Final Project of Working Capital

Sales ASTUDY ON WORKING
Purchase CAPITAL
Wages OF BSP,
Cash/ Bhilai
Bank
Wages-II Zonal
A STUDYStock ON
Excise Sales tax ledger
WORKING
Stores
CAPITAL
Wages 1 A/BMANAGEMENT
and
ports township
OF THE BHILAI STEEL PLANT, BHILAI,
wages
CHHATTISGARH
Project Operation
Raw expansion miscellaneou
Store bills materials Imports Costing s
and
budgeting
SUMMER PLACEMENT PROJECT

Submitted By
VISHAL KESHRI
(Reg. No: 0935F0631)
Central account department

Under the guidance of
Ms. C. Vinotha, MBA, M. Phil
In the partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION
Of Bharathiar University, Coimbatore.
2009-2011
GURUVAYURAPPAN INSTITUTE OF MANAGEMENT

(AFFILIATED BY BHARATHIAR UNIVERSITY)
COIMBATORE-641105
ASTUDY ON WORKING CAPITAL OF BSP, Bhilai
(An exclusive institute offering MBA Programme,

approved by AICTE & affiliated to Bharathiar University)
Certificate
This is to certify that the project work entitled
“A STUDY ON WORKING CAPITAL MANAGEMENT OF

THE BHILAI STEEL PLANT, BHILAI, CHHATTISGARH”
Is the bonafide record of work done by

MR. VISHAL KESHRI
Reg. No: 0935F0631
And is submitted in partial fulfillment of the requirements

For the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
Of the Bharathiar University, Coimbatore
2009-2011
Director/ Principal Faculty Guide

DECLARATION
I, VISHAL KESHRI, student of Guruvayurappan Institute of Management

Coimbatore hereby declare that the project report entitled “A STUDY ON
WORKING CAPITAL MANAGEMENT OF BHILAI STEEL PLANT, BHILAI
CHHATTISGARH” which is submitted to Bharathiar University in partial
fulfillment of the requirement for the award of the Degree of Master of Business
Administration, is a record of original research work done by me under the
guidance of Ms. C. Vinotha, MBA, M.Phil., of Guruvayurappan Institute of
Management, during the academic year 2009-2011
Place: Coimbatore VISHAL KESHRI
Date: (Reg.No. 0935F0631)
Acknowledgement
I sincerely feel that the credit of the project work could not be narrowed down to only one
individual. The work is an integrated effort of all those concerned with it, thorough whose able
cooperation and effective guidance I could achieve its completion.
I would like to express my sincere gratitude to Dr. VERGHESE MATHEW B.Sc. (Engg),
MBA, Ph.D., DGM (Germany), FIIE, the Director, Guruvayurappan Institute of
Management and Dr.THOMAS T. THOMAS, B.Sc., MBA, PGDPR&J, Ph.D. the
Principal, Guruvayurappan Institute of Management, for their active support and guidance
during the course of my studies in the Institute.
I am greatly indebted to my guide Ms. C. VINOTHA MBA, M.Phil, for his kind cooperation,
help, guidance and encouragement for preparing this project report.
I express my sincere gratitude to Mr. R.C.SRIVASTAV the deputy manager, Finance

Department, Bhilai Steel Plant, Bhilai for giving me the opportunity to conduct this project
work in their organization and whose immense support and guidance helped me to make this
project fruitful.
I would like to thank my family, friend and well wisher for their encouragement in completing
the project work
I take this opportunity to extend my sincere thanks to all who have helped me and encouraged
me all through out in bringing the best of project.
Vishal keshri
CONTENT
PAGE
CHAPTER CONTENT NO.
LIST OF TABLES
LIST OF CHARTS
I INTRODUCTION
1.1 Industry Profile 1-13
1.2 Company Profile 14-51
1.3 Introduction to the topic 52-64
1.4 Objective of the study 65
1.5 Scope of the study 65
II REVIEW OF LITERATURE 66
III Design of the study
3.1 Research Methodology 67
3.2 Limitation of the study 68
IV ANALYSIS AND INTERPRETATION 69-88
V FINDINGS, SUGGESTIONS &
CONCLUSION
5.1 Finding 89
5.2 Suggestions 89
5.3 Conclusion 90-91
BIBLIOGRAPHI 92
ANNEXURE 93
TABLE PAGE
NO. LIST OF TABLES NO.
Table showing Asia- pacific steel market value 4
Table showing Asia- pacific steel market volume 5

Table showing Asia- pacific steel market segmentation 6
Table showing Asia- pacific steel market share 7
Table showing key facts 8
Table showing expansion plan 10
Table showing saleable steel capacities 18
Table showing main product & expected market share 20
2011-2012
Table showing market share of BSP’s product range 30
Table showing product mix 31
Table showing total production 31
Table showing total inventories 69
Table showing total current assets 70
Table showing current liabilities 71
Table showing working capital 72
Table showing liquidity ratio 73
Table showing current ratio 75
Table showing quick ratio 76
Table showing absolute ratio 77
Table showing current turnover ratio 79

Table showing inventory ratio 80
Table showing calculation of forecasting 83
working capital
Table showing forecasting working capital 84
Table showing profit after tax 85
Table showing cash profit 85
Table showing operating profit 86
Table showing gross marging 86
Table showing profitability ratio 87
CHAPTER I
INTRODUCTION
There’s a little bit of SAIL in everybody’s life….
“STEEL is the basic framework which has built nations, and it is on this strength that
nation stand apart. This man-made metal has an extraordinary quality of contributing to every
aspect of life while it keeps the wheels of industry turning. It also lends ever-lasting quality to
all kinds of structure and infrastructure.”
‘SARDAR VALLABH BHAI PATEL’
Many students may have done work on this project in different ways/styles. I have also tried to
work on this project in a different way. It was for the first time I got the opportunity to work in
such a prestigious and well-known organization and things which I have experienced in my
training period are going to help me through out my life time. I have worked on this project
with great enthusiasm and zeal. I have tried to cover almost all the things, which I have
experienced and learned during the training period. To run a giant organization each and every
department has to play its role effectively. In this era of cut-throat competition there is no
room for complacency. Steel is the basic framework which has built nation, it contributes
every aspect of life.
The main goal of my project is the “A Study on working capital management of the Bhilai
Steel Plant, Bhilai. It would be my great pleasure, if this project can help this company to
achieve its goal higher. This project has been undertaken to study the procedures and practices
followed in Finance and Accounts department. The Finance & Accounts Department of Bhilai
Steel Plant is divided into various sections and each section specializes in different activities.
This report is prepared on the basis of the extensive study carried out at Finance & Accounts
Department of SAIL, Bhilai Steel Plant.
Industry profile
1.1 Industry introduction
The global steel industry has been going through major shifts in focus. Not only has a new
steel making giant emerged the entire geographical focus of steel production has been
undergoing major changes. Such changes have been taking place on a critical scale since the
Second World War but have completely taken many by surprise in the last quarter of a
century.
Steel is a strong material. The strength of steel reflects the strength of nation. It is reflected in
two ways, economic and military. The quantum of steel consumed has been the barometer for
measuring development & economic progress. Whether it is construction or industrial goods,
steel is the basic raw material.
Global steel production grew enormously in the 20th century from a mere 28 MT at the
beginning of the century to 780 MT at the end. That was the period when the steel industry
developed in Western Europe & the USA followed by the Soviet Union, Eastern Europe &
Japan. However, steel consumption in the developed countries has reached a high stable level
& growth has tapered off.
Attention has now shifted to the developing regions. In the West, steel referred to as a sunset
industry. In the developing countries, the sun is still rising, for most it is only a dawn. Towards
the end of the last century, growth of steel production was in the developing countries such as
China, South Korea, Brazil & India.
World crude steel production reached 1,220 million metric tons for the year of 2009. This is a
decrease of -8.0% compared to 2008.
Steel production declined in nearly all the major steel producing countries and regions
including the EU, North America, South America and the CIS in 2009. However, Asia,
in particular China and India, and the Middle East showed positive growth in 2009.
China’s crude steel production in 2009 reached 567.8 MMT, an increase of 13.5% on 2008.
This is a record annual crude steel production figure for a single country. China’s share of
Page1
world steel production continued to grow in 2009 producing 47% of world total crude steel,
an increase of 9 percentage points compared to 2008.
Asia produced 795.4 MMT of crude steel in 2009, an increase of 3.5% compared to 2008. Its
share of world steel production increased to 65% in 2009 from 58% in 2008. Japan produced
87.5 MMT in 2008, a decrease of -26.3% on 2008. India’s crude steel production was 56.6
MMT in 2009, 2.8% growth on 2008. South Korea showed a decrease of -9.4%, producing
48.6 MMT in 2009.
In 2008 International Iron & Steel Institute (IISI) changed its name to World Steel Association
(world steel) and launched the Safety and Health Excellence Recognition Award, given to
Arcelor Mittal Dofasco Inc, BlueScope Steel, Corus Group, Nucor Corporation and Subic-
Saudi Basic Industries Corporation.
The World Steel Association (world steel) is forecasting that apparent steel use will contract
worldwide by -8.6% to 1,104 MMT in 2009 after declining by -1.4% in 2008. This is an
improved figure over the spring forecast issued in April 2009 which predicted a decrease of
-14.1%. The improvement is largely due to the exceptionally strong growth in steel demand in
China. With signs, from the beginning of the second half of 2009, of a recovery across the
world now apparent, global steel demand in 2010 is forecast to grow by 9.2% to 1,206 MMT
which is a recovery to the level of 2008.
The healthy world economic growth & demand in emerging market countries, notably in Asia,
where major infrastructure projects were under way, acted as the key trigger to the significant
production rise. But this trend seems rather transitory.
Some important points regarding Global Steel Industry are as follows:
 During 2009, the world crude steel production reached 1,220 million metric tons
 Its shows a decrease of -8.0% compared to 2008.
 China retained it’s No.1 position by producing around 567 Million Tonnes, followed
by Japan with production of 87.5 Million Tones & USA with production at around
59.9 Million Tonnes.
Page2
 India with production of 56.6 Million Tones ranked 5th amongst world steel
producing countries.
 Steel Production in India is expected to reach 124 million tons by 2012 and 275
million tons by 2020 which could make it the second largest steel maker.
 China is expected to account for 47.7% of world steel apparent use and excluding
China, potential world steel demand would have fallen by -24.4%.
 The president of the China Iron and Steel Association (CISA), Deng Qilin, stated on
February 5 that apparent consumption of crude steel in China is expected to grow by
8-10 percent in 2010.
 During the year 2005, USA ranked No.1 as net importer country at 20.8 Million
Tonnes followed by Thailand at 10.8 Million Tonnes & Iran at 6.9 Million Tonnes.
 In 2010, Russia produced 5.2 million metric tons of crude steel, up 33 percent year
on year,
 Global steel production at 1,200 million tons in 2009. This represents a 9.5 percent
reduction on the outturn in the previous twelve month period.
 In January, China's crude steel production totaled 48.7 million metric tons, an
increase of 18.2 percent, while Japan produced 8.7 million metric tons of crude steel,
up 36.8 percent, both compared to the same month last year. South Korea showed an
increase of 32.4 percent from January 2009, producing 4.5 million metric tons of
crude steel in January 2010.
 In the EU, Germany's crude steel production for January 2010 was 3.4 million metric
tons, with an increase of 27.7 percent compared to January 2009.
The steel market consists of the production of crude steel in the stated country or region.
Crude Steel Production refers to production of first solid steel product upon solidification of
liquid steel. It includes Ingots (in conventional mills) and Semis (in modern mills with
continuous casting facility).
Crude Steel also includes liquid steel which goes into production of steel castings. Market
values have been calculated using appropriate regional annual average steel prices. Market
shares reflect revenues earned in this market during the last year for which financial data was
available for all companies listed.
Page3
Any currency conversions used in this report have been calculated using constant exchange
rates.
For the purpose of this report the Americas comprises Argentina, Brazil, Canada, Chile,
Colombia, Mexico, the US, and Venezuela.
Western Europe comprises Belgium, Denmark, France, Germany, Italy, Netherlands, Norway,
Spain, Sweden, and the UK.
Eastern Europe comprises the Czech Republic, Hungary, Poland, Romania, Russia and
Ukraine. Europe is the sum of Eastern and Western Europe. Asia-Pacific comprises Australia,
China, Japan, India, Singapore, South Korea and Taiwan. The global figure comprises the
Americas, Asia-Pacific and Europe.The Asia-Pacific steel market generated total revenues of
$382.9 billion in 2008, representing a compound annual growth rate (CAGR) of 14.5% for the
period spanning 2004-2008.Market consumption volumes increased with a CAGR of 10.8%
between 2004-2008, to reach a total of 755.6 million metric tons in 2008.
The performance of the market is forecast to accelerate, with an anticipated CAGR of 21.9%
for the five-year period 2008-2013, which is expected to drive the market to a value of
$1,030.2 billion by the end of 2013.
Global Crude Steel Production (IISI) (Million Tonnes) Table No.1.1.1

Source: IISI
Region Year2007 Year2008 %change

Africa 18.8 18.8 0
Middle East 15.4 16.4 6.7
C.I.S. 119.9 124 3.4
Asia 675.6 754.3 11.6
South America 45.3 48.3 6.5
North America 131.7 132.1 0.4
Other Europe 28.1 30.5 8.5
EU-27 206.8 210.3 1.7
World 1250.2 1343.5 7.5
page 4
Top 10 steel producing countries

Table1.1.3
Rank Country 2009 2008 %2009/2008
1 China 567.8 500.3 13.5
2 Japan 87.5 118.7 -26.3
3 Russia 59.9 68.5 -12.5
4 US 58.1 91.4 -36.4
5 India 56.6 55.1 2.7
6 South Korea 48.6 53.6 -9.4
7 Germany 32.7 45.8 -28.7
8 Ukraine 29.8 37.3 -20.2
9 Brazil 26.5 33.7 -21.4
10 Turkey 25.3 26.8 -5.6

CAGR Analysis For Last Five Years: -

MARKET VALUE
The Asia-Pacific steel market shrank by -6.8% in 2008 to reach a value of $383 billion.
The compound annual growth rate of the market in the period 2004-2008 was 14.5%.
Page5
Table 1.1.2
Page6
MARKET VOLUME
The Asia-Pacific steel market grew by 1.7% in 2008 to reach a volume of 755.6 million metric
tons.
The compound annual growth rate of the market volume in the period 2004-2008 was 10.8%.
Table 1.1.3
Page7
MARKET SEGMENTATION
China generates 63.4% of the Asia-Pacific steel market's value.
Japan accounts for a further 20.9% of the steel market's value.
Table 1.1.4
Page8
Page9
MARKET SHARE
Arcelor Mittal generates 16% of the Asia-Pacific steel market's revenue.
In comparison, POSCO accounts for a further 7.7% of the market's value.
Table1.1.5
Page10
FIVE FORCES ANALYSIS
The steel market will be analyzed taking steel makers as players. The key buyers will be taken
as end-users come from numerous industries, but mainly include automotive, construction and
engineering firms that utilize metals in the production of their goods, and producers of raw
materials, such as iron ore and coal as the key .
INDIAN STEEL INDUSTRY Page11

The Indian Steel Industry is almost100 years old now. Till 1990, the Indian Steel industry
operated under a regulated environment with insulated markets & large scale capacities
reserved for the public sector. Production & Prices were determined & regulated by the
Government, while SAIL & Tata Steel were the main producers, the latter being the only
player. In 1990, the Indian steel Industry had a production capacity of 23 MT. 1992 saw the
onset of liberalization & the Indian economy was opened to the world. Indian Steel Sector also
witnessed the entry of several domestic private players & large private investments flowed
into the sector to add fresh capacities.
The last decade saw the Indian Steel Industry integrating with the global economy & evolving
considerably to adopt world-class production technology to produce high quality steel. The
total investment in the Indian Steel since 1990 is over Rs. 19,000 crores mostly in plant
equipments, which have been installed after 1997 & 2001 when there was a downturn in the
global steel industry. The progress of the industry in terms of capacity additions, production,
consumption, exports & profitability plateaued off during this phase. But the industry
weathered the storm only to recover in 2002 & is beginning to get back on its feet given the
strong domestic economic growth & revival in global markets.
With a current capacity of 35 MT the Indian Steel Industry is today the 8th largest producer in
the world. India produces international standard steel of all most all grades/ varieties & has
been net exporter for the last few years, underling the growing acceptability of its product in
the global market.
Steel is a highly capital intensive industry & cyclical in nature. Its growth is intertwined with
growth of economy at large & in particular the steel consuming industries such as
manufacturing, housing & infrastructure. Steel given its backward and forward linkages has its
large multiplier effect.
With capital investments of over Rs.100, 000 crores, the Indian Steel Industry currently
provides direct/indirect employment to over 2 Million people. As India moves ahead in the
new millennium, the Steel Industry will play a critical role in transforming India into an
economic superpower.
Page12
Current
Scenario:
1. Indian economy growing @ 8 to 9% is of the fastest growing economies in the

world.
2. Industrial production showing encouraging trends. Index of industrial production
for Capital goods is growing @ 8.4% CAGR and growth in index for consumer durables
was @ 10.5% CAGR during 2005-06.
3. The 10th plan investment in infrastructure has been envisaged at around Rs.880,
550 crores.
4. The major sector wise anticipated investment is likely to be Rs.292000 crores in
power, Rs.145000 crores in Roads & Bridges, irrigation Rs.111000 crores.
5. During 11th plan (2007-08 to 2011-12), the projected investment towards
infrastructure is likely to be Rs.2027000 crores, an increase of 180% over 10th plan.
6. Per capita Steel consumption at 35 kg low as world average of 150 kg & 300 kg for
China.
7. National Steel Policy, as formulated by Indian Ministry of Steel envisages the
following:-
• Crude Steel production of 110 Million Tonnes by 2019-20 at
CAGR of 7.1% from 2005-06.
• The demand of Steel by 2020 is likely to be 90 Million Tonnes at
CAGR of 6.9% from 05-06.
• Steel exports by 2020 are likely to grow at CAGR of 13.3% from
04-05 to 26 Million Tonnes.
• Steel importers to the country by 2020 shall grow of 7.1% from
04-05 to 6 Million Tonnes.
8. Lot of Steel projects both Brownfield and Greenfield likely to come up and are in
various stage of execution.
9. As per the news, Steel Minister has projected India’s Steel production to be around
124 Million Tonnes by 2012 and a capacity of around 275 Million Tonnes by 2019-20.
10. Due to infrastructure focus, production of long products is gradually increasing &
ratio of flat to long products is narrowing.
11. With due focus on infrastructure development & strong economic indicators, the
demand for Steel in India shall to remain
robust.
Page13
Company profile
Page14
1.2 Company profile
STEEL AUTHORITY OF INDIA LIMITED (SAIL)

HISTORY:
Steel Authority of India (SAIL) was established in 1973 to manage the operations of state-
owned 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.
Page15
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
tones 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
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 tonnes cement per annum from the
slag generated during the blast furnace operations at SAIL’s Bhilai Steel Plant.
In April 2007, the company’s board approved a proposal for modernization and capacity
expansion of Bhilai Steel Plant to 7 million tonnes 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 silico-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;
Page16
joint usage of each other's existing marketing and warehousing network; and co-ordination in
procurement of coking coal, nickel, and ferro-alloys and engagement of transportation vessels.
Further in August 2007, SAIL, NMDC, and RINL, signed a MOU for jointly setting up a 4
million tonne 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.
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.
Page17
EXPANDING HORIZON (1959-1973)
Hindustan Steel (HSL) was initially designed to manage only one plant the Rourkela. For
Bhilai and Durgapur Steel Plants, the preliminary work was steel ministry. From April 1957,
the supervision and control of these two transferred to Hindustan Steel. The registered office
was originally in New Calcutta in July 1958, and ultimately to Ranchi in December1959.
A new Steel company, Bokaro Steel Limited, was incorporated in January operate the steel
plant at Bokaro. The 1 MT phases of Bhilai and Rourkela completed by the end of December
1961. The 1 MT phase of Durgapur Steel completed in January 1962 after commissioning of
the wheel and axis plant production of HSL went up from .158 MT (1959-60) to 1.6 MT. T he
second plant was completed in September 1967 after commissioning of the wire of the 1.8 MT
phase of Rourkela- the Tandem Mill –was commissioned the 1.6 MT stage of Durgapur Steel
Plant was completed in August 1969 the Furnace in SMS. Thus with the completion of the 2.5
MT stage at Bhilai and 1.6 MT at Durgapur, the total crude steel production capacity of HSL
1968-69 and subsequently to 4 MT in 1972-73.
Key Facts:
Table No.-1.2.1
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.
Page18
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
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 India’s largest producer of iron ore and of having the country’s
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.
Page19
CORE VALUES OF SAIL:

 Customer satisfaction.
 Concern for people.
 Consistent Profitability.
 Commitment of Excellence.
THE SEVEN C’s 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.
EXPANSION PLAN 2012: Table No.-1.2.2
Item 2006-07(Actual) Capacity as per Expansions 2010

Hot Metal 14.61 26.18
Crude steel 13.51 24.59
Saleable Steel 12.58 23.13
Source: SAIL
Page20
SAIL’s Growth Plan 2010
Much has happened ever since SAIL’s 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.
Table No.-1.2.3
Saleable Steel Capacities (MT)
PLANT 2010
Bhilai Steel Plant 6.21
Durgapur Steel Plant 2.85
Rourkela Steel Plant 2.90
Bokaro Steel Plant 6.50
IISCO Steel Plant 2.37
Alloy Steels plant 0.43
Salem Steel Plant 0.36
Visvesvaraya Iron & Steel Plant 0.22
Graph No.- 1 Saleable Steel Production Capacity
7
6
Million Tonne
2.3
5 2.7
4
3
4.2 1.9 3.8
2 1.2
1 1.6 1.9 2.0
0 0.4
LA
R
I
O
O
A
C
R
IL
E
P
II S
K
H
K
B
R
G
O
U
R
B
O
U
R
D
Existing capacity Planned increase
Page21
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 e-commerce.
 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
302-MW power generation and 1880 tonnes per hour steam generation facilities at
Bokaro Steel Plant.
 Mjunction Services Limited: A joint venture between SAIL and Tata Steel on 50:50
basis, this company promotes ecommerce activities in steel and related areas.
Page22
 SAIL-Basel 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.
 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 and 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.
Page23
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:
Bhilai Steel Plant:
 Rebuilding of Coke O
 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 tonnes capacity
 New Bar & Rod Mill (1 million tonnes).
 AMR (Additions, Modifications & Replacements) & other Schemes including.
 Logistics & infrastructure.
 Installation of new Steel Melting Shop (SMS) – (3.9 million tonnes 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.
Page24
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.
 Installation of Slab Caster.
 Installation of New modern BOFs.
IISCO Steel Plant:
 Modernization of Steel Making Facility.
 New Multi purpose 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.
 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
IISCO’s 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).

Page25
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.
THREAT
 Steel prices may remain stumpy on account of over supply 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.
Page26
ORGANISATION STRUCTURE OF
SAIL
CHAIRMAN
DIRECTOR (TECH) MANAGING DIRECTOR, BSP
DIRECTOR
PERSONNEL MANAGING DIRECTOR, BSL
DIRECTOR FINANCE MANAGING DIRECTOR, RSP
CHIEF VIGILANCE
MANAGING DIRECTOR, DSP
EXE. DIR
(OPERATION)
EXECUTIVE DIRECTOR VISL
EXE. DIR (IA)
EXECUTIVE DIRECTOR SSP

ED (TECH & LEGAL
SERVICE)
EXECUTIVE DIRECTOR ASP

EXE. DIR (PROJECTS)
EXE. DIR (CMMG)
EXE. DIR. (CIG)
EXE. DIR. (CP)

Page27
Company vision:
India 2020 – a vision for the new Millennium
“We still have a number of persons in our country in steel Authority of India Limited
(SAIL)…….. They have the will to excel and transform the country, given a long term
vision”
- Dr. A.P.J.ABDUL KALAM -
Bhilai Steel Plant, a unit of Steel Authority of India Limited - a public sector undertaking
was conceived under aegis of Indo - USSR Treaty in the 2nd Five year plan. This was in
accordance with erstwhile government policy for strengthening economy and self reliance
through development of core sector.
Nine - time winner of Prime Minister’s Trophy for best Integrated Steel Plant in the country,
Bhilai Steel Plant (BSP) is India’s sole producer of rails and heavy steel plates and major
producer of structural. The plant is the sole supplier of the country's longest rail tracks of 260
meters. With an annual production capacity of 3.153 MT of saleable steel, the plant also
specializes in other products such as wire rods and merchant products. Since BSP is accredited
with ISO 9001:2000 Quality Management System Standard, all saleable products of Bhilai
Steel Plant come under the ISO umbrella.
At Bhilai IS0: 14001 has been awarded for Environment Management System in the Plant,
Township and Dalli Mines and it is the only steel plant to get certification in all these areas.
The Plant is accredited with SA: 8000 certification for social accountability and the OHSAS-
18001 certification for Occupational health and safety. These internationally recognized
certifications add value to Bhilai’s products and helps create a place among the best
organizations in the steel industry.
Bhilai steel plant profile
Bhilai Steel Plant is a flag ship unit of Steel Authority of India Limited. SAIL, a fully
integrated iron and steel maker, produces both basic and special steels for domestic
construction, engineering, power, railway, automotive and defense industries and for sale in
export markets. In terms of annual production SAIL is the 18th largest steel producer in the
world.
Page29
Living up to the description by Jawaharlal Nehru as significant symbol of a new age in India,
Bhilai Steel Plant has been performing consistently despite many odds and has achieved
profits for the 18th consecutive year. It broke its own record of highest ever profit of Rs 1932
crore by any steel plant in 2003-04 and registered a profit of Rs 4042 crores in 2004-05. In the
year 2005-06 also it earned a handsome profit of Rs. 2781 Crores despite input price
escalation. The true testimony to BSP’s status of a world class steel plant is that BSP’s
EBITDA margin of 33% is quiet comparable to many International steel players like POSCO
(30%), NIPPON (19%), MITTAL STEEL (16%0, ARCELOR (16%), etc. Its Gross Margin to
average capital employed at 182% is a Global Benchmark. Maintaining the track record, BSP
continued to operate above the rated capacity in production of the three main items viz. Hot
Metal, Crude Steel and Saleable Steel. BSP is the first steel plant in India to have crossed the
annual production of 5MT crude steel in the year 2005-06.
In order to meet the challenges of Corporate Plan 2012 and to maintain the leadership position
of BSP in Indian steel industry, the leadership has taken bold steps to make significant
investments for breakthrough improvements in efficiency, resource management, knowledge
and skill by deploying world class tools. This year is a milestone in BSP journey when new
tools have been introduced viz. ERP, Knowledge Management, Six Sigma, Multi-skilling etc.
Building Future Capabilities
BSP is on its way to equip itself with assets required by 21st century. New state of the art
technologies for improvement in productivity, yield, quality and operational costs have been
planned under Corporate Plan 2012. The plant capacity will be 7 MT of hot metal by 2012.
The key goals of CP-2012 are capacity enhancement, 100% Comcast production, reduction in
semis, achieving international benchmarks in eight selected parameters, higher percentage of
value added products and essentially to become a true world class steel plant. Apart form
investing in plant, technology and machinery, BSP has taken bold steps to make significant
investments to leverage its most precious and differentiating resource, the human resource by
deploying ERP, Knowledge Management, Six Sigma, and Multi-skilling and other
performance enhancing tools.
Page29
“The principal products and key customers of Bhilai Steel Plant along with key segments; key
competitors and market share in that segment are given as per the format specified in”
“A glimpse of product portfolio and targeted market share after proposed implementation of
unit perspective Plan 2012 is given in” Table No.-1.2.4
Table: Main Products & Expected Market Share 2011-12

Expected Domestic
Main Products Current Market Share
Market Share
Rails 100% 100%
Plates 24% 30%
Bars, Rods & Structural. 4.8% 10%
HR Coils / Sheets Nil 6%
Pipes Nil 6%
The Beginning
This Leadership of free, India took a visionary decision to set up integrated steel plants under
the exclusive responsibility of the state owing to the massive investment needed for creating
additional Steel capacity, which private industry would not be able to mobilize and the
cardinal role steel would play in rapid economic advancement as a major step towards this
goal, government of INDIA and USSR entered into an agreement signed at New Delhi on 2nd
march 1955, for the establishment of an integrated Iron and Steel works at Bhilai with an
initial capacity of one million tonnes of ingot steel.
The main consideration which responsible for setting up the plant at Bhilai, was the
availability of Iron ore at Delhi-Rajhara at a distance of about 90 Km from the site limestone
from Nandini at 22 km and dolomite at HIRRI at 41 km. The plant was commissioned with the
inauguration of the first blast furnace by the then president of India. Dr. Rajendra Prasad on 4th
February 1959. The plant was soon expanded to 2.5 Million tonnes in September 1967 and in
further expansion to 4 MT was completed in 1988. The main focus in the 4 MT stage was on
the continuous casting unit and the plate mill, a new technology in steel casting and shaping
for any integrated steel plant to India during those time
Page30
The Organization
Bhilai Steel Plant functions as a unit of SAIL with its corporate office at New Delhi. SAIL is
governed by a Board consisting of function Directors, Managing Directors and government
nominee Directors, 85.62% of the shares of SAIL are with Indian Government and balance are
with financial institutions, mutual funds, Indian Public and others, corporate office formulate
Policies, strategies and overall guidelines for its unit, central organization like CMO (Central
Marketing Organization) RDCIS (Research and Development Center for Iron & Steel ) CET
( Center for engineering and Technology ) look after the relevant activities for the plates under
SAIL.
Over the years, Bhilai Steel Plant has developed an organizational culture that run forces its
commitment to values and stimulates continuous improvements and higher levels of
performance.
Bsp’s Organizational Objectives
To encage customer satisfaction through:-

 Improvement in productivity and product quality.
 Skill enhancement of our people by competence commitment and culture-
Building.
 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.
Page31
Product Profile
Bhilai Steel Plant (BSP) has mainly three types of products:-
1. Semis Product
2. Long Products
3. Flat Products
MARKET SHARE OF BSP’S PRODUCT RANGE:

Table No.1.2.5
SAIL BSP
BARS & RODS 08.70% 05.90%
STRUCTURALS 17.90% 13.90%
RAILWAY MATERIALS 89.30% 85.90%
TOTAL LONG PRODUCT 14.80% 11.80%
PLATES 52.90% 23.90%
TOTAL FINISHED STEEL 22.40% 07.70%
TOTAL SEMIS 13.00% 06.10%
TOTAL SALEABLES STEEL 20.00% 07.30%
Table No.:1.2.6
PRODUCT-MIX TONNES/ANNUM
Semis 5,33,000
Rail & Heavy Structural 7,50,000
Merchant Products
5,00,000
(Angles, Channels, Round & TMT bars)
Wire Rods (TMT, Plain & Ribbed) 4,20,000
Plates (up to 3600 mm wide) 9,50,000
Total Saleable steel 31,53,000
Page31
PLANT AND FACILITIES:
Process Flow of Bhilai Steel Plant:

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
Page32
Coke Ovens:-
BATT NO. NO. OF OVEN COAL USEFUL SP.HEAT

OVENS HEIGHT HOLDING VOLUME CONSPN.
(M) CAPACITY PER OVEN KCAL/KG
PER OVEN CU.M.
(T)
1-8 65 4.3 16.8 21.6 625-675
9&10 67 7.0 32.0 41.6 625-675
Blast Furnaces:
 3 of 1033 Cu m capacity each.
 3 of 1719 Cu m capacity each.
 1 of 2350 Cu m capacity.
Steel Melting Shop:
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: Capacity - 5, 00,000 Tonnes.
Products:
 Plain Rounds: dia 28, 32, 36,40, 50,53, 56, 63 & 67

 TMT Bars
 Angles
Page33
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 metres.
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 World’s 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
Page34
 Plate Mill:
Capacity - 9,50,000 T
Plates thickness - 8-120 mm
Width - 1500-3270 mm
Length - 5-12.5 M
Product Mix: Saleable Steel Production: table 1.2.7
Page35
Major suppliers of Bhilai steel plant:

1. Apollo industrial corporation Mumbai.
2. Ashok Leyland Chennai.
3. BHEL Bhopal and Mumbai.
4. Bharat petroleum gas Nagpur.
5. Birla Corporation limited Kolkata.
6. Cimmco Birla limited New Delhi.
7. Dunlop India limited Kolkata.
8. Siemens casting limited Mumbai.
9. Simplex casting limited Raipur.
10. 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. Chandigarh industrial journalism and development corporation Chandigarh.
8. Cropro international Italy.
9. Sangyong Corporation Japan.
Competitors:
1. Ispat industries limited.
2. Lloyds steel limited.
3. Essar steel limited.
4. Jindal steel and power limited.
5. Jindal strips limited.
6. National steel industries limited.
7. Bhusan steel and strips limited.
Page36
Environment Management: A conscious corporate citizen, BSP has gone in for ISO-
14001 certification for its Environment Management System.
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 afforestation 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.
Page37
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.
• 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, structural, plates, steel
sections and wire rods.
Page38
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:
• Training need assessment is a continuing process.

• About 19,000 employees are imparted training every year.
• The focus is on need-based innovative programmes, such as Action Collaboration.
SWOT Analysis of BSPs:
• 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.
Page39
SWOT
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,
 Depleting Mines.
Page40
ORGANISATIONAL STRUCTURE OF
BHILAI STEEL PLANT
MANAGING DIRECTOR
ED (F&A)
ED
ED (PROJECTS) ED (P&A) ED (MM)
(WORKS)
90
GM (F&A) GM (TS)
GM (PROJECTS) GM (MM)
GM (PERS)
GM (M&SP)
GM (PP&E & BEDB)
GM (HRD)
GM (IA) GM I/C (SERVICES)
GM (SAFETY) GM (MS)
GM I/C
(MINES)
GM I/C (M&U) (REFR) DGM (L & A)
DIR (M&HS) GM (P MILL & MILLS-LP)
ACVO GM (CO, CCD & SP, OHP)
GM I/C (PE, EN & STEEL)

COC
GM (QUALITY)
GM (IT) GM (CCS) - SMS-II
Page41
PERFORMANCE HIGHLIGHTS 2008-2009

BHILAI STEEL PLANT
Item (Unit : MT) 2007-08 2008-09 % Rated Capacity

Hot Metal 5.27 5.18 121.0*
Crude Steel 5.05 5.18 132.1
Saleable Steel 4.43 4.49 142.5
• With respect to BFs in operation
TURNOVER (Rs Crore)

18000 16518
16000
13526.31
14000
13246
12000 11389 11217 9 Months
10000 10479.41
9736.08
8000 7557.98 7949.1
6000
4000 Yearwise
2000
0
2004-05 2005-06 2006-07 2007-08 2008-09
Page42
PROFIT (Before Tax) (Rs Crore)

6000
5366
5000
4287.29
4042
4000
3367.14 3266
3000 2781.07 3048.89 9 Months
2365.64
2000 2175.52
1000 Yearwise
0
2004-05 2005-06 2006-07 2007-08 2008-09
Record production of 7.46 MT of Total Sinter, surpassing the previous best of 7.23 MT in 07-
08 and registering a growth of 3.2% over previous Year.
Production of Total Sinter ('000T)

7459
7500 7229
6933
6800 6647
6100 5741
5400
4700
4000
2004-05 2005-06 2006-07 2007-08 2008-09
Page43
Record production of 5.39 MT of Hot Metal, exceeding previous best of 5.27 MT in 07-08 and
registering a growth of 2.3% over the previous Year.
Production of Hot Metal ('000T)

5500 5387.2
5267.7
5178.3
5200
4900 4816.8
4600 4511.2
4300
4000
2004-05 2005-06 2006-07 2007-08 2008-09
Record production of 5.2 Million Tonnes of Total Crude Steel, surpassing the previous best of
5.1 Million Tonnes in 07-08 and registering a growth of 2.6% over the previous Year.
Production of Total Crude Steel ('000T) 5183.5

5200
5053.7 5054.6
4960
4798.4
4720
4581.7
4480
4240
4000
2004-05 2005-06 2006-07 2007-08 2008-09
Page44
Record production of 4.49 Million Tonnes of Saleable Steel, surpassing the previous best of
4.43 T achieved in 07-08 and registering a growth of 1.4% over the previous Year.
Production of Saleable Steel ('000T)

4491.6
4500 4428.9
4285.6
4300 4222.9
4100
3935.1
3900
3700
3500
2004-05 2005-06 2006-07 2007-08 2008-09
"Sinter Plant-3 crossed the 20 MT landmarks in July ‘08

Record Cast Steel production of 2.65 MT from SMS-2”.
Record production of 756,232 T of Merchant products, surpassing the previous best of
730,660 T achieved in 07-08 and registering a growth of 3.5% over the previous Year.
Production of Finished Rails ('000T)

1000 978.7
940 916.1
880.9
880 868.4
855.2
820
760
700
2004-05 2005-06 2006-07 2007-08 2008-09
Page45
Record production of 3604.6 Thousand Tonnes Finished Steel, surpassing the previous best
of 3603.1 Thousand Tonnes in 2007-08.
Production of Merchant Products ('000T)

800
756.2
750 730.7
700
650
610
592.7 582.7
600
550
500
2004-05 2005-06 2006-07 2007-08 2008-09
“Plate Mill completed 25 years in March ’08 with cumulative output of about 18.13 MT”.
Best-ever Energy rate at 6.503 G Cals/TCS against previous best of 6.503 G Cals/TCS in
2007-08.
Highest ever production of Special Steel & value-added products at 2.85 MT surpassing the
previous best of 2.17 MT in 07-08 and registering a growth of 31.1% over previous year.
Special Quality & Value-added Products ('000 T)

3000 2845.6
2600
2170.9
2200
1800
1555.7
1444.2
1358.2
1400
1000
2004-05 2005-06 2006-07 2007-08 2008-09
Page46
Best ever production of 430,494 Tonnes of TMT Bars from Merchant Mill, surpassing the
previous best of 417,591 Tonnes in 07-08, registering a growth of 3.1% over previous year.
Production of TMT Bars ('000T)

Merchant Mill
500
417.6 430.5
400
300
210.6
187.1
200 156.7
100
0
2004-05 2005-06 2006-07 2007-08 2008-09
Best ever production of 403,175Tonnes of TMT Rods from Wire Rod Mill, surpassing the
previous best of 277,488Tonnes in 07-08, registering a growth of 45.3% over previous year.
Production of TMT Wire Rods ('000T)

Wire Rod Mill
500
403.2
400
300 277.5
200
109.5 107.2 109.8
100
0
2004-05 2005-06 2006-07 2007-08 2008-09
Best ever production of 814,805 Tonnes of UTS-90 Rails, surpassing the previous best of
791,541 Tonnes in 07-08, registering a growth of 2.9% over previous year.
Page47
Best ever loading of 213,652 Tonnes of 26 metre rails and 106,284 T of 130 & 260 metre
rails, surpassing the previous best of 197,708 Tonnes and 101,104 T, respectively in 2007-08.
Production of HT (H/S) Plates ('000T)

150
122.8
120 110 106.1
98.2 99.4
90
60
30
0
2004-05 2005-06 2006-07 2007-08 2008-09
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.
Page48
MAJOR PROJECTS COMMISSIONED:-
 Hot Metal Desulphurisation 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.
 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.
Page49
OTHER PROJECTS COMPLETED:-

 Procurement of 9 WDS-6 Locos for T&D Organization.

 Enabling works, Fabrication & Erection of TOPR and Supply of Drawings for COB-6.
 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 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.
 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.
o 2*6 Strand Billet Casters.
o 1*4 Strand Bloom-cum-Billet Casters.
o 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.
Page50
ORGANISATIONAL STRUCTURE OF
FINANCE AND ACCOUNT DEPARTMENT OF BHILAI
STEEL PLANT
Bifurcation and coordination of Finance and Accounts department
Finance and
accounts
department
Invoici
ng
ng
Page51
Introduction of the topic

Chapter 1.3
Finance is considered the life blood of any business. It is defined as “the provision of money at
the time it is wanted”. All the plans of a businessperson would remain mere dreams unless
adequate money is available to convert them into reality. It has given birth to “Financial
management” as a separate subject.
Financial management refers to that part of managerial activity concerned with procurement
and utilization of funds for business purpose. In other words it involves the application of
general management principles to financial operations. Thus financial management is
concerned with estimation of a fixed and working capital and management of earnings.
Finance management, also referred to as corporate finance, emerged as a distinct field of study
at the turn of the 20th century. Financial management is that management activity which is
concerned with the planning and controlling of the firm’s financial resources.
Financial management involves the procurement and use of funds. Its fundamental objective is
to use business funds in the most profitable manner. But it must contribute towards the
accomplishment of organizational goals. Although the importance of financial functions
largely on the size of the firm, financial management is an integral part of the overall
management of the firm.
Page52
Introduction to WORKING CAPITAL
Working Capital is the capital available for conducting the day-to-day operations of an
organization, normally, the excess of current assets over current liabilities.
In accounting terms this is a static balance sheet concept referring to the excess at a particular
moment in time of permanent capital plus long-term liabilities over the fixed assets of the
business. As such it depends on accounting rules, such as what is capital and what is revenue,
what constitutes a retained profit, the cut-off between long term and short term (12 months
from the balance sheet date), and when revenue should be recognized.
A business must be able to generate sufficient cash to meet its immediate obligations and
therefore continue trading. Unprofitable business can survive for quite some time if they have
access to sufficient liquid resources, but even the most profitable business will quickly go
under without adequate liquid resources. Working capital is therefore essential to the
company’s long-term success and development, and the greater the degree to which current
assets cover the current liabilities, the more solvent the company. Efficient managing of
working capital is important from the points of view of both liquidity and profitability.
Gross working capital:
It refers to the firm’s investment in current assets. Current assets are the assets, which can be
converted into cash within an accounting year or within an operating cycle. You can include
here cash, short-term securities, debtors (accounts receivable & book debts), and bills
receivable and stock.
Net working capital:

The net working capital refers to the difference between current assets and current liabilities.
Current liabilities are those claims of outsider, which are expected to mature for payment
within an accounting year & include creditors, bills payable & the outstanding expenses. In
other words we can say that this is the excess of current assets over current liabilities.
Page53
Working capital
Current assets Current liabilities
Cash Accounts Payable
Accounts receivable Notes payable
Notes receivable Accrued expenses
Marketable securities Taxes payable
Inventory Short term loans
Prepaid expenses Bank overdraft
Total current assets Total current liabilities
Net working capital = CA-CL
1Kinds of Working Capital:

1. Permanent Working Capital:
Permanent working capital is the minimum amount of current assets, which is needed
to conduct a business even during the dullest season of the year. The minimum level of
current assets is called permanent or fixed working capital as this part is permanently
blocked in current Assets. This amount varies from year to year, depending upon the
growth of the company and the stage of the business cycle in which it operates.
2. Temporary Working Capital:
Temporary working capital represents a certain amount of fluctuations in the total
current assets during a short period. These fluctuations are increased or decreased and
are generally cyclical in nature. Additional current assets are required at different times
during the operating year. Variable working capital is the amount of additional current
asset that are required to meet the seasonal needs of a firm, so is also called as the
seasonal working capital. For example: additional inventory will be required for
meeting the demand during the period of high sales When the peak period is over
variable working capital starts decreasing or very little during the normal period.
Page54
Page55
IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL
 SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining

the solvency of the business by providing uninterrupted of production.
 Goodwill: Sufficient amount of working capital enables a firm to make prompt

payments and makes and maintain the goodwill.
 Easy loans: Adequate working capital leads to high solvency and credit standing can
arrange loans from banks and other on easy and favorable terms.
 Cash Discounts: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.
 Regular Supply of Raw Material: Sufficient working capital ensures regular

supply of raw material and continuous production.
 Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It

leads to the satisfaction of the employees and raises the morale of its employees,
increases their efficiency, reduces wastage and costs and enhances production and
profits.
 Exploitation Of Favorable Market Conditions: If a firm is having adequate

working capital then it can exploit the favorable market conditions such as purchasing
its requirements in bulk when the prices are lower and holdings its inventories for
higher prices.
 Ability To Face Crises: A concern can face the situation during the depression.
 Quick And Regular Return On Investments: Sufficient working capital enables a

concern to pay quick and regular of dividends to its investors and gains confidence of
the investors and can raise more funds in future.
 High Morale: Adequate working capital brings an environment of securities,

confidence, high morale which results in overall efficiency in a business.
Page56
EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its
business operations. It should have neither redundant or excess working capital nor
inadequate nor shortages of working capital. Both excess as well as short working capital
positions are bad for any business. However, it is the inadequate working capital which is
more dangerous from the point of view of the firm.
DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING

CAPITAL
1. Excessive working capital means ideal funds which earn no profit for the firm and
business cannot earn the required rate of return on its investments.
2. Redundant working capital leads to unnecessary purchasing and accumulation of

inventories.
3. Excessive working capital implies excessive debtors and defective credit policy
which causes higher incidence of bad debts.
4. It may reduce the overall efficiency of the business.
5. If a firm is having excessive working capital then the relations with banks and
other financial institution may not be maintained.
6. Due to lower rate of return n investments, the values of shares may also fall.
7. The redundant working capital gives rise to speculative transactions
Page57
DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. The need for working capital arises
due to the time gap between production and realization of cash from sales. There is an
operating cycle involved in sales and realization of cash. There are time gaps in purchase of
raw material and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:
• For the purpose of raw material, components and spares.
• To pay wages and salaries
• To incur day-to-day expenses and overload costs such as office expenses.
• To meet the selling costs as packing, advertising, etc.
• To provide credit facilities to the customer.
• To maintain the inventories of the raw material, work-in-progress, stores and spares
and finished stock.
For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the
size of the company and ambitions of its promoters. Greater the size of the business unit,
generally larger will be the requirements of the working capital.
The requirement of the working capital goes on increasing with the growth and expensing
of the business till it gains maturity. At maturity the amount of working capital required is
called normal working capital.
Page58
Determinants Working Capital:

We can explain the determinants of working capital as follows:
• Nature of business:
• Terms of sales and purchases:
• Manufacturing cycle:
• Rapidity of turnover:
• Business cycle:
• Changes in technology:
• Seasonal variation:
• Market conditions:
• Seasonality of operation:
• Dividend policy:
Working capital cycle:

Larger the working capital cycle, more is the requirement of working capital.
Page59
If working capital thus defined exceeds net current operating assets (stocks plus debtors less
creditors) the company has a cash surplus (usually represented by bank deposits and
investments); otherwise it has a deficit (usually represented by a bank loan and/or overdraft).
On this basis, therefore, the control of working capital can be sub divided into areas dealing
with stocks, debtors, creditors and cash.
Poor managing of working capital means that the funds are unnecessarily tied up in idle
assets, hence reducing liquidity, and also reducing the ability to invest in productive assets as
plant and machinery, so affecting the profitability.
The Investment Decision

All businesses, to one degree or another need working capital. The actual amount of working
capital will depend on many factors like age of the firm, the type of business activity, credit
policy and also time of the year. There is no standard fixed requirement. It is essential that an
appropriate amount of working Capital is budgeted to meet anticipated future needs. Failure
to budget correctly could result in the business being unable to meet its liabilities as the fall
due. If a business finds itself in such a situation, it is said to be technically insolvent. In
conditions of uncertainty firms must hold some minimal level of cash and inventories based on
expected sales, plus additional safety stocks. Firms with an aggressive working capital policy
hold minimal safety stock. Such a policy would minimize costs, but it could lower sales
because a firm may not be able to respond rapidly to changes in demand. Conversely, a
conservative working capital policy would call for large safety stocks. Conservative policy has
lower returns but lesser risk when compared to an aggressive policy. A moderate policy falls
somewhere between the two extreme policies.
Page60
The Financing Decision
Working capital decisions involve the determination of the mix of long term versus short-term
debt. When the yield curve is upward sloping, short-term debt costs less than long term debt.
A firm with an aggressive financing policy finances part of its permanent asset base with
short-term debt (which generally provides the highest expected return but is very risky) while
a firm with a conservative finance policy has permanent financing (long term debt plus equity)
more than its permanent base of assets. This has much lower returns but also is much safer.
Current Assets
It consists of cash of cash, investments, inventory and receivables and other market securities.
Current assets are normally converted into cash within a year.
These assets consist of:
1) Cash and bank balances
2) Investments
a) Government and other trustee’s securities.
b) Fixed deposits of banks, which are not earned, marked for any specific purpose,
maturing within one year.
3) Receivables
a) Sundry debtors arising out of sales other deferred receivables.
b) Bills discounted.
c) Investments of deferred receivables due within one year.
4) Inventory
a) Raw materials and components include those in transit.
b) Stock in process including semi finished goods.
Page61
c) Finished goods including goods in transit.
d) Consumable stores and spares.
5) Other current assets
a) Advanced payment of tax.
b) Advance for the purchase of raw materials, components and stores.
Inventories- They consist of tangible assets held for sale in business, for process of
production, or currently consumed in the production of goods or services for sale. Raw
materials are basically used in manufacture of the project, finished goods are final goods for
sale and semi finished goods are goods in process of production.
The constituents of inventory carrying cost are interest, storage, insurance, physical
deterioration and obsolescence. Inventory procurement also involves ordering cost consisting
of number of deliveries multiplied by the cost of delivery. These two costs make up the total
cost of inventory. The economic order quantity or lot size is to be found where the total
inventory cost is minimal.
Cash-Cash is the important component of current assets, which is kept to meet running
expenses and meet expenses and meet emergencies. It is the most liquid of current assets and
its level is determined by the liquidity of other assets. Cash is kept in the bank deposits or
readily convertible temporary investments.
Receivables-It rises out of delivery of goods or rendering of services on credit. They

include book accounts, notes and bills and accrued receivables. It represents claims against
others for future receipt of money, goods and services. They are considered on earning asset
because they finance sales. Their values depend upon the volume of the credit sales and policy
of collection of credit. Accounts receivables are valued at face value after deduction of market
rate of discount.
Page62
Market Securities-A portion of current earnings may be invested in government

securities, bonds, debentures and shares which are readily marketable and may be converted
into cash at short notice.
Current Liabilities
Current liabilities consist of estimated or accrued amounts, which are anticipated to cover
expenditure within a year, for known obligation.
Current liabilities include:
• Borrowings:
a) From banks
b) From other
• Others:
a) Unsecured loans
b) Public deposits maturing within one year.
c) Sundry creditors for raw materials and stores.

d) Interest and other charges accrued but not due for payment.
e) Advance/progress payments from customers
f) Deposits from dealers, selling agents etc.
• Statutory liabilities:
a) Provident fund dues
b) Provision for tax.
c) Sales taxes, excise etc
• Miscellaneous current liabilities:

a) Dividends
b) Liabilities for expenses
c) Gratuity payable within one year.
Page63
Current Liabilities
They comprise of borrowing from banks, trade credits, assessed tax and unpaid dividends. The
share of each constituent to total current liabilities partly determines the availability of
working capital. There is very little scope of maneuvering current liabilities.
Working Capital Management

It involves the management the administration of current assets liabilities. It consists of
optimizing the levels of current assets in a partial equilibrium context. Investment in current
assets should be made in such a manner similar to NVP approach used in making investment
decision in fixed assets. Current assets constitute a continuously fluctuating level of liquid
assets that is rapidly transformed from one form to another.
The normal rule for investment in fixed assets – invest in it if its NPV is positive cannot be
applied to current assets because the useful life of current asset cannot be determined. The
level and nature of current assets depend on product types, operating cycle, level of sales,
operating expenses, management and pricing. Current assets provide the liquidity necessary to
support the realization of the expected returns from long time investment. It is also true that
different assets have different type of liquidity. In terms of assets liquidity means the time
necessary to covert the asset into money and the degree of certainty associated with such
conversions.
Working capital is also necessary to synchronize cash flows from long-term assets that are
uncertain and irregular.
Amount of Working Capital

The amount of working capital it requires varies from unit to unit and between units in
different industries current assets are required because the operations do not convert into cash
instantaneously there is always an operating cycle which converts cash into raw materials, raw
material into goods in process, good in process into finished goods and finished good into
debtors through credit sales and finally debtors into cash..
Page64
1.4 Objective of the study
• To evaluate the working capital management of the company.
• To optimum investment in current assets.
• To study and to analyze the various financial statements using ratio analysis.
• To make a comparative analysis of sail’s financial performance & bsp’s financial

performance.
• To offer suggestion for better cash management of BSP.
• To forecast working capital for future.
1.5 scope of the study
To analyze the working capital position of BSP, Bhilai on the basis of calculation and
interpretation of some important parameters of liquidity such as current ratio quick ratio,
inventory turnover ratio & profitability ratio.
To give an overview of the company in which the project was carried out.
To find out the liquidity position of the company.
To find out the profitability position of the company.
Page65
Chapter II
REVIEW OF LITERATURE
Working cpital is a firm’s capacity in raising, handling and using money. Otherwise, it can be
said as a company’s ability to generate new sources, form day to day operation, over a given
period. Financial analysis is a powerful tool for the studying the working capital of a
company. Ti is the process of identifying the strengths and weakness of the company with
help of accounting information provided by profit & loss account and & balance sheet. It make
use of various tools like ratio analysis, trend analysis etc.
In attempt has been made to study the available literature in the area of “working capital” of
enterprises. The review mainly concentrated on the working capitalof the company up & down
of enterprises & current assets & liabilities etc. Review of literature shows that the majority of
the studies were conducted based on published dataof the companies & similar line of to other
studies. The related studies referred are presented below:
A study entitles “working capital in Korba, Chhattisgarh : A evalution on working capital of

NTPC was conducted by Bumitra Tripathi. The study was undertaken to examine & evaluate
the working capital of NTPC. The study which was descriptive was conducted using five
year’s financial statement of the company.
Rupesh gupta (2006) made “A study on the working capital management with reference to
Jindal steel industries raigarh”. The objective of the study was to analyze & evaluate the
working capital management, to analyze the liquidity position of the company, inventory
management of the company, to receivables, payables & cash management & suggest ways &
means to improve the present state of working capital. The author suggested the proper
management of inventory.
Page66
CHAPTER III
3.1 RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. One can also define research
as a scientific and systematic search for pertinent information on a specific topic.
Research methodology is a way to systematically solve the research problem. Research

methodology just does not deal research method but also consider the logic behind the
method. It facilitates the researcher with reason for evaluating the research problem.
DATA COLLECTION
The study is based on the secondary data obtained from published accounts and annual reports
of Bhilai Steel Plant.
1. Annual report for the period from 2005 to 2010
2. Journals
3. Plant visit
4. Personal discussion & interaction
The study covers a period of 5 years from 2006 to 2010. The research design adopted for the
purpose of working capital analysis was analytical and descriptive in nature.
THE TOOLS USED FOR ANALYSIS
 Percentage analysis
 Ratio analysis
 Trend analysis
Page67
3.2 Limitations of the Study
The limitation encountered in the study on working capital management:-
• Detailed analysis was not possible due to time constraints.
• Limitation in non availability of data.
• The analysis is based on the annual reports of the company.
• The limitation of the data given in the annual reports is also applicable for the data
used in the study.
• Non monetary factors like human behavior, their relationship etc are not considered.
Page68
CHAPTER IV
Current Assets
It consists of cash of cash, investments, inventory and receivables and other market securities.
Current assets are normally converted into cash within a year.
Current assets of B.S.P
Total inventories (in

Rs.crores) Table No.4.1
Particulars
2005-2006 2006-2007 2007-2008 2008-09 2009-10
Inventories:
Stores and
417.62 444.12 465.75 570.51 592.19
Spares
Raw materials
353.99 342.95 284.73 484.18 588.77
Stock
Semi/Finished
734.15 769.59 962.42 1828.45 1430.96
goods
Total 1505.76 1556.66 1712.90 2883.14 2611.92
Interpretation
Inventories are a major part of current asset. The inventories has increased by 68% in the
year 2008-2009 but for the accounting year 2009-2010 the inventories has decreased by 9.4%.
Page no 69
Total current assets:

(In crores) Table no4.2
Particulars 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Total
1505.76 1556.66 1712.90 2888.52 2611.92
inventories
Sundry
20.53 18.82 13.7 13.42 19.08
debtors
Cash and
33.81 36.80 39.86 43.14 51.40
bank balances
Other current
16.55 16.55 12.6 10 10.11
assets
Loans to
218.44 325.12 480.73 473.14 947.65
Others
Total 1795.09 1951.26 2259.79 3419.25 3640.16
Interpretation
There is a nominal increase of 6% in the year 2009-2010 in current asset with respect to a
increase of 51% in the year 2008-2009. This slow increase is due to decrease of level of
inventories by 9.5% in the year 2009-2010 with respect to year 2008-2009.Although a
nominal increase , but increase in current asset shows the liquidity soundness of company.
Current Liabilities
Current liabilities consist of estimated or accrued amounts, which are anticipated to cover
expenditure within a year, for known obligation.
Page70
Current Liabilities of B.S.P

(In Rs. Crores) Table No. 4.3
Particulars 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Sundry creditors 518.08 521.81 771.77 991.52 1362.75
Security deposits 42.13 35.07 37.28 61.07 63.52
Other liabilities 289.95 353.20 446.71 658.70 745.47
Provisions 29.36 132.58 620.29 919.01 1001.09

Total current
879.52 1042.66 1810.88 2433.17 2580.11
liabilities
Interpretati
on
Current liabilities shows company short term debts pay to outsiders. In the accounting year
2009-2010 the current liabilities increases by 6.8%..
Working capital management of BSP

The basic goal of working capital management is to ensure that a firm is able to continue its
operations and that it has sufficient ability 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.
Page71
WORKING CAPITAL
(In Rs. Crores) Table No: 4.4
Working
Total current Total current
Year capital
assets liabilities
(F-G=H)
2005-2006 1795.09 879.52 915.57
2006-2007 1951.26 1042.66 908.6
2007-2008 2259.79 1810.88 448.91
2008-2009 3424.25 2527.70 896.55
2009-2010 3640.16 2580.11 1060.05
Interpretation
Working capital is required to finance day to day operations of a firm. There should be an
optimum level of working capital. It should not be too less or not too excess. In the company
there is increase in working capita by 18% with respect to 2008-2009. The increase in working
capital arises because the company has expanded its business.
Methods of Analysis of Working Capital
Analysis of working capital is significant for both management and short-term creditors.
Managements can assess the efficiency of the working capital employed in the business.
Such an analysis helps management to detect trends and initiate corrective measures. It helps
the shareholders and creditors to determine the prospects of payment of dividend and interest.
The analysis of Working Capital helps in determining the ability of the company to repay its
current debt promptly, assess the effectiveness of management of working capital, adequacy of
working capital and to undertake credit ratings. Analysis of working capital relates to an
examination of circulation, liquidity, level and structural aspects of working capital. In
analysis of working capital the tools used are ratio analysis and funds flow analysis of the
company.
Page72
Ratio Analysis
To analyze the current financial position of a company, ratios computed on the basis of the
figure appearing in the balance sheet are compared with norms set for the ratios. Depending
upon the purpose, various ratios are used. The ratio discussed here relate to liquidity,
circulation level and structure of working capital.
Liquidity Ratios
Net working capital is sometime used as a measure of firm’s liquidity.
1. Net working capital to total assets: It is the ratio between net
working capital and the total assets of a company.
Liquidity Ratios of B.S.P
Net working capital ratio = Net working capital

Net assets
Table No.4.5
Year Total current assets Working capital Ratio
2005-2006 1795.09 915.56 0.51001:1
2006-2007 1951.26 908.60 0.46565:1
2007-2008 2259.79 448.91 0.19865:1
2008-2009 3424.25 896.55 0.26182:1

2009-2010 3640.16 1060.05 0.29120:1
Page73
Interpretation
Liquidity refers to the ability of a firm to meet its current obligations as and when these
become due. The short-term obligations are met by realizing amounts from current, floating or
circulating assets. The current assets should either be liquid or near about liquidity. These
should be convertible in cash for paying obligations of short-term nature. The sufficiency or
insufficiency of current assets should be assessed by comparing them with short-term
liabilities. If current assets can pay off the current liabilities then the liquidity position is
satisfactory. On the other hand, if the current liabilities cannot be met out of the current assets
then the liquidity position is bad.
To measure the liquidity of a firm, the following ratios can be calculated:
1. CURRENT RATIO
2. QUICK RATIO
3. ABSOLUTE LIQUID RATIO
1) Current ratio: It is the ratio between a firm’s current assets and its current
liabilities. It is the most frequently used ratio also called working capital ratio. It
is considered as an index of solvency of a company. It indicates the ability of a
company to meet its current obligations. Changes in current ratio can be
misleading. If a company raises money through commercial paper and invests the
amount in marketable securities, net working capital is unaffected but the current
ratio changes.
Page74
a) Current Ratio:
Current Ratio = Current Assets

Current Liabilities
Table no. :4.6
Year Current assets Current liabilities Ratio
2005-2006 1795.09 879.52 2.04099:1
2006-2007 1951.26 1042.66 1.87143:1
2007-2008 2259.79 1810.88 1.2478:1
2008-2009 3424.25 2527.70 1.3546:1
2009-2010 3640.16 2580.11 1.4108:1
Interpretation
As we know that the ideal current ratio for any firm that ideal current ratio is 2:1. If we see
the current ratio of the company for last three years it is less than the ideal ratio. This signifies
that the company does not have a sound liquidity position. .It’s current assets is less than that
of its current liabilities.
b) Quick (or acid-test) ratio:
A high ratio is an indication that the firm is liquid and has the ability to meet its current
liabilities in time and on the other hand a low quick ratio represents that the firms’ liquidity
position is not good. As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally
thought that if quick assets are equal to the current liabilities then the concern may be able to
meet its short-term obligations. However, a firm having high quick ratio may not have a
satisfactory liquidity position if it has slow paying debtors. On the other hand, a firm having a
low liquidity position if it has fast moving inventories.
The liquidity arises because finished goods cannot be sold for more than production cost.
Page75
The interval expressed in number of days measures the ability of the company to finance its
daily expenditure with the current assets in its position even if it receives no further cash.
Quick Ratio:
Quick Ratio = (Cash + Marketable Securities + Receivables) /
Current Liabilities
Table no.: 4.7

Year Cash +Marketable Current Liabilities Ratio
Securities+Receivables
2005-2006 289.33 879.52 0.32:1
2006-2007 394.60 1042.66 0.37:1
2007-2008 546.89 1810.88 0.30:1
2008-2009 536.11 2527.70 0.21:1
2009-2010 1028.24 2580.11 0.40:1
Interpretations
A quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities
in time. The ideal quick ratio is 1:1. Company’s quick ratio is less than ideal ratio. This shows
company may have liquidity problem. However, a firm having high quick ratio may not have a
satisfactory liquidity position if it has slow paying debtors
C) ABSOLUTE LIQUID RATIO
2. Although receivables, debtors and bills receivable are generally more liquid than
inventories, yet there may be doubts regarding their realization into cash immediately
or in time. So absolute liquid ratio should be calculated together with current ratio and
acid test ratio so as to exclude even receivables from the current assets and find out the
absolute liquid assets. Absolute Liquid Assets includes :
ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS
CURRENT LIABILITES
ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES.
Page76
Table no:4.8
Year Cash& bank Current liabilities Ratio
2007-2008 39.86 1810.88 0.022
2008-2009 43.14 2527.70 0.017
2009-2010 51.40 2580.11 0.019
Interpretation
These ratio shows that company carries a small amount of cash. But there is nothing to be worried
about the lack of cash because company has reserve, borrowing power & long term investment. In
India, firms have credit limits sanctioned from banks and can easily draw cash.
Circulation of Working Capital

An analysis of circulation aspect throws light on the efficiency with which working capital is
being utilized in a firm. Various turnover ratios covering each component of current assets
have been developed to analyze the efficiency in the use of working capital. The higher the
turnover of these components, the lower will be the need of working capital. These ratios may
be divided into 5 categories as
 Inventory turnover ratios
 Receivables turnover ratio
 Current assets turnover ratio
 Working capital turnover ratio
Page77
Inventory turnover ratios: Inventory turnover ratios show the extent of use of working funds in
different types of inventory. These ratios include
 Turnover of raw materials inventory: this ratio shows the number of times the raw
materials were replaced during a year. It is obtained by dividing raw materials issued
to the factory by raw materials in ending inventory. A low ratio indicates that
excessive raw materials have been procured and a high ratio indicates that more raw
materials are required.
 Turnover of goods-in-process: It is obtained by dividing the value of goods produced

in a year by the value of goods in process at the end of the fiscal year. A high ratio
shows less accumulation of inventory.
 Turnover of finished goods inventory: It is obtained by dividing net sales by finished

goods inventory. A high turnover indicates that a higher level of sales has been
attained with less investment in finished goods inventory.
 Turnover of aggregate inventory: It is obtained by dividing net sales in a year by the

value of aggregate inventory at the end of the year. A high turnover quickens the flow
of funds from inventory.
Turnover of current assets: This ratio measures the turnover of total current assets used in
business operations. The ratio is obtained by dividing cost of goods sold by total current
assets. A lower turnover indicates utilization of working capital. .
Current asset turnover ratio:
C.A.T.R = sale
Avg. Current asset
Page78
Table no.4.9
Opening Closing Average current Current asset

Year Sales
balance balance asset turnover ratio
2005-06 1297.22 1795.09 1546.16 9564.63 6.18times
2006-07 1795.09 1951.26 1873.18 11771.09 6.28times
2007-08 1951.26 2259.79 2105.52 14156.35 6.72 times
2008-09 2259.79 3424.25 2842.02 18496.70 6.5 times
2009-2010 3424.25 3640.16 3532.205 15874.30 4.49times
Interpretation Funds
are invested in various assets in business to make sales and earn profits. The efficiency with which
assets are managed directly affects the volume of sales. The better the management of assets, large is
the amount of sales and profits
Current assets movement ratios measure the efficiency with which a firm manages its resources. These
ratios are called turnover ratios because they indicate the speed with which assets are converted or
turned over into sales.
1) Inventory Turnover Ratio
Every firm has to maintain a certain amount of inventory of finished goods so as to meet the
requirements of the business. But the level of inventory should neither be too high nor too low.
Because it is harmful to hold more inventory as some amount of capital is blocked in it and some cost
is involved in it. It will therefore be advisable to dispose the inventory as soon as possible.
Page79
Inventory turnover ratio measures the speed with which the stock is converted into sales. Usually a
high inventory ratio indicates an efficient management of inventory because more frequently the stocks
are sold; the lesser amount of money is required to finance the inventory. Where as low inventory
turnover ratio indicates the inefficient management of inventory. A low inventory turnover implies
over investment in inventories, dull business, poor quality of goods, stock accumulations and slow
moving goods and low profits as compared to total investment.
Inventory turnover ratio = cost of good sold / average inventory
Inventory conversion period
I.C.P = 360
Inventory turnover
Table no.:4.10
Opening Closing Average Inventory Inventory holding

Year
balance balance inventory turnover ratio period
2005-06 1041.68 1505.76 1273.72 5.33 times 68 days
2006-07 1505.76 1556.66 1531.21 4.9 times 73 days
2007-08 1556.66 1712.90 1634.78 5.31times 62 days
2008-09 1712.90 2883.79 2298.345 6.298 times 58 days
2009-2010 2883.79 2611.92 2747.855 5.8 times 62 days
Page80
Interpretations:
A) Inventory turnover ratio:
This ratio shows how rapidly the inventory is turning into receivable through sales.
In 2008-09 the company has high inventory turnover ratio but in 2009-2010 it has
reduced to 5.8 times. This shows that the company’s inventory management
technique is less efficient as compare to last year.
B)Inventory conversion period
Inventory conversion period shows that how many days’ inventories take to convert from raw material
to finished goods. In the company inventory conversion period is fluctuating. This shows the
inefficiency of management to convert the inventory into cash.
2) Debtor’s Turnover Ratio
A concern may sell its goods on cash as well as on credit to increase its sales and a liberal
credit policy may result in tying up substantial funds of a firm in the form of trade debtors.
Trade debtors are expected to be converted into cash within a short period and are included in
current assets. So liquidity position of a concern also depends upon the quality of trade
debtors. Two types of ratio can be calculated to evaluate the quality of debtors.
a) Debtors Turnover Ratio b) Debtors Collection Period
DEBTORS TURNOVER RATIO = TOTAL SALES / AVERAGE DEBTORS
Debtor’s velocity indicates the number of times the debtors are turned over during a year.
Generally higher the value of debtor’s turnover ratio the more efficient is the management of
debtors/sales or more liquid are the debtors. Whereas a low debtors turnover ratio indicates
poor management of debtors/sales and less liquid debtors. This ratio should be compared with
ratios of other firms doing the same business and a trend may be found to make a better
interpretation of the ratio.
Page81
Debtors collection period = 360

Debtor Turnover
3) Creditor’s payment period:

Creditor payment period = Avg.trade credit
Credit purchase per
day
NOTE - In B.S.P we do not have debtors and creditor’ turnover as the finished goods
produced in all the plants of SAIL are directly transferred to CENTRAL
MARKETING ORGANIZATION (CMO) headquarters were further marketing of
these finished goods occurs , so B.S.P has nothing to do with creditors and debtors.
Page82
Table showing forecasting working capital for the next five financial years
using least square trend method
∑Y=na+b∑x ∑xy =
a ∑ x+ b∑x2
Year ending Net working Deviation from

31st march capital (y) middle year(x) X2 XY
2006 915.57 -2 4 1813.14
2007 908.60 -1 1 908.60
2008 448.91 0 0 0
2009 896.55 1 1 896.55
2010 1060.05 2 4 2120.1
2=
∑y= 4229.68 ∑x 10 ∑xy= 5738.39
(In crores) table no:4.11
We have n= 5
4229.68= 5a + bx 0 5738.39 = 0 + b x 10
a = 845.94 b = 573.84
Page83
Table showing forecasting working capital using least square method

Table no.4.12
Year end X Y=a+bx
2011 3 845.94 + 573.84*3 = 4259.34
2012 4 845.94 + 573.84*4= 5679.12
2013 5 845.94 + 573.84*5= 7098.9
2014 6 845.94 + 573.84*6= 8518.68
2015 7 845.94 + 573.84*7= 9938.46
Page84
A Comparative Study of SAIL, Contribution of B.S.P in

SAIL Profit Financial accounts
a) UNDERSTANDING PROFIT & LOSS ACCOUNT
PROFIT AFTER TAX (PAT) = Profit before tax – Tax.
Table no.4.13
Particulars SAIL (Rs. /Crs.) BSP (Rs. /Crs.)
10132.03
PBT 4270.48
3377.66
LESS : TAX
6754.37
PAT 4270.48
Interpretation
The company SAIL has achieved a profit of Rs6754.37crs (profit after tax) in SAIL profit the
Bhilai Steel Plant comprises for 63% of profit, contributing the most.
CASH PROFIT = Profit before tax (PBT) + Depreciation

Depreciation Is added because it s not actual cash outflow, it is an appropriation of fund
Future replacement of old assets with new assets
DEPRECIATION IS CHARGED AT THE RATE PRESCRIBED UNDER SCHEDULE XIV OF
THE COMPANY ACT, 1956.
Table no. 4.14
Profit Before tax

10132.03 4270.48
(PBT)
269.11
Add :Depreciation 1337.24
4539.59
Cash Profit 11469.27
Page85
Interpretation
Adding depreciation to the profit after tax the cash profit of SAIL is found to be Rs.
11469.27crs. The bhilai steel plant alone contributes a cash profit of Rs.4539.59crs. i,e
approximately 40%.of the total cash profit.
Operating profit
OPERATING PROFIT = PROFIT BEFORE TAX + INTEREST & FINANCE

CHARGES.
Table no :4.15
Profit Before tax

10132.03 4270.48
(PBT)
Add Int.& Fin. Charges
402.01 133.01
Operating Profit 10534.04 4403.49
Gross margin
GROSS MARGIN = PROFIT BEFORE TAX + INTERST + DEPRECIATION.
Profit Before tax

10132.03 4270.48
(PBT)
Add Int.& Fin. Charges
402.01 133.01
Depreciation
1337.24 269.11
4672.60
Gross Margin 11871.28
Table no.4.16
Page86
Profitability ratios
• Gross profit / Margin ratio = Gross margin / turnover *100
• Net Profit Ratio = Operating profit / Turnover * 100
• Operating Ratio = Operating profit / turnover * 100
Profitability ratios
Table no.4.17
Particulars SAIL (Rs./Crs.) B.S.P (Rs./Crs.)
Turn Over (Sales)
43934.70 15874.30
Gross Margin
11871.28 4672.60
Operating Profit
10534.04 4403.49
Profit Before tax
10132.03 4270.48
(PBT)
Gross Margin
27.02% 29.43%
Ratio
Operating Ratio
23.98% 27.74%
23.06%
Net Profit Ratio 26.90%
Interpretations
The net profit as seen in the calculations above is seen to be 23.06% of SAIL of which B.S.P
contributes of about 26.90%.
Turnover of BSP
Page87
Profit of B.S.P
Interpretations
6000
As seen in the graph the net profit has increased by 25% in the year 2007-08(base year 2006-
07), but later the profit has started to decline. In the year 2008-09 the profit declined by 7.4%.
Further in the year 2009-2010 the profit declined by 14%.
5000 4042
This decline in profit is due to decrease in turnover by 14%. Resulting in decrease of sales.
A good co-ordination between raw material conversion period and finished goods conversion
4000
period has to be maintained by the organization.
4. Debtors conversion period = Debtors × 360 2781

3000 Credit sales
2000
5. Creditors deferral period = Creditors × 360

Debit sales
Note: - BSP doesn’t go for the calculation of DCP & CDP as both the things are dealt in
corporate office, hence due to this reason working capital management is not done at BSP.
Page88
CHAPTERV
Finding, suggestion &

conclusion
5.1 SUGGESTIONS & FINDINGS

I came across following suggestions and findings during undergoing the project work
on topic “A STUDY ON WORKING CAPITAL MANAGEMENT OF THE BHILAI STEEL
PLANT, BHILAI, CHHATTISGARH
1. In BSP the coordination among the various sections of the Finance & Accounts
department is very nice, 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.
2. In the BSPs there not to create debtors they generally deal with first to receive the
cash or cheque, and then they supply the finished material.
3. In the BSPs there working capital management is very good, they use the MMIS &
SAP system to manage the over all activity.
4. During the study I find that their is no huge variation in budget decided and the
actual one.
5. Bills of store handling contracts and freights payments are not processed through
MMIS. As a result records of these payments are not available in the system, which
makes task tedious and hence ERP is to be implemented to resolve the problem.
6. Government is not having the commercial approach regarding the implementation
of taxes.
7. The taxation policy is to be made flexible because of which bulkiness of the work is
to be removed.
8. The tendering process time is to be minimized so that the current market price
benefits if any can be availed.
9. Monthly return filling is not on line process, hence sales and excise department face
problem.
10. Online inventory valuation can be implemented
11. The departmental policies is to made flexible which leads to decrease in the work
flow process as well as it leads in better profits.
Page89
5.2 Conclusion
Bhilai Steel Plant a major unit of sail has been generating continuous profits as compared to
previous year with current year. To summaries, working capital at a plant level, this mainly
involves forecasting and monitoring of various components, which is done systematically.
Whereby major portions of receivables are managed by central marketing organization for all
plants level. Other important components of working capital are bill payables and borrowings
of funds monitored by corporate level.
Finance Department of Bhilai Steel Plant and various individual units decides the amount of
funds requirement during the preparation of operation budget, and then requirement of fund is
intimated to corporate office. Cash inflows and outflows are estimated in budget.
The marketing of all SAIL’s prime products are done by the central marketing organization
and the receipts of sale are directly sent into the inner unit current account which is centrally
controlled by the corporate office allocates the funds as per intimation to individual units.
Cash is monitored every day and intimated to the top management as well as fortnightly to the
company.
Inventory is monitored differently for raw materials, work in progress, finished goods and
stores. Monthly inventory report is sent to chairman through the finance department to
corporate office, but the major portion of debtor are dealt by central marketing organization.
Bhilai Steel Plant (BSP) is an enormous unit and hence the evaluation of its working capital
management cannot be done thoroughly but in our brief stay we have at our best tried to
present a general idea of the working capital management at BSP.
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 is the indication of
the amount of money that a company has in comparison to what it owes and it is generally
considered adequate to have a current ratio of more than 2:1. Post observing the ratios for the
last five years it can be observed that the ratio in nearly all cases is more than one which
indicates that BSP always has money at hand.
Page90
It is also noticeable that the ratio for most of the years is very close to two and it ascertains
that BSP is in very good health and also that the working capital management of this
behemoth is exceptionally good.
The quick ratio is a measurement of the liquid assets that the unit in question has at hand.
Basically if one takes out inventories from the calculation of current ratios we get the quick
ratio. It is usually expected that the quick ratio be more than 1:1 but in case of BSP it has
remained at an even level of nearly 0.3. This is because the expected quick ratio is for
industries where inventories are not as important as they are in the steel industries. 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. Besides the company that is as big as BSP the liquid assets still amount to nearly 300
crores which is adequate for all transactions that may need to be carried out.
Bhilai Steel Plant (BSP) is one of the few public sector units that make a profit on the scale of
nearly 4,000 crores. The reasons behind these are excellent management of the finances. This
statement can easily be supported by the statistics of the years 2003-04 in which one can see
that BSP made a profit of nearly 4000 crores with a working capital of -93.14 crores.
Page91
BIBLIOGRAPHY
The above report has been prepared from the following sources of data and information:
1. Web Sites:
1.1. www.google.co.in (regarding Global Steel Industries),
1.2. www.indiansteelalliance.org,
1.3. www.sail.co.in.
2. Books:
2.1. Financial Management, I M Pandey,
2.2. Project Management and Control (2000), Narendra Singh.
3. Other Reference:
3.1. Functional & Finance accounts manual ,

3.2. Previous project reports done at the Finance & Accounts department ,
3.3. Previous finance year book,
3.4. SAIL journal,

3.5. BSP news magazine,
3.6. BSP Performance Highlights 2008-2009 magazine,
Page92
Annexure
LIST OF ABBREVIATIONS :
ACVO : Additional Chief Vigilance Officer
AP : Automatic Procurement
BG : Bank Guarantee
CA : Competent Authority
CE : Chief Executives
CEC : Commercial Evaluation Committee
CVC : Central Vigilance Commission
CVO : Chief Vigilance Officer
CMMG : Corporate Materials Management Group
CPA : Centralized Procurement Agency
DGS&D : Director General of Supplies & Disposal
DOP : Delegation of Power
DRO : Direct Reporting Officer
EMD : Earnest Money Deposit
FIFO : First In First Out
GARN : Goods Acceptance/Rejection Note
GCC : General Conditions of Contract
HOMM : Heads of Material Management
HOD : Head of the Department
IPSS : Inter Plant Steel Standards
ISO : International Organization for Standards
LCNS : Landed Cost Net of Set Off
LTE : Limited Tender Enquiry
MD : Managing Director
MM : Materials Management
NIT : Notice Inviting Tender
OEM : Original Equipment Manufacturer
OTE : Open Tender Enquiry
HOP : Head of Personnel
LD : Liquidated Damage
OA : Operating Authority
PAN : Permanent Account Number
P2K : Purchase/Contract Procedure 2000
PCP-06 : Purchase/Contract Procedure 2006
PS : Post Script
PGB : Performance Guarantee Bond
PO : Purchase Order
sPSU : Public Sector Units
RA : Reverse Auction
SSI : Small Scale Industries
STE : Single Tender Enquiry
TC : Tender Committee
TC/GC : Test Certificate/Guarantee Certificate
s
page93

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Sales ASTUDY ON WORKING

SUMMER PLACEMENT PROJECT

Central account department

In the partial fulfillment of the requirement for the degree of

GURUVAYURAPPAN INSTITUTE OF MANAGEMENT

(An exclusive institute offering MBA Programme,

“A STUDY ON WORKING CAPITAL MANAGEMENT OF

Is the bonafide record of work done by

And is submitted in partial fulfillment of the requirements

Director/ Principal Faculty Guide

I, VISHAL KESHRI, student of Guruvayurappan Institute of Management

Place: Coimbatore VISHAL KESHRI

Date: (Reg.No. 0935F0631)

I express my sincere gratitude to Mr. R.C.SRIVASTAV the deputy manager, Finance

Table showing Asia- pacific steel market volume 5

Table showing current turnover ratio 79

There’s a little bit of SAIL in everybody’s life….

‘SARDAR VALLABH BHAI PATEL’

1.1 Industry introduction

Some important points regarding Global Steel Industry are as follows:

Global Crude Steel Production (IISI) (Million Tonnes) Table No.1.1.1

Region Year2007 Year2008 %change

Top 10 steel producing countries

Rank Country 2009 2008 %2009/2008

1 China 567.8 500.3 13.5

2 Japan 87.5 118.7 -26.3

3 Russia 59.9 68.5 -12.5

4 US 58.1 91.4 -36.4

5 India 56.6 55.1 2.7

6 South Korea 48.6 53.6 -9.4

7 Germany 32.7 45.8 -28.7

8 Ukraine 29.8 37.3 -20.2

9 Brazil 26.5 33.7 -21.4

10 Turkey 25.3 26.8 -5.6

CAGR Analysis For Last Five Years: -

FIVE FORCES ANALYSIS

INDIAN STEEL INDUSTRY Page11

1. Indian economy growing @ 8 to 9% is of the fastest growing economies in the

1.2 Company profile

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

Installation of state-of-the-art environment-friendly and energy-efficient steel making

In February 2008, an INR112,620 million (approximately $2,797.5 million) expansion

CORE VALUES OF SAIL:

THE SEVEN C’s OF SAIL:

Item 2006-07(Actual) Capacity as per Expansions 2010

SAIL’s Growth Plan 2010

Graph No.- 1 Saleable Steel Production Capacity

Existing capacity Planned increase

Integrated Steel Plants

 Bhilai Steel Plant (BSP) in Chhattisgarh

Special Steel Plants

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

Ownership and Management

Rourkela Steel Plant:

SWOT Analysis of SAIL

 Heavily dependent on import of raw materials (coking coal).

 Strong Economy growth (second fastest growing economy after China).

DIRECTOR FINANCE MANAGING DIRECTOR, RSP

EXE. DIR (IA)

EXECUTIVE DIRECTOR SSP

EXECUTIVE DIRECTOR ASP

EXE. DIR (CMMG)

EXE. DIR. (CIG)