The West Coast Paper Mill Limited INTRODUCTION:The word "paper" has its origin to "Papyrus" an aquatic plant, which grows in abundance in the delta of Egypt. The barks and leaves of this plant could be and pressed into a sheet and was used as a writing material by the ancient Egyptians. The evidence of papyrus having been used as writing material can be found even now in some of the European libraries preserving old manuscripts. Paper is a material that is basically produced from bamboo. Paper meets the basic need of the modern society by contributing to Communication, Education, Packing and Hygiene.

The West Coast Paper Mill Limited came into existence on 22nd March, 1955. This Mill is located at Dandeli in the mildest of forest area of Uttar Kannada district of Karnataka. Dandeli is 56kms from Dharwad and from Pune-Bangalore Pune highway No.4 31kms from Alnavar railway station on Miraj Bangalore Network.

In 1956, the factory started with an authorized capital of Rs.5 crores and the trial production commenced with effect from 18th November 1958. Shri Morarji Desai, Hon. Finance Minister, Union Government had inaugurated the factory on 19th May, 1959. Thereafter, regular production continued.

The availability of basic raw material like Bamboo and the wood in abundance and the availability of water in all seasons from the Kali River and the railway link to transport raw materials as well as finished products promoted the promoters to set up this huge plant in this remote forest area. It is one of the renounced and reputed companies in the paper industry. It is one of the large- scale companies in India. This project is done in West Coast Paper Mills Limited as a part of Master of Business Administration curriculum with an objective of knowing the working conditions

1

The West Coast Paper Mill Limitedand systems that are followed in practical world. This report gives details of all the major departments of West Coast Paper Mills Ltd.

Need of the studyIt is essential for all the management student to virtually experience the working culture in the organization to put theoretical knowledge into practice.. The project is based on the study of all the departments in an organisation. Apart from this, other needs include, y y y y y Study of the industry. Detailed information of various departments. Responsibility given to the departments. Managerial controls of all the departments. The planning process and control system of the organisation.

Objectivesy y y y To understand the working of West Coast Paper Mills Limited To understand the trend of paper industry in India. To understand the current problem of West Coast Paper Mills Limited. The study helped to see and understand how the theoretical knowledge is put into practice in an organisation. y To learn about organizational department, present status, future of West Coast Paper Mills Limited.

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The West Coast Paper Mill Limited INDUSTRY PROFILE:Paper being the primary medium of Communication, the global demand for pulp and paper is therefore, growing at 3% per annum. The paper industry accounts for 2.5% of worlds industrial production. It is considered to be the highest consumer of forest based cellulose materials. The present status of the industry suggests that, Paper Industry is now not only on its self amateur industry but also constitutes the life blood of a large number of other units, the recovery of the Paper Industry from 1994 onwards was by packaging needs of industry and demand for high grade printing paper i.e. special paper was used for Cheque, Currency, Fax and Copiers.

The Pulp and Paper Mill sector is one of the oldest Industries in India. The economy has already grown to 7.4% in the year ended 31st March 2010 from 6.7% in the previous year. Demand for paper is directly linked to the GDP growth and prosperity. The paper industry will also benefit from the growing thrust on education.

Foreign publishers today look at India as an important destination for their printing solutions. The printing industry is expanding at a rate of nearly 15% p.a. The growth of the service sector also fuels demand for paper. Thus, the paper industry is expected to grow at a compounded annual growth rate of over 8 % per annum.

There are, at present, about 515 units engaged in the manufacture of paper and paperboards and newsprint in India. The country is almost self-sufficient in manufacture of most varieties of paper and paperboards. Imports, however, is confined only to certain specialty papers. To meet part of its raw material needs the industry has to rely on imported wood pulp and waste paper. The first paper mill in India was set up at Sreerampur, West Bengal, in the year 1812. India is currently the 15th largest paper producing country. The Indian Paper Industry accounts for more than 2% of the worlds production of paper and paperboard. The industry provides employment to more than 0.12 million people directly and 0.34 million people indirectly. The paper industry is

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The West Coast Paper Mill Limitedcategorized into forest-based, agro-based and others (waste paper secondary fibre, bast fibres and market pulp).

Structure of the Indian industryIn 1951, there were 17 paper mills, and today there are over 600 units engaged in the manufacture of paper and paperboards and newsprint in India. The pulp & paper industries in India have been categorised into large-scale and small-scale. The Indian paper industry comprises of both the organised as well as unorganised units. The large integrated wood based companies share 32% pie of the total production capacity levels with the remaining share being equally divided between the medium sized agro based companies and the small unorganised units. The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat straw, rice husk, etc.; approximately 35% are based on chemical pulp, 44% on recycled fibre and 21% on agro-residues. To meet part of its raw material needs the industry has to rely on imported wood pulp and waste paper. Growth of paper industry in India has been constrained due to high cost of production caused by inadequate availability and high cost of raw materials, power cost and concentration of mills in one particular area. The role the government is crucial in the Indian paper industry as it plays the role of regulator, supplier (the wood supplying forests are owned by the government) and the buyer (government is the single largest buyer of paper). Due to prevailing depressed international trade, imported material was cheaper as compared to the Indian material and also availability was an additional benefit of credit which ran into months at a significant low rate of interest. Thus price took a downward trend and inventories started piling up.

Current scenarioSince October 2008, the demand scenario was sluggish in line with the weak economic situation and this scenario persisted till the end of calendar year 2009. The Indian paper mills bore the brunt of dampening demand situation which took a toll of their overall production and realisations. The weak demand also coincided with new

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The West Coast Paper Mill Limitedupcoming capacity from almost all the major paper mills, which created an oversupply of paper and paper products. Piling up of huge inventories together with new capacities and fear of imports from China and Indonesia kept prices in under pressure. However, since April 2010, the demand cycle reversed primarily driven by strong demand and closure of capacities in the world. The growth in paper industry has mirrored the growth in GDP and the Indian paper industry has grown on an average 6-7% over the last few years. While the paper market in the developed countries is stagnating, paper consumption in India and China is growing rapidly. India is the fastest growing market for paper globally and it presents an exciting scenario as paper consumption is poised for a big leap forward in sync with the growth drivers.

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The West Coast Paper Mill Limited COMPANY PROFILEThe West Coast Paper Mill Limited came into existence on 22nd March, 1955 in Dandeli. The availability of basic raw material like Bamboo and the wood in abundance and the availability of water in all seasons from the Kali River and the railway link to transport raw materials as well as finished products promoted the promoters to set up this huge plant in this remote forest area. It is one of the large- scale companies in India. It is one of the renounced and reputed companies in the paper industry.

VisionTo excel in serving the growing demands of the paper and paper product worldwide and enhance the share holder value with consistence and sustained performance.

MissionThe company stands for producing the best quality of paper in writing & printing that is white paper and duplex board.

Brief History of the company

The mill is the brain child of Shri. A.D.Chowdari, when he visited Dandeli, he found that Dandeli could host a good paper mill of moderate capacity production. His conceptualization crystallized into the establishment of WEST COAST PAPER MILLS LIMITED. An incorporated company, with its registered office at first in Mumbai and later it was shifted to Dandeli. The location of the factory was opted as the most suitable and advantageous, being situated in the heart of thick forests on the banks of river Kali and the major factors that weighed in its favour were the assurance of the then State Government of Maharashtra for continued supply of forest-based raw materials,

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The West Coast Paper Mill Limitedavailability of water from the perennial Kali river, assured power supply from the State Grid, vicinity of rail and road linkages. The company was promoted by Shri Digvijay Cement Company limited, Gujarat in 1955. On the manpower part, in addition to West Coast Paper Mills there were also major industries like Ballarpur Industries in the area producing vital chemicals required for paper plant, water treatment chemicals rendering employment potential in this region and establishment of Kaiga Nuclear Plant Project etc, have been additional source of employment. With this background, the Karnataka Power Corporation, project work at Ganeshgudi, Ambikanagar, Bommanahalli pickup dam etc. has provided to the progress of this part of north Kanara district.

Originally the plant was designed to manufacture 18000 MT per year of writing, printing and packaging paper. The trial production started in November 1958 and

commercial production from May, 1959. The company was granted license from the Government of India in December, 1964 for 45,000 MT/P.A.

The performance of the company is very impressive. The Andhra Pradesh Paper Mill Ltd. was promoted by the Company by taking over the Andhra Paper Mills owned by Government of Andhra Pradesh in 1964. The Company provided technical assistance to the APPM for increasing its capacity from 21,000 MT to 71,000 MT per annum. The installed capacity of APPM has since gone up to 1, 74,000 MT per annum. The Company has an impressive track record of production and productivity for which various Awards have been conferred on it by the National Productivity Council [Government of India] and other organizations. The Company also has an excellent track record in timely repayment of loans/lease rentals to financial institutions/leasing companies and maintained the same even during recession period to which this industry has been subjected many a time. This has been highly appreciated by the financial institutions and lessors. The company has been playing a very active role in developing the backward district of Uttara Kannada. Stabilising fly-ash dumps by biological means, developing

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The West Coast Paper Mill Limitedbetter drainage systems, organizing education from primary to graduate, including pulp and paper technology course, facilities for needy children, organizing various social awareness programs etc. are some of the steps it has taken to manifest its commitments to society. Some of the achievements by the Company include,y

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

y

First in India to use synthetic wire on paper machine.

y

First in India to install Drum Chipper (supplied by Pallmann, Germany), Disk Refiners, Rotary Limekilin to reburn limesludge, 330 TPD Sids Chemical Recovery Boiler and FBC Coal-fired Boiler.

y

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

y

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

y

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

y

First to have captive plantation.

y

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

y

And increase in net profit from Rs 31.86 crores in 2001-02 to Rs 36.04 crores and the earnings per share from Rs 35.64 in 2001-02 to Rs 40.31 currently.

y

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

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The West Coast Paper Mill Limited Corporate InformationThe West Coast Paper Mills Ltd., is managed by the Board of Directors, chaired by Mr. SK Bangur as Chairman & Managing Director of the company. Mr. S.K. Bangur, 60, is a distinguished industrialist, hailing from the Bangur family- scions of industry and noted philanthropists. He is the chairman and Managing Director of The West Coast Paper Mills Ltd, the flagship company of the S.K. Bangur Group. In addition to West Coast, he is also the chairman of Rama Newsprint & Papers Ltd, Jayashree Chemicals Ltd. and Kil Kotagiri Tea & Coffee Estates Co. Ltd. Mr. S.K. Bangur is also Director of Hindusthan National Glass & Industries Ltd. Immediate Past President of the Indian Chamber of Commerce.

The other Board of Directors include, Mrs. Shashi Devi Bangur Mr. Raghunandan Mody Mr. C.K.Somany Mr. Premal N. Kapadia, Mr. Saurabh Bangur Lt. Gen [Retd] Utpal Bhattacharyya Mr. Krishna Kumar Karwa Mr. Sanjay Kothari Mr. K.L. Chandak Registered Office of the company:

Bangur Nagar, Dandeli - 581325 Uttar Kannada District, Karnataka

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The West Coast Paper Mill LimitedCorporate Office of the company: Chandra Kiran, 10- A, Kasturba Road, Banglore-560001

Dividend Policy of the FirmThe Directors Recommend a Dividend of Rs. 10/- (Rupees Ten only) per Equity Shares of Rs.10/-each. The dividend when received by the shareholders will be free of tax in their hands and the Company will pay dividend distribution tax @12.50% plus applicable surcharge on the dividend amount subject to relevant laws at the appropriate time. The dividend payout will be highest ever by the company amongst the Paper Mills in India.

Month

Bombay Stock Exchange (BSE) High Low 48.00 38.30 60.00 40.10 68.00 49.00 58.55 43.90 62.50 49.50 69.30 59.80 66.90 56.50 72.65 50.10 76.00 63.70 77.70 62.60 67.40 59.75 64.20 54.55

National Stock Exchange ( ) High Low 49.80 37.50 59.95 38.10 68.00 49.00 58.50 41.55 62.50 46.70 69.40 60.00 67.45 56.90 72.85 54.80 76.00 64.20 77.90 62.40 67.10 59.50 64.20 55.00

Apr.09 May.09 Jun.09 Jul.09 Aug.09 Sep.09 Oct.09 Nov.09 Dec.09 Jan.10 Feb.10 Mar.10

The market price data from April 2009 to March 2010 of Bombay Stock Exchange and National Stock Exchange is given above. According to the above data, the WCPM share performance has been quite fluctuating over the months but has been able to keep it quite satisfactory.

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The West Coast Paper Mill Limited Quality Control/Central Laboratory:The Company has a fully equipped laboratory for quality control and to conduct research on raw material and process. Detailed analysis of process materials, intermediate product, water, effluent stack gases etc., is carried out in the central laboratory. Customer service, complaints, product development apart from normal work of inspection, testing and monitoring is done by the Quality Control Laboratory.

Research & Development Centre:The Company has set up a separate Research & Development Centre with modern facilities to carry out research on various activities such as Suitability of pulping various hard wood available

y

y

Improving process efficiency

y

Developing or optimization of the process for improving productivity and energy conservation

y

Substituting import.

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The West Coast Paper Mill Limited PRODUCT PROFILE:Paper is classified into two heads (based on its end use):

a) Writing /printing paper b) Industrial paper c) Speciality paper

The industrial variety accounts for high volumes and holds the potential for above average growth, the writing/printing category provides high margins; specialized grades provide increasing volumes and high realizations.

Writing/printing paperClassified into creamwove, maplitho (branded copier) and coated varieties.

Industrial paperClassified into Paperboard and Kraft; Paperboard can be subdivided into Duplex Board with Grey Back, White Board and MG Poster/Board.

Speciality paperClassified into MICR and NON MICR cheque paper, Parchment paper

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The West Coast Paper Mill Limited

PRODUCT PROFILE OF THE COMPANYType of Paper Main Varietiesain varieties Demand DriveDemand drive

Cultural paper

Azurelaid

Stable demand arises out of the use of this kind of paper in ledgers, extensively used by the traders and bankers

Creamwove

Stable demand from the notebook, textbook and government sectors. The demand for lower gsm paper is expected to increase due to the user attempts to cut costs.

Maplitho

Increase in demand for office printouts and stationery items. The demand for better quality notebooks & textbooks are also increasing, in which this paper is used.

Copier paper

With increasing automation, this type of paper is expected to register the maximum growth.

Industrial paper

Paper board/Duplex board

Demand for this product comes from the increasing use of board packaging for consumer items like cigarettes, crackers, pharmaceuticals, hosiery, textiles, food & beverage. It is also used for the covers of notebooks & textbooks.

Base costing

paper

for Increased demand for high quality magazines, calendars, dairies and posters, in which this variety of paper is used.

Machine-glazed paper

This kind of paper is mainly used for file covers, covers for notebooks and soap wrapping segments.

Speciality paper

MICR & Non- Cheques are regularly used as a medium through MICR Cheque which money is transacted. The increased

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The West Coast Paper Mill Limitedpaper velocity of trade, commerce and banking are driving growth in this segment the highest among speciality segments Parchment paper This paper variety is largely used in share certificates, university degrees certificates.

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The West Coast Paper Mill Limited

ORGANISATIONAL STRUCTUREChairman and M.D.

Executive Director

Local Management

Administration

Technical

Accounts

Production

Planning & Development

Sales

Operations

Maintenance

PurchasesDepartment Head

Stores

Shift In-Charge Shift Engineer

MarketingSenior Supervisor Employees Personnel

Warehousing

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The West Coast Paper Mill Limited

This is the organisational structure of West Coast Paper Mills Ltd where the hierarchy begins with Chairman who is also the Managing Director. Below him is the Executive Director who in charge of the local management in each branch. The local management is divided into Administration and Technical. Administration management is divided into seven departments, namely, Accounts, Sales, Purchases, Stores, Marketing, Personnel and Warehousing. The organisational hierarchy below each department is shown in the later chapter. The Technical management is divided into Production and Planning and Development. The Production function is mainly divided into Operations and Maintenance, both of which has a Departmental Head. The Shift-incharge comes under the Departmental Head. The Shift Engineer and Senior Supervisor come below the Shift-in-charge chronologically. And the Employees and workers come finally in the whole hierarchy.

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The West Coast Paper Mill Limited Purchases DepartmentPurchase Department plays an important role in management of the company. Any big concern has a separate department known as purchase department. The

efficiency of this department can save more money by purchasing the right quality of items at the right time and at a right price. This department is under the charge of purchase officer and he has a staff under him to assist in carrying the various activities of the department. This department is of great importance as the company has to perform all its activities efficiently and smoothly.

The Purchase Officer has to take decisions regarding all the purchases of the company. He has to select the right suppliers, the right quality of material and the right quantity required for a particular period. The purchase officer follows the described procedure for making the purchases of the company as and when this department gets indent from the stores department or from consuming department gets indent from the stores department for procurement of the items. The department studies the indent and then it takes necessary steps to procure the items or material required. The company has two sources of supply. One is external supply and the other internal supply i.e. from its own workshop.

Objectives of the Department:Maintaining continuity in supply of materials required for Production, maintenances, and support to various Project Schedules at work. y Procuring materials at reasonably competitive cost with minimum possible investment. y y Avoiding duplication, waste; obsolesce, with respect to input materials. Reducing lead time right from the indenting to purchase order stage by adapting perpetual inventory follow up corrective measures and preventive actions.

y

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The West Coast Paper Mill Limitedy To conduct periodic market survey for developing reliable sub contracts & periodically evaluate and monitor sub contractors as documented in procedures for performance rating y To impart training to the employees for processing the perception of empowerment through various form of HRD and TQM.

Procedure followed for purchasing the items: 1. Purchase activity shall be initiated after receiving indents from stores. 2. On the basis of indents, enquiries are floated on the approved sub contractors or per decision taken by manager 3. Offers from supplies based on enquiry received either on phone or by personal approach or sometimes in writing 4. Evaluation of offers are done 5. To negotiate with suppliers for finalization of the best possible rate then the proposals are kept for approval for high value orders. 6. Placement of order: After having scrutinized the details, the same is communicated immediately to the party for immediate action. Then purchase orders are mailed.

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The West Coast Paper Mill Limited Procedure:DAILY PROCESS REPORT

RECEIVING INDENT

ENQUIRY FLOATING

RECEIVING QUOTATIONS

NEGOTIATION WITH THE SUPPLIERS

ORDER PLACEMENT

FOLLOW UP TILL RECEIPT & REJECTION

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The West Coast Paper Mill Limited Stores DepartmentIt is a basically a service department. Stores department is maintained based on nature of product and organization. They maintain the spares for different departments like pulp mill, power house etc.

y

The foremost objective of the store is to ensure materials at right time so that there should not be any hindrance or stoppage of work due to shortage of materials.

y

The second objective of the stores is that the materials should be arranged in a proper fashion and well preserved.

y

Economy in investments.

y

Better security arrangements.

y

Less storage space.

The department has to perform various important functions which are as follows. a) Fixing code number to each material. b) Raising indents as and when needed. c) Maintaining permanent card and stock card. d) Issuing materials against issue vouchers raised by consuming departments. e) Receipt and Inspection.

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The West Coast Paper Mill LimitedIn general, 1) Visual Inspection: The goods which are bought from different places should be checked whether it is in good condition or whether it is in a damaged condition, otherwise insurance can be claimed.

2) Check the Challan for quantity.

3) Inspection: Inspection should be done to know the materials brought should be accepted or rejected.

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

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

Fixing code number to each material (Codification)

In this company the total number of items used by the different departments is approximately 28,000 items. Dealing and handling of these items in their own name is almost impossible and a difficult job. The method of coding is therefore adopted and the materials are grouped in different groups and each group is given a code number.

In the WCPM stores department is divided into following sections. 1. Machinery spares parts stores. 2. General stores 3. Chemical department 4. Stores receipt department 5. Automobile spare parts

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The West Coast Paper Mill Limited Accounts DepartmentThe hierarchy is as follows in the accounts department is as follows:

Vice President Accounts and Finance

Senior Manager

Manager

Section Officer

Senior Accountants

Accounts Assistants

The Accounts Department deals with all financial aspects of the firm. It is the main department responsible for maintaining all accounts of the company. All receipts and expenditures relating to the company are recorded. It is the main department which prepares budgets and assists management in investment decisions.

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The West Coast Paper Mill LimitedThe overall functions performed by Accounts Department are:

y

Preparing the Balance Sheet, P/L A/c, & other necessary A/cs at the end of the Accounting or Financial Year.

y

Maintaining cash and bank transactions.

y

Pay slips.

y

Preparing Payment, Receipt and Journal Vouchers File.

y

Dealing with Loans and other financial matters.

y

Preparing Branch Accounts of different branches.

y

Preparing Monthly Trial Balance.

y

Framing of Annual Reports etc.

The ten years highlights of the company in regard to the financial performance of the Company is given below,

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The West Coast Paper Mill LimitedHIGHLIGHTS OF THE COMPANYS FINANCIAL PERFORMANCE:2010 Production Paper board and multilayer board Optical fibre cable JFTC Control cable Sales Paper board and multilayer board Optical fibre cable JFTC Control cable Operating results Turnover Gross Profit Depreciation Taxation Mat credit entitlement Deferred tax Net profit Dividend Financial position Gross block Depreciation Net Block Paid-up capital Reserves surplus Net worth & Rs./lakhs Rs./lakhs Rs./lakhs Rs./lakhs Rs./lakhs 177888 22636 155252 7755 52378 161798 29112 132686 7708 49070 80141 27022 53119 1425 38771 48467 25309 23158 894 22324 46514 22584 23930 894 17246 46074 19863 26211 894 15573 44504 17614 26890 894 14036 39334 15241 24095 894 12935 31499 13204 18295 894 10188 18454 7928 10526 894 9716 Rs./Lakhs Rs/Lakhs Rs./lakhs Rs./lakhs Rs./lakhs 65050 10524 2377 1400 (1370) 66271 12036 1990 1149 _ 65352 11438 2043 1095 _ 61944 9552 2098 862 _ 60684 6992 3695 300 _ 53335 5649 1893 295 _ 49184 6057 1689 315 _ 52236 6224 1823 400 _ 48719 4934 1209 295 _ 39820 4826 1028 950 _ Tonnes 175194 170686 170193 179915 180397 168315 162642 152046 124941 113864 Tonnes 173638 173682 169891 178871 173070 163714 151477 120210 120293 120210 2009 2008 2007 2006 2005 2004 2003 2002 2001

Km CKm CKm

18003 14

16787 -

22829 -

7060 165407

6303 512170

8090

6230 81971

3889 18239

4283 356048

629 7087

Km CKm CKm

17790 _ 14

16762

22836

7105

6593

7774

6319

4236

3997

648 _

_

_

_

_

_

_

_

_

_

Rs./lakhs Rs./lakhs Rs./lakhs

2647 5470 _

(154) 9054 1258

110 8190 1721

(54) 6646 1341

(276) 3203 1341

395 3066 1341

1209 2844 894

397 3604 760

244 3186 581

_ 2848 447

Rs./lakhs

60133

56778

40616

23218

18140

16467

14930

12935

11082

10610

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The West Coast Paper Mill LimitedBorrowings Capital Employed Rs./lakhs Rs./lakhs 123471 183604 117365 174143 40616 80812 17407 40625 16588 34728 22922 39389 20106 35036 17553 31382 17842 28924 11876 22486

Some Selected RatiosEarningsper share(Rs.2) (Basic) Book value per share Dividend(equity shares) Debt-equity ratio 67:33 67:33 50:50 43:57 43:57 48:52 58:42 57:43 56:44 62:38 53:47 Rs. 96 94 70 52 41 37 33 31 25 24 9 16 17 15 7 7 6 8 7 6

%

100

100

150

150

150

150

100

85

65

50

Like every other company, West Coast Paper Mills Ltd. would have liked to post better numbers. However, the sluggish demand conditions, which had prevailed since October 2008 continued for several months into 2009-10, and this has impacted the Companys performance. This period also coincided with the capacity addition across the industry and increase in raw material costs. The increase in raw material, fuel, chemical cost impacted the entire industry. As competition was fierce, it was not possible for the Company to increase prices, and hence the margin remained under pressure. The Company posted gross profit of Rs. 105.24 Crores as against Rs.120.36 Crores in the previous year lower by Rs.15.12 Crores (13 per cent). The net profit also decreased from Rs. 90.54 Crores to Rs.54.70 Crores - by Rs.35.84 Crores (40 per cent) due to higher provision of depreciation and deferred tax on account of commissioning of equipments under the expansion programme, the benefits of which will be derived in the current year.

But this is a small aberration from the otherwise sustained revenue and profitable growth that the Company has maintained over last several years.

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The West Coast Paper Mill Limited Sources of FundsMain Sources of funds are in the form of Equity; it also raises funds from various financial institutions namely:

a. ICICI b. IDBI c. EXIM Bank d. CANARA Bank e. SBM f. SYNDICATE Bank g. KARNATAKA Bank h. Bank of BARODA

The Company issues debentures only for heavy projects. The company also does not allot Preference Shares; they make use of their own reserves.

Significant Accounting Policies:1.)

Method of AccountingThe financial statements are prepared under the historical cost convention in

accordance with the generally accepted accounting principles in India and the provisions of the companies act, 1956 using the accrual basis except unascertained insurance claims comply with the accounting standards issued by institute referred to in section 211(3c) of companies act, 1956.

2.)

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

taxes and incidental expenses related thereto. In respect of assets scrapped or discarded during the year, the book value of such assets is written off as Obsolete Assets. Assets

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The West Coast Paper Mill Limitedunder installation or under construction as at balance sheet date are shown as capital work in progress.

3.)

DepreciationOn the fixed assets, is provided at the rates and in the manner specified in schedule XIV to the companies act, 1956 on the written down value method, other than on plant and machinery, effluent treatment plant, roads and drainage on which depreciation is provided on Straight Line Method.

4.)

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

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

5.)

Valuation of InventoriesInventories are valued as under: a. Stores, spares, machinery/machinery parts, building materials, loose tools etc. (At weighted average cost)

b. Raw materials (At weighted average cost).

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

d. Stock of Scrap (At realizable value)

e. Work in process (At cost)

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The West Coast Paper Mill Limited6.) Bad debts/ advances are written off in the year in which they become irrecoverable.

7.) Sales are inclusive of Excise Duty.

8.) Research & development Expenditure

Revenue expenditure on research & development is charged to profit & loss account and capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

9.) Retirement BenefitsRetirement benefits viz., Provident, and Pension Funds, Leave Encashment and Gratuity are accounted on accrual basis. Contribution to Provident, Gratuity and Pension Funds are made to appropriate authorities. Provision for Gratuity and Leave Encashment are made on the basis of actuarial valuation.

10.) Foreign Currency transactionsIncome and Expenditures in Foreign currency is converted into Indian Rupee at the rate of exchange prevailing on the date of transaction. Any income or expenses on account of exchange rate difference is recognized in the profit & loss account (expect cases where they relate to acquisition of fixed assets in which case they are adjusted to carrying cost of such assets).

28

The West Coast Paper Mill Limited11.)

Taxation

a) Provision for taxation is made on the basis of the Taxable profits computed for the current accounting period in accordance with the Income Tax Act, 1961.

b) Deferred Income Tax on accounting of timing differences between taxable income and accounting income for the year is accounted by applying the prevailing tax rates under Income Tax Act/Rules in force.

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The West Coast Paper Mill Limited Cost Accounting DepartmentThe cost accounting department is essentially a link between the production department and the management. The company is manufacturing different varieties of paper/ paper board/ Duplex board which require various types of raw materials and chemicals. A process cost accounting system is followed up to the pulp stage. Thereafter batch costing system is followed. Budgetary Control System is in vogue.

When the material is received, stores inward receipt is prepared by the stores department, checks the material and after approval, it is recorded in the stock cards. Chemicals are tested in the laboratory for its quality. Valuation is done by the stores account department. The indenting departments draw the materials through the issue vouchers. A monthly statement of consumption is prepared accordingly. Detailed records for production and consumption of water, steam and power are maintained. Also production and service cost centre wise classification of salaries and wages are prepared.

The works overhead have been absorbed on the conversion cost basis in different processes and service centres. The administration and selling and distribution overheads are apportioned or absorbed to final products on pre-determined basis i.e. machine hours, tonnes etc.

As such system followed can be considered as adequate to determine correctly the cost of the products.

Following are the daily reports sent to the Costing Department:

a. Raw materials yard report

b. Pulp Mill Operation

c. Production Report

30

The West Coast Paper Mill Limited

d. Power house report

e. Steam consumption report

f. Energy generation and consumption report

g. Chemical Recovery

h. Duplex Board

The above are the different reports prepared in their respective departments daily and are later forwarded to costing department. There are also some departments which send their reports on monthly basis. For example, finishing house will take all the reports into consideration. Daily production report is made in this department which helps the managers to take decisions for the future production.

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The West Coast Paper Mill Limited

Production DepartmentProduction Organisational structure

Vice- President Purchases

Senior Manager

Manager

Asst. Manager

Shift in-charge

Supervisor

Workers

The main source of raw material in production required is wood i.e., Eucalyptus, Casuarina, Subabul & other Hard wood. Bamboo, which was earlier the main source of raw material, has now become scarce and is not used. Small quantity of Pine wood pulp is also imported basically for special specialty papers. The company's raw material procurement is basically from private cultivators within the state and from Andhra

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The West Coast Paper Mill LimitedPradesh, Tamil Nadu and Pondicherry. Total requirement of raw material is about 3,00,000 MT per annum. The company is dependent on private cultivators for its Raw material i.e., hard woods and no problem is expected in procurement of wood for the increased production level. Eco-friendly environment norms are strictly observed in this regards. As there is no supply of raw material from the State Reserved Forest for the last 12 years, the Company has to source its requirement from farm-grown material available in social Forestry and farm Forestry Project and the farmers are motivated to grow pulp wood plantations in their marginal unproductively lands to maintain sustainability in the raw material availability. During the year under review the availability of raw material remained satisfactory and Company is now in the process of supplying genetically superior seeding developed in house as to increase the wood productivity per unit area.

Manufacturing process of paper in WCPMFor manufacturing of paper, the basic raw material required is the wooden timbers. Initially bamboo is used as the basic raw material for paper manufacturing, the reduced availability of bamboo and the government crisp rule has made the industry to go for other plants. So, now Eucalyptuses, Eichhornia, timber are used as raw materials along with bamboo. These raw materials are processed from the other states such as Andhra Pradesh, Tamil Nadu, and Kerala etc. The daily consumption of raw materials is 800 tonnes/day. The manufacturing Process of Paper involves mainly 4 steps, 1. Chipping. 2. Pulping. 3. Chemical Recovery. 4. Paper Making.

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The West Coast Paper Mill Limited Manufacturing Process: RAW MATERIAL 5. (WOOD) CHIPPING PULPX

WATER ADDITION

X

STOCK PULP

STUFF REGULATOR BOXWATER REMOVED 95-96 %

SCREENING & CLEANINGDRYING 18%

Y

Y

MACHINE

HEAD BOX

WIRE/SCREEN

Z

PRESSING PART

DRYING SECTION

STEAM

A

A

CALANDER

POPEREEL L

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The West Coast Paper Mill Limited

Chipping: Bamboo, Eucalyptus & hardwood are used for manufacture of paper pulp. Multi knife chippers chip bamboo and hardwood. Bamboo & Hardwood chips are then screened & conveyed by Bert conveyer or blown by blowers into chip silos for shortage of different wood pieces.

Pulping: From chip silo the chip and blown over the digester where they are cooked by sulphate process. The resultant pulp is blown under steam pressure into blow tank, heat from blown off steam is recovered in high efficiency heat exchange. The unbleached pulp free knot is washed over multistage vacuum washing plant. After washing the pulp is screened and cleaned to remove uncooked material, sand and other foreign material. Finally bleached pulp is taken thickened and stored in storage chests or high-density tower for manufacturing bleached variety of paper.

Chemical Recovery: It is indirectly a profit making unit. Because it recovers 92% of the chemicals used. Thereby reducing the chemical cost to the least.

The maximum recovery of chemicals and heat in the Sulphate process renders the manufacture of pulp more economical. The spent liquor which consists of non-cellulose material from bamboo and hard wood and the cooking chemicals are collected in sealed tanks, while the pulp is being washed on brown stock vacuum drum washers. The spent liquor usually known as weak black liquor is then evaporated in the multi stage evaporation plant to remove the excess amount of water mixed during the washing of pulp. The thick or concentrated black liquor is burnt just like furnace oil in recovery furnace. Non cellulose substance from bamboo and hard wood is burnt as fuel in the

35

The West Coast Paper Mill Limitedfurnace and produce the required heat of smelting the inorganic chemicals in the thick black liquor.

The steam generated in the recovery boiler is diverted into the steam turbine in powerhouse for generating power as a by product and the extracted steam is utilized for process performance. The smelt from the recovery furnace is dissolved into water or weak white liquor solution. The resultant slurry is called as green liquor lime is mixed with green liquor. The resulted slurry is clarified to remove white liquor on over flow. The white liquor i.e. a mixture of caustic soda and sodium sulphide is sent to the digester for cooking of bamboo and hard wood. The under flow sludge mud from clarifier is washed in multistage mud washers. This sludge combined with sea shell/ limestone is burnt using fuel oil in a rotary lime kiln to produce burnt lime.

Paper-making:

Pulp stock is usually beaten and prepared in stock preparation, section ahead of paper machine. Disc and conical refiners are used for refining of stock for each paper machine. When the pulp is refined/ bleached to a sufficient degree, sizing chemicals such as Rosaline, alum colours, filters and bleaching material such as soapstone powder are added to the pulp. The main function of the filter is to improve the capacity and finish of the paper. The stock thus prepared is taken into the paper machine where the final sheet formation taken place accompanied by a large quantity of water which subsequently has to be removed through the mesh of endless wire by vacuum and then by passing and drying over steam heated drying cylinder. The dry web of the paper is then glazed in cylinder rolls. The resultant paper of required quality is wound as a reel. From these reels, the paper is cut into sheets and packed into the reams.

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The West Coast Paper Mill Limited Paper Warehousing Department:At W.C.P.M before production process starts, the marketing department being situated in different cities collects the order from their prospective customers with reference to the papers quality, size, quantity, etc. After collecting the orders from the customers, the order form is being sent to the production department. In case the stock is already available with respect to the customers order specification then the goods are being dispatched by the paper warehouse department. If not, then the customer order is been transmitted to the production department, where the production of finished goods gets started.

First the paper is being wounded up in reel then as per the customer specifications, goods are packed in the reams or rolls. If the customers order concerned with the package is rolled then, the reels are being unloaded from the production department. Quality of paper is checked by the quality control department. Then in the finishing house department these papers are being weighed, counted & packed in wrapping and are transmitted to the paper warehousing department. In the paper godown or ware housing department, the reams are packed into bundles, which should contain less than 70kg of weight. These reels are packed with plastic gunny bags manually. Now a day, this bundle packaging is even done by the machine. This results in low cost, time saving etc.

After getting the finished goods packed into bundles, the paper warehouse department stores in the respective storage section by marking numbers and codes on the packed goods for its easy identification. Then they are duly entered in the stock register, being maintained by the paper warehouse department manually.

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The West Coast Paper Mill LimitedThe Stock Register consists of the following particulars:

Date & Shift Lot No. Quality Size Weight GSM Sheets Total bundles Reams Per Bundle Total Reams Total Weight

Once the goods are stored in paper warehouse department, the invoice procedure starts in the department itself, wherein the quality, transport line medium, insurance charges, freight charges are being mentioned in the excise invoice copy. Three copies of invoice are made. One is retained with the department, other to the transporter and another is transmitted to the sales accounts department.

Following are Registers maintained by the Paper Warehousing Department: Bundling Register. Packing Register.

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

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The West Coast Paper Mill LimitedFollowing are the Reports prepared in this Department:

Paper godown daily report of reams packed into bundles. Program sheet for dispatch of paper. Allotment report. Loading list. Reconciliation. Pending order report

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The West Coast Paper Mill Limited Sales Department:The marketing system at WCPM is handled by the marketing department which is located in the administrative office at Mumbai. This marketing department procures order from different zones. Then copy of the confirmation order will be sent to the sales department, located at register office, Dandeli.

The confirmation orders contain all the details about the party such as partys name and address, terms and conditions, final destination of goods, quantity and size required etc. After receiving the confirmation, sales department will send a copy of it to the production department and they will manufacture the paper according to the size and quantity required by the party. As per the demand of the party, sales department will give dispatch order to the paper godown and then it is dispatched from the godown after the completion of formalities.

The discount system of WCPM is as follows:

1) Trade Discount 2) Additional Discount 3) Quantity Discount

The sales department will produce the final bill by deducting the required deductions and adding some expenses like the excise duty, freight charges (if any), insurance charges etc. A copy of such bill will be sent to the party and concerned branches after recording the transactions in the sales ledger.

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The West Coast Paper Mill Limited Credit Policies at WCPMThe credit policies include the following:

y

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

y

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

y

If the party makes payment in between 16-21 days then the company will give 1.5% cash discount

y

If the party makes the payment within 21-30 days then there is no cash discount and even the interest will not be charged.

y

If the party makes the payment within 30 days then the company will provide 15 days grace period for the payment by charging 21% of interest

y

If the party does not make the payment in 45 days then the company will charge interest for the whole 45 days at the rate of 21%

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The West Coast Paper Mill Limited Sales Account Department:Basically the sales account department is accounts related to the sales made by the company. A copy of challan or excise invoice is received from the paper godown department. Then the trade discount, special discount, additional discount or cash discount provided to the customers, if allowed, will be mentioned in the customer order. Such deductions are respectively made.

After deducting all discounts, on the remaining amount excise duty of 16% basic excise and 0.125% cess is charged. In case the goods are being transmitted outside Karnataka then CST is also charged.

In case the goods are exported, then the invoice is being prepared in the same manner but there will be some exemptions provided on the excise duty. Finally, after providing for all adjustments, the commercial invoice is prepared and is sent to the concerned party or distributor for the payment of goods sold to them.

Marketing Department:With the winds of Liberalization and opening up of Indian economy since 1991 the era of control regime started to give way to market oriented economy. Liberalization and the move to integrate Indian economy with global economies had its consecutive effect on Indian paper industry as well. The effect of change by Liberalization was less pronounced in the initial years of 1990s i.e. up to 1995. The systematic lowering of custom duty on import of paper and paperboard during the period of 1994 1996 had a profound effect on marketing of paper and paperboard in India. The custom duties on import, which were as high as 85 %, were brought down to 20 % during this period. This lowering of custom duty tariff made imported paper cheaper in domestic market and thus gave the Indian paper industry a serious challenge on the price front. The domestic industry did not have a choice but to respond to this international challenge by give quality products at international price levels as any price above international level would lead to flooding of imported paper in the market.

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The West Coast Paper Mill LimitedWhile the customers started to enjoy due to benefits of Globalization the Indian industry had a rude shock. The industry to survive this globalization had nothing but to innovate, become cost competitive and provide quality at International level. This is the age of consumerism i.e. consumer is the king and he alone can determine the way markets will move. The Indian paper industry is highly fragmented with a total installed capacity of 62 Lakh metric tonnes annually. It is reported that a major part of installed capacity is lying idle due to closure of mills. Indian paper industry is broadly classified into paper and paperboards and newsprint segment. The paper and paperboard segment constitutes of cultural paper, industrial paper, and special paper. Newsprint is a separate type of paper and is dealt with in a separate section. The domestic demand for paper and paperboard is estimated to increase at a compounded annual growth rate of 5 %. But the same is also directly linked to literacy levels. Newsprint is a special type of paper used for printing newspapers and magazines. Though newsprint is a different type of paper, very few paper units manufacture both newsprint and other varieties of paper. Newsprint production requires slightly different pulping process to yield characteristics like higher strength, absorbency, pliability, printability, low gram mage, etc. The demand for newsprint is directly dependent upon literacy rate in the country, number of magazines and newspapers published, average size of booklet, etc. For better marketing and proper focus of products WCPM has separate marketing team for these two segments each headed by a manager who in turn reports to the President. The products are marketed through a network of authorized dealers spread across the country. For proper co-ordination and liaison with dealers the company has set up zonal offices at Mumbai, Delhi, Kolkata, and Chennai to look after West, East, North, and South zones. The central marketing office is situated at Bangalore.

The orders are received from dealers who procure them and are forwarded to the Central marketing office where they are processed for their acceptance. The marketing

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The West Coast Paper Mill Limitedoffice intern bunches the order according to the variety and informs the production department accordingly.

After production, the paper is dispatched to the individual dealer or customer as per his instruction to their respective destinations. Paper is marketed both in the reel and sheet form. Paper converters generally purchase reels / whole sellers to sell printers for onward processing where as sheets retail and hence to consumers.

The marketing system (aspects) of West Coast Paper Mills Ltd. Dandeli is handled by the Corporate Office at Bangalore. This marketing dept procures orders from different zones, to distribute the maximum tonnage to customers in the shortest time, W.C.P.M. works with 124 dealers of long-lasting reputation and experience as opposed to direct retail across the country. These distributors are spread across 21 Indian states. In turn these dealers recruit a marketing team to service their immediate geography, service retailers and direct consumers (publishers, MNCs & Industrial users)

Prices are revised at periodic intervals in line with the following considerations: the landed price of imported paper, the demand for & supply of specific paper segments within the country & the delivered cost of paper to various points within the country.

The company does not find any difficulty in marketing its products due to a well establish network of dealers and is also confident that the additional production due to installation of a new machine and modernization of existing machines will also be absorbed in the market. A glimpse of the Client List is given below,

Indian Aluminium Co. Ltd. PG Foils Limited Godfrey Philips India Ltd. Kores (India) Ltd. Paper Products Ltd.

44

The West Coast Paper Mill LimitedState Bank of India, Bank of Baroda, Central Bank of India, Syndicate Bank Canara Bank, Punjab & Sindh Bank, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Standard Chartered Bank, HSBC, etc. Security Printing Press, Government of India, Hyderabad and Nasik Madras Security Printers Calcutta Security Printers Manipal Power Press Speciality Coatings & Laminations Pvt. Ltd., Gurgaon Gateway Coated Papers, Haryana Surya Coats Pvt. Ltd., Ahmedabad Sarda Coats, Mumbai Malhotra Book Depot, Delhi Rohit Pulp & Paper Board Pvt. Ltd., Mumbai Lakhanpal Batteries, Baroda Kiran Datta Forms, Mumbai Vijay Flexible Containers New Man Press, Chennai Reliance Printers, Bangalore Swadhya Printers & Packaging, Indore Cartoon World, Cochin Coromandal Cartons & Containers, Visakhapattanam Polite Printers, Guregaon Metal Box (I) Ltd., Mumbai And various other reputed printers, converters and merchant exporters.

45

The West Coast Paper Mill Limited Human Resource/Personnel Department:The industrial relations are cordial and the Company has not suffered any loss of production on account of labour problem. The Directors acknowledge the support and cooperation from employees at all levels.

The Company has out a specific programme to harness and improve the knowledge, skill and efficiency of each employee for their career development. The senior management is actively involved in boosting employee morale through continuous dialogue in structured communication meetings. The Company employed 2551 people as on 31st March 2009 as against 2526 people as on 31st March 2008. The personnel dept. performs all the functions right from the recruitment to right from an employee. The development of a just & reasonable promotion & transfer policy, the placement of employees according to their qualifications, & plans which aim at

increasing efficiency, promotions job satisfaction, motivating employees, & finally the administration & adoption of wage & other incentive plans, all these are looked after by the personnel dept. The establishment of this paper in Dandeli has attracted many technical & non technical personnel from all over the country for taking up the employment .The mill has given a new avenue for socio-economic development not only of Dandeli but also of Uttar Kannada District in a big way.

46

The West Coast Paper Mill Limited Establishment departmentEstablishment department is the dept where the new employees are recruited. The technical and commercial department sends an internal memo letter regarding the type of employee they need to the concerned department. After receiving the letter the establishment department, gives the advertisement and details in the newspaper. As they receive the bio-data of the fresher from the different places, later they select and send them call letter for interview.

Employment ProcedureThe procedure for the selection of candidate is as follows: a. Recruitment b. Call letter c. Interview d. Selection e. Offer of Appointment f. Training

Methods of TrainingThe training is conducted usually on the class room training and in addition to it on the job training is a must. From various departments training nominations are received. The training provided by WCPM is

1) On job training- Technical 2) Off job training- Clerical 3) Training

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The West Coast Paper Mill Limited Training committeeA committee has been formed in order to access, evolve, co-ordinate and meet the training needs to bring in visible improvements in understanding the shop floor.

Time Office DepartmentEvery industry either small or big has the time office department, which deals in the time keeping of the various employees in the factory. Every worker should be punctual and proper attendance of the worker is a must, so time office plays a very important role in an organization. At West Coast Paper ltd., punch card system is prevailing to keep the record of the timings during which the worker comes inside the factory premises to work and the time he leaves the factory. Each worker has to punch his card in the punching machine before his working hours and if he is one minute late one hour pay will be deducted from his salary. Before this the company gives three chances and if the same is repeated more than three times and they will not be allowed inside the factory. Functions of Personnel Department are as follows, a) Checking and recording the attendance of the permanent workers of the company. b) Calculation of wages of the company. c) Adding overtime incentives to their wages. d) Granting leave to the employees as and when they request. e) Salary increment of the workers. f) Giving advance or loans to the employees. g) Paying gratuity to the employee, who had resigned, retired or expired.

Time office department maintains various files and records. Register of leave with wages, leave book, pay sheet or salary sheet, register of O.T., Register of absenteeism, Register of late arrivals, Office order files, office circular files, accidents record files,

48

The West Coast Paper Mill Limitedpersonnel files of the employees, allowance files, strikes & lock out files time office procedures files, increment files, etc. Time office department is one of the important departments of the company as it keeps records and files of all the employees of the company.

Leave Facilities to the workers:Privilege Leave - 1 Day Leave for every 20 working days. Casual Leave Sick Leave Maternity ESI Leave - 7 Days - 4 Days - As per ESI Act - In case of Harmful or Chronic Disease or Accident or Injury

Allowances for the workers:Night Shift Allowances Attendance Allowances HRA LIC Medical Allowances Provisions Allowances Annual Bonus Production Bonus --------0.90 paise Rs.15.00 Rs.160.00 Rs.750.00 4% of salary Rs.150 20% of salary 11% of salary

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The West Coast Paper Mill Limited Welfare Facilities to the EmployeesStatutory Welfare Facilities to the employees: y y y y y y y y Drinking water. Canteen. Rainy wear, uniforms & shoes. Shelter room & lunch room. Welfare office. Safety office. Fire office. ESI, Gratuity, P.F, Bonus facilities.

Non-Statutory Welfare Facilities to the employees: y y y y y y y y y y y y y y y y Housing facilities Education Training and development. Medical check up. Sports, game, cultural activities. Employees club & reading room Co-operative societies. Shopping complex Transportation facilities. Banking facilities. Post office. Companys own social security. Ranganath auditorium. Bangurnagar officers club. T.V. VCR channels cables. Multi gym.

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The West Coast Paper Mill Limited MedicalCompany runs a Hospital with 40 beds with a well equipped operation theatre, laboratory, X-ray manned by specialised doctors, including 1 lady doctor, compounders and staff nurses. A heart specialist visits once in a week at this hospital. The families and dependents of employers not covered under ESI scheme are eligible for having medical treatment in this hospital. Specialized consultation facilities are also made available periodically. Cases which cannot be treated at this Hospital are referred to KMC Hubli, KLE Belgaum, KMC Manipal. The Company spends Rs.10 lakhs every year which includes the cost of medicine and establishment.

Employees/Officers ClubA reading room has been provided in the employees club and an average 150 persons are availing this facility daily. Dailies, weeklies, fortnightly, monthly newspapers and magazines in various languages are made available in the club. Indoor games like table tennis, chess, playing card etc., are played on regular basis in this club. No membership fee is there.

AuditoriumThis Auditorium has more than 1000 seating capacity and this auditorium is utilized for multi-purpose like screening 35 mm films, conducting cultural programmes etc., Lately, this auditorium has been equipped with latest audio and lightning system so that the entertainment programmes conducted in this auditorium could become more attractive and enjoyable. In this auditorium, company has provided a 35 mm projector to screen feature films on regular basis for which entry is totally free to employees and to their family members.

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The West Coast Paper Mill Limited Hydraulic GymnasiumAs a part of health care, employees are given facility to have their physical exercise in this Gym. Adequate equipment's and other infrastructure have been provided in this gym. This gym is managed by qualified persons to ensure that the employees may avail this facility to maximum extent for their own benefit.

Co-operative SocietyThe WCPM Employees Co-operative Society is considered to be one of the best societies in the region. There are 1250 members in the society. This society has long term and short term loan facilities. Medium term loan facility available helps the members to buy house hold articles and also two wheelers etc., in instalment basis. The society also runs a fair price shop, cloth and general stores etc., for the benefit of the members.

Transport FacilitiesThe Management runs an Omnibus for the benefit of employees and their family members to visit nearby cities like Hubli, Belgaum and Karwar. Daily trips are conducted and very nominal charges are collected from the employees. In addition to the facility of Omnibus, the Company also runs school buses for the benefit of children going to different schools in Dandeli. Company also provides conveyance to employees at nominal charges to Alnavar railway station.

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The West Coast Paper Mill Limited Banking FacilitiesCompany has provided accommodation at nominal rent or lease amount to 3 banks namely, KDCC Bank, Central Bank of India and State Bank of Mysore to operate in Bangur Nagar Colony for the benefit of the employees and colony residents in general.

Industrial SafetyThe West Coast Paper Mills Limited considers safety as the main function of their productivity. The Executive Director of the company is considered as occupier of the company. Apart from that the factory manager is considered as representing occupier. The Industrial Safety department works under president technical, which is the top most authority of the production. The safety officer has been appointed as per the factorys Act, 1948 Sec 40 B. The qualifications of the Safety Officer are as per Karnataka Factories Rules 1969 Rule No 88A.

The company is very much interested to eliminate hazards in the work environment. The following are the tools which are being utilized to eliminate hazards.

1. Safety Survey

2. Intermittent Safety Inspections

3. Periodical Safety Inspections

4. Safety Audit (Internal)

5. Safety Audit (External)

6. Hazard and Operability Study (hazop study)

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The West Coast Paper Mill LimitedApart from the above the company has formulated departmental operating procedures (DOP) and also (SOP). The company is certified by ISO 9001 (2000) and ISO 14001(2004).

AccidentsThe company deals with accidents very seriously. To control the accident safety department insists for investigation of every accident. If any accident occurs, the respective shift in-charge or supervisor has to go to the spot and access the situation without getting biased by the statement of the surrounding people. The statements of other people are to be judged without any influence and he has to segregate which is the immediate cause and basic cause for the accident and the copy of the report is to be forwarded to the safety department. The department then decides necessary action so that no such incident will occur in future.

If any accident occurs, the affected person should be hospitalized and the patient is investigated. Investigation report is to be forwarded to welfare and safety department. The company is maintaining 30 bed hospitals with qualified doctors.

The company is very much interested to maintain good working environment. For this, there is fully fledged industrial pollution control department. Each working area of the mill has been checked frequently for rise in temperature, rise in noise or presence of harmful chemicals in the working environment. If any deviations are found, it will be taken care along with the concerned department so that the health of workers remains unaffected. The company provides safety gadgets like helmets, shoes, goggles, rubber hand gloves, PVC hand gloves and apron. Apart from this, protection from chemicals is also provided by the following personal protective equipments.

-

Self contained breathing apparatus Compressed air breathing apparatus

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The West Coast Paper Mill LimitedCanister Mask for acid gases Dual cartridge masks for chlorine Welding masks

Above equipments and its qualities are regularly monitored by the safety department. To train the workers to wear the protective equipments in case of emergencies, once in three months workers who are exposed to hazardous areas are trained in mock drills.

Promotion of Safety

The safety promotion activities are directly handled by the safety department. The Company celebrates NATIONAL SAFETY WEEK from 4th of March to 10th of March every year. During this week company involves all workers including contractors for participation in celebration activities.

y y y y

Slogan writing competition Painting competition Essay competition Safety drama competition

The selected posters, painting and essays will be displayed along with the safety gadgets, fire fighting equipments for celebrations. The company believes in educating local public. During this several competitions for the school children are also conducted and rewarded. Even the children are also provided training.

The West Coast Paper Mills Ltd won the SURAKSHA PURASKAR 2005 by the National Safety Council, Karnataka chapter. .

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The West Coast Paper Mill Limited CODE OF CONDUCT:All Directors and officers shall observe and implement following code of conduct in their official day to day activities;y Sincere, Honest and Ethical Conduct:

All Directors and all officers shall observe high standard of personal, professional integrity, honesty and ethical conduct which is free from fraud and deception, while in employment with the organization. They should act in good faith, responsibly, with due care, competence and diligence, without allowing their independent judgment to be subordinated. Directors will act in the best of interest of the Company and fulfill the fiduciary obligations. All concerned are expected to devote full attention and are committed to optimizing the growth of the Organization by adopting best of the corporate governance practices and ethos.

y Statutory compliance:

All Directors and Officers shall take utmost care and pay attention to comply with all applicable laws, regulations, rules and regulatory orders in letter and in spirit. They are also expected to acquire appropriate knowledge of the requirements relating to their duties sufficient to enable them to recognize potential dangers and to report to the Board or management the possible violation of laws and regulations or code of conduct.

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The West Coast Paper Mill Limitedy Conflicts of Interest:

Directors shall avoid situations where a conflict of interest might occur or appear to occur on account of personal transactions and investments which conflict with interest of the Company. A Conflict of interest exists when any personal or professional interest is adverse to or may appear adverse to the interest of the Company. Conflict of interest may also arise when a director/officer, or member of his or her family or firm, an organization with which the director/officer is directly or through relatives or otherwise is affiliated receives improper personal benefits as a result of his or her position as Director/officer of the Company. Such conflict of interest impairs ability to exercise good judgment on behalf of the Company. y Corporate Opportunities: Directors and Officers should not exploit for their own personal gain opportunities that are discovered through the use of corporate property, information or position unless the opportunity is disclosed fully in writing to the Companys Board of Directors and the Board of Directors declines to pursue such opportunity.

y Protection of Assets:

Protecting the Company's assets is a key responsibility of every employee. Care should be taken to ensure that assets are not misused, misappropriated, loaned to others, or sold or donated, without appropriate authorization.

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The West Coast Paper Mill Limitedy Confidentiality of Information:

Any information concerning the Companys business, its customers, suppliers etc, which is not in the public domain and to which the director or officer has access or possesses such information must be considered confidential and held in confidence, unless authorized to do so and when disclosure is required as a matter of law. The Companys confidential information includes product architectures; source codes; product plans and road maps; names and lists of customers, dealers, and employees; and financial information. All confidential information must be used for Company business purposes only.

y Insider Trading:

Directors and Officer of the Company shall not derive benefit or assist others to derive benefit by giving investment advice from the access to and possession of information about the Company not in public domain and therefore constitutes insider information. All concerned shall ensure to comply with the Insider Trading Code of the Company and Insiders Trading Regulations of the SEBI since failure to do so attract serious consequences.

y Disciplinary Actions

The matters covered in this Code of Business Conduct and Ethics are of the utmost importance to the Company, its stockholders and its business partners, and are essential to the Company's ability to conduct its business in accordance with its stated values. It is expected that all will adhere to these rules in carrying out their duties for the Company. The Board shall determine appropriate actions to be taken in the event of violations of the Code.

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The West Coast Paper Mill Limited Enterprise Resource PlanningManaging information is one of the major tasks of a company. In any company, information is obtained at various levels and is also processed at various levels. While some information may have relevance only to a particular department or business unit, most of the information is required to be used or analyzed by more than one department or business unit before a company finalize an order of procurement, plans of investments etc. Today, most of the companies including THE WEST COAST PAPER MILLS LTD have adopted Enterprise Resource Planning. It is normal to find different departments in a company using different standalone software solutions customized to their specific needs. The Human Resource department is concerned with the management of employees and their benefits; the Finance department is concerned with the income and expenditure of the company and so on.

-

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

-

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

-

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

-

To enable volumes to be scaled without increasing people

Thus having an integrated system for the company will eliminate the following problems:a) Wastage of time and effort in re-entry of data at various points. b) Chances of mistakes are more as the data is entered multiple times. c) Data may look different in different programmes depending on how it is entered.

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The West Coast Paper Mill Limited Corporate Social Responsibility ActivitiesWCPM supports the community of its presence through initiatives that go beyond direct indirect employment and has invested significantly in Dandelis upkeep.

The Company maintains a self-sufficient colony with facilities of Shopping Complex, Temple, Hospital, Theatre, Club and Cable TV Network. The Company has also been rendering financial support since 1963 to Dandeli Education Society, Dandeli, and the premier educational network of Dandeli, which runs several institutions including two Pre-University Colleges and a Degree College as well as a Post Graduate Course in pulp and paper technology.

The West Coast Paper Mills Ltd., although dependent heavily on trees for supply of raw materials, remains one of the foremost ecology conscious concerns in the country. With the threats of ozone depletion and global warming, the company has taken a number of steps to protect ecology as well as to ensure steady supply of raw material. The natural forests in India being under tremendous pressure, the Company has started a programme of distributing quality seedlings of fast growing species like Eucalyptus, Casurina, Acacia and Subabul (which are the raw materials of the plant).

The beneficiaries are owners of low yielding local agricultural lands in the vicinity of the plant, i.e. Uttar Kannada, part of Shimoga, Belgaum and Dharwar districts. The target is to distribute to the tune of 4 million quality seedlings.

The productivity of the plantation can be increased sustainably by promoting technology based plantations. Of late in India, clonal forestry is gaining acceptance among the progressive Foresters and Plantation Managers. Clonal technology is a strategy adopted in tree improvement programme to capture and exploit the best recombination in a shortest possible time. The ultimate objective of tree improvement is to produce quality seeds. Seeds are the carriers of entire improvement made in one

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The West Coast Paper Mill Limitedgeneration to the next generation. Keeping in view the improved superior seeds are the major source for propagation. The principles and practices of plant breeding of trees are well established and they apply equally to industrial plantations and small holder agro-forestry and community plantations also. The goal of tree improvement for agro-forestry is to increase the effectiveness of land for productivity, suitability and sustainability of land use for rural communities.

It consists of:

Germination of the species or geographic sources within a species in a given area. Kind and causes of variability within a species. Packaging the desired qualities into improved individuals. Mass production of improved individuals for planting purposes. Developing and maintaining a genetic base population for advanced generation.

Success in the establishment and productivity of forestry plantations is determined largely by species used and the source of seed within species. The higher gain in most of the forestry improvement programmes can be made by assuring the use of the proper species.

The Company has implemented Clonal Technology to achieve the following:y y y y y

Supply genetically high quality planting stock. Improve land productivity and yields from pulpwood plantation Provide fuel wood etc. for local use Encourage overall tree forming practices. Improve the economic

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The West Coast Paper Mill LimitedThe company has been playing a very active role in developing the backward district of Uttara Kannada. Stabilising fly-ash dumps by biological means, developing better drainage systems, organising education from primary to graduate, including pulp and paper technology course, facilities for needy children, organising various social awareness programmes etc. are some of the steps it has taken to manifest its commitments to social and environmental causes.

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

and water. Company is also making conscious efforts to reduce water consumption. The consents granted by pollution control board are valid.

Expansion programmeIn the present era of globalization along with projected and sustainable growth of the Industry, development-cum-induction of energy efficient technology is the need of the day. The development that meets the needs of the present without compromising ability, needs and expectations of future generation shall become the viable bench mark for a sustained growth. Constant efforts are to be made with efficient fibre and energy management system to further strengthen and usher in the realm of sustainable operations of the industry.

The survival and healthy growth of the Indian paper industry solely depends on matching with the global capacities, operational efficiency and stringent quality standards. The robustness and optimal size of the production processes shall be a primary determinant for modernization and expansion programme. The growth in paper and paperboard companies is more or less directly proportional to the countrys GDP even with the advent of modern world of electronic communication.

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The West Coast Paper Mill LimitedThe Company, with a vision to intensify the development activities towards fibre resource management, quality improvement, up gradation of technology to achieve energy efficiency, to be environmental friendly and ergonomic coupled with effective utilization of human resources have embarked on an ambitious expansion cum modernization plan for increased production facility in the existing mill at Dandeli. This program includes the replacement of existing Pulp Mill with new fibre line, a new paper machine for writing/printing grade papers, additional equipments in Chemical Recovery section.

Projects under Consideration-Rs. 300 Crores:y

Complete fibre line of 725 TPD bleached pulp capacity comprising of wood chipper, chip screen, chip silo, modified batch cooking system, brown stock washing & screening, oxygen delignification of pulp, ECF bleaching and chlorine dioxide generation plant.

y

New paper machine comprising continuous stock preparation, head box to pope reel rewinder QCS & DCS systems, converting equipments, mechanized handling of paper in converting, finishing and godown stages.

y

Rotary lime kiln of 230 TPD lime production capacity.

y

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

y

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

y

Causticizing section comprising liquor clarification equipments, mud washing and thickening etc.

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The West Coast Paper Mill Limitedy

Power plant comprising boilers and turbine to meet additional requirement of steam and power.

y

Additional equipment for effluent treatment plant, environmental protection and to improve basic infrastructure.

y

The production capacity will go up to 3, 20,000 TPA after completion of the said investment program as against 1, 80,000 TPA at present.

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The West Coast Paper Mill Limited

Some of the Major Competitors of the CompanyCompetitors for White PaperA.P.P.Mills Ltd. Rajahmundry J.K.Paper Industries. Mysore Paper Mill. Bilt Paper Mill.

y y y y

Competitors for Duplex Board:I.T.C Badralachalam Bal Krishna Paper Mill N.R.Paper Mill Ballarpur Industries. Sirpur Paper Industries Sheshasai Paper Mills Ltd.

y y y y y y

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The West Coast Paper Mill Limited SWOT ANALYSIS:

Strengths

y y

The mill has an overall experience of almost 45 years. The company maintains a strong dealership network across the country which makes its sales processes much easier.

y

There are large tracks of wasteland in India which are proven to be of rich natural resource which the company can exploit.

y

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

y

There has been a change in focus from a forest based industry to a farm based industry through technology-led farming initiatives.

y

The company has positioned very strong entry barriers for other companies to enter the paper industry.

y

The company has a quick decision making process which makes the company avail of all the potential opportunities that the company comes across.

Weaknessesy y The paper industry is an extremely capital intensive industry. The company has a long gestation or development period which proves that the company takes time for it to implement its expansion programs into action. y The company employs a water intensive manufacturing process which utilizes the water for the manufacturing process of paper. y y There are high energy costs which impacts the overall cost of production. There is an immediate need for empowerment of the employees in the organisation.

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The West Coast Paper Mill Limitedy The promotion policy is not satisfactory at all as it is given on basis of seniority and not on performance. y There is unwillingness of the staff and workers to change to new practices and are rigid in nature. y The company is facing a rapid labour turnover over the past few years of which the company has been not able to prevent.

Opportunities

y

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

y

There is a thrust on education which would enforce the usage of paper and paper products more extensively.

y

There is a tremendous growth potential in copier business segment through services sector which would again escalate the need of paper broadly.

y

There can be more emphasis to produce international grade quality by the paper mill to make foreign market demand more realistic.

y

The modernization plans and technological up gradation are completed or likely to be completed in near future by the company.

y

The Online ordering process is a great approach to open the way to getting in orders from the clients almost instantaneously.

y

There should a performance based evaluation, promotion, and increments in the salary of the employees and workers working in the organisation.

y

There can be a foreign market expansion which provides the company with export opportunities resulting in the shifting of capacities to developing nations.

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The West Coast Paper Mill Limited ThreatsThe entry of foreign players into the paper industry is a great danger for the company. y The expectant losses in resources mainly water and other raw materials pose an immense risk to the industry. y There is a massive cheap dumping of paper and paper products from China which is ruining the domestic market. y A slowdown in the economy would have direct impact on the paper industry for certain. y The foreign exchange currency fluctuations impact the imported raw material prices adversely y There are prevailing stringent environmental laws as per CREP guidelines which requires the paper mills in the industry to upgrade their facilities y The massive threat is caused by the product substitutes existing in the market.

y

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The West Coast Paper Mill Limited FINDINGS:

y

The company has adopted Enterprise Resource Planning system through which it is able to run its activities smoothly and efficiently.

y

As far as Expansion programme is concerned the company is very professional and it has appointed external as well as internal experts to check the feasibility of the project.

y

Raw material is the biggest challenge for the industry. Governing laws do not permit the leasing of land, further a wood-based industry is expected to raise raw material outside the forest, and there is a ceiling on land holding restricted to 54 acres per person.

y

The Company is infected with technical obsolescence which impacts efficiency and quality

y

Current status of WCPM paper quality is good in the market but there is much opportunity to improve status and brand in market and some of the dealers are unhappy with quality of paper like thickness variation and brightness variation.

y

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

y

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

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The West Coast Paper Mill Limited RECOMMENDATIONS:Paper is truly recyclable and bio-degradable; therefore, the Company should be dependent on agro-forestry. Under agro-forestry the pulp wood trees are harvested after 5 years whereas as the number of trees planted are more than those harvested.

y

y

Regarding technological obsolescence, the Company should take more initiatives than the already implemented projects and measures like usage of renewable resources,

y

The salaries of the workers and employees should be increased in such a manner that the employees and workers remain loyal and sincere to the Company and increased on the basis of performance and not on seniority criteria by providing performance appraisals, Effective and strict supervision should be maintained in order to minimize the wastage of finished goods.

y

y

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

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The West Coast Paper Mill Limited

CONCLUSION:

The forthcoming years will be a crucial. The Company is confident about posting robust performance. So, whether it is capacity, technology, additional raw material supply, water, power, storage, dealership network, overall efficiency with environmental focus the Company has infused strengths in each and every area of business. The Company has an excellent product range and the best quality to offer the customers. By virtue of the Companys diverse product range, it services institutional and retail segments.

The Company has shown excellent financial acumen by raising long-term debt at low rates. The entire expansion has been carried out at the existing location ensuring zero additional land cost. The modern technology across each and every process will provide the Company significant margin improvement.

Assuming the economic conditions remain favourable, the Company and its team have a strong outlook to the future and further success of the West Coast Paper Mills Ltd.

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The West Coast Paper Mill Limited

BIBLIOGRAPHY

BOOKS:

y

Aswathappa. K. (2008) Human Resource Management, Tata Mc Graw Hill publishing company Ltd.pp 116,117,286. Philip Kotler,(2008)12th edition Marketing Management