Chapter-1

Introduction
1.1. Backdrop
The growth of any organization depends on the overall performance such as
production, marketing, Human resource and financial performance of the
organization. The financial performance of any organization reflects the strength,
weakness, opportunities and threats of the organization with respect to profits
earned, investments, sales realization, turnover, return on investment, net worth of
capital. Efficient management of financial resources and deliberate analysis of
financial results are prerequisite for success of an enterprise. In that working capital
management is one of the major and important areas of financial management.
Every organization required working capital for day today business transactions.
Managing working capital implies managing of current assets of the company like
cash, inventory, accounts receivable, loans and advances and current liabilities like
sundry creditors, interest payment and provision.

The scope of the study is confined to one of the key areas of “FINANCE,
OPERATIONS & PRODUCTIONS” i.e. “INVENTORY MANAGEMENT” which plays a
vital role in the manufacturing organization.

The study concentrates on them thousands techniques followed by the “ JK PAPER

MILLS” for its “INVENTORY MANAGEMENT” and its relative merits and demerits.

The present study also concentrates on the importance of the “INVENTORY

MANAGEMENT SYSTEM” and the study appraises the company success in meeting
requirements of the organization.

Finance is so basic that it cannot be considered a separate function. Evaluation of

financial performance of an organization is continuous processes for understanding
the direction in which the organization is heading so as to plan decide and
implement the future course of action with a view to achieve the resent objectives in
the interest of the organization. Store and spare is always required for an
organization for its smooth production channel, so I have selected “inventory
management” as my topic.

1
 The theory of inventory management helps the management to understand and
manage the nature of components i.e., work In Progress, finished goods. Raw
materials, consumables, stocks & spares, and operations of the organization.

1.2. Objectives of the Study

The study is oriented with the following objectives:-
The primary objective was to compare and analyze these legend distribution
channels of JK paper and to understand the inventory management system of
JK PAPER LIMITED.
To familiarize our self with the stores department and to know about it’s storing
and distribution function.
To know various steps aspects of the stores department such as Order
Execution System, Dispatching System, Warehousing, Transportation, and
distribution etc.
To study the statutory and non- statutory matters relating to storing and
distribution.
To gain the first hand knowledge about the storing and distribution of spares
followed by stores department.
To identify the prerequisites of designing the buying and storing strategy.
To know the storing & operations of JK Paper Limited.
To know the liquidity position of JK Paper Limited.
To understand the cash management system of JK Paper Limited.
To understand the purchase accounting and creditor management system of JK
Paper Limited.
To know the position of current assets and current liabilities of JK Paper
Limited.
To know the working capital requirement of the firm.
1.3. Methodology
JK Paper Mill Limited Odisha, has consistently increased production due to the
continuous improvement of skills, technological advancements, and adoption of
industry best practices by various departments. Training and development are
crucial for refreshing, upgrading, and acquiring news kills. This project aims to
systematize the Training and Development process at JK PAPER MILL, Odisha.

2
 Since its establishment, JK PAPER MILL has conducted various programs to
enhance employee knowledge, skills, and attitudes, including induction, orientation,
and safety training. The 45-day internship collected primary and secondary data on
these programs and presented the data in this report.

The training initiatives at JK PAPER MILL cover technical skills, soft skills, and
safety protocols, focusing on both immediate skill enhancement and long-term
career development. There port details the design, implementation, and evaluation of
these programs, methodologies used, stake holder involvement, and feedback
mechanisms.
The study highlights the importance of training in adapting to technological
advancements and industry changes, contributing to maintaining a competitive
edge. It provides a model for enhancing training practices at JK PAPER MILL and
potentially other organizations.

1.4. Outline of the study

This report consists of seven Chapters.
The first Chapter elucidates the introductory part of the study, the objective
of the study, a brief description of the methodology, and an outline of the
report.
The second Chapter provides a detailed review of theoretical perspective,
review of literature and scope of the study.
The third Chapter emphasizes the research design, providing a detailed
description of the methodology adopted for the study.
The fourth Chapter contains the organization profile, including a detailed
description of JK Paper Mill Limited and its processes.
The fifth Chapter describes the Details of various product In JK paper mills.
The sixth Chapter presents the practical aspect of inventory management In
JK paper mills
The seventh Chapter concludes the study, highlighting the salient findings
and recommendations.

3
 Chapter-2
Theoretical Perspective, Review of Literature and Scope of the Study

2.1 Brief of Inventories

Inventories constitute the most significant part of current Assents of a large majority
of companies on India. On an Average Inventories are approximately 60 percent of
current Assets in public Limited. Companies. Because of the large size of the
Inventories maintained by the firm it is requested to efficiently & effectively
management over Inventories. A excessive ‟Inventory carries a unfavorable impact on
a company’s profitability.”
(a) Nature of Inventories: -
The various forms in which Inventories exist in a manufacturing companies.
They are:
Raw material.
Work-in-process.
Finished goods.
Stores & Spares.

I. Raw Material: These are the basic inputs that are converted into finished product
through the manufacturing process. These are those units which have been
purchased and stored for future production.
II. Work-in-process: These are the semi-finished product. They represent the
products that need more work before they become finished goods.
III. Finished goods: These are the completely manufactured products which are
saleable.
IV. Stores & Spares: These are the material which don’t enter directly in the
production but are necessary for the production process. Ex. -Soap, brooms, oil,
fuel, jute, bulbs, etc.

(b) Need to Hold Inventories:-

Maintaining inventories involves with many costs & also it causes to blocking of
companies fund. So there may be a question arise that why do company hold
inventories?

4
There are three general motives for holding inventories:
I. Transactional motive: To facilitate smooth production & sales operation.
II. Precautionary motive: To guard against the risk of unpredictable changes
in demand and supply forces & other factors.
III. Speculative motive: Influences the decisions to increase or reduce
inventory levels to take advantage of price fluctuations.

(c ) Objective of Inventory Management

The objective inventory management should be to excessive inadequate levels of
inventories& to maintain sufficient inventory for the smooth operation of sales &
production. So the aim of the inventory management is to maintain a large size of
inventory for efficient & smooth Production & uninterrupted sales operations. To
maintain a minimum investment in inventories to maximize profitability.
An effective inventory management should-
Insure a continuous supply of raw material to facilitate uninterrupted
production.
Maintain sufficient stocks of R.M. in period of short supply & anticipate price
change.
Maintain sufficient finished good inventory for smooth sales operation &
Efficient Customer service.
Minimizing the carrying cost &time.
Control investment in inventories & Keep it at an optimum level.

2.2 Review of Relevant Literature

The present paper focuses on the review of existing literature in the field of Inventory
Management which helps in capturing both conceptual and research based studies.
A Number of studies have been conducted to find the determinants of investment in
inventories and the process is still going on. The present study is the summary of
critical points of a particular topic consisting of essential findings as well as
theoretical and methodological contributions. My paper shall discuss conceptual
studies of both Indian and other nationals.

a) R.S. Chadda (1964)

Study had been made on inventory management practices of Indian companies.
The analysis suggested application of modern scientific inventory control

5
 techniques like operations research. These modern scientific techniques furnish
opportunities for the companies, Companies can minimize their investment in
inventory but there is continuous flow of production. He argued that industrially
advanced countries, like, USA, were engaged in developing highly sophisticated
mathematical models and techniques for modernizing and redefining the existing
tools of inventory investment.

b) National Council of Applied Economic Research (NCAER) (1966)

Conducted a study in 1966 regarding working capital management of three
industries namely cement, fertilizer and sugar. This study mainly devoted to ratio
analysis of composition, utilization and financing of working capital for the period
of 1959 to 1963. The study reveals that inventory constituted a major portion of
working capital i.e. 74.06 per cent in the sugar industry followed by cement
industry (63.1%) and fertilizer industry (59.58%). It was observed that inventory
had not managed properly. So far as the utilization of working capital was
concerned, cement and fertilizer industry had better implementation of working
capital. The sugar industry had huge accumulation of stocks so there was
inefficient utilization of working capital heavily.

c) Mishra (1975)
It is the study of six major public sector enterprises. He concluded that (i) inventory
constitutes the most important component of working capital of public enterprises
(ii) efficiency of working capital funds employed in receivables is terribly low in the
selected enterprises and (iii) In all units both the current assets and the quick
ratios are greater than their standards. Enterprises need proper control on
receivables.

d) Rich Lavely (1998)

Asserts that inventory means “Piles of Money” on the shelf and the profit for the
firm. However, he notices that 30% of the inventory of most retail shops is dead.
Therefore, he argues that the inventory control is facilitate the shop operations by
reducing rack time and thus increases profit. He also elaborates the two types of
inventory calculations that determine the inventory level required for profitability.
The two calculations are “cost to order” and “cost to keep”. Finally, he proposes
seven steps to inventory control.

6
e) Dave Piasecki (2001)
He focused on inventory model for calculating the optimal order quantity that used
the Economic Order Quantity method. He points out that many companies are not
using EOQ model because of poor results resulted from inaccurate data input. He
says that EOQ is an accounting formula that determines the point at which the
combination of order costs and inventory costs are the least. He highlights that
EOQ method would not conflict with the JIT approach. He further elaborates the
EOQ formula that includes the parameters such as annual usage in unit, order
cost and carrying cost. Finally, he proposes several steps to follow in implementing
the EOQ model. The limitation of this literature is that it does not elaborate further
relationship between EOQ and JIT. It does not associate the inventory turns with
the EOQ formula and fails to mention the profit gain with the quantity is
calculated.

f) Gaur, Fisher and Raman (2005)

In their study examined firm-level inventory behavior among retailing companies.
They took a sample of 311 public-listed retail firms for the years 1987–2000 to
examine the relationship of inventory turnover with gross margin, capital intensity
and sales surprise. They observed that inventory turnover for retailing firms was
positively related to capital intensity and sales surprise while inversely associated
with gross margins. They also suggested models that yield an alternative metric of
inventory productivity, adjusted inventory turnover that can be used in study of
performance analysis and managerial decision-making.

g) S. Singh (2006)
Analysed the inventory control practices of single fertilizer company named IFFCO.
He statistically examined the inventory system with consumption, sales and other
variables along with growth of these variables and inventory patterns. He
concluded that an increase in components of inventory lead to an increase in the
proportion of inventory in current assets. A special focus was made on stores and
spares in order to calculate excess purchases resulting in loss of profit.

h) Pradeep Singh (2008)

In his study made an attempt to examine the inventory and working capital
management of Indian Farmers Fertilizer Cooperative Limited (IFFCO) and National
Fertilizer Limited (NFL). He concluded that the overall position of the working

7
 capital of IFFCO and NFL is satisfactory. But there is a need for improvement in
inventory in case of IFFCO. However inventory was not properly utilized and
maintained bay IFFCO during study period. The management of NFL must try to
properly utilize the inventory and try to maintain the inventory as per the
requirements. So that liquidity will not interrupt

i) Capkun, Hameri and Weiss (2009)

Statistically analyzed the relationship between inventory performance and financial
performance in manufacturing companies using the financial information of a large
sample of US-based manufacturing firms over a 26-year period, that is, 1980 to
2005. They inferred that a significant relationship existed between inventory
performance along with the performance of its components and profitability. Raw
material inventory performance was highly correlated to gross profit and operating
profit.

2.3 Scope of the Study of JK Paper Limited

The Scope of the Inventory management of JK paper ;-
The primary objective was to compare and analyze these ligand distribution
channels of JK paper and to understand the inventory management system of JK
PAPER LIMITED.
To familiarize our self with the stores department and to know about its storing
and distribution function.
To know various steps aspects of the stores department such as Order Execution
System, Dispatching System, Warehousing, Transportation, and distribution etc.
To study the statutory and non- statutory matters relating to storing and
distribution.
To gain the firsthand knowledge about the storing and distribution of spares
followed by stores department.
To identify the prerequisites of designing the buying and storing strategy.
To know the storing & operations of JK Paper Limited.
To know the liquidity position of JK Paper Limited.
To understand the cash management system of JK Paper Limited.
To understand the purchase accounting and credit or management system of JK
Paper Limited.
To know the position of current assets and current liabilities of JK Paper Limited.
To know the working capital requirement of the firm.

8
 Chapter – 3
Research Design of the Study
3.1 Introduction
3.1.1 What is paper?
“Paper” has played a vital role in the development of mankind, since time is
immemorial, as a means of communication, as the most versatile material for
packaging of goods, as a medium of preserving knowledge for progeny. Paper is
defined as “A mat of cellulose fibers arranged in crisscross fashion with hydrogen
bond and other forces.”

3.1.2 Evolution of paper industry

A courtier named Ts‟ai-Lun, from Lei-Yang in China, was the inventor of paper (not
papyrus) circa 105 A.D. However, the word paper is derived from the name of the
reedy plant papyrus, which grows abundantly along the Nile River in Egypt. Paper is
made of pulped cellulose fibers like wood, cotton or flax. Papyrus is made from the
sliced sections of the flower stem of the papyrus plant, pressed together and dried.

3.1.3 Evolution of paper

3000BC
Of all the writing and drawing materials that people have employed down the ages,
paper is the most widely used around the world. Its name derives from the material
used by the ancient Egyptians, Greeks and Romans: papyrus. Papyrus, however, is
one of those predecessors so paper produced by beating or pressing. They are known
by the generic term “tapa” and are mostly made from the inner bark of paper
mulberry.

3.1.4 Growth of paper industry

Paper Industry is one of the oldest industries established in India. Before the
advent of machine-made paper a sizable handmade paper manufacture flourished in
India. The earliest efforts of mechanizing this industry in our country dates back to
the beginning of 19th century.

In India, the first paper machine was installed in 1812 at Sorampet (west Bengal).
Over the decades the there was rapid growth in the number of Pulp & paper mills
from 17 in the early 1950‟s to 250 Mills in 1980‟s. The domestic output of paper and

9
paperboards grew form 1, 35,000mts in 1951 to 15,00,000 mts in 1985. What
followed then is a virtual doubling of capacities and production was around 25 lakh
tons annum and the no, of mills increased to over 350 in the organized sector.
Figures speak of a production of 28-lakh tons from 375 organized mills.
Future projections indicate that by the year 2005 A.D., India requires about 59-
lakh tons per annum of paper and board and there after the growth accelerates.
The paper industry in India is more than a century old. The industry is
predominately in the private sector. There are about 406 paper mills in India
with a total installed capacity of around 6.2 million tones.

3.1.5 Classification of paper

Posters Bedi leaves,

Cream wove School books, bank slips etc.
Offset Printing
Duplicating Cyclostyling
Maplitho Photocopying
Super printing Annual reports
Bond paper Letter heads
Cultural Art paper Multicolored printing
paper Chromo Paper Labels
Tissue paper Beedi labels, napkins.
Cartridge Paper Drawing books for artist and
Architects
Ledger paper Accounting Bank
Packing Duplex Board Consumer Goods
paper Pulp Board/straw board Filter Cigarette spackersetc
Kraft paper Corrugated packing
Micro Paper Cheques and Drafts Gamine
Specialty paper
paper Waxed paper for Wrapping(colored)
Biscuits
Cello phone Paper Wrapping
Base Boards Tetra packs
Vegetable parchment Wrapping for butter

10
3.1.6 Indian Paper Industry
Indians were using Copper plates, Iron plates and for the purpose of writing,
before paper came into existence. Papermaking entered our country through Arbs as
an art. This art was restricted to Muslim families as a secret, at that time, which
were mainly based and lived Kashmir & Punjab named Kagazius.

Nothing can be said the first paper mills in India. But it was said that, William
Warvaty, in 1812 started the first paper mills at sarampur, with the help of
Kagazius. In 1832 four machines were installed and introduced in India. “Royal
Black Paper Mills” stated at Hubli in 1870‟s and was merged in. Teleghar Paper
Mills. Later the remaining Paper Mills are established one by one.

The per Capita Paper Consumption in India is only 3.62; it is inclusive of Newsprint
paper consumption. According to this it is clear that, we are much backward in
paper consumption that compared to the some developed countries.

Paper Industry supplies various types of Paper, Paper Boards and Specialty Paper to
a number of End users, which includes Government, Education, Companies,
Packing, Printing, News Paper and Magazines etc. Use of paper and paper product is
intimately linked with the cultural and Economic Development of a country. The
demand for paper depends on a number of intangible factors such as Population,
National Income, Growth of Literacy spread of Education, Standard of Living and
Industrial production.

3.1.7 Consumption of Paper In India

The per capita consumption of paper in India is at anaverage low level of about 3kgs
at present. This is one of the lowest in Asia, where the average annual consumption
is around 18 kgs per head. On the assumption, consumption of paper will move upto
5kgs by 2009 AD.

11
Demand forecast for paper & board in India
Year Population Per Capita Total Demand
(Billion) Consumption (kg/ year) (million tons)
2024 1.4 15 21
2025 1.41 15.9 22.4
2026 1.42 16.85 23.9
2027 1.43 17.86 25.5
2028 1.45 18.93 27.5
2029 1.46 20.06 29.3

3.1.8 Paper industry in the global

Global/Region Percapita Consumption (kg/year)

United states 210-220
Canada 210-220
Japan 150-160
Western Europe 125-150
China 75-80
Brazil 50-55
Mexico 50-55
Eastern Europe 50-70
South Africa 20-25
India 15-20
Sub-Saharan Africa 05-10
Global average 55-60

12
3.1.9 Company In Production Capacity in Paper Industry
Production Numbers
Category Company Capacity (Tons Of Mills
Per Annum) (Approx)
Large Ballarpur industry Limited 450000 7
ITC paper boats and specialty 850000 1
paper
J.K paper Limited 455000 2
Tamil Nadu news print and 600000 1
paper Limited
West coast paper mills 320000 1
Century pulp and paper 450000 1
Andhra paper Limited. 240000 2
Medium Various regional mills 50000-200000 50-60
Small Numerous small mills <50000 700-730
Total ~25 million ~750-800

3.2 Analysis
3.2.1 Cost & Risk Associated with Inventories
(A) The costs associated with inventories are mainly divided into 2 costs.
I. Capital cost: maintaining of inventory results the blocking of the financial
resources. These resources may be arranged from the own or outsiders sources.
In the case of sawn resources there is an opportunity cost in the areas of outside
resources the firm has to pay interest to the outsiders.
II. Storage or handling cost: Cost incurred for manufacture a given level of
inventory is called carrying or handling cost.

(B) The storage or handling or carrying cost includes warehousing, handling, clerical,
insurance, deterioration and obsolescence.
Risks associated with inventories are mainly divided into 3 risks:
1. Risk of price decline.
2. Risk of obsolescence.
3. Risk deterioration quantity.

13
Questions Involved With “To Manage Inventories Efficiently”.
The two important questions for effective inventory management are-
1. How much should be ordered?
2. When it should it be ordered?
The 1st question, How much to ordered, relates to the problem of determining
economic ordered quantity i.e. EOQ.
The 2nd question, when to ordered, relates to the problem of determining re-ordering
point.

(C) Selective Inventory Control:

The inventory of a firm consists of a large number of items of various nature, size &
value. It is not possible to exercise the same degree of control over each and every
item of inventory. To get optimum benefits for the firm we have to select all the items
and to categories them into different classes.

3.2.2 Different Method of Inventory

For this purpose, there are different methods of selective control which are
enumerated as under:

ABC Analysis (Always Better Control Analysis).

Measurement of different levels of the inventory.
Inventory turnover ratio.
Measures of Economic order quantity i.e. EOQ.
Selection of Replenishment system.
Codification.
Standardization.
Simplification or variety reduction.
Computerization
Theory of probability of demand forecasting.
Review of surplus & dead stocks.
Reporting.
Perpetual inventory system.
JIT control system.

14
Out of the above methods of selective control, the following are explaining as under.
(i) ABC Analysis:
This method of selecting the items of stock for control is known as Always Better
Control method. In this method, various types of goods are classified into three
classes.
i.e. A “class
B‟ class
C ‟class

“A” class goods

Goods constituting higher percentage of value but lower percentage of items are
included in “A‟ class.
“B‟ class goods
Goods of the medium nature are both the respects of the value & items are
grouped under “B‟ class.
“C‟ class goods
Good constituting lower percentage of value but higher percentage of items are
included in “C‟ class.

After classification, control is exercised over them. Here “A‟ class goods find more
attention, “B” class goods normal and “C” class goods find attention. By doing so
the cost of inventory control is minimized.

Characteristics of different classes:

“A” class:
 It requires strict control.
 It needs frequent control.
 It needs frequent review at short interval.
 It requires very low level of safety stock.
 It needs centralized purchasing.
“B” class:
 It requires moderate control.
 It needs moderate lead time.
 It requires low safety stock.
 It needs both centralized & decentralized purchasing.

15
 “C” class:
 It deserves loose control.
 It can manage with long lead time.
 It requires more amount of safety stock.
 It needs decentralized purchasing.

(ii) Measures of Different Levels of Inventory:

There are different levels of stocks which are to be carefully ascertained for
effective inventory control under different situation.

Minimum stock level:

It is the level below which the stock of an item should not be allowed to fall. It is
minimum quantity of the material which must be kept in store at all time.
For determination of the minimum level of stock, the following mode list to be
applied.

Minimum stock level=Re-ordering level –(Normal use X normal re-order period)

Maximum stock level:

It is the quantity beyond which the stock of particular item should not be allowed
to stand.

Maximum stock level = (Re- ordering level + Re-ordering quantity) –

(minimumuse Xminimum re-ordering period)

It is the maximum quantity of an item which be held at store at any time to avoid
the over stocking &un necessary blockage of capital are avoided.
Ordering level:
It is the level of stock at which the production cycle is taken to be complete & fresh
orders are made for replenishment of the stock for starting with an other
production cycle.

Ordering level = Minimum level + consumption during the lead

time

Re-order level:
It is the level of stock at which an order to be placed when stock reaches a
particular level.

Re-ordering level=maximum consumption X maximum re-order

period Or

16
 Re-ordering level =safety stock + (avg. daily usage X avg. lead time (in days)

Danger level:
This refers to that level of stock at which normal issues of the material to the
production center are stopped.
Danger level = avg. consumption X maximum re-ordering period for
emergency Purchases.
Avg. stock level:
It is the level at which the stock of an item ordinarily remains throughout a
production cycle.

Avg. stock level=minimum level +½re-order quantity

Or
(Minimum level + maximum level)/2.
Safety level:
It is the level of stock at which there will be no danger for the firm an account of
sudden rise in the demand for the goods.

Safety level=maximum demand during the maximum lead time–avg.

demand during the avg. lead time.

(iii) Inventory Turnover Ratio (ITR)

I.T.R. is calculated to indicate whether inventories have been used efficiently or
not. I.T.R indicates the No. of times the stock has been turnover during the
period &evaluates the efficiency with which a form is able to manage its
inventory.
I.T.R.= Cost of goods sold or Net sales
Avg. inventory at cost Avg. inventory at cost

 Inventory conversion period is calculated to see avg. time taken for clearing the
stocks.

Inventory period =365 /ITR

(iv) Measures of Economic Order Quantity
One of the measure problem is
“How much inventory should be added?”
“When inventory is replenished?”

17
This problem is called order quantity problem & the task of the firm is to determine
the optimum or economy order quantity or economic lot size.
Determining an optimum inventory level involves two type of cost i.e.-
➢ Carrying cost.
➢ Ordering cost.
Carrying cost:
Cost is incurred for maintaining a given level of inventory are carrying cost. This
includes:
Warehousing
Handling
Clerical & Staff
Insurance
Deterioration & Obsolescence.
Carrying costs vary with the inventory size.
Order size increases carrying cost increases.

Ordering cost:
Costs incurred for acquiring inventory from suppliers are called ordering cost. This
includes: -
Requisition
Order placing
Transportation
Receiving, inspecting & storing
Clerical & staff

When order size increases the ordering cost decreases.

The economic inventory quantity is that inventory level which minimizes the total of
ordering into carrying cost.

Approaches to determine EOQ

To determine the EOQ we can follow two approaches.
Order formula approach.
Graphical approach.

18
Order formula approach:
Suppose the ordering cost per order “O” is fixed “A‟ be the annual demand and “Q” be
the order size. Then the No. of orders will be A/Q &the total order cost will be
Let us further assume that carrying cost per unit “C” is constant. The total carrying
cost will be the product of the avg. inventory units & the carrying cost per unit if “Q‟
is the order size the average inventory will be –

TOC= AO/Q

Average inventory=Q/2 &

total carrying cost will be=Average inventory X
per unit carrying cost
T.C.C.= (Q/2)X C
The total inventory cost, then, is the sum of the total carrying & ordering costs:
Total cost =T.C.C +T.O.C
Total cost=((Q/2)XC) +(AO/Q)

This show, for a large order quantity the carrying cost will increase, but the ordering
cost will decrease on the other hand, the carrying cost will be lower & the order cost
higher in the lower order quantity.
So to obtain a formula for EOQ the total cost equation is differentiated with respect to
Q & setting the derivative equal to zero, we get-
1. Economic Order Quantity=

2X quantity required X ordering cost

Carrying cost
i.e EOQ=
Where,
2AOC A = Annual demand
O=Ordering cost
C=carrying cost

Graphical Approach:-
The EOQ can also be finding out graphically. In the following graph the cost i.e.
carrying cost, total cost & ordering cost are floated on vertical axis & horizontal axis
are used to represent an order size.

19
We note that total carrying cost increases as the order size increases because a large
inventory to be maintained.
On the other case the ordering cost curve declines because as the order size increases
the No. of order decreases, the total cost curve behave definitely. The total cost
declines in the first instance, but they start rising when the ordering cost decreases &
the carrying cost increases.

So the economic order quantity occurs where the total cost is minimum i.e. Q. The
following graph indicates how EOQ is determined by using graph method.

Total Cost

Costs
Ordering Cost

Q Order Size

Economic order Quantity Graph

Classification & Codification of Inventory:

For proper recording & control of inventory proper classification of various items are
essential. The inventory should be classified & coded respectively as per the re
identification. The coding may be done alphabetically or numerically.

Computerization:
A computerized inventory control system enables a company to easily track large
items of inventory. It is the automatic system of inventory, recording with drawls
&revising the balance. There is in built system of placing order as the computer
notices that there-order point has been reached.

20
Inventory Report:
To know the latest stock position of different items, the inventory reports are needed
to be producing continuously. This report contains all information on required for
management.

Perpetual Inventory System

It is a system maintained by the controlling department, which reflects the physical
movement of stock & their current balance. The store ledger & bin cards are helpful
in this system because this records help in knowing the movement of store. This
facilitates regular checking of stores without closing down the plant.
Advantages:
 Quick calculations of closing stock.
 Helpful in formulating purchase policies.
 Check on stores personal.
 Helpful in production planning.
 Investment under check.
 Errors and shortage daily detected.
 Increasing efficiency of organization.

Just In Time(JIT):
In JIT system material on manufactured component & parts arrive to the
manufacturing sites or stores just before few hours when they are put to use. JIT
system helps to save the carrying& other related cost to the manufacturer. The
success of the system depends upon how well a company manages its suppliers. The
JIT system complements the total quality management (TQM).

Difficulties Being Faced in Practicing Inventory Management System in J.K.

Paper Mills:
Demand &lead times are not static & deterministic in most of the actual cases.
RIL policy has not been followed as periodic preview system.
Inventory norms for some of the major items could not be followed mainly raw
material, pulp, coal &m/c clothing due to Govt. control & its seasonal
availability.
Location disadvantages of J.K. Paper mills forces to carry large inventories of
spare parts.
Most of times user departments don’t realize the cost involve in materials.

21
3.3. Explanation of variables
3.3.1. Definition of variables
A variable is a characteristic, attribute, or measure that can take on different values
or categories across different individuals, groups, or situations. Variables are
essential components of research as they represent the key concepts or factors that
researchers aim to investigate, describe, and analyze.

3.3.2. Types of variable

A. Dependent variable: A dependent variable is the outcome or effect observed
and measured in an experiment or study, which changes in response to
variations in the independent variable. It represents what researchers are trying
to understand or explain through their investigation.

B. Independent variables: An independent variable is the factor or condition that

researchers manipulate or control in an experiment or study to observe its
effect on the dependent variable. It is the variable that is changed or varied to
see how it influences the outcome
3.4. Research Design
3.4.1. Definition of Research design
Research design is the plan that outlines how data will be collected and analyzed to
address research questions. It includes identifying variables, choosing methods for
data collection, planning data analysis, and considering ethical guidelines.

3.4.2. Types of Research design

I. Descriptive Research Design: Describes characteristics of a phenomenon
using surveys or observational studies.

II. Exploratory Research Design: Explores new ideas or phenomena to gain

initial insights, often using literature reviews or interviews.

III. Explanatory Research Design: Establishes cause-and-effect relationships

through experiments or quasi-experiments.
IV. Experimental Research Design: Tests hypotheses under controlled conditions
with random assignment to experimental and control groups.

V. Mixed Methods Research Design: Integrates qualitative and quantitative

methods to provide a comprehensive understanding of a research problem.

22
3.5. Sampling Procedure
3.5.1. Definition of Sampling
Sampling techniques refer to the methods used to select a subset of individuals or
entities from a larger population. This subset is then studied to draw conclusions or
make inferences about the entire population.

3.5.2. Types of Sampling Techniques

Probability sampling Techniques Non-Probability sampling Techniques
Random sampling Accidental sampling
Judgmental sampling Stratified simple random sampling
Simple random sampling Snowball sampling
Multistage sampling Convenience sampling
Cluster sampling
Systematic sampling

3.5.3 Sampling Techniques used in JK Paper

Stratified simple random sampling process was adopted to select the sample size. The
questionnaire was given to the Respondents. The questionnaire was prepared in
simple language so that the participants could understand the questions. Leading
questions were avoided. The researcher is using a structured questionnaire or survey
methodology. This approach typically involves predefined questions with fixed
response options, aimed at gathering specific feedback on various aspects of a
training program.

3.6. Sample size

The total population was 108 out of which the sample size drawn was 60.
N=108 & n=60
3.7. Method of Data Collection
All the secondary Data was collected from published and unpublished records
available within the organization and the website, such as the Annual Report of the
Organization, theses, and dissertations. Primary data were collected through the
administration of questionnaires to officials at different levels in JK Paper. The
questionnaires were filled out by the respondents and sent back to the HR
Department. Finally, the data were analyzed and presented in the subsequent
Chapter

23
 Chapter – 4
Organization Profile
4.1 Introduction of the JK Paper Mill.
4.1.0. History and Journey
JK Paper Limited is among the foremost paper and packaging companies in India. In
the last six decades, JK Paper has emerged as a leading paper brand in the industry.
A brand that is forward-looking. A brand that extends beyond profitability for its
stakeholders. A brand that measures its success not by its bottom-line but by the
lives it has enriched.

JK Paper was founded in 1962 by the JK Organization, a business group with its
roots in India. The company set up its first paper mill in **Rayagada, Odisha**,
known as the **JK Paper Mills**. This marked the beginning of its journey as a key
player in the Indian paper industry. The mill initially focused on producing high-
quality writing and printing paper.

During the early years, JK Paper focused on developing its product range, gradually
expanding into a variety of paper grades to meet growing demand from industries like
publishing, education, and packaging. By the 1970s, the company had established a
strong presence in the Indian market, known for its commitment to quality and
innovation.

In the 1990s, JK Paper entered a period of modernization and expansion to meet

increasing demand and adopt more eco-friendly practices. In 1992, the company
commissioned a second paper mill, **Central Pulp Mills** (CPM) in **Songadh,
Gujarat**. This expansion enabled JK Paper to diversify its product portfolio,
introducing coated and uncoated paper, packaging board, and other specialty papers.

During this period, JK Paper began focusing more on sustainability and

environmental protection, launching initiatives to use raw materials sourced from
renewable plantations. The company also invested heavily in modernizing its
technology, embracing automation and cleaner production methods to improve
efficiency and reduce its carbon footprint.

24
In the 2010s, JK Paper continued its journey towards becoming a leading player in
the global paper industry. A key focus during this period was sustainability. The
company began working with local farmers in areas surrounding its mills to promote
social forestry programs, encouraging the cultivation of fast-growing species like
eucalyptus and casuarina for pulpwood. This helped ensure a sustainable supply of
raw materials, while also benefiting local communities.

In 2013, JK Paper undertook one of its largest expansions, investing in capacity at

both its Rayagada and Songadh mills. The Rayagada facility saw a significant boost
with the establishment of a state-of-the-art **multilayer packaging board machine**.
This enabled the company to enter the premium packaging board segment, which has
become one of its core business areas.

25
4.1.1. Current Operations
Today, JK Paper is one of the largest producers of paper and packaging board in
India, with a combined capacity of over **6 lakh tonnes per annum** across its two
mills. It exports to more than 35 countries and has a well-established domestic
market, with products catering to various industries including publishing, education,
and packaging.

The company continues to focus on innovation, sustainability, and enhancing

operational efficiency through automation and digital transformation. It has adopted
several eco-friendly practices, including the use of **non-conventional energy
sources**, water recycling, and the reduction of waste.

JK Paper is well-poised for future growth, expanding into value-added paper

products, improving operational efficiencies, and driving sustainability through
partnerships with local communities and global organizations.

This journey has cemented JK Paper’s position as a leader in India’s paper

manufacturing industry.
4.1.2. Vision, Mission& Values
Vision:
To be a dynamic benchmark and leader in the Indian paper industry
To be a trusted industry leader enriching lives and creating a better future.
Mission
Deliver sustainable solutions & profitable growth through:
Digitalization and Innovation
Cost Competitiveness
Customer Centricity
People and Community care
Outstanding & Agile Talent
Core values
Caring for People
Integrity including Intellectual Honesty,
Openness, Fairness and Trust
Commitment to Excellence

26
4.1.3Overview of JK Brands

27
Overview
JK Paper is a member of the multi-business industrial conglomerate known as JK
Organization. With a history spanning over a century, the JK brand has become
synonymous with innovation and superior product quality. The organization enjoys a
robust presence across diverse sectors such as paper, automotive tyres, cement, V-
belts, oil seals, power transmission systems, Agri genetics, defence electronics, dairy
products, education, hospital and health services.

Respect
JK Paper is one of the largest wood-based paper companies in India. The Company
possessed an installed capacity of 7.61 Lac TPA of paper and board at the close of
2023-24. The Company is present in the following segments directly or through its
subsidiaries: office paper, writing & printing paper, packaging board, coated paper,
specialty paper, corrugated packaging, monocartons and labels.

Management
The paper business enjoys a pivotal role within the JK Organisation. With roots going
back to 1938, JK Paper is currently led by Chairman and Managing Director Mr.
Harsh Pati Singhania and overseen by President and Director Mr. A.S. Mehta,
alongside a committed team of seasoned professionals and subject matter experts.

Employees
JK Paper stands as one of the major employers in India’s paper industry, with a
workforce of over 12,000 employees (permanent and contract) as of March 31, 2024.
The average age of these employees of 40 reflects a blend of youthful energy and
seasoned experience.

Presence
JK Paper is present across more than 60 countries, including US, UK, Bangladesh,
Singapore, Malaysia, Africa and the Middle East. The brand is globally renowned for
its quality and price-value proposition. It operates through a pan-India distribution
network of 468 trade partners and over 4,000 dealers.

28
Manufacturing competence
The Company possesses three state-of the-art manufacturing units of Paper and
Board in different geographies proximate to plantation wood and consumption
markets, nine corrugated conversion units, two monocarton units and one unit for
labels.

4.2 Description of Organization Process

The organizational process at *JK Paper Mills* follows a structured and efficient
model, reflecting the company's focus on sustainability, innovation, and operational
excellence. Below is an overview of the typical organizational process:

1. Corporate Structure
Executive Leadership: The company is headed by a Board of Directors and an
executive team, including a CEO and senior management overseeing strategic
decision-making.

Departments: It is divided into key departments like Production, Marketing, Finance,

Human Resources, Research & Development, Procurement, and IT, each functioning
with specialized teams.

2. Production & Operations

Raw Material Sourcing: Sourcing of raw materials (mainly wood pulp) is essential. The
company uses a mix of captive plantations and external vendors, emphasizing
sustainable forestry.
Manufacturing Process: The paper production process involves pulping, bleaching,
sheet forming, drying, and cutting into desired formats. JK Paper operates modern
paper mills with advanced machinery to ensure high-quality output.

Quality Control: Rigorous quality checks are in place at every stage of production.
This ensures that the end product meets international standards.

Sustainability Initiatives: There is a strong focus on eco-friendly practices, including

the use of recycled materials, reduction in water consumption, and energy efficiency.

29
3. Supply Chain Management
Logistics: Efficient transportation and supply chain mechanisms are vital for
distributing finished products. JK Paper operates warehouses and distribution
networks to ensure timely delivery to domestic and international markets.

Vendor Management: They maintain a strong relationship with suppliers and vendors
to ensure a steady supply of raw materials and other necessary inputs.

4. Research & Development (R&D)

Innovation: The R&D team focuses on developing new paper grades, improving the
quality of existing products, and implementing environmentally friendly technologies.

Product Development: The company continuously upgrades its product portfolio to

meet evolving market demands, including specialized packaging papers and copier
paper products.

5. Sales& Marketing
Branding and Market Segmentation: JK Paper targets different customer segments,
such as educational institutions, corporate, publishers, and the packaging industry.

Sales Channels: They employ both direct and indirect sales channels, utilizing a
network of distributors and retailers across India and globally.

Customer Relationship Management (CRM): They prioritize customer feedback and

satisfaction, maintaining long-term relationships and loyalty programs.

6. Human Resource Management

Talent Acquisition & Training: The HR department is responsible for recruiting
skilled talent and providing ongoing training and development programs for
employees.
Employee Welfare: Focus on employee well-being through health programs, safety
measures, and work-life balance initiatives.
Performance Management: Regular performance evaluations and incentive programs
ensure high productivity and motivation.

30
7. Finance & Governance
Budgeting & Financial Planning: The finance department oversees financial
strategy, including budgeting, capital allocation, and investment decisions.
Compliance & Risk Management: JK Paper adheres to industry regulations,
environmental laws, and governance protocols to mitigate operational risks and
ensure transparency.

8. Sustainability and Corporate Social Responsibility (CSR)

Sustainability Initiatives: A significant focus is placed on sustainable forestry, water
conservation, and reducing the carbon footprint. The company is committed to
adopting renewable energy sources and environmentally friendly production
techniques.

CSR Programs: JK Paper is involved in community development, education,

healthcare, and afforestation projects as part of its corporate social responsibility.
This process ensures that JK Paper Mills operates efficiently, sustainably, and
remains competitive in the global market.

31
 Chapter-5
Demographic Profile of the JK Paper Mills

5.1. Brief Overview

JK Corp Limited (formerly Straw Products Limited.) belongs to the Eastern Zone and is
one of the member-companies of JK Organization. JK Corp limited along with JK
Raymond, Bombay are regarded as the flagship companies of JK Organization. It is a
multi-product and multi-unit company.

JK Paper limited was incorporated in the year 1938 and started its operation with the
Board Mill at Bhopal for manufacture of Straw Board. Since then, the activities of the
Company have been diversified for time to time.

JK Paper Limited., comprising of two units JK Paper mills at Rayagada, Orissa and
Central Pulp Mills at Songarh, Gujarat, is the 2nd largest producer of quality paper
with turnover exceeding Rs 650 Crores. Today, JK Paper has total manufacturing
output in excess of1,70,000 TPA pulp and Paper, operating at an average capacity
utilization of 115%.In the year 1962, JK Corp Limited set up this integrated Pulp and
Paper MILL in the backward district of Rayagada in Orissa with an installed capacity
of 18,000 tones per annum. Presently the installed capacity of the Paper Mills and
Board Mills Stands at 90,000 tones per annum. Their Papers and Board enjoy high
reputation for qualities which are constantly, strive to maintain.

JK Paper Mills was setup with an annual installed capacity of 18,000 tones in 1962,
JK Paper Mills has expanded its operations ad now has five Paper Machines with an
annul installed capacity of 1,70,000 tones of Writing and Printing Paper of different
grades and varieties. Production of Paper and Paper Boards of high quality has been
the forte of JK paper mills. This image for quality has sustained the Mills so far and
has contributed to its own growth. The Mills works to carve a niche for its especially
paper in the market.

32
Plant Location – Jaykaypur
Jaykaypur is located on the slopes of the Eastern Ghat Plateau in the southern part of
Orissa bordering the state of Andhra Pradesh and its geographical position 83-25‟
East Longitude and19-10 ‟North Latitude. Its average height above the means
ealevelis 758 feet.

The township has a population of about 25,000 and has a self-sufficient marketing
complex, including Employees Multi-purpose Co-operative society, a sub- post office
and Telegraph office, a branch post office, a police outpost and has two banks viz.,
State Bank of India and Indian overseas Bank.

The township has two schools and places of worship of all major faiths. Singapur
Road Railways Station on the Raipur, Walter Section of southeastern Railway station
and is at a distance of 2km from the plant and all passenger and express trains halt
here.

JK Paper Mills, Jaykaypur-765017, Dist- Rayagada, Orissa (India)

The nearest town is Rayagada, which is the district headquarter and is located at
distance of about 10 km form the mills.

Rayagada District has a predominance of tribal population. Therefore, the villages in

and around the mill are inhabited mostly by the adivasis, who too are assimilating
the Industrial culture and thus coming into the national mainstream.

33
5.2. How JK Paper has delivered financial value?

34
Production Capacity of JK Paper Mills

MACHINE PLANT LOCATION INSTALLED CAPACITY,

TPA
PULP CPM 150,000 TPA
PULP JKPM 215,000 TPA
PULP SPM 110,000 TPA
PAPER CPM 50,000 TPA
PAPER JKPM 315,000 TPA
PAPER SPM 105,000 TPA
PKG. BOARDS SPM 31,000 TPA
PKG. BOARDS CPM 260,000 TPA

Objectives of JK Paper Mills

Sustained growth optimizing production potential in least possible time.

Leadership in niche market & customer-orientated marketing.
Inter nationalization of business.
Cost competitive news with international bench-marketing.

Strategic Orientation of JK Paper Mills

Strategic Planning & Strategic Objectives.

Quality assurance system.
Continuous improvement in Productivity, Quality, Cost Reduction & Customer
service.
Technology upgradation.
Process system development in all functions such as production, Maintenance.
Marketing, Finance Management & inventory Management etc.
Adopting modern management practices (TPM, JIT)* People involvement.

Environment Policy

JK Paper Mills, Jaykaypur, Rayagada and Orissa (India) are committed to:
Comply with applicable Environmental Legislations. *Prevention of pollution.
Continual improvement in Environmental Performance.
Afforestation through Social and farm forestry supported by colonel technology.
Cleaner technologies and processes &Conservation of Resources.
Reducing pollutants in discharged water* Reducing particulate missions.

35
Quality Accreditation:

First emphasis is quality product manufacturing is assured. All exports are checked
of their quality as per specifications laid down. Supplier considers no substandard
materials even at discount. J.K.P.M. is the first Indian paper mill to receive the ISO
9001(2015) certification. It also received ISO 14001 for environmental friendly in the
year 1998.

ISO- 9001 Quality System

JK Paper mills are the first Indian Paper Mills to receive the ISO-9001(2015)
certification. The ISO-9001 standards define an effective quality system with reference
to Organizational structures and responsibilities, processes and procedures and the
documentation and implementation of Quality Policy.

Export

Export of selected grades of paper is made to Australia, Malaysia, Singapore, Sri

Lanka, Bangladesh, Africa and middle east, UK etc. The company is dispatching its
consignment through water transport. Normally the company is dispatching the
consignment from its port located at Chennai.

TPM Policy

In continuous pursuit on organizational excellence by maximizing overall plant

effectiveness and achieving total customer satisfaction, the organization is committed
to
Achieve zero accidents, zero defects and zero breakdowns.
Continuous reduction in cost of production.
Involve all employees in systems and process improvement through teamwork.
Create a clean and safe working environment.

36
5.3 Major Departments

1.Pulp Mill 12.Power House

2.Stock Preparation 13. Civil Department
3.Paper Machine 14. Technology Development
4. Paper Finishing House 15.HRD & Personal
5.Finishing House 16. Township & Transport
6. Soda Recovery 17. Works office
7. Quality control 18. Accounts
a) Central laboratory 19. Stores &Yard
b) Pulp Paper Laboratory 20. Sales &Stock
and Pollution control
8.Mechanical Engineering 21. Security
9. Electrical Engineering 22. Dispensary
10. Instrumentation 23. Safety & Management
Services
11.Planning & Designing

5.4 Overview of Different Product’s

5.4.1 Surface sized Maplitho and Surfaced Sized Super High

Super grade of writing & printing paper with high finish and brightness.

A New paper specially developed for Laser Printers called “JK Laser” was introduced for

the first time in the Country. Their Mills continue to be the largest manufacture of

Copier Paper in India.

37
5.4.2 JK Paper Mills Product’s

BRIGHT MAPLITHO
Jk Copier A Paper most suited in all Xerox machines.
Surface Sized Pulp Board & Super grade of Board for Printing & Poaching
Surface Sized Super High with high finish and brightness.
Bright Pulp Board
Chacell or bond A superior variety Bond and Writing.
Jk bond A normal grade of Bond Paper.
Wood free printing Writing and printing paper with good finish
and brightness meant for export market.
Arimail A lower grammar writing & Printing paper
Used for Bills Books as well as Airmail.
JK laser printing Suitable for Laser Printer.
Titanium Dioxide Loaded A better grade food packaging paper.
Tissue Paper
Opaque Printing Paper A common food packing
White Off Set board A high bright board supplied to Cigarette
Industries.
Varnish able maplith Catering labels and quality printing jobs With
varnishing.
Yellow Printing Used of Yellow Pages in Telephone Directory as
well as for other quality printing.
Wax match Tissue Used for Match Stick so better quality.
Off Set Printing (Natural A paper used for Coating base.
Shade)
Black Centered Art Board For Playing Cards.
Ivory Board A Superior Coated board used for
Enamel Board A Superior coated board used for Visiting.
Chromo paper A Coated Board used for Printing Magazine
covers.

38
5.4.3 A Look At Some of JK Brands

39
5.4.4 JK Paper Products:

JK Copier: Suitable for any job on Office printers –Inkjet and Laser Jet, Photo
copiers and Multi-functional Devices.

JK Easy Copier: Ideal for Photo copying.

JK Excel Bond : Ideal for Letter heads, Brochures, Certificate, Presentations,

Project Reports, Envelopes, Pamphlets, Manuscript writing, Corporate Stationery.

JK Copier Plus : Ideal for Quality Photo copying, Project Reports, Resumes, Inkjet &
LaserJet printers, Presentation copies or any aesthetic job.

Sparkle Copier: Ideal for photo copying & desktop printing

40
Details of the Brand Products

JK Easy Copier:
▪ JK Easy Copier improves the efficiency of copier
operations.
▪ Increasing the drum life of the copier machine.
▪ Ensuring smooth flow of paper into the copier
machine preventing jamming.
▪ Excellent performance on all types of copier machines-high and low speeds, single
path or multi path.
▪ Long lasting shade.
▪ Good photo imaging.
▪ Designed for both single- and double-sided copying.
▪ Cut and packed with automatic machines- ensuring correct sizes and number of
sheets.
▪ End uses.

JK Copier
Excellent performance on all types of laser printers.
Features
• Designed especially for single and multicolor prints in laser printers.
• Ensures good picture quality-great for downloading from the net.
• Crisp print quality Long lasting whiteness.

JK Excel Bond
JK Excel Copier is a super White Watermark Bond Paper.
Features
• Super fine and ultra-white 97+brightness paper.
• Long lasting whiteness.
• Excellent whiteness.
• Ideal for resumes, Inkjet, Laser printing, corporate & personal letter heads.
End uses
▪ Photo copying and non-touch printing.

41
 JK Copier Plus
Super white multipurpose premium grade copier paper.
Features
▪ Designed especially for high resulance printing..
▪ Ideal for Desktop multi-color printers.
▪ Ensure very good crisp print quality.
▪ Smooth surface.
▪ Everlasting Whiteness.

Quality Assurance
First emphasis on Quality Product manufacturing is assured. All inputs are checked
for their quality as per laid down specifications. No sub-standard materials are
considered even at discount by supplier. All intermediate products are checked at
regular intervals and action is expedited in case of non-conformance. Final product is
rigorously inspected/ tested to ascertain conformance to Quality Standards.

All the specifications have been evolved from statistical data analysis of actual result
and the same is subjected to alterations as per consumer’s end. Any product no
conforming to the specifications is liable for rejections. Periodical evaluation of the
properties of the product is done in order to verify the process capabilities.

Average Outgoing Quality (AOQ) of the finished product wise valuated based on actual
checking and defects generated. This is to quantify inherent defects escaping
totheconsumers.AregularcheckingcreatesanallroundalertnessamongsttheFinishers.Fo
r bulk consumers (Reel order) 100% checking is ensured for a better AOQ. We have
3(three) Laboratories Viz., Central Laboratory, Pulp and Power control Laboratories
well equipped with latest testing instruments for controlling the quality of incoming
and outgoing products.

42
Customers Service
Regular feedback for the market is fed to the Mills by the Marketing Department. In
case of any problem, technical service is provided to overcome the problem arising at
conversion/consumer’ send. Interaction between the technocrats of the Mills and the
Wholesalers/Consumers is the regular feature of their organization. Arrangements
are made fodder the visit of wholesalers, Distributors and Customers to Mills for
direct discussion of the problems faced by them for further quality improvement.
Technocrats are very often deputed to the converters/consumers/wholesalers to gain
direct knowledge about the problem arising at market. Facilities are open to their
bulk consumers to be present at mills during manufacture of their product up to
their satisfaction. Interaction is also encouraged for suppliers of the inputs and
suggestions from the technocrats of their Mills with regard to quality improvement are
made for betterment of the products.

Variety of Paper Budgeted Production(In a year)

JK COPIER 48176
PULP BOARD 7873
SPARKEL COPIER 2043
JK COPIER PLUS 613
JK EXCEL BOND 1224
SS MAPLITHO (SHB) 25598
JK EVER VITE 3216

43
 Chapter- 6
Analytical Findings of the Study
6.1 Data Analysis & Interpretation
Performance appraisal of inventory management through ratio analysis:

(A) Inventory Turnover Ratio: -

It is the ratio of cost of goods sold and average inventory. It indicates how rapidly the
inventory is turning into receivable through sales. A high ratio is an indicator of good
inventory management. A low inventory implies excessive inventory level thus
warranted by production and sales activity.

Cost Of Average Inventory

Year Goods Sold Inventory Turnover
(Rs. In (Rs. In Ratio
crores) crores) (In times)
2013-2014 1721.37 291.51 5.9

2014-2015 2516.37 373.58 6.73

2015-2016 2887.33 352.56 8.19
2016-2017 2736.83 382.94 7.15
2017-2018 2826.83 394.23 7.17
2018-2019 3233.64 322.47 10.03
2019-2020 3014.13 447.29 6.73
2020-2021 2717.38 396.41 6.86
2021-2022 3889.99 406.05 9.58
2022-2023 6208.32 572.19 10.85

Inventory turnover ratio = Cost of goods sold/Average inventory at cost

&
Average inventory at cost=opening inventory + closing inventory
2

44
Interpretation:
Efficiency:
The inventory turnover ratio fluctuates over the year but shows a general trend
towards improvement, particularly in the later years (2018-2019).
Sales Growth:
Net sales have constantly increased, with a significant jump in 2021-2022 and 2023-
2024, reflecting store market performance.
Inventory Management:
Periods of high inventory turnover ratio (e.g., 2018-2019, 2022-2023) indicates
effective inventory management practices, ensuring the inventory is being sold and
replenished efficiently.

INVENTORY TURNOVER RATIO (IN TIMES)

1.2

0.8

0.6

0.4

0.2

0
1 2 3 4 5 6 7 8 9 10

45
(B) Inventory Holding Period:
It is the period for which inventory held by a firm.
The table shows the inventory holding period for the period 2012-2023
Inventory Turnover Inventory
YEAR DAYS Ratio (In Times) Holding Period
(In Days)
2013-2014 365 5.9 60
2014-2015 365 6.73 53
2015-2016 365 8.19 43
2016-2017 365 7.15 50
2017-2018 365 7.17 50
2018-2019 365 10.03 35
2019-2020 365 6.73 53
2020-2021 365 6.86 52
2021-2022 365 9.58 37
2022-2023 365 10.85 33

Inventory holding period = 365

Inventory Turnover ratio

INVENTORY HOLDING PERIOD

INVENTORY TURNOVER RATIO (IN TIMES) INVENTORY HOLDING PERIOD (IN DAYS)
60

53

53

52
50

50
43

37
35

33
10.85
10.03

9.58
8.19

7.15

7.17

6.86
6.73

6.73
5.9

2013- 2014- 2015- 2016- 2017- 2018- 2019- 2020- 2021- 2022-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

46
Interpretation:
Efficiency:
The inventory turnover ratio shows a general trend towards improvement particularly
in the later years, indicating enhanced efficiency in inventory management.

Inventory Holding Period:

The holding period fluctuates but shows a trend of reduction in the later years,
reflecting faster movement of inventory and better management practices.

Sales Growth and Inventory Management:

Period of high inventory turnover ratio are shorter holding periods (e.g. 2018-2019,
2021-2022, 2022-2023) indicates effective inventory management, contributing to
improved sales performance.

6.2. Data Presentation

1. Employees awareness of the company’s “primary aim”
The result of the study indicates that 96% of the respondents agreed that they are
aware of the companies‟ primary aim. To a very small extent, 4% of the
respondents said that they are not aware. The percentage of respondents, who felt
that they are aware, is a parameter of self-satisfaction that the employees know the
primary aim of the organization.
Total of 50 100%
respo ndent s
YES 48 96% YES
NO 2 4% NO

2. Proper maintenance of inventory and logistical activities helps to achieve

the primary aim, goal, objective soft he organization?

From the above data it can be interpreted that more than 76% of the employees
agreed the Proper maintenance of inventory and logistical activities helps to achieve
the primary aim, goal, objectives of the organization. 26% said that not only this can
improve the way to reach the goal of the organization.

47
 Total of respo ndent s 50 100%
RESPONDS
YES 38 76%
YE 76%
NO 12 24%
S
NO 24%

3. Role of inventory is useful in the achievement of logistic objectives?

From the above graph it can be interpreted that about 54% employees have an
opinion that the system helps in the achievement of logistical objectives & 46%
employees viewed that the system does not help to improve their performance.

Total of respo ndent s 50 100%

YES 27 54% YES

NO 23 46%
NO
4. The uncertainty in demand and lead time affects the inventory levels.
To the question, all the respondents said equally that it might be affected and may
not be whether 2 respondents didn’t answer the question. According to them the
system is nothing to do with their inventory as now a days just in time is
introduced.

Total of 48 100
respondents % YES
YES 24 50% NO

NO 44 50%

5. Just in time is whether always helpful for the organization? However, we

know that is very difficult to implement.
When the employees were asked about JIT function, it is found that
around28%respondents are clear about the question, to a large extent. 34%
respondents were clear about their System to a very large extent. Only 18% said that
they are clear aboutthe system to a small extent only, where as about 20%
Respondents are not at already to say that JIT function is really helpful.

48
 Total of respo ndent s 50 100%

A. To a very Large extent. 17 34%

B. Total Large extent 14 28%

C. To a small extent 9 18%

D. Not at all 10 20%

A B C D

6. Is the organization always thinks about optimum utilization of its resources

or inventory?

From the above graph it is clear that more than ABOUT 60% Respondents are consult
that the organization optimum utilizes the recourses available. Only 40 %
respondents viewed that they are not being agreed that about the utilization process

Total of r espon den ts 44 100%

YES 26 59.09%
YES
NO 18 40.90% NO

7.How clear you are about your organization’s priorities in maintaining the
inventory?
From the above data it can be interpreted that 40% of people saying that they are fully
clear about the organizations priorities in maintaining the inventory where as 36%
respondents are strongly & 24% are partially clear about this.

A B C
Total of respondents 50 100%

A. Fully clear 20 40%

B. Strongly clear 18 36%

C. Partially clear 12 24%

49
8. How you feel about the inventory management system of your organization?
From the above graph it can be interpreted that more than 46% Respondents agreed
that the inventory should valued and taken care of. Where as about 30% Respondents
viewed that system not at all serves this purpose they feel safe. About 24% have an
opinion that improve loyalty as per the need.
A B C
Total of 50 100%
respondents
A. Feel safe 15 30%
B. Feel valued & 23 46%
taken care of
C. Improve loyalty 12 24%
&commitment

50
 Chapter- 7
7.1 Findings
After the study I have found some critical things in the organization in maintaining
the inventory, supply chain of raw materials and finished goods. As I have done
aresearch of the employees to learn something more provisions of finding the
critical things in the organization, I made a questionnaire regarding some questions
on logistics and inventory and circulated that among the JK PM employees and
found. I have circulated the questionnaires among 50 employees including
managers, executives, officers, asst-officers of JKPM, Rayagada and found the
critical things from them. I met all of them personally and got the results out from
them although it is a very difficult task for me to do but the since re cooperation of
them made my task easier however I have not found any sources from some of the
employees of here as they are too busy in their work that they have not given any
time form. Still, I found some suggestions out from the rest of them and reached to
the conclusion and finding &suggestion part.

Inventory norms for some of the major items could not be followed mainly raw
material pulp, coal & m/c clothing due to Govt. control and its seasonal
availability.
Most of times user department don’t realize the costs involved in materials.
Location is advantages of J.K.PM forces them to carry large inventories of
spare parts.
Demand and lead times are not static and deterministic in most of the actual
cases.
RIL policy has not been followed as periodic review system.
ABC Analysis is not applied for the raw material like Bamboo and Hardwood.

51
7.2 Conclusion

This practical study is about the “INVENTORY MANAGEMENT”. Its purpose is to

present, as clearly and vividly as possible the nature, characteristics of modern day
inventory management techniques. This task poses a major portion of the current
assets of any firm. Many appropriate techniques are employed so as to control
unnecessary wastage of money in maintaining the inventory of the firm. In spite of
variety and the pace of change in the inventory management techniques proper
focus has to be made on the use of appropriate techniques to plan the inventory
level which affecting the production and sales of the firm because the major
revenue for any firm is from its sales. The intent of this report is to provide an
insight in the application of various inventory management techniques. It has
always been important to identify and apply various appropriate techniques of
logistic inventory management. So as to, achieve high performance sales and thus
reduce unnecessary costs.
The summer internship training was instrumental in acquiring through knowledge
about the Inventory Management at JKPM. Learnt the applicability of the study and
above all I got a chance to test and enhance my knowledge in any field.

7.3 Recommendation & Suggestions

In my opinion the company should give more emphasis on backward integration

by inducing the local farmers to produce Bamboo and hard wood which helps
the company to be independent over inventory in raw materials.
Timely connective action to control inventory will definitely yield fruitful results.
Much control should be exercised in procuring spare parts for old equipment
due to the fact that remaining life of these equipment’s will be very less and the
same way be replaced by new equipment shortly.
Due to logistics limitation and localization of industry some time the inventory
levels effected the organization should be carefully watched.
FIFO system should be implemented & strengthened.

52
 Cost reduction on inventory can achieved to a greater extent if the concerned
department like stores, purchase & user departments work in close co-
ordination.
The identification & disposal of stocks should be done on top priority basis.
Timely connecting action to control inventory will definitely yield fruitful results.
Much control should be exercised in procuring spare parts for old equipments
due to the fact that remaining life of these equipments will be very less & the
same way be replaced by new equipment shortly.
Standardization in respect of equipment will greatly help in reducing inventory
of spare parts
If ABC analysis is applied for the materials produced it helps to reduce the
unnecessary investment and if applied for raw materials it will reduce the CC
and OC.
Perpetual system needs to be strengthened.
Storage area for certain nature of item to be taken care & involved lively.

7.4 Summary

Inventory management at JK Paper Mill involves the systematic process of

overseeing, controlling, and optimizing the acquisition, storage, and distribution of
raw materials, work-in-progress, and finished goods. Efficient inventory management
ensures a balanced flow of materials to maintain smooth production while
minimizing holding costs.

Key aspects include:

Raw Material Management: JK Paper Mill primarily uses pulp, wood,
chemicals, and recycled paper as raw materials. A real-time tracking system
ensures proper stock levels, timely replenishments, and smooth supply chain
operations.

Stock Classification: JK Paper categorizes its inventory based on ABC

analysis (based on value and turnover rate). This helps prioritize high-value
items, reducing overstocking and stock outs.

53
 Just-In-Time (JIT): The company may adopt JIT practices to reduce excess
stock while ensuring materials are available as needed, thus cutting storage
costs and waste.

Demand Forecasting: Forecasting techniques are used to predict demand

based on market trends, seasonal changes, and customer orders. This
prevents understocking or overstocking.

Inventory Tracking Systems: An ERP system or other digital solutions

manage inventory data, from procurement to dispatch. Real-time data aids in
decision-making for procurement and distribution processes.

Waste Management: With sustainability in focus, JK Paper implements

measures to minimize material wastage and promote recycling within the
inventory process.

Safety Stock: To avoid disruptions in production, safety stock levels are

maintained for critical materials, accounting for any unexpected delays in the
supply chain.

Overall, JK Paper’s inventory management system is designed to align with

production needs, cost-efficiency, and sustainability goals, ensuring optimal
resource use and timely product availability.

54