NILOMADHABA PANDA

Registration No- PGPIB/09-11/28

Presented By:

Under the esteemed guidance of

Mr. Sanjeeb Kumar Samal
Officer HRD , JK Paper

& Mr. Samarendra Nath Officer Stores (Inventory), JK Paper

OVERVIEW OF JK ORGANISATION
JK Organization is an association of Industrial and commercial companies, which was founded in 1918 by Late. Lala Kamalapatiji Singahania. The initials JK are the grouping of the first letters of the name of Juggilal and Kamalaat father and son.
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JK GROUP OF COMPANIES

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OVERVIEW OF JK PAPER MILLS, RAYAGADA UNIT

Established in the year 1962 by Late Lala Laxmipatji Singhania.. JK paper ltd. is having two units in India. One in the east at Rayagada, Odisha and another one in west at Songarh, Gujarat.
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JK PAPER MILLS LTD.

JK MISSION
To achieve growth and leadership through the JK brand equity, customer obsession, technology innovation and cost leadership, with a clear focus on environment, while continuously enhancing shareholders value.

JK VISION
To be a dynamic benchmark and leader in the Indian Paper Industry.

JK CORE VALUES
Integrity Trust Caring for people. Commitment to excellence

JK QUALITY POLICY
To provide customer Delight- both internal and external through products and services at lowest cost by continuous Improvement in processes, productivity, quality and management systems
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PRODUCTION PER ANNUM

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NEED AND SIGNIFICANCE OF THE STUDY

The scope of the study is confined to one of the key areas of FINANCE, OPERATIONS & MARKETING to some extent i.e. LOGISTICS & INVENTORY MANAGEMENT which plays a vital role in the manufacturing organization. The study concentrates on the methods and techniques followed by the JK PAPER MILLS for its LOGISTICS & INVENTORY MANAGEMENT and its relative merits and demerits. The present study also concentrates on the importance of the LOGISTICS & INVENTORY MANAGEMENT SYSTEM and the study appraises the company success in meeting requirements of the organization.
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OBJECTIVES OF THE STUDY

The primary objective was to compare and analyze the selling and distribution channel of JK paper and to understand the inventory management system of JK PAPER LTD. To familiarize our self with the marketing department and to know about its selling and distribution function. To know various steps aspects of the marketing department such as Order Execution System, Dispatching System, Warehousing, Transportation, and Intermediaries in selling and distribution etc. To gain the first hand knowledge about the selling and distribution strategy followed by marketing department. To identify the pre requisites of designing the selling and distribution strategy. To know the Marketing & operations of JK PAPER LTD. To know the liquidity position of JK PAPER LTD. To understand the cash management system of JK PAPER LTD. To know the position of current assets and current liabilities of JK PAPER LTD. To know the working capital requirement of the firm.
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LOGISTICS

Logistics is the all-important link between a manufacturer and his customer. The concern is for designing a distribution strategy to facilitate the smooth physical flow of products from the manufacturer to the place from the customer can buy them.

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LOGISTICS AT J.K.P.M.

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Depending upon the purchasing pattern consumers are divided into categories.
Direct consumer. Wholesaler. Dealers Retailers Consignment agent. Branch/depots Export Buyers

JKPM follows 3 modes of transportation. Rail Road Water

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EXPORT :

Abu Dhabi B a n g la d e s h E th io p ia K enya M a ld iv e s O m an S ri L a n k a Yem en

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S o u th A fric a B ra z il G hana Lebanon M a u ritiu s S h a rja S y ria

A u s tra lia Dubai Ira n L ib y a Nepal S in g a p o re T u rk e y

A u s tria E gypt J o rd a n M a la y s ia N ig e ria S o u th K o re a Uganda

THE ABOVE WORLD MAP SHOWS THE COUNTRIES TO WHICH JK PAPER IS EXPORTED. Nilomadhaba Panda -- PGPIB/09-11/28

INVENTORY MANAGEMENT:
Inventory management is done to excessive inadequate levels of inventories & to maintain sufficient inventory for the smooth operation of sales & production. TYPES OF INVENTORIES AT JKPM Raw material. Work-in-process. Finished goods. Stores & Spares. (Soap, brooms, oil, fuel, jute, bulbs, etc.)
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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? There are three general motives for holding inventories: Transactional motive: To facilitate smooth production & sales operation. Precautionary motive: To guard against the risk of unpredictable changes in demand and supply forces & other factors. Speculative motive: Influences the decisions to increase or reduce inventory levels to take advantage of price fluctuations.
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OBJECTIVE OF INVENTORY MANAGEMENT

To maintain a large size of inventory for efficient & smooth Production & uninterrupted sales operations. To maintain a minimum investment in inventories to maximize profitability.

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COST & RISK ASSOCIATED WITH INVENTORIES:

Capital cost Storage or Carrying cost

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.

Both the above questions can be answered by optimizing the two main cost involved i.e. Capital Cost / Ordering cost Inventory Storage / Carrying Cost
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SELECTIVE INVENTORY CONTROL IN JKPM

ABC Analysis VED Analysis FNSD Analysis HML Analysis SDE Analysis GLF Analysis VIR Analysis MTR Analysis SOS Analysis (Always Better Control Analysis). (Vital, Essential & Desirable items Analysis). (Fast moving, Normal moving, Slow moving & Dead moving item Analysis) (High, Medium, Low volume Analysis) (Scarce, Difficult & Easily available items Analysis) (Govt., Local or Foreign suppliers Analysis) (Vital, Important, Routine Analysis) (Material, Turn over, Rate Analysis) (Seasonal & Off Seasonal Analysis)
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INVENTORY MANAGEMENT SYSTEM IN JK PAPER MILLS:

Inventory Management System

Production Based Inventory

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Maintenance Based Inventory.

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PRODUCTION BASED INVENTORY:

Inventories which are used in production process, it means without these inventories, production is not possible. J.K. Paper Mills has kept raw material, coal, chemical & clays under this category.
The raw material for J.K. Paper Mills are Bamboo Wood Coal

There are two types of bamboo used by J.K. Paper Mills Daba & Salia

And different woods are used by J.K. Paper Mills

Casurina, DEF-Debarked Eucalyptus Fire wood, Accasia, Chakunda, Popular, Cashew, SAL FW, Kaju, etc.
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MAINTENANCE BASED INVENTORY

These are the inventory items which are not used for production purpose rather they are used to ensure uninterrupted production. These inventories include spare parts, bearings, nuts, bolts, o-rings, valves, lubricants, etc.

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INVENTORY TURNOVER RATIO = Net Sales / Avg. Inventory

YEAR COST OF GOODS SOLD
(RS.IN CRORES)

AVG. INV.
(RS. IN CRORES)

INVENTORY TURNOVER RATIO

INV. TURN OVER RATIO

(IN TIMES)

INVENTORY TURNOVER
12 10 8 6 4 2 0

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

483.30 483.95 519.33 477.45 516.22 535.86 601.97 692.58 676.16 710.67

46.26 65.47 62.81 66.98 68.42 81.11 93.01 90.09 85.87 97.71

10.448 7.392 8.268 7.128 7.545 6.607 6.472 7.688 7.874 7.273

ACCOUNTING YEARS

INTERPRETATION: It is observed that in J.K. Paper Mills stock velocity indicates efficient management of inventory; because of more frequently the stocks are sold. Due to installation of coating plant the inventory increased for more productions.
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INVENTORY HOLDING PERIOD: 365/ Inv. Turnover Ratio

YEAR DAYS INV. TURN OVER RATIO
(IN TIMES)

INV.
HOLDING

PERIOD
(IN DAYS)

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

365 365 365 366 365 365 365 366 365 365

10.448 7.392 8.268 7.128 7.545 6.607 6.472 7.688 7.874 7.273

35 49 44 51 48 55 56 47 46 50

INTERPRETATION: It can be interpret here that the level of inventory of the JKPM is maintained for 46-48 days averagely, for all items of inventory. However for finished goods the inventory is maintained mostly for 6-8 days for dispatching the items.

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Findings

DIFFICULTIES BEING FACED IN PRACTICING INVENTORY MANAGEMENT SYSTEM IN J.K.PAPER MILLS:

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 dont realize the costs involved in materials. Location disadvantages 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 in not applied for the raw material like Bamboo and Hardwood Most of times user departments dont realize the cost involve in materials.

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LIMITATIONS OF THE STUDY

LIMITATIONS More dependence on published data rather actual data, because financial data are confidential in nature. Major activities like procurement of capital items, A Class inventory are under control of Head Office. Working capital budget is prepared only at head office, no activate of mills is involved in such budget preparation. Less operation in the marketing areas inside the firm as the marketing is totally done by the head office in Mumbai & New Delhi. Due to the confidential issues the data are not published to anybody.
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SUMMARIZING .
RECOMMENDATION & SUGGETIONS
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 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. Cost reduction on inventory can achieved to a greater extent if the concerned department like stores, purchase & user departments work in close co-ordination. 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. 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 (maintenance by controlling dept.)needs to be strengthened. Storage area for certain nature of item to be taken care & involved lively.
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