VISL
-
Upload
kshama-asha-sunder -
Category
Documents
-
view
314 -
download
0
Transcript of VISL
CHAPTER 1: INDUSTRY PROFILE
Iron and steel, although closely related, are not the same thing. Iron begins as iron ore,
which is melted in a blast furnace and blown through with air. Then it is manipulated so
as to limit its content of carbon and other impurities. Steel is a particular kind of iron that
is approximately one percent carbon, with the carbon content spread throughout the metal
evenly. Steel is harder than iron and does not rust as easily. However, for most of history
steel was harder to make than iron. That is why iron making was by far the bigger
industry in America until the late 19th century.
The first iron works in America, called Hammersmith, began operation in 1647 in
Saugus, Massachusetts, but lasted only five years. Subsequent iron making firms would
be small operations that tended to be located close to local ore supplies, water power, and
major transportation routes. Some of the most important iron making regions of the
country in colonial America were in eastern Pennsylvania near the Delaware River,
western Pennsylvania around the Allegheny and Monongahela Rivers, and the Hudson
River valley in New York and New Jersey. Most of these firms remained small because
of the high cost and low efficiency of available fuel to run their furnaces. When
Americans switched fuels from charcoal or wood to coal in the early nineteenth century,
larger operations became possible. The discovery of huge iron ore deposits in the
northern Great Lakes region during the 1840s gave a further boost to production.
The Expansion of Iron Production in the 19 th Century
The widespread adoption of puddling as a technique to make iron also contributed to
growth in production. In the early days of American ironmaking, craftsmen used a
method called fining to produce iron. This meant that the mixture of iron and slag
expelled from a blast furnace was separated out by hammering it. Puddling involved
adding iron oxide to the blast furnace charge because the chemical reaction made it easier
to separate impurities from the iron. Puddlers did the separating by stirring the melted
product with a long iron rod. The slag that rose was poured off the top and the iron at the
bottom was shaped into balls. The balls were squeezed into iron bars that were worked
Bapuji Academy of Management and Research, Davangere 1
into the mill's final product (such as rails or rods) by other workers. Puddling required
many judgment calls based on experience. Therefore, it could take up to two years of
training to become a skilled puddler. Many puddlers in the mid-nineteenth century were
successful enough to later move into the ranks of owners.
Both fining and puddling were pioneered in Great Britain and adopted by American
producers in subsequent decades. As they gained more experience, American iron-
masters developed their own variations of these English techniques, depending on local
resources like the quality of their iron and the efficiency of their fuel. A means of
automating iron production was not developed until the 1930s.
In the nineteenth century, the American iron market produced a wide variety of products.
Stoves, gun parts, cannons, and machinery were among key early uses for iron. Iron also
played a crucial role in the development of railroads. Once again, the English pioneered
techniques for making high-quality iron rails. In fact, American railroads imported all
their rails from British mills until 1844. In 1857, John Fritz's Cambria Iron Works in
Johnstown, Pennsylvania, created a technique to automate partially the production of iron
rails. The resulting increase in productivity made the railroad boom of the next two
decades possible.
Global steel industry
The deteriorating global business environment adversely impacted the steel industry
world wide which experienced huge swings in its fortunes in the last fiscal. The demand
as well as international prices of steel and also those of raw materials reached a historic
high during first half of 2008, followed by sharp dip in the steel prices in October 2008
onwards, as demand shrunk under the impact of global slow down. Fall in market prices
and the demand was steep & sudden affecting adversely the steel producers across the
globe who had to cope with the following output prices, declining demand & high input
prices , putting a great strain on their margins. This led to many steel majors , globally ,
to effect major cuts in production in order to align themselves with market demand and
control rising inventory. The impact can be gauged by the fact that while the global steel
Bapuji Academy of Management and Research, Davangere 2
output increased by 2.5% in the first half of the calendar year 2010 it fell by as much as
9.5% in the second half & by more than 20% in the first half of 2011.
Steel Manufacturing: Henry Bessemer and Andrew Carnegie
Before the Civil War, American manufacturers made only small quantities of steel.
Because they were unable to master the demanding requirements to create steel through
puddling, imports from England's Sheffield mills dominated the American market. That
all changed with the application of the Bessemer process. Henry Bessemer was a British
inventor who created a way to refine iron into steel using air alone in 1855. His machine,
the Bessemer converter, blew air over molten iron from a blast furnace so as to remove
impurities and create a substance of a uniform consistency. The American engineer
Alexander Holley brought Bessemer technology to America in 1864, but did not perfect
the Bessemer design until he created his first plant from the ground up as opposed to
adapting an existing facility. This was the Edgar Thomson Works in Braddock,
Pennsylvania. The mill, which opened in 1875, was the model for all subsequent
Bessemer facilities.
Holley built the Edgar Thomson Works for Andrew Carnegie, who used it mostly to
produce steel rails for the Pennsylvania Railroad. Carnegie's first experience in industry
came when he invested in the iron business during the 1860s. His genius was to
champion technological innovations like the Bessemer converter and the Jones mixer,
which sped the delivery of iron from the blast furnace to the converter, in order to cut
production costs and undersell his competitors. Carnegie also had a genius for picking
good associates. For example, William R. Jones, the inventor of the Jones mixer, served
as superintendent of the Edgar Thomson Works and was just one of many men who
shared in Carnegie's business success.
Another Charles Schwab, would go on to form Bethlehem Steel in 1904.Carnegie's
devotion to vertical integration also contributed to his success. His firm eventually
controlled supplies of everything needed to make steel: iron ore and coal deposits;
railroads to transport everything; and marketing networks for the finished product. By the
Bapuji Academy of Management and Research, Davangere 3
1890s, Carnegie Steel made more steel than the entire country of Great Britain. In 1900,
its annual profit was $40 million.
Between the mid-1870s and the early 1890s steel replaced iron in more and more markets
that iron had once dominated, such as rails and nails. The key reason for this was
increased steel production. Accelerated by the innovations in Carnegie's mills, Bessemer
steelmaking allowed firms to make thousands of more tons of metal per year than when
iron had dominated the market. And because the Bessemer method required less skill
than ironmaking, labor costs dropped too. As steel prices dropped dramatically,
consumers increasingly chose the cheaper, harder, more durable metal.
As this trend accelerated, puddlers began to find that their skills were no longer needed.
Steelmakers came to depend on immigrant labor, particularly workers from southern and
eastern Europe. In the Homestead lockout of 1892, the only major union in the iron and
steel industry, the Amalgamated Association of Iron and Steel Workers, made one last
violent stand to prevent managers from driving the union out of the industry at Carnegie
Steel's Homestead Works. Its effort failed. From 1892 to 1937, American steelmakers
operated in an almost entirely union-free environment.
The U.S. Steel Corporation
As in other industries, many steel producers joined forces at the beginning of the
twentieth century. However, the effect of the great merger movement in the American
steel industry is particularly noteworthy. The United States Steel Corporation formed in
1901 when a group of firms dominated by J. P. Morgan decided to buy out Andrew
Carnegie so that the latter would no longer undercut their selling price. Carnegie's take
from the deal made him the richest man in the world.
U.S. Steel was the first business in history to be valued by the stock market at over one
billion dollars ($1.4 billion, to be exact). This figure represented one sixty-seventh of the
total wealth of the United States at that time. U.S. Steel controlled 72 percent of
Bessemer steel production in the United States and 60 percent of the market in open
Bapuji Academy of Management and Research, Davangere 4
hearth steel, a new steelmaking process that made steel in a furnace which achieved high
heat by recycling exhaust gases. U.S. Steel's ten divisions reflected the diversity of steel
products made at that time, including steel wire, steel pipe, structural steel (for bridges,
buildings, and ships), sheet steel (which would go largely for automobile bodies in
subsequent decades), and tin plate (once used for roofing shingles, it would increasingly
go to make tin cans). Like Carnegie Steel, the U.S. Steel Corporation was also vertically
integrated, with substantial interests in iron ore, coal, shipping, and railroads.
Although it held one of the largest monopolies in an age of monopolies, U.S. Steel
deliberately let its market share decline over the first few decades of its existence to avoid
dissolution through antitrust prosecution by the federal government. Even though the
Justice Department filed suit against U.S. Steel in 1911, this policy helped it survive
when the Supreme Court resolved the case in 1920. U.S. Steel's largest competitors took
advantage of the policy and the opportunities afforded them by World War I to grow at
U.S. Steel's expense. Bethlehem Steel, for example, grew big during the war by selling
armaments to Europe and ships to the U.S. Navy. Nevertheless, other firms took their
cues from U.S. Steel for everything from product prices to wages and labor policy. The
American Iron and Steel Institute, the industry trade organization formed in 1911 and led
by U.S. Steel chairman Elbert Gary, helped spread many of U.S. Steel's policies and
practices.
An important effect of the corporation's dominance was its imposition of the Pittsburgh
Plus pricing system upon the entire industry. This system dictated that all steel prices be
based upon the costs of production and transportation from Pittsburgh, no matter where
the steel was originally produced. This allowed producers based in Pittsburgh to compete
with local producers all around the country, since these producers were unable to
undersell steel made in markets that U.S. Steel dominated. Although its origins are
obscure, Pittsburgh Plus was firmly in place by 1901 and U.S. Steel championed its
continued existence. Despite losing a suit by the Federal Trade Commission in 1924, U.S.
Steel fought to keep the Pittsburgh Plus system in place in a modified form until it lost a
U.S. Supreme Court decision on the matter in 1948.
Bapuji Academy of Management and Research, Davangere 5
The Steel Industry growth
Throughout the early twentieth century, steel executives were determined to prevent the
return of organized labor to their industry. Managers fought off national organizing
campaigns in 1901, 1919, and 1933 through a combination of the carrot and the stick.
They used hard-nosed tactics like spies, blacklists, and the fomenting of racial strife
along with softer policies like safety improvements and employee stock ownership plans.
However, when the Committee on Industrial Organization (later the Congress of
Industrial Organizations, or CIO) started the Steelworkers Organizing Committee
(SWOC) in 1936, it used the impetus of the National Labor Relations Act (1935) to gain
a foothold in U.S. Steel. Rather than risk a costly strike at a time when production was
just beginning to recover from the Depression, U.S. Steel recognized the SWOC without
a strike in March 1937.
Although many other steel producers followed the steel corporation's lead, its largest
competitors did not. Firms like Bethlehem Steel, Youngstown Sheet and Tube, and
Republic Steel were part of a group known as Little Steel, not because they were small,
but because they were smaller than U.S. Steel. Rather than recognize the union on terms
similar to those agreed to by their larger competitor, these firms started the Little Steel
Strike of 1937. Despite violence, particularly the so-called Memorial Day Massacre in
Chicago, the Little Steel firms won the strike relatively easily. However, government
pressure during World War II to keep production moving forced each of these firms to
recognize the SWOC's successor organization, the United Steel Workers of America
(USWA), over the course of that conflict.
World War II and Postwar Decline
During World War II, industry production increased sharply because of steel's
importance to war mobilization. Some of this increase was a result of production
returning to full capacity after the depression, but new plants also came on line. For
Bapuji Academy of Management and Research, Davangere 6
example, the government loaned the shipbuilder Henry J. Kaiser enough money to build
the first steel mill on the West Coast so as to ensure his yards would have enough product
to meet his many navy contracts. U.S. Steel used both its money and money from the
federal government to expand its production capacity during the war, particularly around
Pittsburgh. By 1947, the United States controlled 60 percent of the world's steelmaking
potential.
When the war ended, steelmakers wanted to roll back union gains that the administration
of Franklin D. Roosevelt had forced the industry to accept, but the USWA had grown too
big to destroy. Between 1946 and 1959, the USWA struck five times in an effort to win
higher wages and more control over workplace conditions for its members. Each of these
strikes shut down the industry. The 1952 strike led to President Harry Truman's historic
decision to seize the entire steel industry. The Supreme Court ruled this action
unconstitutional in Youngstown Sheet and Tube Company v. Sawyer (1952). The 1959
dispute lasted 116 days and was the largest single strike in American history. As a result
of these disputes, America's steelworkers were among the highest paid manufacturing
employees in the country. The cost of these wage gains contributed to the collapse of the
industry in subsequent decades.Foreign competition also contributed to the industry's
decline. Countries like Japan and Germany first became major players in the international
steel market during the 1960s. Later on, countries like Brazil and South Korea would
break into the American market to the detriment of domestic producers. Although friends
of the American steel industry would often complain of unfair competition from abroad,
foreign producers' use of new technology and the failure of American steelmakers to
innovate also explain these developments. For example, two Austrian firms developed
the Basic Oxygen Furnace (BOF) in 1952. This process, which used pure oxygen as the
only fuel in the furnace, was much more efficient than the then-traditional open hearth
method. No major American steelmaker adopted this technology until 1957. U.S. Steel,
still the largest firm in the industry, did not commission its first BOF unit until 1964.
Close proximity to cheaper raw materials was another advantage that foreign steel
producers had over their American counterparts.
Bapuji Academy of Management and Research, Davangere 7
The collapse of the steel industry began in the late 1960s and has only grown worse since
then. Old-line firms like Wisconsin Steel and Republic Steel went bankrupt and ceased
operations. Even survivors like U.S. Steel closed old plants in order to cut back capacity.
U.S. Steel's decision to buy two oil companies in the 1980s and then change its name to
USX symbolized the company's break with its roots. The elimination of much of
America's steel capacity devastated the communities that had depended on these mills,
including Pittsburgh, Pennsylvania, and Youngstown, Ohio. The Monongahela River
valley around Pittsburgh lost approximately thirty thousand jobs during the 1980s. Many
of these workers experienced significant psychological distress as they went from having
high-paying jobs to joining the ranks of the long-term unemployed. Alcohol and drug
abuse, depression, and suicide all increased dramatically as deindustrialization
progressed.
The only sector of the American steel industry to expand since the 1960s has been the
mini-mills. These facilities use large electric furnaces to melt scrap steel and reshape it
rather than making new steel from scratch. Among the advantages that mini-mills have
over traditional facilities are lower start-up costs, greater freedom of location, and more
flexible job organization. Because these facilities tend to be built in rural areas and
because workers need fewer skills than those at larger mills, mini-mills tend to be
nonunion. The Nucor Corporation of North Carolina, which operates in ten states (mostly
in the South), has had great success filling this niche in the international steel market. As
this technology has improved in recent years, mini-mills have been able to break into
more and more markets that large producers once dominated. Because of globaland
domestic competition, it has become increasingly unlikely that the American steel
industry.
Africans Invent Steel 1,900 Years before Europeans
The Haya people on the western shore of Lake Victoria in Tanzania made medium-
carbon steel in preheated, forced-draft furnaces between 1,500 and 2,000 years ago. The
person usually given credit with inventing steel is German-born metallurgist Karl
Wilhelm who used an open hearth furnace in the 19th century to make high grade steel.
Bapuji Academy of Management and Research, Davangere 8
The Haya made their own steel until the middle of the middle 20th century when they
found it was easier to make money from raising cash crops like coffee and buy steel tools
from the Europeans than it was to make their own.
The discovery was made by anthropologist Peter Schmidt and metallurgy professor
Donald Avery, both of Brown University. Very few of the Haya remember how to make
steel but the two scholars were able to locate one man who made a traditional ten-foot-
high cone shaped furnace from slag and mud. It was built over a pit with partially burned
wood that supplied the carbon which was mixed with molten iron to produce steel. Goat
skin bellows attached to eight ceramic tubs that entered the base of the charcoal-fueled
furnace pumped in enough oxygen to achieve temperatures high enough to make carbon
steel (3275 degrees F).
While doing excavations on the western shore of Lake Victoria Avery found 13
furnaces nearly identical to the one described above. Using radio carbon dating he was
astonished to find that the charcoal in the furnaces was between 1,550 and 2,000 years
old.
Steelmaking was invented in Europe around 1860, when it was discovered that a blast
of air through molten pig iron removed impurities such as sulfur that made the metal
brittle. Later it was discovered that adding an iron alloy containing manganese and
limestone removed the remaining impurities—oxygen, phosphorus and leftover sulfur—
producing steel.Other developments such high carbon steel, adding chromium alloys,
blast furnaces made steel stronger.
From time to time white hot liquid iron and melted impurities are drawn off. Some of
the coke and limestone is absorbed into the iron, which make its strong and hard. The rest
combines with impurities to produce slag which is lighter than the iron and is skimmed
off.
Molten iron is drained off in a process called tapping and then poured into molds to
produce pig iron, which is cooled with jets of water. The name pig iron dates to the 1700s
Bapuji Academy of Management and Research, Davangere 9
when molds received molten iron from a runner that look like a suckling pig.
Blast furnaces are kept on all the time-24 hours a day, seven days a week, 365 days a
year—expect for regular inspections or equipment renovation, When it shut down the
meted iron turns solid and it is very difficult to start it up again.
Industry Structure
Indian Iron and steel Industry can be divided into two main sectors Public sector and
Private sector. Further on the basis of routes of production, the Indian steel industry can
be divided into two types of producers.
1.3.1 Integrated producers
Those that convert iron ore into steel. There are three major integrated steel players in
India, namely Steel Authority of India Limited (SAIL), Tata Iron and Steel Company
Limited (TISCO) and Rashtriya Ispat Nigam Limited (RINL).
1.3.2 Secondary producers
These are the mini steel plants (MSPs), which make steel by melting scrap or sponge iron
or a mixture of the two. Essar Steel, Ispat Industries and Lloyds steel are the largest
producers of steel through the secondary route.
1.4 Production Scenario
India's steel production during 2009-10 was 64.88 million tonne (MT), up 11% from a
year ago. India has emerged as the fifth largest producer of steel in the world and is likely
to become the second largest producer of crude steel by 2015-16.
Considering a steel consumption of 300 kg per man per year to be a fair level of
economic development, India will have to come up to somewhere around 300 million
tonnes, if it is to fulfill its ambitions of being a developed country. That of course is a
long journey from the present production level of around 50 million tonnes but one must
consider its past before coming to a conclusion about its potential. India was producing
only around a million tonnes of steel at the time of its independence in 1947. By 1991,
when the economy was opened up steel production grew to around 14 million tonnes.
Thereafter, it doubled in the next 10 years, and then it is doubling again, maybe over a
slightly longer span. Steel Production in India is expected to reach 124 million tons by
Bapuji Academy of Management and Research, Davangere 10
2012 and 275 million tons by 2020 which could make it the second largest steel maker.
In the developed countries, the trend is on consolidation of industry. Cross-border
mergers have been taking place for several years. The focus is on technological
improvements and new products.
Higher production of value-added products, capacity expansion, upgradation of
production process achieveing cost effective production in an environment friendly
manner, have been the major thrust areas of the Indian Iron and steel producers in the
recent times. After liberalization, there have been no shortages of iron and steel materials
in the country.
SAIL –STEEL AUTHORITY OF INDIA LIMITED
The Precursor
SAIL traces its origin to the formative years of an emerging nation - India. After
independence the builders of modern India worked with a vision - to lay the infrastructure
for rapid industrialization of the country. The steel sector was to propel the economic
growth. Hindustan Steel Private Limited was set up on January 19, 1954.
Expanding Horizon (1959-1973) :
Hindustan Steel (HSL) was initially designed to manage only one plant that was coming
up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by
the Iron and Steel Ministry. From April 1957, the supervision and control of these two
steel plants were also transferred to Hindustan Steel. The registered office was originally
in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December
1959.The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of
December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January
1962 after commissioning of the Wheel and Axle plant. The crude steel production of
HSL went up from .158 MT (1959-60) to 1.6 MT. A new steel company, Bokaro Steel
Limited, was incorporated in January 1964 to construct and operate the steel plant at
Bokaro. The second phase of Bhilai Steel Plant was completed in September 1967 after
Bapuji Academy of Management and Research, Davangere 11
commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the
Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur
Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS.
Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT
at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in
1968-69 and subsequently to 4MT in 1972-73.
Holding Company:
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presented to the Parliament on December 2,
1972. On this basis the concept of creating a holding company to manage inputs and
outputs under one umbrella was mooted. This led to the formation of Steel Authority of
India Ltd.
The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000
crore, was made responsible for managing five integrated steel plants at Bhilai, Bokaro,
Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In
1978 SAIL was restructured as an operating company.Since its inception, SAIL has been
instrumental in laying a sound infrastructure for the industrial development of the
country. Besides, it has immensely contributed to the development of technical and
managerial expertise. It has triggered the secondary and tertiary waves of economic
growth by continuously providing the inputs for the consuming industry.
Major Units
Integrated Steel Plants
1. Bhilai Steel Plant (BSP) in Chhattisgarh
2. Durgapur Steel Plant (DSP) in West Bengal
3. Rourkela Steel Plant (RSP) in Orissa
4. Bokaro Steel Plant (BSL) in Jharkhand
Bapuji Academy of Management and Research, Davangere 12
5. IISCO Steel Plant (ISP) in West Bengal
Special Steel Plants
• Alloy Steels Plants (ASP) in West Bengal
• Salem Steel Plant (SSP) in Tamil Nadu
• Visvesvaraya Iron and Steel Plant (VISL) in
Karnataka
Subsidiary
• Maharashtra Elektrosmelt Limited (MEL) in
Maharashtra
Joint Ventures
• NTPC SAIL Power Company Pvt. Limited (NSPCL): A 50:50 joint venture between Steel
Authority of India Ltd (SAIL) and National Thermal Power Corporation Ltd (NTPC Ltd);
manages SAIL’s captive power plants at Rourkela, Durgapur and Bhilai with a combined
capacity of 814 megawatts (MW).
• Bokaro Power Supply Company Pvt. Limited (BPSCL): This 50:50 joint venture between SAIL
and the Damodar Valley Corporation (DVC) is managing the 302-MW power generating
station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant.
• Mjunction Services Limited: A 50:50 joint venture between SAIL and Tata Steel; promotes e-
commerce activities in steel and related areas. Its newly added services include e-assets sales,
events & conferences, coal sales & logistics, publications, etc.
• SCI Shipping Pvt. Limited: A 50:50 joint venture with Shipping Corporation of India for
provision of various shipping and related services to SAIL for importing of coking coal and
other bulk materials and other shipping-related business.
Bapuji Academy of Management and Research, Davangere 13
CHAPTER 2: COMPANY PROFILE
Visvesvaraya Iron & Steel Plant, the latent addition to the stable of Steel Authority of
India Limited is located at Bhadravathi,260 kilometers north-west of Bangalore in the
state of Karnataka. The Plant & Township are nestled by the river Bhadra on three sides.
The Plant covers an area of about 3.8 square kilometers and 2677 persons as on
1.10.2006.The Steel Town covers an area of 4.5 square kilometers.
The vision and foresight of late Sir .M Visvesvaraya, the then Dewan of Mysore,
resulted in the setting up of “Mysore Wood Distillation & Iron Works “in 1918. It
became a limited company in 1962. As a tribute to its illustrious founder, the company
was renamed “Visvesvaraya Iron & Steel Limited”(VISL) on February 16,1976.An
Engineer statesman par excellence, he perceived Bhadravathi as an ideal location for the
plant amidst the forests of Shimoga.
Starting as a Wood Distillation Plant in 1918, the Mysore Iron Works commenced Pig
Iron production in a charcoal Blast Furnace in 1923 to produce 60 tons of pig iron per
day. A pipe plant was installed in 1927 to make profitable use of pig iron thus produced.
Mild steel production was started in 1936 and in the same year the name of the company
was changed to Mysore Iron & Steel Works. Production of Ferro-Alloys began in 1942
with the addition of two small furnaces and the production capacity was augmented
subsequently in 1962.
Mild steel production capacity was also expanded in 1965 with the addition of two LD
converters, one Electric Arc Furnace and a Blooming and Heavy Section Mill. The plant
was expanded further and diversified into the field of Alloy and Special Steel production
in 1965 with the addition of Electric Arc Furnace, Combined Bar and Rod Mill and
Central Heat Treatment Shop. Subsequently a modern Forge Plant was established in
1977 to produce high alloy steels like high speed steel, tool steels, die block steel and
valve steel etc. With this , the production capacity of alloy and special steels went up to
Bapuji Academy of Management and Research, Davangere 14
77,000 tons per year.
VISL PLANT VIEW
Bapuji Academy of Management and Research, Davangere 15
VISL has carved a niche for itself in the field of alloy and special steels in the country.
It takes care of requirements of strategic sectors like Defense, Nuclear Power
Corporation, Railways etc. VISL is producing alloy and special steels since 1966 and has
kept pace with the developments by quickly adopting newer technologies to meet the
requirements of the day and has always remained in the forefront as quality steel
producer in the country.
As a long-term strategy VISL installed one 530Cu.M Blast Furnace in 1995 to produce
hot metal of right quality so as to take the full advantage of BF-BOF-LRF-VD route in
the production of Alloy and Special Steel.
VISION:
1. To be a respected world class corporation and the leader in Indian steel business in
quality, productivity and profitability, customer satisfaction.
2. To achieve an international competitiveness through satisfaction of customer needs
by continuous improvement in the quality, cost and dispatch.
“Vision is the key for achieving
a goal of success”
MISSION OF VISL:
1. First mission of VISL plant is too achieving “safety”. Because if the employees
are safe their working chemistry is high at the top. So automatically it leads to
profit. So safety is the first step for achieving the satisfaction.
Bapuji Academy of Management and Research, Davangere 16
2. The principle product of VISL is to produce high grade alloy and special steels for
the strategic sector, to sustain this status, short and long term modernizing
proposals are in various stages of consideration & implementation, the customer
expect cheap and sustainable steel.
3. The next mission of VISL is committed to environment friendly, there is a special
environment department in VISL to achieve “environmentally green”
concept.VISL steel plant recognizes that the process of competences building
people involvement unleashing and leveraging the creative energies of our people.
4. Achieve international competitiveness by economically viable source of alloy and
special steel to meet the growing needs of the country. Steady profitable business
organization to protect the Interest of stakeholder. Building a strong and
confidence team for achieving a business activity over social responsibility.
QUALITY POLICY:
We shall build and sustain a world-class organization, where quality is the hallmark of
every process and activity.
With the involvement and dedication of our human resource, we are committed to
achieve satisfaction of all our stakeholders, through innovation and continual
improvement.
We are committed to achieving total customer satisfaction by:
Providing products and services that meet or exceed customer expectations
Continual improvement to our quality management and processes
Fostering the professional development of our employee
ISO 9000 standards are complimentary to TQP. Implemented together on a
continuous basis they can lead to the ultimate goal of zero defect.
VISL as obtained certification to ISO 9002- 1994 standards for production of alloy
and special steels through forged route in 1995 and for rolled route and pig iron in
Bapuji Academy of Management and Research, Davangere 17
1997.
VISL has upgraded the QMS to ISO- 9001: 2000 in FEB 2005
Area of the plant:
1.47 square miles or 3.8 square kilometers. Area of operation carried out is
National & International. It is a public sector, looked after by the Central Government.
MILESTONES:
1918- construction work started for setting up a Wood Distillation plant of 200 tonnes per
day and one charcoal based blast furnace of 60 tonnes per day.
1927-Pipe Foundry commissioned
Bapuji Academy of Management and Research, Davangere 18
1938-Cement plant commissioned
1943-Open health ‘B’ Furnace commissioned
1955- Second 100 T per day capacity electric iron furnace started
1967- Second 20 T electric arc furnace started
1970- combined bar and rod mill started
1985-CCM commission
1994- Conversion of 8T EAF to LRF 2
1997-certified to ISO 9002 for rolled route and pig iron in April
1998-VISL merged to sail in December
2003-Appgraded to ISO 9001-2000 quality management system
2005-conversion of II 20 T EAF to LRF 4
2007-Certification VISL for QMS ISO-TS 16949-2002 by M/s TUV Germany
2008-D.G.set 2.1 MuA capacity was commissioned.
2009-Bloom Caster was commissioned
2010-Development of B.G Axle forging for RWF , Bangalore.
SOURCE
VISL News – A monthly news Magazine.
VISL Annual Performance Plan.
Personnel manual of VISL
Insight – A VISL magazine.
MAJOR COMPETITORS
ISSAL,Pune
Sunflag, Nagpur
Kalyani Steels,Hospet
Mukund , Mumbai
SISCOL, Salem
Jindal, Bellary
TISCO , Jamshedpur
Bapuji Academy of Management and Research, Davangere 19
FACOR , Nagpur
RINL , Vizag
Starwire, Faridabad
MUSCO, Mumbai
SOURCE
VISL News – A monthly news Magazine.
VISL Annual Performance Plan.
Personnel manual of VISL
Insight – A VISL magazine.
EMERGING COMPETITORS
RINL, Vizag
SISCOL, Salem
Vardhaman, Punjab
Adhunik, Orissa
Bhushan steels, Haryana
JSPL Raighad
SOURCE
VISL News – A monthly news Magazine.
VISL Annual Performance Plan.
Personnel manual of VISL
Insight – A VISL magazine.
FUTURE GROWTH AND PROSPECTUS
Future Growth of VISL, the SAIL has designed the corporate plan for 2011-2012
as a long term plan, is as follows:-
SAIL investing 2000 crores for 3 special steel plants including VISL, for the
modernization. SAIL planning to increase in the production of saleable steel up to 0.993
Bapuji Academy of Management and Research, Davangere 20
MNT by 2011-2012. VISL was given final nod for setting up a cryogenic air separation
unit on build-own-operate basis.VISL is a special plant of SAIL. It is a large scale public
limited industry. Present Status of Industry The Indian Steel prices are competitive, in
relation to international prices up to 1978. The new technology also includes quality
through higher automation and better process controls.
The steel sector has responded strongly to the positive stimulus of reform. An apparent
consumption of finished steed has increased from 15MT in 1991-92 to around 23MT in
1996-97.The domestic steel sector has been able to withstand competition from important
produces, despite a steep reduction in custom duty. A number of fresh capacities are
likely to be commissioned in the coming years.
Future Prospects of Industry
According to government estimates, India’s per capita consumption of steel is
expected from present 55-60 kgs to 100 kgs by 2010. By 2012, the consumption of steel
in India is expected to reach around 55-60 MT, nearly double the current level. The SAIL
is planning to increase hot metal production from its plant to a level of about 20 MT per
annum 2012 against the current level of 13 MT. For crude steel production, SAIL is
planned to reach a level of 18.7 MT by 2012 from the current level of 11.83 MT
(achieved in 2003-04).
VISL adopts the 7 strategies :
Consistent quality.
Commitment to delivery schedules.
Customised grades and products.
Contemporary products.
Competitor prices.
Bapuji Academy of Management and Research, Davangere 21
Complaint settlements.
Culture of customer service
Nature of the Business Carried :
VISL today is one of the premier of high quality alloys and special steel producer in the
country starting with basic raw materials such as Iron ore, Lime stone, etc. VISL Steel is
mostly used by Railways and Defence sectors besides different heavy.Industries
including Steel plants.
Some of its very specialized steel is also used for our Atomic plants and reactors.
Steel is produced through BF-BOF-LRF-VD route. The facilities include ladle refining
furnaces, vacuum degassing, Continuous casting machine and 1600 Tones-hydraulic high
speed forging press, a fully automatic horizontal long forging machine with
Programmable Logic Controller (PLC) numerical control system for a semi-automatic
and automatic mode of operation.
The capacity of the plant has been increased to 1,25,000 tonnes of liquid steel
and 70,000 tonnes of pig iron with the addition of a 530Cu M Blast Furnace build
indigenously through in house effort of steel. The first indigenous Blast Furnace,
“CAUVERY” was commissioned on 24th Feb 1995.
Bapuji Academy of Management and Research, Davangere 22
WORK FLOW DIAGRAM
Bapuji Academy of Management and Research, Davangere 23
Blast furnace
Mixer
Basic Oxygen Furnace
Pig Casting Machine Cast Iron Foundry
Laddle Refining Furnace
VD/VOD Continuous Casting
Up-Hill Teeming
Rolling at primary Mill
Forging at forge plant
DispositionDisposition
Heat Treatment
Inspection Straightening
Processing at Vendor
Inspection
Metallurgical Test
Inspection
Bar Mill
Ignots
CHAPTER 3: THE 7S MC KINSEY MODEL
The three s across the top of the model are describer as “Hard Ss”:
STRATEGY
Specializing in developing and marketing special alloy steels & achieve possible
market share in this niche area has been notable strategy adopted by the company. Market
penetration by the best possible past optimization techniques & achieving price
excellence has been another strategy adopted by the company.
Smart sizing of the company through introduction of the voluntary retirement
scheme & leveraging most advanced production techniques has been another major
strategy adopted by the company.
Systematic interview into all the processes through development & the processes
through development & the implementation of various systems has been another strategy
adopted by the company to streamline its operations. Very good selection & development
Bapuji Academy of Management and Research, Davangere 24
Dispatch
systems adopted coupled with several employee welfare measures has been a notable
strategy adopted by the company for attracting & returning the talent.
STRUCTURE: ORGANIZATION STRUCTURE OF VISL
Govt. licensing Civil
Internal auditing Waste handling
House keeping
Iron Ore sorting
Safety
Bapuji Academy of Management and Research, Davangere 25
Executive Director(1)
General Manager(1)
ProjectsManagr
(1)
AccountManagr
(1)
HR & AdminManager
(1)
Materials D.G.M
(1)
Production, Planning &Plant maintenanceManager
(1)
H.R
Salaries & IncentivesIncentives
Recruitment
Training
ADMIN
Admin H.O.(1)
Admin Plant(1)
Raw material & Finished productMovement (1)
Stores Dept (1)
Purchase Dept (1)
Vehicle Maintenance
(1)
Lab testingH.O.D.
(1)
Processing H.O.D
(1)
Mechanical H.O.D (1)
Electrical &Instrumentation H.O.D (1)
AdministrationPlant Dept H.O.D (1)
BOARD OF DIRECTORS(4)
Canteen
Security
Vehicle maintenance
The above organization structure shows the following points.
1) Hierarchy relationship between different department members.
2) Participative management.
3) Cooperative work culture.
4) Standardized of polices.
5) Decentralized decision making system provided that some exceptions:-
Valuable & economical decisions are taken by top level management only. So it is
centralized decision making.
In visl all major decisions will be taken from board of directors they have full
control over the administration they will control the executive and general
managers these board of directors are selected by SAIL.
But the general manager of visp will have full control over the deputy managers
of project , HRD, production and material departments.
These deputy managers will have full control over their respective area and they
have a right to take minor decisions regarding over their respective area.
Bapuji Academy of Management and Research, Davangere 26
Structure is the organizational chart and associated information that shows who report to
whom and how task are both divided up and integrated. In other words structure describe
the hierarchy of authority and accountability in an organization, the way the
organizations units relate to each other :centralized, functional, division ( Top-Down) ;
decentralized ( The trend in larger organizations) ; matrix, networks, holding ,etc,. These
relationship are frequently diagrammed in organizational charts. Most organization use
some mix of structures- pyramidal, matrix or networked ones- to accomplished their
goals strategy.
SYSTEMS:
Systems define the flow of activities involved in the daily operation of
business, including its core processes and its support systems. They refer to the
procedures, processes and routines that are used to manage the organization and
characterize how important work is to be done.
Systems in business system:
1. Business process management system
2. Management information system
3. Innovation system
4. Performance management system
5. Financial system/ Capital allocation system
6. Compensation system/ Reward system
7. Customer satisfaction monitoring system..,etc,
The 4Ss across the bottom of the model are less tangible, more cultural in nature, and
were termed “soft Ss” by McKinsey these are shared values:
Bapuji Academy of Management and Research, Davangere 27
SKILLS
The company is capable of accepting & producing any type of the product &
executes it well before schedule & to the expectation of the customers. The company is
able to manufacture over 700 grades of alloy & special steels to meet the specific
requirement of individual customers.
The steps taken to improve necessary skills of the employee
1) On the job training
7 days training for transferred employees
1 year probationary period for newly recruited employee
Induction training to promoted employee from non-executive level to
executive level
6 months probationary period for all the executives who are promoted
2) Off the job training
Lecture
Group discussions, case studies
Management games
Developing presentation skill
Conference
External training
Specific need base training etc
STYLE
As VISL is a unit a unit of SAIL, VISL follows three types of styles. Those are as
follows.
Top down approach
Bottom up approach
Recruitment process approach
Bapuji Academy of Management and Research, Davangere 28
In top down approach the corporate office plans activities & sent it to the every
units. Because to know whether it is suitable or not & with construction decision are
taken.
In the bottom up approach all the units of SAIL plans the activities or
recommended certain policies for their convenient & send to the corporate office for
their convenient & send to the corporate office for approval, thus decisions are made. In
this approach the corporate offices only takes certain decisions without consulting the
units.
In recruitment process the decisions regarding the recruitment of execution are
made by the decisions are made by the units itself according to their corporate office
without consulting its units. But in case of recruitment of non-executives, the decision are
made by the units itself according to their requirement & then sent for the approval of
corporate office.
STAFF
The people in the organization are very dedicated & work towards the
improvement of the organization. The skill levels of the workers are work oriented &
they are specialized in their respective field of work.
Most of the workers are well experienced & well trained.
The staffs are graded from S1 to S11 for non-executives & E1 to E9 for the
executives. The qualification for the non-executive employees are SSLC, ITI & for the
non-executives Diploma & any degree or higher.
There is totally around 2300 staff members are the members also there. Their
average age is 51-52. The duties & responsibilities of staff differs from department to
department like production department to other department.
SHARED VALUES
With a vision of being a world class, innovative & profitable alloy & special steel
plant it has used all the available resources .The companyhas common goal to all its
concerns & shares the information available in every concern.
Bapuji Academy of Management and Research, Davangere 29
The VISL has implemented the following main objectives.
It has been able to build the lasting relationship with customers based on trust &
mutual benefit.
It has been able to uphold highest ethical standards in conduct of business
It has been able to create & nurture a culture that supports ,flexibility learning &
its proactive to change.
It also charted a challenging career for the employees with opportunities for the
advancement & rewards.
It values opportunity & responsibility to make a meaningful difference in
people’s levels.
Hard elements are easier to define or identify and management can directly
influence them: These are strategy statements; organization charts and reporting lines;
and formal processes and IT systems.
Soft elements, on the other hand, can be more difficult to describe, and are less
tangible and more influenced by culture. However these soft elements are as important as
the hard elements if the organization is going to be successful.
The way the model is presented in figure above depicts the interdependency of the
elements and indicates how a change in one affects all the others.
Bapuji Academy of Management and Research, Davangere 30
CHAPTER 4: DEPARTMENTAL STUDY
HUMAN RESOURCE DEPARTMENT
Human Resources Development (HRD) in VISL is not merely limited to training of the
employees but is aimed at overall development of employees in all fields. A new Entrant
to the organization is given necessary training like induction training, class room training
and on the job training to equip them to handle challenges in their work. The experienced
and committed workers of VISL are ever ready to acquire more skill and competency in
their job. Multi skill training activity is a prime thrust in all our training activities.
A culture of team work and creativity has been encouraged through the Suggestion
Award Scheme “SURABHI”, Special Award Scheme and Quality circles. The creative
talent of our employees has been harnessed for improvement of various operational and
maintenance practices. It is no mean feat that a small plant like VISL has bagged Prime
Minister’s Award as well as Vishwa Karma Award for 14 employees. VISL team has
won second place in the second place in the grand final of the Mega Steel Quiz
“CRUCIBLE 2005” held at the Bhilai in September.
Large number of employees are communicated about the tasks, targets and performances
of the company in a periodic communication exercise conducted by our Chief Executive.
Bapuji Academy of Management and Research, Davangere 31
DSM- PERS & HRD
AGM (HRD)
1 Senior Administrative Assistants
Employees suggestions during these meetings to achieve task and targets are followed up
and implemented by a high power committee.
Number of employees in the plant:
2300 employees,1030 employees including technical , non technical,
mechanical.270 executives. 1000 contract employees.
INFRASTRUCTURAL FACILITIES:
VISP is a huge plant; it covers 4.8 Sq kms area. It has been providing
infrastructural facilities like,
Accommodation for employees at lower rates.
One Guest House
One club
VISL Town Administration office
VISL Hospital
VISL Silver Jubilee Stadium.
VISL Platinum Jubilee Stage
Ispat club for executives
Gents club for both executives and non executives
Officers association
Workers association
8 Education Institutions
2 Parks and cultural Exhibition.
HRD KENDRA
Bapuji Academy of Management and Research, Davangere 32
HRD concentrates on developing people through training with the objective of
changes in knowledge, skills and attitudes, resulting in changes in job performance and
ultimately changes in organizational effectiveness. Emphasis is given to need based
training with the active guidance from the corporate office, SAIL and MTI, Ranchi.
HUMAN RESOURCE DEVELOPMENT
Resource is any means of supply which ca be drawn on when necessary. To develop
means to grow, mature and make progress in the desired direction. Developing a human
being in to a resource means making him or her into a person of resourcefulness,
initiative wittedness, cleverness talent and ability.
Human Resource Development is considered to be a super speciality of HRM. It is a
process by which the employees of an organization are helped in planned and continuous
manner to acquire new capabilities and sharpen existing capabilities, that may be required
to perform their present functions or expected future voles.
HRD is a process which is geared towards developing the general enabling capabilities of
employees as individuals so that they can discover and exploit their own inner potential for
their own and / or organization development purposes. HRD strives to develop an
organizational culture where superior subordinate relationships, team different sub units are
strong and contribute to the organizational health, dynamisms and pride of employees.
Training programs are as follows :
FRESH ENTRANTS
Induction and orientation
COMPETENCE ENHANCEMENT
Technical
Bapuji Academy of Management and Research, Davangere 33
Multi skill training
Managerial
SPECIFIC AREA
Safety
Environment
Cost control and deduction
Quality
EXTERNAL TRAINING
OTHER AREAS
Hindi training
GOALS OF HRD:
Development of individual capacity
Development of competitive in relations job being performed
Development of corporate approach
Development interpersonal relationship
Development of overall organization culture
Role of HRD:
Human resources planning
Human resources accounting
Human resources allocation and role planning
Human resources training and development
Human resources maintenance
Climate development of HRD
Bapuji Academy of Management and Research, Davangere 34
Activities of HRD
Training need identification
1) Training need assessment
2) Training need justification
3) Budgeting and controlling of cost
4) Selection of learning process
5) Planning, designing, conducting the training procedure
6) Evolution of program through, the trainee and feed back records
Training Objectives:-
1. To help the trainee
2. To improve knowledge, skill, attitude & performance.
3. To develop competence to increase productivity.
4. To prepare for greater responsibility.
5. To improve interpersonal relationship.
6. To equip with modern tools & techniques of to harness best of the human
resources and maintains industrial harmony.
7. Modern how to develop self and his subordinates.
Human Resource rely’s on the 4 M’s
Money
Material
Manpower
Machine
RECRUITMENT/SELECTION/INDUCTION METHODS
Recruitment for executives is carried out by the Corporate office at Kolkatta.The
grades from E1 cadre to E6 cadre. In order to fulfill the requirements and to meet
Bapuji Academy of Management and Research, Davangere 35
their expectation. Non-executives are recruited by the top level managers based
on the experience, skills, abilities.
Induction methods carries initial show of the work culture given for the freshers
& executives who are transferred. It carries a training of a week.
Selection is done through interviews , written tests & group discussions.
Promotion & transfer are of 3 types carried out in VISL
Within executive cadre
Within non executive cadre
Non executive to executive cadre
There are 2 types of interview carried out in VISL
Direct (Personnel ) interview
Exit interview
Performance appraisal
For the executives it is self-appraisal , here the HOD gives the task to the
executives and the executives need to complete the task and need to rate
himself. This would be referred by the reporting officer. The appraisal is done
online through electronic appraisal system.
For the non executives it is done by the shift managers. The shift managers
will provide the task to the non executives and the appraisal will be rated by
the reporting officer according to their performance, attendance, discipline etc.
There is performance related pay and bonus.There are awards provided by
Steel executive federation and National joint committee for steel industry.
Motivation
Instant award scheme this award will be recommended by the HOD to the
team or to the individual.
1. On 26th January Jawahar award for executives
2. Nehru award for non executives
3. Long service award
Bapuji Academy of Management and Research, Davangere 36
4. Employee suggestions for this the best one will be awarded
5. They have a system called HRIS where the employee can see his
position in his respective department through intranet.
6. Schemes
7. Employee family benefit scheme
8. PF & Gratuity
PRODUCTION & PURCHASE DEPARTMENT
Process of functioning of purchase department
Purchase indent by consuming party
↓
Purchase enquiry
↓
Floating
↓
Finalizing the offers
↓
Placing the purchase order
↓
Procurement of materials
↓
Inspection of materials
↓
SDR, SIV & SRV are prepared
PRODUCTS OF VISL
Rolled Alloy & Special Steels.
The ores used in making iron and steel are iron oxides, which are compounds of
iron and oxygen. The major iron oxide ores are hematite, which is the most plentiful,
Bapuji Academy of Management and Research, Davangere 37
limonite, also called brown ore, taconite, and magnetite, a black ore. Magnetite is named
or its magnetic property and has the highest iron content. But important ore, which
contains both magnetite and hematite .
This is the main major component which is produced in visl and it will have the
demand from defence units, railways and steel units.
Forged Alloy & Steels
Some rare companies will produce like these forged and alloy steels in that
visl is one of them. These type of alloy and steels will have the greater demand in defence
units, railways, engineering industries.
Bapuji Academy of Management and Research, Davangere 38
Concast Blooms.
This is made by the special treatment in which it will have the greater
demand from alloy companies, power sector units, bhel Hyderabad etc..
As Cast Alloy & Special Steels Ingots.
This type cast alloy and steel ingots will incur more expenditure and they
made from special alloys and they have a greater demand from bearing
industries like TATA, NBC and also from the defence units.
Pig Iron – Basic & Foundry Grade.
The three raw materials used in making pig iron (which is the raw material
needed to make steel) are the processed iron ore, coke (residue left after heating
coal in the absence of air, generally containing up to 90% carbon) and limestone
(CaCO3) or burnt lime (CaO), which are added to the blast furnace at intervals,
making the process continuous. The limestone or burnt lime is used as a fluxing
material that forms a slag on top of the liquid metal. This has an oxidizing effect
on the liquid metal underneath which helps to remove impurities.
Bapuji Academy of Management and Research, Davangere 39
Approximately two tons of ore, one ton of coke, and a half ton of limestone are
required to produce one ton of iron.
Granulated Slag. This slag is the component coming from the blast furnace when we get the pig iron, this slag is usually used in the cement industries to produce cements so it will have the demand from cement industries.
Liquid Nitrogen It is prepared in visl only and they have a unit of producing nitrogen gas used for their own consumption and it is used to burning purpose.
STEEL GRADE: o TOOL STEELS
Bapuji Academy of Management and Research, Davangere 40
o SPRING STEELS
o ALLOY STEELS
SIZE RANGE:
o 20 TO 56 DIA / RCS ROLLED (BAR MILL)
o 60 TO 140 DIA / RCS ROLLED (PRI. MILL)
o 75 TO 195 DIA / RCS FORGED (LFM)
o 200 TO 700 DIA / RCS FORGED (PRESS)
o UNIT WT. OF FORGING – 8 Ts.
SUPPLY CONDITION
o NORMALISED
o ANNEALED
o SPHERODISED ANNEALED
o HARDENED & TEMPERED
o MACHINED TO DRG. SIZE
o CLOSED DIE FORGED ITEMS
o PEELED & GROUND BARS.
As VISL is a large scale industry it function not only in the national market but also
in international market.
Various department first identify the needs of material, then approach to the purchase
department and sent a purchase indent, in which they state quantity, amount and Quality
of the product required, then purchase department makes an enquire about purchase
indent, then it places a purchase order to the supplier.
Bapuji Academy of Management and Research, Davangere 41
Purchase order is prepared on the basis of quotation in which they stator quality, rate3
amount terms of purchase frequency of supply and delivery schedule etc, and then they
think best, then there makes an inspection of all the materials as per the condition and
terms of purchase order.
RAISING OF INDENTS
In the Indent, the Indenter will ensure, depending upon the nature of the item indented,
incorporation of special requirement of inspection/check-list for special packing
instructions, if any.
In case some of the items in the Indent are matching/ complementary parts of an
equipment/assembly and are required to be supplied by one supplier only, the Indenter
shall specify this in the Indent.
With a view to optimizing the utilization of internal facilities, each Plant/Unit is to
prepare and get approved by the Competent Authority, an annual plan for 'Make' items in
increasing numbers on cost-effective basis, one month before the beginning of each
financial year for the ensuing financial year.
Indents shall not be raised for items identified as 'Make' in the annual plan for the
financial year. For such items the department shall raise 'Work Order (WO)' in the
prescribed form, to be placed on the Shops.
FOR JOB CONTRACTS
The Indenter should give detailed information regarding description of the jobs to be
executed along with the materials to be supplied and equipment to be deployed by the
contractor, wherever applicable. For the items to be supplied, the quantity along with
detailed specifications and drawing number, etc., should be given in the indent. Similarly,
for the equipment to be deployed the desired capacities of the equipment, their
ownership, procurement through rent/lease, etc., should be specified in the Indent.
The overall quality of the jobs to be executed along with the expected Performance
Bapuji Academy of Management and Research, Davangere 42
Guarantees should be clearly indicated in the Indent. The Indent should also include any
other special terms and conditions required for the execution of the jobs.
In case only one contractor is to be engaged for some of the jobs/all the jobs given in the
Indent, the Indenter shall specify this in the Indent.
The indents for purchase of materials/job contracts shall be raised by the department(s)
concerned or designated centralized agencies. These Indents shall be prepared in the
prescribed format (to be designed by each Plant/Unit). The indent shall be signed by the
Head of the Department (HOD). The Plant/Unit shall devise a proper system of
numbering the Indents initially and their processing reference at different stages to
facilitate cross-reference. Suitable Index registers shall also be maintained for such
numbering/references at different stages for control purposes.
FOR PURCHASE OF MATERIALS
The Indenter should give full and complete information regarding the description and
specification of the material to be procured. To the extent possible, specifications given
should be standard specifications conforming to IPSS, PS, ISS or DIN, etc. The cut-off
points for performance and the points for bonus and penalties should be indicated,
wherever feasible.
Manufacturing Drawings, wherever required, should be enclosed in adequate numbers
with the Indent.
Along with the Indent, the Indenter shall also prepare and enclose the following:
n respect of new items, a check-list as per the prescribed proforma (to be designed by
each Plant/Unit) justifying the indented quantity, with all columns correctly and
completely filled. This check list shall be signed by the HOD.
In respect of proprietary items, a certificate on the prescribed proforma (to be designed
by each Plant/ Unit) signed by the HOD. The purchase of items on proprietary basis
should be kept at the minimum possible level and should be resorted to when other
technically acceptable substitutes are not available.
MODE OF TENDERING
iii) For any other commercial consideration i.e. as a policy, DOP/estimated value of
Bapuji Academy of Management and Research, Davangere 43
purchase/job contract, formation of cartel/ ring like situations etc.
Plants/Units shall ensure that the complete tender documents along with the enclosures, if
any, are displayed on the SAIL website which can be downloaded by the interested
tenderers. Application made on such forms shall be treated as valid for participation in
the tender. The cost of tender documents, if any, may be collected from the bidders at the
time of submission of tenders. However, bidders would be given option to collect the
complete document in hard copy, if they so desire.
An abridged version of the open tender notice shall be published in leading local/ national
newspapers, as per prevailing guidelines; about the required material/job and that the
details of the tender are available in the given website. For import, the tender notices
should also be published in Indian Trade Journals and/or Indian Export Bulletin.
LIMITED TENDER ENQUIRY (LTE)
LTE should be issued only when reliable manufacturers/ suppliers/traders/contractors are
known. For this purpose, the MM Deptt./Contract Cell shall maintain a list of registered
parties in accordance with Para 5.3.3.
When the decision is to adopt LTE as a mode of tendering, the whole indent should be
treated as one and no split up thereof should be made to reduce the value of tender
enquiries.
LTE shall be issued only to the registered manufacturers/ suppliers/traders/contractors.
The registration of manufacturers/suppliers/traders/contractors should be according to
relevant IPSS.
LTE for trial order may be issued only with the approval of Head of MM Deptt./Contract
Cell. The total quantity to be ordered under the trial order shall also be specified and
approved by Competent Authority. The procedure for placement of trial order will be as
per Para 12.0.
The recommended modes of tendering for placement of orders are as under:
i) Open Tender/Global Tender,
ii) Limited Tender Enquiry (LTE),
iii) Single Tender for Proprietary items (Original Equipment Manufacturers).
Bapuji Academy of Management and Research, Davangere 44
iv) SingleTender(otherthanProprietaryitem)
Apart from the above methods of tendering, the following methods for placement of
direct orders may also be considered.
i) Repeat orders,
ii) Plant/Unit/SAIL Rate Contract,
iii) DGS&DRateContract.
In addition to the above, there may be occasions when the Plant/Unit may have to resort
to emergency purchase/job contract.
Approval of Competent Authority shall be obtained for issuance of NIT in each of the
above case.
Open/Global tenders are to be considered under the following circumstances:
When reliable manufacturers/suppliers/traders/ contractors as well as latest technology
are not clearly known.
When it is felt that advertising may elicit better response.
SINGLE TENDER ENQUIRIES (FOR PROPRIETARY ITEMS)
Proprietary (Original Equipment Manufacturers-OEM) Enquiry :
Enquiries for Proprietary items (OEM) should be issued with the approval of Competent
Authority as per the DOP. Such Proprietary items should be purchased from their
manufacturers or their authorized dealers only, where the manufacturer does not supply
the equipment directly. In case there is more than one dealer authorized to sell a
particular proprietary item, to Plant/Units, discount may be possible through Limited
Tender Enquiries, therefore LTE may be issued to the authorized dealers.
Single Tender Enquiry (Other than Proprietary Items)
Single Tender Enquiries should be issued as an exception only. Such enquiries should be
processed, after recording reasons and indenter should take approval of Chief
Executives of the Plant/Unit in all cases except procurement from PSUs/State
Government Undertakings where approval of Competent Authority shall be obtained.
A list of items procured on single tender basis, of value Rs. 5 Lacs and above should be
hosted on SAIL website to enhance vendor base of such items. The list of items displayed
Bapuji Academy of Management and Research, Davangere 45
would be plant-wise; giving items details viz. Catalogue number, description, detailed
specifications, annual requirement as well as area of use etc.
The instructions to be included on the website should be that, “Whoever is interested to
be a registered supplier of these items, should fill up the vendor registration form,
uploaded on the website. The normal registration process shall, thereafter be followed by
the Plants/Units for registering the eligible suppliers.”
Plants/Units should ensure updating of the list of Single tender items on website on a
quarterly basis. A resource person at respective plants/Units should be nominated for co-
ordination.
REPEAT ORDERS
Normally, as per the lead time, prior to expiry of the running supplies/Job Contract, the
Indenter has to process fresh Indent. However, due to unavoidable circumstances, if
either the Indent is not processed or even after processing the Indent, it is not possible to
place fresh order in time, under such circumstances for the Item/ Job Contract for which
continuity is essential, it may be necessary to place repeat order on existing party/
contractor. After recording the reasons leading to placement of repeat order, the proposal
for repeat order on same terms, conditions and specifications may be considered on the
following:
i) The original order must have been placed in the usual course after issue of LTE or
Open Tender. Emergency orders shall not be considered.
ii) Not more than two years have elapsed since placement of the original order.
METHODS FOR CALLING TENDERS
The following methods for calling of tenders shall be adopted:
1) Single Part Tendering,
2) Two Part/Three Part Tendering,
3) Pre-qualification bid/Expression of Interest (EOI)
followed by single/two part/three part tendering.
Payment terms
Bapuji Academy of Management and Research, Davangere 46
Payments should be made strictly according to terms & conditions as indicated in
Purchase Order (PO)/ Contract. Deviation, if any, in payment terms should be approved
by Competent Authority with the concurrence of Head of Finance of respective Plant/
Unit.
In case where delivery period has expired, documents sent through Bank should be
released only on approval of the Competent Authority based on recorded reasons. Such
approval should be obtained within two working days. In the case of payments through
Bank, the Accounts Department after receipt of necessary advice from the concerned
Bank will make payment to the Bank as per the terms of Purchase Order.
TAXES
If any tenderer does not ask for duties, taxes, levies, etc. extra in his quotation and
if this clause has accordingly been incorporated in the Purchase Order/Contract,
the tenderer will not be eligible for payment .
A. PRODUCTION DEPARTMENT:
BLAST FURNACE:
STEEL MAKING SHOP:
ROLLING MILLS:
FINISHING SHOP:
HEAT TREATMENT SHOP:
FOUNDRY:
MATERIAL MANAGEMENT:
Structural Shop:
In this section almost all the type of equipments used in the VISP are
manufactured and repaired. Some of the equipments manufactured in structural shop are:
1. converter
2. Laddle
3. BF vibarator screen
4. VD covers
5. Lifting table
Bapuji Academy of Management and Research, Davangere 47
6. Drilling Machine
7. Gate
MARKETING DEPARTMENT
VISL MARKETING
CMO
Advertising
Bapuji Academy of Management and Research, Davangere 48
Services
Demand & Respond
Place to Advertise
Product
Plan
Marketing is a systematic function and it has its own importance in every organization.
Main objectives of marketing department in VISP are to identify customer’s needs and
satisfies then accordingly. It is the process of buying and selling mainly based on demand
and supply analysis.
Before liberalization, “producer” controlled the market. He took the decision about
the price, quality etc. Now trend has changed, “customer” is the king in the market and
satisfying the customer needs is main objective of the organization.
Before the liberalization was marketing of steel was very easy as steel was a
controlled commodity. Now in the era of LPG, it is a free market and customer dictates
the market.
VISL produces special steel and alloy it sells it products directly to the customers. It
does not have any channels of distribution for selling its product. It has branches in
various areas like Bangalore, Calcutta, Pune, Delhi, Mumbai, and Nagpur. Pune branch
has a very large branch.
Bapuji Academy of Management and Research, Davangere 49
The branch manger receives all the enquiries from the customer and sends it to
marketing department. Any rejection that takes place due to low quantity, quality etc, is
handled by branch managers. Finished goods of VISP are raw material for other
company. They adopt integrated marketing procedure. It produces goods only after
getting the order from customer.
MARKETING NETWORK
So VISL has an expanded marketing network in India. The following summary of
marketing network, branches, and stockyard of VISL are as
Bangalore - Branch sales office
Calcutta - Branch sales office
Mumbai -Branch sales office
Pune - Branch office & stockyard
Delhi -Branch office & stockyard
Ahmedabad -Stockyard
PPRODUCTS OF VISL
Rolled Alloy & Special Steels
Forged Alloy & Special Steels
As Cast Alloy & Special Steels
Concast Blooms
As Cast Alloy & Special Steels Ingots
Pig Iron – Basic & Foundry Grade
Granulated Slag
Liquid Nitrogen
MARKETING NETWORK OF VISL
Bapuji Academy of Management and Research, Davangere 50
GRADES MANUFACTURED
CARBON & ALLOY - Brakes, Camshaft,
CONSTRUCTIONAL STEELS Axles, Spring Bolts,
CASE HARDENING STEELS - Piston Rings, Bushes, Gear wheels,
Spindles, Shafts, Steering parts.
Bapuji Academy of Management and Research, Davangere 51
Marketin
g HQ BDVT
Bangalor
e
Chennai
Calcutta
NewDelhi
S/Y
(SAIL)
Ahmedaba
d
Mumb
ai
Pune
S/Y
(VISP)
S/Y
(SAIL)
S/Y(SAIL)
FREE CUTTING STEELS - Bolts, Nuts, Screw
SPRING STEELS - Leaf, Helical, Volute
& Torsion Springs
BALL BEARING STEELS - Balls, rollers & races
TOOL & DIE STEELS - Heavy forging / riveting hammers, chisels,
scissors knife blades punches, lathe
centers etc. & all types of die blacks for
medium & small forging dies.
SOFT MAGNETIC IRON - Railway Signaling & other electrical /
magnetic relay system.
CATEGORIES OF STEEL :
CARBON & ALLOY CONSTRUCTION STEEL
CASE HARDENING STEEL
FREE CUTTING STEELS
TOOL & DIE STEELS
SPRING STEELS
BALL BEARING STEELS
SOFT MAGNETIC IRON
HIGH TEMPERATURE STEELS
B) SIZE RANGE:
20 TO 56 DIA / RCS ROLLED (BAR MILL)
60 TO 140 DIA / RCS ROLLED (PRI. MILL)
75 TO 195 DIA / RCS FORGED (LFM)
UNIT WT. OF FORGING – 1 T.
200 TO 700 DIA / RCS FORGED (PRESS)
UNIT WT. OF FORGING – 8 Ts.
Supply condition
1. NORMALISED
2. ANNEALED
3. SPHERODISED ANNEALED
Bapuji Academy of Management and Research, Davangere 52
4. HARDENED & TEMPERED
5. PROOF MACHINED
6. MACHINED TO DRG. SIZE
7. CLOSED DIE FORGED ITEMS
8. PEELED & GROUND BARS
9. SPECIFIC / UNIT LENGTH
MAJOR CUSTOMERS
DEFENCE UNITS :
ORDNANCE FACTORY, AMBAJHARI
ORDNANCE FACTORY, KANPUR
ORDNANCE FACTORY, KHAMARIA
ORDNANCE FACTORY, TRICHY
METAL & STEEL FACTORY, ISHAPORE
RIFLE FACTORY, ISHAPORE
SMALL ARMS FACTORY, KANPUR
HEAVY VEHICLES FACTORY, AVADI
MIDHANI, HYDERABAD
RAILWAYS:
INTEGRAL COACH FACTORY, PERAMBUR
CENTRAL RAILWAY, MUMBAI
RAIL SPRING KARKHANA, GWALIOR
DIESEL LOCO WORKS, VARANASI
SOUTHERN RAILWAY, PODANUR
RAIL WHEEL FACTORY, BANGALORE
POWER SECTOR:
BHEL UNITS, HYDERABAD, TRICHY, HARDWAR
NLC, NEYVELI
NPC, MUMBAI
Bapuji Academy of Management and Research, Davangere 53
STEELS PLANTS:
BHILAI STEEL PLANT
BOKARO STEEL PLANT
ROURKELA STEEL PLANT
DURGAPUR STEEL PLANT
IISCO STEEL PLANT
JSW, BELLARY
RINL, VIZAG
ENGINEERING INDUSTRY:
HMT UNITS, BANGALORE
TRACTOR ENGINEERS, MUMBAI
SHANTI GEARS, COIMBATORE
KIRLOSKAR TOYODA TEXTILE MACHINERY,
BANGALORE
DYNAMATIC TECH, BANGALORE
FERROMATIC MILACRON, AHMEDABAD
DEE TEE INDUSTRIES, INDORE
AUTOMOBILE / FORGING INDUSTRY:
BHARAT FORGE LIMITED, PUNE
AMFORGE INDUSTRIES LIMITED, PUNE
AMTEK GROUP, PUNE
AHMEDNAGAR FORGINGS LIMITED, PUNE
TRINITY FORGE GROUP, PUNE
TRINITY ENGINEERS LIMITED, PUNE
MM FORGINGS LIMITED, CHENNAI
SHARDLOW INDIA LIMITED, CHENNAI
BAY FORGE LIMITED, CHENNAI
SIFL, THRISSUR
MGM INDUSTRIES LIMITED, MYSORE
TATA MOTORS, JAMSHEDPUR
Bapuji Academy of Management and Research, Davangere 54
EARTH MOVERS:
BEML UNITS, BANGALORE, MYSORE, KOLAR GOLD FIELDS
L&T, BANGALORE
HINDUSTAN MOTORS, HOSUR
BEARING INDUSTRY :
NEI, JAIPUR
TISCO, JAMSHEDPUR
JINABAKUL FORGE PRIVATE LIMITED, BELGAUM
JINALLOY STEEL PROCESSOR, MUMBAI
DUAL RINGS, HYDERABAD
AUSTIN ENGINEERING, JUNAGADH
PIG IRON:
MUKUND LTD., GINIGERA
KALYANI STEELS LTD., GINIGERA
ISSAL, PUNE
KALYANI CAPENTER, PUNE
MUSCO, KHOPOLI
PEARLITE LINERS, SHIMOGA
SISCOL, SALEM
NAVAKARNATAKA STEEL, BELLARY
VARIOUS TRADER
FINANCE DEPARTMENT
Finance Department chart
Bapuji Academy of Management and Research, Davangere 55
DGM-I/C Finance
FINANCIAL DEPARTMENT:
FLOW CHART OF FINANCIAL DEPARTMENT:
ACCOUNT SYSTEM:
CENTRAL ACCOUNTS:
PURCHASE FINACE SECTION:
SALES ACCOUNTS SECTION:
PAY AND ESTABLISHMENT:
COST ACCOUNT SECTION:
OTHER AREAS OF FINANCE:
Finance means acquisition of funds and proper utilization and allocation of funds in
proper way. Finance plays a vital role in the development of any business. Thus
development of any business majorly depends on the effective finance management.
In VISL Finance Management Department can be divided into different sections.
General Manager is the head of the finance department and computer section. He looks
after over all activities of finance department. Each section maintains the books of the
accounts. The following sections deal with their related transactions.
1. Central accounts section.
Bapuji Academy of Management and Research, Davangere 56
DGM-Finance
AGM-C&IT SR.MGR SALES,C/A, C/E
MGR.COST & BUD
MGR.PUR & PROJ
MGR.PAY & EST
MGR.SALES Jr.Mgr CASH
DY.MGR C/E
ASST.MGR C/A
2. Purchase accounts section.
3. Sales accounts section.
4. Capital project account section.
5. Pay and Establishment Section
6. Cost and budget account section.
Finance Management is one of the most important functions in the organization. It
is the lifeblood of the company. Financial management involves the preparation of
budget, which will be useful for the future decisions, and it will give information about
the company’s financial position to the customer, creditors and Government.
Depreciation method followed:
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to
the Companies Act, 1956.
However, where the historical cost of a depreciable asset undergoes a change, the
depreciation on the revised unamortised depreciable amount is provided over the residual
useful life of the asset.
Classification of plant and machinery into continuous and non-continuous is made on the
basis of technical opinion and depreciation provided accordingly.
Depreciation on addition/deletion during the year is provided on pro-rata basis with
reference to the month of addition/deletion.There seems to be no deviation from the
provisions of the Companies Act in respect to Depreciation rates.
The schedule is known as "Significant Accounting Policies and notes on Accounts".
Cost Control Measures
Emphasis on cost reduction and productivity improvement continued during the
year through systematic application of new technology, process improvement through
R&D efforts and strong awareness to control cost at all levels of operation.
Continuous monitoring of procurement of high value items, maximising use of in-
house engineering shops and optimisation in procurement including negotiations with
suppliers for price reduction.
A saving of ` 1082 crore was achieved during the year through cost control and
Bapuji Academy of Management and Research, Davangere 57
revenue maximization. Several strategic actions were taken to achieve cost control
savings in major areas of operation viz. optimisation of coal blend, higher yield,
reduction in specific energy consumption and coke rate, higher BF productivity, higher
CC production, low power consumption and improvement in other techno-economic
parameters.
Funds Management
During the year, the Company continued its thrust on better fund management. The high
cost short term loans were replaced with low cost debts. Also, the Company earned
interest of ` 1772 crore through short-term deposits with scheduled banks. The Company
continued to maintain its virtual debt-free status with term deposits with Banks of ` 22023
crore against borrowings of ` 16511 crore as at the year-end. The total debt during the
current year increased by ` 8948 crore on account of borrowings for capital expenditure.
M/s FITCH and M/s CARE, RBI approved credit rating agencies, maintained "AAA"
ratings indicating the highest safety, to SAIL's long term borrowing programme.
To ensure faster and timely payment to suppliers, contractors, employees, etc. e-
payments were increased substantially and it covered almost 80% of total payment.
Contribution to SAIL Gratuity Trust.During the year, the Company contributed ` 850
crore to SAIL Gratuity Trust. The total contribution made by the company as on
31.03.2010 was ` 3350 crore. The fund size had grown to ` 4037 crore as on 31.03.2010,
including returns on investments made by the Trust.
Capital Investments
1.The Company had undertaken modernization and expansion plan to increase
capacity of Hot Metal production from 13.82 MTPA to 23.46 MTPA
progressively in the current phase.
2.Orders for all major packages of ISP and SSP, stand alone and other part packages
of BSL, BSP, RSP & DSP were placed. These packages are under
implementation. The finalization of orders for balance packages are in progress.
3.During FY 2009-10, capital expenditure of ` 10,606 crore was made (` 5,233 crore
in previous year) which has been funded by a mix of borrowings and internal
Bapuji Academy of Management and Research, Davangere 58
accruals.
ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE COMPANY
Sales Turnover
Other Revenues
The total loans were increased by ` 8948 crore during the year, mainly on account of
additional borrowings for meeting working capital requirements and capital expenditure.
*As at the end of the respective financial year.
The inventories decreased mainly on account of reduction in semi/ finished inventory by
` 1157 crore and stores & spares inventory by ` 22 crore. However, there was increase in
raw material inventory by ` 46 crore.
The decrease in finished/semi-finished inventories by 20% was due to decrease in
quantity and valuation rate on account of reduction in both cost of production or Net
Sales Realisation, whichever applicable.
The stores & spares inventory was reduced by 1% and raw material inventory had
increased marginally by 2%.
CHAPTER 5: SWOT ANALYSIS
Bapuji Academy of Management and Research, Davangere 59
Strengths
Well-equipped chemical and metallurgical laboratories.
Producing 700 varieties of alloy & special steels.
Satisfied and loyal customers.
Locational advantage with proximity to major markets
(South and West)
Known as quality supplier of alloy and special steels.
Good Brand Name / Image in the Market.
Advantage of Stock Yards.
Reliable Quality.
Delivery with Short Lead Time.
Integrated steel making facilities offer prospects for
Brownfield capacity additions, offering significant
intrinsic advantage in lower incremental capital cost –
related charges.
Weakness
Old technology in certain production shops.
High Overheads and fixed costs.
Adverse age-mix of workers and high average
wage.
Higher Cost of Production.
High Consumption of Coke / High Coke Rate.
Old Machinery – Frequent Troubles &
Maintenance down time.
Higher dependence on Auto & Private Sector.
Ageing Man Power and the average age
of the employees around 50.
Lack of Captive Mines.
Opportunity
Growing market for iron and steel.
Competitive environment calls for improvement and
increase in productivity.
Cutting costs by making use of new technology.
Hardening of Steel Prices & Increasing Demand.
Integrated Manufacturing Facility.
Skilled Man Power & Established Process Standards.
Threats
Due to better technology competitors are able to
offer the same products at lesser prices.
Too many welfare activities lead to the increase
in expectations of employees, which could at
some point of time become a reason for dispute.
Entry of New Players with Higher Automation.
Volatility in the prices of raw Materials.
CHAPTER 6: SUMMARY OF LATEST ANNUAL REPORT
Bapuji Academy of Management and Research, Davangere 60
Balancesheet of Visveswaraya Iron & Steel Ltd
Particulars Mar'10 Mar'09 Mar'08 Mar'07 Mar'06Liabilities 12 Months 12 Months 12 Months 12 Months 12 MonthsShare Capital 4,130.40 4,130.40 4,130.40 4,130.40 4,130.40Reserves & Surplus
29,186.30 23,853.70 18,933.17 13,182.75 8,471.01
Net Worth 33,316.70 27,984.10 23,063.57 17,313.15 12,601.41Secured Loans 7,755.90 1,473.60 925.31 1,556.39 1,122.16Unsecured Loans
8,755.35 6,065.19 2,119.93 2,624.13 3,175.46
TOTAL LIABILITIES
49,827.95 35,522.89 26,108.81 21,493.67 16,899.03
AssetsGross Block 35,382.49 32,728.69 30,922.73 29,912.71 29,360.46(-) Acc. Depreciation
21,780.91 20,459.86 19,351.42 18,315.00 17,198.32
Net Block 13,601.58 12,268.83 11,571.31 11,597.71 12,162.14Capital Work in Progress.
15,039.83 6,544.24 2,389.55 1,236.04 757.94
Investments. 668.83 652.70 538.20 513.79 292.00Inventories 9,027.46 10,121.45 6,857.23 6,651.47 6,210.06Sundry Debtors 3,493.90 3,024.36 3,048.12 2,314.75 1,881.73Cash And Bank 22,436.37 18,228.53 13,759.44 9,609.83 6,172.64Loans And Advances
5,155.32 4,292.50 3,644.22 3,097.70 4,524.37
Total Current Assets
40,113.05 35,666.84 27,309.01 21,673.75 18,788.80
Current Liabilities
13,383.67 10,201.51 8,960.91 8,105.99 8,081.23
Provisions 6,211.67 9,408.21 6,797.83 5,550.78 7,236.44
Total Current Liabilities
19,595.34 19,609.72 15,758.74 13,656.77 15,317.67
NET CURRENT ASSETS
20,517.71 16,057.12 11,550.27 8,016.98 3,471.13
Misc. Expenses 0.00 0.00 59.48 129.15 215.82
TOTAL ASSETS (A+B+C+D+E)
49,827.95 35,522.89 26,108.81 21,493.67 16,899.03
Bapuji Academy of Management and Research, Davangere 61
Profit & Loss Account of Iron & Steel Ltd.
Mar'10 Mar'09 Mar'08 Mar'07 Mar'06
12 Months 12 Months 12 Months 12 Months 12 Months
INCOME:
Sales Turnover 44,059.72 49,331.47 46,175.85 39,722.59 32,805.96
Excise Duty 3,463.82 5,532.89 6,217.18 5,393.82 4,605.48
NET SALES 40,595.90 43,798.58 39,958.67 34,328.77 28,200.48
Other Income 0.00 0.00 0.00 0.00 0.00
TOTAL INCOME 42,924.01 46,078.47 41,498.36 35,683.73 29,092.78
EXPENDITURE:
Manufacturing
Expenses4,234.65 3,762.77 3,317.74 2,925.43 2,793.45
Material Consumed 19,768.57 22,042.58 16,821.39 15,963.13 13,903.23
Personal Expenses 5,417.00 8,401.73 7,919.28 5,087.76 4,156.97
Selling Expenses 1,126.12 935.68 1,143.90 1,066.73 1,108.12
Administrative
Expenses834.52 1,644.78 1,321.44 1,064.29 1,035.99
Expenses
Capitalised0.00 -1,930.40 -1,832.22 -1,423.08 -1,352.05
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL
EXPENDITURE31,380.86 34,857.14 28,691.53 24,684.26 21,645.71
Operating Profit 9,215.04 8,941.44 11,267.14 9,644.51 6,554.77
EBITDA 11,543.15 11,221.33 12,806.83 10,999.47 7,447.07
Depreciation 1,337.24 1,285.12 1,235.48 1,211.48 1,207.30
Other Write-offs 10.33 128.02 75.49 128.59 181.44
EBIT 10,195.58 9,808.19 11,495.86 9,659.40 6,058.33
Bapuji Academy of Management and Research, Davangere 62
Interest 402.01 253.24 250.94 332.13 467.76
EBT 9,793.57 9,554.95 11,244.92 9,327.27 5,590.57
Taxes 3,452.89 3,284.28 3,934.65 3,253.80 1,694.36
Profit and Loss for
the Year6,340.68 6,270.67 7,310.27 6,073.47 3,896.21
Non Recurring
Items228.89 -277.12 161.90 53.75 45.64
Other Non Cash
Adjustments184.80 181.26 64.61 60.57 71.12
Other Adjustments 0.00 0.00 0.00 14.50 0.00
REPORTED PAT 6,754.37 6,174.81 7,536.78 6,202.29 4,012.97
KEY ITEMS
Preference
Dividend0.00 0.00 0.00 0.00 0.00
Equity Dividend 1,363.03 1,073.90 1,528.25 1,280.42 826.08
Equity Dividend
(%)32.99 25.99 37.00 30.99 20.00
Shares in Issue
(Lakhs)41,304.01 41,304.01 41,304.01 41,304.01 41,304.01
EPS - Annualised
(Rs)16.35 14.95 18.25 15.02 9.72
Bapuji Academy of Management and Research, Davangere 63
RATIO ANALYSIS
1. CURRENT RATIO= Current Assets / Current Liabilities
Theoretically, the standard of current ratio is 2:1. But in practice, it changes from
industry to industry. If the current ratio is more than 1:1, it means to say that the firm is in
position of meet its short term obligations like creditors, bills payable, bank over draft
and the like. In VISL LTD, the current ratio is 2.04 in FY 20010-11.
.
2. QUICK RATIO: Quick Assets/ Current Liabilities
The actual quick ratio has to be compared with the standard quick ratio of 1:1. If
the actual quick ratio is equal to or more than the standard ratio of 1:1, the conclusion can
be that the concern is liquid and so that it can pay off its short term liabilities out of its
quickly realizable assets without any difficulty. But, VISL LTD’s quick ratio is standard
quick ratio of 1:58. So, it is possible to meet VISL LTD to the short-term obligation.
3. CASH RATIO:
An asset which converts suddenly into cash without risk is called as cash ratio. It
is a pure liquid asset. It means there is no much risk involved while converting those
assets into cash, and also taking very least time to convert that asset into cash So, those
assets include cash in hand, bank balance.
In VISL LTD, the cash balance is very least. In 2010-11 the cash balance is Rs
10.90 lakhs.
Bapuji Academy of Management and Research, Davangere 64
Current Ratio Current Assets Current Liabilities
2.04 40,113.05 19,595.34
Quick Ratio Quick Assets Current Liabilities
1.58 31085.59 19,595.34
4. NET WORKING CAPITAL RATIO= Total Current Assets/ Total Current
Liabilities
Net Working Capital
Ratio
Total Current Assets Total Current
Liabilities
2.54 49,827.95 19,595.34
Higher the ratio greater the ability of the firm to meet its current obligations and
vice-versa. VISL LTD having 2.54 in 2010-11. If this ratio is more than 1 time we can
say that the firm is solvent.
5. DEBT-EQUITY RATIO = Long term debt/ Share holders fund
Debt equity ratio Long term debt Share holders fund
2.62 23040.85 28779.79
In present case, the debt-equity ratio is more than one in both the years. So we can
say that it is a lever firm. We can do more trading on equity. It is very beneficiary to
shareholder if the firm having more EBIT. When the EBIT is more and more over a
period of time, interest cost cannot be change proportion to changes of EBIT. Interest is a
fixed cost. So, if EBIT is higher in a particular period we cannot pay the higher interest.
VISL LTD is under loss in 2010. So it cannot be a benefited one to shareholders.
Bapuji Academy of Management and Research, Davangere 65
6. INTEREST COVERAGE RATIO= EBIT/interest
Ratio EBIT Interest
1.75 10,195.58 5819.01
7. DEBT TURNOVER RATIO= sales/ Average Accounts Receivable
Debtors Turnover
ratio
Sales Average Accounts
Receivable
11.61 40,595.90 3,493.90
It expresses the relationship between credit sales and debtors. It needs to be noted
that debtors should be taken before making any provision for doubtful debts.
Significance: The liquidity position of the firm depends upon the speed with which
debtors are realised. This ratio indicates the number of times the receivables are turned
over and converted into cash in an accounting period.
8. AVERAGE COLLECTION PERIOD=360days/ Debtors Turnover ratio
Average collection
period
Days Debtors Turnover ratio
31days 360 11.61
For every 31 days the debtors will paid the outstanding amount.
Bapuji Academy of Management and Research, Davangere 66
9. CURRENT TURNOVER RATIO = Net Credit purchases/Average accounts
payable
Creditors Turnover ratio Net Credit purchases Average accounts
payable
1.03 times 31380 30316
Creditors turnover ratio indicates the pattern of payment of accounts payable. As
accounts payable arise on account of credit purchases, it expresses relationship between
credit purchases and accounts payable.
Significance: It reveals average payment period. Lower ratio means credit allowed by
the supplier is for a long period or it may reflect delayed payment to suppliers which is
not a very good policy as it may affect the reputation of the business.
10. AVERAGE PAYMENT PERIOD=360days/Creditors Turnover ratio
Average payment period Days Creditors Turnover ratio
349 days 360 0.99
The firm will made payment 261 days after it buy the goods on credit. So the firm
has enough time to meet its obligation. So when a firm deaccelerate its disbursement the
firm has good receivables management.
11. FIXED ASSETS TURNOVER = Net Sales/Net Fixed Assets
12. WORKING CAPITAL TURNOVER = Net Sales/Working Capital
Bapuji Academy of Management and Research, Davangere 67
Fixe asset d turnover Net Sales Net Fixed Assets
1.97 40,595.90 20000
Working Capital
Turnover
Net Sales Working Capital
1.97 40,595.90 20517
It reflects relationship between employed in the business. Higher turnover means
better liquidity and profitability.
Significance: High turnover, capital employed, working capital and fixed assets
is a good sign and implies efficient utilisation of resources. Utilisation of capital
employed or, for that matter, any of its components is revealed by the turnover ratios.
Higher turnover reflects efficient utilisation resulting in higher liquidity and profitability
in the business.
13. GROSS PROFIT RATIO: GP/SALES*100
Gross Profit Ratio Gross profit Sales
0.15 6340.68 40595
Gross profit ratio as a percentage of sales is computed to have an idea about gross
margin.
Significance: It indicates gross margin or mark-up on products sold. There is no standard
norm for its comparison. It also indicates the margin available to cover operating
expenses, non-operating expenses, etc. Change in gross profit ratio may result from
change in selling price or cost of sales or a combination of both.
14. OPERATING RATIO: operating cost/sales*100
Bapuji Academy of Management and Research, Davangere 68
Operating ratio operating cost sales
22.97% 9317 40595
It is computed to analyse cost of operation in relation to sales. Operating expenses
include office expenses, administrative expenses, selling expenses and distribution
expenses.
Cost of operation is determined by excluding non-operating incomes and expenses such
as loss on sale of assets, interest paid, dividend received, loss by fire, speculation gain
and so on.
15. OPERATING PROFIT RATIO:100-0perating ratio
Operating Profit Ratio 100 0perating ratio
77.03 100 22.97
It is calculated to reveal operating margin. It may be computed directly or as a
residual of operating ratio.
Significance: Operating Ratio is computed to express cost of operations excluding
financial charges in relation to sales. A corollary of it is ‘Operating Profit Ratio’. It helps
to analyse the performance of business and throws light on the operational efficiency of
the business.
16. NET PROFIT RATIO: net profit/sales*100
Net profit Ratio Net profit Sales
0.15 6340 40595
Net Profit Ratio is based on all inclusive concept of profit. It relates sales to
net profit after operational as well as non-operational expenses and incomes.
Bapuji Academy of Management and Research, Davangere 69
Significance: It is a measure of net profit margin in relation to sales. Besides revealing
profitability, it is the main variable in computation of Return on investment. It reflects the
overall efficiency of the business.
17. RETURN ON INVESTMENT (ROI) OR RETURN ON CAPITAL
EMPLOYED (ROCE)
Return on Investment Profit before Interest and
Tax
Capital Employed
0.24 10195 41304
It explains the overall utilization of funds by a business enterprise. Capital
employed means the long-term funds employed in the business and includes shareholders
fund, debentures and long-term loans.
Significance: It measures return on capital employed in the business. It reveals the
efficiency of the business in utilization of funds entrusted to it by shareholders,
debenture-holders and long-term liabilities.
18. RETURN ON NET WORTH (RONW): profit after tax/net worth*100
Return on Net Worth profit after tax net worth
7.44% -666.42 8946
This ratio is very important from shareholders’ point of view in assessing
whether their investment in the firm generates a reasonable return or not. It should be
higher than the return on investment otherwise it would imply that company’s funds have
not been employed profitably.
Bapuji Academy of Management and Research, Davangere 70
19. EPS:PAT/No. of shares outstanding
Earnings refer to profit available for equity shareholders which are worked out as
Profit after Tax – Dividend on Preference Shares.
This ratio is very important from equity shareholders point of view and so also
for the share price in the stock market. This also helps comparison with other firm’s to
ascertain its reasonableness and capacity to pay dividend.
20. P/E RATIO: MPS/EPS
Price earnings ratio Market price of a Share Earnings per Share
-1.5 5 -6.50
It reflects investors expectation about the growth in the firm’s earnings
and reasonableness of the market price of its shares. P/E ratios vary from industry to
industry and company to company in the same industry depending upon investors
perception of their future.
Bapuji Academy of Management and Research, Davangere 71
Earnings per share PAT No. of shares outstanding
-6.50 -77.23 76971094
CHAPTER 7: LEARNING EXPERIENCE
FINDINGS & SUGGESTIONS
FINDINGS:
VISL has good reputation in the steel market having long experience of around 6
decades in the steel industry.It has an easy access through major ports like Goa,
Chennai, Mangalore & Mumbai.
VISL is a fully integrated stainless steel plant.VISL is far away from the main
market as such it faces problems with the infrastructure.
India’s only integrated private sector producer of galvanized steel producer.VISL is
the only co. producing the special alloyed steel in India.
The main problem of VISL is it does not have any captive mines.
Before merging to SAIL, VISL had plants like, cement plant, bus building etc.
SUGGESTIONS:
It must provide good commission to the traders to increase sales.
Existing Employees have to be given training for handling their jobs in their new
plant.Training program is necessary to all the workers, to improve the quality of
production.The company must give importance to sales promotion.
Dealers meeting should be held once in 3 months to solve the problem of dealers
and to take their valuable suggestion.
It should develop customer sensitiveness, give incentives, reduce the cost.It
should also ensure that suppliers deliver at right time.Traditional method of
Bapuji Academy of Management and Research, Davangere 72
operation is decreasing the productivity of the employee. So modernization of
the machines must be taken up.
CONCLUSION
VISL produces special steels and it has gained a reputation for itself in the
industry by ensuring quality steel production matching international standards. It was
setup in Bhadravati, Karnataka in 1918 to produce pig iron. The plant has been producing
alloy and special steels since the 1960. SAIL has invested over Rs.430 crores since it
took over VISL in 1989 and installed a new 530 cu.m. Blast furnace and numerous
support facilities. Today, the plant is able to produce over 700 varieties of quality alloy
and special steels.
In VISL all major decisions is taken by the board of directors. They have full
control over the administration. They control the executive and general managers.
These board of directors are selected by SAIL. But the general manager of VISL will
have full control over the deputy managers of project , HRD, production and material
departments.
These deputy managers will have full control over their respective area and they
have a right to take minor decisions in their respective areas.
Overall VISL has done a significant achievements but from last one and half years
VISL has incurred losses due to fluctuation in steel prices.
Bapuji Academy of Management and Research, Davangere 73
BIBILOGRAPHY
VISL News – A monthly news Magazine. (26 JULY 2011), page no 2-24.
VISL Annual Performance Plan. (2 AUGUST 2011), page no 4-14 & 25-64.
Personnel manual of VISL. (14 AUGUST 2011), page no 25-34.
Insight – A VISL magazine. (16 AUGUST 2011), page no 1-18.
WEBSITES
www.sail.co.in (http://www.sail.co.in/pdf/Q2%20FY12.pdf),
www.visl.co.in (http://www.visl.co.in/aboutus.php?tag=company-
background).
Miso, Thomas J. A Nation of Steel: The Making of Modern America, 1865–1925.
Baltimore: Johns Hopkins University Press, 1995.
Sunil Mukhopadhyay. "VISL expects operating profit in 2000-01". Online Edition
of The Indian Express, dated 2000-05-03. Retrieved 2007-10-23.
"VISL on road to profit, says Sahi". Online Edition of The Deccan Herald, dated
2006-01-23. Retrieved 2007-10-23.
Bapuji Academy of Management and Research, Davangere 74