Institute of Chartered Financial Analysts of India (ICFAI) University 2008 Certification Certified Financial Planner Portfolio management - Question Paper

box onto the wire, the water drains away through the mesh leaving tiny fibers as a mat on top of the mesh. By the time it reaches the end of
the wire section, it becomes a sheet of paper, although very moist and of little strength. It passes through press part where more moisture
is squeezed out. The paper then passes through drier part with a temperature of slightly over 100 0C. Here it becomes completely dry.
Part way down the bank of drying cylinders is the size press, where a solution of water and starch are added in order to improve the surface.
At the end of the drying process, the paper is smoothed by ‘ironing’ method, which consists of hot polished rollers mounted in
pairs (calendars). This also helps to consolidate, polish and glaze the surface of the paper. Still traveling at very high speed, the paper
comes off the machine ready for reeling up into large reels, which are normally cut or slit into smaller sizes, according to
http://206.223.65.215/suggested/MSF2E4-0708.htm (2 of 14) [31-Jul-2008 8:47:04 PM]
Suggested Answers with Examiner's Feedback
customer requirement.
Manpower
The company is in the process of recruiting manpower. The requirement of manpower for this project is estimated as under:
Particulars Operations Maintenance Administrative
Skilled seven eight 10
Semi-skilled 15 13 27
Unskilled 30 18 11
Cost of Project
(Rs. in lakh)
Particulars Amount
Land
- Basic Cost of Land 48.16
- Registration Charges 5.78
- Site Development 12.64
66.58
Building 279.67
Plant & Machinery 888.55
Miscellaneous Fixed Assets 64.94
Contingencies 204.75
Preliminary Expenses 266.18
Pre-operative Expenses 163.03
Margin money for Working Capital 316.80
Total 2,250.50
Means of Finance
(Rs. in lakh)
Particulars Amount
Share Capital
Promoters
Public
1021.50
679.00
Term Loan from UBI 550.00
Total 2,250.50
Additional info
1. The capacity utilization is expected to be 70% during the 1st year, 80% during the 2nd year and 90% in the following years.
2. The current selling price is Rs.18,000 per tonne of finished product. The management projected that the selling price would go up at
a rate of 3.5% every year from the year of commercial production.
3. Currently, cost of raw material to produce every tonne of finished product is Rs.7,500. 35% of this would be wood pulp, the price
of which is expected to face inflation at the rate of 5.5% every year. 40% of the raw material cost comes from waste paper, on which

Earning:   Approval pending.