Final Report on MEL by Mr.gurpreet Singh Chahal
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A Final report ON The Financial Analysis of Maharashtra Elektrosmelt Ltd.(To understand the financial viability of the Unit)
(A Subsidiary Plant of Steel Authority of India Limited)
Internship Project 3rd SEM
Submitted towards the partial fulfillment of MASTER DEGREE OF BUSINESS ADMINISTRATION (2008 2010)
Guided By:Mr.Anirudh Gachke
Submitted by:Gurpreet Singh Chahal 8NBCP047
ICFAI NATIONAL COLLEGE, CHANDRAPUR
This is to certify that the project work on The Financial Analysis of Maharashtra Elektrosmelt Ltd.(To understand the financial viability of the Unit) being submitted by Mr.Gurpreet Singh Chahal for the partial fulfillment of MBA degree, III semester from ICFAI NATIONAL COLLEGE, CHANDRAPUR for the academic session 2008-10 is an original work and the work has been done by him under my guidance and supervision.
I wish him best of luck for a bright future.
For Mr. Anirudh Gackhe Sd/-
I hereby declare that the project report titled The Financial Analysis of Maharashtra Elektrosmelt Ltd.(To understand the financial viability of the Unit) submitted by me towards the partial fulfillment of MBA degree during the academic year 2008-10 is a bonafide work. All collected information is authentic to the best of my knowledge and the work done by other if referred has been properly acknowledged.
Gurpreet Singh Chahal MBA III Semester ICFAI NATIONAL COLLEGE CHANDRAPUR MAHARASHTRA
Guidance, help and encouragement are the essential requirements for successful completion of any project. I owe my gratitude to all those who have helped me in the preparation of this project report. I express my deepest gratitude to my Project Guide Mr. Anirudh Gackhe Faculty (Finance), for his valuable guidance and help in completion of this project. I feel obliged to all the staff of M.E.L Plant in general for their generous help and support. I also feel obliged to all the respondents, friends and others who have shared their valuable time and opinion, for making significant contribution directly or indirectly in the project. Gurpreet Singh Chahal MBA III Semester ICFAI NATIONAL COLLEGE CHANDRAPUR (M.S)
Preface Theres a little bit of SAIL in everybodys life..Many students may have done work on this project in different way or styles. I have also tried to work on this project in a different way. It was for the first time I got the opportunity to work in such a prestigious and well known organization. And things which I have experienced in my training period are going to help me through-out my life time. I have worked on this project with great enthusiasm & Zeal. I have experienced and learned during the training period. To run a giant organization each & every department has to play its role effectively. In this era of cut throat competition there is no room for complacency every aspect of life. The main goal of my project is the The Financial Analysis of Maharashtra Elektrosmelt Ltd.(To understand the financial viability of the Unit) This project has been undertaken to study the challenges faced by the typical government owned organization MEL.To understand the financial viability of the Unit (Ratio Analysis).To discuss the competitive strategic of MEL in the light of changes in the business environment .The M.E.L Plant is divided into various sections & each section specializes in different activities. This report is prepared on the basis of the extensive study carried out at Finance & Account Department of M.E.L Plant. Gurpreet Singh Chahal
ICFAI NATIONAL COLLEGE CHANDRAPUR (M.S)
Table of ContentsCertificate of approval
Acknowledgement 1. Global Steel Industry 2. Indian Steel Industry 3. Steel Authority of India Ltd. (SAIL) 4. History of Maharashtra Elektrosmelt Limited (M.E.L) 5. Introduction: MAHARASHTRA ELEKTROSMELT LTD
6. Powers & Duties of Officers & Employees 7. Production Review 8. Financial Review 9. Financial Statement Analysis 10. Ratio Analysis: M.E.L 11. Key Financial Ratios of M.E.L 12. Findings / Conclusion 13. Bibliography
THE GLOBAL STEEL INDUSTRY
Steel is by far the most important and one of the most multifunctional materials without which development of mankind would have taken on entirely new facet. The performance of the steel industry is often considered as an indicator of economic progress, particularly in developing countries. Global steel production has increased by 59 per cent over a period of seven years. Rapid growth and industrialization achieved in China and India along with an impetus to infrastructure development after 2003 has led to a rise in steel production. China is the largest producer of steel turning out more than 400 million tonnes followed by the EU27, Japan, US, Russia and India. The production of world crude steel is projected to touch 1,410 million tonnes in 2008. This increase is due to expected rise in Chinese and EU-27 production.
WORLD TRADE SCENARIOThe demand for steel is directly co-related with economic growth. With the world economy entering into an expansionary phase since 2003, demand for steel has been on the rise and so has trading in the commodity. The leader in world steel exports is China followed by Japan, Ukraine, Germany and Russia. The US followed by Germany, South Korea, Italy, and France are the major importers. Steel has long remained out of the purview of futures markets. However, trading in steel futures commenced on the London Metal Exchange on April 28. Two regional steel billet contracts have been launched, for Mediterranean and Far East delivery. Each contract is for 65 tonnes of billets.
INDIAIndia is the sixth largest producer of steel. After India's iron and steel industry was delicensed in 1991-92, the country has added capacity in private sector. However, compared to world production, India's production is a mere 4 per cent (2007). Though India produces various varieties of steel, mild steel predominates in the production share. For the 2001-2007 period, production has increased by 94 per cent. The major Indian companies producing steel are Tata Steel, SAIL, RINL, ESSAR, Jindal Steel and ISPAT. The ministry of steel has predicted a slight increase in exports to 6.58 million tonnes in 2007-08 and a decrease in imports to 7.83 million tonnes in the same period.
INDIAN STEEL INDUSTRY
The Indian Steel industry is almost 100 years old now. Till 1990, the Indian steel industry operated under a regulated environment with insulated markets and large scale capacities reserved for the public sector. Production and prices were determined and regulated by the Government, while SAIL and Tata Steel were the main producers, the latter being the only private player. In 1990, the Indian steel Industry had a production capacity of 23 MT. 1992 saw the onset of liberalization and the Indian economy was opened to the world. Indian steel sector also witnessed the entry of several domestic private players and large private investments flowed into the sector to add fresh capacities. The last decade saw the Indian steel industry integrating with the global economy and evolving considerably to adopt world-class production technology to produce high quality steel. The total investment in the Indian steel since 1990 is over Rs 19,000 crores mostly in plant equipments, which have been installed after 1990. The steel industry also went through a turbulent phase between 1997 and 2001 when there was a downturn in the global steel industry. The progress of the industry in terms of capacity additions, production, consumption, exports and profitability plateaued off during this phase. But the industry weathered the storm only to recover in 2002 and is beginning to get back on its feet given the strong domestic economic growth and revival of demand in global markets. With a currant capacity of 35MT the Indian steel industry is today the 8th largest producer in the world. Today India produce international standard steel of all most all grades/ varieties and has been net exporter for the last few years, underlying the growing acceptability of its product in the global market. Steel is a highly capital intensive industry and cyclical in nature. Its growth is intertwined with the growth of economy at large and in particular the steel consuming
industries such as manufacturing, housing and infrastructure. Steel given its backward and forward linkages has its large multiplier effect. With capital investments of over Rs 100, 000 crores, the Indian steel industry currently provides direct/indirect employment to over 2 million people. As India moves ahead in the new millennium, the steel industry will play a critical role in transforming India into an economic superpower.
Factors Influencing Demand & Supply of Steel1. The demand for steel is dependent on the overall health of the economy and the infrastructure developmental activities being undertaken. 2. Steel prices in the Indian market primarily depend on domestic demand and supply conditions and international prices. 3. Government and different producer and consumer associations regularly monitor steel prices, with government intervention quite routine. Government intervention often has a major influence on domestic prices. 4. The duty imposed on import of steel and its fractions, and on the export of iron ore also have an impact on steel prices. 5. The price trend in steel has been a function of domestic as well as world economic activity. 6. Prices of input materials for iron and steel such as power tariff, freight rates and coal prices, also contribute to the rise in the input costs for steel making. The main crisis in the steel industry is spiralling costs and availability of coal and iron ore. H