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 ROLL NO. :1090110578

DATE: 10TH JAN’2011

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 traderelations. 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 company’s 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: INTRODUCTION1.1 General Introduction about the sector1.2 Industry profile

a. Origin and development of the industryb. Growth and present status of the industryc. Future of the industry

CHAPTER 2: PROFILE OF THE ORGANISATION2.1 Origin of the organisation2.2 Growth, Development & Present status of the Organization2.3 Organization structure and organization chart2.4 Product and service profile of the Organization2.5 Market profile of the Organization

CHAPTER 3: DISCUSSIONS ON TRAINING3.1 Student’s work profile (Role and Responsibilities )3.2 Key learning from training

CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM4.1 Statement of research problem4.2 Statement of research objectives4.3 Research design and methodology

CHAPTER 5: ANALYSIS5.1 Data analysis5.2 Summary of Findings

CHAPTER 6: SUMMARY AND CONCLUSIONS6.1 Summary of learning experience6.2 Conclusions and Recommendations

APPENDICESCopy of questionnaires,brouchers

BIBLIOGRAPHY AND REFRENCES

LIST OF GRAPHS & CHARTS

CHAPTER 1: INTRODUCTION1.1 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 profilea. 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 (403–221 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 Gilchrist-Thomas process (or basic Bessemer process) was an improvement to the Bessemer process, lining the converter with a basic material to remove phosphorus. Another improvement in steelmaking was 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 12–14% 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 ORGANISATION2.1 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 country’s 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 BSL’s 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 country’s 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 country’s 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 India’s 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 Mr Neeraj Singal (Chairman) (Vice chairman & Managing Director)

Mr Mohan Lal Mr V K Malhotra

(Director) (Director)

Ms. Sunita Sharma Mr Rahul Sengupta

(Nominee Director of LIC) (Whole Time Director-Technical)

Mr B.B Tondon Mr. P.K Aggarwal

(Director) (Whole Time Director-Commercial)

Mr Nitin Johari Mr M.V Suryanarayan

(Whole Time Director-Finance) (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 Technical details/specifications/Stds

Product name BHUSHAN RAINBOW

Reference standard ASTM 755

0ther containing standards JIS G3312, IS 14236, ECCA

Strip thickness mm 0.20 to 1.2 0

Strip widths mm 900 to 1250

Substrate material Zinc coating as per ASTM A 653/A 653M with steel base as per ASTM std

Substrate Coating mass gms/m2Substrate coating mass class

80 to 275Z120; Z150; Z180 and Z275 as per ASTM stdOr As mutually agreed

Grade designation Gr 50/ Gr 80/CS type A, B as per ASTM std

Yield strength Mpa minTensile strength Mpa min

340 for Gr 50 & 550 for Gr 80410 for Gr 50 & 570 for Gr 80

Paint type Regular Polyester/Silicon Polyester/PVDF

Paint coating thickness (DFT) Top coat 18 to 22 microns (+5 microns primer)Back coat 5 to 8 (including primer)

Digital DFT meter accuracy Accuracy +/- 2% of reading) as per ASTM A 153

Pencil hardness H or Harder

Gloss 15-80% at 60 degrees ASTM D 523

Resistance to chalking QUVASTM D 53

1000 HRS –rating ≤4 for PVDF, 750 HRS –rating ≤4 for others

Resistance to corrosion(ASTM B 117)

500 HRS with blister density ≤2, creepage ≤2 mm.

Resistance to Humidity 1000 HRS blister density ≤ 2 (ASTM D 2247)

Resistance to color change QUV- ASTM G 53

2000 HRS (delta E ≤ 5 unit) for PVDF1000 HRS (delta E ≤ 5 unit) for others

Flexibility 4 T- (ECCA) - no cracking

Resistance to abrasion ≤20 mg as per 100 cycles

Resistance to Acid/solvents No discoloration/no blistering- ASTM D 1308

Product certification All products are accompanied with MTC and packing list.

Quality System ISO 9001 - 2000

Galvanized Plain Coil

Technical details/specifications

PLAINSKIN

PASSED

CORRUGATED

HILGP PETROL/FUEL TANK

FGP FAN BLADE

GPC BUSES/COAC

HES

Thickness (mm)

0.10 to 2.500.30 to 2.50

0.12 to 1.60 0.30 to 2.500.40 to 1.20

0.60 to 1.60

Width (mm)

upto 1350 upto 1350

602,762,800,900,1050

200 to 1350100 to 1350

100 to 1350

Surface Finish

Regular &mim.spangle

Matte with zero/min. spangle

Regular Spangle

Matte, Bright Finish, No spangle

Matte finish, No spangle

Matte, Bright finish, No spangle

Coating Mass (gms/m2)

80 to 300 80 to 300

80 to 300 20 to 8060 to 90

60 to 80

Grades Soft/Lock forming

EDD, DD,D, SPCEN, SPCD,SPCC

RoofingEDD, DD,D, SPCEN, SPCD,SPCC

SPCD, SPCC

SPCEN, SPCD, SPCC

Galvanized Plain Sheet

Technical details/specifications

PLAIN

SKIN

PASSED

CORRUGAT

ED

HILGP PETROL/FUE

L TANK

FGP

FAN

BLADE

GPC BUSES/COACH

ES

Thickness (mm)

0.10 to 2.50

0.30 to 2.50

0.12 to 1.60

0.30 to 2.50

0.40 to 1.20

0.60 to 1.60

Width (mm)

upto 1350

upto 1350

602,762,800,900,1050

200 to 1350

100 to 1350

100 to 1350

Cut to Length (mm)

upto 4500

upto 4500

upto 4500

upto 4500

upto 4500

upto 4500

Surface Finish

Regular &mim.spangle

Matte with zero/min. spangle

Regular Spangle

Matte, Bright Finish, No spangle

Matte finish, No spangle

Matte, Bright finish, No spangle

Coating Mass (gms/m2

)

80 to 300

80 to 300

80 to 300

20 to 8060 to 90

60 to 80

Grades

Soft/Lock forming

EDD, DD,D, SPCEN, SPCD

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

SPCD, SPCC

SPCEN, SPCD, SPCC

,SPCC

COLD ROLLED STEEL COILS :

Parameters Technical Details/Specifications

Thickness (mm) 0.10 to 4.00

Width (mm) 10 to 1700 (Max)

Coil Weight (MT) Up to 30 MT (7 to 18 kg/mm width)

Surface Finish Super Bright, Bright, Dull & Matte. (RaValue with controlled Rmax on request).

Grades Specifications - As per JIS/BIS/ ASTM/EN Standards

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

Medium & High Carbon CRCA GradesC- 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 GradesCase Hardening Steel- 15Cr3, SAE 1010, SAE 1012Through 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

Max. Width for Cut Size

1500 mm 1250  mm

600 mm

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) 0.10 t0 4.00

Width (mm) 10 to 1700 (Max)

Cut- to -Length (mm) Up to 4500mm with tolerance of +2/-0 mm(Further close tolerance on - request)

Coil Weight (MT) Up to 30 MT (7 to 18 kg/mm width)

Surface Finish Super Bright, Bright, Dull & Matte. (RaValuewith controlled Rmax on request).

Grades Specifications - As per JIS/BIS/ ASTM/EN Standards

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

Medium & High Carbon CRCA GradesC- 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 GradesCase Hardening Steel- 15Cr3, SAE 1010, SAE 1012Through 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

Max. Width for Cut Size 1500 mm           1250 mm                          600 mm

Width for Coil 50 mm - 1700 mm      50 mm - 1700 mm       50 mm - 1700 mm

PROCESS ROUTE OF CRCA MATERIAL

2.5 Market Profile of the Organization

CHAPTER 3: DISCUSSIONS ON TRAINING

3.1 Student’s 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 one’s 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 problemDue 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 company’s 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 Directory2. www.vcsdata.com3. www.fundoodata.com4. www.onesource.com5. 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(`) RATE TOTAL(`)ALIGARH 23,546,843.99 0.000033089360 779.15BANGALORE 81,921,249.90 0.000033089949 2,710.77CHENNAI 10,096,387.18 0.000033090054 334.09INDORE 14,876,514.93 0.000033091084 492.28KANPUR 114,261,830.42 0.000033089178 3,780.83LUDHIANA 24,871,312.72 0.000033089528 822.98PUNE 13,733,813.18 0.000033088407 454.43TIRUPATI 931,453.73 0.000033077327 30.81TOTAL 284,239,406.05 9,405.34Illustration 1: IDBI SERVICE CHARGES FOR MARCH 2011

IDBI-CMS Cheque Returns ChargesLOCATION AMOUNT (`) RETURN

CHARGES (`)INTEREST TOTAL (`)

BANGALORE 1,653,651.00 55.15 1399.22 1454.37KANPUR 500,000.00 55.15 0.00 55.15KANPUR 500,000.00 55.15 0.00 55.15LUDHIANA 794,602.00 55.15 0.00 55.15LUDHIANA 661,372.00 55.15 0.00 55.15LUDHIANA 621,314.00 55.15 0.00 55.15LUDHIANA 832,578.00 55.15 0.00 55.15LUDHIANA 661,372.00 55.15 0.00 55.15LUDHIANA 661,372.00 55.15 0.00 55.15TOTAL 6,886,261.00 496.35 1,399.22 1895.57Illustration 2: IDBI CHEQUE RETURN CHARGES FOR MARCH 2011

PARTICULARS AMOUNT (`)Collection Charges 9,901.69SERVICE TAX 10.3% 1,019.87TOTAL 10,921.56Illustration 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 TOTAL(`)

AGRA 9,277,744.00 0.00008 742.22ALLAHABAD 3,348,526.00 0.00008 267.88GORAKPUR 3,619,316.00 0.00008 289.55JAMMU 1,733,251.00 0.00008 138.66REWARI 3,574,107.00 0.00008 285.93SAHARANPUR 3,106,865.00 0.00008 248.55TOTAL 24,659,809.00 1,972.78

Illustration 4: CORPORATION BANK SERVICE CHARGES FOR MARCH 2011

PARTICULARS AMOUNT (`)

Collection Charges 1,972.78SERVICE TAX 10.3% 203.20TOTAL 2,175.98Illustration 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 COLLECTION(`)

RATE PICKUP CHARGES

TOTAL(`)

LUDHIANA 41,388,026.00 0.000040000700 400.00 1,655.55GHAZIABAD 126,543,958.82 0.000040000250 - 5,061.79GURGAON 74,144,831.34 0.000039999821 - 2,965.78INDORE 13,330,920.00 0.000039999490 - 533.23MILLER GANJ 2,693,961.00 0.000039993155 - 107.74

INTEREST 1399.22

BRANCHTOTAL 258,101,697.16 400.00 10,724.09Illustration 6: AXIS BANK SERVICE CHARGES FOR MARCH 2011

AXIS BANK - CMS Cheque Returns Charges

LOCATION AMOUNT (`)

RETURN CHARGES (`)

INTEREST TOTAL (`)

LUDHIANA 322698.00 100.00 - 100.00 LUDHIANA 101862.00 100.00 - 100.00 LUDHIANA 123483.00 100.00 - 100.00 LUDHIANA 175855.00 100.00 - 100.00 LUDHIANA 228008.00 100.00 - 100.00 GHAZIABAD

393,117.00 100.00 -

GHAZIABAD

432,320.00 100.00 - 100.00

GHAZIABAD

77,637.00 100.00 - 100.00

GHAZIABAD

750,000.00 100.00 - 100.00

GHAZIABAD

570,000.00 100.00 - 100.00

GURGAON 314,989.00 100.00 - 100.00 GURGAON 134,963.00 100.00 - 100.00 GURGAON 4,208,591.00 100.00 1988.99 2088.99 TOTAL 7,833,523.00 1,300.00 1,988.99 3288.99Illustration 7: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR MARCH 2011

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 COLLECTION(`)

RATE PICKUP CHARGES

COMM. CHARGES(`)

AURANGABAD

2,665,451.00 0.000040000735 - 106.62

BANGALORE 1.00 400.000000000000

400.00 -

CHENNAI 1.00 400.000000000000

400.00 -

JAIPUR 44,614,086.00 0.000035000157 - 1,561.50

PARTICULARS AMOUNT (`) Collection Charges 12,024.09 SERVICE TAX 10.3% 1,238.48 TOTAL 13,262.57

INTEREST 1988.99

COIMBATORE 1,126,118.00 0.000039995809 - 45.04GHAZIABAD 1.00 400.0000000000

00400.00 -

HALDWANI 2,573,509.00 0.000039999860 400.00 102.94KANPUR 1.00 400.0000000000

00400.00 -

VARANASI 1.00 400.000000000000

400.00 -

TOTAL 50,979,169.00 2,400.00 4,216.10Illustration 9: AXIS BANK SERVICE CHARGES FOR FEBRUARY 2011

AXIS BANK - CMS Cheque Returns Charges LOCATION AMOUNT (`) RETURN

CHARGES (`)INTEREST TOTAL (`)

JAIPUR 3,000,000.00 100.00 1,417.81 1517.81JAIPUR 949,499.00 100.00 448.74 548.74JAIPUR 3000000.00 100.00 1,417.81 1517.81JAIPUR 4000000.00 100.00 3,780.82 3880.82TOTAL 10,949,499.00 400.00 7,065.18 7465.18Illustration 10: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR FEBRUARY 2011

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 COLLECTION(`)

RATE PICKUP CHARGES

TOTAL(`)

LUDHIANA 24,913,342.00 0.000040001056 400.00 996.56GHAZIABAD 99,792,160.89 0.000039999735 - 3,991.66GURGAON 56,876,286.19 0.000040000326 - 2,275.07INDORE 16,471,683.00 0.000040000163 - 658.87KANPUR 535,634.00 0.000030001830 - 16.07HALDWANI 31,352.00 0.000039869865 - 1.25MILLER GANJ BRANCH

1,130,164.00 0.000039994196 - 45.20

TOTAL 199,750,622.08 400.00 8,384.68Illustration 12: AXIS BANK SERVICE CHARGES FOR FEBRUARY 2011

LOCATION AMOUNT (`) RETURN INTEREST TOTAL (`)

PARTICULARS AMOUNT (`)Collection Charges 4,616.10SERVICE TAX 10.3% 475.46TOTAL 5,091.56

INTEREST 7065.18

CHARGES (`)GHAZIABAD 3,85,064.00 100.00 - 100.00GHAZIABAD 5,87,724.00 100.00 - 100.00GURGAON 222725.00 100.00 - 100.00GURGAON 33,82,110.00 100.00 - 100.00LUDHIANA 353620.00 100.00 - 100.00LUDHIANA 175,304.00 100.00 - 100.00LUDHIANA 2,00,000.00 100.00 - 100.00LUDHIANA 1,75,304.00 100.00 82.85000000000

0182.85

LUDHIANA 10,000.00 100.00 - 100.00LUDHIANA 2,82,038.00 100.00 - 100.00MILLER GANJ BRANCH

1,03,085.00 100.00 48.720000000000

148.72

MILLER GANJ BRANCH

1,92,386.00 100.00 - 100.00

TOTAL 6,069,360.00 1,200.00 131.57 1331.57Illustration 13: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR FEBRUARY 2011

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 COLLECTION(`) RATE PICKUP CHARGES

TOTAL(`)

AURANGABAD 537,630.00 0.0000400089 - 21.51BANGALORE 1.00 400 400 -CHENNAI 1.00 400 400 -JAIPUR 42,396,935.00 0.0000350002 - 1483.9COIMBATORE 2,492,611.00 0.0000400022 - 99.71FORT 1,263,162.00 0.0000199974 - 25.26GHAZIABAD 1.00 400 400 -HALDWANI 4,401,280.00 0.0000399952 - 176.03KANPUR 1.00 400 400 -VARANASI 1.00 400 400 -TOTAL 51,091,623.00 2,000.00 3,806.41Illustration 15: AXIS BANK SERVICE CHARGES FOR JANUARY 2011

AXIS BANK - CMS Cheque Returns Charges

PARTICULARS AMOUNT (`)Collection Charges 9,584.68SERVICE TAX 10.3% 987.22TOTAL 10,571.90

INTEREST 131.57

LOCATION AMOUNT (`) RETURN CHARGES (`)

INTEREST TOTAL (`)

JAIPUR 2,000,000.00 100 945.21 1045.21JAIPUR 2,000,000.00 100 945.21 1045.21JAIPUR 2,000,000.00 100 1,890.41 1990.41JAIPUR 1,000,000.00 100 945.21 1045.21JAIPUR 2,149,319.00 100 2,031.55 2131.55JAIPUR 4,000,000.00 100 1,890.41 1990.41JAIPUR 2,850,000.00 100 1,346.92 1446.92TOTAL 15,999,319.00 700.00 9,994.92 10,694.92Illustration 16: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR JANUARY 2011

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 ChargesLOCATION COLLECTION

(`)RATE PICKUP

CHARGESCOMM. CHARGES(`)

GHAZIABAD 116,031,674.77 0.000039999767 - 4,641.24GURGAON 71,808,517.73 0.000039999851 - 2,872.33HALDWANI 499,318.00 0.000039994553 - 19.97INDORE 12,734,282.00 0.000039999114 - 509.36KANPUR 403,509.00 0.000030011722 - 12.11LUDHIANA 26,790,011.00 0.000039999237 400.00 1,071.58MILLER GANJ BRANCH

1,935,800.00 0.000040004133 - 77.44

TOTAL 230,203,112.50 400.00 9,604.03Illustration 18: AXIS BANK SERVICE CHARGES FOR JANUARY 2011

AXIS BANK - CMS Cheque Returns ChargesLOCATION AMOUNT (`) RETURN

CHARGES (`)INTEREST TOTAL (`)

GHAZIABAD 318,942.00 100.00 - 100.00GHAZIABAD 1,209,514.00 100.00 - 100.00GHAZIABAD 220521.00 100.00 - 100.00GURGAON 150000.00 100.00 - 100.00GURGAON 155917.00 100.00 - 100.00GURGAON 317502.00 100.00 - 100.00GURGAON 150000.00 100.00 - 100.00GURGAON 54797.00 100.00 - 100.00LUDHIANA 47,609.00 100.00 - 100.00LUDHIANA 100,000.00 100.00 - 100.00LUDHIANA 250,000.00 100.00 - 100.00

PARTICULARS AMOUNT (`)Collection Charges 4,506.41SERVICE TAX 10.3% 464.16TOTAL 4,970.57

INTEREST 9,994.92

LUDHIANA 35,000.00 100.00 - 100.00LUDHIANA 57,159.00 100.00 - 100.00LUDHIANA 134,125.00 100.00 - 100.00LUDHIANA 148,737.00 100.00 - 100.00LUDHIANA 82,722.00 100.00 - 100.00TOTAL 3,432,545.00 1,600.00 - 1600.00Illustration 19: AXIS BANK CHEQUE RETURN AND INTEREST CHARGES FOR JANUARY 2011

PARTICULARS AMOUNT (`)Collection Charges 11,204.03SERVICE TAX 10.3% 1,154.02TOTAL 12,358.05Illustration 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 GOBINGARH

1,04,71,128 0.00005 Rs. 523.56 Rs. 523.56

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 CHANDIGARH

13,93,590 0.00004 Rs. 55.74 Rs. 55.74

TOTAL 3,81,70,422 0.00 1,894.59 1,894.59Illustration 21: HDFC BANK SERVICE CHARGES FOR MARCH 2011

COLLECTIONCHARGES

Rs. 1,894.59

S.TAX Rs. 195.14TOTAL ` 2,089.73Illustration 22: HDFC BANK SERVICE TAX CHARGES FOR MARCH 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (FEBRUARY 2011) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 1848408 0.00005 92.42 92.42MUZAFFARNAGAR

618328 0.00005 30.92 30.92

MANDI GOBINGARH

12698399 0.00005 634.92 634.92

SRINAGAR 8614174 0.00005 430.71 430.71CHANDIGARH 1707060 0.00004 68.28 68.28ALLAHABAD 6586950 0.00005 329.35 329.35TOTAL 32073319 0.00 1586.60 1586.60Illustration 23: HDFC BANK SERVICE CHARGES FOR FEBRUARY 2011

INTEREST -

COLLECTIONCHARGES

1586.60

S.TAX 163.42TOTAL `1750.01Illustration 24: HDFC BANK SERVICE TAX CHARGES FOR FEBRUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JANUARY 2011) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 1710187 0.00005 85.51 85.51MUZAFFARNAGAR

2507833 0.00005 125.39 125.39

MANDI GOBINGARH

21203230 0.00005 1060.16 1060.16

SRINAGAR 18500000 0.00005 925.00 925.00CHANDIGARH 2724129 0.00004 108.97 108.97ALLAHABAD 4829425 0.00005 241.47 241.47TOTAL 5,14,74,804 0.00 2546.50 2546.50Illustration 25: HDFC BANK SERVICE CHARGES FOR JANUARY 2011

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)MANDI GOBINGARH

500,000.00 100 0 100

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 ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 2816774 0.00005 140.84 140.84MUZAFFARNAGAR

4529554 0.00005 226.48 226.48

MANDI GOBINGARH

27124800 0.00005 1356.24 1356.24

SRINAGAR 35200000 0.00005 1760.00 1760.00CHANDIGARH 948895 0.00004 37.96 37.96ALLAHABAD 8403505 0.00005 420.18 420.18TOTAL 7,90,23,528 0.00 3941.69 3941.69Illustration 27: HDFC BANK SERVICE CHARGES FOR DECEMBER 2010

COLLECTIONCHARGES

2646.50

S.TAX 272.5894176TOTAL 2919.09

Illustration 28: HDFC BANK SERVICE TAX CHARGES FOR DECEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (NOVEMBER 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 1421796 0.00005 71.09 71.09MANDI GOBINGARH

23008409 0.00005 1150.42 1150.42

SRINAGAR 27500000 0.00005 1375.00 1375.00CHANDIGARH 3235305 0.00004 129.41 129.41ALLAHABAD 4378277 0.00005 218.91 218.91TOTAL 5,95,43,787 0.00 2944.84 2944.84Illustration 29: HDFC BANK SERVICE CHARGES FOR NOVEMBER 2010

Illustration 30: HDFC BANK SERVICE TAX CHARGES FOR NOVEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (OCTOBER 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 27,37,048 0.00005 136.85 136.85MUZAFFARNAGAR

10,69,180 0.00005 53.46 53.46

MANDI GOBINGARH

1,27,85,542 0.00005 639.28 639.28

SRINAGAR 2,91,00,000 0.00005 1455.00 1455.00CHANDIGARH 43,24,958 0.00004 173.00 173.00ALLAHABAD 30,10,312 0.00005 150.52 150.52TOTAL 5,30,27,040 0.00 2608.10 2608.10Illustration 31: HDFC BANK SERVICE CHARGES FOR OCTOBER 2010

HDFC BANK - CMS Cheque Returns Charges

LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)CHANDIGARH 340,000.00 100 0 100TOTAL 100 100

COLLECTIONCHARGES

3941.69

S.TAX 405.99TOTAL `4347.68

COLLECTIONCHARGES

2944.84

S.TAX 303.32TOTAL `3248.15

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 ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)AMBALA 3034859 0.00005 151.74 151.74LUCKNOW 9445840 0.00005 472.29 472.29LUDHIANA 1444941 0.00005 72.25 72.25KANPUR 22832594 0.00004 913.30 913.30PUNE 3575084 0.00004 143.00 143.00ALIGARH 7910713 0.00005 395.54 395.54MUZAFFARNAGAR

5596549 0.00005 279.83 279.83

MANDI GOBINGARH

931628 0.00005 46.58 46.58

SRINAGAR 10000000 0.00005 500.00 500.00CHANDIGARH 509652 0.00004 20.39 20.39JAIPUR 16330506 0.00004 653.22 653.22ALLAHABAD 3336612 0.00005 166.83 166.83TOTAL 8,49,48,978 0.00 3,814.97 3,814.97Illustration 33: HDFC BANK SERVICE CHARGES FOR SEPTEMBER 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)KANPUR 898,758.00 100 0 100TOTAL 100 0 100

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 ChargesLOCATION AMOUNT(`) RATE CHARGE(`)BANGLORE 53678866.30 0.00003 1610.37AMBALA 2515710.00 0.00005 125.79LUCKNOW 8500000.00 0.00005 425.00LUDHIANA 27680571.00 0.00005 1384.03KANPUR 32570584.00 0.00004 1302.82

COLLECTIONCHARGES

2708.10

S.TAX 278.93TOTAL `2987.04

COLLECTIONCHARGES

3,914.97

S.TAX 403.24TOTAL `4,318.21

PUNE 9575084.00 0.00004 383.00INDORE 11082063.24 0.00003 332.46ALIGARH 18160537.00 0.00005 908.07MANDI GOBINGARH

920681.00 0.00005 46.03

SRINAGAR 23882335.00 0.00005 1194.12MUZZAFARNAGAR 5319986.00 0.00005 266.00MADRAS 1413593.00 0.00002 28.27CHANDIGARH 100000.00 0.00004 4.00

JAIPUR 22493405.00 0.00004 899.74ALLAHABAD 3573982.00 0.00005 178.70TOTAL 22,14,67,397.54 9,088.39Illustration 35: HDFC BANK SERVICE CHARGES FOR AUGUST 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`)AMBALA 367987.00 100.00LUDHIANA 668848.00 100.00JAIPUR 561138.00 100.00JAIPUR 500000.00 100.00LUDHIANA 750000.00 100.00JAIPUR 500000.00 100.00JAIPUR 567442.00 100.00LUDHIANA 588688.00 100.00LUDHIANA 305170.00 100.00CHANDIGARH 100000.00 100.00LUDHIANA 500000.00 250.00TOTAL 1250.00

Illustration 36: HDFC BANK SERVICE TAX CHARGESFOR AUGUST 2010

COLLECTIONCHARGES 10338.39

S.TAX 1064.85TOTAL `11403.25

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

2406832.00 0.00005 120.34 120.34

SRINAGAR 7631762.00 0.00005 381.59 381.59TIRUPATHI 1184050.00 0.00005 59.20 59.20MADRAS 1817276.00 0.00002 36.35 36.35CHANDIGARH 1101720.00 0.00004 44.07 44.07JAIPUR 7061309.00 0.00004 282.45 282.45ALLAHABAD 2607163.00 0.00005 130.36 130.36TOTAL 15,41,85,815.75 0.00 6115.92Illustration 37: HDFC BANK SERVICE CHARGES FOR JULY 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)KANPUR 700000 100 0 100KANPUR 2605461 100 0 100KANPUR 330000 100 0 100INDORE 400000 100 0 100LUDHIANA 400000 100 0 100KANPUR 500000 100 0 100JAIPUR 500000 100 0 100CHANDIGARH 540816 100 0 100INDORE 426128 100 0 100KANPUR 330000 189.9 189.86KANPUR(OUTSTATION)

135000 58.75 0.0 58.75

TOTAL 1148.613 0.00 1148.61

COLLECTIONCHARGES7264.54 Illustration 38: HDFC BANK SERVICE TAX CHARGES FOR JULY

2010S.TAX 748.25TOTAL `8012.79

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JUNE 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE(`) CHARGE(`) TOTAL(`)BANGLORE 33430435.5 0.00003 1,002.91 1,002.91LUCKNOW 10298307 0.00005 514.92 514.92LUDHIANA 15458019 0.00005 772.90 772.90KANPUR 50397517 0.00004 2,015.90 2,015.90PUNE 4114538 0.00004 164.58 164.58INDORE 15994305.07 0.00003 479.83 479.83GWALIOR 387709 0.00005 19.39 19.39ALIGARH 17106341 0.00005 855.32 855.32MUZAFFARNAGAR

1793546 0.00005 89.68 89.68

SRINAGAR 15191393 0.00005 759.57 759.57TIRUPATHI 4913589 0.00005 245.68 245.68MADRAS 990997.9 0.00002 19.82 19.82

ALLAHABAD 2230970 0.00005 111.55 111.55TOTAL 17,23,07,667.5 0.00 7,052.04 7,052.04Illustration 39: HDFC BANK SERVICE CHARGES FOR JUNE 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)CHANDIGARH 540,816.00 100 0 100SRINAGAR 1,891,198.00 100 0 100SRINAGAR 3,062,696.00 100 0 100TOTAL 300 0 300

Illustration 40: HDFC BANK SERVICE TAX CHARGES FOR JUNE 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (MAY 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)BANGLORE 82427389.47 0.00003 2,472.82 2,472.82LUCKNOW 24500000 0.00005 1,225.00 1,225.00LUDHIANA 20015856 0.00005 1,000.79 1,000.79KANPUR 15704920 0.00004 628.20 628.20PUNE 5413747 0.00004 216.55 216.55INDORE 28670251.01 0.00003 860.11 860.11ALIGARH 17050644 0.00005 852.53 852.53MUZAFFARNAGAR

1866659 0.00005 93.33 93.33

MANDI GOBINGARH

810562 0.00005 40.53 40.53

SRINAGAR 14059318 0.00005 702.97 702.97TIRUPATHI 4604339 0.00005 230.22 230.22MADRAS 1845882 0.00002 36.92 36.92CHANDIGARH 1178390 0.00004 47.14 47.14JAIPUR 10043954 0.00004 401.76 401.76ALLAHABAD 3970244 0.00005 198.51 198.51TOTAL 23,21,62,155.5 0.00 9,007.37 9,007.37Illustration 41: HDFC BANK SERVICE CHARGES FOR MAY 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)KANPUR 553,882.00 100 0 100KANPUR 1,000,000.00 100 0 100LUCKNOW 4,000,000.00 100 0 100TOTAL 300 0 300

COLLECTIONCHARGES

7352.04

S.TAX 757.26TOTAL `8109.30

Illustration 42: HDFC BANK SERVICE TAX CHARGES FOR MAY 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (APRIL 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGE(`) TOTAL(`)BANGLORE 74428409.25 0.00003 2,232.85 Rs. 2,232.85LUCKNOW 26000000 0.00005 1,300.00 Rs. 1,300.00LUDHIANA 37041955.27 0.00005 1,852.10 Rs. 1,852.10KANPUR 104142138 0.00004 4,165.69 Rs. 4,165.69PUNE 892623 0.00004 35.70 Rs. 35.70INDORE 31642789.3 0.00003 949.28 Rs. 949.28ALIGARH 13782149 0.00005 689.11 Rs. 689.11MUZAFFARNAGAR

3088043 0.00005 154.40 Rs. 154.40

MANDI GOBINGARH

4391894 0.00005 219.59 Rs. 219.59

SRINAGAR 17831685 0.00005 891.58 Rs. 891.58TIRUPATHI 3,128,936.00 0.00005 156.45 Rs. 156.45MADRAS 4991522.5 0.00002 99.83 Rs. 99.83CHANDIGARH 4314736 0.00004 172.59 Rs. 172.59JAIPUR 5190567 0.00004 207.62 Rs. 207.62ALLAHABAD 4488889 0.00005 224.44 Rs. 224.44TOTAL 335356336.3 0.00 13351.24653 13351.24717Illustration 43: HDFC BANK SERVICE CHARGES FOR APRIL 2010

HDFC BANK - CMS Cheque Returns Charges LOCATION AMOUNT(`) CHARGES(`) INTEREST(`) TOTAL(`)SRINAGAR 2,000,000.00 100 0 100SRINAGAR 1,000,000.00 100 0 100SRINAGAR 1,000,000.00 100 0 100SRINAGAR 1,000,000.00 100 0 100LUDHIANA 492,826.00 100 0 100KANPUR 1,257,169.00 100 0 100LUDHIANA 755,000.00 100 0 100KANPUR 821,905.00 100 0 100KANPUR 1,100,000.00 100 0 100KANPUR 400,000.00 100 0 100KANPUR 350,000.00 100 0 100INDORE 578,048.00 100 0 100KANPUR 1,692,597.00 100 0 100KANPUR 553,882.00 100 0 100CHANDIGARH 540,816.00 100 0 100KANPUR 821,905.00 236.44 0 236.44PUNE(OUTST 404,509.00 126.13 0 126.13

COLLECTIONCHARGES

9,307.37

S.TAX 958.66TOTAL `10,266.03

ATION)KANPUR(OUTSTATION)

1,100,000.00 300 0 300

KANPUR 1,100,000.00 100 0 100TOTAL 2262.57 2262.57

Illustration 44: HDFC BANK SERVICE TAX CHARGES FOR MAY

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (MARCH 2011)HDFC BANK- CMS Bank Service Charge

LOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`)

MANDI GOBINDGARH

1098359 0.00005 54.91795 54.918

TOTAL 10,98,359 54.91795 54.918Illustration 45: HDFC BANK SERVICE CHARGES FOR MARCH 2011

Illustration 46: HDFC BANK SERVICE TAX CHARGES FOR MARCH

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (FEBRUARY 2011) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`)MANDI GOBINDGARH

1,785,707.00 0.00005 89.28535 89.2854

TOTAL 1,785,707.00 89.29 89.29Illustration 47: HDFC BANK SERVICE CHARGES FOR FEBRUARY 2011

Illustration 48: HDFC BANK SERVICE TAX CHARGES FOR FEBRUARY 2011

COLLECTIONCHARGES

15613.82

S.TAX 1608.22TOTAL `17222.04

COLLECTION 54.918SERVICE TAX

5.656554

TOTAL `60.574554

COLLECTION 89.2854SERVICE TAX 9.1963962TOTAL `98.4817962

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (JANUARY 2011) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`)MANDI GOBINDGARH

29,48,533 0.00005 147.42665 147.4267

TOTAL 29,48,533 147.42665 147.4267Illustration 49: HDFC BANK SERVICE CHARGES FOR JANUARY 2011

Illustration 50: HDFC BANK SERVICE TAX CHARGES FOR JANUARY 2011

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (DECEMBER 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`)MANDI GOBINDGARH

369,295.00 0.00005 18.46475 18.4648

TOTAL 369,295.00 18.46 18.46Illustration 51: HDFC BANK SERVICE CHARGES FOR DECEMBER 2010

Illustration 52: HDFC BANK SERVICE TAX CHARGES FOR DECEMBER 2010

CHEQUE COLLECTION AMOUNTS AT HDFC BANK BRANCHES (OCTOBER 2010) HDFC BANK- CMS Bank Service ChargesLOCATION AMOUNT(`) RATE CHARGES(`) TOTAL(`)SAHARANPUR

17,681.00 0.00005 0.88405 0.8841

DELHI 140,682.00 400 400 400GURGAON 140,682.00 1,200.00 1,200.00 1200SAHIBABAD 140,682.00 400 400 400TOTAL 439,727.00 2,000.88 2,000.88Illustration 53: HDFC BANK SERVICE CHARGES FOR OCTOBER 2010

COLLECTION 147.4267SERVICE TAX

15.1849501

TOTAL `162.6116501

COLLECTION 18.4648SERVICE TAX

1.9018744

TOTAL `20.3666744

illustration 54: HDFC BANK SERVICE TAX CHARGES FOR OCTOBER 2010

5.2 Summary Of Findings

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) +

COLLECTION 2,000.88SERVICE TAX

206.091062

TOTAL `2206.97516

(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 company’s 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 BSL’s 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 JANUARY’11: 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 JANUARY’11: 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 MARCH’11: 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 FEBRUARY’11: 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 JANUARY’11: 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 DECEMBER’10: 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 NOVEMBER’10: 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 OCTOBER’10: 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 SEPTEMBER’10: 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 AUGUST’10: 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 JULY’10: 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 JUNE’10: 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 MAY’10: 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 APRIL’10: 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 MARCH’11: 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 FEBRUARY’11: 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 JANUARY’11: 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 DECEMBER’10: 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 OCTOBER’10: 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.bhushan-group.org/milestones.asp 4 BHUSHAN STEEL LIMITED – MANAGEMENT DESK: http://www.bhushan-

group.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

Internet

www.bhushansteel.com

www.jindalsteelpower.com

www.corporationbank.com

www.utibank.com

www.hsbc.com

www.ask.com