overall performance management

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A PROJECT REPORT ON OVERALL PERFORMANCE MANAGEMENT BY ABDUL ANAS.T PROJECT GUIDE PROF. RANADE. CA A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION VISHWAKARMA INSTITUTE OF MANAGEMENT AFFILIATED TO UNIVERSITY OF PUNE

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Page 1: Overall performance management

A PROJECT REPORT

ON

OVERALL PERFORMANCE MANAGEMENT

BY

ABDUL ANAS.T

PROJECT GUIDE PROF. RANADE. CA

A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

VISHWAKARMA INSTITUTE OF MANAGEMENT AFFILIATED TO UNIVERSITY OF PUNE

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CERTIFICATE

This is to certify that Mr. ABDUL ANAS .T,

student of MBA-II of VISHWA KARMA INSTITUTE OF

MANAGEMENT , PUNE has successfully completed his

Project report titled OVERALL PERFORMANCE

MANAGEMENT

from STEEL COMPLEX LIMITED .

D R . SH AR AD JOSH I PR OF. R AN AD E D I R ECT OR PR OJECT GU I D E

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DECLARATION

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DECLARATION

I here by declare that this project report entitled OVERALL PERFORMANCE

MANAGEMENT submitted to the PUNE UNIVERSITY in partial fulfillment of

the requirement of the award of the degree of Master Of Business Administration,

during the year 2004-2006 , is a record of orginal workdone by be under guidance

of MR. S.A. RANADE C.A faculty guide of VISHWAKARMA INSTITUTE OF

MANAGEMENT(VIM ),PUNE .

I assured that this study is not copy of any other work done before .

PLACE CANDIDATES SIGNATURE

DATE -

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ACKNOWLEDGEMENT

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ACKNOWLEDGEMENT

First and foremost I would thank my parents who given me an opportunity to do this course.

Secondly I would like to thank Dr. Sharad Joshi, our director for the advice he has given me . Then I would like to thank Mr. S.A .Ranade C.A , my project guide.

I would like to extend my thanks to Mr. Rajesh , Finance manager of Varthamanam daily news paper for the suggestions given throughtout the work.

I also express my sincere gratitude to Mr.T.K. Sudakaran, Personnel Manager ,Mr.Vasakam, Finance Manager and Mr. Shanavas, Finance Dep and other staff of Steel Complex Limited for having got their proper guidance and extended support to me during my training period even they were full busy withtheir office routines.

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OBJECTIVE OF THE STUDY

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OBJECTIVE OF THE STUDY

1. To understand the Overall Performance of SCL.

2. To understand the current problem of SCL especially the consecutive loss of the company.

3. To study the functions of each department like marketing ,Production, Finance,Personnel and other department.

4. To give suggestion for the improvement of SCL and uplift the company from the loss area.

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METHODOLOGY OF THE STUDY

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METHODOLOGY OF THE STUDY

Research methodology speaks mainly of the ways and procedures adopted to conduct the study and in preparing the report . The data assisted in the collection of details are both primary and secondary data .

Primary data

Primary data are collected by direct interference in each and every departments, direct discussion with managers and direct interview with employees.

Secondary data

Secondary data are collected mainly from audited financial statements , Government publications , annual reports , souvenir , internal journals, pamphlets and other records of the company etc.

INDEX

Sl.NO CONTENTS PAGE NO.

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1. INTRODUCTION

2. COMPANY PROFILE

3. PRODUCT PROFILE

4. PROCESS FLOW SHEET

5. ORGAIZATIONAL STRUCTURE

6. STEEL INDUSTRY IN INDIA

7. VARIOUS DEPARTMENT IN SCL

a) PERSONNEL DEPARTMENT b) COMMERCIAL DEPARTMENT

I) SALES DEPARTMENT II) PURCHASE DEPARTMENT III) STORES DEPARTMENT

c) WORKS DEPARTMENT

I) MAINTENANCE DEPARTMENT II) QUALITY CONTROL

d) SAFETY MEASURES e) FINANCE AND ACCOUNTING DEPARTMENT

8. DEVICE FOR ANALYSIS AND INTERPRETATION

9. TREND ANALYSIS

10. RATIO ANALYSIS

11. FINDINGS OF THE STUDY

12. SICKNESS HOW , WHEN ,WHY ?

13. RECOMMENDATIONS

14. SUGGESTION

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15. CONCLUSION

16. BIBLIOGRAPHY.

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INTRODUCTION

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COMPANY PROFILE

BACKGROUND

Steel Complex Limited is the only mini steel plant owned by the government of Kerala. The Company was originally promoted in the joint sector with KSIDC and private entrepreneurs in 1969. SCL set up its mini steel plant in 1972 with installed capacity of 37,000 tones p.a. The promoters of the company were: S. A. Jiffrey, A. K. Kadarkutty, N. Ramananda Rao, P. N. Menon, K. T. Joseph etc. The company commenced commercial production of mild, medium carbon and spring steel billets of 100mm square in August 1973. As part of rehabilitation package KSIDC raised its share holdings in SCL to more than 50% in 1979, and thus it became a subsidiary of KSIDC. In 1983, SCL undertook an expansion scheme by adding third electric arc furnace by which the production capacity was raised to 55000 tones per annum.

The operation of the company then improved, and SCL earned substantial profits during the years 1984

87. In July 1986, SCL took over Malabar Steel re-rolling mill located in Malappuram district as its rolling mill. Because of its unviable operation and working capital shortages, the company was referred to BIFR in 1992. The revival scheme submitted to BIFR through the operating agency

IDBI; was approved in 23-05-95. The company was expected to make profit and cash surplus from 1997-98. The net worth is expected to be wiped by 2004-2005. The company was not functioning during the period of July 93 to August 95. The company re-opened in August 95 and started production in October 95, under the approved BIFR scheme. Due to various constraints; company was not able to achieve, the envisaged production of 4000MT per month and sales realization of 444.50 lakhs per month. It was also expected to set up a rolling mill during the last quarter of 1996 - 97 by using the fund of deferred sales tax.

Since the production and sales were much below the envisaged level; cash surplus did not turn out as expected. Hence, setting up of rolling mill as per the scheme was not fulfilled. A glut in the steel market had increased the stock of materials, and decreased the production level. The products were marketed only to

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the government departments during the last few years. The company was finding it difficult to collect the out standings from these government departments; which effected the working capital requirements of the company adversely. As 50% of the cost is involved in raw material scrap, procurement of this item is very expensive. The scrap is usually imported from foreign countries under irrecoverable Letter Of Credit opened by the company. When the company was facing financial difficulties; opening Letter Of Credit and importing scrap were found difficult. In such circumstances; the company was left without production, due to raw material shortage. This also led to short fall in production.

REFERENCE TO BIFR

In the financial year 1991-92 the company s net worth became negative i.e. its accumulated losses exceeded its net worth and it fell into sick. So, under the provision of Industrial companies (special provision)Act-18\985,the directors of the company had made reference to Board for industrial and reconstruction (BIFR)on july 1992. The Board industrial and financial reconstruction(BIFR) had its first hearing on 5-119923 and in this meeting the company was declared as a sick company and industial Development bank of India(IDBI) has been appointed as the operating agency to examine the viability and rehabilitation prospects of steel complex limited (SCL). IDBI submitted its revival scheme in the 2nd meeting held on 26-07-1993. the scheme (draft) was reviewed by IDBI as per the views of management and other expert views and suggestions and thus revival scheme approved by BIFR on 23-05-1995.

TAKE OVER BY GOVERNMENT OF KERALA

In the financial year 1993-94 the company closed its operations due to heavy accumulated losses and shortage of working capital . in 1994 the government of kerala decided to take over steel complex ltd shares from Kerala State Industrial Development Corparation Ltd ( KSIDC), which holds 78% of equity capital , since the ANSHIRK STEEL , MALAYSIA, who agreed to run SCL could not establish their satisfactory financial position in the BIFR meeting . government of kerala took over SCL from KSIDC in the year 1994 in addition to it the government of kerala bought additional equity capital of nearly Rs .300 lakhs and gave Rs.450 lakhs as term loan carrying interest @13.5% p.a. Meanwhile , the company remained closed for the period from 1-7-93 and 3-10-95

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THE SUGGESTIONS OF IDBI

In the light of study, IDBI submitted a report, which included the following

suggestions.

1. The company should be taken over by the state government. 2. Strength of workers should be reduced. 3. Wages of the workers should be frozen. 4. Welfare expenditure should be reduced. 5. Sales tax deferment for seven years. 6. Electricity tariff should be at pre 1991 rate. 7. Sales tax arrears, electricity arrears should be funded and repayable in

installments. 8. 50% of products will be purchased by the government. 9. Production target to be fixed as 4000tones per month.

OUTCOME

Company accepted the above suggestions and production was restarted on October 95; but the production target could not be achieved.

PERFORMANCE AFTER BIFR

Performance of steel complex ltd (SCL) was not satisfactory . though BIFR scheme envisaged net operating profit 1997-98 onwards and the capacity utilization @ 87% , the operation of SCL have not been up to the expected ievel due to many constraints. However, the production of billets increased from 7085 tonnes in 1995-96 to 14286 tonnes in 1996-97 (102% increase comparing to the previous year )also sales turnover increased from Rs.730 lakhs in 1995-96 to 1646 lakhs during 1996-97. making an increase in 125% over the previous year . cash loss reduced from Rs. 129 lakhs 1995-96 to 70 lakhs during 1996-97. Producton of Billets increased from 14286 tonnes in 1996-97 to 17296 tonnes in 1997-98 showing 21% increase when compared to prvious year . and sales turnover in 1997-98 resulted in an increase of 27% over the previous year . cost of production reduced by approximately Rs.1000 per tones of billets by introducing various measures.

The following table gives a comparative study of SCL with BIFR scheme. PRODUCTION SALES PROFIT/LOSS YEAR

BIFR ACTUAL

BIFR ACTUAL

BIFR ACTUAL

94-95 1700 ++ 198 2.89 -376 -363.37 95-96 48000 7086 5335 1646.59 -151 -350.27

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96-97 48000 14286 5335 1646.27 -166 -359.72 97-98 48000 17295 5335 2110.59 -153 -314.62 98-99 48000 10590 5335 1756.53 +265 -440.31 99-2000 48000 9421 5335 1602.44 +327 -285.2 2000-2001

48000 9651 5335 1727.57 +389 -315.67

2001-2002

48000 7520 5335 990.83 +451 -500.05

2002-2003

48000 12831 5335 1734.05 +513 -286.33

2003-2004

48000 9596.74 5335 730.499 +521 -180.65

2004-2005

48000 15338.93 5335 491.19 +536 -270.92

++No production since the company closed. Source : BIFR report financial statement , data collected from production department.

The above table clearly shown the performance of SCL after implementation of BIFR scheme. The main recommendation of BIFR , setting up of captive re-rolling by 1997, could not be made in the practice . As well as capacity utilization could not reach the BIFR standards due to many reasons . Due to all this SCL could not make profit as forecasted by the BIFR s projected pprofit and loss account . it is better to say that the company is creeping on its way . way only a strong decision from the part of government of kerala could save the company and its employees. Its sure that the company can run in profit if it is lifted up by the government or any other agency.

MANAGEMENT

A team of experts in the steel field professionally manages company with adequate support from a committed board of directors . SCL had over 550 employees and equal number is employed indirectly in connected activities with its progressive and dynamic approach. It has a proud position among the public sector undertakings in kerala.

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SALIENT FEATURES

Authorised capital : Rs. 1625 lakhs

Paid up capital : Rs.700 lakhs

Installed capacity : 55000 tonnes

Connected load : 16MVA

Highest daily production : 253 tonnes

Highest monthly production : 5331 tonnes

Highest yearly production : 50475 tonnes

Total plant area : 32,732 acres

Envisaged annual turnover : RS. 70 crores

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PRODUCT PROFILE

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PRODUCT PROFILE OF THE SCL

SCL manufacturers steel by melting various grades of quality scrap , hot briquette iron. Iron ore and refining the same in Electric arc furnaces. The steel is cast into 100 mm sq.billets which are further rolled and converted into constructional steel of various section in rolling mill.

PRODUCT MIX

The Steel Complex Ltd. Markets a wide range of products with sizes varying from 6mm to 40mm dia plain rounds and 8mm to 40mm dia . CTD Bard, besides other sections needed for engineering industry. These are rolled out of 100mm.sq. billets manufactured by the company .the rounds/CTD bares are produced strictly confirming to IS:226/1786 speciification . besides mild steel , the company also produces medium and high carbon billets against firm orders.

PRODUCT RANGES

1.BILLETS

Continuously cost billets of 100mm square size in mild/medium/high carbon grades as per BIS quality stsndards.

2. MILD STEEL

a)ROUNDS

(b) CTD Bars © SQUARES (d)FLATS (e) ANGLES

06mm 08mm 10mm 25 × 6mm 35 × 35 × 6mm 10mm 10mm 12mm 32 × 6mm 40 × 40× 6mm

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12mm 12mm 40 × 6mm 45 × 45 × 6mm 16mm 16mm 50 × 6mm 45 × 45 × 6mm 20mm 20mm 50 × 6mm 50 × 50 × 6mm 25mm 25mm 65 × 8mm 65 × 65 × 8mm 28mm 28mm 32mm 32mm

36mm 36mm 40mm 40mm

3. Carbon Steel

Category : En 8, En 9, En 44, En 45, En 45A

(a) Rounds (b) Flats ( c) Squares

20mm 20×6×8/10/12mm 20mm 25mm 25×6×8/10/12mm 25mm 28mm 32×6×8/10/12mm 32mm 32mm 40×6×8/10/12mm 40mm 36mm 50×6×8/10/12mm 50mm 40mm 50mm

4. Other Items

Other specifications are also manufactured and sold against firm orders.

QUALITY OF THE PRODUCT

During refining ,samples are analysed in the laboratory and the process in controlled according to the bath sample analysis. Steel produced in the plant is every time subjected to the most stringent and ucompromising quality control tests .the company , being the holder of A grade BIS license, is authorized to issue certificates confirming to BIS specification .With strict compliance to the prescribed code of standards , SCL has over the years acquired a reputation for quality steel.

BASIC LAYOUT OF THE PLANT

The plant which is spread over a total area of 32.732 acres, has three electric arc furnaces of 10/12 T capacity each and a twin-strand continuous casting machine designed

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by concast-zurich besides these the company has various auxiliary equipments like 25/5 T EOT cranes , water treatment plant, 10/11 KV substation, full fledged metallurgical laboratory etc.

The steel produced here is strictly confirming to BIS specification falling under mild , medium carbon and spring steel qualities and is cast into 100 mm sq.Billets . The billets are further rolled and converted into constructional steel of various sections at rolling mills.

SCRAP ROOM

The plant has scrap room which has the imported scrap in it , used for used for the steel production . The scrap room has 5T EOT cranes for transporting the scrap from the room to the furnance through scrap boxes.

ELECTRIC ARC FURNANCE

The plant has three electric arc furnances of 10/12 capacity, which is used for the production of steel. The furnance comprises a cylindrical refractory lined shell with dished bottom and domed roof. The shell is mounted on a chassis, mast which also carried a back frame with the roof suspension beams electrode mast which unites for electrode arms etc. The chassis with the furnance shell and the back frame is carried on two toothed rackers for tilting forward and backward. The separate mounting of the back frame ensures that the torque and stress set up by rood on electrode movements are transmitted directly to the chassis and have no effect on the furnance shell .Each furnance has three electrodes made of graphite which receives a 220V supply from a specially constructed beside it . The roof opening and the tilting of the whole body of each furnance are controlled by a hydraulic system. The slag door opening and the bumper.(a support for the furnance on one side ) tilting is controlled buy a pneumatic system.

The furnance is internally lined with a brick of magnesite material and is covered with DBM ramming powder. The furnance roof is also internally lined with bricks of magnesite material. The maximum capacity will be increased maximum up to 15 T.

The DBM ramming material contains high percentage of magnesium oxide. It can withstand high temperature. After every tapping some proportion of the ramming material gets damaged. For repairing the damage of bottom ramming materials is fettled in the furnace bottom. The roof rings are supplied so that when one is in operation of the furnance, the other may be bricked ready for use. The roof suspention beam assemble together with roof is swung off the furnace for use charging.

The furnace roof is suspended at four points and is lifted by two hydraulic cylinders mounted on the back of the furnance.

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On vertical pivot pins is provided and secured to the chassis. The back structure carrying the roof lifting mechanism rotates about its pivot pin supported on rollers, which move on a track concentric with its pivot pin. Rotation of the back structure and consequently sowing of the roof is carried out by the double acting cylinder. Electrode arms are of tabular steel section and carry water-cooled copper tubes to the electrode clamps. The electrode arms bolted to the heads that move on the electrode mounted on the back structure.

The Electrode clamps are made of non-magnetic heat resisting steel, water cooled copper inserts are included in the clamps for carrying current to the electrode. The clamps are operated by preumatic cylinder and operating lever.

The arms of the electrodes used to control the distance of the electrode from the charge are automatically controlled by sensitive thruster with gear box system. The same process a safety cut off system.

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PROCESS FLOW SHEET

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ORGANIZATIONAL CHART

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STEEL INDUSTRY IN INDIA

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STEEL INDUSTRY IN INDIA

IRON & STEEL PRODUCTS :

Iron and steel are the worlds cheapest and most useful metals .these hard durable metals are used in making thousands of product , from paper clips to cars. Machines made of iron and steel helps to produce almost everything we use on daily basis to meet our personal needs , domestic requirement etc .

Steel is produce by refining iron and alloying it with other metals . iron may be thought of as the basic material of steel and steel may be considered as the refined products of iron. Today, the production of iron and steel is one of the worlds most vital industries . Through out the world , millions of workers are employed in steel manufacturing plants . thus it opens employment to many people.

HISTORY Iron and steel industry plays an important role in the development of any country . it is one of the basic or key industry . iron & steel got its industrial orgin in India in 1874 . It was in 1874 , the first iron & steel industry of India . BARAKKER IRON WORKS was started in Bengal.

Though iron &steel industry got its origin as industry in India in the year 1874 , the real growth and development of the industry has taken place only 1907. it was in that year sri. Jamshedji tata started tata iron& steel company ltd .(TISCO) at

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sakthi (later known as jamshedpur) in bihar . and jamshedji tata is known as the father of iron & steel industry in India . In the period of 1st world war the growth of the industry had been boosted up . new players like Indian iron &steel company (IISCO) at haripur 1929 , mysore iron works at badravathi (1929) etc . were come up . iron & steel industry was a protected industry from 1924 to 1947. in this period the industry grew faster.

5 YEAR PLANS AND IRON & STEEL INDUSTRY

The introduction of five year plan in the year 1951 had helped much the development of iron & steel industry. In the second plan period , thre pactories , each having the capacity of 10 lakh tones per year were started in the public sector . and also the capacity of the private sector units wre lifted up . as a result , at the end of the second plan period , the steel production reached around 60 lakh tones per year.

In the third year plan period the industry had been diversified and production raised to 90 lakh tones per year .the 4th plan emphasized on full capacity utilization . fifth and sixth plan given stress to improve production capacity.

PRESENT STATUS OF STEEL INDUSTRY

Steel making ranks among the worlds most important industries . steel plays an essensial role in almost all major economic activities , including manufacturing , mining , construction , transportation and agriculture . In India , the integrated steel plants in the public sector are steel Authority of India(SAIL), Vizag steel plant (VSP) and in the private sector , its TISCO . the three majors in the secondary sector are essar group, gindal group and the Ispat group . other steel majors are LIoyds steel, Bellary steel , malavika steel and Bhuvalka steel etc . After liberation of the economy ,imports have become easier . some countries particularly , US countries are exporting at very low prices . During the past few years , the Indian industry has made effort to increase exports . However , rising input cost and South Asian crisis have reduced competitveness of Indian steel.

FUTURE OF STEEL INDUSTRY :

For the past half century , Asia (Korea ,Taiwan,China,the six major ASEAN countries and India)has dynamic growth , and its status in the world economic order has been rising steadily , in the 1980s the newly industrialized economy in Asia gained widespread recognition through a rapid economic progress . Along with rapid economic growth and Industrialisation in India , the region is fast emerging as the heart of the world steel industry in terms of both consumption and production

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. Under such circumstances , we can expect that the Asian steel Industry will strengthen its position as a major contender in the world.

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VARIOUS DEPARTMENTS OF SCL

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PERSONNEL DEPARTMENT

ORGANISATIONAL CHART

Source:Data collected from Personnel Department.

General function and working of the department

General function of the department is to look after the personnel matters in the organization, to maintain a satisfied work force and look after the welfare of the employees. There are about 366 employees presently working in the organization after two VRS scheme is adopted. The opproximate expenditure to maintain this working force is about 21 lakhs per month. Since number of employees do not exceed 500, a welfare officer is not needed to appoint separately.

Working time:

Factory : general shift - 8.00 A.M to 4.30 P.M. Shift A - 7.00 A.M to 3 P.M.

Shift B - 3.00 P.M to 11 P.M.

Shift C - 11.00 P.M to 7.00 A.M.

PERSONNEL MANAGER

Jr. MANAGER PERSONNEL

Jr.MANAGER(PERL&LEGAL)

Time office staff Security staff

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Office - 9.00 A.M to 5.00 P.M. Detailed and step by step procedure adopted by the department for maintaining the work force is given below.

Recruitment

In the early stages employees were recruited directly by the company. By the year 1985 recruitment is made through employment exchanges. Now the government has given the power to recruit to the Kerala Public Service Commission (KPSC). But rules for such recruitment is to be finished. In order to fill up the backlog in the representation of SC/ST communities, a special recruitmen5t is made by the company in the year 1986. There after they has not been much recruitment in the company. In the top management cadre the recruitment is made directly by the company through advertisement in newspapers.

Traning and probation

Newly recruited employees are generally put on probation for a period of 6 month and in the managerial cadre, it is for a period of one year. In the time of probation they are under going a re-orientation programme, which will enable them to adapt thye new environment and to understand the job they have to perform.

Apprenticeship Training

Graduate/Diploma engg s , ITI certificate holders , Diploma holders in commercial practice and certificate holders in VHSC are taken as apprentice and given apprenticeship training in their respective field as per Apprenticeship Act.

Promotion

SCL follows two types of promotions schemes. They are described as under: a) vacancy promotion

In vacancy promotion scheme, the promotion is given to next higher post depending oupon the vacancy available. For this promotion every employee has to complete a fixed year of service stipulated for the post.

b) Time bound promotion

Where vacancy promotion is not applicable , an employee in a particular post is given time bound promotion to the next higher grade on completion of certain number of years of service. Employees promoted under these two schemes are put on 6 month probation to know whether they are capable to the post or not.

Grading the employees

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There at present 392 employees including Managing Director and other Managerial staff in the organization . All employees are graded in different catogories. The broad division of these grades are given as follows.

1) Managerial staff

2) Engineers and supervisors

3) Skilled workers

4) Semiskilled workers

5) Unskilled workers

6) Administrative staff

7) Attenders, watchman & driver

Performance Appraisal of Employees

In Scl performance appraisal report is a basis for the promotion. It is done yearly in the case of staff grade, skilled workers, and semiskilled workers. It is by Managerial level staff . There is a reporting officer and a reviewing officer(higher authority,generally department head). If any employee fails in any item of appraisal report he is informed it and a chance is given to improve . The company conducts an interim reporting for these employees and if they pass in it they are considered for promotion after that date . Failures in this interim report is also informed to the employee connected. In the case of managerial staff appraisal is done by sction head or department head. For them, there is no yealy reporting.

Trade union

There are seven trade unions in the organization. Four of them are recognized by the management. For getting recognition, trade must get the 15% vote of the employees. Last referendum was taken in the year 1991. Management participation is not allowed for trade unions.first four of them are recognized and in the bracket is the name of the trade union to which they are affiliated.

Steel workers union(CITU) Steel Employees union(INTUC) Steel mazdoor sangam(BMS) Steel complex swatatra tozhilali union(STU) Steel mill workers union(AITUC) Steel &engineering employees union(INLC) Merchandile employees association (INTUC)

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Welfare activity of the department

Canteen: There is a subsidized industrial canteen run by the company to provide quality food at reduce rate to it s employees. The company, through a contractor runs it . The contract is given on yearly basis. There is a canteen management committee under the personnel department to look after working of the canteen. In the committee there is one representative from each trade union and representative from management. The committee decides the quality, quantity etc. of food items.

Co-operative stores: A co-operative store is function in the company. It runs a consumer store for suppling groceries and stationary items. Members are also given facility of purchasing consumer durables under hire purchase scheme. There is a Group Saving Deposit Scheme managed by the society.

The management of the society is done through a Board of Directors consisting of the representatives of employees and management.

Recreation Club: There is a recreation club in the organization to promote cultural and sports activities of the members. The management committee of the recreation club comprises of representatives from management and employees.

TIME KEEPING DEPARTMENT

It is a sub department of personnel department. The function of the department is to keep and record the attendance of the employees. The department is headed by junior manager (personnel) and assisted by senior time keepers(3 in general shift and 4 in shift) The department maintains record of employee s attendance by mechanical system of time keeping i.e. through time clock and punch card. Employees are to punch the card when they are entering to the company and going out. After every shoft the details of the punch card is entered in the muster roll of the employees . It is totaled on the end of the month and given to accounting department. Managerial persons are exempted from the punching the card.

Leave , overtime,advance salary and payment is done by the department. All works except salary and payment is done by the department such as ESI,PF< insurance etc. For keeping records employees are coded into two. For management and staff, code starts from 101 and for workers from 1001. code number is given sequentially based on the joining date. Employees are identified through employee code and name.

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SECURITY DEPARTMENT

It is also a sub department of personnel department. It is managed by security in charge and two security officers and seven security staff. The department maintain the remaining strength through contract to security agencies, such as national security agencies, calicut etc. The department had duty to look after all the security aspects of the organization.

LEGAL DEPARTMENT

The department is headed by a junior manager (legal). The department has to given necessary advises to the company on legal matters. There is no supporting staff in this department.

SECRETERIAL DEPARTMENT

Company has not appointed a whole time new company secretary after the resignation of a company secretary who had there prior to the shutdown of factory. Now all secretarial works carried out by a person on part time basis which is not well suitable for a limited company and for a govt. undertaking like steel complex Ltd.

If the paid-up capital exceeds 25,00,000 lakhs there need a company secretary as per the companies act ,1956, which is not complied by SCL due to the paucity of fund.

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SALES DEPARTMENT

Organisational chart

FUNCTION

Billets , after it is graded by the quality control department , it is transferred to sales department.When the Billets are received by sales department, it is send out to re-rolling mills to get it re-rolled.In rare cases the department may sell the billet directly.

MANAGER(SALES)

JUNIOR MANAGER (SALES)

SENIOR SALESASSISTANTS/DIPO

SALES ASSISTANT

JUNIOR SALES ASSISTANT

JUNIOR MANAGER (PERSONNEL ASSISTANT)

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CHART SHOWING THE FUNCTIONS OF THE SALES DEPARTMENT

RECIEPT OF BILLETS

Billets , after checking and grading it according to BIS standard by quality control department, the production department transfers it to sales department. Sales department, when it receive billets , gives a goods received note to production department.

SALE OF BILLETS

In some unavoidable occasions the organization sell off its billets to outside private re-rolling mills .It is generally done when there is shortage of fund or working capital . This sale is only done from head office.

RE-ROLLING OF BILLETS

Generally company gets its billets re-rolled for sale . Since the company do not have a captive re-rolling mill, it sends billets outside and get it re-rolled . Generally

RECIEPT OF BILLETS (FROM THE PRODUCTION

DEPARTMENT)

RE-ROLLING

SALES

GOVT SALE

DIRECT SALE

PUBLIC SALE

AGENT

SALE

SALES

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re-rolling is done from mills in and outside Kerala such as Towersteel , Vadakkancherry ,TN auto Engg.co.,Salem. Company also get the billets re-rolled from its subsidiary company, Malabar steel Re-rolling Mills Ltd at Venniyoor, Malappuram. But only large, slow moving categories of 16/20/25/28 mm dias can be re-rolled here. Hence, company has to send its billets for re-rolling them in to fast moving small dias of 8/10/12 mmetc . to out side private parties. This is one of the main reason for incurring losses, since the company has to spend large amount on transportation and the private companies charge 10% conversion loss. Which can be reduced to 5% if re-rolled internally.

SALES

Sale of product of SCL is mainly done to government. It has also open market sale . But realization of sale price is time consuming .Open market sale are only done on cash basis .The product of SCL has high quality, since the company maintains BIS standards. 10% price preference is obtained whwn sale is made to govt. department . it is sold to Govt. against advance payment in general and on short credit period in afew circumstances. Goods sold to private parties against spot payment . But marketing of the product is very much difficult since the price is comparatively higher.

RESPONSIBILITY OF SALES DEPARTMENT

1. Calculating the requirements by Management committee.

2. Opening quotations.

3. Negotiation regarding price, qualityand credibility.

4. Collecting orders.

5. Publicity and promotion.

6. Interact with customers and appraise the quality of the product.

PRICING POLICY

Top management is fixing the price in consideration of competitors price, cost of production and existing marketing condition etc. M.D, Sales Manager,finance manager are responsible for pricing. If any amendment regarding the prices are made, it will be circulated among every department of the company.

CUSTOMERS

Since SCL is a public sector unit , products are mainly supplied to cater to the needs of Govt.dep and Govt. agencies. According to IDBI suggestions, 50% of the total

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product should be consumed by Govt. private institution , whole sale dealers and private individuals and other customers. No intermediaries are allowed.

SALES NETWORK

The company has a sale network spread throughout the state. Company under takes sale of all its products through their state depot at major centers. But at present .company has only two sales depot, one Ernakulam and one at calicut within the company primises adjesant to entrance gate of the company. Other depots at Kannur,Kollam, Trivandrum are dropped now because of poor sale s activity and heavy paucity of fund.

COMPETITORS

The competitors are mainly, P.K.Steel casting(p) Ltd, Koyenco steel (p) Ltd and other induction furnace competitors at palghat and other places of the state and outside the state too.It s to be pointed out that nothing beats the quality of the product since quality is checked at each stage before billet is sold away. Among the company s product, CTD bar has commendable movement in the market.

TARGET

Though the IDBI suggestion is 4000 tons per month , company could produce only 2000tons or below it per month due to acute working capital shortage. Further, on account of heavy competition from other units in the state and outside Kerala, demand is very low. At rainy season , conctruction activities may be less and consequently the also decreases.

STEEL DEMAND

2000 tons per month is the demand for steel in the state as far as total is concerned. It may vary accordind to the seasons. To this,hardly 2000 tones is the only contridution of SCL, say 10% of the total after it s reopening. Thus , a abnormal marketing gap is there which can be welded if the life blood, fund , is smoothly obtained to run the unit SCL has both direct sale and agency sale. The following chart shows the channels of distribution.

A) GOVERNMENT SALE

1) SCL GOVERNMENT 2) SCL GOVERNMENT SALES REPRESENTITIVES

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B) OPEN MARKET SALE

1) SCL Private perties (contractors, construction company etc)

2) SCL Sales representatives private parties

3) SCL consumers

SalesTax (ST) is charged at the rate of 4% As per the law , at the time of sales. And in addition to above, if the company delivers goods, it charges an additional amount , per metric tones , according to the district of delivery . it is rupees 150 in Malappuram and Kozhikode (lowest) and 480 in Trivandrum(highest). Billet of 100 mm sq.size of 4 mt.length is directly sold with out any conversion at rs. 13300/-+ 16%Excise duty + 4% sales tax. In case of tore steel, it is sold at 4% sales tax with no attraction of excise duty.

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PURHASE DEPARTMENT

SCL has a strong purhase department which carries out all types of domestic as well as import purhase . Organisational structure of purchase department:

SOURCE : Data Collected from the department

Above is the existing organizational structure of purchase department . There is one Jr. Manager who looks after the affairs of purhase deparment . Under him, there are two assistants , one stenographer and one helper/ Attender in the office.

FUNCTIONS

The responsibility to purchase all raw materials , General stores and consumable lie with this department. The purchase function of the department can be divided to three according to material purchased and procedure adopted to purchase it.

( i) Purchase of Scrap

Heavy melting iron & steel scrap is the main raw material used for production. So ,the purhase department makes separate arrangement for the purhase of it . nowadays SCL uses imported scrap as well as indigenous scrap. Purchase are made through international quotations published in the National Dailies. The company has to receive minimum three quotations for consideration . The tendor cost must be of C & F at cochin port and also contain a credit period of 180 days .

JUNIOR MANAGER

ASSISTANT

STENO/ HELPER

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Tenders are fixed at lowest cost after enquiring all relevant details of he party such as credit worthiness, other customers etc. Scrap imports are mainly done from Middle East ,Europe , USA etc .The payment is guaranteed by letter of credit by stste bank of India, which is opened in US dollar itself . so there is no problem of foreign exchange . presently , company does not make any import activities when they are not in a position to open Foriegh Letter Of Credit drawn on their own name since they can t avail those facilities from their bankers due to heavy liability to them . hence , if they propose the scrap , it can be imported through any traders for which they will have to pay higher price.

(ii) Other raw materials for production

All other raw materials for production such as Fero manganese, silicon, Limestone ,Bauxite, coke power ,iron ore etc . are directly purchased from the manufacturers situated outside the state like Gujarat, A.P, M.P, Maharastra,Karnataka. Etc . If there is government company which produces any of these raw materials, it is preferred to purchase raw materials from them to other to suppliers without considering price factor. There is no periodical contract for purchase of material other than scrap.

(iii) General stores :

Tools and spares that are needed for producton and maintenance departments are purchase localty at lowest cost .

(iv) Consumables:

Grahite electrode, Magnetite bricks , line board, slide gate items are purchased as and when its requ8ired which are very important items for the smooth functioning of production process.

PAYMENTS

Mainly payments are done through finance & accounting department . Payment on scrap purchase is to be made as per the terms & condition laid down. For raw materials and consumables , advance payment be made through DD . For others 30 days credit or spot payment .

PROCEDURE TO BE FOLLOWED

problem identification 9search for the items to be purchased).

Receive the advice from the department who initiates the purhase

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Sending the decision for the approval of Top-level-Management . Purhase value exceeds Rs5 Lakhs is decided by Board of Directors and up to Rs 5000/- is empowered to purchase manager

Aquire approval from finance department.

Inviting quotation according to the firms requirement .

Complying delivery period items and mode of payment .

Negotiation regarding price and quality .

Arrange payments if documents are negotiated .

Follow up the parties for delivery.

Preparing the purhase order so as to place to the supplier with a copy given to the department initiate the requisition routed through stores department.

REQUIREMENT OF PURCHASE

Because of lower production and stringent financial constraint, the purchase requirement will also become low. So purchase department can t fix a purchase target regarding the raw material requirement and very often , rush purchases are made with extra cost.

The main raw material used in SCL is scrap . It is mainly imported from other countries. Import of scrap is mainly done on the basis of OGL. Scrap is purchased in bulk quantity in containers . Containers are opened only after prior supervision . Since SCL is an end user of scrap ,5.5% duty only to be paid while for others pay 35%. The department is also maintaining GRL register, bill forwarding register , supplier list, stock register, indent register , L.R register etc.

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STORES DEPARTMENT

Stores section has 2 subsection such as items meant for production materials which includes scrap and Raw materials and items for general maintenance.

ORGANIZATIONAL CHART

SOURCE : Data from the stores department, SCL

There is one asst manager (stores )to look and manage the affairs of stores department . He is assisted with four senior assistants ,two in general shifts and two in shifts. And one Jr.stores assistant in general shift . There are tree senior supervisors(general shift) in the department to look after the raw material stock. One weigh bridge assistant (general shift ) and 17 various helpers like scrap charging helpers , raw material helpers etc. in different shifts. FUNCTIONS

Function of stores is receiving,maintaining and issuing stock of various materials that are needed for production and maintenance. For performing the task easily stores are divided in to three.

(a) Raw material(scrap) (b) Other raw materials

MANAGER (SALES & PURHASE)

ASST. MANAGER (STORES)

SR. SUPERVISOR(RAW MATERIALS)

SR. STORE ASSISTANT

RAW MATERIAL HELPERS/SCRAP CHARGING HELPERS

JR.STORES ASSISTANT

JR.ASST.WEIGHBRIDGE

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(c) Equipments and spares.

The procedure for stock keeping for each type of stores are given below. (a) RAW MATERIAL(Scrap)

Scrap is the main raw material for production .the daily level of stock of scrap(in metric tones) is informed to purchase Manager, Works Manager , Production Manager . The purchase department makes order automatically by seeing the level of stock in the report.

(b) Other raw material For all other raw materials for production and main items in general stores , aweekly statement/monthly report of stock level are given to department connected .The department through stores when they are in need of raw material. © Equipment and spares All equipment and spares are categorized into 2 according to the stock level that is to be maintained.

(i) Equipment and spares for which minimum stock level is to be maintained.

For this type of equipments and spares the stores department will place the purchase intent to purchase department when the stock level of that particular item reaches the minimum level fixed .

(ii) If no minimum level is required. For all equipment and spares for which no minimum stock level is fixed, the stores department will inform the level of stockto the department connected periodically. They have to place purchase intent through stores by seeing the stock.

RECIEPT OF MATERIAL

The material ordered by the purchase department ,when it is arrived , is received by the stores department . The department will check the quatity and the purchase intent to know whether the material received is as per correct purchase intent and in correct quantity. After receiving the goods and checking the quantity and intent it will be entered into the goods received register then stores department prepares a goods received note and send one copy to Accounts, one to inspection section and one to Purchase . The connected department after checking the quantity of material arrived sign the goods received note and send it back to the stores department . only then goods received will be taken into stock and recorded in the ledger.

RECEIPT OF SCRAP

Since scrap is the main raw material the receipt of he scrap has some special procedures. There is an inspecting committee, consisting of officials from stores , production and purchase department to inspect the scrap . They will

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inspect the scrap grading and check the quanlity etc.and give necessary suggestion to stores department on the besis of these suggestions the stores department prepares the goods received note and the materials are taken into stock.

ISSUE OF MATERIAL

All materials for production other than scrap is issued general shift only. Scrap has a 24 hour issue . consumables & spare parts are issued , in A & B shifts only . All issue of scrap is weighed and total weight per feet is to be certified by production in charge. All materials issued are entered in records and all issues are infirmed to department connected through materal issued note . All records are made on quantity basis only . No rate aspect of material issued is entered. The department couldnot follow a scientific stores control system due to many reasons. Only reporting of stock on fixed intervals are done and reporting are done on reaching minimum stock level for materials on which minimum stock levels are kept.

WRITING OFF OF STOCKS

An inspecting committee must inspect the stock or item and certify that it cannot be used for production . The managing director has to place this certificate in the board meeting and get it passed . Only then an item can be removed from the stores ledger. Stores department maintains a store ledger showing the movement of quantities for each item kept in the stores . There are nearly 8000nos of spare parts , less than 400 items of raw materials and scrap, and the stock movement of all these are being controlled by stores department . At the end of accounting period, book quantity is to be got tallied with physical quantity for closing stock purpose. Further , scrap received from outside party for jobwork for conversion for which stores department has to give daily stock report to Works Manager regarding the stock in hand as those scrap belongs to outside party for which companys held responsible till the conversion to billet work is completed

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WORKS DEPARTMENT

Works department , managed by a senior manager is again divided into many departments. Main department under wors department are production , maintenance(which are again divided into electrical maintenance and mechanical maintenance department) and quality control department . The departmentalization of works department, organizational chart and function of each department are given below:

CHART SHOWING DEPARTMENTALIZATION OF WORKS DEPARTMENT

Source: data collected from works department, SCL

Works manager has an overall control on production , maintenance , quality control(only administrative control )department. Each of these sub department are functioning under their section heads. Working manager is held responsible to co-ordinate the entire functions of all these sections without which the total activity of the company might become uneasy. He should interact with other department like sales,purchase personnel, safety etc. However, works section have to play an important role in steel complex.

WORKS DEPARTMENT

PRODUCTION DEPARTMENT

MAINTENANCE DEPARTMENT

QUALITY CONTROL DEPARTMENT(ONLY ADMINISTRATIVE CONTROL)

ELECTRICAL MAINTENANCE DEPARTMENT

MECHANICAL MAINTENANCE DEPARTMENT

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A. PRODUCTION DEPARTMENT:

It is the most important department under Works department. It has the responsibility to look after the production function in the organization. The department works for 24 hours through three shofts (A,B and C) of eight hours each. And in general shofts the office works and other upper level managerial activities are done.

ORGANIZATIONAL STRUCTURE

(a) shifts(A,B & C)-Source: collected from production department

SHIFT MGR

FUNCTION

A) GENERAL SHIFT

Functions of employees in general shifts is to perform day-to-day management of the department and to make sure that the production is not interrupted due to

JOINT MANAGER

GENERAL ASST.MANAGER

SUPERVISOR

WORKERS

MASONS&GENERAL PERSONS

SHIFT A

SHIFT B SHIFT C

SHIFT MGR

SHIFT MGR

SHIFT MGR

SHIFT ENGR

SHIFT ENGR

SHIFT ENGR

SHIFT SUPERVISOR

SHIFT SUPERVISOR

SHIFT SUPERVISOR

WORKERS WORKERS

WORKERS

FURNACE MEN MASON LADLE MAN BILLET YARD PERSON

GENERAL PERSON

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any reason. The day-to-day management function includes scrap as a member of the inspection committee, to order for necessary raw material that are needed for production through an intent to stores, to place purchase indent with quality and quantity through stores when materials are out of stock. And another main function performed in genersl shift id maintenance of quality of the output .

In general shift there is one Asst. manager (production ), who has the whole responsibility of the production department .In addition to this , there are supervisors and workers in workman grade under his direct control after the affair of the department.

When the production process is completed the finished products are tested and checked by quality control department and they grade it according to BIS quality standards. The quality reports are given to the production department . The graded products(Billets)and then transferred to sales department.

B .SHIFT

Officers and workers in the shift hane the duty to look after the actual production process, shift works and time-to-time break-down maintenance. Each shift is headed by one shift manager /engineer/incharge and he is assisted with one supervisor in staff cdre and other workers in different workers grades.Shift engineer has the duty to receive scrap for each heat and he has to certify the quantity used to stires department.

PRODUCTION PROCESS

Steel making by melting various grades of good quality steels scrap, hot briquette iron, iron ore and pig iron and refining the same in Electric Arc Furnace is adopted in the organization . The process of filling the scrap in the furnace is called ramming .After ramming furnance roof. 600KV electricity should be consumed for one melting. Its consumed furnace oil for the furnace operation. Average time required to melt one furnace with full scrap of 12 tons is 3 1/2 hours . The company has 6 charge buckets,5ladles each has 13 tons capacity, 3 Electric Arc Furnace of 10/12 T capacity each and a twin strand continuous castig machine designed by concast-AG,Zurich. Besides these the company has various auxiliary equipments like 25/5 TEOT crabes, water treatment plant, 110/11KV substation, fullfledged metallurgical laboratory etc. The steel production here is strictly confirming to BIS specification falling under mild, medium carbon and spring steel qualities and is casting 100mm sq.billets. The Billets further rolled and converted into constructional steel of various classification at re-rolling mills in and outside Kerala; and also in Malabar Steel Re-rolling Mills Ltd, which is subsidiary company of SCL. Now one furnace is only working and 800 tons per month is only produced as against the recommended monthly production target is 4000 tones by BIFR.

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The main raw material in production process are preparation of furnace, charging, melting,refining ,taping,casting. Then the billets are formed they are gathered and they are cut at 4 meter length . The other main equipment made use here is ladle . The liquid form or molten iron is carrying in ladle with the help of EOT cranes . Patches should be identified and mended before strarting the function of production. This ladle has 12/15 tons capacity which is lined with high alumna refractory bricks, on bottom side, a nozzle of 24 mm dia is made and this nozzle can be opened to take out melted iron through a gate mechanism. Thus if 11 tons scrap is charged into buckets for production 10 tons of billets (33nos of billets of each 100mm sq.size of 4mtr length)is produced. If 16 tons scrap is charged into bucket for production - 14.5 tons of billets(478 nos of billet of each 100mm sq.size of 4 mtr length )is produced. It takes 2 hours for melting and 1 ½ hour for casting of 12 tons scrap . Thyus altogether takes 3 ½ hour for the production of 12 tons of billets . The production area is divided into three . Scrap bay wherein only scrap meant for production is dumped . furnace bay consist of furnace. Concasting machines,EOT cranes wherein production work is carried out . 3rd one is finished goods bay or billet bay wherein the straightened billets are cut into 4 mtr length with torch cutting point and laid down in the ground to get natural cooling. Thus production department is responsible for finished goods stock and reports toWorks Manager and Sales Manager regarding the closing stock of finished goods billets.

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PROCESS FLOW CHART

Raw material consumption per Metric tons of billet:

SL NO MATERIALS Cost / M.T (Rs)

Consumption/MT of billet

Cost/ M.T of billet

1 Gr Electrode 107328/- 6 kg Rs.644/ 2 Ferro silicon 37075/- 4 kg Rs.148/- 3 Ferro

manganese 24972/- 10.5kg Rs.262/20

4 Electricity 0.60ps/unit

800 kwh unit Rs.480/

Layout; SCL has a combined product lay out , product layout and process layout . For some operations , product moves from Machine and for operation, process or Machine come to product through EOT.

SCRAP

BAY

Scrap filled in buckets with the help of EOT

Taken Scrap to furnace for

melting it for 3 hrs at 11000V

Taken the melted iron through ladle with the help of EOT

Tundich

Concasting machine

Spraying water for cooling @16.1 per

minute for cooling the billet

Lengthier billet is withdrawn from straightner through the roller

Cut the billet (100mm) into 4 mtr length at two sides

Finished goods bay where pieces of billets of 4 mtr length reaches from both sides of the roller and taken with the help of cranes and kept on the bay for getting cooled naturally

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MAINTENANCE DEPARTMENT

Next department under works department is maintenance department. This is further divided in to two department, i.e, Electrical maintenance department and Mechanical Department . Working and function of maintenance department is perform all kinds of maintenance works, both break-down maintenance and preventive maintenance of the factory.

ORGANISATION STRUCTURE

Source:Data collected from maintenance department

I .ELECTRICAL MAINTENANCE DEPARTMENT

This department has the responsibility to maintain all electrical equipments and fitting as well as to operate the substation of the organization . The department has both the shift activity and general shift activity. Organizational chart and function of shift and general shift are as given below. ORGANIZATIONALCHART

General shift

ASST.MANAGER ELEC. MAINTENANCE

WORK MAN GRADE

MAINTENANCE DEPARTMENT

ELECTRICAL MAINTENANCE

MECHANICAL DEPARTMENT

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SHIFT

Source:Data collected from SCL.

FUNCTION

In general shift , the function of the department is generally, to make preventive maintenance of all equipments etc. in addition to the usual office work. The department orders and receive tools and equipments that are needed from the stores department . There are 3 types of maintenance, breakdown maintenance ,preventive maintenance and periodical maintenance .Generally in shift the break down maintenance is done . SCL has two OTC cranes which is operated and maintained by the electrical department.Operation and maintenance of the 110KV substation, 5000KVA transformer which is owned by SCl is also the function of the electrical department in shift ,Its to be noted that 4000-4200KVA electrical consumption is made per month .Power is consumed for Electrical Arc furnace ,ladle,concasting machine ,EOT,500KVA alone is consumed for pump house operation.A genset is

ELEC.MAINTENANCE DEPARTMENT

SHIFT ENGINEER (MAINTENANCE)

SHIFT ENGINEER (MAINTENANCE)

CRANE OPERATER ELECTRICIAN

ELECTRICAL HELPER

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kept as stand by so as to operate at the time of exigency so as not hold up the flow of production since it s a process industry.

ii.MECHANICAL MAINTENANCE DEPARTMENT

A) General shift

FUNCTION

The main function of the mechanical department is general shifts is to do all preventive maintenance activity as well as to perform day-to-day management of the department and its overall administration . The duty of the employees in general shoft includes all necessary activity to minimize break down time and to prepare all spare items that are require for smooth running of the production department.

HELPERS

ASST.MANAGER

JR.MANAGER

SHIFT MANAGER

MECHANICAL MAINTENANCE DEPARTMENT

SHIFT ENGINEER (MAINTENANCE)

WORKMAN GRADE(CUTTER ,FITTER,DRAFTMAN ETC)

HELPERS

SHIFT ENGINEER (CONCAST)

CONCAST OPERATOR

WORKMAN GRADE(CUTTER ,FITTER,DRAFTMAN ETC)

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Function of the department in shift comprises break down maintenance activities as well as plant maintenance , running auto workshop etc.All maintenance of factory , building etc is also the duty of the shift employees.

The areas looked after by Mechanical Section are as follows:

1. Maintenance of furnace .

2. Maintenance of ladle .

3. Maintenance of Tundich

3. Keeping pumphouse ready.

4. Maintenance of auto mobile workshops.

6. Keeping EOT cranes ready.

7. Other civil work activites.

8. Vehicle maintenance.

9. Supervivion of blacksmith,civil work, automobile works.

10.Transporting arrangement.

11.Maintenance of casting m/c & furnace.

12.Daily checking of EOT cranes.

This department is held responsible for pump operation. It s required about 50000ltrs of water per day for drinking water and canteen purpose and 750 ltrs for spraying for cooling and 800 ltrs for casting operation on recycled basis.

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QUALITY CONTROL DEPARTMENT

Quality control department has the responsibility to control and maintain the quality of the output (Billets) and to grade it according to BIS standards. Reporting of the quality of the output to production department is also its function. The department has full fledged metallurgical laboratory to perform this task.

ORGANIZATIONAL STRUCTURE

a) General shift.

b)shift

Source: Data collected from quality control department. FUNCTION

Functon of the department in general shift is to perform all administrative activities of the department, to act as the scrap inspecting committee member and to check the quality of all important raw materials. It is done by the senior chemist . The quality report of raw material are send to the deputy manager (production) and all other connected departments.

JUNIOR MANAGER(QUALITY CONTROL)

SHIFT CHEMIST

LAB ATTENDER

MANAGING DIRECTOR

Jt.MANAGER(QUALITY CONTROL)

ASST.MANAGER(QUALITY CONTROL)

SENIOR CHEMIST

WORKS MANAGER

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In shift , the shift chemist will analyse the sample from each heat and its chemical contend is reported to production department , so that they can add or reduce each components in order to get a high quality product. Final Billet samples are also analysed by the shift chemist and the result will be given to production department.Each and every Billet will thoroughly checked by shift chemist in order to give code and colour according to the quality of each Billet and quality standards laid by BIS .He will be assisted by billet yard supervisors.

SCL re-rolls its billets in to constructional steel from mills in and outside Kerala . When the final product is received, then the department will check the quality of it randomly. The report of this checking will be given to sales department. The department also extends constancy aid to sales departments.

STANDARD CHEMICAL COMPONENTS OF BILLETS

SCL produces the following grades of mild steel for construction purpose:

IS 2830-1992 STD.QUALITY

GRADE

C Mn SI S Ph COLOR CODE

I C29A 0.17-0.23

0.30-0.6

0.1-mnm

0.05-mxm

0.05-mxm

ORANGE TWO

DOTS AT THE END

II

C20M MNA

0.17-0.23

0.60-1.0

0.1-mnm

0.05-mxm

0.05-mxm

ORANGE TWO

DOTS AT THE END

IS 6915- ORDINARY QUALITY

GRADE

C Mn SI S Ph COLOR CODE

I 6915 0.1-0.17

0.40-1.2

0.1-mnm

0.07-mxm

0.07-mxm

BLUE TWO DOTS

AT THE END

II

6915 0.18-0.3

0.40-1.2

0.1-mnm

0.07-mxm

0.07-mxm

BROWN ONE

DOTS AT THE

END C-carbon Mn-

manganese SI-Silicon P-

Phosphorus

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S-Sulpuhur Mnm-Minimum Mxm-maximum

There is a sarap inspection committee consists of Quality control Manager, Production Manager and Stores Manager.Scrap is inspected to ensure its quality and if there is any sudstandard ness on quality , it is to be reported to Purchase Manager through Works Manager . Raw material inspection is done at general shift.During refining ,sample of it is taken 2-3 times with the aid of a slag coated spoon and analyzed in the laboratory working under Qc department.to ensure whether the standard chemical components of Carbon,Sulphur<Silicon,Manganese and Phosphorus which varies for each grade of steel. Carbon sulphur apparatus is used in the laboratory to test it. The analysis is done for every 15 minutes. If it does not meet the specification said above, it will be adjusted as follows:

1. Iron ore is added for carbon components.

2. Coke powder is added to increase the carbon.

3. Lime stone is added to reduce phosphorus.

Regerding billets sent for conversion for rolling and thereafter received as tore steel is also tested in the laboratory to ensure the standard ratio of components and if it does not meet the specification as said above, it will be reported to Works Manager by Q.C Manager.

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SAFETY MEASURES

SCL observes all safety measures to prevent the accidents and unhappy events in the factory. These are under the control of Managing Director. Previously there had a safety department and safety officer in the company . Now . owing to creeping stage , it s also stopped functioning . Instead . Managing Director will look after all the activities regarding this. Employees will be provided fire protecting items , googles, gloves, helmet to prevent the fire accident.

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FINANCE AND ACCOUNTING DEPARTMENT

Organizational structure

FUNCTION

The department has the responsibility to manage the financial affairs and ro account the financial transaction in the books of the company. All payments and receipts are done through the finance department. The department has the responsibility to calculate and pay off all wages and salaries. Computerization of the department is not yet finished.the department has already published the audited financial statement up to the financial year 2003-2004 and completed the statutory audit for the year ended 2004-2005 and yet to publish the 35th annual report for the year ended 2004-2005.

The department had completed statutory audit work for the year 2004-2005 and annual report is under press. The department is responsible for arranging all the ingredients required to audit the books of accounts of the company and for the preparation andverification of vouchers,receipt sales invoice ,purchase bills, cash/bank book, journals,ledger etc and also responsible for verification and valuation of closing stock of raw materials,WIP, finished goods, consumables, other input etc. they are also held responsible for the preparation of plant register for providing depreciation at the end of the financial year.

INTERNAL AUDIT

Internal audit is said to be a pillar of the accounts and financial department. But it s found that company has not appointed internal auditors. Since it s a public Ltd company and also a govt. undertaking with large in size and nature, internal audit is very much essential. But this is not a fair practice at all . the the same is pointed out in auditors report up to 2002-2003. Annual accounts are prepared according to

Jt.MANAGER(ACCOUNTS)

JUNIOR MANAGER (ACCOUNTS)

ACCOUNTANT ASSISTANT

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applicable accounting standards and provision of companies. Company follows accrual system of accounting under the going concern concept.

Cost accounts and cost audit:

Since it s a mini steel plant , it has been prescribed to maintain cost accounting record for cuch class of companies. Witheffect from 31.7.90 , all the mini steel plant of which product is prescribed in the class, is required to be cost audited as per the order of central govt. once the cost Acounting (records rules are applicable to the company,the govt. amy issue order for audit of cost account of the company on continous basis. When such company has to maintain cost records, cost audit can be recorded for it . The concerned company manufacturing the product come under the list of that class are required to maintain all cost records relating to arious element of cost and sales for each of the financial year from the date of prescription and those records to be audited and submit the audit report to department of company affairs. But the SCL has not maintained cost record till 2003 and central govt. had sent an order to company to maintain cost record and carry out cost audit as per section 209(1) (d). In the year 2002-2003 company has appointed a cost audit firm to conduct the cost audit and maintenance of records. Thus this cost audit firm upated all cost records upto the period 2002-2003 and conducted the cost audit . Because, once order is issued by central govt. to carry out audit , it becomes applicable on continuous basis.

ACCONTANT GENERAL S AUDIT (AG S AUDIT)

As per section 619(4) of the companies act 1956, any govt. undertaking is to be audited by comptroller & Accountant general of India to safe guard the interest of public. The A.G s audit is of two types. One is supplementary audit where as other one is propriety audit.

Supplementary audit:

This audit is supplement to statutory audit and it s carried out immediately after the statutory audit and on the basis of statutory audit report. The report is supplementary audit is to be placed before AGM. It s pure based on accounts related matters. If there is any comment, they will give comment and suggestions in their report which is attached with annual report. This comptroller and accountant general report be undersigned by auditor general of that region.

propriety audit:

it s carried out to find any avoidable expenditure, abnormal expenditure . it s also signed by Accountant general and submit their report to govt. legislative so as to forward to public under committee. For deemed gobt. Companies, supplementary audit is only carried out.

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Steel complex Ltd & its re-rolling mill unit :

SCL is set up with the purpose of manufacturing the billets and convert in to tore steel and selling of the same. Billets are manufactured in the factory at calicut and it s sent to outside for re-rolling purposes . Billets are mainly rolled at west India steel company , which is very near to SCL. In the year 1991 , company acquired a at malappuram known as Malappuram Steel Rolling Mills(MSRM) situated at Venniyioor, Malappuram to meet their requirement. But this own rolling unit has so many limitations and does not srve the purpose of SCl. Thus SCL is again resorted to other rolling mill when it has own rolling mill at malappuram. Now it sends the billet to Trichur, Salem and other rolling company outside the Kerala. But this makes huge loss to company by way of transportation cost and high percentage of burning loss is chabged by those company.

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DEVICE FOR ANALYSIS AND INTERPRETATION

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DEVICE FOR ANALYSIS AND INTERPRETATION

ANALYSIS: In this chapter 1 may analyse the working of SCL. It had its commercial production and sales from the financial tear 1973-74. There

are some charts and graphs in the following pages.

TABLE SHOWING THE PRODUCTION ,SALES ,OPERATING PROFIT AND NET PROFIT FROM THE FINANCIAL YEAR 1973-74.

YEAR (As on

31 March)

PRODUCTION

(in tonnes) SALES

(in lakhs)

OPERATING PROFIT (in lakhs)

NET PROFIT (in lakhs)

1974 13736 172.01 -15.67 -39.82 1975 11804 147.09 -93.16 -90.09 1976 7215 104.13 -87.63 -84.48 1977 18238 322.81 -48.22 -49.07 1978 23233 479.02 -31.32 -32.58 1979 22787 686.02 -10.06 -14.57 1980 18052 635.99 18.43 16.81 1981 28077 1,048.19

38.61 26.66 1982 31544 1,149.03

10.76 5.67 1983 29069 1,293.01

11.43 5.28 *1984 24100 1,074.96

-17.94 -29.03 *1985 43698 2,117.18

192.24 116 1986 47607 2,614.65

396.96 376.15 1987 41148 2,388.96

43.87 113.29 1988 37293 2,087.42

-11.71 1.44 1989 45159 2900.22 -178.37 -170.89 1990 40837 3424.10 -171.57 -167.02 1991 50457 4168.75 -116.86 -76.94 1992 46388 4888.88 -319.64 -363.88 1993 28045 3477.99 -525.62 -544 1994 174 286.28 -394.5 -400.55 1995 0 2.89 -353.24 -363.37 1996 7086 729.59 -320.66 -350.27 1997 14286 1646.27 -349.81 -359.72 1998 17295 2110.59 -314.65 -314.62 1999 10590 1746.53 -538.82 -440.31

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2000 9421 1602.44 381.61 285.21 2001 9651 1727.57 387.36 315.67 2002 7519.86 990.83 500.05 539.13 2003 12831.27 1734.05 286.33 281.26 2004 9596.74 730.49 333.03 180.65 2005 15338.93 491.19 97.97 67.667

Source: Annual reports and date collected from SCL *company closed its operation due to heavy losses and shortage of funds +indicate Profit & - indicate Loss .

By analyzing the above tables , charts etc . you can see that SCL could make a net profit only for 8 years amoung 31 years of its operation and it could make an operating profit for seven years. From the financial year 1987-88, firm is continuously making loss. The accumulated losses of the company amounts to Rs.50,67,33,109.59 lakhs in the financial year ended on 31st March 2005. Production and Sales in the year 1993-94 and 1994-95 is less or zero because the company closed its operation in those years . The company could achieve its highest production in the financial year 1990-91 i.e., 50457 metric tonnes.

FOLLOWING ARE THE SOME OF THE SIGNIFICANT ANALYSIS RELATING TO THE PERFORMANCE OF THE COMPANY FROM THE

YEAR 2000-2005:

1. PRODUCTION OF BILLETS:

YEAR PRODUCTION IN TONNES

2000-2001 9651 2001-2002 7520 2002-2003 12831 2003-2004 9596.74 2004-2005 15338.93

The production of billets is the output of the factory keeps on coming down till 2001-2002 but shooted up in the year 2002-2003 and again came down at 2003-2004 and then increased in 2004-2005 when compared to 2003-2004.

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2.SALES OF BILLETS AND FINISHED STEEL:

YEAR SALES (Rs . IN

LAKHS) 2000-2001 1727.57 2001-2002 990.83 2002-2003 1734.05 2003-2004 730.49 2004-2005 491.19

The sale of billets and finished steel of different grade also keeps on coming down and increasing gradually . 2002-2003 was a better year when compared to the last five years .

3.NET LOSS:

YEAR NET LOSS(Rs.IN LAKHS)

2000-2001 -315.67 2001-2002 -539.13 2002-2003 -281.26 2003-2004 -180.65 2004-2005 -67.667

The net loss of the company keeps on increasing and decreasing till 2001-2002. then loss is decreasing from that year and in 2005 the loss is slated to be Rs.67.667 lakhs which is less than that of previous year.

4.NET WORTH (PAID UP CAPITAL + RESERVE & SURPLUS)AND ACCUMULATED LOSS:

YEAR NET WORTH

(Rs.in lakhs)

ACCUMULATED LOSS (Rs.inlakhs)

2000-2001 767.52 3968.30 2001-2002 710.29 4507.44 2002-2003 710.29 4731.48 2003-2004 710.29 4959.35 2004-2005 710.29 5067.33

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Paid up capital of the company is Rs.700 lakhs and reserve and surplus for the year 2000-2001 is 10.29 lakhs only . Further if the accumulated loss exceeds Net worth , the company is said to be in a sickness condition .here , accumulated loss exceeds networth . Hence the company can t recover from sickness stage easily.

5.COST OF SALES TO SALES (IN %):

YEAR COST OF SALES TO SALES(IN%)

2000-2001 122.42 2001-2002 150.47 2002-2003 116.51 2003-2004 145.59 2004-2005 113.78

It s to be seen that cost always exceeds the sales and this ratio keeps on going and came down up to 2002-2003.and increased in the year 2003-2004 . If sales value is Rs.100 cost Rs. 122.42 in 2000-2001 ,150.47 in 2001-2002 thus goes on decreasing to 113.78 in 2004-2005.

6. CLOSING STOCK OF FINISHED GOODS(RS):

YEAR VALUE OF CLOSING STOCK

(RS. IN LAKHS) 2000-2001 272.13 2001-2002 170.41 2002-2003 193.59 2003-2004 193.47 2004-2005 73.78

Value of finished goods in hand keeps on coming down from 2000-2001,and keep on decreasing.

7. SUNDRY DEBTORS:

YEAR SUNDRY DEBTORS(IN LAKHS) 2000-2001 893.78 2001-2002 849.71 2002-2003 758.30 2003-2004 187.36 2004-2005 103.27

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Receivable from debtors keeps on coming down from 2001-2001 and it is continuously decreasing till 2004-2005.

8. % OF DEBTORS TO SALES:

YEAR DEBTORS TO SALES(IN %) 2000-2001 51.74% 2001-2002 85.76% 2002-2003 33.34% 2003-2004 25.64% 2004-2005 21.02%

It shows that out of the total sales what s the portion of receivable from party . This portion of receivable out of sale is decreasing from the year 2002-2003 . It shows that the firm is not giving that much credit to crediters to save the liquidity position of the firm.

9. WORKING CAPITAL(CURRENT ASSET CURRENT LIABILITY):

YEAR WORKING CAPITAL(RS.IN LAKHS)

2000-2001 226.43 2001-2002 -127.45 2002-2003 -145.19 2003-2004 -164.95 2004-2005 -319.75

It shows that working capital is reduced till 2000-2001. But in the year 2001-2002 ,it shows a negative gap i.e, when liability exceeds current assets, there will be negative working capital gap. Thus current asset is not sufficient to meet the current liability and this will have to settle even out of sales proceeds of fixed asset since there will not be sufficient stock, debtors and even liquid cash/bank to settle the current liability . It s a bad sign of liquidity and solvency position of the company.

Source : Annual reports and data collected from SCL.

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TREND ANALYSIS

The particulars of sales, cost of sales and percentage of cost of sales to sales for the five years up to 2004-05 are tabulated below.

2000-01 2001-02 2002-03 2003-04 2004-05 A) Sales 1727.57 990.83 1,734.05 730.49 491.19 B) Add. Loss for the year

387.36 500.05 286.33 333.03 67.66

C) Cost of sales.

2114.93 1490.88 2020.38 1063.52 558.88

D) Percentage of cost of sales to sales.

122.42 150.47 116.51 145.59 113.78

It is to be seen that cost always exceeds the sales and this ratio keeps on going and came down .and increased in the years 2001-02 and 2003-04. Precisely to say , if sales value is Rs.100 cost is 122.42 in 200-01 , 150.47 in 2001-02, 116.51 in 2002-03, 145.59 in 2003-04, 113.78 in 2004-05 by decreasing. Thus cost reduced sizably in the year 2003-04 compared to 2004-05.

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RATIO ANALYSIS

a) Current Ratio

YEAR Current Ratio = CA / CL 2000-2001 1.12:1 2001-2002 0.94:1 2002-2003 1.2:1 2003-2004 1.5:1 2004-2005 0.58:1

The ratio keeps on reducing till 2001-02 and then increasing till 2003-2004 . But there is a drstic decrease in 2004-2005 because of the increase in current liabilities. This is not at all a good sign regarding the liquidity and solvency position of the company.

b) % of Debtors to Sales.

YEAR % OF DEBTORS TO SALES 2000-2001 51.74% 2001-2002 85.76% 2002-2003 33.35% 2003-2004 25.65% 2004-2005 21.02%

It shows that out of the Sales what s the portion of receivable from party. This part of receivable increased in the year 2001-02 but falling down steeply . This is a good sign that affect the liquidity position of the firm.

c) Working Capital Ratio

YEAR W.C RATIO = Sales/CA 2000-2001 0.84:1 2001-2002 4.66:1

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2002-2003 1.03:1 2003-2004 0.56:1 2004-2005 1.12:1

This ratio doesn t have a good proportion. So the working capital position is

very poor because it is not steady , sometimes increasing and sometime decreasing.

d) Debt Equity Ratio

YEAR DEBT/EQUITY RATIO 2000-2001 3.68:1 2001-2002 3.68:1 2002-2003 3.75:1 2003-2004 3.96:1 2004-2005 3.98:1

The debt equity ratio of the company is almost for last 5 years. This shows that company is working on the same capital for last 5 years, And debt is higher than equity . It shows that debt is 3 or more times higher than equity this is not a good sign, or we can say that the company is over debted.

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FINDINGS OF THE STUDY

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FINDINGS OF THE STUDY

STEEL COMPLEX LIMITED , the only mini steel plant in kerala with Electrical Arc Furnace technology is running loss for years . During my study in the SCL ,I could find some important reason in the following areas, which lead to the loss of the company. a) In the area of production i) Low capacity utilization ii) Obsolescence of technology iii ) High cost of operation iv ) No captive re-rolling mill.

b) In the area of finance

i) Lack of working capital ii) Heavy borrowing and high interest iii) Delay in realizing Government debt. iv) No credit to private parties.

c) In the area of marketing and sales

i) Inadequate product range ii) Failure in marketing quality

iii) Inadequate sales network.

d) In the area of personnel

i) Under utilization of Human resources ii) Outdated organizational structure iii) Excess labour force iv) No worker participation v) young generation working in SCL are worried about their future because of uncertainty.

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e) Pertaining to Macro Economy

i) Steep increase in power tariff, cost of raw material,customs duty,excise duty etc.

ii) High competition from low quality and low priced products. iii) Unsteady market for steel products. iv) Import of steel and related products.

PRESENT STATUS OF THE ORGANIZATION

As per the revival scheme sanctioned by BIFR, the company was to produce 4000 M.T of steel billets per month although the company is having 3 Electri Arc Furnace capable of producing more than the targeted production prescribed by BIFR. Owing to shortage of working capital , the company is not able to run even 2 furnace at a time though sufficient no. of men are available for the operation of 2 furnace.

During the last 9 years from 1997-2005 , company has been running only one furnace that is for 10-15 days a month.the main reason for the low output is non-availability of working capital for want of working capital. The average monthly production for the above period is 978 M.T.

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SICKNESS ---- HOW , WHEN, WHY ?

SICKNESS is a disease that causes to companies when the ratio of Accumulated

loss is about 50% of the total capital . This stage we can say that it is a starting stage. But if it is not properly cured this sickness will affect the total working of the company.

# -- HOW ?

Mainly we can say that sickness is a stage that the company fall into a trap that it can t recover from that stage without a proper planning.

How the sickness effect a company?

When the Accumulated loss of the company is 50% of that of the capital employed , we can say that sickness is started. If it is not properly cured it will take away the life of the company . and it also make the company to a position that , it can t comeback to the earlier position. This stage is called total sickness.

# --- WHEN ?

YEAR ACCUMULATED LOSS CAPITAL 1985-86* 376.15 224.45 1986-87* 113.29 224.45 1987-88 ----- 224.46

1988-89# 43.97 225.00 1989-90 210.99 225.00 1990-91 287.93 400.00 1991-92 651.82 400.00 1992-93 1195.81 400.00 1993-94 1596.35 700.00 1994-95 1959.72 700.00 1995-96 2310.00 700.00 1996-97 2669.72 700.00 1997-98 2984.34 700.00 1998-99 3367.43 700.00

1999-2000 3652.63 700.00 2000-2001 3968.30 700.00 2001-2002 4507.44 700.00 2002-2003 4778.70 700.00 2003-2004 4959.36 700.00 2004-2005 5067.33 700.00

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--- Here the capital means equity share + preference share . * company is in profit.

# From this year company began to change (in to loss).

SCL was running in very profit till 1987-88. it was a main profitable firm running by public sector. But from the starting of 1988-89, company fall in to Loss due to some reasons . the amount was Rs.43.97 lakhs , it was comparitively very low when compare to the caplital of Rs.224.46 lakhs.

The main problem occurred at this time. The management was not careful about that loss. And that loss extends the liabilities of SCL to an Accumulated loss of Rs.287.93 lakhs for the next working year (1990-91) against the capital of Rs.225.00 lakhs . By this time the company falled into a trap that it can t recover . This was a turnover to the company then company began to fail and now it stands as an Accumulated loss of Rs.5067.33 against the capital of Rs.700.00 lakhs.

# --- WHY ?

The main reason because of this sickness or fall was lack of professionalism in every area. When company is running in profit it must take a better precaution for coming year. But SCL failed to do so . and another thing is that if any loss occurred they have to plan accordingly and think professionally to cure that sickness. In this area also the management of SCL was a big failure.

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PROBLEM CENTERED STUDY:

From the foregoing analysis, we could note that company is continuously making loss due to so many reasons .some of the reasons for this consecutive loss is explained here Under.

1. Shortage of working capital is the main problem faced by the company . This is due to:

a) Non-receipt of sales proceeds from various gov.dept which stands Rs.175 lakhs as on 31.3.05 .

b) Non-receipt of fund from govt. towards the settlement of working capital term loan, funded interest term loan of SBI.

c) Over due of cash credit a/c at SBI.

d) High cost of production due to low production and non-utilization of full capacity.

2. Taken over of MSRM(steel rolling mill unit ) in the year 1991 was the another reason behind the continous loss and will not help in anyway to recover from the sickness condition. It s due to the following reasons:-

a) Taking over of MSRM by SCL is still in pending before high court. The company took over this unit by way of amalgamatiom. After it s amalgamated, the company filed the income return to income tax dept. and annual return to registrar of companies as separate return. But it s quite contradict to the legal entity of both SCL and MSRM. Once SCL takes over the assets and liabilities of MSRM. SCL ,amalgamating company had planned to set of their business income against the accumulated loss of MSRM, amalgamating unit. But filing of separate return by each unit stood to the way and has not allowed to set off the loss of MSRM against the profit of SCL. Since this amalgamation is pending before high court, the income tax on business income of earlier years will have to be paid which may further leads SCL to huge loss and high amount of debt.

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b) Since the amalgamation unit is in pending, all amount spend on behalf of MSRM is capitalized though good percentage may be revenue in nature and shown under the head Advances to MSRM in the asset side of balance sheet.

3. Further, apart from the above legal issue, following deeds also shows that MSRM is not at all beneficial for the working of SCL , instead it only make huge loss to SCL and may turn the company from worser to worst position.

a) In MSRM 16 to 28 mm tore steel can only be produced. But the

demand for the tore steel is always lying with 6 mm ,10mm ,12mm ,32mm, 36mm, 40mm dia . For manufacturing the tore steel of these sizes,company will have to send billets to companies located at Trichur , Salem, Coimbatore etc, which has facilty to convert in to said dia.

b) Huge transportation cost is involved to send billets to Trichur , Salem and other far places for conversion to above said sizes when SCL has own rolling mill ,wherein 16-28 mm can only be made.

c) 10% burning loss will occurred for outside rolling mill which could be sasved if MSRM had been worked to do all sizes.

d) MSRM can start operating when it s fed 100-150 tonns of input at the beginning. Since products ranging from16-28 mm have lesser demand. Hence ,it can t wait till such product cumulative demand exceeds 100 tonns. Thus some time will have to send for conversion of same size with few demand.

e) Machinery at MSRM is pure outdated and manpower based. It s not beneficial keeping in view the time factor and quality. It can produce only 30-35 tonns a day. Such outdated machinery has nil demand in the market if we go for sale of it .

f) High amount of fixed expenses whether MSRM runs or not will have to be paid in terms of alary ,electricity , other administrative over head which is really waste to SCL which is paid against no production take place .

g) Shortage of working capital of SCL also effect the working of MSRM since it s financed by SCL.

h) Furnace oil required to operate for 1 load of material is Rs.1,00,000/- which some time can t arrange when there is a heavy shortage of funds.

i) Frequent power problem, shortage of other raw material, scarity of water etc, stands on the way has a mainhandicap for the smooth functioning of SCL.

j) The product of MSRM for 2001-2002 is only 257.160 as against 1820.59 in the last year but installed capacity is 7200 tonns p.a.

4. company is eligible for power consesional tariff .KSEB has raised a demand of Rs. 22.04 crores for period from January 1995 to march 2002 with out considering companies claim for consessional tariff

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as approved by BIFR. The company wich is under BIFR scheme is to charged low electricity tariff. Out of this , Rs.5.64 crores is paid and balance Rs.16.40 crores is yet to pay which is an another liability to KSEB.

5. An amount of Rs.23.52 lakhs is shown as receivable in the books of Trivandrum

Depot which is closed now. But still the amount is receivable from the party which come under Trivandrum depot is not followed up properly. Sales depot should adopt a scientific system in finding debtors balance is not conformed from parties till date . Due to the lacking of proper systems, it was written off more numbers of debtors balance . The management has to take action to find the bad debts.

6. Paymaent of sales tax arrears was deferred for 7 years upto 2004-2005 totaled Rs.415.38 lakhs. The Sales tax arrears were deffered to start a captive rolling mill unit . but it s not used such defferement of sales tax amount instead spent for meeting the working expenses. Out of this Rs.415.38 lakhs , Rs.116 lakhs is converted as interest free loan repayable in instalments. Here company paid only Rs.29 lakhs as 1st installment in march 2000 and 2nd installment falling due in March 2001 but not paid till date. Mean while , Revenue dept. initiated for Revenue recovery proceeding for the recovery of 2nd

installment. But it was stayed by Govt. of kerala and thus RR action is pending by High court of kerala.

7. Company has availed cenvat credit on purshase of Raw material and the same is utilized for remittance of Central Excise Duty @ 16% against the billet dispatch from company. Nearly 157 lakhs of cenvat credit is availed . But now company has received a show cause notice from Central Excise Authority to raise a demand payment of Excise duty of Rs.4407591/- and against the Cenvat Credit, they have partially allowed the claim of company, and balance is yet to settle and company has gone for approval before CEGAT,Madras.

8. Now company is not able to use bank facility though company submits Debtors list and stock report to bank every month. Company settles their Creditors payment by way of demand to the Debtors to take a DD infavour of creditors of SCL.

9. Amount receivable form party is deposited in treasury and amount is withdrawn from treasury for meeting day to day expenses.

10. Since it s a Govt. company, company demands Govt. to provide funds for getting salary to employees and statuary paymentsuch as ESI and PF and in addition , some more fund will be required which is arrived at their treasury account and this money is withdrawn for meeting the salary and other day to day payments. Thus company passes through a precarious condition with regard to liquid money for meetingt their day to day expenses.

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11. Due to shortage of working capital, company presently works on below 1000MT per month when its production quantity envisaged is 4000MT billet.

12. Company was forced to sell M S billets , semi finished goods, for urgent collection of money to meet day to day affairs of the company as company could not obtain funds from Govt. by way of interest free loan as per the terms of BIFR scheme.

13. Company also takes job work of other steel companies who will bring scrap and converted to billet and company takes Rs.1600/ ton plus 10% burning loss. This is done with an aim to make money for meeting day to day expenses and also to retain the employees and workers.

14. Sometimes, company may demand scrap in exchange of billets to them as barter system. This helps to make functioning of the company and retain the employees and there by producing billets so as to sell it.

15. There is a debtors balance of Rs. 103.27 lakhs from Govt. dept as on 31.3.05 which is not recovered till date. This is the another drawback of the company in realizing the amount from Govt. dept.

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RECOMMENDATIONS

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RECOMMENDATION

As an introduction to recommendation , let me say that if steel complex limited come up from its inabilities and weaknesses and is organized and managed in a high professional way it can make profit

The demand for construction steel viz. bars, rods and light structurals in the state is estimated as around 3 lakh tonnes in a year . Total capacity of all the re-rolling mill in kerala is about 1,26,000 tonnes. Means there is a gap of 1,74,000 tonnes per year. This gap is now filled by products from outside the state . it means there is a good market and demend for constructional steel within the state.

In the previous chapter I have pointed out major weakness and inefficiencies of SCL. Following are my recommendations to over come those problems.

i) Recommendations to SCL

a) In the area of production

1. Now SCL is maintaining and operating two-furnace capacity. It cannot utilize this capacity due to shortage of raw material , working capital etc. So I recommend to reduce capacity to one furnace . It can be increased to two or three furnace after setting up of the captive re-rolling mill.

2. Tecnology used in SCL is very much obsolete . It makes the production of billets uneconomic. So SCL may try to get updated technology.

3. Now re-rolling of billets are done from outside. It increases the product cost due to high cost of transportation and conversion loss. So by setting up off a captive re-rolling mill, the cost of productioncan be reduced and it can complete with the low priced products.

b) In the area of finance

1. Lack of working capital is the main problem of SCL . due to this the production is continuously interrupted and it cannot utilize the capacity in full. So it is very necessary to get adequate working capital. It is better if the finance has no fixed cost connected such as interest ctc. Bank should open letter of credit for the import of scarp for the continous operation of the company.

2.SCL may try to reduce the loan liability and interest rates through any adjustment with financial institutions.

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3.Delay in realizing the government debt is another main problem. Though the sale price is high it takes years to realize the amount. SCL charges no interest on the delay payments. I recommend SCL to charge interest in delay payment at 1% higher the rate of its borrowings.

4. Private parties may be given credit facility against bank guarantees. It may help SCL to capture the and to increase the sale.

5. Government should ensure that the amount steel purchased by Government department is paid to the company promptly within one month.

c) In the area of Marketing & Sales

1. Product range and product mix of SCL is adequate. It must add special steel which are having high profit margin to its product

range. It means that SCL must diversify its production. 2. SCL produce BIS standard quality products . so the production cost

is higher. Since SCL is not marketing the quality of the production the product is beaten in the open market. SCL may try to market its quality through product branding etc and by making awareness among public through advertisement etc.about the quality of the steel.

3. A well organized sales network with the participation of private agencies which is vey much needed to promote the sale of SCL s products. Effective advertisement be made to know about the product.

d) In the area of personnel

1. The SCL maintains a Human resourse that is needed for two furnace operation. But due to many reasons it could not operate even one furnace. So it is recommended to reduce human resource to one furnace strength.

2. The organizational structure and division of labour is outdated one. So it is recommended to conduct a labour requirement study to each and every function or event and to reorganize the organizational structure according to it

3. Workers participation in the day to day management and working of the organization is very much needed. It will increase the efficiency of the workers. So I recommend to constitute works committee participatory management etc., in the organization.

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ii) Recommendations to Government

1. If the Government needed to run SCL in profit it need a complete

reorganization of SCL and further capital investment or reduced/concessional financial aid to set up captive re-rolling mill and for working capital.

2. The Govt. Should not allow expansion of the capacity of exsisting induction furnace units or putting up of new units through induction furnace route, as it can t ensure the supply of finished steel as per ISI standards fixed by BIS.

3. Purchase of steel of govt department / undertakings from outside the state should permitted only when it is in the short supply in the state or when there is a high price advantage . At least 50% of the production be met for govt. department which is to be strictly done by all govt. department with 10% price preference.

4. Government may notify order that all civil workers above 25 lakhs must use steels which has BIS standard and make sure that it is strictly followed.

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SUGGESTION

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SUGGESTION

Reduce the work force.

Give the training to the workers according to the nature of their work.

The managers must give more importance to safety measures especially in plant area and the workers who dealing with fire.

They must give motivation to the workers as far as possible with in the limited facility.

Managers must act as employee oriented leaders as well as production oriented leaders.

In compensation package , timely increment package should be included.

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CONCLUSION

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CONCLUSION

In this concluding part of the study titled as OVERALL PERFORMANCE MANAGEMENT OF STEEL COMPLEX LTD . Is explained as much as possible though it has it s own limitation to collect the data relating to it. Steel complex Ltd. Steel makers to the state , and the only Government mini steel plant in the state is creeping now. I belief that it can run remaining in public sector itself, if proper

aid and help is extended by the Government. I am sure that if there is a political will and vision. SCL can be operated in profit since the workers, market etc are very favourable. Also it is very much needed for public interest and to keep away loosing of government employment. Besides , management and employees are waiting for the report submitted to Enterprise Reforms Committee constituted by Govt. to hear a fovourable action from the Govt. regarding the restructuring of SCL for the smooth functioning and uninterruption of the company.

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BIBLIOGRAPHY

Page 92: Overall performance management

BIBLIOGRAPHY

1. Annual report of SCL

2. Financial management. Prasanna Chandra

3. Pamplets,Souvenir

4. Books and periodicals

5. Steel Industrial Magazines

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