UNIVERSITY OF MUMBAI

A PROJECT ON
HINDUSTAN PENCILS
MASTER OF COMMERCE PART I ( SEMESTER-I )

2014-2015
SUBMITTED BY
Mr. PRADEEP VASUDEV SEVAK
PROJECT GUIDE
Mr. Sabestian Rebello

Subject: Advance Costing Accounting

SHANKAR NARAYAN COLLEGE OF ART& COMMERCE

BHAYANDAR (EAST), THANE 40110

DECLARATION
I ,Mr. Pradeep Vasudev Sevak student of M.COM in Advance
Accountancy ( Semester-I ) of Shankar Narayan College Of Art
& Commerce hereby declare that
I have completed this project on HINDUSTAN PENCILS
in the academic year 2014-2015.

I declared that the project report is my original work and it has not
been

submitted

by

me

in

university/institution/statutory

part

body

or
for

full
the

to

any

award

of

other
any

degree/diploma/certificate.
Name of Candidate : Mr. Pradeep Vasudev Sevak
Place

Bhayander

Sign:
Date:16-NOV-2014

CERTIFICATE
I certify that the above declaration is true to the best of our
knowledge and belief.
Project Guide

Co-ordinator

Prof. Sabestian Rebello

Date:

Date:

16-NOV-2014

SHANKAR NARAYAN COLLEGEOF ART &

COMMERCE
BHAYANDAR (EAST), NAVGHAR ROAD , THANE 401105.

CERTIFICATE
This is to certify that Mr. Pradeep Vasudev Sevak has completed
the project titled A PROFILE ON HINDUSTAN PENCILS
under the guidance of Prof. Sabestian Rebello in practical
fulfillment of the requirement for the award of Master of
Commerce Part - I studies for academic period 2014-2015

PROJECTGUIDE

PRINCIPAL

Prof. Sabestian Rebello

Dr.V.N. Yadav

EXTERNAL GUIDE

CO-ORDINATOR

Mr. Ajit N. Jadhav

Date

16-NOV-2014

PLACE :

BHAYANDER

ACKNOWLEDGEMENT

The Gratification and joy that accompanies the successful

completion of any task would be incomplete without the humble
and deep felt expression of gratitude to everyone who has made
it possible.

I would like to convey my sincere thanks to Prof. Sabestian Rebello,

my internal project guide, who has been a constant source of
motivation and inspiration and has helped in bring out the best
in me.

CONTENT
INDUSTRY ANALYSIS
HINDUSTAN PENCIL LTD.

PROFILE
OBJECTIVE
MISSION
QUALITY POLICY
ENVIRONMENTAL POLICY
MANUFACTURING
DISTRIBUTION
PRODUCTS

MARKETING- HINDUSTAN PENCIL LTD.

CRS OF HINDUSTAN LTD.
SWOT ANALYSIS
MANUFACTURING PROCESS
PRODUCTION COST
FINANCIAL ANALYSIS
CONCLUSION
BIBLIOGRAPHY

Executive summary

Hindustan Pencils (HP) is the largest pencil manufacture in India,

having a market share of more than 85% and the oldest pencil brand
in India, Nataraj pencils. It has two of the biggest pencil brands in the
country - Nataraj and Apsara.
The objective of the study was to find out the influence of CSR in
building the brand image of Hindustan Pencils Ltd. The other
important objectives of the study were to find out the consumers
perception about CSR, consumers awareness about HPs CSR and to
find out the influence of CSR in buying behaviour.

INDUSTRY ANALYSIS
21st century perspective
The world has changed, it is not the same as it was 15 years back,
every thing has been computerised, new technologies comes every
day. From dawn to dusk we use a lot of technical products. The
standard of living of the people has improved. The lifestyle of people
has changed. So has the way of recording things. In this modern era
people use computer to record information, transaction and any
communication. Electronic mail has replaced the normal written
mails. Manual recording of transactions has been replaced by
computerised transaction.
But still writing letters and notes retain popularity. A kid in
school starts writing with the pencil and continues to use it through
out his life. The usage of pencils has not come down even in this
technical era. So even when all the experts doubt the future of the
pencil industry, the emotional Indian consumer extends the life of
pencil industry. The atmosphere in the stationery market is still the
same during the June -July season when the schools re-open and the
kids are hunting these shops for new pencils and pens.
An article titled Bunder Street's the place for affordable
stationery written by Meera Srinivasan published in The Hindu
dated 23/3/2006 supports the above point.

Bunder Street looks ready for war. Not one that uses knives or
guns but pens and pencils.
With hundreds of new varieties of stationery items stocked,
Bunder Street in Parrys Corner is all set for the upcoming academic
year. There are nearly 500 stationery shops in the lane off the Flower
Bazaar police station. Fountain pens, ballpoint pens, pencils, erasers,
sharpeners, rulers, notebooks, files, CD cases, pencil boxes,
geometry boxes, colour pencils, paints, correction pens, adhesives
and charts are but a few items that catch one's eye in a glance.
PENCIL a low involvement product which seems to be really
simple is not as simple as it looks in manufacturing it. An ordinary
lead pencil requires 40 different raw materials the main being wood
and lead.
Pencils Manufacture
The 'pencil', derived from the Latin word penicillum,
seems humble enough to be hurriedly put together in one's backyard.
In this aspect, the simplicity of the pencil is truly misleading. The
common pencil uses about 40 different raw materials, the basic ones
being wood, graphite and clay. The indigenously grown wood
brought specifically from the state of Jammu and Kashmir, is first cut
into slats that are as long as but only half the width of the pencil. The
slats are then subjected to wood staining and grooves are cut into the
slats.

Next, the lead, which is a mixture of micronised graphite and ball

clay, is dried and inserted into these grooves. The leads are bonded,
shaped and compressed to ensure that they are breakage resistant and
long lasting. Each of these slats with lead is then stuck together with
another slat without lead to complete the pencil. Once the pencil is
created through this "sandwich" method, they are then meticulously
shaped,

lacquered

and

printed

as

per

requirement.

In this technical era, pencils have to compete with other new

technologies like computers for its market. But there is also a more
serious threat from the internal competitive products such as the new
hi-tech versions of the traditional wooden pencil. This competition is
evident in the real market place as the article Pencil industry shakeout has the stronger in fray, by R. Balaji published in The Hindu
Business Line explains.
The basic writing instrument, a thin core of graphite covered in
wood, the pencil, has stood the test of time and is here to stay.
Though its hi-tech siblings, the mechanical pencil and the ballpoint
pen, may draw away a share of its market, its simplicity and tenacity
in keeping pace with market preferences on aesthetics and utility,
have assured it space on shop shelves.
But as observed with a high-tech product, the pencil industry, for
all its simplicity, has gone through a phase of consolidation, with the
giants gobbling up the smaller manufacturers and the multinationals
setting up manufacturing facilities overseas. But a few small players
have managed to carve a niche for themselves.
9

Hindustan Pencils Ltd.

PROFILE
Established, in 1958, Hindustan Pencils has perfected the process of
manufacturing pencils to a fine art. With the latest machinery in
place, today HPs state-of-the-art manufacturing units manufacture
upto 5.25 million pencils, 0.80 million sharpeners, 1.75 million
erasers

and

0.12

million

scales

daily.

HPs obsession with quality has driven them to build their own
manufacturing infrastructure. Every little component like pencil
lacquer, Sharpener blade & screw that goes into the making of their
products, are produced in-house. HPs brands 'Apsara' and 'Nataraj'
have emerged as household names. In other words, Hindustan Pencils
Ltd has come to personally quality
A competitive

at

price. Their success goes hand in hand with their

social responsibilities. By growing trees specifically for wood used in

pencil making, and using environment friendly raw materials, they
ensure that trees are insulated from the hazards of pencil
manufacture.
Type of company : Privately held company
Founded in : 1958
Head office : Mumbai
10

Objectives
to find out the influence of CSR in building the brand image of
Hindustan pencils ltd.
to find out the consumers perception about CSR.
to find out the consumers awareness about HPs CSR.
to find out the influence of CSR in buying behaviour
Mission
Delighting consumers with globally recognised stationary.
QualityPolicy
Hindustan Pencils is committed to the manufacture of market
quality products of international standards at competitive prices, in
the stationery field. Constant effort is made by the company to meet
international safety standards and to prevent degradation of the
environment.
Environment Policy
Constant effort is made by the company in improving processes
and maximizing utilization of inputs to prevent degradation of
environment. All ingredients used by the company are non-toxic in
nature. Wood being one of the main inputs for pencils, efforts are
made to develop plantations to ensure renewal of this precious
natural resource. Research & Development efforts are also done to
switch over to eco-friendly water based lacquers and PVC-free
formulations.
11

Manufacturing
Given that enduring reliability is the hallmark of HPs products,
understandably, they are manufactured using the most stringent
quality controls backed by years of research and development. The 7
factories of HP at 5 locations in India employ the latest in technology
and the best of raw materials to grant to its products the quality, so
ingrained in its product development philosophy. Besides developing
the machines for manufacture indigenously, every component that
goes into the making are produced in-house by Hindustan Pencils.
Their concern for the environment has led them to grow their
own trees to satisfy their requirements for wood, an essential
ingredient in pencil manufacture. This practice in turn ensures an
uninterrupted supply of wood of consistent quality from plantations.
All said and done, the outcome of their manufacturing process are
products that offer the customers excellent "value for money".
The process results in bonded lead pencils of high calibre, about
18 cms long that can draw a line 55 kms long and on an average
write about 45,000 words. The pencils that write smooth and dark are
tipped at one end to indicate the end that has to be sharpened,
ensuring maximum utilization. Every stage of the process is executed
with maximum controls and quality checks to ensure that the product
is truly world-class.

12

Distribution
Hindustan Pencils large manufacturing capacity at 5 locations
across India is backed by an impressive distribution network, which
ensures that their products find their way to every household in
India. 25 depots/C & F agents, 2,500 distributors, 1, 50,000 retail
outlets and a formidable field force complete the supply chain. The
depots are spread across the length and breadth of the country and are
located at Ahmedabad, Sewree, Bhivandi, Nagpur, Indore, Raipur,
Delhi, Gaziabad, Jaipur, Kanpur, Pabhat, Ranchi, Cuttak, Gauhati,
Chandigarh, Dehradun, and Goa.
Global Sales
HPs commitment to quality, competitive pricing and its
enormous manufacturing capacities have carried their products well
beyond Indian shores. At present, they export to over 32 countries
which includes Bahrain, Bangladesh, Belgium, Botswana, Brazil,
Burkina Faso, Canada, Chile, Costa Rica, Cyprus, Dominican
Republic, Dakar, Egypt, El Salvador, Gabon, Gambia, Ghana,
Guinea, Guatemala, Hungary, Honduras, Italy, Iran, Israel, Ivory
Coast, Jamaica, Jordan, Kenya, Kuwait, Mali, Mauritius, Mexico,
Morocco, Myanmar, Nicaragua, Niger, Nigeria, Oman, Panama,
Peru, Philippines, Portugal, Puerto Rico, Saudi Arabia, Senegal,
South Africa, Spain, Sri Lanka, Suriname, Tanzania, Thailand, Togo,
Turkey, U A E, U K, U S A, Venezuela, Vietnam, West Indies.

13

Products
Hindustan Pencils has two big brands Apsara and Nataraj and
they have come up with a new brand Colorama which has been
developed after a lot of research with a view to promote creativity
among kids. Under each brand they have

Senior officials of

Hindustan Pencils Limited, the brand owners of Nataraj and Aspara

range of pencils, said that the company is producing pencils in 14
varieties and it has over 150 products including pencil sharpeners,
erasers, etc. The pencil market in India is estimated at around Rs. 200
crore and the company has over 85% market share, despite stiff
competition from unorganised players and international brands. The
company produces around 15 lakh pencils a day, using branded lead
and high quality wood.
HP has recently entered into colouring instruments market
under the brand name : Colorama and has recently entered into ball
pens market as well Narayan Khetan, head, retail division - south
zone, BILT said that the retail division of Ballarpur Industries
Limited (BILT), a leading paper manufacturer, has entered into
producing notebooks as a forward integration.
It markets notebooks for kids and youth segment under the
brand names of '10 on 10' and Matrix respectively. Launched one and
a half years ago, the retail division which markets notebooks and
papers is growing at 30 per cent per annum. The turnover of the retail
division is Rs 2,500 crore. The company is aiming for the number
one position in the Indian notebooks market in the next 3 years
14

Apsara
Black lead pencils are available in a number of types under
Apsara brand name. Each one is for a different use example the
steno pencil is for distinctive hand writing, in the same way they
have differentiated between different pencils under the same brand
Apsara
They are as follows Writing Pencils
>> 01G96 Apsara Triangle Metallic Pencils
>> 01G37 Apsara Twinkle 509 Extra Dark
>> 01G16 Apsara 510 Printed Pencils
>> 01G03 Apsara Platinum Pencils
>> 01G01 Apsara Beauty Pencils
>> 01G02 Apsara Gold Pencils
>> 01G11 Apsara Natural Pencils
>> 01G10 Apsara Matt Magic Pencils
>> 01G33 Apsara Twinkle 507 Pencils
>> 01G15 Apsara Triangle Natural Pencils
>> 01G15 Apsara Triangle Yellow Pencils
>> FX 01G21 Apsara Yellow Pencils
>> 01F01 Apsara Steno Pencils

15

Nataraj
Writing pencils
Colour Pencils
Checking Pencils
In Nataraj under writing pencils they have a number of different
products.
>> 01L01 Nataraj 621 Pencils
>> 01L62 Nataraj Marble Pencils
>> 01L61 Nataraj Metallic Pencils
>> 01L33 Nataraj Picture Pencils
>> 01L03 Nataraj Yellow Pencils
>> 01L05 Nataraj Monday to Friday Pencils
>> 01L17 Nataraj Fluorescent Pencils
Each and every pencil above mentioned is classified from one
another for example Monday to Friday pencil is for, For special
writing each day at school and picture pencil is for, For clear and
smooth writing

16

Marketing Hindustan Pencils Ltd.

Pencils have always been an integral part of ones academic life.
From the lower kindergarten "comrade in arms". People are using
pencils now at office (some times more than a pen) after a long gap
from their childhood. Many senior executives use pencils rather than
pen in scribbling their notes ( not for official circulation). Still this
pencil is ubiquitous. May be if the usage of the pencil in ones life
was plotted it would be some thing like this
0-4 : no pencil
4-10 : only pencil
10-19 : pencil only for drawing/graphs etc
19-35: Pencil what is that? May be for bank exams.
35-55: Pencil for scribbling (person in a senior position in corporate
scene)
Nataraj is a brand from Hindustan Pencils Ltd which is the
oldest brand in india. Nataraj is famous for its quality and its feature
of not breaking easily . The brand was positioned as the " pencil with
special bonded lead". The old cartoon ad and the jingle " Nataraj still
champion " still has some recall with the public. Nataraj took a break
from ads for the past five years. Now they are planning to relaunch
the brand in the Indian market where Camlin is eating up the portion
of market share.
Pencil market is sustaining in the Indian market because
there is a restriction in using pen in the lower primary schools. Even
in China , pens are taking over the market. The time is not far enough
for restrictions in using pens in lower classes to be lifted. Then where
will the pencil go.

17

Pencils are used in schools mainly to improve handwriting. But

experience proves other wise.Secondly wooden pencils are a drain in
our forest resources. Already there are pencils which have plastic
body and lead refills. Camlin have segmented the market and have
launched Exam Subbrand for pencils to be used during exams ( a
smart move). But when pencils are not going to be used at all , what
is the solution? Is it going to be a tool only to be used for drawing? If
there are no pencils , what about erasers and sharpener?
As the campaign has been worked out in different languages,
the creative team worked out different lines, written during the spots.
The whole idea is Nataraj versus other pencils.. Considering the
brand has been on air over the years before it disappeared for a while,
the creative professional felt the main challenge was to sustain the
legacy normally associated with the brand.
Nataraj pencils have a wonderful heritage. We have all used
them over the years and I, for one, have fond associations with the
brand. Working on new advertising for the brand meant keeping that
great heritage in mind and simply updating it - giving it a
contemporary spin, he said. On the decision to prefer animation
over live-action, Chattopadhyay said,in an interview Our scripts
called for animation. And since children are part of the target
audience, we felt it would add the fun element that would appeal to
them. We all felt that working on a category like this allows one to
think in a childlike manner. And to be creative in any sphere you
have to, in any case, tap into the child inside. So, all in all, it was a
highly satisfying experience
18

Corporate Social Responsibility Of Hindustan Pencils Ltd.

Corporate social responsibility of Hindustan Pencils starts with
their efforts to protect the natural resources, which is evident from
their environment policy.
CSR in cutting competition
In this highly competitive market manufacturers are trying
do a lot of marketing activities to get a major share of market. It is
also very important for the companies to build a very good brand
image one of the major tools used by the companies is CSR
corporate social responsibility. Nowadays companies are trying to
do many welfare activities that will give a positive image for the
company and will create goodwill and loyalty among consumers.
An article in Netlink Solutions (India) Ltd talks about these
welfare activities that are done by these companies the article states
that School stationery industries have come up in a big way by
contributing in education awareness, thus participating in social
programs hand in hand with the government. Some companies have
also adopted villages for providing full education to the rural children
and some stationary industrialists have started contributing some of
the company's profit to the government for rural development. A
socially sound company who knows it's social role is bound to
receive popularity among others.
19

Environment Policy of Hindustan Pencils Ltd

Constant effort is made by HP in improving processes and
maximizing utilization of inputs to prevent degradation of the
environment. All ingredients used by the HP are non-toxic in nature.
Wood being one of the main inputs for pencils, Efforts are made to
develop plantations to ensure renewal of this precious natural
resource. Research & Development efforts are also made to switch
over to eco-friendly water based lacquers and PVC-free formulations.
HPs objective is not limited to churning out millions of pencils
daily. Hindustan Pencils do realise the greater responsibility they
have towards the society and their commitment to this responsibility
is realized through the contribution made to the preserve trees. They
protect the bio-diversity and to maintain

ecological

balance.

Rather than relying on forest grown timber, they use

renewable sources of timber by procuring raw materials from those
who either grow trees on their farms, land or in the court yard of their
residential premises.
Contributing to India's national policy of increasing the forest
cover from 19.3% at present to 33% in years to come, HP has
ventured into developing our own timberland. These timberlands are
short rotation plantations that are developed by converting untapped,
fallow land resources to superior quality tree Plantations.
.
20

Other CSR activities of HP

Apsara Colorama Excellence Awards
Hindustan Pencils Ltd. has contributed in its own way to
cultivate the habit of good handwriting and to generate interest in art
among thousands of children across the country. One of the popular
event organised by HPL is Apsara Colorama Excellence Awards
an Inter-school Art Contest in Mumbai. It has been organized at Sir J.
J. School of Arts, Mumbai since 1969. Apsara Excellence Awards
has been a platform for bringing together budding artists from
thousands of schools and surrounding areas since inception.

39th Apsara Colorama Excellence Awards 2007

39th Apsara Colorama Inter School Art Contest 2007 was
organised at Sir J. J. School of Arts, Mumbai on January 28, 2007.
This year, 1,600 children from schools across Mumbai and
surrounding areas participated in the event.
The entries were judged by a panel of judges comprising
of eminent artists like Mrs. Prafulla Dahanukar, Mr. Suhas Bahulkar,
Mr. Dattatreya Padekar and Mr. Manohar Mhatre.
Three prizes First, Second and Third and ten consolation
prizes were awarded per group. The best entry among all was
selected and Ms. Diya Nambiar, a second class student of Kendriya

21

Vidyalaya 2, Colaba was awarded with The Apsara Colorama

Excellence Awards Rotating Trophy.
Hindustan Pencils Ltd apart from the above mentioned
they also do a lot of other activities like handwriting competition,
painting competition etc to promote the creativity among kids and to
improve the skills of the kids. Hindustan Pencils do these kind of
activities on a regular basis every year. They do it individually and
also in association with schools and other educational and non profit
organisation.

Awards
Three gold medals, six silver medals and nine bronze
medals were awarded under each level apart from 19 consolation
prizes. While B. Rajkumar, a Fine Arts student at Potti Sree Ramulu
Telugu University bagged the gold medal under the degree students'
category, K.M. Praveena of K.V. One Public School, Uppal and K.
Mamatha of Vardhana School bagged the level one and level two
gold medals respectively. (source The Hindu)

These are some of the activities that are done by Hindustan

pencils ltd. with a view to develop the skills of kids and to develop
the inherent talents of kids.

22

SWOT ANALYSIS OF HINDUSTAN PENCILS LTD

STRENGTH

1. Children are the most important strength of HP

2. Quality of the HP is always consistent
3. They take great care in maintaining the ecological balance as
wood is the main raw material for pencil
4. HP are the Oldest market leader were they have loyal
customers
5. They are manufacturing 25Lakh pencils everyday.
WEAKNESS
1. Same pencil cannot be used for all purpose.
2. Pencils are now available in plastics which are not
manufactured by HP.
3. Reduction of ADS in television has given a reduction in sales.
4. Lots of confusion in selecting the products.
THREAT
1. New companies entry.
2. More number of competitions with existing companies.
3. ITCs note books have become a major threat for the HP.
OPPURTUNITIES
1. Demand for pencils are increasing every year.
2. Raw materials may get cheaper.
3. Engineering sector is gaining more importance, where usage of
pencils, scales will increase.

MANUFACTURING PROCESS
INTRODUCTION :
23

Pencil Lead is a thin round stick used a core item of a pencil,

which is used for writing notes, rough works and drawings. This lead
is made out of Graphite and clay where clay acts as a binder.
Graphite is a form of Carbon so it is black in colour and greasy to
touch and solves the purpose of writing. Graphite pencils were
invented by Nicholas Conte in 1795 AD but till today same old
concept i.e. use after mending it by sharpener is being continued.
Now a part of our population do not like to mend their pencil
but strongly desire to use a pencil which could be functioned without
sharpening. This project thus aims at providing the users a
readymade pencil stick, which will help them to get a cooked food.
i.e. just insert the lead stick into a ball pen type cover and operate the
movement of the lead stick by pressing top switch fitted on the top of
the pencil cover with a rubber optional. Its smoothness in writing
and fine delible black mark on paper pencil is still satisfying the need
of the people. Pencils are used by artists, Engineers, Students of
drawing, writing notes, rough works etc. pencils with sticks of
different colours are showing a positive demand over ball pen,
because of its long durability and economic in price. Day-by-day
writing papers are becoming dearer. Rough work by ball pen leads in
user a wastage of paper whereas due to the unique erasable property
of the pencil-writing by rubber, the user can use the same paper
several times for rough work and thus can save the excess
expenditure over paper.

MARKET POTENTIAL :

At present the market demand of West Bengal is being met by

the supply from a few manufacturers from Mumbai and also
24

from a few local Small Scale manufacturers e.g. M/s. Camlin

Ltd., Mumbai and M/s. Hindustan Pencils Ltd., 510, Himalaya
House, Mumbai. As per market survey the demand of this type of
lead stick of 60 mm length and 0.5mm dia has been estimated
based on total no. of population in West Bengal.
Available market demand 80% of the potential market demand
96 lakhs i.e. 76 lakhs pkts each of 15 no. lead stick. At present at
least 25% of the available market has been penetrated by the
leading manufacturers as stated above. However, there is huge
demand still exists in the available market of Jharkhand.
Considering this demand gap entrepreneurs of West Bengal can
easily take up a Graphite thin lead stick plant with installed
capacity 5 lakhs pkts. Per month i.e. 5% of the available market
demand.
BASIS & PRESUMPTIONS :

1.
2.
3.
4.
5.

6.
7.
8.

Labour wages are taken at minimum applicable.

Interest rate on capital investment has been considered @ 15%
per annum.
One month inventory of Raw Material has been considered.
The unit will work for 300 days in a year in single shift only.
The efficiency of men and machinery were considered as 80%
for achieving full capacity production.
Cost of machinery and equipment, raw materials and
consumables, other expenses etc. indicated in the profile are
based on the price prevailing at the time of project profile
preparation.
Depreciation on plant and machinery @ 10% and General fixed
asset @ 10% & building will depreciate @ 10% per annum.
Product mix only one variety e.g. length 60mm and 0.5mm dia
graphite thin lead stick.
While calculating fixed cost 40% of salary expenses has been
considered as fixed expenses where as for other contingent
expenses and power expenses 20% and 25% have been
considered as fixed expenses respectively.

The Pencil Making Process

25

Our story of how cedar pencils are made is a celebration of timehonored traditions married to modern manufacturing facilities. The
journey begins at a sawmill, where Incense-cedar logs are cut into
lumber called Pencil Stock or Pencil Squares. This lumber
product is then dried in a dry kiln to reach a uniform moisture content
before being shipped to the Slat factory.

10 Steps to Pencil Perfection

1. At the Slat factory, pencil stock is cut into Pencil Blocks a
bit longer than the normal length of a pencil. The small amount
of extra length is called trim allowance that bears importance
later on in the process.

2. Pencil Blocks are cut into Pencil Slats using specially

designed circular saws. These saws are very thin in order to
reduce the amount of waste in the form of sawdust. Due to
the natural grain and defect characteristics of the wood, slats
are sorted by width and grade for further processing. Slats
without defects are called full ply. Some slats are cut to
smaller widths (called narrow ply) or shorter lengths (called
memos) in order to eliminate the defects and to produce a
variety of usable grades and plies of pencil slats.
3. Pencil Slats are treated with wax and stain to obtain uniform
color and improve the machining and sharpening
26

characteristics of the wood for future processing. The slats

pass through a final inspection process and then are packaged
and shipped to Pencil Factories all over the world.

4. At the Pencil Factory a Groover machine cuts grooves into

the slats to accept the writing core (or lead).

5. Writing cores made from a mixture of graphite and clay

are placed into the grooves. Coloring pencils may use waxbased cores while many other formulations are used in
cosmetic pencils.

6. A second grooved slat is glued onto the first making a

sandwich by a machine called a lead layer. The
sandwiches are then clamped and held together tightly while
the glue dries.

7. Once the glue dries, the sandwiches are transferred to a

Shaper and are first trimmed to assure that the sandwich is
square and that all the pencils will be the proper length. Then
the sandwich is machined into pencil shapes such as
hexagonal, round or triangular.

27

8. Individual pencils cut from the sandwich are ready for further
processing. Any pencils with defects, such as uncentered leads
or chipped wood, are discarded at this point.

9. Next, each pencil is painted in a machine receiving from 4-10

coats of lacquer, depending on the desired quality of the finish
and the color depth. A recess is cut to accept the ferrule. (After
painting, some pencils are wrapped in decorative film or foils
with fancy designs; although, most pencils are imprinted with
the brand name by stamping the foil into the surface of the
pencil.)

10.On a tipping machine, an eraser and a ferrule (the metal ring

that holds the eraser to the pencil) are crimped into place on
each pencil.

28

1.

Submission of Project Report and Loan

1 Month
Application
2.
Processing of loan application and sanction of
2 Months
Loan
Disbursement of loan 1st Installment
3.
1 month
4.
Building construction
3 Month
5.
Machinery selection & placement of order
1 Month
6.
Order processing by suppliers and receipt of
5 Months
machinery at site.
7.
Formalities in the electricity board &
4 Months
connection of power line.
8.
Procurement of raw materials & packing
1 Month
Material
9.
Errection of machinery, trial run comprising of
1 Month
operators training idle running of machineries
trial production etc.
TECHNICAL ASPECTS :
1.
Process of Manufacturing :
Finely divided Graphite and clay (lime free stoneware clay) are
wet grinded in a ball mill to get a required fineness of the mix.
After grinding, the sludge passes to filter press. Excess water is
removed by hydraulic dewatering press, then the plastic mass is
compressed gradually by the extruder at an extrusion pressure
800 to 2000 PSI and finally it is forced through die of the
diameter of the finished lead into a continuous string.
The die head is mounted on a toggle joint so that the string is coiled
as it comes out of the die and is caught in a shallow metal dish or on
a carrying board. The lead is uncoiled by hand and pinched off into
lengths each equal to 60mm length. The extruded leads are laid
between boards and allowed to air dry. The dried leads are arranged
in bundles in Graphite boxes for firing in a kiln at a temperature of
80-100C at a slow controlled rate of heating. The hot products are
cooled out of contact with air. The cooled leads are immersed in
boiling wax to remove grittiness and to increase strength and
smoothness. The leads coming out from the boiling wax bath are
packet 15 nos. in a rectangular plastic container 65 x 15 x 5mm.

29

2.

Quality Standard :
It should conform ASTM D 4236.

3.

Production Capacity [Per Annum] :

Quantity
: 600 Lakhs plastic container each of with 15 nos.
thin Graphite stick per annum.
Value
: 128 Lakhs

4.

Motive Power : 120 HP

FINANCIAL ASPECTS :

1.

Fixed Capital :

Land
Building
Work shed
Raw material stores
Finished goods
Office
Water position and supply lining arrangement
Boundary wall

3650 sq.ft

Rs.1,82,000/-

17x42
16 x 10
16 x 10
16 x 10
L.S.

Rs.1,40,000/Rs.28,000/Rs.28,000/Rs.72,000/Rs.20,000/Rs.75,000/Rs.3,65,000/-

TOTAL :

30

Machinery & Equipments :

Sl.No Description
.
1.
Ball mill 500 Kg. Cap. With accessories and
Motor
2.
Agitator Plastic Tank, Capacity 500 ltr. With
accessories and motor.

Qty.

Price [Rs.]

1 no.

20,000/-

1 no.

15,000/-

3.
4.

1 no.
1 no.

20,000/50,000/-

5.
6.
7.
8.

9.

Filter press & pump 1 dia, 5 plates

Extruder barrel diameter 100mm pressure 60
bar volumetric output 0.5 m/h, power
requirement 30 KW approx.
Corrugated wooden plates (2x2)
Dryer (700 x 1050 x 240mm)
Furnace 1100C (700x1050x240mm) with
automatic programme controller
Copper wax bath connected with heater
(1050x1050x300mm)
Sorting machine with counter & belt
conveyor 10

Add : Sales Tax and Excise Duty @24%

10.
11.

12.
13.
14.
15.
16.
17.

50 nos.
2 nos.
1 no.

20,000/40,000/1,00,000/-

2 nos.

30,000/-

1 no.

20,000/-

75,600/-

POLLUTION CONTROL
Pollution control equipment complete with 1 no.
ducts, blowers and filter bag system
Laboratory equipment
L.S.
Add. Installation & erection @ 15% of
L.S.
Sl.No. 1 to 11
Scooter (for marketing)
--Office furniture & Equipment
L.S.
Fire fighting equipment
L.S.
Generator 5 KVA
Weighing Scale
Show room cum distributor center at prime 2 nos.
area
TOTAL
:

31

50,000/50,000/50,000/35,000/25,000/5,000/30,000/5,000/3,00,000/Rs.5,50,000/
-

1.

2.
3.
4.

Preliminary expenses, such as preparation of project

report, registration fee, legal fee, processing fee with
different institution
Traveling & negotiation
Trial run expenses, salary of staff during
construction period.
Security deposited JSEB
TOTAL
:

Rs.20,000/-

Rs.5,000/Rs.20,000/Rs.15,000/Rs.60,000/-

PRE: OPERATIVE EXPENSES

Total Fixed Capital :

1.
2.
3.
4.
5.

Land
Building
Machinery Equipment
Other general fixed assets
Pre-operative expenses
TOTAL

Rs.1,82,000/Rs.3,65,000/Rs.3,90,600/Rs.5,50,000/Rs.60,000/: Rs.15,47,600/-

32

WORKING CAPITAL [PER MONTH]:

I.
A.
Sl.No
.
1.
2.
3.
4.
5.

Personnel :
Administration :
Description
General Manager
Clerk cum typist
Peon
Watchman
Sweeper
TOTAL
15% for service benefits
TOTAL

B.
Sl.No
.
1.
2.
3.
4.
5.
6.
7.

Production :
Description

Supervisor
Ball mill operator
Semi skilled labour for mixing area
Semi skilled labour for extrusion area
Semi skilled labour for drying
Skilled labour for firing articles
Semi skilled labour for wax bath
operation and sorting area
TOTAL
15% for service benefits
TOTAL
C.
Selling & Distribution :
Sl.No Description
.
1.
Sales Manager
2.
Sales Representative
3.
Sales Clerk
TOTAL
15% for service benefits
TOTAL

No.

Total (Rs.)

1
1
1
2
1
:
:
:

10,000/3,000/1,200/2,400/1,200/Rs.17,800/Rs.2,670/Rs.20,470/-

No.

Total (Rs.)

1
2
4
2
2
1
2

5,000/6,000/4,800/2,400/2,400/3,000/2,400/-

:
:
:

Rs.26,000/Rs.3,900/Rs.29,900/-

No.

Total (Rs.)

1
2
1
:
:
:

9,000/10,000/3,000/Rs.22,000/Rs.3,300
Rs.25,300/-

Total wage bill per month : ( A+B+C)

A.
B.
C.

Administration
Production
Selling & Distribution
TOTAL

II.

Rs.20,470/Rs.29,900/Rs.25,300/Rs.75,670/-

Raw Material & Consumables :

Sl.No Description
.
1.
2.
3.
4.
5.
6.
7.

Graphite
Clay
Grey
sulphide
Lamp black
Wax

Antimony

Qty. per
annum/
Kg.
2200
2000
500
150
40 Kg.

Plastic container with 60,00,000

lid
Packing material for 3,00,000
distribution

Rate
[Rs.]/unit

Value [Rs.]

173/Kg.
3/Kg.
400/Kg.

3,80,600/6,000/2,00,000/-

20/Kg.
20/Kg.
TOTAL
:
Rs. 1 per
Pc.
Rs. 3/- Pkt.

TOTAL :
Raw materials & consumables for one month
III.

3,000/8,000/Rs.5,97,600/60,00,000/9,00,000/Rs.74,97,600/Rs.3,74,880/-

Utilities [Per Month] :

1.
2.
3.

Extruder
Furnace
Other

30 KW x 6 Hrs.
47 KW x 25 Hrs.
10 KW x 10 Hrs.
TOTAL

1455 unit x 25 days = 36,375 unit per month

Power
36,375 @ 5/- per unit
Diesel
157 ltr @ 20/- per liter
Water
L.S.
TOTAL

180 units
1175 units
100 units
1455 units

Rs.1,81,875/Rs.3,673/Rs.200/Rs.1,85,748/-

IV. Other Contingent Expenses [Per Month]:

Sl.No. Description
1.
Printing & Stationery
2.
Telephone & Postal
3.
Repair & Maintenances
4.
Lubricating oil
5.
Consumable Stores
6.
Cotton waste
7.
Small tool for general purpose
8.
First Aid expenses
9.
Insurance of office building & showroom
10.
Lighting and General Cleaning of office building
11.
Legal fee
12.
Audit fee
13.
Traveling allowance
14.
Advertisement expenses
15.
Advances
TOTAL
V.
1.
2.
3.
4.

Total Recurring Expenditure [Per Month]:

Personnel
Raw materials for 30 days
Utilities
Other expenses
TOTAL

Total Capital Investment :

i.
Fixed Capital
ii.
Working Capital
TOTAL

Cost [Rs.]
200/800/2,000/450/2,500/150/400/450/700/600/800/800/4,000/3,000/2,100/Rs.18,950/-

Rs.75,670/Rs.7,49,760/Rs.1,85,748/Rs.18,950/: Rs.10,30,128/-

Rs.15,47,600/Rs.10,30,128/Rs.25,77,728/-

FINANCIAL ANALYSIS :
1.
Cost of Production
i.

Total recurring cost

Rs.1,23,61,536/

ii.
iii.
vii.
v.

Depreciation on machinery @ 10%

Depreciation on General fixed assets @ 10%
Depreciation on building @ 10%
Interest on capital investment @ 15%

Rs.39,060/Rs.55,000/Rs.36,500/Rs.3,86,659/-

TOTAL

2.

Rs.1,28,78,755/
-

Turn Over (Per annum)

By sale of 1000 x 20x 300 x 2.33

Rs.1,39,80,000/-

3.

Profit (Per annum)

Rs.11,01,245/-

4.

Net Profit

Rs.5,52,122/-

5.

Net Profit Ratio

3.95%

6.

Rate Of Return :

43%

7.

Fixed Cost :
Depreciation on plant & machinery
Depreciation on General fixed assets

Rs.39,060/Rs.55,000/-

Depreciation on building

Rs.36,500/-

Interest on capital investment

Rs.3,86,659/-

40% of salary
20% of other expenses
25% of power expenses
TOTAL

Rs.3,63,216/Rs.45,480/Rs.5,45,625/: Rs.14,71,540/-

Break-Even-Point :
Fixed Cost x 100

14,71,540 x 100
=

Fixed Cost + Profit

= 57%
14,71,540 + 11,01,245

CONCLUSION

Role of CSR in building Hindustan Pencils ltd. Products as home brands.

The CSR activities of Hindustan Pencils does not play a direct role in building
its brand. That is because the company is not effective in communicating its
CSR activity to its consumers. Most of the consumers have suggested that the
pencil manufacturing company should take great care in maintaining the
ecological balance as wood is the main raw material for pencil. The main CSR
activity of Hindustan Pencil is its environmental policy which is the same as
what the consumer expects so this makes its clear that the CSR activity is not
communicated. If it is communicated surely the brand value of Apsara and
Nataraj will go up.So it be concluded that HPs CSR does not have a direct
impact in building its brand but if well communicated will generate
tremendous increase in its sale and will surely make more loyal consumers
and will build its brand image.

BIBLIOGRAPHY

Web sites-

www.Hindustan Pencils. Com

www.Education world. Net

37