Sail Bokaro | Working Capital | Capital (Economics)

PROJECT REPORT ON WORKING CAPITAL MANAGEMENT AT

BOKARO STEEL PLANT
THE PROJECT SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES (MMS)

Done by:-

SHAMBHU KUMAR

Under the Guidance of:-

Mr. R.B SHARMA (Manager Finance &Account))
1

MAY-JUNE 2013

INSTITUTE CERTIFICATE

2

COMPANY CERTIFICATE

3

DECLARATION

I, undersigned, Mr. SHAMBHU KUMAR, hereby declare that the report on ‘WORKING CAPITAL MANAGEMENT OF STEEL AUTHORITY INDIA LIMITED’ is the authenticated and carried out by me during the period from 09-May, 2013 to 16-July, 2013. I also declare that this project report has not been submitted to any other University/Institute/Organization for the award of degree/diploma or any other personal/professional benefit other than to University of Mumbai and steel authority India limited. Signature Name of the Student Date : : SHAMBHU KUMAR :20/09/2013

4

SHARMA. without whom my project work would not have been successfully be completed. Among the seniors. Finally. Sinha senior manager. R. V. especially the Financial Analysis. I would first like to thank Mr. for guiding me throughout the project and also for his encouragement and support. asst manager (Finance). I would like to thank all the people who gave me their valuable time for the inputs. SAIL. Next. K.B. I would like to thank my project mentor Mr. I am truly obliged to the management of steel authority India limited for all the knowledge that I have gained and the skills that I have developed to meet careers in Finance. BSL for giving me this opportunity in the esteemed organization.ACKNOWLEDGEMENT I would like to take this opportunity to thank the authorities of Steel authority India Limited for providing me an excellent facility to carry out my Summer Internship project at Bokaro steel plant at Jharkhand. Shambhu Kumar 5 . A great deal of appreciation goes to the contribution of my Professors of Finance Department of Parle Tilak Vidyalaya Association’s Institute of Management for their guidance.

6 7.5 7. Analysis of Data. References & Websites 6 Topics Page No. Findings and Interpretations Working Capital Status Raw material consumption BSL expenditure BSL turnover trends Labour turnover Product turnover Power and Fuel Suggestion and conclusion Bibliography.7 8 9 Introduction Executive Summary Industry/Sector Overview Company Profile Literature Review Objectives and Need for the Study Research Methodology.3 7. No.Contents Sr. 1 2 3 4 5 6 7 7.2 7.1 7. 7 11 12 14 24 27 29 30 31 34 36 37 38 39 41 46 .4 7.

CHAPTER-1 INTRODUCTION 7 .

Per capita consumption of steel is treated as an indicator of socioeconomic development of any country. Working capital management is of paramount significance for all businesses. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has largely been shaped by the strength of their steel industries in the initial stages of their development. working capital is the difference between resources in cash or readily convertible into cash (Current Assets) and organisational commitments for which cash will soon be required (Current Liabilities) Current Assets are resources which are in cash or will soon be converted into cash in "the ordinary course of business". 1. It refers to the portion of the total fund which finance the day working expenses during the operating cycle.efficient working capital management is the most crucial factor for its survival. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. In general. That is. 8 . working capital management in the steel industry involves a large portion of the company’s total assets. “As a large manufacturing industry.CURRENT LIABILITIES The working capital is the life-blood and nerve centre of a business firm. It is rightly said.Steel is significant for the progress of any economy.1 IMPORTANCE OF STUDY The term working capital refers to the amount of capital which is readily available to a company. and it is considered as the backbone of economic development. whereas redundant working capital is a criminal waste. Working capital is the back bone of an organization. Current Liabilities are commitments which will soon require cash settlement in "the ordinary course of business" WORKING CAPITAL = CURRENT ASSETS . financial soundness and profitability of a company largely depend upon the working capital. Management of working capital is one of the most important functions of corporate management . “adequate working capital is advantageous. A business enterprise with proper working capital management is always in a position to avail advantages of any favourable opportunity either to buy raw materials or to implement a special order or to wait for enhanced market status.

However. it is crucial for a company to retain right level of working capital to avoid any problems.2 STATEMENT OF THE PROBLEM Working capital management is a vast area and consists of different problem. CASH FLOW MANAGEMENT Managing cash balances is the most important part of working capital management. 2. Halt activity 2. There are many influencing factors for this such as anticipated demand for the items and the cost-efficient use of the organisation's resources. Money is tied up in extra stock when it could be put to better use. So. it should be handled properly because it shows the efficiency and financial strength of company.No business can run effectively without a sufficient quantity and management of working capital. There are superfluous warehousing and storage costs which cause loss to the company. 4. Finance manager is required to decide the right amount of working capital needed by the company. On the other hand. The aim is to strike a balance between putting money to work so it returns a satisfactory yield from deposit accounts or short-term investments If an organisation runs out of cash resources it will have to stop operating immediately. Cause discomfort or distress to clients. which cause wastage of money in several ways:1. Some of these are discussed separately in the following sections: 1. Lose income 3. After a long time interval stock may deteriorate. Cash flow management is about achieving maximum effectiveness of cash receipts and payments. and the banks might have 9 .workers. Our aim is to find the right balance of how much stock is needed. The overall success of the company depends upon its working capital management. 1. too little stock can also lead to stock-outs which can: 1. 3. 2. There are potentially greater risks of theft. STOCK CONTROL: Sometime too much stock is held. There may not even be the money to pay the salaries at the end of the month. All this decisions regarding working capital management is decided and taken by the finance manager with the help of their co. is a complex task to find the correct level of stock for any one particular item. So.

You cannot afford to risk running out of cash. the costs rise sharply. the trustees or directors could stand charged with wrongful or fraudulent trading. 1. 4. If a large client demands an unreasonable amount of credit you may have to simply walk away from the contract. CREDITOR CONTROL Creditors are the suppliers and credit control is managing your relationship with organisations or people you owe money to. If you get the money in quickly you can use it for other purposes which will advance the organisation's objectives. even if it is only a small amount of interest foregone.started dishonouring cheques. 10 . 1. which could entail personal liability or even imprisonment.4 COLLECTION OF DATA As this is a financial project report most of the data are secondary and collected from the annual book of the Bokaro Steel Plant. During this period I worked with Finance and Accounts department of Bokaro Steel Plant and collected data from annual report of SAIL. Furthermore. If you have an overdraft. It forms part of working capital management. Whereas Primary data include the information collected from the officials through discussions. DEBTOR CONTROL “It is better to have cash in your bank account than in your customers” Commercial organisations normally give credit to their customers in order to encourage sales. Giving credit costs money. 3.3 PERIOD OF THE STUDY The period of the study for this project was 6-weeks as a vocational trainee in SAIL Bokaro Steel Plant started from 13th May 2013 to 22nd June 2013. Also I got the opportunity to visit Bokaro Steel Plant which was a great experience for me. So it is highly important to manage case flow management.

e. railway automotive and defence industries and for safe in export markets. and was later merged with SAIL first as a subsidiary and then as a unit through the public sector iron & steel companies act1978 11 . Working capital management of India`s steel industry holds a greater importance because steel forms the backbone of any infrastructural facility and in recent years has become more crucial for achieving rapid economic growth of the country. Steel Authority of India Limited (SAIL) is the leading steel making company in India. working capital becomes an important part of business. Working capital is the life blood of business because no business can undertake its day to day operations without an adequate amount of working capital. Every business concern irrespective of its size. Working capital management is the core to whole system. It is fully integrated iron and steel maker. nature needs funds to manage the business operations. The term contains the basics of working capital.EXECUTIVE SUMMARY Nowadays it’s very important for organizations to achieve corporate excellence. ratios used to define the working capital and the impact of shortcomings in the management. Bokaro Steel Plant – The fourth integrated plant in the public sector taking shape in 1965 in collaboration with the Soviet Union. payment of wages. It has got one of the prestigious honours i. It was originally incorporated as a limited company on 29thJanuary 1964. a “MAHARATNA COMPANY”. In this term paper attempt is made to examine the working capital practices in SAIL with special reference to bokaro steel plant. Effectiveness of an organization depends on the strength of its working capital management. Every business has to do day to day expenses like purchase of raw material. power. producing both basic and special steel for domestic construction engineering. procedures for analysis of working capital.

CHAPTER-3 SECTOR OVERVIEW 12 .

automotive and Defense industries and for sale in export market. It was converted into unitary company in 1978 and is now responsible for the management of five integrated steel plants at Bhilai. if the proposed expansion plans are implemented as per schedule. 13 . India was the 5th largest producer. Total crude steel production in India for 2011-12 was around 69 million tonnes and it’s expected that the crude steel production in capacity in the country will increase to nearly 110 million tonne by 2013-14. SAIL was established as a holding company at New Delhi on 24-1-1973 with authorized share capital of Rs. Durgapur. Further.The Indian steel industry accounted for around 5% of the world’s total production in 2010.3% in steel production as compared to 2009. It produces both basic and special steel for domestic consumption. In 2010.This holding company was formed with four public sector steel plants.SAIL has a well equipped Research and development for Iron and steel at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. USA and Russia had recorded a growth of 11. However. Burnpur and Rourkela. as per the recent figures release by World Steel Association in April 2011. It was ranked in top ten public sector companies in terms of turnover.India has emerged as the fourth largest steel producing nation in the world. The demand for steel in the country is currently growing at the rate of over 8% and it is expected that the demand would grow over by 10% in the next five years. Japan.4% during 2005-06 to 2009-10. railway. Bokaro. the steel intensity in the country remains well below the world levels. Overall domestic crude steel production grew at a compounded annual growth rate of 8. This indicates that there is a lot of potential for increasing the steel consumption in India. after China. Our per capita consumption of steel is around 110 pounds as compared to 330 Pounds for the global average. engineering power. SAIL`s consultancy division at New Delhi offers services and consultancy to clients world-wide.2000 crores. Steel Authority of India limited is one of the leading steel manufacturing companies in India. India may become the second largest crude steel producer in the world by 2015-16.

CHAPTER -4 COMPANY PROFILE 14 .

18% of shares are held by the public. it has immensely contributed to the development of technical and managerial expertise. engineering. SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. producing both basic and special steels for domestic construction. automotive and defence industries and for sale in export market. Since its inception. 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 (Indian Iron and Steel Company) Steel Plant (ISP) in West Bengal 15 . railway. power.348 crore and the company is among 5 Maharatnas of the country’s Central Public sector Enterprises with 85.82% of shares are held by the Government of India and remaining 14. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry.SAIL is world’s 14th largest and India’s largest Steel manufacturer with a turnover of 50. Besides. It is fully integrated iron and steel maker.

CHAPTER-5 LITERATUREREVIEW 16 .

it has not attracted much attention of scholars. mostly economists. return on total assets is used as a measure of profitability and the relation between working capital management and corporate profitability is investigated for a sample of 58small manufacturing firms. those have exercised profound influence on the understanding of working capital management good number of these studies which pioneered work in this area have been conducted abroad. The trend in working capital needs and profitability of firms are examined to identify the causes for any significant differences between the industries. Although working capital is an important ingredient in the smooth working of business entities. A strong significant relationship between working capital management and profitability has been found in previous empirical work. The key variables used in the analysis are inventories days. accounts receivables days. An analysis of the liquidity. The regression results show that high investment in inventories and receivables is associated with lower profitability. accounts payable days and cash conversion cycle. According to PADACHI ET AL (2008) a well designed and implemented working capital management is expected to contribute positively to the creation of a firm’s value . using panel data analysis for the period 1998 –2003.The purpose of this paper is to examine the trends in working capital management and its impaction firms’ performance. The dependent variable. Studies adopting a new approach towards working capital management are reviewed here. profitability and operational efficiency of the five industries shows significant changes and how best practices in the paper industry have contributed to performance. Whatever studies have conducted. The 17 . following which. to study the dynamics of inventory investment which often represented largest component of total working capital.The purpose of this chapter is to present a review of literature relating to the working capital management. Special studies have been undertaken. Indian scholars have also conducted research studies exploring various aspects of working capital.

fund flow analysis and working capital analysis technique. it was found that liquidity and receivable management of the selected private steel companies were not satisfactory. It was suggested that overall inventory management needed to be improved and composition of net current assets needed to be sustained.He used accounting techniques like ratio analysis and statistical techniques. There have been a phenomenon observed in the business that most of the companies increase the margin for the profits and losses because this act shrinks the size of working capital relative to sales. From his research it was found that the relationships among these variables are strongly negative. then it has to increase its 18 . it was found that the position of current ratios and turnover ratios was not up to the standard bench mark.Lloyds steel ltd. This denote that decrease in the profitability occur due to increase in cash conversion cycle. It poses direct impacts on the profitability liquidity. It is also found that if the number of days of account receivable and inventories are diminished then the profitability will increase numbers of days of accounts receivable and inventories. He focused on the variables that include profitability. conversion cycle and its related elements and the relationship that exists between them. According to KHATIK and JAIN (2009) analysed the working capital by three important techniques like Ratio analysis.findings also reveal an increasing trend in the short-term component of working capital financing. DONG (2010) analysed that the firms’ profitability and liquidity are affected by working capital management in his analysis. SASWATA CHATTERJEE (2010) focused on the importance of the fixed and current assets in the successful running of any organization.alyani steel Ltd and JSW steel ltd. BHUNIA and BRAHMA(2011)examined the effectiveness of working capital in terms of short term liquidity of the top private sector Indian steel companies like Tata steel Ltd. Pooled data are selected for carrying out the research for the era of 2006-2008 for assessing the companies listed in stock market of Vietnam. But if the companies want to increase or improve its liquidity.

growth rates and simple linear regression analysis. (TISCO) in private sector and Steel Authority of India Ltd. The study further showed that all the firms in the industry had made excessive use of bank borrowings to meet their working capital requirement vis-à-vis the norms suggested by Tandon Committee. (SAIL) and Indian Iron and Steel Company. Simple regression results revealed that working capital and sales were functionally related concepts. Sample included Tata Iron and Steel Company Ltd. By using the techniques of ratio analysis. the study revealed that private sector had certainly an edge over public sector in respect of working capital management. 19 . in public sector.working capital. In the response of this policy the organization has to lower down its sales and hence the profitability will be affected due to this action Verma(1989)evaluated working capital management in iron and steel industry by taking a sample of selected units in both private and public sectors over the period 1978-79 to 1985-86. a wholly owned subsidiary of SAIL.

CHAPTER-6 OBJECTIVES & NEED FOR THE STUDY 20 .

How finance department link to other department. To trained myself properly before working with an organization to properly deal with the problems in the company. Along with this one objective is to find out how the organisation will reduce their cost with the increase in the output.  Collection of data and its analysis is the main part of the study which will help in giving certain suggestion for the organization. The primary objective of this project is the study of the working capital management of the organisation. To know about the Industrial environment.The objectives for doing my summer training is to make myself capable for moving forward in corporate world to gain knowledge and experience and know how to work in the organization environment .      To gain the practical knowledge about the jobs. Knowing the various welfare programs & employees services taken up by the Management of the company and the sort comings of the programs. To manage working capital according to the priorities already setup. To know the routine work in the organization. SECONDARY OBJECTIVES:The secondary object of this study was to undergone with the various activities performed within the organization. To study the employee's behavior. Therefore I joined steel authority India limited to improve my capabilities. It will help me to gain more and more about corporate sector which was very essential for me to do. 21 . PRIMARY OBJECTIVES:The main purpose of my practical training at SAIL Ltd was      To gain the practical knowledge in the Accounts/Finance field.

 To know how the theoretical knowledge apply in practical approach.7 RESEARCH METHDOLOGY ANALYSIS & INTERPRETATION OF WORKING CAPITAL MANAGEMENT 22 . CHAPTER.

so the knowledge process began with the fundamentals of Finance & Accounts.As the study mainly concerned to Finance & Account division. news-paper. The heads of various key section of the F&A departments shared their views on the concerned areas followed to the production process. Secondary Data The data was collected from books. internet etc. 23 . The study is focused to WORKING CAPITAL MANAGEMENT of a Public Sector Unit in SAILBSL. Primary Data The data was collected through discussions with Managers and Executives and Records of previous years. marketing strategies. the public relations (personnel management) etc. The data was collected from the following sources.

30 648.81 crore which was provided by my guide.72 485. Gratuity & Accumulated Leave) TOTAL Working Capital ( A .61 247.78 2461.53 51.27 121.96 606.51 1464.57 12.1SAIL/BOKARO STEEL PLANT WORKING CAPITAL STATUS Particulars (A) CURRENT ASSETS Cash & Bank Balances Raw Materials Stores & Spare Parts Finished/Semi-finished products Sundry Debtors Loans & Advances Other Current Assets 2009-10 2010-11 ` In Crores 2011-12 51.55 1893.94 477.66 784.01 261.19 201. 24 .91 7.22 460.7.02 11.53 536.12 2374.28 5.76 793.86 692.61 55.15 1220.39 Note: Working capital for the year 2008-09 was 303.64 462.83 318.58 4355.67 24.01 TOTAL (B) CURRENT LIABILITIES & PROVISIONS Sundry Creditors Security & Other Deposits Advances received Other liabilities Provisions (Excluding Prov for VRS.26 3222.90 6.29 345.94 591.68 1869.64 1352.90 429.23 346.52 377.26 969.14 176.93 30.07 637.45 181.78 619.B ) Increase/Decrease in Working Capital Over Previous Year 2134.55 159.25 1485.

increase/decrease on working capital over previous year for the year 2009-10 was calculated. coke and few other things.96-303. i. Here is the share of raw material that is being used by the last 5 years by the organization. Share of major raw materials for the previous 5 financial years.2 Data for Raw Material After calculation of the working capital it is necessary to find out the total raw materials that are used by the organisation..81=345. 25 . Iron ore is the main essential component required in making of steel.In consideration of this data.15 Interpretation: After studying the working capital data I can interpret that from last 4 years there is a rise in the working capital of the organization it indicate that they have two much inventory or they are not investing their excess cash.e. coal. There are many other components which are required in this process like lime stone. 7. 648.

 All the above raw material shares are given in % by which exact consumption of these raw materials is not determined. imported coal. tin. dolomite occupies healthy share. So in order to get the exact value here is the table showing the exact consumption by the organization for the last 3 years. Similarly other raw materials like indigenous coal. aluminium. Ferro silicon. limestone. nickel. 26 . other ferrous metals. Some other raw materials are also required which cover only 1% which is very low but asthese are also essential for manufacturing the steel so they cannot be ignored. zinc.Interpretation: We can see that more than half of the total raw materials were occupied by iron ore. These small quantity materials consist of scrap. copper. Ferro manganese. silico manganese. coke.

02 1.50 16.33 6.86 0.15 3143.51 201.26 17.85 8.30 1.94 3139.99 34.32 13.06 69.00 0.13 817. 2010-11 Value 587.00 2009-10 Value 532.58 112.27 6.09 292.10 7.58 192.00 0. This can also help in analyzing that organization is growing and their targets are increasing every year.01 873.61 808.86 2.79 42. 6299.10 0.52 12.36 4810.00 96.98 127.67 3.55 0.00 0.22 22.22 65.31 184.07 63.21 796. 5798.25 894.75 887.88 79.50 81.44 1147.20 545.83 0.27 0.33 450.06 14.17 130.87 Qty.77 14. It is expected that it will go on increasing in the next year.63 160.24 10.66 36.94 112.00 15.33 495.00 104.92 4122.10 95.78 7232.63 104.24 3.11 13.34 5900.51 2.72 0.25 33.81 388.60 3580.71 103.20 0. So it is advisable that the organization should plan in advance the 27 .15 13.39 0.00 Interpretation: after going through the data it is easy to interpret that the consumption of raw material by the organization is increasing year after year.63 44.75 0.22 310.91 Value Qty.47 70.SAIL/BOKARO STEEL PLANT RAW MATERIALS CONSUMPTION FOR LAST 3 YEARS Qty in'000 Ton Tonnes Value ` In Crores ITEMS Iron Ore Coal Coke Limestone Dolomite Nickel Ferro Manganese Ferro Silicon Silico Manganese Other Ferrous Metals Intermediary Products Zinc Tin Copper Aluminium Others TOTAL 2011-12 Qty.94 71.15 793.55 3516.08 15.41 0.85 0.73 12.86 3834.00 6.40 6.14 105.22 5989.55 0.68 2.

In crore 7232.means from where they will procure their extra raw material in order to save themselves from any shortage.44 1125.50 149. The below table shows the area of expenditure by the organization in the year 2011-2012: SHARE OF EXPENDITURE IN 2011-12(%) AREAS Raw Materials Employees' Remuneration & Benefits Stores & Spares Power & Fuel Repairs & Maintenances Other Expenses Depreciation Interest Total expenditure Rs.13 693.81 1528.95 298.88 115.98 % 61 13 6 10 1 6 3 1 100 28 .32 679. 7.95 11823.3 BOKARO STEEL PLANT EXPENDITURE Apart from raw material organisation spent in many areas in order to achieve their targets in better way and to satisfy their customers.

29 . Their expenditure chart is well planned and organised which is a sign of healthy organization. After that they give emphasis on their manpower and spend around 13% on their remunerations and benefits.Interpretation: Organization spent around 60% of their budget for procurement of the raw material which shows their dedication towards increasing their targets and rules the market in the steel sector.

7.4 TURNOVER TRENDS: The turnover trends for the last 5 years are given below: 30 .

Interpretation:After studying the turnover for the 5 years I can interpret that after 2007-08 the turnover was started declining.03 cr 31 . From 2008 to 2010 it was in the declining phase but in the year 2010-11 it started rising and in the year 2011-12 tremendous growth has been observed and the turnover reached up to 12865.

7. Even though there were ups and downs in the total output but the total labourers were declining which shows a good sign for the organisation.5 LABOUR TURNOVER: Bokaro steel plant isa big organization and its labour turnover is also huge. Interpretation: After analysis of the data I can interpret that there was a continuous decrease in the total labourers utilized over a period of five years. Total number of labour for 6 years from 2007 to 2013 is given below:- Total number of labourers over a period Note: Figures in numbers. 32 .

13 78.48 192.33 33 3 2091 467 163 505 53 21 101 18 6.04 1509.10 .84 1783. But.52 1527.But in the last financial year 2012-13 the total labourers was increased this was mainly because the budgeted total output is much higher than previous years so.47 65.81 507.02 7011. in order to get the required output there was increase in 6000 labourers in the financial year 2012-13.55 391.94 2076 404 111 356 42 24 58 10 8002.23 49.77 57.67 3155 11409.67 534.66 209.63 214.07 267.87 1680.86 59.77 383.19 451. SALEABLE STEEL: MS Slab HR Coil HR Plate HR Sheet CR Coil CR Sheet Cobble Plate G P Coil/Sheet G C Sheet Others Sub Total : (1) 3422 11178.33 1 2000 412 138 433 51 22 86 11 2. 7. the organisation has to increase in the labour productivity so that cost/tonne will be minimized.12 79.6PRODUCT TURNOVER: Bokaro steel plant manufactures different productswhich aregiven below: SAIL/BOKARO STEEL PLANT PRODUCT WISE TURNOVER FOR LAST 3 YEARS Qty in'000 MT Value ` In Crores Particulars 2009-10 Quantity Value 2010-11 Quantity Value 2011-12 Quantity Value 1.80 1596.06 3080 12165.78 1484.26 6604.

7 POWER AND FUEL: Power & Fuel/tonne with respect to total no.35 3432 11296. 7. 12474. OTHERS Total 10 22.96 3203 11672. of tonnes produced 34 .70 3140 12474.94 48 107.67 60 153.69 95.96cr.93 cr.49 156.e. and in the year 2011-12 it was 3140 which was less in comparison to the previous year but the cost for the product was more i. MS INGOT 4.93 Interpretation: The data clearly defines that the product turnover in 2009-10 it was 3432 tonnes which accounted for 11296. PIG IRON 3.67 156.2.

but it involves huge cost. Organisation has to concentrate more on producing its own power rather than buying it. By correcting their mistakes organization reduce their power & fuel per tonne in the year 2012.Fig: 17 Power & Fuel/tonne with respect to total no. of tonnes produced Interpretation: There is an increase in cost of power and fuel over a period of years irrespective of total number of tonnes produced. It’s time to utilize these resources efficiently in order to survive in the competitive market. There can be further decrease if the organisation installed power efficient sophisticated plant and machinery instead of existing ones. 35 .13 decreases which is a good sign for the organisation. Major portion of power is supplied by its own resource. This might be happened due to the negligence of labour and supervisors.

CHAPTER-8 SUGGESTIONS & CONCLUSIONS 36 .

As the imported coal is the valuable raw material which cost much more for the company. After going through the records it was found that organisation make purchases only from the register vendors in this case more number of vendors has to be register globally. If the company will invest in the research and development they can find the substitutable material in place of imported coal which will help to reduce their costs. Organisation should reframe the policy regarding the wastage of raw material.SUGGESTION After studying the data I can conclude that industrial scenario is changing day by day. Many steel companies are in the market with competitive power. Hence company need certain policies that suits best for competition with its competitor in domestic as well as in the global market. So organisation has to frame a special purchasing policy for purchasing that material. Organisation has to invest a reasonable amount in research and development. This will increase the competition among the vendors and organisation will get the materials at the best price. 2. There is tough competition in the market of STEEL product and therefore. it is felt that a company must reorient its policies time to time for betterment and profit. It should not increase more than 0. Wastage is one of the main reasons for reducing the productivity of raw materials and profits. As per my study there are certain suggestions: 1. So in order to reduce wastage the error rate should be checked. 37 . 3.5% of the total output.

So it would be good if the company make tie ups and contracts with some of the power plants in order to fulfil the demand. the power consumption by the organisation has increased. Organisation has a separate power producing plant but now it is not enough to supply according to the current organisation demands. Organisation has to upgrade all its plant and machinery properly in order to utilise it to its maximum capacity. 6. CONCLUSION 38 . With the rise of the targets. there is huge volume of non-moving and obsolete stores and spare items which are there in the organisations which is yet to be disposed of. By doing this they can estimate the life of the machinery so that they can replace it timely. 5. This is highly needed for doing the exact calculations. In order to avoid this they should pay according to job which will help in reducing the expense and increasing the productivity. These are some of the issues and the suggestions which I found here in Bokaro Steel Plant with the help of my guide and many other employees of the organisations. so they are paying for idle time also which is a loss to the organisation. They can also ask help from the Government of Jharkhand as Bokaro Steel Plant is one of the important organisations of Jharkhand. Organisation has adopted the time basis pay system for paying the wage and incentives. This is also necessary in order to compete with the other leaders. 7. They should check the efficiency of the machinery daily. After doing the study and from the explanation of the management and my guide I can say that.4.

organisations should make certain policies in advance in order to control this. of labour. I conclude that all the information’s provide in this chapter provide technological inputs to the company`s plant with thrust on their benefits in the field of cost reduction. quality improvement and development of new product. Organization is having a huge financial data and it is very difficult to study all of them. 39 . So prime cost along with direct materials and direct labour are also expected to increase drastically. This up gradation will help them in many important areas. Also as the training period was only for 6 weeks it was very difficult to collect all the data and study them. So it is highly necessary that controlling or reducing prime cost is most important in order to reduce the cost. Overall I can say that the main limitation was with searching and analysis of data. At last I can say that Working capital management is highly important to manage and organize thing in the organisation. value addition. Mantainence and handling cost will also reduce which reduce no. As the company wants to maintain certain confidentiality the interns were not allow to look into the main files of STEEL AUTHORITY OF INDIAN LTD due to which I did not get all the data for the financial year 2012-13.In this organisation the cost incurred is very high. LIMITATIONS Bokaro steel plant is very big unit of SAIL and a powerful organization of the Jharkhand. In future they are going to replace major plant and machinery of existing ones with those which consumes less raw materials and power. So. The budgeted production in the financial year 2012-13 is 3720000 tonnes. Organisation is working in the field of expansions and the up gradations. As because the organisation is trying to reduce the total number of labour employed so as to reduce the overall labour cost. 72% of the total cost comes under prime cost.

There are not proper arrangements for the trainees. Time was limited. So cent percent accuracy cannot be claimed. The ratios have been interpreted by comparing the standard with the actual wherever these are available in literature. Some of the limitations which I have faced in this respect are as follows:       Working capital study is only based upon monetary information and nonmonetary factors are ignored. 40 . Different people may interpret the same analysis in different ways. But the analysis is based on the information available in the financial statements.Working capital and Analysis of Financial Statements is powerful tool of determining company’s strength and weakness. Data may not be accuratewhich means the results and their analysis also might be inaccurate. It does not consider change in price level Analysis is only a mean and not an end in itself.

com/ 41 .in http://www.GUPTA FINANCIAL MANAGEMENT NEW DELHI WEBSITES:   www. S.google.P.moneycontrol.Appendices BIBLIOGRAPHY BOOKS: AUTHOR  AUTHOR  TITLE  PLACE OF PUBLICATION I M PANDEY Dr.sail.com www.co.

Sign up to vote on this title
UsefulNot useful