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SUMMER TRAINING REPORT ON BHUSAN STEEL LIMITED (CASH MANAGEMENT SYSTEMS & LETTER OF CREDIT)

Submitted to MAHARSHI DAYANAND UNIVERSITY, ROHTAK IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION (INDUSTRY INTEGRATED) (III SEMESTER)

SUBMITTED BY: NAME : SANDEEP SHEORAN REGN. NO. :1073900578 ROLL NO. :1090110578 JAGANNATH INSTITUTE OF MANAGEMENT SCIENCES (ELC CODE: 331012066) (34,RING ROAD,LAJPAT NAGAR IV,NEW DELHI-24)

CERTIFICATE

This is to certify that SANDEEP SHEORAN, a student of the MaharshiDayanand University, Rohtak, has prepared his training report entitled CASH MANAGEMENT SYSTEMS & LETTER OF CREDIT at Jagannath institute of management sciences, under my guidance. He has fulfilled all requirements leading to award of the degree of BBA(Industry integrated). This report is the record of bonafide training undertaken by him and no part of it has been submitted to any other University or Educational Institution for award of any other degree/diploma/fellowship or similar titles or prizes.

I wish him all success in life.

STUDENTS DECLARATION I hereby declare that the Training Report conducted at BHUSAN STEELS LTD. (SITE IV, INDUSTRIAL AREA, SAHIBABAD, GHAZIABAD, UTTAR PRADESH ) Under the guidance of (MRS. NISHI AGGARWAL)

Submitted in Partial fulfillment of the requirements for the Degree of BACHELOR OF BUSINESS ADMINISTRATION (Industry Integrated) To MAHARSHI DAYANAND UNIVERSITY, ROHTAK

is my original work and the same has not been submitted for the award of any other Degree/diploma/fellowship or other similar titles or prizes.

SANDEEP SHEORAN REGN. NO. :1073900578 PLACE: GHAZIABAD


DATE: 10TH JAN2011

ROLL NO. :1090110578

TRAINING LETTER

ACKNOWLEDGEMENT

I am grateful to Mr. Harish Tiwari for being a constant source of guidance during my training period. His support helped me to accomplish the project.

I am very confident that this project will help me in my future.

SandeepSheoran BBA- B JIMS, Lajpatnagar

EXECUTIVE SUMMARY
Bhushan Steels Limited is a Secondary Steel Manufacturer with its buyers as the largest Original Equipment Manufacturers (OEM) in the automobile and the white goods sector. The steel industry is a very vast one with huge requirements of working capital and good trade relations. The industry has the largest organizations in the country like SAIL, TISCO, JINDAL STEELS and many more among which BHUSHAN STEELS stands in the third position. In this competitive scenario, there is an urgent need of the processes being streamlined and the cash flows being suited to the requirements of the company. The report deals with the latest services of the banks i.e., Cash Management Services and the Letter of Credit, being utilized in the company to deal with the problem of cash handling. While creating the report the author came across various advantages of these services both to the company as well as the banks. These have not only helped the company manage its cash but have also been instrumental in bringing in profits to the company. The findings suggest that because of these services the company was able to save `50 lakhs per annum on an average. In a massive boost to the companys endeavours, this huge saving per year has allowed it to expand beyond industry expectations and challenge the biggest players in the field. This agreement between the banks and the company also holds significance for the future of the industry as with this kind of understanding we can expect the banks to pool in more of their efforts for better trade facilitation and also enhancing their own businesses. Thus, this report has fully analyzed the CMS and LC facilities and found them highly beneficial over the Cash Credit facilities earlier provided by the banks.

CONTENTS
CHAPTER 1: INTRODUCTION 1.1 General Introduction about the sector 1.2 Industry profile a. Origin and development of the industry b. Growth and present status of the industry c. Future of the industry CHAPTER 2: PROFILE OF THE ORGANISATION 2.1 Origin of the organisation 2.2 Growth, Development & Present status of the Organization 2.3 Organization structure and organization chart 2.4 Product and service profile of the Organization 2.5 Market profile of the Organization CHAPTER 3: DISCUSSIONS ON TRAINING 3.1 Students work profile (Role and Responsibilities ) 3.2 Key learning from training CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM 4.1 Statement of research problem 4.2 Statement of research objectives 4.3 Research design and methodology CHAPTER 5: ANALYSIS 5.1 Data analysis 5.2 Summary of Findings CHAPTER 6: SUMMARY AND CONCLUSIONS 6.1 Summary of learning experience 6.2 Conclusions and Recommendations APPENDICES Copy of questionnaires,brouchers BIBLIOGRAPHY AND REFRENCES

LIST OF GRAPHS & CHARTS

CHAPTER 1: INTRODUCTION
1.1 General Introduction about the sector It is common today to talk about "the iron and steel industry" as if it were a single entity, but historically they were separate products. The steel industry is often considered to be an indicator of economic progress, because of the critical role played by steel in infrastructural and overall economic development. In 1980, there were more than 500,000 U.S. steelworkers. By 2000, the number of steelworkers fell to 224,000. The economic boom in China and India has caused a massive increase in the demand for steel in recent years. Between 2000 and 2005, world steel demand increased by 6%. Since 2000, several Indian and Chinese steel firms have risen to prominence like Tata Steel (which boughtCorus Group in 2007), Shanghai Baosteel Group Corporation and Shagang Group. ArcelorMittal is however the world's largest steel producer. In 2005, the British Geological Survey stated China was the top steel producer with about one-third of the world share; Japan, Russia, and the US followed respectively. In 2008, steel began trading as a commodity on the London Metal Exchange. At the end of 2008, the steel industry faced a sharp downturn that led to many cut-backs. 1.2 Industry profile a. Origin and development of the industry Steel was known in antiquity, and may have been produced by managing bloomeries, iron-smelting facilities, where the bloom contained carbon. 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 Falcata were produced in theIberian Peninsula, while Noric steel was used by the Roman military. The Chinese of the Warring States (403221 BC) hadquench-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 invented 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 b. Growth and present status of the industry 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. Processes starting from bar iron Main articles: Blister steel and Crucible steel

In these processes pig iron was "fined" in a finery forge to producebar iron (wrought iron), which was then used in steel-making. The production of steel by the cementation process was described in a treatise published in Prague in 1574 and was in use inNuremberg 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 were bars of wrought iron. During the 17th century it was realised that the best steel came from oregrounds iron from a region of Sweden, north of Stockholm. This was still the usual raw material in the 19th century, almost as long as the process was used. Crucible steel is steel that has been melted in a crucible rather than being forged, with the result that it is more homogeneous. Most previous furnaces could not reach high enough temperatures to melt the steel. The early modern crucible steel industry resulted from the invention of Benjamin Huntsman in the 1740s. Blister steel (made as above) was melted in a crucible or in a furnace, and cast (usually) into ingots. Processes starting from pig iron 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 GilchristThomas 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 theSiemens-Martin process, which complemented the Bessemer process. These were rendered obsolete by the Linz-Donawitz process of basic oxygen steelmaking (BOS), developed in the 1950s, and other oxygen steelmaking processes. Basic oxygen steelmaking is superior to previous steelmaking methods because the oxygen pumped into the furnace limits impurities. Now, electric arc furnaces (EAF) are a common method of reprocessing scrap metal to create new steel. They can also be used for converting pig iron to steel, but they use a lot of electricity (about 440 kWh per metric ton), and are thus generally only economical when there is a plentiful supply of cheap electricity.[ 1.3 Future of the industry Modern steels are made with varying combinations of alloy metals to fulfill many purposes. Carbon steel, composed simply of iron and carbon, accounts for 90% of steel production. High strength low alloy steel has small additions (usually < 2% by weight) of other elements, typically 1.5% manganese, to provide additional strength for a modest price increase. Low alloy steel is alloyed with other elements, usually molybdenum, manganese, chromium, or nickel, in amounts of up to 10% by weight to improve the hardenability of thick sections. Stainless steels and surgical stainless steels contain a minimum of 11% chromium, often combined with nickel, to resistcorrosion (rust). Some stainless steels are magnetic, while others are nonmagnetic.

Some more modern steels include tool steels, which are alloyed with large amounts of tungsten andcobalt or other elements to maximize solution hardening. This also allows the use of precipitation hardening and improves the alloy's temperature resistance. Tool steel is generally used in axes, drills, and other devices that need a sharp, long-lasting cutting edge. Other special-purpose alloys include weathering steels such as Cor-ten, which weather by acquiring a stable, rusted surface, and so can be used un-painted. Many other high-strength alloys exist, such as dual-phase steel, which is heat treated to contain both a ferritic and martensitic microstructure for extra strength. Transformation Induced Plasticity (TRIP) steel involves special alloying and heat treatments to stabilize amounts of austentite at room temperature in normally austentite-free low-alloy ferritic steels. By applying strain to the metal, the austentite undergoes a phase transition to martensite without the addition of heat. Maraging steel is alloyed with nickel and other elements, but unlike most steel contains almost no carbon at all. This creates a very strong but still malleable metal. Twinning Induced Plasticity (TWIP) steel uses a specific type of strain to increase the effectiveness of work hardening on the alloy. Eglin Steel uses a combination of over a dozen different elements in varying amounts to create a relatively low-cost metal for use in bunker buster weapons. Hadfield steel (after Sir Robert Hadfield) or manganese steel contains 1214% manganese which when abraded forms an incredibly hard skin which resists wearing. Examples include tank tracks, bulldozer blade edges and cutting blades on the jaws of life. Most of the more commonly used steel alloys are categorized into various grades by standards organizations. For example, the Society of Automotive Engineers has a series of grades defining many types of steel. The American Society for Testing and Materials has a separate set of standards, which define alloys such as A36 steel, the most commonly used structural steel in the United States. Though not an alloy, galvanized steel is a commonly used variety of steel which has been hot-dipped or electroplated in zinc for protection against rust.

CHAPTER 2: PROFILE OF THE ORGANISATION


2.1 Origin of the Organisation Bhushan Steel Limited (BSL) is one of the globally renowned and a leading supplier of high grade steel. It was formerly known as the Bhushan Steel and Strips Limited. It was established by Mr. Brij Bhushan Singal in 1987 with the first production facility being started at Sahibabad, Uttar Pradesh (on NH 58 between Ghaziabad and Delhi). The company has seen various stages of intensive growth, coupled with stable as well as reduced demand periods and it has withered all these with the best of its abilities. Being just a 24 year old company, it gives a big impetus to its reputation that it has grown to become the 3rd largest Secondary Steel producer in the country with an existing capacity of more than 2million tones per annum , just behind the Government backed SAIL and TISCO. The company has three manufacturing units in the state of Uttar Pradesh (Sahibabad Unit), Maharashtra (Khopoli unit), and Orissa Plant (Meramandali unit) in India and has sales network across many countries. The company is a source for vivid variety of products such as Cold Rolled Closed Annealed, Galvanized Coil and Sheet, High Tensile Steel Strapping, Colour Coated Coils , Galume Sheets and Coils, Hardened & Tempered Steel Strips , Billets, Sponge Iron, Precision Tubes and Wire Rod. As one of the prime movers of the technological revolutions in Indian Cold Rolled Steel Industry, BSL has emerged as the countrys largest and the only Cold Rolled Steel Plant with an independent line for manufacturing Cold Rolled Coil and Sheet, as well as Galvanized Coil and Sheet. In due course of time, BSL has grown its turnover incredibly and increased production capacity by successive expansions as well as improved realizations with the manufacturing units.The dynamic reason of awesome and unparalleled growth of BSL is rapid integration on the Steel value chain. Conceivably, it would be its unwavering focus on acquiring the latest technology and knowhow and also the BSLs commitment to provide its customers with the best quality products. Given a vibrant Steel industry dynamics in India, BSL is on a course to become a fully Integrated Steel & Power Company with market leading offerings in value added Steel in Automotive and White Good Segment with the quality been approved by ISO 9002 and QS 9000 . IMPORTANT MILESTONES IN THE HISTORY OF BHUSHAN STEEL: Setting up of Steel and Power Plant in Orissa. On completion, the Plant will be one of the largest integrated Hot Rolled Steel and Power complexes of the nation. BSL has emerged as the countrys largest and the only CR Steel Plant with an independent line for manufacturing Cold Rolled Coils and Sheets up to a width of 1700mm, as well as Galvanized Steel Coils and Sheets up to width of 1350mm. Bhushan Steel has transformed into the 3rd largest producer of Cold Rolled Steel with an installed capacity of one million tons and sales of more than USD 1 Billion. Focused on niche high value added segment of automobile and white goods & is today a leader in these segments.

Recently started the countrys largest Color Coated line and first to manufacture the Galume (zinc and aluminum coated sheets / coils) in Khopoli Plant. BSL has a good debt-servicing track record. First to set up a high Tech Plant in 1996 to cater to auto mobile and white good sector, in technical tie up with Sumitomo Metals, Japan. Profit making and dividend paying company since inception.

2.2 Growth, Development &Present status of the Organization

GROWTH TRAJECTORY SINCE ESTABLISHMENT

10 YEARS FINANCIAL SUMMARY FOR BHUSHAN STEEL LIMITED

FINANCIAL STRENGTH AND STABILITY OVER THE YEARS

2.3 Organization structure and Organization chart The company has three production facilities with the corporate Head Office at Delhi. The CEO and MD are placed at Delhi along with the heads of each of the departments Finance, HR, Production, Marketing, etc as General Managers. Each production facility has its own head for each of the departments as the Deputy GMs. Below these are the Assistant General Managers and the Managers. Below this level fall the production workers, the clerks, the assistants and the simple accountants. Each of the departments has its AGMs playing a communicating role with the other departments. The information flows through them only and at a senior level through the GMs. This might not be true for every time, but is the general case. The teams in the production areas have their work cut out, depending on the machines they are assigned and their field of work. The other people in Finance, HR departments do not exactly form teams but report to the AGMs as one department. The decision making for small term and small volumes of work is usually decentralized with each facility taking care of itself. Large decisions with long lasting impact are usually discussed with the concerned areas and implemented by the corporate office. The lines of communication are well defined and usually form a scalar link but may be tweaked sometimes to match the situation.

SIZE OF THE ORGANISATION Over the years, Bhushan Steel has increased its turnover and production capacity by successive expansions as well as improved realizations. The company has gradually migrated to higher value added products viz., Auto Grade Steel, Colour Coating Sheets, Galume (aluminium and zinc coated sheets), etc. and these have helped the company maintain the leadership position in the automobile and white goods segment. Operating with the most advanced technology, expressed through a fleet of latest equipment, machinery and systems, the Khopoli plant in Orissa has given a tremendous boost of 4,25,000 TPA to the total production capacity which includes 2,40,000 MTPA of Galvanised Steel, which are further forward integrated into Colour Coated Sheet, Galume and other value added products. The Sahibabad plant also provides a tremendous thrust to the capacity with a production of 4, 75,000 TPA comprising products such as Automotive Grade C R Sheet and Galvanised Sheets. With sales touching `5000 crores and installed capacity of over 1 MTPA, the company is Indias third largest Secondary Steel producer. Industrial and employee relations within the company have always been cordial. It is the fulfillment of the market commitments, prompt communication, participation in social

activities and providing a challenging working atmosphere in the company, wherein every employee can develop his/her own strength and deliver expertise in the interest of the company. The company has a total strength of nearly 3500 employees on its rolls. Organizatation chart Bhushan Steel Limited was started by Mr. Brij Bhushan Singal who is currently the Chairman and Chief Executive Officer of the organization. He has been holding this post for the last 24 years, ie. , since the company was established. The company has a clear cut hierarchy with respect to the reporting and official work which is handled by the Vice Chairman and Managing Director of the organization, Mr. Neeraj Singal. The company has departments for Finance, Human Rsources, Marketing & Purchase and Operations (Steel Rolling) who have full time dedicated Directors as their heads. Also there are numerous Directors who are nominated due to the legal obligations. These Directors are most of the times non executive and usually play major roles during the Annual General Meetings and help to maintain Corporate Realtions. The Board of Directors [4] of Bhushan Steel is as follows: Mr Brij Bhusan Singal (Chairman) Mr Neeraj Singal (Vice chairman & Managing Director)

Mr Mohan Lal (Director)

Mr V K Malhotra (Director)

Ms. Sunita Sharma (Nominee Director of LIC)

Mr Rahul Sengupta (Whole Time Director-Technical)

Mr B.B Tondon (Director)

Mr. P.K Aggarwal (Whole Time Director-Commercial)

Mr Nitin Johari (Whole Time Director-Finance)

Mr M.V Suryanarayan (Additional Director)

Mr O.P Davra (Company Secretory)

2.4 Product and Service profile of the Organization

T ECHNICAL DATA SHEET FOR PREPAINTED GALVANIZED PRODUCTS

Parameters
Product name Reference standard 0ther containing standards Strip thickness mm Strip widths mm Substrate material

Technical details/specifications/Stds BHUSHAN RAINBOW ASTM 755 JIS G3312, IS 14236, ECCA 0.20 to 1.2 0 900 to 1250 Zinc coating as per ASTM A 653/A 653M with steel base as per ASTM std 80 to 275 Z120; Z150; Z180 and Z275 as per ASTM std Or As mutually agreed Gr 50/ Gr 80/CS type A, B as per ASTM std

Substrate Coating mass gms/m2 Substrate coating mass class

Grade designation

Yield strength Mpa min Tensile strength Mpa min Paint type Paint coating thickness (DFT)

340 for Gr 50 & 550 for Gr 80 410 for Gr 50 & 570 for Gr 80 Regular Polyester/Silicon Polyester/PVDF Top coat 18 to 22 microns (+5 microns primer) Back coat 5 to 8 (including primer) Accuracy +/- 2% of reading) as per ASTM A 153 H or Harder 15-80% at 60 degrees ASTM D 523 1000 HRS rating 4 for PVDF, 750 HRS rating 4 for others 500 HRS with blister density 2, creepage 2 mm. 1000 HRS blister density 2 (ASTM D 2247)

Digital DFT meter accuracy Pencil hardness Gloss Resistance to chalking QUV ASTM D 53 Resistance to corrosion (ASTM B 117) Resistance to Humidity

Resistance to color change QUVASTM G 53 Flexibility Resistance to abrasion Resistance to Acid/solvents Product certification

2000 HRS (delta E 5 unit) for PVDF 1000 HRS (delta E 5 unit) for others 4 T- (ECCA) - no cracking 20 mg as per 100 cycles No discoloration/no blistering- ASTM D 1308 All products are accompanied with MTC and packing list. ISO 9001 - 2000

Quality System

Galvanized Plain Coil

Technical details/specifications SKIN PASSE D


0.30 2.50 upto 1350 Matte with zero/min. spangle to

PLAIN

FGP HILGP CORRUGAT FAN PETROL/FU ED BLAD EL TANK E


0.12 to 1.60 602,762,800, 900,1050 0.30 to 2.50

GPC BUSES/COAC HES

Thickne ss (mm) Width (mm) Surface Finish

0.10 to 2.50

0.40 to 0.60 to 1.60 1.20 100 to 100 to 1350 1350

upto 1350 Regular &mim.span gle

200 to 1350

Regular Spangle

Matte Matte, Bright finish, Finish, No No spangle spangle

Matte, Bright finish, No spangle

Coating Mass 80 to 300 (gms/m2 ) Grades Soft/Lock forming

80 to 300 80 to 300

20 to 80

60 90

to

60 to 80

EDD, DD,D, SPCEN, SPCD,SP CC

Roofing

EDD, DD,D, SPCD, SPCEN, SPCC SPCD,SPCC

SPCEN, SPCC

SPCD,

Galvanized Plain Sheet

Technical details/specifications SKIN PASSE D


0.30 2.50 upto 1350 to

PLAIN

FGP HILGP CORRUGAT FAN PETROL/FU ED BLAD EL TANK E


0.12 to 1.60 0.30 to 2.50 0.40 to 1.20 100 to 1350

GPC BUSES/COAC HES


0.60 to 1.60

Thickne 0.10 to 2.50 ss (mm) Width (mm) Cut to Length (mm) Surface Finish upto 1350

602,762,800, 900,1050
upto 4500

200 to 1350

100 to 1350

upto 4500 Regular &mim.span gle

upto 4500
Matte with zero/min . spangle

upto 4500

upto 4500 Matte finish, No spangle

upto 4500

Regular Spangle

Matte, Bright Finish, No spangle

Matte, Bright finish, No spangle

Coating Mass 80 to 300 (gms/m 2 ) Grades Soft/Lock forming

80 300

to

80 to 300

20 to 80

60 90

to

60 to 80

EDD, DD,D, SPCEN, SPCD,SP CC

Roofing

EDD, DD,D, SPCEN, SPCD,SPCC

SPCD, SPCC

SPCEN, SPCC

SPCD,

COLD ROLLED STEEL COILS :

Parameters
Thickness (mm) Width (mm) Coil Weight (MT) Surface Finish Grades

Technical Details/Specifications 0.10 to 4.00


10 to 1700 (Max) Up to 30 MT (7 to 18 kg/mm width) Super Bright, Bright, Dull & Matte. (RaValue with controlled Rmax on request). Specifications - As per JIS/BIS/ ASTM/EN Standards

Low Carbon CRCA Grades


Super EDD/DD/D (SPCX, SPCEN, SPCD, SPCC) non-aging, IFHigh Strength steel(IF-HSS), High Strength Low Alloy Steel (HSLA), viz., ST -42, ST-45, ST-52, SAPH-400/41O, Steel for PorceleinEnammeling, Corrosion Resistant Steel, viz., Tin Mill Black Plate (TMBP)

Medium & High Carbon CRCA Grades C- 30, C-40,MC -ll,EN - 8, for spring steel application, C-55,MC-12, EN- 9 C-62,C-60, C-80,HC-14,EN-42J ELECTRICAL Grades Elec -I, Elec-n, Elec-nI, SemiProcessed Elect. Steel OTHER CRCA Grades Case Hardening Steel- 15Cr3, SAE 1010, SAE 1012 Through Hardening Grades- SAE 1040, SAE 1045, 1055, 1065, 1080, 1541

H.R PICKLED/ SKIN PASSED & OILED


Thickness

Up to 3.00 mm 3.00 mm - 4.00 mm Above 4.00 mm 1500 mm 1250 mm 600 mm

Max. Width for Cut Size

Width for Coil

50 mm - 1700 mm 50 mm - 1700 mm 50 mm - 1700 mm

COLD ROLLED STEEL SHEETS :

Parameters

Technical Details/Specifications

Thickness (mm) Width (mm) Cut- to -Length (mm)

0.10 t0 4.00 10 to 1700 (Max) Up to 4500mm with tolerance of +2/-0 mm(Further close tolerance on - request) Up to 30 MT (7 to 18 kg/mm width) Super Bright, Bright, Dull & Matte. (RaValuewith controlled Rmax on request). Specifications - As per JIS/BIS/ ASTM/EN Standards

Coil Weight (MT) Surface Finish Grades

Low Carbon CRCA Grades


Super EDD/EDD/DD/D (SPCX, SPCEN, SPCD, SPCC) nonaging, IF-High Strength steel (IF-HSS), High Strength Low Alloy Steel (HSLA), viz., ST -42, ST-45, ST-52, SAPH-400/41O, Steel for PorceleinEnammeling, Corrosion Resistant Steel, viz., Tin Mill Black Plate (TMBP)

Medium & High Carbon CRCA Grades


C- 30, C-40,MC -ll, EN - 8, C-55, MC-12, EN- 9 C-62, C-60, C-80, HC-14, EN-42J

ELECTRICAL Grades Elec -I, Elec-n, Elec-nI, SemiProcessed Elect. Steel OTHER CRCA Grades
Case Hardening Steel- 15Cr3, SAE 1010, SAE 1012 Through Hardening Grades- SAE 1040, SAE 1045, 1055, 1065, 1080, 1541

H.R PICKLED/ SKIN PASSED & OILED


Thickness Max. Width for Cut Size Width for Coil

Up to 3.00 mm 4.00 mm 1500 mm

3.00 mm - 4.00 mm 1250 mm 50 mm - 1700 mm

Above 600 mm 50 mm -

50 mm - 1700 mm 1700 mm

PROCESS ROUTE OF CRCA MATERIAL

2.5 Market Profile of the Organization

CHAPTER 3: DISCUSSIONS ON TRAINING


3.1 Students work profile (Role and Responsibilities ) For any student studying an BBA course, the summer training period lasting 6 to 8 weeks is usually the most important one apart from the knowledge that he/she gains in the classrooms from the faculty and peers. This is one period in which the student comes to know the requirement theoretical knowledge that he has gained so far in his Three year course and also what is the requirement of the industry from an BBA graduate. For me, being in an organization and getting to know the functioning was a very exciting opportunity as this would surely have meant the practical application of the ideas and thoughts gathered during the last one year at Jagannath Institute Of Management Sciences,MDU Rohtak. First of all, the value of time and the regularity at work which is the best thing that I have learnt in my tenure at JIMS was of utmost help to me at BSL. Since there is usually and overload of work on the employees, it was not a very good idea to procrastinate work and I put my learnt skill to utmost use and gained praise from the project guides as well as other people. Since Finance was taught to us during two terms and the subject covered a lot of portion relating to Corporate Finance, it was really of help to me. The concepts of Finance I relating to the inventory and cash cycle were very relevant to the topic that I had as my project. Also the topics on Working Capital Management and the correct balance of current and fixed assets were also helpful to me during my analysis of the Cash Management Cycle of BSL. Finance II topics on the rates of return and the evaluation of companies also proved beneficial as they provided an insight into the actual functioning of corporate policies. The study of Accounting provided a better way of analyzing balance sheets and income statements and using Finance I was able to gather a lot of information based on the Financial Ratio Analysis of BSL as well as its competitors. Organizational Behaviour was of utmost importance when dealing with my point of contacts in the organization and also other people whom I had to approach for my project work. It helped me to understand the organizational hierarchy as well as the approach I had to maintain while interacting with them. Human Resource Management was applied while understanding the work division and also the interdepartmental co operation. Business Ethics played an important part in the whole project as the organization was itself ethical and hence as a Summer Trainee I had to keep up the integrity by being ethical in my work. Thus the whole of the Summer Training period was a very lively one with the knowledge that I had gained at the Institute being utilized to the full and my gaining practical exposure on the working of the organization. 3.2 Key learning from training New knowledge, tools, techniques and skills picked up during the summer training The summer training period was a very knowledgeable and learning one for me, as it was during this period that I came across a lot of new and interesting things. As a Summer Trainee, one is expected to behave as an employee of the organization and be responsible for

all the actions that he does or he is asked to do by his seniors. During the period, I came across multiple techniques relating to the Finance and Banking world that I was not aware of earlier. The facilities of Cash Management Systems and the Cash Credit facilities were among them. During my training period, I took my time and referred various sources to understand the functioning of these faculties and also study the implications of using them. As an BBA student, I have been working on MS Excel for quite a long time but during my training period I came across its features that were really helpful in reducing the work and also took less time than the methods I used earlier. During my Summer Training, I was able to go through the Excel Bible and learn a lot many new features of MS Excel. Since I was working using the bank statements, I was also allowed to handle the Enterprise Resource Planning System for BSL. Though only the Finance portion was made available to me, I got a lot of headway as to how the software functioned and what all features were available to the user. Working on the system was a totally novel experience for me. Working on the project report, the 7S Framework for the company analysis was an efficient tool and a very good one to gain more knowledge of the company. It allowed me to study the company in a very different manner and provided a totally different perspective to analyse companies. Thus all in all, the Summer Training proved beneficial with regards to my gaining a lot of new techniques and skills. Augmentation of Soft Skills One of the most important factors responsible for the progress and growth of a person are the soft skills that he possesses. These soft skills are the shining halo that one can enhance and also provide others for guidance. During the summer training, it was my luck that I was introduced to some of the people possessing the best soft skills. It was through them that I was able to fully understand the requirement of soft skills and also when they are required. The foremost thing that I learnt was the benefit of maintaining good interpersonal relations, not only with your seniors and peers and also with the people below ones rank. Also the same people were a live example of team spirit, who during the peak time of closing and audit, proved pillars of support for each other and shared responsibility and accolades together. As a student, business etiquette is difficult to learn, but being in an organization, I was able to gather a lot of business etiquette. Negotiation skills were also a part of my training which has now influenced me a lot. Other soft skills gained during the period were communication skills with the people around you, willingness to learn and flexibility. Directions for future learning Looking at the variety of services being provided by the banks, it might be correct to assume that the banking industry would surely innovate and come out with better services and opportunities for the Corporate to earn better returns. Thus, it would be a very good idea to study banking industry and analyze what better services can be offered to the industrialists to keep the evergreen banking industry on the pursuit of totality in services.

CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM


4.1 Statement of research problem Due to various reasons such as day to day investments, factory requirements, raw material procurement, and many other similar huge cash involving activities, the organizations need to have reserves of cash with them or in other words they need to have liquidity at all times. The need for such assets may arise any time and any organization needs to be prepared for the situation. Looking at the circumstances the companies need to face in terms of cash crunches or low liquidity, banks have started providing a number of schemes in which huge working capital requiring companies are paid their dues instantly and they also need not pay their debtors instantly. These facilities are referred to as Cash Management Services (CMS) in terms of instant payment to the companies and Letters of Credit (LC) in terms of delayed payment by the companies. Bhushan Steel Limited being a very big organization needs a huge amount of Working Capital and hence it needs cash in hand at all times. It is a big user of the CMS and LC facilities of banks and hence we need to cheque out whether these facilities are actually beneficial to it or they are just gimmicks by the banks to enhance their business. 4.2 Statement of research objectives To meet Cash disbursement as per payment schedule & minimize the amount locked up as cash balance. To analyze the different services available to the company and determine if they enhance Working Capital Management.

Meeting Payment Schedule :- The main objective of cash management is to meet the payment schedule. In other words, the company should have sufficient cash to meet the various requirements. The company has to make payment for purchase of raw materials, purchase of plant-machinery parts & tools, wages, taxes etc. Minimize the amount locked up as cash balance :- The other main objective of cash management of the company is to minimize cash balance. For minimizing the cash Page 32 of 84 balance, the companys financial manager always focuses to have its optimum amount, keeping in mind that a high level of cash balance will result in a large balance of cash remaining idle because cash is a non earning asset. On the other hand, a low level of cash balance will result in the failure of meeting the payment schedule. 4.3 Research design and methodology Preparation of Questionnaire, keeping in mind all BSL Finance services portfolio

Preparation of Database 1. DELHI/NCR Business Directory 2. www.vcsdata.com 3. www.fundoodata.com 4. www.onesource.com 5. www.google.com Filling of Questionnaire via Personal Visit & Cold Calling

CHAPTER 5: ANALYSIS
5.1 Data analysis CHEQUE COLLECTION AMOUNTS AT IDBI BRANCHES (MARCH 2011) The following sheet has been developed from the statement provided by IDBI Bank for the cheques sent out by the buyers of Bhushan Steel at its different branches. The whole sheet was a consolidated one comprising the details as to what were the amounts, dates and the nature of transactions. The sheet comprising about a 1000 entries for each of the cheques provided, has been reduced to a 8 branch wise sorted table that shows the total amount of transactions at each of the branches along with the rates that have been calculated based on the amounts the banks charged for the services they provided. IDBI-CMS Bank Service Charges: LOCATION COLLECTION(`) ALIGARH 23,546,843.99 BANGALORE 81,921,249.90 CHENNAI 10,096,387.18 INDORE 14,876,514.93 KANPUR 114,261,830.42 LUDHIANA 24,871,312.72 PUNE 13,733,813.18 TIRUPATI 931,453.73 284,239,406.05 TOTAL
Illustration 1: IDBI SERVICE CHARGES FOR MARCH 2011

RATE 0.000033089360 0.000033089949 0.000033090054 0.000033091084 0.000033089178 0.000033089528 0.000033088407 0.000033077327

TOTAL(`) 779.15 2,710.77 334.09 492.28 3,780.83 822.98 454.43 30.81 9,405.34

IDBI-CMS Cheque Returns Charges LOCATION AMOUNT (`) RETURN CHARGES (`) BANGALORE 1,653,651.00 55.15 KANPUR 500,000.00 55.15 KANPUR 500,000.00 55.15 LUDHIANA 794,602.00 55.15 LUDHIANA 661,372.00 55.15 LUDHIANA 621,314.00 55.15 LUDHIANA 832,578.00 55.15 LUDHIANA 661,372.00 55.15 LUDHIANA 661,372.00 55.15 TOTAL 6,886,261.00 496.35
Illustration 2: IDBI CHEQUE RETURN CHARGES FOR MARCH 2011

INTEREST 1399.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,399.22

TOTAL (`) 1454.37 55.15 55.15 55.15 55.15 55.15 55.15 55.15 55.15 1895.57

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 9,901.69 1,019.87 10,921.56

INTEREST 1399.22

Illustration 3: IDBI COLLECTION CHARGES AND INTEREST FOR MARCH 2011

The totals beneath each of the tables denote the total amount of Rupees that were processed using the CMS facilities of IDBI in the month of March 2011. The second table shows the amount of cheques that had to be sent back due (bounced) due to non availability of cash in accounts. The total collection charges that banks charged are shown which are charged with an additional service tax of 10.3%. The interest charge on bounced cheques is also payable to the bank by BSL.

CHEQUE COLLECTION AMOUNTS AT CORPORATION BANK BRANCHES (MARCH 2011) COPORATION BANK- CMS Bank Service Charges LOCATION COLLECTION(` RATE ) AGRA 9,277,744.00 0.00008 ALLAHABAD 3,348,526.00 0.00008 GORAKPUR 3,619,316.00 0.00008 JAMMU 1,733,251.00 0.00008 REWARI 3,574,107.00 0.00008 SAHARANPUR 3,106,865.00 0.00008 24,659,809.00 TOTAL

TOTAL(`) 742.22 267.88 289.55 138.66 285.93 248.55 1,972.78

Illustration 4: CORPORATION BANK SERVICE CHARGES FOR MARCH 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 1,972.78 203.20 2,175.98

Illustration 5: CORPORATION BANK SERVICE TAXES AND CHARGES FOR MARCH 2011

CHEQUE COLLECTION AMOUNTS AT AXIS BANK BRANCHES (MARCH 2011) AXIS BANK- CMS Bank Service Charges An additional column of pick up charges is present over here which shows the amounts of money collected by the banks from BSL for the extra service of pickup of the cheques from the buyers.

LOCATION LUDHIANA GHAZIABAD GURGAON INDORE MILLER GANJ

COLLECTION (`) 41,388,026.00 126,543,958.82 74,144,831.34 13,330,920.00 2,693,961.00

RATE 0.000040000700 0.000040000250 0.000039999821 0.000039999490 0.000039993155

PICKUP CHARGES 400.00 -

TOTAL(`) 1,655.55 5,061.79 2,965.78 533.23 107.74

BRANCH TOTAL

258,101,697.16

400.00

10,724.09

Illustration 6: AXIS BANK SERVICE CHARGES FOR MARCH 2011

AXIS BANK - CMS Cheque Returns Charges

LOCATION

AMOUNT (`) 322698.00 101862.00 123483.00 175855.00 228008.00 393,117.00 432,320.00

LUDHIANA LUDHIANA LUDHIANA LUDHIANA LUDHIANA GHAZIABAD

RETURN CHARGES (`) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1,300.00

INTEREST

TOTAL (`)

1988.99 1,988.99

100.00 100.00 100.00 100.00 100.00

100.00 100.00 100.00 100.00 100.00 100.00 2088.99 3288.99

GHAZIABAD 77,637.00 GHAZIABAD 750,000.00 GHAZIABAD 570,000.00 GHAZIABAD GURGAON GURGAON GURGAON TOTAL 314,989.00 134,963.00 4,208,591.00 7,833,523.00

Illustration 7: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR MARCH 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 12,024.09 1,238.48 13,262.57

INTEREST

1988.99

Illustration 8: AXIS BANK SERVICE TAX AND INTEREST CHARGES FOR MARCH 2011

CHEQUE COLLECTION AMOUNTS AT AXIS BANK BRANCHES (FEBRUARY 2011) AXIS BANK- CMS Bank Service Charges LOCATION AURANGABA D BANGALORE CHENNAI JAIPUR COLLECTION (`) 2,665,451.00 1.00 1.00 44,614,086.00 RATE 0.000040000735 400.0000000000 00 400.0000000000 00 0.000035000157 PICKUP CHARGES 400.00 400.00 COMM. CHARGES(`) 106.62 1,561.50

COIMBATORE GHAZIABAD HALDWANI KANPUR VARANASI TOTAL

1,126,118.00 1.00 2,573,509.00 1.00 1.00 50,979,169.00

0.000039995809 400.0000000000 00 0.000039999860 400.0000000000 00 400.0000000000 00

400.00 400.00 400.00 400.00 2,400.00

45.04 102.94 4,216.10

Illustration 9: AXIS BANK SERVICE CHARGES FOR FEBRUARY 2011

AXIS BANK - CMS Cheque Returns Charges LOCATION AMOUNT (`) RETURN CHARGES (`) JAIPUR 3,000,000.00 100.00 JAIPUR 949,499.00 100.00 JAIPUR 3000000.00 100.00 JAIPUR 4000000.00 100.00 10,949,499.00 400.00 TOTAL

INTEREST 1,417.81 448.74 1,417.81 3,780.82 7,065.18

TOTAL (`) 1517.81 548.74 1517.81 3880.82 7465.18

Illustration 10: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR FEBRUARY 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 4,616.10 475.46 5,091.56

INTEREST

7065.18

Illustration 11: AXIS BANK SERVICE TAX AND INTEREST CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT AXIS BANK BRANCHES (FEBRUARY 2011) AXIS BANK- CMS Bank Service Charges LOCATION LUDHIANA GHAZIABAD GURGAON INDORE KANPUR HALDWANI MILLER GANJ BRANCH TOTAL COLLECTION (`) 24,913,342.00 99,792,160.89 56,876,286.19 16,471,683.00 535,634.00 31,352.00 1,130,164.00 199,750,622.08 RATE 0.000040001056 0.000039999735 0.000040000326 0.000040000163 0.000030001830 0.000039869865 0.000039994196 PICKUP CHARGES 400.00 400.00 TOTAL(`) 996.56 3,991.66 2,275.07 658.87 16.07 1.25 45.20 8,384.68

Illustration 12: AXIS BANK SERVICE CHARGES FOR FEBRUARY 2011

LOCATION GHAZIABAD GHAZIABAD GURGAON GURGAON LUDHIANA LUDHIANA LUDHIANA LUDHIANA LUDHIANA LUDHIANA MILLER GANJ BRANCH MILLER GANJ BRANCH TOTAL

AMOUNT (`) 3,85,064.00 5,87,724.00 222725.00 33,82,110.00 353620.00 175,304.00 2,00,000.00 1,75,304.00 10,000.00 2,82,038.00 1,03,085.00 1,92,386.00 6,069,360.00

RETURN CHARGES (`) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1,200.00

INTEREST 82.85000000000 0 48.72000000000 0 131.57

TOTAL (`) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 182.85 100.00 100.00 148.72 100.00 1331.57

Illustration 13: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR FEBRUARY 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 9,584.68 987.22 10,571.90

INTEREST

131.57

Illustration 14: AXIS BANK SERVICE TAX AND INTEREST CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT AXIS BANK BRANCHES (JANUARY 2011)


AXIS BANK- CMS Bank Service Charges LOCATION AURANGABAD BANGALORE CHENNAI JAIPUR COIMBATORE FORT GHAZIABAD HALDWANI KANPUR VARANASI TOTAL COLLECTION(`) 537,630.00 1.00 1.00 42,396,935.00 2,492,611.00 1,263,162.00 1.00 4,401,280.00 1.00 1.00 51,091,623.00 RATE 0.0000400089 400 400 0.0000350002 0.0000400022 0.0000199974 400 0.0000399952 400 400 PICKUP CHARGES 400 400 400 400 400 2,000.00 TOTAL(`) 21.51 1483.9 99.71 25.26 176.03 3,806.41

Illustration 15: AXIS BANK SERVICE CHARGES FOR JANUARY 2011

AXIS BANK - CMS Cheque Returns Charges LOCATION AMOUNT (`) RETURN CHARGES (`) JAIPUR 2,000,000.00 100 JAIPUR 2,000,000.00 100 JAIPUR 2,000,000.00 100 JAIPUR 1,000,000.00 100 JAIPUR 2,149,319.00 100 JAIPUR 4,000,000.00 100 JAIPUR 2,850,000.00 100 TOTAL 15,999,319.00 700.00

INTEREST 945.21 945.21 1,890.41 945.21 2,031.55 1,890.41 1,346.92 9,994.92

TOTAL (`) 1045.21 1045.21 1990.41 1045.21 2131.55 1990.41 1446.92 10,694.92

Illustration 16: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR JANUARY 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 4,506.41 464.16 4,970.57

INTEREST

9,994.92

Illustration 17: AXIS BANK SERVICE TAX AND INTEREST CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT AXIS BANK BRANCHES (JANUARY 2011) AXIS BANK- CMS Bank Service Charges LOCATION COLLECTION RATE (`) GHAZIABAD 0.000039999767 116,031,674.77 GURGAON 0.000039999851 71,808,517.73 HALDWANI 0.000039994553 499,318.00 INDORE 0.000039999114 12,734,282.00 KANPUR 0.000030011722 403,509.00 LUDHIANA 0.000039999237 26,790,011.00 MILLER GANJ 1,935,800.00 0.000040004133 BRANCH 230,203,112.50 TOTAL
Illustration 18: AXIS BANK SERVICE CHARGES FOR JANUARY 2011

PICKUP CHARGES 400.00 400.00

COMM. CHARGES(`) 4,641.24 2,872.33 19.97 509.36 12.11 1,071.58 77.44 9,604.03

AXIS BANK - CMS Cheque Returns Charges LOCATION AMOUNT (`) RETURN CHARGES (`) GHAZIABAD 318,942.00 100.00 GHAZIABAD 1,209,514.00 100.00 GHAZIABAD 220521.00 100.00 GURGAON 150000.00 100.00 GURGAON 155917.00 100.00 GURGAON 317502.00 100.00 GURGAON 150000.00 100.00 GURGAON 54797.00 100.00 LUDHIANA 47,609.00 100.00 LUDHIANA 100,000.00 100.00

INTEREST -

TOTAL (`) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

LUDHIANA LUDHIANA LUDHIANA LUDHIANA LUDHIANA LUDHIANA TOTAL

250,000.00 35,000.00 57,159.00 134,125.00 148,737.00 82,722.00 3,432,545.00

100.00 100.00 100.00 100.00 100.00 100.00 1,600.00

100.00 100.00 100.00 100.00 100.00 100.00 1600.00

Illustration 19: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR JANUARY 2011

PARTICULARS Collection Charges SERVICE TAX 10.3% TOTAL

AMOUNT (`) 11,204.03 1,154.02 12,358.05

INTEREST

Illustration 20: AXIS BANK SERVICE TAX AND INTEREST CHARGES FOR JANUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (MARCH 2011) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 29,60,071 0.00005 Rs. 148.00 Rs. 148.00 MANDI 1,04,71,128 0.00005 Rs. 523.56 Rs. 523.56 GOBINGARH ALLAHABAD 31,93,609 0.00005 Rs. 159.68 Rs. 159.68 SRINAGAR 2,01,52,024 0.00005 Rs. 1,007.60 Rs. 1,007.60 13,93,590 0.00004 Rs. 55.74 Rs. 55.74 CHANDIGAR H TOTAL 1,894.59 1,894.59 3,81,70,422 0.00
Illustration 21: HDFC BANK SERVICE CHARGES FOR MARCH 2011

COLLECTION CHARGES S.TAX TOTAL

Rs. 1,894.59 Rs. 195.14 ` 2,089.73

Illustration 22: HDFC BANK SERVICE TAX CHARGES FOR MARCH 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (FEBRUARY 2011) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 1848408 0.00005 92.42 92.42 MUZAFFARNA 618328 0.00005 30.92 30.92 GAR MANDI 12698399 0.00005 634.92 634.92 GOBINGARH SRINAGAR 8614174 0.00005 430.71 430.71 CHANDIGARH 1707060 0.00004 68.28 68.28 ALLAHABAD 6586950 0.00005 329.35 329.35 TOTAL 32073319 0.00 1586.60 1586.60

Illustration 23: HDFC BANK SERVICE CHARGES FOR FEBRUARY 2011

COLLECTION CHARGES S.TAX TOTAL

1586.60 163.42 `1750.01

Illustration 24: HDFC BANK SERVICE TAX CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JANUARY 2011) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 1710187 0.00005 85.51 85.51 MUZAFFARNA 2507833 0.00005 125.39 125.39 GAR MANDI 21203230 0.00005 1060.16 1060.16 GOBINGARH SRINAGAR 18500000 0.00005 925.00 925.00 CHANDIGARH 2724129 0.00004 108.97 108.97 ALLAHABAD 4829425 0.00005 241.47 241.47 TOTAL 5,14,74,804 0.00 2546.50 2546.50
Illustration 25: HDFC BANK SERVICE CHARGES FOR JANUARY 2011

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) MANDI 500,000.00 100 GOBINGARH 100 TOTAL COLLECTION CHARGES S.TAX TOTAL 2646.50 272.5894176 2919.09

INTEREST(`) 0

TOTAL(`) 100 100

Illustration 26: HDFC BANK SERVICE TAX AND INTEREST CHARGES FOR JANUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (DECEMBER 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 2816774 0.00005 140.84 140.84 MUZAFFARNA 4529554 0.00005 226.48 226.48 GAR MANDI 27124800 0.00005 1356.24 1356.24 GOBINGARH SRINAGAR 35200000 0.00005 1760.00 1760.00 CHANDIGARH 948895 0.00004 37.96 37.96 ALLAHABAD 8403505 0.00005 420.18 420.18 TOTAL 7,90,23,528 0.00 3941.69 3941.69

Illustration 27: HDFC BANK SERVICE CHARGES FOR DECEMBER 2010

COLLECTION 3941.69 CHARGES S.TAX 405.99 `4347.68 TOTAL

Illustration 28: HDFC BANK SERVICE TAX CHARGES FOR DECEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (NOVEMBER 2010) HDFC BANK- CMS Bank Service Charges CHARGE(`) LOCATION AMOUNT(`) RATE TOTAL(`) AMBALA 1421796 0.00005 71.09 71.09 MANDI 23008409 0.00005 1150.42 1150.42 GOBINGARH SRINAGAR 27500000 0.00005 1375.00 1375.00 CHANDIGARH 3235305 0.00004 129.41 129.41 ALLAHABAD 4378277 0.00005 218.91 218.91 TOTAL 5,95,43,787 0.00 2944.84 2944.84
Illustration 29: HDFC BANK SERVICE CHARGES FOR NOVEMBER 2010

COLLECTION CHARGES S.TAX TOTAL

2944.84 303.32 `3248.15


Illustration 30: HDFC BANK SERVICE TAX CHARGES FOR NOVEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (OCTOBER 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 27,37,048 0.00005 136.85 136.85 MUZAFFARNA 10,69,180 0.00005 53.46 53.46 GAR MANDI 1,27,85,542 0.00005 639.28 639.28 GOBINGARH SRINAGAR 2,91,00,000 0.00005 1455.00 1455.00 CHANDIGARH 43,24,958 0.00004 173.00 173.00 ALLAHABAD 30,10,312 0.00005 150.52 150.52 TOTAL 5,30,27,040 0.00 2608.10 2608.10
Illustration 31: HDFC BANK SERVICE CHARGES FOR OCTOBER 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION CHANDIGARH TOTAL AMOUNT(`) 340,000.00 CHARGES(`) 100 100 INTEREST(`) 0 TOTAL(`) 100 100

COLLECTION CHARGES S.TAX TOTAL

2708.10 278.93 `2987.04

Illustration 32: HDFC BANK SERVICE TAX AND INTEREST CHARGES FOR OCTOBER 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (SEPTEMBER 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) AMBALA 3034859 0.00005 151.74 151.74 LUCKNOW 9445840 0.00005 472.29 472.29 LUDHIANA 1444941 0.00005 72.25 72.25 KANPUR 22832594 0.00004 913.30 913.30 PUNE 3575084 0.00004 143.00 143.00 ALIGARH 7910713 0.00005 395.54 395.54 MUZAFFARNA 5596549 0.00005 279.83 279.83 GAR MANDI 931628 0.00005 46.58 46.58 GOBINGARH SRINAGAR 10000000 0.00005 500.00 500.00 CHANDIGARH 509652 0.00004 20.39 20.39 JAIPUR 16330506 0.00004 653.22 653.22 ALLAHABAD 3336612 0.00005 166.83 166.83 TOTAL 8,49,48,978 0.00 3,814.97 3,814.97
Illustration 33: HDFC BANK SERVICE CHARGES FOR SEPTEMBER 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) KANPUR 898,758.00 100 TOTAL 100

INTEREST(`) 0 0

TOTAL(`) 100 100

COLLECTION CHARGES S.TAX TOTAL

3,914.97 403.24 `4,318.21

Illustration 34: HDFC BANK SERVICE TAX AND INTEREST CHARGES FOR SEPTEMBER 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (AUGUST 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) BANGLORE 53678866.30 0.00003 1610.37 AMBALA 2515710.00 0.00005 125.79 LUCKNOW 8500000.00 0.00005 425.00 LUDHIANA 27680571.00 0.00005 1384.03 KANPUR 32570584.00 0.00004 1302.82

PUNE INDORE ALIGARH MANDI GOBINGARH SRINAGAR MUZZAFARNAGAR MADRAS CHANDIGARH JAIPUR ALLAHABAD TOTAL

9575084.00 11082063.24 18160537.00 920681.00 23882335.00 5319986.00 1413593.00 100000.00 22493405.00 3573982.00 22,14,67,397.54

0.00004 0.00003 0.00005 0.00005 0.00005 0.00005 0.00002 0.00004 0.00004 0.00005

383.00 332.46 908.07 46.03 1194.12 266.00 28.27 4.00 899.74 178.70 9,088.39

Illustration 35: HDFC BANK SERVICE CHARGES FOR AUGUST 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) AMBALA 367987.00 LUDHIANA 668848.00 JAIPUR 561138.00 JAIPUR 500000.00 LUDHIANA 750000.00 JAIPUR 500000.00 JAIPUR 567442.00 LUDHIANA 588688.00 LUDHIANA 305170.00 CHANDIGARH 100000.00 LUDHIANA 500000.00 TOTAL

CHARGES(`) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 250.00 1250.00

COLLECTIONCHARGES S.TAX TOTAL

10338.39 1064.85 `11403.25


Illustration 36: HDFC BANK SERVICE TAX CHARGES FOR AUGUST 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JULY 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) BANGLORE 48382460.55 0.00003 1451.47 1451.47 AMBALA 1070311.00 0.00005 53.52 53.52 LUCKNOW 4000000.00 0.00005 200.00 200.00 LUDHIANA 18054680.00 0.00005 902.73 902.73 KANPUR 15723922.00 0.00004 628.96 628.96 PUNE 14300156.00 0.00004 572.01 572.01 INDORE 9466407.20 0.00003 283.99 283.99 ALIGARH 19377767.00 0.00005 968.89 968.89 MANDI 2406832.00 0.00005 120.34 120.34

GOBINDGARH SRINAGAR TIRUPATHI MADRAS CHANDIGARH JAIPUR ALLAHABAD TOTAL

7631762.00 1184050.00 1817276.00 1101720.00 7061309.00 2607163.00 15,41,85,815.75

0.00005 0.00005 0.00002 0.00004 0.00004 0.00005 0.00

381.59 59.20 36.35 44.07 282.45 130.36

381.59 59.20 36.35 44.07 282.45 130.36 6115.92

Illustration 37: HDFC BANK SERVICE CHARGES FOR JULY 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) KANPUR 700000 100 KANPUR 2605461 100 KANPUR 330000 100 INDORE 400000 100 LUDHIANA 400000 100 KANPUR 500000 100 JAIPUR 500000 100 CHANDIGARH 540816 100 INDORE 426128 100 KANPUR 330000 189.9 KANPUR(OUT 135000 58.75 STATION) TOTAL 1148.613

INTEREST(`) 0 0 0 0 0 0 0 0 0 0.0 0.00

TOTAL(`) 100 100 100 100 100 100 100 100 100 189.86 58.75 1148.61

COLLECTIONCHARGES S.TAX TOTAL 7264.54 748.25 `8012.79


Illustration 38: HDFC BANK SERVICE TAX CHARGES FOR JULY 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JUNE 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE(`) CHARGE(`) TOTAL(`) BANGLORE 33430435.5 0.00003 1,002.91 1,002.91 LUCKNOW 10298307 0.00005 514.92 514.92 LUDHIANA 15458019 0.00005 772.90 772.90 KANPUR 50397517 0.00004 2,015.90 2,015.90 PUNE 4114538 0.00004 164.58 164.58 INDORE 15994305.07 0.00003 479.83 479.83 GWALIOR 387709 0.00005 19.39 19.39 ALIGARH 17106341 0.00005 855.32 855.32 MUZAFFARNA 1793546 0.00005 89.68 89.68 GAR SRINAGAR 15191393 0.00005 759.57 759.57 TIRUPATHI 4913589 0.00005 245.68 245.68

MADRAS ALLAHABAD TOTAL

990997.9 2230970 17,23,07,667.5

0.00002 0.00005 0.00

19.82 111.55 7,052.04

19.82 111.55 7,052.04

Illustration 39: HDFC BANK SERVICE CHARGES FOR JUNE 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) CHANDIGARH 540,816.00 100 SRINAGAR 1,891,198.00 100 SRINAGAR 3,062,696.00 100 TOTAL 300

INTEREST(`) 0 0 0 0

TOTAL(`) 100 100 100 300

COLLECTION CHARGES S.TAX TOTAL

7352.04 757.26 `8109.30


Illustration 40: HDFC BANK SERVICE TAX CHARGES FOR JUNE 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (MAY 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) BANGLORE 82427389.47 0.00003 2,472.82 2,472.82 LUCKNOW 24500000 0.00005 1,225.00 1,225.00 LUDHIANA 20015856 0.00005 1,000.79 1,000.79 KANPUR 15704920 0.00004 628.20 628.20 PUNE 5413747 0.00004 216.55 216.55 INDORE 28670251.01 0.00003 860.11 860.11 ALIGARH 17050644 0.00005 852.53 852.53 MUZAFFARN 1866659 0.00005 93.33 93.33 AGAR MANDI 810562 0.00005 40.53 40.53 GOBINGARH SRINAGAR 14059318 0.00005 702.97 702.97 TIRUPATHI 4604339 0.00005 230.22 230.22 MADRAS 1845882 0.00002 36.92 36.92 CHANDIGARH 1178390 0.00004 47.14 47.14 JAIPUR 10043954 0.00004 401.76 401.76 ALLAHABAD 3970244 0.00005 198.51 198.51 9,007.37 TOTAL 23,21,62,155.5 0.00 9,007.37
Illustration 41: HDFC BANK SERVICE CHARGES FOR MAY 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) KANPUR 553,882.00 100 KANPUR 1,000,000.00 100 LUCKNOW 4,000,000.00 100 300 TOTAL

INTEREST(`) 0 0 0 0

TOTAL(`) 100 100 100 300

COLLECTION CHARGES S.TAX TOTAL

9,307.37 958.66 `10,266.03


Illustration 42: HDFC BANK SERVICE TAX CHARGES FOR MAY 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (APRIL 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`) BANGLORE 74428409.25 0.00003 2,232.85 Rs. 2,232.85 LUCKNOW 26000000 0.00005 1,300.00 Rs. 1,300.00 LUDHIANA 37041955.27 0.00005 1,852.10 Rs. 1,852.10 KANPUR 104142138 0.00004 4,165.69 Rs. 4,165.69 PUNE 892623 0.00004 35.70 Rs. 35.70 INDORE 31642789.3 0.00003 949.28 Rs. 949.28 ALIGARH 13782149 0.00005 689.11 Rs. 689.11 MUZAFFARN 3088043 0.00005 154.40 Rs. 154.40 AGAR MANDI 4391894 0.00005 219.59 Rs. 219.59 GOBINGARH SRINAGAR 17831685 0.00005 891.58 Rs. 891.58 TIRUPATHI 3,128,936.00 0.00005 156.45 Rs. 156.45 MADRAS 4991522.5 0.00002 99.83 Rs. 99.83 CHANDIGARH 4314736 0.00004 172.59 Rs. 172.59 JAIPUR 5190567 0.00004 207.62 Rs. 207.62 ALLAHABAD 4488889 0.00005 224.44 Rs. 224.44 TOTAL 335356336.3 0.00 13351.24653 13351.24717
Illustration 43: HDFC BANK SERVICE CHARGES FOR APRIL 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) SRINAGAR 2,000,000.00 100 SRINAGAR 1,000,000.00 100 SRINAGAR 1,000,000.00 100 SRINAGAR 1,000,000.00 100 LUDHIANA 492,826.00 100 KANPUR 1,257,169.00 100 LUDHIANA 755,000.00 100 KANPUR 821,905.00 100 KANPUR 1,100,000.00 100 KANPUR 400,000.00 100 KANPUR 350,000.00 100 INDORE 578,048.00 100 KANPUR 1,692,597.00 100 KANPUR 553,882.00 100 CHANDIGARH 540,816.00 100 KANPUR 821,905.00 236.44 PUNE(OUTST 404,509.00 126.13

INTEREST(`) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL(`) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 236.44 126.13

ATION) KANPUR(OUT STATION) KANPUR TOTAL

1,100,000.00 1,100,000.00

300 100 2262.57

0 0

300 100 2262.57

COLLECTION 15613.82 CHARGES S.TAX 1608.22 `17222.04 TOTAL

Illustration 44: HDFC BANK SERVICE TAX CHARGES FOR MAY 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (MARCH 2011) HDFC BANK- CMS Bank Service Charge LOCATION MANDI GOBINDGAR H TOTAL AMOUNT(`) 1098359 RATE 0.00005 CHARGES(`) 54.91795 TOTAL(`) 54.918

10,98,359

54.91795

54.918

Illustration 45: HDFC BANK SERVICE CHARGES FOR MARCH 2011

COLLECTION 54.918 SERVICE 5.656554 TAX `60.574554 TOTAL

Illustration 46: HDFC BANK SERVICE TAX CHARGES FOR MARCH 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (FEBRUARY 2011) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`) MANDI 1,785,707.00 0.00005 89.28535 89.2854 GOBINDGARH TOTAL 1,785,707.00 89.29 89.29
Illustration 47: HDFC BANK SERVICE CHARGES FOR FEBRUARY 2011

COLLECTION SERVICE TAX TOTAL

89.2854 9.1963962 `98.4817962

Illustration 48: HDFC BANK SERVICE TAX CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JANUARY 2011) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`) MANDI 29,48,533 0.00005 147.42665 147.4267 GOBINDGAR H TOTAL 29,48,533 147.42665 147.4267
Illustration 49: HDFC BANK SERVICE CHARGES FOR JANUARY 2011

COLLECTION SERVICE TAX TOTAL

147.4267 15.1849501 `162.6116501

Illustration 50: HDFC BANK SERVICE TAX CHARGES FOR JANUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (DECEMBER 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`) MANDI 369,295.00 0.00005 18.46475 18.4648 GOBINDGAR H TOTAL 369,295.00 18.46 18.46
Illustration 51: HDFC BANK SERVICE CHARGES FOR DECEMBER 2010

COLLECTION 18.4648 SERVICE 1.9018744 TAX `20.3666744 TOTAL

Illustration 52: HDFC BANK SERVICE TAX CHARGES FOR DECEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (OCTOBER 2010) HDFC BANK- CMS Bank Service Charges LOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`) SAHARANPU 17,681.00 0.00005 0.88405 0.8841 R DELHI 140,682.00 400 400 400 GURGAON 140,682.00 1,200.00 1,200.00 1200 SAHIBABAD 140,682.00 400 400 400 TOTAL 439,727.00 2,000.88 2,000.88
Illustration 53: HDFC BANK SERVICE CHARGES FOR OCTOBER 2010

COLLECTION 2,000.88 SERVICE 206.091062 TAX `2206.9751 TOTAL 6 5.2 Summary Of Findings

illustration 54: HDFC BANK SERVICE TAX CHARGES FOR OCTOBER 2010

The main part of our analysis of the above provided data has been done therein with the total amount of service charges that the banks charge and the amount of the interest that BSL has to pay to the banks for the returned cheques (cheques that bounce due to non availability of balance in the bank accounts). These show us the meager amount of money that is charged from them for the huge amounts of transactions that take place through the banks. The service charges that are received by the banks for the CMS facilities vary from 0.035 per thousand rupees to about .08 per thousand rupees. These service charges are charged for the instantaneous money transfer from cheques or drafts to BSL accounts which in usual money transactions would have taken from 5 to 7 days. This happens because of the initial transfer of the money drafts of cheques to BSL headquarters at New Delhi from the suppliers which might take 1 to 2 days. After this they are deposited at the concerned bank branches. The process of money transfer takes about 3-4 days from here on depending on the heavy or slow business traffic. Thus during this time the company is without any money and the only way to secure money is to avail Cash Credit (CC) facilities of the banks that are charged at an interest of 11% per annum or more. This would mean a lot of money for a simple cashing of a cheque. BSL, in addition to the interest, had to pay for the courier for the buyers due to the competition. Hence the earlier scheme was quite tedious and maybe was proving to be hefty on BSL bottom line (analysis later on). The interest charged on the Cash Credit facilities is simply calculated by the method of Simple Interest which is usually: Interest = (Amount * Days * Rate)/ (365*100) The courier charges on an average for all the transactions will be taken as `30. The calculations for the different months have been done in the Exhibit 1. The values thus obtained from the exhibits will be used in the analysis and discussion further on. The data which has been obtained in the exhibit after calculations shows that the CMS services availed by BSL have been highly beneficial in saving huge amounts of money for them and at the same time they have also allowed the company to have Working Capital reserves without bothering for external help as it is the money that is in their accounts that is being used to fund their daily needs. The amount of money saved in each of the banks transactions for the months is as follows: March 11: (4, 55,756.09 12,320.78) + (32,838.00 - 2175.98) + (4, 04,040.37 - 15250.99) + (72,517.1 2089.73) + (5255.06 60.5) = `9, 38,508.64 February 11: (78,137.93 12,156.74) + (3, 14,734.09 10,703.47) + (63, 329 1750.01) + (6050.79 98.48) = `4, 37,543.11

January 11: (78,397.38 14,965.49) + (3, 61,881.4 12,358.05) + (95,564 2,919.09) + (9,122.99 162.61) = `5, 14,560.53 December 10: (1, 41,576.55 4, 347.68) + (2,296.47 20.37) = `1, 39,504.97 November 10: (1, 09,223.51 3,248.15) = `1, 05,975.36 October 10: (97,903.76 2987.04) + (5942.6 2206.98) = `98,652.34 September 10: (1, 53,295 4,318.21) = `1, 48,976.79 August 10: (3, 65,397 11,403.25) = `3, 53,993.75 July 10: (2, 68,124.79 8012.79) = `2, 60,112 June 10: (2, 96,661.69 8109.30) = `2, 88,552.39 May 10: (3, 91,833.38 10,266.03) = `3, 81,567.35 April 10: (5, 49,041.46 17,222.04) = `5, 31,819.42 TOTAL SAVINGS (Adding all amounts above) = ` 41, 99,764 If we consider the IDBI and Axis Bank savings for the months April 10 to December 10 (data not available) and add to the above total, we would reach an amount above `50 lakhs. As we can see from the above calculations, the service charges that the banks collect from BSL rather than the Cash Credit charges that were applied before them has enabled BSL to save 4 lakh rupees per month on an average and has also helped to improve its bottom line over the years. This amounts to about `50 lakh per annum which has a lot of meaning in working capital and instant cash for a company which has its supply and demand varying and regularly increasing with the increasing customers and the increasing population of India. The major implication of this savings comes in the income statement of the company which shows that when the company started using CMS services in 2003-2004(Figure 8), the cash profit as well as the EBITDA showed huge jumps along with the sales of the company. This is significant from the view point that with the introduction of Cash Management Services, the buyers of the company products became more trustful of it and this resulted in the increase in the number of clients and also the increase in the sales per client.

Another inference that can be drawn from the same data is that the company, as it was able to hold onto its cash, has been investing its money in more profitable ventures and this has allowed its EBITDA and Cash Profits to grow at a very high rate. In all the banks and branches, the companys marketing network has played a very important role for its strategy implementation. The marketing sites of BSL are spread all across India and it comprises more than 50 urban and semi- urban areas with a few Special Economic Zones under its purview. The company has been able to control the overheads on its marketing department due to the initial collection and deposition of cheques from the buyers and also it has been able to reduce the other charges that it had to bear due to the stiff market competition. Now the onus is on the banks to provide the best of the services by collecting cheques and instantaneously depositing the amounts in BSLs accounts as the competition scenario has now been transferred over to them. This allows the marketing department to be less exhausted and free for its core functions and this has reflected in the better management of the buyers and the suppliers and the interests of each of them are well taken care of by providing better perks and better industry relations. Thus we can see that along with managing the cash to provide for better working capital management the company has been able to increase its overall productivity and hence strengthen its position in the industry. Going further into the details furnished from the bank statements for the CMS services, we have been able to calculate the service charge rates and they vary for each bank and also vary with the branches in each bank. For the Corporation Bank it is 0.08 per `1000 of transaction, for the IDBI bank it is 0.04 per `1000 of transaction and for the Axis Bank it varies from 0.03 to 0.04 per `1000 of transaction. These charges are extremely relevant to the costs BSL has to pay for the CMS facilities and hence it is very important that the least of the rates be used and the banks providing these lower rates be preferred for all the major and minor transactions as this would be very beneficial in bringing the costs further down. Also it is visible from the data that all those cheques that have been returned have an additional cost of `100 per returned cheque for the Axis Bank & Corporation Bank and `50 for IDBI Bank. Additional interest is charged on the days for which the money is not available in the account. The interest is charged to BSL and it is to the tune of 17.5% per day, which is a very significant amount, not for the monetary value but the trust value that is behind it. Thus, one very important implication of the data is the correct choice of the banks and the rates of service they provide.

CHAPTER 6: CONCLUSIONS AND RECOMENDATIONS


INFERENCES The nature of the study in the project was such that the more beneficial of the Cash Credit Services or the Cash Management Services had to be ascertained. From the above calculations and the data that have been made available to me, the Cash Management Services (CMS) clearly have an upper hand on the Cash Credit Services. They are a very good source of instant cash and maintain Working Capital for any company. Also it is truly beneficial to a company of such a large size as Bhushan Steel as the cost of revenue collection and its conversion into tradable form (cash) has been reduced and with these services the onus is totally on the banks to satisfy their customers and provide instant service. As seen from the various calculations and tabulations, the overall benefit to BSL in terms of cash has been an additional `50, 00,000 to the reserves per annum. This is a very good amount which is of high importance to the company when it tries to reach out to the suppliers in situations of very high demand which come at unprecedented times. Also, this has helped the company reduce its credit period during which it had to be dependent on the banks for the cash that too at higher rates. Since the inception of CMS services at BSL, the company has been able to cater to the growth demands and has invested in multi - million dollar initiatives in India and abroad. This has helped it to acquire two steel companies, one in Australia and the other in UAE. With respect to the CMS facilities, the management and the working staff have another positive view that the expansion of the Orissa plant and the increase in the capacities at different sites has been due to the extra cash reserves that the company can avail at low or negligible rates after the CMS facilities have been installed along with the better technology that has come up in the steel sector. The Letter of Credit has been an important source of funds for BSL and huge amount of transactions are carried out by way of Letter of credit in both domestic and international market. It not only hedges the company against the default risk but also ensures that the cash is realized much earlier than the due date of payment. However, in many cases I have noticed that the party does not default but delays the payment to the bank which in turn charges interest to BSL for the period for which it has remained out of funds. This increases the cost of financing. Provisions should be made while entering into agreement with the party so as to avoid such costs. Also, at times it has been observed that the party makes payment to its banker on the due date only and hence the transfer of funds are delayed, again BSL ends up paying an interest for the same. This does not make much of a difference if the credit period is anywhere between 60-180 days. But in case the credit period is less than 60 say 30-45 the cost of financing becomes high. Thus, while entering into agreement with the party such costs must also be taken into consideration. BSL has been managing the funds very well by employing latest management techniques and have also ensured timely realization of funds.

RECOMMENDATIONS I would like to recommend BSL to negotiate with Axis Bank or IDBI Bank for locations such as Aligarh, Allahabad, Mandi-Gobindgarh, Pune and Guwahati as from these locations BSL is having huge transactions, so if negotiated at lower rates, the savings would be higher. As regards to business with Corporation Bank, it is having very high service charges (.08 per `1000) as compared to Axis and IDBI banks (.03 to .04 per `1000); hence better options should be sought in terms of rates and the quality of service. IDBI is charging return charges at half the rate as other banks and this should be a matter for concern when dealing with the other banks. BSL should insist on writing a clause in the agreement with the banks stating that in case of delayed credit, BSL is entitled to claim an interest equivalent to the interest charged by the bank in case of instrument return. Thus, fresh negotiations with banks could save up to 70% of the cost.

APPENDICES
EXHIBIT 1: CALCULATIONS FOR IDBI COLLECTIONS IN MARCH 11: Total collection: `28, 42, 39,496.05 If such an amount was availed on Cash Credit for an average of 5 days, interest for the facility would have been: (284239496.05*5*11) / (100 * 365) = `4, 28,306.09 Total transactions with IDBI: 915 Total courier charges: 915*30 = `27,450 Total expenses of BSL (when cash credit was availed): 428306.09+27450 = `4, 55,756.09 Total expenses of BSL (using CMS services): 10921.56 + 1399.22 = `12,320.78 CALCULATIONS FOR CORPORATION BANK COLLECTIONS IN MARCH 11: Total collection: `24,659,809.00 Cash Credit interest: (24,659,809*5*11) / (100 * 365) = `31,758.62 Total transactions with Corporation Bank: 36 Total courier charges: 36*30 = `1,080 Total expenses of BSL (when cash credit was availed): 31,758+1,080 = `32,838.00 Total expenses of BSL (using CMS services): `2,175.98 CALCULATIONS FOR AXIS BANK COLLECTIONS IN MARCH 11: Total collection: `2, 58,101,697.16 Cash Credit Interest: (2, 58,101,697.16 * 5 * 11) / (100 * 365) = `3, 88,920.37 Total transactions with Axis Bank: 504 Total courier charges: 504*30 = `15,120 Total expenses of BSL (when cash credit was availed): 3, 88,920.37 +15,120 = `4, 04,040.37 Total expenses of BSL (using CMS services): 13,262 + 1988.99 = `15,250.99 CALCULATIONS FOR AXIS BANK COLLECTIONS IN FEBRUARY 11: Total collection: `50,979,169.00 Cash Credit Interest: (50,979,169 * 5 * 11) / (100 * 365) = `76,817.93 Total transactions with Axis Bank: 44 Total courier charges: 44*30 = `1,320 Total expenses of BSL (when cash credit was availed): 76,817.93 + 1,320 = `78,137.93 Total expenses of BSL (using CMS services): 5,091.56 + 7,065.18 = `12,156.74 CALCULATIONS FOR AXIS BANK COLLECTIONS IN FEBRUARY 11: Total collection: `19, 97, 50,622.08 Cash Credit Interest: (19, 97, 50,622.08 * 5 * 11) / (100 * 365) = `3, 00,994.09 Total transactions with Axis Bank: 458 Total courier charges: 458 * 30 = `13,740 Total expenses of BSL (when cash credit was availed): 3, 00,994.09 + 13,740 = `3, 14,734.09 Total expenses of BSL (using CMS services):10,571.90 + 131.57 = `10,703.47 CALCULATIONS FOR AXIS BANK COLLECTIONS IN JANUARY11: Total collection: `51,091,623.00 Cash Credit Interest: (51,091,623 * 5 * 11) / (100 * 365) = `76,987.38

Total transactions with Axis Bank: 47 Total courier charges: 47 * 30 = `1,410 Total expenses of BSL (when cash credit was availed): 76,987.38 + 1410 = `78,397.38 Total expenses of BSL (using CMS services): 4,970.57 + 9,994.92 = `14,965.49 CALCULATIONS FOR AXIS BANK COLLECTIONS IN JANUARY11: Total collection: `230,203,112.50 Cash Credit Interest: (230,203,112.50 * 5 * 11) / (100 * 365) = `3, 46,881.4 Total transactions with Axis Bank: 500 Total courier charges: 500 * 30 = `15,000 Total expenses of BSL (when cash credit was availed): 3, 46,881.4 + 15,000= `3, 61,881.4 Total expenses of BSL (using CMS services): `12,358.05 CALCULATIONS FOR HDFC BANK COLLECTIONS IN MARCH11: Total collection: `3, 81, 70,422 Cash Credit Interest: (3, 81, 70,422 * 5 * 11) / (100 * 365) = `57517.10 Total transactions with HDFC Bank: 500 Total courier charges: 500 * 30 = `15,000 Total expenses of BSL (when cash credit was availed): 57,517.1 + 15,000= `72,517.1 Total expenses of BSL (using CMS services): `2,089.73 CALCULATIONS FOR HDFC BANK COLLECTIONS IN FEBRUARY11: Total collection: `3, 20, 73,319 Cash Credit Interest: (3, 20, 73,319 * 5 * 11) / (100 * 365) = `48,329.66 Total transactions with HDFC Bank: 500 Total courier charges: 500 * 30 = `15,000 Total expenses of BSL (when cash credit was availed): 48,329.66 + 15,000= `63,329.66 Total expenses of BSL (using CMS services): `1750.01 CALCULATIONS FOR HDFC BANK COLLECTIONS IN JANUARY11: Total collection: `5, 14, 74,804 Cash Credit Interest: (5, 14, 74,804 * 5 * 11) / (100 * 365) = `77,564.77 Total transactions with HDFC Bank: 600 Total courier charges: 600 * 30 = `18,000 Total expenses of BSL (when cash credit was availed): 77,564.77 + 18,000= `95,564.77 Total expenses of BSL (using CMS services): `2919.09 CALCULATIONS FOR HDFC BANK COLLECTIONS IN DECEMBER10: Total collection: `7, 90, 23,528 Cash Credit Interest: (7, 90, 23,528 * 5 * 11) / (100 * 365) = `1, 19,076.55 Total transactions with HDFC Bank: 750 Total courier charges: 750 * 30 = `22,500 Total expenses of BSL (when cash credit was availed): 1, 19,076.55 + 22,500= `1, 41,576.55 Total expenses of BSL (using CMS services): `4347.68 CALCULATIONS FOR HDFC BANK COLLECTIONS IN NOVEMBER10: Total collection: `5, 95, 43,787 Cash Credit Interest: (5, 95, 43,787 * 5 * 11) / (100 * 365) = `89,723.51 Total transactions with HDFC Bank: 650 Total courier charges: 650 * 30 = `19,500

Total expenses of BSL (when cash credit was availed): 89,723.51 + 19,500= `1, 09,223.51 Total expenses of BSL (using CMS services): `3,248.15 CALCULATIONS FOR HDFC BANK COLLECTIONS IN OCTOBER10: Total collection: `5, 30, 27,040 Cash Credit Interest: (5, 30, 27,040 * 5 * 11) / (100 * 365) = `79,903.76 Total transactions with HDFC Bank: 600 Total courier charges: 600 * 30 = `18,000 Total expenses of BSL (when cash credit was availed): 79,903.76 + 18,000= `97,903.76 Total expenses of BSL (using CMS services): `2987.04 CALCULATIONS FOR HDFC BANK COLLECTIONS IN SEPTEMBER10: Total collection: `8, 49, 48,978 Cash Credit Interest: (8, 49, 48,978 * 5 * 11) / (100 * 365) = `1, 28,005.31 Total transactions with HDFC Bank: 843 Total courier charges: 843 * 30 = `25,290 Total expenses of BSL (when cash credit was availed): 1, 28,005.31 + 25,290= `1, 53,295.31 Total expenses of BSL (using CMS services): `4,318.21 CALCULATIONS FOR HDFC BANK COLLECTIONS IN AUGUST10: Total collection: `22, 14, 67,397.54 Cash Credit Interest: (22, 14, 67,397.54 * 5 * 11) / (100 * 365) = `3, 33,717.99 Total transactions with HDFC Bank: 1056 Total courier charges: 1056 * 30 = `31,680 Total expenses of BSL (when cash credit was availed): 3, 33,717.99 + 31,680 = `3, 65,397.99 Total expenses of BSL (using CMS services): `11,403.25 CALCULATIONS FOR HDFC BANK COLLECTIONS IN JULY10: Total collection: `15, 41, 85,815.75 Cash Credit Interest: (15, 41, 85,815.75 * 5 * 11) / (100 * 365) = `2, 32,334.79 Total transactions with HDFC Bank: 1193 Total courier charges: 1193 * 30 = `35,790 Total expenses of BSL (when cash credit was availed): 2, 32,334.79 + 35,790 = `2, 68,124.79 Total expenses of BSL (using CMS services): `8,012.79 CALCULATIONS FOR HDFC BANK COLLECTIONS IN JUNE10: Total collection: `17, 23, 07,667.5 Cash Credit Interest: (17, 23, 07,667.5 * 5 * 11) / (100 * 365) = `2, 59,641.69 Total transactions with HDFC Bank: 1234 Total courier charges: 1234 * 30 = `37,020 Total expenses of BSL (when cash credit was availed): 2, 59,641.69 + 37,020 = `2, 96,661.69 Total expenses of BSL (using CMS services): `8,109.30 CALCULATIONS FOR HDFC BANK COLLECTIONS IN MAY10: Total collection: `23, 21, 62,155.5 Cash Credit Interest: (23, 21, 62,155.5 * 5 * 11) / (100 * 365) = `3, 49,833.38 Total transactions with HDFC Bank: 1400 Total courier charges: 1400 * 30 = `42,000 Total expenses of BSL (when cash credit was availed): 3, 49,833.38 + 42,000 = `3, 91,833.38 Total expenses of BSL (using CMS services): `10,266.03

CALCULATIONS FOR HDFC BANK COLLECTIONS IN APRIL10: Total collection: `33, 53, 56,336.3 Cash Credit Interest: (33, 53, 56,336.3 * 5 * 11) / (100 * 365) = `5, 05,331.46 Total transactions with HDFC Bank: 1457 Total courier charges: 1457 * 30 = `43,710 Total expenses of BSL (when cash credit was availed): 5, 05,331.46 + 43,710 = `5, 49,041.46 Total expenses of BSL (using CMS services): `17,222.04 CALCULATIONS FOR HDFC BANK COLLECTIONS IN MARCH11: Total collection: `10, 98,359 Cash Credit Interest: (10, 98,359 * 5 * 11) / (100 * 365) = `1655.06 Total transactions with HDFC Bank: 120 Total courier charges: 120 * 30 = `3,600 Total expenses of BSL (when cash credit was availed): 1,655.06 + 3,600= `5,255.06 Total expenses of BSL (using CMS services): `60.5 CALCULATIONS FOR HDFC BANK COLLECTIONS IN FEBRUARY11: Total collection: `17, 85,707 Cash Credit Interest: (17, 85,707 * 5 * 11) / (100 * 365) = `2, 690.79 Total transactions with HDFC Bank: 112 Total courier charges: 112 * 30 = `3,360 Total expenses of BSL (when cash credit was availed): 2,690.79 + 3,360 = `6,050.79 Total expenses of BSL (using CMS services): `98.48 CALCULATIONS FOR HDFC BANK COLLECTIONS IN JANUARY11: Total collection: `29, 48,533 Cash Credit Interest: (29, 48,533 * 5 * 11) / (100 * 365) = `4,442.99 Total transactions with HDFC Bank: 156 Total courier charges: 156 * 30 = `4,680 Total expenses of BSL (when cash credit was availed): 4,442.99 + 4,680= `9,122.99 Total expenses of BSL (using CMS services): `162.61 CALCULATIONS FOR HDFC BANK COLLECTIONS IN DECEMBER10: Total collection: `3, 69,295 Cash Credit Interest: (3, 69,295 * 5 * 11) / (100 * 365) = `556.47 Total transactions with HDFC Bank: 58 Total courier charges: 58 * 30 = `1,740 Total expenses of BSL (when cash credit was availed): 556.47 + 1,740= `2,296.47 Total expenses of BSL (using CMS services): `20.37 CALCULATIONS FOR HDFC BANK COLLECTIONS IN OCTOBER10: Total collection: `4, 39,727 Cash Credit Interest: (4, 39,727 * 5 * 11) / (100 * 365) = `662.6 Total transactions with HDFC Bank: 176 Total courier charges: 176 * 30 = `5,280 Total expenses of BSL (when cash credit was availed): 662.6 + 5280= `5942.6

Total expenses of BSL (using CMS services): `2206.98 EXHIBIT 2 (A): BALANCE SHEET AS ON 31st March, 2009

EXHIBIT 2 (B): BALANCE SHEET AS ON 31st March, 2010

EXHIBIT 2 (C): CONTINUATION OF EXHIBIT 2 (B)

BIBLIOGRAPHY AND REFRENCES


REFERENCES 1 BHUSHAN STEEL LIMITED PROFILE: http://www.bhushan-group.org/about.asp 2 BHUSHAN STEEL LIMITED PROFILE: http://www.bhushan-group.org/about.asp 3 BHUSHAN STEEL LIMITED MILESTONES: http://www.bhushangroup.org/milestones.asp 4 BHUSHAN STEEL LIMITED MANAGEMENT DESK: http://www.bhushangroup.org/management_desk. BHUSHAN STEEL LIMITED VISION: http://www.bhushan-group.org/vision.asp 5 BHUSHAN STEEL LIMITED PROFILE: http://www.bhushan-group.org/about.asp 6 THE McKINSEY 7S FRAMEWORK STRATEGY SKILLS TRAINING FROM MindTools.com: http://www.mindtools.com/pages/article/worksheets/7S.htm 7 THE McKINSEY 7S FRAMEWORK STRATEGY SKILLS TRAINING FROM MindTools.com: http://www.mindtools.com/pages/article/worksheets/7S.htm BIBLIOGRAPHY
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