in the
required time.

 Debtors turnover ratio of the company is 6.9 and its

collection period is 53 days which shows that the company allows longer
period of credit to its customer because if the company allow people time
to pay their bills, they are more likely to buy from it rather than from
another business that doesn't give credit for that much period. The length
of credit period allowed is an important factor that can help a potential
customer decide whether to buy from that company or not: the longer the
better, of course.

 Credit policy of the company is satisfactory. The credit

provided to the customers is in the form of supplier’s credit (bills of
exchange). Management is so concerned about it’s credit policy. But they
should do check on their debtors and should also be strict about their
credit policy otherwise it would lead to bed debts.

 Stock turnover ratio of the company is 3.8 for imported stock

and 8.7 for indigenous stock and average days to sell its inventory is 96
days and 42 days respectively which indicates that it takes some time to
convert inventory into cash and as company has large amount of working
capital in the form of inventory it can not use cash anywhere else because
if there’s less stock to worry about, lower investment in stocks meaning
that the money they used to have tied up in the stock room is now free to
spend somewhere else.

53
  Creditors turnover ratio of the company is 3.7 and its
payment period is 100 days, which shows that the company pays its
account in three months means company has good credit terms with its
suppliers.

If company pays earlier, say, to get a discount this will

decline. If company simply defers paying its suppliers (without
agreement) this will also increase - but company’s reputation,
the quality of service and any flexibility provided by its suppliers
may suffer.

 As for short term financing company uses bank loan for

having short-term funds to finance its working capital.

Hence it’s clear that company manages its working capital

effectively and is much concerned about it. And the effective management
of working capital has very much enhanced the financial position of the
company.

54
 SUGGESTIONS

The suggestions for SATIA PULP & PAPER LTD are as determined:-

 Sanitation facilities for the workers lacks adequacy.

Cleanliness is a must for good working conditions.

 The workers who come from far off places should be provided
canteen facilities if it suits the budget of the company

 The drainage system for the waste water after purification

process is not proper, this affects the cleanliness of company
premises.

 The costs of the firm are on a steady increment which has

affected the net profit of the firm 2 times the previous year.

 The company must try for better management of HRIS

through computerized techniques.

 The company must adopt some cost cutting measures in the

upcoming year.

55
 ANNEXTURE

All the details in the project are being captured from company’s
formal documents and the website of the firm.

The figurative details are from master file of the SATIA PULP &
PAPER LTD.

56
57