COMPANY NAME: SUBJECT: MBA 512

Rantanpur Steel Re-Rolling SECTION: O4

Mills Limited

Topic: Capacity Planning

Members Name ID
Nayna Sharmin 1810531
Muhammad Shariful Islam Shaon 1810530
Al Afarat Hossain 1711218
Md. Rafat-Al-Fashis 1821262
Md. Aminur Rashid 1810566

INDEPENDENT UNIVERSITY, BANGLADESH

Contents
Abstract .................................................................................................................................................. iii
Introduction ............................................................................................................................................ 1
Mission ................................................................................................................................................ 2
Vision................................................................................................................................................... 2
Objectives ........................................................................................................................................... 2
RSRM Values ....................................................................................................................................... 3
Industry Analysis ..................................................................................................................................... 4
Challenges faced by the steel industry ................................................................................................... 4
Construction details that RSRM Provided Rods ...................................................................................... 5
RSRM credit rating .................................................................................................................................. 5
Methodology........................................................................................................................................... 6
Limitation ................................................................................................................................................ 6
Competitor Analysis ................................................................................................................................ 7
Capacity planning .................................................................................................................................... 8
Production capacity of RSRM .................................................................................................................. 9
Capacity Utilization ........................................................................................................................... 10
Planning Horizon ................................................................................................................................... 11
Long term capacity ............................................................................................................................ 11
Location......................................................................................................................................... 11
Production Process ....................................................................................................................... 11
Work System Design ..................................................................................................................... 14
Intermediate capacity ....................................................................................................................... 15
Finished goods .............................................................................................................................. 15
Inventory ....................................................................................................................................... 15
Short-Term Planning ............................................................................................................................. 16
Production lot Size ............................................................................................................................ 16
Importance of Capacity planning for RSRM .......................................................................................... 17
Monitor Costs.................................................................................................................................... 17
New Locations ................................................................................................................................... 17
Production Cycles.............................................................................................................................. 17
Growth .............................................................................................................................................. 17
Factors Affecting Capacity planning of RSRM ....................................................................................... 18
Controllable Factors .......................................................................................................................... 18
Amounts of labor employed ......................................................................................................... 18

i
 Facilities installed .......................................................................................................................... 18
Sift worked per day ....................................................................................................................... 18
Uncontrollable Factors...................................................................................................................... 18
Absenteeism ................................................................................................................................. 18
Machine break-down .................................................................................................................... 18
Findings ................................................................................................................................................. 19
Recommendation.................................................................................................................................. 20
Reference .............................................................................................................................................. 21

ii
Abstract
This report has been written in the fulfillment of Operation Management Course. In this course,
an important part is being covered which is based on Capacity planning. So for further research
on this topic, we have picked Rantanpur Steel Re-Rolling Mills Limited (RSRM) to evaluate
and discuss about their Capacity planning. In this report, some of its parts covered like- Industry
Analysis, Challenges faced by the steel industry, Capacity planning, Competitor Analysis,
Capacity Utilization etc. This report mostly emphasized on capacity planning that are related
in Steel Re-Rolling Mills Industry. And we have tried accumulate relevant planning like
Planning Horizon, Importance of Capacity planning, Factors Affecting Capacity planning of
Rantanpur Steel Re-Rolling Mills Limited (RSRM). Lastly, doing this report we got some
problems and through that we tried to provide recommendations through analysis which might
be work for Rantanpur Steel Re-Rolling Mills Limited (RSRM).

iii
Introduction
Maksudur Rahman who is the Managing Director of the company is the founder of Ratanpur
Group. Ratanpur Steel Re-Rolling Mills Limited is one of the concerns of Ratanpur group.
Mrs. Shamsunahar Rahman, wife of Mr. Maksudur Rahman, is the Chairperson of Board of
Directors of the company.

Ratanpur Steel Re-Rooling Mills Ltd. (RSRM) was established in January 1984 to meet the
growing demand for high quality M.S. deformed bars in the country. The mill is situated in the
heart of the progressive Baizid Bostami Industrial Area, Chittagong.

In 2003 RSRM started to manufacture quality billets from recycled scrap under their go green
initiative, creating new steel from recycled steel reduces CO2. In 2006 throughout the world
recycled steel made up more than 496 million metric tons, this saved an estimated 894 million
metric tons of CO2. Ratanpur Steel Re-Rolling Mills Limited was incorporated as a private
limited company on 22nd April, 1986 under the Companies Act 1913 and subsequently
converted into a public limited company along with the subdivision of face value of shares
from TK. 100 to TK. 10 each.

The company is listed with the Dhaka Stock Exchange (DSE) and Chittagong Stock
Exchange(CSE) as a publicly quoted company. Trading of the shares of the company started
in two stock exchange from 22 September 2014.

RSRM is widely recognized as one of the leading steel manufactures in the country and has
embarked upon a series of initiatives aimed at increasing its production capacity to1000 tons
per day and yearly capacity of 300,000 tons of world class products. To keep up with the
demand of the current world market RSRM introduced facilities which include induction
melting furnaces a ladle refining furnace, a continuous casting plant and rolling mills with the
latest automated features. Other necessary ancillaries like main power sub-station, water
complex for primary, secondary and emergency water supply, natural gas supply station,
machine shop with CNC machine, pollution control system, well equipped quality control unit,
cranes of different capacities including crawler cranes for material handling etc. RSRM rebars
are supplied in sizes 8, 10, 12, 16, 20, 22, 25, 32 and 40 mm diameters and also in a fixed length
of 12 meters. RSRM provides bars of different size, length and grade as required by client.

1
Mission
 To understand responsibility in contributing to a better tomorrow and a strong
tomorrow.
 Continue to be the first name in the region’s steel industry by harnessing their assets
and resources.
 To achieve portable growth, operational and organizational excellence and good
corporate citizenship.

Vision
To be the trend setter and the power force of the steel re-rolling industry with education,
training and skills development.

Objectives
 To conduct business operation based on market mechanism within the legal & social
framework
 Customer satisfaction, technology development and cost reduction.

2
RSRM Values
Quality

RSRM wants to provide products and services to their customers by constantly improving their
processes as well as reducing wastage and minimizing costs. They also want to invest in
systems and technology through constant technological upgrades and developing their
resources for creating skilled workforce.

Trust

RSRM wants to preserve the faith and goodwill of all their stakeholders – customers,
shareholders, suppliers, employees, regulatory bodies and society by adopting ethical and
transparent business practices, they also want to be fair and honest in all their dealing and good
governance and risk management processes.

Leadership

To be a role model, setting landmark through our products, processes and people. They want
to move ahead in competition by differentiating their products and processes and by increasing
market share.

Customer Satisfaction

RSRM wants to serve all customers at every stage of dealings by truly understanding their
needs, offering best products and services.

Economic Analysis

Developing high-strength products aiming to reduce the customer’s material consumption

and ensuring competitive prices through superior strength, easy workability at site and
reduces costs for the consumer.

3
Industry Analysis
The steel sector in Bangladesh has recorded a 15 per cent growth in 2015 riding on
infrastructure projects both housing and public utilities. Bangladesh had about 1 million tonne
(mnt) of steel capacity in 2014 which grew exponentially to 3 mnt in 2016 and expected to
grow to 4.5-5 mnt by 2018 owing to government’s various initiatives to push steel production
in the country. Domestic steel production, which was almost stagnant at 25-30 lakh tonnes a
year between 2008 and 2014, rose in later years. With about 70 lakh tonnes of capacity, the
mills produced 50-55 lakh tonnes of steel in 2017, up from 40-45 lakh tonnes a year ago. The
growth is expected to increase because of government steel consumption in big projects like
padma Multipurpose Bridge and Metro Rail and Many flyovers, Tunnel (under the karnafuli
river) and concrete casting of roads and highways, Dhaka water supply network, Khulna
800MW LNG based power plant, Sub regional transport facility, flood and river bank erosion
risk management and many others projects.

Challenges faced by the steel industry

 Steelmakers passed a challenging year for a number of factors including rising import
costs, port congestion and restriction on transport of goods by 20-tonne vehicles on the
highways, industry insiders said.
 Operators feared that the imposition of 15 percent VAT will lead to an increase in the
prices of rod and steel products and subsequently reduce the demand for steel products.
 Energy is a significant input and considered as lifeline for the steel industry there is a
huge shortage of Electricity in Bangladesh.
 Technologies used by a company may provide competitive advantage over the
competitors. Failure to compete with the other market players in terms of technology
would result in adverse effect on the company’s productivity as well as profitability.
 The main raw material is billet for manufacturing MS products while Scrap is the basic
raw materials for billets. There is shortage of billets and scrap in the local market and
large quantity of raw materials is being imported every year to meet the industrial
demand. High cost of imported billets and unavailability due to protection by exporting
countries may cause increase in billet price.

4
Construction details that RSRM Provided Rods
Chowdhury Builders Bangladesh Fire Service Fire Service Station,
Bandrbon.

Trade Mode International Chittagong University Chittagong University

Minority Ladies Hall
Zia & Brothers BRB BRB Kustia Medical Colleege

KDDL Khranaphully Dry Doc Ltd.

NDE (National Development Bangladesh China Power Payra 1320 MW Thermal

Engineering) Company Limited (BCPCL) Power Plant
TAEYOUNG E&C (Korea) CWASA Potenga Booster Pump

Western Industrial BPDB Sikalbaha 150 MW Power

Engineering Services Ltd. Plant.

RSRM credit rating

Long Term Short Term

A ST-2

Long term rating A shows a strong safe and strong credit quality. This Level of rating indicates
that RSRM has a sound credit profile.

"ST-2" indicates high certainly of timely payment. Liquidity factors are strong and supported
by good fundamental protection factors. Risk factors are very small.

5
Methodology

In order to prepare this report, we have collected data and information from annual report and
talk with the RSRM employee (questioners) and find out the answers of our required questions
from the production supervisor. To prepare this report we have tired our best to relate the topics
that have being covered in the chapters in operation management course. We have try to put
together the information we have gathered and tried to present their company’s capacity
planning for their production in this report.

Limitation

The information for the production process is highly confidential for any company so they were
not willing to talk with us. The information we have collected from them was not the exact
value rather than they provided us an estimated number. Their company policies does not
allowing them to share many information of production with outsider our team has got very
little time to ask some of the questions. Visiting the production factory was not possible because
it is situated in Chittagong.

6
Competitor Analysis

RSRM has been recognized as the Best Brand of Bangladesh in 2013 by Bangladesh Brand
Forum. In Bangladesh there are number of steel companies that has been established and they
are operating very well. The name of some competitors in the industry for RSRM are:
Bangladesh Steels Re-Rolling Mills Ltd (BSRM), Kabir Steel Re-Rolling Mills Ltd. (KSRM),
Rahim Steel Mills Co. (Pvt) Ltd. (RSM), Bandar Steel Industries Ltd. (BSI), GPH Ispat Ltd.
(GPH), High-tech Steel & Re-Rolling Mills Ltd. Etc.

800,000
692,504
700,000

600,000
METRIC TONNES

500,000

400,000

300,000

200,000
139,380 120,405
100,000

0
Sales BSRM Sales RSRM Sales GPH Ispat
Ltd. (GPH)
2017

7
Capacity planning
Capacity planning is the process of determining the production capacity needed by an
organization to meet changing demands for its products. Capacity planning is long-term
decision that establishes a firm's overall level of resources. Capacity decisions affect the
production lead time, customer responsiveness, operating cost and company ability to compete.
Inadequate capacity planning can lead to the loss of the customer and business. Excess capacity
can drain the company's resources and prevent investments into more lucrative ventures.

Capacity is calculated: (number of machines or workers) × (number of shifts) × (utilization) ×

(efficiency).

Capacity often refers to an upper limit on the rate of output, there are subtle difficulties in
actually measuring capacity in certain cases. These difficulties arise because of different
interpretations of the term capacity and problems with identifying suitable measures for a
specific situation.

It can be refined into two useful definitions of capacity:

Design capacity is the maximum amount of work that an organization is capable of completing
in a given period.

Utilization = Actual Output/ Design Capacity x 100%

Effective capacity is the maximum amount of work that an organization is capable of

completing in a given period due to constraints such as quality problems, delays, material
handling, etc

Efficiency = Actual Output/ Effective Capacity x 100%

8
Production capacity of RSRM

Particulars 2017 2016 2015

Production Capacity (MT) 187,200 187,200 187,200

Production (MT) 136,664 106,831 103,402

Capacity Utilization (%) 73.00% 57.07% 55.23%

Sale Qty (MT) 139,380 105,150 101,142

As seen in the table above from 2015-2017 the total capacity of production for RSRM is
187,200 MT. Whereas if we compare the actual production for the consecutive years was
103,402; 106,831; 136,664 which shows that they have enough capacity to satisfy the future
demand for the steel in the society.

160,000
136,664 139,380 105,150
140,000 101,142
METRIC TONNES

120,000 106,831 103,402

100,000
80,000
60,000
40,000
20,000
0
2017 2016 2015
Production (MT) Sale Qty (MT) Linear (Sale Qty (MT))

From the graph above it is seen that the production of RSRM rod has increased from 2015 to
2017 as well as the sales quantity increased which shows demand and usage of rod has
increased in the consecutive years. And in 2017 it is seen that the estimated forecast for
production was not enough which was 136,664 MT as the actual sale was more which is
139,380 MT which indicates the demand for rod was more.

9
Capacity Utilization

Particulars 2017 2016 2015

Production Capacity (MT) 187,200 187,200 187,200

Production (MT) 136,664 106,831 103,402

Capacity Utilization (%) 73.00% 57.07% 55.23%

Capacity Utilization (%) = Actual Output/ Design Capacity x 100%

2017
136,664
X100% =73 %
187,200
2016
106,831
X100% = 57.07%
187,200

2015
103,402
X100% = 55.23 %
187,200

10
Planning Horizon
Long term capacity
RSRM has a production capacity of 187,200 MT yearly but they have a plan to produce
300,000 MT in future.

Location
Head Office
Nahar Mansion,116 C.D.A Avenue, Muradpur, Chittagong.
Factory Address
175-176 Baizid Bostami I/A, Baizid Bostami Road, Chittagong
Dhaka office
Rupayan Golden Age (7th floor), 99 Gulshan Avenue, Gulshan-2, Dhaka-1212.

Production Process

11
Scrap Yield
Incoming scrap is analyzed for chemical composition during unloading of truck. The unloaded
scrap is then segregated for unwanted material like Cast Iron, non-metallic, non-ferrous, etc.

Induction Furnace
The selected scrap is then weighed and then transferred to Induction Furnace for melting.
Selected scrap and Sponge Iron (In-house production) is melted in Induction Furnace. Slag is
removed at regular intervals and a sample is taken 2-3 times during melting for Spectrometer
Analysis. Once RSRM achieve the required Carbon level then de-oxidation is carried out. The
liquid metal is then tapped into Ladle with purging arrangement.

Ladle refining furnace

Secondary refining is done in LRF. Following is carried out in LRF:

 Raising or maintaining of Temperature

 Sulphur Removal
 Micro alloying of elements
 Homogenization of temperature
 Homogenization of chemical composition
 Inclusion removal
 Holding for sequence casting

Continuous Casting Machine

Liquid metal brought to CCM for casting into required size of Billets. The CCM is fully PLC
controlled for controlling all Casting parameters. The sizes available in Electro herm are:

 100 x 100 mm2

 110 x 110 mm2
 130 x 130 mm2
 160 x 160 mm2
 200 x 200 mm
Billet Yard
After inspection and surface grinding, wherever required the billets are sent to either market
or to Rolling mills in the required lengths.

12
Product design/ production process
Billet Received From Steel
Melt Shop

Cut To Length as Per the Size

of TMT to Be Rolled

Billet Reheating Furnace

Heated To Rolling
Temperature

Passed Through Roughing

Stands

Go Through Continuous Stands

TMT Box A) Quenching

Thermo Mechanical Treatment C) Self-Tempering

Cut Into Lengths B) Atmospheric Cooling

Accommodate on Cooling Bed

Shearing Machine (Cut into Fix Lengths as Per Requirement of Market)

13
 A. Quenching: The hot rolled bar leaving the final mill stand is rapidly quenched by a
special water spray system. This hardens the surface of the bar.
B. Self-Tempering: When the bar leaves the quenching box, the core remains hot
compared to the surface, allowing heat to flow from the core to the surface, causing
tempering of the outer martensitic layer into a structural called “Tempered Martensitic”
The core still remains austenitic at this stage.
C. Atmospheric Cooling: This takes place on the cooling bed where the austenitic core is
transformed into a ductile ferrite-pearlite structure. Thus the final structure consists of
an optimum combination of a strong outer layout (Tempered Martensite) with ductile
core (ferrite-pearlite). This gives “X power 500W TMT” is unique combination of
higher strength and ductility.

Work System Design

RSRM produces TMT (RSRM 500W) grade steel using most advanced and latest technology
suitable for the production of thermo-mechanically treated (TMT) reinforcement bar renowned
worldwide for its special features of having high strength with high elongation percent and
toughness which is not possible in other ordinary reinforcement bars of conventional processes.

14
Intermediate capacity

Finished goods
Finished goods are goods that have been completed by the manufacturing process, or purchased
in a completed form, but which have not yet been sold to customers. Goods that have been
purchased in completed form are known as merchandise. The company has capable to store
finished goods capacity. They control it very carefully. These are the annual finished goods
information of this company.

Finished Goods 30 June 2017 30 June 2016

Information
Finished Goods 869,071,392 946,362,692

Inventory
Inventory is the collection of unsold products waiting to be sold. Inventory is listed as a current
asset on a company's balance sheet. Inventory is the term for the goods available for sale and
raw materials used to produce goods available for sale. Inventory represents one of the most
important assets of a business because the turnover of inventory represents one of the primary
sources of revenue generation and subsequent earnings for the company's shareholders. The
company doesn’t contain too much inventory. The annual basic inventory information’s of the
company is given below.

Inventory Information 30 June 2017 30 June 2016

Finished Goods 869,071,392 946,362,692

Raw Materials 980,179,200 635,477,378

Spares Parts 37,256,890 32,056,210

Total Inventories = 1,886,507,482 1,613,896,280

15
Short-Term Planning
Production lot Size
“The RSRM in Chittagong has a lot size of 140 ton but is currently produce at 125 ton per lot.
They are working to raise the production at least to a level of 130 ton per lot by March 2019.”

Base on the requirements of product, Material Requirements Planning refers to the net
requirements of parts or materials. But these requirements without any change may be
unsuitable for placing an order or manufacturing. Lot sizing is to unify the calculated net
requirements by a certain unit considering cost reduction and work efficiency.

There are two main types of lot sizing: a method to unify in terms of the period and another
method to unify in terms of the quantity. The former includes "Fixed Period Requirements",
which, generally speaking, is suitable for the relatively expensive items whose demand occurs
irregularly. The latter includes "Fixed Period Requirements" or "Economic Lot Sizing", which
is suitable for items whose demand is relatively stable.

16
Importance of Capacity planning for RSRM

Monitor Costs
RSRM broad of directors periodically discuss about their costs as well as revenue, capacity
planning is helpful for RSRM because it takes into account personnel, facilities, production
schedules and supplies. Therefore, when the capacity level is carefully planned, RSRM can
monitor its costs of production during periods of growth and recession.

New Locations
As company grows, RSRM may find the need to open new production facilities. Using capacity
planning information from RSRM existing locations, they can develop a more accurate
projection of needs for facilities and personnel levels, and of the kind of production that can be
expected from the new location.

Production Cycles
RSRM Company can use capacity planning to maintain proper production levels during
expected business cycles. They can use historical data to plan production capacity and have
ample staff on hand to handle the rise in demand.

Growth
Planning for the growth of RSRM requires several important considerations. RSRM need to
determine if their company will need to add more physical locations, more personnel to run
those locations and how much capital you will need to raise for your expansion and growth.
Capacity planning becomes an integral part of business planning because it helps you determine
how RSRM company will grow based on their projections.

17
Factors Affecting Capacity planning of RSRM

Controllable Factors
Amounts of labor employed
The number of employee that RSRM higher is in their hand, they usually hire experienced
worker in their company. There present employees are above 500. But they are willing to
increase it to 700 within 1.5 years. They are not getting enough skilled employees.

Facilities installed
They have installed advanced and latest technology suitable for the production of thermo-
mechanically treated (TMT) steel bars.

Sift worked per day

Currently RSRM has 2 shifts each shifts work for 8 hours but RSRM wants to make it 3 shifts
and want to make a schedule that allow them to operate 24 hours.

Uncontrollable Factors
Absenteeism
The worker that are working their sometime does not concentrate in their work for that
sometimes minor accidents had happened.

Machine break-down
Sometime order lot delivery need to be postponed because of machine malfunction.

18
Findings

 Production Capacity:
Production Capacity of RSRM for 2017 is 187,200(MT) and they produced
136,664(MT). This means the company is not utilizing its resources to their maximum
efficiency. Capacity Utilization is 73 % which very low compared to their competition
BSRM which is 97%.

 Production Process:
Production process of RSRM has 11 steps of fully automated production process.
Sometimes breakdown of machineries in between the production process or before the
production process create great problem for the production supervisor as well as for the
production manager. The capacity planning of all things is partially related on the
production. So, the failure or breakdown of machineries suffers the company a lot.

 Work Design System:

RSRM produces TMT (RSRM 500W) grade steel using most advanced and latest
technology, which means that the workforce needs to be skilled and have expertise on
managing these advanced technologies. Failing to properly operate such systems will
hamper the production for which the employees need to have proper training and
knowledge.

 Power:
As RSRM is a heavy industry it needs lots of power supply and gas in daily production.
They need to ensure a continuous flow of electricity and gas supply to ensure their
machineries to operate at maximum efficiency.

19
Recommendation
Though the Ratanpur Steel Re-rolling Mills Ltd. (RSRM) is undoubtedly a benefited company
for the country, we recommend some particular factors which, we think can make some more
betterment for the company. The recommendations are given:

1. The company should increase the production volume by installing new machine as it
has been informed that Government takes some big project which will increase demand
in near future such as Padma Multipurpose Bridge, Metro rail, Tunnel under the
Karnaphuli River etc.
2. They should utilize maximum amount of its production capacity which leads to increase
annual turnover as well as profit margin.
3. To deal with the power supply and gas problem RSRM needs to convince the
government to provide them with better facility. They have to make the government
understand the greater benefit the country.
4. RSRM has huge production area and a massive number of machineries. Therefore, they
should maintain a repair section in the company so that future repair cost can be reduced
for their automated system and machineries.

20
Reference
http://aonesteelgroup.com/2018/04/how-are-tmt-bars-manufactured-step-by-step-process-
description

https://www.lightcastlebd.com/insights/2016/02/26/market-insight-emerging-steel-industry-in-
bangladesh

http://rsrmbd.com/annual-report/

https://www.thedailystar.net/news/business/steelmakers-flexing-muscles-1625572\

21