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Submitted to: Prof. Dr. S.U. Sharma
Prepared BY: Digesh C. Shah Roll No. 29 MBA-Ist Yr(2009-‘11) F.M.S. Baroda (M.S.U.)
I, undersigned, Shah Digesh Chandreshbhai, declare that this project report on “HUMAN RESOURCE MANAGEMENT” for NEO STRUCTO CONSTRUCTION LIMITED is the result of the
research work carried out during 26th Oct, 2009 to 31st Oct, 2009. The information collected from the company has been used for academic purpose only.
Date: 30th Nov, 2009. Place: SURAT
DIGESH C. SHAH
CHAPTER - 1 INTRODUCTION
Neo Structo Construction Limited is an ISO 9001:2008 Accredited Mechanical Engineering Company, specialized in the field of Construction of Refineries, Petrochemicals, Fertilizers, Steel & Metallurgical, Chemical, Oil & Gas, Power, Cryogenic and other core industries. The company have been in this field for the last 30 years executing various jobs involving fabrication & erection of reformers, heaters, vessels, tanks, erection of heavy static & rotary equipments, cryogenics plants, piping & structures, etc for Indian & International customers under the stringent supervision of renowned consultants & inspection agencies like EIL, Lloyds, Mecon, PDIL, SNAMPROGETTI, DCL, FEDO, KELLOGS, KPG, BV, TPL, FW, UOP, SGS, ABS, etc. The company also has executed many critical plant shutdown jobs for refineries, petrochemicals, steel plants, fertilizer, cryogenic plants and oil & gas industries ahead of tight delivery targets getting high appreciation. The company has maintained a wonderful reputation for quality, safety, timely delivery and efficient management which is a critical factor attributable to the success in Construction Industry. The company’s backbone is a team of highly professional and experienced Managers, Engineers, Technical and Non-Technical staff backed up with a very strong resources comprising of Fleet of Cranes, Power generators, Welding machines, Electric Winches, Lifting Tackles and all the required tools and tackles required for the Construction Industry. Neo Structo set up fully equipped fabrication shop under its sister concern Spetech Plant Equipments Private Limited which is a fully fledged heavy engineering shop, involved in fabrication of pressure vessels columns, towers, modules, skids, special equipments, piping etc. Spetech is certified by ASME & NB for manufactures of boiler & pressure vessels with 'U' & 'S' stamp and carrying out repair & alteration with 'R' stamp.
Established in 1996, its mission was to meet the growing Indian Heavy Engineering Industry’s need for fabrication of high quality equipments within the stipulated delivery period. This fabrication shop is working as an in-house equipment manufacturer to cater to clients requirement in specialized fabrication shop where complicated products are fabricated with technical skill. The company’s aim is to provide innovative and practical solutions to meet the requirements of its clients. Their objectives are to develop a strong commitment to a project and to ensure that all key decisions are made on a fully informed basis.
BOARD OF DIRECTORS:
Chairman & Managing Director Director Director Director Director
Mr. N Syamaprakash Mr. N Suseelan Mr. N Surendran Mr. K B Viswanathan Mr. Deepu Syamaprakash
Mr. S L Varma Mr. S R Srinivasan Mr. S Vijayaraghavan Sr. Vice President Vice President (Projects) Sr. General Manager (Contracts)
FIELD OF OPERATIONS
• Fabrication & Erection of Reformers, Heaters & Furnaces. • Complete construction works of Cryogenic Plants & Package Units. • CCR Modules, Skids, Offshore Decks.
• Erection of Heavy Static and Rotary Equipments. • Fabrication & Erection of Plant Piping Structures. • Fabrication of Pressure Vessels, Columns, Reactors, HRSG & WHR Modules. • Shutdown / Revamp jobs.
INDUSTRIES WE SERVE
1. REFINERIES & PETROCHEMICAL:
Refineries being the most important area of operation for Neo Structo, the company have executed a large number of composite works, huge quantity of piping and major shutdown and revamp jobs in various refineries. Among the recent job executed by the company is the Heaters for Reliance Jamnagar Export Refinery Project in Gujarat, a milestone is the history so far for the company. The job involved detailing, supply of non pressure parts, fabrication, and erection, testing and commissioning assistance of Heaters for a package construction. A breakthrough as one of the only company which has executed the maximum number of CCR (Continuous Catalyst Regenerator) Modules in India. These process modules have recently been put up in various refineries as a part of plant modernization projects. • • • • • • • • Indian Oil Corporation Ltd., Baroda/Panipat/Guwahati. Hindustan Petroleum Corporation Ltd., Mumbai. Kochi Refineries Ltd., Kerala. Chennai Petroleum Corporation Ltd., Chennai Reliance Petroleum Ltd., Jamnagar. Reliance Industries Ltd., Hazira. Essar Oil Refinery Ltd, Vadinar. UOP India Pvt. Ltd, New Delhi.
2. OIL & GAS / OFFSHORE: Neo Structo provides all services associated with process plants including engineering procurement, manufacturing &construction of oil & gas industries. The company has executed various LTSK projects successfully for hydro carbon
process by planning controlling and implementing project, maintaining schedules, quality, cost and safety objectives. • Oil and Natural Gas Corporation Ltd., Mumbai. • Clough Offshore Engineering Ltd., Australia. • Cairn Energy India Pty Ltd., Chennai. • Gujarat Gas Co. Ltd., Surat. • LNG Petronet Ltd., Dahej. • Hazira LNG Terminal Ltd., Shell, Surat. • GSPC Niko Resources Ltd., Vadodara.
3. CRYOGENIC PLANTS:
Neo Structo has fabricated and erected or installed over 20 cryogenic plants across the country mainly for Air Separation Plants, Oxygen Plants, Argon Recovery Plants, Purge Gas Recovery units etc. for Praxair, Hitachi, Air Liquide, etc. to the Asia’s biggest Oxygen Plant for Jindal Praxair, Bellary and Karnataka which produces oxygen, nitrogen, argon in both gaseous and liquid forms. Thus Neo has been associated with all the leading technologists like Praxair, Linde, Air Liquide and Hitachi. • • • • • • Praxair India Ltd., Bangalore. Bharat Heavy Plate & Vessels Ltd., Visakhapatnam. Hitachi, Japan. Air Liquide India Ltd., Hyderabad. Jindal Praxair Oxygen Company Ltd., Bellary Goyal Gas, New Delhi.
4. FERTILISERS & CHEMICALS: By volume Neo Structo has executed large amount of shutdown or revamp in Fertilizer plants. They include reversals of Urea Stripper, Energy Saving Projects, Revamp of Ammonia, methanol Reformer Units, Replacement of Coils and Tubes in Hydrogen Reformer, De-bottlenecking projects etc. at various fertilizer units like KRIBHCO, IFFCO, GNFC, INDO – Gulf, Tata Chemicals. • Krishak Bharati Co-Operative Ltd., Surat.
• Indo Gulf fertilizer & Chemicals Corporation Ltd., Jagdishpur. • National Fertilisers Ltd., Guna. • Zuari Agro Chemicals, Goa. • Gujarat Narmada Valley Fertilisers & Chemicals Ltd., Bharuch • Chambal Fertilisers & Chemicals Ltd., Kota. • Rashtriya Chemicals & Fertilisers Ltd., Thal, Chembur. • Gharda Chemicals Ltd., Panoli. • Indian Farmers & Fertilisers Co-operative Ltd., Phulpur/Kalol.
5. STEEL & METALLURGICAL:
Neo Structo has significant experience in executing projects for Steel industry including supply and installation of equipments. Neo Structo has specialized team for the execution of Steel plant projects. Neo has installed various units in steel plants like Reformer, Sinter plant, Furnace, Oxygen plant. • • • • • • Essar Steel Ltd., Hazira. Kalyani Steel Plant, Hospet. Jindal Steel Plant, Bellary. Ispat Industries Ltd., PEN Vikram Ispat Ltd., Alibagh. Hindalco Industries Ltd., (Birla Copper), Dahej.
Power is the most crucial ingredient that keeps the wheel of Industry moving and it’s also helps in the growth of infrastructure of any economy. Power sector has been striving since 2003. to position their selves in the proper niche, Neo Structo ventured into Power sector. Now, Neo Structo plays a major role in execution of power as well as downstream activities of power generation. • National Thermal Power Corporation, Gandhar.
• Maharashtra State Electricity Board, Chandrapoor. • Essar Power Ltd. Surat. • Suzlon Energy Ltd. Pune.
• • • • • • • • • • • • • Larsen & Toubro Ltd. Hazira, Mumbai. Essar Construction Ltd., Hazira. ION Exchange (India) Ltd., Mumbai. Ballast Nedam International, Netherlands. Afcons Infra Structure Ltd., Mumbai. Daelim Engineering Ltd., South Korea. Hyundai Heavy Industries Ltd., South Korea Technip Italy Spa., Italy. Technip KTI, New Delhi. Toyo Engineering India Ltd., Mumbai. Kvaerner Power Gas Ltd., Mumbai. Tata Honeywell Ltd., Pune. L'Oreal India Pvt. Ltd., Pune.
Equipped with its own cranes for heavy erection of various capacities up to 500T SWL to handle heavy erection. Full range of machinery & infrastructure as required for executing any mechanical construction jobs. Construction Managers, Engineers, technical & nontechnical staff are highly professional & experienced in multiple projects of various areas of operations. Regular training is imparted to all the employees for executing their jobs as per the latest technical advancements. Mobilization capacity of more then 4000 skilled / semiskilled / unskilled work crew at a given point of time.
Qualified over 100 Welding procedures during execution of various projects involving, CS, AS, SS, Duplex/ Super Duplex Steels, Urea Grade Steel, Inconel, Monel, CuproNickel, Aluminum, etc and IBR approved. Rich working experience with various Indian & International clients and renowned consultants, with full understanding of their technical requirements & systems. Expertise in executing challenging & critical shutdown/ revamp jobs with tight delivery schedules.
NEO STRUCTO CONSTRUCTION LTD. is committed to meet customer requirements and specifications to achieve maximum customer satisfaction with unerring regularity on lasting basis. The company tries for continual improvement by following P.D.C.A. Cycle (Plan, Do, Check, Act) and by following Quality Management Principles. The company endeavor to provide efficient leadership, encourage creativity and training to keep pace with the latest advances for growth of the organization and the employees. The company endeavor to maintain highest standards of safety, health and environment. The company shall try to maintain our position as one of the leaders in the Construction Industry.
HSE POLICY AND AWARDS
It is the endeavor of NEO STRUCTO CONSTRUCTION LIMITED to maintain the highest standard of Health, Safety & Environment for all our operations. Safety is considered of prime importance and gets riding priority over all other activities The company shall comply with all legal and other statutory requirements and shall prevent pollution and safeguard environment by minimizing use of natural resources, recycle and re-use options. The Company believes in Zero Accident and Maximum Productivity and enforces it by educating, constant monitoring and giving full backup to our managerial and down the line Engineers, Technicians and Others involved in the operations.
SITE ORGANISATION CHART
PROFILE OF THE COMPANY:
CORPORATE OFFICE: 3RD Floor, Mahaan Terrace, Adajan Road, Surat -395 009. Gujarat, INDIA.
PROJECT OFFICE: Mezzanine Floor, Rekha Park Building, Near Pal Octroi, Adajan Road, Surat - 395 009. Gujarat, INDIA. REGISTERED OFFICE: “STRUCTO HOUSE” A1 – A4, Narayan Park, Icchapore. Surat – 395 510. Gujarat, INDIA.
CHAPTER - 2 OVERVIEW OF DIFFERENT SECTIONS
1. Salary Section:
The income under the head salaries means the remuneration received by a person in any form from his employer for the services rendered by him. The total salary takes into account the following:• Salary • Perquisites • Allowances The main function of salary section can be divided into the following:1. Salaries allowances and other employee’s payment. 2. Payment / recovery / reconciliation of employee’s loans and advances. 3. Deduction of tax at source. Remittances and filing of return of the income tax. 4. Separation / transfer of employees. 5. Traveling payment bills. 6. 50% of basic salary plus Leave Travel Allowance plus 50% of medical expenses employee’s is eligible. During Onam time 8.33% of basic salary is given as bonus. During Diwali time 12% of basic salary is given as bonus ex-gratia and medical and leave travel allowance i.e. half of basic salary is given. If a trainee joins the Company and if he is GET (Graduate Engineer Trainee) his salary and allowances are as follows – Basic salary Rs. 10,500 + Rs. 500 House Rent Allowance (HRA)
+Rs.200 Food Allowance, no other benefit is provided to trainee. If a trainee joins the Company and if he is DET (Diploma Engineer Trainee) his salary and allowances are as follows – Basic salary Rs. 7500 + Rs. 500 House Rent Allowance (HRA) +Rs.200 Food Allowance. If the person is the permanent staff then following benefits are provided to them – Salary is given according to scale Basic salary + General allowances Add: + 30% House Rent Allowance (HRA) + Rs.200 Food Allowance + 10% washing allowance + Updation i.e. given according to salary scale of employees + Personal pay i.e. also given according to salary scale of employees + Special allowance is given depending on the performance of employee = Gross Salary Deduct / Less: - Provident Fund - Professional tax = Net Salary
2. Provident Fund:
The objective of provident fund is to provide future benefit to the employees after retirement from service or financial security for his beneficiaries in the event of his death while in the service. For this, both the employee and the employer have to forego certain percent of their respective basic salary as a contribution towards the provident fund scheme.
Both the employer & employee make certain amount of contribution towards PF scheme. In case of employee 12% of salary is to be contributed. In case of employers, equal amount is contributed but out of which 3.67% is contributed towards PF & rest 8.33% is contributed towards family pension scheme where the maximum amount is Rs. 780 and the basic salary limit is Rs. 6500.
Every employee is required to fill the nomination form giving details of the person/persons who would receive the amount standing to his credit in event of his death.
An employee gets interest on the deposits he makes towards Provident fund. This interest is applicable to both employee and employer’s contribution. The rate of interest is fixed by the central government. For a particular financial year, interest is calculated on 1st April. 8.5% is the current interest rate.
Form 19 is used by employee to withdraw amount. Form 20 is used by nominee to withdraw amount. Form 31 is used by employee to take advance amount. Under certain conditions and provisions an employee can withdraw money from his PF account. 3. PAYROLL: The term 'payroll' encompasses every employee of a company who receives a regular wage or other
compensation. Some employees may be paid a steady salary while others are paid for hours worked. All of these different payment methods are calculated by a payroll specialist and the appropriate paychecks are issued. After a payroll accountant multiplies an employee's hours by his or her pay rate, the gross income amount is entered into a calculator or computer program. Regular deductions such as tax withholdings, social security and medical insurance and so on are then categorized and subtracted. The remaining balance is then converted to a check and becomes the employee's net pay for that time period. Payroll departments also identify the employer and employees by a federal code and keep a running tally on total income and deductions for the year. Setting up an effective payroll system is not especially difficult for trained accountants, but it can be very time consuming. In a company, payroll is the sum of all financial records of salaries, wages, bonuses and deductions. FUNCTIONS OF PAYROLL:
1. Receiving of inputs:
The preparation of payroll starts with the receipt of inputs from various departments. These inputs are received from the personnel & administration department. 2. Checking against eligibility: Once information is received they are checked against eligibility before approval. The criteria for eligibility are mentioned in the company’s policies, circulars and notes. If the inputs received are not eligible, then the concerned employee and the personnel and administration department is informed about it. If the inputs fulfill the eligibility criteria, they are further processed for settlement. If required these inputs are matched with the pay roll history of the employees, stored in the data base files.
3. Consolidation: The inputs which are found eligible are then entered in the system, which contains all the relevant information about the employees. Once the statement has been entered in the computer they are checked again to make sure that there are no errors. They are checked against the inputs receiving and eligibility criteria for each input. Checking the input is an important step in the preparation of payroll because any mistakes while entering the data into the computer system will result in miscalculation of the employees pay. 4. Processing: The reconciled statements are then processed. This step involves matching of the bank statement with pay and reimbursement registers. In case of adjustment of excess advance taken by an employee a negative pay slip is prepared. Preparation of head count report is a vital task as this gives the total number of employees. Other functions carried out during processing include the preparation of salary comparison statement, etc. While processing claims and reimbursement some of them are approved and sent back to the concerned employee and administrative department. The processed information is stored in files or system for use in future. 5. Reporting: The processed information is used to generate various reports. These reports are sent to the concerned departments, employees, etc. The pay register, reimbursement register, provident fund register are prepared and information of these registers is sent to the administration department and employees. Bank statement along with floppy is sent to the bank
concerned. Professional statements are sent to the government and income tax statements to income tax department. Pay slips are prepared and distributed to all the employees.
6. INSURANCE Insurance section deals with • Adequate protection of company property. • Proper loss assessment and recovery of the claim from the insurer. Objective: The insurance section of the Finance & Accounts department has to safeguard its property against various types of losses by taking various policies. The philosophy of the company is also to prevent losses by getting adequate cover at optimum premium. The premium is charged as per risks involved. Controls Tools of Insurance Section: 1. All the vehicles owned by the Company are only insured. 2. Employees can claim the entire amount in case of accident policy. Medical insurance is applicable only in case of accident no diseases are covered. Various Insurance Policies taken by Company: • Building insurance policy. • Equipment insurance policy. • Vehicle insurance policy. • Employees and workers policy. • Personal Accident insurance.
FUNCTIONS OF INSURANCE SECTION: 1. Adequate protection of property - The property owned by the Company is protected by getting insurance cover under various policies of the company. 2. Optimum cost – To obtain insurance cover at an optimum cost. 3. Recovery of claims from insurer – Insurance sections deals with the measures regarding recovery of claims for the losses and damages. 4. Constant interaction with official of the insurer – Insurance section interacts with the official of the insurer by arranging visits of senior executives and arranging seminars / presentations / workshops.
5. Policy selection - To avail opinion experts regarding
the public liability, selection of coverage. This helps the insurance section in selecting the best policy available to them.
7. COSTING & BUDGETING:
Costing refers to the collection and analysis of expenses that includes direct cost, indirect cost, fixed cost, variable cost, operating cost, standard and actual cost. Cost accounting provides information for both management and financial accounting. It measures both financial and non-financial reports relating to the cost of acquiring or consuming the resources by the company. The section activities: deals with the following major
1. Revenue Budgeting 2. Capital Budgeting 3. Costing and related MIS 4. Excise, custom duty and service tax Revenue Budget: Revenue budget involves collection of estimates of expenditure from all the cost centers and compiling the same to present to the top management for approval. Budget control involves activities like monitoring the budgeted cost v/s actual cost throughout the year with suitable reports for emphasizing the stand of each cost center / responsibility center to the management. Revenue Budget includes the following: • Stores, Spares and Consumables budget • Salaries and Wages budget • Repairs and Maintenance budget • Administration expenses budget Capital Budgeting: Capital Expenditure involves huge amounts of investment. Thus a long term planning is required while undertaking new project. Some projects may take longer time for completion thus capital expenditure may be extended beyond the estimated budget period. In such cases the expenditure requirement has to be fragmented financial year wise, specifying the starting date and the estimated date of completion.
Operation and Maintenance Budget: Repairs and maintenance expenses are one of the major expenses that are incurred in the organization / company. It includes three types of maintenance such as predictive maintenance, preventive maintenance and breakdown maintenance. The repairs and maintenance expenses incurred are determined by analyzing the condition of the equipments and also by checking the routine activities of the maintenance. The estimate for each other cost center is calculated on the probable maintenance work that may be taken during the year. This budget is decided by mutual discussion between Finance & Accounts department and top management. Control Tools of Costing and Budgeting Section: 1. Budgets for every plant / site should be maintained by the technical department. 2. Monthly Performance Review meeting should be held every month in order to improve the performance. 3. If there is any difference between budgeted and actual cost, then justification should be given to the higher authorities. 4. Budgets given at the beginning of the year should be spent economically.
8. Human Resource Department / Section:
Human resource department / section mainly take care of the requirement of manpower according to site’s requirement. They train manpower for whatever work they are going to do. If the employees are facing any problem
from administrative point of view is to be studied and taken care of. This department also takes care of time keeping, salary administration, recruitment, training and development etc.
CHAPTER – 4 STUDY
STUDY OF MANAGEMENT:
Management has these days become a crucial issue for every organization. There are 4 M’s of Business Composition:
1.MAN / HUMAN RESOURCE :
Man i.e. the human resource is considered to be the most important and valuable asset of an organization. It is very difficult to replace human resource i.e. it is irreplaceable. Now a days in each and every organization there is a Human Resource department who takes care of employee needs their problems etc. To retain human resource in an organization these days has become a matter of concern, so all the facilities are to be provided to them so that they are satisfied with the organization and give their best to fulfill the organizational needs. Human resource is the most important element or component irrespective of the nature of industry. Importance of human resource may vary from industry to industry i.e. it depends on type of industry. In every industry human resource is considered as mind of company. In software development industries human resources are very important in the same way in industries where work is mainly carried out through machines. Now a day’s human resource plays an important role in every organization, the manpower employed or recruited should have high technical knowledge and it is mainly found in mechanical driven industries. Human resource departments look after the problems of the employees and provide them with facilities so that they can deliver their expertise in their jobs without any mental worry for their personal needs. Labour turnover is also considered a crucial component these days in every organization. Qualified and experienced manpower are difficult to retain. Sometimes it is found that the manpower is qualified but does not have the experience and vice-versa. Thus the growth of the company depends
on the qualified and experienced manpower or staff recruited by company.
Material is also an important factor for producing a product. If input is of good quality then output will also be good. E.g. Garbage in Garbage out (GIGO) i.e. what you put you get back. The better quality product you use the better output you get. There are two major categories of material:1) INPUT RAW MATERIAL - which are mainly found in the
2) CONSUMABLES - which are consumed and loose their
entity while producing final product. Quality of material used is in direct proportion to the product cost. Lower the quality - lower is the cost. Higher the quality - higher is the cost. However quality pays in long run i.e. long term benefit is to be seen. E.g. suppose if we are going to buy a product, the quality is low and the price is also low, so looking to the price we may buy the product initially but we are not able to get the benefit in long run. But next time while buying product we may look high quality though the price may be somewhat higher than the previous purchase we made, but it will give us long run benefit that we are looking for. According to the requirement of industry materials are required, different industries require different materials to produce the product.
Humans help produce the final product, raw material serve as an input to final product, but it is the machines which shape and formally manufacture the final product. Different industries require different types of machinery to produce products. The organization or industry has to continuously keep themselves updated according to the changes taking place in the market, otherwise the technology used in machinery will become obsolete and the organization will not be aware of it if it is not in touch with the changes taking place around the world. Thus to survive in cut-throat competition these days, the industries have to keep a track record of all the technological changes taking place around. Lot of funds is to be blocked by the company in purchasing machinery, so decisions are to be taken carefully. Hi-tech machines require highly skilled, expertise and experienced people to handle it. These machines need to be over hauled regularly so as to maintain its productivity i.e. regular maintenance is needed.
Money is considered as last M and to be the most important component in a business or organization, without money no activity takes place. It is money for which the business is been started and it is money which actually helps the business runs like we have an old saying – “Money makes the mare go”. The purpose for which money is required may be short term, medium term and long term. For short term, money is required for working capital requirements and for meeting day to day expenses. The organization should have surplus funds with themselves to run the routine business cycle i.e. for meeting daily business requirements.
For medium term, money is required for purchasing stock (inventory), tools, insurance etc. For long term money is required to purchase heavy machinery, equipments. The company can take loan for this purpose. To collect funds from public the company can issue equity shares, preference shares and can come out with a public issue etc. Without money the business cannot function smoothly. From profits of the company or organization some portion or proportion is to be kept aside as reserve so that it can be used during time of contingency or emergency etc. The organization has to keep a strict watch on where the amounts of funds are spent. For purchasing heavy machinery huge amount of funds are required mortgage loans can be taken, hypothecation can be done etc. Thus proper records are to be maintained for the inflow and outflow of funds.
RECEIPT SIDE (From where does the Company receives the funds):
1. Refund of Earnest Money Deposit (EMD). 2. Mobilization Advance. 3. Billing. 4. Refund of Security deposit. 5. Refund of Retention money. 1. Refund of Earnest Money Deposit :If the contract is cancelled then Earnest Money Deposit is refunded. It means after the technical bid is opened and after evaluating and ascertaining the technical compatibility of the party/contractor, if the contractor is found to be technically unqualified then the Earnest Money Deposit collected from the contractor is returned back or refunded. Thus it acts as receipt for the Company.
2. Mobilization Advance :The money paid in advance of a transaction to protect the seller against damage or non-payment is called mobilization advance. In other words, mobilization advance is needed to meet the expenses and it is mainly provided to facilitate liquidity. Normally the advance is 10% of contract value against Bank Guarantee. 3. Billing :Normally the duration period of raising bills by the Company is usually 30 to 45 days. E.g. Suppose the Company does the first transaction on 1st May it raises bill up to 30th May, thus it is called Running Account Bills. 4. Refund of Security deposit :When the contract is awarded that time Earnest Money Deposit is not refunded, it is converted into Security deposit. But after successful completion of the contract the amount that was submitted by the contractor to the client will be refunded by the client to the contractor. Thus it will be receipt for the Company. 5. Refund of Retention Money :Retention money is that money that is held back that would otherwise be paid until the other party performs some service or task. E.g. Normally in construction business it is common that a series of payments is made overtime that time certain percentage (%) depending on the work order is withheld by the client until the job is complete. This way the contractor can pay his costs during construction of the project, but obviously he does not get the entire amount until the job is done. But after successful completion of the contract the amount that was submitted by the contractor
to the client will be refunded by the client to the contractor. Thus it will be receipt for the Company.
PAYMENT SIDE (To whom the Company makes payments):
1. While filling up tender Earnest Money Deposit is paid i.e. expenses are to be made. 2. Mobilization expenses. 3. Purchase of Consumables. 4. Hire of equipment. 5. Staff salary/wages. 6. Overheads. 7. Fixed expenses. 8. Deduction of Retention money. 9. Deduction of Security deposit. 10. Installment of loans. 1. While filling up tender Earnest Money Deposit is paid i.e. expenses are to be made :While filling the tender the Company/Contractor has to give the Earnest Money Deposit to the client, the client collects the amount because the client intends that those who are the genuine contractors i.e. only those who are interested in contract only they should apply for the tender and submit the bid, the uninterested parties should not apply for tender and submit the bid. 2. Mobilization expenses :It means the expenses for mobilizing at the site i.e. man, material and machinery for the site, all these expenses are
related to 3 M’s hence depending on the conditions of work order mobilization expenses are made. 3. Purchase of Consumables :It is an expense for the Company. Consumables are those which are consumed and loose their identity while producing the final product. E.g. Fleet of cranes, Power generators, Welding machines, Electric winches, Lifting tackles and other required tools and tackles this entire are the consumables for the Company and to acquire all this expenses are to be made by the Company. 4. Hire of equipment :As the Company has to go to the client’s site and manufacture according to client’s requirement, different clients have different requirement so the Company may not have all the equipments with them, sometimes the Company may have to hire the equipments. E.g. Hiring of equipments like heavy machinery, hydra cranes etc all this are the equipments hired by the Company to do the work and according to client’s requirements the equipments are hired by the Company, for hiring the equipments all this expenses are to be made by the Company. 5. Staff salary / wages :The Company has to give salary to employees and wages to the workers who are working at the site. Payment of wages and salaries to the employees and workers are to be made accurately then only they will work efficiently and contribute their best to the Company. Hence minimum wages are to be paid to workers irrespective of whether they are skilled, semi-skilled, unskilled etc. 6. Overheads :-
It refers to an ongoing expense of operating a business. Overheads is usually used to group expenses that are necessary to the continued functioning of the business, but do not directly generate profits. E.g. Insurance, interest, legal fees, rent, repairs, taxes, travel and utility bills etc. 7. Fixed expenses :It includes office rent, electricity bill, telephone charges and mobile bills, Xerox charges, courier charges, erection and fabrication work done etc.
8. Deduction of Retention money :Certain percentage (%) is deducted depending on work order. In case if any defective work is there or work done is not according to the requirement of client, then the deducted retention money is repayable. 9. Deduction of Security deposit :The Company / contractor have to submit security deposit to the client when the contract is awarded to them. Certain percentage (%) of security deposit is deducted depending on the work order / requirement by the client. 10. Installment of loans:The purpose for which the Company has to take loans may be to purchase heavy equipments, machines, cranes etc. The interest rates on loan amount are higher, so the Company has to pay a huge amount of installments on loan. the the the not
4.4 HOW THE COMPANY IS MANAGING ITS FUNDS:
The Company normally manages its funds through the receipts received from the clients, but the Company cannot wait till they get payment from the client before that what all are the expenses that the Company has to incur i.e. paying wages, salaries, etc that they have to make. The Company has got a credit limit of Rs.10 crores from bank and has to pay 15 -16 % interest on it. The Company normally takes long term loans to purchase hydra cranes, heavy equipments and vehicles that are used at the site like cars, jeeps, buses, trailers etc. Thus the fund requirements are met by the unsecured loans taken from the Directors of the Company as public money is not involved in the Company.
CHAPTER – 5 CONCLUSION
The Company’s vision is to continue to generate strong financial returns and create a world class engineering procurement and construction company. With a particular focus in Oil & Gas, Power, Refineries, Petrochemicals, Steel & Metallurgical, etc. The objective is to expand and enhance their presence throughout India and abroad by capitalizing on competitive strengths, local experience, and familiarity with local working conditions and relationships with clients and strategic partners. The company intends to target specific project segments and industries where they believe there is high potential for growth and where they enjoy competitive advantages.
Neo Structo has since its inception grown steadily and it enjoys a prominent position as one of the leading medium scale Lump sum Turnkey (LSTK) Company having multifaceted operation and division. Neo Structo is continuously striving for adapting with the global challenges for the growth and development of the industries and provides the clients innovative and optimal solutions. The company is always committed for services/materials of best quality with high safety standards and as well as timely delivery with efficient management.
PLANT & MACHINERY:
Neo Structo has a full range of mechanical construction equipment and machineries including one of the largest fleet of cranes in India, welding machines and mobile offices to undertake fabrication and erection of heavy equipment at client’s site at any place. The fleet comprises of wide range of sophisticated and specialized
equipment contributing in timely completion with high standard of quality and cost effectiveness of our projects. The asset base includes Heavy duty cranes, core drilling machines, welding machines, compressors, DG sets, plate rolling machines (semi automatic as well as automatic) up to 80 mm thick. The equipment management activity at job site like mobilization, commissioning, operation & periodic maintenance, repairs are undertaken through well defined operation procedures. These activities are handled by dedicated teams located at sites which consist of competent manpower; required materials and technical support by over own expertise technical persons as well as third party consultants to carry out major repairs and overhauls for the equipments.
Expanding global operations and to enter into other vertical mechanical engineering field like designing, detailed engineering and take up more Lump Sum Turn Key (LSTK) jobs. With success in India, Neo Structo is venturing into overseas markets. With a vision to ultimately become a Global Project Engineering and Construction Company. Like any other competitive markets, Middle East, Far East, South East and African markets too are highly receptive to innovative ideas, refreshing outlooks, pioneering experimentations of high quality and competitive priced services, which Neo Structo promises to offer. Bearing that newer markets bring in newer challenges and concerns, like culture and federal policies, Neo Structo is prepared to handle these challenges with its competence, expertise and experience.
Very good unity among staff.
Friendly working atmosphere. Good record keeping. Good inter-personal relations.
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