jk paper Presentation

Presented By:NILOMADHABA PANDARegistration No- PGPIB/09-

11/28Under the esteemed

guidance ofMr. Sanjeeb Kumar Samal

Officer HRD , JK Paper&

Mr. Samarendra NathOfficer 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.

Friday, April 7, 2023 Nilomadhaba Panda -- PGPIB/09-11/28

JK GROUP OF COMPANIES


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.

Nilomadhaba Panda -- PGPIB/09-11/28Friday, April 7, 2023

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”


JK PAPER MILLS LTD.

PRODUCTION PER ANNUM


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.


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.


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.



LOGISTICS AT J.K.P.M.

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



Abu Dhabi South Africa Australia AustriaBangladesh Brazil Dubai EgyptEthiopia Ghana Iran JordanKenya Lebanon Libya MalaysiaMaldives Mauritius Nepal NigeriaOman Sharja Singapore South KoreaSri Lanka Syria Turkey UgandaYemen

Abu Dhabi South Africa Australia AustriaBangladesh Brazil Dubai EgyptEthiopia Ghana Iran JordanKenya Lebanon Libya MalaysiaMaldives Mauritius Nepal NigeriaOman Sharja Singapore South KoreaSri Lanka Syria Turkey UgandaYemen

EXPORT :

THE ABOVE WORLD MAP SHOWS THE COUNTRIES TO WHICH JK PAPER IS EXPORTED.

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.)


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.


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.


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


SELECTIVE INVENTORY CONTROL IN JKPM

• ABC Analysis (Always Better Control Analysis).• VED Analysis (Vital, Essential & Desirable items

Analysis).• FNSD Analysis (Fast moving, Normal moving, Slow

moving & Dead moving item Analysis)• HML Analysis (High, Medium, Low volume Analysis)• SDE Analysis (Scarce, Difficult & Easily available items

Analysis)• GLF Analysis (Govt., Local or Foreign suppliers Analysis)• VIR Analysis (Vital, Important, Routine Analysis)• MTR Analysis (Material, Turn over, Rate Analysis)• SOS Analysis (Seasonal & Off Seasonal Analysis)


INVENTORY MANAGEMENT SYSTEM IN JK PAPER MILLS:


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 MillsCasurina, DEF-Debarked Eucalyptus Fire wood, Accasia, Chakunda, Popular, Cashew, SAL FW, Kaju, etc.


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.


INVENTORY TURNOVER RATIO = Net Sales / Avg. Inventory


YEAR COST OF GOODS SOLD(RS.IN

CRORES)

AVG.INV.

(RS. IN CRORES)

INV.TURNOVER RATIO

(IN TIMES)

2000-2001 483.30 46.26 10.4482001-2002 483.95 65.47 7.3922002-2003 519.33 62.81 8.268

2003-2004 477.45 66.98 7.1282004-2005 516.22 68.42 7.5452005-2006 535.86 81.11 6.6072006-2007 601.97 93.01 6.472 2007-2008 692.58 90.09 7.688

2008-2009 676.16 85.87 7.8742009-2010 710.67 97.71 7.273

0

2

4

6

8

10

12

INV

ENTO

RY T

URN

OV

ER R

ATI

O

ACCOUNTING YEARS

INVENTORY TURNOVER

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.

INVENTORY HOLDING PERIOD: 365/ Inv. Turnover Ratio


YEAR DAYS INV.

TURN

OVER

RATIO(IN TIMES)

INV.

HOLDING

PERIOD(IN DAYS)

2000-2001 365 10.448 35

2001-2002 365 7.392 49

2002-2003 365 8.268 44

2003-2004 366 7.128 51

2004-2005 365 7.545 48

2005-2006 365 6.607 55

2006-2007 365 6.472 56

2007-2008 366 7.688 47

2008-2009 365 7.874 46

2009-2010 365 7.273 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.

FindingsDIFFICULTIES 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 don’t 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 don’t realize the cost involve in materials.


LIMITATIONS OF THE STUDYLIMITATIONS

• 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.


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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