77622562 West Coast Paper Mills

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The West Coast Paper Mill Limited

INTRODUCTION:

The word "paper" has its origin to "Papyrus" an aquatic plant, which grows in

abundance in the delta of Egypt. The barks and leaves of this plant could be and pressed

into a sheet and was used as a writing material by the ancient Egyptians. The evidence of

papyrus having been used as writing material can be found even now in some of the

European libraries preserving old manuscripts. Paper is a material that is basically

produced from bamboo. Paper meets the basic need of the modern society by contributing

to Communication, Education, Packing and Hygiene.

The West Coast Paper Mill Limited came into existence on 22nd March, 1955.

This Mill is located at Dandeli in the mildest of forest area of Uttar Kannada district of

Karnataka. Dandeli is 56kms from Dharwad and from Pune-Bangalore Pune highway

No.4 31kms from Alnavar railway station on Miraj – Bangalore Network.

In 1956, the factory started with an authorized capital of Rs.5 crores and the trial

production commenced with effect from 18th November 1958. Shri Morarji Desai, Hon.

Finance Minister, Union Government had inaugurated the factory on 19th May, 1959.

Thereafter, regular production continued.

The availability of basic raw material like Bamboo and the wood in abundance

and the availability of water in all seasons from the Kali River and the railway link to

transport raw materials as well as finished products promoted the promoters to set up this

huge plant in this remote forest area.

It is one of the renounced and reputed companies in the paper industry. It is one of

the large- scale companies in India.

This project is done in West Coast Paper Mills Limited as a part of Master of

Business Administration curriculum with an objective of knowing the working conditions

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and systems that are followed in practical world. This report gives details of all the major

departments of West Coast Paper Mills Ltd.

Need of the study

It is essential for all the management student to virtually experience the working

culture in the organization to put theoretical knowledge into practice.. The project is

based on the study of all the departments in an organisation. Apart from this, other needs

include,

Study of the industry.

Detailed information of various departments.

Responsibility given to the departments.

Managerial controls of all the departments.

The planning process and control system of the organisation.

Objectives

To understand the working of West Coast Paper Mills Limited

To understand the trend of paper industry in India.

To understand the current problem of West Coast Paper Mills Limited.

The study helped to see and understand how the theoretical knowledge is put into

practice in an organisation.

To learn about organizational department, present status, future of West Coast

Paper Mills Limited.

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INDUSTRY PROFILE:

Paper being the primary medium of Communication, the global demand for pulp

and paper is therefore, growing at 3% per annum. The paper industry accounts for 2.5%

of world’s industrial production. It is considered to be the highest consumer of forest

based cellulose materials. The present status of the industry suggests that, Paper Industry

is now not only on its self amateur industry but also constitutes the life blood of a large

number of other units, the recovery of the Paper Industry from 1994 onwards was by

packaging needs of industry and demand for high grade printing paper i.e. special paper

was used for Cheque, Currency, Fax and Copiers.

The Pulp and Paper Mill sector is one of the oldest Industries in India. The

economy has already grown to 7.4% in the year ended 31st March 2010 from 6.7% in the

previous year. Demand for paper is directly linked to the GDP growth and prosperity.

The paper industry will also benefit from the growing thrust on education.

Foreign publishers today look at India as an important destination for their

printing solutions. The printing industry is expanding at a rate of nearly 15% p.a. The

growth of the service sector also fuels demand for paper. Thus, the paper industry is

expected to grow at a compounded annual growth rate of over 8 % per annum.

There are, at present, about 515 units engaged in the manufacture of paper and

paperboards and newsprint in India. The country is almost self-sufficient in manufacture

of most varieties of paper and paperboards. Imports, however, is confined only to certain

specialty papers. To meet part of its raw material needs the industry has to rely on

imported wood pulp and waste paper. The first paper mill in India was set up at

Sreerampur, West Bengal, in the year 1812. India is currently the 15 th largest paper

producing country. The Indian Paper Industry accounts for more than 2% of the world’s

production of paper and paperboard. The industry provides employment to more than

0.12 million people directly and 0.34 million people indirectly. The paper industry is

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categorized into forest-based, agro-based and others (waste paper secondary fibre, bast

fibres and market pulp).

Structure of the Indian industry

In 1951, there were 17 paper mills, and today there are over 600 units engaged in

the manufacture of paper and paperboards and newsprint in India. The pulp & paper

industries in India have been categorised into large-scale and small-scale. The Indian

paper industry comprises of both the organised as well as unorganised units. The large

integrated wood based companies share 32% pie of the total production capacity levels

with the remaining share being equally divided between the medium sized agro based

companies and the small unorganised units.

The mills use a variety of raw material viz. wood, bamboo, recycled fibre,

bagasse, wheat straw, rice husk, etc.; approximately 35% are based on chemical pulp,

44% on recycled fibre and 21% on agro-residues. To meet part of its raw material needs

the industry has to rely on imported wood pulp and waste paper. Growth of paper

industry in India has been constrained due to high cost of production caused by

inadequate availability and high cost of raw materials, power cost and concentration of

mills in one particular area.

The role the government is crucial in the Indian paper industry as it plays the role

of regulator, supplier (the wood supplying forests are owned by the government) and the

buyer (government is the single largest buyer of paper). Due to prevailing depressed

international trade, imported material was cheaper as compared to the Indian material and

also availability was an additional benefit of credit which ran into months at a significant

low rate of interest. Thus price took a downward trend and inventories started piling up.

Current scenario

Since October 2008, the demand scenario was sluggish in line with the weak

economic situation and this scenario persisted till the end of calendar year 2009. The

Indian paper mills bore the brunt of dampening demand situation which took a toll of

their overall production and realisations. The weak demand also coincided with new

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upcoming capacity from almost all the major paper mills, which created an oversupply of

paper and paper products. Piling up of huge inventories together with new capacities and

fear of imports from China and Indonesia kept prices in under pressure. However, since

April 2010, the demand cycle reversed primarily driven by strong demand and closure of

capacities in the world.

The growth in paper industry has mirrored the growth in GDP and the Indian

paper industry has grown on an average 6-7% over the last few years. While the paper

market in the developed countries is stagnating, paper consumption in India and China is

growing rapidly. India is the fastest growing market for paper globally and it presents an

exciting scenario as paper consumption is poised for a big leap forward in sync with the

growth drivers.

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COMPANY PROFILE

The West Coast Paper Mill Limited came into existence on 22nd March, 1955 in

Dandeli. The availability of basic raw material like Bamboo and the wood in abundance

and the availability of water in all seasons from the Kali River and the railway link to

transport raw materials as well as finished products promoted the promoters to set up this

huge plant in this remote forest area.

It is one of the large- scale companies in India. It is one of the renounced and

reputed companies in the paper industry.

Vision

“To excel in serving the growing demands of the paper and paper product worldwide and

enhance the share holder value with consistence and sustained performance.”

Mission

“The company stands for producing the best quality of paper in writing & printing

that is white paper and duplex board.”

Brief History of the company

The mill is the brain child of Shri. A.D.Chowdari, when he visited Dandeli, he

found that Dandeli could host a good paper mill of moderate capacity production. His

conceptualization crystallized into the establishment of WEST COAST PAPER MILLS

LIMITED. An incorporated company, with its registered office at first in Mumbai and

later it was shifted to Dandeli. The location of the factory was opted as the most suitable

and advantageous, being situated in the heart of thick forests on the banks of river Kali

and the major factors that weighed in its favour were the assurance of the then State

Government of Maharashtra for continued supply of forest-based raw materials,

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availability of water from the perennial Kali river, assured power supply from the State

Grid, vicinity of rail and road linkages. The company was promoted by Shri Digvijay

Cement Company limited, Gujarat in 1955.

On the manpower part, in addition to West Coast Paper Mills there were also

major industries like Ballarpur Industries in the area producing vital chemicals required

for paper plant, water treatment chemicals rendering employment potential in this region

and establishment of Kaiga Nuclear Plant Project etc, have been additional source of

employment. With this background, the Karnataka Power Corporation, project work at

Ganeshgudi, Ambikanagar, Bommanahalli pickup dam etc. has provided to the progress

of this part of north Kanara district.

Originally the plant was designed to manufacture 18000 MT per year of writing,

printing and packaging paper. The trial production started in November 1958 and

commercial production from May, 1959. The company was granted license from the

Government of India in December, 1964 for 45,000 MT/P.A.

The performance of the company is very impressive. The Andhra Pradesh Paper

Mill Ltd. was promoted by the Company by taking over the Andhra Paper Mills owned

by Government of Andhra Pradesh in 1964. The Company provided technical assistance

to the APPM for increasing its capacity from 21,000 MT to 71,000 MT per annum. The

installed capacity of APPM has since gone up to 1, 74,000 MT per annum.

The Company has an impressive track record of production and productivity for

which various Awards have been conferred on it by the National Productivity Council

[Government of India] and other organizations. The Company also has an excellent track

record in timely repayment of loans/lease rentals to financial institutions/leasing

companies and maintained the same even during recession period to which this industry

has been subjected many a time. This has been highly appreciated by the financial

institutions and lessors.

The company has been playing a very active role in developing the backward

district of Uttara Kannada. Stabilising fly-ash dumps by biological means, developing

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better drainage systems, organizing education from primary to graduate, including pulp

and paper technology course, facilities for needy children, organizing various social

awareness programs etc. are some of the steps it has taken to manifest its commitments to

society.

Some of the achievements by the Company include,

First in Asia to install twin-wire Papriformer paper machine.

First in India to use synthetic wire on paper machine.

First in India to install Drum Chipper (supplied by Pallmann, Germany), Disk

Refiners, Rotary Limekilin to reburn limesludge, 330 TPD Sids Chemical

Recovery Boiler and FBC Coal-fired Boiler.

First in India to establish and use sulphuric acid as a protective agent in

conventional bleaching.

First in India to use 100% hardwood in place of 100% bamboo.

First to have well equipped Research Centre attached with a paper mill.

First to have captive plantation.

First to have chemical Recovery Boiler of 500 Solids per day capacity.

And increase in net profit from Rs 31.86 crores in 2001-02 to Rs 36.04 crores and

the earnings per share from Rs 35.64 in 2001-02 to Rs 40.31 currently.

Installation of a 100 TPD Duplex Board Machine and 350 TPD brown stock

washing equipments.

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Corporate Information

The West Coast Paper Mills Ltd., is managed by the Board of Directors,

chaired by Mr. SK Bangur as Chairman & Managing Director of the company.

Mr. S.K. Bangur , 60, is a distinguished industrialist, hailing from the Bangur

family- scions of industry and noted philanthropists. He is the chairman and Managing

Director of The West Coast Paper Mills Ltd, the flagship company of the S.K. Bangur

Group. In addition to West Coast, he is also the chairman of Rama Newsprint & Papers

Ltd, Jayashree Chemicals Ltd. and Kil Kotagiri Tea & Coffee Estates Co. Ltd. Mr. S.K.

Bangur is also Director of Hindusthan National Glass & Industries Ltd. Immediate Past

President of the Indian Chamber of Commerce.

The other Board of Directors include,

Mrs. Shashi Devi Bangur

Mr. Raghunandan Mody

Mr. C.K.Somany

Mr. Premal N. Kapadia,

Mr. Saurabh Bangur

Lt. Gen [Retd] Utpal Bhattacharyya

Mr. Krishna Kumar Karwa

Mr. Sanjay Kothari

Mr. K.L. Chandak

Registered Office of the company:

Bangur Nagar, Dandeli - 581325

Uttar Kannada District,

Karnataka

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Corporate Office of the company:

Chandra Kiran,

10- A, Kasturba Road,

Banglore-560001

Dividend Policy of the Firm

The Directors Recommend a Dividend of Rs. 10/- (Rupees Ten only) per Equity

Shares of Rs.10/-each. The dividend when received by the shareholders will be free of tax

in their hands and the Company will pay dividend distribution tax @12.50% plus

applicable surcharge on the dividend amount subject to relevant laws at the appropriate

time. The dividend payout will be highest ever by the company amongst the Paper Mills

in India.

Month Bombay Stock National StockExchange (BSE) Exchange ( )High Low High Low

Apr.09 48.00 38.30 49.80 37.50May.09 60.00 40.10 59.95 38.10Jun.09 68.00 49.00 68.00 49.00Jul.09 58.55 43.90 58.50 41.55Aug.09 62.50 49.50 62.50 46.70Sep.09 69.30 59.80 69.40 60.00Oct.09 66.90 56.50 67.45 56.90Nov.09 72.65 50.10 72.85 54.80Dec.09 76.00 63.70 76.00 64.20Jan.10 77.70 62.60 77.90 62.40Feb.10 67.40 59.75 67.10 59.50Mar.10 64.20 54.55 64.20 55.00

The market price data from April 2009 to March 2010 of Bombay Stock

Exchange and National Stock Exchange is given above. According to the above data, the

WCPM share performance has been quite fluctuating over the months but has been able

to keep it quite satisfactory.

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Quality Control/Central Laboratory:

The Company has a fully equipped laboratory for quality control and to conduct

research on raw material and process. Detailed analysis of process materials, intermediate

product, water, effluent stack gases etc., is carried out in the central laboratory. Customer

service, complaints, product development apart from normal work of inspection, testing

and monitoring is done by the Quality Control Laboratory.

Research & Development Centre:

The Company has set up a separate Research & Development Centre with

modern facilities to carry out research on various activities such as

Suitability of pulping various hard wood available

Improving process efficiency

Developing or optimization of the process for improving productivity and energy

conservation

Substituting import.

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PRODUCT PROFILE:

Paper is classified into two heads (based on its end use):

a) Writing /printing paper

b) Industrial paper

c) Speciality paper

The industrial variety accounts for high volumes and holds the potential for above

average growth, the writing/printing category provides high margins; specialized grades

provide increasing volumes and high realizations.

Writing/printing paper

Classified into creamwove, maplitho (branded copier) and coated varieties.

Industrial paper

Classified into Paperboard and Kraft; Paperboard can be subdivided into Duplex

Board with Grey Back, White Board and MG Poster/Board.

Speciality paper

Classified into MICR and NON MICR cheque paper, Parchment paper

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PRODUCT PROFILE OF THE COMPANY

Type of Paper Main Varietiesain

varieties

Demand DriveDemand drive

Cultural paper Azurelaid Stable demand arises out of the use of this kind

of paper in ledgers, extensively used by the

traders and bankers

Creamwove Stable demand from the notebook, textbook and

government sectors. The demand for lower gsm

paper is expected to increase due to the user

attempts to cut costs.

Maplitho Increase in demand for office printouts and

stationery items. The demand for better quality

notebooks & textbooks are also increasing, in

which this paper is used.

Copier paper With increasing automation, this type of paper is

expected to register the maximum growth.

Industrial paper Paper

board/Duplex

board

Demand for this product comes from the

increasing use of board packaging for consumer

items like cigarettes, crackers, pharmaceuticals,

hosiery, textiles, food & beverage. It is also used

for the covers of notebooks & textbooks.

Base paper for

costing

Increased demand for high quality magazines,

calendars, dairies and posters, in which this

variety of paper is used.

Machine-glazed

paper

This kind of paper is mainly used for file covers,

covers for notebooks and soap wrapping

segments.

Speciality paper MICR & Non-

MICR Cheque

paper

Cheques are regularly used as a medium through

which money is transacted. The increased

velocity of trade, commerce and banking are

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driving growth in this segment the highest

among speciality segments

Parchment paper This paper variety is largely used in share

certificates, university degrees certificates.

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Employees

Executive Director

Local Management

Administration Technical

Accounts

Sales

Purchases

Stores

Marketing

ProductionPlanning

& Development

Operations Maintenance

Department Head

Shift In-Charge

Shift Engineer

Senior Supervisor


ORGANISATIONAL STRUCTURE

Chairman and M.D.

Personnel

Warehousing

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This is the organisational structure of West Coast Paper Mills Ltd where the

hierarchy begins with Chairman who is also the Managing Director. Below him is the

Executive Director who in charge of the local management in each branch. The local

management is divided into Administration and Technical. Administration management

is divided into seven departments, namely, Accounts, Sales, Purchases, Stores,

Marketing, Personnel and Warehousing. The organisational hierarchy below each

department is shown in the later chapter. The Technical management is divided into

Production and Planning and Development. The Production function is mainly divided

into Operations and Maintenance, both of which has a Departmental Head. The Shift-in-

charge comes under the Departmental Head. The Shift Engineer and Senior Supervisor

come below the Shift-in-charge chronologically. And the Employees and workers come

finally in the whole hierarchy.

Purchases Department

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Purchase Department plays an important role in management of the company.

Any big concern has a separate department known as purchase department. The

efficiency of this department can save more money by purchasing the right quality of

items at the right time and at a right price. This department is under the charge of

purchase officer and he has a staff under him to assist in carrying the various activities of

the department. This department is of great importance as the company has to perform

all its activities efficiently and smoothly.

The Purchase Officer has to take decisions regarding all the purchases of the

company. He has to select the right suppliers, the right quality of material and the right

quantity required for a particular period. The purchase officer follows the described

procedure for making the purchases of the company as and when this department gets

indent from the stores department or from consuming department gets indent from the

stores department for procurement of the items. The department studies the indent and

then it takes necessary steps to procure the items or material required. The company has

two sources of supply. One is external supply and the other internal supply i.e. from its

own workshop.

Objectives of the Department:

Maintaining continuity in supply of materials required for Production,

maintenances, and support to various Project Schedules at work.

Procuring materials at reasonably competitive cost with minimum possible

investment.

Avoiding duplication, waste; obsolesce, with respect to input materials.

Reducing lead time right from the indenting to purchase order stage by adapting

perpetual inventory follow up corrective measures and preventive actions.

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To conduct periodic market survey for developing reliable sub contracts &

periodically evaluate and monitor sub contractors as documented in procedures

for performance rating

To impart training to the employees for processing the perception of

empowerment through various form of HRD and TQM.

Procedure followed for purchasing the items:

1. Purchase activity shall be initiated after receiving indents from stores.

2. On the basis of indents, enquiries are floated on the approved sub contractors or

per decision taken by manager

3. Offers from supplies based on enquiry received either on phone or by personal

approach or sometimes in writing

4. Evaluation of offers are done

5. To negotiate with suppliers for finalization of the best possible rate then the

proposals are kept for approval for high value orders.

6. Placement of order: After having scrutinized the details, the same is

communicated immediately to the party for immediate action. Then purchase

orders are mailed.

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Procedure:

DAILY PROCESS REPORT

RECEIVING INDENT

ENQUIRY FLOATING

RECEIVING QUOTATIONS

NEGOTIATION WITH THE

SUPPLIERS

ORDER PLACEMENT

FOLLOW UP TILL RECEIPT & REJECTION

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Stores Department

It is a basically a service department. Stores department is maintained based on

nature of product and organization. They maintain the spares for different departments

like pulp mill, power house etc.

The foremost objective of the store is to ensure materials at right time

so that there should not be any hindrance or stoppage of work due to

shortage of materials.

The second objective of the stores is that the materials should be

arranged in a proper fashion and well preserved.

Economy in investments.

Better security arrangements.

Less storage space.

The department has to perform various important functions which are as follows.

a) Fixing code number to each material.

b) Raising indents as and when needed.

c) Maintaining permanent card and stock card.

d) Issuing materials against issue vouchers raised by consuming departments.

e) Receipt and Inspection.

In general,

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1) Visual Inspection: The goods which are bought from different places

should be checked whether it is in good condition or whether it is in a

damaged condition, otherwise insurance can be claimed.

2) Check the Challan for quantity.

3) Inspection: Inspection should be done to know the materials brought

should be accepted or rejected.

4) Storage of the accepted items: Rejected items should be stored separately.

5) Rejected items should be sent back and asked to replace.

Fixing code number to each material (Codification)

In this company the total number of items used by the different departments is

approximately 28,000 items. Dealing and handling of these items in their own name is

almost impossible and a difficult job. The method of coding is therefore adopted and the

materials are grouped in different groups and each group is given a code number.

In the WCPM stores department is divided into following sections.

1. Machinery spares parts stores.

2. General stores

3. Chemical department

4. Stores receipt department

5. Automobile spare parts

Accounts Department

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The hierarchy is as follows in the accounts department is as follows:

The Accounts Department deals with all financial aspects of the firm. It is the

main department responsible for maintaining all accounts of the company. All receipts

and expenditures relating to the company are recorded. It is the main department which

prepares budgets and assists management in investment decisions.

The overall functions performed by Accounts Department are:

Vice President Accounts and Finance

Senior Manager

Manager

Section Officer

Senior Accountants

Accounts Assistants

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Preparing the Balance Sheet, P/L A/c, & other necessary A/c’s at the end of

the Accounting or Financial Year.

Maintaining cash and bank transactions.

Pay slips.

Preparing Payment, Receipt and Journal Vouchers File.

Dealing with Loans and other financial matters.

Preparing Branch Accounts of different branches.

Preparing Monthly Trial Balance.

Framing of Annual Reports etc.

The ten year’s highlights of the company in regard to the financial performance of

the Company is given below,

HIGHLIGHTS OF THE COMPANY’S FINANCIAL PERFORMANCE:

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

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Production

Paper board and multilayer board

Tonnes 173638 173682 169891 178871 173070 163714 151477 120210 120293 120210

Optical fibre cable

Km 18003 16787 22829 7060 6303 8090 6230 3889 4283 629

JFTC CKm - - - 165407 512170 81971 18239 356048 7087

Control cable CKm 14

Sales

Paper board and multilayer board

Tonnes 175194 170686 170193 179915 180397 168315 162642 152046 124941 113864

Optical fibre cable

Km 17790 16762 22836 7105 6593 7774 6319 4236 3997 648

JFTC CKm _ _

Control cable CKm 14 _ _ _ _ _ _ _ _ _

Operating results

Turnover Rs./Lakhs 65050 66271 65352 61944 60684 53335 49184 52236 48719 39820

Gross Profit Rs/Lakhs 10524 12036 11438 9552 6992 5649 6057 6224 4934 4826

Depreciation Rs./lakhs 2377 1990 2043 2098 3695 1893 1689 1823 1209 1028

Taxation Rs./lakhs 1400 1149 1095 862 300 295 315 400 295 950

Mat credit entitlement

Rs./lakhs (1370) _ _ _ _ _ _ _ _ _

Deferred tax Rs./lakhs 2647 (154) 110 (54) (276) 395 1209 397 244 _

Net profit Rs./lakhs 5470 9054 8190 6646 3203 3066 2844 3604 3186 2848

Dividend Rs./lakhs _ 1258 1721 1341 1341 1341 894 760 581 447

Financial position

Gross block Rs./lakhs 177888 161798 80141 48467 46514 46074 44504 39334 31499 18454

Depreciation Rs./lakhs 22636 29112 27022 25309 22584 19863 17614 15241 13204 7928

Net Block Rs./lakhs 155252 132686 53119 23158 23930 26211 26890 24095 18295 10526

Paid-up capital

Rs./lakhs 7755 7708 1425 894 894 894 894 894 894 894

Reserves & surplus

Rs./lakhs 52378 49070 38771 22324 17246 15573 14036 12935 10188 9716

Net worth Rs./lakhs 60133 56778 40616 23218 18140 16467 14930 12935 11082 10610

Borrowings Rs./lakhs 123471 117365 40616 17407 16588 22922 20106 17553 17842 11876

Capital Employed

Rs./lakhs 183604 174143 80812 40625 34728 39389 35036 31382 28924 22486

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Some

Selected

Ratios

Earningsper

share(Rs.2)

(Basic)

9 16 17 15 7 7 6 8 7 6

Book value per

share

Rs. 96 94 70 52 41 37 33 31 25 24

Dividend(equity

shares) % 100 100 150 150 150 150 100 85 65 50

Debt-equity

ratio

67:33 67:33 50:50 43:57 43:57 48:52 58:42 57:43 56:44 62:38 53:47

Like every other company, West Coast Paper Mills Ltd. would have liked to post better

numbers. However, the sluggish demand conditions, which had prevailed since October

2008 continued for several months into 2009-10, and this has impacted the Company’s

performance. This period also coincided with the capacity addition across the industry

and increase in raw material costs. The increase in raw material, fuel, chemical cost

impacted the entire industry. As competition was fierce, it was not possible for the

Company to increase prices, and hence the margin remained under pressure.

The Company posted gross profit of Rs. 105.24 Crores as against Rs.120.36

Crores in the previous year – lower by Rs.15.12 Crores (13 per cent). The net profit also

decreased from Rs. 90.54 Crores to Rs.54.70 Crores - by Rs.35.84 Crores (40 per cent)

due to higher provision of depreciation and deferred tax on account of commissioning of

equipments under the expansion programme, the benefits of which will be derived in the

current year.

But this is a small aberration from the otherwise sustained revenue and profitable

growth that the Company has maintained over last several years.

Sources of Funds Main Sources of funds are in the form of Equity; it also raises funds

from various financial institutions namely:

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a. ICICI

b. IDBI

c. EXIM Bank

d. CANARA Bank

e. SBM

f. SYNDICATE Bank

g. KARNATAKA Bank

h. Bank of BARODA

The Company issues debentures only for heavy projects. The company also

does not allot Preference Shares; they make use of their own reserves.

Significant Accounting Policies:

1.) Method of Accounting

The financial statements are prepared under the historical cost convention in

accordance with the generally accepted accounting principles in India and the provisions

of the companies act, 1956 using the accrual basis except unascertained insurance claims

comply with the accounting standards issued by institute referred to in section 211(3c) of

companies act, 1956.

2.) Valuation of Fixed Assets

Fixed assets are valued at cost of acquisition inclusive of inward freight, duties,

taxes and incidental expenses related thereto. In respect of assets scrapped or discarded

during the year, the book value of such assets is written off as Obsolete Assets. Assets

under installation or under construction as at balance sheet date are shown as capital work

in progress.

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3.) Depreciation

On the fixed assets, is provided at the rates and in the manner specified in

schedule XIV to the companies act, 1956 on the written down value method, other

than on plant and machinery, effluent treatment plant, roads and drainage on

which depreciation is provided on Straight Line Method.

4.) Investments

The long term investments are valued at cost. However, provision for diminution

in value is made to recognize a decline other than temporary in the value of long term

investments.

5.) Valuation of Inventories

Inventories are valued as under:

a. Stores, spares, machinery/machinery parts, building materials, loose tools

etc. (At weighted average cost)

b. Raw materials (At weighted average cost).

c. Finished goods (At cost or realizable value whichever is lower)

d. Stock of Scrap (At realizable value)

e. Work in process (At cost)

6.) Bad debts/ advances are written off in the year in which they become

irrecoverable.

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7.) Sales are inclusive of Excise Duty.

8.) Research & development Expenditure

Revenue expenditure on research & development is charged to profit & loss

account and capital expenditure is added to the cost of fixed assets in the year in

which it is incurred.

9.) Retirement Benefits

Retirement benefits viz., Provident, and Pension Funds, Leave Encashment and

Gratuity are accounted on accrual basis. Contribution to Provident, Gratuity and Pension

Funds are made to appropriate authorities. Provision for Gratuity and Leave Encashment

are made on the basis of actuarial valuation.

10.) Foreign Currency transactions

Income and Expenditures in Foreign currency is converted into Indian Rupee at

the rate of exchange prevailing on the date of transaction. Any income or expenses on

account of exchange rate difference is recognized in the profit & loss account (expect

cases where they relate to acquisition of fixed assets in which case they are adjusted to

carrying cost of such assets).

11.) Taxation

29


a) Provision for taxation is made on the basis of the Taxable profits computed for the

current accounting period in accordance with the Income Tax Act, 1961.

b) Deferred Income Tax on accounting of timing differences between taxable

income and accounting income for the year is accounted by applying the

prevailing tax rates under Income Tax Act/Rules in force.

Cost Accounting Department

30


The cost accounting department is essentially a link between the production

department and the management. The company is manufacturing different varieties of

paper/ paper board/ Duplex board which require various types of raw materials and

chemicals. A process cost accounting system is followed up to the pulp stage. Thereafter

batch costing system is followed. Budgetary Control System is in vogue.

When the material is received, stores inward receipt is prepared by the stores

department, checks the material and after approval, it is recorded in the stock cards.

Chemicals are tested in the laboratory for its quality. Valuation is done by the stores

account department. The indenting departments draw the materials through the issue

vouchers. A monthly statement of consumption is prepared accordingly. Detailed records

for production and consumption of water, steam and power are maintained. Also

production and service cost centre wise classification of salaries and wages are prepared.

The works overhead have been absorbed on the conversion cost basis in different

processes and service centres. The administration and selling and distribution overheads

are apportioned or absorbed to final products on pre-determined basis i.e. machine hours,

tonnes etc.

As such system followed can be considered as adequate to determine correctly the

cost of the products.

Following are the daily reports sent to the Costing Department:

a. Raw materials yard report

b. Pulp Mill Operation

c. Production Report

d. Power house report

31


e. Steam consumption report

f. Energy generation and consumption report

g. Chemical Recovery

h. Duplex Board

The above are the different reports prepared in their respective departments daily and are

later forwarded to costing department. There are also some departments which send their

reports on monthly basis. For example, finishing house will take all the reports into

consideration. Daily production report is made in this department which helps the

managers to take decisions for the future production.

Production Department

32


Production Organisational structure

The main source of raw material in production required is wood i.e., Eucalyptus,

Casuarina, Subabul & other Hard wood. Bamboo, which was earlier the main source of

raw material, has now become scarce and is not used. Small quantity of Pine wood pulp

is also imported basically for special specialty papers. The company's raw material

procurement is basically from private cultivators within the state and from Andhra

Pradesh, Tamil Nadu and Pondicherry. Total requirement of raw material is about

3,00,000 MT per annum. The company is dependent on private cultivators for its Raw

material i.e., hard woods and no problem is expected in procurement of wood for the

Vice- President Purchases

Senior Manager

Manager

Asst. Manager

Shift in-charge

Supervisor

Workers

33

CHIPPING PULPRAW MATERIAL (WOOD)

X


increased production level. Eco-friendly environment norms are strictly observed in this

regards. As there is no supply of raw material from the State Reserved Forest for the last

12 years, the Company has to source its requirement from farm-grown material available

in social Forestry and farm Forestry Project and the farmers are motivated to grow pulp

wood plantations in their marginal unproductively lands to maintain sustainability in the

raw material availability. During the year under review the availability of raw material

remained satisfactory and Company is now in the process of supplying genetically

superior seeding developed in house as to increase the wood productivity per unit area.

Manufacturing process of paper in WCPM

For manufacturing of paper, the basic raw material required is the wooden

timbers. Initially bamboo is used as the basic raw material for paper manufacturing, the

reduced availability of bamboo and the government crisp rule has made the industry to go

for other plants. So, now Eucalyptuses, Eichhornia, timber are used as raw materials

along with bamboo. These raw materials are processed from the other states such as

Andhra Pradesh, Tamil Nadu, and Kerala etc. The daily consumption of raw materials is

800 tonnes/day.

The manufacturing Process of Paper involves mainly 4 steps,

1. Chipping.

2. Pulping.

3. Chemical Recovery.

4. Paper Making.

Manufacturing Process:

5.

34

HEAD BOXMACHINEY

WIRE/SCREEN Z

DRYING 18%WATER REMOVED 95-96 %

POPEREELL

Z A

A CALANDER


Chipping:

Bamboo, Eucalyptus & hardwood are used for manufacture of paper pulp.

Multi knife chipper’s chip bamboo and hardwood. Bamboo & Hardwood chips

PRESSING PART

DRYING SECTION

STEAM

35


are then screened & conveyed by Bert conveyer or blown by blowers into chip

silos for shortage of different wood pieces.

Pulping:

From chip silo the chip and blown over the digester where they are cooked

by sulphate process. The resultant pulp is blown under steam pressure into blow tank,

heat from blown off steam is recovered in high efficiency heat exchange. The unbleached

pulp free knot is washed over multistage vacuum washing plant. After washing the pulp

is screened and cleaned to remove uncooked material, sand and other foreign material.

Finally bleached pulp is taken thickened and stored in storage chests or high-density

tower for manufacturing bleached variety of paper.

Chemical Recovery:

It is indirectly a profit making unit. Because it recovers 92% of the chemicals

used. Thereby reducing the chemical cost to the least.

The maximum recovery of chemicals and heat in the Sulphate process renders the

manufacture of pulp more economical. The spent liquor which consists of non-cellulose

material from bamboo and hard wood and the cooking chemicals are collected in sealed

tanks, while the pulp is being washed on brown stock vacuum drum washers. The spent

liquor usually known as weak black liquor is then evaporated in the multi stage

evaporation plant to remove the excess amount of water mixed during the washing of

pulp. The thick or concentrated black liquor is burnt just like furnace oil in recovery

furnace. Non cellulose substance from bamboo and hard wood is burnt as fuel in the

furnace and produce the required heat of smelting the inorganic chemicals in the thick

black liquor.

The steam generated in the recovery boiler is diverted into the steam turbine in

powerhouse for generating power as a by product and the extracted steam is utilized for

36


process performance. The smelt from the recovery furnace is dissolved into water or

weak white liquor solution. The resultant slurry is called as green liquor lime is mixed

with green liquor. The resulted slurry is clarified to remove white liquor on over flow.

The white liquor i.e. a mixture of caustic soda and sodium sulphide is sent to the digester

for cooking of bamboo and hard wood. The under flow sludge mud from clarifier is

washed in multistage mud washers. This sludge combined with sea shell/ limestone is

burnt using fuel oil in a rotary lime kiln to produce burnt lime.

Paper-making:

Pulp stock is usually beaten and prepared in stock preparation, section ahead of

paper machine. Disc and conical refiners are used for refining of stock for each paper

machine. When the pulp is refined/ bleached to a sufficient degree, sizing chemicals such

as Rosaline, alum colours, filters and bleaching material such as soapstone powder are

added to the pulp. The main function of the filter is to improve the capacity and finish of

the paper. The stock thus prepared is taken into the paper machine where the final sheet

formation taken place accompanied by a large quantity of water which subsequently has

to be removed through the mesh of endless wire by vacuum and then by passing and

drying over steam heated drying cylinder. The dry web of the paper is then glazed in

cylinder rolls. The resultant paper of required quality is wound as a reel. From these

reels, the paper is cut into sheets and packed into the reams.

Paper Warehousing Department:

At W.C.P.M before production process starts, the marketing department being

situated in different cities collects the order from their prospective customers with

reference to the papers quality, size, quantity, etc. After collecting the orders from the

customers, the order form is being sent to the production department. In case the stock is

37


already available with respect to the customer’s order specification then the goods are

being dispatched by the paper warehouse department. If not, then the customer order is

been transmitted to the production department, where the production of finished goods

gets started.

First the paper is being wounded up in reel then as per the customer

specifications, goods are packed in the reams or rolls. If the customer’s order concerned

with the package is rolled then, the reels are being unloaded from the production

department. Quality of paper is checked by the quality control department. Then in the

finishing house department these papers are being weighed, counted & packed in

wrapping and are transmitted to the paper warehousing department. In the paper godown

or ware housing department, the reams are packed into bundles, which should contain

less than 70kg of weight. These reels are packed with plastic gunny bags manually. Now

a day, this bundle packaging is even done by the machine. This results in low cost, time

saving etc.

After getting the finished goods packed into bundles, the paper warehouse

department stores in the respective storage section by marking numbers and codes on the

packed goods for its easy identification. Then they are duly entered in the stock register,

being maintained by the paper warehouse department manually.

The Stock Register consists of the following particulars:

Date & Shift

Lot No.

Quality

38


Size

Weight

GSM

Sheets

Total bundles

Reams Per Bundle

Total Reams

Total Weight

Once the goods are stored in paper warehouse department, the invoice procedure

starts in the department itself, wherein the quality, transport line medium, insurance

charges, freight charges are being mentioned in the excise invoice copy. Three copies

of invoice are made. One is retained with the department, other to the transporter and

another is transmitted to the sales accounts department.

Following are Registers maintained by the Paper Warehousing Department:

Bundling Register.

Packing Register.

This keeps the records of the reams bundled & packed in the paper godown

department.

Following are the Reports prepared in this Department:

Paper godown daily report of reams packed into bundles.

Program sheet for dispatch of paper.

Allotment report.

39


Loading list.

Reconciliation.

Pending order report

Sales Department:

The marketing system at WCPM is handled by the marketing department which is

located in the administrative office at Mumbai. This marketing department procures order

40


from different zones. Then copy of the confirmation order will be sent to the sales

department, located at register office, Dandeli.

The confirmation orders contain all the details about the party such as party’s

name and address, terms and conditions, final destination of goods, quantity and size

required etc. After receiving the confirmation, sales department will send a copy of it to

the production department and they will manufacture the paper according to the size and

quantity required by the party.

As per the demand of the party, sales department will give dispatch order to the

paper godown and then it is dispatched from the godown after the completion of

formalities.

The discount system of WCPM is as follows:

1) Trade Discount

2) Additional Discount

3) Quantity Discount

The sales department will produce the final bill by deducting the required deductions

and adding some expenses like the excise duty, freight charges (if any), insurance charges

etc.

A copy of such bill will be sent to the party and concerned branches after recording

the transactions in the sales ledger.

Credit Policies at WCPM

The credit policies include the following:

41


The pay will be given 30 days period for the payment without interest

If the party makes the payment in 15 days then the company will give 3% cash

discount

If the party makes payment in between 16-21 days then the company will give

1.5% cash discount

If the party makes the payment within 21-30 days then there is no cash discount

and even the interest will not be charged.

If the party makes the payment within 30 days then the company will provide 15

days grace period for the payment by charging 21% of interest

If the party does not make the payment in 45 days then the company will charge

interest for the whole 45 days at the rate of 21%

Sales Account Department:

Basically the sales account department is accounts related to the sales made by the

company. A copy of challan or excise invoice is received from the paper godown

department. Then the trade discount, special discount, additional discount or cash

42


discount provided to the customers, if allowed, will be mentioned in the customer order.

Such deductions are respectively made.

After deducting all discounts, on the remaining amount excise duty of 16% basic

excise and 0.125% cess is charged. In case the goods are being transmitted outside

Karnataka then CST is also charged.

In case the goods are exported, then the invoice is being prepared in the same

manner but there will be some exemptions provided on the excise duty. Finally, after

providing for all adjustments, the commercial invoice is prepared and is sent to the

concerned party or distributor for the payment of goods sold to them.

Marketing Department:

With the winds of Liberalization and opening up of Indian economy since 1991

the era of control regime started to give way to market oriented economy. Liberalization

and the move to integrate Indian economy with global economies had its consecutive

effect on Indian paper industry as well. The effect of change by Liberalization was less

pronounced in the initial years of 1990’s i.e. up to 1995. The systematic lowering of

custom duty on import of paper and paperboard during the period of 1994 – 1996 had a

profound effect on marketing of paper and paperboard in India. The custom duties on

import, which were as high as 85 %, were brought down to 20 % during this period. This

lowering of custom duty tariff made imported paper cheaper in domestic market and thus

gave the Indian paper industry a serious challenge on the price front.

The domestic industry did not have a choice but to respond to this international

challenge by give quality products at international price levels as any price above

international level would lead to flooding of imported paper in the market.

While the customers started to enjoy due to benefits of Globalization the Indian

industry had a rude shock. The industry to survive this globalization had nothing but to

innovate, become cost competitive and provide quality at International level. This is the

43


age of consumerism i.e. consumer is the king and he alone can determine the way

markets will move.

The Indian paper industry is highly fragmented with a total installed capacity of

62 Lakh metric tonnes annually. It is reported that a major part of installed capacity is

lying idle due to closure of mills.

Indian paper industry is broadly classified into paper and paperboards and

newsprint segment. The paper and paperboard segment constitutes of cultural paper,

industrial paper, and special paper. Newsprint is a separate type of paper and is dealt with

in a separate section. The domestic demand for paper and paperboard is estimated to

increase at a compounded annual growth rate of 5 %. But the same is also directly linked

to literacy levels.

Newsprint is a special type of paper used for printing newspapers and magazines.

Though newsprint is a different type of paper, very few paper units manufacture both

newsprint and other varieties of paper. Newsprint production requires slightly different

pulping process to yield characteristics like higher strength, absorbency, pliability,

printability, low gram mage, etc. The demand for newsprint is directly dependent upon

literacy rate in the country, number of magazines and newspapers published, average size

of booklet, etc.

For better marketing and proper focus of products WCPM has separate marketing

team for these two segments each headed by a manager who in turn reports to the

President. The products are marketed through a network of authorized dealers spread

across the country. For proper co-ordination and liaison with dealers the company has set

up zonal offices at Mumbai, Delhi, Kolkata, and Chennai to look after West, East, North,

and South zones. The central marketing office is situated at Bangalore.

The orders are received from dealers who procure them and are forwarded to the

Central marketing office where they are processed for their acceptance. The marketing

office intern bunches the order according to the variety and informs the production

department accordingly.

44


After production, the paper is dispatched to the individual dealer or customer as

per his instruction to their respective destinations. Paper is marketed both in the reel and

sheet form. Paper converters generally purchase reels / whole sellers to sell printers for

onward processing where as sheets retail and hence to consumers.

The marketing system (aspects) of West Coast Paper Mills Ltd. Dandeli is

handled by the Corporate Office at Bangalore. This marketing dept procures orders from

different zones, to distribute the maximum tonnage to customers in the shortest time,

W.C.P.M. works with 124 dealers of long-lasting reputation and experience – as opposed

to direct retail across the country. These distributors are spread across 21 Indian states. In

turn these dealers recruit a marketing team to service their immediate geography, service

retailers and direct consumers (publishers, MNCs & Industrial users)

Prices are revised at periodic intervals in line with the following considerations:

the landed price of imported paper, the demand for & supply of specific paper segments

within the country & the delivered cost of paper to various points within the country.

The company does not find any difficulty in marketing its products due to a well

establish network of dealers and is also confident that the additional production due to

installation of a new machine and modernization of existing machines will also be

absorbed in the market.

A glimpse of the Client List is given below,

Indian Aluminium Co. Ltd.

PG Foils Limited

Godfrey Philips India Ltd.

Kores (India) Ltd.

Paper Products Ltd.

State Bank of India, Bank of Baroda, Central Bank of India, Syndicate Bank

Canara Bank, Punjab & Sindh Bank, Corporation Bank, Dena Bank, Indian Bank, Indian

Overseas Bank, Standard Chartered Bank, HSBC, etc.

45


Security Printing Press, Government of India, Hyderabad and Nasik

Madras Security Printers

Calcutta Security Printers

Manipal Power Press

Speciality Coatings & Laminations Pvt. Ltd., Gurgaon

Gateway Coated Papers, Haryana

Surya Coats Pvt. Ltd., Ahmedabad

Sarda Coats, Mumbai

Malhotra Book Depot, Delhi

Rohit Pulp & Paper Board Pvt. Ltd., Mumbai

Lakhanpal Batteries, Baroda

Kiran Datta Forms, Mumbai

Vijay Flexible Containers

New Man Press, Chennai

Reliance Printers, Bangalore

Swadhya Printers & Packaging, Indore

Cartoon World, Cochin

Coromandal Cartons & Containers, Visakhapattanam

Polite Printers, Guregaon

Metal Box (I) Ltd., Mumbai

And various other reputed printers, converters and merchant exporters.

Human Resource/Personnel Department:

46


The industrial relations are cordial and the Company has not suffered any loss of

production on account of labour problem. The Directors acknowledge the support and co-

operation from employees at all levels.

The Company has out a specific programme to harness and improve the

knowledge, skill and efficiency of each employee for their career development. The

senior management is actively involved in boosting employee morale through continuous

dialogue in structured communication meetings.

The Company employed 2551 people as on 31st March 2009 as against 2526

people as on 31st March 2008.

The personnel dept. performs all the functions right from the recruitment to right

from an employee. The development of a just & reasonable promotion & transfer policy,

the placement of employees according to their qualifications, & plans which aim at

increasing efficiency, promotions job satisfaction, motivating employees, & finally the

administration & adoption of wage & other incentive plans, all these are looked after by

the personnel dept.

The establishment of this paper in Dandeli has attracted many technical & non -

technical personnel from all over the country for taking up the employment .The mill has

given a new avenue for socio-economic development not only of Dandeli but also of

Uttar Kannada District in a big way.

Establishment department

47


Establishment department is the dept where the new employees are recruited.

The technical and commercial department sends an internal memo letter regarding the

type of employee they need to the concerned department. After receiving the letter the

establishment department, gives the advertisement and details in the newspaper. As

they receive the bio-data of the fresher from the different places, later they select and

send them call letter for interview.

Employment Procedure

The procedure for the selection of candidate is as follows:

a. Recruitment

b. Call letter

c. Interview

d. Selection

e. Offer of Appointment

f. Training

Methods of Training

The training is conducted usually on the class room training and in addition to it on

the job training is a must. From various departments training nominations are received.

The training provided by WCPM is

1) On job training- Technical

2) Off job training- Clerical

3) Training

Training committee

48


A committee has been formed in order to access, evolve, co-ordinate and meet the

training needs to bring in visible improvements in understanding the shop floor.

Time Office Department

Every industry either small or big has the time office department, which deals in the

time keeping of the various employees in the factory. Every worker should be punctual

and proper attendance of the worker is a must, so time office plays a very important role

in an organization.

At West Coast Paper ltd., punch card system is prevailing to keep the record of the

timings during which the worker comes inside the factory premises to work and the time

he leaves the factory. Each worker has to punch his card in the punching machine before

his working hours and if he is one minute late one hour pay will be deducted from his

salary. Before this the company gives three chances and if the same is repeated more than

three times and they will not be allowed inside the factory.

Functions of Personnel Department are as follows,

a) Checking and recording the attendance of the permanent workers of the company.

b) Calculation of wages of the company.

c) Adding overtime incentives to their wages.

d) Granting leave to the employees as and when they request.

e) Salary increment of the workers.

f) Giving advance or loans to the employees.

g) Paying gratuity to the employee, who had resigned, retired or expired.

Time office department maintains various files and records. Register of leave with

wages, leave book, pay sheet or salary sheet, register of O.T., Register of absenteeism,

Register of late arrivals, Office order files, office circular files, accidents record files,

49


personnel files of the employees, allowance files, strikes & lock out files time office

procedures files, increment files, etc.

Time office department is one of the important departments of the company as it

keeps records and files of all the employees of the company.

Leave Facilities to the workers:

Privilege Leave - 1 Day Leave for every 20 working days.

Casual Leave - 7 Days

Sick Leave - 4 Days

Maternity - As per ESI Act

ESI Leave - In case of Harmful or Chronic Disease or

Accident or Injury

Allowances for the workers:

Night Shift Allowances -- 0.90 paise

Attendance Allowances -- Rs.15.00

HRA -- Rs.160.00

LIC -- Rs.750.00

Medical Allowances -- 4% of salary

Provisions Allowances -- Rs.150

Annual Bonus -- 20% of salary

Production Bonus -- 11% of salary

50


Welfare Facilities to the Employees

Statutory Welfare Facilities to the employees:

Drinking water.

Canteen.

Rainy wear, uniforms & shoes.

Shelter room & lunch room.

Welfare office.

Safety office.

Fire office.

ESI, Gratuity, P.F, Bonus facilities.

Non-Statutory Welfare Facilities to the employees:

Housing facilities

Education

Training and development.

Medical check up.

Sports, game, cultural activities.

Employees club & reading room

Co-operative societies.

Shopping complex

Transportation facilities.

Banking facilities.

Post office.

Company’s own social security.

Ranganath auditorium.

Bangurnagar officers club.

T.V. VCR channels cables.

Multi gym.

51


Medical

Company runs a Hospital with 40 beds with a well equipped operation theatre,

laboratory, X-ray manned by specialised doctors, including 1 lady doctor, compounders

and staff nurses. A heart specialist visits once in a week at this hospital. The families and

dependents of employers not covered under ESI scheme are eligible for having medical

treatment in this hospital. Specialized consultation facilities are also made available

periodically. Cases which cannot be treated at this Hospital are referred to KMC Hubli,

KLE Belgaum, KMC Manipal. The Company spends Rs.10 lakhs every year which

includes the cost of medicine and establishment.

Employees/Officers Club

A reading room has been provided in the employees club and an average 150

persons are availing this facility daily. Dailies, weeklies, fortnightly, monthly newspapers

and magazines in various languages are made available in the club. Indoor games like

table tennis, chess, playing card etc., are played on regular basis in this club. No

membership fee is there.

Auditorium

This Auditorium has more than 1000 seating capacity and this auditorium is

utilized for multi-purpose like screening 35 mm films, conducting cultural programmes

etc., Lately, this auditorium has been equipped with latest audio and lightning system so

that the entertainment programmes conducted in this auditorium could become more

attractive and enjoyable. In this auditorium, company has provided a 35 mm projector to

screen feature films on regular basis for which entry is totally free to employees and to

their family members.

52


Hydraulic Gymnasium

As a part of health care, employees are given facility to have their physical

exercise in this Gym. Adequate equipment's and other infrastructure have been provided

in this gym. This gym is managed by qualified persons to ensure that the employees may

avail this facility to maximum extent for their own benefit.

Co-operative Society

The WCPM Employees Co-operative Society is considered to be one of the best

societies in the region. There are 1250 members in the society. This society has long

term and short term loan facilities. Medium term loan facility available helps the

members to buy house hold articles and also two wheelers etc., in instalment basis. The

society also runs a fair price shop, cloth and general stores etc., for the benefit of the

members.

Transport Facilities

The Management runs an Omnibus for the benefit of employees and their family

members to visit nearby cities like Hubli, Belgaum and Karwar. Daily trips are conducted

and very nominal charges are collected from the employees. In addition to the facility of

Omnibus, the Company also runs school buses for the benefit of children going to

different schools in Dandeli.

Company also provides conveyance to employees at nominal charges to Alnavar

railway station.

53


Banking Facilities

Company has provided accommodation at nominal rent or lease amount to 3

banks namely, KDCC Bank, Central Bank of India and State Bank of Mysore to operate

in Bangur Nagar Colony for the benefit of the employees and colony residents in general.

Industrial Safety

The West Coast Paper Mills Limited considers safety as the main function of their

productivity. The Executive Director of the company is considered as occupier of the

company. Apart from that the factory manager is considered as representing occupier.

The Industrial Safety department works under president technical, which is the top most

authority of the production. The safety officer has been appointed as per the factory’s

Act, 1948 Sec 40 B. The qualifications of the Safety Officer are as per Karnataka

Factories Rules 1969 Rule No 88A.

The company is very much interested to eliminate hazards in the work

environment. The following are the tools which are being utilized to eliminate hazards.

1. Safety Survey

2. Intermittent Safety Inspections

3. Periodical Safety Inspections

4. Safety Audit (Internal)

5. Safety Audit (External)

6. Hazard and Operability Study (hazop study)

54


Apart from the above the company has formulated departmental operating

procedures (DOP) and also (SOP). The company is certified by ISO 9001 (2000) and ISO

14001(2004).

Accidents

The company deals with accidents very seriously. To control the accident safety

department insists for investigation of every accident. If any accident occurs, the

respective shift in-charge or supervisor has to go to the spot and access the situation

without getting biased by the statement of the surrounding people. The statements of

other people are to be judged without any influence and he has to segregate which is the

immediate cause and basic cause for the accident and the copy of the report is to be

forwarded to the safety department. The department then decides necessary action so that

no such incident will occur in future.

If any accident occurs, the affected person should be hospitalized and the patient

is investigated. Investigation report is to be forwarded to welfare and safety department.

The company is maintaining 30 bed hospitals with qualified doctors.

The company is very much interested to maintain good working environment. For

this, there is fully fledged industrial pollution control department. Each working area of

the mill has been checked frequently for rise in temperature, rise in noise or presence of

harmful chemicals in the working environment. If any deviations are found, it will be

taken care along with the concerned department so that the health of workers remains

unaffected.

The company provides safety gadgets like helmets, shoes, goggles, rubber hand

gloves, PVC hand gloves and apron. Apart from this, protection from chemicals is also

provided by the following personal protective equipments.

- Self contained breathing apparatus

- Compressed air breathing apparatus

55


- Canister Mask for acid gases

- Dual cartridge masks for chlorine

- Welding masks

Above equipments and its qualities are regularly monitored by the safety

department. To train the workers to wear the protective equipments in case of

emergencies, once in three months workers who are exposed to hazardous areas are

trained in mock drills.

Promotion of Safety

The safety promotion activities are directly handled by the safety department. The

Company celebrates ‘NATIONAL SAFETY WEEK’ from 4th of March to 10th of March

every year. During this week company involves all workers including contractors for

participation in celebration activities.

Slogan writing competition

Painting competition

Essay competition

Safety drama competition

The selected posters, painting and essays will be displayed along with the safety

gadgets, fire fighting equipments for celebrations. The company believes in educating

local public. During this several competitions for the school children are also conducted

and rewarded. Even the children are also provided training.

The West Coast Paper Mills Ltd won the SURAKSHA PURASKAR 2005 by the

National Safety Council, Karnataka chapter.

.

56


CODE OF CONDUCT:

All Directors and officers shall observe and implement following code of conduct in their

official day to day activities;

Sincere, Honest and Ethical Conduct:

All Directors and all officers shall observe high standard of personal,

professional integrity, honesty and ethical conduct which is free from fraud and

deception, while in employment with the organization. They should act in good

faith, responsibly, with due care, competence and diligence, without allowing

their independent judgment to be subordinated. Directors will act in the best of

interest of the Company and fulfill the fiduciary obligations. All concerned are

expected to devote full attention and are committed to optimizing the growth of

the Organization by adopting best of the corporate governance practices and

ethos.

Statutory compliance:

All Directors and Officers shall take utmost care and pay attention to

comply with all applicable laws, regulations, rules and regulatory orders in letter

and in spirit. They are also expected to acquire appropriate knowledge of the

requirements relating to their duties sufficient to enable them to recognize

potential dangers and to report to the Board or management the possible

violation of laws and regulations or code of conduct.

57


Conflicts of Interest:

Directors shall avoid situations where a conflict of interest might occur or

appear to occur on account of personal transactions and investments which

conflict with interest of the Company. A Conflict of interest exists when any

personal or professional interest is adverse to or may appear adverse to the

interest of the Company. Conflict of interest may also arise when a

director/officer, or member of his or her family or firm, an organization with

which the director/officer is directly or through relatives or otherwise is

affiliated receives improper personal benefits as a result of his or her position as

Director/officer of the Company. Such conflict of interest impairs ability to

exercise good judgment on behalf of the Company.

Corporate Opportunities:

Directors and Officers should not exploit for their own personal gain

opportunities that are discovered through the use of corporate property,

information or position unless the opportunity is disclosed fully in writing to the

Company’s Board of Directors and the Board of Directors declines to pursue such

opportunity.

Protection of Assets:

Protecting the Company's assets is a key responsibility of every

employee. Care should be taken to ensure that assets are not misused,

misappropriated, loaned to others, or sold or donated, without appropriate

authorization.

Confidentiality of Information:

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Any information concerning the Company’s business, its customers,

suppliers etc, which is not in the public domain and to which the director or

officer has access or possesses such information must be considered confidential

and held in confidence, unless authorized to do so and when disclosure is

required as a matter of law. The Company’s confidential information includes

product architectures; source codes; product plans and road maps; names and

lists of customers, dealers, and employees; and financial information. All

confidential information must be used for Company business purposes only.

Insider Trading:

Directors and Officer of the Company shall not derive benefit or assist

others to derive benefit by giving investment advice from the access to and

possession of information about the Company not in public domain and

therefore constitutes insider information. All concerned shall ensure to comply

with the Insider Trading Code of the Company and Insiders Trading Regulations

of the SEBI since failure to do so attract serious consequences.

Disciplinary Actions

The matters covered in this Code of Business Conduct and Ethics are of

the utmost importance to the Company, its stockholders and its business

partners, and are essential to the Company's ability to conduct its business in

accordance with its stated values. It is expected that all will adhere to these rules

in carrying out their duties for the Company. The Board shall determine

appropriate actions to be taken in the event of violations of the Code.

Enterprise Resource Planning

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Managing information is one of the major tasks of a company. In any company,

information is obtained at various levels and is also processed at various levels. While

some information may have relevance only to a particular department or business unit,

most of the information is required to be used or analyzed by more than one department

or business unit before a company finalize an order of procurement, plans of investments

etc. Today, most of the companies including THE WEST COAST PAPER MILLS LTD

have adopted Enterprise Resource Planning.

It is normal to find different departments in a company using different standalone

software solutions customized to their specific needs. The Human Resource department is

concerned with the management of employees and their benefits; the Finance department

is concerned with the income and expenditure of the company and so on.

- West Coast has embarked on an ERP solution to enhance informed decision

making

- Solution to connect all branches, dealers, suppliers across the country

- To enable the company to know what inventory is lying where for timely

allocation

- To enable volumes to be scaled without increasing people

Thus having an integrated system for the company will eliminate the following

problems:-

a) Wastage of time and effort in re-entry of data at various points.

b) Chances of mistakes are more as the data is entered multiple times.

c) Data may look different in different programmes depending on how it is

entered.

Corporate Social Responsibility Activities

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WCPM supports the community of its presence through initiatives that go

beyond direct indirect employment and has invested significantly in Dandeli’s upkeep.

The Company maintains a self-sufficient colony with facilities of Shopping

Complex, Temple, Hospital, Theatre, Club and Cable TV Network. The Company has

also been rendering financial support since 1963 to Dandeli Education Society, Dandeli,

and the premier educational network of Dandeli, which runs several institutions including

two Pre-University Colleges and a Degree College as well as a Post Graduate Course in

pulp and paper technology.

The West Coast Paper Mills Ltd., although dependent heavily on trees for

supply of raw materials, remains one of the foremost ecology conscious concerns in the

country. With the threats of ozone depletion and global warming, the company has taken

a number of steps to protect ecology as well as to ensure steady supply of raw material.

The natural forests in India being under tremendous pressure, the Company has started a

programme of distributing quality seedlings of fast growing species like Eucalyptus,

Casurina, Acacia and Subabul (which are the raw materials of the plant).

The beneficiaries are owners of low yielding local agricultural lands in the

vicinity of the plant, i.e. Uttar Kannada, part of Shimoga, Belgaum and Dharwar districts.

The target is to distribute to the tune of 4 million quality seedlings.

The productivity of the plantation can be increased sustainably by promoting

technology based plantations. Of late in India, clonal forestry is gaining acceptance

among the progressive Foresters and Plantation Managers. Clonal technology is a

strategy adopted in tree improvement programme to capture and exploit the best

recombination in a shortest possible time. The ultimate objective of tree improvement is

to produce quality seeds. Seeds are the carriers of entire improvement made in one

generation to the next generation. Keeping in view the improved superior seeds are the

major source for propagation.

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The principles and practices of plant breeding of trees are well established and

they apply equally to industrial plantations and small holder agro-forestry and community

plantations also. The goal of tree improvement for agro-forestry is to increase the

effectiveness of land for productivity, suitability and sustainability of land use for rural

communities.

It consists of:

• Germination of the species or geographic sources within a species in a given area.

• Kind and causes of variability within a species.

• Packaging the desired qualities into improved individuals.

• Mass production of improved individuals for planting purposes.

• Developing and maintaining a genetic base population for advanced generation.

Success in the establishment and productivity of forestry plantations is determined

largely by species used and the source of seed within species. The higher gain in most of

the forestry improvement programmes can be made by assuring the use of the proper

species.

The Company has implemented Clonal Technology to achieve the following:

Supply genetically high quality planting stock.

Improve land productivity and yields from pulpwood plantation

Provide fuel wood etc. for local use

Encourage overall tree forming practices.

Improve the economic

The company has been playing a very active role in developing the backward

district of Uttara Kannada. Stabilising fly-ash dumps by biological means, developing

better drainage systems, organising education from primary to graduate, including pulp

and paper technology course, facilities for needy children, organising various social

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awareness programmes etc. are some of the steps it has taken to manifest its

commitments to social and environmental causes.

Pollution Control

The Company is meeting the standards laid down by the pollution control board for air

and water. Company is also making conscious efforts to reduce water consumption. The

consents granted by pollution control board are valid.

Expansion programme

In the present era of globalization along with projected and sustainable growth of

the Industry, development-cum-induction of energy efficient technology is the need of

the day. The development that meets the needs of the present without compromising

ability, needs and expectations of future generation shall become the viable bench mark

for a sustained growth. Constant efforts are to be made with efficient fibre and energy

management system to further strengthen and usher in the realm of sustainable operations

of the industry.

The survival and healthy growth of the Indian paper industry solely depends on

matching with the global capacities, operational efficiency and stringent quality

standards. The robustness and optimal size of the production processes shall be a primary

determinant for modernization and expansion programme. The growth in paper and

paperboard companies is more or less directly proportional to the country’s GDP even

with the advent of modern world of electronic communication.

The Company, with a vision to intensify the development activities towards fibre

resource management, quality improvement, up gradation of technology to achieve

energy efficiency, to be environmental friendly and ergonomic coupled with effective

utilization of human resources have embarked on an ambitious expansion cum

modernization plan for increased production facility in the existing mill at Dandeli. This

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program includes the replacement of existing Pulp Mill with new fibre line, a new paper

machine for writing/printing grade papers, additional equipments in Chemical Recovery

section.

Projects under Consideration-Rs. 300 Crores:

Complete fibre line of 725 TPD bleached pulp capacity comprising of wood

chipper, chip screen, chip silo, modified batch cooking system, brown stock

washing & screening, oxygen delignification of pulp, ECF bleaching and chlorine

dioxide generation plant.

New paper machine comprising continuous stock preparation, head box to pope

reel rewinder QCS & DCS systems, converting equipments, mechanized handling

of paper in converting, finishing and godown stages.

Rotary lime kiln of 230 TPD lime production capacity.

Black liquor evaporators of 230 m3/hr. water evaporation capacity.

Chemical recovery boiler of 1100 TPD black liquor solids firing capacity.

Causticizing section comprising liquor clarification equipments, mud washing and

thickening etc.

Power plant comprising boilers and turbine to meet additional requirement of

steam and power.

Additional equipment for effluent treatment plant, environmental protection and

to improve basic infrastructure.

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The production capacity will go up to 3, 20,000 TPA after completion of the said

investment program as against 1, 80,000 TPA at present.

Some of the Major Competitors of the Company

Competitors for White Paper

A.P.P.Mills Ltd. Rajahmundry

J.K.Paper Industries.

Mysore Paper Mill.

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Bilt Paper Mill.

Competitors for Duplex Board:

I.T.C Badralachalam

Bal Krishna Paper Mill

N.R.Paper Mill

Ballarpur Industries.

Sirpur Paper Industries

Sheshasai Paper Mills Ltd.

SWOT ANALYSIS:

Strengths

The mill has an overall experience of almost 45 years.

The company maintains a strong dealership network across the country which

makes its sales processes much easier.

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There are large tracks of wasteland in India which are proven to be of rich natural

resource which the company can exploit.

There is availability of cheap factors of production for the company i.e. labour,

materials etc.

There has been a change in focus from a forest based industry to a farm based

industry through technology-led farming initiatives.

The company has positioned very strong entry barriers for other companies to

enter the paper industry.

The company has a quick decision making process which makes the company

avail of all the potential opportunities that the company comes across.

Weaknesses

The paper industry is an extremely capital intensive industry.

The company has a long gestation or development period which proves that the

company takes time for it to implement its expansion programs into action.

The company employs a water intensive manufacturing process which utilizes the

water for the manufacturing process of paper.

There are high energy costs which impacts the overall cost of production.

There is an immediate need for empowerment of the employees in the

organisation.

The promotion policy is not satisfactory at all as it is given on basis of seniority

and not on performance.

There is unwillingness of the staff and workers to change to new practices and are

rigid in nature.

The company is facing a rapid labour turnover over the past few years of which

the company has been not able to prevent.

Opportunities

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There is a strong economic growth forecasted both in the paper industry as well as

the Indian economy.

There is a thrust on education which would enforce the usage of paper and paper

products more extensively.

There is a tremendous growth potential in copier business segment through

services sector which would again escalate the need of paper broadly.

There can be more emphasis to produce international grade quality by the paper

mill to make foreign market demand more realistic.

The modernization plans and technological up gradation are completed or likely

to be completed in near future by the company.

The Online ordering process is a great approach to open the way to getting in

orders from the clients almost instantaneously.

There should a performance based evaluation, promotion, and increments in the

salary of the employees and workers working in the organisation.

There can be a foreign market expansion which provides the company with export

opportunities resulting in the shifting of capacities to developing nations.

Threats

The entry of foreign players into the paper industry is a great danger for the

company.

The expectant losses in resources mainly water and other raw materials pose an

immense risk to the industry.

There is a massive cheap dumping of paper and paper products from China which

is ruining the domestic market.

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A slowdown in the economy would have direct impact on the paper industry for

certain.

The foreign exchange currency fluctuations impact the imported raw material

prices adversely

There are prevailing stringent environmental laws as per CREP guidelines which

requires the paper mills in the industry to upgrade their facilities

The massive threat is caused by the product substitutes existing in the market.

FINDINGS:

The company has adopted Enterprise Resource Planning system through which it

is able to run its activities smoothly and efficiently.

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As far as Expansion programme is concerned the company is very

professional and it has appointed external as well as internal experts to check the

feasibility of the project.

Raw material is the biggest challenge for the industry. Governing laws do not

permit the leasing of land, further a wood-based industry is expected to raise raw

material outside the forest, and there is a ceiling on land holding restricted to 54

acres per person.

The Company is infected with technical obsolescence which impacts efficiency

and quality

Current status of WCPM paper quality is good in the market but there is much

opportunity to improve status and brand in market and some of the dealers are

unhappy with quality of paper like thickness variation and brightness variation.

Wastage of raw materials used and residues for the process of production should

be reduced.

The salaries and promotions are not given on the basis on performance but on

seniority.

RECOMMENDATIONS:

Paper is truly recyclable and bio-degradable; therefore, the Company should be

dependent on agro-forestry. Under agro-forestry the pulp wood trees are harvested

after 5 years whereas as the number of trees planted are more than those

harvested.

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Regarding technological obsolescence, the Company should take more initiatives

than the already implemented projects and measures like usage of renewable

resources,

The salaries of the workers and employees should be increased in such a manner

that the employees and workers remain loyal and sincere to the Company and

increased on the basis of performance and not on seniority criteria by providing

performance appraisals,

Effective and strict supervision should be maintained in order to minimize the

wastage of finished goods.

The company should provide training facility to senior employees for working on

ERP systems.

CONCLUSION:

The forthcoming years will be a crucial. The Company is confident about posting

robust performance. So, whether it is capacity, technology, additional raw material

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supply, water, power, storage, dealership network, overall efficiency with environmental

focus – the Company has infused strengths in each and every area of business. The

Company has an excellent product range and the best quality to offer the customers. By

virtue of the Company’s diverse product range, it services institutional and retail

segments.

The Company has shown excellent financial acumen by raising long-term debt at

low rates. The entire expansion has been carried out at the existing location ensuring zero

additional land cost. The modern technology across each and every process will provide

the Company significant margin improvement.

Assuming the economic conditions remain favourable, the Company and its team

have a strong outlook to the future and further success of the West Coast Paper Mills Ltd.

BIBLIOGRAPHY

BOOKS:

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Aswathappa. K. (2008) Human Resource Management, Tata Mc Graw Hill publishing company Ltd.pp 116,117,286.

Philip Kotler,(2008)12th edition Marketing Management, Published by Indian Branch 48.F.I.E Patraparganji Delhi,pp 68,130,430.

B.S.Raman, (2007) Financial Management, United Publishers Mangalore, pp 304,398.

WEBSITES:

www.westcoastpaper.com

www.paper.com

www.paperinfo.com

http://www.paperinfo.com/

http://www.paper.com/

http://www.westcoastpaper.com/

Documents

77622562 West Coast Paper Mills