(A GOVT.

OF INDIA UNDERTAKING UNIT)

SUMMER INTERNSHIP PROJECT ON WORKING
CAPITAL MANAGEMENT OF SAIL WITH SPECIAL
REFERENCE TO BOKARO STEEL PLANT (BSL)

SUBMITED TO:-
SUBMITED BY:-
PRAVEEN KUMAR
Roll No.
0914370042
MBA 2
nd
year(3
rd
Sem)
Session 2009-11

1
ACKNOWLEDGEMENT
At the very outset, I wish to express my heartiest gratitude to all those who
extended their help, guidance and Suggestion and without their help it was
not possible for me to complete this Project Report.
I am deeply indebted to my guide Mr.
R.B Sharma (Jr. Manager) (A!"n#$ % a&m'n'$#ra#'!n)( Mr. S. K. R!)
(D M F'nane % A!"n#$) for their valuable and enlightened guidance as
well as freedom they had offered to me during the project wor. I can!t
forget the contribution and helped extended to me by Mr. Kr'$hn Chan&
(Manager) , (Sa*e$ Ta+ % E+'$e) Mr. U. S. Bha$,ar (D). Manager) %
Mr. -. C. M'$hra (Sr. Manager) (O.era#'!n F'nane) . "hey ever
prepared to feed #ecessary information and guidance.
I can not forget the contribution and helped extended to me by An"rag
G".#a (Sr.Manager( Ma'n a/) J'#en&ra K"mar (D).Manager) (-r!0e#
F'nane) D . K"mar (D). Manager) (-.F. $e#'!n) Mr$. -!!nam (D).
Manager) K.C. Ga0ra' (Jr.Manager) S.C.Shr'1a$#a1 (Sr.Manager Ra2
Ma#er'a*$).
I am also than full to all the employee who provide the practical
information about the production process, practical show the woring
criteria of the plant % those employee who give the lift to me at the time of
plant visit because with out them I can!t visit the plant easily.
-RAVEEN KUMAR
R!** N!. 3 456789447:
MBA :
n&
;ear
Se$$'!n3:445366
2
CERTIFICATE CERTIFICATE
"his is to certify that the project entitled $WORKING CA-ITAL
MANAGEMENT% at BOKARO STEEL -LANT has been carried out by
Mr. -RAVEEN KUMAR from &
"'
(uly)* to +)st (uly )*, under my
supervision in partial fulfillment of his MBA :n& )ear at IMS
ENGINEERING COLLEGE( G<A=IABAD.
I am satisfied with his sincere performance and study conducted by him in
BOKARO STEEL -LANT.
I recommend to submit the project report. I wish him all success in life.
"his is also certified that the project wor is original and has not been
submitted to any other place.
,A"-. Mr. R.B. Sharma
((r. /anager, 01 A2
3oaro Steel Plant 3oaro Steel Plant
SAI4 SAI4


3

DECLARATION
I hereby declare that the following documented project report titled
$W!r,'ng Ca.'#a* Managemen# > is an authentic wor done by me as a
part of my study on finance.
I also further state that the project has been prepared by me with the special
help of M$. -"n0',a Ra#h' 5faculty of /3A in I/S-62 and secondary
data provided in the reports of the company, which were essential for the
completion of the project. "he project was undertaen as a part of the course
curriculum of MBA( GAUTAM BUDD<A TEC<NICAL
UNIVERSIT;( LUCKNOW.

PRAVEEN KUMAR PRAVEEN KUMAR
IMS ENGEINEERING COLLEGE IMS ENGEINEERING COLLEGE, ,G<A=IABAD G<A=IABAD
4
COLLEGE CERTIFICATE COLLEGE CERTIFICATE
5
TRAININNING CERTIFICATE TRAININNING CERTIFICATE
6
INDE?
C!n#en#$ @ .age n!.
Cha.#er 3 6
).) -xecutive summary *7
).8 Introduction
9lobal Steel Scenario and Indian Steel Industry *:
SAI4 ))
3S4 );
).+ Review of literature 8<
).= >bjective of study 8:
Cha.#er A :
8.) #ature of product +*
8.8 process +=
8.+ S?>" Analysis
Cha.#er 38
+.) Strategies =8
+.8 policies =<
Cha.#er 3 7
=.) Research /ethodology &)
=.8 "ypes of ,ata &&
=.+?oring 6apital @ >verall Aiew &;
6ash /anagemeni
7
=.=Inventory /anagement 7*
=.&Receivable /anagement 78

=.7 0inancial Statements and Ratio Analysis ==

=.; 0low chart of sales process followed in 3S4 =7
Cha.#er 3 B
&.)6onclusions =:
&.8Suggestion &*
&.+3ibliography B &)

8
Cha.#er 3 6
).) -xecutive summary
).8 Introduction
9lobal Steel Scenario and Indian Steel Industry
SAI4
3S4
).+ Review of literature
).= >bjective of study
9
6.6 E?ECUTIVE SUMMAR;
Steel Authority of India 4imited 5SAI42 is the leading steel maing
company in India. It is fully integrated iron and steel maer, producing both
basic and special steel for domestic construction engineering, power,
railway automotive and defense industries and for safe in export marets.
3oaro Steel Plant @ "he fourth integrated plant in the public sector taing
shape in ):7& in collaboration with the Soviet Cnion.
It was originally
incorporated as a limited company on 8:
th
(anuary ):7=, and was later
merged with SAI4 first as a subsidiary and then as a unit through the public
sector iron 1 steel companies act):;<. ?oring capital management is
concerned with the problem that arises in attempting to manage the current
assets, current liabilities and the interrelationship between them. Its
operational goal is to manage the current assets and current liabilities in
such a way that a satisfactory level of woring capital is maintained.
"he woring capital ratio is calculated as.
Positive woring capital means that the company is able to pay off its shortD
term liabilities. #egative woring capital means that a company currently is
unable to meet its shortDterm liabilities with its current assets 5cash,
accounts receivable and inventory2.
?oring capital also gives investors an idea of the company!s underlying
operational efficiency. /oney that is tied up in inventory or money that
customers still owe to the company cannot be used to pay off any of the
company!s obligations.
10
"o measure efficiency we have used ratio analysis as a techniEue and the
main ratio we have used are liEuidity ratio and activities ratio. >ne more
tool we have used is calculation of operating cycle which showsFhow
effectively the firm is using its resources or how much time its tae to
convert its investment bac into cash. 3y looing previous data we came to
now 3S4 have done a great job in this field operating cycle by +*G in just
three financial years.
11
6.: INTRODUCTION
6.: INTRODUCTION
GLOBAL STEEL SCENARlO AND lNDlAN STEEL
lNDUSTRY :-
"hough evidences indicate that iron and steel have been used by for almost
7*** years, the modern form of iron and steel industry came into being only
during the ):
th
century. "he growth and development of Iron and Steel
Industry in the world until the Second ?orld ?ar was comparatively slower.
3ut the industry has grown very rapidly after the Second ?ar was. ?orld
production of steel, which was only 8<.+ million tones 5/"2 in ):**, rose to
7:& /" by )::8. "he oil crisis of the seventies affected the entire economy
of the world including the steel industry. "he position started improving
after ):<+ and peaed at ;<* /" in ):<:. It starred declining till )::=
5;8+/"2, piced up again to ;&&.< in )::&. "he ?orld Steel production is
around ))+8 /" in 8**&, registering a growth of 7G over 8**=
12


Satisfaction 6ustomer
Aspiration Cnlimited
Improvement 6ontinual
Leadership /aret


VISION
"o be a respected world class corporation and the leader in Indian steel business in
Euality, productivity, profitability and customer satisfaction.

CREDO
?e build lasting relationships with customers based on trust and mutual
13
benefit.
?e uphold highest ethical standards in conduct of our business.
?e create and nurture a culture that supports flexibility, learning and is
proactive to change.
?e chart a challenging career for employees with opportunities for
advancement and rewards.
?e value the opportunity and responsibility to mae a meaningful
difference in peopleHs lives.

A BRIEF <ISTOR; OF SAIL@
STEEL AUT<ORIT; OF INDIA LIMITED (SAIL)
SAI4 was established as a holding company at #ew ,elhi on 8=
th
(anuary
):;+ with authoriIed share capital of Rs.8*** crores. "his holding company
was formed with four public sector steel plants and the input industries in
iron ore, coing coal and scrap. "he companies were 'industan Steel 4td,
14
'industan Steelwors 6onstruction 4td, 3oaro steel 4imited, Salem Steel
4td, 3harat 6oing 6oal 4td, #ational /ineral ,evelopment 6orporation.
"he shares of these companies were held by the President of India and were
transferred in /arch ):;+ to SAI4. "he paid up capital as on +)
st
/arch
):;= was Rs.)+87 crores.
It was converted into a into a unitary company in ):;< and is now
responsible for the management of the five integrated steel plants at 3hilai
in 6hattisgarh, 3oaro in (harhand, ,urgapur and 3urnpur in ?est 3engal
and Rourela in >rissa. It is also responsible for the management of four
alloy steel plants at Salem in "amil #adu, ,urgapur in ?est 3engal,
3hadravati in Jarnataa and 6handrapur in /aharastra.
1960
"he Alloys steel plant was installed at ,urgapur in ?. 3engal with
(apanese assistance . "he plant with an installed capacity of ) lah "PA of
ingot steel has capacity to produce 8.7* "PA of liEuid steel with modern
facilities such as AA,, A>, and continuous casting. Special steels were
produced such as armour plate, grade steel and many special grade alloys to
meet vital and strategic needs of the country in areas of nuclear energy,
defence, space.
65CD
D SAI4 too over the management of /aharashtra -letrosmelt 4td. a small
compact company, at 6handrapur, /aharashtra for utilising some of its
facilities for R1, wors as well as maximising its production of ferro
manganese for use in SAI4 plants. "he unit produces several goods of
special steels. "he 6ompany proposed to diversify into manufacture of ferro
alloys, low carbon pig iron etc.
6598
D Pursuant to a decision taen by the 9overnment of India in (anuary the
Steel Authority of India, 4td. was formed on 8=th (anuary, as a holding
company for Steel and Associated input industries.
15
D 6-,3 was converted into a separate company in the name of
/etallurgical -ngineering 1 6onsultants 5India2, 4td., 3olani >res 4td.,
/etal Scrap "rade 6orporation and /ysore Iron 1 Steel 6o. 4td. became
subsidiaries of SAI4. /aharashtra -lecrosmelt 4td., Aisvesvaraya Iron and
Steel 4td., Indian Iron 1 Steel 6o., 4td., IIS6>DCjjain Pipe 1 0oundry 6o.,
4td. are all subsidiaries of the 6ompany.
D "he 3hilai Steel Plant was set up in the late fifties at /adhya Pradesh with
a capacity to manufacture ) million "PA of ingot steel, with Russian
6ollaboration. "he products include heavy rails, heavy structurals, sEuares,
merchant sections besides semis lie blooms and billets and pig iron for
sale.
D "he ,urgapur Steel Plant was erected in ?. 3engal in the late fiftees with
3ritish collaboration. Set up as a ) million "PA ingot steel capacity plant, it
was subseEuently expanded to ).7 million "PA in ):7*. "he plant is a major
producer of railway materials lie wheels and axles, fish plates and sleepers.
It also manufactures light and medium sections, merchant sections and
selp. "he plant underwent continuous expansion in stage to ).7 million
"PA of ingot steel and ).8+: million "PA of saleable steel.
D "he Rourela Steel Plant was commissioned in the late fifties with the
assistance of 0ederal Republic of 9ermany. Situated in >rissa, the plant was
the first of its ind of integrated steel plant in India and was designed to
produce only flat products. It was the first plant to introduce basic oxygen
furnace process. It also has a fertiliIer plant with a capacity to produce
=,7*,*** "PA of calcium ammonium nitrate.
6597
D SAI4 International 4td., was incorporated to coordinate the export and
import business.
659C
16
D ,urgapur /ishra Ispat 4td., 3hiali Ispat 4td., an Rourela Ispat 4td., were
formed as fully owned subsidiaries of SAI4 for taing over the running
business of Alloy Steels Plants, 3hilai steel Plant and Rourela Steel Plant
on tranfer from 'S4.
659D
D >n )st /ay, /etallurgical 1 -ngineering 6onsultants 5India2, 4td.,
'industan Steel ?ors 6onstruction 4td., #ational /ineral ,evelopment
6orporation 4td., 3harat Refractories 4td., India 0irebrics 1 Insulation
6o. 4td., and 3harat 6ooing 6oal 4td. 5):;=2, were delined from SAI4.
D "he Indian Iron 1 Steel 6o. 4td. became a subsidiary of SAI4. "he Julti
?ors of this company, with an annual capacity of ).&; lah tonnes is the
largest producer of cast iron and spun pipes.
65D4
D 8;+,+8,=;) shares allotted to the President of India 5)8=,=+,<8: shares
allotted for consideration other than cash2.
65D6
D ==,+:,)** #o. of shares allotted to the President of India.
65D:
D "he Salem Steel Plant was inagurated at Salem in "amil #adu in /arch. It
represents the dispersal of industries and balance regional development
bringing the latest sophistication in cold rolling. "he products find
application in major industries viI., nuclear, petroleum, chemicals,
fertilisers, food processing, Pharmaceuticals, dairy, household appliances,
cutlery etc.
D "he Salem Steel Plant designed to roll +8,*** "PA of cold rolled stainless
steel strips and wider sheet was expected to be increased to ;*,*** "PA by
the installation of a SendIimir mill.
D >n 8)st /ay, /S"6 ceased to be a subsidiary of the 6ompany.
D =,+:,+** #o. of Shares allotted to the President of India.
17
65D8
D 8*,)7,==8 #o. of shares allotted to the President of India.
65D7
D )7,*&,<** #o. of shares allotted to the President of India.
65DB
D A number of technological improvement schemes were undertaen, the
most notable being the conversion of open hearth furnace #o. )* into twin
hearth furnace.
D 8<,<+,+7* #o. of shares allotted to the President of India.
65DC
D All the PhaseDI units under the plantsH = million tonne expansion
programme were commissioned. A vacuum arc degassing unit was started in
the converter shop and a second normalising furnace in plate mill was
added.
D &,8+,)** #o. of shares allotted to the President of India.
65D9
D +,:&,8** #o. of shares allotted to the President of India.
65DD
D "he Aisvesvaraya Irons 1 Steel 6o. 4td. became a subsidiary of SAI4
with SAI4 acEuiring 7*G of the shares of the 6ompany. It has an installed
capacity of saleable steel to the tune of ;;,*** "PA of alloy and special steel
and =<,*** "PA of mild steel. It produces 8** varieties of sophisticated
alloy steel and ferro alloys.
D "he 3hilai Steel Plant set up a blast furnace bellDless top charging system.
D :*,*** #o. of shares allotted to the President of India.
6554
D A modernisation programme was started to revamp and technologically
upgrade the plant. After the modernisation the plant is slated for a crude
steel capacity of ).: million "PA.
18
D :*,*** #o. of shares allotted to the President of India.
6556
D ):,:*,;&,=** #o. of eEuity shares of Rs )* each transferred by 9ovt. of
India 5President2 to 0inancial InstitutionsK3ans and /utual 0unds.
655:
D "he 6ompany produce various Eualities and grades of iron and steel i.e.,
mild steel, alloy steel, special steel, stainless steel, ferro alloys, -R? pipes,
spirally welded pipes, etc. "he 6ompanyHs activities include planning,
promoting and organising an integrated and efficient development of the
iron and steel and its associated input industries such as iron ore, cooing
coal, manganese, limestone etc. It has a well eEuipped Research 1
,evelopment 6entre for Iron 1 Steel 5R,6IS2.
D "he 6ompanyHs R1, unit at Ranchi was set up with a view to promote
continuous improvement in critical performance indices of the steel plant in
order to increase productivity, reduce production cost and improve Euality
by production optimisation or by introduction of new technologies. "he
centre undertoo various collaborative ventures with agencies both in India
and abroad.
D =+<=,==& #o. of shares allotted to the President of India.
6558
D 9overnment approval for modernisation of 3S4 stageDI were received.
D "he 6ompany launched the consultancy division with a view to harness
the resources and expertise in steel related areas and maret engineering,
technical, managerial and training services.
19
D "he 6ompany undertoo to float a joint venture company in collaboration
with CSL -ngineers 1 6onsultants Inc., Pittsburg, CSA for development
and execution of technology and system integration for computer
applications in basic industries such as those engaged in steel mining and
metallurgy.
D "he 6ompany issued bonds valuing Rs ;:& crores by way of private
placement to various financial institutions and bans.
6557
D "wo major schemes viI. new sinter plant III and expansion of oxygen
plant II were taen up for implementation. 6.>. 3attery #o. )* was
commissioned.
D A number of production units lie new sinter plant, basic oxygen furnace
shop continuous casting plant were commissioned. At Rourela steel plant,
five of phase II modernisation pacages viI. power distribution, mobile
eEuipment for R/'S D II siIing plant at Satara, "arera intae facilities and
maeDup water pump houses for "arera wors were commissioned.
655B
D Cnder the modernisation programme, the new units lie 3asic >xygen
0urnace Shop 53>02, 6ontinuous 6asting Plant 566P2 and #ew Sinter Plant
were stabilised.
D "he operation of hot rolling mill was stabilised in April )::7. "he mill
would enable rolling of stainless steel and carbon steel slabs at Salem itself.
D SAI4 has ventured into setting up a power project at 3hilai in joint venture
with /Ks. 4arsen 1 "oubro and 6-A, CSA Inc.
D "he 6ompany issued nonDconvertible bonds valuing Rs ;)* crores through
private placements to various financial institutions, bans, trusts, etc.
655C
20
D 9overnment clearances were obtained. >ther joint venture options were at
various stages of consideration in the area of manufacturing of slag cement
and mareting of Romelt technology.
D 0or Romelt technology, 9overnment approval for investment by SAI4 1
Russian partners were received and joint venture agreement was signed with
the promoters.
D "o augment availability of iron ore for 3hilai steel plant, the company
planned to develop Rowghat iron ore mines for which /P 9overnment
recommenced clearance of Rowghat project subject to signing of />C
between /inistry of Railways, /P 9overnment, SAI4 and #/,6 for
construction of Railway line from ,alli Rajhara to (agdalpur from both end
simultaneously.
D In /arch, the company launched an -uro Issues of CS M)8& million
offering :7,++,:* 9lobal ,epository Receipts representing )=,=&,*<,&**
eEuity shares 5) 9,R N )& share2 at an issue price of CS M)8.:;& per 9,R.
6559
D /ajor production facilities of modernisation lie both continuous casting
machines, steel refining unit and coilerD= were installed.
D "he /odernisation of rail 1 structural mill 5stage )Dphase2 was
commissioned.
D A Steel rolling mill will be set up by Steel Authority of India 4imited
5SAI42 at ,aDgaon, 7* m northDwest of 9uwahati.
D "he hot rolling mill complex of the public sector Salem Steel Plant, a
subsidiary of the Steel Plant, a subsidiary of the Steel Authority of India
4imited 5SAI42, has been awarded the IS>D:**8 certification in a record
period of one year within its commissioning.
D "he 6ompany has proposed a joint venture with 6I4 for running the
collieries and washeries to improve the Euality and Euantity to cooing coal.
21
D Sailcon, the SAI4 6onsultancy ,ivision, has entered into an agreement
with CSL -ngineers and 6onsultants Inc of the CS 5C-62 to assist C-6 in
providing technical consultancy for its client "isco for the installation of the
galvanising lines at the 9opalpur complex.
D "he SAI4 has signed an agreement with #ational Securities ,epository
4imited for admission of its shares eligible for trading on depository system
through electronic mode.
D SAI4 is all set to hie its global presence through joint ventures and
technological upgradation. "he joint venture was set up early last year to
develop and maret computer systems with specific reference to the steel,
mining and metallurgical industries, based on the technology already
implemented by its joint venture partners.
D SAI4 is already the lowest Euoted scrip 5Rs.8)2 on the /umbai Stoc
-xchangeHs +*Dshare Sensex.
D Steel behemoth Steel Authority of India is currently considering a joint
venture for setting up two finishing mills at ,urgapur Steel Plant to covert
huge number of semis which constitute &* per cent of the plantHs total
production even after the Rs &,*** crore modernisation.
D Public Sector Steel major Steel Authority of India has signed up "R0
5formerly "ata Robins 0raser2 for providing technology for the blast furnace
upgradation project at its 3hilai steel plant in /adhya Pradesh. "R0 will
provide the coal dust injection technology to improve the efficiency of the
blast furnaces.
655D
D "he largest steel conglomerate in the country, Steel Authority of India
5SAI42, is offering deposit schemes D fixed and cumulative D for one, two
and three years respectively.
22
D In view of Steel Authority of India 4tdHs 5SAI4Hs2 rising demand for
cooing coal, 6oal India 4td 56I42 is contemplating a joint venture with
SAI4 for opening new mines.
D SAI4 is also looing for mareting tieDups in the overseas maret. Some
SAI4 products lie plates and intermediate steel products 5semis2 are well
received in the international maret.
D In an effort to help the country save foreign exchange, 6oal India 4td
56I42 and Steel Authority of India 4td 5SAI42 have entered into an
agreement for the supply of coal.
D Steel Authority of India 4td 5SAI42 is taing up development of new iron
ore, coal and limestone mines through joint ventures in the wae of
increasing steel output and fastDdepleting reserves of these inputs.
D RomeltDSAI4 India 4td 5RSI42, a joint venture between Steel Authority of
India and three Russian companies offering the Romelt technology, has been
signed up with the (indal group flagship, (indal Strips, for preparing a
feasibility report for setting up a +**,***Dtonne capacity Romelt plant in
Raigarh, /adhya Pradesh.
D "he 3hilai Steel Plant 53SP2 of Steel Authority of India 4td 5SAI42 has
been awarded the prestigious national Euality award for the sixth time by the
Indian Institute of /etals 5II/2 for the year )::;D:<.
D SAI4Hs research and development centre for iron and steel 5R,6IS2 which
decided to undertae research wor for the private sector, signed an /oC
with Csha /artin Industries to carry out investigation of patented steel wireD
rod and wire samples of the company.
6555
D "he Steel Authority of India 4td 5SAI42 has forged a mareting tieup with
"yaIpromexport 5"P-2 of Russia to sell the entire range of castings and pig
iron produced by Julti ?ors, a division of Indian Iron and Steel 6ompany
5Iisco2.
23
D "he SAI4 is all set to finalise a major power deal with -nron Power
6orporation of the Cnited States. "he deal envisages formation of a joint
venture with the global power major acEuiring &)Dper cent eEuity in the new
company. "he new company will tae over SailHs captive power plants at
3oaro, Rourela and ,urgapur which have a combined capacity of about
&&* /?.
D Indian steel major SAI4 has joined the ClsabDAA6 5ultraDlight steel auto
bodyDadvanced vehicle concepts2 consortium, a grouping of 8< steel
producing companies around the world formed to support the automotive
industryHs search for steelDbased solutions to its longDterm challenges.
D Sail is considering setting up an additional steel maing facility at Salem,
through a joint venture or hiving off the entire SSP to create a separate
subsidiary with it holding a majority stae.
D "he management and trade unions of Steel Authority of India 4td 5SAI42
have joined hands to mae the public sector steel giantHs lossDmaing
subsidiary alloy steels plant 5ASP2 at ,urgapur in ?est 3engal viable.
:444
D Steel Authority of IndiaHs Rourela Steel Plant is planning to increase its
saleable steel production from ).8 million tonne to ).; million tonne per
annum by 8**)D*8.
D "he 6ompany signed a /oC with -gyptHs public sector /etallurgical
Industries 6orporation 5/icor2 for the establishment of a modern technical
and management training centre for the -gyptian steel industry.
D 6risil has upgraded rating of companyHs 3ond programme from 333 to
33 and 0, Programme from 03O to 0AD.
D SAI4 has proposed to convert lisco into a joint venture with the company
having a minority shareholding.
24
D "he 6ompany signed a memorandum of understanding with the ministry
of steel, as directed by the cabinet, for the implementation of business
restructuring with detailed milestones.
D Steel Authority of India is increasing the capacity of hotDrolled coils
5'R62 at 3oaro Steel plant to meet growing demand in the domestic
maret.
D "he 6ompany has set up an office of restructuring at its corporate
headEuarters to facilitiate coordination on all aspects of the detailed
business restructuring exercise it is currently engaged in.
D "he 6ompany is expanding its mareting networ by appointing
wholesale dealers for medium and heavy structurals in select cities lie
/umbai, ,elhi and 6hennai and plant locations lie 3hilai and ,urgapur.
D "he 6ompany had received a good response to its global tender for a joint
venture with its subsidiary, Indian Iron and Steel 6ompany 4td.
D "he 6ompany would introduce the next round of voluntary retirement in
the next two to three months.
D "he 6ompany has launched a new millennium special media campaign to
hardsell its wide range of products.
D "he 6ompany has shortlisted Avesta Sheffield 5CJ2 and "ata SteelKCsinor
combine from the four parties which had expressed interest in being joint
venture partners for its Salem Steel Plant.
D ,urgapur Steel Plant of Steel Authority of Indian 4td will set up a slag
granulation plant on buildDownDoperate basis to generate more revenue
through better waste utilisation.
D "he 6ompany will undertae the modernisation of the coldDrolled mill at
its 3oaro steel plant.
25
D "he ,urgapur Steel Plant of SAI4, has commissioned the computerised
integrated production planning and control 5PP62 system that helps in
practically every aspect of plant operation and despatch.
D "he 6ompany has formed a joint venture with 6alcuttaDbased 3ansal
/echanical ?ors to set up a steel service centre at 3oaro.
D Private sector steel majors "isco, Jalyani Steel and the public sector Steel
Authority of India are all set to form a threeDway joint venture for
undertaing eDcommerce activities in the steel sector.
D Steel Authority of India 4td., "ata Steel and Jalyani Steels 4td. entered
into an agreement for creation of an InternetDbased global, independent 383
Steel /aret place.
D SAI4 is liely to ic off a fresh round of voluntary retirement scheme on
>ctober to separate )*,*** of its worers during the current financial year.
D Steel Authority of India 4tdHs Research 1 ,evelopment 6entre for Iron
and Steel has signed a memorandum of understanding with /-6># to
enable complementary of strengths in Iron 1 Steel and allied areas.
D Steel Authority of India 4td and the #ational "hermal Power 6orp. are set
to begin for a joint venture for three captive power plants and associated
units of SAI4.
D Steel Authority of India has prioritised the hiveDoff of nonDcore activities
over internal restructuring due to scarcity of funds.
D "he 6ompany has deferred its Aoluntary Retirement Scheme to reduce
worforce by )*,*** until the next financial year.
D Steel Authority of India 4td, "ata Steel and Jalayani Steels 4td signed a
joint venture agreement for the formal creation of metaljunction.com Pvt.
4td, to manage their eDmaretplace, metaljunction.com.
D Steel Authority of India have to sellDoff its power plants to #ational
"hermal Power 6orporation at a heavy discount.
26
D "he 6ompany has entered into a joint venture with "ata Iron and Steel 6o
and Jalayani Steel for the creation of a company to manage their steel eD
commerce venture, metaljunction.com.
D "he Steel Authority of India and #ational "hermal Power 6orporation
may float two separate joint ventures for hiving off SAI4Hs power generation
business.
:446
D "he 6ompany has finally launched a new voluntary retirement scheme for
its employees, which will begin from 8*th 0ebruary.
D"he Alloy Steel Plant 5ASP2, a company from the Steel Authority of India
4td 5SAI42 stable, may witness another voluntary retirement scheme 5ARS2
before it is sold off to a joint venture partner.
D "he 9overnment has served a notice to the Steel Authority of India run
3hilai Steel Plant for recovery of dues to the tune of Rs ; crore towards
water charges by (uly <.
:44:
D Steel Authority of India 4td has informed that on the nomination by
9overnment of India, the 3oard of ,irectors of the 6ompany at its meeting
held on ,ecember 87, 8**) has approved the appointment of Shri
S.#./ishra IAS 5Retd2 as PartDtime #onD>fficial ,irector on the SAI4
3oard.
D Steel Authority of India 4td 5SAI42 has informed 3S- that /r. ,eepa
Pareh, ,irector, SAI4 has resigned from the 3oard of ,irectors of the
6ompany.
D Steel Authority of India 4td 5SAI42 has informed that 9overnment of
India 59>I2 has appointed /r. ,.P.Singh, as ,irector on the 3oard.
27
D Steel Authority of India 4td has informed that on superannuation Shri / J
/oitra ,irector, Sail has ceased to be a ,irector on the 3oard of ,irectors
of Steel Authority of India.
DSteel Authority of India 4td has informed 3S- that ,r Isher (udge
Ahluwalia has resigned from the 3oard of ,irectors of the 6ompany.
D Steel Authority of India 4td has informed 3S- that on nomination by
9overnment of India, the 3oard of ,irectors of the company has approved
the appointment of ,r Sana /ishra as /anaging ,irector, Rourela Steel
Plant, SAI4 on the SAI4 3oard.
DSteel Authority of India 4td has informed 3S- that on superannuation of
Shri Arvind Pande from the services of the 6ompany, Shri A S (ain has
taen over the charge of 6hairman, SAI4 with effect from September +*,
8**8 5A#2.
DSteel Authority of India 4td has informed 3S- that on superannuation Shri
R 6 (ha ,irector Sail has ceased to be a ,irector on the 3oard of ,irectors
of the company wef >ctober +), 8**8 5AK#2.
:448
DSteel Authority >f India 4td. has informed that 9ovt. of India has
nominated after approval of the 3o, of Steel Authority of India 4td 5SAI42,
/r. Ashis ,as has joined as ,irector 5Personnel2 on the 3oard of SAI4,
w.e.f. (une )<, 8**+.
DA J Singh ceases to be a ,irector of SAI4
DApproves appointment of nominee directors Shri A J Agarwal, Shri P J
Sengupta, ,r Amit /itra and Shri A ' (ung as Part time #on >fficial
,irectors on the 3oard
D/r. Amit /itra, secretary general of 0I66I, appointed as director on the
board
28
DSAI4 eDbusiness achieves Rs )**Dcr business mar
D4osses slide down by ;*G in 8**8D*+ compared to 8**)D*8
D3hilai Steel Plant 53SP2 developes a special grade steel for the countryHs
naval warships in collaboration with the ,efence /etallurgical Research
4aboratory, 'yderabad
D,urgapur Steel Plant 5,SP2 developes target steel for ballistic testing used
in defence sector with stringent specifications
DSAI4 8**+D*= -xports jumps by =* pc
DShare price hits &8Dwee high of Rs +).:* on ))K*<K8**+
DSAI4 gets new 3loom 6aster for its ,SP in ?est 3engal
D3reas into top ten in /aretcap chart, occupies ;th slot
D, P Singh ceases to be director on the 3oard of SAI4
D9overnment of India appoints Shri S P Quraishi, additional secretary 1
financial advisor, /inistry of Steel, as director on the 3oard of ,irectors of
Steel Authority of India 4td on September )), 8**+
DShri Suresh Pandey has ceased to be a ,irector on 3oard of ,irectors of
the 6ompany wef #ovember +*, 8**+ 5AK#2. 0urther Shri CP Singh has
been appointed as ,irector on the 3oard 0rom ,ecember ), 8**+.
D/r C.P. Singh is the new /anaging ,irector of SAI4Hs 3oaro Steel Plant.
'e too over charge of office from /r Suresh Pandey, who superannuated
on #ovember +*.
D3hilai plant records Rs +8* crore steel exports
:447
29
DSAI4 pays bac Rs +,*** crore to 0Is
D/r. R P Singh inducted as the /anaging ,irector of 3hilai Steel Plant
53SP2
D/etaljunction 5/(2D the online trading and procurement joint venture of
"ata Steel and Steel Authority of India 5SAI42D has roped in C"I 3an to
start off own eEuipment for "ata Steel.
DSAI4 forges alliance with 6I4 to develop coal mines in /oIambiEue
DSAI4 R1, division gets 9olden Peacoc Innovation Award
DSAI4 ties up with Judremuh Iron >re
DSAI4 signs strategic agreement with 3'P 3illiton
DSAI4 ties up with ,urgapur Projects
DSAI4 ties up with 3'P 3illiton
:44B
D9AI4 ties up with SAI4
D,elist eEuity shares from "he Stoc -xchange, Ahmedabad 5AS-2 with
effect from (anuary 8<, 8**&.
DSteel Authority of India 4tdHs 3hilai Steel Plant has been adjudged the best
performing steel plant in the country for 8**+D*=.
DSteel Authority of India 4td 5SAI42 delists shares of the 6ompany from
"he 6alcutta Stoc -xchange Association 4td 56S-2 with effect from
,ecember 8), 8**&.
:44C
DSAI4 join hands 3664 to develop /oonidih mine
30
DSteel Authority of India 4td 5SAI42 has informed that on nomination by
9overnment of India, the 3oard of ,irectors of the 6ompany has approved
the appointment of Shri. P J Sengupta, Prof. (avaid Ahtar and ,r.
Ainayshil 9autam as PartDtime #onDofficial ,irectors on the 3oard of the
6ompany.
:449
DSteel Authority >f India 4td. has informed that >n nomination by
9overnment of India, the 3oard of ,irectors of Steel Authority of India
4imited 5SAI42 has approved the appointment of Shri S 3hattacharya,
-xecutive ,irector, SAI4 as ,irector 50inance2, on the 3oard of ,irectors
of SAI4.
DSteel Authority of India 4td 5SAI42 has informed that on nomination by
9overnment of India, the 3oard of ,irectors of the 6ompany has approved
the appointment of Shri. S S Ahmed, -xecutive ,irector, of the 6ompany as
,irector 56ommercial2, on the 3oard of ,irectors of the 6ompany.
D Steel Authority of India 4td 5SAI42 has informed that the 6ompany is
signing on (une 87, 8**; a /emorandum of Cnderstanding 5/>C2 with
/anganese >re India 4td 5/>I42 for setting up of a (oint Aenture
6ompany 5(A62 to produce ferroDmanganese and silicoDmanganese.
DSAI4 has appointed Shri. A J 9ulhati as ,irector 5"echnical2 on the 3oard
of ,irectors of the 6ompany w.e.f. >ctober *), 8**;.
D Steel Authority of India 4tdHs /anagement "raining Institute 5/"I2 has
ined a memorandum of understanding 5/oC2 with the Indian Institute of
/anagement 5II/2 Indore for conducting programmes together for various
organisations in areas of mutual interest.
D Steel Authority of India 4td 5SAI42 has ined a traffic guarantee pact with
Rail Aias #igam 4td 5RA#42 under the /inistry of Railways, for
transportation of & lah tonnes of imported coing coal per year using the
ParadipD'aridaspur railway line.
DSteel Authority of India 4td 5SAI42 has informed that 9overnment of India
has appointed Shri. 3 S /eena, Additional Secretary 1 0inancial Adviser,
/inistry of Steel as director on the 3oard of ,irectors of the 6ompany
31
:44D
DSteel Authority of India 4td 5SAI42 has informed that the 3oard of
,irectors of the 6ompany has approved the appointment of Shri. S P Rao,
-xecutive ,irector, SAI4 as /anaging ,irector, IIS6> Steel Plant and
,irector on the 3oard of ,irectors of SAI4.
DSteel Authority of India 4td 5SAI42 has informed that the 6ompany on
0ebruary 8), 8**< has signed a (oint Aenture Agreement with /Ks.
(aipraash Associates 4imited 5(A42 for formation of a (oint Aenture
6ompany 5(A62 to set up a cement plant for producing 8 million tonnes of
6ement at 3oaro 5(harhand2 by using slag generated at 3oaro Steel Plant
of SAI4.
DSteel Authority of India 4imited and 4arsen and "oubro 4imited 541"2 has
signed a /emorandum of Cnderstanding 5/oC2 to jointly set up, develop,
manage and own captiveKindependent power plants at suitable locationKs to
meet future power reEuirements of SAI4.
:445
D SAI4 signed a (oint Aenture Agreement with 6oal India 4td, Rashtriya
Ispat #igam 4td, #/,6 4td and #"P6 4td for setting up of a Special
Purpose Aehicle i.e. International 6oal Aentures Pvt. 4td 5I6A42 for
acEuisition of coal minesKbloc overseas for securing coal supplies.
D Steel Authority of India 5SAI42 will mae an investment of more than Rs
)*,*** crore mainly on expansion in this fiscal.
D SAI4 stated that it is open to partnering #/,6 in setting up a steel plant
in Jarnataa, mainly catering to sectors lie the automobile and consumer
durables while #/,6, has proposed setting up a &D/"PA steel plant in a
jointDventure format.
SAIL T!&a)
SAI4 today is one of the largest industrial entities in India. Its strength has
32
been the diversified range of Euality steel products catering to the domestic,
as well as the export marets and a large pool of technical and professional
expertise.
"oday, the accent in SAI4 is to continuously adapt to the competitive
business environment and excel as a business organisation, both within and
outside India.
SAIL 3 In#! #he F"#"re
/odernisation and -xpansion Plan of SAI4 6orporate PlanD-xpansion Plan,
8*)*
"he 6orporate Plan, 8*)8 was reviewed by 'on!ble /inister of Steel in
(ul!*7, wherein it was decided to tae up the -xpansion of Integrated Steel
Plants and Special Steel Plant in one go based on 6omposite Project
0easibility Report 56P0R2.
3y that time -xpansion of IIS6> Steel Plant and Salem Steel Plant was
already approved $inDprinciple% based on the "echnoD-conomic 0easibility
Report 5"-0R2 of /-6>#. 0or the -xpansion of other four integrated Steel
Plants, /-6># was assigned the job of Preparation of 6P0R in Aug!*7.
"he 6P0R for the four integrated steel plants was prepared by /-6>#.
RIn principle! approval has been accorded by SAI4 3oard for the expansion
plans of IIS6>
33
E+.an&'ng <!r'E!n (65B536598)
'industan Steel 5'S42 was initially designed to manage only one plant that
was coming up at Rourela. 0or 3hilai and ,urgapur Steel Plants, the
preliminary wor was done by the Iron and Steel /inistry. 0rom April ):&;,
the supervision and control of these two steel plants were also transferred to
'industan Steel. "he registered office was originally in #ew ,elhi. It
moved to 6alcutta in (uly ):&7, and ultimately to Ranchi in ,ecember
):&:.
A new steel company, 3oaro Steel 4imited, was incorporated in (anuary
):7= to construct and operate the steel plant at 3oaro. "he ) /" phases of
3hilai and Rourela Steel Plants were completed by the end of ,ecember
):7). "he ) /" phase of ,urgapur Steel Plant was completed in (anuary
):78 after commissioning of the ?heel and Axle plant. "he crude steel
production of 'S4 went up from .)&< /" 5):&:D7*2 to ).7 /". "he second
phase of 3hilai Steel Plant was completed in September ):7; after
commissioning of the ?ire Rod /ill. "he last unit of the ).< /" phase of
Rourela D the "andem /ill D was commissioned in 0ebruary ):7<, and the
).7 /" stage of ,urgapur Steel Plant was completed in August ):7: after
commissioning of the 0urnace in S/S. "hus, with the completion of the 8.&
/" stage at 3hilai, ).< /" at Rourela and ).7 /" at ,urgapur, the total
crude steel production capacity of 'S4 was raised to +.; /" in ):7<D7: and
subseEuently to =/" in ):;8D;+.
JOINT VENTURES
34
SAI4 has promoted joint ventures in different areas ranging from power
plant to eDcommerce. "he important joint ventures of the company, among
others, are.D
6>/PA#P 4>6A"I>
#
(A
PAR"#-R
-QCD
I"P
PR>0I4-
#"P6DSAI4
Power 6o.
Pvt. 4td
#-?
,-4'I
#"P6 &*.&* >perates 1 manages the
captive power plants of
durgapur, Rourela 1 3hilai
3oaro
Power supply
company Pvt.
4td
3>JAR> ,A6 &*.&* /anages +*8/? power
generation 77*tonnes per
hour steam generation
facilities at 3oaro steel
plant.
/D (unction
services 4td.
J>4JA"
A
"A"A Steel &*.&* Promotes eDcommerce
activities in steel and related
areas.
SAI4 1
/>I4 0erro
Alloys Pvt.
4td.
3'I4AI /A#9A#-
S- >R-
5I#,IA2
4I/I"-,
&*.&* Production of ferro
Dmanganese and silicon @
/anganese at 3hilai with
furnace operation at #andiniK
3halai
3hilai jaypee
cement
limited
SA#"#A
1
3'I4AI
(aiparash
Associates
4td.
87.;= "o set up and operate a
cement plant of 8.8 million
tones per annum capacity at
split location at satna 1
3hilai , using slag generated
35
during blast furnace .
3oaro
jaypee
cement 4td.
3>JAR> (aiparash
Associates
4td.
87.;= "o set up and operate a
cement plant of 8.) million
tones per annum capacity,
utiliIing generated slag
during 3last furnace
operation at 3S4.
MEMORANDUM OF UNDERSTANDINGS
36
4arsen 1 "oubro 4td.
to set up, develop, manage and own captiveKindependent
power plant 5s2 at suitable locationKs to meet future power
reEuirements of SAI4. "he scope of agreement also
includes exploration of opportunities to own captive
thermal coal blocs to cater the power plant reEuirements.
Shipping corporation
of India.
to promote a (oint Aenture 6ompany, which shall
primarily provide shipping related services to SAI4 for
imported coing coal and also participate in world wide
dry bul shipping trade.
9overnment of Jerala to increase production from the existing facilities at Steel
6omplex 4imited 5S642, 6alicut and also set up, develop
1 manage a &*,*** "/" Rolling /ill along with its
balancing facilities and auxiliaries at S64, 6alicut.
P>S6> to collaborate in a wide range of strategic business and
commercial areas of mutual interest.
Rashtriya Ispat #igam
4td. 5RI#42
to jointly explore and develop low silica limestone mines
in the Sultanate of >man.
/ineral -xploration
6orporation 4td.
for exploration by /-64 at all SAI4 mines for assessing
the reserves and Euality of ore available. It has already
started exploratory wor in 9ua and 6hiria mines.
3harat -arth /overs
4imited 53-/42
for supply of crucial eEuipment.
Rajasthan State /ines
1 /inerals 4td.
for longDterm supply of lowDsilica limestone.
II/, Ahmedabad and
/,I, 9urgaon
nowledge sharing.
Indian Railways for procurement of high power locomotives
BOKARO STEEL -LANT 3 A -ARTNER IN NATION BUILDING
37
3oaro Steel Plant D the fourth integrated plant in the Public Sector D started
taing shape in ):7& in collaboration with the Soviet Cnion. It was
originally incorporated as a limited company on 8:th (anuary ):7=, and was
later merged with SAI4, first as a subsidiary and then as a unit, through the
Public Sector Iron 1 Steel 6ompanies 5Restructuring 1 /iscellaneous
Provisions2 Act ):;<. "he construction wor started on 7th April ):7<.
"he Plant is hailed as the country!s first Swadeshi steel plant, built with
maximum indigenous content in terms of eEuipment, material and nowD
how. Its first 3last 0urnace started on 8nd >ctober ):;8 and the first phase
of ).; /" ingots steel was completed on 87th 0ebruary ):;< with the
commissioning of the third 3last 0urnace. All units of = /" stage have
already been commissioned and the :*sH moderniIation has further upgraded
this to =.& /" of liEuid steel.
"he new features added in moderniIation of S/SDII include two twinDstrand
slab casters along with a Steel Refining Cnit. "he Steel Refining Cnit was
inaugurated on ):th September, )::; and the 6ontinuous 6asting /achine
on 8&th April, )::<. "he moderniIation of the 'ot Strip /ill saw addition
of new features lie high pressure deDscalers, wor roll bending, hydraulic
automatic gauge control, Euic wor roll change, laminar cooling etc. #ew
38
waling beam reheating furnaces are replacing the less efficient pusher type
furnaces.
A new hydraulic coiler has been added and two of the existing ones
revamped. ?ith the completion of 'ot Strip /ill moderniIation, 3oaro is
producing top Euality hot rolled products that are well accepted in the global
maret.
3oaro is designed to produce flat products lie 'ot Rolled 6oils, 'ot
Rolled Plates, 'ot Rolled Sheets, 6old Rolled 6oils, 6old Rolled Sheets,
"in /ill 3lac Plates 5"/3P2 and 9alvaniIed Plain and 6orrugated
59PK962 Sheets. 3oaro has provided a strong raw material base for a
variety of modern engineering industries including automobile, pipe and
tube, 4P9 cylinder, barrel and drum producing industries.
-e!.*e 3 The m!1'ng F!re
3oaro Steel values its people as the fulcrum of all organiIational activities.
"he saga of 3oaro Steel is the story of 3oaro erecting a gigantic plant in
the wilderness of 6hhotanagpur, reaching milestones one after another,
staving off stiff challenges in the liberaliIed era, moderniIing its facilities
and innovating their way to the top of the heap.
D're#'!n$
3oaro Steel is woring towards becoming a oneDstopDshop for worldDclass
flat steel in India. "he moderniIation plans are aimed at increasing the
39
liEuid steel production capacity, coupled with fresh rolling and coating
facilities. "he new facilities will be capable of producing the most premium
grades reEuired by the most discerning customer segments.
3rand 3oaro will signify assured Euality and delivery, offering value for
money to the customers.
BOKARO STEEL -LANT A FACILITIES
Ra2 Ma#er'a*$ % Ma#er'a* <an&*'ng -*an#
"he Raw /aterials and /aterial 'andling Plant receives, blends, stores and
supplies different raw materials to 3last 0urnace, Sinter Plant and
Refractory /aterials Plant as per their reEuirements. It also maintains a
buffer stoc to tae care of any supply interruptions.
Some : /" of different raw materials viI. Iron ore fines and lumps,
4imestone 530 and S/S grade2, ,olomite lumps and chips, hard 6oal and
/anganese ore are handled here every year.
Iron ore and fluxes are sourced from the captive mines of SAI4 situated at
Jiriburu, /eghahataburu, 3hawanathpur, "ulsidamar and Juteshwar.
?ashed coal is supplied from different washeries at ,ugda, Jathara,
Jargali and 9iddi, while raw coal is obtained from (haria coalfields.
40
C!,e O1en$ % B)3.r!&"# -*an#
"he 6oe >ven 6omplex at 3oaro converts prime coing coal from (haria,
,ugda and /oonidih and medium coing coal form Jargali, Jathara and
/ahuda, blended with imported coal, into high Euality coe for the 3last
0urnaces, recovering valuable byDproducts lie Anthracene >il, 3enIene,
"oluene, Lylene, 4ight Solvent #aphtha, Ammonium Sulphate and -xtraD
hard Pitch in the process. 3oaro is situated in the prime coal belt of the
country.
"he 6oe >ven battery has < batteries with 7: ovens each, maintained
meticulously in terms of fugitive emission control, use of phenolic water
and other pollution control measures.
B*a$# F"rnae$
3oaro has five 8***Dcubic metre 3last 0urnaces that produce molten iron D
'ot /etal D for steel maing. 3ellDless "op 6harging, modernised double
6ast 'ouses, 6oal ,ust Injection and 6ast 'ouse Slag 9ranulation
technologies have been deployed in the furnaces. "he process of ironD
maing is automated, using P46 6harging System and 6omputer
6ontrolled Supervision System. "he wastes products lie 3last 0urnace slag
and gas are either used directly within plant or processed for recycling K reD
use.
S#ee* Me*#'ng Sh!.$
'ot /etal from the 3last 0urnaces is converted into steel by blowing ::.&G
pure >xygen through it in the 4, converter. Suitable alloying elements are
added to produce different grades of steel.
3oaro has two Steel /elting Shops D S/SDI and S/SDII. S/SDI has & 4,
41
converters of )+*" capacity each. It is capable of producing Rimming steel
through the ingot route. S/SDII has 8 4, converters, each of +** "
capacities, with suppressed combustion system and 6ontinuous 6asting
facility. It produces various Jilled and SemiDJilled steels.
C!n#'n"!"$ Ca$#'ng Sh!.
"he 6ontinuous 6asting Shop has two doubleDstrand slab casting machines,
producing high Euality slabs of width ranging from :&* mm to )<&* mm.
66S has a 4adle 0urnace and a 4adle Rinsing Station for secondary refining
of the steel. "he 4adle 0urnace is used for homogeniIing the chemistry and
temperature. "he concast machines have straight moulds, uniEue in the
country, to produce internally clean slabs.
Argon injection in the shroud and tundish noIIle prevent reDoxidation and
nitrogen picDup, maintaining steel Euality. "he eddy current based
automatic mould level control, uniEue in the country, gives better surface
Euality. "he air mist cooling and continuous straightening facilities eep the
slabs free from internal defects lie cracs. "he casters are fully automated
with dynamic cooling, onDline slab cutting, deDburring and customiIed
maring. "he shop is eEuipped with advanced 4evelD+ automation and
control systems for scheduling, monitoring and process optimiIation.
66S produces steel of ,rawing, ,eep ,rawing, -xtra ,eep ,rawing,
3oiler and "in Plate Euality. It also produces low alloy steels lie 4P9,
?"6R, SAI46>R and API 9rade.
S*aGG'ng M'**
Slabbing /ill transforms ingots into slabs by rolling them in its )8&* mm
Cniversal 0ourD'igh /ill. "he rolling capacity of the /ill is = /" per
annum. "he shop has 'ot and 6old Scarfing /achines and 8<** " Shearing
42
/achine. 6ontrolled heating in Soaing Pits, close dimensional accuracy
during rolling and hot and cold scarfing help produce defectDfree slabs.
<!# S#r'. M'**
Slabs from 66S and Slabbing /ill are processed in the stateDofDtheDart 'ot
Strip /ill. "he fully automatic 'ot Strip /ill with an annual capacity of
+.+7+ million tonnes has a wide range of products D thicness varying from
).8 mm to 8* mm and width from ;&* mm to )<&* mm. "he mill is
eEuipped with stateDofDtheDart automation and controls, using advanced
systems for process optimisation with onDline real time computer control,
P46s and technological control systems.
?aling 3eam Reheating 0urnaces provide uniform heating with
reduction in heat losses, ensuring consistency in thicness throughout the
length. 'ighDpressure ,eDscaling System helps eliminate rolledDin scale.
-dger in the roughing group maintain width within close tolerance. "he
roughing group has a roughing train of a Aertical Scale 3reaer, one 8Dhigh
Roughing Stand and four =Dhigh Cniversal Roughing Stands. "he finishing
group consists of a 0lying Shear, 0inishing Scale 3reaer and seven =Dhigh
0inishing Stands. 'ydraulic Automatic 9auge 6ontrol system in the
finishing stands ensures close thicness tolerance. "he ?or Roll 3ending
System ensures improved strip crown and flatness. "he rolling speed at the
last finishing stand is between ;.&D);.& meters per second. "he 4aminar
6ooling System is a uniEue feature to control coiling temperature over a
wide range within close tolerance. "he 'ydraulic 6oilers maintain perfect
coil shape with >nDline Strapping system.
<!# R!**e& C!'* F'n'$h'ng
All the 'ot Rolled coils from the 'ot Strip /ill are received in 'R60 for
further distribution or dispatch. 'R 6oils rolled against direct shipment
orders are sheared and finished to customerDreEuired siIes and dispatched to
43
customers. "he material is supplied as per Indian specifications and many
internationalK foreign specifications. "he shop has two shearing lines with
capacities of 7, =&,*** "onnesK year and =, ;&,*** "onnesK year respectively.
C!*& R!**'ng M'**
"he 6old Rolling /ill at 3oaro uses stateDofDtheDart technology to produce
high Euality sheet gauge material, "in /ill 3lac Plate and 9alvaniIed
Products. 6old rolling is done to produce thinner gauge strips of very
smooth and dense finish, with better mechanical properties than hot rolling
strips. Rolling is done well below reDcrystalliIation temperature without any
prior heating of the material. "he products of 6R/ are used for deep
drawing purposes, automobile bodies, steel furniture!s, drums and barrels,
railway coaches, other bending and shaping jobs and coated steels. "he
6R/ complex comprises of two Picling 4ines 5including a high speed
'ydrochloric Acid Picling 4ine with reDgeneration facilities2, two "andem
/ills, an -lectrolytic 6leaning 4ine, a 6ontinuous Annealing 4ine, 3ell
Annealing 0urnaces, two SinDPass /ills, a ,ouble 6old Reduction /ill
5,6R2, Shearing 4ines, Slitting 4ines and a pacaging and dispatch section.
"he &Dstand "andem /ill is capable of rolling sheet gauges upto *.)& mm
thicness. It has sophisticated 'ydraulic Automatic 9auge 6ontrol,
computerised mill regulation and optimisation control.
<!# D'. Ga*1an'E'ng C!m.*e+
"he 'ot ,ip 9alvaniIing 6omplex integrated with the 6R/ produces IincD
coated 6old Rolled strips resistant to atmospheric, liEuid and soil corrosion.
"he 6ontinuous 6oil 6orrugation 4ine in the ',96 produces corrugated
sheets and the 9alvaniIed Sheet Shearing 4ine produces galvaniIed plain
sheets for a variety of applications. "he first shop of 3oaro Steel to get the
IS>D:**) certification way bac in )::=, this complex has maintained a
44
highDstandard of coating Euality and its SAI4(P>"I branded products enjoy
a loyal maret.
"his complex made certain innovations for higher productivity to help reD
build earthEuae ravaged 9ujarat.
Ser1'e$ 3 a 1a*"aG*e $"..!r# ne#2!r,
"he service departments lie "raffic, >xygen Plant, ?ater /anagement and
-nergy /anagement provide invaluable support to this gigantic plant.
3oaro Steel has a vast networed of railway tracs and over =* diesel locos
to smoothly run its operations. "he >xygen Plant provides >xygen,
#itrogen and Argon for processes lie steelmaing and annealing. ?ater
/anagement loos after the huge water reEuirements of the plant and the
township, providing different grades of water and taing care of recycling
needs. -nergy /anagement juggles the supply and demand of byDproduct
gases and their demand as process fuel.
Ma'n#enane De.ar#men#$
3oaro has centralised maintenance departments for largeDscale electrical
and mechanical maintenance, in addition to shopDbased maintenance wings
for running repairs and maintenance. "hese facilities are capable of
executing massive capital repairs, supported by the fabrication facilities of
the auxiliary shops.
A"+'*'ar) Sh!.$
"o meet its needs for maintenance and repairs, 3oaro has a cluster of
engineering shops such as /achine Shop, 0orge Shop, Structural Shop,
Steel 0oundry, Ingot /ould 0oundry, 6ast Iron and #onD0errous 0oundry,
-lectrical Repair Shop and Power 0acilities Repair Shop in addition to
45
shopDspecific Area Repair Shops. /ost of the repairs and maintenance
reEuirements of the plant are met inDhouse.
"he auxiliary shops and
maintenance wings of 3oaro Steel, aided by inDhouse design teams, have
executed a number of highly sophisticated procurementDsubstitution,
productivity enhancement and Euality improvement jobs, saving revenues
and enhancing eEuipment availability.
BOKARO STEEL -LANT 3 C!mm"n'#)
Peripheral Development
3oaro Steel is striving to reach the glow and warmth of its furnaces to
people living at the periphery of this thriving steel city. All villages and
residential settlements within a radius of 8* ilometers are covered under
the peripheral development programmes that benefit some + lah persons. In
recent years, the stress has been on developing basic and infrastructure
facilities lie roads, bridges, schools, primary health centre!s, wells, pumps
etc. and renovating the existing facilities.
Regular health camps are organised to reach
46
immunisation and free medicines to people. 0ree medicines are also
supplied to Asha ,an, a hospital for the lepers, and to government hospitals
in the event of natural calamities.
3oaro
Steel pitched in with its share in the relief of victims of natural calamities
lie the >rissa cyclone, 9ujarat earthEuae and 3ihar floods.
0or a number of years, 3oaro Steel has been sponsoring a 0irst Aid camp
during Shravani /ela for the Janwariyas waling with holy water from
Sultanganj in 3ihar to ,eoghar in (harhand D a holy journey of some )**
ilometers.
C!mm"n'#) Care
In a uniEuely sensitive gesture of social care, 3oaro Steel has adopted
children belonging to the primitive 3irhor tribe that has a very limited
population. "hese children live under the love and care of 3oaro Steel,
getting free board, lodging, dresses and education. "hey are getting
developmental opportunities of the modern world, without having to shun
their own cultural moorings.
En!"rag'ng An'**ar'e$
"he ancillaries under the 3oaro Industrial Area ,evelopment Authority
symbolise the spillDover of economic activities due to 3oaro Steel. "he
Plant aids these industrial units by providing testing facilities, technical
support for modernisation and upgradation, and preferential procurement
orders in their areas of strength that match 3oaro SteelHs reEuirements.
"o eep them abreast of the prevailing Euality assurance standards, 3oaro
Steel has been giving free consultations to these units for developing their
IS> :**) QA Systems.
47
B!,ar! Mah'*a Sam'#'
0ounded in ):7=, 3oaro /ahila Samiti is a leading philanthropic
organisation of the spouses of steelmen, giving succour to needy people and
creating opportunities for sill enhancement and selfDemployment. "he
Samiti runs a number of schools for poor children and for uneducated
elderly and a childrenHs library. "he training centre and Cdyog Jendra with
wings for maing spices, flour, safety gloves, soap, shawls, apparel and
embroidered clothes, provide livelihood to a number of women. 0ree
medical consultation for neonates and their mothers and mobile dispensary
play a ey role in providing primary healthcare to needy persons. "he
Samiti organises aid drives for lepers, victims of natural calamities, children
from poor families and other resourceDconstrained people.
BOKARO STEEL -LANT 3 -RODUCT BASKET
M'** Ca.aG'*'#'e$
48
Sh!. -r!&"#$ Fa'*'#) Ann"a*
Ca.a'#)
((444
T!nne$)
Th',ne$$
range
(mm)
W'&#h
range
(mm)
Leng#h
(me#re)
<SM 'R 6oilsK
SheetsK Plates
6ontinuous
/ill
+:&& ).7 D)7 :**D
)<&*

<RCF 'R SheetsK
Plates
Shearing
4ineDI
D &D)* )<** 8.&D)8
'R SheetsK
Plates
Shearing
4ineDII
).7D= )&** ).&D=.&
'R 6oil Slitting 4ine
CRM )77*
6R 6oilsK
Sheets
6R/DI
complex
*.7+D8.& ;**D
)<&*

6R 6oilsK
Sheets
6R/DII
complex
*.7+D).7 7&*D
)8&*

6R 6oilsK
Sheets, "/3P
,6R /ill )** *.88D*.< 7&*D
)*=*

9P 6oils 1
Sheets 96
Sheets
',94 );* *.+D).7 7&*D
)8&*

B)3.r!&"#$
#itrationDgrade 3enIene
#itrationDgrade "oluene
4ight Solvent #aphtha
Still 3ottom >il
'ot Pressed #aphthalene
Anthracene >il
-xtraDhard Pitch
'ardDmedium Pitch 5solidK
liEuid2
Ammonium Sulphate
Pitch 6reosote
/ixture
30 9ranulated Slag
4iEuid #itrogen
Phenol 0raction
49
S.e'a* Gra&e$ !F S#ee*
S.e'a* S#ee* Gra&e$ A..*'a#'!n
SA- )&=) Automobile Industry
/6 )) 6ycle Industry
SP6 +;*K+:* 6ycle Industry
6 )& 6ycle Industry
API LD=8, LD=7, LD&8, LD&7, LD7*
5SAI4API2
Pipe 4ine
SAI46>R 5corrosion resistant2 Railways
SAI4/-,Si 5/edium Silicon Steel2 'eavy -lectrical ?inding
SAI4PR>P Propeller Shaft
Strapping Steel 5for internal use only2 Strapping 0inished Products
0ullDhard 9alvanised 6oil -xtra hard roof of houses
6old Rolled /edium -lectrical Steel "ransformer core
-xtraDlow 6arbon -xtra ,eep ,rawing
5'R 1 6R2
?hite goods
,/R 8=:A 9rade Steel ,efence Research ,evelopment
>rganisation 5,R,>2 for fabrication
of Submarine parts 5import
substitution2
-=7*K-&**K-&&* 0loating bridges for ,efence. 0or /KS
3-/4S for maing. 5import
substitution2
IS<&** 0e &=*3 high strength low alloy
steel with C"S value in excess of &=*
/pa
Jolata flyDover
4ow 6arbon, 4ow /anganese, 'igh Structural purposes. "hermoD
50
Strength Structural Steel without
microalloying 56arbon *.)*G2
mechanically 6ontrolled Processing.
6.8 REVIEW OF LITERATURE
?oring 6apital management is the management of assets that are current
in nature. 6urrent assets, by accounting definition are the assets normally
converted in to cash in a period of one year. 'ence woring capital
management can be considered as the management of cash, maret
securities receivable, inventories and current liabilities. In fact, the
management of current assets is similar to that of fixed assets in the sense
that is both in cases the firm analyses their effect on its profitability and ris
factors, hence they differ on three major aspects.
). In managing fixed assets, time is an important factor discounting and
compounding aspects of time play an important role in capital
budgeting and a minor part in the management of current assets.
8. "he large holdings of current assets, especially cash, may strengthen
the firm!s liEuidity position, but is bound to reduce profitability of the
firm as ideal car yield nothing.
51
+. "he level of fixed assets as well as current assets depends upon the
expected sales, but it is only current assets that add fluctuation in the
short run to a business.
"o understand woring capital better we should have basic nowledge about
the various aspects of woring capital. "o start with, there are two concepts
of woring capital.
9ross ?oring 6apital
#et woring 6apital
Gr!$$ W!r,'ng Ca.'#a*@
9ross woring capital, which is also simply nown as woring capital,
refers to the firm!s investment in current assets. Another aspect of gross
woring capital points out the need of arranging funds to finance the current
assets. "he gross woring capital concept focuses attention on two aspects
of current assets management, firstly optimum investment in current assets
and secondly in financing the current assets. "hese two aspects will help in
remaining away from the two danger points of excessive or inadeEuate
investment in current assets. ?henever a need of woring capital funds
arises due to increase in level of business activity or for any other reason the
arrangement should be made Euicly, and similarly if some surpluses are
available, they should not be allowed to lie ideal but should be put to some
effective use.
Ne# W!r,'ng Ca.'#a*@
"he term net woring capital refers to the difference between the current
assets and current liabilities. #et woring capital can be positive as well as
negative. Positive woring capital refers to the situation where current assets
exceed current liabilities and negative woring capital refers to the situation
where current liabilities exceed current assets. "he net woring capital helps
in comparing the liEuidity of the same firm over time. 0or purposes of the
woring capital management, therefore ?oring 6apital can be said to
measure the liEuidity of the firm. In other words, the goal of woring capital
52
management is to manage the current assets and liabilities in such a way that
a acceptable level of net woring capital is maintained.
Im.!r#ane !F 2!r,'ng a.'#a* managemen#@
/anagement of woring capital is very much important for the success of
the business. It has been emphasiIed that a business should maintain sound
woring capital position and also that there should not be an excessive level
of investment in the woring capital components. As pointed out by Ralph
Jennedy and Stewart /6 /uller, $the inadeEuacy or misDmanagement of
woring capital is one of a few leading causes of business failure.
6urrent assets, in fact, account for a very large portion of the total
investment of the firm.
De#erm'nan#$ !F W!r,'ng Ca.'#a*@
"here is no specific method to determine woring capital reEuirement for a
business. "here are a number of factors affecting the woring capital
reEuirement. "hese factors have different importance in different businesses
and at different times. So a thorough analysis of all these factors should be
made before trying to estimate the amount of woring capital needed. Some
of the different factors are mentioned here below.D
Na#"re !F G"$'ne$$@
It is an important factor in determining the woring capital
reEuirements.Some businesses reEuire a very nominal amount to be invested
in fixed assets but a large amount in woring capital, such as trading and
financing type and are some businesses which reEuire large investment in
fixed assets and normal investment in the form of woring capital.
S'Ee !F G"$'ne$$@
53
It is another important factor in determining the woring capital
reEuirements of a business. SiIe is usually measured in terms of scale of
operating cycle. "he amount of woring capital needed is directly
proportional to the scale of operating cycle i.e. the larger the scale of
operating cycle the large will be the amount woring capital and vice versa.
B"$'ne$$ F*"#"a#'!n$@
/ost business experience cyclical and seasonal fluctuations in demand for
their goods and services. "hese fluctuations affect the business with respect
to woring capital because during the time of boom, due to an increase in
business activity the amount of woring capital reEuirement increases and
the reverse is true in the case of recession. 0inancial arrangement for
seasonal woring capital reEuirements are to be made in advance.
-r!&"#'!n -!*')@
As stated above, every business has to cope with different types of
fluctuations. 'ence it is but obvious that production policy has to be
planned well in advance with respect to fluctuation.
F'rmH$ Cre&'# -!*')@
"he credit policy of a firm affects woring capital by influencing the level
of boo debts. 'ence a firm should always frame a rational credit policy
based on the credit worthiness of the customer.
A1a'*aG'*'#) !F Cre&'#@
"he terms on which a company is able to avail credit from its suppliers of
goods and devices creditKalso affects the woring capital reEuirement. If a
company in a position to get credit on liberal terms and in a short span of
time then it will be in a position to wor with less amount of woring
capital.
Gr!2#h an& E+.an$'!n a#'1'#'e$@
"he woring capital needs of a firm increases as it grows in term of sale or
fixed assets. "here is no precise way to determine the relation between the
54
amount of sales and woring capital reEuirement but one thing is sure that
an increase in sales never precedes the increase in woring capital but it is
always the other way round.
-r'e Le1e* Change$@
9enerally increase in price level maes the commodities dearer and it
increases the reEuirement of woring capital too. "he companies which are
in a position to alter the price of these commodities in accordance with the
price level changes will face fewer problems as compared to others.
6.7 OBJECTIVES OF T<E STUD;
BROAD OBJECTIVES@
"o find out the efficiency of woring capital management in
,urgapur Steel Plant and selected other major plants of Steel
Authority of India.
"o have a first hand experience of the functioning of a large PSC
Steel Plant.
"o have a practical experience of the functioning of the 0inance
,epartment of a steel producing company.
55
"o study how woring capital management practices plays an
important role in supporting other activities of an integrated steel
plant.
S-ECIFIC OBJECTIVES@
"o gain familiarity with the various components of woring capital in
,urgapur Steel Plant.
"o judge the success of the management in carrying on the daily
transactions of the company.
"o gain an inDdepth nowledge of the trics of managing the daily
financial activities of ,SP.
"o find out the difference between the theoretical and practical aspect
of woring capital management.
"o study and come out with any solution for improvement of woring
capital management at ,urgapur Steel Plant.
56
Cha.#er A :
:.6 Na#"re !F .r!&"#
:.: .r!e$$
:.8 SWOT Ana*)$'$
:.6 Na#"re !F .r!&"#
57
BOKARO STEEL -LANT 3 -RODUCT BASKET
M'** Ca.aG'*'#'e$
Sh!. -r!&"#$ Fa'*'#) Ann"a*
Ca.a'#)
((444
T!nne$)
Th',ne$$
range
(mm)
W'&#h
range
(mm)
Leng#h
(me#re)
<SM 'R 6oilsK
SheetsK Plates
6ontinuous
/ill
+:&& ).7 D)7 :**D
)<&*

<RCF 'R SheetsK
Plates
Shearing
4ineDI
D &D)* )<** 8.&D)8
'R SheetsK
Plates
Shearing
4ineDII
).7D= )&** ).&D=.&
'R 6oil Slitting 4ine
CRM )77*
6R 6oilsK Sheets 6R/DI
complex
*.7+D8.& ;**D
)<&*

6R 6oilsK Sheets 6R/DII
complex
*.7+D).7 7&*D
)8&*

6R 6oilsK Sheets,
"/3P
,6R /ill )** *.88D*.< 7&*D
)*=*

9P 6oils 1
Sheets 96 Sheets
',94 );* *.+D).7 7&*D
)8&*

58
Special Grades of Steel
S.e'a* S#ee* Gra&e$ A..*'a#'!n
SA- )&=) Automobile Industry
/6 )) 6ycle Industry
SP6 +;*K+:* 6ycle Industry
6 )& 6ycle Industry
API LD=8, LD=7, LD&8, LD&7, LD7*
5SAI4API2
Pipe 4ine

SAI46>R 5corrosion resistant2 Railways
SAI4/-,Si 5/edium Silicon Steel2 'eavy -lectrical ?inding
SAI4PR>P Propeller Shaft
Strapping Steel 5for internal use only2 Strapping 0inished Products
0ullDhard 9alvanised 6oil -xtra hard roof of houses
6old Rolled /edium -lectrical Steel "ransformer core
-xtraDlow 6arbon -xtra ,eep ,rawing 5'R
1 6R2
?hite goods
,/R 8=:A 9rade Steel ,efence Research ,evelopment
>rganisation 5,R,>2 for fabrication
of Submarine parts 5import
substitution2
-=7*K-&**K-&&* 0loating bridges for ,efence. 0or /KS
3-/4S for maing. 5import
substitution2
IS<&** 0e &=*3 high strength low alloy steel
with C"S value in excess of &=* /pa
Jolata flyDover
4ow 6arbon, 4ow /anganese, 'igh Strength
Structural Steel without microalloying
56arbon *.)*G 2
Structural purposes. "hermoD
mechanically 6ontrolled Processing.
By-prodcts
#itrationDgrade 3enIene
#itrationDgrade "oluene
4ight Solvent #aphtha
Still 3ottom >il
'ot Pressed#aphthalene
Anthracene >il
-xtraDhard Pitch
'ardDmedium Pitch 5solidK
liEuid2
Ammonium Sulphate
Pitch 6reosote
/ixture
30 9ranulated Slag
4iEuid #itrogen
Phenol 0raction
:.: -r!e$$@3
59
BSL -r!e$$ F*!2
60
-RODUCTION -ROCESS@I
RAW MATERIALS
0e scraps, 0e ore, 0erro silicon, 3auxite, 0luorspar, 6oe powder,
0erro/anganese, graphite electrodes, etc are the main raw materials used
for theconstruction steels.
6. C!a* &"$# 'n0e#'!n 'n B*a$# F"rnae A6( 8( 7
6oal dust is a substitute of 6>J- in 3last 0urnace as a auxiliary fuel.
"hereplacement ratio is ).).8 aprox. Csing coal dust in 3last furnace
directly throughtuyers reduces the reEuirement of 6oe. In 6oe >vens ).<
gcal energy consume forconverting 6oal to coe, this energy is saved.
:. VVVF &r'1e !mm'$$'!ne& 'n ID Fan m!#!r !F SMS3
"he I, fan motor5 )8** w2 capacity for convertor @6 was running
continuously atrated speed during process and as well as during idle time.
After installation of AAAfdrive during idle period, the motor run at
=8 G of the rated speed. "hereby saving of ;&** whKday.
8. De1e*!.men# !F *!2 .!2er &e&'a#e& Ven#'*a#'!n $)$#em F!r
*e1e*er3: ( 9B ,2 G) 8 ,2) 'n -*a#e M'**.
;& J? ventilation system had been installed for levellerD8 cooling system.
3ut due tolow loading on levellerD8 it was observed that the reEuirement is
very less.Accordingly ;& J? system has been replaced by +.;& w
ventilation system.
7. C!a* Tar In0e#'!n 'n B*a$# F"rnae
61
6oal "ar is a byDproduct of coe maing process. "he year when severe coal
crisiswas experienced by all Indian steel plants.It was decided by 3hilai
management toinject coal tar as a measure to conserve coe consumption in
3last 0urnace."echnology was developed with inDhouse now how and
reEuired installation waserected in 3last 0urnace T +. At present about +*D=*
liter of coal tar is injectedthrough tuyers of the furnace and it is observed
that the replacement ratio is about ).=g of 30 coe per liter of coal tar.
-ncouraged by the result obtained, managementhas decided to extended to
3last furnace T 8 also. Plant scale trial is going on toestablish the obtained
result.
B. M!&'F)'ng #he F'e*& !F Ver#'a* $#an& an& F'n'$h'ng $#an& Sre2
D!2n #! *!2 1!*#age $)$#em ( ::4 V #! 67B V) 'n -*a#e M'**.
"he 8+* A supply of Aertical 1 0inishing stand motor were fed through
resistance.
"he 8+* A supply of Aertical 1 0inishing stand motor were fed through
resistance
boxes. It was observed that actual field supply reEuirement is only )=& A
and ;& A is
being dropped in resistance box. "hat is why only )=& A direct fed to field
winding
without resistance box by changing incoming supply from )) JA to 7.7 JA
of 6A,6
transformer.
C. E+#en$'!n !F Un*!a&'ng Ga) F!r re&"'ng "n*!a&'ng #'me !F LS<S
62
"he time taen for unloading a rae of 4S'S fuel 5 ;* wagons2 was about
7& hrs , thiswas due to insufficient unloading points. It was observed that if
7 no of unloadingpoints are increased the time for unloading can be reduced
to =* hrs. After thismodification 5 in house2 total steaming time was reduced
.
;. U#'*'Ea#'!n !F 2a$#e L"Gr'a#'!n !'* 'n L'me K'*n.
"he waste lubrication oil5 used2 about )** J4 per year earlier was disposed
at lowprice . A unit is commissioned to reclaim this oil by mixing in 4S'S
fuel in a ratio of) to ).& G and successfully consumed in 4ime Jiln with out
any major effect.
D. B*a$# F"rnae ga$ F'r'ng 'n B!'*er N!3C !F -!2er an& B*!2'ng
S#a#'!n.
"he 3oiler #o @7 of P3S was commissioned with out 30 gas firing system
and wasconsuming coal . In 3hilai Steel Plant 30 gas is available in excess
and was flared inthe atmosphere , to use this gas 3oiler #oD7 was modified
by providing 3urners , andafter this about 7**** /+ Khr 30 gas is able to
consume in 3oiler . "his has saved3oiler coal about 8=* "ones per day
:.8 SWOT ANAL;SIS OF T<E COM-AN;
63
6J STRENGT<@3
"he main strength are.D
"he company has got a monopoly maret condition for it in
manufacturing of steel in Indian maret.
"he strength of the company 53hilai Steel Plant2 is its iron mines situated
near to the plants which reduce transportation cost and help to increase the
profit of 3S4.
"he another strength of company is due to its central government
holding so its primaryK major customer is the government itself lie
Indian railways and so on which gives large orders for its reEuirements.
:J WEAKNESS@3
"he main weaness are.D
As a central government organiIation as 3SP cannot fix a price of its
own as there are pressure from the government.
"he other weaness is some times3SP is not able to fulfill the rising
supply as the demand exceeds production capacities.
64
8J O--ORTUNITIES@3
"he main opportunities are.D
As demand for the steel in the local maret as well as in international
maret is increasing day by day
/anufactures are less and demand is on the rise.
7J T<REATS@3 .
"he main threats are.
#on availability of coe in the domestic maret which is considered as a
raw material in the manufacturing of iron and steel products as it is mainly
imported from Australia, CSA and /iddle -ast due to which price of steel
increases.
65
Cha.#er A 8
8.6 S#ra#eg'e$
8.: -!*''e$
66
8.6 S#ra#eg'e$ @3
"he strategy in the ;s framewor includes purposes, missions, objectives,
goals and /ajor action plans and policies of the company. "hrough out the
past decade, the corporate world has given close attention to the interplay
between strategy and structure. 6ertainly clear ideas about the strategy mae
the job structural design rational. 3y $strategy% we mean those actions that a
company plans in response tour anticipation to or changes in its external
environmentDits consumers, its competitors.
S#ra#eg'e$ a..*'e& G) BSL@3
"he main aim of the company will be producing good Euality of Iron and
steel product to the public as well as providing more number of employment
and increase the standard of living of the people.
"he 3oaro steel plant business strategies are based of three core valuesS
they are operational excellence, 6ustomer!s focus and product leadership.
"he business strategy emphasiIes the following.D
). Increase their maret shares.
8. Reduced cost of production.
+. Increase company performance.
=. Produce always Euality product.
67
&. "o meet social responsibilities.
7. Provide employment opportunity to the people of the area.
;. /eet the national and regional demand of iron and steel products.
<. Reduce the import of iron 1 steel from the foreign maret.
"he ey to succeed in this environment is to develop that acumen to
perceive these challenges as opportunities. "he opportunities for leadership
always come in disguise of challenges and the path to future is full of them
3S4%s leadership has evolved a multi pronged strategy to excel in face of
multitude of these challenges right from growth oriented capacity
investment, an aggressive mareting plan, thrust on new products
development, investment in raw material projects to strategic social
responsibility measures.
68
8.: -!*''e$ @3
Corporate Social Responsibility Policy
SAIL recognizes that its business activities have irect an
inirect
i!"act on the societ#. $he %o!"an# strives to integrate its
business
va&ues an o"erations in an ethica& an trans"arent !anner to
e!onstrate
its co!!it!ent to sustainab&e eve&o"!ent an to !eet the
interests o' its
sta(eho&ers.
$he %o!"an# is co!!itte to continuous&# i!"roving its socia&
res"onsibi&ities) environ!ent an econo!ic "ractices to !a(e
"ositive
i!"act on the societ#.
Guiding Principles
$o*ar this co!!it!ent) the %o!"an# sha&&+
%reate a "ositive 'oot"rint *ithin the societ# to !a(e a
!eaning'u&
i,erence in the &ives o' "eo"&e b# continua&&# a&igning its
initiatives
to the goa&s 'or sustainab&e eve&o"!ent.
-aintain co!!it!ent to .ua&it#) hea&th an sa'et# in ever#
res"ect o'
the business an "eo"&e.
/nerta(e ethica& business "ractices across the su""&# chain.
-a(e "ositive i!"act on the environ!ent an "ro!ote goo
environ!enta& "ractices.
69
0ro!ote e.ua&it# o' o""ortunit# an iversit# o' *or('orce
throughout
its business o"erations.
SaFe#) -!*')
Safety of its employees and the people associated with it including
those living in the neighbourhood of its plants, mines and units.
Pursue efforts in sustained and consistent way by establishing safety
goals, demanding accountability for safety performance and providing
resources to mae safety programmes wor.
G"'&'ng -r'n'.*e$
-xcellenc in health 1 supports excellent business result.
All accidents can and must be prevented.
Safety standards to be incorporate in all wor procedures.
All employees are responsible and accountable for maintaining safety
standards.
K"a*'#) .!*')
70
?e shall build and sustain a worldDclass organiIation, where Euality is the
hallmar of every process and activity.
?ith the involvement and dedication
of our human resource, we are commited to achieve satisfaction of all our
staeholders, through innovation and continual improvement.
C!r.!ra#e En1'r!nmen# -!*') @3
SAI4 reaffirms its commitement to contributing towards a clean and
sustainable environment and continually enhancing its environmental
performance as an integral part of its business philosophy and values.
"owards this commitment, we shall .
Integrate sound environmental management practices in all our activities.
Progressively adopt cleaner and energy efficient technologies.
/inimise waste generation and promate recovery, recycle and reuse.
Increase greenery in and around our plants and mines.
-nhance environment awareness amongst employees woring for and on
behalf of us and the general populace around plants and mines.
-ncourage our business associates to adopt similar approach for
environmental protection.
<"man Re$!"re -!*') !F SAIL -er$!nne* D're#!ra#e @3
71
SAI4 Personnel ,iractorate shall ensure competent and committed team
engaged in building a culture of learning to achive excllance in performance
and employee satisfaction through innovation and continual improvement.
InF!rma#'!n Tehn!*!g) Se"r'#) -!*') @3
"he information "echnology Security policies are intended to help users of
I" system to determine as to how the I" systems are to be used.
All employees shall familiariIe
themselves with these policies and ensure their adherence.
"he policies covered in the information security system include .
Information sensitivity policy
Acceptable use policy
-lectronic mail use, retention 1 forward policy
Server security policy
#etwor infrastructure security policy
Password policy
,atabase password policy
-xtranet policy
Acceptable encryption policy
72
,ialDin access security policy
Antivirus policy
Cha.#er 3 7
=.) Research /ethodology
=.8 "ypes of ,ata
=.+ ?oring 6apital @ >verall Aiew 6ash /anagement
=.= Inventory /anagement
=.& Receivable /anagement

=.7 0inancial Statements and Ratio Analysis

=.; 0low chart of sales process followed in 3S4
73
7.6 RESEARC< MET<ODOLOG;
Re$earh De$'gn@
,ata 6ollection. Da#a ha$ Geen !**e#e& #hr!"gh $e!n&ar) a..r!ah.
Da#a S!"re$
"he research involved gathering Secondary data. 4ot of data has been
pooled from 3oaro Steel Plant to use in the study.
7.: T).e$ !F &a#a
"he data which I have collected for maing this project is combination of
both primary and secondary data.
-RIMAR; DATA@
"his data had been collected through meetings and interviews with various
managers and employees of the finance department located in the
administrative building 5ISPA" 3'A?A#2 of ,urgapur Steel Plant. At the
same time I had visited various departments for collection of data. "he
departments that had been visited are as follows.D
/ain 6ash ,epartment
3illing and >peration ,epartment
3udget ,epartment
Pay Section
74
-xcise ,epartment.
?elfare 1 /iscellaneous 3ill Section
Sales ,epartment
Project /anagement ,epartment
SECONDAR; DATA.
Apart from the primary data certain secondary data were reEuired for this
project. 0ollowing are the sources of secondary data.D
Annual Reports
6ost 1 3udget Reports
6reditors Reports
,ebtors Reports
Inventory Reports
6ash Report
Raw /aterials Report
Production Reports
Sales Reports
S!.e !F #he S#"&)
"he data has been collected from the secondary sources comprising Annual
Reports of the firm, other journals and periodicals.
Apart from conducting this research wor on the basis of this information,
various techniEues of financial management e.g., comparative statement and
ratio analysis etc. were used in the present study. "o present a broad view so
far the purpose of the analysis and to mae it easy to understand the
problemKconcept of a few graphs and tables shall also be presented. In each
chapter, the analysis has been compared with actual management practices
of the company under study. "he project is strictly on financing the
companies for their day to day transactions. "he broad parameters being
75
current assets ratio, Euic test ratio etc.
76
7.8 WORKING CA-ITAL3 OVERALL VIEW
?oring capital means the funds which are reEuired to meet the daily
transactions of the business .In other words it refers to that part of the firm!s
capital which is reEuired for financing current assets such as cash,
maretable securities, debtors and inventories. "hus woring capital is very
significant facet of financial management. -very business concern should
have adeEuate woring capital to run its operations smoothly. It should have
neither excess woring capital nor inadeEuate woring capital because both
of these have adverse effects on firm!s profitability and liEuidity positions.
"herefore, business concerns should maintain adeEuate woring capital. "he
basic objective of woring capital is to manage the firm!s current assets and
current liabilities in such a way that that a satisfactory level of woring
capital is maintained.
?oring capital policies have a great effect on a firm!s liEuidity and
profitability. "herefore, the woring capital should be managed in such a
way which will ensure higher profitability and proper liEuidity to the
business concern.
"he significance of woring capital management is to ensure that the
organiIation maintains a Rgood fit! with the changing environment and
strives to build the capability to cope with challenge.
CONCE-TS OF WORKING CA-ITAL
"here are two concepts of woring capital.
3alance sheet concept or traditional concept.
>perating cycle concept.
77
BALANCE S<EET CONCE-T OR TRADITIONAL
CONCE-T
It shows the position of the firm at a certain point of time. It is calculated on
the basis of balance sheet prepared at a specific date. In this method there
are two types of woring capital.
9ross woring capital
#et woring capital
GROSS WORKING CA-ITAL
It refers to a firm!s investment in current assets. "he sum of the current
assets is the woring capital of the business. "he sum of the current is
Euantitative aspect of woring capital which emphasiIes more on Euantity
than on its Euality, but it fails to reveal the true picture of the financial
position of the business because every increase in current liabilities will
decrease the gross woring capital.
NET WORKING CA-ITAL
It is difference between the current assets and current liabilities or the excess
of total current assets over total current liabilities. It can also be defined as
that part of a firm!s current asset which is financed with long term funds. It
may be either negative or positive. ?hen the current assets exceed the
current liabilities, the woring capital is positive and viceDversa.


78
O-ERATING C;C;E CONCE-T
"he duration or time reEuired to complete the seEuence of events right from
the purchase of raw materials for cash to the realiIation of sales in cash is
called operating cycle or woring capital cycle. "he operating cycle consists
of three phases.
In phase ), cash gets converted into inventory. "his would include purchase
of raw materials, conversion of raw materials into worDinDprogress,
finished goods and terminate in the transfer of goods to stoc at the end of
the manufacturing process. In the case of trading organiIation, this phase
would be shorter as there would be no manufacturing activity and cash will
be converted into inventory directly. "he phase will, of course, be totally
absent in case of service organiIations.
In phase 8 of the cycle, the inventory is converted into receivables as credit
sales are made to customers. 0irms which do not sell on credit will
obviously not have phase 8 of the operating cycle.
"he last phase, phase +, represents the stage when receivables are collected.
"his phase completes the operating cycle. "hus, the firm has moved from
cash to inventory, to receivables and to cash again.
79
FI?ED/-ERMANENT WORKING CA-ITAL
"o carry on business, a certain level of woring capital is necessary on a
continuous and uninterrupted basis, for all practical purpose, the
reEuirement has to be met as with other fixed assets. Permanent woring
capital represents the minimum level of raw materials, worDinDprogress,
finished goods, stores, accounts receivables and cash which are in
circulation to ensure continuity of production.
Permanent woring capital is again divided into two parts. regular woring
capital and reserve woring capital. "he portion of fixed woring capital
which is utiliIed to carry out the cyclical operation of current assets in the
form of conversion of liEuid cash into raw materials, raw materials into
finished goods, finished goods into debtors and debtors into liEuid cash in a
continuous manner is nown as regular woring capital. >n the other hand,
the portion of fixed woring capital, which is preserved for meeting
uncertain and emergent woring needs 5lie sudden price hie, abnormal
scarcity in times of war, natural calamity, etc2 is nown as reserve woring
capital.
VARIABLE/TEM-ORAR; WORKING CA-ITAL
3esides fixed woring capital, a business may need additional woring
capital to meet the growing demands of busy seasons at stated intervals. If
the demand for the products of the business goes up at any time it needs
additional funds to pay for more materials, labour and other expenses and to
meet the reEuirement of cash balance to be maintained in the changed
situation. "his additional woring capital needed to feed the operating cycle
in busy business periods is nown as variable or temporary woring capital.
It is called variable or temporary because the business does not need it
always but it is reEuired according to the need of the situation.
9enerally the importance of variable woring capital is more acute in
business concern having seasonal maret demands. Aariable or temporary
woring capital may be further subD divided into 5a2 seasonal woring
capital and 5b2 special woring capital.
80
"he additional woring capital reEuired by a concern to carry out its
operating activities in busy seasons of high maret demands is nown as
seasonal woring capital. 3usinesses which mostly have seasonal demands
of their products lie iceD cream, cold drins, wool and liely products
manufacturing concern may need huge amount of seasonal woring capital.
In other business concerns too the maret may rise to the pea in some
particular time period. So in all types of business a portion of woring
capital may be preserved for meeting seasonal needs. >n the other hand, the
portion of woring capital that is needed by a concern to meet the
extraordinary reEuirements of special situations is nown as special woring
capital. "his is called special woring capital because it is needed in special
situations and not in normal circumstances.
5,iagrammatic representation of the concept of woring capital 2
81
IM-ORTANCE OF WORKING CA-ITAL
"he adeEuate reserve of woring capital ensures a steady flow of raw
materials to the production process.
"he adeEuate reserve of woring capital indicates the good solvency
position of the concern and helps it to get loan from the maret at
favorable terms.
"he adeEuate stoc of woring capital maes it possible for a concern
to purchase the trading goods in cash and cash purchase always
carries the benefit of getting cash discount.
A strong woring capital base is probably the only remedy to
overcome the odd situations lie dull maret conditions, scarcity of
raw materials and other components in case of any emergency,
sudden maret fluctuations, etc.
A business concern can exploit the maret opportunities with the help
of adeEuate woring capital.
"he regular flow of adeEuate woring capital maes possible efficient
use of fixed assets, reduces wastage, ensures Euic replying of current
assets, and establish a wellD tuned woring environment.
A Euic rotation of woring capital cycle and an efficient
management of woring capital reduce cost and increases production
and sales. "he combined effect of all these favorably add to the
profitability of the concern.
"he adeEuate amount of woring capital and its Euic rotation
increases profit. "he rate of dividend of the shareholders also
increases as a result of such increase in profit.
Sufficient woring capital helps in research and development to face
the present era of cut throat competition and Euic technological
advancement
82
DETERMINANTS OF WORKING CA-ITAL
"he total woring capital reEuirement is determined by a wide variety of
factors. "hey also vary from time to time. In general, the following factors
are involved in a proper assessment of the Euantum of woring capital
reEuired.
GENERAL NATURE OF BUSINESS@
"he woring capital reEuirements of an enterprise are basically related to
the conduct of the business. According to the nature of business they have to
maintain a sufficient amount of cash, inventories and boo debts. "he
industrial concerns reEuire fairly large amounts of woring capital though it
varies from industry to industry depending on their assets structure.
-RODUCTION C;CLE@
Another factor which has a bearing on the Euantum of woring capital is the
production cycle. "he term $production or manufacturing cycle% refers to
the time involved in the manufacture of goods. It covers the timeDspan
between the procurement of raw materials and the completion of the
manufacturing process leading to the production of finished goods. "o
sustain such activities the need of woring capital is obvious.
BUSINESS C;CLE@
"he woring capital reEuirements are also determined by the nature of the
business cycle. "he variations in business conditions may be in two
directions. 5i2 upward phase when boom conditions prevail, and 5ii2
downward phase when economic activity is mared by a decline. ,uring the
upswing of the business activity the need of woring capital is more as
opposed to the downward phase of the business.
83
-RODUCTION -OLIC;@
"he reEuirement of woring capital also depends on the production policy
of the firm. In manufacturing concerns having mostly seasonal demand for
the product the production policy is a significant determinant of woring
capital.
C<ANGES IN -RICE LEVEL@
9eneral increase in price level increases woring capital need of a firm
because the firm has to pay more for maintaining the previous level on
woring capital.
GROWT< AND E?-ANTION@
As a company grows, it is logical to expect that a larger amount of woring
capital will be reEuired. "he critical fact is however, is that the need for
increased woring capital funds does not follow the growth in business
activities but precedes it.
AVAILABILIT; OF RAW MATERIALS@
In case raw materials are easily available on soft terms the firm does not
reEuire maintaining a huge inventory of raw materials. Such a firm does not
reEuire blocing up huge amount of woring capital for this purpose. >n the
contrary if raw materials are scarce and its supply is irregular and seasonal
in nature the firm needs to store a reasonable Euantity of raw materials in
hand. "he woring capital need of such a firm is significantly high.
DIVIDEND -OLIC;@
"he payment of dividend consumes cash resources and, thereby, affects
woring capital to that extent. 6onversely, if the firm does not pay dividend
but retains the profits, woring capital will increase.
84
DE-RECIATION -OLIC;@
,epreciation policy also exerts an influence on the Euantum of woring
capital. ,epreciation charges do not involve any cash outflow. "he effect of
depreciation policy on woring capital is, therefore indirect.
At ,SP depreciation is provided on straight line method at the rates
specified in scheduleD LIA to the companies act, ):&7. 'owever where the
historical cost of the depreciable asset undergoes a change, the depreciation
on the revised amortiIed depreciable amount is provided prospectively over
the residual useful life of the asset based on the rates specified in scheduleD
LIA to the companies act, ):&7. ,epreciation on assets installedK disposed
off during the year is provided with respect to the month of additionK
disposal thereof.
STRUCTURE OF WORKING CA-ITAL
"he structure of woring capital includes a study of the components of
current assets and current liabilities.
CURRENT ASSETS .
"he list of current assets comprises inventories 5including raw materials,
worDinDprogress and finished goods and spares2, sundry debtors including
receivables, readily realiIable securities and tax reserve certificates, shortD
term investments, accrued incomes, prepaid expenses 5not in the nature of
deferred charge2, cash at ban, and cash in hand.

In 3oaro Steel Plant current assets are.
Inventories 5stores 1 spares, raw materials, semiDfinished products2
Sundry debtors
6ash 1 ban balances
Interest receivableKaccrued
4oans 1 advances etc.
85
CURRENT LIABILITIES@
"he list of liabilities includes trade creditors, accounts payable, outstanding
or accrued expenses, ban overdraft, outstanding liabilities, shortDterm loans
and borrowings and certain obligations including different provisions, i.e.,
provision for taxation, proposed dividend etc.
In 3oaro Steel Plant current liabilities are.
Sundry creditors
Advances from customers
Security deposit
>ther liabilities etc.
SOURCE OF WORKING CA-ITAL FOR BOKARO STEEL -LANT
"he allocated amount by the registered office of SAI4 in #ew ,elhi gets
transferred into the cash credit account of ,urgapur Steel Plant in State
3an of India, ,urgapur. "his cash credit account is the source of woring
capital for ,SP. "he plant uses this amount to meet its daily expenditure. At
the end of the day the balance of this account is transferred bac into
account of SAI4, #ew ,elhi. "his practice is done on a daily basis.

86
IM-ORTANCE OF WORKING CA-ITAL RATIOS @3
Ratio analysis can be used by financial executives to chec upon the
efficiency with which woring capital is being used in the enterprise. "he
following are the important ratios to measure the efficiency of the woring
capital. "he following, easily calculated, ratios are important measures of
woring capital utiliIation.
RA"I>S 0ormulae Result Interpretation
6urrent Ratio "otal 6urrent
AssetsK"otal
6urrent
4iabilities
NL
times
It is the relationship between the
amount of current assets and the
amount of current liabilities. It
measures the shortDterm liEuidity
position of the firm.
AcidD"est Ratio "otal 6urrent
AssetsD
InventoriesK
"otal 6urrent
4iabilities
NL
times
Similar to the 6urrent Ratio but
taes account of the fact that it
may tae time to convert inventory
into cash.
?oring 6apital
"urnover Ratio
SalesK?oring
6apital
NL
times
A 'igher ?oring 6apital Ratio
means lower investment in
woring capital and better
profitability.
Stoc "urnover
Ratio5in days2
SalesKInventory NL
days
>n average, you turn over the
value of your entire stoc every x
days. Pou may need to brea this
down into product groups for
effective stoc management.
6urrent Assets
"urnover Ratio
SalesK6urrent
Assets
NL
times
It reflects the efficiency in
generating sales by 6urrent assets.
7.7 In1en#!r) Managemen#
87
Inventories are the stoc of the product made for sale by the company or
semi finished goods or raw materials. Inventory of finished goods which are
ready for sale is reEuired to maintain smooth mareting operation. "he
inventory of raw material and wor in progress is reEuired in order to
maintain an unobstructed flow of material in the production line. "hese
inventories serve as a lin between the production and consumption of
goods.
"he aspect of management of inventory is especially important in respect to
the fact that in country lie India, the capital bloc in terms of inventory is
about ;*G of the current assets. It is therefore, absolutely imperative to
manage efficiently and effectively in order to avoid unnecessary investment
in them. Although to maintain low inventories may prove to be profitable
but to maintain very low inventories may prove risy on the contrary.
"his aspect of management if tacled in a proper way may prove to be a
boon its effective and efficient management would result in the maintaining
of optimum level of inventories. At this level the profitability of the
organiIation will not be jeopardiIed at the cost of inventory.
#ow from the above stated facts it is clear that maintaining of optimum
level of inventory involves huge cost, so why should eep the inventories at
all. 3asically there are three main reasons for which inventories are stoced
and they are.D
1. Transaction Motive: "his motive lays emphasis on maintaining of
inventories in order to maintain a smooth and unobstructed supply of
materials for the sales and production operations.
2. Precautionary Motive: "his motive emphasiIes on the stocing goods
in order to guard against the uncertainties of future i.e. unpredictable
changes in the forces of demand, supply and other forces.
3. Speculative Motive: "his motive influences the decisions
regarding the increase or decrease in the level of inventory in order to tae
advantage of price fluctuations.
Ra2 Ma#er'a*$@3
88
A company should maintain adeEuate stoc of materials for a continuous
supply to the factory for an uninterrupted production. It is not possible for a
company to procure raw material instantaneously whenever needed. "he
procurement of materials may be delayed because of factors beyond
company!s control e.g. transport disruption, strie etc. "herefore, the firm
should eep a sufficient stoc of raw material at a time.
W!r,3'n3-r!gre$$@3
"he wor in process inventory builds up because of the production cycle.
Production cycle is the time span between the introduction of raw material
in to the production and the emergence of finished goods at the completion
of production cycle. "ill the production cycle completes, the stoc of wor
in process has to be maintained.
F'n'$he& G!!&$@3
"he stoc of finished goods has to be held because production and sales are
not instantaneous. A firm cannot produce immediately when goods are
demanded by customers. "herefore to supply finished goods on regular
basis, their stoc has to maintain for sudden demand of customers, 0ailure
to supply products to customer, when demanded, would mean loss of the
firm!s sales to the competitors.
"he basic objective in holding raw material inventory is separate purchase
and production activities and in holding finished goods inventory is to
separate production and sales activities
"he excessive investment in the inventory has the following drawbacs.
Cnnecessary tie up of firm!s fund and loss of profit.
-xcessive carrying cost.
"he ris of liEuidity.
"he over investment of funds in inventory eat up the precious funds which
could have been put to some profitable use. "he carrying cost incurred, can
not be ignored, this is the cost of storage, handling insurance, recording and
inspecting. "hese all costs incurred in order to have large inventories impair
the profitability of the firm. Another danger of carrying excessive inventory
89
is the deterioration, obsolescence and pilferage of raw materials.
3efore discussing the inventory control techniEue, here is the discussion of
the various terms such as economic order Euantity, carrying cost etc.
1. Economic Order Quantity:
It is the inventory level which minimiIes the total of ordering and carrying
cost
2. Ordering Cost:
"his is used especially in the case of raw materials and is included in the
cost incurred in acEuiring the raw material. It is proportional to the number
of orders and inversely proportional to the siIe of inventory
3. Carrying Cost:
"here are the costs which are incurred for holding a given amount of
inventory, they include opportunity cost of funds invested is inventories
insurance, taxes, storage cost and the cost of deterioration and obsolescence
. !eorder Points:
Reorder point is the inventory level at which an order must be placed to
replenish the inventory and evade the ris of running out of raw material
". Sa#ety Stoc$s:
"herefore in order to guard against the stoc out, the company may eep
some buffer stoc as a cushion against expected increased andKor delay in
delivery ."his buffer stoc is called as safety stoc.
90
RECEIVABLES
"he term receivables are defined as Rdebt owed to the firm by customers
arising from sale of goods or services in the ordinary course of businesses!.
"rade credit, the tool which as a bridge for movement of goods through
production and distribution stages to customer, is a force in the present day
business and an essential device. "rade credit is granted with a motive of
protecting the sale from ones, competitors and attaching more of the
potential customers. "rade credit is said to be extended to a customer when
a firm sell its services or goods and does not receive the payment for them
immediately. "hus trade credit creates receivable which refer to the amount
which a firm is expected to collect in near future.
"he boo debt or receivable which arise a result of trade credit have the
following features.
It involves a element of ris and hence should never to be fiddled
with. As credit sale leave a sum to be recovered in future and future can
never be the certainty, hence it is risy.
It is based on economic value, while for the buyer, the economic
value in goods passes immediately at the time of purchase, while the
seller expects an eEuivalent value to be received later on.
It represents futurity. "he cash payments for the goods or services
received by the buyer will be made in future.
In order to maximiIe the wealth of the firm, the cost involved in the credit
and its management has to be controlled within the acceptable limits. "hese
costs can brought to Iero level but that would adversely affect the sales,
therefore the objective should be to ept receivable to the minimum level. A
dynamic credit policy and its management will help to optimiIe the sale at a
minimum cost.
91
,ebtors involve funds, which have an opportunity cost. "herefore the
investment in debtors should be never be excessive. -xtending liberal credit
pushes the sale and results in higher profitability but the increase in level of
investment in debtors result in increased cost. "hus we are to bring the
investment at a optimum level by doing trade off between the costs and
benefits. "he level of debtors to a large extent depends on external factors
such an industry norms, level of activity, seasonal variations etc. 3ut there
are lot of internal factors which affects the firm! credit policy. "hese factors
include credit terms, standard, limits and collection procedures. "he internal
factors should be well administered to optimiIe the investment in debtors.

A good and well administered credit means profitable credit accounts. "he
whole set of decision variables that affects the investment in receivable is
termed as credit policy.
9enerally, we can divide the credit policy into two types
4enient 6redit Policy
Stringent 6redit Policy
4enient 6redit policyD "he firms following 4enient 6redit Policy tend to sell
on credit to its customers very readily, without even nowing the credit
worthiness of the customers. "he firms with lenient credit policy will have
more sales and higher profits. 3ut they can also incur high bad debts losses
and face the problem of liEuidity.
92
S#r'ngen# Cre&'# -!*')3
"he firm which follows Stringent 6redit policy are very selective in
extending credit, and credit is extended to those customer only whose credit
worthiness is well proven. "hese firms follow tight credit standards and
terms as a result, minimiIe cost and chances of bad debts."he stringent
credit policy never poses the problem of liEuidity but restrict the sale and
profit margins.
-xtension of credit increases the sale of the firm. "he number of customers
purchasing the firm!s goods and services increases as it maes its credit
policy liberal. If the cost do not increase at a greater rate, the increased
revenue will increase the profit of the firm. As a conseEuence, the maret
value of firm!s share will rise.
"he extent to which the sales will be affected by pursuing a particular credit
policy can not be gauged with accuracy. Sales forecast with respect to a
particular credit policy can be made with regards to prevailing economic
condition. 'owever, cost benefit analysis has to be done in order to
anticipate the acceptability of a credit policy.
6redit extension involves cost, the incurred cost can be of many types such
as bad debt losses, production and selling costs, administrative expenses,
cash discounts, opportunity cost etc.3ad debt losses are incurred when a
firm is unable to collect the boo debts. 3ad debt losses are more if the
credit policy is lenient.
"he additional sales resulting from the relaxed credit policy will increase the
production and selling costs. >nly the incremental production or selling
costs should be estimated. Similarly, the expenses incurred in the
administration of credit should be included in the costs of extending credit.
Again, these costs will be nil if the credit policy simply utiliIe the idle
capacity of the credit department.
93
"he opportunity cost is the cost of foregone profits of the amount bloced as
trade credit to customers in order to sustain or increase sales. As a result of
the funds tied up in credit accounts often the firms have to go in for credit
from bans in order to sustain their operations.
In order to collect the trade credits at an early date, often cash discounts
have to be extended. As a result of these cash discounts firms are not in a
position to collect the remuneration for their sales in full. "his is essentially
a tool to bring the trade credit to an optimum level.
A$.e#$ !F Cre&'# -!*')@
"he important aspects of credit policy should be identified before
establishing an optimum credit policy. "he important decision variables of
the credit policy are.
Credit Terms: 6redit terms are the conditions or stipulations under
which the firm extends credit. "he terms and conditions can be
clubbed according to the period for which they are extended and
according to the amount of discount offered thereby there are two
important components of trade credit namely cash period and cash
discounts. 6redit terms can be effectively used as a tool to boost
sales. If the action of relaxation of the credit terms is followed by the
competitors. "hen the firm may have to pay instead of gaining
anything.
"he time duration for which the credit is
extended to the customers is referred to as credit period. Csually the
credit period of the firm is governed by the industry norms, but firms
can extend credit duration to stimulate its sales.
Credit Standards: "he credit standards followed by the firm have an
impact on sales and receivable. "he sales and receivable levels are
liely to be high if the credit standards of the firm are relatively loose.
"he credit standards are governed by various aspects such as the
94
willingness of customer to pay, the ability of customer to pay in the
economic conditions etc.
Collection Policy: "he need to collect the payments early gave rise to
a policy regarding it, called as the collection policy. It aims at the
speed recovery from slow payers and reduction of bad debts losses.
Cre&'# -r!e&"re
A clear cut guiding policy regarding the granting of credit to individual
customers and the collection from individual account should be laid down.
"he collection procedure of the firm differs from customer to customer.
"he credit evaluation procedure before extending of credit is done in the
following ways.
1% Credit &n#ormation: In extending credit to customers, the firm would
ensure that the receivable are collected in full and on due date. "o ensure
this, the firm should have credit information concerning each customer to
whom credit is given. 6ollection of credit information involves expenses.
"he cost of collecting information should therefore be less than the potential
profitability. In addition to the cost, the time reEuired to collect information
should be considered. "his information can be collected from financial
statement, ban references, trade references, credit bureau reports etc.
2% Credit &nvestigation: After the collection of credit information the
firm needs to go in for further investigation. "hese investigations are
different for different people and depend upon the type of customers,
customer!s bacground, nature of our product, siIe of the other, firm!s credit
policy etc.
6redit investigations involve cost. 3ut a credit decision without adeEuate
investigations can be more expensive in terms of excessive collection costs
and possible bad debts losses. "herefore credit investigations should be
cared so long as the savings, in terms of speedy collection and prevention of
bad debts losses, from it exceed the cost incurred in the process.
95
3% Credit 'nalysis: In the credit procedure, the next step is of credit
analysis. "he appraisals regarding the financial strength, nature of business,
type of management with respect to the other party are to be considered. "he
decision to extend credit to the customers will basically depend upon the
judgment of the credit analyst, although numerical, credit evaluation
systems exist, if it is expected that more and more of Eualitative systems
will evolve in near future.
% Credit (imits: >nce the decision regarding the extending of credit has
been taen then the decision regarding the duration and the amount of credit
are to be taen. "he credit limit is to be periodically reviewed and
alterations, continuously done. "he decision on the magnitude of credit will
depend upon the amount of contemplated sale and the customer!s financial
strength.
"% Collection Procedure: A clear cut and well administered collection
procedure will speed up the rate of dues collection if collection is delayed
then the chances of bad debts also increases. "he procedure of collection
can not be same for everyone, it has to down according to the relation of the
firm with its customer the responsibility of follow up and collection should
be clearly designated. "o speed up the process of collection after we use
discount schemes etc.

96
F'g"re 6@ F!"r )ear !m.ara#'1e $#"&'e$ Ge#2een "rren# a$$e#$
!m.!$'#'!n
97
F'g"re :@ F!"r )ear !m.ara#'1e $#"&'e$ Ge#2een "rren# *'aG'*'#'e$
!m.!$'#'!n
CALCULATlON OF WORKlNG CAPlTAL FOR
98
BOKARO STEEL PLANT
1In
crores2
YEA
R 2004-05
2005-
06
2006-
07
2007-
08
CURRENT ASSETS:
I3453$67I5S 953.87
1365.5
6
1407.4
9 1185.74
S/3879 85:$67S 11.13 12.51 8.95 7.74
%AS; < :A3= 35.77 37.9 41.08 44
I3$575S$ 75%54IA:L5 23.14
18.96
14.02 10.95
L6A3S < A84A3%5S 255.87 391.18 390.9 587.45
TOTAL CURRENT
ASSETS 1279.78
1826.1
1
1862.
44
1835.8
8
CURRENT
LlABlLlTlES:
%/7753$ LIA:ILI$I5S 656.07 761.14 800.47 917.47
0764ISI63S 99.22 94.82 53.99 48.27
TOTAL CURRENT
LlABlLlTlES 755.29 855.96
854.4
6 965.74
NET WORKlNG
CAPlTAL 524.49 970.15
1007.
98 870.14
CHART SHOWlNG WC OF BSL:

99
ANAL;SIS OF VARIOUS COM-ONENTS OF WORKING
CA-ITAL
INVENTOR; ANAL;SIS@
Inventory in 3oaro Steel Plant is composed of the following three
things.
Raw /aterials
Stores and Spares
0inished and SemiDfinished products
-OSITION OF RAW MATERIALS IN BOKARO STEEL -LANT
5In
crores2
P-AR 8**=D*& 8**&D*7 8**7D*; 8**;D*<
RA? /A"-RIA4S
6>#SC/-, 8&+:.=: +&=<.*: +;7&.&7 +7;8.<8
RA? /A"-RIA4S
I#A-#">RP 8&+.=< 8&7.8) 8&).)+ )7<.8<
,AI4P
6>#SC/P"I>#U 7.:7 :.;8 )*.+8 )*.*+
'>4,I#, P-RI>,5in
days2U +7 87 8= );
A#A4PSIS "'R>C9' 6'AR".

100

U,aily consumption N Raw materials consumedK#o. of days in a year

U'olding period N Raw materials inventoryK ,aily consumption
INTER-RETATION@
"he holding period in 3oaro Steel Plant is decreasing year after year with
the increase in consumption. It is the lowest in the year 8**;D*< though the
consumption has dipped as compared to the previous year. ,ecreasing trend
will help 3oaro Steel Plant in having a good liEuidity position.
POSlTlON OF STORES AND SPARES lN BOKARO
STEEL PLANT
5In
crores2
P-AR 8**=D*& 8**&D*7 8**7D*; 8**;D*<
S">R-S A#, SPAR-S
6>#SC/-, 7)=.<< 7<8.&; <)=.< <=&.+;
S">R-S A#, SPAR-S
I#A-#">RP 8=&.:; +=).8: +;<.=7 =7;.:7
,AI4P 6>#SC/P"I>#U ).7< ).<; 8.8+ 8.+)
'>4,I#9 P-RI>,5in
days2U )=7 )<8 );* 8*8

101
A#A4PSIS "'R>C9' 6'AR".

U,aily consumptionNRaw materials consumedK#o. of days in a year
U'olding periodNRaw materials inventoryK ,aily consumption
INTER-RETATION@
3oaro Steel Plant shows a similar situation as displayed by Rourela Steel
Plant. ?hile the management was able to bring down the holding period in
the year 8**7D*; as compared to the previous year but it couldn!t bring it
further down in the year 8**;D*< when it again rose though the
consumption had gone up. Immediate control steps are reEuired to be taen
by the company.


POSlTlON OF FlNlSHED AND SEMl-FlNlSHED
PRODUCT lN BOKARO STEEL PLANT
102
5In
crores2
;EAR :44734B :44B34C :44C349 :44934D
"CR#>A-R :;+8.<= :&+;.+; ))**=.; )8*+;.7
S-/IK0I#IS'-, PR>,C6"
I#A-#">RP =&=.=8 ;7<.*7 ;;;.: &=:.=<
,AI4P
6>#SC/P"I>#U 87.77 87.)+ +*.)& +8.<<
<OLDING -ERIOD5in days2U 69 :5 :C 69
ANALYSlS THROUGH CHART:

U,aily consumptionN "urnoverK#o. of days in a year
U'olding periodNSemi 1 finished product inventoryK,aily consumption
lNTERPRETATlON:
After studying the above table and chart we find that in each year the
holding period has decreased than the previous year except in the year
8**&D*7 where the turnover has gone down resulting in the increase of
holding period. "he poor performance of the company and the maret
demand are both the reasons for lower turnover and thereby higher holding
period. "he year 8**;D*< where the turnover is the highest, had the least
holding period.

SUNDRY DEBTORS ANALYSlS:
103
-OSITION OF SUNDR; DEBTORS IN BOKARO STEEL -LANT
5In
crores2
;EAR :44734B :44B34C :44C349 :44934D
,-3"S >A-R SIL />#"'S +;.&: +7.+< +&.== +7.7=
>"'-R ,-3"S =.:8 ;.*) 7.+8 ;.*+
7:.B6 78.85 76.9C 78.C9
4-SS.PR>AISI>#S
0>R
,>C3"0C4
,-3"S +).+< +*.<< +8.<) +&.:+
TOTAL 66.68 6:.B6 D.5B 9.97
C<ANGE IN
AMOUNT LL. 6.8D 38.BC 36.:6
ANALYSlS THROUGH CHART:

lNTERPRETATlON:
"here has been a marginal increase in sundry debtors in the year 8**&D*7
due to increase in other debts after which there has been a continuous
decline in sundry debtors which reflects lesser amount of blocage of cash.
"he plant should try to maintain the same situation in future. "he year 8**7D
104
*; and 8**;D*< shows recovery from debtors and this is Euite positive for
the plant.
CASH AND BANK ANALYSlS:
-OSITION OF CAS< AND BANK BALANCE IN BOKARO STEEL
-LANT
5In
crores2
;EAR :44734B :44B34C :44C349 :44934D
6AS' A#, S"A/P I# 'A#, *.): *.8) *.): *.8&
6'-QC-S ># 'A#, * * * *.*+
?I"' S6'-,C4-, 3A#J.
"-R/
,-P>SI" +&.&< +;.7: =*.<: =+.;8

TOTAL 8B.99 89.5 76.4D 77
C<ANGE IN
AMOUNT .... :.68 8.6D :.5:
ANALYSlS THROUGH CHART:

lNTERPRETATlON:
"he table shows that the position of cash and ban balance in 3S4 is similar
to the position of previous three years of the plant. "he liEuidity position
105
shows an improvement year after year. It is both positive as well as
negative. Positive because it means good liEuidity position and negative
because it means unnecessary cash lying with the company. "hus, a
balanced level of cash and ban balance should be maintained.
lNTEREST RECElVABLE ANALYSlS:
-OSITION OF INTEREST RECEIVABLE IN BOKARO STEEL
-LANT
5In
crores2
;EAR :44734B :44B34C :44C349
:4493
4D
I#"-R-S" R-6-IAA34- *R
A66CR-,.
-/P4>P--S 88.;8 );.<: )+.=< )*.=)
>"'-RS *.=8 ).*; *.&= *.&=
:8.67 6D.5C 67.4: 64.5B
4-SS.PR>AISI># 0>R ,>C3"0C4

I#"-R-S" * * * *
TOTAL :8.67 6D.5C 67.4: 64.5B
C<ANGE IN
AMOUNT LL 37.6D 37.57 38.49

ANALYSlS THROUGH CHART
106
lNTERPRETATlON:-
3y analyIing the above table we find that there is a decreasing trend in
interest receivable. It displays the fact that the management of the company
has been Euite effective in lowering the amount of interest receivable. It can
be said that the amount of interest receivable would come down more in
future which will mean reduction in the blocage of funds.
LOANS AND ADVANCES ANALYSlS:
POSlTlON OF LOAN AND ADVANCES lN
BOKARO STEEL
PLANT
1In
crores2
YEA
R
2004-
05
2005-
06
2006-
07
2007-
08
L6A3S+
5-0L6955S 39.56 59.09 80.94 95.26
S$675S
ISS/58 0 0 0 0
6$;57S 7.81 5.96 5.23 5.15
A84A3%5 75%5I4A:L5 I3 %AS;
67 I3
=I38 67 4AL/5 $6 :5
75%5I458+
%LAI-S
75%6457A:L5 74.79 98.64 142.02
143.7
1
%63$7A%$67S A38 S/00LI57S 39.62 57.93 42.02 62.91
5-0L6955S 3.35 7.35 1.99 3.15
I3%6-5 $A> 75%5467A:L5 0 0 0 0.62
107
6$;57S 53.09 82.97 77.34
121.0
1
8506SI$S+
067$ $7/S$) 5>%IS5 850$)
7AIL?A9S 41.99 77.41 37.92 80.43
6$;57S 32.75 35.48 39.4
105.2
5
292.9
6 425
426.8
6 617.4
L5SS+ 0764ISI63 @67
86/:$@/L
L6A3 A38
A84A3%5S 37.09 33.82 35.96 29.95
TOT
AL
255.8
7
391.1
8 390.9
587.4
5
CHANGE lN
AMOUNT
.
.
135.3
1 -0.28
196.5
5
ANALYSlS THROUGH CHART:
108
lNTERPRETATlON:
3oaro Steel Plant has an uneven trend in loan and advances. "here has
been a negative change in the amount of loan and advances in the year
8**7D*; and this means recovery of loan and advances which can be useful
for the company in other business activities. "he continuous decrease in
provision for doubtful debt and advances is a positive sign for the plant.
CURRENT LlABlLlTlES ANALYSlS:
-OSITION OF CURRENT LIABILITIES IN BOKARO STEEL
-LANT
5In
crores2
;EAR :44734B :44B34C :44C349 :44934D
SC#,RP
109
6R-,I">RS.
/I6R> A#, S/A44
-#"-RPRIS-S * * * *
S/A44 S6A4- I#,CS"RIA4
C#I"S 7.:& ).:& * *
SC3SI,IARP 6>/PA#P ;.<+ * *.& *
>"'-R +8<.+: +*+.;; +8=.&; =+8.7<
A,AA#6-S 0R>/.
6CS">/-R +&.+& 8=.)7 8&.&; +*.8
>"'-RS *.*= *.)) *.)) ;+.<=
S-6CRI"P
,-P>SI"S 8:.=& =8.:) 7;.7< 8+.7:
S">R-S R-6-IA-, >#
4>A# * * * *
4-SS. I#A-S"/-#"
R-6-IA-, AS
S-6CRI"P ,-P>SI" * * * *
>"'-R 4IA3I4I"I-S 8=<.*7 +<<.8= +<8.*= +&;.*7
TOTAL CBC.49 9C6.67 D44.79 569.79
C<ANGE IN
AMOUNT
L
L.. 64B.49 85.88 669
ANALYSlS THROUGH CHART:
110
lNTERPRETATlON:
After a detained analysis of the above table, we can find that the current
liabilities in 3oaro Steel Plant also follow an increasing trend. Its current
liabilities increased by )7G in 8**&D*7, &G in 8**7D*; and )&G in 8**;D*<
mainly due to the growth in other liabilities. Its sundry creditors showed a
significant decline in the year 8**&D*7, after which it started rising in the
next two years.
PROVlSlONS ANALYSlS:
-OSITION OF -ROVISIONS IN BOKARO STEEL -LANT
5In
crores2
;EAR :44734B :44B34C :44C349
:4493
4D
A>4C#"ARP R-"IR-/-#"
S6'-/- 8&.8< ):.8; )=.7+ )*.)8
-/P4>P-- 0A/I4P 3-#-0I"
S6'-/- 8+.7& 8=.8< 8&.+ 8=.77
>"'-RS &*.8: &).8; )=.*7 )+.=:
111
TOTAL 55.:: 57.D: B8.55 7D.:9
C<ANGE IN
AMOUNT L.. 37.7 374.D8 3B.9:
ANALYSlS THROUGH CHART:
lNTERPRETATlON:
"he provisions in 3oaro Steel Plant show a consistent decrease over the
four years. /ore amount of provisions means blocage of funds. So, a
lower amount of provisions is always a good sign for the plant. At the same
time a balanced level of provisions should be made for the employees and
other parties.
WORKlNG CAPlTAL RATlOS
CURRENT RATIO@
112
"his ratio reflects the firm!s ability to pay its current liabilities and the
strength of its woring capital. "he standard of the normal ratio is 8.) but in
most of the companies, standard is taen according to "andon 6ommittee
which is ).++.).
Current Ratio= Current Assets/Current Liabilities.
Year 2004-05 2005-06 2006-07 2007-08
Durgapur
Steel
Plant
1.66+1 1.98+1 2.09+1 2.14+1
Bhilai
Steel
Plant
1.31+1 1.88+1 1.97+1 1.78+1
Rourkela
Steel
Plant
1.61+1 2.04+1 2.13+1 1.95+1
Bokaro
Steel
Plant
1.69+1 2.13+1 2.18+1 1.90+1
lNTERPRETATlON:
If we analyIe the four!s data it can be said that ,urgapur Steel Plant has
shown an increasing trend. Its financial position has improved in every year
and is better than the other plants of SAI4 being considered here.
3hilai Steel Plant, Rourela Steel Plant and 3oaro Steel Plant hold a good
position as reflected by the ratios except in the year 8**;D*< where the ratio
has gone down but is greater than the standard ratio of ).++.).
113
AClD-TEST RATlO:
Acid test ratio is a refinement of current ratio. As it excludes inventory from
current assets, it can more effectively measure the short term debt paying
ability. "he conventional ratio is ).) 5i.e. every rupee of short term
liabilities must be baced by eEuivalent liEuid assets.
Acid-Test Ratio= Total Current Assets-Inventories/Total Current
Liabilities
YEAR 2004-05 2005-06 2006-07 2007-08
Durgapur
Steel
Plant
0.31+1 0.31+1 0.30+1 0.30+1
Bhilai
Steel
Plant
0.26+1 0.30+1 0.40+1 0.43+1
Rourkela
Steel
Plant
0.50+1 0.52+1 0.49+1 0.47+1
Bokaro
Steel
Plant
0.43+1 0.54+1 0.53+1 0.67+1
lNTERPRETATlON:
0rom the above table it is clear that ,urgapur Steel Plant does not meet with
the standard ratio but it can be said that its liEuidity position on an average
is stable and the company is reEuired to improve the current position.
"he liEuidity position of 3hilai Steel Plant, Rourela Steel Plant and
3oaro Steel Plant is sound as well and is on an increasing trend except for
the year 8**7D*; and 8**;D*< when there is a slight fall in the liEuidity
position of Rourela Steel Plant.
114
WORKlNG CAPlTAL TURNOVER RATlO:
"his ratio indicates the relationship between sales and woring capital.
'igher the ratio lower is the investment in woring capital and higher is the
profitability. >n the other hand, a low woring capital ratio indicates that
the woring capital is not efficiently utiliIed.
Working Capita T!rno"#r Ratio$ Sa#%&N#t Working
Capita
YEAR 2004-05 2005-06 2006-07 2007-08
Durgapur
Steel
Plant
17.48 11.91 10.16 10.83
Bhilai
Steel
Plant
36.90 13.33 14.06 16.74
Rourkela
Steel
Plant
16.95 9.31 10.47 12.94
Bokaro
Steel
Plant
18.56 9.83 10.92 13.83
(Note:-Figures are in times)
lNTERPRETATlON:
A detailed analysis of above table reveals that ,urgapur Steel Plant follows
an uneven trend in these four years of study. ?oring capital ratio has been
the highest in the year 8**=D*& which came down in later years. "he
company needs to mae better use of its woring capital.
115
>n the other hand 3hilai, Rourela and 3oaro Steel Plants show an
increasing trend after 8**&D*7 which means that their investment in
woring capital is lower and these companies are utiliIing more of its
profits.
lNVENTORY TURNOVER RATlO +
"his ratio tells the story by which stoc is converted into sales. Csually, a
high inventory turnover ratio reveals the liEuidity of the inventory, i.e., how
many times on an average, inventory is sold during the year. #eedless to say
that if a firm maintains minimum stoc level in order to maximiIe sales by
Euic rotation of inventory, no doubt, the profit will be maximiIed since the
holding cost of inventory will be minimal.
In"#ntor' T!rno"#r Ratio$ Sa#%&A"#rag# In"#ntor'
YEAR 2004-05 2005-06 2006-07 2007-08
Durgapur
Steel
Plant
9.41 7.42 6.96 7.25
Bhilai
Steel
Plant
11.50 8.80 8.83 10.10
Rourkela
Steel
Plant
9.66 7.52 7.94 8.37
Bokaro
Steel
Plant
11.68 8.22 7.93 9.28
(Note:-Figures are in times)
lNTERPRETATlON:
0rom the above table it is clear that ,urgapur Steel Plant has a very
inconsistent inventory turnover ratio. ?hile in the year 8**=D*& it was the
116
highest, 8**7D*; shows the lowest ratio. 3ut in the year 8**;D*< the ratio
increased by =G and reached ;.8& times. As there is no standard inventory
turnover ratio, it can be concluded that ,urgapur Steel Plant on an average
is efficient in converting its stoc into sales.
3hilai Steel plant, Rourela Steel Plant and 3oaro Steel Plant also displays
a similar inconsistency in their ratios. "he management of these plants
needs to tae steps to establish a better efficiency in managing their
inventories.
CURRENT ASSETS TURNOVER RATIO@
"his ratio measures the degree of efficiency in utiliIing the current assets.
'igher the ratio, the better is the utiliIation of current assets. In other
words, it indicates how much rupee of investment in current assets
generates sales. 'ence, a lower ratio is not desirable.
C!rr#nt A%%#t% T!rno"#r Ratio$Sa#%&C!rr#nt A%%#t%
YEAR 2004-05 2005-06 2006-07 2007-08
Durgapur
Steel
Plant
6.93 5.88 5.30 5.77
Bhilai
Steel
Plant
8.78 6.25 6.93 7.31
Rourkela
Steel
Plant
6.43 4.75 5.55 6.30
Bokaro
Steel
Plant
7.61 5.22 5.91 6.56

(Note:-Figures are in times)
lNTERPRETATlON:
117
After analyIing the figures of the four years, it can be said that ,urgapur
Steel Plant has made a much better utiliIation of current assets than the
other three plants of SAI4. ,urgapur Steel Plant had a very much stable
ratio as compared to 3hilai Steel Plant, Rourela Steel Plant and 3oaro
Steel Plant which had fluctuations in the current assets turnover ratio over
the four years. Its ratio of 7.:+ was the highest in the year 8**=D*&.

118
TRADE3OFF BETWEEN -ROFITABILIT; AND RISK
In evaluating a firm!s #?6 position, an important consideration is the
tradeDoff between profitability and ris. "he term profitability used in this
context is measured by profit after expenses. "he term ris is defined as the
probability that a firm will become technically insolvent so that it will not
be able to meet its obligations when they become due for payment.
In evaluating the profitabilityDris tradeDoff related to the level of #?6,
three basic assumptions, which are. 5a2 that we are dealing with
manufacturing firmS 5b2 that current assets are less profitable than fixed
assetsS and 5c2 that shortDterm funds are less expensive than longDterm funds.
EFFe# !F #he *e1e* !F "rren# a$$e#$ !n #he .r!F'#aG'*'#)3r'$, #ra&e3!FF
"his effect can be shown by using the ratio of current assets to total assets.
E##ect o# increase)*ig*er ratio:
An increase in the ratio of current assets to total assets will lead to a decline
in profitability because current assets are assumed to be less profitable than
fixed assets. A second effect of the increase in the ratio will be that the ris
of technical insolvency would also decrease because the increase in current
assets, assuming no change in current liabilities, will increase #?6.
E##ect o# decrease)lo+er ratio:
A decrease in the ratio of current assets to total assets will lead to an
increase in profitability as well as ris. "he increase in profitability will
primarily be due to the corresponding increase in fixed assets which are
liely to generate higher returns. Since the current assets decrease without a
corresponding reduction in current liabilities, the amount of #?6 will
decrease, thereby increase ris.
119
EFFe# !F #he *e1e* !F "rren# *'aG'*'#'e$ !n #he .r!F'#aG'*'#)3r'$, #ra&e3!FF
E##ect o# increase)*ig*er ratio:
An increase in the ratio of current liabilities to total assets will lead to a
increase in profitability. "he reason for the increased profitability lies in the
fact that current liabilities, which are a short term sources of finance will be
reduced. As short term sources of finance are less expensive than longDrun
sources, increase in the ratio will, in effect, mean substituting less expensive
sources for more expensive sources of financing. "here will, therefore, be a
decline in cost and a corresponding rise in profitability.
"he increase in the ratio will also increase the ris. Any increase in current
liabilities, assuming no change in current assets, would adversely affect the
#?6. A decrease in #?6 leads to an increase in ris. "hus, as the current
liabilitiesDtotal assets ratio increases, profitability increases, but so dose ris.
E##ect o# decrease)lo+er ratio:
A decrease in the ratio of current liabilities to total assets will lead to
decrease in profitability as well as ris. "he use of more long term funds
which, by definition, are more expensive will increase the costS by
implication, profits will also decline. Similarly, ris will decrease because of
the lower level of current liabilities on the assumption that current assets
remain changed.

Rs. In lah
120
year :44D345 :445364
6urrent Assets 8+)8*8.** 8)+=.87
0ixed Assets +=8=7;.** =&8<.+)
T!#a* A$$e#$ &;+77:.** 7778.&;
6urrent
4iabilities 8*)+)8.** )=&+.+)
C"rren#
A$$e#$/T!#a*
A$$e#$ (M age) =*.+* =;.)+
C"rren#
L'aG'*'#'e$/T!#a*
A$$e#$ (M age) +&.*: 8).<)
RATIO ANALYSIS: ,

LIKUIDIT; RATIO@
4iEuidity ratio shows the firm!s short term solvency and its ability to pay
off the liabilities. It has been devised to eep a trac of their firm!s exposure
the ris that it will not be able to meet its short term obligations. It provides
a Euic measure of liability of the firm by establishing a relationship
between its current assets and its current liabilities.
S!me !F #he *'N"'&'#) ra#'!@
a) C"rren# ra#'!@
"he current ratio gives the margin by which the value of the current assets
may go down without creating and payments the firms. "he total current
assets include prepaid expenses and short term investments. ?hereas the
current liability includes all types of liability which will mature for
121
payments within a period of one year e.g. ban overdraft, bills payable,
trade creditor, outstanding etc.
"he current ratio is compared with the standard ratio of two times for 8. )
G) K"', ra#'! / A'& #e$# ra#'! / L'N"'& ra#'!@
"his ratio establishes relationship between Euic current assets and current
liabilities. A current assets is considered to be liEuid if it I convertible into
cash without loss of time and value. "herefore,
4iEuid assets N currents assets @ 5inventory O prepaid expenses2
9enerally a Euic ratio of ).) is considered to be satisfactory because this
mean that the Euic assets of the firm are just eEual to the Euic liability and
there has not been seen to be a possibility of default in payments by the
firm.
) Ne# W!r,'ng Ca.'#a* Ra#'!@
It indicates the firms! potential reservoir of fund.
#et ?oring 6apital RatioN #et ?oring 6apitalK #et Assets
ACTIVIT; / TURNOVER / -ERFORMANCE RATIO@D
It is measure of movement and thus indicates as to how freEuently an
account has moved over during a period. It shows as to how efficiently and
effectively the assets of the firm are being utiliIed. "hese ratios are usually
calculated with references to sales K cost of goods sold and its expressed in
terms of rate or times.
a) W!r,'ng a.'#a* #"rn!1er ra#'!@
"he ?6" ratio studies the velocity or utiliIation of the woring capital of
the firm during a year. "he ?6 here refers to the net woring capital which
is eEual to the total current assets less total current liabilities.
"he higher the ?6" ratio the lower is the investment in the woring capital
and higher would be the profitability. A high ?6" ratio reflects the better
utiliIation of the ?6 of the firm. 'owever, a high ?6" ratio implies a low
net woring capital in relation to the sales volume and therefore implies
over trading by the firm in relation to its net ?6.
122
G) F'+e& a$$e#$ #"rn!1er ra#'!@
"his ratio shows the contribution of average fixed assets to net sales. 'igher
the ratio better will be the sales per unit of fixed assets.
0A turnover ratio N 5net sales2 K average fixed assets
) Ca.'#a* #"rn!1er ra#'!@
6apital turnover ratio N 5net sales2 K average capital employed.

II. Ra#'! Ana*)$'$ Ca*"*a#'!n$ (:44DA45)
L'N"'&'#) .!$'#'!n@
a) C"rren# ra#'!@
6urrent assets N Rs. 8)+=.87 crore
6urrent liability N Rs )=&+.+) crore
6urrent ratio N current assets K current liabilities
N 8)+=.87 K )=&+.+)
N ).=; times

G) K"', Ra#'!@
Inventory N Rs. )&<+.)* crore
Quic ratio N 5total 6A @ inventory2 Ktotal current liabilities
N V8)+=.87 @ )&<+.)*WK)=&+.+)
N 5&&).)72K )=&+.+)
N *.+< times
) Ne# W!r,'ng Ca.'#a Ra#'!@
#et ?oring 6apital N 7<*.:&
"otal Assets N 0ixed Assets O 6urrent Assets N=&8<.+)O 8)+=.87
N7778.&;
#et Assets N "otal Assets D 6urrent 4iabilities N 7778.&;D
)=&+.+)N&8*:.87
#et ?oring 6apital RatioN #et ?oring 6apitalK #et Assets
O7<*.:& K&8*:.87
N*.)+
123
A#'1'#) Ra#'!@
a) Ca.'#a* #"rn!1er ra#'!@
#et sales N Rs. )*=)=.+&crore
?oring capital N total 6A @ "otal 64
N Rs. 7<*.:& crore
#et capital employed N #et bloc O woring capital
N 88;7.87 O 7<*.:&
N Rs. 8:&;.8) crores
6apital turnover Ratio N net sales K net capital employed
N )*=)=.+&K 8:&;.8)
N +.&8 times
G) W!r,'ng a.'#a* #"rn!1er ra#'!@
#et sales N Rs. )*=)=.+&crore
?oring capital N Rs. 7<*.:&
?oring capital turnover ratio N net sales K ?.6
N )*=)=.+&K 7<*.:&
N )&.8: times
) F'+e& #"rn!1er ra#'!@
#et sales N Rs. )*=)=.+&crore
#et fixed assets N RS. =&8<.+)
0ixed turnover ratio N #et sales K net fixed assets
N )*=)=.+&K=&8<.+)
N 8.+* times
;EAR :44D345 :445364
6CRR-#" RA"I> ).)& ).=;
QCI6J RA"I> *.8< *.+<
#-" ?>RJI#9 6API"A4 RA"I> *.*< *.)+
6API"A4 "CR#>A-R RA"I> =.77 +.&8
124
?>RJI#9 6API"A4 "CR#>A-R
RA"I>
+:.7; )&.8:
0IL-, "CR#>A-R RA"I> +.=7 8.+*
In#er.re#a#'!n
6urrent ratio with respect to previous year, current ratio is positive.it
shows better position of current assets over current liabilities, and it is
going towards the standard current ratio which is 8.)
Quic ratio. ?ith respect to previous year it also shows better
position.Its standard is ).).It increased from last year which shows
better financial position of 3S4 Plant for 6urrent financial
reEuirement.
?ith respect to previous year ? 6 Ratio shows the positive sign , It
indicates, since.D
5a2woring capital is used for smooth running of the organistion.
5b2for meeting rutine reEuirements of the organiIation easily.
5c2 for fulfillment of future Euic reEuirements of the organiIation.
5d2It shows the strength of the organiIation
And increasing woring capital shows better strength of 3S4 Plant.
6apital turnover is calculated with respect to turnover and current
year!s turnover is )*=)=.+& and last year!s turnover is )*=78.;:.So it
is not in better position.
?oring 6apital turnover Ratio is 6alculated with respect of turnover
,as turnover of current year is decreased so this ratio is negative.
0ixed assets turnover ratio is calculated by comparing net fixed assets
with respect to turnover. this ratio is also declining this year, It shows
the under utiliIation of fixed assets with respect to turnover.
0ixed turnover ratio is decreasing because of huge investment in fixed
assets.
SALES -ROCESS OF -RODUCTS MANUFACTURED IN BOKARO
STEEL -LANT
125
P4A#"
Sales Stoc "ransfer
-xport Sales Stocyard "ransfer
,irect Sales IP" "ransfer
6/> ,irect Sales Plant ,irect Sales
Sales of Primary Product
6/>
Sales of Secondary Products
3S> A( B( C LLL.. Sister Plants A( B L...
Party A( B( C( D LLLLLLLL
126
6/>. 6entral /areting >rganiIation
IP". Inter Plant "ransfer
3S>. 3ranch Sales >ffice 5there are total =& 3S> of SAI4 situated in
different States of India2
Primary Product. Product made or manufactured as per specification.
Secondary Product. "hese are effective items but not meeting the
specification.

127
Cha.#er A B
&.) 4imitation of study
&.8 6onclusions
&.+ Suggestion
&.= 3ibliography B

128
B.6 L'm'#a#'!n !F $#"&)
"he present study is limited to 3oaro Steel Plant.
"he authenticity of the suggestions and recommendations
depend upon the rationality of the data provided to me.
'ave to rely upon the data supplied.
-xecutives are not ready to part with the information beyond a
limit.
129
B.: CONCLUSlONS
Summer internship has given lot of practical experiences from on the job
culture to theoretical implications at different levels. "here is a great
learning in financing to corporate.
$he "roAtabi&it# o' the "&ant is getting a,ecte ue to
the ho&ing o' cash as i&e *hich is increasing #ear
a'ter #ear.
$he co!"an# has an eBce&&ent shortCter! &i.uiit#
"osition an it shou& &oo( 'or*ar to i!"rove it in the
'uture.
,uring 8**:@)*, profit before tax of 3oaro Steel Plant is Rs. )8<7.&*
which is less as compared to profit before tax of 8**;D*< that is Rs.)8<7.&*,
although production has been increased. It is because of decrease in price of
flat product in domestic and global maret due to recession. Although the
maret is dull, 3S4 is able to mae profit which shows the continuous
strengthening of the company!s financial fundamentals. "his was the
outcomes of multiDpronged strategy @ including increase in production and
sales volume, improvement in product mix, cost reduction major, reduction
in borrowing coupled with buoyancy in the steel maret.

130
B.8 SUGGESTlON
In view of the analysis and with the change in industrial scenario it is felt
that a company must reorient its policies for betterment. 3S4 produces flat
product and now a days there is tough competition in the maret of flat
product. 'ence company needs certain best policies for competition with its
competitor in domestic as well as global maret.
In brief the following suggestions are.D
6ompany use perpetual inventory, which is very costly. 'ence the
company should use both perpetual and periodic inventory.
3esides automatic procurement items there is no specific system for
calculating reorder level, minimum and maximum level. A proper
system for different items should be developed.
4ead time for receipt of stores and spare items is around 7 months,
which is very high. "he lead time should be brought down by
decreasing the time duration in paper wor.
As understand from the explanation of the management, there is huge
volume of nonDmoving and obsolete stores and spare items which are
yet to be disposed of.

131
5.4 BlBLlOGRAPHY
BOOKS% REFERENCES@
I./. Pandey 0inancial /anagement
Annual Reports *:D)*
PurchaseK 6ontract ProcedureD8**:
Annual StatisticsDSteel Authority of India58**=D*&, 8**&D*7, 8**7D*;,
8**;D*<2
0inancial /anagement by /.P.Jhan and P.J.(ain
0inancial /anagement by S.Jr.Paul
0inancial Statement Analysis by S.Jr.Paul
WEBSITES @D
www.google.co.in
www.sail.co.in
www.sail.nic.in
www.scribd.com
132
www.valuenotes.com

133
T(ank
Yo!
134