A Report On Organisational Structure Training

At

Rashtriya Ispat Nigam Limited

Visakhapatnam Steel Plant

A Project report submitted in partial fulfillment of the requirement for the award of

Master Of Business Administration

By

Ch. Shiva Kumar

KENGERI CAMPUSKANMINIKE, KUMBALGODU

BANGALORE-560060

1

DECLARATION

I, Shiva kumar here by solemnly declare that the project report entitled a

study on the Organization Structure submitted by me is a bonafide work done and it

is not submitted to any other university or published anytime before. This project

work is in partial fulfillment of the requirements for the award of the Master of

Business Administration from Christ University, Bangalore.

Place: VISAKHAPATNAM (Shiva kumar)

Date:

2

ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of any task would

be incomplete without mentioning people who made it possible and whose

encouragement and constant guidance crowned my effort with success.

I am grateful to external project guide SRI B. Uma Maheswar Rao ,

SENIOR MANAGER (Personnel) and I am also thankful to SRI O. Ram Mohan Rao

Assistant General Manager, Coordinator of student trainees HRD & PROJECT

WORKS and SRI M.L.Srinivas Varma, Assistant General Manager, Coordinator of

student trainees HRD & PROJECT WORKS in VISHAKAPATNAM STEEL PLANT for

their co-operation and in providing the opportunity to do my project in their

esteemed organization .

I especially thank all those who have helped me directly or indirectly. I

express my profound thanks to my affectionate parents for their constant

encouragement throughout my educational career.

(Ch. Shiva Kumar)

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Contents

1. History………………………………………..………………………..….6

2. Profile of the Products…………………………………..............…….......8

3. Mission/ Vision, objectives and strategies….……...…….……………....12

4. Organisation Structure ……………………………………………..….....15

5. Policies & Procedures………………………………………………....….17

6. Functions of various departments and their managers………………...….18

7. SWOT Analysis………………………………………………………..….21

8. Key Result Areas………………………………………………………….22

9. Significant Factors for Success…………………………………………....23

10. System of accounting followed…..………………………………………25

11.Product Promotional Measures……………………………..………….….27

12.Career planning and promotion policy of employees………………….….29

13.Training measures……………………………………………………........30

14.HRD measures…………….……………………………………………….31

15.Manpower planning……….………………………………………..……...34

16.The Appraisal Process…………………………………………….….……36

17.Financial highlights of the organization……………………………….…..37

18.Future plans…………………………………………………………….….44

19.Advantages and drawbacks…………………………………………….….46

20.Recommendations…………………………………………………………48

Annexure…………………….………………………………………………..51

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HISTORY

On 17 April 1970, the then prime minister of India, Late Mrs. Indira Gandhi announced the

government's decision in the Parliament to establish a steel plant at Visakhapatnam. The activities

kicked off by appointing site selection committee in June 1970 and subsequently the committee‘s

report was approved for site. On 20 January 1971 she laid the foundation stone. Consultants were

appointed in February 1971, and feasibility reports were submitted in 1972. The first block of land

was taken over on 7 April 1974. M/s M.N. Dastur & Co was appointed as the consultant for

preparing the detailed Project report in April 1975 and in October 1977 they have submitted the

report for 3.4 mtpa of liquid steel. With the offer for assistance from government of

erstwhile USSR, a revised project concept was evolved. Detailed Project Report for a plant capacity

of 3.4 Mtpa was prepared by M/s M.N. Dastur & Co in November 1980. In February 1981 the

contract was signed with USSR for preparation of working drawings for coke ovens, Blast

Furnace and sinter plant. The blast furnace foundation was laid with first mass concreting in the

project in January 1982. The construction of township also started.

A new company Rashtriya Ispat Nigam Limited (RINL) was formed on 18 February 1982.

Visakhapatnam Steel Plant was separated from SAIL and RINL was made the corporate entity of

Visakhapatnam Steel Plant in April 1982.

Vizag Steel Plant is the only Indian shore-based steel plant, and it has massive land, up to 19,000

acres (7,700 ha), and is poised to become up to 20 MT in a single campus and turnover in 2011-

2012 was 14,457Crores. On 20th May, 2009 Honorable Prime Minister Manmohan Singh launched

the expansion project of Visakhapatnam Steel Plant from a capacity of 3.6MT to 6.3MT at a cost of

Rs. 8,692 Crores. But the investment was revised to 14,489 crores with following classification:

Expenditure for the financial year 2009-10 Rs 1840 Crore

Rs 5883 Crores since inception of the Project

Total Commitment, including enabling works, steel procurement, Consultancy, Spares, etc

is Rs 11591 Crores as on 25.03.10.

The expansion project is expected to become functional by 2012.

.

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AWARDS:

1. ISO 9002 for SMS and all the down stream units – a unique distinction in the steel industry.

2. Indira Priya Darshini Vriksha Mitra award 1992-93, Nehru memorial national award for pollution

control 1992-93 & 1993-94.

3. EEPC export excellence award – 1994-95.

4. CII (Southern Region) energy conservation award – 1995-1996.

5. Continuously growing peacock (1st prize) national quality award – 1996.

6. Steel ministries trophy “Best safety performance – 1996.”

7. IIM national quality commitment award – 1997.

8. Gold star award for excellent performance in productivity.

9. Udyog excellence gold medal for excellence in steel plant.

10. Excellence award for out standing performance in productivity management, quality and

innovation.

11. ISPAT Suraksha Puraskar (1st prize) for largest accident free period 1991-94.

12. PM Trophy for the year 2002-03 as the Best Integrated Steel Plant

13. World quality commitment international star award in 2004

14. Cll-GBC National Award in 2005

15. Safety innovation award in 2006

16. Organizational excellence award in 2006

17. National Energy Conservation Award in 2006

18. Enterprise Excellence Award – 2007

19. Viswakarma Rashtriya Puraskar – 2007

20. Best Quality Circles implementing Organization Award -2007

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Profile of the products

Wire Rods:

Wire rods are manufactured in special steel grades using stelmor cooling process from fully killed

steel which ensures uniform grain size and proper coil shape. It’s diameter ranges from 5.5mm to

14mm. these are used for various applications like cold heading, cable armouring , concrete

wires,etc.

TMT Re-Bars:

The reinforcement bars in either straightened form or coil form are produced from fully killed steel

and have low carbon content. These have ultimate tensile strength and higher percentage of

elongation when compared to cold twisted bars of same grade. These are ideally suited for any type

of concrete structure. These vary from a size of 8mm and weight of 0.363kgs/m to 36mm and

weight of 7.750kgs/m.

Plain rounds:

Rounds are produced from fully killed steel. Bundling and automatic tying/strapping of rounds

ensures minimum damage during handling and transport and has close dimensional tolerance. These

vary from a size of 16mm and weight of 1.58kgs/m to a size of 80mm and a weight of 39.47kgs/m.

Structurals:

Structurals are rolled from fully killed steel. It has sectional properties and tolerance as per angles,

channels and beams. Piling and automatic tying of structurals ensures minimum damage during

handling and transport.

The size of angles varies from 50x50x5/6mm and a weight of 4.5kgs/m to 110x110x8/10mm and a

weight of 4.82kgs/m.

The size of channels varies from 40x32x5mm with a weight of 4.82kgs/m to 150x76x6.5mm with a

weight of 16.80kgs/m.

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The dimensions of IPE beams are 180x91x5.3mm with a weight of 18.80kgs/m.

The dimensions of HE beams are 120x114x5mm with a weight of 19.90kgs/m.

Special steels:

The other products like flats, blooms and billets are also manufactured by steel plant of vizag. Their

specifications are as follows:

Flats: 150x10mm to 150x12mm.

Blooms: 245x245mm to 315x245mm.

Billets: 125x125mm to 65x65mm.

8

Major sources of Raw Materials:

Iron Ore lumps & fines Bailadilla, M.P

BF Lime Stone Jaggayyapeta, A.P

SMS Lime Stone UAE

BF Dolomite Dubai

SMS Dolomite Madharam, A.P

Manganese Ore Chipuripalli, A.P

Boiler Coal Talcher, Orissa

Coking Coal Australia

Water supply Yeluru canal, Andhra Pradesh

Power supply Captive power plant

Medium cooking coal Gidi/Swang/Rajarappa/Kargil

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Major Units:

DEPARTMENTSANNUAL CAP.

(‘000T)UNITS (3.0 MT STAGE)

COKE OVERNS2,261

3 Batteries each of 67 ovens & 7 Mts

Height

SINTER PLANT 5,2562 Sinter machines of 312 Sqm grate area

each

BLAST FURNACE 3,400 2 Furnaces of 3200 cu m volume each

STEEL MELT SHOP 3,0003 LD Converters each of 150 Cum.

Volume and size 4 strand bloom casters

LMMM 710 4 Stand finishing Mill

WRM 850 2 x 10 Stand finishing Mill

MMSM850 6 Stand finishing Mill

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Mission, objectives and strategies of the organization

Mission:

To attain 16 million ton liquid steel capacity through technological up-gradation, operational efficiency and expansion.

Augmentation of assured supply of raw materials to produce steel at international standards of cost and quality.

To meet the growing aspirations of the stakeholders.

Objectives:

Expand Plant capacity to 6.3Mt by 2012 with the mission to expand further in subsequent phases as per the corporate plan.

Revamp existing Blast Furnace to make them energy efficient to contemporary levels and in process increase their capacity by 1 Mt, thus total hot metal capacity to 7.5 Mt.

Be amongst top five lowest cost steel producers in the world. Achieve higher levels of customer satisfaction. Be proactive in conserving environment, maintaining high levels of safety and addressing

social concerns.

Strategies:

RINL-VSP has formed a joint venture company with Manganese Ore India Limited- RINMOIL FERRO ALLOY Pvt. This will help VSP to meet its Ferro Alloys requirements.

RINL-VSP acquired 51% stake in M/s EIL, the holding company of OMDC & BSLC (Bird group of Companies) .

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Employee involvement & Process improvements:

The imagination and creativity of employees have always been key success factors for the company.

Employees of RINL have always been at the forefront in contributing ideas for process improvements.

Voluntary involvement of employees in 4251 quality circles projects is a testimony of the interest

exhibited by employees in process improvements.

Safety & Health:

Safety and health of employees has always been the prime concern in the plant and all efforts have

been made to leverage upon the safety initiatives to maximize employee morale and satisfaction.

These initiatives have yielded positive results with a 13.33% reduction in reportable accidents when

compared to year 2007-08.

Corporate Social Responsibility:

RINL continues to contribute in the area of Corporate Social Responsibility (CSR). CSR activities in RINL

focus mainly on Environmental care, education, community health care, people care, peripheral

development, cultural efflorescence, activities as a responsible corporate citizen and help during

natural calamities.

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VISION:

To be a continuously growing world-class company.

We shall:

Harness our growth potential and sustain profitable growth.

Deliver high quality and cost competitive products and be the first choice of customers.

Create an inspiring work environment to unleash the creative energy of people.

Achieve excellence in enterprise management.

Be a respected corporate citizen, ensure clean and green environment and develop vibrant

communities around.

13

Organisation Structure

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CHAIRMAN CUM MANAGING DIRECTOR

Director

(Finance)

Director

(Commercial)

Director

(Personnel)

Director

(Operations)

Director

(Vigilance)

ED

(Finance)

CompanySecretary

AGM

(Int. Audit)

ED (MM)

Addl. GM

(Mktg)

Addl. GM (Mktg)

- Services & Exports

DGM (M&HS) I/C

GM (P&A)

Addl. GM

(P&IR)DGM (Trg)

DGM (HRD)

DGM (Legal

Affairs)

GM (Works)

Addl. GM

(QATD)

Addl. GM

(Audio & Telco)

Addl. GM (Services)

Addl. GM (Steel)

Addl. GM

(C, S & C)

ED (Maint.)

GM

(Maint.)

Addl. GM(CR&RM)

DGM

(System)

GM (D&E)& I/C PECS

Addl. GM

(Vig.)

ACM

(Cordon)

BRIEF IDEA ABOUT STEEL MAKING PROCESS

The modern era in steel making began with the introduction of Henry Bessemer's & Bessemer

process in the late 1850’s. This enabled steel to be produced in large quantities cheaply, so that Mild Steel

is now used for most purposes for which wrought iron was formerly used. This was only the first of a

number of methods of steel production. The Gilchrist-Thomas process (or basic Bessemer process) was an

improvement to the Bessemer process, lining the converter with a basic material to remove phosphorus.

Another was the Siemens-Martin process of open hearth steelmaking which like the Gilchrist-Thomas

process complemented, rather than replaced, the original Bessemer process.

These were rendered obsolete by the Linz-Donawitz process of basic oxygen steel making,

developed in the 1950’s, and other oxygen steelmaking processes. One third of world's steel is currently

produced in China. Arcelor-Mittal is however the production. White-hot steel pouring out of an electric arc

furnace.

Blast furnaces have been used for two millennia to produce pig iron, a crucial step in the steel

production process, from iron ore by combining fuel, charcoal, and air. Modern methods use coke instead

of charcoal, which has proven to be a great deal more efficient and is crediting with contributing to the

British Industrial Revolution. Once the iron is refined, converters are used to create steel from the iron.

During the late 19th and early 20th century there were many widely used methods such as the Bessemer

process and the Siemens-Martin process. However, basic oxygen steelmaking, in which pure oxygen is fed

to the furnace to limit impurities, has generally replaced these older systems. Electric arc furnaces are a

common method of reprocessing scrap metal to create new steel. They can also be used for converting pig

iron to steel, but they use a great deal of electricity (about 440 kWh per metric ton), and are thus generally

only economical when there is a plentiful supply of cheap electricity.

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Policies and Procedure followed

Policies:

Quality, Environment and Occupational Health & Safety Policy:

Supply quality goods and services to customers delight.

Document, implement, maintain & periodically review the management systems including

the policy, objectives and targets.

Use resources efficiently and reduce waste and prevent pollution.

Comply with all relevant legal, regulatory and other requirements applicable to products ,

activities and processes.

Encourage development and involvement of employees.

Energy policy:

Monitor closely and control consumption of various forms of energy through an effective

energy Management system.

Adopt appropriate energy conservation technologies.

Maximize the use of cheaper and easily available forms of energy..

HR Policy:

Provide work environment that makes the employees commited and motivated for maximizing productivity.

Establish systems for maintaining transparency , fairness and equality in dealing with employees.

Encourage teamwork, creativity, innovativeness and high achievement orientation. Ensure functioning of effective communication channels with employees.

IT Policy:

Follow best practices in process automation & business processes through IT by in-house efforts/ outsourcing and collaborative efforts with other organizations.

Follow scientific and structured methodology in the software development processes with total user involvement, and thus delivering integrated and quality products to the satisfaction of internal and external customers.

Enrich the skill and knowledge at regular intervals to make employees knowledgeable.

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Functions of various departments and their Managers

Every organisation is made up of different department. Each department contributes to the running

of the business. The most common departments are:

Production

Marketing & Sales

Finance

Human resource

Production DepartmentThe production department is responsible for converting inputs into outputs through the stages of

production processes. The Production Manager is responsible for making sure that raw materials are

provided and made into finished goods effectively. He or she must make sure that work is carried

out smoothly, and must supervise procedures for making work more efficient and more enjoyable.

There are five production sub-functions

Production and planning

They will set the standards and targets at each stage of the production process. The quantity and

quality of products coming off a production line will be closely monitored.

Purchasing department

This department will provide the materials, components and equipment required. An essential part

of this responsibility is to ensure that stocks arrive on time and are of good quality

The stores department

The stores department are responsible for stocking all the necessary tools, raw materials and

equipment required to service the manufacturing process.

The design and technical support department

They are responsible for the design and testing of new product processes and product types,

together with the development of prototypes through to the final product.

The works department

This department is concerned with the manufacture of products. This will include the maintenance

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of the production line and other necessary repairs. The works department may also have

responsibility for quality control and inspection.

Human resource Department

The role of Human resource department is in charge of recruiting, training, and the dismissal of

employees in an organisation.

Recruitment and selection

Training programmes

Training programs are held by the HRD to improve the employees skills, as well as to motivate

them.

There are three main types of training are

1. Induction training

2. On-the- job training

3. Off-the-job training

Manpower Planning

The HR department needs to think ahead and establish the number and skills of the workforce

required by the business in the future. Failure to do this could lead to too few or too many staff or

staff with inappropriate needs.

Dismissal and Redundancy (retrenchment)

Dismissal is where a worker is told to leave their job due to unsatisfactory work or behaviour.

Redundancy is when the business needs to reduce the number of employees either because it is

closing down a branch or needs to reduce costs due to falling profits. It may also be due to

technological improvements, and the workers are no longer needed.

Marketing department

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These are the main section of the market departments:

Sales department is responsible for the sales and distribution of the products to the different regions.

Research & Department is responsible for market research and testing new products to make sure that they are suitable to be sold.

Promotion department decides on the type of promotion method for the products, arranges advertisements and the advertising media used.

Distribution department transports the products to the market.

Finance Department

Book keeping procedures

Keeping records of the purchases and sales made by a business as well as capital spending.

Preparing Final Accounts

Profit and loss account and Balance Sheets

Providing management information

Managers require ongoing financial information to enable them to make better decisions.

Management of wages

The wages section of the finance department will be responsible for calculating the wages and

salaries of employees and organising the collection of income tax and national insurance for the

Inland Revenue.

Raising Finance

The finance department will also be responsible for the technical details of how a business raises

finance e.g. through loans, and the repayment of interest on that finance. In addition it will

supervise the payment of dividends to shareholders.

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SWOT Analysis of the organization

Strengths and weaknesses:

Strength Weaknesses Availability of funds for investment and

redemption of preference equity. Availability of land and infrastructural

facilities for expansions up to 16Mt. Superior basic steel making technology. Strong committed workforce.

Lack of in house or captive raw materials mines.

High expenses due to purchase of raw materials.

Capital repairs, up-gradation and modernization due to major facilities.

Opportunities and Threats:

Opportunities Threats High to moderate rates of economic

growth. Projected and strong demand forecast for

steel.

Shift of value chain towards raw materials-rising input costs.

Expansion plans of existing competitors. Entry of international players. Dependency on single supplier for sourcing

iron ore.

From the above SWOT matrix the emerging concerns/issues are as follows:

Shutdowns required for carrying out the capital repairs and major equipments.

In the long term, non availability of captive mines for iron ore and coking coal has been a handicap for the company. Inconsistencies in supplies - quantity and quality - along with rising prices have impacted the company's performance throughout and more so in the recent past. The company has applied for lease for iron ore mines in the states of Orissa and Chattisgarh without much success. Also the company is contemplating exploring the possibility of acquiring controlling stake in existing / new iron ore mines outside the country.

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Major threat that challenges the profitability concerns in steel industry continues to be increasing input costs. As per ABARE (Australian Bureau of Agricultural and Resource Economics), world steel prices are expected to remain high and reflecting higher steel making costs and growing steel demand. Steel making costs are expected to rise as a result of high freight costs and higher prices for iron ore and metallurgical coal, the two key steel making ingredients

Key Result Areas of the organization

“Key Result Areas” or KRAs refer to general areas of outputs or outcomes for which the department’s role is responsible.

Importance of KRAs.

• Set goals and objectives• Prioritize their activities, and therefore improve their time/work management• Make value-added decisions• Clarify roles of department or individual• Focus on results rather than activities• Align their roles to the organization’s business or strategic plan• Communicate their role’s purposes to others

Key result areas (KRAs) capture about 80% of the department’s work role. The remainders are usually devoted to areas of shared responsibility.

Human resource:

Motivational Trip Harmonious Employee Relations Counselling Trouble Makers Effective Grievances Handling Handle issues like staff, production, salary .Performance Appraisal Training & Quality Circle

Marketing:

Product promotion Sales Customer care

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Finance:

Audit P & L statement Balance Sheets Financial analysis

Production:

Manufacturing, quality control and purchase of raw materials.

Significant factors for success

Implementing change in an organization is a lengthy and often difficult process. It requires

collaboration between departments within the organization and persistence to drive the change

initiative forward. This document outlines a number of factors that, taken together, impact the

dynamics of change and ultimately help determine whether change efforts are sustained over time.

These change initiatives within organizations are commonly referred to as organization

development. OD is an effort that is

a) planning

b) organization wide, and

c) managed from the top

d) increase organization effectiveness and health

e)planned interventions in the organization’s “processes.

In a sense, organisation success is never ending because it is a process of constant striving to

become a more healthy, productive and viable organization. In order for change to take hold,

however, Organisation success must include clear, measurable goals along the road of development.

Characteristics for success:

There is pressure from the environment, internal or external, for change.

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Some strategic person or people are “hurting.”

Some strategic people are willing to do a real diagnosis of the problem.

There is leadership (consultant, key staff man, new line executive).

There is collaborative problem identification between line and staff people.

There is some willingness to take risks in trying new forms or relationships.

There is a realistic, long-term time perspective.

There is a willingness to face the data of the situation and to work with it on

changing the situation.

The system rewards people for the effort of changing and improvement, in

addition to rewarding them for short-term results.

There are tangible intermediate results.

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System of accounting followed

Significant accounting policies:

General:

Financial Statements are prepared under the historical cost convention in accordance with

fundamental accounting assumptions and Generally Accepted Accounting Principles(GAAP) in

India.

Fixed assets: Fixed assets are stated at historical cost less depreciation. Contributions made by the company towards the cost of fixed assets owned by the State / Central Government are grouped together with similar assets owned by the

company with appropriate disclosure thereof. Expenditure attributable / relating to construction, to the extent not directly identifiable

to any specific Plant Unit, is kept under ‘Expenditure During Construction’ for allocationto Fixed Assets and is grouped under ‘Capital Work-in- Progress’.

Investments:

Current investments are carried at lower of cost and fair value. Long term investments are carried at cost. Diminution in value, other than temporary,

is provided for.

Inventories:

Inventories are valued at lower of cost and net realizable value. The basis of determining cost is: Finished / Semi-finished goods - Weighted Average cost Raw material, Stores & Spares, Loose Tools - Monthly weighted average cost and

those in transit at cost. Obsolete / Surplus / Non-moving inventory are adequately provided for.

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Revenue Recognition:

Sales are recognized when all significant risks and rewards of ownership have been to the buyer.

Export incentives under various schemes are recognized as Income on certainty of realisation.

CLAIMS Claims against outside agencies are accounted on certainty of realisation.

FOREIGN CURRENCY TRANSACTIONS Foreign currency monetary items are recorded at the closing rate. Exchange differences arising on account of settlement / conversion of foreign currency monetary items are recognised as expense or income in the period in which they

arise.

EMPLOYEE BENEFITS Actuarial gains and losses on defined benefit plans are recognized during the year.

DEPRECIATION AND AMORTISATION Depreciation is provided on straight line method (SLM), up to full value of the cost of asset over

the specified period derived in accordance with the provisions of Schedule XIV of the Companies Act, 1956, except the following: Assets costing up to Rs.5000/- are fully depreciated in the year of capitalisation. Depreciation on the following categories of assets is provided up to full value of the

cost of asset on SLM over the period of their useful life based on the Management’s estimate given in brackets.

Photo Copiers & Fax Machines, Telecom Equipment (5 years); Cranes, Slag Pot Carriers, Audio & Visual Equipment (10 years); Other Office Equipment, Earth Moving Equipment,

Forklift Trucks, Air Conditioners, Refrigerators, Water Coolers, Air Coolers, Freezers (7 years); Cars (6 years); Safety Equipment, Other light vehicles (8 years); Computers

[including system Software] (4 years); Coke Ovens & Coal Chemical Plant (15 years). Contributions made by the company towards the cost of fixed assets owned by the State / Central

Government are depreciated over the estimated period of their utility or five years, whichever is less.

Mining lease rights are amortised over the period of lease.

BORROWING COSTS Borrowing costs incurred for obtaining assets which take more than 12 months to get ready for its

intended use are capitalised to the respective assets wherever the costs are directly attributable to such assets and in other cases by applying weighted average cost of borrowings to the expenditure on such assets.

Other borrowing costs are treated as expense for the year.

PRIOR PERIOD ADJUSTMENTS

25

Items of Income / Expenditure which arise in the current period as a result of errors or omissions in the preparation of Financial Statements of one or more prior periods.

Product promotional measures

Intent

RINL, a leading Central Public Sector Enterprise, under the administrative control ofMinistry of Steel, GOI, manufactures Iron and Steel produces in long productcategory, intends to appoint a consultant for assessing market environment andformulation of comprehensive marketing policy, appropriate to RINL/VSP, takinginto account RINL’s growth potential and also requirement of exports.

Objective

The consultant to suggest various policy initiatives, covering the followingactivities/strategies, at the current level of 3.0 Mt stage, 6.3 Mt, 7.3 Mt and 11 Mtstages of expansion to carry out Marketing function effectively.

_ Type of products to be manufactured in various stages of expansion

_ Market segmentation

_ Product mix in various stages of expansion and optimum product mix

_ Increasing share of high end value added steels

_ Development of market segments

_ Optimisation of market-mix

_ Product placement and distribution

_ Exports as a strategy

_ Product pricing

_ Modes of sales

_ Optimisation of NSRs

_ Credit sales

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_ Brand building and product promotion activities

_ Optimisation of transport-mix i.e. rail, road, container and coastal

_ Marketing network

_ Organisation structure and competence building

_ Empowerment

_ Future initiatives

Existing Marketing Network

Currently, RINL/VSP has a network of 5 regional offices, 23 branch sales offices and

22 stockyards spread across the country. In addition to these outlets, RINL/VSP has appointed

Consignment Sales Agents (CSAs) at strategic locations, where RINL does not have a branch sales

office. Currently, RINL/VSP has appointed 8 CSAs. These are Vizag, Kadapa, Damtal,

Jamshedpur, Guwahati, Agartala, Jabalpur and Bhopal. RINL/VSP has appointed

about 150 Retailers. These Retailers purchase and sell RINl’s products. District Level

Dealers (DLDs) and Rural Dealers are also registered by RINL/VSP to take care of

demand in semi-urban and rural areas. Currently, RINL/VSP has 78 DLDs and 177

Rural dealers. In due course, to take care of expansion requirements, the Distribution Network is

proposed to be enhanced.

Present pattern of sales

_ Sales categorization

Actual users, project customers, small scale industry corporations, retailers, district level dealers and rural dealers : Product-wise percentages are specified for each category.

_ Mode of sales

MOUs with actual users, project customers, retailers, sales to small scale industry corporations i.e. NSIC/SSIs as per the allocation of GOI, eauctions and spot sales.

27

_ Pricing

The High Power Committee consisting of Functional Directors fixes the price bands of various products taking inputs from the Pricing Section. As per these price bands, the prices are fixed every month.

Career planning and promotion policy of employees

The vizag steel plant is a huge platform to provide various career opportunities to fresh talentd

people. It requires high qualifications from candidates who wish to make a career for themselves in

the executive staff. However, for the post of a non-executive staff a minimum of matriculation or

ITI or a diploma in engineering from any recognized college is required. For candidates acquiring

educational qualification of a lower level there is scope in the plant as workers.

The career planning process at steel plant is however an impressive one as the employees can

choose to uplift their career by possessing additional qualification with the help of the organization

and qualifying in the internal entrance exams conducted every 7years. It is a platform for

developing skill and knowledge where merit is recognized and rewarded.

There are various policies for the support and growth of the employees

The system indicates smooth change of the plant over the shifts and uninterrupted pace of the operation of the plant during shifts.

Employees are paid gratuity in terms of the payment of gratuity Act 1972 and as amended from time to time. Over and above the gratuity Act, in case of death of an employee before the qualifying service of five years is paid.

Incentive scheme for acquiring additional qualifications and promoting small family norms.

Performance based benefit scheme for all the employees.

There are also various other schemes like mediclaim insurance policy for retired employees, awards for achievements, death/accident funds,etc.

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Training Measures

The needs of induction training, skill up gradation, unit training, computer related training, refresher training, foreign training, faculty development etc are attended by training and development centre while management development and attitudinal development are taken care at the centre for HRD.

The training in specialized areas like safety, fire prevention, occupational health, etc is also taken up by departments specializing in respective fields.

It is the initiative of the HRD group to provide In-house training programs.

In-plant training for management students.

Employees are sent to other steel plants on short duration tours to find solutions to the various issues facing the company.

Employees are also sent to suppliers manufacturing units/training institutes to get specific training in identified areas.

The T&D department identifies the development needs of employees on regular basis and provide necessary training and continually monitors effectiveness of the training.

It fulfills its social obligations by providing training to students of educational institutions and to trainees of other organizations.

29

HRD measures

30

HRD POLICYfocu

s

Identifying competence needs

Providing training inputs

Monitoring training effectiveness

Creating learning environment

Facilitating Self Development,

innovativeness & self expression

Enabling employees to assume higher responsibility

RINL believes that the employees are its assets and strives to realize their potential in full for mutual advantage. The human resource development involves development of the employee as a whole.

In-house Training Programs. Nominations to external Training Programs. Organisation Research, Employees satisfaction surveys and voice of employees Index Organisation development Membership with professional bodies Performance Appraisal for executives Human Resource Information System In- plant training for management students Lectures by eminent personalities Corporate presentations Interactions with professionals,academicians and consultants Knowledge management Initiatives in “Six Sigma” Emancipation of women through WIPS, Women Development Programs Thrust on “Samalochana” Pursuit of Business Excellence Model Maintaining harmonious industrial relations where entire workforce works as a well knit

team for the progress of the company. Statutory welfare measures like canteen facilities, baby crèche, first aid facilities, water

coolers, leave, maternity leave, gratuity and workmen’s compensation. Non- Statutory welfare measures like facilities for education, scholarships, medical

facilities, housing facilities, work dress, vehicle advances to employees, house building advances and various other motivational schemes.

31

HRD PHILOSOPHY IN VISAKHAPATNAM STEEL PLANT

Employees of the organization are greatest and most valuable resources.

Whole on the one hand, HRD should appropriately harness the employee potential for the

attainment of the company objectives, the company on the other, as its corporate responsibility,

should create an enabling climate where in human talent gets the best opportunity for self

expression, all round development and fulfillment.

People are more than mere resources and therefore it will be the company’s sincere endeavor to

treat people with all the respect and that is warranted when employees are seen as more mere

instrumentalities.

HRD as a management function will be given a place of strategic priority, along with function like

production, maintenance, materials on finance in the overall scheme of management action in the

company.

HRD does not refer to training alone, nor it is just a new name for training. In RINL/VSP HRD refers

to creative and innovative initiatives in several management functions for the development and

growth of employees

HRD should eventually be a core philosophy of all management actions and should not remain

merely a departmental / sectional activity.

All functional and divisional heads responsible for various activities of the company will imbibe the

HRD spirit and suitability integrate HRD into their plans, decisions and actions

32

Manpower Planning

MANPOWER PROFILE – GROWTH PATTERNS

YEAR EXECUTIVES NON-EXECUTIVES

31-3-1997 2617 14570

31-3-1998 2617 14572

31-3-1999 2617 14087

31-3-2000 2683 13593

31-3-2001 4027 13104

31-3-2002 4203 12823

31-3-2003 4308 12586

31-3-2004 4533 12222

31-3-2005 4512 12101

31-3-2006 4629 11932

31-3-2007 4674 11727

31-3-2008 4967 11449

31-3-2009 5218 12007

31-3-2010 5263 12567

33

Engineering

Diploma

Graduation/PG

ITI

Literates

Works

Projects

Mines

Others

Error: Reference source not foundQualification Profile :

Engineering -14.34%

Diploma -10.33%

Grad/PG -11.65%

Literates -24.33%

ITI -39.35%

According to the latest statistics of 2011

Works Projects Mines Others TotalExecutives 3262 344 109 1492 5207

Non executives

11358 51 257 956 12622

So, the total number of employees as per the recent statistics are 17829.

DIVISION-WISE MAN POWER:

Works -82.03%

Projects -2.10%

Mines -2.14%

Others -13.72%

34

Performance Appraisal System

The appraisal process happens at the end of every year where the performance of the employees is evaluated on the basis of the MBO’s given to them.

The grading is done on the scale of 1-5. People who get 1 are rewarded where as people with a score of 4 are given a warning. But people who score 5 are asked to leave the organization.

35

Financial highlights of the organization

Financial Ratio Analysis

The traditional financial statements comprising the balance sheet and the profit and loss account are

proving the information related to the financial operation of the firm. They provide some extremely

useful information that mirrors the financial position on a particular date in terms of the structure of

assets, liabilities and owner’s equity and so on. The profit and loss account shows the results of

operations during a certain period of time in terms of the revenues obtained and the cost incurred

during the year. Therefore, much can be learnt about a firm from a careful examination of its

financial statements. Users of financial statements can get further insight about financial strengths

and weaknesses of the firm if they properly analyze information reported in these statements.

Management should be particularly interested in knowing financial weakness of the firm to take

suitable corrective actions. The future plans of the firm should be laid down in view of the firm’s

financial strengths and weaknesses. Thus, financial analysis is the starting point for making plans,

before using any sophisticated forecasting and planning procedures. Understanding the past is a pre-

requisite for anticipating the future.

36

BALANCE SHEET AS AT 31st March 2009

Rs CrsSchedule As at As at

No. 31st March, 2009 31st March, 2008SOURCES OF FUNDS

SHAREHOLDERS' FUNDS1 7 827.32 7 827.32

Reserves and Surplus 2 4 592.59 3 653.72

LOAN FUNDSSecured loans 3 907.72 332.78Unsecured loans 4 100.04 107.95

Deferred Tax Liability ( Net ) 124.49 163.12

Total 13 552.16 12 084.89

APPLICATION OF FUNDSFIXED ASSETS

Gross block 5 9 005.99 8 900.83Less: Depreciation 7 749.74 7 516.19Net block 1 256.25 1 384.64Held for disposal 6 0.05 0.04Capital work-in-progress 7 4 617.81 2 087.19

5 874.11 3 471.87INVESTMENTS 9 0.05 0.05CURRENT ASSETS, LOANS & ADVANCES

Inventories 10 3 215.28 1 761.15Sundry debtors 11 191.27 93.41Cash & Bank balances 12 6 624.17 7 699.11Other Current assets 13 258.91 292.43Loans & Advances 14 1 569.69 1 958.49

11 859.32 11 804.59LESS: CURRENT LIABILITIES & PROVISIONS

Liabilities 15 2 560.79 1 610.15Provisions 16 1 620.53 1 581.47

4 181.32 3 191.62Net Current assets 7 678.00 8 612.97Total 13 552.16 12 084.89Accounting Policies & Notes to Accounts 29Schedules 1 to 29 annexed form part of the Accounts

For and on behalf of Board of Directors As per our report of even dateFor RAO & KUMARChartered Accountants

(P.K.Bishnoi) (K.S. Shankar)Chairman-cum-Managing Director Director (Finance)

(CA Anirban Pal)Partner

M.No: 214919

(P Mohan Rao)Company Secretary

Place : New DelhiDate : 04 July 2009

37

Rashtriya Ispat Nigam LimitedAnnual Accounts 2008-09

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31st March 2009Rs Crs

Schedule For the year ended For the year endedNo. 31st March, 2009 31st March, 2008

INCOMEGross Sales 18 10 410.63 10 433.07Less: Excise duty recovered on sales 1 282.25 1 344.70Net Sales 9 128.38 9 088.37Internal consumption 114.10 88.46Interest earned 19 787.21 724.64Other revenue 20 75.02 91.27Total 10104.71 9 992.74

EXPENDITURERaw materials consumed 21 5 896.25 4 280.22Depletion / (Accretion) to Stock of Semi-finished/Finished goods 22 (916.65) (343.17)Employees' remuneration & benefits 23 1 156.68 1 030.72Stores & spares consumed 501.23 364.06Power & fuel 24 340.31 258.81Repairs & maintenance 25 149.81 125.79Freight outward 286.53 306.96Other expenses & provisions 26 377.12 509.93Interest 27 88.14 31.57Depreciation 240.46 471.55Wealth tax 0.89 0.48

8 120.77 7 036.92Less: Inter account adjustments-raw material mining cost 38.06 39.15Net expenditure 8 082.71 6 997.77Profit for the year 2 022.00 2 994.97Prior period adjustments- Net credit 28 4.59 0.39Profit Before Tax 2 026.59 2 995.36Provision for Taxation

Current Tax 746.38 1 188.13Fringe Benefit Tax 4.66 4.43Earlier years adjustments (21.39) (11.77)Deferred Tax (38.63) (128.17)

Profit After Tax 1 335.57 1 942.74Balance of Profit brought forward from previous year 3 652.55 1 709.81Amount available for appropriation 4 988.12 3 652.55

APPROPRIATIONSProposed Dividend 339.18 0.00Tax on Proposed Dividend 57.64 0.00Reserve for Redeeming Preference Share Capital 2937.47 0.00Balance carried to Balance Sheet 1653.83 3652.55Total appropriations 4988.12 3652.55

Basic and Diluted Earnings Per Share (in Rupees)(Face Value Rs. 1000 per share) 273.13 397.3029

38

BALANCE SHEET AS AT 31st MARCH 2010Rs Crs

Schedule As at As atNo. 31st March, 2010 31st March, 2009

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS7 827.32Share Capital 1 7 827.32

Reserves and Surplus 2 5 057.68 4 592.59

LOAN FUNDS407.28Secured loans 3 907.72

Unsecured loans 4 825.27 100.04

Deferred Tax Liability ( Net ) 97.82 124.49

Total 14 215.37 13 552.16

APPLICATION OF FUNDSFIXED ASSETS

9 473.90Gross block 5 8 971.80Less: Depreciation 8 008.55 7 749.74Net block 1 465.35 1 222.06Held for disposal 6 0.05 0.05Capital work-in-progress 7 7 506.90

8 972.304 652.00

5 874.11INVESTMENTS 9 0.25 0.05CURRENT ASSETS, LOANS & ADVANCES

2 451.52Inventories 10 3 215.28Sundry debtors 11 181.18 191.27Cash & Bank balances 12 5 415.54 6 624.17Other Current assets 13 137.40 258.91Loans & Advances 14 1 365.02 1 569.69

LESS: CURRENT LIABILITIES & PROVISIONS9 550.66 11 859.32

2 871.95Liabilities 15 2 560.79Provisions 16 1 435.89 1 620.53

Net Current assets4 307.84

5 242.824 181.32

7 678.00Total 14 215.37 13 552.16Significant Accounting Policies & Notes to Accounts 28Schedules 1 to 28 annexed form part of the Accounts

For and on behalf of Board of Directors As per our report of even dateFor B.V. RAO & CO

Chartered AccountantsRegn. No (F.R.N) 003118S

(P.K.Bishnoi) (P. Madhusudan)Chairman-cum-Managing Director Director (Finance)

(CA A.R. UNNI)Partner

M.No: 07447

(P Mohan Rao)Company Secretary

Place : VisakhapatnamDate : Th

24 June 2010

39

Rashtriya Ispat Nigam LimitedAnnual Accounts 2009-10

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31st March 2010Rs Crs

Schedule For the year ended For the year endedNo. 31st March, 2010 31st March, 2009

INCOME10 634.63Gross Sales 17 10 410.63

Less: Excise duty recovered on sales 825.489 809.15

1 282.25Net Sales 9 128.38Internal consumption 121.07 114.10Interest earned 18 534.71 787.21Other revenue 19 101.75 22.36Total 10566.68 10052.05

EXPENDITURE5 535.11Raw materials consumed 20 5 896.25

Depletion / (Accretion) to Stock of Semi-finished/Finished goods 21 415.35 (916.65)Employees' remuneration & benefits 22 1 399.74 1 157.35Stores & spares consumed 466.48 501.23Power & fuel 23 408.27 340.31Repairs & maintenance 24 142.13 149.81Freight outward 312.65 286.53Other expenses & provisions 25 334.63 324.46Interest & Finance Charges 26 77.55 87.47Depreciation 277.17 240.46Wealth tax 0.45 0.89

9 369.53 8 068.11Less: Inter account adjustments-raw material mining cost 43.26 38.06Net expenditure 9 326.27 8 030.05Profit for the year 1 240.41 2 022.00Prior period adjustments- Net credit 27 7.24 4.59Profit Before Tax 1 247.65 2 026.59Provision for Taxation

463.08Current Tax 746.38Fringe Benefit Tax (0.05) 4.66Earlier years adjustments 14.62 (21.39)Deferred Tax (26.67) (38.63)

Profit After Tax 796.67 1 335.57Balance of Profit brought forward from previous year 1 653.83 3 652.55Amount available for appropriation 2 450.50 4 988.12

APPROPRIATIONS100.01Interim Dividend 0.00

Proposed Dividend (Final) 185.28 339.18Tax on Interim Dividend 16.61 0.00Tax on Proposed Dividend (Final) 30.77 57.64Reserve for Redeeming Preference Share Capital 0.00 2937.47Balance carried to Balance Sheet 2117.83 1653.83Total appropriations 2450.50 4988.12Basic and Diluted Earnings Per Share (in Rupees)(Face Value Rs. 1000 per share) 113.89 223.93

40

BALANCE SHEET AS AT 31st MARCH 2011` Crs

Schedule As at As atNo. 31st March, 2011 31st March, 2010

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS7 827.32Share Capital 1 7 827.32

Reserves and Surplus 2 5 401.90 5 057.68

LOAN FUNDS274.89Secured loans 3 387.32

Unsecured loans 4 861.87 845.23

Deferred Tax Liability ( Net ) 79.97 97.82

Total 14 445.95 14 215.37

APPLICATION OF FUNDSFIXED ASSETS

9 794.60Gross block 5 9 473.90Less: Depreciation 8 264.71 8 008.55Net block 1 529.89 1 465.35Held for disposal 6 0.03 0.05Capital work-in-progress 7 9 536.71

11 066.637 506.90

8 972.30INVESTMENTS 9 361.60 0.25CURRENT ASSETS, LOANS & ADVANCES

3 254.71Inventories 10 2 451.52Sundry debtors 11 330.61 181.18Cash & Bank balances 12 1 998.89 5 415.54Other Current assets 13 75.96 137.40Loans & Advances 14 1 965.04 1 365.02

LESS: CURRENT LIABILITIES & PROVISIONS7 625.21 9 550.66

3 271.43Liabilities 15 2 871.95Provisions 16 1 336.06 1 435.89

Net Current assets4 607.49

3 017.724 307.84

5 242.82Total 14 445.95 14 215.37Significant Accounting Policies & Notes to Accounts 28Schedules 1 to 28 annexed form part of the Accounts

For and on behalf of Board of Directors As per our report of even dateFor B.V. RAO & CO

Chartered AccountantsRegn. No (F.R.N) 003118S

(P.K.Bishnoi) (P. Madhusudan)Chairman-cum-Managing Director Director (Finance)

(CA B.V. Rao)Partner

M.No: 019138

(P Mohan Rao)Company Secretary

Place : VisakhapatnamDate : 13 June 2011

41

Rashtriya Ispat Nigam LimitedAnnual Accounts 2010-11

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st March 2011` Crs

Schedule For the year ended For the year endedNo. 31st March, 2011 31st March, 2010

INCOME11 516.99Gross Sales 17 10 634.63

Less: Excise duty recovered on sales 1 045.8110 471.18

825.48Net Sales 9 809.15Internal consumption 87.70 121.07Interest earned 18 347.54 534.71Other revenue 19 90.32 81.03Total 10 996.74 10 545.96

EXPENDITURE7 188.36Raw materials consumed 20 5 535.11

Depletion / (Accretion) to Stock of Semi-finished/Finished goods 21 (532.32) 415.35Employees' remuneration & benefits 22 1 272.95 1 399.74Stores & spares consumed 471.22 466.48Power & fuel 23 425.03 408.27Repairs & maintenance 24 145.18 142.13Freight outward 300.72 312.65Other expenses & provisions 25 397.02 313.91Interest & Finance Charges 26 164.55 77.55Depreciation 265.94 277.17Wealth tax 0.49 0.45

10 099.14 9 348.81Less: Inter account adjustments-raw material mining cost 49.10 43.26Net expenditure 10 050.04 9 305.55Profit for the year 946.70 1 240.41Prior period adjustments- Net credit 27 34.96 7.24Profit Before Tax 981.66 1 247.65Provision for Taxation

369.10Current Tax 463.08Fringe Benefit Tax 0.00 (0.05)Earlier years adjustments (28.08) 14.62Deferred Tax (17.85) (26.67)

Profit After Tax 658.49 796.67Balance of Profit brought forward from previous year 2 117.83 1 653.83Amount available for appropriation 2 776.32 2 450.50

APPROPRIATIONS0.00Interim Dividend 100.01

Proposed Dividend (Final) 271.47 185.28Tax on Interim Dividend 0.00 16.61Tax on Proposed Dividend (Final) 44.04 30.77Balance carried to Balance Sheet 2460.81 2117.83Total appropriations 2776.32 2450.50Basic and Diluted Earnings Per Share (in Rupees)(Face Value ` 1000 per share) 85.79 113.89

42

Future plans for growth of the organisation

In line with the vision in National Steel Policy envisaging 110 MT steel by 2019-20, Vizag Steel is also planning to expand it’s capacity. Considering the buoyancy in domestic steel market for long products, which is the product mix of VSP and the high acceptance of VSP’s brand image in the market, an expansion plan has been proposed. The expansion plan of doubling the capacity of the plant has been cleared in a record time of 10 months and the entire Vizag Steel collective is totally geared up for completing the expansion in the stipulated 36 months. The consultant is in place and the funds are in hand. The expansion should give a strong footing for VSP’s growth.

The expansion programme is progressing well as per plans and the present focus is on creating an enabling infrastructure such as roads, water, power etc., for smooth execution. Also thrust is on finalization of the specifications and placement of orders. To leverage from our brand leadership in the long segment category, expansion has been cast to enhance volumes in the long product category. A seamless tube mill is also been envisaged to reduce the dependence on imports in view of the huge requirement by the oil and gas sector.

The envisaged expansion of the Plant’s capacity by 2008-09 is as below:

1. Hot Metal - 6.50 Mtpa 2. Liquid Steel - 6.30 Mtpa

3. Saleable Steel - 5.72 Mtpa

The following major facilities are proposed to be added under expansion stage.

1. Blast Furnace - 3800 M3- 1 No.

2. Sinter Plant

a. Sinter Machine No.3 – 400 M2- 1 No.

3. Steel Melt Shop No.2:

a. LD Converters 150 M3Cap - 2 Nos. b. 6 Strand Billet Casters - 2 Nos.

c. 6 Strand Round Caster - 1 No.

d. Secondary Steel Making Facilities

4. Rolling Mills :

a. Wire Rod Mill No.2 - 600,000 TPY b. Special Bar Mill - 750,000 TPY

43

c. Structural Mill - 700,000 TPY

d. Seamless Tube Plant - 300,000 TPY

VSP will enhance the volume of production in long products segment in view of Brand image. In order to diversify the product mix and help reduce the dependence on import of pipes in oil and gas sector, a seamless pipe mill is envisaged.

1. Wire Rod (Plain) - 5.5 mm to 20 mm in coils 2. Special Bars (Plain) - 16 mm to 40 mm – in coils and straight lengths

3. Structurals

4. Seamless pipes - 139 mm to 365 mm

5. Semis - Blooms , Billets

The Project is estimated to cost Rs.8,259 Crores (Base IV Qr.2004).

44

Advantages and drawbacks of the organization

Advantages:

Tall organisation structure helps in easy flow of command.

Authority and responsibility can be delegated easily as it is a simple structure.

Chances of romours is less as the organisational structure is staight.

Disadvantages:

Flow of command is time consuming which can lead to delay in decision making.

Authority to take the decision is at a very high level.

45

Summary of the organization

Visakhapatnam Steel Plant was founded on 20th Jan ’71 but became fully operational on 1st Aug

’92. VSP is the first shore based integrated steel plant with new technology, large scale computerization

and automation. The organizational manpower has been rationalized to operate it at international

levels of efficiency and to attain international labor productivity.

The production, commercial and financial performance has been improving with the passage of

years. The financial analysis of VSP by the use of various techniques i.e. Ratio, Cash flow analysis shows

that:

1) The liquidity position of the company is excellent.

2) The company is zero debt/low debit company.

3) The net worth of VSP is satisfactory

4) It is noted that the inventory level is increasing.

5) The profitability ratio is in decline state

6) Liquidity position of VSP is very good.

7) The company has accumulated funds which are available for expanding business

operations and expansion works.

8) Security to share holders is evisaged

46

Recommendations to overcome the drawbacks

The following suggestions will improve the financial position of the VSP.

PRODUCTION

1) Need for continuous up gradation of technology for improving the processes.

2) Effort should be made at cost savings particularly in spares and energy consumption.

3) Using the natural gas reserves of KG basin, Hot metal production capacity can be

enhanced with the present BF facility with negligible investment.

FINANCE1) Improving financial leverage ratio for better returns.

PERSONNEL:

1) Rationalization of existing man-power with effective training for future expansion of

the plant.

2) Improving efficiency through better HRD programs.

3) Providing better motivation.

47

4) Striving towards becoming the most chosen employer.

MARKETING

1) Continuously monitoring the indigenous sale, export sale ratio to capture the best of

markets.

2) Increasing the net realization by selling in the most profitable region.

3) Identifying new markets and new application of the company’s product.

4) Improving realization by identifying value added products and providing feedback to

production department.

5) Value added products (high value items) are to be produced instead of selling semi-

finished products in order to increase profit margin.

48

49