ORGANIZATION STUDY

A report with reference to

DELTA PAPER MILLS LIMITED

Vendra-534210, Palakoderu Mandal, W.G.Dt., Andhra Pradesh

Submitted by

YERRA SUBBARAYUDU

12MMA7043

Between 14/02/2013 and 14/03/2013

In partial fulfillment of the requirements for the award of

Post Graduate Diploma in Management (PGDM)

Under the supervision and guidance of

Mohan Kumar Iyer GANAPATHI RAJU.K

Faculty Member officer H.R

Submitted to

MATS Institute of Management & Entrepreneurship (Approved by AICTE, New Delhi)

Jakkasandra Post, Kanakapura Taluk, Ramanagara Dist - 562112, Karnataka

Academic Year 2012 - 2013

DECLARATION

I, YERRA SUBBARAYUDU, with Reg. No.: 12MMA7043, declare that this report on the

organization study undertaken by me at DELTA PAPER MILLS LIMITED, submitted to MATS

Institute of Management and Entrepreneurship, in partial fulfillment for the award of Post Graduate

Diploma in Management is a record of original study conducted by me form 14/2/2013 to 14/3/2013

during the academic year 2012 – 13.

Place: Bangalore

Date: …………………………………….

Yerra subbarayudu

ACKNOWLEDGEMENT

I owe a great many thanks to many people who helped and supported me during

the organization study.

My deepest thanks to lecturer, Mr. MOHAN KUMAR IYER the guide of the

organization study for guiding and correcting various documents of mime with attention

and care. He has taken pain to go through the project and make necessary corrections as

and when needed

My deep sense of gratitude to Mr. GANAPATHI RAJU KANUMURI (officer

H.R), DELTA PAPER MILLS LIMITED for his support and guidance. Thanks and

appreciation to the helpful people at DELTA PAPER MILLS LIMITED for their support.

I would also thank my institute without whom this project would have been a

distant reality. I also extend my heartfelt thanks to my family and well-wishers.

LIST OF EXHIBITS

EXHIBIT NO TITLE PAGE NO

1 Raw material used in India 7

2 Porters 5 forces 20

3 Modal of balanced score card 32

4 Functional structures 38

5 Product divisionalisation structure 39

6 Territorial divisionalisation structure 40

7 Organization structure of the

Delta Paper Mill Limited 44

8 Purchase department structure 50

9 Operations department structure 52

10 Production process of paper production 53

11 Paper go-down department structure 55

12 Quality department structure 56

13 Personnel department structure 58

14 Finance department structure 62

15 Marketing department structure 64

LIST OF TABLES

TABLE NO TITLE PAGE NO

1 Pulp producing countries 4

2 Leading paper producers 6

3 Key players in Indian paper industry 10

4 Production units of ITC ltd. 13

5 Production units of JK paper 14

6 Production units of orient paper 15

7 Financial status of delta paper mill ltd. 26

TABLE OF CONTENTS

Acknowledgement

List of Tables

List of Exhibits

CHAPTER NO PAGE NO

I Introduction

1.1 Executive Summary 1

1.2 Global Scenario 2

1.3 Indian Scenario 7

1.4 key players in industry 10

1.5 Environmental Study – PEST 16

1.6 Market Forces – Porter’s Model 20

II About the Organization

2.1 Brief history of the company 23

2.2 The Mission, Vision & Corporate Goal 27

2.3 SWOT Analysis 29

2.4 Product & Target markets 30

2.5 The Balance Score Card Approach 32

III The Organization Structure

3.1 Meaning and Definition 35

3.2 Components of organization design 35

3.3 A review of choices in design 36

3.4 Organization structure 43

3.5 Critical review of the structure 46

3.6 Conclusion 49

IV Business / Unit Level Analysis

4.1 Purchase department 50

4.2 Operations department 52

4.3 Paper go-down department 55

4.4 Quality department 56

4.5 Personnel department 58

4.6 Finance department 62

4.7 Marketing department 64

4.8 Enterprise Level Initiatives 66

V Summary of Observations & Conclusion

Bibliography

Annexures

1

CHAPTER I

INTRODUCTION

1.1 Executive summary

Organization Study carried out to study the structure of the organization which is

followed by the company. It also studies about the structure of each different department

and different functions followed by them. The organization study also helps to learn more

about the company history and products.

This study focus on the examination of how individuals construct organizational

structures, processes, and practices and how these, in turn shape social and formal

relationship. The report contains industry profile, company profile, a study of the

organization design, key business level functions and processes. Industry profile includes

background and history, vision, mission, goals, swot analysis and product profile. Study

of the organization design shows the present organization structure.

The report discuss about the Indian and global scenario of the paper industry. Then it

goes through company profile, which talks about the history, background, vision,

mission, goals and products of the company. Later part includes function of finance,

marketing and human resource department of the company. Various functions carried by

different departments of the company which is mentioned in report consists of the

finance, marketing, human resource and Enterprise Level Initiatives. Different functions

of finance department are budget preparation, cost allocation, payroll, accounts payable

etc. The HR department mainly focuses on employee recruitment, training, induction

programs etc.

2

1.2 Global scenario

1.2.1 Invention of pulp

The pulp is the main raw material for the paper industry. The pulp can be manufactured

from various sources like wood, baggage, (add some more) etc., Using wood to make

pulp for manufacturing paper is a recent innovation.

In the 1800s, fiber crops such as linen fibres were the primary material source, and paper

was a relatively expensive commodity. The use of wood to make pulp for paper began

with the development of mechanical pulping and thereafter with chemical pulping.

1.2.2 Nature and types of pulp

The nature of pulp differs on various parameters. The three main parameters considered

in defining the pulp are fiber length, brightness and pulping process and this are very

important in deciding the quality and value of the pulp. The different pulp grades give

different quality paper.

There are basically two types of pulp:

1. Pulp from wood

2. Pulp from non-wood substances

Today around 90-95% of the pulp is produced from wood and 5-10% of the pulp is

produced from Non-wood substances like field crop fibre or agricultural residues. The

use of Non-wood pulp is significantly less for a variety of reasons, including seasonal

availability, problems with chemical recovery, brightness of the pulp etc. And Non-wood

pulp processing requires a high use of water and energy.

1.2.3 Processing of pulp

There are different processes in existence for the production of pulp. The few prominent

processes are:

3

1. Mechanical pulp: The logs are first chopped into wood chips for the production of

mechanical pulp, wood is ground against water lubricated rotating stone. The heat

generated by grinding softens the lignin binding the fibres and the mechanized forces

separate the fibres to form ground wood. The yield from this process is higher than the

other processes and the cost of production is low

2. Chemical pulp: For chemical pulp, logs are first chopped into wood chips which are

then cooked with chemicals under high pressure. Cooking removes lignin and separates

the wood into cellulose fibres. The resulting slurry contains loose but intact fibres which

maintain their strength. During the process, approximately half of the wood dissolves into

what is called black liquor. The cooked pulp is then washed and screened to achieve a

more uniform quality. The black liquor is separated out from the pulp before the

bleaching process. The cost of production is high in compared with the mechanical pulp

process, the yield is low but the paper produced from this pulp is of high quality.

3. Recycled pulp: This process is also called deinked pulp (DIP). DIP is recycled

paper which has been processed by chemicals, thus removing printing inks and other

unwanted elements and freed the paper fibres. The process is called deinking.

1.2.4 Pulp producing countries

In the most of the countries paper mills do produce pulp (raw material) themselves for

their process. And there are few specialized pulp manufacturers round the world. USA &

Canada are the largest pulp producing countries in the world respectively and the

countries which produce pulp are in the world are shown in table no 1

4

Table No: 1 pulp producing countries

Argentina Australia Austria Bangladesh Belgium

Brazil Canada Chile China Colombia

Cuba Czech Republic North Korea Denmark Dominican

Republic

Ecuador Egypt Finland France Germany

Greece Hungary India Indonesia Iran

Iraq Israel Italy Japan Kenya

Malaysia Mexico Morocco Netherlands New Zealand

Nigeria Norway Pakistan Peru Philippines

Poland Portugal South Korea Romania Russian

Federation

Serbia Slovakia South Africa Spain Swaziland

Sweden Switzerland Thailand Tunisia Turkey

United kingdom United republic

of Tanzania

United states of

America

Uruguay Venezuela

Vietnam Zimbabwe

1.2.5 Pulp exporting countries

Many of the pulp producing countries are playing an important role in the exports of their

pulp produced and the major pulp exporters in the world are Canada, brazil, use, Chile,

Sweden, Indonesia, Finland, Russia, Germany, Portugal, Norway, japan respectively and

many countries do export the waste paper which can be used as the raw material in the

paper industry.

5

1.2.6 Major pulp Products in the world

With the availability of wide range of pulp grades there are incredible variety of end

products manufactured such as printing and writing papers, magazines, bathroom and

facial tissue, baby diapers, exterior housing siding, cardboards and electrical insulating

papers

1.2.7 Invention of paper

The invention of paper states back to 2nd

century BC in china where “Cal Lun” is

traditionally regarded as the inventor of paper and the papermaking process. Paper spread

from China through the Middle East to medieval Europe in the 13th century, where the

first water-powered paper mills were built. In the 19th century, industrial manufacturing

greatly lowered its cost and made it can effective medium for communication.

In 1845 with the inventions in the industry by Canadian “Charles Fenerty” and

German “F.G. Keller” independently developed processes for pulping wood fibers

through mechanical pulping brought significant change in the production capacity. And

further with the invention of chemical pulping in the 19th

century made the industry to

develop at a rapid phase.

1.2.8 Leading paper producers in the world

International paper is the major player globally with its production capacity and sales. It

has paper mills around the world serving a wide variety of product range and it has

started its operations in India by the acquisition of “Andhra Pradesh paper mills” at

Rajahmundry, Andhra Pradesh in 2011.And the top 10 key players, their country of

operation and production in tons is shown below in the table no 2

6

Table No: 2 leading paper producers

Rank Company group Country Production in (1,000

ton)

1 International paper United states 11,922

2 Stora Enso Finland 10,812

3 UPM Finland 9,914

4 Svenska Cellulosa

Aktiebolaget

Sweden 8,948

5 Smurfit Kappa Group United states 7,650

6 Nippon Paper Japan 7,292

7 Nine Dragons Paper China 7,280

8 Sappi South Africa 6,900

9 Oji paper Japan 6,861

10 Smurfit-Stone Container United states 5,896

1.2.9 Global paper consumption

About 400 million metric ton paper is produced and consumed per year and 50% of the

paper and board produced globally is used for packing;

The North America and Europeans consume half of the global production and the

forecast of paper consumption of paper by 2020 is around 500 million metric ton.

7

1.3 Indian scenario

In India there are around 700 paper mills and this are classified in to three types

based on the raw material used

1. Wood/forest based mills

2. Agro-residue based mills

3. Waste paper based mills

Due to the increasing regulation and raw material prices, the companies are increasingly

using more non-wood based raw material (agro-residue, waste paper) over the years. In

2011 around 69 % of the total production is based on non- wood raw material. With agro-

residue based mills taking 22% and waste paper based mills around 47% of total paper

production in India. And in the wood/forest based mills bamboo is been the major raw

material science its fast growing nature.

Exhibit No: 1 raw material used in India

The above exhibit no 1 shows the different raw material consumed by the Indian paper

industry

32%

38%

22%

raw material input

wood

recycled paper

agro-residues

8

1.3.1 Bamboo cultivation in India

The cultivation of bamboo in India is not managed in an efficient manner. In many areas,

bamboo resources have dwindled due to over exploitation and poor management ,This

issue needs to be addressed through well-organized cultivation, on the lines of

homestead, small-holder and plantation-based cultivation. In recent times government is

has understood the importance of bamboo cultivation and its demand in the global

markets due to its multiple uses.

The areas particularly rich in bamboo cultivation are the North Eastern States, the

Western Ghats, Chhattisgarh, Madhya Pradesh and Andaman Nicobar Islands.

1.3.2 Major paper producers in India

The leading paper mills in India which took a prominent position in the market are:

1. ITC Limited

2. Ballarpur industries ltd.

3. JK Paper ltd

4. Tamil Nadu newsprint & paper ltd

5. The Andhra Pradesh paper mills ltd

6. West coast paper mills ltd

1.3.3 Paper production statistics

The Indian Paper Industry accounts for about 3% of the world’s production of paper and

paperboard. The operating capacity of the industry currently stands at 12.75 million tons.

And production of paper and paperboard is estimated to be 10.11 million tons in 2011.

India is the fastest growing market for paper globally and it presents an exciting scenario;

paper consumption is poised for a big leap forward in sync with the economic growth and

is estimated to touch 13.95 million tons by 2015-16.

9

1.3.4 Paper consumption in India

The average paper consumption in India is relatively less when compared with many

countries which are as well leading in the paper production. India stands at 15th

place in

the paper production in the world with per capita consumption of 9.3 kg in 2011 which

has increased from 8kg from the past few years.

1.3.5 Exports and imports of paper

The India paper industry is producing the required quantity of paper though they are

imports for special grades of paper which are not available in India. And there are exports

to other countries like Pakistan, Sri Lanka and few others from India. The amount of

exports and imports are equal with around 3% of the total paper produced.

Challenges faced by the paper producing firms

Environmental issues is one of the major problems faced by the firms science due to

recognized as a polluter they are many problems faced from the environmentalists in

the surrounding localities; the management of the solid waste and gases pollutants has

been a major concern

Non availability of good quality fibrous raw material has got its impact on the quality

of the paper produced and due to this the major paper production is done on non-

conventional method using waste paper and agro residues

The increasing cost of inputs due the inflation is a challenge for the firms in

managing the cost of production mainly for the small and medium scale paper firms

Technological issues are been the one of the major factor in reducing the quantity and

quality of output where many of the paper mills are still using the age old machinery

due to lack of renovation

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1.3.6 Future prospects for paper producers

At present India consumption of paper is very low when compared to the other countries

average consumption and now the usage of paper and the demand is gradually going high

in recent times so there is a huge potential in expanding the productions and as well the

high quality paper or the different grades like medical-grade coated paper, lightweight

online coated paper, etc. are produced at a very low quantity where the industry can

expand in this prospective.

Modernization of the manufacturing units can be taken to improve the quality and

quantity of output and can increase the forest based raw material i.e. Wood for the paper

production which is the primary raw material for the paper industry.

1.4 key players in the industry

The first paper mill in India is founded in 1870’s in Shrirampur a city in west- Bengal,

British India and at present in India there are around 700 large, medium and small paper

mills all over India

But the paper mills operating in large scale with primary raw material i.e. wood in India

are only 20; few of the important paper mills which are predominant in the Indian market

are shown in table no 3

Table No: 3 key players in India paper industry

Name Registered office Paper units

Ballarpur Industries Ltd. Gurgaon, Haryana 6

ITC papers limited. Secunderabad 4

J K Paper Ltd. New Delhi 2

TNPL (Tamilnadu newsprint

and papers limited).

Chennai 1

West Coast Paper Mills Ltd. Dandeli, Karnataka

1

11

Name Registered office Paper units

The Orient Paper mills Ltd. Bhubaneswar 2

Century Pulp & Paper

Industry.

Uttaranchal 1

The South India paper

mills Ltd.

Karnataka 1

Mysore Paper Mills. Bangalore 1

The Hindustan Paper

Corporation.

New Delhi

4

Kuantum papers. Punjab 1

Malu paper mills ltd. Nagpur 1

Kunnath paper mills Pvt ltd. Kerala 1

Shreyans Paper Mills Ltd. Ludhiana, Punjab 1

Hemkunt Paper Mills Ltd. Ludhiana, Punjab 1

Punalur Paper mill Panalur, Kerala 1

Trident Paper Mills Ltd. Punjab 1

The Khanna paper mills

Ltd.

Amritsar, Punjab

2

Shree Krishna paper mills. New Delhi 1

Sai Rayalaseema paper

mills Ltd.

Hyderabad 1

Satia Paper Mills Ltd. Mohali, Punjab 1

Delta paper mills ltd. Vendra 1

Rolex paper mills ltd. Palakollu 1

Shree Rishabh Papers. Ludhiana, Punjab 1

12

1.4.1 Market leaders

The market leaders in the Indian paper industry as per the production are

1Ballarpur Industries Limited (BILT)

• Founded in 1945, with the name of Ballarpur Paper and Straw Board Mills Limited.

The company changed its name to Ballarpur Industries (BILT) in 1975. BILT is the

largest paper manufacturing company in India.

• The company product portfolio includes - coated wood free paper, uncoated hi-bright

paper (Maplitho), business stationery, copy paper and speciality & fine paper

• In 2008, BILT controlled approximately 21% of Writing and Printing Paper (WPP)

market and approximately 53% of the coated paper market.

• The company is pursuing both organic and inorganic strategy to increase its installed

capacity to 1.5 million tones paper by 2014.

• In 2006, the company acquired a paper manufacturing firm, Sabah Forest Industries,

in Malaysia. The acquisition helped the company to secure the future supply and also

provide a platform to the company to enter the South-east and East Asian market

• To maintains its leadership in the market, BILT is focusing on 4 key areas:

- Securing raw material supply

- Rapidly developing larger scale of operations

- Continuously innovating to introduce new products and grow new markets

- Creating a de-risked corporate financial and capital structure

• It has six paper units in operation at different geographical locations in India which

helped the company to serve the entire nation.

• BLIT is the first Indian company to acquire an overseas integrated paper and pulp

facility firm.

13

2. ITC Limited – Paperboards & specialty Papers

• ITC’s paperboards and specialty paper unit was created after the merger of

Bhadrachalam Paperboards Limited with ITC in 2002.

• The company produces paperboards and specialty paper for all types of carton-

consuming segments including cigarettes, foods, beverages, pharmacy, personal care

& toiletries, durables and match shells.

• ITC also makes some of the premium graphic boards used for greeting cards, covers,

sleeves, tags and playing cards.

• It produces both virgin and recycled boards spanning the full requirement of a

packaging customer.

• ITC paper unit exports nearly 15% of the coated papers to customer requirements in

Malaysia, Sri Lanka, Bangladesh, Iran, Australia, UAE, UK, Italy, Poland and Russia.

• The paperboard, paper & packaging segment is one of main focus area of the

company, accounted for approximately 10% revenue of the ITC group. The company

wants to maintain its leadership in value-added coated boards segment by using latest

technology.

• ITC is also looking to integrate its operation fully by creating in-house pulping

capacity. In 2009, it has a 240,000 tons of Elemental Chlorine Free pulp capacity at

Bhadrachalam mill

• The company has four manufacturing units shown in table no 4

Table No: 4 production units of ITC ltd.

Paper unit State

Bollaram Andhra Pradesh

Bhadrachalam Andhra Pradesh

Kovai Tamil Nadu

Tribeni West Bengal

14

3. JK Paper Limited

• Founded in 1962, JK Paper Mills (JKPM) started its operations with an annual

capacity of 18,000 tones. It is promoted by the H.S. Singhania Group.

• JKPM is the first paper company to get TPM Certification from JIPM, Japan and 3rd

paper company in the world.

• JKPM is the largest producer of branded papers in India. The company is a market

leader in copier varieties and SS Maplitho segment.

• Due to low capacity, the company started to outsource coated paper in 2003.

Outsourcing and trading contributed approx. 10% of total sales.

• The company has a wide range of branded products in its portfolio. It sells

approximately 40% of paper produced under various brand names - JK Copier, JK

Excel Bond, JK Bond, JK Savannah, JK Copier Plus and JK Easy Copier.

• It sells its products through a nationwide distribution network of approximately 100

distributors and 2,500 dealers.

• JKPM follows its growth plans through capacity addition and its market expansion

plans through outsourcing & trading

• The company exports its products to more than 40 countries including Sri Lanka,

Bangladesh, Middle East, Africa, Australia, Singapore, Malaysia etc.

• The company has two manufacturing units shown in table no 5

Table No: 5 production units of jk paper

Paper unit State

Rayagada (JK paper

mills)

Orissa

Songadh(Central pulp

mill)

Gujarat

15

4. Orient Paper & Industries Limited

• Founded in 1939, Orient Paper & Industries Limited (Orient Paper) is a part of the

CK Birla Group and diversified into Paper, Cement and Electric Fans. The company

also announced its plans to enter into CFL business.

• The company produces a wide range of writing, printing, industrial and speciality

papers. It is also a market leader in the domestic tissue paper industry with over 50%

market share.

– Tissue paper is one of the fastest growing segments of paper. The growth in

the use of tissue paper is positive for the company.

• In 2007, the company raised approx. INR1.7 billion via a right issue, part of which

would be utilized to create additional tissue paper capacity of 20,000 tones at paper

plant.

• The company plans to hike the capacity of the Amlai paper unit by 50% from the

existing 80,000 tons a year at an investment of INR1.0 billion.

• The company’s main plant is situated in Amlai, Madhya Pradesh with an annual

capacity of 76,000 tones. The company also provided technical and financial aid to

Pan African Paper Mills (EA), to set up a pulp and paper mill in Kenya

• The company has two manufacturing units which are shown in table no 6

Table No: 6 production units of orient paper

Paper unit State

Amlai Madhya Pradesh

Brajrajnagar Orissa

16

1.5 pest analysis

Pest analysis describes a framework of macro-environmental factors used in

the environmental scanning component of strategic management. The four factors

considered in the analysis are given below.

1.5.1 Political factors

Import duties

The government of India has recently reduced the import duty of waste paper from 2.5%

to 0% which is one of the major raw materials for the paper mills in India. It was stated

that the act was implemented for reducing the shortage of raw material prevailed in India;

and this can be taken as a good note for the paper industry in improving its raw material

flow.

On the other side the import duties on the other raw material “pulp” and “wood chips”

are been high and due to India being short of fibre many firms are importing the “pulp”

and “wood chips/logs” are requesting the government to bring import duties to nil which

could help then in reducing the input costs.

Forest policy

The forest policy in India is very stringent due to which wood being the major raw

material for paper production around the world; but in India the paper mills operating

with wood as input are only 20 which around to 31% of the industry capacity.

Where the Revision of forest policy is required for wood based paper industry so that

plantation can be raised by industries, cooperatives of farmers and state government. So

that it can reduce the import of pulp and wood chips from abroad and help in reducing the

input costs

17

FDI

The foreign direct investment in the paper industry in India is open up to 100% in 2007

with allowing tax rebates and other facilities has got good investments and technology in

the industry

1.5.2 Economic factors

The India economy is suitable for the paper manufacturing firms as the

government has identified paper industry as the one of the 35 important industries in

India. There is a huge potential in raising IPO’s for the firm expansions and other

activities; the operating banks are in good position and are willing to provide long term

loans. The increasing disposable income for the people has a positive impact on the

industry.

The annual turnover of the industry at present is at 35,000 crores and contribution to the

government kitty is 3,000 crores

Standard of living

As compared to many countries in the world the per capita consumption of paper in India

is very less at 9.5 kg whereas in many countries like America, china, japan the per capita

consumption of paper is around 200 kg; due to the standard of living being low in India

has its impact on the paper industry in its consumption.

Effect of inflation

Due to the inflation the input costs of the raw material and the machinery and other

operating costs has gone up this has created the increase in the final cost of the output

leading decrease in the quantity demanded

18

Economy of country

Science the economic condition of the country is not good the development of the

infrastructure in the country is not up to the mark to provide good ports, roads, railways

and communication facilities. This could have helped the industry to grow further by

reducing the expenses in the logistics and by improving new trades.

The machinery and the operational costs are very high so huge investments are required

for the establishment of the mills; this has limited the investments in the industry.

1.5.3 Social factors

Paper industry is closely related to national economic factors as well as social factors;

paper and paper consumption is a measure of a country's modernization level and the sign

of the degree of civilization. Our paper products in approximately 80% of consumption

by individuals, 20% for consumption in different industry packing

Lifestyle patterns and changes

The lifestyle patterns and changes have both pro’s and con’s on the paper industry.

Where pro’s being in the modernization phase use of the different paper products like

tissues etc. has been increasing consistently and had a wide scope in this stream and on

the other side though not a complete impact but the digitalization storage of data also has

its impact on the paper industry by reducing the demand for the paper to an extent.

Literacy rate

The increase in the literacy rate in the country is a positive indicator in the development

of the paper industry in the country science many people come in use with the available

paper resources at various stages like schools, offices, newspapers etc. leading in the

development of the industry.

This also makes availability of skilled labor for the industry which indeed helps in the

improving the production values.

19

1.5.4 Environment issues

The increasing environmental concerns lead in the implementation of new emission

limits for waste management; enterprises increased investment in environmental eco-

friendly measures, so that a large number of small and medium enterprises are out of

the market due to lack of funds in improvising the firms due to high input costs.

1.5.5 Technological factors

In India there are many firms manufacturing the technology required for the paper

industry but when compared in the phase of technology available in the foreign markets

the technology available in the country in not up to the mark

Many small and medium scale firms in the industry use the local technology due to the

low cost but when compared to the other technologies available and the output is as well

low. In India only large scale manufacturers have good technology machinery and are

attaining economies of scale.

And most of the firms do import technologies from other countries for paper machines,

waste water treatment plants, digesters, crushers, cutters etc. in special paper production

like coated paper most of the technology adopted is imported from foreign markets.

To an extent the foreign trade policies are favoring the paper industry but still the duties

imposed do exists on the technological imports.

20

1.6 porter’s 5 force analysis

Porter five forces analysis is a framework for industry analysis and business strategy

development formed by Michael E. Porter of Harvard Business School in 1979. The five

forces that are considered are shown below in the exhibit no 2

Exhibit No: 2 porters 5 forces

Force 1: Competitive rivalry with in the industry

The number of grades available in the paper mills of individuals with distant uses

gives the firm an advantage against the competitive rivalries

The high switching cost among the products also makes the industry rivalry less

instance

The difficulties to exit from the business due to high capital cost increases the

chances of the rivalry among the producers of similar grades.

Force 1: competitive rivalry

with in the industry

Force 2: bargaining power of

suppliers

Force 3: bargaining power of

customers

Force 4: threat of substitute

product

Force 5: threat of new entrants

21

Force 2: Bargaining power of suppliers

Bargaining power of suppliers of raw materials i.e. wood, straws, bagasse, waste

paper, energy (coal etc.) is high due to the shortage of available raw material

The number of suppliers in the market are very few so the bargaining power of

the suppliers is high

The imported technology is available easily to the firms and the bargaining power

of the suppliers is less due to small market

Force 3: Bargaining power of customers

The growing per-capita income of the customers has created a benefit to the firms

by reducing the bargaining interest of the customers.

The increase in imports of duty free newsprint has created a negative factor

increasing the options for the customer there by increasing the bargaining power

of the customer

Diversified customer requirement and wide range of options have increased the

bargaining power of the customer

Force 4: Threat of substitute product

The digitalization of data storage has been the major substitute to the paper

usage and has been a major threat

Within the firm there is no near substitute because most of the production is

customized based on the order taken

The e-book/e-newspapers are been a clear substitute to the paper usage and

considered to be threat to the firm.

22

Force 5: Threat of new entrants

The entry of new firm is difficult due to high capital cost involved in starting up a

firm

The trained manpower is not available as the requirement science most of the

paper mills are situated in rural areas.

The rate of return is very low when compared to other capital invested so it acts as

a barrier for the new players to enter

The raw material shortage prevailing in the market makes it difficult for the new

players to enter.

23

CHAPTER II

COMPANY PROFILE

2.1 Brief history of the company

The Delta Paper Mills Limited was established as public limited company on 23rd

May

1975 and certificate of commencement of business was obtained on 26th

February

1976.The Delta Paper Mills Limited was promoted by late Sri Bh. Vijay Kumar raju

The company started its production on 7th

April 1977. The plant was located at Vendra,

village of Palakaderu mandal, W.G.Dt. because of availability of raw material in

surrounding areas, water facility, and drainage facility for disposal of effluents and is

approximately to the broad gauge railway line connecting madras and Calcutta.

Delta Paper Mills Limited commissioned the paper machine for commercial production

from July 1978 and pulp mill by November 1978. It earned its profit in the second and

third year of operations. Around 2000 families are getting their livelihood from this

company. Besides, all famers in and around the Vendra village and benefited selling their

paddy straw to the company. The company manufactures writing and printing papers of

different cultural varieties such as cream wove, white printing, azure wove, azure laid,

duplicating etc. the company uses unconventional raw materials like paddy straw and

baggase. The main objective of this establishment was to use agro residues and cater to

the needs of the farmers. It is the first company to utilize natural gas supplied by oil &

natural gas Corporation in entire south India. To keep the environmental balances, the

company has taken up plantation of trees in and around the mill premises. It has got full-

fledged effluent treatment plant.

The company has developed superior quality of paper called “SUPER DELUX

CREAMWOVE” and penetrated into the market with good results. It has a strong

marketing network. The majority of sales comprise to the government department viz.,

24

government textbook Corporation of Andhra Pradesh, Maharashtra, Madhya Pradesh,

tamilnadu, Kerala, and other central/state government agencies through DGS & D rate

contract. The company enjoys patronage of private market distributors and also having a

brand name and image. It’s “Delta Hasti Duplicating Paper and Note Books” are very

popular. The company has also installed a 9.9MW power plant. In entire south India out

of agro based paper mills, the company is the only mill installed chemical recovery plant

for abating the pollution. With all these developments, the company is now producing at

the rate of 51,100MT per annum of quality writing and printing papers.

2.1.1 Reasons for selecting the location

For bringing reputation to the native place, creating employment to the rural youth and

The availability of raw material in surrounding areas, water facility, drainage for disposal

of effluents and its proximity to the broad gauge railway line connecting Chennai and

Kolkata. Has been considered to select the existing mill location

2.1.2 Board composition

Dr. G. Ganga raju - Chairman

Mr. G.V.K. Ranga Raju - Executive Director

Mr. G. Panduranga Raju - Executive Director

Mr. G. Rama Raju - non-Executive Director

Mr. G.V. Narasimha Raju - non-Executive Director

Mrs. Bh. K.K. Kasturi - Independent Director

Mr. M. Subba Raju - Independent Director

Mr. A. Narasimha Rao - Independent Director

25

2.1.3 Capacity:

In 1978 the initial production capacity was 30 tonnes per day. In 1986, Delta

Paper Mills Limited under took an expansion project to double its capacity to 60 tonnes

per day. Now the capacity of the plant is 150 tonnes per day.

2.1.4 Turn over:

The initial turnover of the company is 9,000 MT. The company has taken

expansion in the year 1986 to add another 9,000MT per annum. Now the total turnover of

the company is 18,000 MT. The company has installed 3rd

paper machine and required

plant & machinery and increased the capacity to 42,000MT per annum and

commissioned the same during December 2004.

The mill development has been successfully completed and the company is now

capable of producing 51,100MT per annum of quality writing and printing papers.

2.1.5 Nature of activity:

Delta Paper Mills Limited specialities in making paper alone, and produce

primarily only three types of paper.

Printing

Writing

Craft paper

2.1.6 Raw material:

The following types of raw materials are being used in manufacturing of paper in

this company. They are mainly.

Paddy straw

Waste paper

Casurina Wood

26

Bagasse

Bleached pulp

Imported waste paper

2.1.7 Financial performance

The performance of the company during the year is satisfactory in terms of

production and sales during the year under review; the company has taken up

modernization of plant with the assistance of bank finance.

The financial result of the company for the year ended March 31, 2012 in

comparison with preceding financial year ended as on March 30, 2011 are summarized

and shown below in the table no 7

Table No: 7 financial status of delta paper mills ltd.

(Rs. In Lakhs)

Particulars 2011-2012 2010-2011

Sales 17752.11 16266.62

Less: excise duty 1051.04 833.21

Add: other income 52.69 51.66

Total revenue 16753.76 15485.07

Profit/ (loss) before interest and

depreciation

(489.15) 505.71

Less: interest 1093.45 998.86

Less: deprecation 769.25 756.17

Profit/loss for year (2351.85) (1249.32)

Less: income tax 24.60 0.49

Less: deferred tax 10.23 64.61

Profit/ (loss) after tax (2386.68) (1314.42)

27

2.1.8 Capital sources:

The initial capital of the Delta Paper Mills Limited was 1, 50, 00,000/-. The Delta Paper

Mills Limited has the financial support from the banks like UCO bank, Canara bank,

Andhra bank and Indian overseas bank.

Term loans availed from canara bank, Andhra bank and Indian overseas bank are secured

by way of equitable mortgage by deposit of title deeds of the company’s immovable

properties both present and future and by way of first charge of all fixed assets of the

company as a primary security and hypothecation of movable properties of the company

with the term loan lender banks and further secured by a second charge on the current

assets of the company consisting of raw materials, stock in process, finished goods, stores

and spares and book debts both present and future.

2.2 Mission, vision and corporate goal

The delta paper mills limited mission, vision statements and corporate goals are

explained below

2.2.1 Mission:

Delta Paper Mills Limited is committed to actively promote the safety, health and

wellbeing of all its personnel. Delta Paper Mills Ltd will ensure that these aspects are

inbuilt and become integral part of its operations and strategic planning.

Delta Paper Mills Ltd also is committed to make available necessary funds, resources and

any such means required to implement the occupational health, safety and welfare (OHS

& W) policy and commits to ensure:

A safe work culture that minimizes the risk of injury or illness to its personnel

Adequate facilities at work places

Regular training, instructions and information to all its OHS & W.

28

To meet these provisions Delta Paper Mills LTD is committed to:

Meet its Responsibility of care and wellbeing of all persons in Delta Paper Mills LTD

work places including visitors, contract workmen, casual workmen and trainees.

Comply with relevant OHS & W legislation, code of practices and standard.

Implement an effective hazard management policy.

The right of employees to demand for safe working environment and shall strive to

provide the same.

Have effective two-way communication with all its employees for a better and safe work

culture.

2.2.2 Vision:

Delta Paper Mills Limited, Vendra is committed to satisfy our customers, for the

products we develop and supply with an emphasis on

Customer requirement at competitive prices

Use of Eco friendly systems to the extent possible

Continuous process of improvement for betterment in quality

Continuous interaction between the mills, suppliers, dealers and customers

2.2.3 Corporate goal:

Adapting latest international technology to math paper requirement.

Accelerate growth through brand building.

Continuous research and product development.

To utilize the maximum production capacity

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2.3 Swot analysis

Swot analysis is a structured planning method used to evaluate the strengths, weaknesses,

opportunities and threats involves in a project or in a business venture and the swot

analysis for the delta paper mills ltd. is done below.

Strengths

The management of Delta Paper Mills Limited is very strong in production

activities and decision making

Optimum utilization of company resources and human skills and capacity

Consistency in the quality of the product irrespective of the market conditions etc.

Fulfilling social responsibility by keeping environment clean.

Weakness

The Delta Paper Mills Limited is located in a remote place so there are few skilled

labor

The brightness of the paper produced is dull which limits its value in the market.

The employees leaving the firm are notable and been a problem in controlling the

issue.

Opportunities

There is an opportunity to use new technology i.e. oxygen bleaching system

Expanding the company product line like as tissue papers and card boards

Expanding into new geographic markets science there is only one manufacturing

unit.

Increase in the demand and usage of different types of paper in the national and

global arena.

The Delta Paper Mills Limited has an opportunity to updated technology with

further improvement in the global technical expertise

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Threats:

The availability of raw material is been very difficult and is been a continuous

threat to the firm and the industry

The import duties charged by the government on the import of the new

technology and raw materials

The 100% foreign direct investment in the industry has lead in many international

firms to enter the market increasing the market completion.

2.4 Products and target markets

2.4.1 Products of the company

Cream wove:

Wove paper is a writing paper with a uniform surface, not ribbed or watermarked. Is

normally used as a writing paper.

Azurlaid:

Laid paper is a type of paper having a ribbed texture imparted by the manufacturing

process. In the 19th century its use diminished as it was largely supplanted by wove

paper. Laid paper is still commonly used by artists as a support for charcoal drawings.

This type of paper is used for making charts, cards etc.

Azurwove:

This type of paper has partial properties like cream wove and azurlaid. It is used as a

writing paper but the finishing of the paper is not as uniform as cream wove and has a

partial ribbed texture as azurlaid

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Duplicating paper:

This type of paper is used for stencil work cyclostyling etc. It is used very much for

rough works, colour paper, vouchers etc. generally the duplicating paper has very less

GSM and brightness varied as per the manufacturer.

Colour wove:

This type of paper has good finishing and it costs more than the cream wove and is a kind

of cream wove which has more properties like different shades which can be

manufactured as per the requirement.

Sack kraft:

Sack Kraft Paper is a porous kraft paper with high elasticity and high tear resistance,

designed for packaging products with high demands for strength and durability.

Delta hasthi:

This is the brand name of the note books and duplicating paper produced by the firm and

is made of high quality paper.

2.4.2 Target markets

The company has a strong marketing network. The majority of sales comprises to the

government department viz., government text Book Corporation of Andhra Pradesh,

Maharashtra, Madhya Pradesh, Tamil Nadu, Kerala and other central/state government

agencies through DGS & D rate contract. The majority of the business of the firm is to

other business units mostly paper supplied in the form of rolls and sheets for further

process to be performed.

The firm has manly based on the consumer segment while there is industrial segment

producing paper for different packing processes but the operations in this segment is very

limited with only producing “sack Kraft”.

32

2.5 Balanced Score Card Approach:

The balanced scorecard is a strategy performance management tool - a semi-standard

structured report, supported by design methods and automation tools, which can be used

by managers to keep track of the execution of activities by the staff within their control

and to monitor the consequences arising from these actions below shown is the modal of

balance score card of the delta paper mills limited. In exhibit no 3

Exhibit No: 3 Model of Balanced Score Card

2.5.1 Finance Activity

Objective:

The main financial objective is that to improve the financial status overcoming the losses.

Measures:

In order to overcome the losses the cost of production is to be reduced and the total

capacity of the firm is to be utilized.

33

Targets:

The immediate target aimed is to get to a financial position to a break-even point and

there by gradually improve to attain profits.

2.5.2 International Business Process

Objective:

The main objective is to enter into the international market

Measures:

In order to reach this objective they are slowly improving the quality of the product.

Target:

The target aimed is to firstly enter into small international markets like Bangladesh and

Sri Lanka.

2.5.3 Customer

Objective:

The objective is to satisfy the customer by providing the product according to his

specifications

Measures:

To attain the objective the paper production is customized according to the consumer

requirement.

Target:

To attain 100% customer satisfaction and make them loyal customers to the firm.

34

2.5.4 Learning and growth

Objective:

The main objective is to update the technology and to give good training to new

employees or labor which could help in developing the firm.

Measure:

Establishing an R&D and introducing latest market changes in the classes of training.

Target:

To upgrade the technology and the improve the employee skills to the market condition

in a span of 3 years.

35

CHAPTER III

A STUDY OF THE ORGANIZATION DESIGN

3.1 Meaning and definition

An organization structure refers to the determination of organization system of the

enterprise it determines the programs and procedures by which the administrative

relations of an enterprise are defined and established. No activity of the organization can

go out of this structure. As the policy of the enterprise determines the limits within which

the enterprise has to work. In the same manner organization structure determines and

defines the shape and size of the enterprise according to which the administrative and

organization decisions have to be taken. It is also the framework of activities of the

enterprise, it may also be considered as the map of the building to be constructed.

3.2 Components of an organization design

Organization structure influences the division of the tasks, grouping of activities,

coordinating the activities and the overall accomplishment of the tasks. Since

organization structure relates to relatively stable relationship and process of the

organization, all influencing factors must be analyzed for designing the organization

structure.

According to Robbins organization structure stipulates how tasks are to be allocated, who

reports to whom, and the formal coordinating mechanisms and interaction patterns that

will be followed. John Ivancevich and Michael Matteson have also expressed the same

view and advocated that manager are required to take

Following four decisions for designing organizational structure:

Divisions of overall task into smaller jobs.

Distribution of authority among the jobs.

Bases by which the individual jobs are to be grouped together; and

36

3.3 A review of choices in design

3.3.1 Advantages of the organization structure:-

The organization structure has the following advantages in the enterprise:-

Necessary for the management: it is necessary for the management of the business and

industrial enterprise. In the absence of a clearly defined organization structure, the

management cannot discharge its duties properly because the structure defines and

defines the relation between all the departments of the enterprise and the rights and duties

of all the in the enterprise. It also tells us about the managerial approach.

It reveals the drawback of an organization: organization structure is an important

document of an enterprise. It serves as the guidelines to explain what should be done in

the enterprise. Actual performance of the enterprise is compared with this document. The

way it reveals the drawback of an organization

Helpful in delegation: it is also helpful in providing the suitable training to the

employees of the organization and defining their duties. It helps in delegating proper

authority to the employees so that they can discharge their duties effectively and

efficiently.

Helpful in training: It is also helpful in providing suitable training to the employees and

defining their duties like mentioned in the above. It defined the requirements of all the

suitable postages and it also determines the need, nature, and the form of the training

required.

3.3.2 Disadvantages of organization structure:

The organization structure follows from the certain defects:-

It is difficult to change: Management is a dynamic science. To make is a real science,

must be practical, no hard and fast line can be drawn in the activities of enterprise,

37

organization structure is the definite determination of activities. Therefore, it develops

rigid ness in the activities and becomes difficult to make any changes easily.

It reveals only the formal relations: A very important drawback of the organization

structure is that it is only a formal document. It defines only the formal relations among

the employees of an enterprise. But in practice, there are two types of relations among

them. Formal and informal and organization structure does not define informal relations.

It creates conflicts: Organization structure makes clear difference in the rights and duties

of all the employees of the enterprise. It is the feeling of boss and subordinate among

them. It also develops the feeling of superior and inferior. It also develops the feeling of

senior and junior.

3.3.3 Types of organizations structure:

Different types of Organization structure can be created on the basis of arrangement of

activities.

Accordingly, three broad types of structural forms are:

Functional Structure

Divisional Structure and

Adaptive Structure

I Functional Structure:

When units and sub-units of activities are created in organization on the basis of

functions, it is known as functional structure. Thus, in any industrial organization,

specialized functions like manufacturing, marketing, finance and personnel constitute as

separate units of the organization. All activities connected with each such function are

placed in the same unit. As the volume of activity increases, sub-units are created at

lower levels in each unit and the number of persons under each manager at various levels

38

gets added. This results in the interrelated positions taking the shape of a pyramid. The

exhibit no 4 shows the functional structure of a medium-size organization.

Exhibit No: 4 functional structures

Chief Executive

Manufacturing Marketing Finance

Mechanical Electrical Advertising Sales Accounts Audit

Sub-units Sub-units Sub-units Sub-units Sub-units Sub-units

The main advantage of the functional structure of organization is that there is functional

specialization in each unit, which leads to operational efficiency of people engaged, and

the organization as a whole derives the benefit of specialized operations. The heads of the

functional units are in direct touch with the chief executive who can sort out inter-

functional problems, if any, and also coordinate the interrelated functions. The chief

executive is also able to be in direct touch with lower level subordinates and thereby have

full knowledge of the state of affairs in the organization. However, while the functional

arrangement may be well suited to small and medium size organizations, it is incapable

of handling the problems of an organization as it grows in size and complexity. Problems

of subunits at lower levels do not receive adequate attention of higher level managers

while some of the activities tend to be over-emphasized.

39

Functional units become unwisely and difficult to manage when there are diverse kinds

of activities performed in large number of sub-units. Personal contact between superiors

and subordinates become rare, and flow of communication is slow leading to problems of

coordination and control.

II Divisional Structure:

The divisional organization structure is more suited to every large enterprise particularly

those which deal in multiple products to serve more than one distinctive markets. The

organization is then divided into smaller business units which are entrusted with the

business related to different products or different market territories. In other words,

independent divisions (product divisions or market division), are created under the

overall control of the head office. Each divisional manager is given autonomy to run all

functions relating to the product or market segment or regional market. Thus, each

division may have a number of supporting functions to undertake. A divisional structure

may consist of two or more product divisions or market or territorial divisions as depicted

in the diagrams shown below from the exhibits no 5 and 6

Exhibit No: 5 Product divisionalisation

Chief Executive

Corporate Planning Finance Personnel and Control

Chemicals Products Division Textiles Division

Manufacturing, Marketing Manufacturing, Marketing

Accounting & Personnel Accounting & Personnel

40

Exhibit No: 6 Territorial divisionalisaton

Chief Executive

Corporate Planning Finance Marketing Personnel and Control

Eastern Division Western Division Northern Division Southern Division

Accounting Accounting Accounting Accounting

Personnel Personnel Personnel Personnel

Manufacturing Manufacturing Manufacturing Manufacturing

Marketing Marketing Marketing Marketing

In a divisional structure each division contributes planned profits to the organization, but

otherwise operates as an independent business. The functional units are headed by

managers while the final authority vests in the divisional manager, who coordinates and

controls the activities of the various functional units in the division. The top management

of the organization, besides providing funds, determines the organization goals and

formulates policies. The divisional structure is characterized by decentralization of

authority. Thus, it enables managers to take decisions promptly and resolve problems

appropriate to the respective divisions. It also provides opportunity to the divisional

managers to take initiative in matters within their jurisdiction. But such a structure

41

involves heavy financial costs due to the duplication of supporting functional units for the

divisions. Moreover, it requires adequate number of capable managers to take charge of

the respective divisions and their functional units.

III Adaptive Structure:

Organization structures are often designed to cope with the unique nature of undertaking

and the situation.

This type of structure is known as adaptive structure. There are two types in structures.

i) Project Organization and

ii) Matrix Organization

i) Project Organization: When an enterprise undertakes any specialized, time-bound

work involving one-time operations for a fairly long period, the project organization is

found most suitable. In this situation the existing organization creates a special unit so as

to engage in a project work without disturbing its regular business. This becomes

necessary where it is not possible to cope with the special task or project. Within the

existing system, the project may consist of developing a new project, installing a plant,

building an office complex, etc... A project organization is headed by a project manager

in charge, who holds a middle management rank and reports directly to the chief

executive. Other managers and personnel in the project organization are drawn from the

functional departments of the parent organization. On completion of the project they

return to their parent departments.

The main advantage of such a structural arrangement is that it leaves regular business

undisturbed. It is exclusively concerned with the task of completing the project work on

time and in conformity with the standards of performance relevant to its goal. There is

better management and control over the project activities as the project manager enjoys

necessary authority and is alone responsible for the results. But project organization may

create problems as well. Functional managers often resent the exercise of authority by the

project manager in the functional areas and hence conflict arises. The stability of the

functional departments is disturbed by transfer of personnel to project work from time to

42

time. Shifting of personnel from project to project disrupts their developments in the

specialized fields.

ii) Matrix Organization: This is another type of adaptive structure which aims at

combining the advantages of autonomous project organization and functional

specialization. In the matrix organization structure, there are functional departments with

specialized personnel who are deputed to work full time in different projects sometimes

in more than one project under the overall guidance and direction of project managers.

When a project work is completed, the individuals attached to it go back to their

respective functional department to be assigned again to some other project. This

arrangement is found suitable where the organization is engaged in contractual project

activities and there are many project managers, as in a large construction company or

engineering firm.

Matrix organization provides a flexible structure ideally suited to the requirements of

changing conditions. It facilitates pooling of specialized and technical personnel from

different functional departments, who can be deputed to a number of projects. They

acquire valuable experience of handling varied and complex problems in project work.

There is speedy exchange of information and decision-making as they work under the

coordinating authority of project managers.

The major drawback of matrix organization is that the personnel drawn from specialized

functional departments are subjected to dual authority, that of the functional heads and

the project managers. The principles of unity of command are thereby sacrificed. This

generates stresses and strains in project management, because there is simultaneous

engagement of the same individual in a number of projects.

3.3.4 Selection of an appropriate organization structure:

The most important step to choosing the appropriate organizational structure is to

determine the needs of your business and prioritize them. Each business has unique needs

that will help determine which structure is most appropriate.

What type of decision making or management structure is needed?

43

How important is liability for personal injury and product liability?

How important are taxation issues (for example: treatment of profits/losses and

deducibility of employee benefits -- health insurance, group term life insurance)?

3.4 Organization structure:

An organizational structure consists of activities such as task allocation, coordination

and supervision, which are directed towards the achievement of organizational

aims. It can also be considered as the viewing glass or perspective through which

individuals see their organization and its environment.

An organization can be structured in many different ways, depending on their

objectives. The structure of an organization will determine the modes in which it

operates and performs.

Organizational structure allows the expressed allocation of responsibilities for

different functions and processes to different entities such as the branch, department,

work group and individual.

Organizational structure affects organizational action in two big ways. First, it

provides the foundation on which standard operating procedures and routines rest.

Second, it determines which individuals get to participate in which decision-making

processes, and thus to what extent their views shape the organization’s actions. And

the organization structure of the delta paper mills limited in shown below in the

exhibit no 7

44

Exhibit No: 7 organization structure of delta paper mills limited

Board of directors

Chairman

Managing director

Director

Management executive president (operations)

Finance & accounts purchase marketing administration personnel

Department Department Department Department Department

Managers, Managers, Managers, Managers,

Asst.man, Asst.man, Asst.man, Asst.man, Manager

Officers & Officers & Officers & Officers &

Clerks Clerks Clerks Clerks Dy.manager

Officer personal welfare officer medical officer security officer

Time keeper scavenger, canteen staff compounder guards

45

President (operations)

Personnel Dept.

Mechanical Dept. Man (mech), asst.man, eng, and tech

Electrical Dept. Man (elec), asst.man, eng, and tech

Paper machine Dept. Manager, asst.man, tech and atndt

Stock preparation Dept. Manager, asst.man, tech, atndt

Pulp mill Dept. Manager, asst.man, tech, atndt

Finishing Dept. Manager, asst.man, tech, atndt

Paper go-down Dept. Manager, asst.man, tech, labour

Store Dept. Manager, asst.man, staff, labour

Abbrivations:-

Man - Manager

Asst.man - Assistant Manager

Dy.man - Deputy manager

Dept. - Department

Eng - Engineer

Tech - Technician

Atndt - Attendant

46

3.4.1 Reasons for using functional organization structure:

The organization structure followed in the organization is “functional design” the

organization has selected this type of structure because every function is in the firm is

assigned to a department who are specialized in the particular operations and hence the

efficiency of the output is high. And in this structure there are defined structure of

hierarchy and the heads of the functional units are in direct touch with the chief executive

who can sort out inter-functional problems, if any and also coordinate the interrelated

functions. Being delta paper mills limited a medium size organization this type of

structure is suitable but if the organization develops in size it may become difficult to

organize with the functional structure. The organization structure with its interrelated

positions takes the shape of a pyramid and the organization as a whole derives the benefit

of specialized operations.

3.5 Critical review of the structure:

3.5.1 Objective:

Their commitment is to manufacture & supply quality products by improvement,

innovation, continuous up gradation of technology & skills resulting in customer

satisfaction. Objectives are:

Reduce in the wastage during the production

To maintain an efficient communication in the functional departments

Reducing number of customer complaints

47

Training and communicating all employees to ensure the better knowledge of the

work and implemented to achieve better outputs.

3.5.2 Specialization:

The main benefit of the company is its wide product range of different grades makes it

more specialized in variety of market segments.

3.5.3 Co-ordination:

The co-ordination of the different functional departments is very good in the firm. Where

the heads of the departments co-ordinate with their subordinates and with the other

employees of different departments to attain their organization goals. Science any firm

need a proper co-ordination between the departments to attain their goals in the specified

time, in delta paper mills limited there is a good rate of success in delivering the goods in

time shows the existence of co-ordination

3.5.4 Authority:

With the evident functional organization structure there is clear authority with accordance

with the position in the firm where a person in higher post have an authority over all the

subordinates. In delta paper mills the main authority lies with the chairman and the

different heads of the functional departments.

3.5.5 Responsibility:

The every individual employee working in the delta paper mills limited is responsible of

the work assigned to him and continuous supervision in verifying the individual duties is

done by the high grade officers and this indeed is an responsibility of their roles.

3.5.6 Span of control:

Wide span of control is followed in the delta paper mills limited with a few managers and

Assistant Manager oversees a large number of subordinates. As the narrow span of

control is more expensive as well the firm is not in a good financial position the existing

48

wide span of control is suitable to minimize the expense but the responsibilities of the

head of the functional groups are more.

3.5.7 Chain of command:

It is defined as a continuous line of authority that extends from upper organizational

levels to the lowest levels and clarifies who reports to whom. And following a functional

organization structure or called pyramid structure the commanding power starts from to

top of the pyramid and goes down by level by level to the bottom of the pyramid.

3.5.8 Delegation:

Delegation is a critical skill for small business success, however. No one can be good at

everything, and running a small business involves so many different tasks and skills that

some sort of division of labor becomes necessary for survival. A manager alone cannot

perform all the tasks assigned to him. In order to meet the targets, the manager should

delegate authority.

The “assignment of duties” being a very important job by which a capable employee is

to be selected to do a specific job in delta paper mills the assignment of duties is not to

the standard.

“Grant of authority” is yet another task under the delegation which is to be performed

with care which indeed is an important aspect in the development of the organization and

this issue in the firm is good and the firm is seeing good results over years

3.5.9 Continuity:

The continuity of the business functions in the delta paper mills limited is an actual pride

of the organization where the organization has continuous running science its

establishment except only ones due to a natural calamity which shows a good

organization structure without any internal issues.

49

3.5 Conclusion:

Organizing is a very important element in management. It takes its importance in

decision making, communication, Evaluating Employee Performance, Achieving Goals

and Prevention/Solution for the problems. Where in in decision making most companies

either have a tall or flat organizational structure which have its impact directly on the

decision making process. The Organizational structure enables the distribution of

authority. When a person starts a job, he knows from day one to which officer he need to

report. Most companies funnel their communication through department leaders this

makes the firm employees clear in their duties and enhance their output. The head of the

departments can have a clear idea of the employee performance if there is proper

organization structure and can be helpful in determining their annual performance

appraisals

Organizational structure is particularly important in achieving goals and results.

Organizational structure allows for the chain of command. Department leaders are in

charge of delegating tasks and projects to subordinates so the department can meet

project deadlines.

50

CHAPTER IV

BUSINESS LEVEL FUNCTIONS AND PROCESSES

4.1 Purchase department:

The main objective of the purchase department is to ensure uninterrupted flow of

Materials to Support Operations with a better Cost, Quality & Delivery across all

Purchase Functions. And they should play a key role to maintain good relations with the

sellers and to find new sellers with better benefits, forecast the future prices of the raw

material and to keep a track of the purchases and Resolve complaints on all purchased

goods and services

4.1.1 Organization chart of the department:

The below exhibit no 8 shows the organization structure of the purchase department.

Exhibit No: 8 purchase department structure

Manager purchase

Assistant manager purchase

Officer’s purchase

Clerks

51

4.1.2 Purchase functions:

Materials purchased:

The material purchased is bagasse which is supplied to the mill in the form of bales or in

loose form is the main raw material used in the mill and the other raw materials are rice

straw and wood.

And the other intermediates purchases include caustic soda, chlorine, talcum, lime used

in the production process

Suppliers of materials:

The main suppliers of the bagasse is delta sugar mill ltd. and is an sister concern of the

delta paper mill ltd. the rice straw and wood is purchased from the surrounding farmers

around the mill

Talcum powder supplied from the Rajasthan the only producers in India and surya lime

chemical products are the suppliers of lime and chlorine, Vishnu sri chemicals are the

suppliers of the castic soda.

Supplier selection procedure:

All the suppliers of the raw materials are in business with the firm from a very long time

and suppliers of small and varying goods are purchased from the suppliers only after the

detailed talks and verification of their ability to do business and their records

Purchasing schedule:

As the mill operates all the year with continues shifts the purchasing schedule is also

quite regular for the main raw material bagasse is purchased at an interval of 5 days and

the rice straw is purchased in seasons of the crop and the purchase occurs twice a year

and other intermediate raw materials are purchased in an span of two month.

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Purchasing decision:

The managing director, purchase manager and president operations are involved in the

purchase decision based the type and quality of the paper demanded by the customer.

Inspection of purchased material:

The stock preparation department is authorized for the inspection of the purchased

material before they process the material further.

4.2 Operations department:

The major function of the firm i.e. the manufacturing process of paper tales place here

and the main objective of the department is to adopt the best procedures in the process

and to give an good quality output, maintain the eco-friendly principles laid down, and to

create a safe working place and increase the employee participation, to maintain a

coordination between the different sub-departments in the operations department.

4.2.1 Organization chart of the department:

The below exhibit no 9 shows the organization structure of the operations department.

Exhibit No: 9 operations department structure

President operations

Managers of sub-departments

Assistant managers of sub-departments

Engineers

Technicians

Labour

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4.2.2 Production process:

The below exhibit no 10 shows the production procedure of the paper production

Exhibit No: 10 production process of paper production

Raw material (fiber-70% waste, 30% cellulose*)

Caustic soda, chlorine, line digester

Hypo (concentrated paste)

Wash (to clean waste)

White pulp

Glue stock preparation

GSM 45 to 150 (set on paper machine)

Paper machine (prepared stock sprayed on belt)

Roll output

Finishing Revinders

Abbreviation:

GSM - Gram per Square Mater

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4.2.3 Production / operations function:

Technology adopted:

The technology adopted is brought from foreign and there is no change in the technology

adopted but there has been installation of new paper machines and effluent treat plants

installed to increase the production capacity and to treat the waste material obtained in

the process. And the paper machines installed are manufactured by “James betman &

sons”

Machinery & equipment maintenance:

Specific gap is given between the maintenance of the paper machine and there are three

paper machines in the delta paper mill limited and they are maintained at a gap of three

months and the predictive maintenance is followed in the firm and qualified and well

trained mechanical and electrical engineers are appointed for the unexpected and the

periodic maintenance all over the machinery of the mill from digesters, stock preparation

machine, effluent treatment plant and paper machine.

Steps taken to conserve energy / fuel:

The use of waste paper with the bagasse and rice straw helps in reducing the consumption

of energy and this process is implemented in the firm along with the proper maintenance

of the power grid lines so that energy wastage is reduced and the company is good at

capacity utilization which indeed helps in the energy conservation even proper selection

of the raw material used has its impact on the amount of energy used and development in

this point is to be improved by the firm.

Steps taken to increase productivity:

Various methods are been experimented by the delta paper mills to increase the

productivity and it is evident that the raw material selected plays a major role in the

productivity and different add-ons used in the intermediate process are also important at

which ratio they are used to increase the quality of the raw material composition so as to

increase the output.

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4.3 Paper go-down department:

The paper go-down department or the material handling functions are to maintain the

finished goods in the manufacturing process until they are supplied to the consumers and

also involves in the preparation of the material for the consumer delivery.

4.3.1 Organization chart of the department:

The below exhibit no 11 shows the organization structure of the paper go-down

department.

Exhibit No: 11 paper go-down department structure

Manager paper go-down

Assistant manager paper go-down

Technicians paper go-down

Labour

4.3.2 Material handling function:

List of material involved:

The final materials of the production are handled by the paper go-down department and

the major form of paper handled by the department is in the form of roles and as

requirement the rolls are cut down in to sheets by the department and are preserved.

Weighing and measuring devices of material:

The material produced is weighted before its dispatch for the accurate measure by using

the heavy digital weighting machines and automated paper cutting and bundle separators

are used for the paper in the form of the sheets.

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Logistics for material handling within the firm:

Frock lifts are the major logistics used for handling the paper rolls and heavy trucks are

used to transport the rolls with in the mills and cranes are used to unload the paper role

from the paper machine.

Risks involved in material handling:

They are several accidents registered in the handling the huge paper rolls during the

loading for transport, where many accidents are registered for damages on legs due to

over rolling of the paper rolls over the leg due to not balancing the movement.

4.4 Quality department:

The main objectives of the quality department is to check the quality of the paper

produced across all the parameters required necessary before the delivery to the customer

and to maintain the certifications issued by the quality verification bodies in India

4.4.1 Organization chart of the department:

The below exhibit no 12 shows the organization structure of the quality department.

Exhibit No: 12 quality department structure

Manager quality

Assistant manager quality

Technician’s quality

Attendant

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4.4.2 Quality function:

Quality policy:

Delta Paper Mills has been successfully in unifying the quality with eco friendliness. The

Company strictly follows the standards of quality; it produces 100% Virgin Pulp by using

Sugar Cane Bagasse as Raw Material, Delta Paper Mills has full-fledged Laboratory and

equipment’s to meet the specifications of quality checking as prescribed by the quality

standard boards.

Quality certifications received:

B.I.S and DGS&D have qualified the delta paper mills limited for the maintenance of its

quality in the effluent treatments and the paper quality

Techniques adopted to ensure quality:

Different techniques are adopted to check the quality of the paper in the firm after the

production stage like the thickness test with the help of thickness gauge, bursting strength

and tensile strength is found using vertical load methods

And smoothness being one of the major aspect to be checked due to its importance in the

printing grades of paper is done and cobb test for water absorption capacity of the paper

is found, where this are the major tests to be performed along with few other tests.

Brightness of paper:

The main drawback of the firm is its low brightness of its paper produced there has been

different procedures followed to improve the brightness and there is a significance

improvement but due to its raw material lacking the ability to give brightness paper

produced is limited to some markets. So the quality check for the brightness is been a

barrier in few market segments.

Future plans to improve quality:

Delta paper mills limited being developing consistently with its product line and

production capacity is aiming to develop its quality in coming years to enter in to new

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market segments and to create its brand name. As the steps to be taken it has started

concentrating on the input raw material quality which has direct relation with the

improvement of the quality of the product.

4.5 Personnel department

The personnel department function includes a variety of activities and key among them is

deciding what staffing needs you have and whether to use independent contractors or hire

employees to fill these needs, recruiting and training the best employees, ensuring they

are high performers, dealing with performance issues, and ensuring your personnel and

management practices conform to various regulations. Activities also include managing

your approach to employee benefits and compensation, employee records and personnel

policies. Usually small businesses (for-profit or nonprofit) have to carry out these

activities themselves because they can't yet afford part- or full-time help. These policies

are often in the form of employee manuals, which all employees have the role of the

personnel department will be very useful for the management as well as the employees

for running business organization in the infrastructure and welfare measures.

4.5.1 Organization chart of the department:

The below exhibit no 13 shows the organization structure of the personnel department.

Exhibit No: 13 personnel department structure

Manager personnel

deputy manager personnel

Officers personal

Attendant

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4.5.2 Personnel functions:

The HR policies:

The delta paper mills personnel departments Policies are clear with employee’s issues as:

The nature of the organization

What they should expect from the organization

What the organization expects of them.

How policies and procedures work.

What is acceptable and unacceptable behavior

The consequences of unacceptable behavior

Human Resource Planning

The human resource planning of the delta paper mill is very good with all the employees

are allocated work at different shifts with rotation policy to avoid any dissatisfaction

among the different employees

Recruitment process:

The recruitment process begins when new recruits are sought and end when their

applicants are submitted. Group has both contract employees and permanent employees

Group Pharmaceuticals is one of the advanced pharmaceuticals where they lag in human

resource and the recruitment process

• Through advertisement

• Reference

• Online

Process includes two types,

a) Internal recruitment

b) External recruitment

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Internal recruitment:

Recruitment is meant for existing employees, formal employees.

Objectives:

• It helps in Cost reduction of recruitment, training, orientation and other activities.

• Employee’s economic needs for promotion can be satisfied.

External recruitment:

Sources of external recruitment are advertisement, employment exchanges,

college/university, walk-in, consultancies, contractors, radio& television, internet job

sites, company website.

The company prefers external recruitment because:

• New talents, new skills, reaches large number of people to organization..

• Compliance with reservation policy becomes easy.

• Group follow the most common and least expensive approach for selecting the

candidates is direct applications, in which the job seekers unsolicited application

letters or resume.

• Group check for original proofs of the document.

• Walk-in are preferable as they are free from the problems associated with other

methods of recruitment.

Company has contractors:

For recruiting the casual workers, the names of the workers are not entered in the

company records. By this HR department avoid the difficulties in maintaining permanent

workers.

Selection process in group:

As the recruitment process ends the next follows HRM process, which determine who is

best qualified for the job, this step is called the selection process. The selection methods

are different for different jobs, Group follows:

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Preliminary interview

Written test

Document verification

Personal interview

Background investigations

Physical examinations

Job offer

Evaluation & control

Orientation

Training & development:

Training & development is a process of imparting specific skill, ability and knowledge to

an employee. Employee training is an important HRM activities, as job demand change,

employee skill have to be altered and updated.

They have two level of training system

I Induction Training

II On-job training

Group gives the training to every employee who is recruited at the supervisor or higher

level in manufacturing and quality assurance system and a detail description of the

equipped and its handlings are provided to the newly inducted employee. Group maintain

A separate training record for every employee for the time of joining and is upgraded as

and when training is given.

Performance appraisal:

Performance appraisal is done in Group, Senior Manager checking the assessment

of employee performance by using different methods of performance appraisal

Managers need to know whether their employees are performing their job

efficiently and effectively or whether there is need for improvement, because an

organization’s goals can be achieved only when people put their best efforts.

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Performance appraisal may be understood as the assessment of an individual’s

performance with respect to his/her performance in a systematic way.

Employee’s performance appraisal describes the job relevant strengths and

weakness of each individual. it includes promotions and transfer, awarding pay

increases.

Finally, performance appraisal can be used to determine whether personnel programmers

such As selection, training and transfer have been effective or not.

4.6 Finance department

The financial function is generally concerned with procurement, allocation and control of

financial resources of the firm among the different departments and to follow up the

accounts department, book-keeping and related accounting practices.

4.6.1 Organization chart of the department:

The below exhibit no 11 shows the organization structure of the finance department.

Exhibit No: 14 finance department structure

Manager finance

assistant manager finance

Officer’s finance

Attendant

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4.6.2 Finance functions:

Accounting policies:

The company’s financial statements are prepared under the historical cost conventions on

the accrual basis of accounting in accordance with the mandatory standards (AS) issued

by the Institute of Chartered Accountants of India and the relevant provisions of the

companies Act 1956.

Book keeping

The financial statements and the different financial activities are recorded in the book

keeping section maintained by the finance officers; the petty cash book is maintained by

the firm on the general expenses and single entry system of book keeping is followed.

Various heads of accounts:

Different accounts are maintained by the accounting and the financing department like

the capital account, current liabilities, current assets, bank accounts, cash in hand, and

purchase account to perform all the different activities in the organization.

Budgetary technique

The most important budgetary technique is forecasting, or the ability to set out a detailed

plan for the future. This forecast is a dialogue about what to look for in the future. Each

manager should prepare detailed plans with targets and resource needs. These needs

should be compared with the overall look to ensure alignment with industry standards.

Focus on creating an agile budget; provide percentages of common accounts for other

groups to compare. Budgeting should be looked at as a tool, not a harness, and is well

implemented by the firm to take an advantage.

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Costing

Process costing is an accounting methodology that traces and accumulates direct costs,

and allocates indirect costs of a manufacturing process. Costs are assigned to products,

usually in a large batch, which might include an entire month's production. Eventually,

costs have to be allocated to individual units of product. It assigns average costs to each

unit, and is the opposite extreme of Job costing which attempts to measure individual

costs of production of each unit. Process costing is usually a significant and is followed

by the firm

Internal Auditing

Internal auditing is done every quarter in the firm to keep a track of the process and the

financial state of the firm and the finance and accounting managers are liable in

submitting the reports to the chairman and to get the approval for the processes.

4.7 Marketing department

The marketing department is one of the key departments in the firm which takes its

operations levels with sales and marketing and customer relationship the marketing

department activities in the firm are not good as the existing rivals. And market research

is carried out by the firm for its pricing strategy

4.7.1 Organization chart of the department:

The below exhibit no 15 shows the organization structure of the marketing department.

Exhibit No: 15 marketing department structure

Manager marketing

assistant manager marketing

Officer’s marketing

Attendant

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4.7.2 Finance functions:

Pricing:

With different pricing strategies existing to follow the company has been following cost

plus pricing for establishing its product prices; the optimum price is fixed for each

product so as to generate profit.

Promotion:

Few promotion activities are followed by the firm to increase its sales by providing cash

rebate on full cash payment before the delivery, interest free time for payment for trusted

customers after the delivery, and providing sample products to the different customer and

detailed explanation of the specifications is done.

Distribution & Distribution network:

The delta paper mills have wide spread distribution channels with different men at

different positions involved in the distribution channel like the product supply is done

through producers to retailers and to consumers generally large retailers buy from the

firm directly or else the wholesaler comes in to picture or even in some cases there are

agents involved between the wholesalers and the producers.

Logistics:

In the firm the fork lifters are used to load the rolls and the paper sheets to the carrying

vehicles and there are heavy load carrying vehicles to transport the finished paper to the

customer in some delivery the logistics are taken care directly by the customers.

Branding:

The branding activities taken by the firm are very less except their effort in few aspects;

the delta paper mill is very less known in the markets far from the mill though it has its

importance among the different states textbook printers of the government departments.

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Market research:

Market research is carried out by the firm at some regular intervals to find the value of

the brand and to know the consumer requirements and to find the changing trends in the

market; and the research carried out is analyzed and required changes are taken few times

which have helped the firms development.

Services / after sales services:

Being a paper mill the after sales service is very limited but the firm is very committed in

providing a proper response on any feedback or the consumer complaints and required

actions are implemented by the firm to develop in a continuous process.

4.8 Enterprise level initiatives implemented by the firm

The delta paper mill limited has implemented the six sigma approach in the stock

preparation process to increase its quality of the final paper output and the firm is

successful in its implementation. Where Six Sigma is a set of tools and strategies for

process improvement originally developed by Motorola in 1985. Six Sigma became well

known after Jack Welch made it a central focus of his business strategy at General

Electric in 1995, and today it is used in different sectors of industry. Six Sigma seeks to

improve the quality of process outputs by identifying and removing the causes of defects

(errors) and minimizing variability in manufacturing and business processes. It uses a set

of quality management methods, including statistical methods, and creates a special

infrastructure of people within the organization ("Champions", "Black Belts", "Green

Belts", "Orange Belts", etc.) who are experts in these very complex methods. Each Six

Sigma project carried out within an organization follows a defined sequence of steps and

has quantified financial targets (cost reduction and/or profit increase).

Advantages:

Six Sigma is driven by the customer and thus aims to achieve maximum customer

satisfaction and minimizing the defects. It targets the customer delight and new

innovative ways to exceed the customer expectations.

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Implementation of Six Sigma methodology leads to rise of profitability and

reduction in costs. Thus improvements achieved are directly related to financial

results.

Six Sigma is successfully implemented in virtually every business category

including return on sales, return on investment, employment growth and stock

value growth.

Six Sigma targets Variation in the processes and focuses on the process

improvement rather than final outcome.

Six Sigma is prospective methodology as compared to other quality programs as it

focuses on prevention on defects rather than fixing it.

It is attentive to the entire business processes and training is integral to the

management system where the top down approach ensures that every good thing

is capitalized and every bad thing is quickly removed.

Disadvantages:

Applicability of Six Sigma is being argued among the Six Sigma critics. They

opined that the quality standards should be according to specific task and

measuring 3.4 defects per million as standard leads to more time spent in areas

which are less profitable.

Six Sigma gives emphasis on the rigidity of the process which basically

contradicts the innovation and kills the creativity. The innovative approach

implies deviations in production, the redundancy, the unusual solutions,

insufficient study which are opposite to Six Sigma principles.

People argue that Six Sigma is a bit gimmicky and simply a rebranding of the

continues improvement techniques and tools as practiced by Toyota. It thus

promotes outsourcing of improvement projects with lack of accountability.

Six Sigma implementation constantly require skilled man force. Thus control and

employee dedication are hard to accomplish if it’s not implemented regularly.

While converting the theoretical concepts into practical applications there are lot

to real time barriers which needs to be resolved.

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CHAPTER V

FINDINGS AND CONCLUSION

5.1 Findings:

The research and development with in delta paper mill is lacking proper support

from the management.

The rewards and incentive in the company are limited. To maintain good

relationship between employees and management the company should increase

the incentive program.

The control of the air pollution is not effective as in the case of the solid waste

treatment taken up by the firm to control the water pollution.

Majority of the employees are of age group above 40 years

The operations of the firm are not computerized and majority of the work is done

in the traditional methods by maintaining books.

There are limited safety measures for workers working on machines. And the

number of accidents recorded in the firm is significant.

The firm is in debt for the past few years because of the establishment of the new

paper machines

The employees leaving the firm every year is high due to lack of development

opportunities within the firm.

The violation of the duties and responsibilities is taken seriously and are taken to

the notice of the senior management which is good in maintaining the work

progress.

There are limited number of sellers of the raw materials to the firm and most of

the raw material selling firms are sister concerns

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5.2 Conclusions:

The delta paper mills limited is a renowned firm around the district where it’s been

located; the firm has come in to gradual profits only after the change in power from the

time of its establishment but due to further establishment of the new paper machines the

debt of the firm has grown high so even with the mill functioning with its full capacity is

finally making losses from the last few years due to its high interests paid and the mill

being one of the few mills in its proximity has an opportunity for developing market

share in the surrounding markets and the development of the nearby town has increased

its chances of making large markets. And the employees are needed to be given updated

technology and different practices existing in the market to enhance their knowledge

about the changing trends in the market.

The organization study has helped in understanding the different organization

departments and their functions carried out in a live participation which has given a clear

shape for the imagination of the theory learned. The study has given the opportunity to

understand the different positions of the firm and their duties and responsibilities to be

followed in accordance with the goals to be achieved. And the different production

procedures and various process implementations are learned in accordance with the paper

industry; the observations carried out for collecting the data has given an idea about the

different modes of collecting data and importance of the primary data and on a whole the

organization study is an value addition to our practical knowledge and exposer of the

industry.

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