MBA, Organization study report/SIFL-Karthika T K

ORGANIZATION STUDY REPORT ON STEEL & INDUSTRIAL FORGINGS LTD. (SIFL) ABSTRACT The development of all manufacturing and consumer goods industries depend upon the extent of development of iron and steel industries. This study will be a significant endeavor in describing the functions of Steel& Industrial Forgings Limited. The project highlights the study on various departments and the functions undertaken in the organization. It depicts the way in which the overall functions are performed and managed by the employees of the organization view point, method and levels of analysis. The aim is to provide possible guidelines and suggestions for improving the productivity managerial efficiency of the steel complex limited. The study is useful in assessing the quality and the performance of the company. It is also basically aimed at the exploration of various departments undertaken by the each department of SIFL, by providing a better knowledge at the functional level departments such as works, materials, finance and personnel etc. Apart from that interaction and interrelationships between different departments are also identified.

1

INDEX SERIAL NO.

DESCRIPTION

PAGE NO.

LIST OF TABLES LIST OF FIGURES ABSTRACT 1.

INTRODUCTION

1

1.1 1.2 1.3 1.4 1.5

1

Introduction about Organization Company Profile History of the Company Vision, Mission and Objectives Achievements

1 4 5 6

2.

INDUSTRY PROFILE

8

3.

FUNCTIONAL DEPARTMENTS

19

3.1

Organization Chart of SIFL

20

3.2

Organization Structure of SIFL

21

3.3

Department Profile

23

3.3.1

Production Department

23

3.3.2

Quality Control Department

31

3.3.3

Maintenance Department

34

3.3.4

Materials Department

37

3.3.5

Store and Purchase Department

40

3.3.6

Marketing Department

44

3.3.7

Finance Department

53

3.3.8

Human Resource Department

62

4.

FINANCIAL ANALYSIS

71

4.1

Balance Sheet

71

4.2

Profit and Loss Account

73

4.3

Ratio Analysis

74

4.3.1

75

Current Ratio

2

4.3.2 5.

6.

Quick Ratio

76

SWOT ANALYSIS

78

5.1

Strengths

78

5.2

Weaknesses

78

5.3

Opportunities

79

5.4

Threats

79

EVALUATIONS AND SUGGESTIONS

80

6.1

Evaluations

80

6.2

Suggestions

81

7.

LEARNING EXPERIENCE

83

8

CONCLUSION

84

REFERENCES

85

3

LIST OF TABLES TABLE NO.

DESCRIPTION

PAGE NO.

2.1

World Steel and Crude Steel Production

12

3.1

Sales Turnover

47

3.2

Product of SIFL

51

3.3

List of Major Customers and Products

52

3.4

Performance

59

3.5

Financial Results

60

4.1

Current Ratio

75

4.2

Quick Ratio

76

4

LIST OF FIGURES FIGURE NO.

DESCRIPTION

PAGE NO.

3.1

Organization Chart of SIFL

20

3.2

Organogram of Production Department

24

3.3

Production Process

26

3.4

Open die forging

28

3.5

Organogram of Quality Control Department

31

3.6

Organogram of Maintenance Department

34

3.7

Organogram of Materials Department

37

3.8

Organogram of Store & Purchase Department

40

3.9

Major Raw Materials Suppliers

43

3.10

Organogram of Marketing Department

44

3.11

Sales Turnover

48

3.12

Organogram of Finance Department

53

3.13

Organogram of HR Department

62

4.1

Current Ratio

75

4.2

Quick Ratio

76

5

CHAPTER 1 INTRODUCTION 1.1 INTRODUCTION ABOUT THE ORGANIZATION Steel & Industrial Forgings Limited (SIFL) is an ISO 9001:2008 certified, Public Sector Undertaking fully owned by Government of Kerala. Incorporated in 1983 and Started commercial production in 1986. With a realistic production capacity is 5000 MT/annum of closed die forgings, SIFL specializes in the medium and heavy range of forgings of Alloy steel, Super alloys, Aluminium and Titanium. Untiring efforts of two decades has saddled SIFL firmly in the Forging Industry of India and abroad with best ratings for its products and services. Forgings with exquisite designs and shapes, flawless forms and contours, broad bands and spectra of metals like alloy Titanium and Aluminium, all in wide range of weights and unmatched quality have made SIFL the most sought after forging company in the country for critical components.

1.2 COMPANY PROFILE Steel & Industrial Forgings Limited (SIFL) is an ISO 9001:2008 certified, Public Sector Undertaking fully owned by Government of Kerala. Incorporated in 1983 and started commercial production in 1986, SIFL rapidly forged ahead to become a name to reckon with. They are masters in Titanium and Special alloy forgings. Untiring efforts of two decades has saddled SIFL firmly in the Forging Industry of India and abroad with best ratings for its products and services. Forgings with exquisite designs and shapes, flawless forms and contours, broad bands and spectra of metals like ALLOY STEEL, SUPER ALLOYS, ALUMINIUM and TITANIUM. All in wide range of weights and unmatched quality have made SIFL the most sought after forging company in the country for critical components. SIFL's diverse product mix caters to a wide range of sectors. These include complex and 6

high precision Aerospace forgings, Specialized Forgings for Defense, Heavy Forgings for Commercial vehicles, Railways and other components for automobiles etc. QUALITY STANDARDS An ISO 9001:2008 certified organization, their strength and prime aim is strict adherence to quality standards. At SIFL, they believe that their success depends entirely on delivering the quality customer demands. Their policy is to always attain and wherever possible exceed the standards expected by the valued customers. This is achieved by continuous improvement programme in process discipline, manufacturing methods and Quality Systems. Their success is in regular interactions with National Laboratories, premier forging institutes and of course, long term association with their prestigious customers. SIFL cater to a wide range of Industries in Defense, Automobile, Heavy engineering, Aero Space, Railways, Earthmoving Equipments, Agriculture etc. They draw strength from their team of experienced professionals and workforce committed to quality and timely delivery. The support from prestigious public and private sector together with guidance from Government of Kerala makes them one among the best performing State Public Sector Units in Kerala. SIFL continued with landmark development, during the last quarter also. The company has been recommended for AS9100 certification. The remarkable products developed includes seven items for Arjun Mark-II, main battle tank being developed by CVRDE for INDIAN ARMY. This includes Integral axle arms which are indigenized for the first time in the country and are of very complex in design. Another technological feat which was successfully completed is the development of stainless steel valve body (S410) for BHEL, Trichy. This is the heaviest forging done by SIFL so 7

far and weighs 550KG/piece. The company has became a partner in the prestigious Brahmos missile development program by obtaining an order from M/s Brahmos Aerospace Ltd, Hyderabad. This involves indigenization of forgings in Titanium, Aluminium and Stainless Steel Alloys. The company has to look beyond 2012 and set its sights higher, to realize its vision of becoming “A globally well known enterprise making significant contribution to the wealth and welfare of the Nation” with its mission of achieving Rs. 100crore in 2012-2013, Rs. 300crore by 2015 and Rs 500 Crores by the year 2020. CLIENTELE The company caters mainly to the needs of Automobile, Heavy Engineering, Defence, Railways, Oil and Aerospace sectors. Their major customers are giants of Indian Industries from Indian Railways, BEML, BHEL, HAL, ISRO, Ordnance factories and other Defence establishments of the Public Sector, L&T Komatsu, Caterpillar, Hindustan Motors, Elgi Equipments, Ashok Leyland etc. from the Private Sector. The company also exports forgings to the Middle East, Indonesia and Korea. Their competence and willingness to take up forgings in special alloys and materials of unique chemistry has stood them in good stead for assuring a niche market in the above weight range for a variety of complex forgings. SIFL have so far developed more than 700 different forgings for various applications. SIFL is now in the threshold of exploring new avenues to widen scope and extent of their operations and are poised for a quantum leap with a vision stretching to the year 2020. SUPPORTING UNITS SIFL has set up a complete Machining unit in Shornur, to support its post forge operations. With this new machining facility SIFL is fully equipped with post forging facilities. SIFL has also developed and trained various units in and around to do machining jobs suiting to our quality standards. These units, therefore, form an effective backup for SIFL, in meeting the

8

entire range of forging requirements.

1.3 HISTORY The story of the State-owned Steel and Industrial Forgings Limited (SIFL) at Athani in Thrissur district is one of a dramatic turnaround. The sick unit which was referred to the Board for Industrial and Financial Reconstruction (BIFR) in the mid-1990s is now a profit-making manufacturer of high-end steel and industrial forgings. SIFL, a subsidiary of Steel Industries Limited Kerala (SILK), which had an accumulated loss of about Rs.15 crores in 1993-94 has been making profit almost consistently since 1995 (except in 2000-01). In 2004, the company made a profit of Rs.1.3 crores. By then it had made an accumulated profit of Rs.25 lakhs after making up for all the accumulated losses. According to the officials, SIFL had achieved the turnaround without much additional investments or acquisition of machineries. The Government made a contribution of Rs.6 crores to Rs.7 crores for arriving at a one-time settlement with financial institutions under a BIFR revival package. The banks were advised to reduce the interest rates on loans advanced to SIFL. Interestingly, some other public sector companies in the forging sector were also accorded similar packages around the same time. But not many could make a similar comeback as SIFL did. Their main strength is their innovative capacity and the dedication of workers. They could develop sophisticated and high-quality products needed by sectors such as the aviation and the defence. Today SIFL makes complex and high precision forgings for establishments such as the Indian Space Research Organisation, Railways, Bharat Heavy Electricals Limited and Bharat Earth Movers, besides the defence and civil aviation units. Their decision to concentrate on high-value forgings for the sophisticated industries helped them achieve the turnaround. An increase in demand for forgings and a hike in their prices also contributed significantly. SIFL now exports products directly to countries such as Indonesia and Qatar and indirectly to the U.S. and the U.K.

9

The company's turnover which stood at Rs.16 crores in 2001 doubled to Rs.32 crores in 2004-05. The plan was to enhance the turnover to Rs.100 crores by 2010. But even now the capacity utilisation is only 50 per cent as against the industry average of 70 per cent.

1.4 VISION, MISSION & OBJECTIVES VISION 

To be world class manufacturers of small and medium class sea going vessels, barges etc.



To be a high quality supplier of general engineering goods.



To be a cost effective source of structural steel products. MISSION



To promote, execute and develop steel based industries in Kerala and other states or elsewhere.



To manufacture steel, purchase, import-export and deal in steel or connected products.



Media for steel and iron corporate, like galvanizing process and paints refractoriness.



Servicing core sector like defense, railways, power generating and transmission in and outside Kerala and promoting ancillary units.



To implement rural technology plans through its modern facilities for casting, forging, fabrication machining and its division of power engineering exports and trading.



Apart from the above the company has set certain social and economic goals for the welfare of the company and the state in a general. CORPORATE OBJECTIVES OF SIFL

SIFL being govt. of Kerala enterprises is accountable to the government of Kerala and through them to people of India. The company‟s policies and action will therefore be governed by consideration of public good and by its obligations towards its shareholders, customers, suppliers, employees and the community in which it exist. Consistent with these obligations the company set for itself to the following obligations and objectives to be achieved. ·

To develop steel based industries and services in Kerala. 10

·

To manufacture, sell, purchase, export and deal in steel or connected products.

·

Servicing core sector like defense, railways, power generation and transmission in and outside Kerala and promoting ancillary units.

·

To implement rural technology plans through its modern facilities for casting, fabrication, machining and its divisions of power engineering agency exports and trading.

·

To establish, maintain, conduct and otherwise subsides research laboratories, power units and experimental workshop for scientific and technical research experiments.

·

To acquire buy purchase or otherwise and to carry on, like business of manufactures, sellers and dealers in light and heavy road transporters, self propelled and non powered hauled power units, rolling stock for ministry of railways and for export abroad different types of road transporters for ministry of defense marine.

·

Crafts light medium and other applications including those needed by ministry of defense barges for inland water ways as well as for use along the cost.

·

Apart from the above the company has certain vital social and economic goals for the welfare of the company and the state.

1.5 ACHIEVEMENTS  Certification from DGQA, DGAQA, Ministry of Defence, Govt. of India.  Assessed and approved by NQA Quality Systems Registrar against the quality assurance system standards ISO-9001:2008 for manufacture and supply of forgings.  Facilities certified by premier inspection agencies viz.: IBR, Indian Registry of shipping, Engineers India Ltd.  Best vendor award from BEML.  Evaluated by the Central Boilers Board and has been granted recognition as a "Well Known Forge".

11

 RDSO, ISRO, Certifications/Approval.  SIATI 2003 Award for excellence in Aerospace indigenization.  Kerala's Best PSU Award Winner - 2006 - 2007, 2007- 2008.  Special Award for notable achievement in Enterprise Performance, 2008-2009, 2009-2010 &2010-2011

12

CHAPTER 2 INDUSTRY PROFILE Steel means generally hard, strong, durable, malleable alloy of iron and carbon, usually containing between 0.2 and 1.5 percent carbon, often with other constituents such as manganese, chromium, nickel, molybdenum, copper, tungsten, cobalt, or silicon, depending on the desired alloy properties, and widely used as a structural material. The development of all manufacturing and consumer goods industries depend upon the extent of development of iron and steel industries. The most important among the industries directly dependent on iron and steel industries are engineering, wagon building and other transport equipment industries. The development of agriculture is dependent on steel both directly and indirectly. Steel production has a multiplier effect on the development of all other industries. So it has been rightly called Mother Industry. WORLD SCENARIO The earliest known production of steel is a piece of ironware excavated from an archaeological site in Anatolia (Kaman-Kalehoyuk) and is about 4,000 years old. Other ancient steel comes from East Africa, dating back to 1400 BC. In the 4th century BC steel weapons like the Falcate were produced in the Iberian Peninsula, while Noric steel was used by the Roman military. The Chinese of the Warring States (403–221 BC) had quench-hardened steel while Chinese of the Han Dynasty (202 BC – 220 AD) created steel by melting together wrought iron with cast iron, gaining an ultimate product of a carbon-intermediate steel by the 1st century AD. The Haya people of East Africa discovered a type of high-heat blast furnace which allowed them to forge carbon steel at 1,802 °C (3,276 °F) nearly 2,000 years ago. This ability was not duplicated until centuries later in Europe during the Industrial Revolution. Evidence of the earliest production of high carbon steel in the Indian Subcontinent was found in Samanalawewa area in Sri Lanka. Wootz steel was produced in India by about 300 BC. 13

Along with their original methods of forging steel; the Chinese had also adopted the production methods of creating Wootz steel, an idea imported into China from India by the 5th century AD. In Sri Lanka, this early steel-making method employed the unique use of a wind furnace, blown by the monsoon winds, that was capable of producing high-carbon steel. Also known as Damascus steel, wootz is famous for its durability and ability to hold an edge. It was originally created from a number of different materials including various trace elements. It was essentially a complicated alloy with iron as its main component. Recent studies have suggested that carbon nano-tubes were included in its structure, which might explain some of its legendary qualities, though given the technology available at that time, they were produced by chance rather than by design. Natural wind was used where the soil containing iron was heated up with the use of wood. The ancient Sinhalese managed to extract a ton of steel for every 2 tons of soil a remarkable feat at the time. One such furnace was found in Samanalawewa and archaeologists were able to produce steel as the ancients did long ago. Crucible steel, formed by slowly heating and cooling pure iron and carbon (typically in the form of charcoal) in a crucible, was produced in Merv by the 9th to 10th century AD. In the 11th century, there is evidence of the production of steel in Song China using two techniques: a "berganesque" method that produced inferior, inhomogeneous steel and a precursor to the modern Bessemer process that utilized partial DE carbonization via repeated forging under a cold blast. Since the 17th century the first step in European steel production has been the smelting of iron ore into pig iron in a blast furnace. Originally using charcoal, modern methods use coke, which has proven to be a great deal cheaper. The production of steel by the cementation process was described in a treatise published in Prague in 1574 and was in use in Nuremberg from 1601. A similar process for case hardening armour and files was described in a book published in Naples in 1589. The process was introduced to England in about 1614. It was produced by Sir Basil Brooke at Coalbrookdale during the 1610s. The raw material for this was bars of wrought iron. During the 17th century it 14

was realized that the best steel came from ore grounds iron from a region of Sweden, north of Stockholm. This was still the usual raw material in the 19th century, almost as long as the process was used. Crucible steel is steel that has been melted in a crucible rather than being forged, with the result that it is more homogeneous. Most previous furnaces could not reach high enough temperatures to melt the steel. The early modern crucible steel industry resulted from the invention of Benjamin Huntsman in the 1740s. Blister steel (made as above) was melted in a crucible or in a furnace, and cast (usually) into ingots. The modern era in steelmaking began with the introduction of Henry Bessemer's Bessemer process in 1858. His raw material was pig iron. This enabled steel to be produced in large quantities cheaply, thus mild steel is now used for most purposes for which wrought iron was formerly used. 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 improvement in steelmaking was the Siemens-Martin process, which complemented the Bessemer process. The Asian countries have their respective dominance in the production of the steel all over the world. India being one among the fastest growing economies of the world has been considered as one of the potential global steel hub internationally. Over the years, particularly after the adoption of the liberalization policies all over the world, the World steel industry is growing very fast. Steel Industry is a booming industry in the whole world. The increasing demand for it was mainly generated by the development projects that have been going on along the world, especially the infrastructural works and real estate projects that has been on the boom around the developing countries. Steel Industry was till recently dominated by the United States of America but this

15

scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree. In the last one year, the world has seen two big M&A deals to take place:

The Mittal Steel, listed in Holland, has acquired the world's largest steel company called Arcelor Steel to become the world's largest producer of Steel named Arcelor-Mittal.



Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth largest steel company, Corus, with the highest ever stock price. It has been observed that Steel Industry has grown tremendously in the last one and a half

decade with a strong financial condition. The increasing needs of steel by the developing countries for its infrastructural projects have pushed the companies in this industry near their operative capacity. The most significant growth that can be seen in the Steel Industry has been observed during the period 1960 to 1974 when the consumption of steel around the whole world doubled. Between these years, the rate at which the Steel Industry grew has been recorded to be 5.5 %. This roaring market saw a phase of deceleration from the year 1975 which continued till 1982. After this period, the continuous fall slowed down and again started its upward movement from the early 1990s. Steel Industry is becoming more and more competitive with every passing day. During the period 1960s to late 1980s, the steel market used to be dominated by OECD (Organization for Economic Cooperation and Development) countries. But with the fast emergence of developing countries like China, India and South Korea in this sector has led to slipping market share of OECD countries. The balance of trade line is also tilting towards these countries. The main demand creators for Steel Industry are Automobile industry, Construction Industry, Infrastructure Industry, Oil and Gas Industry, and Container Industry.

16

New innovations are also taking place in Steel Industry for cost minimization and at the same time production maximization. Some of the cutting edge technologies that are being implemented in this industry are thin-slab casting, making of steel through the use of electric furnace, vacuum degassing, etc. The Steel Industry has enough potential to grow at a much accelerated pace in the coming future due to the continuity of the developmental projects around the world. This industry is at present working near its productive capacity which needs to be increased with increasing demand. World steel industry and Crude Steel Production The following table gives a clear picture upon the major crude steel producers in the world. Country

Crude Steel Production (mtpa)

China

272.5

Japan

112.7

United State

98.9

Russia

65.6

South Korea

47.5

Germany

46.4

Ukraine

38.7

Brazil

32.9

India

32.6

Italy

28.4 Table No.: 2.1 17

In the year 2012, the global steel production has made a record level by crossing the 1000 million tonnes. Among the top producers in the steel production, China ranked 1 in the world. Production of steel in the 25 European Union countries was at 16.3 mmt in January 2011. Production in Italy was increased by 11.5 percent in comparison to the same month in 2004. Italy produced 2.5 mmt of crude steel in January 2011. Austria produced 646,000 metric tonnes. According to rating made by the "World Steel Dynamics", Indian HR Products are categorized in the Tier II category quality of products. Both EU and Japan have ranked the top. USA and South Korea comes as like India. World Steel Industries World Steel Industries are undergoing a booming phase with all sorts of Mergers and Acquisitions taking place all around the world. The key market players are now subjected to fierce competition from the new companies from developing economies. From the early 1990s, China and South Korea have emerged significantly in the World Steel Industries. In the very recent years India is also on a winning streak in terms of M&A. First of all, it was NRI Laxmi Mittal's, Mittal Steel (listed in Netherlands) to acquire Arcelor, many times greater than it. Then came the Indian big shot, TATA Steel to acquire Corus, the fifth largest steel company in terms of production capacity. Thus, it is being observed that World Steel Industries is going at a very competitive pace and time where the OECD (Organization for Economic Cooperation and Development) countries don't have their monopoly on the steel market. The main demand for World Steel Industries comes from the construction industry. With the developmental works on a rise in both the developed and developing countries, the infrastructure industry along with real estate boom, the demand for steel is rising like anything. For example, more and more real estate companies are using steel frames for building houses. In USA, it had been observed in the early 1990s that the use of steel for house building has increased by nearly five times in just one year. The automobile industry is also coming up fast as a potential 18

demander for World Steel Industries because from a research it has been found out that the use of steel in the vehicles would cause the weight of the same to lessen by almost twenty five percent. The other industries who demand steel industries involve appliance industries, Oil and Gas industries and container industries. On the technological front, the World Steel Industries are making rapid improvement with the implementation of cutting-edge technologies like steel making through the utilization of electric furnace, continuous annealing, casting of thin slabs, and vacuum degassing.

19

INDIAN SCENARIO The history of the modern iron and steel industry in India began in 1870 when the Bengal Iron Works Company setup its plants at Kulti in West Bengal. However the first effort al large scale production got under way when the Tata Iron Steel Company (TISCO) was setup at Jamshedpur in 1907. This was followed by the establishment of Indian Iron and Steel Company (IISCO) at Burnpur in 1919. Various five year plans saw the establishments of major public sector steel plants in various parts of India, which worked as the engines of development and economic growth of India. The first unit in public sector now known as Visvesvaraya Iron and Steel Limited (VISL) started functioning at Bhadravati in 1923. Two more integrated public sector steel plants were Setup at Bokaro (Bihar) and Visakhapatnam (Andhra Pradesh) subsequently. Alloy steel plant at Durgapur and stainless steel plant at Salem were set up later. The Steel Authority of India Limited (SAIL), a government company, was created in 1974 and was made responsible for the development of the steel industry and also for the major inputs of the industry. Steel Authority of India Limited (SAIL) is responsible for the management of Hindustan Steel Limited, Bokaro Steel Limited, Salem Steel Limited Hindustan Steelworks Construction Limited, Bharat Coking Coal Limited, and National Mineral Development Corporation Limited. Vishakhapatnam Steel Plant (VSP) is the first shore-based, modern steel plant in the country. The plant has been awarded the ISO: 9002 for steel melt (SMS) and downstream units covering all the products making it the first integrated plant to achieve this honor. Sponge Iron India Limited (SIIL) is a joint venture of the Government of India and the Government of Andhra Pradesh. The Kudremukh Iron Ore Company Limited (KIOCL) a Government of India undertaking and one of the countries largest 100 percent EOU‟s, was established in April 1976 to meet the long term requirements of Iran. This project was to be financed in full by Iran. However, as Iran stopped further loan disbursements, the project was completed as per schedule with the funds provided by Government of India.

20

Metallurgical and Engineering Consultants (India) Limited (MECON), the first consultancy and engineering organization to be accredited with ISO:9001, as developed considerable expertise not only in consultancy services like design, detailed engineering and project management, but also in design and supply of equipment for the ferrous, non ferrous, oil and gas, petro-chemical and other general industries. MECON has diversified its services into power, environmental engineering, ocean engineering, road and highways, petro chemicals, gas pipelines, information technology, defense, projects etc. Growth & development of the industry The rapid development of steel capacity is indeed a logical corollary of any programs of rapid industrialization for developing country. Steel is used as a basic material in the manufacture of metal products, electrical machinery, transport equipment, textile and other machinery. The India steel industry is experiencing a slow but steady growth. The steel industry in India has huge scopes in the future with massive scale of infrastructural development happening all across the country. The India steel industry caters to many other industrial sectors. Indian steel industry has acquired a significant status and is currently ranked as the 5th largest steel producer in the world. The supply of finished steel in India has increased significantly from a level of around 0.86 million tons (Mt) in 1948 to 55.2 Mt in 2008. The availability of cheaper raw materials and labor has made India one of the cheapest steel producers compared to the developed countries like USA, Germany and Japan etc. Consumption of steel has grown by 12.5%during the last three years, well above the 6.9 % envisaged in the National steel Policy for 2008. The scope for raising the total consumption of steel is huge, given that per capita steel consumption in India is only 40 kg – compared to 150 kg across the world and 250 kg in China. Finding ways and means to increase per capita steel consumption is the best solution for the country to meet the global economic challenges.

21

Since its independence, India has experienced steady growth in the steel industry, thanks in part to the successive governments that have supported the industry and pushed for its robust development. Further illustrating this plan is the fact that a number of steel plants were established in India, with technological assistance and investments by foreign countries. In 1991, a substantial number of economic reforms were introduced by the Indian government. These reforms boosted the development process of a number of industries - the steel industry in India in particular - which has subsequently developed quite rapidly. The 1991 reforms allowed for no licenses to be required for capacity creation, except for some locations. Also, once India‟s steel industry was moved from the listing of the industries that were reserved exclusively for the public sector, huge foreign investments were made in this industry. Yet another reform for India‟s steel industry came in 1992, when every type of control over the pricing and distribution system was removed, making the modern Indian Steel Industry extremely efficient, as well as competitive. Additionally, a number of other government measures have stimulated the growth of the steel industry, coming in the form of an unrestricted external trade, low import duties, and an easy tax structure. India continually posts phenomenal growth records in steel production. In 1992, India produced 14.33 million tones of finished carbon steels and 1.59 million tones of pig iron. Furthermore, the steel production capacity of the country has increased rapidly since 1991 - in 2008, India produced nearly 46.575 million tones of finished steels and 4.393 million tones of pig iron. Both primary and secondary producers contributed their share to this phenomenal development, while these increases have pushed up the demand for finished steel at a very stable rate.

22

In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the total amount of domestic steel consumption was 43.925 million tones. With the increased demand in the national market, a huge part of the international market is also served by this industry. Today, India is in seventh position among all the crude steel producing countries.

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CHAPTER 3 FUNCTIONAL DEPARTMENTS Steel and Industrial Forgings Ltd (SIFL) is a public sector undertaking (PSU) fully owned by Government of Kerala situated in Athani in Thrissur, Kerala state of India. The company was incorporated in 1983 and started commercial production in 1986. It is an ISO 9001:2008 certified company. SIFL, a subsidiary of Steel Industries Kerala Limited (SILK) started its commercial production in 1986. The company was referred to the Board for Industrial and Financial Reconstruction (BIFR) in the mid-1990s. The main products of SIFL are: Complex and high precision aerospace forgings, specialized forgings for defence, heavy forgings for commercial vehicles, Indian Railways and other components for automobiles etc. SIFL has set up a complete machining unit to meet its post forge operations and to meet its customer requirements. The machining unit is equipped with modern machineries to meet the requirements. It was set up within a 6 months record time, as a greenfield project. The main machineries include Vertical Machining Centre, Radial Drilling Machine, CNC Horizontal Lathe, Magnetic particle testing machine, Shot blasting machine etc. There are plans to expand the capacity and utilization of this unity with the procurement of Vertical Turning centre and CNC 3 Axes gear hobbing machine.

24

25

Worker s

Engineer

AM

DM

Sr. Manage r

Workers

Worker s

Asst. Engineer

Engineer

AM

DM

PRODUCTION

Fig. No. : 3.1

Workers

Workers

Workers

Engineer

Asst. Engineer

Engineer

DM

Manager

DIE SHOP

WORKS (GM)

Asst. Enginee r

Asst. Engineer

DM

Manager

Sr. Manager

AM

Engineer

MNT

F&D

PPC

MARKETING

Asst. Engineer

Enginee r

TECH/ IT

Asst. Officer

RM

AM

Workers

Asst. Engineer

Engi neer

SC

AM

STORES/ PURCHA SE

MMD

MANAGING DIRECTOR

CHAIRMAN AND BORAD OF DIRECTORS

Workers

Asst. Engineer

Engineer

Asst. Manager

Manager

QA

Workers

FINANCE

Skilled Worker s

Asst. Office r

AM

Sr. Manager

Asst. Officer

Officer

DGM

A & HRD

3.1 ORGANIZATION CHART OF STEEL & INDUSTRIAL FORGINGS LIMITED

ABBREVIATIONS ·

MMD

: Materials Management Department

·

A & HRD

: Administration & Human Resource Development

·

MNT

: Maintenance

·

QA

: Quality Assurance

·

IT

: Information Technology

·

PPC

: Production Planning and Control

·

SC

: Spares & Consumables

·

RM

: Raw Materials

·

F&D

: Finishing & Dispatch

·

AM

: Asst. Manager

3.2 ORGANIZATION STRUCTURE OF SIFL Organization structure is a basic framework within which managers decision making behavior take place. Structure basically deals with relationships. All science try to discover the structural relationship in the phenomenon in which they are interested in management, it is needed to understand how organization are structured and how these structures are crested and maintained. In a simple term, structure is a pattern in which various parts or components are interrelated or interconnected. The organization structure is the pattern of relationships among various activities and position. Since these positions are held by various persons, the structure reflects the relationship among people in the organization. The organization structure can be viewed as an established pattern of relationship among the components of the organization. In a large and complex organization, structure is set forth initially by the design of the major components or subsystems and then by establishing relationship among these sub systems. It is the patterning of these relationships with some degree of permanency, referred company as organization structure. Design of basic structure involves such issues as how the work of the organization will be divided and assigned among various positions, groups, departments and how the coordination is necessary to accomplish total organizational objectives.

26

The operations and successes of SIFL are taken care of by its capable management and Board of Directors. The senior management ensures that collective strengths are effectively leveraged towards attaining the Company‟s vision. BOARD OF DIRECTORS CDR.(Retd.) K.Shamsuddin

:

Chairman

CDR.(Retd.)P.Suresh

:

Managing Director

Sri.S.Babu Abraham

:

Director

Shri.M.Radhakrishnan

:

Director

Executives

63 no.s

Workmen (Permanent )

252 no.s

Contract workers/Temporary

185 no.s

Total employees :

500 no.s

Bankers & Auditors

Banker: State Bank of Travancore, Main Branch, Thrissur. Auditor: M/s. Abraham & Jose, Chartered Accountants, Thrissur.

27

3.3 DEPARTMENT PROFILE 3.3.1 PRODUCTION DEPARTMENT Production system plays a very important role in achieving organizational excellence. But the lack of proper planning, co-ordination and control often affects the capabilities of this system because of which these systems are not utilized fully and effectively leading to many undesirable situations forcing many organizations to become less competitive. A number of organizations worldwide have achieved and sustained excellence by effective production management. Effective production management involves understanding of the characteristics of various types of production system, identification of the dynamics of the different phases of the management process, realizing the potential of different analytical tools, learning nuances of the implementation of these tools, visualizing the impact of various uncertain situation and developing the ability to react under various scenarios to achieve consistently excellent business result. There is evidence to show how a number of organizations achieved world class status by effective management of their production system. These organizations achieved superior quality, higher productivity, perfect delivery performance, customer satisfaction and enterprise excellence all with lower cost. Production is the basic activity of all industrial units. All the other activities revolve around this activity. The end product of the production activity is the creation of goods and services for the satisfaction of human wants. The production activity is nothing but the stepby-step conversion of one form chemically or mechanically. This is done in factories with house manufacturing. The basic inputs of production process are men, machine, plant services and methods. The product of farm, sea forest and mine are used as raw materials on which the processing is done to create or enhance the firm utility it should be noted that the finished product by one manufacturing unit does not always furnish a readymade product for the ultimate consumption.

Production management deals with decision making related to production process so that the resulting goods or services is product to specification, in the amounts and by the schedule demanded and at minimum cost. 28

ORGANOGRAM OF PRODUCTION DEPARTMENT Manager

Assistant Manager

FORGE SHOP

MTP (MATERIALS PREPARATION)

Engineer

Skilled 5

Asst. Engineer

Skilled 69 Unskilled 15 Fig. No.: 3.2 The Production department consists of two divisions, the forge shop and the Materials Preparation division which is headed by a Senior Manager and an Asst. Manager. Based on the monthly and weekly plans, jobs are allocated and recorded in forge shop. The process owners are the primary head of production department and a secondary shift in charge. There are 69 skilled and 15 unskilled labourers. The Production Manager is responsible for day-to-day production within the forge shop. He supervises, motivates, and supports the staff daily, applying a team approach and maintaining open communication. The Production Manager plans, schedules, strategizes, and oversees all production activities while continually building sales and maintaining

29

profitability. The Production Manager performs essential functions to ensure overall customer satisfaction and quality service, and establishes and maintains effective communication with employees and clients. The Production Manager is responsible for the effective and efficient planning and scheduling of personnel and equipment to reduce bottlenecks and problems.

3.3.1.1 FUNCTIONS 

Planning daily production according to annual target.



Monitoring actual production & checking any deviation. The entire production activities of the company are under this department. SIFL has a

well-established production planning and control system. This section deals with the issue of work order, materials issue from store, dispatching, loading and scheduling production progress and material planning.

The existing production system in SIFL is a better one as total is

concerned. Procedure For Production Planning and Control Monthly and weekly plans are communicated to the production head by planning. Based on the plans, the production head will communicate to the shift in-charge about daily plan. Jobs are then allocated and recorded in forge shop job and cum shift wise production report. Set up verification is done before starting the work order and is recorded. After the approval of set up, bulk production is started. Corrective actions are initiated for process non-conformances. Analysis of set up NCs is done daily for implementing corrective actions. Shift in-charge monitors the process and the inspections are carried out by the QA. Route card cum work order is issued and it is updated by the shift in-charge for the required process and the work order is updated and moved along with the material till the completion of all process, which is referred for traceability. If any rejection is found in the process, the same will be updated in the NC register and the route card and the material is identified with rejection tag for disposition action. Components are offered to QA for final inspection. After production, die should be cleaned and handed over to the die shop. 30

3.3.1.2 PRODUCTION PROCESS

Raw materials Charging scrap

Setting of Dies and Tools

Melting Stage

Oxidation stage

Reduction Stage

Forging

Finished product

Testing

Dispatching

Fig. No.: 3.3  Die Design & Development SIFL's design & engineering capabilities are ably backed by a well equipped Die Shop, set up along modern lines with Double Spindle Copy Milling Machines, Electrical Die Sinking Machine, CNC Die Sinking Machine, CNC Turning Centre, Radial Drilling machines, Heavy Duty Plano miller, Lathes, Tool & cutter grinders, etc. The design and development of the die holds the key to blemish-free forgings. SIFL designs both single-impression and multi-impression dies. The design, of course, is related to the forging drawings. And the decision on the type of die to be used is based on the specific requirement of each case. The care that goes into the design of each die also goes into the selection of raw materials and the sequence of operation that follows. To facilitate uninterrupted operations, SIFL is equipped with standby Power Generators. Forging dies are usually made of high-alloy or tool steel. Dies must be impact resistant, wear resistant, maintain strength at high temperatures, and have the ability to withstand cycles of rapid heating and cooling.

31

To keep pace with hi-tech developments, SIFL has equipped itself with CAD, CAM facilities like DELCAM for three dimensional modeling of Product, Die & Tool design etc. thereby minimizing the development cycle time. All these qualities have helped SIFL grow quickly into a premier forging unit, capable of producing forgings with close dimensional tolerances.  Manufacturing of Forgings Forging is a manufacturing process involving the shaping of metal using localized compressive forces. Forging is often classified according to the temperature at which it is performed: "cold", "warm", or "hot" forging. Forged parts can range in weight from less than a kilogram to 580 metric tons. Forged parts usually require further processing to achieve a finished part. Main production machinery of SIFL comprise closed die forging hammers of 10 Ton (16000 ft.lb) and 6Ton (10650 ft.lb) capacity. Open die forgings requirements are met with a 1Ton clear space hammer. Other supporting facilities include shot blasting machines, Pneumatic trimming press of 1000Ton and 500Ton capacity, Hydraulic trimming press of 1200Ton capacity, Billet shearing machines and a number of oil-fired and electric furnaces for soaking as part of forging process. There is a modern heat treatment plant equipped with number of furnaces both LDO fired and electrically heated and a charging machine which takes care of loading and unloading of heat treatment charges. Drop forging

Drop forging is a forging process where a hammer is raised up and then "dropped" onto the workpiece to deform it according to the shape of the die. There are two types of drop forging: open-die drop forging and closed-die drop forging. As the names imply, the difference is in the shape of the die, with the former not fully enclosing the workpiece, while the latter does.

32

Open-die forging is also known as smith forging. In open-die forging, a hammer strikes and deforms the workpiece, which is placed on a stationary anvil. Open-die forging gets its name from the fact that the dies (the surfaces that are in contact with the workpiece) do not enclose the workpiece, allowing it to flow except where contacted by the dies. Therefore the operator needs to orient and position the workpiece to get the desired shape. The dies are usually flat in shape, but some have a specially shaped surface for specialized operations. For example, a die may have a round, concave, or convex surface or be a tool to form holes or be a cut-off tool.  Open-die drop forging Open-die forging lends itself to short runs and is appropriate for art smithing and custom work. In some cases, open-die forging may be employed to rough-shape ingots to prepare them for subsequent operations. Open-die forging may also orient the grain to increase strength in the required direction. Cogging is successive deformation of a bar along its length using an open-die drop forge. It is commonly used to work a piece of raw material to the proper thickness. Once the proper thickness is achieved the proper width is achieved via edging. Edging is the process of concentrating material using a concave shaped open die. The process is called edging, because it is usually carried out on the ends of the workpiece. Fullering is a similar process that thins out sections of the forging using a convex shaped die. These processes prepare the workpieces for further forging processes.

FULLERING

EDGING

Fig. No. 3.4 33

 Impression-die drop forging Impression-die forging is also called closed-die forging. In impression-die forging, the metal is placed in a die resembling a mold, which is attached to the anvil. Usually the hammer die is shaped as well. The hammer is then dropped on the workpiece, causing the metal to flow and fill the die cavities. The hammer is generally in contact with the workpiece on the scale of milliseconds. Depending on the size and complexity of the part the hammer may be dropped multiple times in quick succession. Excess metal is squeezed out of the die cavities, forming what is referred to as flash. The flash cools more rapidly than the rest of the material; this cool metal is stronger than the metal in the die so it helps prevent more flash from forming. This also forces the metal to completely fill the die cavity. After forging the flash is removed. Their annual capacity is around 7500 Metric Tons. They manufacture closed die forgings in the weight range of 5 kg to 450 kg and open die forgings within 1kg to 75kg net weight per piece and ring rolling up to 650mm OD. The company has got the capability to manufacture forgings out of Carbon steels, Alloy steels, Stainless steels, Maraging steels, Aluminium alloys, Titanium alloys etc.  Forging & Heat Treatment Facilities The billets for forging are heated in oil fired or electric furnaces, closely controlling the temperature to reduce the scale formation and overheating so that the metallurgical properties are ensured in the final product. In addition, in-process inspection is carried out at all stages and 100% inspection for visual defects after forging. The accepted forgings are duly heat treated to ensure its mechanical properties. By providing heat treatment services in-house, SIFL is able to maintain greater control over heat treating process. The facility comprise batch furnaces both oil fired & electrical, continuous electrical heating furnaces, solution treatment etc. to carry out annealing, normalizing, hardening, tempering, iso-thermal annealing, solution treatment etc. or other operations as specified by the customer. Close temperature control and process monitoring with the help of temperature recorders ensures uniform properties duly supported by evaluation of metallurgical properties through representative test pieces. 34

 Testing/Inspection Facilities Surface conditioning is done by shot blasting/grinding and final inspection is carried out once again to ensure quality requirements. Non-conformities are taken care of by timely corrective and preventive action. Calibration of electrical furnaces of SIFL is done by NABL accredited laboratories like HAL, STIC, CUSAT etc. SIFL has set up a system of total quality control consisting of an array of state-of-the-art speciality equipments where the products go through a series of rigorous tests, the destructive test including tensile, jominy and impact testing, wet analysis, carbon-sulphur determination, insitu metallography (where microstructure can be observed without destroying the job) and nondestructive tests using Spectrometer, Microscope, Magnaflux crack detection, Die Penetrant, Ultrasonic flaw detection etc. SIFL is now equipped with a new digital ultrasonic flaw detector which has got a range of 5mm to 5m in steel. Setting and control of quality standards at all stages right from the receipt of raw material to the finished product through quality plan makes them deliver superior quality forgings with close dimensional tolerances and metallurgical properties. 3.3.1.3 MACHINING UNIT SIFL has set up a complete machining unit to meet its post forge operations and to meet its customer requirements. The machining unit is equipped with modern machineries to meet the requirements. It was set up within 6 months record time, as a greenfield project. The main machineries includes Vertical Machining Center, Radial Drilling Machine, CNC Horizontal Lathe, Magnetic particle testing machine, Shot blasting machine etc.

35

3.3.2 QUALITY CONTROL DEPARTMENT Quality control department has a responsibility to control and maintain the quality of billets and to grade it according to BIS standards and reporting it to production department. The department has full-fledged laboratory to do this task. During refining the samples are analyzed. The products of the company are every time subjected to the most stringent and uncompromising test. Being holder of a good license, company is authorized to issue certificates conforming BIS specification. The objectives of the department is, to ensure that good quality forging only reach to customers and that the product meet customer‟s requirements and to ensure the customers complaint to Nil on quality. ORGANOGRAM OF QUALITY CONTROL DEPARTMENT

Manager

Asst. Manager

Engineer

Asst. Engineer

Skilled

Unskilled Fig. No.: 3.5

36

The Manager of Quality Assurance is charged with the responsibility for maintaining the procedures and standards, monitoring its effectiveness and implementing a continuous improvement program. The Manager of Quality Assurance‟s authority to overview all functions of the organization and to recommend and/or initiate improvements, is fully supported by the General Manager. All employees are responsible for upholding and enhancing the quality of Company‟s performance through knowledge, dedication to their tasks, awareness of the procedures, standards and regulations that govern their work and appreciation of their role in the company-wide team. 3.3.2.1 FUNCTIONS 

Inspect raw materials available.



Test the quality of scrap.



Checking the quality of billets.



Checking the quality and size of rolled items

 Analyze the heat Control of the elements such as carbon, manganese, silicon, sulphur and phosphorus etc. are also the functions of this department. The quality reports of the raw materials are sent to the deputy production manager and all other departments. In shift, chemist will analyze the sample and its chemical content is reported to the production department, so that they can add or reduce each component in order to get a high quality product. The shift chemist analyzes final billets samples and the result will be given to the production department. Each and every billet are thoroughly checked by shift chemist in order to give code and color according to the quality standards laid down by BIS. Billet yard supervisor will assist him. QUALITY OF INPUTS In fact, SIFL's ISO 9001:2008 quality system covers the whole ground,  Acceptance plan and testing of 100% raw material supplies.  Setting and control of quality standards for forging as per quality plan.  Corrective and preventive actions are implemented promptly for minimizing defects to a zero level.

37

 Certification of facilities by IBR, EIL, IRS and other inspection agencies.  In-depth testing and research, based on specific customer requirements.  Continuous vendor evaluation.  Strict implementation of established processes.  Calibration and maintenance of testing, measuring and thermal control equipment.  Constant and continuous consultation with customers and suppliers on all technical aspects.  Maintenance of high vendor rating with customers.

38

3.3.3 MAINTENANCE DEPARTMENT The term „maintenance‟ means to keep the equipment in operational condition or repair it to its operational mode. Main objective of the maintenance is to have increased availability of production systems, with increased safety and optimized cost. Maintenance management involves managing the functions of maintenance. The responsibility of maintenance department is to keep the entire shift always ready for action. For the smooth and effective functioning of company it is necessary to maintain the system properly. The motto is to minimize the downtime, keep the machineries in good condition, maximize the utilization of equipments and to achieve required level of quality. ORGANOGRAM OF MAINTENANCE DEPARTMENT

Manager

Engineer

Assistant Engineer

Fabricator

Fitter

Pump house Operator

Pump house helper

Fig. No.: 3.6 39

Driver

Cutter

Cutter helper

Mechanic helper

Maintenance organization structure can be considered as being made up three necessary and interdependent components. ·

Resources: men, spares and tools

·

Administration: a hierarchy of authority and responsibility for deciding what, when and how work should be carried out.

·

Work Planning and Control System: a mechanism for planning and scheduling the work and feeding back the information that is needed for correctly directing the maintenance effort towards defined objective.

The manager is responsible for the safe maintenance, repair or replacement of plant equipment and systems, to ensure maximum production quantity and quality, while supporting the policies, goals and objectives of the company. 3.3.3.1 FUNCTIONS 

Breakdown maintenance



Calibration



Preventive maintenance



Machine Capability Test

 Breakdown maintenance There is a section which undertakes the job of maintaining, repairing the parts of machinery where breakdown or disasters had happened. This section is helpful to maintain such problems by them temporarily and thus the production function will conduct smoothly without delays. The department authority gets intimation who then attends the status of the particular equipment in maintenance register. The site is inspected, and the log books are updated. The problems are recorded in machine history book and monthly review is performed.  Calibration

 Thermocouples are identified and calibrated once in 3 months. Non-conforming thermocouples are disposed.

40

 Furnaces are calibrated by using calibrated thermocouples. They are maintained at 100°C. Certificate is issued after calculation.

 Preventive maintenance

 Maintenance of furnaces: Furnaces are provided with thermocouples after ensuring the validity of thermocouples. Furnaces are maintained at a temperature of 100°C. The performance is checked and they are handled over for production process. The furnaces are inspected once in 30 days. Eg: lining failure, coil failure (major breakdown).  Equipments other than furnace: The 10T and 6T hammer and compressors involves replacement/modification, the necessary spares are made available. If unavailable, the parts are sketched. Before assembly of new spares, components are verified with sketches. Records are maintained for 3 years.

41

3.3.4 MATERIALS DEPARTMENT Materials input is very important as excess material as inventory causes costs to the company and shortage of material results into stoppage of conversion process and subsequently shortage of finished goods leading to customer dissatisfaction. Out of 5Ms, that are inputs to a conversion process, material is substantial in terms of its contribution to product cost, and current assets. Management of materials is crucial in a Just in Time Company. Production process needs very strong materials management support to gear up to face challenges of current market. Materials Management provides information about availability of new products and services in the market which leads to cost efficient changes in the process. ORGANOGRAM OF MATERIALS DEPARTMENT MMD

STORES/ PURCHASE

Assistant Manager Purchase

Staffs

Assistant Manager Stores

Stores Assistant

Assistant Manager Sales

Scrap Charge Helpers

Staffs

Fig. No.: 3.7

Sales, purchase, and stores department are headed by general manager. When a change is needed to the existing procedure or document like contract or agreement it shall be communicated to the top level management through a particular format of amendment. The revised procedure or document revised from the higher level shall be incorporated in the document in declaration in this department 42

3.3.4.1 FUNCTIONS  Materials Planning & Control This is the primary function of Materials Management. The market forecast is converted into production schedules by production planning and control. Materials management prepares the materials plan to meet the production schedule. The plan is then implemented and controlled.  Procurement Procurement function begins with sourcing the supply after short listing suppliers. An effective method is to rate the vendors on the basis of performance and choose the best. Purchase order is placed on the source and the material is procured from the source. Procurement activity includes preparation placement of purchase order, follow up, transportation and handling.  Handling The material which reaches the company premise is to be unloaded, moved and positioned as per the storage plan.  Storage & Preservation The procured material is to be stored and preserved against internal and external deterioration and theft. Against the authorized demand the material from the store is retrieved and issued.  Inventory control Inventory control function controls the inventory levels to ensure shortage free and excess free stock to check the costs and ensure customer satisfaction  Vendor development The company makes the chosen vendors effective and efficient by providing necessary inputs of training and information. The suppliers systems are audited to ensure adherence. A good vendor is an asset as he makes his customer more effective and efficient  Vendor rating Vendor rating is used as a tool for narrowing down the supplier base for productive management of materials function. The same system is used continuously to assess 43

strengths and weaknesses of short listed vendors for their effective development.  Waste control Procuring standard material and continuously trying to improve yield is waste reduction and control function. When a product is processed two types of wastes are generated. One type of waste is called as standard scrap. This is accepted as unavoidable. Product that is not right first time is scrap and thereby wastes. Non moving obsolete material is another waste that cripples organization. Material management should address these wastes and not only should control but reduce the wastes. The wastes thus generated are transferred to the Steel Complex for further processing.

44

3.3.5 STORE & PURCHASE DEPARTMENT Items purchased, are broadly meant for managerial activity, which cross the boundary of single act of buying. It is a dynamic activity which includes administration, accurate forecasting, effective planning, developed capacity research and development for selection of materials and resources from which those may be bought follow up to issue proper delivery and forms to enable the purchase department to carry out the standard public. This department is concerned with purchase of each and every article for SIFL. At SIFL, the raw material required for any forgings are bought only from prime manufacturers in the country viz. SAIL, VISL, JSW, MUSCO etc. These prime manufacturers have been approved as vendors based on our evaluation of their capability and quality systems. All the die blocks are imported from the prime die manufacturers viz. M/s EDELSTAHLWERKE BUDERUS A.G, Germany. The furnace oil and High Speed Diesel (HSD) which is required before and after production are supplied as per the contract with IOC. The stores department has two sections: for raw material and for general consumables. Each of this department is responsible to handle the activities of corresponding work. ORGANOGRAM OF STORE & PURCHASE DEPARTMENT

Purchase Manager

Supervisor

Workers

Fig. No. 3.8

45

The areas of responsibility of the Purchase Manager include price negotiation, planning, production, inventory control, quality control and factory control. The authority proactively improves Purchasing processes, supplier selection and development to support above. Oversees the preparation of tenders, analysis of bids and the award of contracts and manage Supplier performance and create action plans to address those that underperform. There is one junior manager for store and sufficient number of subordinates and staffs. 3.3.5.1 FUNCTIONS In SIFL the store and purchase department perform the following functions; 

Supply the needed materials.



Procure quality materials at minimum cost. Try to procure maximum materials from the manufacturers itself.

 Ensure quality of materials.  Issuing and raising the materials  Maintain the stock  Annual stock verifications  Check and maintain the stock of minor items  Stock and consumption return for every month

SIFL is equipped with a load from weighing machine and it is under stores department. One qualified operator is appointed for its operation. The machine is computerized. It has the capacity up to 40 tones. The components of weighing machine are load cell, displaying screen and computer. The normal steps for weighing a vehicle are:  Weighing the empty vehicle  Weighing with load  Comparing with bill The deviations are recorded. Standard deviation will be omitted when scrap is arrived in 46

containers; it will be weighed from outside since the weighing machine can't occupy the length of containers. The weighing machine is used for company purpose only and its maintenance is contracted to outside parties.  Sources of scrap SIFL purchases minor items from home country and major items are imported from foreign countries. Advertising regarding the needs of SIFL assist to achieve the procurements easily. Indigenous materials are got mainly from manufacturers and through dealers.  Import of Scrap Import of scrap is mainly on the basis of open general license (OGM) Following is the steps of import: 1. Scrap arriving bulk in containers 2. Arranging customs clearance, loading etc. 3. Arranging supervisions. Containers are opened only after supervision. 4. The details of arrived materials are entered in ledgers. The major suppliers of the scrap are  Lioyets global trade-Dubai  A- Ahumudi Generator trade in Dubai  Middle east metal trading Dubai  Inventories Raw materials including raw materials in process, semi finished goods, finished goods and stores and spares are valued and carried at lower of cost or Net Realizable Value. Slow-moving inventory of raw materials and finished goods are valued at cost or Net Realizable Value, whichever is lower. Loose tools are carried at cost which is lower than Net Realizable Value. The above are valued adopting FIFO Cost Formula. In relevant cases the Machinery spares in stock are devalued below cost to realistic Realizable Values and to zero value in the case of obsolete/unusable spares.

47

 Major Raw Material Suppliers 1. Steel Authority of India Ltd. (SAIL) 2. Jindal Steel Works(JSW) 3. Visweswaraya Iron & Steel Ltd. (VISL) 4. Super Forgings & Steel Ltd.

Major Suppliers 2% SAIL

7%

JSW 37%

54%

VISL Super Forgings & Steel Ltd.

Fig. No.: 3.9

48

3.3.6 MARKETING DEPARTMENT Marketing management is a business discipline focusing on the practical application of marketing technique and the management of a firm‟s marketing resources and activities. More than any other business functions, marketing deals with customers. Creating customer‟s value and satisfaction are at energy heat of modern marketing thinking and practice. The simplest definition of marketing is “marketing is the delivery of customers satisfaction at a profit” the two field goal of marketing is to attract new customers by promising superior value and to keep present customers by delivery satisfaction. Sound marketing is critical to the business of every organization large or small, for profit or not for profit, domestic or global. The two major aspects of marketing are customer acquisition and the retention and expansion of relation with existing customers. ORGANOGRAM OF MARKETING DEPARTMENT Sr. Manager

Asst. Manager

Engineer

Skilled Workers

Fig. No.: 3.10

49

The primary and secondary process owners of the Marketing Department are the Senior Manager and staffs respectively. Their role in the process involves enquiry, customer P O, and customer dispatch schedule and customer satisfaction survey which are also the process inputs. Their responsibility is to identify and register potential customers and to ensure the supply of items as per the required quality, quantity and delivery schedule. With the help of subordinates, including market research managers and engineers, they estimate the demand for products and services offered by the firm and its competitors. The responsibility of the manager is to develop pricing strategy to help firm maximize profits and market share while ensuring that the customers are satisfied. In collaboration with sales, product development, and other managers, they monitor trends that indicate the need for new products and services, and they oversee product development. Marketing managers work with advertising and promotion managers to promote the firm‟s products and services and to attract potential users.

3.3.6.1 FUNCTIONS 

Enquiry / Order Acceptance



Customer Satisfaction Survey



On Time Delivery



Handling Customer Complaints

 Enquiry / Order Acceptance Enquiry is received by fax / email / letter & verbal. The enquiry is entered in the enquiry register. If the enquiry is feasible, technical doubts are clarified from the customer. The enquiry is reviewed as per the enquiry review checklist. The quotation is sent to the customer, follow up is made for receipt of the order. The order is reviewed and is issued to the Production, Planning, Quality, Materials, Finance, Technical, Stores, Heat Treatment, Special projects and to Shornur unit if applicable. The order acknowledgement is sent to the customer.  Customer Satisfaction Survey The customer feedback is sent to the customer once in 6 months. Follow up is made to receive the filled survey form from the customer. The target is as per the process measurable identified in the procedure for customer related process. 50

The CSR database will be maintained by Marketing and updated whenever there is a change in the customer specific requirement or an addition of new customer and flown down to all concerned. The warranty applicability for the order will be included in the order acceptance and only replacement will be done.  On Time Delivery The information about the availability of finished components is received from stores. Dispatch details will be informed to Stores. The invoice number and date will be entered in the customer wise order book. On time delivery will be monitored through the customer wise order book.  Handling Customer Complaints Complaints from the customers are registered. 8D format is generated with copy of the complaint and forwarded to QC by marketing. QC enters the containment action and root cause in the 8D format and will further discuss with the concerned departments in the next day production meeting. The completed 8d format is forwarded to marketing dept. from where they contact the customer. Complaints are reviewed on a monthly basis with top management.

3.3.6.2 SALES PROCESS  Sales Sales order are released to Production Planning and Control, Finance, Material Management, Quality Assurance, Stores, and Technical department.  Market research  Price fixation and preparation of price list  Preparation of sales report  Keep different sales registers.

Receipt and sale of forging Main product produced in SIFL is industrial forging. Production department produces forgings and send a Daily Production Report (DPR) to sales department, which contains the 51

details of daily total production. Sales department prepare a Goods Receipt Note (GRN) against the daily production report. After the preparation of GRN sales department is responsible for the stock and sales of forgings. SIFL's critical forgings are supplied to various sectors like Aerospace sector, Defence sector, Railway sector, Heavy Engineering sector, Earth Moving sector, Agriculture sector, and Automobile sector. SIFL is equipped to manufacture high pressure application forgings like Gate/ Valve Bodies, Choke Bodies etc. in Carbon and Alloy steel material, to meet the requirements of Oil Field Equipment manufacturers, Thermal Power Stations, Refineries, Petro-Chemical Industries and Nuclear Plants. The company has made significant contribution in Aerospace/Aeronautical sector by way of developing complex forgings for various Aero engines. The latest of which involves the supply for project CHANDRAYAN by ISRO. 3.3.6.3 SALES TURN OVER

Year

Sales Growth in Cr.

2007-08

53

2008-09

2009-10

63

Table No.: 3.1

52

102

2010-2011

2011-2012

135

110

Sales – Diagrammatic Representation

135

140

110

Sales Growth in Cr.

120 102 100 80 60

63 53

40 20 0 2007-08

2008-09

2009-10

2010-2011

2011-2012

Years

Fig No.:3.11

The sales in 2007-2008 were Rs.53cr and 2008-2009 were Rs 63cr and 2009-2010 were Rs.102cr and 2010-2011 were 135cr and 2011-2012 were 110cr the graph shoes increase in the sales. In this graph, we can understand sale of the coming year will increase and this is because maintaining good quality and meet the order efficiently and at given time. This is the key secret of the firm. 3.3.6.4 PRODUCT PROFILE SIFL's critical forgings are supplied to various sectors like Aerospace sector, Defence sector, Railway sector, Heavy Engineering sector, Earth Moving sector, Agriculture sector, and Automobile sector. SIFL is equipped to manufacture high pressure application forgings like Gate/ Valve Bodies, Choke Bodies etc. in Carbon and Alloy steel material, to meet

53

the requirements of Oil Field Equipment manufacturers, Thermal Power Stations, Refineries, Petro-Chemical Industries and Nuclear Plants. The company has made significant contribution in Aerospace/ Aeronautical sector by way of developing complex forgings for various Aero engines, the latest of which involves the supply for project CHANDRAYAN by ISRO. So far the company has developed about 800 different types of forgings and the development of new components are continued. Forgings are also being exported to countries like USA, Indonesia, Malaysia and Middle East. Quality standards  Certification from DGQA, DGAQA, Ministry of Defence, Govt. of India.  Assessed and approved by NQA Quality Systems Registrar against the quality assurance system standards ISO-9001:2008 for manufacture and supply of forgings.  Facilities certified by premier inspection agencies viz.: IBR, Indian Registry of shipping, Engineers India Ltd.  Best vendor award from BEML.  Evaluated by the Central Boilers Board and has been granted recognition as a "Well Known Forge".  RDSO, ISRO, Certifications/Approval.  SIATI 2003 Award for excellence in Aerospace indigenization.  Kerala's Best PSU Award Winner - 2006 - 2007, 2007- 2008.  Special Award for notable achievement in Enterprise Performance, 2008-2009, 2009-2010 &2010-2011

54

PRODUCTS OF SIFL  Acquisition Device

 Dome Closure

 Impellers

 Domes, Cylinder Body, Cover

 Cone forgings

 Wheel Lever Main

 Hemisphere Titanium gas Bottle

 Front Cone

 Carrier forgings

 Body forgings

 Cross Head

 Road Wheel Arm

 Piston pin

 Cam shaft gear

 Retainer Cylinder Head

 Draw hooks

 Centre pivot pin

 Forks

 Motor housings

 Valve bodies

 Sprocket hubs

 Crankshafts

 Tooths

 Shafts

 Rollers

 Gears

 Connecting Rods

 Crank Shafts

 Pinions

 Axle arms.

 Stub axles.

 Couplings.

 Landing Gear

 Wheel Hub

 Vehicle support blocks

 Rings & Vanes

 Blade Fork

 Landing Gear

 Steel Knuckle forgings

 Rear axle housings

 Titanium Online Fittings (Flanges,

 Crank Forgings

Elbow, Coupler Union)  Connecting rods

 MB Cap Kit

 Crank shaft gear

 Axle bearing shells

55

 Saddle Centre

 Pinions

 Bearing Cap

 Blades

 Choke bodies

 Fly wheels

 Gears

 Pinions

 Pinions

 Sliding Block

 Two Arm Lever

 Rack

 Crankshafts

 Gears

 Front hubs.

 Diff cages.

 Crankshafts.

 Crown-wheels Table No.: 3.2

LIST OF MAJOR CUSTOMERS AND PRODUCTS

SL.NO

CUSTOMERS

PRODUCTS

AIRCRAFT & SPACE SECTOR 1.

HAL, Bangalore

Titanium Alloy steel & Nickel Alloy Forgings

2.

IISU, Trivandrum

B51-S Aluminum Alloy Forgings

3.

LPSC, Trivandrum

Aluminum Forgings

4.

VSSC, Trivandrum

Aluminum Forgings, 15CDV6 Forgings

AUTOMOBILESECTOR 5.

Ashok Leyland, Madras

Diffcages, Axle Arms, Hubs

6.

Mahindra & Mahindra

Crank Shafts

7.

TELCO. Ltd, Pune

Crown Wheel, Stub Axle, Crank Shafts

8.

VST Tillers & Tractors

Crank Shafts 56

DEFENCE SECTOR 9.

Heavy vehicles Factory, Avadi

Flange Front LH & RH

10.

Ordinance Factory, Trichy

Cold Swaging Blank

11.

Vehicle Factory, Jabalpur

RAFD

Houlings,

Steering

Knuckles,

Steering Knuckles Carrier HEAVY ENGINEERING SECTOR 12.

BEML, Earth Mover Div.

Gears, Hubs, Shafts

13.

BEML, Hydraulic & Power Div.

Bevel Gears etc.

14.

BEML, Rail Coach Div.

Guide, Lower, Spring Seats

15.

BEML, Truck Din.

Hubs, etc.

16.

BHEL, Bhopal

Gears, Pinions

17.

BHEL, Trichy

Valve Bodies, Choke Bodies

18.

Elgi Equipments, Coimbatore

Crank Shafts, Con Rods

19.

Hindustan Motors, Tiruvallur

Stub Yoke, Sleeve Yoke, Flanges

20.

Hindustan Motors, Hosur

Fly Wheels, Flanges

21.

Kirloskar Pneumatic Company, Pune

Crank Shafts

22.

KSB Pumps, Coimbatore

Yoke , Body

23.

L & T Komotsu Ltd, Bangalore

Various Tooth, Sprocket Hubs, Motor Housing

RAILWAYS 24.

Diesel Component Works, Patiala

Connecting

Rods, Main Bearing Caps,

Gears 25.

Diesel Locomotive Works, Varanasi

Connecting

Rods, Main Bearing Caps,

Gears, Hubs 26.

Southern Railway

Main Gearing Caps

Table No.: 3.3

57

3.3.7 FINANCE DEPARTMENT Management of funds is a critical aspect of financial management. Management of funds acts as the foremost concern whether it is in a business undertaking or in an educational institution. By Financial management we mean efficient use of economic resource, namely capital funds. Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long credits for the firm. Here it deals with the situation that requires selection of specific asset, or a combination of assets and the selection of specific problem of size and growth of an enterprise. Here the analysis deals with the expected inflows and outflows of funds and their effect on managerial objectives. Financial Management deals with procurement of funds and theirs effective utilization in the business. So the analysis simply states two main aspects of financial management like procurement of fund and effective use of funds to achieve business objectives. ORGANOGRAM OF FINANCE DEPARTMENT

Finance Manager

Deputy Manager

Assistant Manager

Accounting Assistant (EDP)

Accounting Assistant (Cashier)

Fig. No.:3.12

58

Since the department is directly under managing director, the decision making responsibility falls to him. Besides the fundamental duty of raising of funds and allocation of funds, profit planning and understanding capital market are the responsibility of the department. The main responsibilities of the department are the following:

All financial activity like collection and payment etc.



Raising of income



Maintain economic stability in the company



Entry of all expenses in accounts book



Maintain all kind of books of accounts

3.3.7.1 FUNCTIONS Some of the main functions of finance department are: 

To manage and account the financial resources of the organization.



Report the financial performance of the company to Management.

 Payroll preparation. Attendance and other allowances details will come from office, directly to finance department. Finance department will prepare payroll with help of software called PayBiz.  Preparation of Various books of account. Various books account are prepared and maintained by finance department with the help of accounting software Tally. Print out of all books of account are taken at a particular interval and filed. Various books of accounts prepared by SIFL are as follows. ·

Cash book

·

Bank book

·

Sales day book

·

Purchase day book

·

Journal Register

·

Debtors Ledger

59

·

Creditors Ledger

·

General Ledger

·

Conversion Register

·

Fixed asset register

 Banking  Accounting In the preparation of the annual accounts, the applicable Mandatory Accounting Standards are followed. The Company maintains adequate Accounting Records in accordance with the provisions of the Companies Act, 1956.  Budget preparation.  Auditing. The auditing is conducted according to the auditing standards generally accepted in India. Those standards require planning and performing the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  Preparation of financial statements & reports. Finance department prepares Balance sheet and Profit & Loss account. Also does financial analysis on this in order to help management to take proper decision.  It maintains economic stability without causing any interruptions in the day to day processing of the company by controlling the inflow and outflow of funds.  Billing and payment All financial activities like billing, collection and payment is done by finance department. Cash payment is done up to Rs.20, 000 and above that payment is done through cheque. 3.3.7.2 PROCUREMENT & UTILIZATION OF FUNDS As fund can be produced from multiple sources so procurement of funds is considered an important problem of business concern. Funds obtained from different sources have different characteristics in terms of potential risk, cost and control. Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of equity capital except when the company is liquidated.

60

From the cost point of view, equity capital is the most expensive sources of funds, as divided expectations of shareholders are normally higher than that of prevailing interest rates. Financial management constitutes risk, cost and control. The cost of funds should be at minimum for a proper balancing of risk and control. In the globalized competitive scenario, mobilization of funds plays a very significant role. Funds can be raised either through the domestic market or from abroad. Foreign direct investment (FDI) as well as foreign institutional investors (FII) is two major sources of funds have to be modified in the light of requirements of foreign investment. In the company accounting and financing functions are performed by the accounts manager. Costs records are also maintained by him. The company follows the double entry system of accounting to maintain the accounts. The accounting and the financing functions include.  Maintaining the books as per statutory requirement.  Recording the transactions.  Ascertaining profit or loss of the company and knowing the position. The authorized persons from the group verify all the records and vouchers. Compulsory audit also take place at the end of the year. The accounts and books are maintained in a prescribed manner. The company prepares manufacturing trading profit and loss account and the balance sheet at the end of every year. 3.3.7.3 ACCOUNTING POLICIES ·

Fixed Assets are carried at Cost, deducting Cenvat credit wherever available.

·

Depreciation is provided for on straight line method at rates prescribed in schedule XIV of the Companies Act 1956 61

·

All income and expenditure are accounted on accrual basis.

However the

following cases are accounted on cash basis: Leave encashment, insurance claims and medical reimbursements, payment of customs duty and excise duty, port-dues, investment subsidy, Festival allowance. ·

Other income accounted net of sales tax wherever applicable.

·

Consumption of all raw materials, stores, spares, etc. valued at cost.

·

Inventory of all input materials, stores, spares, etc valued at cost.

·

Finished goods at cost/market price/realizable value whichever is lower.

·

Goods in transit at actual cost.

·

Capital work in progress at actual cost.

·

Loose tools written off in full in the year in which it is purchased.

·

Investments are stated at cost.

·

Sale within the state includes excise duty but excludes sales tax. Outside state sales include excise duty and lorry freight but excluded tax, if any applicable.

·

Rupee exchange variation on foreign currency on imports of raw materials charged to raw material cost.

3.3.7.4 OPERATIONAL HIGHLIGHTS The company continued to operate during the year under difficult conditions of very stiff competition and volatile raw material costs prevailing in the forgings related industrial scenario. However, with the concerted efforts of the management and all employees and the support from the Government, the bankers M/s State Bank of Travancore, and above all, their valued customers, the Company has been able to successfully beat the adverse factors and continue the performance. The income from Sales & Services, net of taxes and duties, of the current year is Rs. 5799 lakhs as compared to Rs. 6002 lakhs in the previous year. The Turnover includes direct export value of Rs. 2 lakhs (previous year, Rs. 18 lakhs). The production achieved in the year is 2834 Tons as compared to 3247 Tons in the previous year. The value of production has decreased from Rs. 6040 lakhs in the 62

previous year to Rs. 5374 lakhs in this financial year. On the marketing front, the Closing Order Book position as on 31st March 2011 is Rs. 3493 lakhs, that of the previous year being Rs. 3796 lakhs. Executable orders booked during the year were Rs. 5879 lakhs. Execution of the prestigious orders for Aircraft Engines parts for HAL, BEML, BHEL, Railways and L & T Komatsu Ltd. and the good volume of business with ISRO and Defence organizations have been other highlights. The company is in the process of bagging high value orders for supply of Aluminium/Titanium forgings to Brahmos Aerospace Tvm. Ltd. The company is constantly earning net profits during the last 11 years and the company‟s net worth has increased to Rs. 3898 lakhs. The company has achieved a profit of Rs. 704 lakhs for the year (before exceptional items) as compared to Rs. 909 lakhs in the previous year. The Operating Profit for the year is Rs. 836 lakhs, as compared to Rs. 1060 lakhs in the previous year. The company has set up a new machining unit at Shornur with a projected capital outlay of Rs. 12 crores. By setting up such a machining facility at Shornur, it will become easier for the company to offload such jobs with better monitoring, control and will yield faster results. Large technical facilities are being set up by BEML, and the Railways in Palakkad and the facilities created at Shornur could be extended to these units also. The business opportunities from these units are expected to be very high and profitable.

63

PERFORMANCE

Sl. No.

PARTICULARS

2010-2011

2009-2010

2008-2009

1.

Production (Qty. in MT)

2834

3247

2984

2.

Value of Production (Rs. in lakhs)

5366

6040

6283

3.

Net Income from sales & services (Rs. in lakhs)

5799

6002

5933

4.

Central Excise Duty, Edu. Cess and Sales Tax collected from customers and remitted to the Exchequer (Rs. in lakhs)

707

565

791

5.

Gross Income from Sales & Services (including duties and taxes) (Rs. in lakhs)

6328

6385

6724

6.

Cost of Sales (Rs. in lakhs)

5095

5093

5038

7.

Percentage of Cost of Sales to net income from Sales & services

87.86

84.86

84.92

8.

Total sundry Debtors as at 31st March 2011 (Rs. in lakhs)

2838

1896

1503

9.

Percentage of Debts to gross income from sales & services

44.84

29.69

22.35

Table No.: 3.4

64

FINANCIAL RESULTS

(Rs. in lakhs) Sl. No.

PARTICULARS

2010-2011

2009-2010

2008-2009

1.

Operating Profit

836

1060

989

2.

Financial Charges

41

77

50

3.

Depreciation

91

74

44

4.

Profit before Exceptional items

704

909

895

5.

Net Worth as on 31st March

3898

3467

2392

Table No. 3.5

3.3.7.5 CHALLENGES OF FINANCE DEPARTMENT  Working capital crunch Main customers of SIFL are government or government under takings. The main problem faced by the company is the delay in realization of money from debtors. This results in shortage of working capital. Company has three furnaces for operation but due to lack of working capital company can operate only one furnace at a time.  Lack of Information technology applications Management Information Systems is not there in Finance department. MIS provide the management with vital facts which affects the efficient running of the

65

business for decision making on planning, organizing and controlling the major activities of the organization and initiating suitable action. No IT facilities for inter departmental communication. Company is using Pay biz for payrolls. There is a possibility of attaching a finger print sensing attendance machine with this software. This is not attached with this; it will help to reduce paper work and errors.

66

3.3.8 HUMAN RESOURCE DEPARTMENT The human resource management (HRM) function includes a variety of activities, and key among them is, deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees ensuring their high performance, dealing with performance issues. Activities also include managing your approach to employee benefits and compensation, employees records and personnel policies. Usually small business (for profit or non-profit) have to carry out these activities themselves because they can‟t yet afford part or full-time help. Human resource management is one of the most complex and challenging fields of endeavor. It is considered to be the most expensive and important resource of every organization. The existence of an organization depends upon the competent, co-operative and dedicated performance of its personnel. The personnel department of SIFL works efficiently and effectively. ORGANOGRAM OF HR DEPARTMENT

DGM

Officer

Asst. Officer

Skilled Workers 7

Unskilled Workers 2

Fig. No. 3.13

67

The employees of SIFL are classified as follows; ·

Managerial staff

·

Technical staff and supervisors

·

Engineers

·

Office staff

·

Skilled workers

·

Unskilled workers

The service condition of managerial staff is governed by the rules formed by the Board of Directors. The service conditions of other employees are government by long term agreement signed between the management and trade union before the government labour officials. Their responsibility is to maintain the optimum manpower required to sustain the growth of Organization and to motivate & manage human resource and train them to ensure their personal and organizational development.

3.3.8.1 FUNCTIONS 

Organizational human resource planning & development



Recruitment and selection



Retirement



Wage & Salary administration



Employee records maintaining



Performance appraisal



Welfare programmed



Job evaluation



Handling employee grievances



Handling the legal issues within & outside the Organization

·

PAY STRUCTURE ·

Basic pay

·

Dearness Allowance

·

Variable Dearness Allowance 68

·

House Rent allowance (12.5% of Basic pay)

·

Work staff allowance (higher for factory staff and lower for managerial staff)

·

In addition to these; the following allowances are also given:

·

Stitching charge to eligible works men

·

Washing allowance to eligible works men

·

Canteen allowance

·

Attendance bonus

·

Charge man allowance

·

Night shift allowance

·

Acting allowance

·

Over time

·

Medical allowance for ESI out of covered employees

 LABOUR WELFARE ACTIVITIES

·

Bonus

Employees drawing salary not more than Rs.3500/-month are eligible for bonus as per Provision of Bonus Act. ·

Provident fund

All employees are covered under PF scheme. Both the employer and the employee have to contribute 12% gross salary. Out of employee‟s contribution of 12%, 8.33% goes to the persons fund introduced under PF scheme. ·

Gratuity

As per payment of Gratuity Act the company is bound to gratuity to an employee who leaves the company after a minimum of 5 years service. Gratuity is payable at 15 days salary for every completed year of service. In the case of death, gratuity is calculated from the date of joining till the date on which the employees would have actually retired. The company has taken a gratuity policy with LIC for payment of gratuity. ·

Employee state insurance

All employees come under the ESI scheme.

69

·

Other welfare measures

 Co-operative society The board of directors of the co-operative society consists of representative of the employees and management. The society provides loans to employees and credit recover through salary.  Subsidized canteen inside the company premise  Recreation club  Payment of advance for marriage of employees  Vehicles are arranged for transportation of employees during night shift  Lockers are provided for employees to keep their belonging during work.  TIME KEEPING Attendance, leave and other time keeping activities are done in SIFL by Time office. ·

Shift timings A-Shift: 7AM to 3 PM B-Shift: 3PM to 11PM C-Shift: 11PM to 7 AM

·

General shift 8AM to 4.30PM for factory staff 9AM to 5PM for Office staff Attendance is marked by a mechanical punching machine. Employee has to punch his card while entering into the company as well as while leaving the company.  LEAVE There are mainly three type of leave. They are; Casual leave 15 Days for managerial staff and 14 days for other employees. Earned leave One leave for every 11 days of work for all employees. Half pay leave Employees covered under ESI scheme are eligible for half pay leave Leave card is prepared for all employees, it contain all details about these different types of leave available to employees.

70

 REPORTS AND REGISTERS Daily Attendance Report (DAR) Daily attendance report is prepared by time office for every shift for each department separately in triplicate. One copy will keep in time office itself. Two copies will send to respective department. Department head will duly fill the DAR and send one copy back to time office. AR contains the details like ticket numbers of employees present, ticket numbers of employees those who are absent and other allowance details etc. ·

Daily Report Book Daily report book is prepared by time office which contains details about daily strength, absentees and leave for each shift.

·

Attendance Report Attendance Report is the monthly statement of attendance and leave of all employees. This will send to finance department for salary calculation.

·

Details of earning This is a monthly report prepared by time office regarding various allowance available to all employees. This also sends to finance department for salary calculation.  RECRUITMENT ·

Mode of recruitment is through Employment Exchange.

·

Other sources – when employment exchange indicates their inability to sponsor candidates satisfying the prescribed requirements. If panel of candidates / non-availability certificate form employment exchange is not forthcoming within 15 days from the day of intimation, an advertisement is issued in leading daily newspapers.

·

Recruitment for Executive Post decided by the Appointing Authority

·

Open recruitment  advertisement in newspapers, notification to employment exchange.

Recruitment Procedure  Manpower Budget The department informs the chief Executive about vacancies which is thereby intimated to the Personnel & Administration department (before 15th January) who takes further action. 71

 Selection Committee The selection committee includes 3 members: representative of department concerned, representative of P & A department and the representative from any other department or external expert as approved by the Appointing Authority.  For positions of Asst. Manager and above, committee consists of Chairman & Managing Director, chief Executive and the Head of Corporate P & A department.  SELECTION ·

After each candidate has been interviewed, the members will discuss with each other and award agreed marks by the Chairman of committee.

·

At the end of the interview, successful candidates will be recommended for appointment to advertised vacancy in the order of their rating based on written test and interview.

·

Selected candidates will be empanelled in the order of merit. The panel will be valid for 1 year from the date of selection.

 TRAINING The workers and managerial staff are given proper training when they are new to the work. They are kept in probation for a stipulated period of time and they are absorbed if they are found fit. Training on SWP (Strict Working Procedure), safety against hazardous events, housekeeping etc. are mainly given.  PERFORMANCE APPRAISAL Purpose of appraisal reports The annual appraisal reports on employees are valuable documents that should serve as a reliable index of the employee‟s potential for: a) Promotion and transfer to position of greater responsibility. b) Development through training.

Overall Rating (Summary of assessment): Outstanding

>= 90%

Good

>= 65%

Average

>= 45% 72

Below average

>= 25%

Poor

< 25%

System of awarding marks for Performance appraisal Following are the traits based on which the performance is evaluated: 1) Quantity of Work 2) Quality of work 3) Knowledge of Job 4) Dependability 5) Initiative 6) Care of machines, tools, equipments or records. 7) Aptitude 8) Communication 9) Attitude towards organization and work relationship with supervisors 10) Job responsibility 11) Mental ability and Judgement 12) Work habits 13) Resourcefulness 14) House keeping 15) Time keeping/ Attendance  TERMS AND CONDITIONS 1) Rules and Regulations All employees shall obey the rules and regulations. 2) Classification of employees Employees are classified as follows: i) “Permanent” employees shall mean those whose services have been confirmed in writing. ii) “Temporary” employees shall mean those who have been engaged for a limited period of time for work. iii) “Probationers” shall mean those employed to fill a vacancy in permanent post that has not been confirmed in writing. 3) Categories of employees i) Managers 73

ii) Officers iii) Supervisors 4) Appointment Recruitment shall be according to the prescribed policy. The Company requires the applicant to pass a medical examination by a doctor nominated by the company. Employees shall be issued with the appointment letter after verification. 5) Probation The period of probation is 1 year. 6) Increments Increments shall be drawn unless it is withheld on disciplinary grounds. Increments either on 1st January or 1st July depending on date of joining. Employee who is sanctioned Leave Without Pay (LWP) upto 3 months shall have his next increment postponed for an equivalent period. 7) Transfers Employees are transferred at any time from one job, section or department to another and also in any part of the country or outside.  GRIEVANCE HANDLING It is the policy of the company to settle grievances at the lowest possible level so that grievances are not prolonged. Grievances of the employees are handled by the welfare officer. Complaints affecting an individual workmen in respect of the following matters will constitute grievances and will subject to the procedure laid down hereinafter: a) Payment of wages b) Leave c) Inter- department Transfer d) Promotion e) Seniority f) Work assignment g) Work condition  STATUTORY RECORDS All types of statutory records are maintained in the company and these records are verified by the factory inspector. The main statutory records are: 74

1. Service Book 2. Muster roll 3. Statutory books under ESI & PF schedule

4. Leave register  OTHER FACILITIES Canteen: The Canteen provides food items in time, not only to the working staffs but also to trainees who had joined the company, without difference in the price rate. A coupon facility is been introduced for taking the food items from the canteen. The coupon varies from time to time and minimum charge is Rs. 4 and maximum is Rs. 14.

 INDUSTRIAL RELATIONS The Industrial Relations policy of SIFL is to introduce and establish systems and procedure which would ensure a healthy employee-management relation so as to achieve maximum productivity, employee satisfaction and development. Employee relation of the company was found to be harmonious. The period of Memorandum of settlement entered into between the Management and the Trade unions representing the workmen of the company for wage revision got expired on 28.02.‟09. A new agreement between the management and the trade unions in this regard was signed and accordingly wage revision has already been implemented.

75

CHAPTER 4 FINANCIAL ANALYSIS Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit account. The financial analyst may use ratio in two ways. First he may compare a present ratio with the ratio of the past few years and project ratio of the next year or so. This will indicate the trend in relation that particular financial aspect of the enterprise. Another method of using ratios for financial analysis is to compare a financial ratio for the company with for industry as a whole, or for other, the firm‟s ability to meet its current obligation. It measures the firm‟s liquidity. The greater the ratio, the greater the firms liquidity and vice-versa. A ratio can be defined as a numerical relationship between two numbers expressed in terms of (a) proportion (b) rate (c) percentage. It is also defined as a financial tool to determine and interpret numerical relationship based on financial statement yardstick that provides a measure of relationship between two variable or figures.

4.1 BALANCE SHEET AS ON 31ST MARCH 2011 Sch.

As on 31.3.2011 (Rs.)

As on 31.3.2010 (Rs.)

I SOURCE OF FUNDS 1) Share

Holders

Funds a) Capital

A

b) Reserves &

B

159259242 230495123

Surplus

159259242 389754365

187483328

346742570

2) Loan Funds a) Secured Loans

C

b) Unsecured Loans

D

51787014 57499975

Net Deferred Tax Liability TOTAL

76

12231540 109286989

57009620

69241160

11682803

10396402

510724156

426380132

II APPLICATION OF FUNDS E

1. Fixed Assets: a) Gross : Block

247726603

189681600

b) Less : Depreciation

122696742

113566036

c) Net Block d) Capital Work in Progress

125029861

76115564

16478368

4120322

200000

200000

e) Other assets held for disposal 2. Current Assets, Loans F & Advances a) Inventories

170024576

196090224

b) Sundry Debtors

283748860

189646805

39597611

40472133

6407024

7335811

66378487

22579573

566156558

456124546

a) Liabilities

184277389

101322413

b) Provisions

12863241

8857887

197140630

110180300

c) Cash & Bank balances d) Other Current Assets

e) Loans & Advances Sub Total: Less : Current Liabilities &

G

Provisions

Sub Total : Net Current Assets (Sch. FSch. G) Preliminary Expenses to the

369015929

345944246

510724156

426380132

extent not written off TOTAL

77

4.2 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2011 Sch.

20102011 (Rs.)

20092010 (Rs.)

632652951

636581917

52880955

38271128

579771996

598310789

159669

1756602

12621

124699

579944286

600192090

8095160

3172918

588039446

603365008

I INCOME Gross Income from Domestic Sales & Services

H

Less : excise Duty & Education Cess on DomesticSales Net Income from Domestic Sales & Services Export Sales Export Benefit as per DEPB Scheme Total Income from Sales & Services Other Income

I Total – (l)

II EXPENDITURE Decrease/ Increase in Inventory

J

40738235

(3891065)

Raw material Consumed

K

205333331

247422058

Manufacturing, Selling, Administrative & Other –

L

258360170

253887443

504431736

497418436

83607710

105946572

Expenses Sub Total – (ll)

Operating Income before financial Charges & Depreciation (l-II)

Financial Charges

M

4085666

7702054

Depreciation

E

9130706

7368300

III Profit before exceptional & Prior Period items

70391338

90876218

IV Profit before Tax

70391338

90876218

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V Income Tax for the year Current Tax

20503382

30750730

Deferred Tax- Income/ (Expense)

(1286401)

(2278067)

48601555

57847421

VI Net Profit after Tax

Basic Earnings Per Share

Rs.

30.51

36.32

Diluted Earnings Per Share

Rs.

30.51

36.32

Face Value of Share

Rs.

100.00

100.00

4.3 RATIO ANALYSIS Ratio Analysis is a powerful tool o financial analysis. Alexander Hall first presented it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparison of one figure against other, which makes a ratio and the appraisal of the ratios of the ratios to make proper analysis about the strengths and weakness of the firm‟s operations. The term ratio refers to the numerical or quantitative relationship between two accounting figures. Ratio analysis of financial statements stands for the process of determining and presenting the relationship of items and group of items in the statements.

Meaning and Importance: Ratio analysis is concerned to be one of the important financial tools for appraisal of financial condition, efficiency and profitability of business. Here ratio analysis is useful from following objects. 1. Short term and long term planning 2. Measurement and evaluation of financial performance 3. Study of financial trends 4. Decision making for investment and operations 5. Diagnosis of financial ills 79

6. Providing valuable insight into firms financial position or picture

4.3.1 CURRENT RATIO: The relationship of current assets to current liabilities is known as current ratio. It is also known as banker‟s ratio or working capital ratio. It is relationship between firm‟s current assets and current liability. Current ratio = Current assets/Current liability

Statement Showing Current Ratio YEAR

2008-09

2009-10

2010-11

CURRENT ASSETS

416210200

433544973

499778071

CURRENT LIABILITIES

141924054

101322413

184277389

CURRENT RATIO

2.9

4.27

2.71

Table No.: 4.1

Current Ratio 5

Percentage

4 3 2

Current Ratio

1 0 2008-09

2009-10

2010-11

Year

Fig. No.: 4.1 Interpretation: SIFL on an average has maintained a current ratio of 3:1.It implies that for every Re.1 current liabilities the company is having Rs. 3 of current assets. It is more than the ideal ratio of 2:1. Based on current ratio of the company, it is evident that Company‟s liquidity position is favourable. But there exists a mismanagement of assets of the

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company. Therefore, company should take necessary steps to utilize the current assets optimally so as to improve its overall performance.

4.3.2 QUICK RATIO: It establishes the relationship of a company‟s current assets that can be quickly converted into cash and its current liabilities. It is relationship between liquid assets and current liabilities.

Quick ratio = (Current assets- Stock) / Liquid Liabilities

Statement Showing Quick Ratio YEAR

2008-09

2009-10

2010-11

3911368604

237454749

329753495

LIQUID LIABILITIES

141924054

101322413

184277389

LIQUID RATIO

1.33

2.34

1.78

LIQUID ASSETS

Table No.: 4.2 Calculations: 2008-09 : Liquid Ratio= (4162100200-250731596) / 141924054 = 1.33 2009-10 : Liquid Ratio= (433544973-196090224) / 101322413 = 2.34 2010-11 : Liquid Ratio= (499778071-170024576) / 184277389 = 1.78

Liquid Ratio 2.5 Percentage

2 1.5 1

Liquid Ratio

0.5 0 2008-09

2009-10

2010-11

Year

Fig. No.: 4.2 81

Interpretation: Quick ratio of SIFL is fluctuating over the years. The company has a quick ratio of 1.78:1. Based on quick ratio it could be said that the company is able to meet its current liabilities from the quick assets maintained. Thus based on liquidity ratios it is evident that SIFL is having a favourable liquidity position over the years. The management of SIFL should take necessary steps to induce efficient management of assets and liabilities in order to achieve a better position.

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CHAPTER 5 SWOT ANALYSIS Professional mangers, while resorting to management by objectives, resort to SWOT Analysis as a tool for assessment. Such an analysis on SIFL will mean a study of strength, weakness, opportunity and threat faced by SIFL as on today.

5.1 STRENGTHS 1. SIFL is the only public sector forging company in India. Most customers are also from the public sector. 2. Availability of heavy hammers which are few in the country and hence comparatively lesser competition in an otherwise very competitive market for forgings. 3. There is sufficient owned land available adjacent to the existing factory premises for expansion. 4. Skilled and contented workforce committed to quality and timely delivery. 5. Better employer employee relationship. 6. ISO 9001 certification and facility approved for defense and aerospace production. 7. SIFL has developed and trained various units in and around to do machining jobs suiting to the quality standards. These units therefore form an effective backup for SIFL, meeting the entire range of forging requirements.

5.2 WEAKNESSES 1. High transportation cost of goods and personnel due to the distance from raw material suppliers and customers which are mostly outside the state.

2. Over consumption of power and fuel. 3. Man power shortage in production area. 4. Unexpected power failure and restrictions in usage Electric Power.

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5.3 OPPORTUNITIES 1. SIFL has the opportunity to enter the international market because of quality forgings. 2. Liberalization and globalization has opened up new export markets. 3. The demands for forging products are increasing. So there are chances of getting more orders.

5.4 THREATS 1. Unexpected power failure and restrictions in usage of Electric Power. 2. Long distance from the main input sources and major customers causes increase in the transportation expenses. 3. Financial strain on the company due to fast increasing input costs, and the necessity felt to organize large stocks of raw materials. 4. Emergence of private companies into this industry.

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CHAPTER 6 EVALUATIONS AND SUGGESTIONS

6.1 EVALUATIONS In this industry, I proposed to conclude the study report by highlighting important findings of the study. The important findings has led to some suggestions for improving the profitability of the concern  As a government company SIFL enjoys the leadership status in the market.  It produces high level quality steel and negligible number of defective products.  Company makes arrangements to avoid overcrowding in the production unit near the machine.  SIFL is paving the seeds of changes in its way. Stability in its production is production is possible now in SIFL.  Due to liberalization the company need not suffer to import the raw material necessary for production.  The main strategy of SIFL is aiming at gaining a sustainable advantage over competition through quality and reduced price.  SIFL trying to improve its position m the mind of the customers by following up and attending any complaints.  Proper time keeping system is there in SIFL.  SIFL is strict in quality of products and quality checking can be done through modern technique of spectroscopy.  There is proper control and coordination in the company.  The company has facilities such as canteen, rest room etc.  The company appointing general helpers to help different department.  Water and power is supplied for whole day.  There is a sales depot to sell the steel. 85

 The government checks the product quality.  There are several weak spots like sales promotion measures presently undertaken by the company. It includes lack of advertisement support. That effect marketing efforts of the company negatively.

6.2 SUGGESTIONS  SIFL should continue in efforts to collect as much scrap as possible for all indigenous sources, as well as outside sources. Constant efforts are required in this direction.  Proper planning in getting all other raw materials, refractories and spares to maintain regular production at the top most level possible.  Gear up the sales activities in the best possible manner-keeping the watch always whether at any time billet sale is going to prove better than sale of rolled products. Although many times we find that rolled products sale is beneficial to the company, market fluctuations at time change the position very much, making billet sale itself as beneficial. This problem can be to a certain extend neutralized by having our own rolling mills.  Installing a generator plant to take care of at least 30-40% of our energy requirements, so that in the future years when monsoon fails, the power cuts may be squarely met.  Employees should understand company's problems, which periodically come and cooperate to achieve the best efficiency in all operations.  Cost consciousness in all operations should be deeply inculcated in all the employee‟s minds.  With better operations and profitability it should also be possible for us to go in for sponge iron plant our self.  As the product has achieved quality as well as cost competitiveness when compared with other competing brands, there is a scope for improvements in promotional

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measures for expanding the market share for its products and in this regard include the following:  Various types of incentives must be allowable to the sellers on the basis of sales revenue in order to increase the order  Quantity and grade based differential pricing can be adopted to induce users to buy more  Aggressive advertisement campaign using print as well as electronic media can be used to further increase the brand of the product. This will support any market penetration strategy.

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CHAPTER 7 LEARNING EXPERIENCE The Organization Study at Steel and Industrial Forgings Limited has enhanced my knowledge with corporate and provided exposure and practicability of subject in the industry. It gave me an understanding as to how an organization operates and an idea as to how the hierarchical structure of an organization is and helped me understand the chain of command and authority. The study was a significant endeavor in analyzing overall functions of various departments within the organization. Importance of leadership traits which guide in achieving personal as well as organizational goals could be identified. This study has improved my confidence by its successful completion to undertake such studies in the future. I must confess that this experience is an eye opener.

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CHAPTER 8 CONCLUSION The company is envisaged to have a profitable future. Its past history showing no strikes and high product quality reassures its graph of growth pointing upwards. The sincere and dedicated team of human resource strives to lead the company to success. As long as the company caters to the continuously changing needs of its customers, its future seems to be bright. The study was conducted with a view to understand the functions of SIFL and its department. During the course of study I could familiarize with the organization and its environment. This study has improved my confidence by its successful completion to undertake such studies in the future. Organization study has given a great chance to be a part of the industry and to understand the overall working and functioning of different departments. It is sure that Steel & Industrial Forgings Limited will become a dominant part of market share.

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REFERENCES

1. Kotler Philip, “Marketing Management”, Pearson Education, 11th Edition 2. SIFL Department Manuals 3. SIFL 27th Annual Report and Accounts 2009-2010 4. SIFL 28th Annual Report and Accounts 2010-2011

WEBSITES 1. www.economywatch.com/world-industries/steeel/indian.html, 13th May 2012 2. www.siflindia.com, 3rd to 25th May 2012 3. www.worldsteel.org, 14th May 2012

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