Financial Management Focus on Operational Performance of Paper Industry in Andhra Pradesh State of India: Empirical Research Findings

Andra Pradesh is one of the leading producers of paper in India -- there are 22 paper mills in the State; regrettably, the majority of the paper mills in the state are in red/(showing losses) due to the poor performance and failure to manage their finances effectively. Therefore, there is a need to study the causes of poor financial management. The study covers a ten-year period and the sample size is six sample mills. The data have been obtained from the secondary sources such as annual reports and accounts of the sample paper mills and the Stock Exchange Official Directory, etc. The data from various sources have been analysed with the help of various financial tools and techniques. The study reveals that there is no positive relation between debt and equity and there was the possibility of non-payment of interest charges to creditors, which may have caused financial problems. Sample mills had not utilised fixed assets effectively and they used short-term funds to finance fixed assets. Raw material was under-stocked and all the sample mills have not maintained finished paper stock properly.