1 EXECUTIVE SUMMARY

India is one of the leading country in steel producing and growing economy with rapidly expanding the financial service sector. Managing working capital is a matter of balance. A company must have sufficient cash in hand to meet its immediate needs while ensuring that idle cash is invested to the organizations in best efficient way. It is necessary to have clear and accurate reports on each of the components of working capital and awareness of the potential impact of outside influences. WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES

In the analysis for Bhilai Steel Plant it was found that the working capital has increased which could be mainly due to increased sales. The main areas of emphasis were on inventory turnover and creditors turnover and Debtors turnover. Creditor turnover is reducing that was a good sign. Few suggestions that are recommended for better management of working capital are reducing inter-corporate deposits and loans, reducing finished goods inventory, etc. The company uses Operating Cycle Method to calculate its Working Capital method. Thus, good management of working capital is part of good financial management. Effective use of working capital will contribute to the operational efficiency of a company, optimum use will help to generate maximum returns.

Company Analysis

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

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2 HISTORY OF SAIL
Steel Authority of India (SAIL) was established in 1973 to manage the operations of stateowned steel companies Hindustan Steel (established in 1954) and Bokaro Steel (established in 1964). In 1978, SAIL was restructured as an operating company. The company established Durgapur Steel Plant (DSP) in the late 1950s with an initial annual capacity of one million tons of crude steel. The capacity of DSP was later expanded to 1.6 million tons during the 1970s. Over the years, SAIL established various steel plants. Bokaro Steel Plant (BSP), which was originally incorporated as a limited company in 1964, was merged with SAIL, first as a subsidiary and then as a business unit. Salem Steel Plant (SSP) was commissioned, in 1981. The Indian Iron and Steel Company (IISCO), a subsidiary of SAIL, was declared a sick industrial company by the Board for Industrial and Financial Reconstruction (BIFR), in 1994. NTPC SAIL Power Company was established as a joint venture with National Thermal Power Corporation (NTPC), in 2001. In the following year, SAIL established the Bokaro Power Supply Company with Damodar Valley, and the Bhilai Electric Supply Company with the NTPC. In 2005, the Board of Directors of SAIL gave approval for two projects: the revamping of Sinter Plant-2 in Bhilai Steel Plant and the installation of an air turbo compressor and an oxygen turbo compressor at the Oxygen Plant in Bokaro Steel Plant. IISCO was amalgamated with the parent company, in the first quarter of 2006. The foundation stone of the INR96,000 million (approximately $2,384.6 million) Greenfield modernization and expansion program of IISCO Steel Plant (ISP) of SAIL was laid at Burnpur in West Bengal, in the last quarter of 2006. Installation of state-of-the-art environment-friendly and energy-efficient steel making technology was expected to help ISP multiply its crude steel production capacity to 2.5 million tons by the year 2010. In February 2007, SAIL signed a memorandum of understanding (MOU) with Indian Railways for supply of 34 high-power locomotives to SAIL over the next three years. These

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locos would enable faster movement of materials on full-rake basis, leading to a substantial reduction in detention time for the railway wagons. In March 2007, the company signed a joint venture agreement with Jaypee Associates (an India-based cement producer) for producing 2.2 million tones cement per annum from the slag generated during the blast furnace operations at SAILs Bhilai Steel Plant. In April 2007, the companys board approved a proposal for modernization and capacity expansion of Bhilai Steel Plant to 7 million tons of crude steel per annum at an indicative cost of INR112,620 million (approximately $2,797.5 million). In the same month, SAIL, Rashtriya Ispat Nigam (RINL, an India-based steel company), and National Mineral Development Corporation (NMDC, an India-based company engaged in the exploration of a range of minerals) agreed to enter into a strategic business relationship by forming a joint venture company for setting up of an integrated iron and steel plant of four million tonnes annual capacity in the state of Chhattisgarh (a state in India) initially. They also planned to take this process further to other states of India as well. In June 2007, SAIL signed a MOU with Manganese Ore India (MOIL, a public sector company with large resources of manganese) for setting up of a joint venture company to produce Ferro-manganese and silicon-manganese. In August 2007, SAIL and POSCO, a South Korea-based steel company, signed a MOU to establish a strategic alliance for aligning and cooperating with each other in a range of strategic business and commercial interest areas. The MOU stated that the alliance partners had agreed to cooperate in the areas of business which included information sharing in the area of corporate strategy planning; joint usage of each other's existing marketing and warehousing network; and co-ordination in procurement of coking coal, nickel, and ferroalloys and engagement of transportation vessels. Further in August 2007, SAIL, NMDC, and RINL, signed a MOU for jointly setting up a 4 million tonnes per annum capacity integrated steel plant in Chhattisgarh, a state in India. In September 2007, SAIL signed a MOU with IL&FS Infrastructure Development Corporation (IIDC, an infrastructure development and finance company) for formation of a special purpose vehicle (SPV) to develop, operate, and maintain a steel sector special economic zone (SEZ) at Salem in the state of Tamil Nadu in India.
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In January 2008, SAIL and Tata Steel, an India-based steel company, signed an agreement to establish a fifty-fifty joint venture company for coal mining in India. The joint venture would identify, acquire, and develop coal blocks in India. In the same month, foundation stone for the modernization and expansion of Rourkela Steel Plant (located in the state of Orissa in India) of SAIL was laid. In February 2008, an INR112,620 million (approximately $2,797.5 million) expansion program for SAIL was inaugurated in Bhilai. In the same month, SAIL signed a shareholder's agreement with Jaypee Associates to form a joint venture company, Bokaro Jaypee Cement, for setting up a 2.1 million tonne capacity cement plant at Bokaro. In April 2008, the foundation stone for INR110,000 million (approximately $2,732.4 million) modernization and expansion project of the Bokaro Steel Plant of SAIL was laid. In May 2008, SAIL signed a MOU with the government of Kerala (a state in India) for revival of the loss-making Steel Complex; a 50,000 tonnes per annum company producing continuous cast billets used by re-rollers for producing thermo mechanically treated (TMT) bars for the construction industry.

INTRODUCTION TO SAIL

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defense industries and for sale in export markets. Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets
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and coils, galvanized sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite, which are inputs for steel making. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

SAIL VISION To be a respected world-class corporation and leader in India steel business in quality, productivity, profitability, and customer satisfaction.

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

CORE VALUES OF SAIL

Customer satisfaction. Concern for people. Consistent Profitability. Commitment of Excellence.

THE SEVEN Cs OF SAIL

Consistent Quality. Committed Delivery. Customized Product Mix. Contemporary Products. Competitive Price. Complaint Settlement. Culture of Customer Services.

SAIL TODAY
SAIL today is one of the largest industrial entities in India. Its strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets and a large pool of technical and professional expertise. Today, the accent in SAIL is to continuously adapt to the competitive business environment and excel as a business organization, both within and outside India. Much has happened ever since SAILs Corporate Plan was announced in 2004. Investment plans for the three specialty steel plants have been firmed up. Company has grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant). Production targets have been revised from 19 million tonnes (MT) of steel to about 24 MT. Estimated
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investments has increased from Rs 25,000 crore to around Rs 40,000 crore. And the time period has been squeezed by two years, bringing the targeted year of completion of major projects from 2012 to 2010.

SAILs GROWTH PLAN 2010

Much has happened ever since SAILs Corporate Plan was announced in 2004. Investment plans for the three specialty steel plants have been firmed up. Company has grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant). Production targets have been revised from 19 million tonnes (MT) of steel to about 24 MT. Estimated investments has increased from Rs 25,000 crore to around Rs 40,000 crore. And the time period has been squeezed by two years, bringing the targeted year of completion of major projects from 2012 to 2010.

Saleable Steel Capacities (MT) PLANT Bhilai Steel Plant Durgapur Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Alloy Steels plant Salem Steel Plant Visvesvaraya Iron & Steel Plant 2010 6.21 2.85 2.90 6.50 2.37 0.43 0.36 0.22

2 Graph No.- 1 Saleable Steel Production Capacity

MAJOR UNITS
Integrated Steel Plants

Bhilai Steel Plant (BSP) in Chhattisgarh

Durgapur Steel Plant (DSP) in West Bengal Rourkela Steel Plant (RSP) in Orissa

Bokaro Steel Plant (BSL) in Jharkhand

IISCO Steel Plant (ISP) in West Bengal

SPECIAL STEEL PLANTS

Alloy Steels Plants (ASP) in West Bengal Salem Steel Plant (SSP) in Tamil Nadu

Visvesvaraya Iron and Steel Plant (VISL) in Karnataka Maharashtra Elektrosmelt Limited (MEL) in Maharashtra

JOINT VENTURES
SAIL has promoted joint ventures in different areas ranging from power plants to ecommerce.

NTPC SAIL Power Company Pvt. Ltd: A 50:50 joint venture between Steel
Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.), it manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314(MW).

Bokaro Power Supply Company Pvt. Limited: This 50:50 joint venture between
SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302MW power generation and 1880 tonnes per hour steam generation facilities at Bokaro Steel Plant.

Junction Services Limited: A joint venture between SAIL and Tata Steel on 50:50
bases, this company promotes ecommerce activities in steel and related areas.

SAIL-Bansal Service Center Ltd: SAIL has formed a joint venture with BMW
industries Ltd. on 40:60 basis to promote a service center at Bokaro with the objective of adding value to steel.

Bhilai JP Cement Ltd: SAIL has also incorporated a joint venture company with M/s
Jaiprakash Associates Ltd to set up a 2.2 MT cement plant at Bhilai. SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint venture company to produce Ferro-manganese and silico-manganese at Bhilai.

North Bengal Dolomite Limited: A joint venture between SAIL and West Bengal
Mineral Development Corporation ltd on 50:50 basis was formed for development of Jayanti Dolomite Deposit, Jalpaiguri for supply of Dolomite to DSP and other plants.

3 Romelt-SAIL (India) Ltd: A joint venture between SAIL, National Mineral

Development Corporation (NMDC) and Russian promoters for marketing Romelt Technology developed by Russia for reducing of iron bearing materials, which is carried out with carbon in single stage reactor with the use of oxygen. SAIL today is one of the largest industrial entities in India. Its strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets & a large pool of technical & professional expertise.

OWNERSHIP & MANAGEMENT

The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its Navratna status, enjoys significant operational and financial autonomy.

OTHER UNITS:
SAIL Consultancy Division. Center of Engineering & Technology. Management Training Institute. Safety Organization. Environmental Management Division. Raw Material Division. Growth Division. Central Power Training Institute. Central Marketing Organization.

MAJOR CAPITAL SCHEMES

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Bhilai Steel Plant:

Rebuilding of Coke Oven batteries. Modernization of BFs (including Gas Cleaning Plant).

Installation of new Slab Caster, RH Degsser & Ladle Furnace ().

Revamping of existing Slab Casters in phased manner.

New Pipe Plant of 0.2 million tones capacity New Bar & Rod Mill (1 million tons).
AMR (Additions, Modifications & Replacements) & other Schemes including. Logistics & infrastructure.

Installation of new Steel Melting Shop (SMS) (3.9 million tons capacity).

Durgapur Steel Plant:

Bloom Caster & associated facilities.

New 0.7 mtpa Bar & Rod Mill & 0.4 mtpa Medium Structural Mill.
Up gradation of BFs & CDI (Coal Dust Injection) in BFs. Rebuilding of Coke Oven battery. Installation of a new Billet Caster.

Rourkela Steel Plant:

Rebuilding of Coke Oven battery. New Blast Furnace-2,000 m3. CDI & Reconstruction of BFs. Revamping of Sinter Plant including Pollution Control Scheme.

New Plate Mill (0.7-1.0 Million Tonnes Capacity Wide width.

Bokaro Steel Plant:

New 2.5 million tones hot strip mill & 0.6 million tones cold rolling mill.
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Installation of Slab Caster. Installation of New modern BOFs. Rebuilding of Coke Oven batteries.

CDI in blast furnace.

IISCO Steel Plant:

Modernization of Steel Making Facility.

New Multipurpose Section mill/ Universal mill.

Development of collieries.

SWOT ANALYSIS OF SAIL STRENGTH

Largest player in the Indian Steel industry. Strong backward integration like iron ore and power.
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Very aggressive expansion plans. The single largest rail manufacturer in the world. Merger with IISCO would boost its profitability, as SAIL would have access to IISCOs underutilized iron ore and coalmines. All its plants are a profit centers. SAIL is a virtually Debt-Free Company. The approved acquisitions and merger of NINL, NISCO and MEL would result in synergy benefits, operating efficiencies, cost savings and thus higher profit.

WEAKNESS
Concern in obtaining new mining leases and renewal of old leases. Low liquidity in Stock Exchange (85.82% shares is held by GOI itself). Heavily dependent on import of raw materials (coking coal). It has high operation cost when compared to its peers like Tata Steel, JSW Steel.

OPPORTUNITIES
Strong Economy growth (second fastest growing economy after China). Booming infrastructure sector (Roads, Ports, Airports, SEZs, Power). Strong demand in automobile sector, consumer durables sector and engineering goods sector. Robust demand in construction and retail industry. Low per capita steel consumption offers a higher growth. Rich Geological Resource base. Large consumer base, low labor cost and high productivity.

THREAT Steel prices may remain stumpy on account of oversupply from China.
Bureaucratic nature of Government - Socio-Political interventions (in leasing mines). Rising interest rates could affect expansion programmed (High cost of Finance). High cost of energy.

Big ticket investment by POSCO and Mittal could swallow the market (specifically
export). Cyclical nature of Steel Industry. Deficit infrastructure.
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High ash coal.

EXECUTIVE DIRECTOR, ASP MANAGINGFINANCE CHAIRMANPERSONNEL SSP ED (TECH(IA) EXE. DIR (OPERATION) VISL CHIEF VIGILANCE DIRECTOR (TECH) DIR.(PROJECTS) BSP (CMMG) (CP) (CIG) & DIRECTOR BSL LEGAL DSP RSP SERVICE)

2 ORGANISATION STRUCTURE OF SAIL

BHILAI STEEL PLANT

INTRODUCTION
Bhilai Steel Plant - a symbol of Indo-Soviet techno-economic collaboration, is one of the first three integrated steel plants set up by Government of India to build up a sound base for the industrial growth of the country, The agreement for setting up the plant with a capacity of 1 MT of Ingot steel was signed between the Government of erstwhile U.S.S.R. and India on 2nd February, 1955, and after a short period of 4 years, India entered the main stream of the steel producers with the commissioning of its first Blast Furnace on 4th February, 1959 by the then President of India, Dr Rajendra Prasad. Commissioning of all the units of 1 MT stage was completed iby1961. In the initial phase the plant had to face many teething problems, mostly unknown to the workforce at the time, But by meticulous efforts and team-sprit, these problems were surmounted and the rated capacity production was achieved only within a year of integrated operation of the plant. Thereafter, the plant was expanded to 2.5 MT capacity per year, and then to 4 MT of crude steel per year,. Bhilai expanded its production capacity in two phases - first to 2.5 MT which was completed on Sept. 1, 1967 and the 4 MT stages, which was completed in the year 1988 All the units of the plant have been laid out in sequential formation according to technological inter-relationship so as to ensure uninterrupted flow of in-process materials like Coke, Sinter, Molten Iron, Hot Ingots, as well as disposal of metallurgical wastages and slag etc., minimizing the length of various inter-plant communications, utilities and services. Bhilai has its own captive mines spread over 10929.80 acres. Iron ore from Dalli-Rajhara group of mines, 85 kms south-west of Bhilai. Limestone requirements are met by Nandini mines, 20 kms north of Bhilai and dolomite comes from Hirri in Bilaspur district, 135 kms north-east of the plant. To meet the future requirement of iron ore, another mining site Rowghat , situated about 100 km south of Rajhara, is proposed to be developed; as the ore reserves at Rajhara are depleting.
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The plant now consists of ten coke oven batteries. Six of them are 4.4 meters tall. The 7 meter tall fully automated Batteries No 9 & 10 are among the most modern in India. Of Bhilai's seven blast furnaces, three are of 1033 cu. meter capacity each, three of 1719 cu. meter and one is 2000 cu. meter capacity. Most of them have been modernised incorporating state-of-the-art technology. Steel is made through twin hearth furnaces in Steel Melting Shop I as well as through LD Convertor -continuous Casting route in SMS II. Steel grades conforming to various national and international specifications are produced in both the melting shops. Production of cleaner steel is ensured by flame enrichment and oxygen blowing in SMS I while secondary refining in Vaccum Arc Degassing ensures homogenous steel chemistry in SMS II. Also in SMS II is a 130 T capacity RH Degassing Unit, installed mainly to remove hydrogen from rail steel and Ladle Furnace to meet present and future requirements of quality steel. Bhilai is capable of providing the cleanest and finest grades of steel. The rolling mill complex consists of the Blooming & Billet Mill, Rail & Structural Mill, Merchant Mill, Wire Rod Mill and also a most modern Plate Mill. While input to the BBM and subsequently to Merchant Mill and Wire Rod Mill comes from the Twin Hearth Furnaces, the Rail & Structural Mill and Plate mill roll long and flat products respectively from continuously cast blooms and slabs only. The total length of rails rolled at Bhilai so far would circumvent the globe more than 4.5 times. To back this up, there is the Ore Handling Plant, three Sintering Plants - of which one is most modern, two captive Power Plants with a generating capacity of 110 MW, two Oxygen Plants, Engineering Shops, Machine Shops and a host of other supporting agencies giving Bhilai a lot of self-sufficiency in fulfilling the rigorous demands of an integrated steel plant. Power Plant No.2 of 74 MW capacity has been divested to a 50:50 SAIL/NTPC joint venture company NSPCL. BSP is the sole manufacturer of rails and producer of the widest and heaviest plates in India. Bhilai specializes in the high strength UTS 90 rails, high tensile and boiler quality plates, TMT bars, and electrode quality wire rods. It is a major exporter of steel products with over 70% of total exports from the Steel Authority of India Limited being from Bhilai. The distinction of being the first integrated steel plant with all major production units and marketable products covered under ISO 9002 Quality Certification belongs to BSP. This includes manufacture of blast furnace coke and coal chemicals, production of hot metal and pig iron, steel making through twin hearth and basic oxygen processes, manufacture of steel
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slabs and blooms by continuous casting, and production of hot rolled steel blooms, billets and rails, structural, plates, steel sections and wire rods. The plant's Quality Assurance System has been awarded ISO 9001:2000 certification. Not content with the Quality Assurance system for production processes, Bhilai has obtained ISO 14001 certification for its Environment Management System and for its Dalli Mines. Besides environment-friendly technology like Coal Dust Injection System in the Blast Furnaces, de-dusting units and electrostatic precipitators in other units, BSP has continued a vigorous afforestation drive, planting trees each year averaging an impressive 1000 trees per day in the steel township and mines. A leader in terms of profitability, productivity and energy conservation, BSP has maintained growth despite recent difficult market conditions. Bhilai is the only steel plant to have been awarded the Prime Minister's Trophy for the best integrated steel plant in the country seven times.

BSPs ORGANIZATIONAL STRUCTURE

To enhance customer satisfaction through: Improvement in productivity and product quality.

Skill enhancement of our people by competence commitment and culture.

Production as per customer requirements.

QUALITY POLICY OF BSP

Attending market leadership through enhancing customer satisfaction. Achieving continual improvement in productivity, quality and salability of our products. Active involvement of all our people in achieving our goals, objectives and target.

PRODUCT PROFILE
Bhilai Steel Plant (BSP) has mainly three types of products: Semis Product Long Products Flat Products

The product range at Bhilai Steel Plant and their end use/consumers is as : A. FINISHED PRODUCTS Product 1. Rail & Structural Mill
Rails in 13m, 26m, 65/78 m length and welded panels of 130m/260m length Heavy Structurals Construction
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End use / consumers

Indian Railways, Export

Crane Rails Crossing sleepers 2. Merchant Mill Lt. Structurals Med. Rounds (Plain & TMT) Heavy rounds (Plain) 3. Wire Rod Mill Wire Rods- Plain Wire Rods- TMT EQ Wire Rods 4. Plate Mill Plates B. SEMIS Billets (from BBM) Blooms (from BBM) Narrow width slabs CC Blooms Killed Slabs C. Pig Iron D. By Products

Cranes Broad gauge sleepers

Engineering and Construction

Construction Electrodes Boilers, Defence ,Railways, Ship building, LPG cylinders, Export

Re-rollers

Foundry Ammonium Sulphate (Fertilizer)Tar and tar products, (Pitch, Naphthalene, Creosote Oil Road Tar,

Coal Chemicals

Anthracene oil, Dephenolised oil, PCM etc.), Benzol & its products (NG Benzene, Toulene, Xylene, Solvent oil, By. Benzol etc.) Granulated slag from CHSG Plants & SGP for cement manufacture

Processed Slag

CAPTIVE MINES
Iron-Ore - Dalli-Rajhara Iron Ore Complex, 80 kms from Bhilai Limestone - Nandini, 23 kms from Bhilai Dolomite - Hirri, 150 kms from Bhilai

COKE OVENS
BATT NO. NO.OF OVENS OVEN HEIGHT (M) COAL HOLDING CAPACITY PER OVEN (T) USEFUL VOLUME PER OVEN CU.M. SP.HEAT CONSPN. KCAL/KG

1-8 9&10

65 67

4.3 7.0

16.8 32.0

21.6 41.6

625-675 625-675

BLAST FURNANCE
3 of 1033 Cu m capacity each. 3 of 1719 Cu m capacity each. 1 of 2350 Cu m capacity.

STEEL MELTING SHOPS

Steel-making through BOF, VAD/Ladle Furnace/RH-Degasser and Continuous casting route: 3 converters of 110/130 T. VAD unit, RH degasser, Ladle furnace.

3 Slab Casters, 1 bloom caster, 1 Combi caster. Annual Capacity: 1.425 MT Cast steel.

MERCHANT MILL
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2 Capacity - 5, 00,000 Tones. Products: Plain Rounds: dia 28, 32, 36,40, 50,53, 56, 63 & 67
TMT Bars Lt. Structural Angles

RAIL & STRUCTURAL MILL Capacity - 7, 50,000 T Products:

Rails - R52 Kg/m & R60 Kg/m specifications according to Euro norms and international standards. Thick web asymmetric rail Beams Channels Angles Crossing Sleeper. Crane Rails

Bhilai is the sole supplier of the country's longest rail tracks of 260 meters. Bhilai Rails:
Largest producer and leading rail maker of the world. Four and a half decades of experience in rail making.

Produced over 15 million tonnes of rails; 2.7 lakh km in length. Indian Railways Worlds second largest rail company moves exclusively on Bhilai
rails.

Bhilai rails are subjected to worlds highest traffic density and axle loads.
Rails exported to 10 countries with exports to South Korea, New Zealand, Argentina, Turkey, Iran, Egypt, Ghana, Bangladesh and Malaysia.

WIRE ROD MILL Capacity - 4, 20,000 T

Wire Rods (Plain, Electrode Quality & TMT) in 5.5, 6, 7, 8 & 10 mm plain and ribbed, and 12 mm plain in coil form 8, 10, and 12 mm TMT

PLATE MILL
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Capacity Plates thickness Width Length 9,50,000 T 8-120 mm 1500-3270 mm 5-12.5 M

Product Mix: Saleable Steel Production:

SWOT ANALYSIS OF BSP

The primary function of Bhilai Steel Plant are derived from the functions of the mother organization SAIL. As a production unit of SAIL, BSP carries out the specific functions and task assign to it from time to time, both with regards to production and execution of other functions of SAIL, such as design consultancy, training and development etc. The primary analysis of any organization begins with the SWOT Analysis. It gives a complete picture so as to where an organization stands with respect to its competitors. And areas where its lags behind. It also gives a bird eye view f the possible opportunity that exists which can be capitalize upon the threats that may affect its operations at present or in the future.

Strengths:
Capacity of plant, Product Mix, Quality of Products, Human Resource & Management.

Weakness:
Supply of Raw Materials, Demurrages, Rigidity of Labor Law compared to other countries.

Opportunities:
Upsurge in Indian Economy, Technological Edge, Human Resource Management.

Threats:
Effect of Custom Duty, International Competition, Domestic Competition, Increase in Oil Prices,
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Depleting Mines.

ORGANISATIONAL STRUCTURE OF BHILAI STEEL PLANT

DGM (L(SERVICES) COC(M&HS) MILLS-LP) ACVO MILL && SP, DIR(WORKS)DIRECTOR GM(PROJECTS)& STEEL) ED (F&A)CCDBEDB) OHP) MANAGINGEN(REFR) (MM)& & (P&A) -A) (MM) (MS) (HRD) (PERS) (TS) (CCS) (QUALITY) (CO, (P (SAFETY) (PP&E (PROJECTS) I/C (PE, (IA)(M&U) (M&SP) (F&A) SMS-II (MINES)

90

GM (IT)

Major suppliers of Bhilai steel plant:

Apollo industrial corporation Mumbai. Ashok Leyland Chennai. BHEL Bhopal and Mumbai.
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Bharat petroleum gas Nagpur.

Birla Corporation limited Kolkata. Cimmco Birla limited New Delhi. Dunlop India limited Kolkata.
Siemens casting limited Mumbai. Simplex casting limited Raipur. HMT ltd. Ranchi.

Major buyers:
1. Indian railways.

2. Vizard profiles limited. 3. High pressure boiler plant BHEL trichy.

4. NTPC super thermal power project.

5. Jindal steel and power limited raigarh.

6. NTPC limited New Delhi. 7. Common India limited Delhi.

8. Chandigarh industrial journalism and development corporation Chandigarh. 9. Cropro international Italy. 10. Sangyong Corporation Japan. Competitors: 1. Ispat industries limited. 2. Alloys steel limited. 3. Essar steel limited. 4. Jindal steel and power limited. 5. Uttam steels limited.
6. National steel industries limited.

7. Bhusan steel and strips limited. Environment Management A conscious corporate citizen, BSP has gone in for ISO14001 certification for its Environment Management System.
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2 ISO 14001 certification

Environment Management System established at Plate Mill, Rail & Structural Mill, Wire Rod Mill, Merchant Mill and Steel Melting Shop-1.

Reduction in noise levels. Conservation of electricity and lubricants. Environment Management System established at Dalli Mines. Pollution Control Measures:
The plant has introduced environment friendly coal dust injection system in the Blast Furnaces, de-dusting system and electrostatic precipitators in other units and has planted lakhs of trees in a concerted a forestation drive that has seen Bhilai transform into one of the ten cleanest industrial townships in the country.

Green City:
Contrary to the popular perception about industrial townships being dirty and polluted, the city of Bhilai is characterized by blue skies, clean air and green expanses. A green-fingered population and a management aware of its obligations as a corporate citizen have come together for a massive tree-plantation drive over a period of years that has resulted in the township that stands starkly green in a dry regional backdrop. About 48.4 lakhs saplings have been planted so far with a survival rate of 90%. The sprawling Maitri Bagh has the biggest musical fountain in the country, a zoo with a variety of quadrupeds and birds, an artificial lake with boating facilities, a toy train etc. A number of small and large parks in the residential sectors of the steel city are maintained by the Plant's Town Administration Department which also undertakes the civic amenities such as street lighting, cleaning and maintenance of the tree-lined carpeted roads inside the steel township. The water to the township is supplied from the Maroda water treatment plant having a capacity of 30 million gallons per day. Water is distributed throughout the township through a system of underground reservoirs and overhead tanks.

Energy Consumption: Continuous monitoring

Apex Committee Inspection by HODs. Quarter review of Safety activities by ED (W) Fixing responsibility of line managers.

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Contractor workers safety - IPSS procedure enforcement, contractors' audit, safety exhibitions Safety workshops

Regular inspections:
Inspection of gas pipelines Inspection of structures, equipments and installations

Risk Control Grading System implemented in Coke Ovens Battery 9 & 10, Blast
Furnace, SMS-1 and extended to BBM, Foundry Shop, and SMS-II.

Quality Management System:

Facilities relating to quality,

ISO 9001 SEAL OF QUALITY

All major production units and marketable products in Bhilai Steel Plant are covered under ISO 9001:2000 Quality Management Systems. This includes manufacture of blast furnace coke and coal chemicals, production of hot metal and pig iron, steel making through twin hearth and basic oxygen processes, manufacture of steel slabs and blooms by continuous casting, and production of hot rolled steel blooms, billets and rails, structurals, plates, steel sections and wire rods. Bhilai's products come with a complete assurance of quality. Right from selection of input material for steel making, the process parameters are kept under close control. Intensive checking of all quality parameters continues throughout the subsequent operations of casting, reheating and rolling. Express analysis with the help of sophisticated, direct-reading spectrograph and gas analyzer ensures a narrow range of chemical composition. Intensive metallographic investigation with modern instruments like Scanning Electron Microscope, Image Analyzer and Micro Hardness Tester is carried out to assess the quality of the product.

The key points of control are:

Chemical analysis of hot metal, liquid steel and final product. Inspection of surface and internal quality of the product by visual and ultrasonic inspection. Monitoring and control of heating/reheating parameters.

Dimensional and surface check during rolling and on finished product. Human Resource Development:
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Training need assessment is a continuing process. About 19,000 employees are imparted training every year.

The focus is on need-based innovative programmers, such as Action Collaboration.

Multi-Skilling

NEW PROJECTS: A Capital Expenditure exceeding Rs 800 crore was incurred by BSP during the
Financial Year 2008-09.

During the year 2008-09, Turnkey projects of Rs 3959 crore, projects under Capital
Budget of Rs 67.43 crore & projects under Revenue of Rs 2.87 crore have been signed. Project Website and Online Contract Billing & Accounting System have been launched.

MAJOR PROJECTS COMPLETED: COB-5 (Pkg-I) Battery Proper & Oven Machine.
Slab Caster in SMS-II. Installation of MSDS-VI. End Forging Plant for Thick Web in RSM.

MAJOR PROJECTS COMMISSIONED: Hot Metal Desulphurization Unit in SMS-II.

Ladle Furnace in SMS-II. RH Degasser in SMS-II. VVVF Drive for ID fan 1 & 2 of Converter Shop at SMS-II. VVVF Drive for Booster Fan 1, 2 & 3 at SMS-II.

ONGOING PROJECTS: COB-11, New Coal Handling Plant, CDCP. Rebuilding of COB-6 (Battery Proper). Augmentation of Plate Mill capacity. Basic Oxygen Furnace Shop SMS-III. MSDS-7.
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Compressed Air Station-4. Ore Handling Plant Plant-A. Electro Magnetic Stirrer in Bloom Caster in SMS-II. Implementation of ERP.

Installation of 30 MLD Sewerage Treatment Plant with recycling facilities at

Township. This will enable recycling of sewerage water from 10 residential sectors and Indira place Market area for industrial use.

Hot Metal Desulphurization for SMS-III.

Installation of MSDS-V.

Up gradation of Nitrogen Network.

6.6 KV Switchgear for Substation 21 of SP-II. Enabling works for 7 MT expansions. Repl. Of DN 3000 Blast Furnace Header from BF-1 to BF-6.

Repl. Of Main Drives MG sets by Thyristor Converters at Plate Mill.

700 TPD (ASU 4) Unit with associated facility at OP-2. 2*150 T capacity in-motions Weigh Bridge in Peripheral Yard 7 Raw Material Station.

SPU at Ujjain, Hoshangabad & Gwalior. OTHER PROJECTS COMPLETED: Procurement of 9 WDS-6 Locos for T&D Organization. Enabling works, Fabrication & Erection of TOPR and Supply of Drawings for COB6. Replacement of 6.6 KV Switchgear section of S/s 1 of CO & CCD.

Diversion of Nallah at outlet no 14 for liquid slag of BF.

180 + 50 T/15T Ladle Crane in Slab Caster.

Replacement of Thyristor & Automation Drive at CCS.

Replacement of CO Gas Pipeline from column 214 to Plate Mill Gas Booster Station. One Pair Ladle Tilting Stand at SMS-II. 4*200 T in motion Weigh Bridge at line 42, 43, 68 & 69 of BF.

OTHER PROJECTS COMMISSIONED: Replacement of by-product equipment (PKg 4A) at COB-5.

Replacement of Exhauster at COB-5.
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Replacement of 4 numbers Ash Slurry Pipeline. 11 numbers Belt Weighing System at Coke Sorting Plant of CO & CCD.

UPCOMING PROJECTS: Implementation of Manufacturing Executing System. Augmentation of Coal Grinding facility for CDI unit at BF-6 & BF-7. 7 numbers WDS-6 Loco & 1 no WDG-3A Loco.

Installation of 2nd Sinter M/c in Sinter Plant-III (320 m2).

New Blast Furnace 8 (4060 cu m). Continuous Casting Shop SMS III. 2*6 Strand Billet Casters. 1*4 Strand Bloom-cum-Billet Casters. 183 Strand Beam Blank Caster. New Bar 7 Rod Mill (0.90 MT Capacity). New Universal Rail Mill (1.2 MT Capacity). Universal Beam Mil (1.0 MT Capacity). New 2*1250 TPD Oxygen Plant on BOO basis.

OBJECTIVE
The main objectives of undertaking this Project may be summarized under the following points: To ensure optimum investment in current assets. To understand the various financial ratio generally affecting the working capital assessment

To know the performance of Bhilai Steel Plant.

Facilitating cost & expenditure control with appropriate data & analysis To analyze whether the method being used for ascertainment of working capital requirement is efficient or not.

WORKING CAPITAL MANAGEMENT

MEANING
Working Capital is the operating capital required for running the business along with the fixed assets and liabilities. It is calculated as current assets minus current liablities. If current assets are less than current liabilities, an entity has a working capital deficiency or working capital deficit. Positive working capital is required to ensure that the firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming Operational Expenses. The management of working capital involves managing Inventories, Accounts Receivable, Accounts Payable and Cash.

Collection from Debtors

CASH

Payment to

CREDITORS (Accounts Payable)

Purchase of Raw Materials OPERATING CYCLE OF MANUFACTURING COMPANY

STOCK OF RAW MATERIALS

DEBTORS (Accounts Receivable)

Issue of Materials for Production

Sales

Production of Finished Goods

STOCK OF FINISHED MATERIALS ADDED WITH LABOUR AND OVERHEAD (W.I.P) 1

GOODS

A. OPERATING CYCLE OF THE MANUFACTURING UNIT

CAS CREDITORS (Accots Payable)

The operating cycle of any company starts with cash which is the important assets for the company to meet the day to day expenses of the company. If the company is starting its

business then the first requirement for that company is cash and then the process starts. If the company is a running firm then in that case the cash is used for purchasing raw materials for starting the production, with the help of labour and overheads Finished Goods are produced. These finished goods are then sold on cash or credit to debtors, after that cash is received for the goods that are sold on credit to the debtors then payment to creditors are made and the cycle goes on like this. Operating Cycle= Inventory Period + Accounts Receivable Accounts Payable

B. MANAGEMENT OF WORKING CAPITAL FINANCE

Management of Working Capital includes managing all short -term cash and cash equivalents assets and liabilities. It includes Cash Management is the most essential aspect which allows for the business to identify the cash balance to meet the day to day expenses. Inventory Management is essential for the company to identify the level of inventory so that the production does not get interrupted investment in raw materials is reduced and reordering costs are minimized and hence increases cash flow is increased. It is managed by JIT, EOQ and Supply Chain Management.

Debtors Management helps to identify the appropriate credit policy, i.e. credit terms
which will attract customers. The credit period should not be too high otherwise the chance of bad debts increases.

Short Term Financing identifies the appropriate source of financing given by cash
conversion cycle. It is ideally financed by the credit guaranteed by the supplier, necessary bank loan (Bank Overdraft) or to convert debtors into cash in short period of time.

C. SOURCES OF WORKING CAPITAL FINANCE

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1 Line of Credit
An arrangement in which bank or vendor extends a specified amount of unsecured credit a specified borrower for a specified borrower for a specified time period called Credit Line. A line of credit may take several forms such as cash credit, overdraft, demand loan, export packing credit, term loan, discounting or purchase of commercial bills etc.

Accounts Receivable Financing

The selling of a companys account receivable, at a discount to a factor, which assumes the risk of the debtors account and receives cash from the debtors to settle their accounts. A firm that sells its accounts receivable may not be confident of its ability to collect those debts, or might think that the cost of collecting that debt is more than the discount which must be provided to the factor when of selling their receivables also called Accounts Receivable Financing.

Inventory Financing
A loan made to a manufacturer using its inventory as collateral. Inventory financing is often used by manufacturers of consumer products, for whom inventory tends to form a significant percentage of assets. Inventory Financing is advantageous for businesses with a large amount of physical inventory ready to ship. Inventory Financing is used as a stop-gap against temporary cash flow problems resulting from inventory ready to sell but not sold. Term

Loan
A bank loan to a company, with a fixed maturity and often featuring amortization of principal. If this loan is in the form of a line of credit, the funds are drawn down shortly after the agreement is signed. Otherwise, the borrower usually uses the funds from the loan soon after they become available. Bank term loans are very common kind of lending. The major advantage of term loans is their ability to fund long-term needs.

SCOPE OF THE PROJECT

Steel Authority of India Limited (SAIL) is one of the leading industries in steel producing in India. Bhilai Steel Plant is one of the units which is situated in Bhili state Chhattisgarh. The main scope of my project is to know the performance of Bhilai Steel Plant on the bases of working capital calculation.

METHODOLOGY
The study is based on personal decision, interview schedules, documentary observation; the data has been collected from the executives of the organization and through the published sources.

RESEARCH
The study is based on the outcomes of personal interviews and documentary observation. But the extreme care has been taken to involve the constructive suggestion from the executives. The success of research basically depends upon the method, which is adopted to solve the research problem i.e. a. To collect desired information and data in a systematic manner. b. Appropriate selection of method is necessary.

The first & foremost step in any research procedure is:STEP 1: Problem Formulation
It is a very important step which has to be understood properly and clearly on which the study is based because it tells the scope of the study and it should not go beyond it nor should execute some irrelevant aspect.

STEP 2: Objectives of the Study

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After the problem formulation the objectives should be clear through which specific type of information can be collected. The objective of this is to study about the management of Working Capital for day to day business transactions.

STEP3: Determine source data

The third step includes the collection of data, which is from the source i.e. primary secondary data. After the collection of data, it should be organized and analyzed to check whether the objectives are fulfilled or not.

After analyzing the data investigation of research had worked out with the help of following steps: Research Design Tools & Techniques
Collection of Data

RESEARCH DESIGN:
A research is an arrangement of conditions for the collection & analysis of data in a manner that aims the research purpose and achievements of goal with economy in procedure depending on research problem. The study of Working Capital is generally based on documentary evidences.

TOOLS AND TECHNIQUES:

In order to conduct the study the following methods were adopted.

Personal Discussion: There is certain information related to the subject which is known
to employees of the office so through connecting with the employees and executives the information is gathered. Like, about the company profile, its inception, growth etc.

Direct Personal Interviews: The investigator personally approaches the concerned

people and asks them to furnish information, which is of material input for the enquiry. Therefore these ideas, suggestions views are collected on the topic through interview.

Documents observation: The investigator consults the secondary sources like journals,
annual reports, magazines, books, and unpublished material from library, internet and the area office.

COLLECTION OF DATA Primary data: are those that are collected for the first time by the investigator and the
primary data used ad collected for this study are:1

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Direct Personal Interview with my project guide at BSP Indirect Oral Investigation auditors and other concerned employees at BSP

Secondary data: are not collected but obtained from the published and unpublished
sources and the secondary data collected for this study are: Published data about BSP through newspapers, magazines, journals and books. Unpublished data through scholars, libraries, area office in BSP Company information from their SAIL official website.

LIMITATION
Bhili Steel Plant is one of the biggest plants of SAIL. It has a huge production unit and many books of account are maintained and it was difficult to get data from BSP. Some of the limitation is as follow: There was limited time provided for the completion of the project. Some of the data necessary for the preparation of the project was not provided by the BSP.

The current year Balance Sheet was not provided by the BSP as it has not been
approved by the SAIL. Lack of personal interaction with the mentors.

PERFORMANCE HIGHLIGHTS 2008-2009 OF BHILAI STEEL PLANT

PERFORMANCE HIGHLIGHTS 2008-2009 OF

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1 BHILAI STEEL PLANT TURN OVER GRAPH

Year
Sales Amt.(Inlakhs) Net Increase % increase

2008-09
1849670 197889 11.98%

2007-08
1651781 299150 22.11%

2006-07
1352631 230904 20.58%

2005-06
1121727 -17189 -1.5%

INTERPRETATION
From the given chart it is absolutely clear that the company sales has been steadily raising to the consecutive years and the current sales for the given year 2008-09 is Rs.18,49,670 lakhs in compare to 16,51,781 lakhs to the last year i.e. 11.98% (approx) increase. The profit has been increased but the percentage of turnover has dropped down, where the percentage of profit increased in the year 2006-07 was 53.59% but the profit percentage for the year 2007-08 was 25.62% (app.) which came down to 10.13% in the year 2008-09.The reason might be that global crisis hitting the U.S. market has shown a dip in the profit percentage of the company. The company maximum businesses come from abroad so the company has to see the sales dip in percentage terms. While doing my analysis the basic thing which I found was that the company is doing fairly well and due to the infrastructure development and common wealth games the demand for the steel will increase and hence it will increase the total turnover of the company.

PAT GRAPH

Year
Amt. (IN CRORES) Net Increase % increase

2008-09
4965 -401 -7.4%

2007-08
5366 1094 25.6%

2006-07
4272 1491 53.6%

2005-06
2781 -

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From the given chart it is clear that the PAT has drop down to -7.4% in the year 2008-09 as compared to the previous year which was 25.6% growth in the year 2007-08 from the year 2006-07. And in the year 2006-07 it was a increase of 53.6% from the profit of 2005-06. Though the plant was in profit in the financial year 2008-09 but there was a decline in the profit percentage as compare to the previous year.

PROFIT OF THE SISTER PLANTS

As we all know that SAIL has 5 sisters unit from which BSP is one of the plants which contributed more profit to the SAIL as compare to other sister units in the year 2008-09. After BSP, Bokaro plant then RSP and DSP contributed to the same .But IISCO has incurred a loss.

PRODUCTION OF SINTER GRAPH

Record production of 7.459 MT of Total Sinter, surpassing the previous best of 7.229 MT in 07-08 and registering a growth of 3.2% over previous Year. But in the year 2009-10 it is expected to grow about 9.2% of production of sinter.

PRODUCTION OF HOT METAL GRAPH

Record of production of 5.39 MT of HOT METAL exceeding previous best of 5.27MT in 07-08 and registering a growth of 2.3% over previous year.

PRODUCTION OF TOTAL CRUDE STEEL

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Production of 5.2 MT of total Crude Steel, surpassing the Previous beat of 5.1 MT in 07-08 and registered a growth of 2.6% over the previous year. But we can see in the graph that in the year there was a decline in 2006 -07.

PRODUCTION OF TOTAL SALEABLE STEEL GRAPH

Production of 4.49 MT of saleable steel, surpassing the previous best of 4.43 MT achieved in the year 2007-08 and registering a growth of 1.4% over the previous.

PRODUCTION OF TOTAL FINISHED RAIL

There was the highest growth of 6.8% in the year 2008-09 as compared to the last five years which recorded the Rs 978.7 crores in the year.

PRODUCTION OF TMT BAR GRAPH

Production of 430.5 MT of TMT Bars from Merchant Mill, surpassing the previous best of 417.6 MT in 07-08, registering a growth of 3.1% over previous year.

PRODUCTION GRAPH OF TMT WIRE RODS

Best ever production of 403.2 MT of TMT Rods from Wire Rod Mill, surpassing the previous best of 277.5 MT in 07-08, registering a growth of 45.3% over previous year.

WORKING CAPITAL ANALYSIS

STATEMENT OF WORKING CAPITAL POSITION

(IN CRORES) CURRENT ASSETS Inventories S. Debtors Cash &Bank Other C.A Loans & advs TOTAL (A) CURRENT 2005-06 1505.76 20.53 33.81 16.55 218.44 1795.09 2006-07 1556.66 18.82 36.8 13.86 325.12 1951.26 2007-08 1712.90 13.70 39.86 12.60 480.73 2259.79 2008-09 2883.14 13.42 43.14 10.81 473.74 3424.25

LIABILITIES S. Creditors 518.08 Sec. deposits 42.13 Other liab. 289.95 Provisions 29.36 TOTAL (B) 879.52 WORKING CAPITAL (A- 915.57 B)

521.81 35.07 353.20 52,05 962.13 989.13

661.35 37.28 491.96 507.73 1698.32 561.47

737.95 59.06 717.15 1013.54 2527.70 896.55

From the above figures, it is observed that from the year 2005-06 the working capital was steadily increased in 2006-07, while in 2007-08 the working capital has significantly decreased. This can be possible due to decrease in current assets and increase in current liabilities. But in the year 2008-09 Working capital has increased as compared to the year 2007-08 which is 59.79% increase due to more increase in current asset as compared to the increase in current liability. The basic objective of working capital management is to make optimum investments. Hence, in 2008-09 the company has increased Working capital and the company has utilized their resources and capital in efficient manner.
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SCHEDULE FOR WORKING CAPITAL CHANGES (IN CRORES) PARTICULARS CURRENT ASSETS
Inventories S. Debtors Cash &Bank Other C.A Loans & advs TOTAL (A) CURRENT LIABILITIES S. Creditors Sec. deposits Other liab. Provisions TOTAL (B) WORKING CAPITAL (A-B) INCREASE IN WORKING CAPITAL 1173.52 1173.52

2008-09

2007-08

INCREASE

DECREASE

2883.14 13.42 43.14 10.81 473.74 3424.25

1712.90 13.70 39.86 12.60 480.73 2259.79

1170.24 0.28 3.28 1.79 6.99

737.95 59.06 717.15 1013.54 2527.70 896.55

661.35 37.28 491.96 507.73 1698.32 561.47

76.6 21.78 225.15 505.81

335.12

There was increase in working capital in the year 2008-09 to the previous year 2007-08.As there was increase in current asset of Rs 1173.52 and decrease in current liability of 829.34 as
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compared to the last financial year which has resulted in increase in working capital of Rs 335.12.

OPERATING CYCLE Inventory holding period:

FGSP = Average stock of finished good Inventory Turnover

Ye ar 2005-06 2006-07 2007-08 2008-09

Openi ng balanc e 1041.6 8 1505.7 6 1556.6 6 1712.9 0

Closi ng balan ce 1505. 76 1556. 66 1712. 90 2883. 79

Averag e invento ry 1273.7 2 1531.2 1 1634.7 8 2298.3 45

Invento ry turnov er ratio 5.33 times 4.9 times 5.31tim es 6.298 times

Invento ry holding period 68 days 73 days 62 days 58 days

Interpretation
From the above figures, it is observed that inventory has decreased from year to year this is a good sign for the company. If no. of day is less, it means that inventory is soled sooner into the market.

Work in process inventory turnover period:

W.I.P. T.P. = Cost of goods manufactured Avg. work in process inventory

Year

Average inventory of finished /semi finished goods 390.25 559.94 751.87 856.99 1395.44

Cost of production 5731.35 4450.36 6236.89 8324.86 8805.35

Work in process inventory turnover period (times) 14.69 7.95 8.3 10.27 6.32

Work in process inventory turnover period (days) 25 46 44 35.03

2004-05 2005-06 2006-07 2007-08 2008-09

Debtors collection period:

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Debtors collection period = Debtors turnover 360

Debtor Turnover

Note
Debtor collection is not possible to calculate because as per interviewed by BSP finance manager, he told that BSP does not show accurate Sundry Debtor, so it was difficult to calculate Debtor collection period.

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Creditor payment period = Avg.trade credit Credit purchase per day

Creditors payment period:

Year Opening bal.

Closing bal.

Average trade credited 555.99 549.67 519.95 591.58 349.83

Average of trade credit Credit payment purchased per day period in days 12.88 16.42 16.84 17.01 11.89 44 34 31 34.77 29.42

2004-05 2005-06 2006-07 2007-08 2008-09

530.72 581.26 518.08 521.81 661.35

581.26 518.08 521.81 661.35 737.95

Interpretation
The Creditors Payment Period has decreased drastically from 34.77 times in 2007 -08 to 29.42 times in 2008-09. This shows that the company is able to pay its debt earlier then previous year.

Some Important ratio

KEY RATIOS NET PROFIT/NET SALES PBIDT/TOTAL INCOME PBT/NET WORTH PAT/NET WORTH CURRENT RATIO EARNINGS PER SHARE (RS.) BOOK VALUE PER SHARE (RS.) INTEREST COVERAGE 2007-08 37.9% 36.8% 20.7% 20.7% 1.33:1 41.04 197 91.7 2008-09 30.18% 28.2% 16.09% 16.09% 1.35:1 37.97 235.9 76.9 INCREASE/DECREASE -20% -23.36% -22.2% -22.2% 1.5% -7.48% 19.7% -16.13%

1 Workings: 2007-08 NET PROFIT/NET SALES

Net Profit after tax Net Sales % 5366.37 14156.35 37.9% 5401.69 14657.41 36.8% 5366.37 25864.23 20.7% 5366.37 25864.23 20.7% 2259.79 1698.32 1.33:1 5366.37 130.75 41.04 25864.23 130.75 197 4965.45 16452.02 30.18% 4997.21 17720.50 28.2% 4965.45 30846.35 16.09% 4965.45 30846.35 16.09% 3424.25 2527.70 1.35:1 4965.45 130.75 37.97 30846.35 130.75 235.9

2008-09

PBIDT/TOTAL INCOME
PBIDT TOTAL INCOME %

PBT/NET WORTH
PBT Net Worth %

PAT/NET WORTH
PAT Net Worth %

CURRENT RATIO
Current Asset Current liability Ratio

EARNINGS PER SHARE

Total Earnings No. of Share EPS

NET WORTH RATIO

Capital No. of Shares Book Value Per Share

INTEREST COVERAGE RATIO

PBIDT Interest Ratio 5401.69 58.91 91.7 4997.21 64.99 76.9

ANALYTICAL REVIEW OF THE COMPANY

OPERATING RATIOS G.P. RATIO
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1 G.P. Ratio = Gross Profit * 100 Sales 2007-08 = 255289 * 100 1670924 = 15.28% 2008-09 = 246411 * 100 1891613 = 13.03%

Interpretation:. Above G.P. ratio indicates that the gross profit if the firm is around
15.28% in 2007-08 which has reduced to 13.03% of the total sales from the operations This is not a good sign for the company.

NET PROFIT RATIO Net Profit Ratio = PAT *100 Income 2007-08 = 5366.37 * 100 14657.41 = 36.61%

2008-09 = 4997.21 * 100 17720.50 = 28.20%

Interpretation: The above ratio indicates that the net profit to sales ratio which is
calculated on PAT (Profit after Tax) divided by the total income and it is 17.95% which is comparatively lower than the year 2007-08 which was 36.61%. This not a good sign for the BSP.

OPERATING RATIO Operating Profit Ratio = Operating Profit * 100 Net Sales 2007-08 = 5401.69* 100 14156.35 = 38.15% 2008-09 = 4997.21* 100 16452.02 = 30.37%

2 Interpretation: Looking at the above ratio we can say that the company was doing a very
well job where the companys operating profit is 38.16 of Net Sales but it has shown a dip of around 2% (difference) and the companys operating profit ratio of the current year is 30.37%. this not a good sign for the company. To overcome from this loss, company should reduce their operating expenses for the future.

RETURN ON ASSETS ROA= (PBT/Total Assets)*100 2007-08 = 5365.57* 100 27203.01 = 19.72% 20008-09 = 4964.67 *100 32413.35 = 15.3%

From the above figure we can see that as compare to previous year this return on assert has declined due to increase in the expenditure. They increased the assert but the production on certain area might have reduce (assumption). To improve this, company has to use their assert in best possible way.

B. Liquidity Ratios CURRENT RATIO Current Ratio = Current Assets Current Liabilities 2007-08 = 2259.79 1698.32 = 1.33 : 1 2008-09 = 3424.25 2527.70 = 1.35 : 1

1 Interpretation: The current ratio of the company is 1.33: 1 in the year 2007-08 which was
not good because the ideal Current Ratio must be 2:1 which indicates that, for paying a liability of Re.1 the company must have an asset of Rs.2 which the company doesnt satisfies because the company has an asset of Rs.1.33 for paying a liability of Re.1.in the financial year 2008-09 the current ratio was 1.35 which is also not good.

QUICK RATIO Quick Ratio = Current Assets Stock Current Liabilities 2007-08 = 2259.79 1712.90 1698.32 = 0.32 : 1 2008-09 = 3424.25 2883.14 2527.70 = 0.21 : 1

Interpretation: The ideal quick ratio considers satisfactory for the company should be
1:1.From the above table it is clear that the quick ratio or the acid-test ratio of the company is 0.21 in the year 2008-09 and 0.32 in 2007-08 which is a bad indicator that the company is not in a good position as it holds more liability as compare to its assets.

C. Activity Ratios ASSETS TURNOVER RATIO Assets Turnover Ratio = Net Sales Fixed Asset 2008-09 = 16452.02 3027.03 = 5.43:1

2007-08 = 14156.35 2285.09 = 6.19:1

1 Interpretation: Looking at the assets turnover ratio we can say that the company is
utilizing its assets in much efficient way and it is a good sign of the growth of the company because the ideal ratio must be nearer to 1.

INVENTORY TURNOVER RATIO Inventory Turnover Ratio = 2007-08 = 14156.35 1634.78 = 8.65 = Net Sales Avg. Inventory 2008-09 16452.023 2298.02 = 7.1

Interpretation: From above figure we can see that in the year 2008-09 there is a decrease
in the inventory turnover as compared to previous year i.e. 8.65 to 7.1. If the stock turnover is low as compare to previous year then it means that there is slump in the business or we can say that there is a over investment in stock. There is an imbalance in the stock or used in a misappropriation manner.

CREDITORS TURNOVER RATIO Creditors Turnover Ratio =

Net Sales Creditors

2007-08 = 14156.35 661.35 = 21.40 Interpretation

2008-09 = 16452.023 737.95 = 22.29

As we can see that creditor turnover or payable turnover has increased. We can suggest that increase in creditor turnover would have decreased the working capital position of the company. Since creditor purchase is cheaper and it is easily available for BSP, and the company could have earned extra profit by employing this increased working capital finance.
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CURRENT ASSET TURNOVER RATIO Current Asset Turnover Ratio = Sales Current Asset 2008-09 16452.023 3424.25 = 4.8

2007-08 14156.35 2259.79 = 6.2

Interpretation
As we can see that assert turnover has decreased from the 6.2 in the year 2007-08 to 4.2 in the year 2008-09. This shows that what BSP is investing into the company is not able to cover as compare to previous year, thought they have the return from the investment but compare to previous year there is a decline this year. This ratio shows the efficiency in the use of current assert or shows the over or under investment in current assert.

WORKING CAPITAL TURNOVER RATIO Working Capital Turnover Ratio = Sales ,

Working Capital 2007-08 = 14156.35 561.47 = 25.21 Interpretation:

The working capital turnover ratio measures the efficiency with which the working capital is being used by a firm. A high ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. But in this working capital turnover has decreased this means that company has not utilized their resources properly.

2008-09 =

16452.023 896.55 = 18.35

FINDINGS & SUGGESTIONS

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FINDINGS
I came across following findings during undergoing the project work on topic

Analysis of Working Capital Management -A Study in Bhilai Steel Plant.

In BSP the coordination among the various sections of the Finance & Accounts department is very appreciative, as the Finance & Accounts department is a big department consisting of near about 32 sections. It is the work force of the Finance & Accounts department, which makes it possible. During the study I find that there is no huge variation in operation budge and the actual one. From my scrutiny of the annual statement of the company I found that the company has to keep a huge amount of provisions for bad debts for the unsecured debtors in the year 2008-09. BSP generally do not go for credit sale therefore they do not have much amount in there debtors account. They prefer cash sale then to credit sale. Production of Finished Rail mill contributes maximum to the profit percentage. There was increase in working capital in the year 2008-09 as compared to the last year. They maintain a current ratio of 1.35:1 which is less than an idle ratio. BSP has become more efficient to pay out its liability. In the BSPs there working capital management is very good, they use the MMIS & SAP system to manage the overall activity.
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Suggestion
The departmental policies should be made flexible which can help to decrease the work flow process and generate more profits.

BSP should reduce the overall cost of production because cost of production of other
steel plants is less as compared to BSP and TISCO is the cost leader.

CONCLUSION
Bhilai Steel Plant is a major unit of SAIL. In the Analysis, which is done in Bhilai Steel Plant, I found that BSP generating continuous profits as compared to previous year with current year and BSP contributes more profit in SAIL overall profit. The main areas of emphasis were on the Inventory turnover, creditor turnover and debtor turnover. As we can see that BSP has reduced the creditor payment period and this is a good sign for the BSP because they are paying their debts sooner. The two main ratios we used for our analysis were the quick ratio or the acid test ratio and the current ratio, both of which have been explained earlier. The current ratio of BSP is not good as compare to ideal ratio i.e. 2:1. Thought company is liable to pay its liability and BSP has more fund in hand and they had already created more provision for the bad debt. But BSP should try to maintain their ratio and use the recourses efficiently. Liquid ratio is also very important for the BSP. As we know that liquid ratio is calculated when inventory are deducted from the current assert, liquid ratio has been calculated. And the Ideal ratio is 1:1 but in case of BSP it has remained at an even level of nearly 0.33. It is said that if even one blast furnace has to be cooled the BSP suffers losses of up to 10 crores. So an adequate stock of inventory is maintained this affects the level of the liquid assets and cash at hand. Bhilai Steel Plant (BSP) is one of the few public sector units that make a profit on the scale of nearly 4,900 crores, which is highest contribution among the sail unit.

BIBLIOGRAPHY
The above report has been prepared from the following sources of data and information:

1. Web Sites: 1. Books: a. Financial Management, Dr. S.P. Gupta b. Management accounting, Dr. S.P. Gupta 2. Other Reference:
a. Functional & Finance accounts manual , b. Previous project reports done at the Finance & Accounts department ,

www.google.co.in (regarding Global Steel Industries), www.indiansteelalliance.org, www.sail.co.in.

c. Previous finance year book,

d. SAIL journal, e. BSP news magazine,

f. BSP Performance Highlights 2008-2009 magazine,

Annexure
LIST OF ABBREVIATIONS :
ACVO : AP : BG : CA : CE : CEC : CVC : CVO : CMMG : CPA : DGS&D : DOP : DRO : EMD : FIFO : GARN : GCC : HOMM : HOD : IPSS : ISO : LCNS : LTE : MD : MM : NIT : OEM : OTE : HOP : LD : OA : PAN : P2K : PCP-06 : PS : PGB : PO : PSU : RA : SSI : Additional Chief Vigilance Officer Automatic Procurement Bank Guarantee Competent Authority Chief Executives Commercial Evaluation Committee Central Vigilance Commission Chief Vigilance Officer Corporate Materials Management Group Centralised Procurement Agency Director General of Supplies & Disposal Delegation of Power Direct Reporting Officer Earnest Money Deposit First In First Out Goods Acceptance/Rejection Note General Conditions of Contract Heads of Material Management Head of the Department Inter Plant Steel Standards International Organization for Standards Landed Cost Net of Set Off Limited Tender Enquiry Managing Director Materials Management Notice Inviting Tender Original Equipment Manufacturer Open Tender Enquiry Head of Personnel Liquidated Damage Operating Authority Permanent Account Number Purchase/Contract Procedure 2000 Purchase/Contract Procedure 2006 Post Script Performance Guarantee Bond Purchase Order Public Sector Units Reverse Auction Small Scale Industries
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STE : TC : TC/GC : Single Tender Enquiry Tender Committee Test Certificate/Guarantee Certificate