PROJECT REPORT ON MATERIALS

MANAGEMENT

ESSAR STEEL ORISSA LIMITED

PARADEEP, ORISSA
8 MTPA INTEGRATED IRON ORE PELLET PLANT
UNDER THE GUIDANCE OF

MR Ravindra Moharana (Sr.Manager)

RAVENSHAW MANAGEMENT CENTRE

For the partial fulfilment of Master of Business Administration

Session 2009-11
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PREPAIRED BY: - SAYED MUNIR NOOR

Acknowledgement

 This project report in its present form and state is the outcome of the
study of the “MATERIALS MANAGEMENT IN ESSAR STEEL”,
Paradeep, to understand the process of materials management, as part
of our summer training.

 I am grateful to Mr. ParthaSarthi Mishra, HR (Head), who gave me the

golden opportunity to do our project in a company like ESSAR STEEL.

 I would like to thank Mrs. Raj Laxmi, HR manager who gave me this
opportunity to do my project in ESSAR STEEL.
 I am very much thankful to my guide Mr. Ravindra Moharana
Snr.Manager (Stores) who has been a constant source of inspiration and
learning. With his guidance and support I could successfully complete
my project.

 I would like to thank all the members of ESSAR STEEL, Paradeep who
gave their valuable time and helped us in completing my project in due
time.
 I would also like to thank Mr. Sashi Bhusan Mohanty who helped me to
do my project in a company like ESSAR STEEL.

 Finally, I like to thank my family and friends who helped me in

completing this project successfully.

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 CERTIFICATE

This is to certify that Mr. Sayed Munir Noor bearing roll no

.RMC-MBA 028/09-11, a first year student of Ravenshaw
Management Centre, Cuttack has successfully completed
summer internship report on the project titled, “MATERIALS
MANAGEMENT IN ESSAR STEEL” at ESOL Paradeep, for partial
fulfilment of the award of MBA degree under my guidance.

To the best of my knowledge and belief, the work has not been
submitted anywhere else for the award of any degree or
discipline.

Date: Ravindra Moharana

Place: Paradeep Snr.Manager (stores)

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 ESSAR STEEL

DECLARATION

I do hereby declare that this piece of Project Report entitled

“MATERIALS MANAGEMENT IN ESSAR STEEL” is being submitted by
me in partial fulfilment of the MBA programme in Ravenshaw
Management Centre, Ravenshaw University.

This report is my original piece of work done for my academic

purpose only and no part of it has been submitted for any other
purpose nor published anywhere else in any form till date.

Place :

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Date : Sayed Munir
Noor

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 Contents

ESSAR AT A GLANCE...................................................Error! Bookmark not defined.

Genesis and evolution.....................................................Error! Bookmark not defined.
Corporate profile.............................................................Error! Bookmark not defined.
Project.............................................................................Error! Bookmark not defined.
Essar Projects Limited drives our businesses in the construction sector. We own one of
Asia’s largest banks of sophisticated construction equipment........Error! Bookmark not
defined.
Power..............................................................................Error! Bookmark not defined.
Communications..............................................................Error! Bookmark not defined.
Shipping ports & logistics................................................Error! Bookmark not defined.
Current status........................................................................Error! Bookmark not defined.
layout of ESSAR paradeep
plant...........................................................................................17

MATERIALS MANAGEMENT.................................................Error! Bookmark not defined.

Areas of Concentration.......................................................Error! Bookmark not defined.
Goals...............................................................................Error! Bookmark not defined.
Quality Assurance...........................................................Error! Bookmark not defined.
Standards........................................................................Error! Bookmark not defined.
Promoting Sustainability..................................................Error! Bookmark not defined.
Improving circulation infrastructure..................................Error! Bookmark not defined.
Benefits...........................................................................Error! Bookmark not defined.
FUNCTIONS AND DUTIES OF STORES DEPARTMENT:-.......Error! Bookmark not defined.
standard operating
procedure................................................................................................27

Safety measures.................................................................Error! Bookmark not defined.

Perpetual Inventory.........................................................Error! Bookmark not defined.
A monthly stock count procedure would involve a complete stock count i.e. counting the
entire inventory. A weekly perpetual inventory system on the other hand would involve

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 counting some of the quantity on a weekly basis such that the entire stocks are counted
at least twice a year or once every quarter. Inventory Schedule...Error! Bookmark not
defined.
Inventory Count Sheets...................................................Error! Bookmark not defined.
Cut Off Procedures..........................................................Error! Bookmark not defined.
Third Party Stocks...........................................................Error! Bookmark not defined.
Comparison with System Stock.......................................Error! Bookmark not defined.
Variance Analysis............................................................Error! Bookmark not defined.
physical verification of capital
goods .....................................................................................41

inventory of
steel....................................................................................................................54

figures....................................................................................................................................5
6

physical verification of steel..................................................................................................58

inventory of cement..............................................................................................................60

stacking procedure of cement............................................................................................61

inventory of diesel...............................................................................................................64

stacking procedure of diesel...............................................................................................64

problems.............................................................................................................................65

suggestions.........................................................................................................................65

stores credit to management..............................................................................................66

references.........................................................................................................................67

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 ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969, by brothers Mr Shashi Ruia and Mr Ravi Ruia. The
21st century for the Group has been all about consolidating and growing the businesses

The Ruia family’s origins are in Rajasthan. Sometime in the 19th century, they moved to
Mumbai and set up their own business. In 1956, Mr Nandkishore Ruia, father of Mr Shashi
Ruia and Mr Ravi Ruia, moved to Chennai, capital of the south Indian state of Tamil Nadu,
to begin independent business activities. He mentored his two sons in the intricacies of
business. When Mr Nandkishore Ruia passed away in 1969, the brothers laid the foundation
of the Group.
The Essar Group began its operations with the construction of an outer
breakwater in Chennai port. It quickly moved to capitalize on every
emerging business opportunity, becoming India’s first private company
to buy a tanker in 1976. The Group also invested in a diverse shipping
fleet and oilrigs, when the Government of India opened up the shipping
and drilling businesses to private players in the 1980s.
Then, in the 1990s, Essar began its steelmaking business by setting up
India’s first sponge iron plant in Hazira, a coastal town in the western Indian state of Gujarat.
The Group went on to build a pellet plant in Visakhapatnam, and eventually a fully
integrated steel plant in Hazira.
Through the 1990s, with the gradual liberalization of the Indian economy, Essar seized
every opportunity that came its way. It diversified its shipping fleet, started oil & gas
exploration and production, laid the foundation of its oil refinery at Vadinar, Gujarat, and set
up a power plant near the steel complex in Hazira. The construction business helped the
Group build most of its business assets. Essar also entered the GSM telephony business,
establishing India’s first mobile phone service in Delhi (branded Essar Cell phone) with
Swiss PTT as the joint venture partner.
The 21st century for the Essar Group has been all about consolidating and growing the
businesses, with mergers and acquisitions, new revenue streams and strategic
geographical expansion

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The Essar spirit

The Essar Group has been foraying into new international markets, and exploring new
business areas in a bid to keep its entrepreneurial spirit alive, and to keep growing

VISION
we will be a respected global entrepreneur, through the power of positive action.

MISSION
We are committed to innovative growth, through our personal passion, reinforced by
a professional mindset, creating value for all those we touch.

Spirit
The Essar Group has changed significantly in recent years and continues to evolve, to keep
pace with the changing times. We have undertaken a sustainable journey of transformation
by foraying into new international markets, and exploring new business areas in a bid to
keep our entrepreneurial spirit alive, and to continue growing.

To mark the phenomenal growth witnessed over the last four decades, the Group recently
unveiled its new brand identity marking a very important milestone in its journey and
reflecting a new beginning for the Group. A new brand identity reinforces all the positives to
fulfil our vision to be a global entrepreneur through the power of positive action.
We aim to have a robust value system comprising positive attitude, positive action and
positive achievement.
We endeavour to create enduring value for customers and stakeholders in core
manufacturing and service businesses, through world-class operating standards, state-of-
the-art technology and the ‘positive attitude’ of our people.

Privately owned and professionally managed, the Group is judiciously invested in the

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commodity, annuity and services businesses. Forward and backward integration, the use of
state-of-the-art technology, in-house research and innovation have made Essar Global a
force to reckon with in each of its businesses.
Finally, the Essar way is all about keeping its entrepreneurial spirit alive, and to keep
growing with a passion to progress and the power to succeed with a renewed strength of
purpose and commitment.

Corporate profile

Moving beyond Indian frontiers, the Essar Group continues to grow internationally through
focused strategies

The Essar Group is a multinational conglomerate and a leading player

in the sectors of Steel, Oil & Gas, Power, Communications, Shipping
Ports & Logistics, Construction and Minerals. With operations in more
than 20 countries across five continents, the group employs 60,000
people, with revenues of about USD 15 billion.
Essar began as a construction company in 1969 and diversified into
manufacturing, services and retail. Over the last decade, it has grown
through strategic global acquisitions and partnerships, or through Greenfield and Brownfield
development projects, capturing new markets and discovering new raw material sources.
Today, the Group continues to expand its global footprint, focusing on markets in Asia,
Africa, Europe, the Americas and Australia. Essar invests significantly in the latest
technology to drive forward and backward integration in its businesses, and on leveraging
synergies between these businesses. It also focuses on in-house research and innovation
to be a low-cost manufacturer with high quality products and innovative customer offerings.
Alongside its ambitious business pursuits, Essar has been committed to its social
responsibility. The Group runs community outreach initiatives in all its plant locations, with a
focus on education, healthcare, environmental and agricultural development, and self-
employment.
Essar is committed to sustainable business practices. Our HSE (Health, Safety and
Environment) management system is on par with global standards. We are also taking
climate change initiatives to reduce our carbon footprint. This includes several CDM (Clean
Development Mechanism) projects that can earn the company CER (Certified Emission
Reduction) credits. A growing number of our businesses with new businesses joining the list
every year are certified to international environment standards, like ISO 9001 / 14001, and
health and safety standards, like OHSAS 18001.
The Essar Group is widely regarded as a responsible and conscientious global employer. It
has experience in managing businesses in different geographies with a culturally diverse
workforce. This is why its people practices are sensitive to cross-cultural nuances. The
Group’s people strategy is focused on promoting a learning culture that continually
enhances the professional skills of its employees.

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Board of directors
Listed here are the promoter directors of the Essar Group. Each company under the Group
is independently run by a team of professionals

promoter Directors

Mr Shashi Ruia Mr Ravi Ruia Mr Prashant Ruia

Chairman Vice Chairman Group Chief Executive
Essar Group Essar Group Essar Group

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 Mr Anshuman Ruia Ms Smiti Kanodia Mr Rewant Ruia
Promoter Director Promoter Director Promoter Director
Essar Group Essar Group Essar Group

Management team

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Mr J Mehra — Director, Essar Group

Mr Malay Mukherjee — CEO, Steel Business Group

Mr Naresh Nayyar — CEO, Energy Business Group

Mr Shishir Agarwal — CEO, Exploration & Production Business

Mr Sanjay Mehta — CEO, Shipping & Logistics Business Group

Mr Rajiv Sawhney — CEO, Telecom Business Group

Mr Aparup Sengupta — CEO, Aegis

Mr Alwyn Bowden — CEO, Projects Business Group

Mr Pradeep Mittal — CEO, Minerals & Mining Business

Mr Vikash Saraf — Director, Strategy & Planning, Essar Group

Mr VG Raghavan — CFO, Essar Group

Mr Adil Malia — Group President, Human Resources

Mr SM Lodha — Group President, Assurance and Cost Control

Mr Sunil Bajaj — Head, Corporate Relations Group

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 Project
Essar Projects Limited drives our businesses in the construction sector. We own one of
Asia’s largest banks of sophisticated construction equipment

With over 5,000 people, we are a global engineering, procurement

and construction (EPC) company headquartered in Dubai, with
offices in India, China and the Czech Republic.
We honed our skills in the construction of industrial plants and
infrastructure as the turnkey EPC Company for most of the Essar
Group’s world-class projects and supporting infrastructure. Marine
construction is one of our special strengths. Indeed, the very origin of
the Essar Group was in specialized marine construction.

We have built 320,000 bpd of refining capacity and developed over 10 million tons of steel
capacity. We have laid more than 5,000 km of pipelines and developed 1,200 MW of power
projects, and are developing another 4,800 MW.
Our offshore EPCI capabilities currently execute a USD 220 million project for ONGC. We
own over 3,000 nos. construction equipment worth over USD 250 million.
We have 12,000tpa (tons per annum) of fabrication facility with waterfront load-out facility
and also have a dedicated Engineering Centre specializing in Engineering and Design for
the Process and Industrial sectors, with over 1,200 engineers. With over USD 6 billion
procurement capability, we have global procurement support in the Middle East and China.
The ISO 9001:2000 certified pipeline division of our construction business unit is a specialist
in onshore, offshore and cross-country pipelines, from construction to commissioning. The
pipeline division holds the distinction of building the world’s second longest slurry pipeline –
Essar Steel’s 267km Bailadilla-Vizag slurry pipeline.
Our customers can rely on our skilled, engineering team, large bank of the latest
construction equipments, and our talent for scouting the globe to procure the best materials
and equipment at competitive prices.
Our long and impressive list of clients includes most major Indian ports,
the National Highway Authority of India, the Gujarat Water Supply and
Sewerage Board, the Gas Authority of India, Hindustan Petroleum and
ONGC. Our expertise is also internationally recognized, whether for the
pipelines we laid in Qatar or the cold rolling mill we built in Indonesia.
We have won contracts from government agencies through local and
international competitive bidding, meeting the stringent requirements of
the World Bank and the Asian Development Bank.
With four decades of project management expertise, Essar Projects Limited is strategically
placed to support the infrastructure explosion in India and abroad
Oil and Gas

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Essar Oil operates a fully integrated oil company of international size and scale in India

Essar Oil's assets include developmental rights in proven exploration

blocks, a 10.5 mtpa refinery on the west coast of India and over 1,300
Essar-branded oil retail outlets across India. Plans are under way to
increase its exploration acreage in various parts of the globe, expand
its refinery capacity to 36 mtpa, and open 3,000 outlets countrywide.

Our global portfolio of onshore and offshore oil and gas blocks, with
about 70,000 sq km is available for exploration. We have over 300,000
bpd (barrels per day) of crude refining capacity that is being expanded to 750,000 bpd, with
a goal to reach a global refining capacity of 1 million bpd. We have a 50 percent stake in
Kenya Petroleum Refineries Ltd., which operates a refinery in Mombasa, Kenya, with a
capacity of 80,000 bpd.

Our Exploration and Production (E&P) business has participating interests in several
hydrocarbon blocks for exploration and production of oil and gas. This includes the Ratna
and R-Series blocks on Bombay High, and an E&P block in Mehsana, Gujarat, which has
currently started commercial production. It has also been awarded a Coal Bed Methane
(CBM) block at Raniganj in West Bengal, and two more E&P blocks in Assam, India. The
overseas E&P assets include three onshore oil and gas blocks in Madagascar, Africa, and
one offshore block each in Vietnam and Nigeria.
We have a 10.5 mtpa refinery at Vadinar in Gujarat, which started commercial production on
May 1, 2008. It has been built with state-of-the-art technology and has the capability to
produce petrol and diesel suitable for use in India as well as advanced international
markets.
It will also produce LPG, Naphtha, light diesel oil, Aviation Turbine Fuel (ATF) and
kerosene. The refinery has been designed to handle a diverse range of crude — from sweet
to sour and light to heavy. It is supported by an end-to-end infrastructure setup including
SBM (Single Buoy Mooring), crude oil tankage, water intake facilities, a captive power plant
(currently 120 MW, being expanded to 1,010 MW), product jetty and dispatch facilities by
both rail and road.
The refinery is strategically located in Vadinar, a natural all-weather,
deep-draft port that can accommodate Very Large Crude Carriers
(VLCCs). Vadinar also receives almost 70 percent of India’s crude
imports. Post its expansion to 36 mtpa, the refinery will run at a Nelson
Complexity of 12.8. This means it will be able to refine all varieties of
crude, producing Euro 5 grade fuels. It will also be among the largest
single location refineries in the world thus leveraging on economies of
scale.
.

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 Power

Essar Power operates four power plants with a combined capacity of 1,220 MW in three
locations across India

Essar Power has two gas-based plants, of 500MW and 515MW

capacities in Bhander and Hazira respectively, a 120MW co-generation
plant in Vadinar and an 85MW plant in Algoma.

Work is currently under way to expand the current generation capacity

of 1,220MW to 6,100MW by 2012, with a target to reach 11,470MW in
the near future. The company will set up three coal-based plants of
1,200MW each in Gujarat, Madhya Pradesh and Jharkhand,
aggregating 3,600 MW. An additional 1,280MW is also under construction – 1160 MW in
Gujarat and 120MW in Orissa – to supply power and steam to the expanded refinery.
An additional 5,370 MW is under development.

As the first private company with a license to enter the transmission and power trading
segments, we are now a fully integrated, end-to-end player in the power sector. By using the
latest technology and equipment, we generate and supply power at very competitive price
points. Essar currently has complete fuel linkages secured for all projects under execution.
We also have the capability to execute power projects for other companies.
Essar power is exploring opportunities for new projects based on thermal, wind and hydro
energy. We are also committed to reducing emissions from our plants and earning carbon
credits. The 500MW combined cycle power plant at Hazira is eligible for Certified Emission
Reductions (CERs) under the Kyoto Protocol's Clean Development Mechanism (CDM).

The investments made towards the projects under execution are over USD 4 billion

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 Communications
Essar Telecom Infrastructure is one of the largest independent telecom infrastructure
service provisioning companies in the country.

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based
Vodafone Group. It is one of India’s largest cellular service companies. We have over 100
million telecom subscribers in India and Kenya. We have majority stake in the telecom
assets of the Dhabi Group in Uganda and the Republic of Congo.
We operate integrated IT enabled services through the Aegis brand name, with a presence
in interaction services, back office services and value-added services. Aegis operates in 40
locations and employs over 40,000 employees in India and the US, with expertise in the
telecom, insurance, banking and healthcare domains.
We have launched India's first countrywide chain of multi-brand and
multi-service outlets in the telecom retail space. The MobileStore Ltd
currently runs 1,300 outlets, branded “The MobileStore”. In the next
two years, over 2,500 outlets will come up across 650 cities.
Essar Telecom Infrastructure is one of the largest independent telecom
infrastructure service provisioning companies in the country. It builds
telecom tower infrastructure and shares it with several telecom
operators in India. It has a pan-India presence in telecom tower infrastructure with more
than 4,500 telecom towers operational. Essar has a 14 per cent stake in Indus Towers,
India’s largest tower company, which has over 100,000 towers.

Essar Communications Holdings Limited acquired a 49 per cent stake in Econet Wireless
International Limited by subscribing to fresh capital in the company. EWI has a 70 per cent
shareholding in Econet Wireless Kenya. Essar and Econet Wireless Kenya have launched
'yu' — Kenya’s third mobile cellular network. This is a GSM-based mobile services network
in Kenya with close to a million subscribers.

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 Shipping ports & logistics

Essar is an end-to-end logistics services provider with investments in ports and terminals,
logistics services, sea transportation and oilfield drilling services

Our integrated business model provides opportunities to cater to the

complete supply chain management services to clients in oil and gas,
steel and power generation industries. We are one of India’s largest
operator of ports and, building a cargo handling capacity (both dry and
bulk cargo) of over 150 million tons.

Our ports and terminals business operates a crude oil and petroleum
products terminal at Vadinar and includes the construction of a dry bulk
port at Hazira and a coal jetty at Salaya, all in the state of Gujarat. The Vadinar terminal, is
an all-weather, deep-draft port, which provides crude oil and petroleum products storage,
handling and terminal services. The port has a Single Point Mooring system capable of
handling crude capacity of up to 27mmtpa, and marine facility for export of petroleum
products of up to 6.5mmtpa.

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather,
deep-draft port and jetty facility. The port will have a berth of 550 meters length, and an
alongside depth of 12.5 meters. The proposed berth will handle the import of iron ore,
pellets, coal, limestone and export of finished steel products. The port facility at Salaya
comprises setting up a 10mtpa marine material handling facilities to cater to the need of
imported coal requirement and export of petroleum coke.
Essar's logistics business provides end-to-end logistics services – from
ships to ports, lighter age services, intra-plant logistics and dispatch of
finished products. We own trans-shipment assets to provide lighter age
support services, and onshore and offshore logistics services. We also
operate a fleet of 4,200 trucks (38 of which we own) to provide inland
transportation of steel and petroleum products.
Our sea transportation business provides transportation management
services for crude oil and petroleum products, and dry bulk cargo to the global energy, steel
and power industries. With an experience of more than 220 ship years, we own a diverse
fleet of 25 vessels, and a further 12 new building vessels are on order at an investment of
over USD 0.6 billion.
Our oilfields drilling business offers onshore and offshore contract drilling, and offshore
construction services. We offer contract drilling services to global oil majors, with a fleet of
13 onshore rigs and one super-specialty semi-submersible offshore rig; 2 new jack-up rigs
on order

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 STEEL

Essar Steel is a global producer of steel with a footprint in India, Canada, USA, the Middle
East and Asia

We are a fully integrated flat carbon steel manufacturer — from iron ore to ready-to-market
products with a current capacity of 8.6 million tonnes per annum (MTPA). With our
aggressive expansion plans in India, as well as Asia and the Americas, we aim to achieve a
capacity of 14 MTPA by 2011-12. Our products find wide acceptance in highly discerning
consumer sectors, such as automotive, white goods, construction, engineering and
shipbuilding.

Essar Steel is one of India's largest exporters of flat products,

exporting to the highly demanding US and European markets, and to
the growing markets of South East Asia and the Middle East.

A number of major client companies have approved our steel for their
use, including Caterpillar, Hyundai, Swaraj Mazda, the Konkan
Railway, and Maruti Suzuki. Essar Steel has acquired extensive quality
accreditations. Our lean team gives us one of the highest productivities
and lowest manpower costs among steel plants internationally

Seamless integration
A major strategic advantage is our high level of forward and backward integration. We are
totally integrated - from raw material to finished products, adding value at every stage of the
manufacturing process.
Bailadilla facility: Iron ore beneficiation
At Bailadilla, where some of the world's richest and finest ore is available, we have set up a
beneficiation plant of 8 MTPA capacities, which ensures the highest quality iron ore. The
iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the
pellet plant, yielding advantages in quality, cost and real time inventory management.
Visakhapatnam facility: Pelletisation
The slurry is received at our pellet plant at Visakhapatnam, which has a capacity of 8 MTPA,
providing vital raw material for the steel plant at Hazira.
Hazira facility
Our steel complex at Hazira, Gujarat, houses a 5.0 MTPA sponge iron

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plant, the world's largest gas-based sponge iron plant in single location. The plant provides
raw materials for our state-of-the-art 4.6 MTPA hot rolled coil (HRC) plant, the first and
largest of India's new generation steel mills. This plant is fed with inputs from four electric
arc furnaces and three casters. The complex's sophisticated infrastructure includes
independent water supply and power, oxygen and lime plants, a township and a captive port
capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and
floating cranes
Hazira Pipe Mill
Hazira Pipe Mill is located at Hazira, Gujarat has a combined capacity of 0.6 MTPA of
helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW)
steel pipes along with internal and external coating facilities of up to 2mn square meters
annually. This pipe making facility is backed by external and internal anti corrosion coating
facilities.

Cold rolling complex

At the other end of the value chain, our downstream facilities include a 1.4 MTPA cold
rolling complex, which adds further muscle to our steel making facilities. The complex
comprises two pickling lines of 1.4 MTPA capacity, a reversing mill and a 1.2 MTPA tandem
mill, two galvanizing lines of an aggregate capacity of 0.5 MTPA, a batch annealing furnace
of 0.7 MTPA, and a skin pass mill of 1.0 MTPA. This enables us to get into the genre of
products that are tailor-made for the automotive, white goods, shipbuilding, agriculture and
construction industries - segments that had been the exclusive domain of a few international
manufacturers. Essar now holds the leadership position in the cold rolling, galvanizing and
pre-coated segments.
Pune, Maharashtra
We have a 0.6 MTPA cold rolling plant, a 0.5 MTPA galvanising plant, a 0.4 MTPA colour
coating plant, and a 0.7 MTPA pickling line.

Distribution outlets
Essar Steel is the first steel company to set up an end user distribution chain for steel
products under the brand name Essar Hypermart. It has a strong network of over 474 steel
retail outlets. These outlets are conveniently located across the length and breadth of the
country to cater to the customized requirements of small and medium enterprises.
The hypermarts offer a comprehensive range of flat steel products for a variety of
applications. Other product lines, like longs, structural, and tubular, are also being
developed to make Essar Hypermart a one-stop-shop for steel products.

Services (across India)

Largest Steel Service Centre facilities in India with an annual capacity of 2.6 million tonnes
located in Pune (Maharashtra), Hazira (Gujarat), Bahadurgarh (National Capital Region),
and Chennai (Tamil Nadu).
Canada facility: Essar Steel Algoma
Established in 1901, Essar Steel Algoma is an integrated steel producer based in Sault Ste.
Marie, Ontario, and Canada. The plant's current production capacity is 4 MTPA. Some of

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the key equipment at the plant includes a low-cost, technologically advanced Direct Strip
Production Complex (DSPC), a slab caster, a 106-inch strip mill (one of the widest in North
America), a 166-inch plate mill, a cold mill and blanking facility that helps produce steel
customized for client requirements, and a welded beam division.
Indonesia facility: PT Essar Indonesia
PT Essar is Indonesia's largest private sector flat products company, with a domestic
market share of 35 percent and a history of process and product innovation. After a major
expansion drive, its CR capacity has been enhanced to 0.4 MTPA and its newly set up
galvanizing capacity is 0.15 MTP

Current status
Algoma currently is the third largest steel producer in Canada (behind Dofasco and Stelco)
both of which proved stronger corporate entities than Algoma. It remains the largest
employer in Sault Ste. Marie and currently has 3500 employees at the main plant. Algoma
now produces steel strip (i.e. plate and sheet type) which forms its main money maker along
with its blanking operations and welded beams.
Essar Steel is a worldwide producer of steel selling to countries such as India, Canada,
United States and Asia. It is a fully integrated steel producer with a raw steel production
capacity of approximately 2.8 million tons per year. Many of its products are sold in
consumer sectors, such as automotive, white goods, construction, engineering and
shipbuilding. [4] The plant's current production capacity is 4 million tonnes per annum
(MTPA). Some of the key equipment at the plant includes a low-cost, technologically
advanced Direct Strip Production Complex (DSPC), a slab caster, a 106-inch strip mill (one
of the widest in North America), a 166-inch plate mill, a cold mill and blanking facility that
helps produce steel customized for client requirements, and a welded beam division.
Revenues are primarily derived from the manufacture and sale of hot and cold rolled sheet
and plate. Algoma's products are used in the automotive, construction, energy,
manufacturing, pipe and tube, and steel distribution industries. [1] The Direct Stripe
Production Complex is a new addition to Essar Steel. DSPC is the newest thin slab caster
coupled with direct hot rolling in North America. The Heat-Treated Plate facility provides
heat treated products for abrasion resistant, ballistic and other specialty plate applications.
First stage configured blanks and large profile welded shapes and profiles are also made. [4]
Essar Steel Algoma confirmed June 15, 2009 they have successfully started up a new, 70
MW Cogeneration Facility. A final performance test on Saturday, June 13 confirmed the
facility meets all necessary operating standards as required by the Ontario Power Authority.
The cogeneration facility converts by-product fuels from the coke making and iron making
processes into electricity and steam for the steelworks. [3]
It features two 375,000 lb/hr boilers and a 105MW turbine combined with other related
components such as a generator, a blast furnace gas holder, condensate and feed-water
systems, a water treatment plant, a cooling tower, a transformer, and a distributed control
system. Essar has set a precedent as the first integrated steel manufacturer in Canada to
construct a cogeneration facility fuelled with by-product gas from the operation. [3]

21 | P a g e
Essar Steel is the biggest employer in Sault Ste. Marie, Ontario, and Canada. They currently
employ around 3,500 workers and have a major effect in the economy.

ESSAR ORISSA:

The Essar group plans to invest Rs.15,000 crores for its upcoming steel plant in Orissa, with
works for the plant set to start in January, a senior official said.
The 6 million tonne integrated steel plant will be commissioned in 2011, B K Panda, project
director of Essar Steel Orissa Ltd (ESOL), told reporters.
The project would need some 2,000 acres of land. The company is negotiating with local
landowners for acquiring some 1,100 acres of land.
The Orissa government has given it 103 acres of land and the company expects some 200
acres from the government, Panda said.
ESOL general manager Bikram Mohanty said local people have welcomed the plant. The
state government and the district administration are also supportive, he said.
Panda said the company plans to have socio-economic development programs in the region
to help the living standard of the people. Essar also will follow the government guidelines in
the rehabilitation of the people.
The company would function in an eco-friendly fashion using even low grade iron ore for
making pellets, which would be fed in blast furnaces. Currently, steel makers in the country
dump low-grade iron ore, which can cause environmental pollution.

PROGRESS OF ESSAR STEEL ORISSA LTD(ESOL)

A road has come up which is in its final stage it is expected to be completed within
3months. It will link the plant with the National Highway.
A new helipad has been built which allows the landing of the chopper within ESSAR
premises.
A chimney has come up into existence and the 4mt pallete plant will be
operational soon.
The laying down of the pipeline is in the final stages. It will facilitate the the flow
of slurry from paradip to dabuna which is around 250 kms.
A conveyer belt has come into existence.
The work of filtration building is in the final stages.
The work of BALLI building is in the final stages.
The captive power plant will soon be operational it is on its finishing stages.
The CRS building has been completed and is operational now.

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The MRS building work is on the final stages.
The land acquisition process is going on at a rapid speed. We will soon acquire
most of the land. Essar is paying a handsome amount of rupees 20 lakh per acre of
land.

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24 | P a g e
MATERIALS MANAGEMENT

Big text Materials management is the branch of logistics that deals with the tangible
components of a supply chain. Specifically, this covers the acquisition of spare parts and
replacements, quality control of purchasing and ordering such parts, and the standards
involved in ordering, shipping, and warehousing the said parts.

Areas of Concentration
Goals
The goal of materials management is to consolidate and efficiently handle core services. It
creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and
pedestrians. Delivery sites and loading docks are more effective and reduce redundancy.
Cost is reduced when it comes to solid and hazardous waste removal, storage, and
recycling. Utility infrastructure and service equipment relocation can improve aesthetics.
Quality Assurance
A large component of materials management is ensuring that parts and materials used in
the supply chain meet minimum requirements by performing quality assurance (QA). While
most of the writing and discussion about materials management is on acquisition and
standards, much of the day to day work conducted in materials management deals with QA
issues. Parts and material are tested, both before purchase orders are placed and during
use, to ensure there are no short or long term issues that would disrupt the supply
chain. This aspect of material management is most important in heavily automated
industries, since failure rates due to faulty parts can slow or even stop production lines,
throwing off timetables for production goals.
Standards
The other major component of materials management will be gradual movement toward
compliance. There are standards that are followed in supply chain management that are
important to a supply chain's function. For example, a supply chain that uses just-in-time or
lean replenishment requires clarity. in the shipping of parts and material from purchasing

25 | P a g e
agent to warehouse to place of destination. Systems reliant on vendor-managed inventories
may begin to acquire up-to-date computerized inventories and begin to explore robust
ordering systems for outlying vendors to place orders on.

Promoting Sustainability
Many business and institutional campuses have cluttered, noisy, and oftentimes inefficient
service environments. Delivery trucks compete with pedestrians, loading docks are in plain
sight, trash dumpsters sprout up, and lobbies, hallways, and stairwells are cluttered with
unplanned storage. With forethought and creativity, these systems can reduce energy use
and carbon emissions, minimize traffic congestion, streamline operational flows, and
enhance aesthetics.
Improving circulation infrastructure
Redundancy can be reduced and effectiveness is increased when service points are
clustered to reduce the amount of redundancy. An effective materials management program
can also resolve “island” approaches to shipping, receiving, and vehicle movement.
Solutions can include creating a new central loading location, as well consolidating service
areas and docks from separate buildings into one. Developing better campus circulation
infrastructure also means re-evaluating truck delivery and service vehicle routes. Vehicle
type, size, and schedules are studied to make these more compatible with surrounding
neighbourhoods. This will reduce truck traffic, creating a safer environment for pedestrians
and a more attractive environment for other uses.
Benefits
An effective materials management plan builds from and enhances an institutional master
plan by filling in the gaps and producing an environmentally responsible and efficient
outcome. An institutional campus, office, or housing complex can expect a myriad of
benefits from an effective materials management plan. For starters, there are long-term cost
savings, as consolidating, reconfiguring, and better managing a campus’ core infrastructure
reduces annual operating costs. An institutional campus, office, or housing complex will also
get the highest and best use out of campus real estate.

An effective materials management plan also means a more holistic approach to managing
vehicle use and emissions, solid waste, hazardous waste, recycling, and utility services. As
a result, this means a “greener,” more sustainable environment and a manifestation of the
many demands today for institutions to become more environmentally friendly. In fact,

26 | P a g e
thanks to such environmental advantages, creative materials management plans may
qualify for LEED Innovation in Design credits.

And finally, an effective materials management plan can improve aesthetics. Removing
unsafe and unsightly conditions, placing core services out of sight, and creating a more
pedestrian-friendly environment will improve the visual and physical sense of place for those
who live and work there.

Introduction - Why Stocks are Held

Virtually every enterprise finds it necessary to hold ‘stocks’ (or ‘inventory’) of various items
and materials. That is because it would be practically impossible to operate with only one of
each item to be sold or used in manufacture or used in office work. A ‘reserve’ or a ‘fund’
or ‘inventory’ of each item or material used or sold frequently is therefore ‘maintained’, so
that as items or materials are sold or used they can be replaced or replenished from the
stocks ‘held in reserve’.
Let us take a footwear shop as an example to make these matters quite clear to you:-

There will be a variety of different shoes, boots, etc, on display - both in the shop’s windows
and inside the shop itself. It would be very inconvenient and time-consuming for a shop
assistant to have to remove the footwear from the display each time a customer wished to
try on a pair. And, in any case, only one size and colour of each style or type of shoe, boot,
sandal, etc., is likely to be on display at any one time. Instead, when a customer expresses
interest in a particular style, a shop assistant will ask the size he or she usually wears and
the colour preferred, and will then try to find the right size and colour from the pairs of
footwear held in reserve. In many cases pairs of popular items in the most commonly asked
for sizes will be kept inside the shop itself, on shelves or in cabinets. But other pairs will be
kept in another room - or perhaps in more than one room - to which the shop assistant can
go to find the footwear concerned; that room is the ‘store room’ or ‘stock room’. When a
pair of shoes or other footwear is sold from those inside the shop, it must be possible to
replace that pair quickly, whenever possible, by another pair held in the store or stock room.
No business could operate efficiently if every time it sold an item or used up an item in
manufacture, it had to order a replacement from the supplier or manufacturer! Of course,
from time to time, items can ‘run out of stock’ but, as you will learn during this Program,
efficient stock control will reduce or eliminate such happenings, and ensure that
replacements are received in good time, and are available when required to replace those
items sold or used

Why Stores are needed

In some countries the word “store” is used to refer to a retail outlet - such as a “general
store” or a “department store” - from which goods are sold, mainly to individuals, who are
commonly called “consumers”. However, in this Program on Stores Management & Stock
(Inventory) Control, we define a “Store” (with a capital ‘S’) as an area set aside into which all
the items and materials required for production and/or for sale/distribution are received

27 | P a g e
where they are housed for safekeeping, and from which they will be issued as required in
only a tiny minority of cases are sales made directly from Stores, and even in such cases
those sales are merely a “subsidiary” activity, and are not the primary functions of the
Stores, as given in our definition. The various items and materials received into, housed in
and issued from Stores are commonly referred to collectively as being ‘stock’ or
‘inventory’, hence the use of the term ‘stock control’.
• THE TERM STORES, STOREHOUSE, WAREHOUSE ETC REFER TO THE PHYSICAL
PLACE BE IT A BUILDING OR A ROOM ETC. WHERE MATERIALS OF ALL VARIETY
ARE KEPT.
• THE FUNCTION OF STORES IS TO RECEIVE, STORE AND ISSUE MATERIALS.
• STORES ARE NORMALLY DIVIDED INTO VARIOUS SECTIONS SUCH AS -
• RECEIVING SECTION
• TOOL STORES
• GENERAL STORES
• RAW MATERIALS STORES
• FINISHED PARTS STORES ETC.
• STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY
STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE
OPPORTUNITY OF IMPROVEMENT

At this stage, the following serve as a few examples to “introduce” the need
for Stores to us:-

Retail shops such as the footwear shop (or store), need Stores to house reserves of
goods for sale to customers and from which to replace those sold.
Wholesale businesses (often called simply ‘wholesalers’) purchase goods in large
quantities from the producers or manufacturers of them, so they need Stores in
which to hold the goods until they are required for supply in smaller quantities to
retailers.
A manufacturing concern, for example a steel industry, must hold stocks of all
the items (materials and components) which are used in making the different
types of steel.
An office is likely to need stocks of printed and plain paper, envelopes, pins, clips
and other items.
Even an enterprise which provides a service, like a garage for example, must hold
stocks: of spare parts for vehicles, consumables like oil, and, of course, tools for
use by its mechanics. In many cases the “Store” might be quite small, perhaps no
more than a stock cupboard in a small service concern, such as an estate agency,
or a small office. Other enterprises, however, require huge Stores to hold the vast
stocks of items, of many different kinds and sizes, which they must have available
if they are to be able to run efficiently and successfully. In between the two
extremes, there is an enormous range of different enterprises with Stores of

28 | P a g e
 different sizes. Whatever the situation, you will find that the Stores of most
enterprises fall within the definition we have given you. A Store might be a
department or section of an enterprise, and be its ‘Stores Department’; often
that name is shortened simply to ‘Stores’ (with a final letter ‘s’). For example, a
person might work “in the Stores”.

Stocks
The range of items and materials - stocks - which might be held in Stores is huge. The
variety and quantity of items and materials held in the Store of a particular enterprise will
depend on its size and on its range of activities. Broadly speaking, the various activities of
different enterprises can be divided according to the three main groups of enterprises:-

What is involved in Storekeeping:-

The term storekeeping covers the actual handling of the items or materials received into,
held in and issued from the Store. The work involves:
receiving items and materials, including the inspection of them
storing the various stock items in the most appropriate fashion, binning and/or
racking them by the best methods, and placing them in such a way that any item
or material in the Store can be located quickly and easily when it is required;
ensuring the safety of all items and materials whilst in the Store - that is,
protecting them from pilfering, theft, damage and deterioration; Ensuring, when
necessary, that items issued from the Store are so packed that they will not be
damaged or caused to deteriorate whilst in transit to their destinations.

What is Involved in Stock Control (also known as ‘Inventory Control’)

What we refer to as stock control comprises mainly the clerical and administrative
functions of stores work. It involves:
ensuring that the right types and qualities of items needed for production, sale
and distribution, are always available when required;
ensuring that stock is issued in the correct sequence, that is, “first in first out”,
so that “older” stock is not allowed to deteriorate by being kept too long in the
Store, for instance because it has been hidden from view by more recently
received stock;
maintaining records showing the “movement” of items into and out of the Store,
controlling and monitoring those movements and maintaining full records of the
items in the Store;

29 | P a g e
 ensuring that the correct “stock levels” of the various items are set and are
maintained, that orders and reorders are made (or requested to be made) in good
time, and that what is ordered is received;
checking, counting or otherwise measuring stock to ensure that records are
accurate and that no losses are occurring due to pilfering, theft, damage or poor
storage;
pricing and valuing the items in the Store

The Importance of Efficient Stores Management

In an enterprise with a small quantity of stock, one person might be placed in charge of it, if
the owner/manager does not look after it himself. Where the volume of stock is too large to
be handled on a part-time basis, one or more storekeepers will be required. Enterprises
with large quantities of stock must employ trained stores personnel (storekeepers, clerks,
etc) under the control of a Store’s Manager (who might go by the designation of Head or
Chief Storekeeper, Stock Controller, stores administrator).
It is impossible to state at what stage a Store’s Manager will be appointed by a particular
enterprise, as circumstances and sizes vary so greatly. But whatever its size and the
volume of its stocks, the success of the enterprise can depend to a large extent on the
efficient management of its Store and stocks.

Let us now examine why that is so.

All the possessions of an enterprise - that is, what it owns - are called its ‘assets’.
Frequently the value of the stocks of goods and/or materials held in its Store is as
great as - if not greater than - the total value of all its other possessions - e.g.
land and/or buildings, plant, machinery, motor vehicles, equipment, etc., and, of
course, money and investments - added together!
The items and/or materials in the Store cost money; if, through bad Stores
Management, there are too many held in the Store or if the wrong items or
materials are being held, money will be “tied up” - money which might be
required to buy other, needed items and/or materials or to pay the many expenses
involved in running the enterprise.
Conversely, if poor stores management has led to shortages of needed items and
materials, there will be hold-ups and interruptions in production, or losses of
production and/or losses of sales to customers and, indeed, losses of the
customers themselves, and losses of profits which can in turn lead to job losses
and - in extreme cases - to the collapse of the enterprise.
If items in the Store are lost, stolen or damaged in any way, the enterprise loses
money.
And it costs money to run the Store - on building maintenance and/or rent, on
salaries of stores personnel, on containers and equipment, on heating or cooling,

30 | P a g e
 on lighting and power, etc. – and the enterprise must receive a “return” from its
expenditure, in terms of efficiency, particularly as its Stores is “non-productive”

FUNCTIONS AND DUTIES OF STORES DEPARTMENT:-

You will have noted that earlier I stated that the Stores Department has a non-productive
Function. I can now explain what I meant.
Departments of an enterprise such as its Sales Department and/or its Production
department are directly involved in the primary or revenue-earning functions of that
enterprise. Their functions - or activities - are designed to bring money into the enterprise
as the result of producing and/or selling goods or services.

For example, if an enterprise has a Production Department, its function is to make or

manufacture goods or other items which will be sold to bring in money. The whole
function of the Sales department of an enterprise is to sell goods or other items (whether
produced internally or purchased for resale from other enterprises) and/or services, in return
for which customers will pay money to the enterprise.
In contrast, the Stores Department of an enterprise does NOT make or - in general - sell
goods or services to customers.

Its function is to:

Provide a SERVICE to the rest of the enterprise of which it is part.

The SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the
enterprise, because it is basically intended to ensure that all other sections or departments
of the enterprise are furnished, when required, with the correct items, in the correct
quantities and of the correct qualities. As I explained earlier, the standard of the service
provided by the Stores Department will affect the efficiency and profitability of the entire
enterprise of which it is a part. Obviously, the Stores Department cannot be expected to
provide the best service unless it receives adequate information from other departments.
Furthermore, it must work closely in co-operation and co-ordination with those other
departments. The departments with which the Stores will have contact will, of course,
depend on the activities in which an enterprise is engaged. However, we now look briefly at
some of the major departments with which close contact by Stores Departments might be
necessary.

The complete control on the materials is vested in the Stores Department. The field of
materials Management covers the following functions.

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE;

• TO RECEIVE RAW MATERIALS, COMPONENTS, TOOLS, SPARES, SUPPLIES,
EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM.
• TO PROVIDE ADEQUATE, PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR
ALL THE ITEMS.

31 | P a g e
 • PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY
CHALLAN / INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT
REGISTER OR RECORDS.
• ARRANGE FOR INSPECTION OF INCOMING MATERIALS.
• ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT
DELAY
• ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED
REQUISITIONS AND ACCOUNT FOR THE SAME.
• MAINTAIN ACCURATE AND UP – TO – DATE RECORDS OF MATERIAL RECEIVED,
ISSUED, REJECTED, DISPOSED, AND QUANTITY ON HAND OF ALL THE ITEMS.
• THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE;
• ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO
STOCK CONTROL, ACCOUNTS AND OTHER CONCERNED DEPARTMENTS.
• UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE.
• TO HIGHLIGHT STOCK ACCUMULATION, DISCREPANCIES AND ABNORMAL
CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION, WHEREVER
NECESSARY.
• TO MINIMISE OBSOLESCENCE, SURPLUS AND SCRAP THROUGH PROPER
CODIFICATION, STANDARDIZATION, PRESERVATION AND HANDLING.
• TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL
HANDLING.
• TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON
CAPITAL TIED UP IN INVENTORY.
• TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS.
• DEPENDING UPON THE NATURE OF BUSINESS (I.E. MANUFACTURING, TRADING
SERVICES, ETC,) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE
REST.
Basically the functions of store are as follows:-

i) Materials planning and programming of procurement and supplies.

ii) Purchasing
iii) Inventory control
iv) Store keeping and warehousing
v) Materials handling and transportation
vi) Codification and standardization
vii) Value Analysis
viii) Identification, Disposal of supplies, obsolete and scrap materials, etc.

The Production Department:

As the Stores Department must ensure that all items, materials and tools, as well as spare
parts for machinery, are always available for continuous, uninterrupted production, it
requires adequate warning about expected future needs, in terms of types, quantities,

32 | P a g e
qualities (and possibly even colours). Stores might also have responsibility for quality control
and for inspection (although these might be the responsibility of a separate department
which, again, must work closely with the Stores).

The relationship between the Stores and Production Departments

STORE RAW MATERIALS

PRODUCTION
S COMPONENTS, DEPT
Dept TOOLS ETC.

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

QUALITY
PRODUCTS CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or
procedure. These should be carried out without any deviation or modification to guarantee
the expected outcome. Any modification or deviation from a given SOP should be
thoroughly investigated and outcomes of the investigation documented according to the
internal deviation procedure.

All quality impacting processes and procedures should be laid out in Standard Operating
Procedures (SOPs). These SOPs should form the basis for the routine training program of
each employee. SOPs should be regularly updated to assure compliance to the regulatory
requirements and the working practice. A minimum review schedule of 3 years is
recommended Changes of SOPs are in general triggered by process or procedural
changes / adjustments. The internal site change-control procedure should manage these
changes.

33 | P a g e
 Part of the activity list of such changes should be to update the related SOP. SOPs should
be in place for all quality systems plus the specific operational activities on site. The
structure of an SOP System and the total amount of individual SOPs should be carefully
taken into consideration too many SOPs could lead to a collapse of the SOP System.
System SOPs should not be mixed up to keep systems and interaction between quality
systems easy.

ISO 22000 essentially requires the documentation of all procedures used in any
manufacturing process that could affect the quality of the product.

STANDARD OPERATING PROCEDURE OF

Essar Projects India limited (Paradeep)
Rejection

REJECTI
ON

IS THE QUALITY MATCHINGG

Receiving of Document Material Final GRN(USING)
materials checking weighment weighment
SAP

WAREHOUS VENDOR
FREE
E
34 | P a g e
 CHRG
NO IS MIN AVAILABLE

DEPARTME
NT ISSUED

YES

PHYSICAL AGEING
VERIFICATION
SLOW SALES
MOVING
REPORT
SELF LIFE
WEEKL QUATER ITEMS

RECONCILATION WITH RECONCILATION

VENDORS STATEMENT

RECONCILATION WITH DEPT

Layout of ESSAR
SOP,LAYOUT.docx

SAFETY MEASURES FOLLOWED IN ESSAR

Safety is the state of being "safe" (from French sauf), the condition of being
protected against physical, social, spiritual, financial, political, emotional,

35 | P a g e
occupational, psychological, educational or other types or consequences of failure,
damage, error, accidents, harm or any other event which could be considered non-
desirable. This can take the form of being protected from the event or from exposure
to something that causes health or economical losses. It can include protection of
people or of possessions.

Safety measures
Safety measures are activities and precautions taken to improve safety, i.e. reduce risk
related to human health. Common safety measures include:

 Root cause analysis to identify causes of a system failure and correct deficiencies.

 Visual examination for dangerous situations such as emergency exits blocked

because they are being used as storage areas.

 Visual examination for flaws such as cracks, peeling, loose connections.

 Chemical analysis

 X-ray analysis to see inside a sealed object such as a weld, a cement wall or an
airplane outer skin.

 Destructive testing of samples

 Stress testing subjects a person or product to stresses in excess of those the person or
product is designed to handle, to determining the "breaking point".

 Safety margins/Safety factors. For instance, a product rated to never be required to

handle more than 200 pounds might be designed to fail under at least 400 pounds, a
safety factor of two. Higher numbers are used in more sensitive applications such as
medical or transit safety.

 Implementation of standard protocols and procedures so that activities are conducted

in a known way.

 Training of employees, vendors, product users

 Instruction manuals explaining how to use a product or perform an activity

 Instructional videos demonstrating proper use of products

36 | P a g e
 Examination of activities by specialists to minimize physical stress or increase
productivity

 Government regulation so suppliers know what standards their product is expected to

meet.

 Industry regulation so suppliers know what level of quality is expected. Industry

regulation is often imposed to avoid potential government regulation.

 Self-imposed regulation of various types.

 Statements of Ethics by industry organizations or an individual company so its

employees know what is expected of them.

 Drug testing of employees, etc.

 Physical examinations to determine whether a person has a physical condition that

would create a problem.

 Periodic evaluations of employees, departments, etc.

 Geological surveys to determine whether land or water sources are polluted, how firm
the ground is at a potential building site, etc

SAFETY COMPLIANCE
1. THE SERVICE PROVIDER AND HIS MEN SHOULD COMPLY WITH PPE REQUIREMENT
DECIDED BY THE ORGANIZATION SAFETY DEPARTMENT LIKE CUT RESISTANT HAND
GLOVES, SAFETY HELMETS AND SAFETY SHOES..

2. ALL THE PPE’S MUST BE WORN WHILE WORKING ON JOB.

3. THE SERVICE PROVIDER SHOULD BE COMPETENT ENOUGH TO SUPERVISE HISMEN.

JOB DESCRIPTION
1. THE SUPERVISOR HAS TO ENSURE PROPER PLANNING OF COMPETENT MANPOWER AS
DESIRED BY THE ORGANIZATION.

2. PLANNING OF COIL ON SADDLE AS PER PLAN RECEIVED FROM THE ORGANIZATION.

3. ISSUING AND SHIFTING OF WOODEN PALLETS FROM THE ORGANIZATION AS PER SIZE.

4. SEGMENT REMOVAL AND FIXING AS PER COIL I/D.

5. SHEAR GAP SETTING AS PER THICKNESS.

6. UNLOADING OF PACKETS FROM THE STACKER THROUGH EOT CRANE.

37 | P a g e
7. WEIGHMENT OF PACKET AND REPORTING TO THE SHIFT ENGINEER.

8. PACKET SHIFTING AND PROPER STACKING.

9. READINESS AND PLACING OF LOGO ON THE SHEET.

10. BARREL CORRUGATION M/C SETTING AND CORRUGATION COMPLIANCE AS PER IS 277
AND JIS STANDARD.

11. MAINTENANCE KNOWLEDGE OF ALL M/Cs IS MUST.

ESSAR SCOPE OF WORK

1. CRANE, HYDRA & TAILOR FOR SHIFTING, DIS-MANTLING & ERECTION WILL BE PROVIDED
BY ESSAR.

2. ALL RAW MATERIALS, POWER & CONSTRUCTION WATER WILL BE PROVIDED BY ESSAR.

GENERAL SAFETY GUIDELINES

1. Service Provider must not operate any equipment in manual mode without permission
from authorized engineer.

2. Service Provider must not go to any equipment while moving.

3. No person is allowed to stand on coil car / slitting line.

4. No By-passing of interlocks and no pre assumptions for any equipment operation.

5. Use Proper PPE & Safety platform while packing.

6. Ensure that, fingers should be away from strapping procedure and while working with
tensioner.

7. Service Provider trained operator should handle consumables for packing of Coils.

8. Operators should be away from under crane, while crane carrying the Coil/ Plates to
packing saddle/ packing area.

9. Service Provider must remove the waste consumables immediately, disposal to specified
scrap bin and keep the area NEAT & CLEAN.

10. Service Provider must keep only good quality wooden logs for packing.

11. Service Provider must always wear sufficient PPE’s inside the plants.

38 | P a g e
12. Service Provider must keep safe distance to the coils & packs while packing.

13. Service Provider must not modify any tools or equipments.

14. Service Provider must not touch any movable parts.

15. Service Provider must riggers must be alert while pack stacking procedure in yard.

16. Extra care to taken while packing with fork lifter. The signal should be given to fork lifter
driver by standing at least one meter away from pack.

17. Service Provider must keep the packs stack height maximum 6 feet and must not stack
the packs more than 6 feet height.

18. Rigger must ensure as coil properly gripped in sling-gofer/c-hook than after give the
signal to the crane operator.

19. Service Provider must not put wooden blocks for packing while the crane is moving with
load.

20. Service Provider must maintain good housekeeping standards and keep “Yellow
pathway” should be neat & clean.

21. Housekeeping is mandatory at each packing area. All loose wooden logs, straps etc to
be removed from site in frequent intervals.

22. Ensure sling offer should be locked with bolt in main hoist of crane.

23. Service Provider must not pack the packs very near to the rollers on the floor area in
flying shear line. There may be a chance of slipping & falling down.

24. Service Provider must ensure all hooks are properly hooked with chains while lifting
with spreader beams. The lifting signal to crane operator to be given after counter checking
the hooks position. There may be chance of hooks slipped off from chain.

25. Service Provider must not work near the stacker area in flying shear line.

SPECIAL "OHSAS" AND "ISO" CONDITIONS:

�All safety rules, codes applied by respective government agencies both in India
and foreign countries regarding safety and environmental shall be observed and
complied to by the Bidder / service Provider and his workmen without exception.
� The following Health and Safety points for OHSAS 18001 FOR OCCUPATIONAL
HEALTH & SAFETY MANAGEMENT SYSTEM are required to be complied by the bidder
/service Provider:

39 | P a g e
i. To ensure the health, safety and well being of all workmen and compliance to applicable
legislative requirements.

ii. To include all resource requirements for accident prevention during preparation of
estimates.

iii. To ensure proper briefing to workmen.

iv. Not to do wilfully any act which may cause injury to himself or to others.

v. Not to interfere unless duly authorized, remove or interfere with any moving/ stationary
machine/ equipment or facility.

vi. To use only the authorized means of access provided in the site.

vii. The bidder / service Provider shall have full responsibility and accountability of safe
execution of job at work place / site and safety of the personnel conducted inside the
premises of ESSAR, Hazira.

viii. To maintain up-to-date list of employed workman at the work site and maintain identity
cards.

ix. To undertake immediate action to correct all unsafe conditions/ practices as identified/
reported.

x. To ensure that all sub - service providers are provided the necessary documentation, ISI
approved or equivalent standards PPE and informed of their obligations.

xi. To issue standing instructions for prohibition of drugs and alcohol/ fighting/
gambling/horse play or keeping weapons at various worksite (any violation will result in
disciplinary action).

xii. Not to employ workmen with epilepsy/ deafness/ color blindness/ night blindness in any
site activities. All personnel deployed at their site shall have medical fitness certificate
issued by registered medical practitioner.

xiii. Ensure that employees are provided with appropriate ISI approved or equivalent
standards personal protective equipment PPE’s and these should be at no cost to the
employees. These PPE’s should be used in accordance with job requirements and replaced
as necessary.

TRAINING & PPE

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• To provide adequate information, training to workmen; safety equipment of Indian
standard approved (IS) or any other equivalent specifications and ensure their proper

ENVIVORNMENT, SAFETY, HEALTH RULES, REGULATIONS AND MEASURES

TAKEN:-

� Service Provider shall conduct their activities such that the personnel,
equipments, working methods, conditions are safe and without risk to health,
injury, accidents etc for their own personnel/equipments of our or other business
associates at the site.

� Service Provider shall ensure that all the employees deputed by Service
Provider at our site are medically fit to carry out the activities in order to ensure
that the jobs entrusted are completed safely in time and without any hindrances.
For this, it is necessary for Service Provider to submit medical fitness certificate
for all their employees deputed at our site to our fire and safety department. In
case at any time, the persons deputed are found medically unfit, they shall be
denied entry in our premises and not allowed to carry out their jobs.

� Service Provider shall ensure safety of their personnel & follow all safety
measures prescribed. Service Provider shall provide for all safety requirements as
per the demands of the services rendered at their own cost.

� Service Provider shall ensure that all the tools and tackles deployed by Service
Provider are certified by competent authority for use in factory. Such certificate
should be duly valid at all points of time.

� For the works to be carried out, Service Provider shall be deploying qualified
Supervisors who shall be qualified and who shall have knowledge and shall co-
ordinate and supervise all the works including but not limited to the following
activities:-

i. Lifting and shifting of big vessel/pipes/gear boxes/big armature/motors etc. where chain
pulley blocks, cranes, winch machines, loaders etc are used.

ii. Activities/works being carried out at critical heights like crane girder levels, false ceiling

& roof jobs.

iii. Activities/works being carried out at environment having health and/or fire hazards.

iv. Activities/works being carried out in confined space/vessel entry/locations.

v. Activities being carried out on gas line/oil cellars/hydraulic stations/cable tunnels/cable

galleries/conveyors.

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vi. Works being carried out near working/running machines.

vii. Excavation works where U.G.C. system (pipes + cables) exist.

� If their personnel are deployed in dusty/noisy/oily areas, Service Provider must

ensure and practice the following:-

i. Observe the condition of hoses/o-rings/seals. If it is not in a good condition, then inform

the immediate supervisor/concerned officials to prevent the leakage.

ii. Immediately arrest the leakages and recover/collect the maximum amount of spilled oil in
the drum during the leakages.

iii. Put the filled-in drums at designated storage area.

iv. Wear ear plugs/muffs while working in the high dust areas.

v. Ensure proper handling of materials like scrap during bucket preparation.

vi. Ensure proper handling of materials like lime, dolime etc. while feeding.

vii. Ensure materials like scrap, etc are charged into the bucket from lesser height.

viii. Keep the fixed and movable elbow 100% clean.

ix. Arrest any leakage immediately.

x. Ensure proper handling of raw materials to minimize dust emissions

xi. Load the materials like lime-stone etc. from lesser height.

xii. Ensure periodical cleaning of joints and gaskets.

xiii. Ensure proper screening of oxide before charging to hopper.

� All vehicles entering ESSAR complex must have current and valid P.U.C.
certificate without which vehicle shall not be permitted for entry.
� For jobs carried out in the plant, Service Provider shall obtain proper work
permit as per requirements.
� For all the jobs done, Service Provider shall be compulsorily deploying a
qualified competent safety supervisor.
� All scaffolding should be as per satisfaction of department engineer in-charge
should be done.
� All their employees, worker, staff will have to undergo a safety and
environment training.
� Service Provider/their supervisor should positively attend the safety and
environment meeting/other meetings conducted periodically.

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 � Service Provider should comply with all safety and environment
requirements/rules and regulations as per guide lines of fire & safety; environment
department.
� Service Provider shall maintain and ensure continuous availability of First –Aid
facilities for all their personnel.
� Service Provider/Their personnel shall be restricted to the areas required for
the performance of their jobs. Wandering of their personnel/representatives
through plant areas other than the immediate job area is not permitted except
without prior written permission from concerned Head of Department.
� Service Provider shall provide following personal safety gears and safety
equipment with specifications mentioned or as per latest rules and regulations.
Also Service Provider shall take adequate steps to ensure proper use by those
concerned:-
� Safety goggles - toughened polycarbonate scratch resistant lenses with side
shield, Optically correct zero power, impact resistant and approved by BIS
specification no. IS: 7524 part -1 and further applicable amendments
� Hand gloves
� Safety helmet – of yellow colour - moulded out of high impact, heat and
chemical resistant HDPE with brim for additional side protection, with 6 point
ergonomic adjustable head band and chin strap; and approved by BIS specification
no. IS: 2925 -1984 and further applicable amendments
� Safety harness with double lifeline - waist belt with shoulder strap, 6 mm thick
coated friction buckle and joint less d-ring, 44 mm wide nylon webbing, padded
back, nylon stitched along with copper rivets for additional safety, "quick fit"
spring loaded hook; and approved by BIS specification no. IS: 3521
� Safety shoes - high ankle shoes, made from fine quality plain black leather,
padded Collar, D'rings, full below attached tongue, with steel toe cap as per is
5852 with direct Injection P.V.C. nit rile heel sole
� Orange Fluorescent jackets for personnel deployed for up-keeping, cleaning,
Housekeeping jobs
� Dungarees/Aprons of specified colours and make

For the mobile/heavy mobile equipments deployed, Service Provider shall ensure
following -

i. Equipments should work for 20 hours in a day/as per requirements & availability for each
equipment must be there accordingly.

ii. Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of
equipment.

iii. Copy of a current and valid P.U.C. certificate for the equipment should be provided by

Service Provider and operators should have valid driving license.

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iv. Service Provider shall keep and have all valid documents as per Motor Vehicle Act as
applicable in the state/region.

v. The above mentioned documents/certificates must be available at all times.

vi. Head light, tail light, reverse horn and rear view mirror of the equipment should be in
working condition for safe operation.

vii. If Service Provider are replacing any regular equipment deployed then Service Provider
shall inform the user department in writing.

� Service Provider shall keep proper supervision round the clock for optimum
utilisation.
� Inside the plant premises, the speed of the vehicle should not exceed 20 KM per
hour/the limits defined at various places in the plant.

Service Provider shall comply with the following:-

Housekeeping/cleaning of the area including cleaning/removing the debris/scrap/waste and

shifting the same/surplus materials to the location specified/shown by the engineer-in
charge shall be carried out by Service Provider. Disposal of these should not be done to
areas which will create environment hazards and the disposal should not create damage to
environment – land, water, air presently or in future. Service Provider shall dispose off waste
or scrap generated /dust only to designated areas and ensure that these are not disposed
off at any area.

� Minimize pollution at source through environment-friendly processes,

techniques and processes
� Reduce fugitive emission from loading/unloading and transportation of
materials (where applicable).

� Develop/encourage adequate greenbelt in and around the plant.

� Educate and develop an environmentally aware contractual workforce at all
levels.

ESSAR celebrates this year as the accident free year as no life lost
during the commencement of the project and bags the safety
award.

SAP IN ESSAR

Mill Products
The Essar group is one of India’s largest business houses with an asset base of
US $ 3 billion and interests in core industries like Steel, Shipping, Oil and Gas,

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Power, Telecom and Finance. Essar entered the Iron and Steel business in 1989
by setting up a 1.76 million tonnes per annum facility to produce Hot Briquetted
Iron (HBI). This plant is the largest in the world. Essar has also set up a 2 million
tonne flat products steel plant. Simultaneously, a backward integration project in
the shape of a 3.3 million tpa iron ore pelletisation plant has been set up to
manufacture and supply high quality iron ore pellets. Essar has emerged as the
largest fully integrated manufacturer of high-quality flat products in the western
region of India . the hub of industrial activity in the country. Essar needed a fully
integrated IT system to manage this huge set up.

The right data at the right place

According to Anil Kastuar, C.I.O. Steel Business, Essar had a non-integrated

system focused solely on finance. .It was not linked to Production Planning,
Materials Management or Sales & Distribution Management. This is not an era
when decisions can be taken based on standalone solutions. They must be
based on inputs from other business areas. We needed a solution and we looked
at SAP.s R/3, which fulfilled our objective.

Integration is of the essence in a

Complicated industry

To produce high-quality steel with the best ingredients, accuracy in the product
mix was crucial. To enable this there was a need for an integrated and live
information system. Dr P Bhattacharya, Chief Operations Officer, explains: .We
deal with complex products, sizes, 10 grades. The wrong slab in the wrong
furnace could create havoc. We needed a system to manage all this. We also
had to track everything from raw material to production and finally its shipment.
The transportation by road of say, 250 tonnes of steel a day, is dependent on a
powerful information system. Essar selected SAP.s R/3 based on the strengths of
the system and on its success elsewhere. .Our corporate culture is driven by
respect for the best available in the market. SAP.s R/3 turned out to be the most
powerful, proven software that could run a complicated business such as ours..
.SAP is able to provide solutions for a variety of industries. It is not an
industry-specific solution. It is not a hardware-specific solution. It is an
enterprise-wide solution with industry specific components for
businesses like ours.

A live system is needed to facilitate each step in production planning

Dr Bhattacharya explains: .It is imperative that we know, right from the time we
take orders, what our likely delivery schedule will be. All information from raw
material procurement to inventory of finished products should be absolutely live.
We were looking for a solution that would give us all this.

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.What I like about the SAP R/3 solution is that it binds every individual
and every department with one objective- Efficiency. There can be no
conflict of data. If there is a problem it surfaces the same day.

Implementation with a Big Bang

Anil Kastuar explains why Essar chose to unfold the entire R/3 suite in one goes
calling it their Big Bang approach. .Our steel plant was close to being
commissioned and we needed to take care of each business process. Which is
why we decided to go for the Big Bang approach? Arun K Tiwary, GM Information
Technology, explains further: .Our modules included: Finance, Asset-
Management, Product Planning, Plant Maintenance, Sales and Distribution,
Quality Management, Controlling, Commitment Accounting.. The first 12 months
saw the implementation of 3 modules: Finance, Material Management and
Controlling. All the production related modules went live in the 2nd phase, 3
months later.
.SAP India’s support is fantastic. Sometimes I wonder whether they.re
a part of Essar Steel or SAP India..
Essar had the help of their respected business managers in the implementation
stages. They also had the assistance of a team of IT professionals and
implementation consultants from Coopers & Lybrand. Avers D Ashok, Executive
Director, Coopers & Lybrand (India), .We believe this Big Bang implementation
was successful, primarily because of the client.s confidence in jointly taking a
seeming risk. Our well qualified, dedicated and experienced consultants with
guidance from C&L.s global SAP Centre of Excellence . Hamburg, were able to
meet the stringent deadline because of team spirit and dedicated client users
and IT professionals..
.SAP were supportive and responsive. For example when we had a problem with
our Commitment Accounting, they flew down a consultant from Singapore to
help..
We can promise much shorter deliveries..
According to Dr Bhattacharya the cycle of customer enquiry to delivery has been
reduced. Essar truck turnaround time is reducing. The ERP facility that SAP
offers as a part of its production planning module is used extensively. .We are
able to accurately plan our procurement of spares and goods, raw materials and
stocks. Accounting has become totally decentralised. Every transaction that
takes place in the plant updates the book of accounts automatically...For the
first time we are likely to close the first half of our balance sheets within 25 days
of our closing

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INVENTORIES OF ESSAR
Since the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are
huge. The inventory basically consists of capital goods, steel items (like bars,
angle, beams, channel, and plate), cement and diesel. These items are used for
the purpose of the construction of the plant. The inventories are of A category,
the capital goods lying in the helipad, crs building, mrs building, balli building,
store yard, store shed worth more than 400crores.the steel items like bar, angle
channel, plate also worth in crores. Steel items are stacked near crs building,
Weigh Bridge, near chimney, etc. Stores department is responsible for the
stacking, handling and maintaining this high value items.

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

• PHYSICAL VERIFICATION OF CAPITAL GOODS

• PHYSICAL VERIFICATION OF STEEL ITEMS
• PHYSICAL VERIFICATION OF CEMENT
• PHYSICAL VERIFICATION OF DIESEL
• TAGGING OF STORE MATERIALS
• STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy.

Depending on the size and nature of the organization it is verified either frequently or once

47 | P a g e
annually. Given below are steps which can be used to design the physical verification of
inventory process. These need to be fine tuned according to the nature of industry.

Perpetual Inventory
Medium to large organizations having high quantity of stocks must design a perpetual
inventory count system. Physical verification of inventory on a perpetual basis helps to
monitor and control the stocks effectively. A perpetual inventory system can be either
weekly or monthly. An annual verification of stocks during year end audits can reveal
differences between physical and book quantities which would be difficult to identify and a
rectification at that stage may not be possible leading to an excessive write off.

weekly stock take procedure needs to be carried out on the day of the week when the
operations are expected to be at a minimum i.e. here is minimum movement of inventory.
Monthly physical verification needs to be carried out on the last day of the month after all the
invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count i.e. counting the
entire inventory. A weekly perpetual inventory system on the other hand would involve
counting some of the quantity on a weekly basis such that the entire stocks are counted at
least twice a year or once every quarter.

Inventory Schedule
The inventory schedule must be prepared prior to the stock count. It must specify the date
and time of the count and the staff who will be participating in the stock count. The schedule
must be communicated to the staff involved in the stock take.

Inventory Count Sheets

Area wise inventory count sheets must be available for the stock take. The inventory count
sheets need to be numbered and should have a complete list of all items in stock as per the
stock records on the computer system. The unit of measurement specified on the count
sheet should match the unit of measurement in which stock is required to be recorded in the
books. This will enable to compare the book stock with the physical stocks counted and
would reduce errors of conversion. For example if the book stock is in Cartons and Pieces,
the physical stock needs to be counted and recorded as Cartons and Pieces. If
the book stock is in kilograms, then the physical stock needs to be weighed and recorded in
kilograms.
A blind count is always beneficial i.e. the system stock should not be mentioned on the
inventory count sheet.
The staff involved in the stock count must initial / sign each and every page of the inventory
count sheet.

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Cut Off Procedures
Adequate cut off procedures need to be followed. For instance, GRN (goods receipt note)
for all raw materials received need to be accounted prior to counting and included in the
stock count during physical stock take. Similarly finished goods for which invoices are
entered need to be segregated and transferred to dispatch section and should not be
counted during physical stock take. All pending sales invoices and GRN’s need to be
entered before generating the stock count sheets from the system.
Summarizing the above all goods just received for which GRN is not prepared and all sales
invoices entered which are not yet dispatched should be segregated and not counted
during the physical stock take.

Third Party Stocks

During stock counts, inventory belonging to third parties in our stores need to be identified.
Similarly on a monthly or quarterly basis it is important to obtain a confirmation from third
parties with whom our stocks are kept. For example obtaining a confirmation for stocks kept
on consignment basis.
Comparison with System Stock
The physical stock must be entered in the system to compare with the book stock. The
stocks must be entered in the same unit of measurement as present on the system. If
possible the staff entering the stock needs to be different from the staff involved in the stock
count to ensure segregation of duties. This would depend on the size of the organization
and the staff available. Entry should be done from the count sheets page by page to ensure
all items are entered. Any items which were not present in the count sheets and written
manually during physical stock should be entered with care and checked with similar items
in the system.
Subsequent data entry of sales invoices and GRN can be done only after comparing the
system stocks with the physical stock.
Variance Analysis
After entering the physical stocks, the variances, if any, must be analyzed. Huge variances
must be investigated by performing a recount of those items, verifying whether the entry of
physical stock was correctly done, whether any errors are present in data entry of invoices,
stock receipts and stock issue.
The variances need to be accounted for such that the system stock reflects the result of the
physical stock count.

CAPITAL GOODS LIST.xlsx

INVENTORY OF STEEL AS ON 31.03.10

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MAIN SHEET OF STEEL.xlsx

QUANTITY OF BEAM

QUANTITY OF CHANNEL

PHYSICAL VERIFICATION OF STEEL

STEEL INVENTORY.xlsx

INVENTORY OF CEMENT AS ON 22.04.10

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LOCATION QUANTITY

GODOWN NO 4 1583 BAGS

BALLING 2703 BAGS

BUILDING

GOWODN NO 3 1810 BAGS

GOWODN NO 2 1060 BAGS

ISSUED 400 BAGS

TOTAL 6756 BAGS

GRAPHICAL REPRESENTATION OF INVENTORY IN TERMS

OF QUANTITY

GHRAFICAL REPRESENTATION OF INVENTORY IN TERMS

OF INR

STACKING PROCEDURE OF CEMENT

IMPORTANCE OF PROPER STORAGE OF CEMENT

The binding property and strength of cement depend upon its capacity for chemical reaction,
which can take place in the presence of water. Cement if not stored properly can absorb
moisture from the atmospheric air or any other source and react with it chemically. The
strength of such type of cement when used would be adversely affected to the extent such
reaction would have taken place.
For prevention of cement against deterioration and retaining its freshness its storage should

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be such that no dampness or moisture is allowed to reach cement either from the ground,
walls or from the environment. This becomes particularly important during the humid season
and in coastal regions when atmospheric air contains higher amount of moisture in it.

CEMENT GODOWN AT SITE

In most construction projects godowns are constructed at site for storage of a few days
requirement of cement. Even though such godowns are temporary in nature, they must
conform to the following requirement.
• The walls must be plastered and made damp proof
• The roof must be given an appropriate water proofing treatment
• The floor must be raised by atleast 80 cm above the ground level to prevent any
inflow of water. The flooring may consist of a 15 cm thick layer of dry bricks laid in
two courses over a layer of earth consolidated to a thickness of 15cm above the
ground level.
• For further protection, cement bags should be stacked at least 10-20 cm clear above
the floor by providing wooden battens and planking arrangement. For saving timber
concrete may be used.
• If any windows are provided , these should be few and small and normally kept
tightly closed to prevent entry of atmospheric moisture from outside.
• A newly constructed godown should not be used for storage of cement unless its
interior is thoroughly dry.

PROPER METHOD FOR STACKING OF CEMENT BAGS

The arrangement should be such that it is convenient both for stacking and removal of
cement bags and it also leaves adequate space for movement and inspection of bags for
counting purposes etc.,
No cement bags should be stacked in contact with an external wall. A clear space of at least
60 cm should be left between the exterior wall and the stacks

Cement bags should be placed closely together in the stack to reduce circulation of air as
much as possible. Cement bags should not be stacked more than ten bags high to avoid
lumping or ‘warehouse pack’ under pressure. If the stack is more than seven bags high,
arrange the bags in header and stretcher fashion (i.e.) alternately length-wise and cross-wise,
to achieve interlocking between them and lessening the danger of toppling over, the
arrangement of two stacks with a height of seven bags and ten bags respectively.
For extra safety during rainy season, the stacks of cement bags should be enclosed
completely in polythene sheets (atleast 700 gauge thick) or similar material if it is anticipated
that cement would not be required for a prolonged period. This can be achieved by making a
large loose sack of the polythene sheet and arranging cement bags within it with flaps of the

52 | P a g e
sheet closing on the top of the pile. Care should be taken to ensure that the polythene sheet is
not damaged any time while in use.

TEMPORARY STORAGE AT SITE

Sometimes cement requirement of a day or two may have to be stored at site in the open. In
such cases cement bags should be laid on a dry platform made of wooden planks resting over
brick-masonry concrete, dry sand agregates raised about 15 cms above the ground level.
The stack must be kept fully covered with tarpaulin or polythene sheet and protected against
atmospheric moisture. The covering sheets must overlap each other properly. Temporary
storage on open storage should not be adopted in wet weather.

PROPER METHOD FOR REMOVAL OF CEMENT BAGS

When removing bags from storage, cement bags should be removed from upto two or three
tiers on the backside rather than only from one tier on the front as shown in the figure. If the
rows are thus stepped back, there is less chance of over-turning of bags.

Stepping of Tiers while Removing Cement Bags

When removing bags for use, apply the “First in, First out” (FIFO) principle i.e. take out the
oldest cement first. Each consignment of cement should be stacked separately in the godown
so as to permit easy access for inspection and to facilitate removal in a proper sequence. It
would be desirable to pin a play card on each pile of cement indicating the date of its arrival
in the Godown.

STORAGE CAPACITY OF A CEMENT GODOWN

While working out the inside dimensions of a cement godown for storage of specified
quantity of cement filled bags, the following dimensions may be considered.
Length of Cement bags :70 cm (average)
Width: :35 cm (average)
Thickness :14 cm (average)
Clearance and passages :60 cm (average)

EFFECT OF STORAGE ON STRENGTH OF CEMENT

The cement when stored for longer period of time loses its strength characteristics. The
strength of cement when used after one year of its production loses its strength by about 40-

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50% on application as compared to that of freshly produced cement. The loss of strength
characteristic of cement at different interval of times is as given below in the table.

Age of cement % Reduction in its strength

3Months 20-30
6Months 30-40
12 Months 40-50

TIPS FOR PROPER STORAGE OF CEMENT

• Do not store in a building where walls, roof and floor are not completely weather
proof.
• Do not store in a new warehouse until the interior is thoroughly dried out.
• Do not make contact with a badly fitted windows and doors and see that they are kept
closed.
• Do not stack against the wall. Always pile on the floor on wooden planks.
• Do not forget to pile bags together.
• Do not pile more than 15 bags high and arrange the bags in header and stretcher
fashion.
• Do not take cement from one tier. Step back to three or four tiers.
• Do not keep dead storage.
• Do not keep bags on the grounds for temporary storage at work site. Pile on raised
dry platform and cover with tarpaulin or Polythene sheets.

INVENTORY OF DIESEL AS ON 22/04/10

OPENING BALANCE-7390 LTRS

LOCATION- BROWSER

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ISSUED-2708 LTRS
TOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1. Diesel is kept in an container in ESSAR steel.

2. Then it is transported through a truck.
3. It moves to different areas inside the project site and deliver fuel to the
vehicles.
4. It takes the MIN while refuelling the vehicle is done.
5. By this process fuel is efficiently supplied to different department who need it.

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PROBLEMS:-
1. NO PERMANENT PLACE FOR STACKING OF GOODS
2. ITS NOT ESAY TO PICK UP ITEMS
3. MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT AND
MOISTURE, RESULTING IN RUSTING.
4. REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO ANOTHER
CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM.
5. REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF
TIME, LOSS OF MONEY, LOSS OF MAN HOUR, AND OPORTUNITY COST IS
ALSO INVOLVED.
6. NO SHED FOR STACKING OF MATERIALS.
7. MANY OF THE WOODEN BOXES ARE BROKEN AND THE ELECTRICAL
MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE.
8. AS THE MACHINES ARE PACKED IN WOODEN BOX, WE NEVER KNOW THAT
WHETHER THEY ARE IN WORKING CONDITION OR NOT.WE ALSO HAVE TO
VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY
ARE NOT PURSUING ANY MERCHANDISE DAMAGE.
9. THE CONTRACTERS PICK UP ITEM WITHOUT MIN, WHICH CAUSES
PROBLEM WHILE RECONCILIATION.
10.CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD.

SUGGESTIONS:-
1. ACQUIRING OF SPACE FOR STACKING OF MATERIALS.
2. THERE SHOULD BE SPECIFIC PLACE FOR STACKING DIFFERENT ITEMS,
EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS, ANOTHER FOR
STEEL, ANOTHER FOR AGGREGATE.
3. REVIEW OF MATERIAL REQUIREMENT PLANNING.
4. WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE PROJECTED TIME
PERIOD.
5. FIXED POSITION LAYOUT SHOULD BE PREPARED.

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 6. A BIGGER WARE HOUSE NEEDED FOR STACKING.
7. ADDITIONAL EMPLOYEES SHOULD BE RECRUITED.

STORES CREDIT TO MANAGEMENT:-

• Complete inventory visibility the most Himalayan task for the
management.
• Judicious use of the inventory.
• FIFO model used.
• It’s a cyclone prone area still then stores department is efficient
in material management.
• Packing and stacking of material is done periodically.
• Reallocation plan is always happening.
• 24 hr service to facilitate uninterrupted work to drive optimal
internal customer satisfaction.
• Prevention of revenue leakage in term of astringent source of
revenue.
• Satisfying external financial audit
• Bring in transparent material management practice
• Helps in knowing obsolete items.
• Helps in procurement, demand forecasting.
• Curving practise of inferior suppliers
• Claim management.
• Reconciliation with vendors and suppliers.
• Goods receipt note (GRN) preparation against the actual receipt.

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REFERENCES:-
WEBSITE- WWW.ESSAR.COM

BOOKS –

• OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY.

• Manual of instructions for purchase and maintenance of stores of NCSM.

.
• Price lists and vocabulary of stationery stores and forms issued by the
Department of Stationery and Printing, Govt. of India.
• Books on materials management, Inventory Control by famous authors
including publications of National Productivity Council, New Delhi.

• Introduction to Materials Management

by J. R. Tony Arnold, Lloyd M. Clive, Stephen N. Chapman, Ph.D.

Material Flow Management: Improving Cost Efficiency and Environmental

Performance
by Bernd Wagner (Editor), Stefan Enzler (Editor)

Applied Materials Management

by S. Chatterjee

58 | P a g e
Excellence In Warehouse Management: Minimizing Costs And Maximizing
Value
by Stuart Emmett

59 | P a g e