Working Capital Management SWATI MAHAJAN

Analysis of Working Capital Management A study in Bhilai Steel Plant
A PROJECT REPORT ON
Analysis of Working Capital Management

-A Study in Bhilai Steel PlantSubmitted in the partial fulfillment Of Master of Business Administration An integrated plant of SAIL
Steel Authority of India limited
Guided By:Mr,R.C.Shrivastava Manager (F&A) Bhilai Steel Plant
Submitted By:Swati Mahajan MBA 3rd sem Roll No-1170553
PROJECT REPORT ON
ORGANISATIONAL STUDY AT ANALYSIS OF WORKING CAPITAL MANAGEMENT IN BHILAI STEEL PLANT A Report submitted In Partial Fulfillment Of The Requirements For The Award of The Degree Of MASTER OF BUSINESS ADMINISTRATION
Collaborative Programme with DAVV University, Indore
TO
INDORE INSTITUTE OF SCIENCE AND TECHNOLOGY NAME SWATI MAHAJAN
CERTIFICATE
This is to certify that the project done on A STUDY OF ADVERTISING AND SALES PROMOTION HERO MOTO CORP submitted KD RUNGTA COLLEGE OF SCIENCE AND TECHNOLOGY, RAIPUR by BHUNESHWAR KUMAR in partial fulfillment of the requirement for the award of Degree Bachelor Of Business Administration is a bonafide work carried out by him under my supervision and guidance. This work has not been submitted anywhere else for any degree/diploma. The original work was carried out during 15-03-2013 to 31-03-2013 in LAXMI AUTO CARE.
Date-
Name of Guide:WAZID KHAN
(Sales Manager)
HERO MOTO CORP
DECLARATION
I, the student of Bachelor of Business Administration, KD RUNGTA COLLEGE OF SCIENCE AND TECHNOLOGY, RAIPUR, hereby declare that this project report Study of Advertising and Sales Promotion- A Study of Hero Moto Corp prepared, is my original work, which I had submitted in LAXMI AUTO CARE, to my guide Mr. WAZID KHAN ( Manager SALES department) All the information and data given in my project are authentic to the best of my knowledge and taken from reliable sources.
Date:31.03.2013 Place: DALLI RAJHARA
BHUNESHWAR KUMAR
Counter Sign by Guide Mr.Wazid khan Manager (sales)
ACKNOWLEDGEMENT
Every researcher in pursuit of his/her objective collects enormous empirical debt of gratitude to others and I am no exception to it. Completing a task is never one mans effort; it is often the result of invaluable contribution of no. of individuals indirect or indirect way in shaping success on achieving it. Here I take the opportunity to extend my sincere gratitude to Mr.R.C.Shrivastava (Manager- F&A Dept.) allowing me to experience great work environment in their esteemed organization at Bhilai Steel Plant, Bhilai.
Their benevolent nature and timely guidance infused courage in me to complete the project successfully. Their impact on me was tremendous, I wouldnt be exaggerating if I would say that even revolutionized the way in which I used to think and function. My profound, thank are due to them, for giving me unconditional and absolute support, cooperation, and encouragement during the project. This acknowledgement is incomplete without giving special thanks to the persons who are directly or indirectly associated with the project. I do sincerely hope that my report would give value to the organization. Last but not the least I pay my deep regard to my parents and gratitude to God, without whom I was not able to complete this project. BHUNESHWAR KUMAR.
My
sincere
gratitude
to.
BSP:Mr. R.C Shrivastava Manager (F&A)
IIST College MBA Deptt

Dr B.B.Patil (Principal)
Mr. Sanjay Sharma (Project Guide) Dr R.C.Singh
PREFACE
Theres a little bit of SAIL in everybodys life.
STEEL is the basic framework which has built nations, and it is on

this strength that nation stand apart. This man-made metal has an extraordinary quality of contributing to every aspect of life while it keeps the wheels of industry turning. It also lends ever-lasting quality to all kinds of structure and infrastructure. SARDAR VALLABH BHAI PATEL Many students may have done work on this project in different ways/styles. I have also tried to work on this project in a different way. It was for the first time I got the opportunity to work in such a prestigious and well-known organization and things which I have experienced in my training period are going to help me through out my life time. I have worked on this project with great enthusiasm and zeal. I have tried to cover almost all the things, which I have experienced and learned during the training period. To run a giant organization each and every department has to play its role effectively. In this era of cut-throat competition there is no room for complacency. Steel is the basic framework which has built nation, it contributes every aspect of life. The main goal of my project is the Analysis of Working capitalA Study of Bhilai Steel Plant Bhilai. It would be my great
pleasure, if this project can help this company to achieve its goal higher. This project has been undertaken to study the procedures and practices followed in Finance and Accounts department. The Finance & Accounts Department of Bhilai Steel Plant is divided into various sections and each section specializes in different activities. This report is prepared on the basis of the extensive study carried out at Finance & Accounts Department of SAIL, Bhilai Steel Plant.
TABLE OF CONTENT
Chapter 1: INTRODUCTION..
1-1 Industry Analysis The Global Steel Industry 1-2 Company Analysis 1-2-1Steel Authority of India Limited (SAIL) 1-2-2 Bhilai Steel Plant (BSP) 1-2-3 Finance & Accounts Departments 1-3 Introduction of F & A Dept 1-3-1 -Organizational Chart of F & A Dept
Chapter 2: ISSUE ANALYSIS ..

Scope of Study 2-1-1 Working Capital 2-1-2 The Investment decision 2-1-3 The financing decision
2-1-4 Current assets 2-1-5 Analysis of current assets 2-1-6 Current liabilities 2-1-7 Analysis of current liabilities 2-1-8 Working capital management 2-1-9 Amount of working capital 2-1-10 Working capital management of B.S.P 2-1-11 Concept of working capital 2-1-12 Kinds of working capital 2-1-13 Determinants of working capital 2-1-14 Working capital cycle 2-1-15 Method of analysis of working capital 2-1-16 Circulation of working capital 2-1-17 Operating cycle 2-1-18 Calculation of operating cycle
Chapter 3 : DATA COLLECTION 3-1-1 Data analysis and interpretation Chapter 4: RESEARCH 4-1-1 Research Methodology 4-1-2 Research Design Chapter 5: FINDINGS
Chapter 6: CONCLUSION Chapter 7: BIBLOGRAPHY 7-1-1 List of websites 7-1-2 list of books 7-1-3 list of reference
Chapter 1:
INTRODUCTION
Industry Analysis THE GLOBAL STEEL INDUSTRY

The global steel industry has been going through major shifts in focus. Not only has a new steel making giant emerged the entire geographical focus of steel production has been undergoing major changes. Such changes have been taking place on a critical scale since the Second World War but have completely taken many by surprise in the last quarter of a century. Steel is a strong material. The strength of steel reflects the strength of nation. It is reflected in two ways, economic and military. The quantum of steel consumed has been the barometer for measuring development
& economic progress. Whether it is construction or industrial goods, steel is the basic raw material. Global steel production grew enormously in the 20 th century from a mere 28 MT at the beginning of the century to 780 MT at the end. That was the period when the steel industry developed in Western Europe & the USA followed by the Soviet Union, Eastern Europe & Japan. However, steel consumption in the developed countries has reached a high stable level & growth has tapered off. Attention has now shifted to the developing regions. In the West, steel referred to as a sunset industry. In the developing countries, the sun is still rising, for most it is only a dawn. Towards the end of the last century, growth of steel production was in the developing countries such as China, South Korea, Brazil & India. In 2007 World Crude Steel output at 1342.1 Million MT was 5.9% more than the previous year. (Source: IISI). China remained the worlds largest Crude Steel producer in 2007 also (349.4 Million MT) followed by Japan (112.47 Million Metric Tons) & USA (93.89 Million Metric Tons). India occupied the 8 th position (38.08 Million Metric Tons). (Source: IISI). The International Iron & Steel Institute (IISI) in its forecast for 2007 has confirmed the trend of recent years of increase in steel use in-line with the economic growth & with the fastest growth occurring in the
countries with the highest GDP growth such as India & China. Apparent world-wide Steel Demand is forecast to grow to between 1,040 & 1,053 MT in 2008 from a total of 972 MT in 2006. This is a growth of 4-5% over the two year period. However, according to IISI the cost of raw material & energy would continue to represent a major challenge for the world steel industry. The healthy world economic growth & demand in emerging market countries, notably in Asia, where major infrastructure projects were under way, acted as the key trigger to the significant production rise. But this trend seems rather transitory. The Organization for Economic Corporation & Development in November opined, while steel prospects for 2007 remained relatively sound, on increase in output capacity especially in Asia, could lead to overproduction & fall in prices. Some important points regarding Global Steel Industry are as follows: During 2007, the world crude steel production reached a level of 1244 Million Tons. It shows a growth of 9.0% over 2006 crude steel production level at 1142 Million Tons. China retained its No.1 position by producing around 422 Million Tons, followed by Japan with production of 116 Million Tons & USA with production at around 98 Million Tons. India with production of 44 Million Tons ranked 7th amongst world steel producing countries.
China accounted for 34% of world crude steel production where as contributions from rest of the world at EU 16%, NAFT 10.5%, CIS 9.6%, JAPAN 9.3% & other ASIA 10.5%. If we look at crude steel equivalent consumption figures during the year 2006 it will be seen that China accounted for 31%, EU 17%, NAFTA 14.5%, CIS 4.7%, JAPAN 6.7% & other ASIA 14% towards crude steel consumption for the world. Apparent finished steel consumption during the year 2006 was around 1113 Million Tons as against 1026 million Tons during 2005. During the year 2005, total world trade was around 364 Million Tons. During the year 2005, USA ranked No.1 as net importer country at 20.8 Million Tons followed by Thailand at 10.8 Million Tons & Iran at 6.9 Million Tons. During the year 2005, Japan leads the world steel trade as a net exporter at 26.8 Million Tons followed closely by Russia at 26.3 Million Tons. During the year 2007, Crude Steel production till Sept07 (JanSept07) has been around 980 Million Tons representing an increase of around 7.7% over same period last year (910 Million Tons). The ocean freight due to high demand for carrying iron ore has increased substantially in the recent period.
Company Analysis
STEEL AUTHORITY OF INDIA LIMITED (SAIL)

HISTORY:
Steel Authority of India (SAIL) was established in 1973 to manage the operations of state-owned steel companies Hindustan Steel (established in 1954) and Bokaro Steel (established in 1964). In 1978, SAIL was restructured as an operating company.
The company established Durgapur Steel Plant (DSP) in the late 1950s with an initial annual capacity of one million tons of crude steel. The capacity of DSP was later expanded to 1.6 million tons during the 1970s. Over the years, SAIL established various steel plants. Bokaro Steel Plant (BSP), which was originally incorporated as a limited company in 1964, was merged with SAIL, first as a subsidiary and then as a business unit. Salem Steel Plant (SSP) was commissioned, in 1981. The Indian Iron and Steel Company (IISCO), a subsidiary of SAIL, was declared a sick industrial company by the Board for Industrial and Financial Reconstruction (BIFR), in 1994. NTPC SAIL Power Company was established as a joint venture with National Thermal Power Corporation (NTPC), in 2001. In the following year, SAIL established the Bokaro Power Supply Company with Damodar Valley, and the Bhilai Electric Supply Company with the NTPC.
EXPANDING HORIZON (1959-1973)

Hindustan Steel (HSL) was initially designed to manage only one plant the Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was steel ministary. From April 1957, the supervision and control of these two transferred to Hindustan Steel. The registered office was originally in New Calcutta in July 1958 and ultimately to Ranchi in December1959.
A new Steel company, Bokaro Steel Limited, was incorporated in January operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela completed by the end of December 1961. The 1 MT phase of Durgapur Steel completed in January 1962 after commissioning of the wheel and axis plant production of HSL went up from .158 MT (1959-60) to 1.6 MT. T he second plant was completed in September 1967 after commissioning of the wire of the 1.8 MT phase of Rourkela- the Tandem Mill was commissioned the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969 the Furnace in SMS. Thus with the completion of the 2.5 MT stage at Bhilai and 1.6 MT at Durgapur, the total crude steel production capacity of HSL 1968-69 and subsequently to 4 MT in 1972-73.
Key Facts
Table No:-1
INTRODUCTION:
Steel Authority of India Limited (SAIL) is the leading steelmaking company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for
domestic markets.
construction,
engineering,
power,
railway,
automotive and defense industries and for sale in export
Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite, which are inputs for steel making. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified.
SAIL VISION:
To be a respected world-class corporation and leader in India steel business in quality, productivity, profitability, and customer satisfaction.
CREDO:
We build lasting relationships with customers based on trust and
mutual benefit.
We uphold highest ethical standards in conduct of our business. We create and nurture a culture that supports flexibility, learning
and is proactive to change. We chart a challenging career for employees with opportunities for advancement and rewards. We value the opportunity and responsibility to make a meaningful difference in peoples lives.
CORE VALUES OF SAIL:

Customer satisfaction. Concern for people. Consistent Profitability. Commitment of Excellence.
THE SEVEN Cs OF SAIL

Complaint settlement. Culture of Customer Services. Consistent Quality. Committed Delivery. Customized Product Mix.
Contemporary Products.
Competitive Price.
SAIL Today:
SAIL today is one of the largest industrial entities in India. Its strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets and a large pool of technical and professional expertise. Today, the accent in SAIL is to continuously adapt to the competitive business environment and excel as a business organization, both within and outside India. Year Pig Iron Bars & Rods structures Rly. materials Total Long Product Plates Total Fin.Steel Semis Saleable Steel Source: SAIL SAIL 1.7% 6.2% 15.3% 97.5% 8.7% 44.2% 12.6% 4.6% 9.7% BSP 0.1% 4.0% 5.8% 91.2% 5.6% 19.5% 7.1% 1.1% 4.9%
CAPITAL EXPENDITURE
Amount spent on expansion plan & other capital schemes of SAIL (incl. subsidiary) during last 5 years are as follows:
YEAR 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
TOTAL (Rs./Crs.) 2181 5233 10606 11280 11021
SAILS SAILSGROWTH GROWTHPLAN PLAN
Much has happened ever since SAILs Corporate Plan was announced in 2004. Investment plans for the three specialty steel plants have been firmed up. Company has grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant). Production targets have been revised from 19 million tonnes (MT) of steel to about 24 MT. Estimated investments has increased from Rs 25,000 crore to around Rs 40,000 crore. And the time period has been squeezed by two years, bringing the targeted year of completion of major projects from 2012 to 2010.
Saleable Steel Capacities (MT) PLANT 2012
Bhilai Steel Plant
3153
Durgapur Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Alloy Steels plant Salem Steel Plant Visvesvaraya Steel Plant Iron &
1586 1671 3780 314 0.43 0.36 0.22
7 6
2.3
Million Tonne
5 4 3 2 1 0
I HI LA EL A AR PU G A RK O K
1.9
2.7
4.2
1.2
3.8 1.9
2.0
1.6
0.4
IIS
Planned increase
UR
O U
Existing capacity
Graph .- Saleable Steel Production Capacity
MAJOR UNITS
Integrated Steel Plants
Bhilai Steel Plant (BSP) in Chhattisgarh
CO
Durgapur Steel Plant (DSP) in West Bengal Rourkela Steel Plant (RSP) in Orissa Bokaro Steel Plant (BSL) in Jharkhand IISCO Steel Plant (ISP) in West Bengal
Special Steel Plants

Alloy Steels Plants (ASP) in West Bengal Salem Steel Plant (SSP) in Tamil Nadu Visvesvaraya Iron and Steel Plant (VISL) in Karnataka Maharashtra Elektrosmelt Limited (MEL) in Maharashtra
JOINT VENTURES
SAIL has promoted joint ventures in different areas ranging from power plants to e-commerce. NTPC SAIL Power Company Pvt. Ltd: A 50:50 joint vnture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.),it manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 (MW). Bokaro Power Supply Company Pvt.Ltd.: This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power
generation and 1880 tonnes per hour steam generation facilities at Bokaro Steel Plant. Mjunction Services Ltd.: A joint venture between SAIL and TATA Steel on 50:50 basis, this company promotes e-commerce activities in steel and related areas. SAIL-Basel Service Center Ltd.: SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service center at Bokaro with the objective of adding value o steel. Bhilai JP Cement ltd.: SAIL has also incorporated a joint venture company with M/s Jaiprakash Associates Ltd to set up a @.2 MT cement plant at Bhilai. SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint venture company to produce Ferro-manganese at Bhilai. North Bengal Dolomite Ltd: A joint venture between SAIL and West Bengal Mineral Development Corporation Ltd. on 50:50 basis was formed for development o Jayanti Dolomite Deposit,Jalpaiguri for supply of dolomite to DSP and other plants. Romelt_SAIL (India) Ltd.: A joint venture between SAIL, National Mineral Development Corporation (NMDC) and Russian promoters for marketing Romelt Technology developed by Russia for reducing of iron bearing materials, which is carried out with carbon in single stage reactor with the use of oxygen. SAIL today is one of the largest industrial entities in India. Its strength has been the diversified range of quality steel products catering to the
domestic, as well as the export markets & large pool of technical & professional expertise.
Ownership and Management

The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its Navratna autonomy. status, enjoys significant operational and financial
OTHER UNITS:
SAIL Consultancy Division. Center of engineering & Technology. Management training Institute. Safety Organization. Environmental Management Division. Raw Material Division. Growth Division. Central Power Training Institute. Central Marketing Organization.
MAJOR CAPITAL SCHEMES:

Bhilai steel Plant:
Rebuilding of Coke O. Coke Oven batteries. Modernization of BFs (including Gas Cleaning Plant). Installation of new Slab Caster, RH Degasser & Ladle Furnace. Revamping of existing Slab Casters in phased manner. New Pipe Plant of 0.2 million tones capacity. New Bar & Rod Mill ( 1 million tones). Logistics & Infrastructures.
Durgapur Steel Plant:

Bloom Caster & associated facilities. Rebuilding of coke oven battery. Installation of a new Billet Caster. Up gradation of BFs &CDI (Coal Dust injection) in BFs.
Rourkela Steel Plant:

Rebuilding of Coke Oven battery. New Blast Furnace-2000m3. CDI & Reconstruction of BFs. Revamping of sinter Plant including Pollution Control scheme.
Bokaro Steel Plant:

New 2.5 million tones hot strip mill & 0.6 million tones cold rolling mill. Installation of Slab Caster.
Installation of New modern BOFs.
IISCO Steel Plant:

Modernization of Steel Making Facility. New Multi purpose section mill/universal mill. Development of collieries.
SWOT Analysis of SAIL

STRENGTH
Largest player in the Indian Steel industry. Strong backward integration like iron ore and power. Very aggressive expansion plans. The single largest rail manufacturer in the world. Merger with IISCO would boost its profitability, as SAIL would have access to IISCOs underutilized iron ore and coalmines. All its plants are a profit centers. SAIL is a virtually Debt-Free Company. The approved acquisitions and merger of NINL, NISCO and MEL would result in synergy benefits, operating efficiencies, cost savings and thus higher profit.
WEAKNESS
Concern in obtaining new mining leases and renewal of old leases. Low liquidity in Stock Exchange (85.82% shares is held by GOI itself). Heavily dependent on import of raw materials (coking coal).
It has high operation cost when compared to its peers like Tata Steel, JSW Steel.
OPPORTUNITIES
Strong Economy growth (second fastest growing economy after China). Booming infrastructure sector (Roads, Ports, Airports, SEZs, Power). Strong demand in automobile sector, consumer durables sector and engineering goods sector. Robust demand in construction and retail industry. Low per capita steel consumption offers a higher growth. Rich Geological Resource base.
THREATS
Steel prices may remain stumpy on account of over supply from China. Bureaucratic nature of Government - Socio-Political interventions (in leasing mines). Rising interest rates could affect expansion programmed (High cost of Finance).
High cost of energy. Big ticket investment by POSCO and Mittal could swallow the market (specifically export). Cyclical nature of Steel Industry. Deficit infrastructure. High ash coal.
Bhilai Steel Plant

About BSP
Bhilai Steel Plant is a flag ship unit of Steel Authority of India Limited. SAIL, a fully integrated iron and steel maker, produces both basic and special steels for domestic construction, engineering, power, railway, automotive and defense industries and for sale in export markets. In terms of annual production SAIL is the 18th largest steel producer in the world. Living up to the description by Jawaharlal Nehru as significant symbol of a new age in India, Bhilai Steel Plant has been performing consistently despite many odds and has achieved profits for the 18th consecutive year. It broke its own record of highest ever profit of Rs 1932 crore by any steel plant in 2003-04 and registered a profit of Rs 4042 crores in 2004-05. In the year 2005-06 also it earned a handsome profit of Rs. 2781 Crores despite input price escalation. The true testimony to BSPs status of a world class steel plant is that BSPs EBITDA margin of 33% is quiet comparable to many International steel players like POSCO (30%), NIPPON (19%), MITTAL STEEL (16%0, ARCELOR (16%), etc. Its Gross Margin to average capital employed at 182% is a Global Benchmark. Maintaining the track record, BSP continued to operate above the rated capacity in production of the three
main items viz. Hot Metal, Crude Steel and Saleable Steel. BSP is the first steel plant in India to have crossed the annual production of 5MT crude steel in the year 2005-06. In order to meet the challenges of Corporate Plan 2012 and to maintain the leadership position of BSP in Indian steel industry, the leadership has taken bold steps to make significant investments for breakthrough improvements in efficiency, resource management, knowledge and skill by deploying world class tools. This year is a milestone in BSP journey when new tools have been introduced viz. ERP, Knowledge Management, Six Sigma, Multi-skilling etc.
Table: Main Products & Expected Market Share 2011-12 Current Market Expected Main Products Share Market Share Rails 100% 100% Plates 24% 30% Bars, Rods & 4.8% 10% Structural. HR Coils / Sheets Nil 6% Pipes Nil 6%
Domestic
The Organization
Bhilai Steel Plant functions as a unit of SAIL with its corporate office at New Delhi. SAIL is governed by a Board consisting of function Directors, Managing Directors and government nominee Directors, 85.62% of the shares of SAIL are with Indian Government and balance are with financial institutions, mutual funds, Indian Public and others,
corporate office formulate Policies, strategies and overall guidelines for its unit, central organization like CMO (Central Marketing Organization) RDCIS (Research and Development Center for Iron & Steel ) CET ( Center for engineering and Technology ) look after the relevant activities for the plates under SAIL. Over the years, Bhilai Steel Plant has developed an organizational culture that run forces its commitment to values and stimulates continuous improvements and higher levels of performance. The chief executives at Bhilai is the Managing director (MD) who is in overall control of the operations of the plant, township and the mines, Managing Director is assisted by his DROS i.e. the functional heads (Executive directors/General Manager) concept of Zonal heads and HODS helps in integrating various functions with clear accountability for achieving corporate vision, company goals and objectives.
Bsps Organizational Objectives

To encage customer satisfaction through: Improvement in productivity and product quality. Skill enhancement of our people by competence commitment and culture-building. Production as per customer requirements. Table : PRODUCT-MIX TONNES/ANNU
Semis Rail & Heavy Structural Merchant Products (Angles, Channels, Round & TMT bars) Wire Rods (TMT, Plain & Ribbed) Plates (up to 3600 mm wide) Total Saleable steel Captive mines: Iron-Ore Bhilai Limestone - Nandini, 23 kms from Bhilai Dolomite - Hirri, 150 kms from Bhilai Rail & Structural Mill: Wire Rod Mill: -
M 5,33,000 7,50,000 5,00,000 4,20,000 9,50,000 31,53,000
Dalli-Rajhara Iron Ore Complex, 80 kms from
Capacity - 7, 50,000 T Capacity - 4, 20,000 T
Product Mix: Saleable Steel Production:
Major suppliers of Bhilai steel plant:

1. Apollo industrial corporation Mumbai. 2. Ashok Leyland Chennai. 3. BHEL Bhopal and Mumbai. 4. Bharat petroleum gas Nagpur. 5. Birla corporation limited kolkotta. 6. Cimmco Birla limited new Delhi. 7. Dunlop India limited kolkotta. 8. Siemens casting limited Mumbai.
9. Simplex casting limited Raipur. 10.HMT ltd. Ranchi.
Major buyers:
1. Indian railways. 2. Vizard profiles limited. 3. High pressure boiler plant BHEL Trichy. 4. NTPC super thermal power project. 5. Jindal steel and power limited Raigarh. 6. NTPC limited New Delhi. 7. Common India limited Delhi. 8. Chandigarh industrial journalism and development corporation Chandigarh. 9. Cropro international Italy. 10.Sangyong corporation Japan.
Competitors:
1. Ispat industries limited. 2. Lloyds steel limited. 3. Essar steel limited. 4. Jindal steel and power limited. 5. Jindal strips limited.
6. Uttam steels limited. 7. National steel industries limited. 8. Bhusan steel and strips limited..
Pollution Control Measures:

The plant has introduced environment friendly coal dust injection system in the Blast Furnaces, de-dusting system and electrostatic precipitators in other units and has planted lakhs of trees in a concerted afforestation drive that has seen Bhilai transform into one of the ten cleanest industrial townships in the CEO country.
ED (F&A)
ED (PROJECTS)
ED (WORKS)
ED (P&A)
ED (MM)
GM (F&A) 90
GM (PROJECTS)
GM (TS)
GM (MM)
GM (M&SP)
GM (PERS) GM (PP&E & BEDB) GM (HRD)
GM (IA)
GM I/C (SERVICES) GM (SAFETY)
ORGANISATIONAL GM I/C
(MINES) DIR (M&HS) ACVO GM (P MILL & MILLSLP) GM (CO, CCD & SP, OHP) GM I/C (PE, EN & STEEL) GM (QUALITY) GM (CCS) - SMS-II
STRUCTURE
GM (MS)
GM I/C (M&U) (REFR) DGM (L & A) OF BHILAI STEEL PLANT
COC
GM (IT)
TURNOVER
Production of Total Crude Steel ('000T)

5200 4960 4720 4480 4240 4000
4581.7 5053.7 4798.4 5054.6
5183.5
2006-07 2007-08 2008-09 2009-10 2010-11
Record production of 4.49 Million Tons of Saleable Steel , surpassing the previous best of 4.43 T achieved in 10 - 11 and registering a growth of 1.4% over the previous Year.
Production of Saleable Steel ('000T)

4500 4300 4100
3935.1 4285.6 4222.9 4428.9 4491.6
3900 3700 3500 2006-07 2007-08 2008-09 2009-10 2010-11
Record production of 3604.6 Thousand Tonnes Finished Steel, surpassing the previous best of 3603.1 Thousand Tonnes in 2009-10.
Production of Finished Rails ('000T)

1000 940 880 820 760 700 2006-07 2007-08 2008-09 2009-10 2010-11
868.4 880.9 855.2 916.1 978.7
Lowest ever coke Rate at Blast Furnaces at 491.0 Kg/THM, against previous best of 497 Kg/THM in 2007-08.
510 506 502 498 494 490 2006-07 2007-08 2008-09 2009-10
491 499 497
Coke Rate at BFs ( Kg/THM )

508.9 509.2
2010-11
Lowest ever Specific Water consumption of 3.04 M3 /TCS against previous best of 3.06 M3 /TCS in 2007-08 .
Spaecific Water Consumption /TCS (M)

5 4.6 4.2
3.97
3.8 3.4
3.79
3.19
3 2006-07 2007-08 2008-09
3.06
3.04
2009-10
2010-11
Best ever production of 430,494 Tons of TMT Bars from Merchant Mill, surpassing the previous best of 417,591 Tons in 09 -10 , registering a growth of 3.1% over previous year.
Production of TMT Bars ('000T)

500 400 300 200 100 0 2006-07 2007-08 2008-09 2009-10 2010-11
187.1 210.6 156.7
Merchant Mill
417.6
430.5
Best ever production of 403,175Tons of TMT Rods from Wire Rod Mill, surpassing the previous best of 277,488Tons in 09 10, registering a growth of 45.3% over previous year.
Production of TMT Wire Rods ('000T)

500 400 300 200 100 0 2006-07 2007-08 2008-09 2009-10 2010-11
109.5 107.2 109.8 277.5
Wire Rod Mill
403.2
Best ever production of 814,805 Tons of UTS-90 Rails, surpassing the previous best of 791,541 Tons in 09 - 10 , registering a growth of 2.9% over previous year. Best ever loading of 213,652 Tonnes of 26 metre rails and 106,284 T of 130 & 260 metre rails, surpassing the previous best of 197,708 Tonnes and 101,104 T, respectively in 200910.
150 120 90 60 30 0
Production of HT (H/S) Plates ('000T)

122.8 110 106.1 98.2 99.4
2006-07 2007-08 2008-09 2009-10 2010-11
NEW PROJECTS: A Capital Expenditure exceeding Rs 800 crore was incurred by BSP during the Financial Year 2010-11. During the year 2008-09, Turnkey projects of Rs 3959 crore, projects under Capital Budget of Rs 67.43 crore & projects under Revenue of Rs 2.87 crore have been signed.
Project Website and Online Contract Billing & Accounting System have been launched.
MAJOR PROJECTS COMPLETED: COB-5 (Pkg-I) Battery Proper & Oven Machine. Slab Caster in SMS-II. Installation of MSDS-VI. End Forging Plant for Thick Web in RSM.
ONGOING PROJECTS: COB-11, New Coal Handling Plant, CDCP. Rebuilding of COB-6 (Battery Proper). Augmentation of Plate Mill capacity. Basic Oxygen Furnace Shop SMS-III. MSDS-7. Compressed Air Station-4. Ore Handling Plant Plant-A. Electro Magnetic Stirrer in Bloom Caster in SMS-II. Implementation of ERP. Installation of 30 MLD Sewerage Treatment Plant with Recycling facilities at Township. This will enable recycling of sewerage water from 10 residential sectors and Indira place Market area for industrial use. Hot Metal Desulphurization for SMS-III.
Installation of MSDS-V. Up gradation of Nitrogen Network. 6.6 KV Switchgear for Substation 21 of SP-II. Enabling works for 7 MT expansions. Repl. Of DN 3000 Blast Furnace Header from BF-1 to BF-6. Repl. Of Main Drives MG sets by Thyristor Converters at Plate Mill. 700 TPD (ASU 4) Unit with associated facility at OP-2. 2*150 T capacity in-motions Weigh Bridge in Peripheral Yard 7 Raw Material Station.
SPU at Ujjain, Hoshangabad & Gwalior..
UPCOMING PROJECTS: Implementation of Manufacturing Executing System. Augmentation of Coal Grinding facility for CDI unit at BF-6 & BF7. 7 numbers WDS-6 Loco & 1 no WDG-3A Loco. Installation of 2nd Sinter M/c in Sinter Plant-III (320 m2). New Blast Furnace 8 (4060 cu m). Continuous Casting Shop SMS III. o 2*6 Strand Billet Casters. o 1*4 Strand Bloom-cum-Billet Casters. o 183 Strand Beam Blank Caster. New Bar 7 Rod Mill (0.90 MT Capacity). New Universal Rail Mill (1.2 MT Capacity).
Universal Beam Mil (1.0 MT Capacity). New 2 *1250 TPD Oxygen Plant on BOO basis.
Finance and Accounts Department Of Bhilai Steel Plant
Introduction:
Finance and accounts department of Bhilai Steel Plant is one of the key department in the total organization .it has two main functions i.e. Finance and Accounts. These functions are carried out by various
sections of finance and accounts department. The objective of finance and accounts department is always to meet the requirement of line department while doing its own line functions such as accounts maintaining, meeting statutory requirements, budgetary control and advising on financial matters etc. This training report is an attempt to consolidate various functions of accounts and finance department of Bhilai Steel Plant, this report is based on the latest practices and system being followed and would we very useful to everyone functioning as finance and accounts executives and for others as well. This will throw light on the function and importance of finance and accounts department in total organization. This report is prepared with the contribution of all managers of finance and accounts department. The sections of finance and accounts department covered are as follows Mines coordination Stores and Raw material section Freight and claims Purchase and contract concurrence section Project finance and accounts Costing and budgeting section Operation accounts section Wages section Cash section Sales invoicing and accounting section
Excise and sales tax section Central accounts and assets.
ORGANISATIONAL STRUCTURE OF FINANCE AND ACCOUNT DEPARTMENT OF BHILAI STEEL PLANT

Bifurcation and coordination of Finance and Accounts department
Finance Finance and and accounts accounts departme departme nt nt
Invoic Invoic ing ing ng ng
Issue Analysis
SCOPE OF PROJECT OBJECTIVE METHODOLOGY RESEARCH DESIGN
SCOPE OF PROJECT ;
Working Capital is the capital available for conducting the day-to-day operations of an organization, normally, the excess of current assets over current liabilities. In accounting terms this is a static balance sheet concept referring to the excess at a particular moment in time of permanent capital plus long-term liabilities over the fixed assets of the business. As such it depends on accounting rules, such as what is capital and what is revenue, what constitutes a retained profit, the cut-off between long term and short term (12 months from the balance sheet date), and when revenue should be recognized. If working capital thus defined exceeds net current operating assets (stocks plus debtors less creditors) the company has a cash surplus (usually represented by bank deposits and investments); otherwise it has a deficit (usually represented by a bank loan and/or overdraft). On
this basis, therefore, the control of working capital can be sub divided into areas dealing with stocks, debtors, creditors and cash. A business must be able to generate sufficient cash to meet its immediate obligations and therefore continue trading. Unprofitable business can survive for quite some time if they have access to sufficient liquid resources, but even the most profitable business will quickly go under without adequate liquid resources. Working capital is therefore essential to the companys long-term success and development, and the greater the degree to which current assets cover the current liabilities, the more solvent the company. Efficient managing of working capital is important from the points of view of both liquidity and profitability. Poor managing of working capital means that the funds are unnecessarily tied up in idle assets, hence reducing liquidity, and also reducing the ability to invest in productive assets as plant and machinery, so affecting the profitability. A companys working capital policy is a function if two decisions: ~ The appropriate level of investment in, and mix of current assets to be decided upon, for a set level of activity - this is the investment decision. ~ The methods of financing this investment - the financing. Decision.
The Investment Decision

All businesses, to one degree or another need working capital. The actual amount of working capital will depend on many factors like age of the firm, the type of business activity, credit policy and also time of the year. There is no
standard fixed requirement. It is essential that an appropriate amount of working Capital is budgeted to meet anticipated future needs. Failure to budget correctly could result in the business being unable to meet its liabilities as the fall due. If a business finds itself in such a situation, it is said to be technically insolvent. In conditions of uncertainty firms must hold some minimal level of cash and inventories based on expected sales, plus additional safety stocks. Firms with an aggressive working capital policy hold minimal safety stock. Such a policy would minimize costs, but it could lower sales because a firm may not be able to respond rapidly to changes in demand. Conversely, a conservative working capital policy would call for large safety stocks. Conservative policy has lower returns but lesser risk when compared to an aggressive policy. A moderate policy falls somewhere between the two extreme policies.
The Financing Decision

Working capital decisions involve the determination of the mix of long term versus short-term debt. When the yield curve is upward sloping, short-term debt costs less than long term debt. A firm with an aggressive financing policy finances part of its permanent asset base with short-term debt (which generally provides the highest expected return but is very risky) while a firm with a conservative finance policy has permanent financing (long term debt plus equity) more than its
permanent base of assets. This has much lower returns but also is much safer. Management must be concerned with all aspects of the firms operations including production of goods and delivery of services, sales and marketing activities, and supporting functions, such as personal training and data processing to handle these responsibilities, most firms make extensive use of financial data and reports. As businesses become larger and more complex, finance assumed the responsibility of dealing with problems and decisions associated with managing the firms assets. Inventories constitute the major element in the working capital of many business enterprises. For instance, inventories on an average constitute 60 percent of current assets in public limited companies in INDIA. It is, therefore, necessary to manage inventories efficiently and effectively to avoid unnecessary investments in them .Inventories have a direct Impact on the profits of the firm. Profit is affected by inventories in several ways. Firstly, too much, or too little inventory affects the firms rate of return on investment. Secondly, the rate at which the inventories move through the production on distribution process also affects the cost of doing business. It is therefore, necessary to formulate and initiate inventory policies which will serve as guides in determining the correct level of inventory to maintain and the correct amount of working capital to invest in inventory. To develop adequate inventory plan, it is necessary to have thorough knowledge of the objectives of inventory management and inventory management techniques. A firm neglecting the management of inventories will be jeopardizing its long-run profitability and may fail ultimately. It is possible for a company to reduce its levels of inventories to a
considerable degree e.g., 10 to 20 percent, without any adverse effect on production and sales, by using simple inventory planning and control techniques. The reduction in excessive inventories carries a favorable impact on company profitability.
Current Assets
It consists of cash of cash, investments, inventory and receivables and other market securities. Current assets are normally converted into cash within a year. These assets consist of: 1) Cash and bank balance 2) Investments Government and other trustees securities. Fixed deposits of banks, which are not earned, marked for any specific purpose, maturing within one year.
3) Receivables a) Sundry debtors arising out of sales other deferred receivables. b) Bills discounted. c) Investments of deferred receivables due within one year. 4) Inventory
a) Raw materials and components include those in transit. b) Stock in process including semi finished goods. c) Finished goods including goods in transit. d) Consumable stores and spares. 5) Other Current Assets
a) Advanced payment of tax.

b) Advance for the purpose of raw materials, components and stores.
Total Inventories Rs.crores) Particulars Inventories: Stores and Spares Raw materials Stock Semi/Finishe d goods Total 20082009 570.51 20092010 592.19 20102011 805.28 20112012 717.73
(in
484.18 1828.4 5 2883.1 4
588.77 1430.9 6 2611.92
579.33 1790.7 4 3175.35
667.79 1725.2 4 3110.7 6
Interpretation Inventories are a major part of current asset. The inventories has increased by 21.57% in the year 2010-2011 but for the accounting year 2011-2012 the inventories has decreased by 2.03%.
Total current assets :

(In Crores)
Particular s Total inventorie s Sundry debtors Cash and bank balances Other current assets Loans to Others Total
20082009 2883.14
20092010 2611.92
20102011 3175.35
20112012 3110.76
13.42
19.08
13.93
4.36
43.14
51.40
54.35
60.39
10.81
10.11
8.62
358.90
473.74 3424.25
947.65 3640.16
1488.03 4740.28
1575.18 5109.59
Interpretation There is a nominal increase of 7.80% in the year 2011 - 2012 in current asset with respect to a increase of 30.22% in the year 2010 - 2011. This
slow increase is due to decrease of level of inventories by 2.03% in the year 2011-2021 with respect to year 2010-2011.Although a nominal increase , but increase in current asset shows the liquidity soundness of company.
Analysis of current asset.

Inventories-They consist of tangible assets held for sale in business,
for process of production, or currently consumed in the production of goods or services for sale. Raw materials are basically used in manufacture of the project, finished goods are final goods for sale and semi finished goods are goods in process of production. The constituents of inventory carrying cost are interest, storage, insurance, physical deterioration and obsolescence. Inventory procurement also involves ordering cost consisting of number of deliveries multiplied by the cost of delivery. These two costs make up the total cost of inventory. The economic order quantity or lot size is to be found where the total inventory cost is minimal.
Cash-Cash is the important component of current assets, which is

kept to meet running expenses and meet expenses and meet emergencies. It is the most liquid of current assets and its level is determined by the liquidity of other assets. Cash is kept in the bank deposits or readily convertible temporary investments.
Receivables-It rises out of delivery of goods or rendering of services

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

in government securities, bonds, debentures and shares which are readily marketable and may be converted into cash at short notice.
Current Liabilities
Current liabilities consist of estimated or accrued amounts, which are anticipated to cover expenditure within a year, for known obligation. Current liabilities include:
1) Borrowings:
a) From banks b) From other
2) Others:
a) Unsecured loans b) Public deposits maturing within one year. c) Sundry creditors for raw materials and stores.
d) Interest and other charges accrued but not due for payment. e) Advance/progress payments from customers f) Deposits from dealers, selling agents etc.
3)Statutory liabilities:
a) Provident fund dues b) Provision for tax. c) Sales taxes, excise etc
4)Miscellaneous current liabilities:

a) Dividends b) Liabilities for expenses c) Gratuity payable within one year.
Current Liabilities of B.S.P
(In Rs. Crores)
Particulars Sundry creditors Security deposits
20082009 737.95 59.06
20092010 1115.78 63.52
20102011 1212.16 68.59
2011-2012 782.62 96.80
Other liabilities Total current liabilities
1730.69
1400.81
1859.27
2180.50
2527.70
2580.11
3140.02
3059.92
Interpretation
Current liabilities shows company short term debts pay to outsiders. In the accounting year 2009-2010 the current liabilities decreases by 2.55%
Analysis of Current Liabilities

They comprise of borrowing from banks, trade credits, assessed tax and unpaid dividends. The share of each constituent to total current liabilities partly determines the availability of working capital. There is very little scope of maneuvering current liabilities.
Working Capital Management

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

The amount of working capital it requires varies from unit to unit and between units in different industries current assets are required because the operations do not convert into cash instantaneously there is always an operating cycle which converts cash into raw materials, raw material into goods in process, good in process into finished goods and finished good into debtors through credit sales and finally debtors into cash.. Working capital should be continuously supplemented until capacity utilization is full if working capital is inadequate for full capacity utilization the return on fixed assets cannot be maximize
Working capital management of BSP
The basic goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable, accounts payable and cash.
Concept of Working Capital

Gross working capital :
It refers to the firms investment in current asset. Current assets are the assets, which can be converted into cash within in an accounting year or within an operating cycle. You can include here cash, short-term securities, debtors (account receivable and book debts), and bills receivable and stock.
Net working capital:

The net working capital refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expect to mature for payment within an accounting year and include creditors, bills payable and the outstanding expenses. In other words we can say the this is the excess of current assets over current liabilities.
NET WORKING CAPITAL

CURRENT ASSETS CURRENT LIABILITIES
CASH ACCOUNTS ACCOUNTS RECEIVABLES NOTES RECEIVABLES MARKETABLE SECURITIES INVENTORY PERPAID EXPENSES
PAYABLE NOTES PAYABLE ACCURED EXPENSES TAXES PAYABLE SHORT TERM LOANS BANK OVERDRAFT
= CURRENT ASSET - CURRENT LIABILITIES
Kinds of working capital:

1. Permanent working capital:
Permanent working capital is the minimum amount of current assets, which is needed to conduct a business even during the dullest season of the year. The minimum level of current assets is called permanent or fixed working capital
as this part is permanently blocked in current assets. This amount varies from year to year, depending upon the growth of the company and the stage of the business cycle in which it operates.
2. Temporary working capital

Temporary working capital represents a certain amount of fluctuations in the total current assets during a short period. These fluctuations are increased or decreased and generally cyclical in nature. Additional current assets are required at different times during the operating year. Variable working capital is the amount of additional current assets that are required to meet the seasonal needs of a firm, so is also called as the seasonal working capital.. For exadditional inventory will be required for meeting the demand during the period of high sales when the peak period is over variable working capital starts decreasing or very little during the normal period.
Analysis of Working Capital Management A study in Bhilai Steel Plant 2
Diagrammatic representation of temporary and variable working capital.
Fig: Permanent and variable working capital in a stable firm.
3 4
5IMPORTANCE
OR
ADVANTAGE
OR
ADEQUATE WORKING CAPITAL
SOLVENCY OF THE BUSINESS : Adequate working
capital helps in maintaining the solvency of the business by providing uninterrupted of production. GOODWILL:Suffcient amount of working capital enables a firm
to make prompt payments and makes business by providing uninterrupted of production.
EASY LOANS:Adequate working capital leads to high solvency
and credit standing can arrange loans from banks and other on easy and favorable terms.
cost.
CASH DISCOUNT:Adequate working capital also enables a
concern to avail cash discounts on the purchases and hence reduces
REGULAR
SUPPLY
OF
RAW
MATERIALS:Sufficient
working capital ensures regular supply of raw materials and continous production.
REGULAR
PAYMENT
OF
SALARIES,WAGES
AND
OTHER DAY TO DAY COMMITMENTS:It leads to the satisfaction of the employees and raises the morale of its employees,increases their efficiency,reduces wastage and costs and enhances production and profits.
EXPLOITATION
OF
FAVOUABLE
MARKET
CONDITIONS:If a firm is having adequate working capital then it can exploit the favourable market conditions such as purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher prices.
ABILITY TO FACE CRISES:A concern can face the situation
during the depression.
QUICK
AND
REGULAR
RETURN
ON
INVESTMENTS:Sufficient working capital enables a concern to pay quick and regular of dividends to its investors gains comfidence of the investors and can raise more funds in future.
HIGH
MORALE:
Adequate
working
capital
brings
an
environment of securities, confidence, high morale which results in overall efficiency in a business.
EXCESS OR INADEQUATE WORKING CAPITAL Every business concern should have adequate amount of working
capital to run its business operations.It should have neither redundant or excess working capital nor inadequate nor shortages of working capita.Both excess as well as short working capital positions are bad for any business.However,it is the inadequate working capital which is more dangerous from the point of view of the firm.
DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

1. Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments. 2. Redundant working capital leads to unnecessary purchasing and accumulation of inventories.
3. Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of baddebts.
4. It may reduce the overall efficiency of the business.
5. If a firm is having excessive working capital then the relation with banks and other financial institution may not be maintained.
6. Due to lower rate of return in investments,the values of shares may also fall.The redundant working capital gives rise to speculative transcations.
DISADVANTAGES WORKING CAPITAL
OF
INADEQUATE
Every business needs some amounts of working capital.The need for working capital arises due to the time gap between production and realization of cash from sales.There is an operating cycle involved in sales and realization of cash.There are time gaps in purchase of raw material and production; production and sales ; and realization of cash.
Thus working capital is needed for the following purposes:
For the purpose of raw material, component and spares.
To pay wages and salaries. To incur day-to-day expenses and overload costs such as office expenses. To meet the selling costs as packing , advertising, etc. To provide credit facilities to the customer.
To maintain the inventories of the raw material, work-inprogress ,stores and spares and finished stock.
For studying the need of working capital in a business, one as to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized .The amount needed for working capital depends upon the size of the company and ambitions of its promoters. Greater the size of the business unit, generally larger will be the requirements of the working capital. The requirement of the working capital goes on increasing with the growth and expensing of the business till it gains maturity. At maturity the amount of working capital required is called normal working capital.
Determinants of working capital

1.
Nature of Business
This is one of the main factors. Usually in trading businesses the working capital needs are higher as most of their investment is concentrated in stock or inventory. Manufacturing businesses also need a good amount of working capital to meet their production requirements. Whereas, those companies that sell services and not goods, on a cash basis require least working capital because there is no requirement on their part to maintain heavy inventories.
2. Size of Business
Size of business is another influencing factor. As size increases, the working capital requirement is also more and vice versa. 3.Credit Terms / Credit Policy buy on credit and sell on credit, working capital is medium Credit terms greatly influence working capital needs. If terms are: buy on credit and sell by cash, working capital is lower buy on cash and sell on cash, working capital is medium buy on cash and sell on credit, working capital is higher. Prevailing trade practices and changing economic condition do generally exert greater influence on the credit policy of concern. a. A liberal credit policy if adopted more trade debtors would result and when the same is tightened, size of debtors gets slim. b. Credit periods also influence the size and composition of working capital. When longer credit period is allowed to debtors as against the one extended to the firm by its creditors, more working capital is needed and vice versa. c. Collection policy is another influencing factor. A stringent collection policy might not only deter away some credit customers, but also force the existing customers to be prompt in settling dues resulting in lower level of working capital. The opposite holds well with a liberal collection policy. d. Collection procedure also influences the working capital needs. A decentralized collection of dues from customers and centralized payments to suppliers shall reduce the size of working capital. Centralized collections and centralized payments would lead to moderate level of working capital. But with centralized collections and decentralized payments, the working capital need would be the highest.
3. Seasonality Seasonality of Production

Agriculture and food processing and preservation industries have a seasonal production. During seasons, when production activities are in their peak, working capital need is high.
Seasonality in supply of raw materials

This also affects the size of working capital. Industries that use raw materials which are available during seasons only, have to buy and stock those raw materials. They cannot afford to buy these items in a phased way, since either supplies would get reduced or prices would be higher. Also, from the point of view of quality of raw materials, it pays to buy in bulk during the seasons. Hence the high level of working capital needed when season exists for raw materials.
Seasonality of demand for finished goods

In case of products like umbrella, rain-coats and other seasonal items, the demand is high during peak seasons. But the production of these items has to be continuous throughout the year to meet the high demand during peak seasons. Thus, working capital requirement would be higher.
5.Trade Cycle
Trade cycle refers to the periodic turns in business opportunities from extremely peak levels, via a slackening to extremely tough levels and
from there, via a recovery phase to peak levels, thus completing a business cycle. There are 4 phases of trade cycle. Boom Period more business, more production, more working capital. Depression period less business, less production, less working capital. Recession period slackening business, stock pile-up, more working capital. Recovery period recouping business, stock speedily converts to sales, less working capital.
6. Inflation
Under inflationary conditions generally working capital increases, since with rising prices demand reduces resulting in stock pile-up and consequent increase in working capital.
7. Production cycle
The time lapse between feeding of raw material into the machine and obtaining the finished goods out from the machine is what is described as the length of manufacturing process. It is otherwise known as conversion time. Longer this time period, higher is the volume and value of work-in-progress and hence higher the requirement of working capital and vice versa.
8.System of Production process

If capital intensive, high-technology automated system is adopted for production, more investment in fixed assets and less investment in current assets are involved. Also, the conversion time is likely to be
lower, resulting in further drop in the level of working capital. On the other hand, if labor intensive technology is adopted, less investment in fixed assets and more investment in current assets which would lead to higher requirement of working capital.
Working capital cycle
WORKING CAPITAL OF B.S.P Crores)
(In Rs.
Particulars Total current assets (F) Total current liabilities (G) Working capital(FG=H)
20082009
20092010
200102011
2011-2012
3424.25
3640.16
4740.28
5109.59
2527.70
2580.11
3140.02
3059.92
896.55
1060.05
1600.26
2049.67
Interpretation
Working capital is required to finance day to day operations of a firm. There should be an optimum level of working capital. It should not be too less or not too excess. In the company there is increase in working capital by 28.08% with respect to 2011-2012. The increase in working capital arises because the company has expanded its business.
Methods of analysis of working capital

Analysis of working is significant for both management and short-term creditors. Management can assess the efficiency of the working employed in the business. Such an analysis helps management to detect trends and initiate corrective measures. It helps the shareholders and creditors to determine the prospects of payment of dividend and interest. The analysis of working capital helps in determining the ability of the company to repay its current debt promptly, assess the effectiveness of management of working capital, adequacy of working capital and to undertake credit ratings. Analysis of working capital relates to an examination of circulation, liquidity, level and structural aspects of working capital. In analysis of working capital the tools used are ratio analysis and funds flow analysis of the company.
Ratio analysis
To analyze the current financial position of a company, ratio computed on the basis of the figure appearing in the balance sheet is compared with norms set for the ratios. Depending upon the purpose, varies ratios are used. The ratio discussed here relate to liquidity, circulation level and structure of working capital.
Liquidity ratios
1. Net working capital to total assets: It is the ratio between net working capital and the total assets of a company
Liquidity ratios of B.S.P.

Net working capital to assets: 1. For (2008-2009) = 896.55 / 3424.25 = 0.26182:1 2. For (2009-2010) = 1060.05 / 3640.16 = 0.29120:1 3. For (2010-2011) = 1600.26 / 4740.28 = 0.3375:1 4. For (2011-2012) = 2049.67 / 5109.59 = 0.4014:1
INTERPRETATION
Liquidity refers to the ability of firm to meet its current obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulating assets. The current assets should either be liquid or near about liquidity. These should be convertible in cash for paying obligations of short-term
nature. The sufficiency or insufficiency of current assets should be assessed by comparing them with short-term liabilities. If current assets can pay off the current liabilities then the liquidity position is satisfactory. On the other hand, if the current liabilities cannot be met out of the current assets then the liquidity position is bad.
To measure the liquidity of a firm, the following ratios can be calculated:
CURRENT RATIO
QUICK RATIO
ABSOLUTE LIQUID RATIO
1.
Current ratio: It is the ratio between a firms current assets

and its current liabilities. it is the most frequently used ratio also called working capital ratio. It is considered as an index of solvency of a company. It indicates the ability of a company to meet its current obligation. Changes in current ratio can be misleading. If a company raises money through commercial paper and invests the amount in marketable securities, net working capital is unaffected but the current ratio changes.
a) Current Ratio
Current ratio = Current assets Current liabilities
1. For(2008-2009)=3424.25/2527.70=1.3546:1
2. For (2009-2010) = 3640.16 / 2580.11 = 1.4108:1
3. For (2010-2011)= 4740.28 / 3140.02 = 1.5096:1
4. For (2011-2012) = 5109.59 / 3059.92 = 1.6698:1
INTERPRETATION
As we know that the ideal current ratio for any firm that ideal current ratio is 2:1.If we see the current ratio of the company for last three years it is less than the ideal ratio.This signifies that the company does not have a sound liquidity position.Its current assets is less than that of its current liabilities.
2.
Quick (or acid-test ratio):
A firm having high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors. On the other hand, a firm having a low liquidity position if it has fast moving inventories .As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if quick assets are equal to the current liabilities then the concern may be able to meet its short-term obligations. However , a firm having high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors. On the other hand , a firm having a low liquidity position if it has fast moving inventories. The liquidity arises because finished goods cannot be sold for more than productions cost. The interval expressed in number of days measures the ability of the company to finance its daily expenditure with the current assets in its position even if it receives no further cash. Quick ratio = ( Cash + marketable securities+receivables) Current liabilities
1.
For (2008-2009) = 536.11 / 2527.70 = 0.21:1
2.
For (2009-2010) = 1028.24 / 2580.11= 0.40:1
3.
For (2010-2011) = 1564.93 /3140.02 = 0.498:1
4. For (2011-2012) =1998.83 / 3059.92 = 0.6532:1
INTERPRETATION
A quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time. The ideal quick ratio is 1:1.Companys quick ratio is less than ideal ratio. This shows company may have liquidity problem. However, a firm having high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors.
3. Absolute liquid ratio

Although receivables, debtors and bills receivables are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. So Absolute liquid ratio should be calculated together with current ratio and acid test ratio so as to exclude even receivables from the current assets and to find out the absolute liquid assets. Absolute liquid assets include:
Absolute liquid ratio
Absolute liquid assets Current Liabilities
Absolute liquid ratio = cash and bank balance
1. For (2008-2009) = 43.14 / 2527.70 = 0.017 2. For (2009-2010) = 51.40 / 2580.11 = 0.019 3.For (2010-2011) = 54.35/ 3140.02 = 0.017 4.For (2011-2012) =60.39/3059.92 = 0.019
INTERPRETATION
These ratio shows that company carries a small amount of cash. But there is nothing to be worried about the lack of cash because company has reserve, borrowing power & long term investment. In India, firms have credit limits sanctioned from banks and can easily draw cash.
Circulation of working capital

An analysis of circulation aspect throws light on the efficiency with which working capital is being utilized in a firm. Various turnover ratios covering each component of current assets have been developed to analyze the efficiency in the use of working capital. The higher the turnover of these components, the lower will be the need of working capital. The higher the turnover of these components, the lower will be the need of working capital. These ratios may be divided into 4 categories as: Inventory turnover ratios Receivables turnover ratios Current assets turnover ratio Working capital turnover ratio
1.
Inventory turnover ratios: Inventory turnover ratio shows the extent of

use of working capital funds in different types of inventory. These ratio includes-
Turnover of raw materials inventory
Turnover of goods-in-process
Turnover of finished goods inventory
Turnover of aggregate inventory
Turnover of raw materials inventory: This ratio

shows the number of times the raw material were replaced during a year. It is obtained by dividing raw materials issued to the factory by raw materials in ending inventory. A low ratio indicates that excessive raw materials have been procured and a high ratio indicates that more raw materials are required.
Turnover of goods-in-process: It is obtained by

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

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

dividing net sales in a year by the value of aggregate inventory at the end of the year. A high turnover quickens the flow of funds from inventory.
Turnover of current assets: This ratio measures the turnover

of total current assets used in business operations. The ratio is obtained by dividing cost of goods sold by total current assets. A lower turnover indicates utilization of working capital.
Current assets turnover ratio:

Sales Avg.Current Assets
C.A.T.R =
Year
Opening balance 2259.79 3424.25 3640.16 4740.28
Closing balance 3424.25 3640.16 4740.28 5109.59
Average current assets 2842.02 3532.205 4190.22 4924.935
Sales
20082009 20092010 20102011 20112012
16452.02 15069.41 16181.90 17108.89
Current asset turnover ratio 5.78times 4.26 times 3.86Time s 3.47Times
INTERPRETATION:
Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, large is the amount of sales and profits. Current assets movement ratios measure the efficiency with which a firm manages its resources. These ratios are called Turnover Ratios because they indicate the speed with which assets are converted or turned over into sales.
Inventory turnover Ratio:

Every firm has to maintain a certain amount of inventory of finished goods so as to meet the requirements of the business. But the level of inventory should neither be too high nor too low. Because it is harmful to hold more inventory as some amount of capital is blocked in it and some cost is involved in it. It will therefore be advisable to dispose the inventory as soon as possible. Inventory turnover ratio measures the speed with which the stock is converted into sales. Usually a high inventory ratio indicates an efficient management of inventory because more frequently the stocks are sold;the lesser amount of money is required to finance the inventory. Where as low inventory turnover ratio indicates the efficient management of inventory .A low inventory turnover imlies over investment in inventories. dull business. poor quality of goods, stock accumulations and slow moving goods and low profits as compared to total investments. Inventory turnover ratios are calculated to indicate inventories have been used efficiently or not. The purpose is to ensure the blocking of turnover ratio also know as stock velocity ratio. It is normally calculated as sales/ average inventory or cost of goods sold/ average inventory cost. Inventory conversion period may also be calculated to find the average time taken for clearing the stocks.
Inventory
turnover
ratio=
Cost
of
goods
sold/Average inventory at cost.
Year 20082009 20092010 20102011 20112012
Opening balance 1712.90 2883.79 2611.92 3175.35
Closing
Average
Inventory turnover ratio 6.298 times 4.15 times 5.02 times 9.89 times
Inventory holding period 58 days 62 days 72 days 36 days
balance inventory 2883.79 2298.35 2611.92 3175.35 3110.76 2747.85 2893.64 3143.05
Or = Net sales/Average inventory.
I.C.P
360 Inventory Turnover
Inventory Conversion Period
INTERPRETATION
This ratio shows how rapidly the inventory is turning in to receivable through sales.In 2010-2011 the company has low inventory turnover ratio but in 2011-2012 it has increased to 9.89 times .This shows that
the companys inventory management technique is more efficient as compare to last year.
Inventory Conversion Period

Inventory Conversion Period shows that how many days inventories take to convert from raw materials to finished goods. In the company inventory conversion period is fluctuating. This shows the inefficiency of management to convert the inventory into cash.
2)Debtors turnover ratio

A concern may sell its goods on cash as well as on credit to increase its sales and a liberal credit policy may result in tying up substantial funds converted into cash within a short period and are included in current assets. So liquidity position of a concern also depends upon the quality trade debtors. Two types of ratio can be calculated to evaluate the quality of debtors. a)Debtors Turnover Ratios b)Debtors Collection Period
DEBTORS TURNOVER RATIOS=TOTAL SALES/AVERAGE DEBTORS
Debtors collection period =
360
Debtor turnover
Creditors payment period = avg. trade credit Credit purchase per
NOTE: In B.S.P we do not have debtors and creditors turnover as the finished goods produced in all the plants of SAIL are directly transferred to CENTRAL MARKETING ORGANISATION ( C M O) headquarters were further marketing of these finished goods occurs, so B.S.P has nothing to do with creditors and debtors.
2)
Working capital turnover ratio:
Working capital turnover ratio indicates the velocity of utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of the year. This ratio measures the efficiency with which the working capitaland alow ratio indicates otherwise. But a very high working capital turnover is not a good situation for any firm. Working capital = current assets current liabilities
Year
Current assets (C.A) 3424.25 3640.16 4740.28 5109.59
Current liabilities (C.L.) 2527.70 2618.76 3140.08 3059.92
Working capital =C.A-C.L 879.55 951.88 1600.26 2049.67
20082009 20092010 2010-2011 2011-2012
Gross sales to working capital ratio 21.02 times 16.67 times 10.11 times 8.35 times
Working capital turnover ratio: W.C.T.R = Sales X 100
Working capital Year 20082009 20092010 20102011 20112012 Opening balance 561.47 896.55 1060.05 1600.06 Closing balance 896.55 1060.05 1600.26 2049.67 Average net W.C. 729.01 978.3 1300.15 1824.97 W.C.Turnove r ratio 22.56 15.40 12.44 9.37
INTERPRETATION
This ratio indicates low much net working capital requires for sales .In 2011-2012,the ratio is 9.3. Thus this ratio is helpful to forecast the working capital requirement on the basis of sale.
Operating cycle
There is a difference between current assets and fixed assets in the terms of their liquidity. A firm requires many years to recover the initial investment in fixed assets such as plant and machinery or land and buildings. On the contrary investment in current assets in turned over many times in a year. Investment in current assets such as inventories and debtors ( accounts receivable) is realized during the firms operating cycle, which is usually less than a year. Operating cycle is the time duration required to convert resources or inventories into sales and then into cash.
The operating cycle of a manufacturing company involves three phases:

1. Acquisition of resources - such as raw material, labour, power and fuel etc. 2. Manufacture of the product which includes conversion of raw material into work in progress into finished goods 3. Sales of the product either for cash or on credit. Credit sales create account receivable for collection.
How is the length of an operating cycle determined? The length of the operating cycle of a manufacturing firm is the sum of:
i. ii. Inventory Conversion Period (ICP) and Debtors Conversion Period (DCP)
Here the inventory conversion period is the total time needed for producing and selling the product. Typically, it includes: a) Raw material conversion period (RMCP) b) Work-in-progress Conversion Period (WIPCP) c) Finished Goods Conversion Period (FGCP)
Operating Cash Conversion Cycle:

To measure the time taken for the initial cash flows for goods and services to be realized as cash inflows from sales, the device of he operating cash conversions cycle is used. Conversion cycle capture the fact that different components of working capital have different life expectancies and are transformed to liquidity flows at different rates. The imbalance between cash inflows and outflows necessitates investments in current assets. The net cash conversion rate identified with the help of cash converting cycle has to be finance by working capital.
Computation of Operating Cycle

Formulae:
1. RMCP = (RMI*360)/RMC
2. WICP = (WIPI*360)/COP 3. FGCP = (FGI*360)/COGS 4. DCP = (DRS*360)/Cr. Sales 5. PDP = (CRS*360)/Cr. Purchases 6. GROSS OP. CYCLE = ICP+DCP 7. ICP = RMCP+WIPCP+FGCP 8. NET OP. CYCLE = GOC-PDP
Where
RMC is the consumption of raw material. RMI is the closing stock of raw material inventory. WIPI is the closing stock of work-in-process inventory. FGI is the closing stock of finished goods inventory. COP is the cost of production. COGS are the cost of goods sold.
Calculation of operating cycle

1. Raw material conversion period = consumption Raw material X360
Raw material
2008 (284.73*360) /4718.58 =21.7
2009 (484.18*360) /7401.72 =23.5
2010 (588.77*360) /6400.2 =33.11
2011 (579.33*360) /7707.16 =27.06
2012 (667.79*360 )/8314.16 =28.91
INTERPRETATION
Raw material conversion period refers to the period in which raw materials gets converted into finished goods or semi finished goods. The period has gradually increased to 28.9, which indicates inefficiency in the management. 1. Work in progress conversion period = work in progress inventory X 360 Cost of production Note-In BSP the WIPCP is not calculated, as they dont go for the hot metal cost.
2. Finished goods conversion period = finished good conversion period X 360 Cost of goods sold
2008
2009
2010
2011
2012
(962.42*360) (1828.4*360) (1430.96*360) (1790.74*360) (1725.24*36o) /9486.45 =36.52 /12097.53 =54.40 /11424.89 =45.08 /12276.26 =52.51 /13810.77 =44.97
INTERPRETATION
Finished goods conversion period indicates the time or the period in which finished goods gets converted into sales as cash. The figure shows an increasing trend till 2011,but for the year 2012 it has decreased by ,indicating an efficient look of the management on this. A good co-ordination between raw material conversion period and finished goods conversion period has to be maintained by the organization.
3. Debtors conversion period = debtor X 360 Credit sales 4. Creditors deferral period = creditors X 360 Debit sales Note- BSP doesnt go for the calculation of DCO AND CDP as both the things are dealt in corporate office; hence due to this reason working capital management is not done in BSP
A Comparative Study of SAIL, Contribution of B.S.P in SAIL Profit Financial Accounts
a) UNDERSTANDING PROFIT & LOSS ACOOUNT PROFIT AFTER TAX (PAT)=Profit before tax-Tax
Particulars PBT LESS : TAX PAT
SAIL (Rs./Crores) 5150.87 1608.15 3542.72
BSP (Rs./Crores)
2714.75 2714.75
INTERPRETATION
The company SAIL has achieved a profit of Rs 3542.72crs (profit after tax) in SAIL profit the Bhilai Steel Plant comprises for 76% of Profit contributing the most.
CASH PROFIT=Profit Before Tax (PBT) +Depreciation

Depreciation is added because it is not actual cash outflow, it is an appropriation of fund future replacement of old assets with new assets. DEPRECIATION IS CHARGED AT THE RATE PRESCRIBED UNDER SCHEDULE XIV OF THE COMPANY ACT,1956
Particulars Profit Before Tax
SAIL (Rs./ Crs. ) 5150.87
BSP (Rs./Crs.) 2714.75
(PBT) Add: Depreciation Cash Profit 1567.03 6717.90 321.33 3036.08
INTERPRETATION
Adding depreciation to the profit after tax the cash profit of SAIL is found to be Rs.6717.90crs.The Bhilai Steel plant alone contributes a cash profit of Rs.3036.)8crs. i.e., approximately 45% of the total cash profit.
OPERATING PROFIT
OPERATING PROFIT = PROFIT BEFORE TAX + INTEREST & FINANCE CHARGES
Particulars Profit Before Tax (PBT) Add:Int.&Fin.Charges Operating Profit
SAIL (Rs. /Crs.) 5150.87 983.99 6134.86
BSP (Rs. /Crs.) 2714.75 262.04 2976.79
GROSS MARGIN
GROSS MARGIN = PROFIT BEFORE TAX + INTEREST + DEPRECIATION
Particulars Profit before Tax (PBT) Add:Int.&Fin.Charges Depreciation Gross Margin
SAIL (Rs./Crs.) 5150.87 983.99 1567.03 7701.89
BSP (Rs./Crs.) 2714.75 262.04 321.33 3298.12
PROFITABILITY RATIO
Gross Profit/Margin Ratio = Gross Margin/turnover*100 Net Profit Ratio = Operating Profit/Turnover*100 Operating Ratio = Operating profit/Turnover*100 Profitability Ratios
Particulars Turnover (Sales) Gross Margin Operating Profit Profit Before Tax (PBT) Gross Margin Ratio Operating Ratio Net Profit Ratio SAIL (Rs./Crs.) 44574.87 7701.89 6134.86 5150.87 17.27% 13.76% 7.95% B.S.P (Rs./Crs.) 17108.89 3298.12 2976.79 2714.75 19.27% 17.40% 15.86%
INTERPRETATION
The net profit as seen in the calculations above is seen to be 7.95% of SAIL of which B.S.P contributes of about 15.86%.
Turnover of BSP
PROFIT OF BSP
INTERPRETATION
As seen in the graph the net profit has decreased year by year.
OBJECTIVE
To ensure a balance between liquidity and profitability. To ensure proper flow of funds for current operations. To speed up the flow of fund. To produce best quality product in minimum cost. To study and to analyze the various financial statements.
Facilitating cost and expenditure control with appropriate data and analysis. Efficient and effective management of funds through proper planning and control.
Research methodology
Research in common parlance to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic.
Research methodology is a way to systematically solve the research problem. Research methodology just does not deal research method but also consider the logic behind the method. It facilitates the researcher with reason for evaluating the research problem.
Definition:
According to Redman and Mory Research is systematized effort to gain new knowledge. According to Clifford Woody Research comprises defining and redefining problems, formulating hypothesis or suggested solutions, collecting organizing and evaluating
data, making deductions and reaching conclusions and at last carefully testing the conclusions to determine whether they fit he formulating hypothesis. It has also defined as a careful investigation or inquiry especially through search for new fact in any branch of knowledge. Research comprises defining research problems, formulates the hypothesis, research design including sample designing, data collection, analysis of data, interpretation, conclusion on the basic of interpretation. Apart from it suggestions and recommendations are also the part of research. The research methodology is through secondary data: Journals
Plant visit
Personal discussion and interaction
Research design
The formidable problem that follows the task of defining the research problem is the design of the research project, popularly known as the research design . To define the term research design it can be said a research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact the research design is the conceptual structure within which research is conducted, it constitute the blueprint for the collection, measurement and analysis of data. As such the design includes an outline of what the researcher will do from writing the hypothesis and its operational implications to the final analysis of data.
Features of a good design:
It must be flexible enough o Appropriate and efficiency must lie in the report. o It should minimize bias and maximize the reality of the data collected. The design must be suitable be suitable
Research methodology
Research in common parlance to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic.
Research methodology is a way to systematically solve the research problem. Research methodology just does not deal research method but also consider the logic behind the method. It facilitates the researcher with reason for evaluating the research problem. Definition: According to Redman and Mory Research is systematized effort to gain new knowledge. According to Clifford Woody Research comprises defining and redefining problems, formulating hypothesis or suggested solutions, collecting organizing and evaluating data, making deductions and reaching conclusions and at last carefully testing the conclusions to determine whether they fit he formulating hypothesis. It has also defined as a careful investigation or inquiry especially through search for new fact in any branch of knowledge.
Research comprises defining research problems, formulates the hypothesis, research design including sample designing, data collection, analysis of data, interpretation, conclusion on the basic of interpretation. Apart from it suggestions and recommendations are also the part of research. The research methodology is through secondary data: Journals
Plant visit
Personal discussion and interaction
Research design
The formidable problem that follows the task of defining the research problem is the design of the research project, popularly known as the research design . To define the term research design it can be said a research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact the research design is the conceptual structure within which research is conducted, it constitute the blueprint for the collection, measurement and analysis of data. As such the design includes an outline of what the researcher will do from writing the hypothesis and its operational implications to the final analysis of data. Features of a good design: It must be flexible enough
o Appropriate and efficiency must lie in the report. o It should minimize bias and maximize the reality of the data collected. o The design must be suitable be suitable as per the requirement of the case. Important concept relating to research design: o o o o o o o o o o Dependent and independent variables. Extraneous variables. Control. Confounded relationship. Research hypothesis. Experimental and non- experimental hypothesis- testing research. Experimental and control groups. Treatment Experiments. Experimental units.
Research design used in this report

Literature research : analysis with the help of available data. Experience survey: consulting with the experienced officials for a quick summary of the main issue.
FINDINGS
Findings during undergoing the project work on topic Analysis of Working Capital with A Study in Bhilai Steel Plant. 1. In BSP the coordination among the various sections of the Finance & Accounts department is very nice, as the Finance & Accounts department is a big department consisting of near about 32 sections. It is the work force of the Finance & Accounts department, which makes it possible. 2. In the BSPs there not to create debtors they generally deal with first to receive the cash or cheque, and then they supply the finished material.
3. In the BSPs there working capital management is very good, they
use the MMIS & SAP system to manage the overall activity. 4. During the study I find that their is no huge variation in budget decided and the actual one. 5. Bills of store handling contracts and freights payments are not processed through MMIS. As a result records of these payments are not available in the system, which makes task tedious and hence ERP is to be implemented to resolve the problem. 6. Government is not having the commercial approach regarding the implementation of taxes. 7. The taxation policy is to be made flexible because of which bulkiness of the work is to be removed. 8. The tendering process time is to be minimized so that the current market price benefits if any can be availed.
9. Monthly return filling is not on line process, hence sales and excise department face problem. 10. Online inventory valuation can be implemented.
11. The departmental policies is to made flexible which leads to
decrease in the work flow process as well as it leads in better profits.
CONCLUSION
Bhilai Steel Plant a major unit of sail has been generating continuous profits as compared to previous year with current year. To summaries, working capital at a plant level, this mainly involves forecasting and monitoring of various components, which is done systematically. Where by major portions of receivables are managed by central marketing organization for all plants level. Other important components of working capital are bill payables and borrowings of funds monitored by corporate level. Finance Department of Bhilai Steel Plant and various individual units decides the amount of funds requirement during the preparation of operation budget, and then requirement of fund is intimated to corporate office. Cash inflows and outflows are estimated in budget. The marketing of all SAILs prime products are done by the central marketing organization and the receipts of sale are directly sent into the inner unit current account which is centrally controlled by the corporate office allocates the funds as per intimation to individual units.
Cash is monitored every day and intimated to the top management as well as fortnightly to the company. Inventory is monitored differently for raw materials, work in progress, finished goods and stores. Monthly inventory report is sent to chairman through the finance department to corporate office, but the major portion of debtor are dealt by central marketing organization. Bhilai Steel Plant (BSP) is an enormous unit and hence the evaluation of its working capital management cannot be done thoroughly but in our brief stay we have at our best tried to present a general idea of the working capital management at BSP. The two main ratios we used for our analysis were the quick ratio or the acid test ratio and the current ratio, both of which have been explained earlier. The current ratio is the indication of the amount of money that a company has in comparison to what it owes and it is generally considered adequate to have a current ratio of more than 2:1. Post observing the ratios for the last five years it can be observed that the ratio in nearly all cases is more than one which indicates that BSP always has money at hand. It is also noticeable that the ratio for most of the years is very close to two and it ascertains management of this behemoth is exceptionally good. The quick ratio is a measurement of the liquid assets that the unit in question has at hand. Basically if one takes out inventories from the calculation of current ratios we get the quick ratio. It is usually expected that the quick ratio be more than 1:1 but in case of BSP it has remained at an even level of nearly 0.3. This is because the expected quick ratio is
for industries where inventories are not as important as they are in the steel industries. It is said that if even one blast furnace has to be cooled the BSP suffers losses of up to 10 crores. So an adequate stock of inventory is maintained this affects the level of the liquid assets and cash at hand. Besides the company that is as big as BSP the liquid assets still amount to nearly 300 crores which is adequate for all transactions that may need to be carried out. Bhilai Steel Plant (BSP) is one of the few public sector units that make a profit on the scale of nearly 4,000 crores. The reasons behind these are excellent management of the finances. This statement can easily be supported by the statistics of the years 2011-12 in which one can see that BSP made a profit of nearly 4000 crores with a working capital of 2049.67 crores.
BIBLIOGRAPHY
The above report has been prepared from the following sources of data and information: 1. Web Sites:
1.1. www.google.co.in (regarding Global Steel Industries), 1.2. www.indiansteelalliance.org,
Analysis of Working Capital Management A study in Bhilai Steel Plant 1.3. www.sail.co.in.
2. Books: 2.1 Financial Management ,I.M. Pandey. Singh 2.3 Cost Accounting And Financial Management. Prassanna Chandra Financial Management Theory and Practice
6th edition . Tata Mc Graw - hill publishing Company Ltd. New Delhi.
2.2 Project management and Control(2000).Narendra
Dr. S.P. GUPTA Financial Management

First edition 2010 sahitya bhawan publication Agra

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Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management

Steel Authority of India limited

Guided By:Mr,R.C.Shrivastava Manager (F&A) Bhilai Steel Plant

Submitted By:Swati Mahajan MBA 3rd sem Roll No-1170553

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Name of Guide:WAZID KHAN

Analysis of Working Capital Management A study in Bhilai Steel Plant

Date:31.03.2013 Place: DALLI RAJHARA

Counter Sign by Guide Mr.Wazid khan Manager (sales)

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

BSP:Mr. R.C Shrivastava Manager (F&A)

IIST College MBA Deptt

Mr. Sanjay Sharma (Project Guide) Dr R.C.Singh

Analysis of Working Capital Management A study in Bhilai Steel Plant

STEEL is the basic framework which has built nations, and it is on

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Chapter 2: ISSUE ANALYSIS ..

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Industry Analysis THE GLOBAL STEEL INDUSTRY

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

STEEL AUTHORITY OF INDIA LIMITED (SAIL)

Analysis of Working Capital Management A study in Bhilai Steel Plant

EXPANDING HORIZON (1959-1973)

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

automotive and defense industries and for sale in export

Analysis of Working Capital Management A study in Bhilai Steel Plant

CORE VALUES OF SAIL:

THE SEVEN Cs OF SAIL

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

YEAR 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

TOTAL (Rs./Crs.) 2181 5233 10606 11280 11021

SAILS SAILSGROWTH GROWTHPLAN PLAN

Analysis of Working Capital Management A study in Bhilai Steel Plant

Saleable Steel Capacities (MT) PLANT 2012

Bhilai Steel Plant

1586 1671 3780 314 0.43 0.36 0.22

Analysis of Working Capital Management A study in Bhilai Steel Plant

Graph .- Saleable Steel Production Capacity

Analysis of Working Capital Management A study in Bhilai Steel Plant

Special Steel Plants

Analysis of Working Capital Management A study in Bhilai Steel Plant

Analysis of Working Capital Management A study in Bhilai Steel Plant

Ownership and Management

MAJOR CAPITAL SCHEMES:

Analysis of Working Capital Management A study in Bhilai Steel Plant

Durgapur Steel Plant: