Debiters Management

8/12/2019 Debiters Management

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INTRODUCTION

Debtor management means the process of decisions relating to the investment in business

debtors. In credit selling, it is certain that we have to pay the cost of getting money from

debtors and to take some risk of loss due to bad debts. To minimize the loss due to not

receiving money from debtors is the main aim of debtor management.

Main elements or dimensions of Debtors management

For effective debtor management, following elements should be analyzed

. !redit policy

!redit policy effects debtor management because it guides management about how to

control debtors and how to make balance between liberal and strict credit. If company does

not restrict to sell the products on credit after a given limit of sale. This liberated credit policy

will increase the amount of sale and profitability. "ut risk will also increase with increasing

of sale. If we sell the good to those debtors whose capability to pay is not good, then it is

possible that some amount will become bad debts. !ompany can increase the time limit for

paying by such debtors. #n the other hand, if company$s credit policy is strict, then it will

increase li%uidity and security, but decrease the profitability. &o, finance manager should

make credit policy at optimum level where profitability and li%uidity will be e%ual. 'e can

show it graphically.

&ub part of credit policy

(a) *ength of !redit period

*ength of credit period is also an element that affects decisions of finance manager

relating to manage debtors. It is the time which allows to debtor to pay his debt for

purchasing goods on credit from vendor. Finance manager can increase the length of credit

period according to reputation of customers.

(b) !ash discount


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!ash discount is techni%ue to get money fastly from debtors. It is cost of investment

in credit sale.

+. !redit policy analysis

It means decision relating to analysis of credit policy. valuation and analysis of

credit policy is based on following factors.

a) !ollection of debtor$s information

For analysis the financial position of debtors, we have to collect the information

relating to debtors. This information can be obtained from customer$s financial statements of

previous years, bank reports, and information given by credit rating agencies. These

information will be useful for deciding where debtors will our debt or not. It will also be

useful for knowing capability to pay the debt.

b) !redit Decisions

-fter collection and analysis the debtor$s information, manager has to decide whether

company should facilitate to sell goods on credit or not. If company sells the goods on credit

to particular debtor, then at what level it will be sold after seeing his position. For this

manager can fi the standard for providing goods on credit. If a particular debtor is below

than given standard, then he should not accept his proposal of buying goods on credit.

/. Formulation !ollection 0olicy

For getting fund fastly from debtor, the following steps will be taken under

formulation of collection policy.

a) &end reminding letter for paying debt

b) Take the help of debt collection agency for getting bad debt.

c) To do legal action against bad debtors.

d) To re%uest personally to debtor to pay his dues on mobile or email.

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e) Finance manager should monitor collection position through average collection

period from past sundry

Debtor and their turnover ratio.

f) To make ageing schedule. &ample of ageing schedule is given below. -ccounts

receivable is an accounting transaction which deals with the billing of customer who owes

money to a person, company or organization for goods and services that has been provided to

the customers. In most business entities this is typically done by generating an invoice and

mailing or electronically delivering it to the customer, who in turn must pay it within an

established timeframe called credit or payment terms.

-n eample of a common payment term is 1et /2, meaning payment is due in the amount of

the invoice /2 days from the date of invoice. #ther common payment terms include 1et 34

and 1et 52 but could in reality be for any time period agreed upon by the vendor and the

customer.

#n a company6s balance sheet, accounts receivable is the amount that customers owe to that

company. &ometimes called trade receivables, they are classified as current assets assuming

that they are due within one year. To record a 7ournal entry for a sale on account, one must

debit a receivable and credit a revenue account. 'hen the customer pays off their accounts,

one debits cash and credits the receivable in the 7ournal entry. The ending balance on the trial

balance sheet for accounts receivable is always debit.

-ccounts receivable departments use the sales ledger. #ther types of accounting transactions

include accounts payable, payroll, and trial balance.

- debt management plan is a formal agreement between a debtor and creditor(s). Debt

Management 0lans help reduce outstanding, unsecured debts at a reduced level over a fied

period of time to help regain control of finances.

Debt Management 0lans are individually tailored based on what can be realistically afforded

on a monthly basis. To achieve an accurate figure, an income and ependiture test will

establish what monies are coming into the household and what is being paid out. Income and

ependiture includes everything, such as rent8mortgage, secured loans, utility bills, and

essential living epenses (food 9 T: license etc). #nce the income and ependiture is

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completed, the leftover amount is your disposable income which is divided amongst creditors

through a Debt Management company. 'orking capital (abbreviated '!) is a financial

metric which represents operating li%uidity available to a business, organization or other

entity, including governmental entity. -long with fied assets such as plant and e%uipment,

working capital is considered a part of operating capital. 1et working capital is calculated as

current assets minus current liabilities. It is a derivation of working capital, that is commonly

used in valuation techni%ues such as D!Fs (Discounted cash flows). If current assets are less

than current liabilities, an entity has a working capital deficiency, also called a working

capital deficit.

- company can be endowed with assets and profitability but short of li%uidity if its assets

cannot readily be converted into cash. 0ositive working capital is re%uired to ensure that a

firm is able to continue its operations and that it has sufficient funds to satisfy both maturing

short;term debt and upcoming operational epenses. The management of working capital

involves managing inventories, accounts receivable and payable, and cash.!ompany can sell

the goods on credit or cash. !ash sale is inflow of cash and it is controlled under cash flow

analysis. "ut credit sale creates sundry debtors. !ompany has to receive money from them. If

company starts to sell on return of cash, then it decreases the level of company$s sale and

profitability. #n the other side, if company promotes credit sale, it can increase the risk of

bad debts. &o, it is re%uired to control and to manage debtors.

Meaning of Debtor management



debtors and to take some risk of loss due to bad debts. To minimize the loss due to not

receiving money from debtors is the main aim of debtor management.



!redit policy

!redit policy effects debtor management because it guides management about how to control

debtors and how to make balance between liberal and strict credit. If company does not

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restrict to sell the products on credit after a given limit of sale. This liberated credit policy








BOOK KEEPING FOR ACCOUNTS RECEIVABLE

!ompanies have two methods available to them for measuring the net value of accountreceivables, which is computed by subtracting the balance of an allowance account from the

accounts receivable account.

The first method is the allowance method, which establishes a liability account, allowance for

doubtful accounts, or bad debt provision, that has the effect of reducing the balance for

accounts receivable. The amount of the bad debt provision can be computed in two ways ;

either by reviewing each individual debt and deciding whether it is doubtful (a specific

provision) or by providing for a fied percentage, say +

The term receivable management is defined as ?debt owed to the firm by !"tomer

#ri"i$% from the "#&e of %ood"' "er(ie" i$ the ordi$#ry o!r"e of b!"i$e"".@ The

receivable represents an important component of the current assets of the firm.

=eceivables may be known as accounts receivables, trade creditors or customer

receivable. 'hen a firm its products 8 services and does not receive cash for it

immediately, the firm has said to be granted trade credit to the customers. Trade credit

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thus creates receivable 8 book debts, which the firm is epected to collect in near future.

-ccounts receivable are thus amounts due from customers, which bear no interest in

essence, a company is providing no cost financing to the customer to encourage the

purchase of the company$s product8services.

The etension of credit can be 7ustified only if the increase in the sales and related cash

collections (discounted for the time until collection) eceeds the amount otherwise cash

generated under a ?cash only@ policy.

These customer from whom receivable or book debt are to be collected in the future are

called as ?tr#de debtor"@ or simply as ?debtor@ and represents the firm$s claim on assets.

Trade debtors are epected to be converted into cash within a short period and are

included in the current assets. &ince receivables often accounts for the significance portion

of total assets, it re%uires careful attention and ade%uate management. It is skill demanding

field because the customer has to be bestowed with trust along with a continuous

vigilance.

COSTS)

The ma7or categories of cost associated with etension of credit and receivable areA

!ollection cost

!apital cost

Delin%uency cost

Default cost

COLLECTION COST)

These costs are administrative cost incurred in collecting the receivable from the customers.This category includesA

. -dditional epenses on the creation and maintenance of a credit department with staff,

accounting, records, stationary, postage and other related items.

+. penses involved in ac%uiring credit information either through outside specialist

agencies or by the staff of the firm itself.

CAPITAL COST)

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-ccounts receivables, being an investment in current assets, have to be financed involving a

cost. There is a time lag between the sale of goods to, and the payment by, the customers.

Meanwhile the firm has to pay employees and suppliers of raw material i.e. the firm should

arrange for additional funds to meet its own obligations. Thus, the cost on the use of additional

capital to support credit sales is therefore apart of the cost of etending credit .

DELIN*UENC+ COST)

This cost arises out of the failure of the customer to meet their obligations when payment on

credit sales becomes due after the epiry of the period of credit. &uch cost includesA

"locking up of funds for an etended period.

!ost associated with steps that have to be initiated to collect the overdue, such as

reminders and other collection efforts, legal charges, where necessary , and so on.

DEFAULT COST

In addition of the above cost the firm may not be able to recover the overdue because of

inability of the customers. &uch debts are treated as bad debts and have to be written off, as

they cannot be realized. Though a concern may be able to reduce bad debts through efficient

collection mechanism, one cannot altogether rule out the possibility of this cost.

BENEFITS)

-part from the cost, another factor that has a bearing on accounts receivable is the benefit

emanating from credit sales. The benefits areA

?The i$re#"ed "#&e #$d thereby ,rofit"@

Bowever, the benefits would depend upon the credit policy adopted by the firm, i.e., a

conservative or liberal credit policy. The impact of liberal credit policy is likely to have two

formsA;

i. &ales epansion

ii. &ales retention

In sales epansion a firm may grant credit either to increase sales or to attract new customer.

This motive is growth orientedC on the other hand the sales retention the firm may grant credit


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to protect its current sales against emerging competition. 1o matter whatever is the motive, the

result the result of increased sales is the increase the profit of the firm.

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SO-E BASIC DEFINITION

'hen the buying and selling process steps forward and the customer is not able to pay the total

amount, the amount which they are not able to pay at the same time of buying the amount is

known as DEBT.

In the balance sheet of companies those customers are DEBTORS. In their balance sheet

company is a CREDITOR.

#n the basis of market performance and credit rating company decides the time period of

payback of the amount. This time period is known as CREDIT PERIOD.

The total amount called as debt is called as OUTSATNDING.'hen this total outstanding is

not paid within the credit period the amount remained to be collected is called as OVERDUE.

The total overdue is divided in different parts such as overdue within /mo$th"0 from /12

mo$th"0 2134 mo$th"0 3 to 4 yr"0 41/ yr"0 #bo(e /yr"0 #$d #bo(e 5 yr".

'hen the customer is not able to pay back the due after five years then this amount is known

as BAD DEBTS.

BI* has kept some amount for this type of time of contingencies. This amount use for

decreasing the effect of bad debts is called as PROVISION.

CURRENT ASSETSare those assets which can be converted into cash within the period of

34 mo$th"starting from the company$s financial year.

CURRENT LIABILITIESare those liabilities which are repaid within 34 mo$th" starting

from company$s financial year.


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RESEARC6 -ET6ODOLOG+

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The study is descriptive in nature in the sense that it focuses basically on analyzing the

debtor$s management at BI*.

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OB7ECTIVE OF T6E STUD+

The process of debtor$s management in BI* how the outstanding debtors are

accounted 9 what steps and actions are taken and should be taken to recover thesedues on time.

!omparison of BI* with other key players with respect to the debtors.

0osition of debtors in different industries.

Bence the firm is re%uired to allow the credit sale in order to epand its sales volume. The

increase in sales is also essential to increase profitability.

The sales of goods have become an essential part of the modern competitive economic

system.

In fact credit sales and receivables are treated as a marketing tool to aid the sale of goods.

?To promote sales and profit until that point is reached where the return on investment in

further funding of receivable is less than the cost of funds raised to finance that additional

credit(i.e. cost of capital)@


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NEED FOR T6E STUD+

Trade credit is an important marketing tool. - policy of trade credit is followed

nearly in all capital intensive industries either for sales epansion and 8or sales

retention. Hnder any circumstances investment in receivable is growth oriented.

-ARKET FACTOR)Market factors like price, forces accompany to grant credit.For eample, BI* whose price is comparatively higher is forced to grant credit inorder to maintain sale.

CO-PETITION)In view of stiff competition from both domestic and internationalplayers, the company is left with no option then to grant credit. !ompetition is

another vital factor, which affects the credit policy of a firm, and BI* is not an

eception.

CUSTO-ER8S RE*UIRE-ENT) -s the market has changed to the buyer$s

market, the customers have become kings. If the customer epects credit and is

worthy of it, he gets it.

-ARKETING TOOL)T o push up sales of slow moving products and encourage

bulk purchase of fast moving products, credit plays an effective role in this contet.

RESESSIONAR+ ECONO-IC CONDITIONS) *i%uidity crunch forces thecompany to grant credit.

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SCOPE OF T6E STUD+The scope of this study is limited to the study of Debtors Management at BI*. The scope

encompassed with the debtors section of the company which is a part of finance and

accounting department.

&ources of data !ollection

Primary data are collected by interviewing customers and employees of BI*

Secondary dataare collected by using internet, magazines and tet books.

+.4 &ampling

The study was done by using the age wise analysis of debtors.

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LI-ITATION OF T6E STUD+

) The time horizon is very short, so in depth analysis could be done only of fewschemes.

+) The pro7ect is dependent on the relevance of the secondary data (e.g. -nnual reports

of various companies) collected from the internet which might not be correct.

/) The study has been done on only a handful of data so it cannot be generalized to the

entire industry.

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LITERATURE REVIE9

!ompany can sell the goods on credit or cash. !ash sale is inflow of cash and it is

controlled under cash flow analysis. "ut credit sale creates sundry debtors. !ompany has to

receive money from them. If company starts to sell on return of cash, then it decreases the

level of company$s sale and profitability. #n the other side, if company promotes credit sale,

it can increase the risk of bad debts. &o, it is re%uired to control and to manage debtors.

Meaning of Debtor management



debtors and to take some risk of loss due to bad debts.

To minimize the loss due to not receiving money from debtors is the main aim of debtor

management.



. !redit policy

!redit policy effects debtor management because it guides management about how to control

debtors and how to make balance between liberal and strict credit. If company does not

restrict to sell the products on credit after a given limit of sale. This liberated credit policy



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-ccounts receivable are a legally enforceable claim for payment to a business by its

customer8 clients for goods supplied and8or services rendered in eecution of the customer$s

order. These are generally in the form of invoices raised by the business and delivered to the

customer for payment within an agreed time frame. -ccounts receivable are shown in the

balance sheet as asset. It is one of a series of accounting transactions dealing with the billing

of a customer for goods and services that the customer has ordered. These may be

distinguished from notes receivable, which are debts created through formal legal instruments

called promissory notes.

!ontents Lhide

#verview

+ 0ayment terms

/ -ccounts =eceivable -ge -nalysis

3 "ookkeeping

4 &pecial uses

5 =elated accounting topics

&ee also

E 1otes and references

#verview

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-ccounts receivable represents money owed by entities to the firm on the sale of products or

services on credit. In most business entities, accounts receivable is typically eecuted by

generating an invoice and either mailing or electronically delivering it to the customer, who,

in turn, must pay it within an established timeframe, called credit termsL+ or payment terms.

The accounts receivable department uses the sales ledger, because a sales ledger normally

recordsAL/

The sales a business has made.

The amount of money received for goods or services.

The amount of money owed at the end of each month varies (debtors).

The accounts receivable team is in charge of receiving funds on behalf of a company and

applying it towards their current pending balances.

!ollections and cashiering teams are part of the accounts receivable department. 'hile the

collections department seeks the debtor, the cashiering team applies the monies received.

0ayment terms

-n eample of a common payment term is 1et /2 days, which means that payment is due at

the end of /2 days from the date of invoice. The debtor is free to pay before the due dateC

businesses can offer a discount for early payment. #ther common payment terms include 1et

34, 1et 52 and /2 days end of month. The creditor may be able to charge late fees or interest

if the amount is not paid by the due date.

"ooking a receivable is accomplished by a simple accounting transactionC however, the

process of maintaining and collecting payments on the accounts receivable subsidiary

account balances can be a full;time proposition. Depending on the industry in practice,

accounts receivable payments can be received up to 2 > 4 days after the due date has been

reached. These types of payment practices are sometimes developed by industry standards,

corporate policy, or because of the financial condition of the client.

&ince not all customer debts will be collected, businesses typically estimate the amount of

and then record an allowance for doubtful accountsL3 which appears on the balance sheet as


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a contra account that offsets total accounts receivable. 'hen accounts receivable are not paid,

some companies turn them over to third party collection agencies or collection attorneys who

will attempt to recover the debt via negotiating payment plans, settlement offers or pursuing

other legal action.

#utstanding advances are part of accounts receivable if a company gets an order from its

customers with payment terms agreed upon in advance. &ince billing is done to claim the

advances several times, this area of collectible is not reflected in accounts receivables.

Ideally, since advance payment occurs within a mutually agreed;upon term, it is the

responsibility of the accounts department to periodically take out the statement showing

advance collectible and should be provided to sales 9 marketing for collection of advances.

The payment of accounts receivable can be protected either by a letter of credit or by Trade

!redit Insurance

-ccounts =eceivable -ge -nalysis

-n -ccounts =eceivable -ge -nalysis, also known as the Debtors "ook is divided in

categories for current, /2 days, 52 days, 2 days or longer. The analysis or report is

commonly known as an -ged Trial "alance. !ustomers are typically listed in alphabetic

order or by the amount outstanding, or according to the company chart of accounts. Nerobalances are not usually shown.

"ookkeepingLedit

#n a company6s balance sheet, accounts receivable are the money owed to that company by

entities outside of the company. -ccount receivables are classified as current assets assuming

that they are due within one calendar year or fiscal year. To record a 7ournal entry for a sale

on account, one must debit a receivable and credit a revenue account. 'hen the customer

pays off their accounts, one debits cash and credits the receivable in the 7ournal entry. The

ending balance on the trial balance sheet for accounts receivable is usually a debit.

"usiness organizations which have become too large to perform such tasks by hand (or small

ones that could but prefer not to do them by hand) will generally use accounting software on

a computer to perform this task.

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!ompanies have two methods available to them for measuring the net value of accounts

receivable, which is generally computed by subtracting the balance of an allowance account

from the accounts receivable account.

The first method is the allowance method, which establishes a contra;asset account,

allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the

balance for accounts receivable. The amount of the bad debt provision can be computed in

two ways, either () by reviewing each individual debt and deciding whether it is doubtful (a

specific provision)C or (+) by providing for a fied percentage (e.g. +


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&ub part of credit policy

(a) *ength of !redit period

*ength of credit period is also an element that affects decisions of finance manager relating to

manage debtors. It is the time which allows to debtor to pay his debt for purchasing goods on

credit from vendor. Finance manager can increase the length of credit period according to

reputation of customers.

(b) !ash discount

!ash discount is techni%ue to get money fastly from debtors. It is cost of investment in credit

sale.

+. !redit policy analysis

It means decision relating to analysis of credit policy. valuation and analysis of credit policy

is based on following factors.

a) !ollection of debtor$s information

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For analysis the financial position of debtors, we have to collect the information relating to

debtors. This information can be obtained from customer$s financial statements of previous

years, bank reports, and information given by credit rating agencies. These information will

be useful for deciding where debtors will our debt or not. It will also be useful for knowing

capability to pay the debt.

b) !redit Decisions

-fter collection and analysis the debtor$s information, manager has to decide whether

company should facilitate to sell goods on credit or not. If company sells the goods on credit

to particular debtor, then at what level it will be sold after seeing his position. For this

manager can fi the standard for providing goods on credit. If a particular debtor is below

than given standard, then he should not accept his proposal of buying goods on credit.

/. Formulation !ollection 0olicy

For getting fund fastly from debtor, the following steps will be taken under formulation of

collection policy.

a) &end reminding letter for paying debt

b) Take the help of debt collection agency for getting bad debt.

c) To do legal action against bad debtors.

d) To re%uest personally to debtor to pay his dues on mobile or email.

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e) Finance manager should monitor collection position through average collection period

from past sundry

debtor and their turnover ratio.

f) To make ageing schedule. &ample of -geing schedule is given belowManaging the debtors

for 6IL is an important and chief function of the sales accounts division of finance and

accounts. -ll the transactions of commercial nature are dealt with by this department in a

detailed outline frame of working. The debtors arise each month out of the sales made on

credit and suitable feeding of the re%uired figures has to be made once in a month. This

function is very much a difficult task owing to the various subsidiaries and associate

companies being controlled by TISCOitself.

The activities of each of the companies are diverse in operations and re%uire different policy

formulations and strategies for complying with the eisting market re%uirements. "ut they are

controlled in a centralized manner so that they give an actual overview of the standing of the

company. The profitability of each of the above is e%ually important to arrive at a consensus

for finding out the actual earnings and future prospects. -s such each of the company under

subsidiary and associate is incorporated under distinct centres as Profit Ce$tre.

To flatten the organizational structure and developed authority and responsibility for the

%uicker responsiveness to changing market conditions and greater initiative in dealing with

different target markets, BI* has brought in the concept of profit centre. For all practical

purpose, each profit centre functions as a separate company within the hold of BI*. From the

debtors management point of view also each profit centre has the responsibility of appraising

and dealing with its customers. Bowever the overall control is centralized and is in the hands

of the finance department. The main function which lies at the hands of BI*, amshedpur is

to report such standings of the actual debtors as on a particular date to the -D in the form of

a monthly report. The figures thus arrived at give an overview of which profit centrescontribute the most to the debtor$s standing and the specific reasons for the same.

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"eing a steel manufacturing concern, BI* is mainly concerned with the actual debtors arising

for the following profit centresA

STEEL

9IRE DIVISIONS

FERRO ALLO+S AND -INERALS DIVISION

TUBES DIVISION

BEARINGS

ach of the above profit centers have debtors of their own which are handled and managed ina centralized manner. For an eample, tubes division is one of the most important division

which has the maimum contribution to the total sales taking together all the profit centers at

a point of time. It has various parties of its own as debtors such as ESSAR STEEL

LI-ITED0 BLUE STAR LI-ITED0 6+DERABAD INDUSTRIES LI-ITED0

-EC6ATRONICS and many debtors. - database relating to the different parties is

maintained in a pre specified format which helps in understanding the actual standing of the

debtor from the point of view of the actual sale being made to the party on credit till date.

This format helps in maintaining the records in a form which helps in 7udging the actual

ageing of the debtors and the amount being recovered from the total debt. "y ageing we mean

to give an actual definition to the debtors in terms of how old has the debt been to him and

thereby categorizing him for the purpose. - same prescribed format is used by all the profit

centers for managing their respective debtors.

E:PLANATION

Through this preparation we get to know the actual total debtors figures and the ma7or parties

that have contributed to the increase and decrease in the debtors as when compared with the

previous financial period. It mainly emphasizes upon the total debtors figures and the overdue

debtors and their ma7or contributors in the form of party names and figures. It also gives all

list of indications for the debtors whose standing are for periods beyond si months. This

reporting is crucial for the reason that it gives the management the indicative areas for focus,

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the reasons for a rise in debtors and suitable control for future standing which is profitable to

the company as a whole.

This chapter provides related literature on debtor management and business

performance of an organization .It covered what scholars have written about them

from selected published 7ournals, on internet and tet books.

-ET6ODS OF DEBTOR -ANAGE-ENT)

Debtors occupy an important position in the structure of current assets of a firm.

They are the outcome of rapid growth of trade credit granted by the firms to their

customers. Trade credit is the most prominent force of modern business. It is

considered as a Marketing tool acting as a bridge for the movement of goods

through production and distribution stages to customers.

It is generally believed that credit policy stimulates sales as it helps in retaining

eisting customers and winning clients from rivals. Trade debtors represent

amounts owed to the firm as a result of credit sale of goods or services in the

ordinary course of business. The key function of credit management is to optimize

the sales at the minimum possible cost of credit.

RATIONALE OF CREDIT

-ccording to Jakuru ulius (+22), firms use credit as a marketing weapon for

epanding business in a declining industry. In a growing competitive market, credit

is used to increase a firms markets share of minimize erosion of the firm$s

market share by maintaining the firms share and maintaining the firm market

share. Further more, it helps to retain old customers and create new ones by winingthem away from competitors. To him, credit etension is a desirable option on

which companies can do business in a better way hence gaining competitive

advantage.

Jakuru ulius goes further to define credit policy as a set of polices of action

designed to manage costs associated with credit, while maimizing the benefits

from it. - firm may follow a limited or a stringent credit policy.

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T+PE OF CREDIT POLIC+

Jakuru ulius (+22), identifies + types of credit policiesC *enient and &tringent

!redit 0olicies. To him, a lenient credit policy tends to give credit to customer on

very liberal terms and standards. Be further notes that a stringent credit policy is

highly selective and gives credit to only those customers whose credit worthiness

has been ascertained and who are financially strong.

Co"t" #""oi#ted with e;te$di$% redit

"oggess '.0 (5), noted that carrying costs are those costs of capital measured

as the company$s internal re%uired rate of return on funds committed in receivables

where as normal credit costs are those costs for supporting the credit function, for

eample legal collections.

=osse and 'aster field (EE), distinguished two costsC the carrying costs and

opportunity costs.

To them, carrying costs are those associated with credit etension and investment

in receivables. They include the re%uired rate of return from bad debts and the

costs associated with credit analysis, monitoring and collection efforts. They

further argued that opportunity costs are costs related to loss of sales and as a result

of refusing to grant credit.

-ccording to :an Borne (E), a firm should evaluate its credit policy in terms of

returns and costs. The costs involved includeC the selling costs, administration

costs, collection costs and bad debt losses. :an Born however identifies these costs

as involving in the implementation of credit sales. Be further emphasizes that a

firm can realize sales because of credit sales, which leads to larger profits.

Jakuru ulius (+22) noted that though etending credit is beneficial, it involves

costs which are inevitable in some cases, and these costs includeC collection costs,

bad debt losses, administrative costs and opportunity costs. To him, collection

costs are incurred at the time of collection of receivables. These could be in form

of sending reminding letters, meeting telephone charges and making reminders

through the press in some cases.

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NATURE OF CREDIT MANAGEMENT POLICIES

!redit management policies are comprehensive set procedures and guidelines that

must be followed by banks in lending practices to achieve their goals (-gu, E).

The term credit policy is used to refer to the combination of three decision

variables i.e. credit standards, credit terms and collection efforts on which the

financial manager has influence. !redit standards are criteria to decide the types of

customers to whom goods could be sold on credit. If a firm has more slow; paying

customers, its investment in accounts receivable will increase. The firm will also

be eposed to higher risk of default.

-ccording to 0andey (+22), in order to analyze customers and set standards, two

aspects are consideredC the average collection paid and the default rate. To him,

average collection paid refers to the period in which debts remain outstanding, and

default rate is the ratio of uncollected receivables to the total receivables.

0andey (+22) identifies 4!$s of credit as a measurement in setting standards. The

4 !$s includeC character, capacity, condition, capital, and collateral.

Ch#r#ter

-ccording to 0andey (4) the credit manager attempts to ascertain the

applicant$s willingness to pay and settle his or her obligation. Much consideration

is accorded to the moral factor. -s much as possible, the financial manger should

ascertain whether the customer will make honest efforts to meet the credit

obligations of the firm. In making analyses about the customer$s character, the firm

should consider some of the aspect from the clients. These aspects includeC bank

references, marital status, attachment to government agencies, level of education

contact operational stability and historical background.

-ccording to 0andey (+22), !apacity is the ability of a customer to pay credit

advanced to him or her.

In analysis his or her capacity, the manager should look at financial statements,

previous eperience with the firm, bank and trade references, amount and purpose

of credit.

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Jakuru, (+22) also considers that factors like profit margin, cash flows, acid

taste ratio of business, and the duration one has been in the business should be

looked while analyzing capacity.

Co$ditio$

-ccording to Jakuru (+22), this includes the assessment of prevailing economic

and other factors like social > political which may affect the customer$s ability to

pay. In addition, where customers incur substantially larger transport costs, one

could be disruptive in etending credit to such. This is because this high cost

reduces their profits which may affect their payments. -ll these views are shared

by 0andy (+22).

-ccording to 0andey (4), one should evaluate the customer$s financial position

by analyzing ratios and trends in cash and working capital positions. The attributes

to consider are how much the owner of the business has put in the business as this

determines the stake of the person in the business. 0andey (+22) contends that, in

some situations, the applicant may be re%uired to offer securities before credit is

advanced. The security should be safe and easily marketable.

Credit term"

-ccording to 0andey (4), credit terms are stipulations under which a firm

grants credit to its customers. To him, immediately after the credit manager has

verified the credit applicant using set credit standards, decisions to etend

credit is made . The firm should try as much as possible to make terms more

attractive to act as an incentive to clients without incurring unnecessary high

levels of bad debts. Therefore, the terms used should conform to the average

industrial terms and they include credit period and cash discount.

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Co&&etio$ ,roed!re"

"alstansky (/) noted that collection procedures are efforts applied in order to

accelerate collections from slow paying customers and to reduce bad debt losses.

!ollection procedures could be defined for each credit customer. This should be

done in an organized manner that will accelerate cash receipts without endangering

the relationship with the debtor.

Jakuru (+22), gives a step by step procedure that is essential in collecting dues

from slow paying customers and these includeC reminders, final write;off, insuring

debtors, and factoring of debtors.

4.3.5 De"i%$i$% redit ,o&iy

Jakuru ulius (+22), contends that, the only a way a firm can control its sales is

through altering its credit policy. Be says that credit policy is based on three

controllable variables which are credit standards credit terms, and collection

procedure.

Credit I$(e"ti%#tio$" #$d A$#&y"i"

:an Borne (E), emphasizes that, credit analysis considers the character of the

company, its management and the financial strength of the firm in order to avoid

imbalances. To him, credit analysis can be done by using techni%ues like credit

scoring where characteristic of an applicant are %uantitatively rated and credit

decisions made on the basis of the total score. !haracteristics like the marital

status, level of education occupational stability can be rated.

Credit Limit

-ccording to Jakuru ulius (+22), credit limit is the maimum of credit the firm

can etend to customers at any point of time. Be suggests that the analyst should

carefully sensitize the amount of contemplated sales and the customer$s financialstrength and that if a problem arises, it may make it inevitable to review the credit

limit.

Credit "t#$d#rd" "etti$% i$ ,r#tie

-ccording to Jakuru ulius (+22), in order to analyze customers and set

standards, two aspects are consideredC the average collection paid and the default

rate. To him, average collection paid refers to the period in which debts remain

outstanding, and default rate is the ratio of uncollected receivables to the total

receivables.

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Credit term"

-ccording to 0andy (4) credit terms are stipulations under which a firm grants

credit to its customers. To him, immediately after the credit manager has verified

the credit applicant using set credit standards, decisions to etend credit is made.

The firm should try as much as possible to make terms more attractive to act as an

incentive to clients without incurring unnecessary high levels of bad debts.

Therefore, the terms used should conform to the average industrial terms and the

include credit period and cash discount.

Co&&etio$ ,roed!re"

"alstansky (/) noted that collection procedures are efforts applied in order to

accelerate collections from slow paying customers and to reduce bad debt losses.

!ollection procedures could be defined for each credit customer. This should be

done in an organized manner that will accelerate cash receipts without endangering

the relationship with the debtor.

Jakuru, (+22), gives a step by step procedure that is essential in collecting dues

from slow paying customers and these includeC reminders, final write;off, insuring

debtors, and factoring of debtors.

4.4 Defi$itio$ of b!"i$e"" ,erform#$e

&toner () describes business performance as the ability to operate efficiently,

profitably, survives, grow and lead to opportunities and threats.

&toner () singled out the production process efficiently as the key factor

governing business performance. There is also emphasis upon innovation for

profitability, assets management and overall entrepreneurship for achieving lastingperformance.

!onsidering the definitions therefore, business performance can be defined as in

terms of profitability, li%uidity, and growth and epansion prospects for the

business.

-ccording to Dean, (3), #rganizationsC the term Oorganizational performance$

is used comfortably in three time; senses ; the past, present, and the future. In other

+


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words, performance can refer to something completed, or something happening

now, or activities that prepares for new needs.

Managing the debtors for T#t# "tee&is an important and chief function of the sales accounts

division of finance and accounts. -ll the transactions of commercial nature are dealt with by

this department in a detailed outline frame of working. The debtors arise each month out of

the sales made on credit and suitable feeding of the re%uired figures has to be made once in a

month. This function is very much a difficult task owing to the various subsidiaries and

associate companies being controlled by TISCOitself.

The activities of each of the companies are diverse in operations and re%uire different policy

formulations and strategies for complying with the eisting market re%uirements. "ut they are

controlled in a centralized manner so that they give an actual overview of the standing of the

company. The profitability of each of the above is e%ually important to arrive at a consensus

for finding out the actual earnings and future prospects. -s such each of the company under

subsidiary and associate is incorporated under distinct centres as Profit Ce$tre.

To flatten the organizational structure and developed authority and responsibility for the

%uicker responsiveness to changing market conditions and greater initiative in dealing with

different target markets, Tata steel has brought in the concept of profit centre. For all

practical purpose, each profit centre functions as a separate company within the hold of Tata

steel. From the debtors management point of view also each profit centre has the

responsibility of appraising and dealing with its customers. Bowever the overall control is

centralized and is in the hands of the finance department. The main function which lies at thehands of Tata steel, amshedpur is to report such standings of the actual debtors as on a

particular date to the -D in the form of a monthly report. The figures thus arrived at give an

overview of which profit centres contribute the most to the debtor$s standing and the specific

reasons for the same.

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31/72

"eing a steel manufacturing concern, Tata steel is mainly concerned with the actual debtors

arising for the following profit centresA

STEEL

9IRE DIVISIONS

FERRO ALLO+S AND -INERALS DIVISION

TUBES DIVISION

BEARINGS

ach of the above profit centers have debtors of their own which are handled and managed in

a centralized manner. For an eample, tubes division is one of the most important division

which has the maimum contribution to the total sales taking together all the profit centers at

a point of time. It has various parties of its own as debtors such as ESSAR STEEL

LI-ITED0 BLUE STAR LI-ITED0 TATA C6E-ICALS LI-ITED0

-EC6ATRONICS and many debtors. - database relating to the different parties is

maintained in a pre specified format which helps in understanding the actual standing of the

debtor from the point of view of the actual sale being made to the party on credit till date.This format helps in maintaining the records in a form which helps in 7udging the actual

ageing of the debtors and the amount being recovered from the total debt. "y ageing we mean

to give an actual definition to the debtors in terms of how old has the debt been to him and

thereby categorizing him for the purpose. - same prescribed format is used by all the profit

centers for managing their respective debtors.

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E:PLANATION

Through this preparation we get to know the actual total debtors figures and the ma7or parties

that have contributed to the increase and decrease in the debtors as when compared with the

previous financial period. It mainly emphasizes upon the total debtors figures and the overdue

debtors and their ma7or contributors in the form of party names and figures. It also gives all

list of indications for the debtors whose standing are for periods beyond si months. This

reporting is crucial for the reason that it gives the management the indicative areas for focus,

the reasons for a rise in debtors and suitable control for future standing which is profitable to

the company as a whole.

0rofitability, for eample, is often regarded as the ultimate performance indicator,

but it is not the actual performance. The actual performance occurred some time

back ; first with decisions and then the actions that followed the decisions. 0rofit is

therefore an indicator of previous performance. In this sense, performance is the

outcome or Oend$.

If you are also interested in current behaviors that are associated with good or high

performance, then you must identify and assess them as they occur. These

behaviors start with the strategic planning process and continue into

implementation, monitoring, and assessment. In this sense, performance is the

Oactivity$ or Omeans$. are also interested in predictors of performance ; conditions

and behaviors that have been shown over time to lead to better performance. In this

sense, performance is a package of behaviors around strategic planning and

programming.

According to Ghobadian, (1994), There are numerous, major methods and

movements to regularly increase the performance of organiations! "ach

includes regular recurring activities to establish organiational goals,

monitor progress to#ard the goals, and ma$e adjustments to achieve those

goals more effectively and efficiently! Typically, these become integrated

into the overall recurring management systems in the organiation (as

opposed to being used primarily in one%time projects for change!

4./ -e#"!re" of Perform#$e.

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33/72

'hen determining performance of a business, the following have to be considered

according to ("alunywa, E)

I$re#"ed m#r


34/72

such away that customer re%uirements are meet in full. For each element of product or service

that is of concern to the customer, organizations will have an internal response that facilitates

the satisfaction of the customer preferences thus, performance. The most successful

businesses are those that can most effectively configure their operations to meet customer

re%uirements.

P$$i$%

Dune (4) stresses the importance of financial planning in the business to prosper

effectively. - retailer or any business owner invests money in merchandise for profitable resale

to others but this will be impossible of the choice of merchandise if made without effective

planning, and the result is always low profits or loss.

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35/72

-ccording to Mbaguta, (+22+) lack of capital is another impediment to businesses in their early

stages. =esults of the study indicated a significant proportion of the respondents, 53(3E


36/72

Retio$"hi, betwee$ debtor m#$#%eme$t #$d or%#$i>#tio$#& ,erform#$e

For businesses to succeed it is essential to have a good debtor management In addition,

businesses should aim at fiing prices that will enable them to earn sufficient profits for

survival and growth. Further, every businessperson needs effective and efficient management

skills to go into business and new, effective, and efficient management skills to stay there.

1ama77a (+22/) recommends debtor management systems.&he asserts that small to medium

sized businesses should have system or process for managing debtors. It is even more

important during uncertain financial times that you manage your debtors effectively, and there

are several different methods for doing this.

-ccording to "alunywa(5)C medium sized businesses should have budget profit and loss

analysistoreally know what you spend (or intend to spend) in each area of your business over

+ monthsR

Co$&!"io$

In orgarnisations,although there are other ways of driving the business to success like

competitive aggressiveness, visionary, leadership, trained staff and costumer focus, debtor

management provides a reflector of past and a drive to achieve better performance for

effective measurement.

/5


37/72

INDUSTR+ PROFILEIndia is the eighth largest producer of crude steel in the world, accounting for /./< of

the global steel production in +224. India$s finished carbon steel production grew to reach an

estimated 3+.5/mmt in +224;25C primary producers alone contributed about /E< whereas

secondary producers contributed the rest. 'ith reference in changes in economy Indian steel

industry is poised for massive epansion. Dramatic consumption growth over the last few

years has stimulated enormous epansion plans, facilitated by a relatively uneploited iron ore

raw material base. India is now being hailed as the new !hina, where crude steel production

soared from less than 22m tonnes in 4 to over 322m tonnes in +225.This report focuses

on detailed study about the Indian &teel Industry. &teel became an integral part of

development. It discusses basic steel manufacturing processes like "last Furnace and, lectric

arc Furnace, industry value chain with a special reference to ma7or raw material trends and

price trends of steel products. Demand >supply dynamics has been discussed along with key

growth drivers and port;Import scenario. It also talks about Issues 9 challenges of the steel

industry, mergers and ac%uisitions, government policies and regulations. Top 2 *eading

0layers in steel Industry have been profiled namely &teel -uthority of India (&-I*), BI*,

&&-= &teel and &' &teel in this report and analyzed on the basis of financial and

operational performance and compares their !ompetitive 0ositioning along with future

outlook in the light of increasing trend in investments in the domestic industry .&teel Industry

in India is on an upswing because of the strong global and domestic demand. India6s rapid

economic growth and soaring demand by sectors like infrastructure, real estate and

automobiles, at home and abroad, has put Indian steel industry on the global map. -ccording

to the latest report by International Iron and &teel Institute (II&I), India is the seventh largest

steel producer in the world.

'ith reference to development which revised Indian infrastructure, the origin of the modern

Indian steel industry can be traced back to 4/ when a contract for the construction of an

integrated steelworks in =ourkela, #rissa was signed between the Indian government and the

Perman companies Fried Jrupp und Demag -P. The initial plan was an annual capacity of

422,222 tonnes, but this was subse%uently raised to million tonnes. The capacity of

=ourkela &teel 0lant (=&0), which belongs to the &-I* (&teel -uthority of India *td.) group,

is presently about + million tonnes. -t a very early stage the former H&&= and a "ritish

consortium also showed an interest in establishing a modern steel industry in India. This

resulted in the &oviet;aided building of a steel mill with a capacity of million tonnes in"hilai and the "ritish;backed construction in Durgapur of a foundry which also has a million

/


38/72

tone capacity. The Indian steel industry is organized in three categories i.e., main producers,

other ma7or producers and the secondary producers. The main producers and other ma7or

producers have integrated steel making facility with plant capacities over 2.4 mT and utilize

iron ore and coal8gas for production of steel. The main producers are BI*, &-I*, and =I1*,

while the other ma7or producers are &&-=, I&0-T and :&*. The secondary sector is

dispersed and consists ofA () "ackward linkage from about +2 sponge iron producers that

use iron ore and non;coking coal, providing feedstock for steel producersC (+) -pproimately

542 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing

furnaces that use iron ore, sponge iron and melting scrap to produce steelC and (/) Forward

linkage with about ,+22 re;rollers that roll out semis into finished steel products for

consumer use.

&tructural 'eaknesses of Indian &teel Industry

-lthough India has modernized its steelmaking considerably, however, nearly 5< of its crude

steel is still produced using the outdated open;hearth process.

*abour productivity in India is still very low. -ccording to an estimate crude steel output at

the biggest Indian steelmaker is roughly 33 tonnes per worker per year, whereas in 'estern

urope the figure is around 522 tonnes.

India is deficient in raw materials re%uired by the steel industry. Iron ore deposits are finite

and there are problems in mining sufficient amounts of it. India6s hard coal deposits are of low

%uality. Insufficient freight capacity and transport infrastructure impediments too hamper the

growth of Indian steel industry.

&trengths of Indian &teel Industry

S *ow labour wage rates

S -bundance of %uality manpower

S Mature production base

S 0ositive stimuli from construction industry

S "ooming automobile industry

#utlook The outlook for Indian steel industry is very bright. India6s lower wages and

favourable energy prices will continue to promise substantial cost advantages compared to

production facilities in ('estern) urope or the H&. It is also epected that steel industry will

undergo a process of consolidation since industry players are engaged in an unfettered rush

for scale. This is evident from the recent ac%uisition of !orus by Tata. The deployment of

steel.

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39/72

-sbestos is a group ofmineralswith long, thin fibrous crystals. The word

asbestos is derived from a Preekad7ective meaning inetinguishable.

The Preekstermed asbestos the miracle mineral because of its soft and pliant

properties, as well as its ability to withstand heat. -sbestos became increasingly

popular among manufacturers and builders in the late th century due to its

resistance to heat, electricity and chemical damage, its sound absorption and tensile

strength. 'hen asbestos is used for its resistance to fire or heat, the fibers are often

mied with cementor woven into fabric or mats. -sbestos was used in some

products for its heat resistance, and in the past was used on electric oven and

hotplate wiring for its electrical insulationat elevated temperature, and in buildings

for itsflame;retardantand insulating properties, tensile strength, fleibility, and

resistance to chemicals.

The main product -&"&T#& !M1T &BT is primarily a cement based

product were about 2;4< asbestos fiber is needed to reinforce the cement is

weather proof, even through it absorbs moisture, the water will not pass through

the product. -sbestos cement is used for corrugated sheets, slates, flat sheet for

animal pens, cladding molded fitting, water system rain water gutters, down pipes,

under ground pipes and sewer pipes, skills, chalkboards. Most of the asbestos

consumed globally is chrysolite. =ussia, Jazakhstan is ma7or producers of

asbestos. The studies across the globe had not found any increased risk of carrier to

the workers even at the levels of fiber8cubic centimeter, whereas the Indian

chrysolite cement industry works well bellow 2.4 fiber8cubic centimeter.

/.3.3 6i"tori !"#%e

-sbestos was named by the ancient Preeks who also recognized certain hazards of

the material. The Preek geographer &traboand the =oman naturalist 0liny the

ldernoted that the material damaged lungs of slaves who wove it into

cloth. !harlemagne, the first Boly =oman mperor, is said to have had a tablecloth

made of asbestos.

'ealthy 0ersians, who bought asbestos imported over the Bindu Jush, amazed

guests by cleaning the cloth by simply eposing it to fire. -ccording to "iruniin

his book of Pems, any cloths made of asbestos were called shastakeh. &ome of the

/
http://en.wikipedia.org/wiki/Mineralhttp://en.wikipedia.org/wiki/Mineralhttp://en.wikipedia.org/wiki/Crystalhttp://en.wikipedia.org/wiki/Greek_languagehttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Electrical_insulationhttp://en.wikipedia.org/wiki/Flame_retardanthttp://en.wikipedia.org/wiki/Flame_retardanthttp://en.wikipedia.org/wiki/Tensile_strengthhttp://en.wikipedia.org/wiki/Strabohttp://en.wikipedia.org/wiki/Pliny_the_Elderhttp://en.wikipedia.org/wiki/Pliny_the_Elderhttp://en.wikipedia.org/wiki/Charlemagnehttp://en.wikipedia.org/wiki/Holy_Roman_Emperorhttp://en.wikipedia.org/wiki/Persian_peoplehttp://en.wikipedia.org/wiki/Hindu_Kushhttp://en.wikipedia.org/wiki/Biruni#_ref-16http://en.wikipedia.org/wiki/Crystalhttp://en.wikipedia.org/wiki/Greek_languagehttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Cementhttp://en.wikipedia.org/wiki/Electrical_insulationhttp://en.wikipedia.org/wiki/Flame_retardanthttp://en.wikipedia.org/wiki/Tensile_strengthhttp://en.wikipedia.org/wiki/Strabohttp://en.wikipedia.org/wiki/Pliny_the_Elderhttp://en.wikipedia.org/wiki/Pliny_the_Elderhttp://en.wikipedia.org/wiki/Charlemagnehttp://en.wikipedia.org/wiki/Holy_Roman_Emperorhttp://en.wikipedia.org/wiki/Persian_peoplehttp://en.wikipedia.org/wiki/Hindu_Kushhttp://en.wikipedia.org/wiki/Biruni#_ref-16http://en.wikipedia.org/wiki/Mineral


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0ersians believed the fiber was fur from an animal named samandarthat lived in

fire and died when eposed to water.

&ome archeologists believe that ancients made shrouds of asbestos, wherein they

burned the bodies of their kings, in order to preserve only their ashes, and prevent

their being mied with those of wood or other combustible materials commonly

used in funeral pyres. #thers assert that the ancients used asbestos to make

perpetual wicks forsepulchralor other lamps. In more recent centuries, asbestos

was indeed used for this purpose. -lthough asbestos causes skin to itch upon

contact, ancient literatureindicates that it was prescribed for diseases of the skin,

and particularly for the itch. It is possible that they used the

term asbestos for alumen plumosum, because the two terms have often beenconfused throughout history.

-sbestos became more widespread during the industrial revolutionC in the E52s it

was used as insulation in the H.&. and !anada. Development of the first

commercial asbestos mine began in E in the -ppalachianfoothills

of Kuebec. "y the mid +2th century uses included fire retardant coatings, concrete,

bricks, pipes and fireplace cement, heat, fire, and acid resistant gaskets, pipe

insulation, ceiling insulation, fireproof drywall, flooring, roofing, lawn furniture,and drywall 7oint compound.

-pproimately 22,222 people in the Hnited &tates have died, or will die, from

asbestos eposure related to ship building. In theBampton =oadsarea, a

shipbuilding center,mesothelioma occurrence is seven times the national rate.

Thousands of metric tons of asbestos were used in'orld 'ar IIships to wrap the

pipes, line the boilers, and cover engine and turbine parts. There were

approimately 3./ million shipyard workers in the Hnited &tates during ''IIC for

every thousand workers about fourteen died of mesothelioma and an unknown

number died from asbestosis.

-sbestos fibers were once used in automobilebrake padsand shoes. &ince the mid;

2s, a ma7ority of brake pads, new or replacement, have been manufactured

instead with linings made of ceramic, carbon, metallic and -ramid

fiber(Twaronor JevlarUthe same material used inbullet;proof vests). Jent, the

32
http://en.wikipedia.org/wiki/Salamander_(legendary_creature)http://en.wikipedia.org/wiki/Sepulchrehttp://en.wikipedia.org/wiki/Ancient_literaturehttp://en.wikipedia.org/wiki/Alumen_plumosumhttp://en.wikipedia.org/wiki/Appalachian_Mountainshttp://en.wikipedia.org/wiki/Quebechttp://en.wikipedia.org/wiki/Hampton_Roadshttp://en.wikipedia.org/wiki/Mesotheliomahttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Asbestosishttp://en.wikipedia.org/wiki/Brake_padshttp://en.wikipedia.org/wiki/Aramidhttp://en.wikipedia.org/wiki/Aramidhttp://en.wikipedia.org/wiki/Twaronhttp://en.wikipedia.org/wiki/Kevlarhttp://en.wikipedia.org/wiki/Bulletproof_vesthttp://en.wikipedia.org/wiki/Kent_(cigarette)http://en.wikipedia.org/wiki/Salamander_(legendary_creature)http://en.wikipedia.org/wiki/Sepulchrehttp://en.wikipedia.org/wiki/Ancient_literaturehttp://en.wikipedia.org/wiki/Alumen_plumosumhttp://en.wikipedia.org/wiki/Appalachian_Mountainshttp://en.wikipedia.org/wiki/Quebechttp://en.wikipedia.org/wiki/Hampton_Roadshttp://en.wikipedia.org/wiki/Mesotheliomahttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Asbestosishttp://en.wikipedia.org/wiki/Brake_padshttp://en.wikipedia.org/wiki/Aramidhttp://en.wikipedia.org/wiki/Aramidhttp://en.wikipedia.org/wiki/Twaronhttp://en.wikipedia.org/wiki/Kevlarhttp://en.wikipedia.org/wiki/Bulletproof_vesthttp://en.wikipedia.org/wiki/Kent_(cigarette)


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firstfiltered cigaretteon the market, used crocidolite asbestos in its Micronite

filter from 4+ to 45.

The first documented death related to asbestos was in 25. In the early 22s

researchers began to notice a large number of early deaths and lung problems in

asbestos mining towns. The first diagnosis of asbestosiswas made in ngland in

+3."y the /2s, ngland regulated ventilation and made asbestosis an

ecusable work related disease, about ten years sooner than the H.&. The

term Mesotheliomawas not used in medical literature until /, and was not

associated with asbestos until sometime in the 32s.

The Hnited &tates government and asbestos industry have been criticized for not

acting %uickly enough to inform the public of dangers, and to reduce public

eposure. In the late 2s court documents proved that asbestos industry officials

knew of asbestos dangers and tried to conceal them.

In apan, particularly after 'orld 'ar II,asbestos was used in the manufacture

of ammonium sulphatefor purposes of rice production, sprayed upon the ceilings,

iron skeletons, and walls of railroad cars and buildings (during the 52s), and

used for energy efficiency reasons as well. 0roduction of asbestos in apan peaked

in 3 and went through ups and downs until about 2, when production began

to drop severely.

3
http://en.wikipedia.org/wiki/Cigarette_filterhttp://en.wikipedia.org/wiki/Asbestosishttp://en.wikipedia.org/wiki/Mesotheliomahttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Ammonium_sulfatehttp://en.wikipedia.org/wiki/Cigarette_filterhttp://en.wikipedia.org/wiki/Asbestosishttp://en.wikipedia.org/wiki/Mesotheliomahttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Ammonium_sulfate


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CO--ERCIALL+ AVAILABLE ROOFING -ATERIALS

The weather proofing material is the topmost or outermost layer, eposed to the

weather. Many different kinds of materials have been used as weather proofing

materialA

Thatch is roofing made of plant stalks in overlapping layers.

'heat &traw,widely used in ngland, France and other parts of urope.

&ea grass, used in coastal areas where there are estuariessuch as &cotland. Bas a

longer life than straw. !laimed to have a life in ecess of 52 years.

&hingles, called shakes in 1orth -merica. &hingles is the generic term for a roofing

material that is in many overlapping sections, regardless of the nature of the material.

The word is also used specifically to denote shingles made of wood.

=ed cedar.*ife epectancy, up to /2 years. Bowever, young growth red cedar has a

short life epectancy. Bigh cost. &hould be allowed to breathe.

Bardwood. :ery durable roofing found in !olonial-ustralian architecture, its use

now limited to restorations.

&late. Bigh cost with a life epectancy of up to +22 years. &late cleaves into thin

sheets, making it much lighter than concrete tiles, though heavier than sheet steel and

other light roof coverings.

&tone slab. Beavy stone slabs (not to be confused with slate) ;+ thick were

formerly used as roofing tiles in some regions in ngland. &tone slabs re%uire a very

heavyweight roof structure, but their weight makes them storm proof. -n obsolete

roofing material.

!eramic tile. Bigh cost, life of more then 22 years.

Imbre and tegula,style dating back to ancient Preece and =ome.

Metal shakes or shingles. *ong life. Bigh cost, suitable for roofs of /8+ pitch or

greater. "ecause of the fleibility of metal, they can be manufactured to lock together,

giving durability and reducing assembly time.

Mechanically seamed metal. *ong life. Bigh cost, suitable for roofs of low pitch such

as 2.48+ to /8+ pitch.

!oncrete,usually reinforced with fibres of some sort. !oncrete tiles re%uire a stronger

roof structure than slate, as some owners have found to their cost.

3+
http://en.wikipedia.org/wiki/Thatchhttp://en.wikipedia.org/wiki/Strawhttp://en.wikipedia.org/wiki/Seagrasshttp://en.wikipedia.org/wiki/Esturyhttp://en.wikipedia.org/wiki/Roof_shinglehttp://en.wikipedia.org/wiki/Redcedarhttp://en.wikipedia.org/wiki/Redcedarhttp://en.wikipedia.org/wiki/Hardwoodhttp://en.wikipedia.org/wiki/Australian_architecturehttp://en.wikipedia.org/wiki/Restorationhttp://en.wikipedia.org/wiki/Slatehttp://en.wikipedia.org/wiki/Tilehttp://en.wikipedia.org/wiki/Imbrex_and_tegulahttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Thatchhttp://en.wikipedia.org/wiki/Strawhttp://en.wikipedia.org/wiki/Seagrasshttp://en.wikipedia.org/wiki/Esturyhttp://en.wikipedia.org/wiki/Roof_shinglehttp://en.wikipedia.org/wiki/Redcedarhttp://en.wikipedia.org/wiki/Hardwoodhttp://en.wikipedia.org/wiki/Australian_architecturehttp://en.wikipedia.org/wiki/Restorationhttp://en.wikipedia.org/wiki/Slatehttp://en.wikipedia.org/wiki/Tilehttp://en.wikipedia.org/wiki/Imbrex_and_tegulahttp://en.wikipedia.org/wiki/Concrete


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A",h#&t "hi$%&e0made of bitumen embedded in an organic or fiberglass mat, usually

covered with colored, man;made ceramic grit. !heaper than slate or tiles. :arious life

span epectancies.

A"be"to""hi$%&e".:ery long lifespan, fireproof and low cost but now rarely usedbecause of health concerns.

-embr#$e.Membrane roofing is in large sheets, generally fused in some way at the

7oints to form a continuous surface.

Thermo"etti$% ,"ti(e.g.0DM rubber). &ynthetic rubber sheets adhered together

with contact adhesive or tape. 0rimary application is big bo store with large open

areas and little vertical protrusions.

Thermo,"ti(e.g. 0:!,T0#, !&0). 0lastic sheets welded together with hot air

creating one continuous sheet membrane. !an be rewelded with the eception of

!&0. *ends itself well to both big bo and small roof application because of its hot

air weld ability.

-odified bit!me$; heat welded, asphalt adhered or installed with adhesive. -sphalt

is mied with polymers such as -00 or &"&, then applied to fiberglass and8or

polyester mat, seams sealed by locally melting the asphalt with heat, hot mopping of

asphalt, or adhesive. *ends itself well to all applications. B!i&t1U, Roof 1Multiple plies of asphalt saturated organic felt or coated fiberglass

felts. 0lies of felt are adhered with hot asphalt, coal tar pitch or adhesive.

S,r#yed1i$1Pe Po&y!reth#$e Fo#m ?SPUF@; Foam sprayed in;place on the roof,

and then coated with a wide variety of coatings, or in some instances, covered with

gravel.

Po&ye"ter.

PTFE?"y$theti F&!or ,o&ymer@embedded infibre glass.

-et#& roofi$%. Penerally a relatively inepensive building material, unless copper is

used.

G#&(#$i>ed "tee&fre%uently manufactured with wavy corrugations to resist lateral

fleing and fitted with eposed fasteners. 'idely used for low cost and durability.

&heds are normally roofed with this material. Jnown as Pal iron, it was the most

etensively used roofing material of +2th century -ustralia, now replaced in

3/
http://en.wikipedia.org/wiki/Asphalt_shinglehttp://en.wikipedia.org/wiki/Asbestoshttp://en.wikipedia.org/wiki/Thermosetting_plastichttp://en.wikipedia.org/wiki/EPDM_rubberhttp://en.wikipedia.org/wiki/Thermoplastichttp://en.wikipedia.org/wiki/Polyvinyl_chloridehttp://en.wikipedia.org/wiki/ThermoPlastic_Olefinhttp://en.wikipedia.org/wiki/Hypalonhttp://en.wikipedia.org/wiki/Bitumenhttp://en.wikipedia.org/wiki/Polyesterhttp://en.wikipedia.org/wiki/PTFEhttp://en.wikipedia.org/wiki/Fibreglasshttp://en.wikipedia.org/wiki/Metal_roofhttp://en.wikipedia.org/wiki/Copperhttp://en.wikipedia.org/wiki/Galvanised_steelhttp://en.wikipedia.org/wiki/Galvanised_steelhttp://en.wikipedia.org/wiki/Asphalt_shinglehttp://en.wikipedia.org/wiki/Asbestoshttp://en.wikipedia.org/wiki/Thermosetting_plastichttp://en.wikipedia.org/wiki/EPDM_rubberhttp://en.wikipedia.org/wiki/Thermoplastichttp://en.wikipedia.org/wiki/Polyvinyl_chloridehttp://en.wikipedia.org/wiki/ThermoPlastic_Olefinhttp://en.wikipedia.org/wiki/Hypalonhttp://en.wikipedia.org/wiki/Bitumenhttp://en.wikipedia.org/wiki/Polyesterhttp://en.wikipedia.org/wiki/PTFEhttp://en.wikipedia.org/wiki/Fibreglasshttp://en.wikipedia.org/wiki/Metal_roofhttp://en.wikipedia.org/wiki/Copperhttp://en.wikipedia.org/wiki/Galvanised_steel


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popularity by steel roofing coated with an alloy of zinc and aluminum, claimed to

have up to four times the life of galvanized steel.

St#$di$%1"e#m met#& with concealed fasteners.

-eh#$i#&&y "e#med met#&with concealed fasteners contains sealant in seams foruse on very low sloped roofs.

Ft1"e#m met#&with soldered seams.

G""!lear windows have been used since the invention of glass to cover small

openings in a building. They provided humans with the ability to both let light into

rooms while at the same time keeping inclement weather outside. Plass is generally

made from mitures of sand and silicates, and is very brittle. Modern glass curtain

walls can be used to cover the entire facade of a building. Plass can also be used to

span over a wide roof structure in a space frame.

Cer#mi"0theseare such things as tiles, fitures, etc. !eramics are mostly used as

fitures or coverings in buildings. !eramic floors, walls, counter;tops, even ceilings.

Many countries use ceramic roofing tiles to cover many buildings. !eramics used to

be 7ust a specialized form of clay;pottery firing in kilns, but it has evolved into more

technical areas.

Fo#m More recently syntheticpolystyreneorpolyurethanefoam has been used on a

limited scale. It is light weight, easily shaped and an ecellent insulator. It is usually

used as part of a structural insulated panelwhere the foam is sandwiched between

wood or cement.

33
http://en.wikipedia.org/wiki/Curtain_wallhttp://en.wikipedia.org/wiki/Curtain_wallhttp://en.wikipedia.org/wiki/Space_framehttp://en.wikipedia.org/wiki/Tilehttp://en.wikipedia.org/wiki/Fixturehttp://en.wikipedia.org/wiki/Polystyrenehttp://en.wikipedia.org/wiki/Polyurethanehttp://en.wikipedia.org/wiki/Structural_insulated_panelhttp://en.wikipedia.org/wiki/Structural_insulated_panelhttp://en.wikipedia.org/wiki/Curtain_wallhttp://en.wikipedia.org/wiki/Curtain_wallhttp://en.wikipedia.org/wiki/Space_framehttp://en.wikipedia.org/wiki/Tilehttp://en.wikipedia.org/wiki/Fixturehttp://en.wikipedia.org/wiki/Polystyrenehttp://en.wikipedia.org/wiki/Polyurethanehttp://en.wikipedia.org/wiki/Structural_insulated_panel


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CO-PAN+ PROFILE

The year 35 saw the birth of India. It was also the year BGD=-"-D

I1DH&T=I& *IMITD was founded. #ver the decades, it has blazed a

pioneering path in the fibre cement industry and has grown into a formidable

player. The corporate office of BI* is situated at Byderabad. The BI* = 9 D

centers situated at Byderabad and Faridabad support all its manufacturing units to

achieve ecellency in its manufacturing activities. The Manufacturing facilities are

at Byderabad, Faridabad 9 Daruhera (Baryana), !hennai (T1), asidih

(harkhand), 'ada (Maharashtra), :i7ayawada, Timmappur (-0),sutariya (H0),

"alasore(#rissa) and Thrissur (kerala).

The company has four regional offices 9 over 35 sales depots all over India, all

with the purpose of providing convenient services to customers. BGD=-"-D

I1DH&T=I& *IMITD is a flagship !ompany of the !.J."irla group of

!ompanies, incorporated on th une 35. BI* has blazed a pioneering path in

the building products industry. BI* has led the cement industry for well over five

decades. Today BI* is a multi product, multi locational organization with a

formidable network of branches, depots, stockiest and personnel spread all over

India.

BI* being backed by the organizational and technical epertise of the "irlas, also

has a "oard of directors comprising eperienced personnel from "usiness, Finance

and Industry. The "oard is chaired by Mr.!.J."irla. BI*$s product range include

Fibre !ement roofing sheets in the name of !B-=MI1-= and M-*-"-=,

-utoclaved -erated !oncrete "locks and 0anels called -=#!#1, !alcium

&ilicate insulation product called BG&I*, ointing material for Paskets and 0lant

and machinery for these products.

The BGD=-"-D I1DH&T=I& *IMITD, Thrissur is situated 2 km away

from the Thrissur town. The eact place where the company is situated is -thani,

which is an industrial area. This company was incorporated in the year E4 and

commenced production in E5 in the name as M-*-"-= "HI*DI1P

0=#DH!T&, which was a 7oint venture by BI* and J&ID! (Jerala &tate

34


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Industries Development !orporation. *ater in the year +224 -pril the company

was merged with the BI* completely from the J&ID!. -nd in the same year the

company changed its name to BGD=-"-D I1DH&T=I& *IMITD.

-bout +22 employees are working in BI*, Thrissur as a whole. In that 2

employees are working in plant, + are office staffs and E are bargaining staffs.

The plant is working for +3 hours and there are three shifts per day. The whole

plant is completely automated. The BI* Thrissur plant is producing only the -!

roofing sheets in the name of !B-=MI1-=.

!harminar -! =oofing &heets have been the 1o. roofing sheets of choice for

more than 42 years now, providing roofing to millions of low cost houses and toindustries, commercial businesses and for several public utilities. !harminar sheets

are widely known for their superior %uality and durability. The raw materials used

in the production process are Fibre, fly ash, rag pulp and cement. -mong these raw

materials Fibre is importing from "razil and !anada and cement is mainly bought

from -!! cements. The !ompany mainly sells their products through dealers who

are selected by the company. The finished products are mainly sold in the south

India, especially in Tamil 1adu.

The company has a visionary management and motivated team of dynamic

workers sharing common vision and working in the union. The company is moving

ahead with to innovate and provide ecellent production. BI* is providing to have

an operational efficiency compactable with global standards. -s a socially

organization, it has contributed significantly towards eco;friendliness and various

social causes.

The company has involved in conducting a lot of community welfare programme.

In this year the company conducted a welfare programme named

OHB=HTB-M +22E$.

35


47/72

-i""io$ #$d Vi"io$ of 6yder#b#d I$d!"trie" Limited

To m#i$t#i$ &e#der"hi, i$ Fibre eme$t ,rod!t" i$d!"try #$d de(e&o,

om,&eme$t#ry ,rod!t" #$d "er(ie" to "tre$%the$ the ore b!"i$e"" of

b!i&di$% ,rod!t".

Fulfilment of market needs with cost effective solutions for enduring and enhanced

customer satisfaction.

&triving for ecellence in all the area of company$s operation.

Innovative solutions to create world class products and services fostering collective

wisdom and commitment of employees to create corporate and group culture and values

which they are proud to be part of.

Maintain e%uitable balance between development and environmental needs of the society.

/.3.4 *!#&ity Po&iy

0rovide products and services that ade%uately and consistently meet specified and

identified needs of customers by

!ontinues upgrade of product value and by

"uilding customer responsive environment

In making and deliverance of the products and services

/.3./ Re"e#rh De(e&o,me$t.

=esearch and Development !enter of Byderabad Industries *imited is fully

e%uipped with latest state;of;art technology, e%uipment and test facilities including

0ilot 0lants situated in ultra modern spacious building covering an area of about

222 sft of main "uilding and about 5222 sft area of 0ilot 0lant. BI*, = 9 D

center is recognized by Department of &cience and Technology Povernment of

India.

3


48/72

6IL h#(e bee$ o$ferred with the DSIR N#tio$#& Aw#rd for R D effort" i$

i$d!"try for the ye#r 4 i$ the #re# of $ew m#teri#&" for AEROCON

INSTA PANEL

Dedicated team of scientists and engineers are constantly working for product

upgradation, optimum utilization of raw materials, development of substitute

materials, new products and new product applications, saving substantial amount

of foreign echange for the country.The = 9 D Division has contributed in the

following specific areasA

Identification and development of environment friendly building products with

emerging market needs. mphasis on process optimization, cost reduction and development of value added

products.

ffective utilization of energy, water and waste material.

-bsorption of imported technical know;how.

Development of new products i.e., -erocon Insta ; 0anels, -ccess Flooring system,

pressed sheets, fire protection boards, *ight weight --! "locks, non;asbestos

7ointing material for automobile industry etc.

*!#&ity Po&iy

0rovide products and services that ade%uately and consistently meet specified and

identified needs of customers by

!ontinues upgrade of product value and by

"uilding customer responsive environment

In making and deliverance of the products and services

Phi&o"o,hy

BGD=-"-D I1DH&T=I& *IMITD is committed to good !orporate

Povernance. The !ompany has been following good principles of business over

the years by following all the laws and regulations of the land with an emphasis on

accounta

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