Financial Performance and Budgeting

Financial Performance & budgeting
With Reference to Visakhapatnam Steel Plant
Rastriya Ispat Nigam Limited
SUBMITTED BY
G. PARDHA SARADHI
BCOM RR (FINANCIAL REPORTING)
Under Guidance of
Mr. V. RAMESH KUMAR, Asst. Manager (F&A),
Visakhapatnam Steel Plant
Mrs. M.Hema Latha, Lecturer in Commerce,
TSR & TBK DEGREE COLLEGE
Facilitated BY HRD Group
Sri. O R M RAO (A.G.M) (HRD)
Sri. M L S VARMA (ASST. MANAGER) (HRD)
DEPARTMENT OF COMMERCE AND MANAGEMENT
TSR&TBK DEGREE & PG COLLEGE

(Affiliated to Andhra University and approved by AICTE) 1
SRINAGAR, GAJUWAKA, VISAKHAPATNAM

(2016-2019)
CERTIFICATE
This is to certify that project study on “Financial Performance and Budgeting” in
Visakhapatnam Steel Plant is beneficed work done and submitted
by G.PARDHA SARADHI Reg. No 116134203017 in partial fulfillment of the
requirements for the awards of BCOM, from TSR&TBK DEGREE COLLEGE,
VISAKHAPATNAM.
Project Guide
Mrs. M. Hema Latha. Mrs.V.D.N.Subhashini
Lecturer in Commerce Head of the Department
Date:
Place: Visakhapatnam
EXTERNAL EXAMINER
2
STUDENT DECLARATION
I,GRANDHI PARDHA SARADHI (Reg.no.116134203017) declare that the project

report entitled “Financial Performance & Budgeting” with Regard to
Rastriya Ispat Nigam Limited, Visakhapatnam submitted by me under
guidance of Mr.V.RameshKumar(sir), Asst. Manager, (F&A .Department),RINL
of my own work and not has been submitted to any university or institute or
published earlier.
Date: Signature of the Student
Place: Visakhapatnam (G.PARDHA SARADHI)
Reg.No:-116134203017
3
PREFACE
This internship report is a presentation of my effort to study the practice of

Financial Management Topics in public sector enterprises, referring to
Visakhapatnam Steel Plant. The report presents the fields of practical
approaches in the subject of Financial Management in FINANCIAL
PERFORMANCE AND BUDGETING.
This report intends to provide brief knowledge of various concepts,

principles, approaches, considerations relevant to this field. Though the basic
idea is to supply my study in the project, the report has undergone a realistic
survey of actual theory and practices in Visakhapatnam Steel Plant although
there is much gulf to be bridged.
This report seeks to cover the topics of Financial Performance, mainly

focusing the respects like Comparative balance sheet and Common size balance
sheet and many other aspects.
The report has been divided into five chapters and the arrangements of
topics in various chapters have been grouped according to the analysis of the
subject.
4
ACKNOWLEDGEMENT
I take this opportunity to express my deepest and heart full gratitude to

TSR&TBK DEGREE COLLEGE, VISAKHAPATNAM for providing me
an opportunity to take of this project.
This project is a result of the hard work & sincere effort put by many hands. I
render my sincere thanks to Mr.O.R.M.RAO (sir), AssistantGeneral Manager
(HRD) and Mr.M.L.S.VARMA(sir), Assistant Manager (HRD),
Visakhapatnam Steel Plant for giving me this opportunity to do my project work
in Visakhapatnam steel plant.
I express my sincere thanks to Mr.V.RAMESH KUMAR (sir), Assistant

Manager(F&A), whose supervision, valuable guidance & help enabled me to
complete this project work.
I also wish to express my sincere thanks to all the staff members of VSP who
have directly or indirectly lend me a helping hand in completing my project
work.
(G.Pardha Saradhi)
5
INDEX PAGE
Sl. No. CONTENTS PAGE No.
1 Introduction 7-11
2 Profile Of Indian Steel Industry 12-21
3 Profile Of Visakhapatnam Steel 22-39

Plant
4 Theoretical Framework Of 40-50
Financial Performance Analysis
5 Data Analysis & Interpretation 51-114
6 Abbreviations 115
7 Findings & Suggestions 116-118
8 Bibliography 118
6
INTRODUCTION
Steel comprises one of the most important inputs in all sectors of
economy. Economy of any country depends on the strong base of the iron and
steel industry.
Steel is a versatile material with multitude of useful properties, making

indispensable for furthering and achieving continual growth of the economy be
it construction, manufacturing infrastructure or consumables. The level of the
steel consumption has long been regarded as an index of industrialization and
economic maturity attained by country.
Keeping in view the important of steel the integrated steel plant with
foreign collaboration was setup in the public sector in the post independence
era. The growth of any organization depends on the overall performance such
as productions, marketing resources and financial performance of the
organization. The financial performance of the any organization reflects the
strength, weakness, opportunities and threats of the organization with respect to
profits earned, investment, sales, realization, turn over return on investment, net
worth of capital efficient management of financial resources and deliberate
analysis of financial results are pre requisite for success of an enterprise.
In that financial performance is one of the major and important areas of

financial management. Every organization requires study on financial
performance about business transactions, which includes managing current
assets like cash, inventory, accounts receivable, loans and advances and current
liabilities like sundry creditors.
7
1.1 Introduction to Financial Analysis
Financial analysis is the process of identifying the financial strength and

weakness of the firm by properly establishing between the items of the balance
sheet and profit and loss account. There are various methods or techniques used
in analysis financial statements such as comparative statements, trend analysis,
common size statements, schedule of changes in working capital, funds flow
and cash flow analysis – Cost Volume Profit Analysis and Ratio Analysis.
Meaning and Concept of Financial Analysis:
The terms ‘financial analysis’ also known as analysis and interpretation

of financial statements refers to the process of determining financial strength
and weaknesses of the firm by establishing strategic relationship between the
items of the balance sheet, profit and loss account and other operative data.
1.2 Need For The Study:
There is a special role of every industry barring up on the need essentiality

where everything has to be done in accordance with standards that are regulated
by the government.
To understand this, conceptual idea is not only sufficient but also it needs
a wide knowledge and understanding of the factors that are affecting them.
Especially VISAKHAPATNAM STEEL PLANT has emerged from loss to
profit making company.
Now, the study is all about analyzing, how this has been possible for a
company whose figures were budgeted to negative show finally ended with high
positively.
8
At most care was taken in preparing the budget relating to that period of
the year. As days passed on, we could see the development in all the sectors is
quite appreciable. Coming to our main topic, we need to analyze the factors of
the turnaround period (2003-2008) to get as idea of what a major company does
in upcoming the pressures from all sides. This study is also focuses on variances
shown in that period
1.3 Scope of the Study:
Financial analysis depends primarily on financial statements to diagnose

financial performance there are three principle reasons.
 As longer as the accounts bases remain more or less the some

overtime, meaningful mitered is can be drawn by examining trends in raw data
and financial ratios.
 Since similar basis characterize various firms in the same industries,

incur firm comparisons are useful.
 Experience seems to suggest the financial analysis works one is

accounting basis and more adjustments for the same.
The following points explain the nature of the financial statement analysis
in steel industries. The records are maintained on the boards of actual costs data.
 Certain neither accounts nor conversions are followed while

preprimary financial statement.
 Still personal judgment of the accountant phrases on important part.
1.4 Objectives of the Study:
The Study is based upon the part of Financial Performance that is been taken
into consideration i.e. Financial Statements and Analysis. The Study
predominantly aims at the turn around period (2003-08).
9
 To know the current position of various assets, liabilities and results of
operation activities
 To find out Financial Strengths and weaknesses of the firm
 To know the Liquidity Position of a firm
 To know the causes of changes in the Cash Position
 To find out important tools of Short-term, Long-term Financial

Planning
 To know the ability of the firm to meet its current obligations
 To know the overall operation efficiency and performance of the firm
 To find out foremost important Financial Decisions
 To know the detailed information about comparative and common size

balance sheets
.5 Methodology:
The information for the study has been obtained from two sources namely:
 Primary Data
 Secondary Data
1. Primary Data:
It is the information collects directly with out any reference. In tills study
it was mainly interviews with concerned officers and staff, either individually or
collectively, sum of the information has been verified or supplemented with
Personal observations.
The data includes.
1. Having a discussion with finance manager.

10
2. Guidelines are taken from Asst. General Manager (F&A).
2. Secondary Data:
This is taken from the annual reports, websites, company journals,

magazines and other sources of information of steel plant.
1.6 Limitations of the Study:
 The period of study that is 8 weeks was not enough to go in the detailed
aspects of the study.
 The study is carried bearing on the information and documents provided

by the organization and based on the interaction with the various
employees of the respective departments.
 Most of the matters related to budgets were confidential so it not possible

together much information.
11
2.Profile of Indian steel industry
Introduction:-
India’s Steel Industry is more than a century old. Before the economic
reforms of the early 1990s the Indian steel industry was a predominantly
regulated one with the public sector dominating the industry.
Tata Steel was the only major private sector company involved the
production of steel in India. Sail and Tata Steel have traditionally been the
major steel producers of India. In 1992, the liberalization of the India economy
led tothe opening up of various industries including the steel industry. This led
to the increase in the number of producers, increased investments in the steel
industry and increased production capacity. Since 1990, more than Rs 19,000
crores (US$ 4470.58 million) has been invested in the steel industry of India.
India’s steel industry went through a rough phase between 1997 and 2001
when the overall global steel was facing a downturn and recovered after 2002.
The major factors that led to the revival of the steel industry in India after 2002
was the rise in global demand for steel and the domestic economic growth in
India
India has now emerged as the eighth largest producer of steel in the world
with a production capacity of 35million tones. Almost all varieties of steel is
now produced in India. India has also emerged as a net exporter of steel which
shows that Indian steel is being increasingly accepted in the global market.
The growth of the steel industry in India is also dependent, to a large extent, on
the level of consumption of steel in the domestic market. Steel consumption is
significant in housing and infrastructure. In recent years the surge in housing
industry of India has led to increase in the domestic demand for steel.
12
More than 3500 different varieties of steel are available in the steel
industry of India. These can however be classified into two broad categories-
 Flat Products – Flat products include plates and hot rolled sheets such
as coils and sheets. Flat products are derived from slabs. One of the
major uses of steel plates is in ship building.
 Long Products – Long products include bars, rods, wires, ropes and
piers. These are called long products due to their shapes. Long
products are made from billets and blooms. Long products are mostly
used in housing and construction and also in rail tracks.
Highlights of Present Steel Scenario:
 The world steel shows a low growth demand.

 There is a threat to steel industry from competitive products like plastics,
aluminum, etc.
 Developed countries slowly reduced the production of steel.
 Developing countries like China are planning to produce steel as much
large quantity then of present output of 80 Mt. per annum.
 India consciously and strategically decides to invest into steel production.
 Preference is given to superior quality products and high value item
production.
 Customer oriented approach in view of product oriented approach.
13
The Major Steel and Related Companies in India:
 Bharat Refectories Ltd.

 Hindustan Steel works Construction Ltd
 Jindal Steel and Power Ltd
 Manganese ore(India) Ltd
 Metal scrap Trade corporation Ltd
 Metallurgical and engineering consultants India Ltd
 National Mineral Development Corporation
 Rastriya Ispat Nigam Ltd
 Sponge Iron India Ltd
 Steel Authority of India Ltd
 TATA Iron steel Company
S.No plant Collaboration capacity of

finished products
1 Rourkela steel plant West Germany
2 Bhilai steel plant Erstwhile USSR
3 Durgapur steel plant Britain
4 Bokaro Steel plant Erstwhile USSR
14
Sl.No plant Collaboration capacity of Annual production
finished products
1 Rourkela steel plant West Germany 7,20,000 Tones
2 Bhilai steel plant Erstwhile USSR 7,70,000 Tones
3 Durgapur steel plant Britain 8,00,000 Tones
Development of Indian Steel Industry:
The development of steel industry in India should be viewed in

conjunction with the type and system of government that had been ruling the
country. The production of steel in significant quantity started after 1900. The
growth of steel industry can be conveniently studied by dividing in the period
into pre % &post independence era (or before 1950 & after 1950). The total
installed capacity for in-got steel production in during pre-independence era was
1.5 million tones / year, which has risen to about 8 million tones of ingot by the
seventies. This is the result of the bold steps taken by the government to
develop this sector.
1951-1956: First five year plan.
No new steel plant came up. The Hindustan Steel Ltd. Was born on 19 th January
1954 with the decision of setting up three plants each with one million tonne
input steel per year in at Rourkela, Bhilai and Durgapur; TISCO started its
expansion programming.
15
1956-1961: Second five year plan.
A bold decision was taken up to increase the ingot steel output India to 6
million tonnes per year & production at Rourkela, Bhilai and Durgapur steel
plant started.
1961-1966: Third five year plan.
During the third five year plan the three steel plants under HSL, TISCO &
HSCO were expanded as show, in January 1964 Bokaro steel plant came into
existence.
1966-1969: Recession Period.
The entire expansion programme was actively executed during this period.
1969-1974: Fourth five year plan.
 Licenses were given for setting up of many Mini-Steel plants and rolling
mills.
 Government of India accepted setting up two more steel plants in south.

One at Visakhapatnam (Andhra Pradesh) and Hospet (Karnataka).
 SAIL was formed during this period on 24th January, 1973. The total
installed capacity from 6 integrated plants was 106Mt.
1979: Annual Plan
The erstwhile Soviet Union agreed to help in setting up the Visakhapatnam steel
plant.
1980-1985: Sixth five year plan.
 Work on Visakhapatnam steel plant was started with big bang and top
16
priority was accorded to start the plant.
 Scheme for modernization of Bhilai Steel Plant, Rourkela, Durgapur,
TISCO were initiated.
1985-1991: Seventh five year plan.
 Expansion work of Bhilai and Bokaro Steel Plants are completed
 Progress on Visakhapatnam steel plant picked up and rationalized

concept has been introduced to commission the plant with 3.0Mt, liquid
steel capacity by 1990.
1991-1996: Eight five year plan.
Visakhapatnam steel plant started its production modernization of other steel

plants is also duly envisaged.
1997-2002: Ninth five year plan.
Visakhapatnam steel plant had foreseen a 7% growth during the entire

plan period.
2002-2007: Tenth five year plan.
Steel industry registers the growth of 9.9% Visakhapatnam steel plant

high regime targets achieved the best of them.
2007-2012:Eleventh five year plan.
Steel industry registers the growth of Visakhapatnam steel plant high

regime targets achieved the best of them.
2012-2017:TWELFTH FIVE YEAR PLAN.
The steel industry has a bright future as the union government has
announced to create infrastructure worth Rs 50 lakh crore in Visakhapatnam 17
steel plant.
Size of the India’s Steel Industry
The size of India’s steel industry has increased considerably in recent

years. According to latest available estimates, India ranks eighth among the top
steel producers of the world with a production capacity of 35 million tones.
The steel industry of India has capital investments of more than Rs

100,000 crores. The total employment in the industry is more than two million
(including direct and indirect employment).
Global Demand for Steel and Indian Steel Industry
The global demand for steel is at an all time high nowadays. Much of the
tremendous demand for steel around the world may be attributed to the
numerous construction projects that are going on around the world.
Global steel demand recovery continues but growth is stabilizing at a

lower rate with continued volatility and uncertainty leading to a challenging
environment for steel companies.”
After growth of 6.1% in 2013 with support from government

infrastructure investment, apparent steel use in China is expected to slow to
3.0% growth in 2014 to 721.2 Mt as the Chinese government’s efforts to
rebalance the economy continues to restrain investment activities. In 2015, steel
demand growth is expected to further decelerate to 2.7%.
In India, steel demand is expected to grow by 3.3% to 76.2 Mt in 2014,

following 1.8% growth in 2013, due to an improved outlook for the construction
and manufacturing sectors, even though this will be constrained by high
inflation and structural problems. Despite uncertainties relating to the impact of 18
upcoming elections steel demand is projected to grow by 4.5% in 2015
supported by the expectation that structural reforms will be implemented.
Much of these projects are taking place in the economically developing

countries of the world like India, China and Thailand. China is the place where
a lot of construction is being done nowadays and much of the construction is for
the purpose of the Olympics to be held in 2008 and the Shanghai
World Exposition of 2010.
India has a lot of iron ores. This implies that India has a ready base for
producing sufficient amount of steel and the experts are also of the opinion that
the Indian steel industry would continue to grow in the coming years. In the
recent times the production of steel has gone up in the country from 17 million
tones in 1990 to 36 million tons in 2003.
The Indian steel industry is trying to reach the 66 million tones mark in
2011. The high levels of production would allow the Indian steel industry to
establish a stronghold on a number of areas like housing, construction, and
ground transportation. The special steel produced by the Indian steel industry is
supposed to be used in high end engineering industries like generation of power,
fertilizers and petrochemicals.
The fact that India is not a voracious consumer of steel like some of the
major economies like China and the United States of America means that India
would be able to use the surplus steel it produces for exporting to other
countries so that their demands are met. This would help the Indian steel
industry to be regarded as one of the most prominent steel industries if not the
leading one.
Growth Potential of India’s Steel Industry:

19
India has set a vision to be an economically developed nation by 2020.
The steel industry is expected to play a major role in India’s economic
development in the coming years. The steel industry of India has a very high
growth potential and is expected to register significant growth in the coming
decades. India is expected to emerge as a strong force in the global steel market
in coming years.
The two major aspects that are expected to play a significant role in the
growth of the steel industry in India are:–
 Abundant availability of iron ore in the country
 The country has well established facilities for steel production
Steel production in India has grown from 17 million tons in 1990 to 36

million tons in 2003. In India, steel demand is expected to grow by 3.3% to
76.2 Mt in 2014, following 1.8% growth in 2013
The major sectors where consumption of steel is expected to grow in the

coming years are:-
 Construction
 Housing
 Ground transportation
 Hi-tech engineering industries such as power generation,

petrochemicals, fertilizers
Conclusion on Indian Steel Industry:
The Indian steel industry is among the upcoming industries of the world.
It has a number of iron ores, which means that it has plenty of resources from
which to draw its raw material. 20
The rate of production of steel in India has been going up at a steady rate
in the last few years. In the recent times Orissa and Jharkhand have been
identified as the potential steel destinations of India – the ones that would
provide the Indian steel industry with its necessary raw material. There are also
a number of steel companies in India like Tata and ArcelorMittal that are either
coming up or have established themselves as prominent forces in the world steel
scenario.
In the recent times a lot of foreign direct investment is being made in the
Indian steel industry. In fact the rate of investment is being made in the last few
years and, to a certain extent, this increase has been contributed to by the
growth potential of the steel industry of India that is thought of as being
impressive in the international steel circle.
21
3. Profile of Visakhapatnam steel plant
“Visakhapatnam Steel Plant, popularly known as vizag Steel, is one of

the major steel producers in India.” Visakhapatnam steel plant the first coast
based steel plant of India is located 16 km south west of city of destiny i.e.,
Visakhapatnam Bestowed with modern technologies, VSP has an installed
capacity of 7.3 million tons per annum of liquid steel and 6.773 million tons of
saleable steel. At VSP there is emphasis on total automation, seamless
integration and efficient up gradations which results in wide range of long and
structural products to meet stringent demands of discerning customers with in
India and abroad. VSP products meet exacting international quality standards
such as JIS, DINAND BIS, and BS etc.
VSP has become the first integrated steel plant in the country to be
certified to all the three international standards for quality (ISO-9001) for
environment management (ISO-14001), for Occupational Health & Safety
(OHSAS-18001). The certificate covers quality system of all operational,
maintenance and service units besides purchase system, training and marketing
functions spreading over 4 regional marketing offices, 24 branch offices and
stock yard located all over the country.
VSP successfully installing and operating efficiently Rs460 crores worth

of pollution control and environment control equipment’s and converting the
barren land scape by planting more than 3 million plants has made the steel
plant, steel township and surrounding areas into a heaven of lush greenery.
22
Introduction:
Steel occupies the foremost place amongst the materials in use today and
pervades all walks of life. All the key discoveries of human genius – for
instance steam engine, railway means of communication and connection,
automobile, aero place and computer, are in one way or together with steel and
with its sagacious and multifarious application. Steel is a versatile material with
multitude of useful properties making it indispensable for furthering and
achieving continual growth of the economy – be it construction, manufacturing,
infrastructure or consumables. The level of steel consumption has long been
regarded as an index of industrialization and economic maturity attained by a
country. Keeping in view the importance of steel, the following integrated steel
plants with foreign collaboration were set up in the public sector in the post-
independence era:
Sl. No Steel plant Collaborated by

1 Durgapur steel plant Britain
2 Bhilai steel plant Erstwhile USSR
3 Bokaro steel Plant Erstwhile USSR
4 Rourkela steel plant Germany
Background:
With a view to give impetus to industrial growth and to meet the aspirations
of the people from Andhra Pradesh, Government of India decided to establish
integrated steel plant in public sector at Visakhapatnam (AP). The
announcement to this effect was made in the parliament on 17th April, 1970 by
the Prime Minister of India Smt.Indira Gandhi.
A site was selected near Balacheruvu creek near Visakhapatnam city by a

committee set up for the purpose, keeping in view the topographical features,
23
greater availability of land and proximity to a future port. Smt.Indira Gandhi
laid the foundation stone for the plant on 20th January 1971.
Seeds were thus sown for the construction of a modern & sophisticated steel
plant having annual capacity of 3.4 million tons of hot metal. An agreement was
signed between Government of India and the erstwhile USSR on June 12 th 1979
for setting up of an integrated steel plant to produce structural & long products
on the basis of detailed project report prepared by M/s M.N. Dustur& company.
A comprehensive received DPR jointly prepared by soviets & M/s Dustur&
company was submitted in Nov’ 1980 to Government of India.
The construction of the plant started on 1 st Feb 1982. Government of India

on 18th Feb 1982 formed a new company called Rashtriya Ispat Nigam Ltd.
(RINL) and transferred the responsibility of construction, commissioning &
operating the plant at Visakhapatnam from steel authority of
To meet growing domestic needs of steel, Government of India decide to

setup an integrated steel plant at Visakhapatnam.
An agreement was signed with erstwhile USSR in 1979 for co-operation in

setting up 3.4mt integrated steel plant at Visakhapatnam.
It can be seem from the above table, during the year 2002-03, the company
turned around by earned a net profit of Rs 521 crores.
In the same year, it bagged the PRIME MINISTER TROPHY for its
excellent performance in the steel industry. In September 2003, RINL became a
DEBT FREE COMPANY.
VSP Technology: State-of-the-Art:

24
 7meter tall coke oven batteries with coke dry quenching.

 Biggest Blast Furnaces in the country
 Bell less top charging system in blast Furnace.
 100% slag granulation at the BF cast house.
 Suppressed combustion - LD gas recovery system.
 100% continuous casting of liquid steel.
 "Tempore" and "Stelmor" cooling process in LMMM & WRM.
 Extensive waste heat recovery systems.
 Comprehensive pollution control measures.
Major Sources of Raw Materials:
Raw Material Source
Iron Ore Lumps & Fines Bailadilla, MP
BF Lime Stone Jaggayyapeta, AP
SMS Lime Stone UAE
BF Dolomite Madharam, AP
SMS Dolomite Madharam, AP
Manganese Ore Chipurupalli, AP
Boiler Coal Talcher, Orissa
Coking Coal Australia
Medium Coking Coal (MCC) Gidi/Swang/Rajarappa/Kargali
Major Units:
Department Annual Capacity Units (3.0 MT Stage)
(‘000 T)
Coke Ovens 2,261 4 Batteries of 67 Ovens & 7 Mtrs. Height

25
Sinter Plant 5,256 2 Sinter machines of 312 Sq. Mtr. Grate area each
Blast Furnace 3,400 2 Furnaces of 3200 Cu. Mtr. Volume each
Steel Melt Shop 3,000 3 LD Convertors each of 133 Cu. Mtr. Volume and
six 4 strand bloom casters
LMMM 710 4 stand finishing Mill
WRM 850 2 x 10 stand finishing Mill
MMSM 850 6 stand finishing Mill
Main Steel Products of VSP:
Steel Products By Products
Angles Nut Coke
Billets Coke dust
Channels Coal Tar

26
Beams Anthracene Oil
Squares HP Naphthalene
Flats Benzene
Rounds Toluene
Re Bars Zylene
Wire rods Wash Oil
Vision, Mission & Objectives:
Vision:
 To be a continuously growing world class company we shall

 Harness our growth potential and sustain profitable growth.
 Deliver high quality and cost competitive products and be the first choice
of customers.
27
 Create an inspiring work environment to unleash the creative energy of
people.
 Achieve excellence in enterprise management.
 Be respected corporate citizen, ensure clean and green environment and
develop vibrant communities around us.
Mission:
To attain 20 million ton liquid steel capacity through technological up-
gradation, operational efficiency and expansion; augmentation of assured
supply of raw materials to produce steel at international standards of cost and
quality; and to meet the aspirations of the stakeholder.
Objectives:
 Achieve Gross Margin to Turnover ratio > 10%.
 Plan for
 Achieve higher levels of customer satisfaction.
 Vibrant work culture in the organization.
 Be proactive in conserving environment, maintaining high levels of safety

and addressing social concerns.
Core Values:
 Commitment
 Customer Satisfaction
 Continuous Improvement
 Concern for Environment
 Creativity & Innovation 28

VSP – Policies:
VSP takes all necessary actions for the fulfillment of regulatory

requirements. It has dedicated departments for this purpose. Energy
conservation, environmental preservation, safety in work place, and
occupational health gets highest priority in the company. Some of the policies in
this regard are reproduced below.
Quality Policy:
 Supply quality goods and services to customers’ delight.
 Document, Implement, Maintain and periodically review the management

systems including the policy, Objectives and targets.
 Focus on conservation of natural resources and energy with concern for

Environment.
 Comply with all relevant legal, regulatory and other requirements

applicable to products, activities and processes in respect of Quality,
Safety, Occupational Health& Environment, and also ensure the same by
contractors.
 Use resources efficiently and reduce waste & prevent pollution.
 Continually improve Quality, Safety, and Occupational Health&

Environment performance.
 Encourage development and involvement of employees.
 Maintain high level of quality, Environment, occupational health and

safety consciousness amongst employees and contract workers by 29
imparting Educational & Training.

Energy Policy:
 Document, implement, maintain and periodically review the energy

management system including the policy, objectives and targets.
 Make energy conservation a way of life at RINL by promoting awareness

among all.
 Support the purchase of energy efficient products and services and ensure
energy performance improvement in the design of new facilities as well
as up gradation of existing facilities.
 Look for alternative sources to achieve energy security of the plant.
HR Policy:
 Provide work environment that makes the employees committed and

motivated for maximizing productivity
 Establish systems for maintaining transparency, fairness and equality in

dealing the employees
 Empower employees for enhancing commitment, responsibility and

accountability
 Encourage teamwork, creativity, innovativeness and high achievement

orientation
30
 Provide growth and opportunities for developing skill and knowledge

 Ensure functioning of effective communication channels with employees
Customer Policy:
 VSP will strive to meet more than the Customer needs and expectations
pertaining to Products, Quality, Value for Money and Satisfaction
 VSP greatly values its relationship with Customers and would make
efforts at strengthening these relations for mutual benefit
 VSP strive for enhancing value for the money and value the relationship
with Customers.
IT Policy:
 Follow best practices in Process Automation & Business Processes

through IT by in-house efforts / outsourcing and collaborative efforts with
other organizations / expert groups / institutions of higher learning, etc,
thus ensuring the quality of product and services at least cost
 Follow scientific and structured methodology in the software

development processes with total user-involvement, and thus delivering
integrated and quality products to the satisfaction of internal and external
customers
 Install, maintain and upgrade suitable cost-effective IT hardware,

software and other IT infrastructure and ensure high levels of data and
information security
 Strive to spread IT-culture amongst employees based on organizational

need, role and responsibilities of the personnel and facilitate the
objective of becoming a world-class business organization 31
 Enrich the skill-set and knowledge base of all related personnel at regular
intervals to make employees knowledge-employees
 Periodically monitor the IT investments made and achievements accrued

to review their cost effectiveness
HRD Group – Key Initiatives:
RINL believes that the employees are its assets and strives to realize their
potential in full for mutual advantage. The human resource development of the
employee as a whole.
 In-house Training Programs
 Nominations to External Training Programs
 Organization Research, Employees’ Satisfaction Surveys & Voice of

Employees’ Index
 Membership with professional bodies
 Performance Appraisal for Executives
 Human Resource information system
 Organization Development & Knowledge management
 In-Plant training for management students.
Man Power:
Man power as on 01-03-2014
Category Works Non-works Projects Mines Total

Executives 4250 1511 421 117 6299
32
Non- 11016 800 48 221 12085
executives
Total 15266 2311 469 338 18384
Training & Development:
The needs of induction training, skill up gradation, unit training,

computer related training, refresher training, foreign training, faculty
development etc, are attended by the Training & Development Centre while
management development and attitudinal development are taken care at the
Centre for HRD.
Training in certain specialized areas like safety, fire prevention,

occupational health etc. is also taken up by departments specializing in
respective fields.
Production Facilities:
The production facilities in the RINL are most modern amongst the steel
industry in the country. The know-how and the technology have been acquired
from different parts of the world from the reputed/established manufacturers.
Some of the production facilities in RINL are:
 7 meter coke ovens of RINL are the tallest so far built in the country.
 Base Mix Yard for sinter plant introduced for the first time in the country
helps in excellent blending of the faced material to sinter machine and
production of consistent good quality sinter.
 3200 cubic meter two blast furnaces i.e., Godavari and Krishna with bell 33
less top charging equipment and 100% cast house slag granulation, the
biggest to be setup in the country have done away either the conventional
bell charging system.
 100% continuous costing of liquid steel into blooms resulted in lowest
losses and better quality of blooms.
 RINL has sophisticated and latest features of automation of large polling
mills consisting of
 Light and Medium Merchant Mill (LMMM) which include billet
and bar mill
 Wire Road Mill (WRM)
 Medium Merchant and Structure Mill (MMSM)
 The operations of blast furnace, steel melting shop and rolling mills have
been entirely computerized to ensure consistent quality and efficient
performance.
Marketing Network:
VSP has a wide network of Regional Offices and Branch Offices spread
across the country for marketing of its products. There are 5 Regional Offices
and 23 Branch Offices. Stock Yards are attached to each of the Branches. These
are catering to the needs and expectations of the customers in various segments.
The details of Regional Offices and Branch Offices are brought out below:
Region Location of Regional Office Branches

East Kolkata Bhubaneswar, Kolkata, Patna
North Delhi Agra, Chandigarh, Dehradun,
Delhi, Faridabad, Ghaziabad,
34
Jaipur, Kanpur, Ludhiana

West Mumbai Ahmedabad, Indore, Mumbai,
Nagpur, Pune
South Chennai Bangalore, Chennai, Kochi,
Coimbatore
Andhra Visakhapatnam Hyderabad, Visakhapatnam
Pollution Control Measures adopted in VSP:
Generally, integrated steel plant is seen as a major contributor to

environmental pollution as it discharges volumes of waste products. Elaborate
measures have been adopted to combat air and water pollution in VSP has
planted more than 3.4 million trees over an area of 35 Sq. Kms. And
incorporated various technologies at a cost of Rs.460 Crores towards pollution
control measures.
Sources of Funds:
VSP raise its working capital from of 10 Bankers. The following are the
10 banks. Where funds for finance are raised.
 State Bank of India (SBI)

35
 Canara Bank
 UCO Bank
 Bank of Baroda
 Andhra Bank
 State Bank of Hyderabad
 Allahabad Bank.
 HSBC
 Industrial Development Bank of India (IDBI)
 Indian Overseas Bank (IOB)
Achievements & Awards:

The efforts of VSP have been recognized in various fora. Some of the
major awards received by VSP are in the area of energy conservation,
environment protection, safety, quality, Quality Circles, Rajbhasha, MOU,
sports related awards and a number of awards at the individual level.
Some of the important awards received by VSP are indicated

below:
Award Purpose Year
“GOLD AWARD” At IIIE-

For value Engineering case
National productivity 2015
study
competitions 2015
36
BT-Star “PSU Director/Head
For CSR Performance 2015
CSR of the year” Award
Performance Excellence award For Implementation of 5S 2015

by QCFI
ICQCC 2015 At South Korea-1
For Implementation of QC
Silver and 2 Bronze Illumination 2015
Projects
awards
“National Vigilance Excellence

For Preventive Vigilance 2015
Award-2015”
“Excellent Energy Efficient

For Excellence in Energy
Award-2015”& “Innovative 2015
Management.
Project Award” by CII
Star Performance Award by

For Outstanding exports
Ministry of Commerce & 2015
performance
Industry
"ICON OF THE YEAR

AWARD 2014" TO SRI P Recognition by ICAI 2014
MADHUSUDAN, CMD- RINL
"GREATEST CORPORATE
Recognition for Corporate
LEADERS OF INDIA 2014
Leaders
AWARD" TO SRI P
MADHUSUDAN, CMD- RINL
37
Corporate Vigilance Excellence Outstanding initiatives in
2014
Award 2013-14 vigilance arena
Hindi Award - HINDI

For implementation of the
SALAHKAR SAMITI Of 2014
Official language of Hindi.
Ministry Of Steel
Excellence Award by Institute of For excellent performance

2014
Economic Studies in Steel industry
For effective
First prize of prestigious Indira
implementation of Official
Gandhi Rajbhasha Shield 2013
Language
Significant Achievement in CII
Overall Excellence in all
EXIM Bank Award for Business
activities of the company 2013
Excellence 2013
Cost Management Excellence
Award by Institute of Cost For excellence in Cost
2013
Accountants of India , New Management
Delhi
ICC Corporate Governance and For performance on
Sustainability Vision Award Sustainability and 2013
2013 Corporate Governance
National Vigilance Excellence 2013
. For eminent professionals
Award by Vigilance Study
in the field of Vigilance
Circle
CII-ITC Sustainability Award – For performance on 2013
2012 - ‘Strong commitment’ Sustainability
SWOT Analysis:
Strengths: 38
 High commitment to achieve capacity levels.
 Areas of excellence.
 Economics of sales.
 High expansion potential.
 Strong commitment to conserve environment.
Weakness:
 High Capital related charges.

 Low return product mix.
 Productivity below international standards.
 Lack of ore.
Opportunities:
 Share based.
 Sizeable export markets.
 Access to import sources.
 Proximity to southern markets.
 Increasing domestic demand due to thrust on infrastructure
development.
Threats:
 Rising input cost.

 Increasing competition.
 Sensitive to exchange rate variation.
 Possibility of import duties declining further.
4.THEORETICAL FRAME WORK OF

FINANCIAL PERFORMANCE ANALYSIS
39
Introduction:
The Financial Statements (or) Accounting reports contained the financial
information of an enterprise. These financial information is the basis for
financial planning, analysis and decision making. This financial information
also needs to predict, compare and evaluate the firm’s earning ability.
Definition
According to John N.Myer “The financial statements provide a summary
of the accounts of a business enterprise, the balance sheet reflecting the assets,
liabilities, and capital as on a certain date and the income statement showing the
results of operations during a certain period”.
The financial statements are great significance to owners, managers and
investors. The basic financial statements are:
• The income Statement.
• The Balance Sheet.
• A Statement of Retained earring.
• A Statement of Changes in financial position.
Income Statement:
The income statement also called as a Profit and Loss Account. The
earning capacity and potential of a firm are reflected by its profit and loss
account. The profit and loss account is a “score-board” of the firm’s
performance during a period of time. The generally accepted convention is to
show one year’s events in the profit and loss account.
Profit and loss account presents the summary of revenues, expenses and
net income or net loss of a firm. It serves as a measure of the firm’s profitability
Balance Sheet:
Balance sheet is the most significant financial statement. It indicates the
financial condition of an enterprise at particular movement of time. Balance 40
sheet contains information about resources and obligations of a business entity
about its owner’s interests in the business at a particular point of time.
In the language of accounting, balance sheet communicates information
about assets, liabilities and owners’ equity for a business firm as on a specific
date. It provides a snapshot of the financial position of the firm at the close of
the firm’s accounting period.
Statement of Retained Earnings:
The term retained earnings means the accumulated excess earnings over
losses and dividends. The balance shown by the income statement is transferred
to the balance sheet through this statement after making necessary
appropriations.
Statement of changes in financial position:
The balance sheet shows the financial condition of the business at a
particular movement of time while the income statement discloses the results of
operations of business over a period of time for better understanding of the
affairs of the business, it is essential to identify the movement of working
capital or cash in the statement of changes in financial position.
• Change in the firm’s working capital

• Change in the firm’s cash position
• Change in the firm’s total financial position
The terms funds flow statement and cash flow statement are popularly used
for the first and 2nd type of statements while the term statement of changes in
financial position used for the 3rd type of statement
Nature of Financial Statements:

The financial statements are prepared on the basis of recorded facts. The
41
recorded facts are those which can be expressed in monetary terms. The
statements are prepared for a particular period, generally one year. The
transactions are recorded in a chronological order as and when the events
happen. The financial statements by nature are summaries of the items recorded
in the business and there statements are prepared periodically generally for the
accounting period.
Recorded Facts:
The term ‘Recorded facts; refers to the data taken out from the accounting
records. The records are maintained on the basis of actual cost data. The
figures of various accounts such as cash in hand, cash at bank, bills receivables,
Sundry debtors, fixed assets are taken as per the figure recorded in the
accounting books.
Accounting Conversions:
Certain accounting converters are followed while preparing financial
statements. The conversion of valuating inventory at cost or market price,
whichever is lower, is followed. The valuing of assets at cost less depreciation
principle for balance sheet purposes statements comparable, simple and
realistic.
Postulates:
The accountants make certain assumption while making accounting
records. One of these assumptions is that the enterprise is treated as a going
concern. The other alternative to this postulate is that the concern is to be
liquidated the concern. So the assets are shows on a going concern basis.
Another important assumption is to presume that the value of money will
42
remain in the same in different periods.
Personal Judgments:
Even though certain standard accounting conversions are followed in
preparing financial statement but still personal judgment of the accountant plays
on important part.
Characteristics of financial statement:

The financial statements are prepared with a view to depict financial
position of a concern. The financial statements should be prepared in such a
way that they are able to give a clear and orderly picture of the concern. The
ideal financial statement has the following characteristics.
Depict true financial position:

The information contained in the financial statements should be such that
a true and correct idea is taken about the financial position of the concern.
Attractive:
The financial statements should be prepared in such a way that important
information is underlined so that it attracts the eye of the reader.
Comparability:
The results of financial analysis should be comparable. The financial
statements should be presented in such a way that they can be compared to the
previous year’s statements. Previous year’s figures in the balance sheet.
Brief:
43
If possible, the financial statements must be prepared in brief. The reader
will be able to form as idea about the figures.
Importance of Financial Statements:

Financial statements contain a lot of useful and valuable information
regarding profitability financial position and future prospective of business
concern. The utility of financial statement to different parties may be
summarized as follows:
Management:
The financial statements are useful for assessing the efficiency of
different cost centers. The management is able to decide the course of action to
be adopted in future.
Creditors:
The trade creditors are to be paid in a short period. The CRS will be
interested in current solvency of the concerns. The calculations of current ratio
and liquid ratio will enable the creditors to assess the current financial position
of the concerns in relation to their debts.
Investors:
The investors include both short-term and long term investors. They are
interested in the security of the principal amounts of loan and regular payments
by the concern. The investors will not only analyze the parent financial
position but will also study the future prospectus and expansion plans of the
concern. 44
Governments:
The financial statements are used assess tax liability of business
enterprises. The Government studies economic situation of the country from
these statements. These statements enable the government to find out whether
business is following various rules and regulations or not.
Trade Associations:
These associations provide service and protection to the members. They
may analyze the financial statements for the purpose of providing facilities to
these members. They may develop standard ratios and design uniform system
of accounts.
Stock Exchange:
The stock exchange deal in purchase and sale of securities of different
companies. The financial statements enable the stock broker to judge the
financial position of different concerns. The fixation of prices for securities etc.
is also based on the statements.
Limitations of Financial Statements:

Financial statements are relevant and useful for the concern, still they do not
present a final picture of the concern, and otherwise misleading conclusions
may be drawn. The financial statements suffer from following limitation:
Ignoring of non-monetary aspects:

45
These statements are prepared with the help of accounting information
which mainly consider monetary aspects only. The value of business depends
both on qualitative and quantitative factors.
1. Historical cost:
The statements are prepared on the basis of historical cost. The values of
fixed assets are at their original cost less depreciation. The balance sheet value
are not shown the value of assets may be sold more over they do not reflect the
market value which is as important factor in determining the solvency of an
enterprise.
2. Personal Judgments:
In preparing financial statements certain items are left to the personal
Judgment of the accountant. If any accountant is not following accounting
principles correctly his judgment will give wrong picture
3. Conversion of Conservation:
Due to conversion of conservation the income statement may not disclose
true income of the business. This is due to ignorance of probable incomes and
accounting probable losses.
Techniques of Financial Analysis:
A financial analyst can adopt one or more of the following

techniques/ tools of financial analysis:
• Comparative statement analysis

• Common-size statement analysis 46
• Trend analysis
• Funds flow analysis
• Cash flow analysis
• Ratio analysis
• C.V.P. analysis
1. Comparative Financial Statement:

The statements which have been designed in a way so as to provide time
perspective to the consideration of various elements of financial position
embodied in such statements figures for two or more period side by side to
facilitate comparison.
Both the income statement and balance sheet can be prepared in the
form of comparative financial statements.
2. Comparative Income Statement:
The income statement discloses net profit or net loss on account of
operations. A comparative income statement will show the absolute figures for
two or more periods, the absolute change from one period to another and if
desired the change in terms of percentages. Since the figures for two or more
periods are shown side by side, the reader can quickly ascertain whether sales
have increased or decreased, whether cost of sales has increased or decreased
etc.
3. Comparative Balance Sheet:

The balance sheet prepared on a particular date reveals the financial
position of the concern on the date to study the trends of business over a period
of time comparative balance sheet reveals the cause for changes in the financial
position on amount of various transactions. The comparative studies throw light
on financial policies adopted by management.
47
4. Common Size Statements:

Common-size statement is financial tool of studying key changes and
trends in financial position of the company. In common-size statement, each
item is stated as a percentage of the total of which that is a part, each percentage
exhibits the relation of the individual item to its respective total. Therefore, the
common-size percentage method represents a type of ratio analysis.
5. Common Size Income Statement:

The common-size income statement is designed to exhibit what
proportion of the net sales has been absorbed by the various costs and expenses
incurred by the enterprise, and the proportion that remains as net income. For
preparing common-size income statement all items in the income statement are
expressed in percentage from in terms of total sales.
6. Common Size Balance Sheet:

Common-size balance sheet is prepared by setting the total assets as
100and reducing individual assets into percentages of the total. Likewise,
individual liability items are expressed as percentages of the total liabilities.
Thus, the common-size Balance sheet percentage shows the relation of
each asset item to total assets and of each liability and owner’s equity item to
total liabilities and owners’ equity.
7. Trend Analysis:
Trend analysis depicts behavior of the ratios over a period of time and the
trends in the operation of the enterprise. The trend figures are index figures
giving a bird’s eye view of the comparative data by presenting it over a period
of time. Under this form of analysis, generally financial ratios are studied for a
specified number of years. It is a dynamic analysis depicting the changes over a
stated period.
48
8. Cost-Volume-Profit Analysis:
Cost – Volume – Profit analysis is an important tool of profit planning. It
studies the relationship between cost, volume of production, sales and profit. It
is not strictly a technique used for analysis of financial statements.
9. Ratio Analysis:
This is the most important tool available to financial analysts for their
work. All accounting ratios show relationship in mathematical terms between
two interrelated accounting figures. The figures have to be interrelated, because
no useful purpose will be served if ratios are calculated between two figures,
which are not at all related to each other.
10. Cash Flow Analysis:

Cash Flow Analysis enables the management to plan and co-ordinate the
financial operations of the enterprise, and furnish the basis for evaluating
financing policies. It provides a barometer for ensuring the profitability of the
business and makes financing problems of the business much more manageable.
11. Funds Flow Analysis:
Funds flow analysis has become an important tool in the analytical kit of
and financial managers. This is because the balance sheet of business reveals its
financial status at a particular point of time. It does not sharply focus those
major financial transactions.
Funds flow analysis reveals the change in working capital positions. It tells
about the sources from which the working capital was obtained and the purpose
for which it was used. Working capital being the life blood of the business.
Such an analysis is extremely useful.
49
FINANCIAL OVERVIEW:
The Indian steel sector has witnessed a turbulent steel demand in the FY 2012-
2013. However, RINL managed to post sales turnover of rs.13, 553Cr
(including sale of trail run production of rs.89.83 Cr). Sluggish market and
increased competition in long products market has dented the PAT severely by
bringing it down to rs. 353 cr.
50
5. DATA ANALYSIS AND INTERPRETATION
Balance Sheets of VSP Ltd. From 2013-14 to 2015
Source of Funds:Rs in Crores
As at
PARTICULARS 31.03.15 31.03.14 31.03.13
Equity And Liabilities
Shareholders’ Funds
Share Capital 5189.85 5739.85 6346.82
Reserve and Surplus 6404.08 6400.89 6130.50
NON CURRENT LIABILITES

Long-term borrowings 66.52 1203.53 1241.56
Deferred Tax Liabilities(Net) 444.89 419.01 229.21
Other Long term Liabilities 138.27 165.56 105.00
Long term provisions 557.14 531.43 414.77
CURRENT LIABILITIES
Short term borrowings 7444.89 3739.93 3658.44
Trade payables 600.60 829.93 737.95
Other current liabilities 6979.28 5484.05 2615.19
Short term provisions 34.61 157.65 173.10
Total 27860.13 24671.83 24652.52
ASSETS
NON CURRENT ASSETS
Fixed Assets
Tangible Assets 5305.41 4530.03 3787.07
Intangible Assets 51.33 2.75 2.74
Capital work-in-progress 11492.98 10669.47 9965.24
Intangible assets under development 2.57 30.11 22.20
16852.29 15232.36 13777.25
Non-Current Investments 362.53 362.53 362.58
Long term Loans & Advances 926.53 616.05 498.36
Other Non-Current Assets 81.32 60.23 36.58
CURRENT ASSETS
Inventories 5179.51 3863.04 3828.60
Trade Receivables 1035.43 803.65 1009.65
Cash &Bank balances 63.94 175.89 1625.02
Short term Loans and Advances 3259.83 3461.35 3417.75
Other Current Assets 98.75 96.73 96.73
Total 27860.13 24671.83 24652.52
51
COMMON SIZE BALANCE SHEETS

Common Size Balance Sheet of 2013-14 and 2014-15
PARTICULARS 2013-14 2013-14 2014-15 2014-05
Rs. PERCENTAG Rs. Crs. PERCENTAGE
Crs. E
ASSETS:
Cash & Bank Balance
Sundry Debtors
Inventories (Stock)
Loans & Advances
Other Current Assets
Miscellaneous Expenditure
Profit & Loss Account
Investments
Fixed Assets
Total Assets 100 100
LIABILITIES
Current Liabilities
Provisions
Secured Loans
Unsecured Loans
Deferred Tax Liability
Reserves & Surplus
Share Capital
Total Liabilities 100 100
52
Interpretation:
• The fixed assets for the period of 2007-’08 3471.87 i.e., 22.27% &
2008-’09 is5874. i.e., 33.12%it has been increased &%
• The Total assets for the period of 2007-’08 15276.51 i.e., 100 &
2008-’09 is17733.48i.e., is 100% there is an increase of 2456.97
• The current liabilities for the period 2007-’08 i.e.1610.15 i.e., 10.54%&
2008-’09 is 2560.79i.e.,14 this has been increased by 4%
53
PARTICULARS 2011-12 2011-12 2012-13 2012-13
Rs. Crs. PERCENTAG Rs. Crs. PERCENTAG
E E
ASSETS:
Cash & Bank Balance 2068.34 9.57 1625.02 6.7
Sundry Debtors 427.15 1.98 1009.65 4.2
Inventories (Stock) 3403.11 15.76 3828.60 15.84
Loans & Advances 2366.54 10.98 3417.75 14.13
Other Current Assets 226.97 1.05 96.73 0.4
Miscellaneous 208.91 0.97 282.75 1.17
Expenditure
Profit & Loss Account 751 3.48 353 1.46
Investments 1751.10 8.1 992.23 4.10
Fixed Assets 10393.87 48.13 12588.34 52
Total Assets 21595.99 100.02 24194.07 100
LIABILITIES
Current Liabilities 7221.28 32.82 10184 41.2
Provisions 1090.17 4.95 587.87 2.38
Secured Loans 0.00 0 1241.56 5
Unsecured Loans 0.00 0 0.00 0
Deferred Tax Liability 60.98 0.28 229.21 0.92
Reserves & Surplus 5931.97 26.92 6130.50 24.78
Share Capital 7727.32 35 6346.82 25.72
Total Liabilities 22031.72 100 24719.96 100
CommonSize Balance Sheet of 2011-12 and 2012-13
54
Interpretation:
The above diagram shows the Balance sheet of 2011-12 and 2012-13.
55
PARTICULARS 2009-10 2009-10 2010-11 2010-11
Rs. Crs. PERCENTAGE Rs. Crs. PERCENTAGE
ASSETS:
Sundry Debtors 181.18 0.97 330.61 1.73
Loans & Advances 1365.02 7.36 1965.04 10.33
Investments 0.25 0.001 361.60 1.89
Fixed Assets 8972.30 48.43 11066.63 58.08
Total Assets 18523.21 100 19053.44 100
LIABILITIES
Current Liabilities 2871.95 15.50 3279.43 17.16
Provisions 1435.89 7.75 1336.06 7.01
Secured Loans 407.28 2.19 274.89 1.44
Unsecured Loans 825.27 4.45 861.87 4.5
Share Capital 7827.32 42.25 7827.32 41.08
Total Liabilities 18523 100 19053.44 100
56
50
45
40
35
30
25
20 2010
15 2011
10
5
0
e rs k) s ts ts ts s s s s ty s al
a lanc ebto (Stoc ance Asse men Asse bilitie vision Loan Loan iabili urplu Capit
B D s dv t st d ia Pro red red ax L & S are
ank ndry torie s & A urren Inve Fixe ent L u u T s Sh
B
& Su ven oan r C ur r Sec nsec red serve
sh In L e C U ffe e
Ca Ot
h De R
Interpretation:
• The fixed assets for the period of 2009-’10 8972.30 i.e., 48.43%&
2010-’11 is 11066.63 i.e., 59.20 % it has been increased 10.77%.
• The Total assets for the period of 2009-’10 18523.21 i.e., 100%&
2010-’11 is 19053.44 i.e., is 100%.
• The current liabilities for the period 2009-’102871.95 i.e., 15.50%&

2010-’11 is 3279.43 i.e., 17.16% this has been increased by 1.66%.
57
PARTICULARS 2008-09 2008-09 2009-10 2009-10
Rs. Crs. PERCENTAG Rs. Crs. PERCENTAGE
E
ASSETS
Sundry Debtors 191.27 0.01 181.18 0.97
Loans & Advances 1569.69 8.85 1365.02 7.36
Investments 0.05 0.0002 0.25 0.001
Fixed Assets 5874.11 33.12 8972.30 48.43
Total Assets 17733.48 100 18523.21 100
LIABILITIES
Provisions 1620.53 9.13 1435.89 7.75
Secured Loans 907.72 5.11 407.28 2.19
Unsecured Loans 100.04 0.56 825.27 4.45
Share Capital 7827.32 44.13 7827.32 42.25
Total Liabilities 17733.48 100 18523 100
58
Interpretation:
• The fixed assets for the period of 2008-’09 5874.11 i.e., 33.%12 &
2009-’10 is 8972.30 i.e., 48.43 %it has been increased 12%
• The Total assets for the period of 2008-’09 17733.48 i.e., 100 &
2009-’10 is18523.21 i.e., is 100%
• The current liabilities for the period 2008-’09 2560.79 i.e., 14.44%&
2009-’10 is 2871.95 i.e.,15.50 this has been increased by 1.2
59
COMPARATIVE BALANCE SHEETS
Interpretation:
• The cash and bank balance was decreased from 7699.11(crores) to

6624.17 ((crores) i.e. - (1074.94) (crores) (-13.96%). It indicates that
liquidity position of the VSP decreased
• The Fixed assets were increased from 3471.67(crores) to 5874.11 (crores)

i.e +2402.24 (crores) (69.19%). It indicates that the VSP’s interest on
long term benefits through invest on fixed assets.
• Current liabilities were increased from 1610.15 (crores) to 2560.79

(crores) i.e. +950.64 (crores) (+59.04%). It indicates that the working
capital position becoming critical. 60
Comparative Balance Sheet of 2011-12 and 2012-13
PARTICULARS 2011-2012 2012-2013 Increase/decrease Increase/Decrease
Rs. Crs. Rs. Crs. Rs. Crs. Percentage
ASSETS:
Cash & Bank Balance 2068.34 1625.02 -443.32 -3.05
Sundry Debtors 427.15 1009.65 582.5 2.22
Loans & Advances 2366.54 3417.75 1051.21 3.15
Other Current Assets 226.97 96.73 -130.24 -0.95
Miscellaneous 208.91 282.75 73.84 0.2
Expenditure
Profit & Loss Account 751 353 -398 -2.02
Investments 1751.10 992.23 -758.872 -4
Fixed Assets 10393.87 12588.34 2194.47 3.87
Total Assets 21595.99 24194.07 2598.08 0
LIABILITIES
Current Liabilities 7221.28 10184 2962.72 8.38
Provisions 1090.17 587.87 -502.3 -2.57
Secured Loans 0.00 1241.56 1241.56 5
Unsecured Loans 0.00 0.00 - 0
Reserves & Surplus 5931.97 6130.50 198.53 -2.14
Share Capital 7727.32 6346.82 -1380.5 -9.28
Total Liabilities 22031.72 24719.96 2688.24 0
61
30000
25000
20000
15000
10000 2011-2012 Rs. Crs.

2012-2013 Rs. Crs.
5000 Increase/decrease Rs. Crs.
0 Increase/Decrease
Percentage
S: rs s e ts ts s s ty l
-5000SET bto ance itur en sse ilitie oan bili pita
L
AS De Adv end estm tal A Liab ed x Lia e Ca
r y x p nv o t ur a ar
nd s & s E I T en ec d T h
rr S re S
Su oan eou Cu r
L n fe
ell
a De
si c
M
Interpretation:
The above Diagram shows about Comparison of Balance sheets of 2011-12 and
2012-13
62
Comparative Balance Sheet of 2009-10 and 2010-11
PARTICULARS 2009-10 2010- Increase/Decrea Increase/Decre
Rs. Crs. 11 se ase
Rs. Rs. Crs. Percentage
Crs.
ASSETS:
9
Sundry Debtors 181.18 330.61 149.43 82.47
1
Loans & Advances 1365.02 1965.0 600.02 43.95
4
Investments 0.25 1.60 1.35 500.4
Fixed Assets 8972.30 11066. 2094.33 23.34
63
Total Assets 18523.2 19053. 530.23 53023
1 44
LIABILITIES
3
Provisions 1435.89 1336.0 -99.83 -6.95
6
Secured Loans 407.28 274.89 -132.39 -32.50
Unsecured Loans 825.27 861.87 36.6 4.434
Deferred Tax Liability 97.82 79.97 -17.85 -18.247
0
Share Capital 7827.32 7827.3
2
Total Liabilities 18523 19053. 530.23 53023
44
63
2009-10 & 2010-11
600
500
400
300
200
100
0
-100
e rs k) s ts s s s s s s y s l
nc to oc ce se nt sse t litie on an an li t lu i ta
ala De b s (St van t As tme A b i visi d Lo d Lo iabi Surp Cap
B s ed a o L
nk ry rie Ad re n nve Li Pr cure cure Tax s & har
e
Ba und nto ns & Cur I Fix e nt e e d ve S
& S r r S s e r
sh ve Loa he r Cu Un ffe r se
Ca In Re
Ot De
Interpretation:
 The cash and bank balance were decreased from 5415.54 (crores) to
1998.89 (crores) i.e. -3416.65 (crores) (-63.08%).It Indicates that the
VSP’S liquidity position decreasing.
64
Comparative Balance Sheet of 2008-09 and 2009-10:
PARTICULARS 2008-09 2009-10 Increase/Decrease Increase/Decrease

Rs. Crs. Rs. Crs. Rs. Crs. Percentage
A SSETS:
Sundry Debtors 191.27 181.18 -10.09 -5.27
Inventories (Stock) 3215.28 2451.52 -763.76 -23.75
Loans & Advances 1569.69 1365.02 -204.67 -13.03
Other Current Assets 258.91 137.4 -121.51 -46.93
Miscellaneous
Expenditure
Profit & Loss
Account
Investments 0.05 0.25 +0.2 +4.00
Fixed Assets 5874.11 8972.30 +3098.19 +52.74
Total Assets 17733.48 18523.21 +789.73 +4.45
LIABILITIES
Current Liabilities 2560.79 2871.95 +311.16 +12.15
Provisions 1620.53 1435.89 -184.64 -11.39
Secured Loans 907.72 407.28 -500.44 -55.13
Unsecured Loans 100.04 825.27 +725.23 +724.94
Deferred Tax 124.49 97.82 -26.67 -21.42
Liability
Reserves & Surplus 4592.59 5057.68 +465.09 +10.12
Share Capital 7827.32 7827.32
Total Liabilities 17733.48 18523 +789.73 4.45
65
Interpretation:
 The cash and bank balance were decreased from 6624.17 (crores) to
5415.54 (crores) i.e -1208.63(crores) (-18.24%).It Indicates that the
VSP'S liquidity position decreasing.
66
BUDGET
 Introduction
 Definition
 Need of budget
 Essentials of budget
 Advantages of budget
 Limitation of budget
 Types of budget
Introduction:
Planning is the basic managerial function. It helps in determining the

course of action to be followed for achieving organizational goals. It is a
decision in advance, what to do, how to do and who will do a particular task?
Plans are framed to achieve better results. Control is the process of checking
whether the plans are being adhered to or not, keeping a record of progress,
comparing it with the plans, and then taking corrective measures for future if
there is any deviation. Every business enterprise needs the use to control
techniques for surveying in the highly competitive and changing economic
world. There are various control devices in use. Budgets are the most important
tool of profit planning and control. They also act as an instrument of co-
ordination.
67
Definition:
Budget is defined as a kind of future accounting in which problems of

future are met on the paper before transactions actually occur.
According to CIMA, Official Terminology, “A Budget is a financial

and/or quantitative statement prepared prior to a defined period of time, of
the policy to be pursed during that period for the purpose of attaining a
give objective”.
According to Crown and Howard, “A budget is a predetermined

statement of management policy during a given period, which provided a
standard for comparison with the results actually achieved.”
Need of budget:
 To forecast and to plan for the future to avoid losses and maximize
profits i.e. to help in planning.
 To bring about coordination’s between different function of an enterprise
i.e., to help in co-ordination.
 To control actual actions by ensuring that actual are in tune with target
i.e., to help in controlling.
Essentials of budget:
 Budget is prepared on future course of action and is prepare in

advance.
 Budget is based on objectives to be achieved during a definite future
Period.
 Budget is a tool for developing the co-operation, co-ordination and
control among employees.
68
Advantages of budget:
 It formulates basic policies necessary to achieve organizational
objectives.
 It forces all levels of management to participate in the process of
setting
and Fulfillment of targets.
 It creates the feeling of co-operation and understanding between
different Departments of the business
 It ensure optimum utilization of resources with a view to maximize
returns.
 It highlights upon the in efficiency in the business and thus helps the
 Management to take remedial actions.
Types of budget:
The Budgets are usually classified according to their nature. The following
are the types of budgets, which are commonly used.
a) Classification According to Time:
1. Long-term budgets
2. Short-term budgets
3. Current budget
b) Classification on the basis of function:
1. Operation Budgets
2. Financial Budgets
3. Master Budgets
c) Classification on the basis of Flexibility:

69
1. Fixed budget
2. Flexible budget
d) Classification on the basis of nature of business:
1. Capital Expenditure
2. Revenue Expenditure
A) Classification According to Time: -

1) Long Term Budgets:
The Budgets are prepared to depict long term planning of the business. The
period of long term budgets various between five to ten years. The long term
planning is done by the top-level management it is not generally known to
lower levels of management's. Long-term time budgets are prepared for
some sectors of the concern such as capital expenditure research and
development. Long term finances etc these budgets are useful for those
industries where gestation period is long i.e. machinery, electricity, and
organization.
2) Short Term Budgets:
These budgets are generally for one or five Years and are in the form of
monetary terms. The consumer’s goods industries like sugar, cotton, textiles,
etc. use short-term budget.
3) Current Budget:
The Period of current budget is generally of one to twelve months. The

budgets relate to the current activities of the business. According to I.C.W.A.
London. "Current budget is a budget which is established for use over a short
period of time and is related to current conditions.
70
B) Classification on the basis of function: -
1. Operating Budgets:
These budgets relate to the different activities of operations of a firm. The

number of such budget upon the size and nature of business. The commonly
used operating budgets are;
A. Sales Budget
B. Production Budget
C. Production cost Budget
D. Purchase Budget
E. Raw Material Budget
F. Labour Budget
(2)Financial Budget: - Financial Budget are concerned with cash receipts

and disbursements, working capital. Expenditure, financial position and
result of business operations. The commonly used financial budgets are:
a. Cash Budget
b. Working Capital Budget
c. Capital Expenditure Budget
d. Income Statement Budget
e. Statement of Retained Earnings Budget
f. Budget Balance sheet or position statement Budget
(3)Master Budget: -
Various functional budgets are integrated into master budget. This budget is
71
prepared by the ultimate integration of separate function budgets. According

to I.C.W.A. London. "The master budget is the summary budget in corpora-
ting its functional budgets". Master budget is prepared by the budget officers
remained with the top-level management. This budget is used to co-ordinate
the activities of various departments and also to help as a control device.
(c) Classification on the basis of Flexibility:-
(1) Fixed budget: -
The fixed budgets are prepared for a given level of activity, the budget is
prepared before the beginning of the financial year, if the financial year
starts in January then the budget will be prepared a month or two earlier, i.e.
November or December. The charge in expenditure arising out of the
anticipated changes will not be adjusted in the budget. There is a difference
of about twelve months in the budgeted and an actual figures. According to
I.C.W.A. London, "Fixed budget is a is designed to remain unchanged
irrespective of the level of activity actually attained".
(2) Flexible Budget: -
A flexible budget consists of a series of budgets for different level of

activity. It therefore, various with the level of activity attained. A flexible
budget is prepared after taking into consideration unforeseen changes in the
conditions of the Business. A flexible budget is defined as a budget, which
by recognizing the difference between fixed, semi fixed and variable cost is
designed to change in relation to the level of activity.
(d)Classification of on the basis of nature of business:-
(1)Capital expenditure budget: - Budget which are related to the creation of

72
manufacturing facilities are knows as capital expenditure budgets
(2)Revenue expenditure budget: - Budget which are prepared for routine
activities or operations are called revenue budget
Key factors:
The factor that sets a limit to the total activity is known as key factor
which influence budgets. It is also called limiting factor or governing factor
principal budget factor. For example, there may be a high demand for a
particular product but due to non-availability of the supply of raw materials,
production may have to be destructed and this factor is known as key factor.
The following are examples of key factor.
1. MATERIALS : I Availability of supply
ii) Restriction imposed by

licenses, quotas etc.,
2. LABOUR : I) General storage

ii)
Shortage of skilled labor
3. SALES : I) Consumer demand

ii)
Inadequate advertising and
warehousing facilities
iii) Dearth of experience or

successful salesman;
4. PLANT : I) Limited capacity due to lack of

capital
ii) Limited capacity due to lack of

space 73
iii) In sufficient capacity due to
shortage of supply;
Bottleneck incretion key

iv)
processes;
5. MANAGEMENT : I) Insufficient capital
Budget committee:
The responsibility for the preparation of budgets generally rests with the
budget committee, which includes the following executives:
 Chief executive who will be the chairman of the committee

 Production manager
 Sales manager
 Materials manager
 Standards & quality control manager
 Finance manager
 Other departmental heads.
BUDGETARY PROCESS IN VIASAKHAPATNAM STEEL PLANT:
Every organization prepares budgets so that it can plan for its future and
meet any unforeseen contingencies and Visakhapatnam. Steel plant is no
exception to this rule. In many organizations, the budgetary process is taken
up by any senior executive of finance department. Since Visakhapatnam 74
Steel Plant is a large organization it has a separate budget section in the
finance department, which takes care of the budgetary process.
Objectives of preparing budget in Visakhapatnam Steel Plant:
The following are the objectives at preparing Budget in Visakhapatnam

Steel Plant
 To generate profits and formulate the policies to achieve the goal.

 To perform integration and co-ordination among the various
departments like construction department, works department, raw
material handling department, finance department, etc.
 To motivate the closely related departments and the persons for
attaining the desired goal.
 To act as a guide to management decision so that management can
know how successfully the objectives being attained.
Establishing budget Centers:

A budget center is a section of the organization of an undertaking and is
defined as such from the point of view at budgetary control. Visakhapatnam
Steel Plant has a number of well is on the basis at collection of closely related
works into one budget center.
a) Corporate planning Department:
This department is headed by the General Manger (Corporate Planning)

and is responsible for drawing up the policy to be followed by the
company.
b) Medical Department: 75
Headed by the chief medical officer, this department is responsible for
maintaining the health of the employees of the company and their
department.
c) Marketing Department:
Headed by General Manager (Marketing) this department is responsible

for procuring orders for the company and selling the goods produced by
Visakhapatnam Steel Plant
d) Works Department:
Headed by Director (Operation), this is the life and flood of the company
as this department is responsible for manufacturing the various items.
e) G.M. (Maintenance) Department :

Heads by General Manager, this department is entrusted with the
responsibility of maintaining the various machines and keeping the break
down to a minimum level.
f) Information Technology Department :

This department is responsible for maintaining the various computer
facilities in the company and improving the efficiency of production.
g) Ancillary Development Department:
Headed by General Manager (Ancillary Development) this department is

responsible for overseeing the development at ancillary industries in and
around the plant.
h) Town and Administration Department:
Headed by the Chief Town Administrator, this department is responsible

for maintaining the Steel Plant Township and meeting its requirements.
i) Personnel Department:
76
Headed by Director (Personnel), this department is responsible for
maintaining employee records.
j) Commercial Department:
Headed by Director (Commercial), this department is responsible for

material management in the company.
k) Project Division:
Headed by Director (Operation) this division is responsible for the
construction activity in the plant.
l) Human Resource Development:
This department is responsible for developing the skills of the employees

by conducting various personality development programmer.
m) Training Department:
This department is responsible for providing on the job training and off
the job training for fresh recruits.
n) Finance Department:
Headed by Director (Finance) this department is responsible for per

forming the various financial activities at the company. It also prepares
the pay rolls.
Budget Manual:
A budget manual is defined as a document which sets out the
responsibilities of the persons engaged in the routine of and the forms and
records required for budgetary control Visakhapatnam Steel Plant also
77
has a well laid out budget manual which enlists the responsibilities of
different managers and Headed of Department of various budget centers.
Budget Committee:
A budget committee is a group of executives at various major functions
eg. Managing director, Works Manager, Production Manager, Sales
Manager, Accountant etc., in Visakhapatnam Steel Plant, the budget
committee consists of the Board at Directors, Chairman-cum-Managing
Director of Visakhapatnam Steel Plant acts as the chairman of the
committee.
Budget Period:
It refers to the period for which the budget is prepared and employed.
There is no fixed time for budget period. The length of the period
depends on.
 The nature of the production.

 The native of the demand & supply of the product
 Extent of control.
Key Factor:
The factor, which sets a limit to the total activity, is known as the key
factor due to difficult and the high costs involved in the procurement of
raw materials and also due to less demand for the product.
Types of Budgets Prepared By Visakhapatnam Steel Plant:
Visakhapatnam Steel Plant prepares two kindly of budgets
 Capital Budget 78
 Operation Budget
 Memorandum of understanding
 Internal budget and External budget
 Sustainability or Roll on plan
A) Capital Budget :
Capital Budget deals with the new schemes to be implemented during the
current year and also with the completion of schemes already
implemented. It is prepared and approved by Visakhapatnam Steel Plant
and sent to ministry of Finance to incorporate the projected capital
expenditure in the overallplanned expenditure of GOI.
The capital Budget consists of:
1. Continuing Schemes be divided into :

 Land & Site Development
 Civil Works
 Structural Steel Works
 Plant and Equipment
 Repayment of Loans and credit
 Additional/Modification and replacement schemes.
 Research and development schemes.
2. New Schemes can be Divided into:
 Expansion to 6.3MT Stage
 Land acquisition for mines
 COB-4
 Modernization schemes
B) Operations Budgets :
This is the main budget prepared by Visakhapatnam Steel Plant. This
budget deals with the cash from operations of various items produced by
the steel plant. Operations budget is a short term budget and is prepared
79
for a period of one year. It is fixed budget there is periodic review of the
budget to check whether the actual figures match the
Budgeted figures. It may be as follows:
Step – I The Chairman-cum-Managing Director at Visakhapatnam

Steel Plant in consultation with the board at Directors
decides the production schedule for a particular year.
Step – II The production schedule as approved by to board of

Directors is then circulated to all departments.
Step – III The need of each of the 19 budget centers then presents the
budget for his center to CMD’s approval.
Step – IV After discussions with the head of each center with some
modification if necessary is approved.
Step – V After receiving all the budgets, the board of Directors

formulates the master budget for the particular year.
Step –VI The master budget is then circulated to all the department.
Step – VII the budget at each budget center and the master budget are
reviewed frequently, sometimes even daily, using a
computerized monitoring system in case Administrative
Expenditure. Compilation of MOU Budget for the purpose
of incorporating the required financial parameters in the
MOU to be signed with the Ministry.
Memorandum of understanding (MOU) Budget
PURPOSE / SCOPE:
80
The procedure deals with

COLLECTION OF DATA:
The following details / Reports are collected from the departments mentioned
below:
(a) Production of Iron & Steel, By Products Plan, requirement of Raw

Materials Plan for the said Production, Power generation, consumption,
import & export Plan and Iron and Steel Scrap generation &
consumption Plan from PPM dept.
(b) Market Plan i.e., Exports Domestic comprising of Stockyard & Head
quarter Sales quantities Plan and Sale Prices & Sales related Expenditure
Plan from marketing dept.
COMPILATION:
The data is collected from Works dept. and utilized for ascertaining the
production, Raw material consumption quantities and Stores, spares &
consumables, Power, Fuel & Water and Other Works related Expenses for the
year and Stocks at the end of the year. The Sales price report is collected from
marketing dept. and utilized for ascertaining the Sales values for the year and
Stocks values at the end of the year. Raw material prices report is collected
from MM dept. and utilized for ascertaining the Raw material consumption
values for the year. After making the necessary workings / adjustments, the
Budget along with required financial parameters are prepared for Approval of
RINL Corporate and for necessary inclusion in the MOU document with the
Ministry.
The approved MOU Budget along with financial parameters are maintained in
Yearly Budget Projection.
Internal and External budget:

81
PURPOSE / SCOPE:
The procedure deals with compilation of above referred Budgets for the purpose
of submitting Prescribed Reports to Ministry of Steel each year.
COLLECTION OF DATA:
The following details / Reports are collected from the departments mentioned
below:
(a) Production of Iron & Steel, By Products Plan, requirement of Raw

Materials Plan for the said Production, Power generation, consumption,
import & export Plan and Iron and Steel Scrap generation & consumption
Plan from Works dept.
COMPILATION:
The data is collected from Works dept. and utilized for ascertaining the
production, Raw material consumption quantities and Stores, spares &
consumables, Power, Fuel & Water and Other Works related Expenses for the
year and Stocks at the end of the year. The Sales price report is collected from
marketing dept. and utilized for ascertaining the Sales values for the year and
Stocks values at the end of the year. Raw material prices report is collected
from MM dept. and utilized for ascertaining the Raw material consumption
values for the year. After making the necessary workings / adjustments, the
Budget along with internal generations and other statements as required by
Ministry are prepared and put up for Approval of RINL Corporate.
On approval the required information is furnished to Ministry and maintained

on yearly basis in Yearly Budget Projections.
Sustainability plan or Roll on plan:
Sustainability planning exercise, over the years has essentially served the
purpose of finalizing a comprehensive annual business plan in the company. 82
During 2009-10, the concept of Roll-on plan was introduced with a view to
dovetail long term goals in the company with the actions being considered in
the annual plan and roll-on the unfinished agenda to the subsequent year, after
adequate up dation. The approach has further been improvised for 2011-12
based on learning from previous iterations.
STRATEGIC APPROACH FOR SUSTAINABILITY PLAN 2011-12:
The exercise for Sustainability Plan 2011-12 and Roll-on plan till 2015-16
commenced with formation of Committee of Directors, followed by
presentations on overview of various aspects like the market scenario,
expansion plan, equipment health and modernization lanes, with a view to
sustain the Company’s performance with a thrust on growth over a period of
time. The deliberation of Committee of Directors comprising of Director
(Operations), Director (Projects), Director (Finance) and Director (Commercial)
commenced in October 2010 and certain key issues were identified, such as
Rising input costs, evident from prohibitively high rise in spot prices of coking
coal after flooding of North Australian minesCommissioning of expansion
facilities Exploring profitable markets for increasing output from plant, post
commissioningRedeployment , recruitment , incentives , outsourcing etc. in
view of commissioning of expansion units ,Ensuring timely progress of projects
related to modernization & revamps Specific inputs from Marketing, MM,
Projects and Works departments on the likely scenarios were deliberated by the
Committee. Challenging production plans were drawn up, considering the
transition phase of commissioning and thereby likely fluctuation in production
levels from expansion units during its stabilization and likely diversion of
utilities for some period initially from the existing plant, which is a normal
phenomenon for brown field expansion. Based on the production and marketing
plan, profitability scenarios were also developed and targets for 2011-12 along
with Roll-on plan till 2015-16, were arrived at. Functional / departmental heads 83
analyzed various aspects like analysis of 2010-11 performance, improvement

initiatives to be taken up to achieve the Sustainability Plan targets for 2011-12
and presented the same to meet the long term goals as identified in the Roll-on
plan.
ADMINISTRATIVE BUDGET:
RINL also prepares Administrative Budget after obtaining the projections from
the Departments. For the purpose of the obtaining admn. Budget projects the
company has identified around 40 departments as Budget departments and
obtains the administration. Budget projects for the next year. Here
administrative. Budget is the nature of expenditure which can be controlled
within the limits allotted. After consolidation of all projects received from the
all the departments, the Budget section in charge will hold discussions with the
each of the Head of the departments on their administration. Requirements.
Accordingly the administration. Budget for all the departments are either
restricted barest minimum or last year level depends on its overall budgeted
profitability.
Once the consolidation and finalization with the HODs, the projects are
submitted to CMD for approval. After approval of the CMD the administration.
Budget allotted to each department account head wise posted in the
computerized system called Administration. Budget Monitoring System
(ABMS). User departments whenever they want to spend the allotted budget
supposed to draw a budget sheet form the system and enclose with the proposal
for spending. The approving authority can approve the expenditure only when
it is supported by the budget sheet. Once allotted budget is exhausted no more
budget sheets are generated from the system. And departments can spend
further.
84
In case of emergency and budget is exhausted, HOD should
approach Management through Budget section additional budget to meet
emergency. But he has to give sufficient explanation for the same.
PROCESSFORPREPRATIONOFMONTHLYWORKIN
GRESULTSIN RINL(VSP):
Introduction:
Monthly Working Result (MWR) is Management Information Report (MIS)

85
report compiled by the budget section of the F&A Department... Every
month based on information obtained from Production Department,
Marketing Department, Cash section, Raw Materials Account, General
Account, Work accounts, Operation bills, Pay section etc. The compilation is
done at gross level. It is rough estimation of monthly profit based on
monthly production and sales. These estimates are purely on volume basis
and not based on accounting transaction data.
Details of Data Collected:
The following are details of data collected from various Deptt/Section:
S.No Details of Data Dept/Section

1. Daily Flash Statement from by Product By Product sale
Section-Mktg Sections
2. Important Raw Materials Stock at Port T&S
3. Interest on RM Credit Rate Variance Material A/cs
Section
4. Voucher data from operation bills accounts Operation bills
A/cs
5. Voucher data from general A/cs General A/cs
6. Voucher data from works A/cs Works A/cs
7. Voucher data from stores A/cs Stores A/cs
8. Stores and Spares inventory from Stores A/cs Stores A/cs
9. NSR from by products Section Sales(finance)
10. Raw material Receipts Raw Material
Deptt
11. Power details from DNW DNW
12. Production and Closing Balance of main PPM
86
product
13. Monthly Report from PPM PPM
14. Region wise, Branch wise sales a statement Mktg
15. Export sales and shipment plan Exports Sales
Section
16. Cost of production for the month Costing Section
17. Interest Details From cash Section Cash Section
18. Raw Material Prices (Imported) for the month T&S
19. Dispatch money earned T&S
20. Raw Material Prices Variance for the Month MM Deptt
21. Fuel Rate for the Month MM Deptt
22. NSR for the month and up to the month Branch Sales A/cs
23. Wage Analysis Pay Section
24. By Product Prices Mktg Deptt
Computation of Items in MWR:
(i) Gross Sales: This item is derived directly from the data fed from
monthly NSR report given by the Branch sales A/cs.
(ii) Net Sales: This item also derived from the Data fed from Monthly
NSR report given by the branch Sales A/cs
(iii) Export Benefits; This item is derived based on the Export benefits
per ton and Export Quantities given by Export Sales Section. (Export
Benefit = Export benefit per ton X Qty Exported)
(iv) Interest on Term Deposit: This item is derived directly from data
given by the cash Section.
(v) Interest Others: This item is estimated based on previous year
actuals, However current year actuals to be compared and necessary 87
adjustments to be incorporated.
(vi) Miscellaneous Income: This item is estimated based on previous
year. However current year actuals to be compared and necessary
adjustments to be incorporated.
(vii) Stock accretion /depletion; Excess production over sales Qty is
accretion. If it is otherwise it is stock depletion. Accretion /depletion
quantities are valued at cost or NSR whichever is low.
(viii) Raw Material Consumption: Consumption quantities of various
Raw material are valued at weighted average prices of the same
consumption quantities includes Handling loss, Transit losses,
Moisture loss etc.
(ix) Stores & Consumables; This item is derived based on stores JV
details obtained from stores accounts. And also from General accounts
voucher details.
(x) Employees Remuneration & Benefits: This item is derived based on
Salary JV generated by pay section and some items under this
grouping are based on estimates based on previous year actual.
(xi) Power, Fuel &Water: This item is derived based on consumption
quantities given by DNW and PPM and pricing information given by
MM Department.
(xii) Repairs & Maintenance: This item is based on voucher data
obtained from General Accounts, Operation Bills, Works bills, Stores
Accounts etc. Some are estimated at previous year level.
(xiii) Other Expenses: This item is based on estimated contractual rates for
scrap processing quantities and some are on the basis of estimations at
previous year actual level.
(xiv) Adjustments: All the above items are subjective to revision
or adjustments based on realities and likely provision that may arise.
88
VISAKHAPATNAM STEEL PLANT (RINL)
Projections of financials for the year 2008-09, 2009-10

(Rs. In Crores)
Particulars Budget Actual Budget Actual
2008-09 2008-09 2009-10 2009-2010
Income
Gross Sales 10500.4 9860.87 10534.63
6 10410.63
Net Sales 8801.88 8853.98 8798.18 9496.50
Stock Accretion / (-) 22.01 415.35
Discretion 6.71 916.65
Miscellaneous Income 200.59 189.12 35.80
Interest Income 392.66 787.21
Total Income 9401.84 10746.96 9261.78 9838.68
Expenditure
89
Raw Material 4778.79 5858.19 5957.36 5535.11
Stores & Spares 513.00 501.23 498.30 466.48
Employees 1153.20 1399.74
Remuneration 957.00 1156.68
Power, Fuel & Water 361.62 340.31 429.20 408.27
Repair & Maintenance 140.00 149.81 142.00 142.13
Other Expenses 351.44 384.66 375.00 334.63
Total Expenditure 7101.85 8390.88 8555.06 8235.86
Gross Margin (net) 2300.00 2356.09 706.72 1602.82
Interest Expenses 35.50 89.03 60.00
Cash Profit(+)/Loss (-) 2264.50 2267.06 646.72 1524.82
Depreciation & DRE 306.41 240.46 245.00 277.17
Net Profit (+)/Loss(-)
1958.09 2026.60 401.72 796.67

Income Tax &FBT 140.97 450.98
(incl Addl.
Tax for
prv.yrs&Deffered Tax) 672.95 691.02
Net Profit (after Tax) 1285.14 1335.58 260.75 345.69
90

(Rs. In Crores)
Particulars Budget Actuals Budget Actuals

2010-11 2010-11 2011-12 2011-12
Income:
Gross Sales 10500.00 11518.90 13606.53 14461.82
Net Sales 9410.67 10170.46 12048.67 12786.37
Stock Depletion 108.99 530.32 150.92 45.37
Export Benefits 13.32 12.48
Miscellaneous Income 94.2 89.38
Sale of Power 0.00 0.00
Total Income 9787.55 11238.34 12356.29 13147.71
Expenditure:
Raw Material 5861.82 7189.36 8210.50 8472.22
Stores, Spares 550.00 471.22 564.00 518.30
&Consummates
Employees Remuneration 1349.75 1272.95 1480.00 1466.67
Repair & Maintenance 225.00 145.18 270.00 168.48
Power, Fuel & Water 425.97 425.03 630.66 462.36
Other Expenses 375.00 397.02 400.74 499.96
91
Gross Margin (net) 1000.00 1412.64 800.38 1645.99

Interest 209.5 187.84
Cash Profit 790.50 1247.80 612.54 1454.87
Net Profit 438.21 658.49 29.21 751.46

(Rs. In Crores)
Particulars Budget Actuals Budget Actuals

2012-13 2012-13 2013-14 2013-14
Income:
Gross Sales 15000.47 13552.93 15751.22 13364.17
Less : Deductions 1670.85 1964.34 2066.83 1992.69

Net Sales 13329.62 11588.59 13684.39 11371.48
Stock Depletion 26.77 -257.49 -18.29 29.99
Export Benefits 15.79 21.79 13.45 11.22
Interest on deposits 25.00 151.26 91.20 180.04
Miscellaneous Income 78.71 222.09 78.71 126.94
Interest Others 28.58 82.07 0 0
Total Income 13504.47 12065.80 13849.46 11719.67
Expenditure:
Raw Material 8617.72 8121.91 8904.43 6967.25
Stores,Spares&consummate 650 525.13 665.00 552.09
s
92
Employees Remuneration 1680 1469.07 1820.00 1750.22

Repair & Maintenance 285 204.43 235.00 236.50
Power, Fuel & Water 576.94 642.70 700.14 690.31
Other Expenses 419.46 287.45 423.61 364.56
Gross Margin (net) 1275.35 1072.60 110.28 1158.75
Interest 293.26 359.25 425.86 338.12
Cash Profit 982.09 713.35 675.42 820.63
Net Profit 387.06 526.47 148.46 549.15
93
VARIANCE BETWEEN BUDGET AND ACTUALS FOR THE YEAR
2008-2009 (Rs. In Crores)
Particulars Budget Actual Variance Favorable Adverse

Income
Gross Sales 10500.46 10410.63 -89.83 89.83
Net Sales 8801.88 8853.98 52.10 52.10
Stock Accretion / (-)
Discretion 6.71 916.65 909.94 909.94
Miscellaneous
Income 200.59 189.12 -11.47 11.47
Interest Income 392.66 787.21 394.55 394.55
Total Income 9401.84 10746.96 1345.12 1356.59 11.47
Expenditure
Raw Material 4778.79 5858.19 1079.40 1079.40
Stores & Spares 513.00 501.23 -11.77 11.77
Employees
Remuneration 957.00 1156.68 199.68 199.68
Power, Fuel &
Water 361.62 340.31 -21.31 21.31
Repair
&Maintenance 140.00 149.81 9.81 9.81
Other Expenses 351.44 384.66 33.22 33.22
Total Expenditure 7101.85 8390.88 1289.03 33.08 1322.11
Gross Margin (net) 2300.00 2356.09 56.09 1389.67 1333.58
Interest Expenses 35.50 89.03 53.53 53.53 94
Cash Profit(+)/Loss 2264.50 2267.06 2.56 1389.67 1387.11

(-)
Depreciation &
DRE 306.41 240.46 -65.95 65.95
Net Profit
(+)/Loss(-) 1958.09 2026.60 68.51 1455.62 1387.11
Income Tax
&FBT(incl Addl.
Tax for
prv.yrs&Deffered
Tax) 672.95 691.02 18.07 18.07
Net Profit (after
Tax) 1285.14 1335.58 50.44 1455.62 1405.18
2009-2010 (Rs. In Crores)
Particulars Budget Actual Variance Favourable Adverse

Income
Gross Sales 9860.87 10634.63 773.76 773.76
Net Sales 8798.17 9496.50 698.33 698.33
95
Stock Accretion / (-) 22.01 415.35 437.36 437.36
Desertion
Miscellaneous
Income 35.80 222.82 187.02 187.02
Interest Income 405.79 534.71 128.92 128.92
Total Income 9261.77 9838.68 576.91 1014.27 437.36
Expenditure
Raw Material 5957.36 5491.85 -465.51 465.51
Stores & Spares 498.30 466.48 -31.82 31.82
Employees
Remuneration 1153.20 1399.74 246.54 246.54
Power, Fuel &

Water 429.20 408.27 -20.93 20.93
Repair
&Maintenance 142.00 142.13 0.13 0.13
Other Expenses 375.00 327.39 -47.61 47.61
Total Expenditure 8555.06 8235.86 -319.20 565.87 246.67
Gross Margin (net) 706.72 1602.83 896.11 1580.14 684.03
Interest Expenses 60.00 78.00 18.00 18.00
Cash Profit(+)/Loss
(-) 646.72 1524.83 878.11 1580.14 702.03
Depreciation &
DRE 245.00 277.17 32.17
Net Profit
(+)/Loss(-) 401.72 1247.66 845.94 1580.14 734.20
Income Tax 140.97 450.98 310.01 310.01
&FBT(incl Addl. 96
Tax for
prv.yrs&Deffered
Tax)
Net Profit (after
Tax) 260.75 796.68 535.93 1580.14 1044.21
2010-2011(Rs. In Crores)
Particulars Budget Actual Variance Favorable Adverse

Income
Gross Sales 10500 11516.99 1016.99 1016.99
Net Sales 9410.67 10170.46 759.79 759.79
Stock Accretion / (-)
Desertion 108.99 532.32 423.33 423.33
Miscellaneous
Income 60.80 78.71 17.91 17.91
Interest Income 160.39 307.72 147.33 147.33
Other Income 46.7 139.13 92.43 92.43
Total Income 9787.55 11228.34 1440.79 1440.79
Expenditure 97
Raw Material 5861.82 7139.26 1277.44 1277.44
Stores & Spares 550 471.22 -78.78 78.78
Employees
Remuneration 1349.75 1272.95 -76.80 76.80
Power, Fuel &
Water 425.97 425.03 -0.94 0.94
Repair &
Maintenance 225 145.18 -79.82 79.82
Other Expenses 375 362.55 -12.45 12.45
Gross Margin (net) 1000 1412.15 412.15 412.15
Interest Expenses 209.50 164.55 -44.95 44.95
Cash Profit(+)/Loss
(-) 790.50 1247.60 457.10 457.10
Depreciation &
DRE 352.30 265.94 -86.36 86.36
Net Profit
(+)/Loss(-) 438.20 981.66 543.46 543.46
Income Tax
&FBT(incl Addl.
Tax for prv.yrs&

Deferred Tax) 311.57 223.17 88.4 88.4
Net Profit (after
Tax) 126.37 658.49 531.86 531.86
98
2012-2013(Rs. In Crores)
Particulars Budget Actuals Variance Favorable Adverse

2012-13 2012-13
Income
Gross Sales 15000.47 13552.93 1447.54 1447.54
Less : Deductions 1670.85 1964.34

Net Sales 13329.62 11588.59 1741.03 1741.03
Stock Accretion / (-) 26.77 -257.49
Desertion 230.72 230.72
Export Benefits 15.79 21.79 6 6
Interest on deposits 25.00 151.26 126.26 126.26
Miscellaneous 78.71 222.09
Income 143.38 143.38
Interest Others 28.58 82.07 53.49 53.49
Total Income 13504.47 12065.80 1438.67 1438.67
Expenditure
Raw Material 8617.72 8121.91 495.81 495.85
Stores & Spares 650 525.13 124.87 124.87
Employees 1680 1469.07
Remuneration 210.93 210.93
Repair & 285 204.43 80.57 80.57
99
Maintenance
Power, Fuel & 576.94 642.70 65.76
Water 65.76
Other Expenses 419.46 287.45 132.01 132.01
Gross Margin (net) 1275.35 1072.60 202.66 202.66
Interest Expenses 293.26 359.25 65.99 65.99
Cash Profit(+)/Loss 982.09 713.35
(-) 268.74 268.74
Depreciation & 595.03 186.88 408.15
DRE 408.15
Net Profit 387.06 526.47 139.41
(+)/Loss(-) 139.41
Income Tax 77.44 173.64 96.2
&FBT(incl Addl.
Tax for prv.yrs&

Deferred Tax) 96.2
Net Profit (after 309.62 352.83 43.21
Tax) 43.21
GROSS SALES FOR THE PERIOD OF 2006-07 TO 2010-11
Years Budget Actual Variance Favorable Adverse

2008-
2009 10500.46 10410.63 -89.83 89.83
100
2009- 9860.87 10634.63 773.76 773.76
2010
2010-
2011 10500 11516.99 1016.99 1016.99
2011- 13606.53 14461.82
2012 855.29 855.29

2012-
2013 15000.47 13552.93 1447.54 1447.54
12000
10000
8000 2006-2007
6000 2007-2008
2008-2009
4000
2009-2010
2000
2010-2011
0
-2000
BUDGET ACTUALS VARIANCE FAVOUR... ADVERSE
GROSS SALES
NET SALES FOR PERIOD OF 2006-07 TO 2010-11

2008-
2009 8801.88 8853.98 52.10 52.10
2009- 101
2010 8798.17 9496.50 698.33 698.33

2010-
2011 10500 11516.99 1016.99 1016.99
2011-
2012
2012-
2013 13329.62 11588.59 1741.03 1741.03
NET SALES
TOTAL INCOME FOR THE PERIOD OF 2006-07 TO 2010-201
12000
10000
8000 2006-2007
6000 2007-2008
2008-2009
4000
2009-2010
2000 2010-2011
0
BUDGET ACTUALS VARIANCE FAVOURABLE ADVERSE
TOTAL INCOME

2008-2009 9401.84 10746.96 1345.12 1356.59 11.47
2009-2010 9261.77 9838.68 576.91 1014.27 437.36
2010-2011 10500 11516.99 1016.99 1016.99
2011-2012
102
2012-2013 13504.47 12323.29 1181.18 1181.18
Adverse
Favorable
2012-2013
Variance 2011-2012
2009-2010
2008-2009
Actual
Budget
0 2000 4000 6000 8000 10000 12000 14000
TOTAL EXPENDITURE FOR THE PERIOD OF 2006-07 TO

2010-11
Budget Actual Variance Favorabl Adverse

Years e
2008-2009 7101.85 8390.88
2009-2010 8555.06 8235.86
2010-2011 8787.54 9816.19
2011-2012
2012-2013 12229.12 11250.69 978.43 978.43
103
ADVERSE
FAVOURABLE 2010-2011
2009-2010
VARIANCE 2008-2009
2007-2008
ACTUALS 2006-2007
BUDGET
-2000 0 2000 4000 6000 8000 10000 12000
TOTAL EXPENDITURE
GROSS MARGIN FOR THE PERIOD OF 2006-07 TO 2010-

2011

Years e
2008-2009 2300.00 2356.09
2009-2010 706.72 1602.83
2010-2011 1000 1412.15
2011-2012
2012-2013 1275.35 1072.60 202.75 202.75
104
ADVERSE
FAVOURABLE
2010-2011
2009-2010
VARIANCE
2008-2009
ACTUALS 2007-2008
2006-2007
BUDGET
0 500 1000 1500 2000 2500 3000 3500 4000
GROSS MARGIN
INTEREST FOR THE PERIOD OF 2006-07 TO 2010-2011
VARIANC
YEARS BUDGET ACTUALS E FAVOURABLE ADVERSE
2008-2009 35.50 89.03
2009-2010 60.00 78.00
2010-2011 209.50 164.44
2011-2012
2012-2013 293.26 359.25 65.99 65.99
105
INTEREST
ADVERSE
FAVOURABLE
2010-2011
2009-2010
VARIANCE
2008-2009
ACTUALS 2007-2008
2006-2007
BUDGET
-50 0 50 100 150 200 250
CASH PROFIT FOR THE PERIOD OF 2006-07 TO 2010-2011

Years e
2008-2009 2264.50 2267.06
2009-2010 646.72 1524.83
2010-2011 790.50 1247.60
2011-2012
2012-2013 982.09 713.35 284.74 284.74
106
ADVERSE
FAVOURABLE 2010-2011
2009-2010
VARIANCE 2008-2009
2007-2008
ACTUALS 2006-2007
BUDGET
0 500 1000 1500 2000 2500 3000 3500 4000
CASHPROFIT
NET PROFIT FOR THE PERIOD OF 2006-07 TO 2010-2011
Budget Actual Varianc Favorable Adverse

Years e
2008-2009 1285.14 1335.58
2009-2010 260.75 796.68
2010-2011 126.37 658.49
2011-2012
2012-2013 309.62 352.83 43.21 43.21
NET PROFIT
107
2500
2000 2006-2007
2007-2008
1500
2008-2009
1000 2009-2010
500 2010-2011
0
T LS CE LE SE
GE A N B E R
D T U IA RA V
BU AC R U AD
VA V O
FA
Projections of financials for the year 2011-2012

SI.No. Particulars Current Month Cumulative
Estimated(Feb12) Estimated(Feb12)
A. Income
Gross sales 1340.83 12713.51
1 Net sales 1179.94 11189.03
2 Export benefits 1.45 7.29
3 Sale of power -- --
4 Interest on term deposits 15.05 183.18
5 Interest others 3.32 36.52
6 Miscellaneous Income 6.79 74.74

108
Total (1-6) 1206.55 11490.75
B Expenditure
7 Stock Accretion(-)/Decretion 88.49 (-) 295.53
8 Raw material Consumption 670.86 7752.97
9 Stores & consumables 47.66 447.78
10 Employees Remn. & Benefits 123.00 1337.34
11 Power, Fuel &Water 41.31 472.92
12 Repairs & Maintenance 15.59 163.11
13 Other Expenses 26.74 229.04
Total (7-12) 1013.65 10107.63
C Gross Margin (A-B) 192.90 1383.13
D Interest Charges 19.84 167.24
E Cash Profit (C-D) 173.06 1215.88
F Depreciation 25.34 31966.66
G Net Profit(Before tax) (E-F) 147.73 896.22
H Provision for Income Tax 52.75 290.70

incl. deferred Tax
Provision for Income Tax 52.75 360.06
Provision for deferred tax --- (-)69.36
liability
I Net Profit (After tax) for the 94.98 605.52

year (G-H)
J Net Profit (After tax) 94.98 605.52
Regions for differences in the budgetary figures and actual figures:
Firstly, for comparing the budgeted and actual figures Income and
Expenditure statement was taken. The Income and Expenditure statements were
taken from the period of 2006-07 to 2010-11.
109
Analysis of income and Expenditure statements from 2006-2007 to

2010-2011.
Analysis of income and expenditure statement 2006-07 w.r.t. to budgeted

statement is as follows :–
2006-07 reveals more favorable conditions than adverse conditions because

increase in gross and net sales, reduction of price in the consumption of raw
material, increase in gross margin have shown a positive impact in decreasing
the cost and increasing the profit when compared with the budgeted figures.
Some adverse situations also arise like increase in employee remuneration,
increase in total expenditure have shown major differences negatively when
compared with the budgeted statements.
Analysis of Income and Expenditure statement 2007-08 w.r.t. to budgeted

2007-08 reveals more adverse conditions than the favorable conditions when
compared the actual with the budgeted figures, the export benefits have been
decreased than the budgeted reports so the income of the company have been
decreased and the expected miscellaneous income has also decreased as
compared to estimated. Like the previous year the employee remuneration is
also increased the unexpected expenses of the company are increased. The cost
of the raw material has been increased to that extent the expenses of the
company are also increased.
Analysis of Income and Expenditure statement 2008-09 w.r.t to budgeted

statement is as follows:–
2008-09 statement reveals that when compared the actual and budgeted figures
there are equal and favorable and adverse conditions like decrease in gross
sales, net sales and export benefits etc. and increase in miscellaneous income
110
and total income etc. the employee remuneration has increased to the extent
than the expected so the expenses of the company are increased.

there are favorable and adverse conditions like increase in gross sales, net sales
and miscellaneous income etc. and decrease in stock. The employee
remuneration has increased by RS247 crores over budgeted figure.

statement is as follows :-
there are equal and favorable and adverse conditions like decrease in gross
sales, net sales and export benefits etc. and increase in miscellaneous income
and total +income etc. the employee remuneration has increased to the extent
than the expected so the expenses of the company are increased.
111
6. ABBREVIATIONS
RINL Rashtriya Ispat Nigam limited.
HRD Human Resource Development
LMMM Light & Medium Merchant Mill
WRM Wire Rod Mill
MMSM Medium Merchant & Structure Mill
BF Blast Furnace
SP Sinter Plant
RM Rolling Mills
MT Management Trainee
SMS Steel Melting Shop
RMHP Raw Material Handling Plant
112
7.FINDINGS & SUGGESTIONS
Findings:
• The debt capital is less than the share capital so, it reveals that the
company in the high liquidity position.
• Working capital position of the company is in satisfactory position.
• Debt capital is less than the equity and it shows the economical
strength of the company.
• The analysis for the purpose of the investing in shares generally
concentrates on the return on equity of vsp, which is increasing;
therefore it is a good bet for investment subjected to availability of
shares.
• Finally total assets of the company increased by 16% as whole the
financial position is satisfied.
Suggestions:
• High profit realization by selling the products at higher margins will

eventually result in higher cash accrual and hence higher credit rating.
• Since the firm performance is largely dependent on availability of raw

materials. In order to avoid the uncertainties in acquiring the raw materials,
new and innovative steps has to be taken to effectively utilize the surplus
funds.
113
• The present level of the cash is Rs.5415.54 crores, this can be used in
expansion II in order to maintain the current ratio i.e., between current assets
and current liabilities at the optimum level.
• The other main area where RINL has tremendous scope for improvement in
manufacturing value added products. This will result in better sales
realization and higher profits.
• Standardization of general stores material and spares will reduce the number
of items.
• The company should take proper steps to reduce the expenses and
thoroughly seek for maximum gains.
GLOSSARY:
Financial Management:
“Financial management is the operation activity of a business that is

responsible for the obtaining and effectively utilizing the funds necessary for
efficient operations.”
Scenario:
Synthetic Description of an Event or Series of Actions.
Proximity:
Nearness to something
Financial Statements:
It provides a summary of the accounts of a business enterprise, the

balance sheet reflecting the assets liabilities, and capital as on a certain date and
the income statement showing the results of operations during a certain period”.
114
Financial Analysis: It is the process of identifying financial strengths and
weakness of the firm by properly establishing between items of the balance
sheet and profit and loss account.
8.BIBLIOGRAPHY
Financial management : I. M.pandey
Financial management : Prasanna Chandra
Cost management accounting : I.M. Pandey
Annual Reports Of Rashtriya Ispat Nigam Limited
General Articles And Magazines Of Rastriya Ispat Nigam Limited
Website: www.vizagsteel.com,
www.indianinfoline.com,
Newspapers: Deccan Chronicle, The Hindu.
115

Financial Performance and Budgeting

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Financial Performance and Budgeting

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Financial Performance & budgeting

With Reference to Visakhapatnam Steel Plant

Rastriya Ispat Nigam Limited

Sri. O R M RAO (A.G.M) (HRD)

Sri. M L S VARMA (ASST. MANAGER) (HRD)

DEPARTMENT OF COMMERCE AND MANAGEMENT

TSR&TBK DEGREE & PG COLLEGE

SRINAGAR, GAJUWAKA, VISAKHAPATNAM

This is to certify that project study on “Financial Performance and Budgeting” in

Visakhapatnam Steel Plant is beneficed work done and submitted

by G.PARDHA SARADHI Reg. No 116134203017 in partial fulfillment of the

requirements for the awards of BCOM, from TSR&TBK DEGREE COLLEGE,

Mrs. M. Hema Latha. Mrs.V.D.N.Subhashini

Lecturer in Commerce Head of the Department

I,GRANDHI PARDHA SARADHI (Reg.no.116134203017) declare that the project

Date: Signature of the Student

Place: Visakhapatnam (G.PARDHA SARADHI)

This internship report is a presentation of my effort to study the practice of

This report intends to provide brief knowledge of various concepts,

This report seeks to cover the topics of Financial Performance, mainly

I take this opportunity to express my deepest and heart full gratitude to

I express my sincere thanks to Mr.V.RAMESH KUMAR (sir), Assistant

Sl. No. CONTENTS PAGE No.

2 Profile Of Indian Steel Industry 12-21

3 Profile Of Visakhapatnam Steel 22-39

7 Findings & Suggestions 116-118

Steel is a versatile material with multitude of useful properties, making

In that financial performance is one of the major and important areas of

Financial analysis is the process of identifying the financial strength and

Meaning and Concept of Financial Analysis:

The terms ‘financial analysis’ also known as analysis and interpretation

1.2 Need For The Study:

There is a special role of every industry barring up on the need essentiality

1.3 Scope of the Study:

Financial analysis depends primarily on financial statements to diagnose

 As longer as the accounts bases remain more or less the some

 Since similar basis characterize various firms in the same industries,

 Experience seems to suggest the financial analysis works one is

 Certain neither accounts nor conversions are followed while

 Still personal judgment of the accountant phrases on important part.

1.4 Objectives of the Study:

 To find out Financial Strengths and weaknesses of the firm

 To know the Liquidity Position of a firm

 To know the causes of changes in the Cash Position

 To find out important tools of Short-term, Long-term Financial

 To know the ability of the firm to meet its current obligations

 To know the overall operation efficiency and performance of the firm

 To find out foremost important Financial Decisions

 To know the detailed information about comparative and common size

The data includes.

1. Having a discussion with finance manager.

This is taken from the annual reports, websites, company journals,

1.6 Limitations of the Study:

 The study is carried bearing on the information and documents provided

 Most of the matters related to budgets were confidential so it not possible

Highlights of Present Steel Scenario:

 The world steel shows a low growth demand.

 Bharat Refectories Ltd.

S.No plant Collaboration capacity of

2 Bhilai steel plant Erstwhile USSR

3 Durgapur steel plant Britain

4 Bokaro Steel plant Erstwhile USSR

2 Bhilai steel plant Erstwhile USSR 7,70,000 Tones