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ORGANIZATION STUDY OF

STEEL & INDUSTRIAL FORGINGS LTD.


A report submitted in Partial fulfilment of the requirements

For the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION


Of the Mahatma Gandhi University

Submitted by

GIREESH P

Under the guidance of

Prof.Baiju.K.Samuel

DC School Of Management and Technology


Pullikkanam, Vagamon, Idukki 685503
Tel: 04869-2483322, 248323

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DECLARATION

I hereby declare that the organization of STEEL & INDUSTRIAL FORGINGS LTD. (SIFL)
is submitted to Mahatma Gandhi University is a record of the original work done by me and no part of it
has been submitted earlier for any Degree, Post-Graduation or similar of any other university or institution.

Place: Pullikkanam GIREESH P


Date:

2
ACKNOLWLEDGEMENT

I would like to express my heartfelt gratitude to Dr.Ramabharatha Varma, Group Director, DCSMAT
Vagamon and Dr.Shaji.K.Thomas, Principal, DCSMAT, Vagamon for permitting me to undergo this
internship training at STEEL & INDUSTRIAL FORGINGS LTD. (SIFL), ATTHANI

I am extremely thankful to Prof.Baiju.k.Samuel who give me guidance and suggestions for the preparation
of this organizational study report. I extend my thanks to all faculty member of Department Of
Management Studies, DCSMAT for their help and encouragement.

My sincere thanks to STEEL & INDUSTRIAL FORGINGS LTD. (SIFL), HR Manager, for having
granted me the permission to do the organization study and also thanks to Mr.Jayakrishnan, for the help
and support extended to me as organizational guide.

Finally I would like to thank all my relatives and friends who have helped in completing this organization
study report successfully.

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ORGANIZATION STUDY REPORT ON
STEEL & INDUSTRIAL FORGINGS LTD. (SIFL)

ABSTRACT
The development of all manufacturing and consumer goods industries depend upon the extent
of development of iron and steel industries. This study will be a significant endeavour in describing
the functions of Steel& Industrial Forgings Limited. The project highlights the study on various
departments and the functions undertaken in the organization. It depicts the way in which the overall
functions are performed and managed by the employees of the organization view point, method and
levels of analysis.

The aim is to provide possible guidelines and suggestions for improving the productivity
managerial efficiency of the steel complex limited. The study is useful in assessing the quality and the
performance of the company. It is also basically aimed at the exploration of various departments
undertaken by the each department of SIFL, by providing a better knowledge at the functional level
departments such as works, materials, finance and personnel etc. Apart from that interaction and
interrelationships between different departments are also identified.

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INDEX

SERIAL NO. DESCRIPTION PAGE NO.

LIST OF TABLES LIST OF FIGURES


ABSTRACT
1. INTRODUCTION 1

1.1 Introduction about Organization 1

1.2 Company Profile 1


1.3 History of the Company 4

1.4 Vision, Mission and Objectives 5

1.5 Achievements 6
2. INDUSTRY PROFILE 8
3. FUNCTIONAL DEPARTMENTS 19

3.1 Organization Chart of SIFL 20

3.2 Organization Structure of SIFL 21

3.3 Department Profile 23

3.3.1 Production Department 23

3.3.2 Quality Control Department 31

3.3.3 Maintenance Department 34

3.3.4 Materials Department 37

3.3.5 Store and Purchase Department 40

3.3.6 Marketing Department 44

3.3.7 Finance Department 53

3.3.8 Human Resource Department 62


4. FINANCIAL ANALYSIS 71

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4.1 Balance Sheet 71

4.2 Profit and Loss Account 73

4.3 Ratio Analysis 74

4.3.1 Current Ratio 75

4.3.2 Quick Ratio 76


5. SWOT ANALYSIS 78
5.1 Strengths 78
5.2 Weaknesses 78
5.3 Opportunities 79
5.4 Threats 79
6. EVALUATIONS AND SUGGESTIONS 80
6.1 Evaluations 80
6.2 Suggestions 81
7. LEARNING EXPERIENCE 83 8
CONCLUSION 84
REFERENCES 85

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LIST OF TABLES

TABLE NO. DESCRIPTION PAGE NO.

2.1 World Steel and Crude Steel Production 12


3.1 Sales Turnover 47
3.2 Product of SIFL 51
3.3 List of Major Customers and Products 52
3.4 Performance 59
3.5 Financial Results 60
4.1 Current Ratio 75
4.2 Quick Ratio 76

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LIST OF FIGURES

FIGURE NO. DESCRIPTION PAGE NO.

3.1 Organization Chart of SIFL 20


3.2 Organogram of Production Department 24
3.3 Production Process 26
3.4 Open die forging 28
3.5 Organogram of Quality Control Department 31
3.6 Organogram of Maintenance Department 34
3.7 Organogram of Materials Department 37
3.8 Organogram of Store & Purchase Department 40
3.9 Major Raw Materials Suppliers 43
3.10 Organogram of Marketing Department 44
3.11 Sales Turnover 48
3.12 Organogram of Finance Department 53
3.13 Organogram of HR Department 62
4.1 Current Ratio 75
4.2 Quick Ratio 76

CHAPTER 1

8
INTRODUCTION

1.1 INTRODUCTION ABOUT THE ORGANIZATION


Steel & Industrial Forgings Limited (SIFL) is an ISO 9001:2008 certified, Public Sector
Undertaking fully owned by Government of Kerala. Incorporated in 1983 and Started commercial
production in 1986. With a realistic production capacity is 5000 MT/annum of closed die forgings,
SIFL specializes in the medium and heavy range of forgings of Alloy steel, Super alloys,
Aluminium and Titanium.

Untiring efforts of two decades has saddled SIFL firmly in the Forging Industry of India
and abroad with best ratings for its products and services. Forgings with exquisite designs and
shapes, flawless forms and contours, broad bands and spectra of metals like alloy Titanium and
Aluminium, all in wide range of weights and unmatched quality have made SIFL the most sought
after forging company in the country for critical components.

1.2 COMPANY PROFILE


Steel & Industrial Forgings Limited (SIFL) is an ISO 9001:2008 certified, Public Sector
Undertaking fully owned by Government of Kerala. Incorporated in 1983 and started commercial
production in 1986, SIFL rapidly forged ahead to become a name to reckon with. They are masters
in Titanium and Special alloy forgings.

Untiring efforts of two decades has saddled SIFL firmly in the Forging Industry of India
and abroad with best ratings for its products and services. Forgings with exquisite designs and
shapes, flawless forms and contours, broad bands and spectra of metals like ALLOY STEEL,
SUPER ALLOYS, ALUMINIUM and TITANIUM. All in wide range of weights and unmatched
quality have made SIFL the most sought after forging company in the country for critical
components.

SIFL's diverse product mix caters to a wide range of sectors. These include complex and
high precision Aerospace forgings, Specialized Forgings for Defense, Heavy Forgings for Commercial
vehicles, Railways and other components for automobiles etc.
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QUALITY STANDARDS

An ISO 9001:2008 certified organization, their strength and prime aim is strict adherence
to quality standards. At SIFL, they believe that their success depends entirely on delivering the
quality customer demands.

Their policy is to always attain and wherever possible exceed the standards expected by the
valued customers. This is achieved by continuous improvement programme in process discipline,
manufacturing methods and Quality Systems. Their success is in regular interactions with National
Laboratories, premier forging institutes and of course, long term association with their prestigious
customers.

SIFL cater to a wide range of Industries in Defense, Automobile, Heavy engineering, Aero
Space, Railways, Earthmoving Equipments, Agriculture etc.

They draw strength from their team of experienced professionals and workforce committed
to quality and timely delivery. The support from prestigious public and private sector together with
guidance from Government of Kerala makes them one among the best performing State Public
Sector Units in Kerala.

SIFL continued with landmark development, during the last quarter also. The company has
been recommended for AS9100 certification. The remarkable products developed includes seven
items for Arjun Mark-II, main battle tank being developed by CVRDE for INDIAN ARMY. This
includes Integral axle arms which are indigenized for the first time in the country and are of very
complex in design.

Another technological feat which was successfully completed is the development of stainless
steel valve body (S410) for BHEL, Trichy. This is the heaviest forging done by SIFL so far and weighs
550KG/piece.

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The company has became a partner in the prestigious Brahmos missile development
program by obtaining an order from M/s Brahmos Aerospace Ltd, Hyderabad. This involves
indigenization of forgings in Titanium, Aluminium and Stainless Steel Alloys.

The company has to look beyond 2012 and set its sights higher, to realize its vision of
becoming A globally well known enterprise making significant contribution to the wealth and
welfare of the Nation with its mission of achieving Rs. 100crore in 2012-2013, Rs. 300crore by
2015 and Rs 500 Crores by the year 2020.

CLIENTELE

The company caters mainly to the needs of Automobile, Heavy Engineering, Defence,
Railways, Oil and Aerospace sectors. Their major customers are giants of Indian Industries from
Indian Railways, BEML, BHEL, HAL, ISRO, Ordnance factories and other Defence establishments
of the Public Sector, L&T Komatsu, Caterpillar, Hindustan Motors, Elgi Equipments, Ashok
Leyland etc. from the Private Sector. The company also exports forgings to the Middle East,
Indonesia and Korea. Their competence and willingness to take up forgings in special alloys and
materials of unique chemistry has stood them in good stead for assuring a niche market in the above
weight range for a variety of complex forgings. SIFL have so far developed more than 700 different
forgings for various applications.

SIFL is now in the threshold of exploring new avenues to widen scope and extent of their
operations and are poised for a quantum leap with a vision stretching to the year 2020.

SUPPORTING UNITS

SIFL has set up a complete Machining unit in Shornur, to support its post forge
operations. With this new machining facility SIFL is fully equipped with post forging facilities.
SIFL has also developed and trained various units in and around to do machining jobs suiting to
our quality standards. These units, therefore, form an effective backup for SIFL, in meeting the
entire range of forging requirements.

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1.3 HISTORY

The story of the State-owned Steel and Industrial Forgings Limited (SIFL) at Athani in Thrissur
district is one of a dramatic turnaround. The sick unit which was referred to the Board for Industrial
and Financial Reconstruction (BIFR) in the mid-1990s is now a profit-making manufacturer of
high-end steel and industrial forgings.

SIFL, a subsidiary of Steel Industries Limited Kerala (SILK), which had an accumulated loss of
about Rs.15 crores in 1993-94 has been making profit almost consistently since 1995 (except in
2000-01). In 2004, the company made a profit of Rs.1.3 crores. By then it had made an accumulated
profit of Rs.25 lakhs after making up for all the accumulated losses.

According to the officials, SIFL had achieved the turnaround without much additional investments
or acquisition of machineries. The Government made a contribution of Rs.6 crores to Rs.7 crores
for arriving at a one-time settlement with financial institutions under a BIFR revival package. The
banks were advised to reduce the interest rates on loans advanced to SIFL. Interestingly, some other
public sector companies in the forging sector were also accorded similar packages around the same
time. But not many could make a similar comeback as SIFL did.

Their main strength is their innovative capacity and the dedication of workers. They could develop
sophisticated and high-quality products needed by sectors such as the aviation and the defence.
Today SIFL makes complex and high precision forgings for establishments such as the Indian
Space Research Organisation, Railways, Bharat Heavy Electricals Limited and Bharat Earth
Movers, besides the defence and civil aviation units.

Their decision to concentrate on high-value forgings for the sophisticated industries helped them
achieve the turnaround. An increase in demand for forgings and a hike in their prices also
contributed significantly. SIFL now exports products directly to countries such as Indonesia and
Qatar and indirectly to the U.S. and the U.K.

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

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1.4 VISION, MISSION & OBJECTIVES
VISION

To be world class manufacturers of small and medium class sea going vessels, barges etc.
To be a high quality supplier of general engineering goods.
To be a cost effective source of structural steel products.

MISSION

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

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

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

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

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

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

CORPORATE OBJECTIVES OF SIFL

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

To develop steel based industries and services in Kerala.


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

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

To implement rural technology plans through its modern facilities for casting, fabrication,
machining and its divisions of power engineering agency exports and trading.
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To establish, maintain, conduct and otherwise subsides research laboratories, power units and
experimental workshop for scientific and technical research experiments.

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

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

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

1.5 ACHIEVEMENTS

Certification from DGQA, DGAQA, Ministry of Defence, Govt. of India.

Assessed and approved by NQA Quality Systems Registrar against the quality assurance system
standards ISO-9001:2008 for manufacture and supply of forgings.

Facilities certified by premier inspection agencies viz.: IBR, Indian Registry of shipping,
Engineers India Ltd.

Best vendor award from BEML.

Evaluated by the Central Boilers Board and has been granted recognition as a "Well Known
Forge".

RDSO, ISRO, Certifications/Approval.

SIATI 2003 Award for excellence in Aerospace indigenization.

Kerala's Best PSU Award Winner - 2006 - 2007, 2007- 2008.

Special Award for notable achievement in Enterprise Performance,


2008-2009, 2009-2010 &2010-2011

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CHAPTER 2 INDUSTRY PROFILE

Steel means generally hard, strong, durable, malleable alloy of iron and carbon, usually
containing between 0.2 and 1.5 percent carbon, often with other constituents such as manganese,
chromium, nickel, molybdenum, copper, tungsten, cobalt, or silicon, depending on the desired alloy
properties, and widely used as a structural material. The development of all manufacturing and
consumer goods industries depend upon the extent of development of iron and steel industries. The
most important among the industries directly dependent on iron and steel industries are engineering,
wagon building and other transport equipment industries. The development of agriculture is
dependent on steel both directly and indirectly. Steel production has a multiplier effect on the
development of all other industries. So it has been rightly called Mother Industry.

WORLD SCENARIO

The earliest known production of steel is a piece of ironware excavated from an


archaeological site in Anatolia (Kaman-Kalehoyuk) and is about 4,000 years old. Other ancient
steel comes from East Africa, dating back to 1400 BC. In the 4th century BC steel weapons like the
Falcate were produced in the Iberian Peninsula, while Noric steel was used by the Roman military.
The Chinese of the Warring States (403221 BC) had quench-hardened steel while Chinese of the
Han Dynasty (202 BC 220 AD) created steel by melting together wrought iron with cast iron,
gaining an ultimate product of a carbon-intermediate steel by the 1st century AD. The Haya people
of East Africa discovered a type of high-heat blast furnace which allowed them to forge carbon
steel at 1,802 C (3,276 F) nearly 2,000 years ago. This ability was not duplicated until centuries
later in Europe during the Industrial Revolution.

Evidence of the earliest production of high carbon steel in the Indian Subcontinent was found
in Samanalawewa area in Sri Lanka. Wootz steel was produced in India by about 300 BC.

Along with their original methods of forging steel; the Chinese had also adopted the production
methods of creating Wootz steel, an idea imported into China from India by the 5th century AD. In

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Sri Lanka, this early steel-making method employed the unique use of a wind furnace, blown by
the monsoon winds, that was capable of producing high-carbon steel. Also known as Damascus
steel, wootz is famous for its durability and ability to hold an edge. It was originally created from
a number of different materials including various trace elements. It was essentially a complicated
alloy with iron as its main component. Recent studies have suggested that carbon nano-tubes were
included in its structure, which might explain some of its legendary qualities, though given the
technology available at that time, they were produced by chance rather than by design. Natural
wind was used where the soil containing iron was heated up with the use of wood. The ancient
Sinhalese managed to extract a ton of steel for every 2 tons of soil a remarkable feat at the time.
One such furnace was found in Samanalawewa and archaeologists were able to produce steel as the
ancients did long ago.

Crucible steel, formed by slowly heating and cooling pure iron and carbon (typically in
the form of charcoal) in a crucible, was produced in Merv by the 9th to 10th century AD. In the
11th century, there is evidence of the production of steel in Song China using two techniques: a
"berganesque" method that produced inferior, inhomogeneous steel and a precursor to the modern
Bessemer process that utilized partial DE carbonization via repeated forging under a cold blast.

Since the 17th century the first step in European steel production has been the smelting of

iron ore into pig iron in a blast furnace. Originally using charcoal, modern methods use coke, which

has proven to be a great deal cheaper.

The production of steel by the cementation process was described in a treatise published in
Prague in 1574 and was in use in Nuremberg from 1601. A similar process for case hardening
armour and files was described in a book published in Naples in 1589. The process was introduced
to England in about 1614. It was produced by Sir Basil Brooke at Coalbrookdale during the 1610s.
The raw material for this was bars of wrought iron. During the 17th century it was realized that the
best steel came from ore grounds iron from a region of Sweden, north of Stockholm. This was still
the usual raw material in the 19th century, almost as long as the process was used.

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Crucible steel is steel that has been melted in a crucible rather than being forged, with the
result that it is more homogeneous. Most previous furnaces could not reach high enough
temperatures to melt the steel. The early modern crucible steel industry resulted from the invention
of Benjamin Huntsman in the 1740s. Blister steel (made as above) was melted in a crucible or in a
furnace, and cast (usually) into ingots.

The modern era in steelmaking began with the introduction of Henry Bessemer's
Bessemer process in 1858. His raw material was pig iron. This enabled steel to be produced in large
quantities cheaply, thus mild steel is now used for most purposes for which wrought iron was
formerly used. The Gilchrist-Thomas process (or basic Bessemer process) was an improvement to
the Bessemer process, lining the converter with a basic material to remove phosphorus. Another
improvement in steelmaking was the Siemens-Martin process, which complemented the Bessemer
process.

The Asian countries have their respective dominance in the production of the steel all over the
world. India being one among the fastest growing economies of the world has been considered as
one of the potential global steel hub internationally. Over the years, particularly after the adoption
of the liberalization policies all over the world, the World steel industry is growing very fast.

Steel Industry is a booming industry in the whole world. The increasing demand for it was
mainly generated by the development projects that have been going on along the world, especially
the infrastructural works and real estate projects that has been on the boom around the developing
countries. Steel Industry was till recently dominated by the United States of America but this
scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree. In
the last one year, the world has seen two big M&A deals to take place:-

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

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Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth largest steel company,
Corus, with the highest ever stock price.

It has been observed that Steel Industry has grown tremendously in the last one and a half decade
with a strong financial condition. The increasing needs of steel by the developing countries for its
infrastructural projects have pushed the companies in this industry near their operative capacity.

The most significant growth that can be seen in the Steel Industry has been observed during the
period 1960 to 1974 when the consumption of steel around the whole world doubled. Between these
years, the rate at which the Steel Industry grew has been recorded to be 5.5 %. This roaring market
saw a phase of deceleration from the year 1975 which continued till 1982. After this period, the
continuous fall slowed down and again started its upward movement from the early 1990s.

Steel Industry is becoming more and more competitive with every passing day. During the
period 1960s to late 1980s, the steel market used to be dominated by OECD (Organization for
Economic Cooperation and Development) countries. But with the fast emergence of developing
countries like China, India and South Korea in this sector has led to slipping market share of OECD
countries. The balance of trade line is also tilting towards these countries.

The main demand creators for Steel Industry are Automobile industry, Construction Industry,
Infrastructure Industry, Oil and Gas Industry, and Container Industry.

New innovations are also taking place in Steel Industry for cost minimization and at the
same time production maximization. Some of the cutting edge technologies that are being
implemented in this industry are thin-slab casting, making of steel through the use of electric
furnace, vacuum degassing, etc.

The Steel Industry has enough potential to grow at a much accelerated pace in the coming
future due to the continuity of the developmental projects around the world. This industry is at
present working near its productive capacity which needs to be increased with increasing demand.

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World steel industry and Crude Steel Production

The following table gives a clear picture upon the major crude steel producers in the world.

Country Crude Steel Production (mtpa)

China 272.5

Japan 112.7

United State 98.9

Russia 65.6

South Korea 47.5

Germany 46.4

Ukraine 38.7

Brazil 32.9

India 32.6

Italy 28.4

Table No.: 2.1


In the year 2012, the global steel production has made a record level by crossing the 1000
million tonnes. Among the top producers in the steel production, China ranked 1 in the world.

Production of steel in the 25 European Union countries was at 16.3 mmt in January 2011.
Production in Italy was increased by 11.5 percent in comparison to the same month in 2004. Italy
produced 2.5 mmt of crude steel in January 2011. Austria produced 646,000 metric tonnes.

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According to rating made by the "World Steel Dynamics", Indian HR Products are categorized
in the Tier II category quality of products. Both EU and Japan have ranked the top.
USA and South Korea comes as like India.

World Steel Industries

World Steel Industries are undergoing a booming phase with all sorts of Mergers and
Acquisitions taking place all around the world. The key market players are now subjected to fierce
competition from the new companies from developing economies. From the early 1990s, China and
South Korea have emerged significantly in the World Steel Industries. In the very recent years India
is also on a winning streak in terms of M&A. First of all, it was NRI Laxmi Mittal's, Mittal Steel
(listed in Netherlands) to acquire Arcelor, many times greater than it. Then came the Indian big
shot, TATA Steel to acquire Corus, the fifth largest steel company in terms of production capacity.
Thus, it is being observed that World Steel Industries is going at a very competitive pace and time
where the OECD (Organization for Economic Cooperation and Development) countries don't have
their monopoly on the steel market.

The main demand for World Steel Industries comes from the construction industry. With
the developmental works on a rise in both the developed and developing countries, the infrastructure
industry along with real estate boom, the demand for steel is rising like anything. For example,
more and more real estate companies are using steel frames for building houses. In USA, it had
been observed in the early 1990s that the use of steel for house building has increased by nearly
five times in just one year. The automobile industry is also coming up fast as a potential demander
for World Steel Industries because from a research it has been found out that the use of steel in the
vehicles would cause the weight of the same to lessen by almost twenty five percent.

The other industries who demand steel industries involve appliance industries, Oil and Gas
industries and container industries.

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On the technological front, the World Steel Industries are making rapid improvement with
the implementation of cutting-edge technologies like steel making through the utilization of electric
furnace, continuous annealing, casting of thin slabs, and vacuum degassing.

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INDIAN SCENARIO

The history of the modern iron and steel industry in India began in 1870 when the Bengal
Iron Works Company setup its plants at Kulti in West Bengal. However the first effort al large scale
production got under way when the Tata Iron Steel Company (TISCO) was setup at Jamshedpur in
1907. This was followed by the establishment of Indian Iron and Steel Company (IISCO) at Burnpur
in 1919. Various five year plans saw the establishments of major public sector steel plants in various
parts of India, which worked as the engines of development and economic growth of India. The first
unit in public sector now known as Visvesvaraya Iron and Steel Limited (VISL) started functioning
at Bhadravati in 1923. Two more integrated public sector steel plants were Setup at Bokaro (Bihar)
and Visakhapatnam (Andhra Pradesh) subsequently. Alloy steel plant at Durgapur and stainless steel
plant at Salem were set up later.

The Steel Authority of India Limited (SAIL), a government company, was created in 1974 and
was made responsible for the development of the steel industry and also for the major inputs of the
industry. Steel Authority of India Limited (SAIL) is responsible for the management of Hindustan
Steel Limited, Bokaro Steel Limited, Salem Steel Limited Hindustan Steelworks Construction
Limited, Bharat Coking Coal Limited, and National Mineral Development Corporation Limited.
Vishakhapatnam Steel Plant (VSP) is the first shore-based, modern steel plant in the country. The
plant has been awarded the ISO: 9002 for steel melt (SMS) and downstream units covering all the
products making it the first integrated plant to achieve this honor. Sponge Iron India Limited (SIIL)
is a joint venture of the Government of India and the Government of Andhra Pradesh.

The Kudremukh Iron Ore Company Limited (KIOCL) a Government of India undertaking
and one of the countries largest 100 percent EOUs, was established in April 1976 to meet the long
term requirements of Iran. This project was to be financed in full by Iran. However, as Iran stopped
further loan disbursements, the project was completed as per schedule with the funds provided by
Government of India.

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Metallurgical and Engineering Consultants (India) Limited (MECON), the first consultancy
and engineering organization to be accredited with ISO:9001, as developed considerable expertise
not only in consultancy services like design, detailed engineering and project management, but also
in design and supply of equipment for the ferrous, non ferrous, oil and gas, petro-chemical and
other general industries. MECON has diversified its services into power, environmental
engineering, ocean engineering, road and highways, petro chemicals, gas pipelines, information
technology, defense, projects etc.

Growth & development of the industry

The rapid development of steel capacity is indeed a logical corollary of any programs of
rapid industrialization for developing country. Steel is used as a basic material in the manufacture
of metal products, electrical machinery, transport equipment, textile and other machinery. The India
steel industry is experiencing a slow but steady growth. The steel industry in India has huge scopes
in the future with massive scale of infrastructural development happening all across the country.
The India steel industry caters to many other industrial sectors.

Indian steel industry has acquired a significant status and is currently ranked as the 5th
largest steel producer in the world. The supply of finished steel in India has increased significantly
from a level of around 0.86 million tons (Mt) in 1948 to 55.2 Mt in 2008. The availability of cheaper
raw materials and labor has made India one of the cheapest steel producers compared to the
developed countries like USA, Germany and Japan etc.

Consumption of steel has grown by 12.5%during the last three years, well above the 6.9 %
envisaged in the National steel Policy for 2008. The scope for raising the total consumption of steel
is huge, given that per capita steel consumption in India is only 40 kg compared to 150 kg across
the world and 250 kg in China. Finding ways and means to increase per capita steel consumption
is the best solution for the country to meet the global economic challenges.

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Since its independence, India has experienced steady growth in the steel industry, thanks in
part to the successive governments that have supported the industry and pushed for its robust
development.

Further illustrating this plan is the fact that a number of steel plants were established in India,
with technological assistance and investments by foreign countries.

In 1991, a substantial number of economic reforms were introduced by the Indian


government. These reforms boosted the development process of a number of industries - the steel
industry in India in particular - which has subsequently developed quite rapidly. The 1991 reforms
allowed for no licenses to be required for capacity creation, except for some locations. Also, once
Indias steel industry was moved from the listing of the industries that were reserved exclusively for
the public sector, huge foreign investments were made in this industry.

Yet another reform for Indias steel industry came in 1992, when every type of control over
the pricing and distribution system was removed, making the modern Indian Steel Industry
extremely efficient, as well as competitive.

Additionally, a number of other government measures have stimulated the growth of the
steel industry, coming in the form of an unrestricted external trade, low import duties, and an easy
tax structure.

India continually posts phenomenal growth records in steel production. In 1992, India
produced 14.33 million tones of finished carbon steels and 1.59 million tones of pig iron.
Furthermore, the steel production capacity of the country has increased rapidly since 1991 - in 2008,
India produced nearly 46.575 million tones of finished steels and 4.393 million tones of pig iron.
Both primary and secondary producers contributed their share to this phenomenal development,
while these increases have pushed up the demand for finished steel at a very stable rate.

In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the total
amount of domestic steel consumption was 43.925 million tones. With the increased demand in the

24
national market, a huge part of the international market is also served by this industry. Today, India
is in seventh position among all the crude steel producing countries.

25
CHAPTER 3

FUNCTIONAL DEPARTMENTS
Steel and Industrial Forgings Ltd (SIFL) is a public sector undertaking (PSU) fully owned
by Government of Kerala situated in Athani in Thrissur, Kerala state of India. The company was
incorporated in 1983 and started commercial production in 1986. It is an ISO 9001:2008 certified
company. SIFL, a subsidiary of Steel Industries Kerala Limited (SILK) started its commercial
production in 1986. The company was referred to the Board for Industrial and Financial
Reconstruction (BIFR) in the mid-1990s. The main products of SIFL are: Complex and high
precision aerospace forgings, specialized forgings for defence, heavy forgings for commercial
vehicles, Indian Railways and other components for automobiles etc.

SIFL has set up a complete machining unit to meet its post forge operations and to meet its
customer requirements. The machining unit is equipped with modern machineries to meet the
requirements. It was set up within a 6 months record time, as a greenfield project. The main
machineries include Vertical Machining Centre, Radial Drilling Machine, CNC Horizontal Lathe,
Magnetic particle testing machine, Shot blasting machine etc. There are plans to expand the
capacity and utilization of this unity with the procurement of Vertical Turning centre and CNC 3
Axes gear hobbing machine.

26
3.1 ORGANIZATION CHART OF STEEL & INDUSTRIAL
FORGINGS LIMITED

27
ABBREVIATIONS
MMD : Materials Management Department
A & HRD : Administration & Human Resource Development
MNT : Maintenance
QA : Quality Assurance
IT : Information Technology
PPC : Production Planning and Control
SC : Spares & Consumables
RM : Raw Materials
F&D : Finishing & Dispatch

AM : Asst. Manager
3.2 ORGANIZATION STRUCTURE OF SIFL

Organization structure is a basic framework within which managers decision making behavior take
place. Structure basically deals with relationships. All science try to discover the structural relationship
in the phenomenon in which they are interested in management, it is needed to understand how
organization are structured and how these structures are crested and maintained.

In a simple term, structure is a pattern in which various parts or components are interrelated or
interconnected. The organization structure is the pattern of relationships among various activities and
position. Since these positions are held by various persons, the structure reflects the relationship among
people in the organization. The organization structure can be viewed as an established pattern of
relationship among the components of the organization. In a large and complex organization, structure is
set forth initially by the design of the major components or subsystems and then by establishing
relationship among these sub systems. It is the patterning of these relationships with some degree of
permanency, referred company as organization structure.

Design of basic structure involves such issues as how the work of the organization will be divided
and assigned among various positions, groups, departments and how the coordination is necessary to
accomplish total organizational objectives.

The operations and successes of SIFL are taken care of by its capable management and Board of Directors.
The senior management ensures that collective strengths are effectively leveraged towards attaining the
Companys vision.
28
BOARD OF DIRECTORS
CDR.(Retd.) K.Shamsuddin : Chairman
CDR.(Retd.)P.Suresh : Managing Director
Sri.S.Babu Abraham : Director
Shri.M.Radhakrishnan : Director

Executives 63 no.s
Workmen (Permanent ) 252 no.s
Contract workers/Temporary 185 no.s

Total employees : 500 no.s


Bankers & Auditors

Banker: State Bank of Travancore, Main Branch, Thrissur.

Auditor: M/s. Abraham & Jose, Chartered Accountants, Thrissur.

29
3.3 DEPARTMENT PROFILE

3.3.1 PRODUCTION DEPARTMENT


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

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

30
ORGANOGRAM OF PRODUCTION DEPARTMENT
Manager

Assistant
Manager

FORGE SHOP MTP (MATERIALS


PREPARATION)

Engineer Skilled
5

Asst. Engineer

Skilled
69

Unskilled
15
Fig. No.: 3.2

The Production department consists of two divisions, the forge shop and the Materials
Preparation division which is headed by a Senior Manager and an Asst. Manager. Based on the
monthly and weekly plans, jobs are allocated and recorded in forge shop. The process owners are
the primary head of production department and a secondary shift in charge. There are 69 skilled
and 15 unskilled labourers.

The Production Manager is responsible for day-to-day production within the forge shop. He
supervises, motivates, and supports the staff daily, applying a team approach and maintaining
open communication. The Production Manager plans, schedules, strategizes, and oversees all
production activities while continually building sales and maintaining profitability. The
Production Manager performs essential functions to ensure overall customer satisfaction and
31
quality service, and establishes and maintains effective communication with employees and
clients. The Production Manager is responsible for the effective and efficient planning and
scheduling of personnel and equipment to reduce bottlenecks and problems.

3.3.1.1 FUNCTIONS

Planning daily production according to annual target.


Monitoring actual production & checking any deviation.
The entire production activities of the company are under this department. SIFL has a
well-established production planning and control system. This section deals with the issue of work
order, materials issue from store, dispatching, loading and scheduling production progress and
material planning. The existing production system in SIFL is a better one as total is concerned.

Procedure For Production Planning and Control

Monthly and weekly plans are communicated to the production head by planning. Based on the
plans, the production head will communicate to the shift in-charge about daily plan. Jobs are then
allocated and recorded in forge shop job and cum shift wise production report.

Set up verification is done before starting the work order and is recorded. After the approval of set
up, bulk production is started. Corrective actions are initiated for process non-conformances.
Analysis of set up NCs is done daily for implementing corrective actions. Shift in-charge monitors
the process and the inspections are carried out by the QA. Route card cum work order is issued and
it is updated by the shift in-charge for the required process and the work order is updated and moved
along with the material till the completion of all process, which is referred for traceability.

If any rejection is found in the process, the same will be updated in the NC register and the route card
and the material is identified with rejection tag for disposition action.

Components are offered to QA for final inspection. After production, die should be cleaned and handed
over to the die shop.

32
3.3.1.2 PRODUCTION PROCESS

Raw materials

Charging scrap

Setting of Dies and Melting Stage Oxidation Reduction


Tools stage Stage

Forging

Finished product Testing Dispatching

Fig. No.: 3.3

Die Design & Development

SIFL's design & engineering capabilities are ably backed by a well equipped Die Shop, set
up along modern lines with Double Spindle Copy Milling Machines, Electrical Die Sinking
Machine, CNC Die Sinking Machine, CNC Turning Centre, Radial Drilling machines, Heavy Duty
Plano miller, Lathes, Tool & cutter grinders, etc. The design and development of the die holds the
key to blemish-free forgings.

SIFL designs both single-impression and multi-impression dies. The design, of course, is
related to the forging drawings. And the decision on the type of die to be used is based on the
specific requirement of each case. The care that goes into the design of each die also goes into the
selection of raw materials and the sequence of operation that follows. To facilitate uninterrupted
operations, SIFL is equipped with standby Power Generators. Forging dies are usually made of
high-alloy or tool steel. Dies must be impact resistant, wear resistant, maintain strength at high
temperatures, and have the ability to withstand cycles of rapid heating and cooling.

33
To keep pace with hi-tech developments, SIFL has equipped itself with CAD, CAM
facilities like DELCAM for three dimensional modeling of Product, Die & Tool design etc. thereby
minimizing the development cycle time. All these qualities have helped SIFL grow quickly into a
premier forging unit, capable of producing forgings with close dimensional tolerances.

Manufacturing of Forgings
Forging is a manufacturing process involving the shaping of metal using localized
compressive forces. Forging is often classified according to the temperature at which it is
performed: "cold", "warm", or "hot" forging. Forged parts can range in weight from less than a
kilogram to 580 metric tons. Forged parts usually require further processing to achieve a finished
part.

Main production machinery of SIFL comprise closed die forging hammers of 10 Ton (16000
ft.lb) and 6Ton (10650 ft.lb) capacity. Open die forgings requirements are met with a 1Ton clear
space hammer.

Other supporting facilities include shot blasting machines, Pneumatic trimming press of
1000Ton and 500Ton capacity, Hydraulic trimming press of 1200Ton capacity, Billet shearing
machines and a number of oil-fired and electric furnaces for soaking as part of forging process.
There is a modern heat treatment plant equipped with number of furnaces both LDO fired and
electrically heated and a charging machine which takes care of loading and unloading of heat
treatment charges.

Drop forging

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

Open-die forging is also known as smith forging. In open-die forging, a hammer strikes and
deforms the workpiece, which is placed on a stationary anvil. Open-die forging gets its name from

34
the fact that the dies (the surfaces that are in contact with the workpiece) do not enclose the
workpiece, allowing it to flow except where contacted by the dies. Therefore the operator needs to
orient and position the workpiece to get the desired shape. The dies are usually flat in shape, but
some have a specially shaped surface for specialized operations. For example, a die may have a
round, concave, or convex surface or be a tool to form holes or be a cut-off tool.

Open-die drop forging

Open-die forging lends itself to short runs and is appropriate for art smithing and custom work.
In some cases, open-die forging may be employed to rough-shape ingots to prepare them for
subsequent operations. Open-die forging may also orient the grain to increase strength in the
required direction.

Cogging is successive deformation of a bar along its length using an open-die drop forge. It
is commonly used to work a piece of raw material to the proper thickness. Once the proper thickness
is achieved the proper width is achieved via edging. Edging is the process of concentrating material
using a concave shaped open die. The process is called edging, because it is usually carried out on
the ends of the workpiece. Fullering is a similar process that thins out sections of the forging using
a convex shaped die. These processes prepare the workpieces for further forging processes.

EDGING FULLERING

Fig. No. 3.4


Impression-die drop forging
Impression-die forging is also called closed-die forging. In impression-die forging, the metal is
placed in a die resembling a mold, which is attached to the anvil. Usually the hammer die is shaped
as well. The hammer is then dropped on the workpiece, causing the metal to flow and fill the die
35
cavities. The hammer is generally in contact with the workpiece on the scale of milliseconds.
Depending on the size and complexity of the part the hammer may be dropped multiple times in
quick succession. Excess metal is squeezed out of the die cavities, forming what is referred to as
flash. The flash cools more rapidly than the rest of the material; this cool metal is stronger than the
metal in the die so it helps prevent more flash from forming. This also forces the metal to completely
fill the die cavity. After forging the flash is removed.

Their annual capacity is around 7500 Metric Tons. They manufacture closed die forgings in
the weight range of 5 kg to 450 kg and open die forgings within 1kg to 75kg net weight per piece
and ring rolling up to 650mm OD. The company has got the capability to manufacture forgings out
of Carbon steels, Alloy steels, Stainless steels, Maraging steels, Aluminium alloys, Titanium alloys
etc.

Forging & Heat Treatment Facilities

The billets for forging are heated in oil fired or electric furnaces, closely controlling the
temperature to reduce the scale formation and overheating so that the metallurgical properties are
ensured in the final product. In addition, in-process inspection is carried out at all stages and 100%
inspection for visual defects after forging. The accepted forgings are duly heat treated to ensure its
mechanical properties. By providing heat treatment services in-house, SIFL is able to maintain
greater control over heat treating process. The facility comprise batch furnaces both oil fired &
electrical, continuous electrical heating furnaces, solution treatment etc. to carry out annealing,
normalizing, hardening, tempering, iso-thermal annealing, solution treatment etc. or other
operations as specified by the customer. Close temperature control and process monitoring with the
help of temperature recorders ensures uniform properties duly supported by evaluation of
metallurgical properties through representative test pieces.

Testing/Inspection Facilities

Surface conditioning is done by shot blasting/grinding and final inspection is carried out
once again to ensure quality requirements. Non-conformities are taken care of by timely corrective

36
and preventive action. Calibration of electrical furnaces of SIFL is done by NABL accredited
laboratories like HAL, STIC, CUSAT etc.

SIFL has set up a system of total quality control consisting of an array of state-of-the-art
speciality equipments where the products go through a series of rigorous tests, the destructive test
including tensile, jominy and impact testing, wet analysis, carbon-sulphur determination, insitu
metallography (where microstructure can be observed without destroying the job) and
nondestructive tests using Spectrometer, Microscope, Magnaflux crack detection, Die Penetrant,
Ultrasonic flaw detection etc. SIFL is now equipped with a new digital ultrasonic flaw detector
which has got a range of 5mm to 5m in steel.

Setting and control of quality standards at all stages right from the receipt of raw material
to the finished product through quality plan makes them deliver superior quality forgings with close
dimensional tolerances and metallurgical properties.

3.3.1.3 MACHINING UNIT

SIFL has set up a complete machining unit to meet its post forge operations and to meet its
customer requirements. The machining unit is equipped with modern machineries to meet the
requirements. It was set up within 6 months record time, as a greenfield project.

The main machineries includes Vertical Machining Center, Radial Drilling Machine, CNC
Horizontal Lathe, Magnetic particle testing machine, Shot blasting machine etc.

3.3.2 QUALITY CONTROL DEPARTMENT


Quality control department has a responsibility to control and maintain the quality of
billets and to grade it according to BIS standards and reporting it to production department. The
department has full-fledged laboratory to do this task. During refining the samples are analyzed.

37
The products of the company are every time subjected to the most stringent and uncompromising
test. Being holder of a good license, company is authorized to issue certificates conforming BIS
specification.

The objectives of the department is, to ensure that good quality forging only reach to customers
and that the product meet customers requirements and to ensure the customers complaint to Nil
on quality.

ORGANOGRAM OF QUALITY CONTROL DEPARTMENT

Manager

Asst. Manager

Engineer

Asst. Engineer

Skilled

Unskilled

Fig. No.: 3.5


The Manager of Quality Assurance is charged with the responsibility for maintaining the
procedures and standards, monitoring its effectiveness and implementing a continuous
improvement program. The Manager of Quality Assurances authority to overview all functions of
the organization and to recommend and/or initiate improvements, is fully supported by the General
Manager. All employees are responsible for upholding and enhancing the quality of

38
Companys performance through knowledge, dedication to their tasks, awareness of the
procedures, standards and regulations that govern their work and appreciation of their role in the
company-wide team.

3.3.2.1 FUNCTIONS

Inspect raw materials available.


Test the quality of scrap.
Checking the quality of billets.
Checking the quality and size of rolled items
Analyze the heat
Control of the elements such as carbon, manganese, silicon, sulphur and phosphorus etc.
are also the functions of this department. The quality reports of the raw materials are sent to the
deputy production manager and all other departments. In shift, chemist will analyze the sample and
its chemical content is reported to the production department, so that they can add or reduce each
component in order to get a high quality product. The shift chemist analyzes final billets samples
and the result will be given to the production department. Each and every billet are thoroughly
checked by shift chemist in order to give code and color according to the quality standards laid
down by BIS. Billet yard supervisor will assist him.

QUALITY OF INPUTS
In fact, SIFL's ISO 9001:2008 quality system covers the whole ground,

Acceptance plan and testing of 100% raw material supplies.

Setting and control of quality standards for forging as per quality plan.

Corrective and preventive actions are implemented promptly for minimizing defects to
a zero level.
Certification of facilities by IBR, EIL, IRS and other inspection agencies.

In-depth testing and research, based on specific customer requirements.

Continuous vendor evaluation.

Strict implementation of established processes.

Calibration and maintenance of testing, measuring and thermal control equipment.

39
Constant and continuous consultation with customers and suppliers on all technical
aspects.

Maintenance of high vendor rating with customers.

40
3.3.3 MAINTENANCE DEPARTMENT
The term maintenance means to keep the equipment in operational condition or repair it
to its operational mode. Main objective of the maintenance is to have increased availability of
production systems, with increased safety and optimized cost. Maintenance management involves
managing the functions of maintenance. The responsibility of maintenance department is to keep
the entire shift always ready for action. For the smooth and effective functioning of company it is
necessary to maintain the system properly. The motto is to minimize the downtime, keep the
machineries in good condition, maximize the utilization of equipments and to achieve required level
of quality.

ORGANOGRAM OF MAINTENANCE DEPARTMENT

Manager

Engineer

Assistant
Engineer

Fabricator Fitter Pump house Driver Cutter Mechanic


Operator helper

Pump house Cutter helper


helper

41
Fig. No.: 3.6

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

Resources: men, spares and tools


Administration: a hierarchy of authority and responsibility for deciding what, when and how
work should be carried out.
Work Planning and Control System: a mechanism for planning and scheduling the work
and feeding back the information that is needed for correctly directing the maintenance
effort towards defined objective.

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

3.3.3.1 FUNCTIONS

Breakdown maintenance

Calibration

Preventive maintenance

Machine Capability Test

Breakdown maintenance

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

Calibration

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


are disposed.
42
Furnaces are calibrated by using calibrated thermocouples. They are maintained at 100C.
Certificate is issued after calculation.

Preventive maintenance

Maintenance of furnaces:
Furnaces are provided with thermocouples after ensuring the validity of thermocouples.
Furnaces are maintained at a temperature of 100C. The performance is checked and they
are handled over for production process. The furnaces are inspected once in 30 days.
Eg: lining failure, coil failure (major breakdown).

Equipments other than furnace:


The 10T and 6T hammer and compressors involves replacement/modification, the necessary
spares are made available. If unavailable, the parts are sketched. Before assembly of new
spares, components are verified with sketches. Records are maintained for 3 years.

3.3.4 MATERIALS DEPARTMENT


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

43
ORGANOGRAM OF MATERIALS DEPARTMENT

MMD

STORES/
PURCHASE

Assistant Assistant Assistant


Manager Manager Stores Manager Sales
Purchase

Staffs Stores Scrap Charge Staffs


Assistant Helpers

Fig. No.: 3.7

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

44
3.3.4.1 FUNCTIONS

Materials Planning & Control

This is the primary function of Materials Management. The market forecast is


converted into production schedules by production planning and control. Materials
management prepares the materials plan to meet the production schedule. The plan is then
implemented and controlled.

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

45
Waste control
Procuring standard material and continuously trying to improve yield is waste reduction
and control function. When a product is processed two types of wastes are generated. One
type of waste is called as standard scrap. Product that is not right first time is scrap and
thereby wastes. Non moving obsolete material is another waste that cripples organization.
The wastes thus generated are transferred to the Steel Complex for further processing.

3.3.5 STORE & PURCHASE DEPARTMENT


Items purchased, are broadly meant for managerial activity, which cross the boundary
of single act of buying. It is a dynamic activity which includes administration, accurate forecasting,
effective planning, developed capacity research and development for selection of materials and
resources from which those may be bought follow up to issue proper delivery and forms to enable
the purchase department to carry out the standard public. This department is concerned with
purchase of each and every article for SIFL.

At SIFL, the raw material required for any forgings are bought only from prime manufacturers
in the country viz. SAIL, VISL, JSW, MUSCO etc. These prime manufacturers have been approved
as vendors based on our evaluation of their capability and quality systems.

All the die blocks are imported from the prime die manufacturers viz. M/s EDELSTAHLWERKE
BUDERUS A.G, Germany.

The furnace oil and High Speed Diesel (HSD) which is required before and after production are
supplied as per the contract with IOC.

The stores department has two sections: for raw material and for general consumables. Each of
this department is responsible to handle the activities of corresponding work.

46
ORGANOGRAM OF STORE & PURCHASE DEPARTMENT

Purchase Manager

Supervisor

Workers

Fig. No. 3.8

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

3.3.5.1 FUNCTIONS

In SIFL the store and purchase department perform the following functions;

Supply the needed materials.

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

Ensure quality of materials.

Issuing and raising the materials

Maintain the stock

Annual stock verifications

Check and maintain the stock of minor items

Stock and consumption return for every month

47
SIFL is equipped with a load from weighing machine and it is under stores department. One
qualified operator is appointed for its operation. The machine is computerized. It has the capacity
up to 40 tones. The components of weighing machine are load cell, displaying screen and computer.
The normal steps for weighing a vehicle are:

Weighing the empty vehicle

Weighing with load

Comparing with bill

The deviations are recorded. Standard deviation will be omitted when scrap is arrived in
containers; it will be weighed from outside since the weighing machine can't occupy the length of
containers. The weighing machine is used for company purpose only and its maintenance is
contracted to outside parties.

Sources of scrap

SIFL purchases minor items from home country and major items are imported from
foreign countries. Advertising regarding the needs of SIFL assist to achieve the procurements
easily. Indigenous materials are got mainly from manufacturers and through dealers.

Import of Scrap

Import of scrap is mainly on the basis of open general license (OGM)

Following is the steps of import:

1. Scrap arriving bulk in containers

2. Arranging customs clearance, loading etc.

3. Arranging supervisions. Containers are opened only after supervision.

4. The details of arrived materials are entered in ledgers.

The major suppliers of the scrap are

Lioyets global trade-Dubai

A- Ahumudi Generator trade in Dubai

48
Middle east metal trading Dubai

Inventories

Raw materials including raw materials in process, semi finished goods, finished goods and stores
and spares are valued and carried at lower of cost or Net Realizable Value. Slow-moving inventory
of raw materials and finished goods are valued at cost or Net Realizable Value, whichever is lower.
Loose tools are carried at cost which is lower than Net Realizable Value.

The above are valued adopting FIFO Cost Formula. In relevant cases the Machinery spares in stock
are devalued below cost to realistic Realizable Values and to zero value in the case of
obsolete/unusable spares.

Major Raw Material Suppliers

1. Steel Authority of India Ltd. (SAIL)

2. Jindal Steel Works(JSW) 3.

Visweswaraya Iron & Steel Ltd. (VISL)

4. Super Forgings & Steel Ltd.

Major Suppliers
2%
7% SAIL

JSW

37% 54% VISL

Super Forgings &


Steel Ltd.

Fig. No.: 3.9

49
3.3.6 MARKETING DEPARTMENT

Marketing management is a business discipline focusing on the practical application of

marketing technique and the management of a firms marketing resources and activities.

More than any other business functions, marketing deals with customers. Creating customers
value and satisfaction are at energy heat of modern marketing thinking and practice.
The simplest definition of marketing is marketing is the delivery of customers satisfaction at a
profit the two field goal of marketing is to attract new customers by promising superior value and
to keep present customers by delivery satisfaction.

Sound marketing is critical to the business of every organization large or small, for profit or
not for profit, domestic or global. The two major aspects of marketing are customer acquisition and
the retention and expansion of relation with existing customers.

ORGANOGRAM OF MARKETING DEPARTMENT


Sr. Manager

Asst. Manager

Engineer

Skilled
Workers

Fig. No.: 3.10

50
The primary and secondary process owners of the Marketing Department are the Senior Manager
and staffs respectively. Their role in the process involves enquiry, customer P O, and customer
dispatch schedule and customer satisfaction survey which are also the process inputs. Their
responsibility is to identify and register potential customers and to ensure the supply of items as per
the required quality, quantity and delivery schedule.
With the help of subordinates, including market research managers and engineers, they estimate the
demand for products and services offered by the firm and its competitors. The responsibility of the
manager is to develop pricing strategy to help firm maximize profits and market share while
ensuring that the customers are satisfied. In collaboration with sales, product development, and
other managers, they monitor trends that indicate the need for new products and services, and they
oversee product development. Marketing managers work with advertising and promotion managers
to promote the firms products and services and to attract potential users.

3.3.6.1 FUNCTIONS
Enquiry / Order Acceptance
Customer Satisfaction Survey
On Time Delivery
Handling Customer Complaints

Enquiry / Order Acceptance


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

51
The CSR database will be maintained by Marketing and updated whenever there is a change
in the customer specific requirement or an addition of new customer and flown down to all
concerned. The warranty applicability for the order will be included in the order acceptance
and only replacement will be done.

On Time Delivery
The information about the availability of finished components is received from stores. Dispatch
details will be informed to Stores.
The invoice number and date will be entered in the customer wise order book. On time delivery
will be monitored through the customer wise order book.

Handling Customer Complaints


Complaints from the customers are registered. 8D format is generated with copy of the
complaint and forwarded to QC by marketing. QC enters the containment action and root
cause in the 8D format and will further discuss with the concerned departments in the next
day production meeting. The completed 8d format is forwarded to marketing dept. from
where they contact the customer.
Complaints are reviewed on a monthly basis with top management.

3.3.6.2 SALES PROCESS


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

Receipt and sale of forging


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

52
production. Sales department prepare a Goods Receipt Note (GRN) against the daily production report.
After the preparation of GRN sales department is responsible for the stock and sales of forgings.

SIFL's critical forgings are supplied to various sectors like Aerospace sector, Defence sector,
Railway sector, Heavy Engineering sector, Earth Moving sector, Agriculture sector, and
Automobile sector.

SIFL is equipped to manufacture high pressure application forgings like Gate/ Valve
Bodies, Choke Bodies etc. in Carbon and Alloy steel material, to meet the requirements of Oil Field
Equipment manufacturers, Thermal Power Stations, Refineries, Petro-Chemical Industries and
Nuclear Plants. The company has made significant contribution in Aerospace/Aeronautical sector
by way of developing complex forgings for various Aero engines. The latest of which involves the
supply for project CHANDRAYAN by ISRO.

3.3.6.3 SALES TURN OVER

Year 2007-08 2008-09 2009-10 2010-2011 2011-2012

Sales Growth in 53 63 102 135 110


Cr.

Table No.: 3.1

Sales Diagrammatic Representation

53
135
140
110
102
120

100
63
80
53
60
40
20

0
2007-08 2008-09 2009-10 2010-2011 2011-2012

Years

Fig No.:3.11

The sales in 2007-2008 were Rs.53cr and 2008-2009 were Rs 63cr and 2009-2010
were Rs.102cr and 2010-2011 were 135cr and 2011-2012 were 110cr the graph shoes increase in
the sales. In this graph, we can understand sale of the coming year will increase and this is because
maintaining good quality and meet the order efficiently and at given time. This is the key secret of
the firm.

3.3.6.4 PRODUCT PROFILE

SIFL's critical forgings are supplied to various sectors like Aerospace sector, Defence
sector, Railway sector, Heavy Engineering sector, Earth Moving sector, Agriculture sector, and
Automobile sector. SIFL is equipped to manufacture high pressure application forgings like Gate/
Valve Bodies, Choke Bodies etc. in Carbon and Alloy steel material, to meet the requirements of

54
Oil Field Equipment manufacturers, Thermal Power Stations, Refineries, Petro-Chemical
Industries and Nuclear Plants.

The company has made significant contribution in Aerospace/ Aeronautical sector by way
of developing complex forgings for various Aero engines, the latest of which involves the supply
for project CHANDRAYAN by ISRO. So far the company has developed about 800 different types
of forgings and the development of new components are continued. Forgings are also being
exported to countries like USA, Indonesia, Malaysia and Middle East.

Quality standards

Certification from DGQA, DGAQA, Ministry of Defence, Govt. of India.


Assessed and approved by NQA Quality Systems Registrar against the quality assurance system
standards ISO-9001:2008 for manufacture and supply of forgings.
Facilities certified by premier inspection agencies viz.: IBR, Indian Registry of shipping,
Engineers India Ltd.
Best vendor award from BEML.
Evaluated by the Central Boilers Board and has been granted recognition as a "Well Known
Forge".
RDSO, ISRO, Certifications/Approval.
SIATI 2003 Award for excellence in Aerospace indigenization.
Kerala's Best PSU Award Winner - 2006 - 2007, 2007- 2008.
Special Award for notable achievement in Enterprise Performance,
2008-2009, 2009-2010 &2010-2011

55
PRODUCTS OF SIFL
Acquisition Device Dome Closure

Impellers Domes, Cylinder Body, Cover

Cone forgings Wheel Lever Main

Hemisphere Titanium gas Bottle Front Cone

Carrier forgings Body forgings

Cross Head Road Wheel Arm

Piston pin Cam shaft gear

Retainer Cylinder Head Draw hooks

Centre pivot pin Forks

Motor housings Valve bodies

Sprocket hubs Crankshafts

Tooths Shafts

Rollers Gears

Connecting Rods Crank Shafts

Pinions Axle arms.

Stub axles. Couplings.

Landing Gear Wheel Hub

Vehicle support blocks Rings & Vanes

Blade Fork Landing Gear

Steel Knuckle forgings Rear axle housings

Titanium Online Fittings (Flanges, Crank Forgings


Elbow, Coupler Union)

56
Connecting rods MB Cap Kit

Crank shaft gear Axle bearing shells

Saddle Centre Pinions

Bearing Cap Blades

Choke bodies Fly wheels

Gears Pinions

Pinions Sliding Block

Two Arm Lever Rack

Crankshafts Gears

Front hubs. Diff cages.

Crankshafts. Crown-wheels

Table No.: 3.2

LIST OF MAJOR CUSTOMERS AND PRODUCTS

SL.NO CUSTOMERS PRODUCTS

AIRCRAFT & SPACE SECTOR

1. HAL, Bangalore Titanium Alloy steel & Nickel


Alloy
Forgings

2. IISU, Trivandrum B51-S Aluminum Alloy Forgings

3. LPSC, Trivandrum Aluminum Forgings

57
4. VSSC, Trivandrum Aluminum Forgings, 15CDV6 Forgings

AUTOMOBILESECTOR

5. Ashok Leyland, Madras Diffcages, Axle Arms, Hubs

6. Mahindra & Mahindra Crank Shafts

7. TELCO. Ltd, Pune Crown Wheel, Stub Axle, Crank Shafts

8. VST Tillers & Tractors Crank Shafts

DEFENCE SECTOR

9. Heavy vehicles Factory, Avadi Flange Front LH & RH

10. Ordinance Factory, Trichy Cold Swaging Blank

11. Vehicle Factory, Jabalpur RAFD Houlings, Steering Knuckles,


Steering Knuckles Carrier

HEAVY ENGINEERING SECTOR

12. BEML, Earth Mover Div. Gears, Hubs, Shafts

13. BEML, Hydraulic & Power Div. Bevel Gears etc.

14. BEML, Rail Coach Div. Guide, Lower, Spring Seats

15. BEML, Truck Din. Hubs, etc.

16. BHEL, Bhopal Gears, Pinions

17. BHEL, Trichy Valve Bodies, Choke Bodies

18. Elgi Equipments, Coimbatore Crank Shafts, Con Rods

19. Hindustan Motors, Tiruvallur Stub Yoke, Sleeve Yoke, Flanges

20. Hindustan Motors, Hosur Fly Wheels, Flanges

58
21. Kirloskar Pneumatic Company, Pune Crank Shafts

22. KSB Pumps, Coimbatore Yoke , Body

23. L & T Komotsu Ltd, Bangalore Various Tooth, Sprocket Hubs, Motor
Housing

RAILWAYS

24. Diesel Component Works, Patiala Connecting Rods, Main Bearing Caps,
Gears

25. Diesel Locomotive Works, Varanasi Connecting Rods, Main Bearing Caps,
Gears, Hubs

26. Southern Railway Main Gearing Caps

Table No.: 3.3

59
3.3.7 FINANCE DEPARTMENT
Management of funds is a critical aspect of financial management.
Management of funds acts as the foremost concern whether it is in a business undertaking
or in an educational institution.

By Financial management we mean efficient use of economic resource,


namely capital funds. Financial management is concerned with the managerial decisions
that result in the acquisition and financing of short term and long credits for the firm.
Here it deals with the situation that requires selection of specific asset, or a combination
of assets and the selection of specific problem of size and growth of an enterprise. Here
the analysis deals with the expected inflows and outflows of funds and their effect on
managerial objectives. Financial Management deals with procurement of funds and theirs
effective utilization in the business. So the analysis simply states two main aspects of
financial management like procurement of fund and effective use of funds to achieve
business objectives.

ORGANOGRAM OF FINANCE DEPARTMENT

Finance Manager

Deputy Manager

Assistant Manager

Accounting Assistant Accounting Assistant


(Cashier) (EDP)

Fig. No.: 3.12

60
Since the department is directly under managing director, the decision making
responsibility falls to him. Besides the fundamental duty of raising of funds and
allocation of funds, profit planning and understanding capital market are the
responsibility of the department. The main responsibilities of the department are the
following:-

All financial activity like collection and payment etc.

Raising of income

Maintain economic stability in the company

Entry of all expenses in accounts book

Maintain all kind of books of accounts

3.3.7.1 FUNCTIONS

Some of the main functions of finance department are:


To manage and account the financial resources of the organization.
Report the financial performance of the company to Management.

Payroll preparation.
Attendance and other allowances details will come from office, directly to finance
department. Finance department will prepare payroll with help of software called PayBiz.
Preparation of Various books of account.
Various books account are prepared and maintained by finance department with the help
of accounting software Tally. Print out of all books of account are taken at a particular
interval and filed. Various books of accounts prepared by SIFL are as follows.
Cash book
Bank book
Sales day book
Purchase day book
Journal Register
Debtors Ledger
Creditors Ledger
General Ledger
Conversion Register

61
Fixed asset register
Banking
Accounting
In the preparation of the annual accounts, the applicable Mandatory Accounting
Standards are followed. The Company maintains adequate Accounting Records in
accordance with the provisions of the Companies Act, 1956.
Budget preparation.
Auditing.
The auditing is conducted according to the auditing standards generally accepted in India.
Those standards require planning and performing the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
Preparation of financial statements & reports.
Finance department prepares Balance sheet and Profit & Loss account. Also does
financial analysis on this in order to help management to take proper decision.
It maintains economic stability without causing any interruptions in the day to day
processing of the company by controlling the inflow and outflow of funds.
Billing and payment
All financial activities like billing, collection and payment is done by finance department.
Cash payment is done up to Rs.20, 000 and above that payment is done through cheque.

3.3.7.2 PROCUREMENT & UTILIZATION OF FUNDS

As fund can be produced from multiple sources so procurement of funds is


considered an important problem of business concern. Funds obtained from different
sources have different characteristics in terms of potential risk, cost and control.

Funds issued by the issue of equity shares are the best from risk point of view for
the company as there is no question of equity capital except when the company is
liquidated.

From the cost point of view, equity capital is the most expensive sources of funds,
as divided expectations of shareholders are normally higher than that of prevailing
interest rates.

62
Financial management constitutes risk, cost and control. The cost of funds should be
at minimum for a proper balancing of risk and control.

In the globalized competitive scenario, mobilization of funds plays a very significant


role. Funds can be raised either through the domestic market or from abroad. Foreign
direct investment (FDI) as well as foreign institutional investors (FII) is two major
sources of funds have to be modified in the light of requirements of foreign investment.

In the company accounting and financing functions are performed by the accounts
manager. Costs records are also maintained by him. The company follows the double
entry system of accounting to maintain the accounts. The accounting and the financing
functions include.

Maintaining the books as per statutory requirement.

Recording the transactions.

Ascertaining profit or loss of the company and knowing the position.

The authorized persons from the group verify all the records and vouchers.
Compulsory audit also take place at the end of the year.

The accounts and books are maintained in a prescribed manner. The company
prepares manufacturing trading profit and loss account and the balance sheet at the end
of every year.

3.3.7.3 ACCOUNTING POLICIES

Fixed Assets are carried at Cost, deducting Cenvat credit wherever available.
Depreciation is provided for on straight line method at rates prescribed in schedule
XIV of the Companies Act 1956

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

63
Other income accounted net of sales tax wherever applicable.
Consumption of all raw materials, stores, spares, etc. valued at cost.

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


Finished goods at cost/market price/realizable value whichever is lower.
Goods in transit at actual cost.
Capital work in progress at actual cost.

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


Investments are stated at cost.

Sale within the state includes excise duty but excludes sales tax. Outside state sales
include excise duty and lorry freight but excluded tax, if any applicable.
Rupee exchange variation on foreign currency on imports of raw materials charged
to raw material cost.

3.3.7.4 OPERATIONAL HIGHLIGHTS

The company continued to operate during the year under difficult conditions of very stiff
competition and volatile raw material costs prevailing in the forgings related industrial
scenario. However, with the concerted efforts of the management and all employees and
the support from the Government, the bankers M/s State Bank of Travancore, and above
all, their valued customers, the Company has been able to successfully beat the adverse
factors and continue the performance.

The income from Sales & Services, net of taxes and duties, of the current year is Rs.
5799 lakhs as compared to Rs. 6002 lakhs in the previous year. The Turnover includes
direct export value of Rs. 2 lakhs (previous year, Rs. 18 lakhs).

The production achieved in the year is 2834 Tons as compared to 3247 Tons in the
previous year. The value of production has decreased from Rs. 6040 lakhs in the previous
year to Rs. 5374 lakhs in this financial year.

On the marketing front, the Closing Order Book position as on 31st March 2011 is Rs.
3493 lakhs, that of the previous year being Rs. 3796 lakhs. Executable orders booked
64
during the year were Rs. 5879 lakhs. Execution of the prestigious orders for Aircraft
Engines parts for HAL, BEML, BHEL, Railways and L & T Komatsu Ltd. and the good
volume of business with ISRO and Defence organizations have been other highlights.
The company is in the process of bagging high value orders for supply of
Aluminium/Titanium forgings to Brahmos Aerospace Tvm. Ltd.

The company is constantly earning net profits during the last 11 years and the companys

net worth has increased to Rs. 3898 lakhs.

The company has achieved a profit of Rs. 704 lakhs for the year (before exceptional
items) as compared to Rs. 909 lakhs in the previous year. The Operating Profit for the
year is Rs. 836 lakhs, as compared to Rs. 1060 lakhs in the previous year.

The company has set up a new machining unit at Shornur with a projected capital outlay
of Rs. 12 crores. By setting up such a machining facility at Shornur, it will become easier
for the company to offload such jobs with better monitoring, control and will yield faster
results. Large technical facilities are being set up by BEML, and the Railways in
Palakkad and the facilities created at Shornur could be extended to these units also. The
business opportunities from these units are expected to be very high and profitable.

65
Sl. No. PARTICULARS 2014-2015 2013-2014 2012-2013

1. Production (Qty. in MT) 2834 3247 2984

2. 5366 6040 6283


Value of Production (Rs. in
lakhs)

3. Net Income from sales & 5799 6002 5933


services (Rs. in lakhs)

4. Central Excise Duty, Edu. 707 565 791


Cess and Sales Tax collected
from customers and remitted
to the Exchequer (Rs. in
lakhs)

5. Gross Income from Sales & 6328 6385 6724


Services (including duties and
taxes) (Rs. in lakhs)

6. Cost of Sales (Rs. in lakhs) 5095 5093 5038

7. 87.86 84.86 84.92


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

8. Total sundry Debtors as at 31st 2838 1896 1503


March 2011 (Rs. in
lakhs)

9. Percentage of Debts to gross 44.84 29.69 22.35


income from sales & services

PERFORMANCE

Table No.: 3.4

66
FINANCIAL RESULTS

(Rs. in lakhs)

Sl. No. PARTICULARS 2014-2015 2013-2014 2012-2013

1. Operating Profit 836 1060 989

2. Financial Charges 41 77 50

3. Depreciation 91 74 44

4. 704 909 895


Profit before Exceptional
items

5. Net Worth as on 31st March 3898 3467 2392

Table No. 3.5

67
3.3.7.5 CHALLENGES OF FINANCE DEPARTMENT

Working capital crunch

Main customers of SIFL are government or government under takings. The main problem
faced by the company is the delay in realization of money from debtors. This results in
shortage of working capital. Company has three furnaces for operation but due to lack of

working capital company can operate only one furnace at a time.

Lack of Information technology applications

Management Information Systems is not there in Finance department. MIS provide the
management with vital facts which affects the efficient running of the business for
decision making on planning, organizing and controlling the major activities of the
organization and initiating suitable action.

No IT facilities for inter departmental communication. Company is using Pay biz for
payrolls. There is a possibility of attaching a finger print sensing attendance machine
with this software. This is not attached with this; it will help to reduce paper work and
errors.

68
3.3.8 HUMAN RESOURCE DEPARTMENT

The human resource management (HRM) function includes a variety of activities,


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

ORGANOGRAM OF HR DEPARTMENT

DGM

Officer

Asst. Officer

Skilled Workers
7

Unskilled Workers
2

69
Fig. No. 3.13

The employees of SIFL are classified as follows;


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

3.3.8.1 FUNCTIONS
Organizational human resource planning & development
Recruitment and selection
Retirement
Wage & Salary administration
Employee records maintaining
Performance appraisal
Welfare programmed
Job evaluation
Handling employee grievances
Handling the legal issues within & outside the Organization

PAY STRUCTURE
Basic pay
Dearness Allowance

70
Variable Dearness Allowance
House Rent allowance (12.5% of Basic pay)
Work staff allowance (higher for factory staff and lower for managerial staff)
In addition to these; the following allowances are also given:
Stitching charge to eligible works men
Washing allowance to eligible works men
Canteen allowance
Attendance bonus
Charge man allowance
Night shift allowance
Acting allowance
Over time
Medical allowance for ESI out of covered employees

LABOUR WELFARE ACTIVITIES

Bonus
Employees drawing salary not more than Rs.3500/-month are eligible for bonus as per
Provision of Bonus Act.
Provident fund
All employees are covered under PF scheme. Both the employer and the employee have
to contribute 12% gross salary. Out of employees contribution of 12%, 8.33% goes to
the persons fund introduced under PF scheme. Gratuity
As per payment of Gratuity Act the company is bound to gratuity to an employee who
leaves the company after a minimum of 5 years service. Gratuity is payable at 15 days
salary for every completed year of service.
In the case of death, gratuity is calculated from the date of joining till the date on which
the employees would have actually retired. The company has taken a gratuity policy
with LIC for payment of gratuity.

Employee state insurance


All employees come under the ESI scheme.

71
Other welfare measures
Co-operative society
The board of directors of the co-operative society consists of representative of the
employees and management. The society provides loans to employees and credit recover
through salary.
Subsidized canteen inside the company premise
Recreation club
Payment of advance for marriage of employees
Vehicles are arranged for transportation of employees during night shift
Lockers are provided for employees to keep their belonging during work.

TIME KEEPING
Attendance, leave and other time keeping activities are done in SIFL by Time office.
Shift timings
A-Shift: 7AM to 3 PM
B-Shift: 3PM to 11PM
C-Shift: 11PM to 7 AM
General shift
8AM to 4.30PM for factory staff
9AM to 5PM for Office staff
Attendance is marked by a mechanical punching machine. Employee has to punch
his card while entering into the company as well as while leaving the company.

LEAVE
There are mainly three type of leave. They are;
Casual leave
15 Days for managerial staff and 14 days for other employees.
Earned leave
One leave for every 11 days of work for all employees.
Half pay leave
Employees covered under ESI scheme are eligible for half pay leave
Leave card is prepared for all employees, it contain all details about these different types
of leave available to employees.

72
REPORTS AND REGISTERS
Daily Attendance Report (DAR)
Daily attendance report is prepared by time office for every shift for each
department separately in triplicate. One copy will keep in time office itself. Two copies
will send to respective department.
Department head will duly fill the DAR and send one copy back to time office.
AR contains the details like ticket numbers of employees present, ticket numbers of
employees those who are absent and other allowance details etc.
Daily Report Book
Daily report book is prepared by time office which contains details about daily
strength, absentees and leave for each shift.
Attendance Report
Attendance Report is the monthly statement of attendance and leave of all
employees. This will send to finance department for salary calculation.
Details of earning
This is a monthly report prepared by time office regarding various allowance
available to all employees. This also sends to finance department for salary calculation.

RECRUITMENT
Mode of recruitment is through Employment Exchange.
Other sources when employment exchange indicates their inability to sponsor
candidates satisfying the prescribed requirements. If panel of candidates /
non-availability certificate form employment exchange is not forthcoming
within 15 days from the day of intimation, an advertisement is issued in
leading daily newspapers.
Recruitment for Executive Post decided by the Appointing Authority
Open recruitment advertisement in newspapers, notification to employment
exchange.

Recruitment Procedure
Manpower Budget
The department informs the chief Executive about vacancies which is thereby
intimated to the Personnel & Administration department (before 15th January)
who takes further action.
73
Selection Committee
The selection committee includes 3 members: representative of department
concerned, representative of P & A department and the representative from any
other department or external expert as approved by the Appointing Authority.
For positions of Asst. Manager and above, committee consists of Chairman &
Managing Director, chief Executive and the Head of Corporate P & A
department.

SELECTION
After each candidate has been interviewed, the members will discuss with each other
and award agreed marks by the Chairman of committee.
At the end of the interview, successful candidates will be recommended for
appointment to advertised vacancy in the order of their rating based on written
test and interview.
Selected candidates will be empanelled in the order of merit. The panel will be valid
for 1 year from the date of selection.

TRAINING
The workers and managerial staff are given proper training when they are new to
the work. They are kept in probation for a stipulated period of time and they are absorbed
if they are found fit. Training on SWP (Strict Working Procedure), safety against
hazardous events, housekeeping etc. are mainly given.

PERFORMANCE APPRAISAL
Purpose of appraisal reports
The annual appraisal reports on employees are valuable documents that should serve as
a reliable index of the employees potential for:
a) Promotion and transfer to position of greater responsibility.
b) Development through training.

Overall Rating (Summary of assessment):


Outstanding >= 90%
Good >= 65%
Average >= 45%

74
Below average >= 25%
Poor < 25%

System of awarding marks for Performance appraisal


Following are the traits based on which the performance is evaluated:
1) Quantity of Work
2) Quality of work
3) Knowledge of Job
4) Dependability
5) Initiative
6) Care of machines, tools, equipments or records.
7) Aptitude
8) Communication
9) Attitude towards organization and work relationship with supervisors
10) Job responsibility
11) Mental ability and Judgement
12) Work habits
13) Resourcefulness
14) House keeping
15) Time keeping/ Attendance

TERMS AND CONDITIONS


1) Rules and Regulations
All employees shall obey the rules and regulations.
2) Classification of employees Employees are classified as follows:
i) Permanent employees shall mean those whose services have been
confirmed in writing.
ii) Temporary employees shall mean those who have been engaged for a
limited period of time for work.
iii) Probationers shall mean those employed to fill a vacancy in permanent
post that has not been confirmed in writing.
3) Categories of employees
i) Managers

75
ii) Officers iii)
Supervisors
4) Appointment
Recruitment shall be according to the prescribed policy. The Company requires
the applicant to pass a medical examination by a doctor nominated by the
company. Employees shall be issued with the appointment letter after
verification.
5) Probation
The period of probation is 1 year.
6) Increments
Increments shall be drawn unless it is withheld on disciplinary grounds.
Increments either on 1st January or 1st July depending on date of joining.
Employee who is sanctioned Leave Without Pay (LWP) upto 3 months shall
have his next increment postponed for an equivalent period.
7) Transfers
Employees are transferred at any time from one job, section or department to
another and also in any part of the country or outside.

GRIEVANCE HANDLING
It is the policy of the company to settle grievances at the lowest possible level so
that grievances are not prolonged. Grievances of the employees are handled by the
welfare officer.
Complaints affecting an individual workmen in respect of the following matters
will constitute grievances and will subject to the procedure laid down hereinafter:
a) Payment of wages
b) Leave
c) Inter- department Transfer
d) Promotion
e) Seniority
f) Work assignment
g) Work condition
STATUTORY RECORDS

76
All types of statutory records are maintained in the company and these records are
verified by the factory inspector. The main statutory records are:

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

OTHER FACILITIES

Canteen:

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

INDUSTRIAL RELATIONS

The Industrial Relations policy of SIFL is to introduce and establish systems and
procedure which would ensure a healthy employee-management relation so as to
achieve maximum productivity, employee satisfaction and development.

Employee relation of the company was found to be harmonious. The period of


Memorandum of settlement entered into between the Management and the Trade
unions representing the workmen of the company for wage revision got expired on
28.02.09. A new agreement between the management and the trade unions in this
regard was signed and accordingly wage revision has already been implemented.

77
CHAPTER
4 FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strength and
weakness of the firm by properly establishing relationship between the items of the
balance sheet and the profit account. The financial analyst may use ratio in two ways.
First he may compare a present ratio with the ratio of the past few years and project
ratio of the next year or so. This will indicate the trend in relation that particular
financial aspect of the enterprise. Another method of using ratios for financial analysis
is to compare a financial ratio for the company with for industry as a whole, or for other,
the firms ability to meet its current obligation. It measures the firms liquidity. The
greater the ratio, the greater the firms liquidity and vice-versa.
A ratio can be defined as a numerical relationship between two numbers
expressed in terms of (a) proportion (b) rate (c) percentage. It is also defined as a
financial tool to determine and interpret numerical relationship based on financial
statement yardstick that provides a measure of relationship between two variable or
figures.

78
4.1 BALANCE SHEET AS ON 31ST MARCH 2015
Sch. As on 31.3.2015 As on 31.3.201
(Rs.) (Rs.)
I SOURCE OF
FUNDS
1) Share
Holders
A
Funds
B 159259242 159259242
a) Capital
230495123 187483328
b) Reserves
& 346742570
C
Surplus
D 389754365
2) Loan Funds
51787014 12231540
a) Secured
Loans 57499975 57009620
69241160
b) Unsecured
10396402
Loans 109286989
Net Deferred Tax 11682803
426380132
Liability 510724156

TOTAL

79
II APPLICATION OF
FUNDS
1. Fixed Assets: E
a) Gross : Block 247726603 189681600
b) Less : 122696742 113566036
Depreciation
c) Net Block
125029861 76115564
d) Capital Work in
16478368 4120322
Progress
e) Other assets
200000 200000
held for disposal F
2. Current Assets, Loans
& Advances 170024576 196090224
a) Inventories
283748860 189646805
b) Sundry Debtors

39597611 40472133
c) Cash & Bank
balances 6407024 7335811
d) Other Current
Assets

66378487 22579573
e) Loans &
Advances 566156558 456124546

Sub Total:
G
Less :
Current Liabilities &
Provisions 184277389 101322413
12863241 8857887
a) Liabilities
b) Provisions 197140630 110180300
Sub Total :
Net Current Assets (Sch. F-
369015929 345944246
Sch. G)
Preliminary Expenses to the
extent not written off TOTAL
510724156 426380132

80
4.2 PROFIT & LOSS ACCOUNT FOR THE YEAR
ENDED 31ST MARCH 2015
Sch. 20142015 20132014
(Rs.) (Rs.)

I INCOME
Gross Income from Domestic Sales & Services H 632652951 636581917
Less : excise Duty & Education Cess on Domestic-
Sales 52880955 38271128
Net Income from Domestic Sales & Services 579771996 598310789
Export Sales 159669 1756602
Export Benefit as per DEPB Scheme 12621 124699
Total Income from Sales & Services 579944286 600192090
Other Income I 8095160 3172918
Total (l) 588039446 603365008

II EXPENDITURE
J
Decrease/ Increase in Inventory
K
Raw material Consumed 40738235 (3891065)
L
Manufacturing, Selling, Administrative & Other 205333331 247422058
Expenses 258360170 253887443
Sub Total (ll) 504431736 497418436

81
Operating Income before financial Charges &
Depreciation (l-II)
83607710 105946572
Financial Charges M
Depreciation E 4085666 7702054
9130706 7368300
III Profit before exceptional & Prior Period items
70391338 90876218
IV Profit before Tax
70391338 90876218

V Income Tax for the year


Current Tax 20503382 30750730
Deferred Tax- Income/ (Expense) (1286401) (2278067)

VI Net Profit after Tax 48601555 57847421

Basic Earnings Per Share Rs. 30.51 36.32

Diluted Earnings Per Share Rs. 30.51 36.32

Face Value of Share Rs. 100.00 100.00

4.3 RATIO ANALYSIS


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

82
Meaning and Importance:
Ratio analysis is concerned to be one of the important financial tools for appraisal of
financial condition, efficiency and profitability of business. Here ratio analysis is useful
from following objects.

1. Short term and long term planning

2. Measurement and evaluation of financial performance

3. Study of financial trends

4. Decision making for investment and operations

5. Diagnosis of financial ills

6. Providing valuable insight into firms financial position or picture

4.3.1 CURRENT RATIO:


The relationship of current assets to current liabilities is known as current ratio. It is
also known as bankers ratio or working capital ratio. It is relationship between firms
current assets and current liability.

Current ratio = Current assets/Current liability

Statement Showing Current Ratio


YEAR 2012-13 2013-14 2014-15

CURRENT ASSETS 416210200 433544973 499778071

CURRENT LIABILITIES 141924054 101322413 184277389

CURRENT RATIO 2.9 4.27 2.71

Table No.: 4.1

83
Current Ratio
5

2
Current Ratio
1

0
2012-13 2013-14 2014-15
Year

Fig. No.: 4.1

Interpretation:
SIFL on an average has maintained a current ratio of 3:1.It implies that for every Re.1
current liabilities the company is having Rs. 3 of current assets. It is more than the ideal
ratio of 2:1. Based on current ratio of the company, it is evident that Companys
liquidity position is favourable. But there exists a mismanagement of assets of the
company. Therefore, company should take necessary steps to utilize the current assets
optimally so as to improve its overall performance.

4.3.2 QUICK RATIO:


It establishes the relationship of a companys current assets that can be quickly
converted into cash and its current liabilities. It is relationship between liquid assets and
current liabilities.

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

Statement Showing Quick Ratio


YEAR 2012-13 2013-14 2014-15

LIQUID ASSETS 3911368604 237454749 329753495

LIQUID LIABILITIES 141924054 101322413 184277389

LIQUID RATIO 1.33 2.34 1.78

Table No.: 4.2

84
Calculations:

2012-13: Liquid Ratio= (4162100200-250731596) / 141924054 = 1.33

2013-14 : Liquid Ratio= (433544973-196090224) / 101322413 = 2.34

2014-15: Liquid Ratio= (499778071-170024576) / 184277389 = 1.78

Liquid Ratio
2.5
2
1.5
1
Liquid Ratio
0.5
0
2012-13 2013-14 2014-15
Year

Fig. No.: 4.2

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

85
CHAPTER 5
SWOT ANALYSIS
Professional managers, while resorting to management by objectives, resort to
SWOT Analysis as a tool for assessment. Such an analysis on SIFL will mean a study
of strength, weakness, opportunity and threat faced by SIFL as on today.

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

5.2 WEAKNESSES
1. High transportation cost of goods and personnel due to the distance from raw material
suppliers and customers which are mostly outside the state.
2. Over consumption of power and fuel.
3. Man power shortage in production area.
4. Unexpected power failure and restrictions in usage Electric Power.

86
5.3 OPPORTUNITIES
1. SIFL has the opportunity to enter the international market because of quality forgings.
2. Liberalization and globalization has opened up new export markets.
3. The demands for forging products are increasing. So there are chances of getting more
orders.

5.4 THREATS
1. Unexpected power failure and restrictions in usage of Electric Power.

2. Long distance from the main input sources and major customers causes increase in the
transportation expenses.

3. Financial strain on the company due to fast increasing input costs, and the necessity felt
to organize large stocks of raw materials.

4. Emergence of private companies into this industry.

87
CHAPTER 6

EVALUATIONS AND SUGGESTIONS

6.1 EVALUATIONS
In this industry, I proposed to conclude the study report by highlighting important
findings of the study. The important findings has led to some suggestions for improving
the profitability of the concern

As a government company SIFL enjoys the leadership status in the market.

It produces high level quality steel and negligible number of defective products.

Company makes arrangements to avoid overcrowding in the production unit near the
machine.

SIFL is paving the seeds of changes in its way. Stability in its production is production
is possible now in SIFL.

Due to liberalization the company need not suffer to import the raw material necessary
for production.

The main strategy of SIFL is aiming at gaining a sustainable advantage over competition
through quality and reduced price.

SIFL trying to improve its position m the mind of the customers by following up and
attending any complaints.

Proper time keeping system is there in SIFL.

SIFL is strict in quality of products and quality checking can be done through modern
technique of spectroscopy.

There is proper control and coordination in the company.

The company has facilities such as canteen, rest room etc.

The company appointing general helpers to help different department.

88
Water and power is supplied for whole day.

There is a sales depot to sell the steel.


The government checks the product quality.

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

6.2 SUGGESTIONS

SIFL should continue in efforts to collect as much scrap as possible for all indigenous
sources, as well as outside sources. Constant efforts are required in this direction.

Proper planning in getting all other raw materials, refractories and spares to maintain
regular production at the top most level possible.

Gear up the sales activities in the best possible manner-keeping the watch always whether
at any time billet sale is going to prove better than sale of rolled products. Although many
times we find that rolled products sale is beneficial to the company, market fluctuations
at time change the position very much, making billet sale itself as beneficial. This
problem can be to a certain extend neutralized by having our own rolling mills.

Installing a generator plant to take care of at least 30-40% of our energy requirements,
so that in the future years when monsoon fails, the power cuts may be squarely met.

Employees should understand company's problems, which periodically come and


cooperate to achieve the best efficiency in all operations.

Cost consciousness in all operations should be deeply inculcated in all the employees
minds.

With better operations and profitability it should also be possible for us to go in for
sponge iron plant our self.

89
As the product has achieved quality as well as cost competitiveness when compared with
other competing brands, there is a scope for improvements in promotional measures for
expanding the market share for its products and in this regard include the following:

Various types of incentives must be allowable to the sellers on the basis of sales revenue
in order to increase the order

Quantity and grade based differential pricing can be adopted to induce users to buy more

Aggressive advertisement campaign using print as well as electronic media can be used
to further increase the brand of the product. This will support any market penetration
strategy.

90
CHAPTER 7
LEARNING EXPERIENCE
The Organization Study at Steel and Industrial Forgings Limited has enhanced my
knowledge with corporate and provided exposure and practicability of subject in the
industry. It gave me an understanding as to how an organization operates and an idea
as to how the hierarchical structure of an organization is and helped me understand the
chain of command and authority. The study was a significant endeavour in analysing
overall functions of various departments within the organization. Importance of
leadership traits which guide in achieving personal as well as organizational goals could
be identified.

This study has improved my confidence by its successful completion to undertake


such studies in the future.

91
CHAPTER 8
CONCLUSION

The company is envisaged to have a profitable future. Its past history showing no
strikes and high product quality reassures its graph of growth pointing upwards. The
sincere and dedicated team of human resource strives to lead the company to success. As
long as the company caters to the continuously changing needs of its customers, its future
seems to be bright.

The study was conducted with a view to understand the functions of SIFL and its
department. During the course of study I could familiarize with the organization and its
environment.

This study has improved my confidence by its successful completion to undertake


such studies in the future. Organization study has given a great chance to be a part of
the industry and to understand the overall working and functioning of different
departments. It is sure that Steel & Industrial Forgings Limited will become a dominant
part of market share.

92
REFERENCES

1. Kotler Philip, Marketing Management, Pearson Education, 11th Edition

2. SIFL Department Manuals

3. SIFL 31st Annual Report and Accounts 2013-14

4. SIFL 30th Annual Report and Accounts 2012-2013

WEBSITES
1. www.economywatch.com/world-industries/steeel/indian.html, 13th May 2012

2. www.siflindia.com, 3rd to 25th May 2016


3. www.worldsteel.org, 6th May 2016

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