Capital Budgeting Sail

Capital Budgeting- A
project on Project
Management
-A Study in Bhilai Steel Plant-
Steel Authority of India limited

A Project Report submitted in partial fulfillment of the requirement for the award of
MASTERS DEGREE IN BUSINESS ADMINISTRATION
By
B.V.ADITYA
(Roll No: 1225111306)
GITAM INSTITUTE OF MANAGEMENT

GITAM UNIVERSITY
(Established U/S 3 of UGC Act, 1956)
VISAKHAPATNAM
(2011-12)
Certificate by the company on their letter head
This is to certify that B.V.ADITYA, MBA student (Enrollment No

1225111306), GITAM Institute of Management, GITAM University has done
the project from 07 May 2012 to 16 June 2012 on PROJECT
MANAGEMENT in our Organization for submission in partial fulfillment for
the award of Post Graduate Degree of Master of Business Administration by
GITAM University and his/her work has been satisfactory.
Date: 16/6/2012
MR A.K.SAHU
Place: Bhilai
SR MANAGER(FINANCE)
ACKNOWLEDGEMENT
It is my pleasure to acknowledge and express my gratitude to all those who helped me

throughout in the successful completion of this project.
I am very thankful to Sri A.K SAHU SR MANAGER ,PROJECT FINANCE, BSP
SAIL,, for extending support throughout the project.
I wish to express my gratitude to Prof K Siva Rama Krishna, Dean & Principal,
GITAM Institute of Management, GITAM University, Visakhapatnam, for giving me
this valuable opportunity to experience the work culture in an organization.
I am grateful to MR SHAIK SHAMSHUDDIN,ASSISTANT PROFESSOR, GITAM
Institute of Management, GITAM University, Visakhapatnam for his/her continuous
guidance to accomplish this project work, successfully.
B.V.ADITYA
1225111306
DECLARATION
I, B.V.ADITYA a student of Masters of Business Administration (M.B.A.), GITAM

Institute of Management (GIM), GITAM University, hereby declare that the project
work initiated on PROJECT MANAGEMENT
at
BHILAI STEEL
PLANT,SAIL is a genuine work done by me in partial fulfillment for the requirement

of the degree of Masters of Business Administration. I confirm this has not been
published or submitted elsewhere for the award of any degree in part or in full.
B.V.ADITYA
Date:16/6/2012
CERTIFICATE
This is to certify that the project Report titled -----------PROJECT

MANAGEMENT-------------------------- is an original work carried out by
------B.V.ADITYA (Enrollment No 1225111306), under my guidance and
supervision, in partial fulfillment for the award of the degree of Masters of
Business Administration by GITAM Institute of Management, GITAM
University, Visakhapatnam, during the Academic year 2011-12. This report has
not been submitted to any other University or Institution for the award of any
Degree/Diploma/Certificate.
Signature of Guide
Mr. A.K. Sahu // Corporate guide
Sr. Manager (Finance)
MR.SHAIK SHAMSHUDDIN
ASSISTANT PROFFESOR
GITAM Institute of Management
Visakhapatnam
INDEX
Chapter
Chapter 1
Content
Introduction - Project Management
Capital Budgeting
- Evaluation techniques
- Steps in Capital Budgeting
What is a Contract
Chapter 2
Industry Profile
Page no.
6
7
8
11
18
20
Global Steel Industry
20
Indian Steel Industry
23
Company Profile - SAIL

SAIL into the future
Financial Analysis of SAIL
24
31
34
SWOT analysis of SAIL
41
Bhilai Steel Plant
43
Products
48
Customer profile
55
Competition Analysis
56
Chapter 3
Literature Review
Research Methodology
58
60
Chapter 4
Data Collection
61
Analysis & Interpretation
61
Contract Summary
66
Feasibility Report Summary
67
Financial Analysis
75
Chapter 5
Findings
Recommendations
Conclusions
80
81
82
Bibliography
Books / Articles referred
82
Websites referred
82
Chapter 1 - Introduction Project Management
WHAT IS PROJECT MANAGEMENT?

Project management is the science and art of matching a projects goals,
tasks, and resources to accomplish a goal as required. A project is not a part
of normal business operations. It's typically created once, it's temporary, and
it's specific. As one expert notes, "It has a beginning and an end." A project
consumes resources (whether people, cash, materials, or time), and it has
funding limits.
Successful projects do the right things, with the right tools, and in the right
way.
CONCEPT OF PROJECT MANAGEMENT

Project management is the discipline of defining, planning, organizing,
securing, and managing resources to achieve specific goals.
Project management typically follows the same pattern:
1.
2.
3.
4.
5.
Initiation
Planning & Design
Execution
Monitoring & Controlling
Closing / Completion
CHALLENGES OF PROJECT MANAGEMENT

Project management has two major challenges to overcome:1. Achieving all the project goals and objectives
2. Optimizing the allocation of necessary inputs and integrating them to
meet pre-defined objectives
Capital Budgeting
7
WHAT IS CAPITAL BUDGETING?

Capital Budgeting is the process of allocating capital after determining project
feasibility.
Determining project feasibility is a 3 part process.
1. Qualitative analysis
Relationship/Branding feasibility, Socio-Cultural & Political feasibility
2. Forecasting performance
Financial Modeling and Structural analysis
3. Quantitative analysis
IRR, NPV, ARR, BCR/PI, Payback Period and other quantitative analysis
Capital Budgeting is a required managerial tool. One duty of a financial
manager is to choose investments with satisfactory cash flows and rates of
return. Therefore a financial manager must be able to decide whether an
investment is worth undertaking and be able to choose intelligently between
two or more alternatives.
To do this, a sound procedure to evaluate, compare, and select projects is
needed. This procedure is called capital budgeting.
Capital budgeting focuses on capital expenditures and specifically the
analysis of capital expenditures to decide which expenditures should be
made.
A capital expenditure (capex) is the use of funds to acquire operational
assets that will help the organization earn future revenues or reduce future
costs. These are long-term expenditures amortized over a period of time.
More precisely, capital budgeting is the process of evaluating, comparing and
selecting capital projects to achieve the best return on investment over time.
EVALUATION TECHNIQUES
8
A.
B.
C.
D.
E.
F.
Payback period (PBP)

Discounted Payback Period method
Net Present Value (NPV)
Profitability Index (PI) / Benefit-Cost Ratio (BCR)
Internal Rate of Return (IRR)
Modified Internal Rate of Return (MIRR)
A. Payback period (PBP)

The period / time-span required to recover a capital investment is
called pay-back period. The period is normally calculated in years.
For any project to be accepted in a capital budget, the projects
payback period must be less than the maximum acceptable payback
period set by the organization. When a choice must be made between
two or more alternative projects, the one with the shortest payback
period should be selected.
Formula:
PBP
Year +
Remaining amount
Cost of investment
B. Discounted Payback Period method

Discounted Payback Period is similar to the payback period method
with one major exception: it factors time value of money concepts into
the calculation by discounting the expected cash flows at the projects
initial cost of capital. Recall that the discount rate is the rate of return a
company must reach in order to justify its investment. We use this
method to determine the number of years necessary to recover the
initial cost of a project using discounted cash flows (DCFs).
C. Net Present Value (NPV)
Net Present Value is the capital budgeting method managers generally
prefer for evaluating a single project or comparing two or more
projects. Net Present Value (NPV) is a discounted cash flow method in
which the present value of a projects future cash flows are compared
to the projects initial cost. Projects are accepted if NPV is positive.
Formula:
9
NPV = Present value of Cash Inflow Present value of Cash outflow

n
NPV =
CFt__
t=0 (1 + k) t
Where,
CFt is the expected net cash flow in period t,

k is the projects cost of capital, and
n is the number of periods
D. Profitability Index (PI) / Benefit-Cost Ratio (BCR)

The profitability index, or PI, method compares the present value of
future cash inflows with the initial investment on a relative basis.
Therefore, the PI is the ratio of the present value of cash flows (PVCF)
to the initial investment of the project.
Formula:
PI
PVCF____
Initial Investment
In this method, a project with a PI greater than 1 is accepted, but a

project is rejected when its PI is less than 1. Note that the PI method is
closely related to the NPV approach. In fact, if the net present value of
a project is positive, the PI will be greater than 1. On the other hand, if
the net present value is negative, the project will have a PI of less than
1. The same conclusion is reached, therefore, whether the net present
value or the PI is used.
In other words, if the present value of cash flows exceeds the initial
investment, there is a positive net present value and a PI greater than 1, indicating that the project is acceptable.
E. Internal Rate of Return (IRR)
Internal Rate of Return (IRR) is the term for the discount rate at which
the present value of estimated cash flows is equal to the initial cost of
the investment.
In other words, IRR is the discount rate at which the NPV is equal to
zero.
Formula:
n
10
NPV =
__CFt___
t=0 (1 + IRR)t
Where,
CFt is the expected net cash flow in period t,
n is the number of periods, and
IRR is the Internal Rate of Return
F. Modified Internal Rate of Return (MIRR)

The MIRR is similar to the IRR, but is theoretically superior in that it
overcomes two weaknesses of the IRR. The MIRR correctly assumes
reinvestment at the projects cost of capital and avoids the problem of
multiple IRRs. However, please note that the MIRR is not used as
widely as the IRR in practice.
There are 3 basic steps of the MIRR:
1) Estimate all cash flows as in IRR.
2) Calculate the future value of all cash inflows at the last year of
the projects life.
3) Determine the discount rate that causes the future value of all
cash inflows determined in step 2, to be equal to the firms
investment at time zero. This discount rate is known as the
MIRR.
Formula:
n
PVcosts
t=0
_COFt_
(1 + k)t
_TV___
(1 + MIRR)n
Where,
COFt is the Cash outflow in period t,
K is the projects cost of capital,
N is the number of periods,
MIRR is the Modified Internal Rate of Return
PVcosts is the present value costs, and
11
TV is the terminal value.
Capital budgeting procedure followed in BSP

1.
2.
3.
4.
5.
Stage 1 approval
Stage 2 approval
Placement of orders / Award of contracts
Execution and payment
Post completion Audit Report (PCAR)
1. Stage 1 approval
a. Requirements of the project
b. Investment proposal
1) Technical specifications of new asset required
2) Detailed case history
3) Technical requirements
4) Commercial requirements
5) Financial estimates
Investment decisions can be done in three ways:i. Addition
ii. Modification
iii. Replacement
c. Investment proposing Unit (IPU) Committee
d. Acceptance of the proposal
1. Steps in Stage 1 approval
a. Identification of investment requirements
Firstly, a proposal is initiated by shop/factory manager of a third
party company. The proposal comes along with a historical
background and other information of the company.
b. Appointment of consultant if required
If required by the contractor, a consultant can be appointed.
c. Technical requirements of the project
The projects technical requirements are evaluated.
d. Commercial requirements of the project
The projects commercial requirements are evaluated.
e. Financial viability of the project
Whether the project is financially viable or not is evaluated.
f. Acceptance of proposal by the IPU committee
IPU committee forwards the project to management for approval.
g. Approval of the project by competent authority
12
For approval of project, it has to be affirmed by a competent

authority. It is done on the basis of the cost of the project.
If the cost of the project is within the boundaries of the powers
delegated to the party, then the project can be approved by the said
party, otherwise the project will be outside the financial limits for the
competent party and the project has to be approved by a different
party.
Approver
Executive Director
CEO
Chairman
Board sub-committee
Board of Directors / Ministry
Financial limit (in Crores Rs.)

1
(Annual 10 crores)
20
30
300
Beyond 300
Table 1.1
Stage 1 approval ends with the acceptance of the proposal.
2. Stage 2 approval
a. Tendering process
b. Evaluation
a. Tendering process
Tenders are of 4 types based on availability of suppliers and their
geographical locations:1) Global tender
2) Open tender
3) Limited tender
4) Single tender
1) Global tender
Any party including Indian party can participate in tendering
process. They can quote prices in available global currency.
Only condition is that technology they will use is not prohibited in
export/import policy by Government of India.
2) Open tender
In open tender, the tender is issued for parties available within
India. They cannot quote in any foreign currency.
3) Limited tender
Tender is issued to only few parties, who are known to BSP.
They have to quote their terms and conditions.
4) Single tender
Single tender can be further subdivided as:a) Single tender We ask a particular party directly to quote the
prices they desire to supply the equipment.
13
b) Single tender based on proprietorship We ask a single

party to be our supplier who is the sole manufacturer of
goods.
Documents required for tender:1. Notice Inviting Tender (NIT)
A list of all the eligible parties is prepared and a notice notifying them
about the project and inviting their tender prices is sent to those
2.
3.
4.
5.
parties.
Instruction to bidders
Bid evaluation sheets
Bid data sheets
Special conditions of contract
The special conditions of contract supplement the General Conditions
of Contract (GCC). Whenever there is a conflict, the provision in SCC
prevails over those in GCC.

6. General conditions of contract
The general conditions of contract supersede the special conditions of
contract, in case of any conflicts.
7. Time-frame
Tender
Global tender
Open tender
Limited tender
Single
Time allowed
4 weeks
3 weeks
2 weeks
May or may not be any time requirement
Table 1.2
2) Evaluation
1) Technical evaluation / bid
Evaluation of the project is done on the basis of technical aspects.
2) Commercial evaluation
Evaluation of the project is done on the basis of commercial aspects of
the interested supplier.
3) Price evaluation
In this method, evaluation is done on the basis of price quoted by the
interested supplier.
In a techno-commercial evaluation, price-bid is not there. Only the parties
viable according to techno-commercial evaluation are subject to price
evaluation.
14
3) Award of contracts
1) Signing of contract documents
The contract documents is jointly signed between steel plant
representative of concerned departments, executive authorities,
finance consultants, and the authorized representatives of the
contractors after detailed discussion of the contents therein.
2) Communication protocol
Communication protocol is a document which signifies the activities to
be performed within the contract, the initiators, addressees, the
recipients of copies and suitable remarks if necessary.
3) Deployment of labour
4) Payment
a) Traditional methods
1. Cash
This is not a very popular method as income tax act
discourages payment through cash. For payment beyond Rs.
30,000 the transactions are allowed corporate tax, so the
corporate has to bear additional tax of 31%.
2. Cheque
b) Modern methods (E-payment)
1. Real Time Gross Settlement (RTGS)
RTGS is an instantaneous funds-transfer system, wherein the
money is transferred on a real time basis. With this system we
can transfer money in maximum 2 hours. In this system there is
a limit that you have to transfer money only above Rs 2 lakhs.
This is because RTGS is mainly used for high value clearing. As
of now, customers can use the RTGS facility only up to 3 pm
and inter-bank transactions are possible up to 5 pm.
2. National Electronic Funds Transfer (NEFT)
NEFT is on net settlement basis. NEFT involves four settlement
cycles a day 9.30 am, 10.30 am, 12 pm and 4 pm. Thus if a
customer transfers money through NEFT before even one of the
settlement cycles, then money would be transferred on the
same day, else the transfer will take place at the time of the next
settlement cycle.
3. Electronic Clearing Service (ECS)
This system is used mainly for credit and debits of low value
transactions which are in large or frequent transactions. ECS
can be divided into two types:
15
a) ECS Debit - transfer of funds from your account

b) ECS Credit - transfer of funds to your account
5) Quantity certification
a) Work Diary The Work Diary is used to make a rough
estimation of the cost involved in the project without actual
measurement.
b) Measurement book The measurement book is used for the
actual scrutiny of the project. It contains in-detail information
about the various transactions that are done between the
parties to a contract.
The Party produces the invoice based on the data available
in the measurement book.
4) Execution & Payment

Based on the contract a budget needs to be prepared which is used to
know the fund requirements based on which the funds are arranged.
The budget prepared is prepared keeping in mind the price, time and
payment terms required to be fulfilled and Price Schedule, Time Schedule
and Payment Schedules are prepared respectively.
Price Schedule: It contains information regarding the price of various
factors of production to be used for the successful completion of the
project.
Time Schedule: It lays down the time frame within which different activities
related to the project needs to be completed in order to minimize wastage
of time and resources.
Payment Schedule: It consists of the terms and conditions related to the
payment to be made to the contractor performing the project. It specifies
the relevant amount to be given to the contractor in a specified time frame.
5) Post completion audit report (PCAR)

The PCAR (Post Completion Audit Report) is prepared after the
commissioning of the project to review the status of the project with
respect to the proposed project. It is normally prepared within a period of
16
one year from the commissioning of the project. It is normally done in the
form of a questionnaire.
All major schemes are reviewed by the post completion Audit (PCA)
committee after one year of commissioning of the scheme.
Committee for PCA:
a) Head of department where the project was executed is the
chairman of the committee.
b) Representative of concerned department
c)
Project co-coordinator/Officer
d) Representative of Finance (capital budget section)

e) Representative of PP&E
f)
Representative of executive agency
g) The consultant
h) Representative from IED & O&M as the case may be.
Chairman of each post completion audit committee convenes the post
completion audit meeting and coordinates preparation of the post completion
Audit Report. The post completion report is prepared in the format issued by
project directorate of SAIL. The report is submitted to the Sanctioning
Authority.
Contract
A Contract is made between the two parties involved in the Project. The two
parties are Supplier and the Employer (Contractor).
What is a Contract?
A contract is an agreement voluntarily entered into by two parties or more
intended to create a legal obligation, which may have written elements,
though contracts can also be made orally.
General Conditions of Contract (GCC)
17
General Conditions of Contract are a set of conditions which assigns meaning

to words and expressions used in the Contract. It defines the words and
expressions used in the Contract.
Special Conditions of Contract (SCC)

Special Conditions of Contract supplement the General Conditions of Contract
(GCC). Whenever there is a conflict, the provisions herein prevail over those
in the GCC.
Price Schedule
The break-up of the Contract Price is indicated in the Summary Price
Schedule and detailed break-up of Summary Prices is given in the Tables (not
included in this Project).
Time Schedule
Time Schedule represents the time required for completion of the facilities. It
shows which specific work will require how much time. The time required is
shown in weeks or months.
Terms of Payment
Terms of payment are the terms mentioned in the Contract which explain how
and when the payment is to be made. Terms of Payment include Tax
information.
Performance Guarantee Test

Performance Guarantee (PG) Test is a test or a series of tests performed to
ensure the desired functioning of the equipment. The PG test for individual
systems is conducted with a time schedule as per the GCC. Details of test
procedure, test schedules are submitted by the contractor and approved by
the Employer. All facilities required for conducting the PG test are arranged by
18
the Contractor. If the PG test is interrupted due to any reasons the PG test is
repeated.
List of Approved Sub-contractors/Vendors

This is a list of sub-contractors / vendors approved for carrying out the item of
the facilities indicated against each of them in it. Where more than one Subcontractor / Vendor is listed, the Contractor is free to choose between them,
but it must notify the Employer of its choice well in advance time prior to
appointing any selected Sub-contractor / Vendor. If the GCC permits the same
then the Contractor is free to submit proposals for Sub-Contractors / Vendors
for additional items from time to time.
Technical Specifications
It explains the technical specifications of the equipment. The drawings and the
documents involved, conditions required for the usage, the training required
for using the equipment, the safety requirements, operating terms and
conditions, and complete technical detail.
Chapter 2 - Industry Profile

GLOBAL STEEL INDUSTRY
Steel is by far the most important and one of the most multifunctional
materials without which development of mankind would have taken on entirely
new facet. The performance of the steel industry is often considered as an
indicator of economic progress, particularly in developing countries.
Global steel production has increased by 59 per cent over a period of
seven years. Rapid growth and industrialization achieved in China and India
along with an impetus to infrastructure development after 2003 has led to a
19
rise in steel production. China is the largest producer of steel turning out more
than 400 million tonnes followed by the EU-27, Japan, US, Russia and India.
The production of world crude steel is projected to touch 1,410 million tonnes
in 2008. This increase is due to expected rise in Chinese and EU-27
production.
Top steel-producing companies in the World 2011

Previous years' tables and more details about company ownership and
tonnage calculations are available from the PDF files at the bottom of the
page.
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Company
ArcelorMittal
Hebei Group (1)
Baosteel Group
POSCO
Wuhan Group
Nippon Steel
Shagang Group
Shougang Group
JFE
Ansteel Group (2)
Shandong Group
Tata Steel (3)
United States Steel
Gerdau
Nucor (4)
ThyssenKrupp
Evraz
Maanshan
Benxi (2)
Hyundai Steel
Tonnage*
Rank
97.2
21
44.4
22
43.3
23
39.1
24
37.7
25
33.4
31.9
30
29.9
29.8
24
23.8
22
20.5
19.9
17.9
16.8
16.7
16.5
16.3
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Company
RIVA Group
Valin Group
Severstal
Metinvest
China Steel
Corporation
SAIL
Sumitomo Metal
IMIDRO
Jianlong Group
MMK
NLMK
Rizhao
Baotou
Jiuquan
Taiyuan
Techint Group
Anyang (1)
Pingxiang
Jinxi
ISD
Table 2.1
* Tonnage figures include stainless steel where applicable.
20
Tonnage*
16.1
15.9
15.3
14.4
14
13.5
12.7
12.6
12.4
12.2
12.1
11.2
10.2
10.2
9.9
9.5
9.4
9.1
9
8.9
Notes on company ownership and tonnage calculations:

In cases of more than 50% ownership, 100% of the subsidiarys tonnage is
included.
In cases of 30% to 50% ownership, pro-rata tonnage is included.
Less than 30% ownership is considered a minority interest and therefore not
included.
1.
2.
3.
4.
Excludes all 'allied subsidiaries' with a less than 30% share.

Includes Panzhihua but not Benxi.
Includes Tata Steel Europe and Tata Steel Ltd.
Includes shares in Duferdofin (50%)
Share of World Crude Steel Production March 2012
South Korea; 4%
India; 5%
Russia; 5%
United States; 6%
China; 47%
Japan; 7%
European Union (27); 12%

Other; 14%
Total World production: 132.2 million metric tons

Source: World Steel Association
Figure 2.1
21
INDIAN STEEL INDUSTRY

As per the recent figures release by World Steel Association in April 2011,
India has emerged as the fourth largest steel producing nation in the world. In
2010, after China, Japan, USA and Russia, India was the 5th largest producer
and had recorded a growth of 11.3% in steel production as compared to 2009.
Overall domestic crude steel production grew at a compounded annual growth
rate of 8.4% during 2005-06 to 2009-10. The Indian steel industry accounted
for around 5% of the worlds total production in 2010.
Total crude steel production for 2010-11 in India was around 69 million tonnes,
and by 2012-13 its expected that the crude steel production in capacity in the
country will increase to nearly 110 million tonne. Further, India may become
the second largest crude steel producer in the world by 2015-16, if the
proposed expansion plans are implemented as per schedule.
The demand for steel in the country is currently growing at the rate of over 8%
and it is expected that the demand would grow over by 10% in the next five
years. However, the steel intensity in the country remains well below the world
levels. Our per capita consumption of steel is around 110 pounds as
compared to 330 Pounds for the global average. This indicates that there is a
lot of potential for increasing the steel consumption in India.
Immense growth potential in Indian Steel Sector
Domestic crude steel production grew at a compounded annual growth

rate of 8.4% in the last few years.
Crude steel production capacity of the country is projected to be

around 110 million tonne by 2012-13.
222 Memorandum of Understandings (MOU) have been signed with

various states for planned capacity of around 276 million tonnes by
2019-20.
22
Investments at stake are to the tune of $187 billion in the Steel sector.
Increase in the demand of steel in India is expected to be 14% against

the global average of 5-6% due to its strong domestic economy,
massive infrastructure needs and expansion of industrial production.
Demand of steel in the major industries like infrastructure, construction,

housing, automotive, steel tubes and pipes, consumer durables,
packaging and ground transportation.
Target for $ 1 trillion of investments in infrastructure during the 12th

Five Year Plan.
Infrastructure projects (like Golden Quadrilateral and Dedicated Freight

Corridor) will give boost to the demand in the steel sector in near
future.
Projected New Greenfield & up-gradation of existing Airport shall keep

the momentum up.
Increased demand of specialized steel in hi-tech engineering industries

such as power generation, automotive petrochemicals, fertilizers etc.
Company profile
Steel Authority of India Limited (SAIL) A Maharatna
Steel Authority of India Limited (SAIL) is the leading steel-making company in
India. It is a fully integrated iron and steel maker, producing both basic and
special steels for domestic construction, engineering, power, railway,
automotive and defence industries and for sale in export markets.
SAIL manufactures and sells a broad range of steel products, including hot
and cold rolled sheets and coils, galvanised sheets, electrical sheets,
structurals, railway products, plates, bars and rods, stainless steel and other
alloy steels. SAIL produces iron and steel at five integrated plants and three
23
special steel plants, located principally in the eastern and central regions of
India and situated close to domestic sources of raw materials, including the
Company's iron ore, limestone and dolomite mines. The company has the
distinction of being Indias second largest producer of iron ore and of having
the countrys second largest mines network. This gives SAIL a competitive
edge in terms of captive availability of iron ore, limestone, and dolomite which
are inputs for steel making.
SAIL's wide range of long and flat steel products are much in demand in the
domestic as well as the international market. This vital responsibility is carried
out by SAIL's own Central Marketing Organisation (CMO) that transacts
business through its network of 37 Branch Sales Offices spread across the
four regions, 25 Departmental Warehouses, 42 Consignment Agents and 27
Customer Contact Offices. CMOs domestic marketing effort is supplemented
by its ever widening network of rural dealers who meet the demands of the
smallest customers in the remotest corners of the country. With the total
number of dealers over 2000, SAIL's wide marketing spread ensures
availability of quality steel in virtually all the districts of the country.
SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000
accredited unit of CMO, undertakes exports of Mild Steel products and Pig
Iron from SAILs five integrated steel plants.
With technical and managerial expertise and know-how in steel making
gained over four decades, SAIL's Consultancy Division (SAILCON) at New
Delhi offers services and consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and
Steel (RDCIS) at Ranchi which helps to produce quality steel and develop
new technologies for the steel industry. Besides, SAIL has its own in-house
Centre for Engineering and Technology (CET), Management Training Institute
(MTI) and Safety Organisation at Ranchi. Our captive mines are under the
control of the Raw Materials Division in Kolkata. The Environment
Management Division and Growth Division of SAIL operate from their
24
headquarters in Kolkata. Almost all our plants and major units are ISO
Certified.
CORE VALUES OF SAIL:
Customer satisfaction.
Concern for people.
Consistent Profitability.
Commitment of Excellence.
SAILs vision
To be a respected world-class corporation and the leader in Indian steel
business in quality, productivity, profitability and customer satisfaction.
SAILs credo
We build lasting relationships with customers based on trust and mutual
benefit.
We uphold highest ethical standards in conduct of our business.
We create and nurture a culture that supports flexibility, learning and is
proactive to change.
25
We chart a challenging career for employees with opportunities for
advancement and rewards.

We value the opportunity and responsibility to make a meaningful
difference in peoples lives.
THE SEVEN Cs OF SAIL:
Consistent Quality.
Committed Delivery.
Customized Product Mix.
Contemporary Products.
Competitive Price.
Complaint Settlement.
Culture of Customer Services
Safety in the Premises of the Organization:
Cause of accidents:
-
Vehicle change
Late coming
Route change
Stray animals
Sudden turning
Not following traffic rules
Rail Road Safety:

-
Total rail track inside 1365 km

Total authorized rail crossings 79
Total LOCO 85
Permitted speed (max) 7 km/hr
Rail track movements made pulling/ pushing
Occupational hazards:
-
Temporary hearing loss

26
Sounds
o Blast furnace
o Gas
o Liquid metal/slag
Working in continued space

-
Blast furnace gas

Coke-oven gas
Convertor gas
Mixed gas
LPG
DA (dissolved acetylene)
Oxygen
Nitrogen
Ammonia
Ill effects on human body:

-
Suffocation
Headache
Vomiting sensation
Dizziness
Death
Major Units
Integrated Steel Plants
Bhilai Steel Plant (BSP) in Chhattisgarh

27
Durgapur Steel Plant (DSP) in West Bengal
Rourkela Steel Plant (RSP) in Orissa
Bokaro Steel Plant (BSL) in Jharkhand
IISCO Steel Plant (ISP) in West Bengal
Special Steel Plants
Alloy Steels Plants (ASP) in West Bengal
Salem Steel Plant (SSP) in Tamil Nadu
Visvesvaraya Iron and Steel Plant (VISL) in Karnataka
Ferro Alloy Plant
Chandrapur Ferro Alloy Plant

Joint Ventures
NTPC SAIL Power Company Pvt. Ltd (NSPCL)
Bokaro Power Supply Company Pvt. Limited (BPSCL)
Mjunction Services Limited
SAIL-Bansal Service Center Ltd
Bhilai JP Cement Ltd
Bokaro JP Cement Ltd
SAIL&MOIL Ferro Alloys (Pvt.) Limited
S&T Mining Company Pvt. Ltd

28
International Coal Ventures Private Limited
SAIL SCI Shipping Pvt. Limited
SAIL RITES Bengal Wagon Industry Pvt. Limited
SAIL SCL Limited
Ownership and Management

The Government of India owns about 86% of SAIL's equity and retains voting
control of the Company. However, SAIL, by virtue of its Maharatna status,
enjoys significant operational and financial autonomy.
Background & History

The Precursor
SAIL traces its origin to the formative years of an emerging nation - India.
After independence the builders of modern India worked with a vision - to lay
the infrastructure for rapid industrialisation of the country. The steel sector was
to propel the economic growth. Hindustan Steel Private Limited was set up on
January 19, 1954.
Expanding Horizon (1959-1973)
Hindustan Steel (HSL) was initially designed to manage only one plant that
was coming up at Rourkela. For Bhilai and Durgapur Steel Plants, the
preliminary work was done by the Iron and Steel Ministry. From April 1957, the
supervision and control of these two steel plants were also transferred to
Hindustan Steel. The registered office was originally in New Delhi. It moved to
Calcutta in July 1956, and ultimately to Ranchi in December 1959.
The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the
29
end of December 1961. The 1 MT phase of Durgapur Steel Plant was

completed in January 1962 after commissioning of the Wheel and Axle plant.
The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT.
A new steel company, Bokaro Steel Limited, was incorporated in January
1964 to construct and operate the steel plant at Bokaro. The second phase of
Bhilai Steel Plant was completed in September 1967 after commissioning of
the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem
Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur
Steel Plant was completed in August 1969 after commissioning of the Furnace
in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at
Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of
HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73.
Holding Company
The Ministry of Steel and Mines drafted a policy statement to evolve a new
model for managing industry. The policy statement was presented to the
Parliament on December 2, 1972. On this basis the concept of creating a
holding company to manage inputs and outputs under one umbrella was
mooted. This led to the formation of Steel Authority of India Ltd. The company,
incorporated on January 24, 1973 with an authorized capital of Rs. 2000
crores, was made responsible for managing five integrated steel plants at
Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the
Salem Steel Plant. In 1978 SAIL was restructured as an operating company.
Since its inception, SAIL has been instrumental in laying a sound
infrastructure for the industrial development of the country. Besides, it has
immensely contributed to the development of technical and managerial
expertise. It has triggered the secondary and tertiary waves of economic
growth by continuously providing the inputs for the consuming industry.
SAIL Into the future

MODERNISATION & EXPANSION
30
SAIL, is in the process of modernizing and expanding its production units, raw
material resources and other facilities to maintain its dominant position in the
Indian steel market. The objective is to achieve a production capacity of 26.2
MTPA of Hot Metal from the base level production of 14.6 MTPA (2006-07
Actual).
Orders for all major packages of ISP & SSP and part packages of BSL, BSP,
and RSP & DSP Expansion have been placed and these packages are in
various stages of implementation.
Total proposed investment Rs. 17265 crores

Investment already committed Rs 15000 crore(approx.)
OBJECTIVE OF EXPANSION PLAN
100% production of steel through Basic Oxygen Furnace (BOF) route

100% processing of steel through continuous casting
Value addition by reduction of semi-finished steel
Auxiliary fuel injection system in all the Blast Furnaces
State-of-art process control computerization / automation
State-of-art online testing and quality control
Energy saving schemes , and secondary refining
Adherence to environment norms

PRODUCTION TARGET
The production target of hot metal, crude steel and saleable steel after
Expansion is indicated below:
Item
Hot Metal
Crude Steel
Saleable Steel
Base Case (2006-07) Actual
After
14.6
13.5
12.6
Expansion
26.2 (23.5)
24.6 (21.4)
23.1 (20.2)
Table 2.2
Figures in bracket indicate capacity after implementation of ongoing phase of

modernisation and expansion to be completed by 2012-2013
31
CAPITAL EXPENDITURE
Amount spent on Expansion plan and other Capital Schemes of SAIL (incl.
subsidiary) during last 3 years are as follows:
Year
2007-08
2008-09
2009-10
Total (Rs. /Crore)

2181
5233
10606
Table 2.3
Category-wise Sales (FY 2012)
PM plates; 14%
Wire rods; 6%
HR coils, HR plates/sheets, skelp; 37%
Round, TMT; 11%
Structurals; 7%
CR coils, CR sheets; 5%
Semis; 9%
Railway products; 8%
Pipes electrical sheets, Tin plates products; 1% GP coils, GP/GC sheets; 2%
Fig 2.2
Net Sales (in Rs. crores)
32
48,000.00
45,654.00
46,000.00
44,000.00
43,204.00
42,719.00
42,000.00
40,551.00
40,000.00
39,508.00
38,000.00
36,000.00
07-08
08-09
09-10
10-11
11-12
Fig 2.3
Financial Analysis of SAIL

BALANCE SHEET
Mar ' 11
(In Crore Rs.)

Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
Sources of funds
Owner's fund
Equity share
4,130.40
4,130.40
4,130.40
4,130.40
4,130.40
capital
Share
money
Preference
share capital
Reserves &
32,939.0
29,186.3
23,853.7
18,933.1
13,182.7
surplus
Secured loans
11,813.9
7,755.90
1,473.60
925.31
1,556.39
Unsecured loans
1
8,351.58
8,755.35
6,065.19
2,119.93
2,624.13
application
Loan funds
33
Total
57,234.9
49,827.9
35,522.8
26,108.8
21,493.6
Fixed assets
Gross block
38,260.6
35,382.4
32,728.6
30,922.7
29,912.7
Less :
0
-
9
-
9
-
3
-
1
-
reserve
Less :
23,180.5
21,780.9
20,459.8
19,351.4
18,315.0
accumulated
depreciation
Net block
15,080.0
13,601.5
12,268.8
11,571.3
11,597.7
Capital work-in-
6
22,228.4
8
15,039.8
3
6,544.24
1
2,389.55
1
1,236.04
progress
Investments
3
684.14
3
668.83
652.70
538.20
513.79
Uses of funds
revaluation
Net current assets

Current assets,
39,118.7
40,113.0
35,666.8
27,309.0
21,673.7
loans &
advances
Less : current
19,876.4
19,595.3
19,609.7
15,758.7
13,656.7
liabilities &
provisions
Total net current
19,242.3
20,517.7
16,057.1
11,550.2
8,016.98
assets
Miscellaneous
3
-
1
-
2
-
7
59.48
129.15
57,234.9
49,827.9
35,522.8
26,108.8
21,493.6
691.56
676.25
660.12
546.02
521.61
7.49
6.08
2.70
5.12
4.31
expenses not
written
Total
Notes:
Book value of
unquoted
investments
Market value of
34
quoted
investments
Contingent
30,519.8
28,382.4
32,193.1
17,143.5
5,605.90
liabilities
0
Number of equity 41304.01
6
41304.01
3
41304.01
4
41304.01
41304.01
shares
outstanding
(Lakhs)
Table 2.4
INCOME STATEMENT OF SAIL
(In Crore Rs.)
Mar ' 11
Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
Operating
42,534.3
40,595.9
43,798.5
39,958.6
34,328.7
income
Material
21,170.7
19,768.5
22,042.5
16,821.3
15,963.1
consumed
Manufacturing
8
4,896.07
7
4,234.65
8
3,762.77
9
3,317.74
3
2,925.43
expenses
Personnel
7,530.24
5,417.00
8,401.73
7,919.28
5,087.76
expenses
Selling expenses 1,241.04
Administrative
731.84
1,126.12
834.52
935.68
1,644.78
1,143.90
1,321.44
1,066.73
1,064.29
expenses
Expenses
-1,930.40 -1,832.22 -1,423.08
capitalized
Cost of sales
35,569.9
31,380.8
34,857.1
28,691.5
24,684.2
7
Operating profit 6,964.33
6
9,215.04
4
8,941.44
3
11,267.1
6
9,644.51
Other recurring
1,893.66
2,328.11
2,279.89
4
1,539.69
1,354.96
income
Adjusted EBDIT 8,857.99
11,543.1
11,221.3
12,806.8
10,999.4
Income
Expenses
35
Financial
474.61
402.01
253.24
250.94
332.13
expenses
Depreciation
Other write offs
Adjusted EBT
1,482.20
1.12
6,900.06
1,337.24
10.33
9,793.57
1,285.12
128.02
9,554.95
1,235.48
75.49
11,244.9
1,211.48
128.59
9,327.27
Tax charges
Adjusted EAT
Non-recurring
2,304.34
4,595.72
145.31
3,452.89
6,340.68
228.89
3,284.28
6,270.67
-277.12
2
3,934.65
7,310.27
161.90
3,253.80
6,073.47
53.75
items
Other non cash
163.71
184.80
181.26
64.61
60.57
adjustments
Reported Net
4,904.74
6,754.37
6,174.81
7,536.78
6,187.79
profit
Earnings before
29,679.0
27,099.4
22,052.4
18,348.4
12,886.6
appropriation
Equity dividend
Preference
3
991.30
-
2
1,363.03
-
7
1,073.90
-
3
1,528.25
-
3
1,280.42
-
dividend
Dividend tax
Retained
161.15
28,526.5
227.52
25,508.8
181.26
20,797.3
258.91
16,561.2
197.98
11,408.2
earnings
1
Table 2.5
RATIOS
Mar '
Mar '
Mar '
Mar '
Mar '
11
10
09
08
07
Per share ratios

Adjusted EPS (Rs)
Adjusted cash EPS (Rs)
Reported EPS (Rs)
Reported cash EPS (Rs)
Dividend per share
Operating profit per share
11.13
14.72
11.87
15.47
2.40
16.86
15.35
18.61
16.35
19.62
3.30
22.31
15.18
18.60
14.95
18.37
2.60
21.65
17.70
20.87
18.25
21.42
3.70
27.28
14.70
17.95
15.02
18.26
3.10
23.35
(Rs)
Book value (excl rev res) per
89.75
80.66
67.75
55.69
41.60
share (Rs)
Book value (incl rev res) per
89.75
80.66
67.75
55.69
41.60
share (Rs.)
Net operating income per
102.98
98.29
106.04
96.74
83.11
36
share (Rs)
Free reserves per share (Rs)
78.84
69.93
57.16
45.02
30.72
Profitability ratios
Operating margin (%)
Gross profit margin (%)
Net profit margin (%)
Adjusted cash margin (%)
Adjusted return on net worth
16.37
12.88
11.03
13.68
12.39
22.69
19.40
15.73
17.91
19.03
20.41
17.48
13.40
16.67
22.40
28.19
25.10
18.16
20.77
31.77
28.09
24.56
17.38
20.77
35.34
(%)
Reported return on net worth
13.23
20.27
22.06
32.76
36.09
(%)
Return on long term funds
15.10
21.97
28.98
44.47
45.55
Leverage ratios
Long term debt / Equity
Total debt/equity
Owners fund as % of total
0.31
0.54
64.76
0.39
0.49
66.86
0.20
0.26
78.77
0.12
0.13
88.33
0.22
0.24
80.54
source
Fixed assets turnover ratio
1.16
1.20
1.35
1.31
1.16
Liquidity ratios
Current ratio
Current ratio (inc. st loans)
Quick ratio
Inventory turnover ratio
1.97
1.21
1.35
5.13
2.05
1.60
1.53
6.02
1.82
1.61
1.24
5.86
1.73
1.68
1.23
8.62
1.59
1.52
1.01
7.50
Payout ratios
Dividend payout ratio (net
23.49
23.54
20.32
23.71
23.83
profit)
Dividend payout ratio (cash
18.04
19.63
16.54
20.19
19.60
profit)
Earning retention ratio
Cash earnings retention ratio
74.93
81.05
74.92
79.32
79.99
83.67
75.56
79.28
75.66
80.06
Coverage ratios
Adjusted cash flow time total
3.32
2.15
0.98
0.35
0.56
debt
Financial charges coverage
18.66
28.71
44.31
51.04
33.12
ratio
Fin. charges cov.ratio (post
14.46
21.15
30.96
36.26
23.71
(%)
tax)
37
Component ratios
Material cost component (%
53.23
45.84
54.60
43.18
47.34
earnings)
Selling cost Component
Exports as percent of total
2.91
2.30
2.77
1.92
2.13
1.84
2.86
3.08
3.10
3.40
sales
Import comp. in raw mat.
62.00
61.27
63.36
50.93
54.52
consumed
Long term assets / total
0.48
0.40
0.34
0.34
0.37
Assets
Bonus component in equity
capital (%)
Table 2.6
LEVERAGE ANALYSIS (for AY 2011-12)

1. Operating Leverage
2. Financial Leverage
3. Combined Leverage
1. Operating Leverage (OL)

OL
=
Contribution
EBIT
OL
OL
OL
EBIT + Fixed Cost

EBIT
73,75,79,00,000 + 2,11,70,78,00,000
73,75,79,00,000
3.87
38
2. Financial Leverage (FL)

FL
__EBIT__
EBT
FL
73,75,79,00,000
69,00,06,00,000
FL
1.07
3. Combined Leverage (CL)

CL
OL
FL
CL
3.87
1.07
4.141
INCOME STATEMENT OF SAIL (for AY 2011-12)
(in crores Rs.)
Particulars
Amount
Sales
Less:- Variable Cost
Contribution
Less:- Fixed Cost
EBIT
Less:- Interest
EBT
Less:- Income Tax
EAT
Less:- Preference Dividend
Profit available to Equity Shareholders
No. of Equity Shares
39
42,534.30
13987.73
28546.57
21,170.78
7,375.79
475.73
6900.06
2304.34
4595.72
4594.72
412.82
Earnings Per Share (EPS)

Table 2.7
11.13
SWOT Analysis of SAIL

STRENGTH
Largest player in the Indian Steel industry.
Strong backward integration like iron ore and power.
Very aggressive expansion plans.
The single largest rail manufacturer in the world.
Merger with IISCO would boost its profitability, as SAIL would have access
to IISCOs underutilized iron ore and coalmines.
All its plants are a profit centers.
SAIL is a virtually Debt-Free Company.
The approved acquisitions and merger of NINL, NISCO and MEL would
result in synergy benefits, operating efficiencies, cost savings and thus
higher profit.
WEAKNESS
Concern in obtaining new mining leases and renewal of old leases.

Low liquidity in Stock Exchange (85.82% shares is held by GOI itself).
Heavily dependent on import of raw materials (coking coal).
It has high operation cost when compared to its peers like Tata Steel, JSW
Steel.
OPPORTUNITIES
Strong Economy growth (second fastest growing economy after China).
Booming infrastructure sector (Roads, Ports, Airports, SEZs, Power).
Strong demand in automobile sector, consumer durables sector and

engineering goods sector. Robust demand in construction and retail
industry.
Low per capita steel consumption offers a higher growth.
40
Rich Geological Resource base.
THREATS
Steel prices may remain stumpy on account of oversupply from China.
Bureaucratic nature of Government - Socio-Political interventions (in

leasing mines).
Rising interest rates could affect expansion programmed (High cost of

Finance).
High cost of energy.
Big ticket investment by POSCO and Mittal could swallow the market
(specifically export). Cyclical nature of Steel Industry.
Deficit infrastructure.
High ash coal.
BHILAI STEEL PLANT

Bhilai Steel Plant, a unit of Steel Authority of India Ltd. is a public sector
undertaking and was conceived under Indo-USSR Treaty in the 2nd Five
year plan. This was in accordance with erstwhile government policy for
strengthening economy and self reliance through development of core
sector.
The plant is located at the central position of India, which is one of
the major iron belt of India, and it is about 40 kilometer from Raipur, capital
of Chhattisgarh. The captive mines of the plant located at Dalli-Rajahara
supplies iron ore and lime stone used to be available from Nandini captive
mines. At present lime stone is procured from outside. The other major raw
material, coal is purchased from outside either through import or from
indigenous market.
Bhilai Steel Plant, an integrated steel works, was commissioned in
1959 with production capacity of 1.0 million tonne of steel. In successive
phases, capacity was enhanced to 2.5 and 4.0 million tonne in the year 1962
and 1984 respectively. Figure depicts facilities available with Bhilai Steel
41
Plant for 4.0 mt production. As of now this is the largest steel plant in India
with present capacity utilisation more than 100% for three consecutive years.
Bhilai Steel Plant produces wide range of products. This includes Rails,
Wire Rods, Plates and Merchant products. Commitment to quality and
customer satisfaction has resulted in consistent R & D efforts culminating in
development and commercialization of distinctive new grades like SAILMA
UTS-90 etc. Bhilai Steel Plant could dream and implement the project of long
rail (230 meter long) in consistence with its reputation. This was a basic
demand from Indian Railways for enhancement of countrys economy.
Bhilai steel plant is planning to expand its production to 7.0 Mt by the year
2011-12. During its expansion plan all energy efficient technology will be
installed, after this the energy consumption may come down to 5.6 gcal/tcs.
Human resource management is exemplary in Bhilai Steel Plant. It is
worthwhile to note that Bhilai Steel Plant registered maximum profit for 200708 also among all public sector steel plants.
ACHIEVEMENTS
Ten times winner of Prime Minister's Trophy for best Integrated Steel
Plant in the country.

Bhilai Steel Plant (BSP) is India's sole producer of rails and heavy steel
plates and major producer of structural.

The plant is the sole supplier of the country's longest rail tracks of 260
meters.
With an annual production capacity of 3.153 MT of saleable steel, the plant
also specializes in other products such as wire rods and merchant
products.
BSP is accredited with ISO 9001:2000 Quality Management System
Standard; all saleable products of Bhilai Steel Plant come under the ISO
umbrella.
At Bhilai IS0:14001 has been awarded for Environment Management
System in the Plant, Township and Dalli Mines. It is the only steel plant to
get certification in all these areas.

The Plant is accredited with SA: 8000 certification for social accountability
and the OHSAS-18001 certification for Occupational health and safety.
42
These internationally recognized certifications add value to Bhilai's

products and helps create a place among the best organisations in the
steel industry.
Among the long list of national awards it has won, Bhilai has bagged the
CII-ITC Sustainability award for three consecutive years.
Organization Chart of Bhilai Steel Plant
Fig. 2.4
FINANCE AND ACCOUNTS DEPARTMENT - BSP
43
Finance and accounts department of Bhilai steel plant is one of the key
departments in the total organization. It has two main functions that are
finance and accounts carried out by various sections of finance and accounts
department. The objectives of the F&A department is always to meet the
requirement of line department while doing its own line functions such as
accounts maintaining, meeting statutory requirements, budgetary control and
advising on financial matters etc.
This training report is an attempt to consolidate various functions of finance
and accounts department of Bhilai Steel Plant. This report is based on the
latest practices and system being followed and would be very useful to
everyone functioning finance and accounts executives and for others as well.
This will throw light on functions and importance of finance and accounts
department in total organization.
The sections of finance and accounts department covered are as follows
Mines coordination
Stores and raw material section
Freight and claims
Purchase and contract concurrence section
Project finance accounts
Costing and budgeting section
Operation account section
Wages section
Cash section
Sales invoicing and accounting section

44
Excise and sales tax section
Central accounts and assets
PROJECT FINANCE & ACCOUNTS

At the time of the countrys independence in 1947, it was confronted with
various economic and social problems that require to be tackled in a planned
and systematic manner. India was primarily an agrarian economy; it had a
very weak industrial base, low level of savings/investments and lacked
infrastructural facilities. A vast percentage of the population was extremely
poor. There existed considerable inequalities in income and regional
imbalances in economic attainments. Under such circumstances, a bag effort
was required from the governments as the private sector had neither the
necessary resources in terms of funds, nor the will to assume risks involved in
long generation investment projects. Moreover, the financial returns on such
projects were too low to attract private sector enterprises investment. Given
the type and range of problems faced by the country on its economic, social
and strategic fronts and the various imperatives such as the necessity on the
part of government to use the public sector as an instrument for self-reliant
economic growth so as to develop a sound agricultural and industrial base,
diversify the public economy and overcome the economic backwardness.
In view of the above expectations for continued large investment in
PSU, there has been a significant growth, both in number and investments, in
such enterprises over the years, their declining role in the recent years
notwithstanding. For instance, from a modest investment of Rs. 29 crores in 5
PSU as on April 1, 1951, investments grew to Rs 3, 24,632 crores in 240 such
enterprises by march 31, 2002.
The predominant considerations for continued large investments in PSU were:
1) To accelerate the growth of core and strategically important sectors like
railways, telecommunications, defense, etc.
45
2) To invest in the consumer oriented industries such as drugs and food

industries, with a view to ensure easier availability of vital articles of mass
consumption at economic and reasonable prices.
3) To take over sick units from private sector enterprises in order to sustain
production and protect employment.
The project finance & accounts section of BSP is broadly covered under the
following five headings:
1. Capital Budget
2. Project Concurrence
3. Zonal Accounts
4. Works Compilation
5. Import Account
Organization chart Finance & Accounts department
46
ED (F&A)
GM (F&A)
DGM
(F&A-BK)
Admin/Wage
s/PF/Stock
verification
DGM
(F&A-SM)
Bills
payment &
Accountin
g:
Operation,
Raw
materials,
Stores,
Town
services,
Medical,
Resident
offices,
Cash
DGM (F&ABPN)
DGM (F&ASKA)
DGM (F&AGVR)
Projects,
Integrated
Project
manageme
nt
Concurrence
:
(Works/Nonworks/Medic
al/Mines/Stor
es/Purchase)
Costing/Mgt
.Acctg./Opr
n.
Budget/Cen
tral
accounts/E
RP/Energy
CELL &
Income Tax
(TDS)
Fig 2.5
Product-Mix
PRODUCT-MIX
TONNES/ANNU
M
Semis
Rail & Heavy Structural
Merchant Products
5,33,000
7,50,000
5,00,000
(Angles, Channels, Round & TMT bars)

Wire Rods (TMT, Plain & Ribbed)
Plates (up to 3600 mm wide)
Total Saleable steel
Table 2.8
Products of Bhilai Steel Plant

47
4,20,000
9,50,000
31,53,000
These are the major products manufactured by Bhilai Steel Plant. They
constitute to 60-70% of profits of Bhilai Steel Plant.
S.no.
1
2
3
4
5
6
7
8
9
10
11
12
Product
Rails
Heavy Structural
Crane Rails
Crossing Sleepers
Merchant Sleepers
Light structured
Medium Rounds
Heavy Rounds
Wire Rod Plain
Wire Rod Ribbed & TMT
Wire Rod E.Q
Plates
Use
Indian Railways, Export
Construction
Crane
Broad gauge sleepers
Engineering & construction
Construction
Electrodes
Boilers, Defense, Railways,
Ship-building, LPG cylinder,
13
14
15
16
exports, ATM m/c

Re-rollers & sister units of SAIL
Billets
Bloom
Narrow width slab
Pig Iron
Foundry
Table 2.9
Long Products
Product
Rail (Carbon-Manganese; 90
Application
Railway Tracks all over the country
Kg/mm2 UTS)
High YS/UTS Rail (V/Nb
Heavy haulage, high density railway tracks
Micro-alloyed)
Corrosion Resistant Rail
Corrosion prone regions, mainly coastal

areas
Cr-V alloyed High Strength
Heavy haulage, high density railway tracks;
(100 Kg/mm2 UTS) Rail
developed for Dedicated Freight Corridor
Thick Web Asymmetric Rail
Points & Crossings in Railway track
High Conductivity Rail
High conductivity rail or Third Rail for

48
(Rimming quality)
Metro Rail, made through Rimming

process
Crane Rail
Crane rails in CR-80/CR-100/CR-120

sections, used for tracks of different types
of cranes
EQR TMT Bar & Wire Rod (8,
Construction of high-rise buildings, bridges
10, 12, 25, 28, 32, 36 &
and structures in seismic prone areas
40mm)
HCR TMT Bar & Wire Rod (8,
10, 12, 25, 28, 32, 36 &
and structures in corrosion prone areas
40mm)
HCR EQR TMT Bar & Wire
Rod (8, 10, 12, 25, 28, 32, 36
and structures in areas susceptible to both
& 40mm)
seismic activities and also corrosion
Rimming grade EQ Wire Rod
Production of low current consuming Arc

Welding Electrodes
Drawing quality Wire Rod
Drawing of Wire Rods into thinner gauge
(SWR-10, SWR-14)
wires for different applications
SAIL MA 410 structurals
For construction sector, requiring higher

tensile strength
SAIL TOWER Semis
For re-rolling into high strength structurals,

for construction of Transmission Line
Towers
Table 2.10
Flat Products
Product
Thicker gauge plates (up-to
Application
Fabrication of heavy duty structures in
49
150mm thickness) in Structural
the construction industry
quality as per national/

international specifications (IS
2062 E250, ASTM A36, EN 10025
S235/S275, etc.)
High Tensile plates (SAIL MA
High strength applications in the
300/350/410/450, IS 2062
construction sector, high-rise buildings,
E300/E350/E410/E450, EN 10025
bridges, flyovers, heavy machineries,
S355, JIS G 3106 SM490 A/B,
earthmoving equipments, windmills,
ASTM A572 GR.42/50, etc.)
thermal/hydel power projects
Ultra High Strength plates (SAIL
As rolled plates for applications like
MA 550/600, SAIL HITEN 690AR,
Penstocks, heavy duty machineries,
etc.)
defense equipments, thermal/hydel

power projects (used in place of
quenched & tempered steel plates)
Boiler Quality plates for use at
Fabrication of boiler body and/or its
Intermediate & higher temperature different constituents

in grade IS 2002 Gr.I/II/III, ASTM
A / ASME SA 515 Gr. 60/65/70
Boiler Quality plates for use at
Fabrication of boiler body and/or its
Moderate & Lower temperature in
different constituents
grade ASTM A / ASME SA 516

Gr.55/60/65/70
Pressure Vessel Quality plates for
Fabrication of pressure vessels,
use at lower temperature in grade
storage tanks, mounded vessels used
ASTM A / ASME SA 537 Class 1
for storing liquefied gases at high

pressure
Creep Resistant plates in ASTM
High temperature application requiring
A204, EN 10028 Gr.16Mo3
creep resistance property
Ship Building quality plates in LRS Construction and repair of Merchant

50
Gr.A/B/D, ABS Gr.A, DNV NV32
Navy / Cargo vessels
DMR 249A grade plates
Nickel alloyed Steel with High strength

& low temperature toughness for Naval
Ships
Line Pipe Quality plates in grades
Construction of Line pipes for carrying
API 5L X-52/X-60/X-65/X-70
Oil & Gas
Corrosion Resistant steel plates in
Applications requiring atmospheric
grades SAIL-COR, ASTM A 588
corrosion resistance generally
Gr.A, IRS M-41, ASTM A 242
structurals for construction sector and

railway wagons & coaches
Wear Resistant plates in SAIL-
High strength plates with certified
HARD quality
minimum hardness level, for

applications requiring wear resistance
Table 2.11
By-products
Coal chemicals & fertilizers are manufactured by the by-products obtained
from the manufacturing process of the products. They constitute to 30-40%
profits of Bhilai Steel Plant.
Ammonium Sulphate (Fertilizer) Brand Name RAJA
Coal chemicals
Tar products
(Pitch, Naphthalene, Creosote Oil Road Tar, Anthracene oil,
Dephenolised oil, PCM etc.),
Benzol products
(NG Benzene, Toulene,
Xylene,
Solvent oil, Heavy Benzol etc.)
Processed slag
Granulated slag from CHSG Plants & SGP for cement

manufacture
Table 2.12
SOURCES OF RAW MATERIALS

51
Raw Material
Iron-ore fine
Iron-ore Lumps
High-Silica Limestone
High-Silica Dolomite
Low-Silica Limestone
Source
Dalli Rajhara
Dalli Rajhara
Nandini
Hirri Mines
Jaisalmer,Katni,
State
C.G.
C.G.
C.G.
C.G.
Rajasthan,
Consumer units
SP-I, II, III
BFs
SP-I, II, III
SP-I, II, III
RMP-II, SMS-II
High-Silica Manganese ore
Kuteshwar
Ramteke, Tirodi
M.P.
Maharashtr
BF-I, VII
Coal (indigenous)
Bhojudh, Naindan,
a
Jharkhand
Coke Oven
Abroad
Coke Oven
Sudamdih,
Rajarappa, Swan
Australia, New
Coal (imported)
(78% best quality carbon)
Zealand
Table 2.13
Marketing process
Customer
Branch
SRM
Marketin
g
PPC
Production
planning/
Heat
making
Dispatch
(Rail or
Road)
Inspection
& Testing
(R&C lab)
Shipping
bay
Fig 2.6
52
Rolling
shops
Bsps Organizational Objectives:

To encage customer satisfaction through: Improvement in productivity and product quality.
Skill enhancement of our people by competence commitment and
culture- building
Quality Policy of Bsp:

Attending market leadership through enhancing customer satisfaction.
Achieving continual improvement in productivity, quality and salability
of our products.
Active involvement of all our people in achieving our goals, objectives
and target.
Major suppliers of Bhilai steel plant:

1. Apollo industrial corporation Mumbai.
2. Ashok Leyland Chennai.
3. BHEL Bhopal and Mumbai.
4. Bharat petroleum gas Nagpur.
5. Birla corporation limited kolkotta.
6. Cimmco Birla limited new Delhi.
7. Dunlop India limited kolkotta.
8. Siemens casting limited Mumbai.
9. Simplex casting limited Raipur.
53
10. HMT ltd. Ranchi.
Major buyers of BSP:

1. Indian railways.
2. Vizard profiles limited.
3. High pressure boiler plant BHEL Trichy.
4. NTPC super thermal power project.
5. Jindal steel and power limited Raigarh.
6. NTPC limited New Delhi.
7. Common India limited Delhi.
8. Chandigarh
industrial
journalism
and
development
Chandigarh.
9. Cropro international Italy.
10. Sangyong corporation Japan.
Major Competitors of BSP:

1. Ispat industries limited.
2. Lloyds steel limited.
3. Essar steel limited.
4. Jindal steel and power limited.
5. Jindal strips limited.
6. Uttam steels limited.
7. National steel industries limited.
8. Bhusan steel and strips limited.
Customer Profile - Indian Railways

54
corporation
The first railway on Indian sub-continent ran over a stretch of 21 miles from
Bombay to Thane. The idea of a railway to connect Bombay with Thane,
Kalyan and with the Thal and Bhore Ghats inclines first occurred to Mr.
George Clark, the Chief Engineer of the Bombay Government, during a visit to
Bhandup in 1843.
The formal inauguration ceremony was performed on 16th April 1853, when
14 railway carriages carrying about 400 guests left Bori Bunder at 3.30 pm
"amidst the loud applause of a vast multitude and to the salute of 21 guns."
The first passenger train steamed out of Howrah station destined for Hooghly,
a distance of 24 miles, on 15th August, 1854. Thus the first section of the East
Indian Railway was opened to public traffic, inaugurating the beginning of
railway transport on the Eastern side of the subcontinent.
In south the first line was opened on 1st July, 1856 by the Madras Railway
Company. It ran between Vyasarpadi Jeeva Nilayam (Veyasarpandy) and
Walajah Road (Arcot), a distance of 63 miles. In the North a length of 119
miles of line was laid from Allahabad to Kanpur on 3rd March 1859. The first
section from Hathras Road to Mathura Cantonment was opened to traffic on
19th October, 1875.
These were the smalls beginnings which is due course developed into a
network of railway lines all over the country. By 1880 the Indian Railway
system had a route mileage of about 9000 miles. INDIAN RAILWAYS, the
premier transport organization of the country is the largest rail network in Asia
and the worlds second largest under one management.
Competition Analysis
According to World Steel Association, SAIL ranks 26 th in the top steel
producing companies for the year 2011 (which is previous year). In their list
only two of the steel producers are Indian companies. One is SAIL on 26 th
position, and the second company is none other than TATA Steel on 12 th
position. However the comparison is not fair as TATA Steel operates in 26
55
countries and the data by World Steel Association is using TATA Steel Ltd. as
well as TATA Steel Europe.
There are a lot of competitors for SAIL in India, such as: Essar Steel Ltd.
JSW Steel Ltd.
SAL Steel Ltd.
VISA Steel Ltd.
Etc.
But the major competitor is TATA Steel.
Company Profile TATA Steel
Tata Steel has always believed that the principle of mutual benefit - between
countries, corporations, customers, employees and communities - is the most
effective route to profitable and sustainable growth.
Established in 1907, Tata Steel is among the top ten global steel companies
with an annual crude steel capacity of over 28 million tonnes per annum
(mtpa). It is now one of the world's most geographically-diversified steel
producers, with operations in 26 countries and a commercial presence in over
50 countries.
The Tata Steel Group, with a turnover of US$ 22.8 billion in FY '10, has over
80,000 employees across five continents and is a Fortune 500 company.
Tata Steels vision is to be the worlds steel industry benchmark through the
excellence of its people, its innovative approach and overall conduct.
Underpinning this vision is a performance culture committed to aspiration
targets, safety and social responsibility, continuous improvement, openness
and transparency.
Tata Steels larger production facilities include those in India, the UK, the
Netherlands, Thailand, Singapore, China and Australia. Operating companies
within the Group include Tata Steel Limited (India), Tata Steel Europe Limited
(formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium
Steel).
56
Literature Review
Maximum utilization of limited resources has always been the key to progress
and sustain. Same concept is required for the projects a firm undertakes,
time, money and manpower being the prime resources.
Some topics focused on include, concept of project management, capital
budgeting techniques and process, etc. In the present report, the role and
importance of capital budgeting in project management is investigated.
In a tutorial by MIT open-courseware (2011), project management system has
been shown as a process. Inputs such as goal, team, money, time, and
equipment are used to complete a project, and the project results in output in
the form of deliverables which give returns to the investment. This tutorial was
written to provide the basic skills and knowledge needed to effectively
manage a group project (MIT, 2011).
Next the topic of project management is addressed by defining the concept. In
an article by Wikipedia, (2012), project management is described as the
discipline of planning, organizing, securing, managing, leading, and controlling
resources to achieve specific goals (Wikipedia, 2012). A traditional approach
has also been explained in the article which breaks project management as
five developmental phases; initiation, planning and design, execution and
construction, monitoring and controlling systems, and completion (Wikipedia,
2012).
57
In an article by MPUG (2012), project management is defined as the science

and art of organizing the components of a project (MPUG, 2012). A quote of
an anonymous expert including in the article notes, It has a beginning and an
end. (MPUG, 2012).
Next the topic of capital budgeting is addressed by defining the concept. In an

article by Finatics (2010), capital budgeting is defines as the process of
allocating capital after determining project feasibility. The process of
determining project feasibility is shown as a 3-part process; qualitative
analysis, forecasting performance and quantitative analysis (Finatics, 2010).
In an article by Suffolk County Community College (2011), capital budgeting is

described as a required management tool. It is also defined as a sound
procedure to evaluate, compare, and select projects (Suffolk County
Community College, 2011).
In a sample of an Ebook titled Financial Management in the Sport Industry

written by authors; Matthew T. Brown, Daniel A. Rascher, Mark S. Nagel, and
Chad D. McEvoy representing Holcomb Hathaway (2010), capital budgeting
is associated with capital expenditures and specifically the analysis of capital
expenditures to decide which expenditures should be made. Capital
budgeting is also described as the process of evaluating, comparing and
selecting capital projects to achieve the best return on investment over time
(Brown, et al., 2010).
58
Chapter 3 - Research Methodology

OBJECTIVES OF THE STUDY
To study the various financial aspects of the projects carried out by
Bhilai Steel Plant.

To study the Project Management process and its implementation
To study the decision of Bhilai Steel Plant regarding the replacement of
NB 1400 CO Gas Line from COL. 214, to Plate Mill Gas Booster
Station along-with Mixing Station, Mixed Gas Station and Delivery
Headers.
RESEARCH METHOD
In order to conduct the study and achieve objectives, primary and secondary
data is required. It is therefore necessary to gather relevant data from
corresponding areas.
Primary data is highly confidential, and access to all concerned
documents and areas required for the study was not granted, and
because of the restrictions complete raw data could not be analyzed.

Secondary data, which is the data regarding the Steel plant industries
is to be collected from various published sources. They include
Internet, Business Journals, Magazines, Newspapers and Books. The
data relating to Bhilai Steel plant is to be collected from company
records.
This study has been conducted using limited authority and limited resources,
such as; knowledge, practical exposure and time. And therefore this studys
boundaries are limited.
LIMITATIONS
The staff of BSP especially from the Finance department which was the
primary source of information and support is very busy, and therefore
could not afford to assist much in this study.

Because of the restriction in time period, a thorough and complete
study was not likely to be achieved.
59
Chapter 4 - Data Collection

Data required for the project has been collected during the STP period of 45
days. The data collected has been duly verified and is appropriately used in
this project.
Analysis & Interpretation

This project was started by Bhilai Steel Plant in the year 2006 with a total
budget of Rs. 53.92 crores initially and it extended up to Rs. 42,21,85,708. Its
summary Price schedule, time schedule and Payment schedule are as
follows:
Summary Price Schedule
S.No
.
Description
Prices(currency)
Euro converted
Euro
to Indian
currency
220,000
1,36,40,000
b Indigenous (at site)
currency
Design and Engineering

a Imported (FOB)
Indian
22,47,200
Supply of Plant and Equipment

a Imported (FOB)
5,018,400
31,11,40,800
5,20,00,000
a Imported (FOB)
Supply of Refractories (at site)
Supply
of
Commissioning
Spares
60
a Imported (FOB)
1,72,00,000
47,28,380
including Sheeting, Glazing and -
8,97,920
60,00,000
133,000
82,46,000
30,000
18,60,000
77,000
47,74,000
70,00,000
Civil
Engineering Work including
Supplies
Supply
of
Fabricated
Building
Steel Structures at site including

Sheeting,
Glazing
and
Final
Painting
Erection of Building Steel structure
7
Final Painting
8
a Erection of Refractories
b Works
Contract
Tax
on
Erection of Refractories
9
10
11
Storage,
Erection,
Commissioning
Foreign supervision charges in
India during Erection
Training charges
Ocean
12
Handling,
freight,
Customs
Clearance(excluding
Custom
Duty),Port Clearance and Inland

transportation for Imported Items.
13
14
15
Comprehensive
Marine
cum
39,00,000
Erection Insurance
Total Contract Price
5,478,400
CENVAT Credit (ED, Service Tax

and VAT)
61
33,96,60,800
9,39,73,500
1,14,48,592
Contract Price (Net of CENVAT)

5,478,400
Table 4.1
33,96,60,800
8,25,24,908
At present value of 1 Euro is equal to 62 rupees (approx.)
Price Schedule for Indigenous items (Including tax summary)
S.
No.
Item
Design and
Engineering
Basic cost
Service
Excise
Tax @
Duty
12.36%
@16.48%
VAT @
4%
Total
20,00,000
2,47,200 -
22,47,200
4,29,25,824
20,00,000
5,20,00,000
1,65,26,000
6,74,000 -
1,72,00,000
39,03,260
6,43,259
1,81,861
8,00,000
97,920
Plant and
2
Equipment
including
70,74,176
technology
Civil Engineering
3
work including all

supplies
Building steel
structures, Inland
Freight and
47,28,380
handling
5
Erection of
Building Steel
62
8,97,920
Structures,
Sheeting, Glazed
Sheets
Storage
6
handling,
erection and
53,40,000
6,60,000 -
60,00,000
commissioning
Table 4.2
Time Schedule
S.No
.
1
2
3
4
No. of months from effective date

Commencemen
Completion
t
0
2
1
3
2
8
Items of work
Basic Engineering
Detailed Design Engineering
Civil Work
Supply/ delivery of:
i
ii
Foundation Bolts and inserts

Building Steel Structures and
iii
Sheeting:
a Imported
b Indigenous
Mechanical Plant and Equipment
iv
v
vi
including Technological structures:

a Imported
b Indigenous
Electrical Plant and Equipment:
a Imported
b Indigenous
Refractories:
a Imported
b Indigenous
Commissioning Spares:
a Imported
63
NA
vii
b) Indigenous
Special Tools, Tackles,
Consumables oil and lubricants:
a Imported
b Indigenous
Erection of building Steel Structures

Erection of:
1 Mechanical plant & equipment

2 Electrical plant &equipment
Preliminary acceptance
Commissioning
Performance Guarantee Test
Defects Liability period
Table 4.3
7
8
9
10
11
NA
NA
6
6
8
8
7
9
10
12
11
9
NA
10
10
13
22
Rate
Total
Payment Schedule
S.No.
Items
(% of contract price)
Advance payment of the contract 5%
2,11,09,285.5
price at the time of initial approval.

Contract price to be released on 5%
2,11,09,285.5
3
4
placement of orders.
Progress payment.
75%
Payment on issue of the Preliminary 2.5%
31,66,39,281
1,05,54,643
Acceptance Certificate.
Payment
on
issue
1,05,54,642
Commissioning Certificate.
Payment to be released
establishment
of
the
of
the 2.5%
after 5%
2,11,09,285.5
performance
guarantees parameters and issue of

7
PGC.
Payment to be released on issue of 5%
64
2,11,09,285.5
the Final Acceptance Certificate.

Table 4.4
Progress Payment Schedule (75% of the contract price)

S.
Items
Time (in
Rate
Total
No.
1
months)
Basic Design (to be paid monthly from the 2
10%
13,88,720
Detailed Engineering (to be paid quarterly 2
65%
90,26,680
after its commencement)

Civil works (to be paid monthly)
6
Supply of Building and Technological 2
75%
75%
1,29,00,000
27,23,55,60
date of commencement of project)
2
3
Steel
Structures
Equipment
4
and
including
Plant
Refractory
and
and
Commissioning Spares
Ocean Freights, Customs clearance( to as
and 75%
88,30,500
be paid monthly on receipt of imported when

5
supplies)
Erection of
Building
Steel
required
structure 2
75%
6,73,440
foundation and final painting)

Erection of mechanical and electrical 2
20%
21,45,676
plant
including 2
35%
37,54,933
Performance 1
20%
21,45,676
and 75%
61,84,500
including sheeting and final paintings (to

be paid after placing structures on
6
7
and
commissioning
equipment
and
Guarantee Tests of facilities(to be paid

when
8
plant
and
equipments
are
positioned, checked, wielded and tested)

Foreign supervision charges in India as
65
during Erection (to be paid monthly)
when
required
Training charges(to be paid quarterly on as
and 75%
completion
of
actual
training
13,95,000
during when
quarter)
required
Table 4.5
Notes for the Contract Summary:

1 The Contract is dated 2006. Therefore Tax rates mentioned are as on
2006.
2 The only parts included in this Summary from the Contract are:
a Price schedule
b Time schedule
c Payment schedule
d Progress payment schedule
3 Contract documents are confidential information, and can only be used for
reference purposes.
Feasibility report summary

Replacement of NB 1400 CO Gas Line from COL. 214, to Plate Mill Gas
Booster Station along-with Mixing Station, Mixed Gas Station and Delivery
Headers.
STAGE I
BSP was established in the year 1956 with a capacity of 1.0 Mt. of ingot steel.
The plant was subsequently expanded in stages and the present capacity is
4.0 Mt.
The various by-product fuel gases generated in the main production units are
collected, cleaned and distributed to meet the heating requirements of the
plant. The fuel gases are:
Coke oven (CO) gas

Blast furnace (BF) gas and
Basic oxygen furnace (BOF) gas
BSP has been provided with an elaborate gas network for supply of CO gas to
the various plant units. Part of the network is more than 35yrs old. The
66
network is subjected to continuous internal/external corrosion and erosion.

The internal corrosion takes place because of the corroding components
present in the fuel gases. External corrosion takes place because of the
environmental conditions. In the course of time this corrosion in pipe lines
leads to leakages. These leakages are stopped temporarily by metal cladding,
epoxy treatment, patch work welding, etc.
Regular inspection and NDT thickness measurement are carried out by BSP
to ascertain the health of the pipelines. In order to carry out replacement /
modification in a phased and sequential manner the pipeline requiring
replacement are identified based on the above inspection reports.
In this project report the replacement of such pipelines have been undertaken
for their financial analysis as they directly affect the performance of all
associated mills and furnaces.
Background
Existing facilities
A vast BF and CO network exists throughout the plant for supplying fuel gases
to the consuming units. The network system is equipped with bleaders/ flare
stacks to maintain the normal line pressure and safety of the pipe work.
Limitations of Existing Gas Network
Generally there is no proper isolation facility in the present gas network

causing either to work on live lines in hazardous conditions or shut
down the consumers for gas line repair work.

Any blanking/de-blanking of the lines is associated with lot of
hazardous activities. Also the facilities required for the job cannot be
created due to utility pipelines running over gas line and space
constraints.
Space limitation is another aspect to be considered for any
replacement/modification of the existing network. In general space is
not available along the existing route for laying a new line.
All the utility pipelines like steam, nitrogen, oxygen and water are
running over CO gas line. This is a major hurdle for the in situ
67
replacement and day to day maintenance. At many places it is very

difficult to put blanks in the blanking positions due to running of utility
pipelines over gas pipelines without rerouting them.
The alternate supply pipe network (ring main) is not available for many
of the sections. The absence of alternate source of gas supply leads to

stoppages during shutdown.
Replacement/modification of the existing network at the same locations
causes erection problems due to the restricted place availability as

many of the pipelines are laid vertically one over the other.
The old isolation valves of the pipe network do not work properly due to
non-operation of these valves since long. Also these valves are not full
proof.
Steam purging facilities for gas pipelines has been provided. Purging
facility for majority of gas network is not adequate and requires

augmentation/replacement with nitrogen purging facility.
Depending upon the extent of damage in the existing pipelines some of the
pipelines have already been repaired/replaced/rerouted/strengthened such
as:
CO gas line NB 1400 from column 215 to SP II has been replaced
and rerouted on new trestles.

Cladding of BF pipe line (coke side) from Battery-1 to Battery-8.
Cladding of BF gas pipeline from column 66 to Rolling mill booster
station.
Epoxy treatment on the surface of the pipe work to stop minor
leakage.
Replacement of CO and BF gas lines from coke ovens to rolling mill
booster is under implementation.
All the distribution pipelines upto the various shops are regularly inspected
by plant EMD department. Physical inspection and NDT thickness
measurement are conducted for the purpose. Inspection reports are
complied and reviewed to assess the criticality and extent of damages of the
pipes. Remedial actions are planned and executed on this basis.
It is observed that condensate is leaking from pipelines at many locations. At
many places blister formation is found. Although NDT results indicate
68
generally that the remaining thickness is satisfactory, localized thinning has

taken place at many locations. Repair/replacement in a planned way is
necessary to restore healthy conditions of the pipeline.
This project is all about laying of new pipeline of NB1400 partly on a new
route on new supports and partly on existing supports. The existing gas
mixing station no.II for plate mill reheating furnaces of capacity 90000
Nm3/hr. shall be replaced with a new mixing station of 60000/75000 Nm/hr
considering the present pattern of consumption and future requirement as
the same is not used at present and is under shut down. Also existing
NB2000 mixed gas suction and delivery headers of the plate mill gas
booster station shall be replaced with NB1400 headers considering the
present pattern of consumption and future requirements.
Accordingly the problem had been studied and the following 3 alternatives
had been considered for replacement of CO gas lines.
1)
Laying of new pipelines partly on new route and partly on the
2)
3)
existing route.
In situ replacement in phased manner.
Laying of new pipelines parallel to the existing gas line on new
trestles.
ANALYSIS AND SELECTION OF ALTERNATIVES
Replacement of nb1400 co gas line from column 214 to gas mixing station,
replacement of gas mixing station no.2 for plate mill reheating furnaces and
replacement of nb2000 mixed gas supply and delivery header of gas
booster station.
Alternative 1
New co gas line nb1400 will be laid partly on new route on new supports
and partly on existing route/supports. Gas mixing stations no.2 of capacity
90000 nm3/hr shall be replaced in situ with a new gas mixing station of
69
60000/75000 nm3/ hr. Capacity considering the present pattern of

consumption and future requirements. Nb2000 mixed gas delivery headers
of gas booster station shall be replaced by laying new headers of nb1400 on
a parallel route in front of the plate mill gas booster stations of considering
the present pattern of consumptions and future requirements. After
commissioning of new header, old NB 2000 mixed gas delivery header shall
be suitably blanked, dismantled and replaced by a new nb1400 mixed gas
suction header at same location considering the present pattern of
consumption and future requirements.
Advantages:
No. of shut downs shall be reduced

Pipe will be routed mostly on new route
Erection will be easier
Disadvantages:
Space limitations
Layout clearance is required in a congested area
Extra support will be required.
Alternative 2
Nb1400 co gas line, gas mixing station no. 2 and nb2000 mixing gas supply
and delivery headers of gas booster stations will be replaced in situ in parts
by blanking during plant long durations shutdowns.
Advantages:
Less costly
No extra support will be required
Disadvantages:
Time of execution will be very long.

Huge production loss
Shut down of plate mill ,converter shop ,con- cast will be required for
common line
Erection will be very difficult specially at places where layout of pipe
is vertical.
70
Alternative 3
Laying of new co gas line parallel to the existing line on new supports upto
BOF gas holder and then routing on the existing supports. Gas mixing
station no.2 will be replaced in situ and NB2000 mixed gas supply and
delivery headers to booster stations will be replaced by laying new nb1400
headers on parallel route considering the pattern of present conditions and
future requirement.
Advantages:
Pipeline will be routed mostly on existing layout.

Reduced number of shut down.
Erection will be easier.
Disadvantage:
High cost due to longer route length and more nos. of new supports.
Crossing over the main road busy area.
Crossing of railway tracks in a congested area.
Layout clearance is difficult. There is no space for parallel line.
Selection of alternatives:
The alternative 1 was selected for implementation. It was laying of new CO
gas line NB1400 partly on new route form column no. 194 and partly on
existing route to Plate Mill Mixing Station was selected. New pipeline was
tapped from existing CO Gas Header near column Col.194 and laid partly on
a new route and partly on an existing route. Gas Mixing Station no. 2 for
reheating furnaces was replaced in situ and NB2000 Mixed Gas Delivery
Headers of Gas Booster Station shall be replaced by laying new NB1400
header on parallel route in front of Plate Mill Gas Booster Station (in space
between Gas Booster Station and existing column of Mixed Gas Suction and
Delivery Headers) considering the present pattern of consumption and future
requirements after commissioning of the new NB1400 Mixed Gas Delivery
Header , old NB2000 Mixed Gas Delivery Header will be suitably blanked and
then dismantled. Further it will be replaced by a new NB1400 Mixed Suction
71
Header at same location considering the present pattern of consumption and

future requirements.
The replacement/modification of gas network considered under the Feasibility
Report involved the following jobs:
Installation of new CO gas (NB 1400) pipelines from column no. 194
near junction house 24 to plate mill mixing station partly through a new
route and partly through an existing route.

Interconnection of new gas pipeline with NB1800 CO gas header near
column 194.
Providing of NB600 interconnections along with gate valve to
normalizing furnace and SMS (II)

Providing new interconnections to new mixing stations along with gate
valves.
Replacement of existing gas mixing station for reheating furnace of
capacity 90,000Nm3/hr. with a new gas mixing station of 60,000/75,000
Nm3/hr. capacity considering the present pattern of consumption and
future requirements.
Installation of new NB 1400 mixed gas delivery header of plate mill gas
booster station in front of the plate mill gas booster station considering
the present pattern of consumption and future requirements.

Interconnection of new mixed gas delivery header with individual
delivery pipes of gas booster station.

Blanking / dismantling of old NB2000 mixed gas delivery header.
Laying of new NB 1400 mixed gas suction header in place of old
NB2000 mixed gas delivery header considering the present pattern of
consumption and future requirements.

Interconnection of new mixed gas suction header with individual
suction pipes of gas booster station.

The new replaced gas lines will be provided with adequate shut down
facilities like valves, water seals, nitrogen purging etc also the new
pipelines will be lead independently except for the replacement of
existing gas station no.2 with new gas mixing station.

The various jobs will be implemented in phased manner and will be
implemented in 18 months.
The total estimated capital cost including IDC is Rs.926.09 lakhs only.
72
It is recommended that the modification work may be taken up for

implementation immediately as this is a technical necessity to maintain
the network in a healthy condition.
PROJECT IMPLEMENTATION
Implementation
The
project
will
be
implemented
on
non-turnkey
basis.
However,
Instrumentation package will be a separate package and will be implemented

on turnkey basis. The schedule of completion of the project will be 18 months
after stage II approval.
Blanking/ Shutdowns
The NB 1800 CO Gas Header was blanked in order to facilitate tapping NB
1400. New CO gas line near 194 Blast Furnace (6 & 7) will get lesser CO gas
Stoves during the period of the shutdown.
The other end of the new CO line will be connected to the existing blank
flange of the CO gas line near Plate Mill Mixing Header.
The new 1400 delivery header for gas booster will be erected and
interconnected with individual booster. After commissioning of new NB 1400
mixed gas delivery header, old NB 2000 mixed gas delivery header will be
suitably blanked and then dismantled. Further it will be replaced by a new NB
1400 mixed gas suction header at same location. One shut down each is
envisaged for interconnection and commissioning of new mixed gas suction
and delivery headers with old mixed gas headers and shall be done during
plate mill capital repair.
After completing the interconnections as envisaged above, the new NB 1400
CO gas line along with new gas mixing station and NB 1400 headers will be
commissioned. Then the old header and mixing station will be completely
isolated for replacement/ repairs.
73
FINANCIAL ANALYSIS
CAPITAL COST ESTIMATES
The total Capital cost estimate for replacement of the gas pipeline network at
BSP works out to
Rs.926 Lakhs. IDC component of 23.69 Lakhs has been
envisaged to be financed 50% from BSPs internal resources and 50% from
market borrowing.
BASIS OF ESTIMATION
The base date for the above estimate is 3 rd Qtr 2004. The capital cost has
been arrived at based on engineering estimate and cost data available for
similar works executed earlier.
Necessary provisions have been made in the estimate as per details given
below:
I
II
Spares: Nil.
Taxes and Duties
Excise duty @16% on the basic cost of indigenous equipment. No
excise duty has been considered on the structures as the same are
being treated as site fabricated, in line with present practice being
III
IV
followed at BSP.
CST @ 4% on the basic cost of equipment, structures and excise
duty on basic cost of equipment.

WCT @ 2% on civil works cost and @ 3% on Erection &
Commissioning charges.
Services Tax @ 10% on fees towards Erection & Commissioning
charges.
2% Education Cess has been considered on ED and Service Tax.
Freight and Insurance:
Inland Freight and Insurance @ 2% on cost of indigenous Plant and
equipment.
Erection & Commissioning charges @ 12% of basic cost of
indigenous plant and equipment and @ 15% of basic cost of
structures.
Provision towards Engineering and Construction has been kept @
10%.
74
VI
Provision for Contingencies has been considered @ 5% on overall

basis.
MODE OF FINANCING
The capital investment is envisaged to be met from BSPs internal resources
and Market loan on 50%: 50% basis.
The project is basically a replacement scheme and a technological necessity
involving safety of the plant and people and to facilitate uninterrupted gas
supply to various units and improved working conditions of operations/
maintenance of the gas pipeline network at BSP, hence no techno-economic
analysis has been carried out.
FINANCIAL CALCULATION
Total cash outflow
Rebate @.5% (provided by the contractor)
After rebate cash outflow
Cash inflow (as assumed) 10% of cash outflow
Table 4.6
Payback period =
2,08,20,550
(104102.75)
20716447.25
2071644.725
20716447.25 = 10 yrs
2071644.725
Post Payback Profitability Period

Total income over the life of the project - initial investment
6,62,92,631.04 - 20716447.25 = 4,55,76,183.79
Calculation of IRR, NPV and Post Profitability:

Table of calculation of NPV
S. No.
1
2
3
4
YEAR
2004
2005
2006
2007
ANNUAL CASH
PRESENT VALUE
PRESENT
INFLOW
FACTOR @ 6%
VALUE @ 6%
2071644.72
2071644.72
0.943
0.890
0.840
0.792
1740181.56
1640742.62
75
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
2008
2071644.72
2009
2071644.72
2010
2071644.72
2011
2071644.72
2012
2071644.72
2013
2071644.72
2014
2071644.72
2015
2071644.72
0.3
2016
2071644.72
2017
2071644.72
2018
2071644.72
2019
2071644.72
2020
2071644.72
2021
2071644.72
2022
2071644.72
2023
2071644.72
2024
2071644.72
2025
2071644.72
2026
2071644.72
2027
2071644.72
2028
2071644.72
2029
2071644.72
2030
2071644.72
2031
2071644.72
2032
2071644.72
2033
2071644.72
2034
2071644.72
2035
2071644.72
TOTAL PRESENT VALUE
Table 4.7
NET PRESENT VALUE
0.747
0.705
0.665
0.627
0.592
0.558
0.527
0.497
0.469
0.442
0.417
0.394
0.371
0.350
0.331
0.312
0.294
0.277
0.262
0.247
0.233
0.220
0.207
0.196
0.185
0.174
0.164
0.155
1547518.61
1460509.53
1377643.74
1298921.24
1226413.68
1155977.76
1091756.77
1029601.38
971601.38
915666.97
863875.85
816228.02
768580.19
725075.65
683642.75
646353.15
609063.54
573845.58
542770.91
511696.24
482693.22
455761.83
428830.45
406042.36
383254.27
360466.18
339749.73
321104.93
25375576.21
= TOTAL PRESENT VALUE NET INVESTMENT

= 25375576.21 - 20716447.25
NPV = Rs. 4659128.96
INTERNAL RATE OF RETURN

S. NO.
YEAR
2004
CASH
P.V.F.
PRESENT
P.V.F.
PRESENT
INFLOW
@8%
VALUE (8%)
@9%
VALUE (9%)
0.917
0.926
76
2
2005
3
2006
2071644.72
4
2007
2071644.72
5
2008
2071644.72
6
2009
2071644.72
7
2010
2071644.72
8
2011
2071644.72
9
2012
2071644.72
10
2013
2071644.72
11
2014
2071644.72
12
2015
2071644.72
13
2016
2071644.72
14
2017
2071644.72
15
2018
2071644.72
16
2019
2071644.72
17
2020
2071644.72
18
2021
2071644.72
19
2022
2071644.72
20
2023
2071644.72
21
2024
2071644.72
22.
2025
2071644.72
23.
2026
2071644.72
24.
2027
2071644.72
25.
2028
2071644.72
26.
2029
2071644.72
27.
2030
2071644.72
28.
2031
2071644.72
29.
2032
2071644.72
30.
2033
2071644.72
31
2034
2071644.72
32.
2035
2071644.72
TOTAL PRESENT VALUE
0.857
0.794
0.735
0.681
0.630
0.583
0.540
0.500
0.463
0.429
0.397
0.368
0.340
0.315
0.292
0.270
0.250
0.232
0.215
0.199
0.184
0.170
0. 158
0.146
0.135
0.125
0.116
0.107
0.099
0.092
0.085
1644885.91
1522658.87
1410790.05
1305136.17
1207768.87
1118688.14
1035822.36
959171.50
888735.58
822442.95
762365.25
704359.20
652568.08
604920.25
559344.07
517911.18
480621.57
445403.61
412257.29
381182.63
352179.6
327319.86
302460.13
279672.04
258955.59
240310.78
221665.8
205092.83
190591.31
176089.80
19991371.4
0.842
0.772
0.708
0.650
0.596
0.547
0.502
0.466
0.422
0.388
0.355
0.326
0.291
0.274
0.252
0.231
0.212
0.194
0.178
0.164
0.150
0.138
0.126
0.116
0.106
0.097
0.089
0.082
0.075
0.069
0.063
1599309.72
1466724.46
1346569.07
1234700.25
1133189.66
1039965.65
952956.57
874234.071
803798.15
735433.87
675356.18
602848.61
567630.65
522054.57
478549.93
439188.68
401899.07
368752.76
339749,73
310746.7
285886.97
261027.23
240310.78
219594.34
200949.54
184376.38
169874.86
155373.35
142943.48
130513.62
17884508.8
0
Table 4.8
IRR = L+ (PVC-C) Difference between upper value and lower value
PV of L-PV of U
= 8+ (19991371.45-20716447.25)/ (19991371.45-17884508.80) 1
= 8+ (725075.8/2106862.65)
77
= 8- 0.344
IRR = 7.66%
Chapter 5 Findings
Capital budgeting is an important technique of management which is widely
used for evaluation of various capital investment proposals and for choosing
the appropriate source of finance and for implementation of chosen
investment proposals.
In a business, generally a major part of the total investment is in capital
assets. The proper investment in capital assets is a very complicated
problem, but this problem can be solved with the help of Capital Budgeting.
The decisions in Capital Budgeting are taken on the basis of the NPV, IRR,
Pay Back Period etc. obtained. In this project the calculated investment
factors are:
NPV
46,59,128,96
IRR
7.66%
Payback Period
10 years
Post Payback Profitability
4,55,76,183,79
Table 5.1
The project life is 32 years.

The positive IRR shows the feasibility of the project.
The project is supposed to be beneficial for the plant technically and
financially both because the replacement of pipe lines is quite important at this
78
stage as it has eroded and can cause severe damages to the plant and
people working over there. Replacing the pipelines can avoid the possible
financial and technical damages.
The project gives a positive NPV and Post Payback Profitability which shows
that the project should be taken necessarily.
Recommendations
The timely replacement/ modification of the gas network to maintain them in
healthy condition is essential. It is recommended that the replacement of CO
gas line of NB 1400 from column 214 to Plate Mill Mixing Station along with
the gas mixing station no. II and headers for mixed gas booster station should
be taken up immediately. The estimated cost is Rs 926.09 lakhs and the work
can be completed within a period of 18 months.
STAGE II
The project is technically feasible and since it is a project of replacement of
pipelines that do not affect the production at the plant. However they are an
integral part of plant as they provide CO Gas to Plate Mill to carry out the
production of iron plates. So the technical feasibility of this project is primary
consideration and the financial aspects are secondary for the project to be
started.
The pipelines are a part of the plant and do not contribute directly to the
production or any increase in production so the cash outflow are all the
expenses done on replacement of plant.
In the Feasibility Report the cash outflows were 926 Lakhs but after the
tenders were passed at this stage the estimated cost budget reached upto
Rs.2,08,20,550 under the head of Civil Works. However the negotiated cost
budget is Rs.2,01,76,447,25. The duration of work completion is 18 months as
agreed. SAIL had given a rebate upto 0.5% on the estimated cost.
79
All the terms given in the agreement were agreed upon and followed.
Now since it is a case of replacement and hence there are no direct inflows of
cash to SAIL, BSP by undertaking this project so the cash inflow is assumed
to be 10% per annum of the total cash outflows in this project. For the IDC the
interest rate is taken at present rate i.e. 10% of all the credit capital employed.
Conclusions
Capital Budgeting is an integral part of the Project management. SAIL
undertakes a proper procedure of approval of its financial budget as well as it
follows a well designed procedure of project financing. The Finance
Department covers all financial aspects of a project while taking a decision.
In case of capital budgeting which is initially a part of the project
implementation is a well formatted procedure considering time value and
money value. It is prepared not only for the present year but it also covers the
coming years of implementation. In this case SAIL (BSP) has prepared a
schedule of time and payment on the basis of the assumed and agreed
completion time. This project is completed within 10months from its
commencement and so all the required payments are agreed to be done
during this period.
Such schedule helps the organization to make timely payments to the
required parties as on date so as to avoid any delay in work and avoid any
undesired expenses.
Capital budgeting covers all the taxes to be levied upon while trading inland
and internationally. This budget has covered CENVAT, CST, Excise Duty,
Service Taxes and all other taxes (Octroi, Freight, port charges, Education
cess, And Income tax etc.).
80
BRIEF CONCLUSION
1. Finance department of Bhilai steel plant follows a well designed
procedure of project financing
2. The department covers every aspect of project before making any
decision
3. It undertakes proper procedure for approval of budget
4. It makes sufficient budget plans for forth coming years well in
advance
5. Financial review & reports are also made by budgeting department
6. It also prepares a five year plan with anticipated requirement
against approved outlays
7. The organization follows a proper approval by Chief executive
officer at corporate office
DEFINITIONS
a. Contract means a contract agreement entered into between the

Employer and the Contractor, together with the contract documents
referred to therein.
81
GCC General Conditions of Contract

SCC Special Conditions of Contract
b. Preliminary Acceptance Certificate Certified to be issued by the
employee on the successful completion of the Preliminary Acceptance
test.
c. Incoterms means International rules for interpreting trade terms
published by the International Chamber of Commerce (latest edition) ,
38 Course Albert 1er, 75008 Paris, France.
All employees, representatives or sub contractors engaged by the
contractor in relation with the performance of the contract shall be
under the complete control of the contractor and shall not be deemed
to be the employees of the Employer.
d. SAIL Steel Authority of India Limited, a company incorporated under
the Companies Act, 1956 and having its registered office at
IspatBhawan, Lodi Road, New Delhi 110003, India.
e. Order of precedence In the event of any ambiguity or conflict
between the Contractual Documents, the order of precedence shall be
the order in which theyre listed below:
Contract Documents:
i.
ii.
iii.
iv.
v.
Contract agreement and appendices

Special Conditions of Contract and annexure
General Conditions of Contract and annexures
Contract technical Specifications
Safety code for contractors
GLOSSARY
B.S.P. Bhilai Steel Plant
S.A.I.L. Steel Authority of India Limited
P.G. Performance Guarantee
C.C Conditions of Contract
82
Bibliography
BOOKS / ARTICLES REFERRED
None
WEBSITES REFERRED
1 http://economictimes.indiatimes.com/steel-authority-of-india-(sail)ltd/quotecompare/companyid-11974.cms
2 http://en.wikipedia.org/wiki/Project_management
3 http://money.rediff.com/companies/steel-authority-of-india-sailltd/15510002
4 http://ocw.mit.edu/courses/mechanical-engineering/2-000-how-and-whymachines-work-spring-2002/tools/management.pdf
5 http://www.finaticsonline.com/Freebies/IRR_vs_MIRR_vs_NPV_[Finatics].
pdf
6 http://www.hh-pub.com/client/samples/HH2044.pdf
7 http://www.indianrailways.gov.in/railwayboard/view_section.jsp?
8
9
10
11
12
13
14
lang=0&id=0,1
http://www.indiasteelexpo.in/IndustryOverview.php
http://www.mpug.com/Pages/WhatisProjectManagement.aspx
http://www.sail.co.in/pnu.php?tag=bhilai
http://www.tatasteel.com/about-us/company-profile.asp
http://www.worldsteel.org/statistics/crude-steel-production.html
http://www.worldsteel.org/statistics/top-producers.html
http://www2.sunysuffolk.edu/rosesr/ACC212/Lessons/CapitalBudget/Capit
alBudgetingTraining.pdf
83

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Capital Budgeting- A

Steel Authority of India limited

GITAM INSTITUTE OF MANAGEMENT

Certificate by the company on their letter head

This is to certify that B.V.ADITYA, MBA student (Enrollment No

It is my pleasure to acknowledge and express my gratitude to all those who helped me

I, B.V.ADITYA a student of Masters of Business Administration (M.B.A.), GITAM

PLANT,SAIL is a genuine work done by me in partial fulfillment for the requirement

This is to certify that the project Report titled -----------PROJECT

Global Steel Industry

Indian Steel Industry

Company Profile - SAIL

SWOT analysis of SAIL

Bhilai Steel Plant

Analysis & Interpretation

Feasibility Report Summary

Books / Articles referred

Chapter 1 - Introduction Project Management

WHAT IS PROJECT MANAGEMENT?

CONCEPT OF PROJECT MANAGEMENT

CHALLENGES OF PROJECT MANAGEMENT

WHAT IS CAPITAL BUDGETING?

Payback period (PBP)

A. Payback period (PBP)

B. Discounted Payback Period method

NPV = Present value of Cash Inflow Present value of Cash outflow

CFt is the expected net cash flow in period t,

D. Profitability Index (PI) / Benefit-Cost Ratio (BCR)

In this method, a project with a PI greater than 1 is accepted, but a

F. Modified Internal Rate of Return (MIRR)

TV is the terminal value.

Capital budgeting procedure followed in BSP

For approval of project, it has to be affirmed by a competent

Financial limit (in Crores Rs.)

b) Single tender based on proprietorship We ask a single

prevails over those in GCC.

a) ECS Debit - transfer of funds from your account

4) Execution & Payment

5) Post completion audit report (PCAR)

d) Representative of Finance (capital budget section)

Representative of executive agency

General Conditions of Contract (GCC)

General Conditions of Contract are a set of conditions which assigns meaning

Special Conditions of Contract (SCC)

Performance Guarantee Test

List of Approved Sub-contractors/Vendors

Chapter 2 - Industry Profile

Top steel-producing companies in the World 2011

Notes on company ownership and tonnage calculations:

Excludes all 'allied subsidiaries' with a less than 30% share.

Share of World Crude Steel Production March 2012

European Union (27); 12%

Total World production: 132.2 million metric tons

INDIAN STEEL INDUSTRY

Domestic crude steel production grew at a compounded annual growth

Crude steel production capacity of the country is projected to be

222 Memorandum of Understandings (MOU) have been signed with

Increase in the demand of steel in India is expected to be 14% against

Demand of steel in the major industries like infrastructure, construction,

Target for $ 1 trillion of investments in infrastructure during the 12th

Infrastructure projects (like Golden Quadrilateral and Dedicated Freight

Projected New Greenfield & up-gradation of existing Airport shall keep

Increased demand of specialized steel in hi-tech engineering industries