GRIMS MICRO INKS

COMPANY PROFILE

2006-2008

1

GRIMS MICRO INKS
Name of the Unit Year of Establishment Micro Inks Limited 1986

Registration No. Address of registered office

16598 Bilakhia House, Muktanand Marg, Chala, Vapi - 396191

Form of Organization Size of Unit

Public limited Large scale industry

Installed Capacity

Resin T/month

varnish

5000

Ink – 2000 T/month Utilized Capacity Weekly holidays Name of Promoters
2006-2008

Resin 100%

varnish

&

Ink

-

Sundays Bilakhia Brothers
2

GRIMS MICRO INKS

2006-2008

3

Pigments & Wire Enamels. UTI Bank Ltd.GRIMS MICRO INKS Name Bankers of Standard Chartered Bank. AVG PRICE OF SHARE (as per BSE &NSE data) till DEC ‘06 TOTAL SHARES HELD 2006-2008 342.56(N) 4 24. State Bank Of India. Authorized Capital Issued. 2007 Final Dividend @ 45% will be paid on or after April 28. Bank of India. Resins.72 million Paid-up Deloitte Haskins & Sells. Rs. 2007 if approved by member ICICI Bank Ltd. Subscribed and capital Name of Products Inks.871.941 .00 (B) 341. 850 million Rs. Chartered Accountants. 248. Auditors STOCK CODE: BSE NSE AGM OF THE COMPANY DIVIDEND PAYMENT 523886 MICRO 28TH APRIL.

Centuries ago. it communicate. Life without ink is hard to conceive.GRIMS MICRO INKS ORIGIN Ink is essence of life. used to express thoughts and was And even today. crucial and indelible. its impact on our life is remarkable. 2006-2008 5 .

In the present day. History saw the invention of paper in 105 AD and the earliest use of inks in the form of coal. No magazines to leaf through. No morning newspaper to bring us the news. this was conducted through carving on stones. It's no wonder they say. But where did the story of inks begin? Perhaps from our desire to communicate with each other across the barriers of time and space. ink technology evolved in tandem with the evolution of printing technologies. A saga.GRIMS MICRO INKS Imagine a life where there are no books to learn from. No fairy tales to read to our children as we put them to sleep. formulated to create graphic design or text on a variety of substrates or surfaces ranging from paper to 2006-2008 6 Centuries ago. Despite its ancient origin. inks are our silent companions present in our lives in some form or the other in almost everything that we do. Thereafter. Thanks to modern printing technology in particular. gum rosin and tung oil. cave walls . No letters to be exchanged. and tree barks. Printing Inks are a blend of various ingredients. when Johan Gutenberg invented the letterpress. which began in 1450 AD. Today. This was clearly amongst the major influences that led to the rapid progress of human civilization. a world without inks is unimaginable. little has been said or written about the influence of inks throughout history.

Truly an art and science in itself. The USA leads with a global market share of 30%. these consist of Lithography. waxes and solvents. Flexography.3 billion in 1999 – 2000 and is growing at a rate of around 2% to 2006-2008 7 . Printing Inks are a unique blend of various ingredients. vegetable oils. flushes. on a variety of substrates or surfaces. Gravure. Printing Inks business. varieties in ink are as extensive as printing methods themselves.1 in India. The world market for Printing Inks was valued at US $ 14. Broadly. Dainippon Ink / Sun Chemicals is the largest. Fact remains. foils and metals.GRIMS MICRO INKS polyfilms. Screen printing etc. Among the leading Ink manufacturing companies worldwide. is The world market of Printing Inks is around US $15 to US $ 16 billion. Micro Inks ranks the 4th largest globally and No. These inks are a complex mixture of pigments. resins. stride for stride. which ultimately find expression in creating exciting graphic designs or text. The global ink industry has matched progressing technology. Advancing printing technology has also accelerated the creation of high quality inks. though apparently simplistic. Today. a highly complex one. Developments in printing technology and processes made it necessary for Printing Inks to have very high quality.

which ensured consistency and high quality at a low cost.. CLASSIFICATION OF PRINTING INKS 2006-2008 8 . Sun Chemicals is the largest. The other key players are Flint Ink Corp. Among the ink manufacturing companies worldwide. The global Printing Inks Industry has witnessed major These consolidations and alliances in the past and all this has led to a few dominant players controlling the ink markets. It is estimated that by the year 2004 the world market will be around US$15 to US $ 16 billion. The USA is by far the largest market for Printing Inks with nearly 30% + global share. majors have achieved a high growth rate because of vertical integration. Sicpa. Toyo Inks etc. Sakata Inx.GRIMS MICRO INKS 3%.

GRIMS MICRO INKS According to the printing process Printing Inks Letter Press Offset Gravure Flexo Silk Screen Sheeted Web Coldset Heatset THE MARKET FOR PRINTING INKS REGION WISE 2006-2008 9 .

• $3. share and growing at a rate of 2% to 3%.8 billion. • 2006-2008 10 .GRIMS MICRO INKS • USA is the largest market for Printing Inks with a 31% Followed by Europe with a collective 28% share or US Asia Pacific growing at a rate of 6.73%.

Growing at 6% annually.9% global share. Gravure inks – US $ 2 billion – 14. By process – largest segment – lithographic Printing Inks (paste/offset). Estimated rate of growth – 4. This is followed by flexographic inks (liquid) with a global share of US$ 2. US$ 6.9 billion. • • Market for Printing Inks .6 billion. Estimated rate of growth – 2% to 3% annually.Process Wise 2006-2008 11 .GRIMS MICRO INKS GLOBAL PRINTING INKS INDUSTRY AN OVERVIEW: • • • • • • Global market – valued at US$ 15 billion in '03.5% annually.

Bonded Paper. Soya Oil. Linseed Oil. Coated Paper 2006-2008 12 . Phenol. Carbon Black.GRIMS MICRO INKS PROCESS OF MANUFACTURING INKS Rosins. NaturalProd ucts Sulphur. IPA. etc. Oil & Petrochemicals. Copper. ONCB. Bon Acid. Linseed/Soya 4B Acid. Chemical Products/ Inte rmediates Solvent/ More than 500 Raw Materials Pigme nts Flush es Resi ns Varnis hes Additiv es Oils Packing Press/End Customer Print er Materials BOPP. Polyesters. Aniline. CPC. Salts.

GRIMS MICRO INKS 2006-2008 13 .

 Post such acquisition and open offer Equity holding of MHM Holdings is 70. Ursula Borgmann as Director. Heinrich Ringer as Executive Vice chairman & Managing Director & Ms.5% from Bilakhia family @ Rs 675 per share.Fourth Largest post merger globally.  Hubergroup has acquired 50.GRIMS MICRO INKS STRATEGIC PARTNERSHIP HUBER – MICRO INKS  Micro Inks Ltd. is a JV between MHM Holding GmbH and Bilakhia Holding Private Limited.  Long term sustainable model with full backward  integration giving quality and cost leadership.5% and Bilakhia Holdings 4. Further public offer to purchase the 20% of share capital @ Rs 675 per share has been successfully completed. 2006-2008 14 . Bilakhia Huber Partnership at global level with Bilakhia participating in Huber group worldwide.  Changes in the Board with induction of Mr.5%.

2 plants in Ireland and 3 plants in Germany. • Micro has 6 large manufacturing set-ups in Vapi.GRIMS MICRO INKS GLOBAL STRENGTHS • 15 Production facilities across the globe. Gujarat in India within a range of 30 Km and one Plant in USA. 2006-2008 15 . USA. • Backward Integrated paste inks production facilities. presence in various product segments. Switzerland and Italy. • Huber has a plant each in Canada.

Other key players in the market include Flint Inks and BASF. 2006-2008 16 .GRIMS MICRO INKS Shares held by leading companies worldwide: Dainippon Ink & Chemicals is the largest company worldwide. accounting for a 24% share in the market.

• 11th Largest in USA – total revenues USD 216 Mio . • International revenues exceeds 59% spread over 70 countries . 2006-2008 17 .GRIMS MICRO INKS MIL KEY HIGHLIGHTS • 4th Largest ink company in the World.

• Huber has a plant each in Canada. process Chemistry and Technology. USA. • Promoters and management have built market leadership in inks and have created global power house in Agro Chemical. Global Strengths • 15 Production facilities across the globe. 2006-2008 18 . the most profitable unlisted Company. • Strong R&D. • Biggest and only fully backward integrated.GRIMS MICRO INKS • One of the fastest growing Ink companies in the world. Wide product portfolio. • Among the fastest growing companies in India – CAGR of sales exceeds 45% in 10 years. Quality and cost leadership. seamless ink manufacturing plant in the World. Switzerland and Italy. 2 plants in Ireland and 3 plants in Germany. • Micro has 6 large manufacturing setups in Vapi. Gujarat in India within a range of 30 Kms and one Plant in USA.

2006-2008 19 . presence in various product segments.GRIMS MICRO INKS • Backward Integrated paste inks production facilities.

The other word used synonymously is with production to is manufacturing. 2006-2008 Manufacturing understood mean 20 . Production is the process by which goods and services are created.GRIMS MICRO INKS PRODUCTION DEPARTMENT What is production and what does it do? Production is the basic activity of all industrial units.

Production activity is nothing but step-by-step conversion of one form of materials into another. Production function is the conversion of raw materials into finished products. Plant location Plant location may be understood as the function of determining where the plant should be located for maximum operating and effectiveness. The end product of production activities is the creation of goods and services for the satisfaction of human wants. either chemically or mechanically. All other activities revolve around production activities. tangible goods and intangible services. perhaps the most 2006-2008 21 .GRIMS MICRO INKS production of only tangible goods whereas production includes creation of both. The selection of the place for locating a plant is one of the problems.

labour force. A selection on pure economic considerations will ensure an easy and regular supply of raw materials. An ideal location.Labour is easily available at cheap wage rate. Factors affecting plant location:  Availability of labour: . but it certainly contributes to the smooth and efficient working of an organization.GRIMS MICRO INKS important. proper utilization of production capacity and reduced cost of production. by itself. 2006-2008 22 . efficient plant layout. guarantee success. which is faced by any person while launching a new company. may not.

water supply. etc.As Micro Inks is implementing Backward Integration.Being located in an industrial area. due to its location in industrial area. Income Tax Exemption (for Daman units & EOU Plant. 2006-2008 23 .GRIMS MICRO INKS  Cost of land: . The production plant of the company is spread over 90 acres. Nearness to source of raw material: . the cost of land is relatively low and hence. all the units are located near to each other.Easy availability of basic infrastructural facilities like high power supply. with minimum transportation cost.  Power supply: They have their own 2 power plants. So it becomes easy to access the raw materials.)    Proper infrastructure facilities:. proves economic. which enables workers to get proper place of undertaking the production activities in proper manner. which generates electricity at minimal cost and helps them to reduce the cost of production.

GRIMS MICRO INKS Plant layout A plant layout refers to the arrangement of machinery. A layout essentially refers to the arranging and grouping of machines which are meant to produce goods. 2006-2008 24 . equipment and other industrial facilities for the purpose of achieving the quickest and smoothest production at the least cost.

the process layout a grouping together of like machines in one department. For example. all reactors are located at one place and all flushers at another place. The choice of the particular line depends on several factors.GRIMS MICRO INKS Grouping is done on different lines. Production planning and scheduling 2006-2008 25 . a layout for job lot manufacture or batch production layout. Micro inks follows Process Layout style of plant layout in its production unit. Process layout is also called functional layout.

It uses the production planning (PP) module for this purpose.GRIMS MICRO INKS NORMAL PRODUCTION Process order Confirmation with Back flush for Raw material from Sub stores GR for Prcoess order (auto) to Sub stores Sub stores Sales Rejection Internal consumption BSR Deviated Material to Dev. Quality system 2006-2008 26 . This module also has many sub modules in it and the module named PI is specifically used for this purpose. But micro inks do the production planning and scheduling through SAP system. Sub stores Next stage sub stores Issue to next stage process order Rejected Reprocessing Scrap Issue to Reprocessing This is the normal production every company follows.

identified a well-defined resource plan using systems approach. Micro Inks Limited. • ISO 9001: 2000 The 9002:1994 task force assigned was to this by quality KPMGinitiative Quality commenced activities in Sept. zeroed down on a business strategy focused on Quality Management Systems. 96. VAPI (VAPI-1. Micro Inks Limited. VAPI-2 and 100% EOU plants have been certified for ISO 14001:1996 (EMS). for the Daman Plant in March '97. (Morkhal) Silvassa plants with the 2006-2008 27 . then Hindustan Inks & Resins Limited. was poised for rapid growth. At the first stage ISO certification obtained Registrar.96. The same was upgraded to ISO9001: 2000 in July 2001. VAPI-2. It therefore. By 1995 . Subsequently. keeping KPMG-QR as their certifying registrar. 100% EOU).Daman. which led to the following initiatives. Apart from this. Micro Inks is currently implementing Six Sigma program to ensure zero defect level in operation. Micro Inks Limited at Locations . the Morkhal (Silvassa). it was rolled out to other plants that were commissioned.GRIMS MICRO INKS All manufacturing sites of Micro Inks Limited have been confirmed with ISO 9001:2000 certifications for the entire range of products. With a view of sustaining this growth and also ensuring consistency in every thing it did. Currently.

is already reaping the benefits of this ISO consolidation with improvements that have lead to the benefits like uniform work flow. Speciality Inks. Screen inks. through SAP. are on electronic media Micro Inks Limited.GRIMS MICRO INKS Sales and distribution network are under the cover of the ISO 9001: 2000 certification for the following product Range. Wire . Resins. Water based adhesives. quality assurance and high customer satisfaction and rapid sales growth. Sheet fed offset inks. varnishes. Wax Compounds.enamels. Web offset inks. Lamination adhesives. Pigments. 2006-2008 28 . from July2004 through July 2007: Product Development & Manufacture of Liquid inks. The entire ISO documentation and quality records. Metal Decorative Coatings.

GRIMS MICRO INKS HUMAN RESOURCE DEPARTMENT 2006-2008 29 .

the HRM activities include:  HR planning  Job analysis and design  Recruitment and selection  Orientation and placement 2006-2008 30 . It focuses on people in the organization. but rather a means to assist the organization with its primary objective. At Micro Inks. The primary objective of the HRM is to ensure the availability of the competent and willing workforce to an organization. career planning and development and organization development. Therefore.GRIMS MICRO INKS HUMAN RESOURCE MANAGEMENT HRM is a management function concerned hiring. motivating and maintaining people in the organization. HRM is not a stand alone department. HRD is a part of HRM. Whereas HRD is a function more concerned with training and development.

the supply of deficiency of Source supply through references with the of 2006-2008 31 .GRIMS MICRO INKS  Training and development [proposed]  Job evaluation and Performance appraisal  Remuneration  Safety and health Let us understand each of these functions in the general aspect as well as how does the company does it. HR PLANNING Identificatio n manpower Matching requirement Recruiting the personnel at a particular post as per is qualification. Giving them targets and furnishing timely reporting to measure the standards against the actual achievements.

2006-2008 32 . Job specification. involves listing of employee’s qualifications.GRIMS MICRO INKS JOB ANALYSIS It is the process of collecting job related information. skills and abilities. duties and responsibilities involved in a job. It results in two sets of data. Job description implies listing of job title. tasks. job description and job specification. on the other hand.

Promotions: By shifting an eligible and competent employee to higher position.  Surge of workload ( at shop floor level)  Vacancies ( both at top and shop floor level) After approving the Manpower Requisition Form. The need for recruitment arises when. 2006-2008 33 .  Internal Source Transfers: Transferring employees from one department to other or from one location to other as per the requirement.GRIMS MICRO INKS RECRUITMENT AND SELECTION It is usually done through references of present employees and workers. the HR Department looks into two sources: Internal and External – for the purpose of Recruitment.

monster.  External Source There are only two external sources through which it fulfills its requirement for manpower: e – Recruitment: Micro Inks Ltd has registered itself at websites like naukri. Campus: Micro Inks Ltd.com to get new talent and competencies from all over at the world. ORIENTATION AND PLACEMENT Orientation for different level employees is given differently by Micro Inks.com.GRIMS MICRO INKS Databank: One more internal source that lies with Micro Inks Ltd. etc. is that of a huge data bank of those applications which has been received earlier from various sources such as past applicants who were not selected. also conducts campus interviews to recruits fresher for their new competencies. company goes to various Institutes and Universities. HR department goes through this data bank and if any suitable applicant is found in the data bank he/she is called for an interview. references of present employees. For the purpose.  For Employees 2006-2008 34 .com. timesjob.

policies. HR department at the Micro plants does give various types of HR and technical training to their workers and new recruities. Training regarding ISO is also provided to the workers. TRAINING AND DEVELOPMENT The HR department at the corporate. This module currently has a limited usage. They give following types of training: Induction training: Here the recruties are given an induction training of 1 week where. the new trainee has to  2006-2008 35 . has a online systems of arranging training. rules & regulations.GRIMS MICRO INKS Induction is done through presentation its giving overview of the company. and duties & responsibilities  For Workers Training regarding safety measures and making them familiar with the operations of the machines.

Operator’s training: When ever any new machine or new system is adopted in the plant.GRIMS MICRO INKS work in all to plants as well as in all the departments of the plant in which he is recruited. HR training: This training is for the team building and self up-gradation of the employees. not directly related to his job.    2006-2008 36 . Safety training: It is given to all employees in batches for 4 days a week for 1 hour. safety and maintenance. the person who has to handle it is given training regarding its working.

 This document consists of details such as Employee information. Company Objectives / Goals. The practice in Micro Inks Ltd. Functional Objectives / Goals and Individual Objectives / Goals. 2006-2008 37 . appraise and appraiser remarks. weightage. to undergo an exercise of goal setting before reviewing the performance of its employees.  Then after a period of 3 months employee has to fill up a Performance Review Form.GRIMS MICRO INKS PERFORMANCE APPRAISAL It is the policy of Micro Inks Ltd. every employee fills up a document in consultation with his superiors. for an effective Performance Management is described as follows:  Firstly. This form consists of Individual Objectives / Goals.

REMUNERATION The remuneration system which Micro Inks uses is that. Remuneration to the workers is as per the minimum wages as specified from time to time by the government authorities. remuneration than that prevailing in other companies.  After one year one more form is filled up which shows an account of the individual’s significant contributions in the appraisal year. compares it with the same of that of the other companies and pays them 10% higher and manage their remuneration system. This is how they retain 2006-2008 38 . it sees the experience and qualification of a particular designated person. If any deviations are found they are eliminated and again the Objectives / Goals are revised for next 3 months. The process continues every quarter for the whole year.GRIMS MICRO INKS  This review states the status of the employee in accordance to his standard Objectives / Goals. its impact and Appraiser’s comments.

Moral Legal Safety programme o For the safety of workers Plant Incharge. All the workers are given a compulsory safety training for 1 hour for 4 days in a week. Industrial safety or employee’s safety refers to the protection of worker from the danger of industrial accidents. An accident free plant enjoys certain benefits like: o o o o Cost saving. The safety department consists of 1 manager. they are scheduled in batches. 4 officers and 12 firemen. Increased productivity.GRIMS MICRO INKS SAFETY AND HEALTH Safety in simple terms means freedom from the occurrence or risk of injury or loss. Safety Incharge.  Need for safety and health. The 2006-2008 39 . as well as Engineering Incharge are responsible.

o Work permit system. o Certification system. 2006-2008 40 .  It also gives 7 days of casual leave which a worker can under any emergency situation utilize it.GRIMS MICRO INKS 12 firemen are permanent in plant and they cotinously check the safety gadgets. o Fire extinguishers.  Safety systems used in the plant are: o Fire handling system. EMPLOYEE BENEFITS & SERVICES Leave System  Company gives 7 days sick leave in a year and the worker has to produce Doctor’s certificate if he takes sick leave for more than 2 consecutive days.

The various schemes under this trust include: 2006-2008 41 . Any worker can in no chance ask for less than 5 leaves at a time. not considering.  But if a worker does not use any of his sick leave or privilege leave round the year. offers the benefits of Bilakhia Group Employees Welfare Trust Schemes to its employees. any bonus or fringed benefits into account. The worker can also encash his leaves if they accumulate more than 75 days. Welfare activities Micro Inks Ltd.GRIMS MICRO INKS  Through out a year the company gives 30 privilege leaves which a worker can utilize within only 3 times a year. they can be carried forward to next year.  And a worker cannot accumulate his leaves to more than 150 days. And encashment of his leaves will be done on the basis of his basic salary.

Under this scheme all employees and their family members get free medical check – up.GRIMS MICRO INKS Health Insurance / Medi – claim This scheme covers reimbursement of hospitalization expenses for illness / diseases or injury sustained.  Reimbursement of fees for employee’s children from schooling to post graduation. 2006-2008 42 . Education Aid & Maa Foundation Bilakhia Group Employees Welfare Trust offers education and training aid for employees and their children.  Merit Awards for Academic Performances. The salient features include:  For the employee  Aid for upgrading skills  Employee development  For employee’s children  Assistance for the children taking admission first time to the school.  Merit Awards for performance in sports and cultural activities.

GRIMS MICRO INKS FINANCE DEPARTMENT OVERVIEW OF THIS DEPARTMENT The primary purpose of any business is to earn profits. To earn 2006-2008 43 .

management of business must have adequate supply of funds. Financial management means procurement of funds at minimum cost and its effective use in order to maximize the wealth of shareholders. the business has to produce goods or render services. Financial management is the application of planning and control to the finance function of a business to ensure that the funds needed are raised and used effectively for its benefits. To do either. Financial planning and control 2006-2008 44 . It is the responsibility of the finance department to ensure the supply of the needed funds.GRIMS MICRO INKS profit.

GRIMS MICRO INKS Financial planning is the process of analyzing the firm’s investment option and estimating the fund requirement and deciding the sources of funds. • Analyzing the investment options to achieve the stated growth objective. • Projecting the future growth and profitability • Estimating funds requirement and considering alternative financing option • Comparing and choosing from alternative growth plans and financing options. 2006-2008 45 . Thus. • Measuring performance. the financing planning process involves the following facets: • Evaluating the current financial condition of the firm • Analyzing the future growth prospects and options. and according to the review of the cash flow statement. they come to a conclusion of requirement of finance for the company. They plan the requirement of working capital for an annual period. actual performance with planned The company follows a practice of monthly and quarterly review of budgeted and actual cash flows.

GRIMS MICRO INKS

From the review of each category in the cash flow, what are the capital requirements, the company will need in a special segment, according to it will acquire loan from the bank from the total permissible amount under that particular segment.

A. Ratio analysis

(i)

Liquidity ratios :
The liquidity ratios measure the ability of a firm to meet its short term obligations and reflect the short term financial strength or solvency of a firm. These ratios indicate the ease of turning assets into cash.

(a) Current ratio: The current ratio is a measure
of the firms short term solvency. The higher current ratio, the larger is the amount of rupees available per rupee of current liability, the more is the firm ability to meet current obligation and greater is the safety of the funds of short term creditors. so this ratio is a measure of margin of safety to the creditors. A satisfactory current ratio would enable a firm to meets its obligations even when the value of the current assets declines.
2006-2008 46

GRIMS MICRO INKS

Current ratio =

Current assets Current liabilities

Current ratio of the year of 2007 = 618098125 14382801 = 42.97:1 489317741 73071869 = 6.69

Current ratio of the year of 2006 =

Interpretation :
Current ratio is standard measure of a business financial condition. Mitsu Ltd has Current ratio of 43:1 it is interpreted to be more than sufficient liquidity. It is important that very high current ratio may be indicate of slack management practices, as it might signal excessive inventory for the current requirements and poor credit management in terms of overextended account receivable and also may not be making full use of its current assets. so, firm should have a proportional to cycle. our operating

2006-2008

47

GRIMS MICRO INKS
A very high current ratio might imply that management is not investing idle assets productively. Generally, we want to have a current ratio that is proportional to our operating cycle. We will look at the Operating Cycle as part of asset management ratios. What is a satisfactory ratio will differ depending on the development of capital market, availability of long term fund to finance current assets, nature of industry etc.

(b) Quick ratio : The quick ratio is measurement of a firms
ability to convert its current assets quickly into cash without decrease of value in order to meet its current liability. Quick ratio = stock) (current liabilities -bod) Quick ratio of the year of 2007 = 19959079 14382801 = 41.58: 1 489317741 618098125Quick assets (current assets –

Quick ratio of the year of 2006 = - 42211720

73071869
2006-2008 48

975 : 1 of the year of 2006 is represent satisfactory current financial condition. we can interpret that the current ratio is 1. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. 2006-2008 49 .GRIMS MICRO INKS 6.41:1 and quick ratio 0.12:1 Interpretation : The quick ratio of 0. (III) Activity ratio Fund of creditors and owners are invested in various assets to generate sales and profits.98:1 is that large part of current assets of BSL is tied up in fast moving and saleable inventories and fast paying debts. Here.

39times) = (360days/7.44 times =0.GRIMS MICRO INKS (a) Inventory turnover ratio:ratio indicates the number of times This inventory is replaced and the efficiency of the firm in selling its product. during the year Inventory turnover ratio = goods sold Average inventory Inventory turnover ratio of the year of 2007 = 239952076 9979539 = 24.49month(12month/7.39times) Inventory 421784439 21105860 = 20 times turnover ratio of the year of 2006 = 15 days cost of 2006-2008 50 .

ratio it implies may good be inventory indicative management. a very high ratio calls for a underinvestment in inventory. A careful high analysis.6 months ( 12 month/8 times) =1 8 days (360days/8times) Interpretation : Company is turning its inventory of finished goods into sales 24.49 months or 15 days (days of inventory holdings). In other words.GRIMS MICRO INKS = 0. it holds average inventory of: 0. yet.44 times in a year of 2007. and a very low level of inventory will adversely affect the ability to meet 2006-2008 51 .

2006-2008 52 . As the inventory turnover is more operating cycle is fast and company is able to do more turnover and need working capital mean less investment in current asset required.GRIMS MICRO INKS customer demand as it may not cope with its requirements.

the Micro Inks ATM gives printers access to small quantities of ink. 2006-2008 53 .GRIMS MICRO INKS ANY TIME MICRO ATM (ANY TIME MICRO)  Just like a bank ATM gives customers access to relatively small amounts of cash.

 It replaces manual color matching with a technology that provides accurate colors and stores the data to produce an identical color time after time. In double quick time.GRIMS MICRO INKS Each Micro Inks ATM is equipped with technology to match colors accurately. So printers get accurate. high quality colors on time. This saves them the unpredictability of manual color matching. Just like a bank ATM uses technology to help you instantly meet your needs for relatively small amounts of cash. (At most times. every time. It also saves them time and inventory. the Micro Inks ATM delivers a printer’s ink requirements in less than an hour). 2006-2008 54 . a Micro Inks ATM helps you instantly meet your needs for small quantities of ink. Every time. Introduction  Micro Inks ATM was a concept developed by one of the senior most person in Micro Inks. Any time.

18th  The success of ATM is revealed by the fact that today there are 40 ATM’S operating successfully in INDIA and abroad.GRIMS MICRO INKS  It gradually ended the method of manual ink matching and brought up the new latest and effective process.  1st Micro Inks ATM centre was launched on February 2005 at DAMAN.  ATM’S commercial head is guiding the success of ATM onto the path of excellence. PURPOSE OF LAUNCHING ATM 2006-2008 55 .

Also the customers today are very color Now a day’s there is a tough competition in this job.GRIMS MICRO INKS  market. More and more competitors are entering the  specific than they were in the past. They thought an idea of setting up a depot  where peoples according to their requirements can get colored inks by a faster and accurate means. money. Manual matching of color requires a lot of  time. Also to the worst it’s also not very accurate. and labor. accurate method of getting inks of desired color’s and  This was quickly recognized by Micro Inks. This gave them the idea of ATM (Any Time  Micro). 2006-2008 56 . So the need of the time was a faster and   shades.

GRIMS MICRO INKS  But launching up such a thing was not as easy as it looked to be. Three years of hard work by the R&D team  and many trials finally gave the way of launching up the 1st ATM at DAMAN. 2006-2008 57 . Basic Process: 1) Customers walk in with a color reference.

3) The recipe is prepared & the color specs are matched.GRIMS MICRO INKS 2) It is scanned. substrate is specified & a recipe is obtained. 2006-2008 58 .

GRIMS MICRO INKS 4) The correct specs are instantly sent into production at the mini plant in the ATM itself. 2006-2008 59 . sip tea or coffee and go through some of the worlds leading magazines (printed using Micro Inks). 5) Customers wait in the lounge.

Role of Micro Inks 2006-2008 60 .GRIMS MICRO INKS 6) quantity customers The color and the want is delivered on the spot in as little as 45 minutes.

It was possible only with the help of ATM.  This help is also related with the technical aspects.  Onto to these micro inks provide all the help and support to the distributors on setting up the whole ATM. the process and the technology.  This is the first time when Micro Inks has got so nearer to the small printing presses and other customers. These are the people who are in the same business of inks or interested to join it. etc. is it profitable to join ATM.GRIMS MICRO INKS  Micro inks do not own all the ATM Centers. 2006-2008 61 . Instead it gives the distributorship of ATM to the interested people. This help is on the basis of quality guideline.

sofas are also provided by MicroInks. 2006-2008 62 . tables.GRIMS MICRO INKS  All the furniture.

sunrise .Microlame . 2006-2008 63 .Mitsu.Persection. . Heatset Black & Colors.PASTE INK : . . .GRIMS MICRO INKS BRANDS OF MICRO INKS : 1.Turbo chrome. Cold set Black & Colors.Rapida . Wet offset Black & Colors.Microglass 2.Esteralm + . 3.Reflecta. LIQUID INKS : .Esteralm .

MARKET SHARE 2006-2008 64 . Screen Inks . D/c DiaNippon Ink co. 5.Special product  Competitors. Sakata inks.  Promotions methods: 1.Cry 10 . Telephone & E-mail . . 4.ATM . . 3.Dry fix gloss .E-mail and Telephonic Complaint.Seminars .Customer Satisfaction Measures. Competitive approach . Serial Inks. 2.Order Conformation.Polybond .Winfix Gloss & matt . Local ink monitor. Sicpa Inks./ 2. 1.Industrial Trade Fair.GRIMS MICRO INKS 4.

GRIMS MICRO INKS Domestic market share 33% DIC Rest Others 25% 52% Target Market : 15% growth for current year 9% growth was for last year  Zero – Level  Distributors get over .Level 2006-2008 65 . One.riding commission (ORC) at the rate of 6% for introducing new customers.

mails. • Stall in Trade Fairs relating to Packaging & Printing Industries.GRIMS MICRO INKS  Distributor earns commission on turn over discount (TOD) on following basis: Marketing Communication Mix • E. • Target Markets 2006-2008 66 . • Brochures and leaflets to communicate to the external organizations. • Any Time Micro [ATM] to distributors to facilitate smaller requirements of customers. letters and telephone to industrial customers. • Seminars for regular customers and distributors. • Advertisements in the magazines of Printing Industry. Statues and Circles in Vapi as well as Sign Symbols at the street lights on the roads of Vapi is also the part of promotion.

GRIMS MICRO INKS The target market of the Micro Inks Ltd : • Packaging Industry • Commercial & Advertising Industry • Publication Industry • Government for Currency Notes INTERNATIONAL BUSINESS DEPARTMENT 2006-2008 67 .

Of all the markets. The world market for Printing Inks was valued at around US$ 14-15 billion in 1999 and is growing at a rate of around 4-5%. still settling with the norms. It is estimated that by the year 2004. Micro Inks was already ranked No. specifications and regulations of abroad companies and it wanted to grow and expand as quick and fast it could so this strategy to grow fast led to its merging with Huber Group in 2005. the world market will be around US$ 18 billion. USA. with a 30% global share.1 in Indian Market and was still setting up a firm base in USA . USA was the largest for Printing Inks.Tipnis Harshan who gave us an overview as to how IBD department came into existence with the growing challenges from Ink industry way back in 1999 with MNC’s capturing the market share and becoming world leaders. 2006-2008 68 . So Micro Inks came up with its IBD department when it started its operations in USA with the name Micro Inks Corporations.GRIMS MICRO INKS International Business Department We met Mr.

Micro Inks is having a factory near Chicago at Kankakee. With a clear focus on the challenges ahead.that of United States of America. Micro Inks set its target on the largest market for Printing Inks . A prime step in this direction was through the establishment of physical presence in the market.000 sq. Europe and Asia. built up area on 44 acres of land.68. the company gained valuable insights into the marketplace.GRIMS MICRO INKS Micro Inks promptly plunged itself into a thorough study of the major ink markets of the world. Set in its vision of becoming a truly world-class company. For Micro Inks. Such as benchmarking quality and cost. S. covering U. Merging with Huber Group 2006-2008 69 . ft.. it had a few things on its immediate agenda.The US market was rife with consolidations through acquisitions leading to a few large players dominating the market. A. Growth has spiraled upwards in the Group's inks business at a compounded rate of more than 45%. this was the beginning. To penetrate this market. a sound strategy was required along with determination. Through its study. The plant has been successfully commissioned and product trial runs carried out for customers have been successful. establishing a marketing and distribution network and building a team of people to compete globally. having 2.

However. Huber becomes the market leader in India through this integration with the largest Indian printing ink manufacturer and improves its position in Europe. North America and Asia. One of the main objectives of this move from the Huber’s point of view is the backward integration into pigments and resins. From the Bilakhia group’s point of view the forward integration into the sales and service network of the Huber is the main attraction. flushes and pigments to 63 countries. Micro Inks has developed a significant cost effective manufacturing base by a unique backward integration into pigments and resins for printing inks especially for paste inks in a relatively short period of time. Micro Inks is a relatively newer entrant to the global printing ink market and its activities have up to now been focused on India and North America. with limited global 2006-2008 70 . Micro Inks is a relatively newer entrant to the global printing ink market and its activities have up to now been focused on India and North America although it has been exporting inks. Micro Inks has five locations in Daman and Vapi in India and a plant in near Chicago in the USA. Huber has 29 manufacturing facilities in Europe / North America and over 200 sales and service points worldwide.GRIMS MICRO INKS Huber is a long standing ‘family run’ company manufacturing inks since 1765 with 29 manufacturing facilities in Europe and North America.

GRIMS MICRO INKS
distribution and marketing it was imperative to either buy a larger ink company or to be bought by one. This prompted Micro Inks to seek an alliance that would mitigate risks as well as provide access to an existing distribution network. Huber with industry and the ongoing consolidation initiatives in the the increasing cost pressure both on

manufacturing as well as raw material costs has prompted the group to look for opportunities to secure its business further. The need to be present in the fast growing Asian region compared to the slower growth rates in Europe and North America resulted in the current transaction. Huber group acquired majority stake in Micro inks.(2006 sales Rs 3550 mn) Huber group is the 3rd largest in Europe , Micro Huber combine revenues more than $150 mn ,making it in Top 5 US companies. Huber group has acquired 50.5% from Bilakhia family @ Rs 675 per share. Further public offer to purchase the 20% of share capital @ Rs675 per share has been successfully completed. • Fourth Largest post merger globally. The name of Micro Inks Corporation, USA has been changed to Hostmann-Steinberg Inc. USA

2006-2008

71

GRIMS MICRO INKS

2006-2008

72

GRIMS MICRO INKS

TRANSFER PRICING
Overview:
Over the last few years the cross border business between entities belonging to same business group have increased considerably and due to integration of domestic economy with global economy & growth of MNEs. The MNE’s together with their associated enterprises have been playing a critical role in international trade and business. Many studies so far indicated that 2/3rd of the world trade is controlled by multinational groups and trade among them accounts for the bulk of it.The business activities may span from trading of goods and services to undertaking production internationally.
2006-2008 73

But the period after sixties witnessed a substantial growth in business of multinational corporations. A multinational corporation may have business transactions with its associated enterprises situated in several other countries having different or similar tax systems.The provisions were introduced to discourage companies from shifting profit to overseas associates through under or overpricing of cross-border transactions. Historical Background The transfer pricing legislation was first introduced in UK in 1915. transfer pricing was not considered important as there was no significant international trade during this period.other costs and research and development expenses. The enterprises may transfer goods to its associated enterprises at prices which are not market driven and not comparable with uncontrolled transactions entered between unrelated entities.They can also employ methods to minimize their tax liability . by shitfting their profit base. 2006-2008 74 . The issues concerning transfer pricing are of importance to all countries because of their impact on tax revenues and importance in economic activities. from high to low tax jurisdictions. Prior to 1961 .they can determine the level of taxation in a particular country by adjusting the price mechanism.They can combine the available resources and save on interest .This was followed by United States in 1917. This may affect the tax base system of a country having higher rate of taxation to the advantage of another country having lower tax rates.GRIMS MICRO INKS Now. When enterprises of a group have business activities in different countries .

The MNC’s realized that our country offered a big market for their goods and also a cheap place for carrying on manufacturing activities and development of software. This all led to spurt of foreign direct investment into the country. It was also felt that Indian companies could abuse transfer pricing by entering into transactions of exports of raw material and ancillary goods to their associated enterprises that in turn may sell finished goods back to these companies at prices than prevailing market prices. Basic Components of Transfer Pricing International Transaction 2006-2008 75 . There was a feeling that multinational companies pay less tax than comparable domestic companies due to absence of transfer pricing provisions.GRIMS MICRO INKS The Indian economy witnessed major restructuring after its opening up in the early nineties( Liberalisation).

GRIMS MICRO INKS Documentation b /w Associated Enterprise Penalties Resident One of the AE in Non- Adjustment of Difference Methods of ALP Definition of Transfer Pricing: OECD DEFINITION ( Organization of Economic Cooperation and Development) 2006-2008 76 .

• It protects the right of the country to collect due share of tax in respect of transactions between enterprises.GRIMS MICRO INKS • Transfer pricing refers to “prices at which an enterprise transfers physical goods and intangible property or provides services to associated enterprises” GENERAL DEFINITION It relates to the system of pricing the transfer of goods. associated • Absence of regulations allows multinationals to shift profits to low tax jurisdictions by manipulating prices of intra group transactions. RATIONALE OF REGULATIONS • The Regulations provide a statutory framework which can lead to computation of reasonable.fair and equitable profits and tax. services and intangibles between associated enterprises of a multinational enterprise. ASSOCIATED ENTERPRISE 2006-2008 77 .

It is therefore a price.GRIMS MICRO INKS OECD model convention defines an associated enterprise as an enterprise. The principle follows the approach of treating associated enterprises of a group as independent entities and puts associated enterprises and independent entities on equal footing for tax purposes.  Arm’s length price may be defined as a price. which differ from those. which is applied in a transaction between persons other than associated enterprises in uncontrolled conditions. Arm’s Length Price  The arm’s length principle governs the determination of transfer prices among associated enterprises. which would be made between independent enterprises. and impose commercial or financial conditions. which participates directly or indirectly in the management control or capital of another enterprise. which is ordinarily determined by market forces and would be charged in transactions between independent enterprises that deal with each other. TRANSFER PRICING METHODS 2006-2008 78 .

Comparable uncontrolled price method Resale Price method Cost Price method PROFIT BASED METHODS 1. 2. Profit Split Method Transactional Net margin Method ANY OTHER METHOD AS MAY BE PRESCRIBED BY MGMT. 3. 2006-2008 79 . 2.GRIMS MICRO INKS TRANSACTION BASED METHODS 1.

Data Base. It is price for identical or nearly identical property traded between two independent parties under the same or similar circumstances. SOURCES OF CUP DATA Internal CUP. • • 2006-2008 80 . Publications. Price so adjusted is taken as the arm’s length price in relation to international transaction.GRIMS MICRO INKS COMPARABLE UNCONTROLLED PRICE METHOD Comparable uncontrolled price method compares price charged for property or services transferred in a controlled transaction to price charged in a comparable uncontrolled transaction.Internal Company Data External CUP • • • • • Company Price Lists Website Trade Directories Govt. DETERMINING ALP UNDER CUP METHOD • Identify the price charged or paid in a comparable uncontrolled transaction. Adjust such price to account for material differences which would affect the price in open market.

company incorporated in US .000 2006-2008 81 as per books of account = = [$80 *100* 40] .20.40 ).000 LESS: Arm’s Length Price 3.sells laser printer cartridge to its 100% Indian Subsidiary @ $50 per cartridge.Compute the arm’s Length price and taxable income of X Ltd and A Ltd by CUP method Solution: Arm’s Length Price (ALP) of laser printer which is sold to A Ltd will be $80 per cartridge Income of A ltd Income 12.000 ADD: Amount charged by X Ltd [$50 *100 * 40 ] 2. Total Income of A ltd for the assessment year 06-07 is Rs 12.GRIMS MICRO INKS Hypothetical Example: Problem: Lets say X ltd .00.000 after making the payment for 100 cartridges $50 ( 1$= Rs. X Ltd also sells its laser printer cartridge to another company Y Ltd in India @ $80 per cartridge. A ltd has deducted the tax at sourcewhile making payments to X Ltd.00. In this case sold to unrelated party Y Ltd is @ $80.00.

The resale margin may be determined by reference to margin that may be earned by a reseller in a comparable uncontrolled transactions or margin earned by an independent enterprise in comparable transactions.000 RESALE METHOD • The method begins with the price at which a product purchased from an associated enterprise is resold to an independent enterprise. The price is then reduced by appropriate gross resale price margin. 10.GRIMS MICRO INKS _________________ INCOME Rs.80. articles or things are ultimately resold to an unrelated enterprise. This represents the amount out of which a reseller would cover its other costs and selling expenses. DETERMINATION OF ALP UNDER RESALE METHOD • • Identify price at which goods. 2006-2008 82 . The residuary figure is the arm’s length price for the transfer of property.

3 _______ ALP $2. if any.5 but the it is sold by subsidiary at $3 and Gross profit margin is at 10%.P @ 10% $3 $0. Solution: Resale price Less:G. Hypothetical Example: Finished Goods from MIL are transferred to USA at $2.7 2006-2008 83 .GRIMS MICRO INKS • Deduct reasonable expenses and normal profit margin. in the transactions being compared. • • The adjusted price thus arrived at is taken to be arm’s length price. Calculate the ALP. Adjust resultant price for material differences.

• The price arrived at after adding the cost plus mark up to these costs is regarded as arm’s length price of the controlled transaction. The cost plus mark-up is normally the gross profit of the 2006-2008 84 . • Under this method the sellers’s cost plus mark up is bench marked against that of comparable enterprises.GRIMS MICRO INKS Cost Plus Method • The cost plus method begins with the costs incurred by the supplier of property or services in a controlled transaction to which an appropriate mark-up is added to account for an appropriate profit considering the functions performed. assets involved and risk assumed.

if any between international transaction and comparable uncontrolled transactions. DETERMINING ALP UNDER COST PLUS • Determine direct and indirect costs of production.GRIMS MICRO INKS transaction. Adjust normal gross profit mark-up to take into account the functional and other differences. administrative and selling expenses and allows an appropriate net profit. • Determine normal gross profit mark up to such costs. 2006-2008 85 . • • The costs so arrived are increased by adjusted profit mark up. which covers the general.

GRIMS MICRO INKS • The price so arrived is taken to be an arm’s length price in relation to supply of property or provision of services. 2006-2008 86 . sales or assets. The net margin of the transactions so compared forms the basis of determining arm’s length price. Transactional Net Margin Method (TNMM) • Transactional net margin method compares the net profit margin from a controlled transaction with net margin earned in comparable uncontrolled transactions. • The net margin is calculated with reference to appropriate base say costs.

GRIMS MICRO INKS • It is used where the data available is inadequate or unreliable to apply traditional transaction methods DETERMINING ALP UNDER TNMM • Compute net profit margin of associated enterprise transactions. • • • The net profit so established is taken into account to arrive at the arm’s length price. Under this method the EBIT is taken . Compute net profit margin of comparable uncontrolled transactions.) This TNP method examines the operating profit (the profit after fixed and 2006-2008 87 . Adjust net profit margin of uncontrolled transactions for material differences.(that is the earnings before interest and tax is taken. Micro Inks Ltd Case Micro Inks Ltd (MIL) under takes the Transactional Net margin method.

USA (which is its subsidiary). Generally MIL looks at the peers who are paying the tax with reference to their operating margins earned by the same tax payers in comparable uncontrolled transactions.The arm’s length price is taken on that basis. Lets take the price of Resins & Varnish(Product A) Plant the where Raw Material (Z) 88 Packaging cost product is (RM) Cost 2006-2008 . assets etc.GRIMS MICRO INKS variable costs) from controlled transactions as a percentage of a base . for example sales. Due to the confidentiality reasons we would use an hypothetical example to understand the Transfer pricing between MIL and Micro Inks . MIL has huge variety of products for which it has to decide the transfer price. costs .

GRIMS MICRO INKS made(X) 5 (Y) 60 1 So the total or Net RM Cost is X+Y+Z = Rs.50 ADVANTAGES OF USING TNMM • Less affected by transactional differences than is the case with price. 66 + Variable Cost ( Manufacturing cost) = Rs 6 + Fixed Overheads + Depreciation + Freight Total Cost (TC ) + Interest ( 5%) ______ TC + TI Profit Margin of(8%) Total Transfer price = @ Exchange rate 98.80/ 40 TP @ USA = $ 2. 2006-2008 89 . as used in the CUP.47 /Kg 91.80 40 = Rs 3 = Rs 2 = Rs 10 ________ Rs 87 4.50 7.30 _______ Rs 98.

GRIMS MICRO INKS • It is not necessary to determine the functions performed and responsibilities assumed by more than one of the associated enterprise. REASONS FOR USING TNMM  A TNMM approach is useful because global profits could 2006-2008 be influenced by many factors wholly 90 . • The method is also advantageous when one of the parties to the transaction is complex and has many interrelated activities • This method is useful when it is difficult to obtain reliable information about one of the parties.

. The product being transferred.) Moving to net profit margin can factor out some of this differences. BIBLIOGRAPHY 1. the functions being performed.  Net profit margin method is also used when third party data are not sufficiently similar in the transactional elements (eg.GRIMS MICRO INKS unrelated to a particular transaction between related companies.MICRO INKS ANNUAL REPORT 2007 2006-2008 91 .

MANAGEMENT OF CONTROL SYSTEM BY S.S.“TRANSFER PRICING” BY V.SHARMA 2006-2008 92 .GRIMS MICRO INKS 2.WAHI 3.

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.