Project Report in JSW

Project Report On Analysis of Conversion Cost in Colour Coating Line At JSW Steel Limited (May-June’2009)

Under the guidance of Mr. Manoj Kumar (Manager(Costing))

Submitted By: Mohd Arif khan ([email protected])

As part of the MBA-Core Program Curriculum of A.C. Patil College of Mgmt Research (Navi Mumbai)

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Analysis of Conversion Cost

JSW STEEL LTD. TARAPUR

CERTIFICATE

This is to certify that Mr. Mohd Arif khan student of A.C. PATIL

COLL COLLEG EGE E

OF

MGMT MGMT..

&

RESE RESEAR ARC CH

has has

suc su cces cessful sfully ly

completed her project entitled “ANALYSIS OF CONVERSION COST” for the period period of two months months May to to June’09 in our organization organization as part of her summer internship.

During this period we found them honest, sincere & hardworking. hardworking. We wish them all the success in their future endeavors.

Manoj Kumar Nitin Tekade (External Guide)

HOD - HR

Manager- Costing

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INDEX SR.NO SR.NO

PARTIC ARTICUL ULAR ARS S

1

Acknowledgment

2

Executive Summary

3

About JSW Group

4

About JSW Steel Ltd

5 6

Process Flow of JSW Introduction of Cost Optimization

PAGE AGE NO

Strategies 7

Broad analysis of Cost elements in JSW

8

Analysis of CCL Plant - Data Analysis 9

10

Sources of Data Conclusion

11

Recommendation

12

Bibliography

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ACKNOWLEDGEMENTS

I take this opportunity to express our sense of gratitude to all those who guided me and

helped me whenever the going seemed difficult and the road ahead was not visible. I am highly thankful thank ful to Mr. P.K. P.K. Pandey, HOD(Costing) for giving me this opportunity o pportunity to enhance my knowledge. I am also thankful to Mr.Manoj Kumar Jha, Manager (Costing), JSW, Tarapur, for assigning me to the projects which were truly enriching in nature and scope. I am obliged and thankful to Mr. Nitin Tekade, HOD (HR), JSW, Tarapur who made this training possible. I am greatly indebted to Mr.Anil Mr.Anil Sharma, DGM (CCL Plant), Plant), JSW Steel, for providing me with an immense learning opportunity. I would like to extend our gratitude to our guides Mr. T.J. Singh HOD (Packaging); Mr.Praveen Mobian; Mr.Rahul Mahakal, Sr.Manager(CCL); Mr.Ravi Agarwal (CCL); Mr. Mr. Dinesh Dinesh Soni, Jr. Jr. Manager(Cost Manager(Costing); ing); Mr.Atul Mr.Atul Tayade Tayade Asst. Asst. Manager(CCL) Manager(CCL);; Mr. Mr. Mahesh Bhonsle, Asst Manager(CCL); Mr. Sanjay Swami, Dy Manager (PPC) who were with me through this entire journey. They inspired me to think beyond and to always look for better solutions. I am deeply inspired by their profound thoughts, which took me to light whenever the path became difficult. I appreciate the help of Ms. Shweta Bhalekar, Jr. Manager (HR),JSW, (HR),JSW, Tarapur, Tarapur, who made our stay a pleasant one and also provided us with all we needed and were always cordial and helping. Last but not the least, I wish to extend our thanks to all the staff of JSW, Tarapur, who gave me great insight into the day to day operations of the plant.

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I also wish to thank our faculty at ACPCE, specially Dr. Mahesh , HOD and my internal guide Mr.Pampat & colleagues for making this all possible and all others who helped us during these two months.

EXECUTIVE SUMMARY This report is the presentation of findings of the project work carried out during the summer internship at JSW Steel Limited, Tarapur during the period of May’09-June’09. A Project entitled “Analysis of Conversion Cost” was undertaken during this internship. Overall study of JSW Tarapur Tarapur and recommendations for cost optimization strategies were studied. Broad study was done of the whole plant & later as a sampling CCL plant was studied. The project involved the initial study of basic operations at this plant. The main objective was to understand and analyze the prevailing conversion cost practices, their effects and efficiency. It also intended to find the shortcomings and recommend solutions for the same. The various touch points were analyzed, and discussions were made with employees resp respon onsi sibl blee in thes thesee area areass to under underst stand and the the prev prevai aili ling ng proce process sses es and and areas areas of improvement improvement.. Based on these recommendations recommendations,, cost optimization optimization strategies strategies have been made as part of this study. The main products of the company are GI, GL, PPGI & PPGL. The project is mainly about study of the costing of these products and analysis of the variable costs for cost reduction by studying various cost elements involved. The objective of project is Analysis of conversion cost of production & to find the area of cost optimization that can be adopted by company.

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About JSW GROUP JSW Group is one of the fastest growing business conglomerates with a strong presence in the core economic sector. This Sajjan Jindal led enterprise has grown from a steel rolling mill in 1982 to a multi business conglomerate worth Rs. 14700 Crore (US $ 3.7billion). As part of the US $ 10 billion O. P. Jindal Group, JSW Group has diversified interests in Steel, Energy, Minerals and Mining, Aluminum, Infrastructure and Logistic, Cement and Information Technology. JSW Steel Limited is engaged primarily primarily in manufacture manufacture of flat products products viz. H R Coils, Coils, CR Coils, Galvanized products, auto grade / white goods grade CRCA Steel and Power. JSW Steel Limited has the largest galvanizing production capacity in the country and is the largest exporter of galvanized products with presence in over 74 countries across five continents. On its road to growth and expansion, the Group is also conscious about its responsibility towards environment and social development. Eco-efficiency is a matter of principle. Preven Preventiv tivee measur measures es for damage to the environme environment nt are taken taken into into account account at the planning stage of production and growth. JSW Foundation, an integral part of the Group, is the CSR wing, with a vision to create socio economic difference in the fields of Educat Education ion,, Health Health and Sports, Sports, Communi Community ty Relati Relations onship hip/Pr /Propag opagati ation on as well well as Art, Art, Culture and Heritage.

Group Companies:

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• JSW Steel Limited, • JSW Energy Limited • JSW Holdings Limited, • JSW Infrastructure and Logistics Limited, • Vijaynagar Vijaynagar Minerals Pvt P vt Ltd • Jindal Praxair Oxygen Co. Ltd • JSoft Solutions Limited.

ABOUT JSW STEEL LIMITED JSW's history can be traced back to 1982, when Jindal Group acquired Piramal Steel Ltd., which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, who had wide experience in the steel industry, renamed it as Jindal Iron and Steel Co Ltd. (JISCO) now

known

as

JSW

Steel

Limited

(Tarapur

&

Vasind

Works)

In 1994, to achieve the vision of moving up the value chain and building a strong, resilient company, JISCO promoted Jindal Vijayanagar Steel Ltd (JVSL) now known as JSW Steel Limited (Upstream). Its plant is located at Toranagallu in the Bellary-Hospet area of Karnataka, the heart of the high-grade high-grade iron ore belt, and spread over 3,700 acres of land. It is just 340 kms from Bangalore, and well connected to Goa and Chennai ports.

JSW Steel Ltd. Encompasses: •

Tarapur and an d Vasind Vasind Works (Downstream)

•

Vijayanagar Works (Upstream)

India’s third largest steelmaker, JSW Steel Ltd. consists of the most modern, eco-friendly steel plants with the latest technologies for both upstream & downstream processes. JSW Steel Ltd. has received all the three certificates:

• ISO:9001 for Quality Management System

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• ISO:14001 for Environment Management System • OHSAS:18001 for Occupational Health & Safety Management System

Facilities: Vijayanagar Works

Vijayanagar ijayanagar Works Works is a fully integrated integrated steel plant, located in Bellary Bellary district, district, 340 kms from Bangalore. It is also well connected to Goa and Chennai ports. The plant is also equipped with modern technologies to ensure international quality standards. It produces products from iron ore pellets to hot and cold rolled flat products.

Vijayanagar Vijayanagar Works Works was the first Greenfield project in the world to have Corex technology to produce Hot Metal. By 2008, 2 008, Vijayanagar Vijayanagar Works will achieve 7 MTPA MTPA status making it India's largest integrated steel plant at one location. B y 2010, it will further expand to 10 MTPA. This makes it among the fastest growing steel plants in the world. It's eco-friendly approach has also led to the development of Vijayanagar into a modern township. Enveloped by acres of greenery and maintained by JSW, Vijayanagar is prospe prosperin ring g by leaps leaps and bounds. bounds. Be it educati education, on, career career opp opport ortuni unity ty or women women empowerment, the Company's initiative has gone a long way in making Vijayanagar the success that it is today.

Vasind and Tarapur :

It is here that all began. A new chapter was written in the history of Indian Steel Industry when JSW made its foray at Vasind in 1982 and setup a 20 Hi CR mill. JSW then acquired a mini steel mill, which moved on to become JSW Steel Ltd. Apart from being a leading manufacturer of cold rolled and color coated steel, Tarapur and Vasind Vasind works is today India’s biggest producer & largest exporter of galvanized steel. At Vasind Works, the Company has recently launched GALVALUME, a revolutionary product in the steel industry. Its strategic location, with access to the major ports of Mumbai, markets and raw material sources has worked to its advantage.

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Thee tota Th totall capac capacit ity y of Vasin asind d and Tarap arapur ur Works orks is 0.9 MT MTP PA of Galv Galvan aniz ized, ed, GALVALUME & Color Coated Cold Rolled products. As JSW grew phenomenally pheno menally,, it also steered Tarapur and Vasind Vasind towards newer horizon of prosperity. Apart from providing more jobs, JSW actively participates and organizes various social and cultural activities to make lives richer. The region is now cleaner happi happier er and and even even more more beaut beautif iful ul.. Bett Better er healt health h init initia iati tive ve,, prom promot otio ion n of spor sports ts & education are few of the development de velopment initiative that has gained in JSW presence. Salem Works:

JSW Steel group acquired the Company and took over the Management from November 2004. Salem Works is the only integrated steel plant in Tamil Nadu and is located at Pottaneri/M. Kalipatti villages and at about 35 kms from Salem. As part of the JSW Steel group, the plant underwent a dramatic transformation and started making profits from the first year onwards. A fast paced expansion plan has been drawn for the company to quickly become the first 1 MTPA MTPA integrated steel plant in Tamil Tamil Nadu. The plant is having facilities for production of Pig Iron, Steel, Billet and Rolled Steel products in the long product category. The present capacity is being expanded to one million tones per annum. It has adopted the Sinter plant – Blast furnace – Energy Optimizing Furnace – Ladle Furnace, Vacuum Degassing Continuous Casting Machine – bar and rod mill route with iron ore as the basic input material. It also has plants for generation of power and production of oxygen. Salem Salem Works orks is highly highly environ environmen mentt conscio conscious us and the proces processs and technol technology ogy is designed for reusing and recycling the process waste. We have an expanding green belt to provide a green environment. Products of Salem Works have the hallmark of quality and combined with competitive pricing, they are highly preferred in automobile and construction sectors.

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Products: Hot Rolled products:

HR Coil, HR plate and sheet, HRPO, HRSPO Applications: Automobile, Boiler and Pressure Vessels, Vessels, Ship Building, Railways, Transmission Transmission Towers, Towers, Oil and Petro Chemicals, Marine Containers, Coal and Mining General and Heavy Engineering

Cold Rolled Products:

CR coil and Sheet Applications: Automobile, White good, Cold rolled formed section, General engineering & fabrication, Packing, Drums/ barrels, Furniture

Galvanized Product:

Galvanized Corrugated Sheet, GP Sheet and Coil Applications: Automobile, Boiler and Pressure Vessels, Vessels, Ship Building, Railways, Transmission Transmission Towers, Towers, Oil and Petrochemicals, Marine Containers, Coal and Mining, General and Heavy Engineering.

Pre-Painted Galvanized Product:

PPGI coil, PPGI sheet, PPGI profile Application: Roof, Wall Wall cladding and other building products, Household appliances, Furniture, Automotives

Jindal Vishwas GC Sheets

It is the roof that has to take the brunt of nature's extremities during its entire life and

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hence utmost care must be taken in selection of the right roofing material. Wrong choice of roofing and cladding can create losses in terms of human lives and material in cases of natural disasters A good reliable roof with least number of complications gives peace of mind to meet these challenging needs of the customers, JSW offers superior quality Galvanized Corrugated sheets under the brand name "Jindal Vishwas".

New Initiatives: JSW Shoppe

In an endeavor to expand retail base and ensure the easy available of quality and branded steel in all its market, JSW Steel plans to setup 200 exclusive JSW Shoppes across the length and breadth of the country by 2010. It has launched JSW Shoppe at Hubli and Jaip Jaipur ur.. Mr. Mr. Sajj Sajjan an Jind Jindal al,, vice vice chair chairma man n and and manag managin ing g dire direct ctor or,, JSW JSW stee steell has inaugurated two exclusive JSW Shoppe in Hubli, Karnataka on December 4, 2007 and target is to open several more Shoppe in India. The concept originated from the fact that the company wants the end consumer to get the right quality of product at competitive prices at the right place. It will help in building trust with the end user and provide them steel at their door-step. All technical specification and details on manufacturing ranges are available in JSW Shoppe. Information of all types of JSW steel product, ranging from HR coils to Color Coated Steel and Long Products would help in enhancing the awareness on wide usage of steel among cross section of society & industries. At JSW Shoppe, end consumer will also know about different application of different steel products being manufactured by M/s JSW Steel through actual components and pictures from Automobile, White Goods Sectors, and Construction.

STEELeMARTS :

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STEELeMART, a B2B steel-trading portal is a venture of Sapphire Technologies Ltd. It is promoted by the ‘JSW Group’ - one of the leading and fastest growing integrated steel enterprises in India having interests in long & flat steel products. STEELeMART’s intrinsic strength is derived from its trading modules, which have been designed keeping in mind the specific buyers needs. Amongst Amongst these trading trading modules modules the versatile versatile auction auction module is immensely popular. It has established for itself a reputation of being the most transparent, cost- effective and interactive online steel trading portal and this is what sets STEELeMART apart from its contemporaries. Everyday hundreds of steel users and traders across the country, trade on STEELeMART STEELeMART to get the best deals on steel products. STEELeMART cares for its customers and believes in continually evolving to provide better services, which will enhance the experience of its customers while trading through STEELeMART.

JSW, Tarapu Tarapurr

With an employee strength of more than 600 regular employees, Tarapur based unit of JSW is crucial part of JSW steel empire. The Tarapur unit, has an annual sales turnover of more than Rs. 4200 crore and is one of the Quality-conscious units of this conglomerate.

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Hot Rolled Steel, the primary input material for the JSW, Tarapur unit comes to the plant from Bellary based unit of o f JSW. JSW. The first process to which the hot rolled iron is subjected to is termed as “ Slitting ”. In this, the hot rolls are cut from both sides or from a single side into sheets of desired width as per the customer orders. This step removes the damaged edges of the rolls, thus improving the quality of the end product .

Cold Rolling, Galvanizing, Color Coating Hot Rolled Steel Slitting Pickling After slitting, the next step is “Pickling ” of rolls. During transit and previous processing underwent, surface of the rolls acquire some impurities and also gets oxidized, so they are treated with chemicals (HCl acid) to remove these impurities. Later these sheets are rinsed, dried and oiled to avoid further surface impurities. Next process in line is “Cold Rolling” of sheets. After initial uncoiling and welding, the sheet is subjected to a pair of rotating rolls to reduce thickness of pickled sheets, and achieve achieve desire desired d mechani mechanical cal and metall metallur urgica gicall proper propertie tiess for the sheets sheets.. A sensit sensitive ive balance has to be obtained in terms of the sheet thickness, width and length and involves a high precision work. The “Galvanizing process ” takes place next and begins with the uncoiling and welding of the coils to produce a continuous steel strip. This strip is then cleaned and degreased in a continuous cleaning section. The strip next enters the heat treatment furnace. It has an atmosphere of nitrogen and hydrogen to prevent oxidation of the steel surface. Here the steel is subjected to a controlled heating and cooling coo ling cycle to alter its physical properties. The zinc coating operation is performed by passing the steel stri strip p dire direct ctly ly from from the the exit exit of the the anne anneal alin ing g furn furnace ace into into a molt molten en zinc zinc bath bath of -


temperature of around 4600 C. Excess zinc on the surface is wiped off by air "knives" after the strip leaves the bath. The zinc composition in the bath is carefully controlled to ensure that the optimum coating characteristics are achieved. Zinc provides a tough, metallurgical bonded coating that completely protects the steel surface from corrosive action of the environment. The galvanized steel then passes through a set of rollers in the skinpass / leveller unit. Here any distortions that the strip has acquired in the annealing furnace are smoothed out.From the leveller, the strip passes through a chromate spray which reacts with the fresh zinc to produce a passive film of zinc and iron oxides. Galvanized sheets are the major finished goods produced at this plant. “Color Coating” is the next activity in the processing cycle of the sheets and provides a

variety of color coated sheets. This is totally market driven initiative and is earning rich dividends for the organization. A major application of these sheets is in consumer goods industries. The coil is subjected to unwinding, pre-treatment and coating process before being recoiled. This process here employs high grade green technologies and makes little waste, usually burning solvents to provide energy for curing the paint. Various types of paints can be used on the surface for different applications and properties i.e. polyester, epoxy, pvdf, plastisol etc. The organic coating can be done on the cold rolled steel coils, galvanized coils, galvalume and various va rious grades of aluminium.

Galvalume , a zinc-aluminum alloy coated steel sheet, is an upgraded product from

JSW’s hot dip metal coating galvanizing line is the latest offering. JSW Steel Ltd is the first Indian Company, Company, under a technology licensing from BIEC International Inc., USA to produce Galvalume sheets - the fastest-growing sheet steel product renowned for its excel excelle lent nt corr corros osio ion n resi resist stanc ancee and heat heat refl reflec ecti tivi vity ty.. Galv Galval alum umee shee sheet' t'ss supe superi rior or performance has been proven in the field. Over three decades of actual buildings in North Americ America, a, Europe Europe,, Austra Australia lia and Asia Asia testif testify y to the product product’’s unriva unrivaled led corros corrosion ion resistance and long service life. Galvalume sheet’s has 2-6 times longer service life compared to G-90 (275 gsm) galvanized sheet. A patented alloy of barrier-resistant aluminum aluminum and corrosioncorrosion-fight fighting ing zinc gives Galvalume sheet its superior corrosion resistance. Galvalume coating features an alloy that is 55% aluminum, 43.5% zinc and

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1.5% silicon. The Galvalume production has started at Vasind unit and is at advanced stages of production at Tarapur.

Importance of Cost Optimisation Strategies: In today’s competitive world Corporate and businesses are struggling to maintain profits and healthy bottom lines .Cost of production, fuel, raw material and human resources is risi rising ng each each year ear. Th Thes esee deve develo lopm pmen ents ts have have prom prompt pted ed peop people le to look look for for Cost Cost Those who have opted for focused focused cost reducti reduction on Optimisation Ideas & methods . Those strategies have survived those who could not managed have perished .In recent economic down turn it becomes more important to make Cost Optimisation Optimisation program program a major initiative in industry. Companies are finding it difficult to retain people and are lying off people, which is unprecedented in recent history of industrial recession. Companies have to develop its own cost reduction program p rogram for savings without cutting jobs.

achieved through through reduction, reduction, elimination, elimination, Cost Optimisation in Steel Company can be achieved modification, substitution or innovation .All cost drivers are taken into account and with thorough analysis the best and least cost path is adopted for each activity. The best methods methods to achieve achieve result resultss are to benchma benchmark rk operati operating ng paramet parameters ers to worldworld-cla class ss companies.

The major Cost parameters for Steel industry: -

1. Raw Raw mate materi rial alss cost cost.. 2. Powe Powerr (kw (kw h/u h/uni nit) t) 3. Fuel Fuel (kw/ (kw/un uniit) 4. Stores Stores and Spares Spares (Rs/un (Rs/unit) it).. 5. Waste aste & defecti defectives ves ( Proces Processs Loss) Loss) 6. Mfg. Ove Overh rhea eads ds

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7. Packaging 8. Labour 9. Salary 10. Admin. Admin. Overhead Overhead It gives us rapid turnover & thus decrease the amount of money tied in materials. The major problem with just-in-time operation is that it leaves the supplier & downstream consumers open to supply shocks & large supply or demand de mand changes. Following Following are the list of raw materials used in Galvanizing Galvanizing & Color-coating Color-coating Line of JSW: --a) HR/ CR COILS :

conversion cost. So the company must must try It contributes about 64% of the total conversion to find out different alternatives through which they can reduce the cost of their raw materials. Some of the available Suppliers for HR & CR coils:

1. Bao Bao Stee Steell-Ch Chin inaa 2. POSCO-Japan pan 3. Arce Arcelo lorr Mitta Mittall-MN MNC C 4. CORNS-MNC

Big Indian Players in Steel Industry: 1. Tata Steel 2. SAIL 3. JSW Stee Steell Lt Ltd. 4. ISPAT 5. Essar Steel

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Secondary Steel Players in the Market: 1. Bhus Bhusha hann-GP GP//GL 2. ISP ISPAT-GP/ -GP/GL GL 3. Nati Nation onal al Stee Steell 4. JSW Stee Steell Lt Ltd. 5. Utt Uttam Stee Steell.

Tarapur plant of JSW, JSW, the HR/CR coils are brought down do wn Present Supplier: In Tarapur from Bellary plant of JSW.

Company processes the HR coils which are bought from Bellary plant of Jindal, by passing it through various stages and converting it into CR coils which are used in further stages of production. If the company plans to buy the HR coils from outside rather than its own company then it would NOT get HR coils at lower price than its own company. Also the company buys the HR coils at the market value from Bellary plant, as it cannot negotiate with them. An outside company will always want some surplus, additional profit if it is selling its product to other company. But while dealing with outside companies, it can negotiate well to bring down the prices with its good negotiating skills. Cold Rolling department is completely dependent on the raw materials in the form of HR coils as supplied by Slitting and pickling lines. As the stock level of HR coils is maintained at a very low level, this plant has to be closed often, whenever HR coils are not available. So, company must plan to built some inventory for maintaining sufficient stock of HR coils so that there is no stoppage in other lines due to raw material shortage. Buying coils from your own sub-branches is beneficial as they are aware of the quality of product productss requir required ed at their their own organi organizat zation ion.. The source sourcess of raw materials materials are

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limited. All the companies in the business of steel making have to depend on the existing available sources of raw material required for steel making. Though India has good reserves of iron ore but at the same time lack of matching and adequate reserves of coking coal and non-availability of good quality lime-stone for steel making have also to be considered while project planning unless the suitable technology bypass these primary requirements. The input costs for making of HR coils in Bellary plant is approx. Rs. 19000. Out of which 85% is raw material cost i.e. Iron ore & the remaining 15% is conversion cost. In this 85%, there is 70:30 ratio of iron ore & coke. So company must try to reduce the input costs by acquiring new mines having good ironore percentage or getting into long term contract with major suppliers of iron ores in domestic as well as international market. Company must also try to develop good negotiation skills so that they can settle at lower costs with suppliers. But acquiring iron-ore from own mines is very more beneficial. The policies of Governments, both Central and State, should be transparent so that renewal or re-allotments of existing mining leases of primary raw materials like iron ore and coal can be made without any problem. The grants of some of the new mining leases are essential for making investment and expansion of some of the mines for new projects or capacity enhancements (example, Posco). Alternative ways like plans to enter into strategic investments/ tie-ups for coking coal blocks in India and abroad to ensure assured supply of coking coal is a major hurdle to cross.

b) ZINC & ALLOYS :

Zinc & alloys constitutes about 10 % of the total cost of conversion in Galvalume &

Galvanising plant. It has been estimated that corrosion co rrosion costs about 4% of the GDP of an industrial country’s economy. In Galvanizing industry the 45% of the conversion cost involves the zinc consumption. The technique used in Tarapur plant of JSW is hotdipped galvanizing. The main zinc supplier for Tarapur branch is ‘Hindustan Zinc’ .

The coating products of zinc & its alloys are as follows:-

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1. Galvanized: A zinc coating, usually hot-dipped, in which the zinc and steel

form a metallurgical metallurgical bond. The thickness of a hot-dipped coating can be vary from thin zinc/iron layer to heavy applications. Galvanneal eal:: A zinc-i zinc-iron ron coating coating produce produced d by post-h post-heat eating ing a hot-di hot-dippe pped d 2. Galvann coating. It is used when paint is to be applied to the coated sheet.

Galvalume: Here Zn-Al alloy is used in which contribution contribution of Aluminum Aluminum is 3. Galvalume: about 55% with superior corrosion resistance.

So, the thickness of the zinc coating plays very important role in deciding the costs. More the thickness more will be the cost of galvanizing. So, constant efforts must be taken by company to develop new mechanism to reduce the zinc consumption. Increasing the temperature of molten zinc can reduce the thickness of the zinc coating. coating. Also Also research research was done to analyse analyse the cost of other metals that can be used for galvanizing. But it was found that cost of existing metals & alloys that provide good corrosion resistance is very high when compared with zinc except some alloys like terne made from tin & lead & NASSAC.

c) PAINT:

Paint constitutes about 50% of the total conversion cost in Colour Coating plant. Paint

is applied over Galvanized product as per the customer requirements. In JSW, Primer, Top coat & Back coat are three important elements in Colour-coating

line. Here, the colour-coating line applies about 5µ of primer coating on both the side of

GI/GL coils. Top coat is applied as per the customer requirements. Viscosity of paint is

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one of the factor which affects the coverage area of paint. More viscous the paint more is the volume solid percentage. Volume Volume solid is the material that is actually applied over coils & rest part is evaporated. Previously, company use to prefer Epoxy backcoat which consists of 35% volume

solid. Its main characteristic was that it offer good pufadhesion & its cost was also low. But for a good back coat its volume solid % must be high enough, so company thought of using Polyester or PU back coat. But polyester’s pufadhesion was low and PU’s cost was high. So, a company named Akzo nobel developed an intermediate product whic which h conta contain inss comb combin inat atio ion n of above above 3 back back Coat Coatss havin having g good good volu volume me soli solid d percentage, good pufadhesion & reduced cost. Company at present keeps only 10-15 days inventory of paints. It has tied-up contract for 50 shades with suppliers so as to meet its demand. Time procurement plays very important role in deciding cost & continuity in process can be maintained only if there is proper supply of raw materials from suppliers. They also sometimes make use of tinters which are mixed with excess stock & old stock in inventory to make new shades. Hence, stock which would have contributed to waste is actually converted into useful product and thus this recycled product can be used for colour-coating on coils. In this way, way, these processes help in reducing the cost.

Recommendations:

Company can go for setting up their own ‘Mixing Stations’ beside their Color-coating section, so that they can meet their paint requirements easily without any delay. In mixing mixing statio station n they can prepar preparee their their own colours colours so that that they can reduce reduce their their procurement time & cost as well as save their transportation cost.

But after feasibility study we found that setting up our own big mixing station won’t be beneficial as we are not into paint business. The company will have to incur additional cost for procurement of raw materials for making of paints. But our main business is Steel so we cannot indulge our manpower & other resources in paint business. Also the

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capital coat required prevents from setting up of a big mixing station. And moreover we won’t be getting much profit out of it as we will be not be able to compete in market with already established big brands. But we can set up a small mixing station, so that we can make use of the old stock or excess stock by mixing them with tinters to form new shades. This new shades formed from old stock can be applied on GI coils. Thus, it can help a lot to reduce the inventory. Reduced inventory means reduced inventory carry carrying ing costs costs carry carrying ing cost cost on account account of intere interest, st, storag storagee and handli handling ng charges charges,, insurance, record keeping, inspection and risk of deterioration in quality. In November 2008 Company converted most of the part of their old stock of paints to form new shades by mixing with tinters. The thickness thickness of the colour coat has to be reduced. The thickness of the top coat must be minimum but satisfying the customer specification. Even if we are able to reduce the coating by 1µ then we could save lakhs of rupees. In Colour coating business, product rejections are mainly due to change in colour shades. These colour changes occur due to variation in temperature of primer & top coat. The cooking process of primer & top coat must be carefully controlled by maintaining prope properr temper temperatu ature re in furnace furnaces. s. The thickness thickness & colour colour of primer primer also also plays plays very important important role in defining the shade of top coat on GI coils. The quantity & price of the paint vary with their quality.

2. FUEL: Fuel contributes contributes about 1% of the total conversion conversion cost. Basic manufacturi manufacturing ng industry industry consumes fuel in large quantum. Fuels also make large part of cost of production hence any cost reduction strategies would have significant impact.

Following factors helps in fuel consumption:1. Air fuel ratios

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2. Flue gas recycling 3. Nozzles sizes 4. Proper maintenance of burners. NET VALUE OF FUEL = CALORIFIC VALUE X COST Present fuel: Fuel used in plant is LPG for producing heat in furnace & many other

applications. Available substitutes: Cheaper substitutes available for LPG according to me is

Natural Gas, another substitute can be Corex gas. Natural gas is much cheaper than LPG. But the calorific value of the fuels play important role in deciding the cost of the fuel. At ambient temperatures it remains in gaseous form; however, it can be compressed (CNG) under high pressure to make it convenient for use in other applications or liquefied (LNG) under extremely cold temperatures (-260°F) to facilitate efficient transportation of the gas. But consumption of CNG will be 3 times more than the consumption of LPG for the same heating required. Liquefied natural gas (LNG) takes up only 1/600th of the space that natural gas would in its gaseous state and thus can be stored and transported more efficiently. efficiently. Essar steels and Bhushan Steel co are presently using LNG. Corex gas is used in Bellary plant of Jindal but it is one of the by-products b y-products over there so easily available to them & hence it is cheaper substitute for them. So availability cost of fuel and its calorific value must be considered con sidered before selection of fuel. Fuel consumption also depends upon the type of the burners used. Weishaupt burners & Benetone burners can be used. Burner ’s efficiency results in low fuel consumption.

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Other important factor of combustion is air -fuel ratio. All manufacturers of burner provides exact ration of air fuel. This ratio must be maintained within plant also. Regular maintenance of burners also helps in fuel consumption. In CCL plant of JSW, JSW, there are 2 lines running in parallel namely CCL 1 & CCL CCL 2. In CCL CCL 1, the the fuel fuel consu consump mpti tion on rate rate is about about 26-28 26-28 kg/M kg/MT T & in CCLCCL-2 2 the the fuel fuel consumption rate is about 14-16 kg/MT. This difference is due to installation of RTO system in CCL-2 which has reduced the fuel consumption rate. So, same system must be installed in CCL-1 so as to increase its efficiency. efficiency.

3. POWER: Power contributes contributes around 2% of the total production production cost. All manufacturing manufacturing industry consumes power or other energy sources for its production activities. Major source of power consumption consumption are production equipment like furnaces, furnaces, ovens, prime prime movers, movers, air compressors, HVAC, HVAC, cooling towers, lightning etc. It is recommended to conduct an internal audit of energy consumption of all equipment in the factory. It is found that either equipment are overrated or are running idle for sometime. Equipment selection & introducing control features can reduce energy cost. JSW Tarapur branch have already started with their 30 MW power plant to meet its electricity requirements and also gain profit from surplus production by selling it to MSEB. Here they have set-up of thermal power plant. Previously, company use to buy power from MSEB for its production and other purposes. In 1983, they started with just one plant but now they are having about 7-8 lines running parallel. So their power requirements are increasing day-by-day due their various expansion plans. So they have set-up their own Captive Power plant . In a Captive power plant, company uses 50% of the power generated for its own use & the rest 50% is sold to MSEB. The company has to pay double the amount paid by domestic holdings. So, the company will be benefiting a lot with its own Captive power -


plant. Also it will be gaining profit through selling of the power generated to MSEB at higher rates. Company Company previo previousl usly y conver converted ted many many of its power power-dr -drive iven n device devicess to fuel-d fuel-driv riven en because of high cost of power. But now since it has its own power plant it can have more of power-driven devices if its fuel prices are more than power prices.Various other modifications can be done in production line for reducing power consumption.

4. STORES & SPARES: Stores and Spares contribute about 2 % in total cost of production. Stores include the

raw materials materials that will be required required in future. future. It is not always good to keep lot of stock with you. For proper store management, forecast of the production must be accurate. Higher amount of materials in stores, then higher will be our carrying cost. Spares include maintenance of machinery. Proper care of the machinery must be taken in order to prevent any sudden breakdown, which may abruptly affect the production line. Alertness Alertness among the employees will help to reduce the cost of Stores and Spares. In Tarapur JSW branch, ABC method of Stores control is followed. The classification of the items into the categories A, B and C is made on the basis of such factors as their value of consumption, investment value, or sales or profit potential. Thus, here with mini minimu mum m of effo effort rt,, cont contro roll is exerc exercis ised ed over over the the item itemss of compa compara rati tivel vely y high high importance. Proper forecast of the stores must be done based on production. Thus, forecast must be accurate of the production. Stores & spares department here follows Zero movement Inventory process at the end of each month. Through this study they try to find out those items in inventory that have not been moved i.e. there is no issue or dispatch of that item. They prepare the

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frequency reports through which they classify non-usable inventory into non-moving inventory, obsolete inventory etc. Based on their results they try to find out reasons for non-usability of an inventory item and how to deal with it. The primary reason for nonusability is modification in technologies. But there are many other reasons also. Study of critical items is done and buffer stock is maintained for critical items. Here they have their inventory period of 30 days. Some of the raw materials such as Zinc & HR/CR coils follow just-in-time approach. They have mainly 3-4 days inventory, while for paints a proper lead-time is planned. According to me, Cost reduction strategy that can be followed in Stores & spares is – Standardization of equipments, reduction of lead-time in inventory & procurement time must be realistic. Standardization of equipments would help to reduce the spares for machinery. Periodic verification of the stores must be done. Mostly this is done once a year. Periodic stocktaking usually necessitates the shut down of the factory, and it should should therefo therefore re be comple completed ted as soon soon as possible possible..

Theref Therefore ore,, company company plans plans

indentation plan. Wastage Wastage should be reviewed in detail. Excess Excess invento inventory ry holdin holding g leads leads to excess excessive ive carry carrying ing cost cost on account account of intere interest, st, storag storagee and handlin handling g charge charges, s, insura insurance, nce, record record keepin keeping, g, inspec inspectio tion n and risk risk of deterioration in quality and thus adversely affects the profitability of the organization. Non processible material if any is taken either for Rework or Auction considering current order status and Aging/physical condition respectively.

5. PROCESS LOSS: Process Loss constitutes about 3% in CCL plant. There are various reasons for Process

loss. loss. Proces Processs loss loss may be due to breakdo breakdowns wns,, line line stoppag stoppages, es, repetitiv repetitivee works works on production line which consume time & money, human error, inefficient working of some machinery parts, some defects or delays in raw materials, etc……. Process loss can be minimized by reducing the arising’s percentage and increasing the yield. Also steps must be taken to reduce the breakdowns. Mainly process losses are due -


to breakdowns due to raw materials defects, raw material delay or shortage, Operational or mechanical or electrical reasons. Corrective & preventive actions must be taken. Line stoppages must be reduced by maintaining continuity within the plant. Continuity can be maintained by proper planning of orders. Shortage of raw materials & orders often affect the production. Repetitive works must be identified within the plant and corrective measures must be taken taken to taken to reduce redundancy of work. work. Rewinding of the coils is done on the same line in CCL plant. So setting up a separate rewinding line would give better results. Changing of campaigns also results in process loss as it requires cleaning of equipments involved in colour coating purpose & there is loss of thinners. Thus, there should be proper scheduling of similar campaigns in groups or batches & clubbing of same campaigns so that there is less loss due to frequent cleaning of these painting equipments.

As, thickness and width of coils change, many changes have to be brought in into the systems parameters. But the machines are designed in such a way that abrupt changes in thickness and widths will not give satisfactory results. Hence, it has to be done in stages to ensure necessary quality levels. So, ideally the planning of coils must be done carefully so as to reduce the wastage in the form of dummy coils. Dummy coils are used to assimilate the systems to the new thickness and width parameters.

6. PACKAGING : Responsibility for coil quality does not end at the mill. Quality at final point of delivery is dependent on the protection afforded by the coil packaging. Increasing demands for suit suitab able le packag packagin ing g for for coil coil stock stock led led to a new appro approach ach to prot protect ect coils coils durin during g transportation and at their final destination. Storage at destination is one aspect which determines the type of packaging. However, there are still no commonly used standards on how such packaging should look. Starting from the strapping machines, whether manual or fully automatic, a variety of packaging systems are available. Some of the packaging materials that are used here are GP sheet, OD ring GP, ID ring HR, straps, wood for providing support at base etc. Most -


of the packing materials used are reuse of the packing material obtained from HR coils packing. In JSW, they follow floating budget for packaging cost. This floating budget depends on coil weight. As the coil weight decreases by 25% its pa cking cost budget increases by b y 1015%. Saving potential is shown in data & analysis section. There are two main finished goods produced at this plant, namely GI (Galvanized Steel) and PPGI (color coated steel) rolls. Following are the sales channels through which these products are sold in the market, namely: a) Trade b) OEM c) Export Packaging specification for these 3 segments is different depending upon nature of packaging required for different customers. OEM are the manufacturers of white goods whose quality constraints are very high.

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Analysis of Conversion Cost in Colour Coating Line COST SHEET OF JSW STEEL LTD

(A)

(B)

(C)

(D)

Particular Avg. PPGI Thick X Width X Coating Raw Material Cost Paint 5000 Sub-Total(A) Operating Cos Costt(Variable Co Cost) 1.Process Loss 400 2.Stores And Spares 350 3.Fuel 574 4.Power 250 Sub Total(B) Fixed Cost 1.Other Mfg Overheads 62 2.Personal Expenses 600 3.Factory/Admin.overheads 200 Sub Total(C) Operating Cost

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(E)

(F)

7436 Packing &Selling Cost 1.Packing 2.Clg.,Fwd 3. Commission Sub Total(F) 2000 Conversion Co Cost(D+E)Rs. /T /T 9426 (Before Interest & Depreciation)

Above format has been obtained from costing department, which is applicable as on 31.05.2009. The same format has been used for study of all the Six months under consideration of current analysis. anal ysis.

Data and Analysis To understand the problem areas, and the consumption of raw materials & Contribution of each cost elements in total cost of production in CCL plant the following data of past six months has been collected from different departments. From the six months data, the deviations in cost of various factors like paint, Power, fuel, packaging, process loss which are responsible for total conversion cost of production have been represented through following data. Table: 1

CCL-1

Months

Avg

Production Paint

thickness

Paintcost

Paint Consumption

Litres/Mt.

(Rs./Mt.)

in lts.

Oct-08

0.277

302

44

6483

13160

Nov-08

0.38

791

28

4954

12861

Dec-08

0.29

705

35.94

5701

26088

Jan-09

0.209

62

48

7137

2985

-


Feb-09

0.37

1637

25.75

4414

44276

Mar-09

0.332

5088

29.44

4506

150315

Following graph illustrates the variation v ariation in Avg. Avg. thickness & Production P roduction month-wise: Fig - 1 6000

5000

4000

3000

Avg. thickne thickne ss 2000

Production in MT

P d t i / M T r u c o n

1000

0 0.277

0.38

0.29

0.209

0.37

0.332

Monthwise MonthwiseAvg Avg.thick thickness(mm)

EXAMPLE: Thickness of coils 0.25 mm o.50 mm 0.75 mm

DFT (Microns) 10 11.08 5.54s 3.69

18 19.94 9 .97 6 .6 5

25 2 7 .6 9 1 3 .8 5 9.23

1. Low productio production n is observed observed in in some months, months, mainly in January-2 January-2009 009 2. There There is very very high high fluct fluctuat uation ion in in paint paint cost cost 3. From the trend trend analysis analysis it is is also observed observed that that the back coat consumpt consumption ion rate is is not varying in the same manner as a s top coat & Primer in some cases. ca ses.

Reasons:

1. As the the thic thickn knes esss decr decreas eases es,, the the revol revolut utio ion n of coils coils increas increases es and so the the pain paintt consumption increases. Increase in paint consumption may also be due to low volume solid percentage in paints.

-


2. Low product production ion was was observed observed in some month monthss in CCL-1, CCL-1, due to the shortag shortagee of raw materials and also the customers were not placing the orders, because of recession. So, these reasons gave rise to shut down the line in the plant. p lant. 3. Due to the recession recession,, the company company could could negoti negotiate ate well with with their supplie suppliers rs for the low cost of paints, so the paint cost has gradually decreased from Nov-08 to Dec-08. 4. Back Back coat consumpti consumption on is not varying varying proporti proportional onally ly with top coat & primer primer. It may be due to variation in thickness of back coat on coils. The coating thickness which is measured in microns may have been decreased or there may incorrect booking of data.

1. In Jan ’09, ’09, the back coat coat consumption consumption is is not varying varying in proper proper proportion proportion with with other paint.

Reasons:

1. Incr Increas eased ed produ product ctio ion n resu result lted ed in lowe lowerr pain paintt cons consum umpt ptio ion n per metr metric ic tonn tonnee because of increase in Avg. Avg. thickness of GI/GL coils. coils. E.g.2. Variation ariation in back coat coat consumption consumption is due due to increase increase in production production in in Jan 2009 & increase in its coating thickness from 10 µ to 12 µ.

Paint Calculation: X = 1000 / (7.85*GP thick) Y= Vol. Solid* 10/DFT Constant X

1000

Vol. Solid

Densit y

GP THICK

7.85

0.35

Constant

DFT

364

-


Y

46

10

23.00

20

Lit / Ton 15.824663

Z=X/Y Ord. Qty.

500

Total Paint

7912

Yield(97%) - A Tray Qty - B

8157

TOTAL (A+B)

8157

DFT

Gauge 10.00 11.00 12.00 13.00 14.00 15.00 16.00 0.25 0.30 0.35 0.40

11.08

12.18

13.29

14.40

15.51

16.62

9.23

10.15

7.91

8.70

6.92

7.62

17.72

11.08

12.00

12.92

13.85

14.77

9.49

10.29

11.08

11.87

12.66

8.31

9.00

9.69

10.38

11.08

From the above table it is clear that by saving one micron micron coating we can save approximately 0. 9 to 1 litre paint per metric tonne. Avg. Avg. cost of paint presently is Rs.166.

Therefore, Cost of paint/MT that can be saved by reducing 1 µ is approximately Rs.166/MT.

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1. The high fuel fuel consumptio consumption n rate is observe observed d in CCL-1 in in one month inspit inspitee of low production because of in continuity con tinuity in production line & less utilization percentage. 2. There may may be number number of colour changes changes in CCL-1 CCL-1 because because of many small orders orders placed by customers.

-


1. It is also observ observed ed that budgete budgeted d and actual power power consumpt consumption ion is very high high in CCL-1in January month.

Reasons:

1. The thickness thickness of the coil is is inversely inversely proporti proportional onal to the the length length of the coil coil and the length of the coil is directly proportional to the power consumption. 2.

The line speed speed is directly directly proportional proportional to to the production production rate, rate, which which directly directly affects power consumption per metric tonne.

3.

Power Power consu consump mpti tion on is very high high in CCLCCL-1i 1in n one one of the month month,, due to low production which affects the continuity in line.

-


Reasons:

1. Cost of applicator applicator roller rollerss is about Rs. Rs. Two Two lakhs. So if the the production production is low then then the Rs./MT cost of applicator rollers increases. Also there may frequent changing of rollers due breakage, change in its shape.

PROCESS LOSS : CCL – 1 – 1

table : 1.5

CCL - 2

table : 2.5

Month Yield Production Proces s % s Loss 302 4% Oct-08 96%

Nov-08

96%

791

4%

Dec-08

90%

705

10%

Jan-09

80%

62

20%

Feb-09

94%

1637

6%

Mar-09

95%

5088

5%

Month Yield s %

Producti on

Oct-08

95%

6600

Proces s Loss 5%

Nov-08

96%

6557

4%

Dec-08

96%

6435

4%

Jan-09

96%

6992

4%

Feb-09

95%

5959

5%

Mar-09

95%

6150

5%

Summary of CCL -1:

table : 1.5.1

-


BUD

TOTAL PROD.

ACT.

ACTUAL PROD.

EXP <0.3

94.00

1711.87

93.89

1601.31

EXP >0.3

97.07

26896.18

96.61

25977.33

EXP

96.89

28608.05

96.43

27578.63

OEM WG

90.02

1731.81

93.06

1581.00

OEM NW G

96.99

10023.34

97.15

9729.45

OEM

95.96

11755.14

96.42

11310.45

TRD <0.3

94.00

5267.78

95.80

5044.99

TRD >0.3

96.50

1810.14

94.98

1712.29

TRD

94.64

7077.92

95.53

6757.28

TOTAL

96.32

47441.10

96.26

45646.43

Summary of CCL -2:

table : 2.5.1

BUD

TOTAL PROD.

ACT

ACTUAL PROD.

EXP <0.3

94.00

2086.70

94.21

1952.96

EXP >0.3

91.04

28213.66

95.88

27031.67

EXP

91.25

30300.36

95.72

28984.63

OEM WG

92.25

839.88

88.23

736.81

OEM NW G

90.44

6474.08

93.56

6050.60

OEM

90.64

7313.96

92.91

6787.41

TRD <0.3

90.99

1420.36

95.76

1358.54

TRD >0.3

86.72

3408.39

96.65

3288.91

TRD

87.97

4828.75

96.35

4647.45

TOTAL

90.77

42443.08

95.26

40419.49

Interpretation:

1. From the above above data it it can be seen that that the process process loss loss is more more case ‘Trade’ ‘Trade’ & ‘OEM’ as compare to ‘Export’. Reasons:

1. In case of OEM, OEM, there there is more more process process loss due due to quality quality constrain constraintt involved involved with customers & in Trade, the customer requirements vary frequently for more and more reduced thickness of coil so there is more process loss in attending the same. 2. Process Process loss also also occurs occurs when there there is no line line continuity continuity and and when adjusting adjusting production line according to production.

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Packaging : It contributes about 20- 22% of total conversion cost in CCL plant.

Export Coil – PPGI

Month Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09

Avg.

Avg. lot wt.(mt) Actual 5.28 5.79 5.62 5.82 4.80 4.54 5.31

table : 3 Budgeted packing Cost (Rs./MT) 730 651 624 565 502 671 624

OEM Coil – PPGI

Actual Packing Cost(Rs./M T) 703 598 563 564 464 630 587

Packing Qty. ( Mt ) 4832 5436 5401 5267 4638 7539 5519 table : 4

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Month Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Avg.


Budgeted Packing Cost 834 807 681 718 690 782 752

Actual Packing Cost 767 693 569 701 620 727 680

Packing Qty. ( Mt ) 814 858 197 568 1,852 894 864

Trade Coil - PPGI

Month Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Avg.


table : 5

Budgeted Packing Cost 416 409 246 280 214 275 307

Actual Packing Cost 372 323 214 269 180 226 264

Packing Qty. ( Mt ) 131 304 471 417 49 225 266

Interpretation Interpretation : 1. From the Trend Trend analysis, analysis, it can can be observed observed that Budgeted Budgeted packagin packaging g costs for for OEM & Export Coils are more than Trade coils. 2. Also actual actual packing packing cost cost per metric metric tonne is is always always well well below the budgeted budgeted cost/MT. 3. Packing cost varies varies with with the the change in in Avg. Avg. Coil Coil weight. weight.

Reasons :

1. Packing costs costs are are high in OEM due due to high quality quality constraints. constraints. Export Export coils coils also also need very good packing due rough handling during transportation. In trade coils, metal packaging is not needed sometimes, so the packaging cost is automatically reduced.

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2. There is is saving saving in actual actual cost cost due reuse reuse waste waste packing packing materials materials.. 3. Packing cost cost depends depends highly highly upon the the coil weight weight & price price of packing packing materials. materials.

Cost optimization in ‘straps’ used for Packaging : 1. Presently Presently company company uses steel steel strap strap having having dimensi dimensions ons 0.64 x 31.75 mm mm from ITW suppliers. Another Another Supplier named FROMM packaging systems is ready to offer straps having dimensions 0.79 x 25.40 mm. Monthly requirement of company is 25000 kgs. of straps. So, with ITW 6.289 mtrs/Kgs strap is required. Therefore total requirement for whole month goes to 157232 mtrs/month. With With FROMM packaging suppliers, 6.35 mtrs/kgs strap is required. Therefore total requirement for whole month goes to 158750 mtrs/month. So, Savings is 1517 mtrs = 239 kg/month Rate of strap is Rs. 52/Kg Therefore, total savings is Rs. 12428/ month . So, annually, total savings can be Rs. 149136.

Sources of Data Sources of data are mainly secondary. The data is collected from internal sources of company through direct interactions with the concerned persons. Some of the data was collected through Internet. Sampling method is used for study by studying the conversion cost in CCL through past six monts data and based on this analysis have been carried out.

-


Conclusion 1. JSW does not own mines mines for some of its basic basic raw raw materials materials.. 2. Inabil Inability ity to utiliz utilizee 100% capa capacit city y. 3. Low perception perception among among investors investors about the company company’s ’s management management and ability ability to to sustain growth. 4. Althoug Although h the company company is focus focusing ing a on R&D, the budget budget is only only a fractio fraction n of what international competitors can afford to invest in their R&D activities. 5. The labor labor and conversio conversion n costs ( these include labour cost, cost, energy energy cost and other other manufacturing costs) per tonne of steel are among the lowest in the industry( both domestically and internationally)

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6. JSW is India’ India’ss largest largest private private steel maker maker.. This allows allows JSW to the economies economies of scale in production and better bargaining power with respect to suppliers and customers. 7. JSW steel steel is located located in a fast fast growing growing country like India India where the per-c per-capita apita steel steel consumption is still low but this means huge potential for growth. 8. JSW steel steel has access to to top talent talent from the the country country and that too at comparati comparatively vely lower prices than the competition. 9. JSW JSW steel steel stil stilll does does not have capti captive ve mines mines and and once once they they have it, their their cost cost structure would improve further and the external risk to the company will be mitigated to a large extent. 10. The current economic economic scenario where steel demand is declining declining around the world is another major area of concern for the organization. The company has already postponed and/or delayed some of its projects which were in the pipeline. 11. JSW Steel though is driven driven by technology, technology, does not spend much on Research and development and prefer to acquire and get technology solutions from outside either through purchase or sometimes through Joint ventures an d projects.

12. The average cost of production/tonne has reduced over the years and the productivity of labor has increased substantially over the years. This has primarily been due to the deployment of latest technology in their processes and

in order for this trend to continue, it needs to sustain investment in

this domain.

-


Recommendations 1. Controlling Controlling coating coating parameter parameterss such as air, air, temperature temperature & viscosity viscosity using using closed loop controls is important. 2. Improvement Improvementss in continuous continuous coating coating operations operations typica typically lly relate relate to increasi increasing ng the Line speed of the process. 3. Paint Paint jobs must must be schedul scheduled ed to minimize minimize changin changing g colour colour in roll roll & coil coati coating ng equipment. Paint with light colours first, then darker ones; the lighter coating does not need to be completely removed, but can blend into the darker coating.

-


4. Roll Roll & coil coil coating coating equipment equipmentss should should be cleaned cleaned regula regularly rly to prevent prevent coating coating materials from drying on the rollers & feed lines. Water should be used in cleaning steps to reduce the amount of hazardous waste generated. Initial cleaning should should be performed performed with used solvents, solvents, saving fresh solvents for final cleaning cleaning stages. 5. In Packa Packagi ging ng,, effo effort rtss must must be made made to lowe lowerr the the budg budget eted ed cost cost in all all the the 3 segments by bringing automation in packaging line, replacing GP sheets with CR sheets for packing if possible & reducing the strap’s dimensions without affecting its strength. 6. Comp Company any must must try try to acquir acquiree some some mines mines to sati satisf sfy y its its basi basicc raw raw mate materi rial al requirements. 7. It must put some some effor efforts ts to convert convert its fuel- driven driven devices devices into into powerpower- driven driven devices. 8. Company may plan plan in future future to to built its own own mixing mixing stations stations for for paint. paint. 9. Develop Develop good relations relations with with suppliers suppliers so as to to reduce the the raw material material shortages shortages & improve procurement time.

Bibliography / Referances Referances Websites:

1. www.steelbb.com 2. www.steelonthenet.com 3. www.shum www.shumaonlin aonline\cost e\costreduct reductionst ionstrategi rategies.com es.com 4. www.energysavings.com 5. www.google.com

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Referance books :

1. Princi Principle pless of Cost Account Accounting ing – Mr. Mr. N.K Jain Jain 2. Financi Financial al managem management ent – Mr. Mr. I.M. Pandey Pandey..

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Project Report in JSW

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