A STUDY ON CAPITAL BUDGETING With special reference to DELTA PAPER MILLS LTD VENDRA

A Project report Submitted in Partial Fulfillment for The award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By

BALARAM KRISHNA ABBINA

Reg.No: 09HK1E0006 Under the esteemed guidance of

Mr. G.SURESH KUMAR, MBA.

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES A.K.R.G COLLEGE OF ENGINEERING &TECHNOLOGY

(Approved by AICTE & Affiliated to JNTU KAKINADA)

NALLAJERLA - 534 112, W.G Dt., A.P 2009-2011

AKRG COLLEGE OF ENGINEERING & TECHNOLOGY

(Affiliated to Jawaharlal Nehru Technological University, Kakinada)
DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE
This is to certify that the project work titled a study on CAPITAL BUDGETING with special reference to DELTA PAPER MILLS LIMITED, VENDRA Submitted by BALARAM KRISHNA ABBINA examined and adjudged sufficient as partial fulfillment for the award of the Master of Business Administration, by Jawaharlal Nehru Technological University, Kakinada from AKRG COLLEGE OF ENGINEERING & TECHNOLOGY, NALLAJERLA.

INTERNAL GUIDE

HEAD

INTERNAL EXAMINER

EXTERNAL EXAMINER

DECLARATION
I, Mr. BALARAM KRISHNA ABBINA hereby declare that this project report entitled A study on CAPITAL BUDGETING with special reference to DELTA
PAPER MILLS LIMITED, VENDRA is genuine and bona-fide work done by

me during the period from December 2nd 2010 to January 15th 2011 and has not been submitted to any other university or published anytime before. The project work is for the fulfillment of the requirement for the award of MBA degree of AKRG COLLEGE OF ENGINEERING & TECHNOLOGY (Affiliated to JNTU, Kakinada) NALLAJERLA, West Godavari.

(BALARAM KRISHNA ABBINA) 09HK1E0006

Date: Place:

ACKNOWLEDGEMENT
The immense pleasure and joy that one derives on the completion of the assigned job is beyond description. It is the duty of concerned person to pay his respect and acknowledge the advice, guidance and assistance received from all quarters for such an accomplishment. I would like to convey my regards for our chairman Sri Chava Ramakrishna Rao of AKRG group of educational institutions for allowing me to do my project work. My sincere thanks to our Principal Prof.B.N.Reddy of AKRGCET for giving permission for my project work. I would like to thank Mr. A.S.PRASAD, HOD of Management studies, AKRG College of Engineering & Technology, Nallajerla.

I would also like to thank Mr. M.VEERA KRISHANA Assistant Professor in AKRGCET for her guidance and support extended through the period of study.

I express my sincere thanks to Sri GANGARAJU Chairman of the DELTA PAPER MILL Ltd., for giving me opportunity in their organization.

I also express my sincere thanks to Sri. Y.V.V Satyanarayana Finance manager in DELTA PAPER MILL Ltd.,, for accepting my request of doing the project work in this esteemed organization.

I also thank all my family members and friends for their co-operation and encouragement during the project period.

( BALARAM KRISHNA ABBINA) 09HK1E0006

CONTENTS
Page No CHAPTER 1
INTRODUCTION NEED FOR THE STUDY SCOPE OF THE STUDY OBJECTIVES OF THE STUDY METHODOLOGY OF THE STUDY LIMITATIONS OF THE STUDY

1-10

CHAPTER 2:
PROFILE OF THE PAPER INDUSTRY PROFILE OF THE DELTA PAPER MILLS LIMITED

11-43

CHAPTER 3:
THEORITICAL FRAMEWORK OF CAPITAL BUDGETING

44-61

CHAPTER 4:
DATA ANALYSIS AND INTERPRETATION

62-71 72-75

CHAPTER 5:
FINDINGS SUGGESTIONS SUMMARY

ANNEXURE
BIBLIOGRAPHY ANNUAL REPORTS

LIST OF TABLES
PAGE TABLE 2.1 2.2 2.3 2.4 2.5 2.6 2.7 4.1 4.2 4.3 4.4 4.5 TITLE OF THE TABLE Per Capital Paper Consumption Paper industry state-wise distribution of units & capacity Statement showing the personnel Financial Performance Share capital Secured Loans Un-Secured Loans Calculation Of Pay-Back Period The Statement Of Cash Flows(After Tax& Dep.,) The Statement Of Cash Flows (After Tax& before Dep.,) The Statement Of Cash Flows (After Tax & before Dep.,) Calculation Of IRR NO 12 14 18 36 37 38 49 62 64 66 68 70

LIST OF GRAPHS AND CHARTS

GRAPH/ TITLE OF THE CHART OR GRAPH PAGE

CHART 4.1 4.2 4.3 4.4 4.5 1.1 2.2 D 2.2 3.1 3.2

Calculation Of Pay-Back Period The Statement Of Cash Flows(After Tax& Dep.,) The Statement Of Cash Flows (After Tax& before Dep.,) The Statement Of Cash Flows (After Tax & before Dep.,) Calculation Of IRR Goals of the firm Demand For Paper And Paper Board Organisational Structure Capital Budgeting Process Techniques Of Capital Budgeting

NO 63 65 67 69 71 01 48 52

CHAPTER I INTRODUCTION

CHAPTER II PROFILE OF PAPER INDUSTRY PROFILE OF DELTA PAPER MILLS LTD.,

CHAPTER III THEORITICAL FRAME WORK OF CAPITAL BUDGETING

CHAPTER IV DATA ANALYSIS AND INTERPRETATION

CHAPTER V SUMMARY FINDINGS SUGGESTION

BIBLIOGRAPHY

ANNEXURE