organisation structure steel plant visakhapatnam

A Report On Organisational Structure Training At Rashtriya Ispat Nigam Limited Visakhapatnam Steel Plant

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

Master Of Business Administration By

Ch. Shiva Kumar

KENGERI CAMPUS KANMINIKE, KUMBALGODU BANGALORE-560060

1

DECLARATION

I, Shiva kumar here by solemnly declare that the project report entitled a study on the Organization Structure submitted by me is a bonafide work done and it is not submitted to any other university or published anytime before. This project work is in partial fulfillment of the requirements for the award of the Master of Business Administration from Christ University, Bangalore.

Place:

VISAKHAPATNAM

(Shiva kumar) Date:

2

ACKNOWLEDGEMENT The satisfaction that accompanies the successful completion of any task would be incomplete without mentioning people who made it possible and whose encouragement and constant guidance crowned my effort with success.

I am grateful to external project guide SRI B. Uma Maheswar Rao , SENIOR MANAGER (Personnel) and I am also thankful to

SRI

O.

Ram

Mohan

Rao

Assistant

General

Manager, Coordinator of student trainees HRD & PROJECT WORKS and SRI M.L.Srinivas Varma, Assistant General Manager, Coordinator of student trainees HRD & PROJECT WORKS

in

VISHAKAPATNAM

STEEL

PLANT

for their co-

operation and in providing the opportunity to do my project in their esteemed organization .

I especially thank all those who have helped me directly or indirectly. I express my profound thanks to my affectionate parents for their constant encouragement throughout my educational career. 3

(Ch. Shiva Kumar)

Contents

1. History………………………………………..………………………..….6 2. Profile of the Products…………………………………..............…….......8 3. Mission/ Vision, objectives and strategies….……...…….……………....12 4. Organisation Structure ……………………………………………..….....15 5. Policies & Procedures………………………………………………....….17 6. Functions of various departments and their managers………………...….18 7. SWOT Analysis………………………………………………………..….21 8. Key Result Areas………………………………………………………….22 9. Significant Factors for Success…………………………………………....23 10. System of accounting followed…..………………………………………25 11.Product Promotional Measures……………………………..………….….27 12.Career planning and promotion policy of employees………………….….29 13.Training measures……………………………………………………........30 14.HRD measures…………….……………………………………………….31 15.Manpower planning……….………………………………………..……...34 16.The Appraisal Process…………………………………………….….……36 17.Financial highlights of the organization……………………………….…..37 4

18.Future plans…………………………………………………………….….44 19.Advantages and drawbacks…………………………………………….….46 20.Recommendations…………………………………………………………48 Annexure…………………….………………………………………………..51

HISTORY On 17 April 1970, the then prime minister of India, Late Mrs. Indira Gandhi announced the government's decision in the Parliament to establish a steel plant at Visakhapatnam. The activities kicked off by appointing site selection committee in June 1970 and subsequently the committee‘s report was approved for site. On 20 January 1971 she laid the foundation stone. Consultants were appointed in February 1971, and feasibility reports were submitted in 1972. The first block of land was taken over on 7 April 1974. M/s M.N. Dastur & Co was appointed as the consultant for preparing the detailed Project report in April 1975 and in October 1977 they have submitted the report for 3.4 mtpa of liquid steel. With the offer for assistance from government of erstwhile USSR, a revised project concept was evolved. Detailed Project Report for a plant capacity of 3.4 Mtpa was prepared by M/s M.N. Dastur & Co in November 1980. In February 1981 the contract was signed with USSR for preparation of working drawings for coke ovens, Blast Furnace and sinter plant. The blast furnace foundation was laid with first mass concreting in the project in January 1982. The construction of township also started. A new company Rashtriya Ispat Nigam Limited (RINL) was formed on 18 February 1982. Visakhapatnam Steel Plant was separated from SAIL and RINL was made the corporate entity of Visakhapatnam Steel Plant in April 1982. Vizag Steel Plant is the only Indian shore-based steel plant, and it has massive land, up to 19,000 acres (7,700 ha), and is poised to become up to 20 MT in a single campus and turnover in 20112012 was 14,457Crores. On 20th May, 2009 Honorable Prime Minister Manmohan Singh launched the expansion project of Visakhapatnam Steel Plant from a capacity of 3.6MT to 6.3MT at a cost of Rs. 8,692 Crores. But the investment was revised to 14,489 crores with following classification: 

Expenditure for the financial year 2009-10 Rs 1840 Crore



Rs 5883 Crores since inception of the Project

5





Total Commitment, including enabling works, steel procurement, Consultancy, Spares, etc is Rs 11591 Crores as on 25.03.10. The expansion project is expected to become functional by 2012.

.

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AWARDS: 1.

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

2.

Indira Priya Darshini Vriksha Mitra award 1992-93, Nehru memorial national award for pollution control 1992-93 & 1993-94.

3.

EEPC export excellence award – 1994-95.

4.

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

5.

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

6.

Steel ministries trophy “Best safety performance – 1996.”

7.

IIM national quality commitment award – 1997.

8.

Gold star award for excellent performance in productivity.

9.

Udyog excellence gold medal for excellence in steel plant.

10. Excellence award for out standing performance in productivity management, quality and innovation. 11. ISPAT Suraksha Puraskar (1st prize) for largest accident free period 1991-94. 12. PM Trophy for the year 2002-03 as the Best Integrated Steel Plant 13. World quality commitment international star award in 2004 14. Cll-GBC National Award in 2005 15. Safety innovation award in 2006 16. Organizational excellence award in 2006 17. National Energy Conservation Award in 2006 18. Enterprise Excellence Award – 2007 19. Viswakarma Rashtriya Puraskar – 2007 20. Best Quality Circles implementing Organization Award -2007

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Profile of the products Wire Rods: Wire rods are manufactured in special steel grades using stelmor cooling process from fully killed steel which ensures uniform grain size and proper coil shape. It’s diameter ranges from 5.5mm to 14mm. these are used for various applications like cold heading, cable armouring , concrete wires,etc.

TMT Re-Bars: The reinforcement bars in either straightened form or coil form are produced from fully killed steel and have low carbon content. These have ultimate tensile strength and higher percentage of elongation when compared to cold twisted bars of same grade. These are ideally suited for any type of concrete structure. These vary from a size of 8mm and weight of 0.363kgs/m to 36mm and weight of 7.750kgs/m.

Plain rounds: Rounds are produced from fully killed steel. Bundling and automatic tying/strapping of rounds ensures minimum damage during handling and transport and has close dimensional tolerance. These vary from a size of 16mm and weight of 1.58kgs/m to a size of 80mm and a weight of 39.47kgs/m.

Structurals: Structurals are rolled from fully killed steel. It has sectional properties and tolerance as per angles, channels and beams. Piling and automatic tying of structurals ensures minimum damage during handling and transport. The size of angles varies from 50x50x5/6mm and a weight of 4.5kgs/m to 110x110x8/10mm and a weight of 4.82kgs/m. The size of channels varies from 40x32x5mm with a weight of 4.82kgs/m to 150x76x6.5mm with a weight of 16.80kgs/m.

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The dimensions of IPE beams are 180x91x5.3mm with a weight of 18.80kgs/m. The dimensions of HE beams are 120x114x5mm with a weight of 19.90kgs/m.

Special steels: The other products like flats, blooms and billets are also manufactured by steel plant of vizag. Their specifications are as follows: Flats: 150x10mm to 150x12mm. Blooms: 245x245mm to 315x245mm. Billets: 125x125mm to 65x65mm.

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Major sources of Raw Materials:

Iron Ore lumps & fines

Bailadilla, M.P

BF Lime Stone

Jaggayyapeta, A.P

SMS Lime Stone

UAE

BF Dolomite

Dubai

SMS Dolomite

Madharam, A.P

Manganese Ore

Chipuripalli, A.P

Boiler Coal

Talcher, Orissa

Coking Coal

Australia

Water supply

Yeluru canal, Andhra Pradesh

Power supply

Captive power plant

Medium cooking coal

Gidi/Swang/Rajarappa/Kargil

Major Units: 10

DEPARTMENTS

COKE OVERNS

ANNUAL CAP.

UNITS (3.0 MT STAGE)

(‘000T) 2,261

SINTER PLANT

5,256

BLAST FURNACE

3,400

3 Batteries each of 67 ovens & 7 Mts Height 2 Sinter machines of 312 Sqm grate area each 2 Furnaces of 3200 cu m volume each 3 LD Converters each of 150

STEEL MELT SHOP

3,000

Cum. Volume and size 4 strand bloom casters

LMMM

710

4 Stand finishing Mill

WRM

850

2 x 10 Stand finishing Mill

850

6 Stand finishing Mill

MMSM

Mission, objectives and strategies of the organization 11

Mission: •

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

•

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

•

To meet the growing aspirations of the stakeholders.

Objectives: •

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

•

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

•

Be amongst top five lowest cost steel producers in the world.

•

Achieve higher levels of customer satisfaction.

•

Be proactive in conserving environment, maintaining high levels of safety and addressing social concerns.

Strategies: •

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

•

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

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Employee involvement & Process improvements: The imagination and creativity of employees have always been key success factors for the company. Employees of RINL have always been at the forefront in contributing ideas for process improvements. Voluntary involvement of employees in 4251 quality circles projects is a testimony of the interest exhibited by employees in process improvements.

Safety & Health: Safety and health of employees has always been the prime concern in the plant and all efforts have been made to leverage upon the safety initiatives to maximize employee morale and satisfaction. These initiatives have yielded positive results with a 13.33% reduction in reportable accidents when compared to year 2007-08.

Corporate Social Responsibility: RINL continues to contribute in the area of Corporate Social Responsibility (CSR). CSR activities in RINL focus mainly on Environmental care, education, community health care, people care, peripheral development, cultural efflorescence, activities as a responsible corporate citizen and help during 13

natural calamities.

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VISION: To be a continuously growing world-class company. We shall:  Harness our growth potential and sustain profitable growth.  Deliver high quality and cost competitive products and be the first choice of customers.  Create an inspiring work environment to unleash the creative energy of people.  Achieve excellence in enterprise management.  Be a respected corporate citizen, ensure clean and green environment and develop vibrant communities around.

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Organisation Structure

CHAIRMAN CUM MANAGING DIRECTOR

Director (Finance)

Director (Commercial) ED (MM)

ED (Finance

Company

Secretary AGM (Int.

Addl. GM (Mktg) Addl. GM (Mktg) - Services & Exports

Director

Director

Director

(Operations GM ED (Works) (Maint.)

(Personnel) DGM (M&HS) I/C GM (P&A)

(Vigilance

(Vig.)

Addl. GM

Addl. GM

(QATD)

(P&IR) DGM (Trg)

Addl. GM

DGM (HRD)

(Audio & Telco)

DGM (Legal

Addl. GM (Services)

Affairs)

Addl. GM (Steel) Addl. GM (C, S & C)

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Addl. GM

GM (Maint.)

Addl. GM (CR&RM) DGM (System) GM (D&E)& I/C PECS

ACM (Cordon)

BRIEF IDEA ABOUT STEEL MAKING PROCESS

The modern era in steel making began with the introduction of Henry Bessemer's & Bessemer process in the late 1850’s. This enabled steel to be produced in large quantities cheaply, so that Mild Steel is now used for most purposes for which wrought iron was formerly used. This was only the first of a number of methods of steel production. The Gilchrist-Thomas process (or basic Bessemer process) was an improvement to the Bessemer process, lining the converter with a basic material to remove phosphorus. Another was the Siemens-Martin process of open hearth steelmaking which like the Gilchrist-Thomas process complemented, rather than replaced, the original Bessemer process. These were rendered obsolete by the Linz-Donawitz process of basic oxygen steel making, developed in the 1950’s, and other oxygen steelmaking processes. One third of world's steel is currently produced in China. Arcelor-Mittal is however the production. White-hot steel pouring out of an electric arc furnace. Blast furnaces have been used for two millennia to produce pig iron, a crucial step in the steel production process, from iron ore by combining fuel, charcoal, and air. Modern methods use coke instead of charcoal, which has proven to be a great deal more efficient and is crediting with contributing to the British Industrial Revolution. Once the iron is refined, converters are used to create steel from the iron. During the late 19th and early 20th century there were many widely used methods such as the Bessemer

process

and

the

Siemens-Martin

process.

However,

basic

oxygen

steelmaking, in which pure oxygen is fed to the furnace to limit impurities, has generally replaced these older systems. Electric arc furnaces are a common method of reprocessing scrap metal to create new steel. They can also be used for converting pig iron to steel, but they use a great deal of electricity (about 440 kWh per metric ton), and are thus generally only economical when there is a plentiful supply of cheap electricity.

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Policies and Procedure followed Policies: Quality, Environment and Occupational Health & Safety Policy: •

Supply quality goods and services to customers delight.

•

Document, implement, maintain & periodically review the management systems including the policy, objectives and targets.

•

Use resources efficiently and reduce waste and prevent pollution.

•

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

•

Encourage development and involvement of employees.

Energy policy: •

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

•

Adopt appropriate energy conservation technologies.

•

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

HR Policy: •

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

•

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

•

Encourage teamwork, creativity, innovativeness and high achievement orientation.

•

Ensure functioning of effective communication channels with employees. 18

IT Policy: •

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

•

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

•

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

Functions of various departments and their Managers Every organisation is made up of different department. Each department contributes to the running of the business. The most common departments are:

•

Production Marketing & Sales

•

Finance

•

Human resource

•

Production Department The production department is responsible for converting inputs into outputs through the stages of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished goods effectively. He or she must make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. There are five production sub-functions •

Production and planning They will set the standards and targets at each stage of the production process. The quantity and quality of products coming off a production line will be closely monitored.

•

Purchasing department This department will provide the materials, components and equipment required. An essential part of this responsibility is to ensure that stocks arrive on time and are of good quality 19

The stores department

•

The stores department are responsible for stocking all the necessary tools, raw materials and equipment required to service the manufacturing process. The design and technical support department

•

They are responsible for the design and testing of new product processes and product types, together with the development of prototypes through to the final product. The works department

•

This department is concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control and inspection.

Human resource Department The role of Human resource department is in charge of recruiting, training, and the dismissal of employees in an organisation. Recruitment and selection Training programmes

• •

Training programs are held by the HRD to improve the employees skills, as well as to motivate them. There are three main types of training are 1. Induction training

•

2.

On-the- job training

3.

Off-the-job training Manpower Planning

The HR department needs to think ahead and establish the number and skills of the workforce 20

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

Dismissal and Redundancy (retrenchment) Dismissal is where a worker is told to leave their job due to unsatisfactory work or behaviour. Redundancy is when the business needs to reduce the number of employees either because it is closing down a branch or needs to reduce costs due to falling profits. It may also be due to technological improvements, and the workers are no longer needed.

Marketing department These are the main section of the market departments: • • • •

Sales department is responsible for the sales and distribution of the products to the different regions. Research & Department is responsible for market research and testing new products to make sure that they are suitable to be sold. Promotion department decides on the type of promotion method for the products, arranges advertisements and the advertising media used. Distribution department transports the products to the market.

Finance Department •

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

•

Preparing Final Accounts Profit and loss account and Balance Sheets

•

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

•

Management of wages The wages section of the finance department will be responsible for calculating the wages and 21

salaries of employees and organising the collection of income tax and national insurance for the Inland Revenue. Raising Finance

•

The finance department will also be responsible for the technical details of how a business raises finance e.g. through loans, and the repayment of interest on that finance. In addition it will supervise the payment of dividends to shareholders.

SWOT Analysis of the organization Strengths and weaknesses: Strength • Availability of funds for investment and redemption of preference equity.

Weaknesses • Lack of in house or captive raw materials mines.

•

Availability of land and infrastructural facilities for expansions up to 16Mt.

•

High expenses due to purchase of raw materials.

•

Superior basic steel making technology.

•

•

Strong committed workforce.

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

Opportunities and Threats: Opportunities • High to moderate rates of economic growth. •

Projected and strong demand forecast for steel.

Threats • Shift of value chain towards raw materialsrising input costs. •

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Expansion plans of existing competitors.

•

Entry of international players.

•

Dependency on single supplier for sourcing iron ore.

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

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

•

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

•

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

Key Result Areas of the organization “Key Result Areas” or KRAs refer to general areas of outputs or outcomes for which the department’s role is responsible. Importance of KRAs. • Set goals and objectives • Prioritize their activities, and therefore improve their time/work management • Make value-added decisions • Clarify roles of department or individual • Focus on results rather than activities • Align their roles to the organization’s business or strategic plan • Communicate their role’s purposes to others

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

Human resource: • • • • • • •

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

Marketing: • •

Product promotion Sales

•

Customer care

Finance: • •

Audit P & L statement

•

Balance Sheets

•

Financial analysis

Production: • Manufacturing, quality control and purchase of raw materials.

Significant factors for success Implementing change in an organization is a lengthy and often difficult process. It requires collaboration between departments within the organization and persistence to drive the change initiative forward. This document outlines a number of factors that, taken together, impact the dynamics of change and ultimately help determine whether change efforts are sustained over time. These change initiatives within organizations are commonly referred to as organization 24

development. OD is an effort that is a) planning b) organization wide, and c) managed from the top d) increase organization effectiveness and health e)planned interventions in the organization’s “processes. In a sense, organisation success is never ending because it is a process of constant striving to become a more healthy, productive and viable organization. In order for change to take hold, however, Organisation success must include clear, measurable goals along the road of development.

Characteristics for success: There is pressure from the environment, internal or external, for change.  Some strategic person or people are “hurting.”  Some strategic people are willing to do a real diagnosis of the problem.  There is leadership (consultant, key staff man, new line executive).  There is collaborative problem identification between line and staff people.  There is some willingness to take risks in trying new forms or relationships.

 There is a realistic, long-term time perspective.  There is a willingness to face the data of the situation and to work with it on changing the situation.  The system rewards people for the effort of changing and improvement, in addition to rewarding them for short-term results.  There are tangible intermediate results.

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System of accounting followed Significant accounting policies: General: Financial Statements are prepared under the historical cost convention in accordance with fundamental accounting assumptions and Generally Accepted Accounting Principles(GAAP) in India. Fixed assets: • Fixed assets are stated at historical cost less depreciation. 26

• Contributions made by the company towards the cost of fixed assets owned by the • State / Central Government are grouped together with similar assets owned by the company with appropriate disclosure thereof. • Expenditure attributable / relating to construction, to the extent not directly identifiable to any specific Plant Unit, is kept under ‘Expenditure During Construction’ for allocation to Fixed Assets and is grouped under ‘Capital Work-in- Progress’. Investments:

• Current investments are carried at lower of cost and fair value. • Long term investments are carried at cost. Diminution in value, other than temporary, is provided for. Inventories:

• • • •

Inventories are valued at lower of cost and net realizable value. The basis of determining cost is: Finished / Semi-finished goods - Weighted Average cost

Raw material, Stores & Spares, Loose Tools - Monthly weighted average cost and those in transit at cost. • Obsolete / Surplus / Non-moving inventory are adequately provided for.

Revenue Recognition:

• Sales are recognized when all significant risks and rewards of ownership have been to the buyer. • Export incentives under various schemes are recognized as Income on certainty of realisation.

•

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

FOREIGN CURRENCY TRANSACTIONS

• • •

Foreign currency monetary items are recorded at the closing rate. Exchange differences arising on account of settlement / conversion of foreign currency monetary items are recognised as expense or income in the period in which they arise. EMPLOYEE BENEFITS 27

•

Actuarial gains and losses on defined benefit plans are recognized during the year. DEPRECIATION AND AMORTISATION

•

Depreciation is provided on straight line method (SLM), up to full value of the cost of asset over the specified period derived in accordance with the provisions of Schedule

• • •

XIV of the Companies Act, 1956, except the following:

• • • • •

Assets costing up to Rs.5000/- are fully depreciated in the year of capitalisation. Depreciation on the following categories of assets is provided up to full value of the cost of asset on SLM over the period of their useful life based on the Management’s estimate given in brackets. Photo Copiers & Fax Machines, Telecom Equipment (5 years); Cranes, Slag Pot Carriers, Audio & Visual Equipment (10 years); Other Office Equipment, Earth Moving Equipment, Forklift Trucks, Air Conditioners, Refrigerators, Water Coolers, Air Coolers, Freezers (7 years); Cars (6 years); Safety Equipment, Other light vehicles (8 years); Computers [including system Software] (4 years); Coke Ovens & Coal Chemical Plant (15 years). Contributions made by the company towards the cost of fixed assets owned by the State / Central Government are depreciated over the estimated period of their utility or five years, whichever is less. Mining lease rights are amortised over the period of lease. BORROWING COSTS

•

Borrowing costs incurred for obtaining assets which take more than 12 months to get ready for its intended use are capitalised to the respective assets wherever the costs are directly attributable to such assets and in other cases by applying weighted average cost of borrowings to the expenditure on such assets.

•

Other borrowing costs are treated as expense for the year.

•

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

Product promotional measures Intent RINL, a leading Central Public Sector Enterprise, under the administrative control of Ministry of Steel, GOI, manufactures Iron and Steel produces in long product category, intends to appoint a consultant for assessing market environment and formulation of comprehensive marketing policy, appropriate to RINL/VSP, taking into account RINL’s growth potential and also requirement of exports. 28

Objective The consultant to suggest various policy initiatives, covering the following activities/strategies, at the current level of 3.0 Mt stage, 6.3 Mt, 7.3 Mt and 11 Mt stages of expansion to carry out Marketing function effectively. _ Type of products to be manufactured in various stages of expansion _ Market segmentation _ Product mix in various stages of expansion and optimum product mix _ Increasing share of high end value added steels _ Development of market segments _ Optimisation of market-mix _ Product placement and distribution _ Exports as a strategy _ Product pricing _ Modes of sales _ Optimisation of NSRs _ Credit sales _ Brand building and product promotion activities _ Optimisation of transport-mix i.e. rail, road, container and coastal _ Marketing network _ Organisation structure and competence building _ Empowerment _ Future initiatives Existing Marketing Network Currently, RINL/VSP has a network of 5 regional offices, 23 branch sales offices and 22 stockyards spread across the country. In addition to these outlets, RINL/VSP has appointed Consignment Sales Agents (CSAs) at strategic locations, where RINL does not have a branch sales 29

office. Currently, RINL/VSP has appointed 8 CSAs. These are Vizag, Kadapa, Damtal, Jamshedpur, Guwahati, Agartala, Jabalpur and Bhopal. RINL/VSP has appointed about 150 Retailers. These Retailers purchase and sell RINl’s products. District Level Dealers (DLDs) and Rural Dealers are also registered by RINL/VSP to take care of demand in semi-urban and rural areas. Currently, RINL/VSP has 78 DLDs and 177 Rural dealers. In due course, to take care of expansion requirements, the Distribution Network is proposed to be enhanced.

Present pattern of sales _ Sales categorization Actual users, project customers, small scale industry corporations, retailers, district level dealers and rural dealers : Product-wise percentages are specified for each category. _ Mode of sales MOUs with actual users, project customers, retailers, sales to small scale industry corporations i.e. NSIC/SSIs as per the allocation of GOI, eauctions and spot sales. _ Pricing

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

Career planning and promotion policy of employees The vizag steel plant is a huge platform to provide various career opportunities to fresh talentd people. It requires high qualifications from candidates who wish to make a career for themselves in the executive staff. However, for the post of a non-executive staff a minimum of matriculation or ITI or a diploma in engineering from any recognized college is required. For candidates acquiring 30

educational qualification of a lower level there is scope in the plant as workers. The career planning process at steel plant is however an impressive one as the employees can choose to uplift their career by possessing additional qualification with the help of the organization and qualifying in the internal entrance exams conducted every 7years. It is a platform for developing skill and knowledge where merit is recognized and rewarded. There are various policies for the support and growth of the employees

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

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

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

• Performance based benefit scheme for all the employees.

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

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

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

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

• In-plant training for management students.

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

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

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

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

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HRD measures

HRD POLICY focu s

Identifying competence needs Providing training inputs Monitoring training effectiveness Creating learning environment Facilitating Self Development, innovativeness & self expression

Enabling 33 employees to assume higher responsibility

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

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

• Statutory welfare measures like canteen facilities, baby crèche, first aid facilities, water coolers, leave, maternity leave, gratuity and workmen’s compensation.

34

• Non- Statutory welfare measures like facilities for education, scholarships, medical facilities, housing facilities, work dress, vehicle advances to employees, house building advances and various other motivational schemes.

HRD PHILOSOPHY IN VISAKHAPATNAM STEEL PLANT

 Employees of the organization are greatest and most valuable resources.  Whole on the one hand, HRD should appropriately harness the employee potential for the attainment of the company objectives, the company on the other, as its corporate responsibility, should create an enabling climate where in human talent gets the best opportunity for self expression, all round development and fulfillment.  People are more than mere resources and therefore it will be the company’s sincere endeavor to treat people with all the respect and that is warranted when employees are seen as more mere instrumentalities.

35

 HRD as a management function will be given a place of strategic priority, along with function like production, maintenance, materials on finance in the overall scheme of management action in the company.  HRD does not refer to training alone, nor it is just a new name for training. In RINL/VSP

HRD

refers

to

creative

and

innovative

initiatives

in

several

management functions for the development and growth of employees  HRD should eventually be a core philosophy of all management actions and should not remain merely a departmental / sectional activity.  All functional and divisional heads responsible for various activities of the company will imbibe the HRD spirit and suitability integrate HRD into their plans, decisions and actions

Manpower Planning

MANPOWER PROFILE – GROWTH PATTERNS

YEAR

EXECUTIVES

NON-EXECUTIVES

31-3-1997

2617

14570

31-3-1998

2617

14572

31-3-1999

2617

14087

31-3-2000

2683

13593

36

31-3-2001

4027

13104

31-3-2002

4203

12823

31-3-2003

4308

12586

31-3-2004

4533

12222

31-3-2005

4512

12101

31-3-2006

4629

11932

31-3-2007

4674

11727

31-3-2008

4967

11449

31-3-2009

5218

12007

31-3-2010

5263

12567

Error: Reference source not foundQualification Profile :

 Engineering -14.34%  Diploma

-10.33%

 Grad/PG

-11.65%

 Literates

-24.33%

 ITI

-39.35%

Engineering Diploma Graduation/PG ITI Literates

According to the latest statistics of 2011

Executives Non executives

Works

Projects

Mines

Others

Total

3262

344

109

1492

5207

11358

51

257

956

12622

37

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

DIVISION-WISE MAN POWER:

 Works

-82.03%

 Projects

-2.10%

 Mines

-2.14%

 Others

-13.72%

Works Projects Mines Others

Performance Appraisal System

38

The appraisal process happens at the end of every year where the performance of the employees is evaluated on the basis of the MBO’s given to them. The grading is done on the scale of 1-5. People who get 1 are rewarded where as people with a score of 4 are given a warning. But people who score 5 are asked to leave the organization.

Financial highlights of the organization

Financial Ratio Analysis The traditional financial statements comprising the balance sheet and the profit and loss account are proving the information related to the financial operation of the firm. They provide some extremely useful information that mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owner’s equity and so on. The profit and loss account shows the results of operations during a certain period of time in terms of the revenues obtained and the cost incurred during the year. Therefore, much can be learnt about a firm from a careful examination of its financial statements. Users of financial statements can get further insight about financial strengths and weaknesses of the firm if they properly analyze information reported in these statements. Management should be particularly interested in knowing financial weakness of the firm to take suitable corrective actions. The future plans of the firm should be laid down in view of the firm’s 39

financial strengths and weaknesses. Thus, financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future.

BALANCE SHEET AS AT 31st March 2009 As at 31st March, 2009

Rs Crs As at 31st March, 2008

1 2

7 827.32 4 592.59

7 827.32 3 653.72

3 4

907.72 100.04

332.78 107.95

124.49

163.12

13 552.16

12 084.89

Schedule No. SOURCES OF FUNDS SHAREHOLDERS' FUNDS Reserves and Surplus LOAN FUNDS Secured loans Unsecured loans Deferred Tax Liability ( Net ) Total APPLICATION OF FUNDS FIXED ASSETS Gross block Less: Depreciation Net block Held for disposal Capital work-in-progress

5

6 7

8 900.83 7 516.19 1 384.64 0.04 2 087.19

9 005.99 7 749.74 1 256.25 0.05 4 617.81 5 874.11 0.05

9

3 471.87 0.05

INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES Inventories Sundry debtors Cash & Bank balances Other Current assets Loans & Advances

10 11 12 13 14

3 215.28 191.27 6 624.17 258.91 1 569.69 11 859.32

1 761.15 93.41 7 699.11 292.43 1 958.49 11 804.59

LESS: CURRENT LIABILITIES & PROVISIONS Liabilities Provisions

15 16

2 560.79 1 620.53 4 181.32

1 610.15 1 581.47 3 191.62

40

Net Current assets Total Accounting Policies & Notes to Accounts Schedules 1 to 29 annexed form part of the Accounts

7 678.00 13 552.16 29

For and on behalf of Board of Directors

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

8 612.97 12 084.89

As per our report of even date For RAO & KUMAR Chartered Accountants

(K.S. Shankar) Director (Finance) (CA Anirban Pal) Partner M.No: 214919

(P Mohan Rao) Company Secretary

Place : Date :

New Delhi 04 July 2009

41

Rashtriya Ispat Nigam Limited Annual Accounts 200809

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31st March 2009 Schedule No. INCOME Gross Sales Less: Excise duty recovered on sales Net Sales Internal consumption Interest earned Other revenue Total

18

19 20

EXPENDITURE Raw materials consumed Depletion / (Accretion) to Stock of Semi-finished/Finished goods Employees' remuneration & benefits Stores & spares consumed Power & fuel Repairs & maintenance Freight outward Other expenses & provisions Interest Depreciation Wealth tax

21 22 23 24 25 26 27

Less: Inter account adjustments-raw material mining cost Net expenditure Profit for the year Prior period adjustments- Net credit Profit Before Tax Provision for Taxation Current Tax Fringe Benefit Tax Earlier years adjustments Deferred Tax Profit After Tax Balance of Profit brought forward from previous year Amount available for appropriation

28

APPROPRIATIONS Proposed Dividend Tax on Proposed Dividend Reserve for Redeeming Preference Share Capital Balance carried to Balance Sheet Total appropriations Basic and Diluted Earnings Per Share (in Rupees)(Face Value Rs. 1000 per share) 29

42

For the year ended 31st March, 2009

Rs Crs For the year ended 31st March, 2008 10 433.07 1 344.70

10 410.63 1 282.25 9 128.38 114.10 787.21 75.02 10104.71

9 088.37 88.46 724.64 91.27 9 992.74

5 896.25 (916.65) 1 156.68 501.23 340.31 149.81 286.53 377.12 88.14 240.46 0.89 8 120.77 38.06 8 082.71 2 022.00 4.59 2 026.59

4 280.22 (343.17) 1 030.72 364.06 258.81 125.79 306.96 509.93 31.57 471.55 0.48 7 036.92 39.15 6 997.77 2 994.97 0.39 2 995.36

746.38 4.66 (21.39) (38.63) 1 335.57 3 652.55 4 988.12

1 188.13 4.43 (11.77) (128.17) 1 942.74 1 709.81 3 652.55

339.18 57.64 2937.47 1653.83 4988.12 273.13

0.00 0.00 0.00 3652.55 3652.55 397.30

BALANCE SHEET AS AT 31st MARCH 2010 Schedule No.

As at 31st March, 2010

Rs Crs As at 31st March, 2009

SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserves and Surplus

1 2

7 827.32 5 057.68

7 827.32 4 592.59

LOAN FUNDS Secured loans Unsecured loans

3 4

407.28 825.27

907.72 100.04

Deferred Tax Liability ( Net ) Total APPLICATION OF FUNDS FIXED ASSETS Gross block Less: Depreciation Net block Held for disposal Capital work-in-progress

5

6 7

97.82

124.49

14 215.37

13 552.16

9 473.90 8 008.55 1 465.35 0.05 7 506.90

8 971.80 7 749.74 1 222.06 0.05 4 652.00 8 972.30 0.25

9

5 874.11 0.05


10 11 12 13 14

2 451.52 181.18 5 415.54 137.40 1 365.02 9 550.66

3 215.28 191.27 6 624.17 258.91 1 569.69 11 859.32


15 16

2 871.95 1 435.89 4 307.84

2 560.79 1 620.53 4 181.32

Net Current assets Total Significant Accounting Policies & Notes to Accounts Schedules 1 to 28 annexed form part of the Accounts

As per our report of even date For B.V. RAO & CO Chartered Accountants Regn. No (F.R.N) 003118S (P. Madhusudan) Director (Finance) (CA A.R. UNNI) Partner M.No: 07447


Place : Date :

7 678.00 13 552.16

28



5 242.82 14 215.37

Visakhapatnam Th

24 June 2010

43

Rashtriya Ispat Nigam Limited Annual Accounts 2009-10 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31st March 2010 Schedule No. INCOME Gross Sales Less: Excise duty recovered on sales Net Sales Internal consumption Interest earned Other revenue Total

17

18 19

EXPENDITURE Raw materials consumed Depletion / (Accretion) to Stock of Semi-finished/Finished goods Employees' remuneration & benefits Stores & spares consumed Power & fuel Repairs & maintenance Freight outward Other expenses & provisions Interest & Finance Charges Depreciation Wealth tax

20 21 22 23 24 25 26


27

APPROPRIATIONS Interim Dividend Proposed Dividend (Final) Tax on Interim Dividend Tax on Proposed Dividend (Final) Reserve for Redeeming Preference Share Capital Balance carried to Balance Sheet Total appropriations Basic and Diluted Earnings Per Share (in Rupees)(Face Value Rs. 1000 per share)

44

For the year ended 31st March, 2010 10 634.63 825.48

Rs Crs For the year ended 31st March, 2009 10 410.63 1 282.25

9 809.15 121.07 534.71 101.75 10566.68

9 128.38 114.10 787.21 22.36 10052.05

5 535.11 415.35 1 399.74 466.48 408.27 142.13 312.65 334.63 77.55 277.17 0.45 9 369.53 43.26 9 326.27 1 240.41 7.24 1 247.65

5 896.25 (916.65) 1 157.35 501.23 340.31 149.81 286.53 324.46 87.47 240.46 0.89 8 068.11 38.06 8 030.05 2 022.00 4.59 2 026.59

463.08 (0.05) 14.62 (26.67) 796.67 1 653.83 2 450.50

746.38 4.66 (21.39) (38.63) 1 335.57 3 652.55 4 988.12

100.01 185.28 16.61 30.77 0.00 2117.83 2450.50 113.89

0.00 339.18 0.00 57.64 2937.47 1653.83 4988.12 223.93

BALANCE SHEET AS AT 31st MARCH 2011 Schedule No.

As at 31st March, 2011

` Crs As at 31st March, 2010

SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserves and Surplus

1 2

7 827.32 5 401.90

7 827.32 5 057.68

LOAN FUNDS Secured loans Unsecured loans

3 4

274.89 861.87

387.32 845.23

Deferred Tax Liability ( Net ) Total APPLICATION OF FUNDS FIXED ASSETS Gross block Less: Depreciation Net block Held for disposal Capital work-in-progress

5

6 7

79.97

97.82

14 445.95

14 215.37

9 794.60 8 264.71 1 529.89 0.03 9 536.71

9 473.90 8 008.55 1 465.35 0.05 7 506.90 11 066.63 361.60

9

8 972.30 0.25


10 11 12 13 14

3 254.71 330.61 1 998.89 75.96 1 965.04 7 625.21

2 451.52 181.18 5 415.54 137.40 1 365.02 9 550.66


15 16

3 271.43 1 336.06 4 607.49

2 871.95 1 435.89 4 307.84

Net Current assets Total Significant Accounting Policies & Notes to Accounts Schedules 1 to 28 annexed form part of the Accounts

3 017.72 14 445.95 28



5 242.82 14 215.37

As per our report of even date For B.V. RAO & CO Chartered Accountants Regn. No (F.R.N) 003118S (P. Madhusudan) Director (Finance) (CA B.V. Rao) Partner M.No: 019138


Place : Date :

Visakhapatnam 13 June 2011

45

Rashtriya Ispat Nigam Limited Annual Accounts 2010-11 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st March 2011 Schedule No. INCOME Gross Sales Less: Excise duty recovered on sales Net Sales Internal consumption Interest earned Other revenue Total

17

18 19

EXPENDITURE Raw materials consumed Depletion / (Accretion) to Stock of Semi-finished/Finished goods Employees' remuneration & benefits Stores & spares consumed Power & fuel Repairs & maintenance Freight outward Other expenses & provisions Interest & Finance Charges Depreciation Wealth tax

20 21 22 23 24 25 26


27

APPROPRIATIONS Interim Dividend Proposed Dividend (Final) Tax on Interim Dividend Tax on Proposed Dividend (Final) Balance carried to Balance Sheet Total appropriations Basic and Diluted Earnings Per Share (in Rupees)(Face Value ` 1000 per share)

46

For the year ended 31st March, 2011 11 516.99 1 045.81

` Crs For the year ended 31st March, 2010 10 634.63 825.48

10 471.18 87.70 347.54 90.32 10 996.74

9 809.15 121.07 534.71 81.03 10 545.96

7 188.36 (532.32) 1 272.95 471.22 425.03 145.18 300.72 397.02 164.55 265.94 0.49 10 099.14 49.10 10 050.04 946.70 34.96 981.66

5 535.11 415.35 1 399.74 466.48 408.27 142.13 312.65 313.91 77.55 277.17 0.45 9 348.81 43.26 9 305.55 1 240.41 7.24 1 247.65

369.10 0.00 (28.08) (17.85) 658.49 2 117.83 2 776.32

463.08 (0.05) 14.62 (26.67) 796.67 1 653.83 2 450.50

0.00 271.47 0.00 44.04 2460.81 2776.32 85.79

100.01 185.28 16.61 30.77 2117.83 2450.50 113.89

Future plans for growth of the organisation

In line with the vision in National Steel Policy envisaging 110 MT steel by 2019-20, Vizag Steel is also planning to expand it’s capacity. Considering the buoyancy in domestic steel market for long products, which is the product mix of VSP and the high acceptance of VSP’s brand image in the market, an expansion plan has been proposed. The expansion plan of doubling the capacity of the plant has been cleared in a record time of 10 months and the entire Vizag Steel collective is totally geared up for completing the expansion in the stipulated 36 months. The consultant is in place and the funds are in hand. The expansion should give a strong footing for VSP’s growth. The expansion programme is progressing well as per plans and the present focus is on creating an enabling infrastructure such as roads, water, power etc., for smooth execution. Also thrust is on finalization of the specifications and placement of orders. To leverage from our brand leadership in the long segment category, expansion has been cast to enhance volumes in the long product category. A seamless tube mill is also been envisaged to reduce the dependence on imports in view of the huge requirement by the oil and gas sector. The envisaged expansion of the Plant’s capacity by 2008-09 is as below: 1. Hot Metal - 6.50 Mtpa 2. Liquid Steel - 6.30 Mtpa 3. Saleable Steel - 5.72 Mtpa

The following major facilities are proposed to be added under expansion stage. 1. Blast Furnace - 3800 M3- 1 No. 2. Sinter Plant a. Sinter Machine No.3 – 400 M2- 1 No. 3. Steel Melt Shop No.2: a. LD Converters 150 M3Cap - 2 Nos. b. 6 Strand Billet Casters - 2 Nos. c. 6 Strand Round Caster - 1 No. d. Secondary Steel Making Facilities

4. Rolling Mills :

47

a. Wire Rod Mill No.2 - 600,000 TPY b. Special Bar Mill - 750,000 TPY c. Structural Mill - 700,000 TPY d. Seamless Tube Plant - 300,000 TPY VSP will enhance the volume of production in long products segment in view of Brand image. In order to diversify the product mix and help reduce the dependence on import of pipes in oil and gas sector, a seamless pipe mill is envisaged. 1. Wire Rod (Plain) - 5.5 mm to 20 mm in coils 2. Special Bars (Plain) - 16 mm to 40 mm – in coils and straight lengths 3. Structurals 4. Seamless pipes - 139 mm to 365 mm 5. Semis - Blooms , Billets The Project is estimated to cost Rs.8,259 Crores (Base IV Qr.2004).

48

Advantages and drawbacks of the organization Advantages: Tall organisation structure helps in easy flow of command. Authority and responsibility can be delegated easily as it is a simple structure. Chances of romours is less as the organisational structure is staight.

Disadvantages: Flow of command is time consuming which can lead to delay in decision making. Authority to take the decision is at a very high level.

49

Summary of the organization Visakhapatnam Steel Plant was founded on 20 th Jan ’71 but became fully operational on 1st Aug ’92. VSP is the first shore based integrated steel plant with new technology, large scale computerization and automation. The organizational manpower has been rationalized to operate it at international levels of efficiency and to attain international labor productivity.

The production, commercial and financial performance has been improving with the passage of years. The financial analysis of VSP by the use of various techniques i.e. Ratio, Cash flow analysis shows that:

1)

The liquidity position of the company is excellent.

2)

The company is zero debt/low debit company.

3)

The net worth of VSP is satisfactory

4)

It is noted that the inventory level is increasing.

5)

The profitability ratio is in decline state

6)

Liquidity position of VSP is very good.

7)

The

company

has

accumulated

funds

which

are

expanding business operations and expansion works. 50

available

for

8)

Security to share holders is evisaged

Recommendations to overcome the drawbacks

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

PRODUCTION 1)

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

2)

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

3)

Using the natural gas reserves of KG basin, Hot metal production capacity can be enhanced with the present BF facility with negligible investment.

FINANCE 1)

Improving financial leverage ratio for better returns.

PERSONNEL:

51

1)

Rationalization of existing man-power with effective training for future expansion of the plant.

2)

Improving efficiency through better HRD programs.

3)

Providing better motivation.

4)

Striving towards becoming the most chosen employer.

MARKETING

1)

Continuously monitoring the indigenous sale, export sale ratio to capture the best of markets.

2)

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

3)

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

4)

Improving

realization

by identifying

value

added

products

and

providing feedback to production department. 5)

Value added products (high value items) are to be produced instead of selling semi-finished products in order to increase profit margin.

52

53

organisation structure steel plant visakhapatnam

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