The word inventory in accounting language refers to the stocks of the product (finished goods) of a firm offering for sale. In a manufacturing concern, it may include raw materials, work-in-process, finished goods and stores. Raw materials consist of those units or input which are used to manufacture goods that require further processing to give a shape of finished goods. Finished goods are products ready for sale. Inventory should neither be too low to effect the production adversely nor too high to block the funds unnecessarily. About 90 per cent part of working capital is invested in inventories. Therefore, it is necessary for management to give proper attention to inventory management. A proper planning of purchasing, handling, storing and accounting should form a part of inventory management.

 In India, there are 759 pulp and paper mills in India as on March, 2014 with an installed capacity of 12.7 MTPA (Million Tons Per Annum), producing around 10.90 MTPA paper, paper board and newsprint. The production is anticipated to grow up to 14.0 MTPA by the year 2016. The average annual turnover of the industry is approximately ` 30,000 crores, which accounts for approximately 0.37% of the national GDP. It contributes ` 3000 crores to exchequer and provides direct employment opportunities to about 0.37 Million people and indirect employment of over 1.2 Million people. The Indian paper share in World’s production is just 2.6% only. In this connection, inventory is the major role play in the production process. Hence there is need to study the inventory management in paper industries.

KEY WORDS: inventory, profit,  paper, employment, paper mills, working capital