theoretical frame work o financial performance apprasial

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PROFILE OF VISAKHAPATNAM STEEL PLANT

INTRODUCTION

Steel occupies the foremost place amongst the materials in use today

and pervades all walks of life. All the key discoveries of the human genius

for instance, steam engine, railway, means of communication and

connection, automobile, aeroplace and computers, are in one way or other,

fastened together with steel and with its sagacious and multifarious

application. Steel is a versatile material with multitude of useful properties

making it indispensable for furthering and achieving continual growth of

the economy be it construction, manufacturing, infrastructure or

consumables. The level of steel consumption has long been regarded as an

index of industrialization and economic maturity attained by a country.

Keeping in view the importance of steel, the following integrated steel

plants with foreign collaborations were set up in the Public Sector in the

post-independence era:

Sl.No

.

Steel Plant Collaborated by

1. Durgapur Steel

Plant

Britain

2. Bhilai Steel Plant Erstwhile USSR

3. Bokaro Steel Plant Erstwhile USSR

4. Rourkela Steel Plant Germany

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Background :

To meet the growing domestic needs of steel, Govt. of India decidedto set up an integrated steel plant at Visakhapatnam. An agreement was

signed with erstwhile USSR in 1979 for cooperation in setting up 3.4 mT

integrated steel plant at Visakhapatnam. The foundation stone for the plant

was laid by the then Prime Minister on 20th January 1971.

The project was estimated to cost Rs.8397.28 Cr. based on prices as

on 4th quarter of 1981. However, on completion of construction and

commissioning of the whole plant in 1992, the cost escalated to around

Rs.8,500 Cr. Unlike other integrated steel plants in India, Visakhapatnam

Steel Plant (VSP) is one of the most modern steel plants in the country.

The plant was dedicated to the nation on 1st August 1992 by the then Prime

Minister, Shri PV Narasimha Rao.

New technology, large-scale computerization and automation etc.,

are incorporated in the plant. To operate the plant at international levels

and attain such labour productivity, the organizational manpower has been

rationalized. The Plant has a capacity of producing 3.0 mT of liquid steel

and 2.656 mT of saleable steel.

VSP Technology: State-of-the-Art

7 meter tall Coke Oven Batteries with coke dry quenching

Biggest Blast Furnaces in the country

Bell-less top charging system in Blast Furnace

100% slag granulation at the BF Cast House

Supressed combustion LD gas recovery system

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100% continuous casting of liquid steel

Tempcore and Stelmor cooling process in LMMM &

WRM respectively

Extensive waste heat recovery systems

Comprehensive pollution control measures

Major Sources of Raw Materials

Raw Material Source

Iron Ore Lumps & Fines Bailadilla, MP

BF Lime Stone Jaggayyapeta, AP

SMS Lime Stone UAE

BF Dolomite Madharam, AP

SMS Dolomite Madharam, AP

Manganese Ore Chipurupalli, AP

Boiler Coal Talcher, Orissa

Coking Coal Australia

Medium Coking Coal (MCC) Gidi/Swang/Rajarappa/Kargali

Water Supply

Operational water requirement of 36 mgd is being met from the

Yeleru Water Supply Scheme.

Power Supply

Operation power requirement of 180 to 200 MW is being met

through Captive Power Plant. The capacity of the power plant is 286.5

MW. VSP is exporting around 60 MW power to APSEB.

Major Units

Department AnnualCapacity

Units (3.0 MT Stage)

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(000 T)

Coke Ovens 2,261 3 Batteries of 67 Ovens & 7 Mtrs.

height

Sinter Plant 5,256 2 Sinter machines of 312 Sq. Mtr.grate area each

Blast Furnace 3,400 2 Furnaces of 3200 Cu. Mtr.

volume each

Steel Melt

Shop

3,000 3 LD Convertors each of 133 Cu.

Mtr. Volume and six 4 strand

bloom casters

LMMM 710 4 stand finishing Mill

WRM 850 2 x 10 stand finishing Mill

MMSM 850 6 stand finishing Mill

Main Products of VSP

Steel

Products

By-products

Angles Nut Coke Granulated Slag

Billets Coke Dust Lime Fines

Channels Coal Tar Ammonium Sulphate

Beams Anthracene Oil

Squares HP Napthalene

Flats Benzene

Rounds Toulene

Re-bars Zylene

Wire Rods Wash Oil

Advent of Centre for Business Systems (CBS) & Corporate

Strategic Management (CSM)

The CBS was formulated to cater to the strategic needs of Vizag

Steel. The focus of CBS is to study world-class initiatives and develop

suitable framework for their adoption and implementation on an

organization-wide basis at VSP.

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CBS was inaugurated on 18th December 2003. On this occasion, a

booklet on Strategies to achieve the Vision, Mission & Objectives of

Vizag Steel was released. VSPs Knowledge Management PortalGnana was launched on 26th July 2004, basically to capture and share

unique experience in day to day operations.

CBS has four teams to assist other departments in implementation of

the initiatives identified and thus guide VSP to achieve its cherished

vision of becoming a world-class integrated steel plant. The four teams

are:

Corporate Management

Technology & Automation

Marketing Research

Intellectual Capital Development

The above teams initiate activities pertaining to implementation of

various aspects of the Business Excellence Model, alignment and

integration of organizational activities through Process Management,

research on the latest technological developments in the steel industry for

suitable adoption and benchmarking, initiatives leading to improved

customer satisfaction, knowledge sharing initiatives like Knowledge

Management etc., Groups of self organized employees from different areas

of common interest called communities of practices (CoPs) have been

initiated which promote collaboration, information exchange and sharing

of best practices among them.

The CBS has been merged with Corporate Planning Department and

renamed as Corporate Strategic Management in order to suit thechanging trends.

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Vision, Mission & Objectives

Vision

To be a continuously growing world-class company We shall

Harness our growth potential and sustain profitable growth

Deliver high quality and cost competitive products and be the

first choice of customers

Create an inspiring work environment to unleash the creative

energy of people

Achieve excellence in enterprise management

Be a respected corporate citizen, ensure clean and green

environment and develop vibrant communities around us

Mission

To attain 10 million ton liquid steel capacity through technological

up-gradation, operational efficiency and explansion; to produce steel at

international standards of cost and quality; and to meet the aspirations of

the stakeholders.

Objectives

Expand plant capacity of 5 million ton by 2007-08 with the

mission to attain 10 million ton capacity in two subsequent phases.

Wipe out accumulated losses by 2006-07.

Be amongst top five lowest cost liquid steel producers in the

world by 200607.

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Achieve customer satisfaction levels on par with world class

organizations by 2006-07.

Make RINL the employer of choice by caring our employees.

Develop people as knowledge workers by 2005-06 and achieve an

improvement of 5 percentage points in employee satisfaction levels

every alternate year.

Be ranked as an excellent business organization by 2006-07.

Ensure zero effluent discharge by 2005 06 and contribute to

improving quality of life (health literacy and water) in at least onevillage every year.

Core Values

Commitment

Customer Satisfaction

Continuous Improvement

Concern for Environment

Creativity & Innovation

VSP takes all necessary actions for the fulfillment of regulatory

requirements. It has dedicated departments for this purpose. Energy

conservation, environmental preservation, safety in work place, and

occupational health gets highest priority in the company. Some of the

policies in this regard are reproduced below.

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Quality, Environment and Occupational Health & Safety Policy :

We, at Visakhapatnam Steel Plant, are committed to meet the needsand expectations of our customers and other interested parties, the

occupational health and safety of our work force and to preserve the

environment. The accomplish this, we will

Supply quality goods and services to customers delight.

Document, implement, maintain & periodically review the

management systems including the policy, objectives and targets.

Use resources efficiently and reduce waste & prevent

pollution.

Comply with all relevant legal, regulatory and other

requirements applicable to Products, activities and processes in

respect of Quality, Environment, Occupational health & Safety andalso ensure the same by contractors.

Continually improve quality, environment, occupational

health and safety performance with respect to products, activities,

processes, premises and services.

Encourage development and involvement of employees.

Maintain high level of quality, environment, occupational

health and safety consciousness amongst employees and contract

workers by imparting education and training.

Energy Policy

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We, at Visakhapatnam Steel Plant, are committed to optimally

utilize various forms of energy in a cost-effective manner to effect

conservation of energy resources. To accomplish this, we will

Monitor closely and control consumption

of various forms of energy through an effective Energy Management

System

Adopt appropriate energy conservation

technologies

Maximize the use of cheaper and easily

available forms of energy

HR Policy

We, at Visakhapatnam Steel Plant, believe that our employees are

the most important resources. To realize the full potential of employees,

the company is committed to:

Provide work environment that makes the employees committed and

motivated for maximizing productivity

Establish systems for maintaining transparency, fairness and

equality in dealing with employees

Empower employees for enhancing commitment,

responsibility and accountability

Encourage teamwork, creativity, innovativeness and high

achievement orientation

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Provide growth and opportunities for developing skill and

knowledge

Ensure functioning of effective communication channels with

employees

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Customer Policy

VSP will endeavour to adopt a Customer-focused approach atall times with transparency

VSP will strive to meet more than the Customer needs and

expectations pertaining to Products, Quality, Value for Money and

Satisfaction

VSP greatly values its relationship with Customers and would

make efforts at strengthening these relations for mutual benefit

IT Policy

RINL/VSP is committed to leverage Information Technology as the

vital enabler in improving the customer-satisfaction, organizational

efficiency, productivity, decision-making, transparency and cost-

effectiveness, and thus adding value to the business of steel making.

Towards this, RINL shall:

Follow best practices in Process Automation & Business Processes

through IT by in-house efforts / outsourcing and collaborative efforts with

other organizations / expert groups / institutions of higher learning, etc.,

thus ensuring the quality of product and services at least cost

Follow scientific and structured methodology in the software

development processes with total user-involvement, and thus

delivering integrated and quality products to the satisfaction of

internal and external customers

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Make the most out of the sate-of-th art technologies in the IT

field while going for the suitable cost effective IT infrastructure and

software.

Ensure high level of date and information security across the

organization.

Strive to spread IT-culture amongst employees based on

organizational need, role and responsibilities of the personnel and

facilitate the objective of becoming a world-class business

organization Enrich the skill-set and knowledge based of all related

personnel at regular intervals to make employees knowledge-

employees

Periodically monitor the IT investments made and

achievements accrued to review their cost effectiveness

HRD Group Key Initiatives

In-house Training Programs

Nominations to External Training Programs

Organisation Research, Employees Satisfaction Surveys

& Voice of Employees Index

Organisation Development

Membership with Professional Bodies

Performance Appraisal for Executives

Human Resource Information System

In-plant training for Management Students

Lectures by eminent personalities

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Corporate Presentations

Interactions with professionals, academicians and consultants

Knowledge Management

Initiatives on Six Sigma

Emancipation of women through WIPS, Women Development

Programs (Spring Board)

Thrust on Samalochana

Pursuit of Business Excellence Model (BEM)

Dil Ki baat

Chairman tho maata

Training & Development

RINL believes that the employees are its assets and strives to realise

their potential in full for mutual advantage. The human resource

development involves development of the employee as a whole.

The needs of induction training, skill up gradation, unit training,

computer related training, refresher training, foreign training, faculty

development etc. are attended by the Training & Development Centre

while management development and attitudinal development are taken

care at the Centre for HRD.

Training in certain specialized areas like safety, fire prevention,

occupational health etc. is also taken up by departments specializing in

respective fields.

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RINL also provides learning opportunities to individuals by

nominating them to external training programmes for enhancing their

knowledge. Employees are sponsored for external training programmesincluding seminars and competitions organised by various professional

bodies and institutes like CII, IISI, INSSAN, ASSOCHAM, INSDAG,

AIMA, NIPM, LPAI, ISTD, ICWAI, CSI, SCOPE, VSC, QCFI,

RDCIS(SAIL), ICA, ASCI, ESCI, XLRI, MDI, BVQI ,WIPS, IIMs,CBI

Academy, NPC etc.

Employees are sent to other steel plants on short duration tours to

find solutions to the various issues facing the company. Employees are

also sent to suppliers' manufacturing units / training institutes to get

specific training in identified areas.

Marketing Network

The company markets its products through headquarter marketing

office and a network of regional offices, branch offices and stockyards

located at 24 centers all over the country. Consignment agents and

consignment sales agents located at these centers provide the infrastructure

and channels for sale of the products. The exports are carried out by the

export wing of marketing division with the help of different agencies. The

company is recognized as Star Trading House by the Director General of

Foreign Trade, Ministry of Commerce, Govt. of India

Pollution Control and Environmental Protection

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Generally, integrated steel plant is seen as a major contributor to

environmental pollution as it discharges volumes of waste products.

Elaborate measures have been adopted to combat air and water pollution inVSP. In order to be echo-friendly, VSP has planted more than 3.4 million

trees over an area of 35 Sq. Kms. and incorporated various technologies at

a cost of Rs.460 Crores towards pollution control measures.

Human Resource Management

Human resource initiatives at VSP are closely linked to the

corporate strategy of the organization. VSP has harmonious industrial

relations where the entire workforce works as a well-knit team for the

progress of the company. The productive environment prevailing in the

company fosters an atmosphere of growth - both for the employees and for

the company. VSP has introduced multi-skilling concept since inception

and the employees are trained to imbibe this. VSP has adopted a system of

overlapping shifts - the first of its kind in the industry. This system

ensures smooth change over of the shifts and uninterrupted pace of

operation of the plant during the shift change over. The labour productivity

is currently 282 tonnes/man/year unparalleled in the public sector steel

industry.

Management of Industrial Relations

Presently, 20 registered Trade Unions are functioning at VSP. Out

of these, 3 unions viz., Visakha Steel Employees Congress (INTUC), Steel

Plant Employees Union (CITU) and Visakha Steel Workers Union

(AITUC) have the support of more than 90% of the total votes.

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Welfare Amenities

Welfare has been given the utmost emphasis in the overall policy of

Human Resources Management of the Company. Pursuant to this policy,

VSP has taken several initiatives for introducing and implementing Non-

Statutory Welfare schemes which impart and propagate the feeling that the

Company cares for its employees.

Some of the Non-Statutory Welfare and Social Security Schemes

for the benefit of the employees and their family members are detailed

below:

Housing Facility

The Company has a well laid out township Ukkunagaram,

consisting of 8,696 quarters with all modern amenities like water supply,

underground sewerage, schooling, recreation facilities, parks, shopping

complexes, temples, ATMs etc., for its employees.

Educational Facilities

VSP acts as a catalyst in promoting quality education by

encouraging reputed educational Institutions. There are 9 English Medium

Schools, 2 Telugu Medium Schools in and around Ukkunagaram and one

Junior College. Also there is one English Medium School at each Mine

i.e., at Jaggayyapeta and Madharam. Commensurate encouragement exists

to provide scholarships (Merit/Merit-cum-means/Cash Awards) to entitled

employees and their wards.

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Medical Facilities

The company provides comprehensive health care scheme involving

in-patient and out-patient treatment in Company run hospitals and

specialised treatment at referral hospitals to the employees and their

dependants. Visakhapatnam Steel Plant has established a 160 bedded ultra

modern hospital -Visakha Steel General Hospital (VSGH) equipped with

sophisticated equipments.

Achievements & Awards

The efforts of VSP have been recognized in various fora. Some of

the major awards received by VSP are in the area of energy conservation,

environment protection, safety, quality, Quality Circles, Rajbhasha, MOU,

sports related awards and a number of awards at the individual level.

Some of the important awards received by VSP are:

ISO 9002 for SMS and all the downstream units a unique

distinction in the Indian Steel Industry

Indira Priyadarshini Vriksha Mitra Award 1992-93

Nehru Memorial National Award for Pollution Control 1992-93 &

1993-94

EEPC Export Excellence Award 1994-95

CII (Southern Region) Energy Conservation Award 1995-96

Golden Peacock (1st Prize) National Quality Award 96 IIM in

the National Quality Competition 1996

Steel Ministers Trophy for Best Safety Performance 1996

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Selected for World Quality Commitment Award 1997 of

J*BAN, Spain

Gold Star Award for Excellent performance in Productivity

Udyog Excellence Gold Medal Award for Excellence in Steel

Industry

Excellence Award for outstanding performance in Productivity

Management, Quality & Innovation

Ispat Suraksha Puraskar (1st Prize) for longest Accident Free Period

1991-94

Best Labour Management Award from the Govt. of AP

SCOPE Award for Best Turnaround 2001

Environment Excellence Award from Greentech Foundation for

energy conservation 2002

Best Enterprise Award from SCOPE, WIPS 2001-02

Best Enterprise Award from SCOPE for surpassing MOU targets

2003-04

ISTD Award for Best HR Practices 2002

Prime Ministers Trophy for Best Integrated Steel Plant 2002-03

World Quality Commitment International Star Award in the Gold

category conferred by Business Initiative Directions, Paris

Organizational Excellence Award for 2003-04 conferred by

INSSAN

RINL has been bestowed with several national accolades in the year

2005-06 significant among them being :

National Energy Conservation Award for the 6

th

time in succession. National Award for Excellence in Water Management.

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ICWAI Award for excellence in Cost Management.

Viswakharma Rashtriya Puraskar Awards (6 out of 32 at the national

level).

FAPCCI Best Industrial Productivity Award.

INSAAN National Award for Organisational Excellence

Best CEO Award

The above awards are besides a number of awards at the local,

regional & national level competitions in the area of Quality Circles,

Suggestion Schemes etc.

Hallmark of Vizag Steel as an organization

Today, VSP is moving forward with an aura of confidence and with

pride amongst its employees who are determined to give their best for the

company to enable it to reach new heights in organizational excellence.

At the same time, no single advantage accruing from a knowledge

society is found wanting by the neighborhood community with the growth

& development of a phenomenon called VIZAG STEEL existing so close

to its proximity. Futuristic enterprises, academic activity, planned &

progressive residential localities are but few of the plentiful ripple effects

of this transformation and each one of us take immense pride to uphold the

philosophy of mutual (i.e., individual and societal) progress.

The remarkable performance on production front coupled with

prudent financial management has not only resulted in achieving

significant net profits but also helped RINL emerge as a NET POSITIVE

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COMPANY in January, 2006 by wiping out all its accumulated losses

during 2005 06

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STATISTICAL INFORMATION

I. Production Performance (000 Tonnes)

Year Hot Metal Liquid

Steel

Saleable

Steel

Labour

Productivity

(Tonnes/manyear)

1998-

1999

2,510 2,225 2,193 161

1999-2000

2,943 2,656 2,382 192

2000-

2001

3,165 2,909 2,507 211

2001-

2002

3,485 3,083 2,757 228

2002-

2003

3,941 3,356 3,056 253

2003-

2004

4,055 3,508 3,169 262

2004-

2005

3,920 3,560 3,173 265

2005-

2006

4,153 3,603 3,237 282

II. Commercial Performance (Rs. Crs.)

Year Sales

Turnover

Domestic

Sales

Exports

1999-2000 3,037 2,677 295

2000-2001 3,436 3,122 322

2001-2002 4,081 3,710 371

2002-2003 5,059 4,433 626

2003-2004 6,174 5,406 768

2004-2005 8,181 7,933 2482005-2006 8,469 8,026 443

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III. Financial Performance (Rs. Crs.)

Year GrossMargin

CashProfit

Net Profit

1998-

1999

15 (-) 346 -

1999-

2000

252 (-) 130 (-) 562

2000-

2001

504 153 (-) 291

2001-

2002

690 400 (-) 75

2002-

2003

1,049 915 521

2003-

2004

2,073 2,024 1,547

2004-

2005

3,271 3,260 2,008

2005-

2006

2,383 2,355 1,251

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EXPANSION PLAN:

Product Capacity (MT) Additional Facilities

Present Future envisaged

Hot Metal 4.00 6.50 New BF with 3800

CuM

Capacity

Charge Sinter 5.26 8.50 New Sinter Plant of

400

Sq.M.area

Liquid Steel 3.70 6.30 SMS-2 with Two 150

CuM Converters, Two

6 Std Billet Casters &

One 6 std Round Caster

Saleable Steel 3.34 5.72 --

Wire Road 1.05 1.65 New WRM of 600,000T/

Annum

Bars & Structural 1.95 3.40 New SBM of

50,000T/

Annum New SM of

700,000 T/Annum

Seamless Pipes - 0.30 Seamless Tube plant of 300,000 T/Annum

theoretical frame work o financial performance apprasial

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