INTRODUCTION

Debtor management means the process of decisions relating to the investment in business debtors. In credit selling, it is certain that we have to pay the cost of getting money from debtors and to take some risk of loss due to bad debts. To minimize the loss due to not receiving money from debtors is the main aim of debtor management. Main elements or dimensions of Debtors management For effective debtor management, following elements should be analyzed . !redit policy !redit policy effects debtor management because it guides management about how to control debtors and how to make balance between liberal and strict credit. If company does not restrict to sell the products on credit after a given limit of sale. This liberated credit policy will increase the amount of sale and profitability. "ut risk will also increase with increasing of sale. If we sell the good to those debtors whose capability to pay is not good, then it is possible that some amount will become bad debts. !ompany can increase the time limit for paying by such debtors. #n the other hand, if company$s credit policy is strict, then it will increase li%uidity and security, but decrease the profitability. &o, finance manager should make credit policy at optimum level where profitability and li%uidity will be e%ual. 'e can show it graphically. &ub part of credit policy (a) *ength of !redit period *ength of credit period is also an element that affects decisions of finance manager relating to manage debtors. It is the time which allows to debtor to pay his debt for purchasing goods on credit from vendor. Finance manager can increase the length of credit period according to reputation of customers. (b) !ash discount

!ash discount is techni%ue to get money fastly from debtors. It is cost of investment in credit sale. +. !redit policy analysis It means decision relating to analysis of credit policy. ,valuation and analysis of credit policy is based on following factors. a) !ollection of debtor$s information For analysis the financial position of debtors, we have to collect the information relating to debtors. This information can be obtained from customer$s financial statements of previous years, bank reports, and information given by credit rating agencies. These information will be useful for deciding where debtors will our debt or not. It will also be useful for knowing capability to pay the debt. b) !redit Decisions -fter collection and analysis the debtor$s information, manager has to decide whether company should facilitate to sell goods on credit or not. If company sells the goods on credit to particular debtor, then at what level it will be sold after seeing his position. For this manager can fi. the standard for providing goods on credit. If a particular debtor is below than given standard, then he should not accept his proposal of buying goods on credit. /. Formulation !ollection 0olicy For getting fund fastly from debtor, the following steps will be taken under formulation of collection policy. a) &end reminding letter for paying debt b) Take the help of debt collection agency for getting bad debt. c) To do legal action against bad debtors. d) To re%uest personally to debtor to pay his dues on mobile or email.

e) Finance manager should monitor collection position through average collection period from past sundry Debtor and their turnover ratio. f) To make ageing schedule. &ample of ageing schedule is given below. -ccounts receivable is an accounting transaction which deals with the billing of customer who owes money to a person, company or organization for goods and services that has been provided to the customers. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms. -n e.ample of a common payment term is 1et /2, meaning payment is due in the amount of the invoice /2 days from the date of invoice. #ther common payment terms include 1et 34 and 1et 52 but could in reality be for any time period agreed upon by the vendor and the customer. #n a company6s balance sheet, accounts receivable is the amount that customers owe to that company. &ometimes called trade receivables, they are classified as current assets assuming that they are due within one year. To record a 7ournal entry for a sale on account, one must debit a receivable and credit a revenue account. 'hen the customer pays off their accounts, one debits cash and credits the receivable in the 7ournal entry. The ending balance on the trial balance sheet for accounts receivable is always debit. -ccounts receivable departments use the sales ledger. #ther types of accounting transactions include accounts payable, payroll, and trial balance. - debt management plan is a formal agreement between a debtor and creditor(s). Debt Management 0lans help reduce outstanding, unsecured debts at a reduced level over a fi.ed period of time to help regain control of finances. Debt Management 0lans are individually tailored based on what can be realistically afforded on a monthly basis. To achieve an accurate figure, an income and e.penditure test will establish what monies are coming into the household and what is being paid out. Income and e.penditure includes everything, such as rent8mortgage, secured loans, utility bills, and essential living e.penses (food 9 T: license etc). #nce the income and e.penditure is /

completed, the leftover amount is your disposable income which is divided amongst creditors through a Debt Management company. 'orking capital (abbreviated '!) is a financial metric which represents operating li%uidity available to a business, organization or other entity, including governmental entity. -long with fi.ed assets such as plant and e%uipment, working capital is considered a part of operating capital. 1et working capital is calculated as current assets minus current liabilities. It is a derivation of working capital, that is commonly used in valuation techni%ues such as D!Fs (Discounted cash flows). If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. - company can be endowed with assets and profitability but short of li%uidity if its assets cannot readily be converted into cash. 0ositive working capital is re%uired to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short;term debt and upcoming operational e.penses. The management of working capital involves managing inventories, accounts receivable and payable, and cash.!ompany can sell the goods on credit or cash. !ash sale is inflow of cash and it is controlled under cash flow analysis. "ut credit sale creates sundry debtors. !ompany has to receive money from them. If company starts to sell on return of cash, then it decreases the level of company$s sale and profitability. #n the other side, if company promotes credit sale, it can increase the risk of bad debts. &o, it is re%uired to control and to manage debtors. Meaning of Debtor management Debtor management means the process of decisions relating to the investment in business debtors. In credit selling, it is certain that we have to pay the cost of getting money from debtors and to take some risk of loss due to bad debts. To minimize the loss due to not receiving money from debtors is the main aim of debtor management. Main elements or dimensions of Debtors management For effective debtor management, following elements should be analyzed !redit policy !redit policy effects debtor management because it guides management about how to control debtors and how to make balance between liberal and strict credit. If company does not 3

restrict to sell the products on credit after a given limit of sale. This liberated credit policy will increase the amount of sale and profitability. "ut risk will also increase with increasing of sale. If we sell the good to those debtors whose capability to pay is not good, then it is possible that some amount will become bad debts. !ompany can increase the time limit for paying by such debtors. #n the other hand, if company$s credit policy is strict, then it will increase li%uidity and security, but decrease the profitability. &o, finance manager should make credit policy at optimum level where profitability and li%uidity will be e%ual. 'e can show it graphically.

BOOK KEEPING FOR ACCOUNTS RECEIVABLE

!ompanies have two methods available to them for measuring the net value of account receivables, which is computed by subtracting the balance of an allowance account from the accounts receivable account. The first method is the allowance method, which establishes a liability account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable. The amount of the bad debt provision can be computed in two ways ; either by reviewing each individual debt and deciding whether it is doubtful (a specific provision) or by providing for a fi.ed percentage, say +<, of total debtors (a general provision). The change in the bad debt provision from year to year is posted to the bad debt e.pense account in the income statement. The second method, known as the direct write;off method, is simpler than the allowance method in that it allows for one simple entry to reduce accounts receivable to its net realizable value. The entry would consist of debiting a bad debt e.pense account and crediting the respective account receivable in the sales ledger.

=eceivable management >

The term receivable management is defined as ?debt owed to the firm by !"tomer #ri"i$% from the "#&e of %ood"' "er(i e" i$ the ordi$#ry o!r"e of b!"i$e"" .@ The receivable represents an important component of the current assets of the firm. =eceivables may be known as accounts receivables, trade creditors or customer receivable. 'hen a firm its products 8 services and does not receive cash for it immediately, the firm has said to be granted trade credit to the customers. Trade credit 4

thus creates receivable 8 book debts, which the firm is e.pected to collect in near future. -ccounts receivable are thus amounts due from customers, which bear no interest in essence, a company is providing no cost financing to the customer to encourage the purchase of the company$s product8services. The e.tension of credit can be 7ustified only if the increase in the sales and related cash collections (discounted for the time until collection) e.ceeds the amount otherwise cash generated under a ?cash only@ policy. These customer from whom receivable or book debt are to be collected in the future are called as ?tr#de debtor"@ or simply as ?debtor@ and represents the firm$s claim on assets. Trade debtors are e.pected to be converted into cash within a short period and are included in the current assets. &ince receivables often accounts for the significance portion of total assets, it re%uires careful attention and ade%uate management. It is skill demanding field because the customer has to be bestowed with trust along with a continuous vigilance.

COSTS)
The ma7or categories of cost associated with e.tension of credit and receivable areA !ollection cost !apital cost Delin%uency cost Default cost COLLECTION COST) These costs are administrative cost incurred in collecting the receivable from the customers. This category includesA . -dditional e.penses on the creation and maintenance of a credit department with staff, accounting, records, stationary, postage and other related items. +. ,.penses involved in ac%uiring credit information either through outside specialist agencies or by the staff of the firm itself. CAPITAL COST)

-ccounts receivables, being an investment in current assets, have to be financed involving a cost. There is a time lag between the sale of goods to, and the payment by, the customers. Meanwhile the firm has to pay employees and suppliers of raw material i.e. the firm should arrange for additional funds to meet its own obligations. Thus, the cost on the use of additional capital to support credit sales is therefore apart of the cost of e.tending credit. DELIN*UENC+ COST) This cost arises out of the failure of the customer to meet their obligations when payment on credit sales becomes due after the e.piry of the period of credit. &uch cost includesA "locking up of funds for an e.tended period. !ost associated with steps that have to be initiated to collect the overdue, such as reminders and other collection efforts, legal charges, where necessary , and so on. DEFAULT COST In addition of the above cost the firm may not be able to recover the overdue because of inability of the customers. &uch debts are treated as bad debts and have to be written off, as they cannot be realized. Though a concern may be able to reduce bad debts through efficient collection mechanism, one cannot altogether rule out the possibility of this cost. BENEFITS) -part from the cost, another factor that has a bearing on accounts receivable is the benefit emanating from credit sales. The benefits areA ?The i$ re#"ed "#&e #$d thereby ,rofit"@ Bowever, the benefits would depend upon the credit policy adopted by the firm, i.e., a conservative or liberal credit policy. The impact of liberal credit policy is likely to have two formsA; i. ii. &ales e.pansion &ales retention

In sales e.pansion a firm may grant credit either to increase sales or to attract new customer. This motive is growth orientedC on the other hand the sales retention the firm may grant credit

to protect its current sales against emerging competition. 1o matter whatever is the motive, the result the result of increased sales is the increase the profit of the firm.

SO-E BASIC DEFINITION

'hen the buying and selling process steps forward and the customer is not able to pay the total amount, the amount which they are not able to pay at the same time of buying the amount is known as DEBT. In the balance sheet of companies those customers are DEBTORS. In their balance sheet company is a CREDITOR. #n the basis of market performance and credit rating company decides the time period of payback of the amount. This time period is known as CREDIT PERIOD. The total amount called as debt is called as OUTSATNDING. 'hen this total outstanding is not paid within the credit period the amount remained to be collected is called as OVERDUE. The total overdue is divided in different parts such as overdue within /mo$th"0 from /12 mo$th"0 2134 mo$th"0 3 to 4 yr"0 41/ yr"0 #bo(e /yr"0 #$d #bo(e 5 yr". 'hen the customer is not able to pay back the due after five years then this amount is known as BAD DEBTS. BI* has kept some amount for this type of time of contingencies. This amount use for decreasing the effect of bad debts is called as PROVISION. CURRENT ASSETS are those assets which can be converted into cash within the period of 34 mo$th" starting from the company$s financial year. CURRENT LIABILITIES are those liabilities which are repaid within 34 mo$th" starting from company$s financial year.

RESEARC6 -ET6ODOLOG+

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The study is descriptive in nature in the sense that it focuses basically on analyzing the debtor$s management at BI*. =-TI#& -=, H&,D T# TBI& 0=#I,!T '#=JA TH=1#:,= =-TI#& !H==,1T =-TI# KHI!J =-TI#&

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OB7ECTIVE OF T6E STUD+

The process of debtor$s management in BI* how the outstanding debtors are accounted 9 what steps and actions are taken and should be taken to recover these dues on time. !omparison of BI* with other key players with respect to the debtors.

0osition of debtors in different industries. Bence the firm is re%uired to allow the credit sale in order to e.pand its sales volume. The increase in sales is also essential to increase profitability. The sales of goods have become an essential part of the modern competitive economic

system. In fact credit sales and receivables are treated as a marketing tool to aid the sale of goods. ?To promote sales and profit until that point is reached where the return on investment in further funding of receivable is less than the cost of funds raised to finance that additional credit(i.e. cost of capital)@

NEED FOR T6E STUD+

Trade credit is an important marketing tool. - policy of trade credit is followed nearly in all capital intensive industries either for sales e.pansion and 8or sales retention. Hnder any circumstances investment in receivable is growth oriented. -ARKET FACTOR) Market factors like price, forces accompany to grant credit. For e.ample, BI* whose price is comparatively higher is forced to grant credit in order to maintain sale.

CO-PETITION) In view of stiff competition from both domestic and international

players, the company is left with no option then to grant credit. !ompetition is another vital factor, which affects the credit policy of a firm, and BI* is not an e.ception.

CUSTO-ER8S RE*UIRE-ENT) -s the market has changed to the buyer$s market, the customers have become kings. If the customer e.pects credit and is worthy of it, he gets it.

-ARKETING TOOL) T o push up sales of slow moving products and encourage bulk purchase of fast moving products, credit plays an effective role in this conte.t.

RESESSIONAR+ ECONO-IC CONDITIONS) *i%uidity crunch forces the

company to grant credit.

SCOPE OF T6E STUD+

The scope of this study is limited to the study of Debtors Management at BI*. The scope encompassed with the debtors section of the company which is a part of finance and accounting department.

&ources of data !ollection

Primary data are collected by interviewing customers and employees of BI* Secondary data are collected by using internet, magazines and te.t books.

+.4 &ampling
The study was done by using the age wise analysis of debtors.

LI-ITATION OF T6E STUD+

) The time horizon is very short, so in depth analysis could be done only of few schemes. The pro7ect is dependent on the relevance of the secondary data (e.g. -nnual reports of various companies) collected from the internet which might not be correct. The study has been done on only a handful of data so it cannot be generalized to the entire industry.

+)

/)

LITERATURE REVIE9
!ompany can sell the goods on credit or cash. !ash sale is inflow of cash and it is controlled under cash flow analysis. "ut credit sale creates sundry debtors. !ompany has to receive money from them. If company starts to sell on return of cash, then it decreases the level of company$s sale and profitability. #n the other side, if company promotes credit sale, it can increase the risk of bad debts. &o, it is re%uired to control and to manage debtors. Meaning of Debtor management Debtor management means the process of decisions relating to the investment in business debtors. In credit selling, it is certain that we have to pay the cost of getting money from debtors and to take some risk of loss due to bad debts. To minimize the loss due to not receiving money from debtors is the main aim of debtor management. Main elements or dimensions of Debtors management For effective debtor management, following elements should be analyzed . !redit policy !redit policy effects debtor management because it guides management about how to control debtors and how to make balance between liberal and strict credit. If company does not restrict to sell the products on credit after a given limit of sale. This liberated credit policy will increase the amount of sale and profitability. "ut risk will also increase with increasing of sale. If we sell the good to those debtors whose capability to pay is not good, then it is 4

possible that some amount will become bad debts. !ompany can increase the time limit for paying by such debtors. #n the other hand, if company$s credit policy is strict, then it will increase li%uidity and security, but decrease the profitability. &o, finance manager should make credit policy at optimum level where profitability and li%uidity will be e%ual. 'e can show it graphically.

-ccounts receivable are a legally enforceable claim for payment to a business by its customer8 clients for goods supplied and8or services rendered in e.ecution of the customer$s order. These are generally in the form of invoices raised by the business and delivered to the customer for payment within an agreed time frame. -ccounts receivable are shown in the balance sheet as asset. It is one of a series of accounting transactions dealing with the billing of a customer for goods and services that the customer has ordered. These may be distinguished from notes receivable, which are debts created through formal legal instruments called promissory notes. !ontents LhideM #verview + 0ayment terms / -ccounts =eceivable -ge -nalysis 3 "ookkeeping 4 &pecial uses 5 =elated accounting topics D &ee also E 1otes and references #verview

-ccounts receivable represents money owed by entities to the firm on the sale of products or services on credit. In most business entities, accounts receivable is typically e.ecuted by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit termsL+M or payment terms. The accounts receivable department uses the sales ledger, because a sales ledger normally recordsAL/M The sales a business has made. The amount of money received for goods or services. The amount of money owed at the end of each month varies (debtors). The accounts receivable team is in charge of receiving funds on behalf of a company and applying it towards their current pending balances. !ollections and cashiering teams are part of the accounts receivable department. 'hile the collections department seeks the debtor, the cashiering team applies the monies received. 0ayment terms

-n e.ample of a common payment term is 1et /2 days, which means that payment is due at the end of /2 days from the date of invoice. The debtor is free to pay before the due dateC businesses can offer a discount for early payment. #ther common payment terms include 1et 34, 1et 52 and /2 days end of month. The creditor may be able to charge late fees or interest if the amount is not paid by the due date. "ooking a receivable is accomplished by a simple accounting transactionC however, the process of maintaining and collecting payments on the accounts receivable subsidiary account balances can be a full;time proposition. Depending on the industry in practice, accounts receivable payments can be received up to 2 > 4 days after the due date has been reached. These types of payment practices are sometimes developed by industry standards, corporate policy, or because of the financial condition of the client. &ince not all customer debts will be collected, businesses typically estimate the amount of and then record an allowance for doubtful accountsL3M which appears on the balance sheet as D

a contra account that offsets total accounts receivable. 'hen accounts receivable are not paid, some companies turn them over to third party collection agencies or collection attorneys who will attempt to recover the debt via negotiating payment plans, settlement offers or pursuing other legal action. #utstanding advances are part of accounts receivable if a company gets an order from its customers with payment terms agreed upon in advance. &ince billing is done to claim the advances several times, this area of collectible is not reflected in accounts receivables. Ideally, since advance payment occurs within a mutually agreed;upon term, it is the responsibility of the accounts department to periodically take out the statement showing advance collectible and should be provided to sales 9 marketing for collection of advances. The payment of accounts receivable can be protected either by a letter of credit or by Trade !redit Insurance -ccounts =eceivable -ge -nalysis -n -ccounts =eceivable -ge -nalysis, also known as the Debtors "ook is divided in categories for current, /2 days, 52 days, F2 days or longer. The analysis or report is commonly known as an -ged Trial "alance. !ustomers are typically listed in alphabetic order or by the amount outstanding, or according to the company chart of accounts. Nero balances are not usually shown. "ookkeepingLeditM

#n a company6s balance sheet, accounts receivable are the money owed to that company by entities outside of the company. -ccount receivables are classified as current assets assuming that they are due within one calendar year or fiscal year. To record a 7ournal entry for a sale on account, one must debit a receivable and credit a revenue account. 'hen the customer pays off their accounts, one debits cash and credits the receivable in the 7ournal entry. The ending balance on the trial balance sheet for accounts receivable is usually a debit. "usiness organizations which have become too large to perform such tasks by hand (or small ones that could but prefer not to do them by hand) will generally use accounting software on a computer to perform this task.

!ompanies have two methods available to them for measuring the net value of accounts receivable, which is generally computed by subtracting the balance of an allowance account from the accounts receivable account. The first method is the allowance method, which establishes a contra;asset account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable. The amount of the bad debt provision can be computed in two ways, either ( ) by reviewing each individual debt and deciding whether it is doubtful (a specific provision)C or (+) by providing for a fi.ed percentage (e.g. +<) of total debtors (a general provision). The change in the bad debt provision from year to year is posted to the bad debt e.pense account in the income statement. The second method is the direct write;off method. It is simpler than the allowance method in that it allows for one simple entry to reduce accounts receivable to its net realizable value. The entry would consist of debiting a bad debt e.pense account and crediting the respective accounts receivable in the sales ledger. The two methods are not mutually e.clusive, and some businesses will have a provision for doubtful debts, writing off specific debts that they know to be bad (for e.ample, if the debtor has gone into li%uidation.) &pecial usesLeditM

!ompanies can use their accounts receivable as collateral when obtaining a loan (asset;based lending). They may also sell them through factoring or on an e.change. 0ools or portfolios of accounts receivable can be sold in capital markets through securitization. For ta. reporting purposes, a general provision for bad debts is not an allowable deduction from profitL4M ; a business can only get relief for specific debtors that have gone bad. Bowever, for financial reporting purposes, companies may choose to have a general provision against bad debts consistent with their past e.perience of customer payments, in order to avoid over;stating debtors in the balance sheet.

&ub part of credit policy

(a) *ength of !redit period

*ength of credit period is also an element that affects decisions of finance manager relating to manage debtors. It is the time which allows to debtor to pay his debt for purchasing goods on credit from vendor. Finance manager can increase the length of credit period according to reputation of customers.

(b) !ash discount

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

+. !redit policy analysis

It means decision relating to analysis of credit policy. ,valuation and analysis of credit policy is based on following factors.

a) !ollection of debtor$s information

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For analysis the financial position of debtors, we have to collect the information relating to debtors. This information can be obtained from customer$s financial statements of previous years, bank reports, and information given by credit rating agencies. These information will be useful for deciding where debtors will our debt or not. It will also be useful for knowing capability to pay the debt.

b) !redit Decisions

-fter collection and analysis the debtor$s information, manager has to decide whether company should facilitate to sell goods on credit or not. If company sells the goods on credit to particular debtor, then at what level it will be sold after seeing his position. For this manager can fi. the standard for providing goods on credit. If a particular debtor is below than given standard, then he should not accept his proposal of buying goods on credit.

/. Formulation !ollection 0olicy

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

a) &end reminding letter for paying debt

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

c) To do legal action against bad debtors.

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

e) Finance manager should monitor collection position through average collection period from past sundry debtor and their turnover ratio.

f) To make ageing schedule. &ample of -geing schedule is given belowManaging the debtors for 6IL is an important and chief function of the sales accounts division of finance and accounts. -ll the transactions of commercial nature are dealt with by this department in a detailed outline frame of working. The debtors arise each month out of the sales made on credit and suitable feeding of the re%uired figures has to be made once in a month. This function is very much a difficult task owing to the various subsidiaries and associate companies being controlled by TISCO itself.

The activities of each of the companies are diverse in operations and re%uire different policy formulations and strategies for complying with the e.isting market re%uirements. "ut they are controlled in a centralized manner so that they give an actual overview of the standing of the company. The profitability of each of the above is e%ually important to arrive at a consensus for finding out the actual earnings and future prospects. -s such each of the company under subsidiary and associate is incorporated under distinct centres as Profit Ce$tre.

To flatten the organizational structure and developed authority and responsibility for the %uicker responsiveness to changing market conditions and greater initiative in dealing with different target markets, BI* has brought in the concept of profit centre. For all practical purpose, each profit centre functions as a separate company within the hold of BI*. From the debtors management point of view also each profit centre has the responsibility of appraising and dealing with its customers. Bowever the overall control is centralized and is in the hands of the finance department. The main function which lies at the hands of BI*, Iamshedpur is to report such standings of the actual debtors as on a particular date to the -D in the form of a monthly report. The figures thus arrived at give an overview of which profit centres contribute the most to the debtor$s standing and the specific reasons for the same. ++

"eing a steel manufacturing concern, BI* is mainly concerned with the actual debtors arising for the following profit centresA STEEL 9IRE DIVISIONS FERRO ALLO+S AND -INERALS DIVISION TUBES DIVISION BEARINGS

,ach of the above profit centers have debtors of their own which are handled and managed in a centralized manner. For an e.ample, tubes division is one of the most important division which has the ma.imum contribution to the total sales taking together all the profit centers at a point of time. It has various parties of its own as debtors such as ESSAR STEEL LI-ITED0 BLUE STAR LI-ITED0 6+DERABAD INDUSTRIES LI-ITED0 -EC6ATRONICS and many debtors. - database relating to the different parties is maintained in a pre specified format which helps in understanding the actual standing of the debtor from the point of view of the actual sale being made to the party on credit till date. This format helps in maintaining the records in a form which helps in 7udging the actual ageing of the debtors and the amount being recovered from the total debt. "y ageing we mean to give an actual definition to the debtors in terms of how old has the debt been to him and thereby categorizing him for the purpose. - same prescribed format is used by all the profit centers for managing their respective debtors.

E:PLANATION
Through this preparation we get to know the actual total debtors figures and the ma7or parties that have contributed to the increase and decrease in the debtors as when compared with the previous financial period. It mainly emphasizes upon the total debtors figures and the overdue debtors and their ma7or contributors in the form of party names and figures. It also gives all list of indications for the debtors whose standing are for periods beyond si. months. This reporting is crucial for the reason that it gives the management the indicative areas for focus,

+/

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

This chapter provides related literature on debtor management and business performance of an organization .It covered what scholars have written about them from selected published 7ournals, on internet and te.t books. -ET6ODS OF DEBTOR -ANAGE-ENT) Debtors occupy an important position in the structure of current assets of a firm. They are the outcome of rapid growth of trade credit granted by the firms to their customers. Trade credit is the most prominent force of modern business. It is considered as a Marketing tool acting as a bridge for the movement of goods through production and distribution stages to customers. It is generally believed that credit policy stimulates sales as it helps in retaining e.isting customers and winning clients from rivals. Trade debtors represent amounts owed to the firm as a result of credit sale of goods or services in the ordinary course of business. The key function of credit management is to optimize the sales at the minimum possible cost of credit. RATIONALE OF CREDIT -ccording to Jakuru Iulius (+22 ), firms use credit as a marketing weapon for e.panding business in a declining industry. In a growing competitive market, credit is used to increase a firms markets share of minimize erosion of the firm$s market share by maintaining the firms share and maintaining the firm market share. Further more, it helps to retain old customers and create new ones by wining them away from competitors. To him, credit e.tension is a desirable option on which companies can do business in a better way hence gaining competitive advantage. Jakuru Iulius goes further to define credit policy as a set of polices of action designed to manage costs associated with credit, while ma.imizing the benefits from it. - firm may follow a limited or a stringent credit policy.

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T+PE OF CREDIT POLIC+ Jakuru Iulius (+22 ), identifies + types of credit policiesC *enient and &tringent !redit 0olicies. To him, a lenient credit policy tends to give credit to customer on very liberal terms and standards. Be further notes that a stringent credit policy is highly selective and gives credit to only those customers whose credit worthiness has been ascertained and who are financially strong. Co"t" #""o i#ted with e;te$di$% redit "oggess '.0 ( F5D), noted that carrying costs are those costs of capital measured as the company$s internal re%uired rate of return on funds committed in receivables where as normal credit costs are those costs for supporting the credit function, for e.ample legal collections. =osse and 'aster field ( FEE), distinguished two costsC the carrying costs and opportunity costs. To them, carrying costs are those associated with credit e.tension and investment in receivables. They include the re%uired rate of return from bad debts and the costs associated with credit analysis, monitoring and collection efforts. They further argued that opportunity costs are costs related to loss of sales and as a result of refusing to grant credit. -ccording to :an Borne ( FEF), a firm should evaluate its credit policy in terms of returns and costs. The costs involved includeC the selling costs, administration costs, collection costs and bad debt losses. :an Born however identifies these costs as involving in the implementation of credit sales. Be further emphasizes that a firm can realize sales because of credit sales, which leads to larger profits. Jakuru Iulius (+22 ) noted that though e.tending credit is beneficial, it involves costs which are inevitable in some cases, and these costs includeC collection costs, bad debt losses, administrative costs and opportunity costs. To him, collection costs are incurred at the time of collection of receivables. These could be in form of sending reminding letters, meeting telephone charges and making reminders through the press in some cases.

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NATURE OF CREDIT MANAGEMENT POLICIES !redit management policies are comprehensive set procedures and guidelines that must be followed by banks in lending practices to achieve their goals (-gu, FFE). The term credit policy is used to refer to the combination of three decision variables i.e. credit standards, credit terms and collection efforts on which the financial manager has influence. !redit standards are criteria to decide the types of customers to whom goods could be sold on credit. If a firm has more slow; paying customers, its investment in accounts receivable will increase. The firm will also be e.posed to higher risk of default. -ccording to 0andey (+22 ), in order to analyze customers and set standards, two aspects are consideredC the average collection paid and the default rate. To him, average collection paid refers to the period in which debts remain outstanding, and default rate is the ratio of uncollected receivables to the total receivables. 0andey (+22 ) identifies 4!$s of credit as a measurement in setting standards. The 4 !$s includeC character, capacity, condition, capital, and collateral. Ch#r# ter -ccording to 0andey ( FF4) the credit manager attempts to ascertain the applicant$s willingness to pay and settle his or her obligation. Much consideration is accorded to the moral factor. -s much as possible, the financial manger should ascertain whether the customer will make honest efforts to meet the credit obligations of the firm. In making analyses about the customer$s character, the firm should consider some of the aspect from the clients. These aspects includeC bank references, marital status, attachment to government agencies, level of education contact operational stability and historical background. -ccording to 0andey (+22 ), !apacity is the ability of a customer to pay credit advanced to him or her. In analysis his or her capacity, the manager should look at financial statements, previous e.perience with the firm, bank and trade references, amount and purpose of credit.

+5

Jakuru, (+22 ) also considers that factors like profit margin, cash flows, acid taste ratio of business, and the duration one has been in the business should be looked while analyzing capacity. Co$ditio$ -ccording to Jakuru (+22 ), this includes the assessment of prevailing economic and other factors like social > political which may affect the customer$s ability to pay. In addition, where customers incur substantially larger transport costs, one could be disruptive in e.tending by 0andy (+22 ). -ccording to 0andey ( FF4), one should evaluate the customer$s financial position by analyzing ratios and trends in cash and working capital positions. The attributes to consider are how much the owner of the business has put in the business as this determines the stake of the person in the business. 0andey (+22 ) contends that, in some situations, the applicant may be re%uired to offer securities before credit is advanced. The security should be safe and easily marketable. Credit term" -ccording to 0andey ( FF4), credit terms are stipulations under which a firm grants credit to its customers. To him, immediately after the credit manager has verified the credit applicant using set credit standards, decisions to e.tend credit is made . The firm should try as much as possible to make terms more attractive to act as an incentive to clients without incurring unnecessary high levels of bad debts. Therefore, the terms used should conform to the average industrial terms and they include credit period and cash discount. credit to such. This is because this high cost reduces their profits which may affect their payments. -ll these views are shared

+D

Co&&e tio$ ,ro ed!re" "alstansky ( FF/) noted that collection procedures are efforts applied in order to accelerate collections from slow paying customers and to reduce bad debt losses. !ollection procedures could be defined for each credit customer. This should be done in an organized manner that will accelerate cash receipts without endangering the relationship with the debtor. Jakuru (+22 ), gives a step by step procedure that is essential in collecting dues from slow paying customers and these includeC reminders, final write;off, insuring debtors, and factoring of debtors. 4.3.5 De"i%$i$% redit ,o&i y Jakuru Iulius (+22 ), contends that, the only a way a firm can control its sales is through altering its credit policy. Be says that credit policy is based on three controllable variables which are credit standards credit terms, and collection procedure. Credit I$(e"ti%#tio$" #$d A$#&y"i" :an Borne ( FEF), emphasizes that, credit analysis considers the character of the company, its management and the financial strength of the firm in order to avoid imbalances. To him, credit analysis can be done by using techni%ues like credit scoring where characteristic of an applicant are %uantitatively rated and credit decisions made on the basis of the total score. !haracteristics like the marital status, level of education occupational stability can be rated. Credit Limit -ccording to Jakuru Iulius (+22 ), credit limit is the ma.imum of credit the firm can e.tend to customers at any point of time. Be suggests that the analyst should carefully sensitize the amount of contemplated sales and the customer$s financial strength and that if a problem arises, it may make it inevitable to review the credit limit. Credit "t#$d#rd" "etti$% i$ ,r# ti e -ccording to Jakuru Iulius (+22 ), in order to analyze customers and set standards, two aspects are consideredC the average collection paid and the default rate. To him, average collection paid refers to the period in which debts remain outstanding, and default rate is the ratio of uncollected receivables to the receivables. +E total

Credit term" -ccording to 0andy ( FF4) credit terms are stipulations under which a firm grants credit to its customers. To him, immediately after the credit manager has verified the credit applicant using set credit standards, decisions to e.tend credit is made. The firm should try as much as possible to make terms more attractive to act as an incentive to clients without incurring unnecessary high levels of bad debts. Therefore, the terms used should conform to the average industrial terms and the include credit period and cash discount. Co&&e tio$ ,ro ed!re" "alstansky ( FF/) noted that collection procedures are efforts applied in order to accelerate collections from slow paying customers and to reduce bad debt losses. !ollection procedures could be defined for each credit customer. This should be done in an organized manner that will accelerate cash receipts without endangering the relationship with the debtor. Jakuru, (+22 ), gives a step by step procedure that is essential in collecting dues from slow paying customers and these includeC reminders, final write;off, insuring debtors, and factoring of debtors.

4.4 Defi$itio$ of b!"i$e"" ,erform#$ e &toner ( FFD) describes business performance as the ability to operate efficiently, profitably, survives, grow and lead to opportunities and threats. &toner ( FFD) singled out the production process efficiently as the key factor governing business performance. There is also emphasis upon innovation for profitability, assets management and overall entrepreneurship for achieving lasting performance. !onsidering the definitions therefore, business performance can be defined as in terms of profitability, li%uidity, and growth and e.pansion prospects for the business. -ccording to Dean, ( FF3), #rganizationsC the term Oorganizational performance$ is used comfortably in three time; senses ; the past, present, and the future. In other

+F

words, performance can refer to something completed, or something happening now, or activities that prepares for new needs. Managing the debtors for T#t# "tee& is an important and chief function of the sales accounts division of finance and accounts. -ll the transactions of commercial nature are dealt with by this department in a detailed outline frame of working. The debtors arise each month out of the sales made on credit and suitable feeding of the re%uired figures has to be made once in a month. This function is very much a difficult task owing to the various subsidiaries and associate companies being controlled by TISCO itself.

The activities of each of the companies are diverse in operations and re%uire different policy formulations and strategies for complying with the e.isting market re%uirements. "ut they are controlled in a centralized manner so that they give an actual overview of the standing of the company. The profitability of each of the above is e%ually important to arrive at a consensus for finding out the actual earnings and future prospects. -s such each of the company under subsidiary and associate is incorporated under distinct centres as Profit Ce$tre.

To flatten the organizational structure and developed authority and responsibility for the %uicker responsiveness to changing market conditions and greater initiative in dealing with different target markets, Tata steel has brought in the concept of profit centre. For all practical purpose, each profit centre functions as a separate company within the hold of Tata steel. From the debtors management point of view also each profit centre has the responsibility of appraising and dealing with its customers. Bowever the overall control is centralized and is in the hands of the finance department. The main function which lies at the hands of Tata steel, Iamshedpur is to report such standings of the actual debtors as on a particular date to the -D in the form of a monthly report. The figures thus arrived at give an overview of which profit centres contribute the most to the debtor$s standing and the specific reasons for the same.

/2

"eing a steel manufacturing concern, Tata steel is mainly concerned with the actual debtors arising for the following profit centresA STEEL 9IRE DIVISIONS FERRO ALLO+S AND -INERALS DIVISION TUBES DIVISION BEARINGS

,ach of the above profit centers have debtors of their own which are handled and managed in a centralized manner. For an e.ample, tubes division is one of the most important division which has the ma.imum contribution to the total sales taking together all the profit centers at a point of time. It has various parties of its own as debtors such as ESSAR STEEL LI-ITED0 BLUE STAR LI-ITED0 TATA C6E-ICALS LI-ITED0 -EC6ATRONICS and many debtors. - database relating to the different parties is maintained in a pre specified format which helps in understanding the actual standing of the debtor from the point of view of the actual sale being made to the party on credit till date. This format helps in maintaining the records in a form which helps in 7udging the actual ageing of the debtors and the amount being recovered from the total debt. "y ageing we mean to give an actual definition to the debtors in terms of how old has the debt been to him and thereby categorizing him for the purpose. - same prescribed format is used by all the profit centers for managing their respective debtors.

E:PLANATION
Through this preparation we get to know the actual total debtors figures and the ma7or parties that have contributed to the increase and decrease in the debtors as when compared with the previous financial period. It mainly emphasizes upon the total debtors figures and the overdue debtors and their ma7or contributors in the form of party names and figures. It also gives all list of indications for the debtors whose standing are for periods beyond si. months. This reporting is crucial for the reason that it gives the management the indicative areas for focus, the reasons for a rise in debtors and suitable control for future standing which is profitable to the company as a whole.

0rofitability, for e.ample, is often regarded as the ultimate performance indicator, but it is not the actual performance. The actual performance occurred some time back ; first with decisions and then the actions that followed the decisions. 0rofit is therefore an indicator of previous performance. In this sense, performance is the outcome or Oend$. If you are also interested in current behaviors that are associated with good or high performance, then you must identify and assess them as they occur. These behaviors start with the strategic planning process and continue into implementation, monitoring, and assessment. In this sense, performance is the Oactivity$ or Omeans$. are also interested in predictors of performance ; conditions and behaviors that have been shown over time to lead to better performance. In this sense, performance is a package of behaviors around strategic planning and programming. According to Ghobadian, (1994), There are numerous, major methods and movements to regularly increase the performance of organi ations! "ach includes regular recurring activities to establish organi ational goals, monitor progress to#ard the goals, and ma$e adjustments to achieve those goals more effectively and efficiently! Typically, these become integrated into the overall recurring management systems in the organi ation (as opposed to being used primarily in one%time projects for change! 4./ -e#"!re" of Perform#$ e. /+

'hen determining performance of a business, the following have to be considered according to ("alunywa, FFE) I$ re#"ed m#r<et "h#re. This is where the company e.pands on its activities by occupying a large position of the e.isting markets. This can be in terms of sales and the range of products in the market hence a sign of good performance. Ret!r$ o$ %ro"" i$(e"tme$t. This is in terms of profits obtained from investment you made. Therefore, high rates of profitability show a sign of good performance Tot#& w#"te red! tio$. 'hen a company performs well, waste reduction is minimized because every activity is done in the right time and right place thus not wasting firm$s resources ("akunda, +22 ). ?For world class companies, the ultimate goal is zero costs. -ll costs are unnecessary unless proven otherwise.@ -eeti$% "t#$d#rd". Hsually when a company meets standards set in a particular field, it will indicate a good performance level. #thers include cost reduction, improved facilities, and good reputation. Despite important advances made in determining what %ualifies to be a good indicator of business performance, much more needs to be done to develop a satisfactory understanding of the sub7ect because no measure works in isolation of the other, all factors must be combined and e.ploited efficiently to achieve performance targets. 4.= Other f# tor" #ffe ti$% b!"i$e"" ,erform#$ e Com,etitio$ !ompetition comes in e.istence from situations where two or more business organizations produce identical products, share the same market. Many ,conomists believe that competition is a fact, which must be considered if the business is to prosper (0orter, FF+). In order to match increasing competition, most companies will produce products that can be bought at relatively low prices. Bowever, this may compromise %uality in that customers may purchase infre%uently hence affecting performance (Drucker, FEF). C!"tomer" i$f&!e$ e David and Bouston (+222) argues that the most important factor that impact on any organizations operations function is to manage value adding activities inside the business in //

such away that customer re%uirements are meet in full. For each element of product or service that is of concern to the customer, organizations will have an internal response that facilitates the satisfaction of the customer preferences thus, performance. The most successful businesses are those that can most effectively configure their operations to meet customer re%uirements. P&#$$i$% Dune ( FF4) stresses the importance of financial planning in the business to prosper effectively. - retailer or any business owner invests money in merchandise for profitable resale to others but this will be impossible of the choice of merchandise if made without effective planning, and the result is always low profits or loss. -#r<eti$% f!$ tio$ Jotler, ( FF4) cited marketing function as one of the ma7or weapons to be used for the better results of business operations. -ll business organizations have to continuously encourage through potential customers to buy their products and they must achieve this as efficiently as possible through implanting marketing function. -dock ( FF4) advises business organizations with no formal marketing function, in order to succeed to use specialists or managers who initially understand market re%uirements. "iimble ( FF2) advises business operators or owners to acknowledge that, a business, which carries out advertising as part of marketing function, increases its market share, which indicates good performance. E o$omi h#$%e" In situations where high currency is charged, business is forced to increase prices for sustainability of business hence affecting their performance. This can be because of importation in periods for e.ample, when the currency rate is very high. #ther economic changes as inflation also causes prices to increase eventually cost of production increases as a result demand reduces hence affecting performance "rown, ( FF2). Penerally, it can be seen that the theoretical models have only served as a rough guides and have not specifically analyzed the imposition of a ta. on business performance. ,ven "rown ( FF2) who tried to analyze economic changes never pointed out how ta.ation affects business performance that the present study wants to investigate

/3

-ccording to Mbaguta, (+22+) lack of capital is another impediment to businesses in their early stages. =esults of the study indicated a significant proportion of the respondents, 53(3E<) raised this as a ma7or problem. First, these businesses were started with limited capital. &econdly, micro businesses lack collaterals such as cars or land titles that can be deposited to get loans from the traditional commercial banks. #n the other hand, the loans provided by microfinance institutions are small, with a short repayment period and high interest rates. &nyder (+222) points poor record keeping as also a cause for startup business failure. In most cases, this is not only due to the low priority attached by new and fresh entrepreneurs, but also a lack of the basic business management and skills. Most business people, therefore, end up losing track of their daily transactions and cannot account for their e.penses and their profits at the end of the month. Bigh rental charges have impeded the success of many businesses as some charges are pegged to the Hnited &tates dollar, which in most cases appreciates against the Byederabad shilling "agazonzya (+22/). #ne businessperson mentioned that their rent is H&Q+22 for a space of + feet by 2 feet. ,.pansion of towns has led to increased demand for business premises, which means that some small businesses have been pushed away from the busy areas of the town to the periphery. This has increased costs and resulted in poor sales and negative cash flow, thus minimizing the chances for most businesses to succeed. -rden, (+22/) points$ lack of effective management during their early stages is also a ma7or cause of business failure for small businesses. #wners tend to manage these businesses themselves as a measure of reducing operational costs. This study uncovered the e.ample of businessperson who locks the shop for a full day whenever he goes shopping in Jampala. Be does this once every week, a total of four days a month. #ne result of this is loss of customer loyalty.

/4

Re&#tio$"hi, betwee$ debtor m#$#%eme$t #$d or%#$i>#tio$#& ,erform#$ e For businesses to succeed it is essential to have a good debtor management In addition, businesses should aim at fi.ing prices that will enable them to earn sufficient profits for survival and growth. Further, every businessperson needs effective and efficient management skills to go into business and new, effective, and efficient management skills to stay there. 1ama77a (+22/) recommends debtor management systems. &he asserts that small to medium sized businesses should have system or process for managing debtors. It is even more important during uncertain financial times that you manage your debtors effectively, and there are several different methods for doing this.

-ccording to "alunywa ( FF5)C medium sized businesses should have budget profit and loss analysis to really know what you spend (or intend to spend) in each area of your business over + monthsR Co$ &!"io$ In orgarnisations,although there are other ways of driving the business to success like competitive aggressiveness, visionary, leadership, trained staff and costumer focus, debtor management provides a reflector of past and a drive to achieve better performance for effective measurement.

/5

INDUSTR+ PROFILE
India is the eighth largest producer of crude steel in the world, accounting for /./D< of the global steel production in +224. India$s finished carbon steel production grew to reach an estimated 3+.5/mmt in +224;25C primary producers alone contributed about /E< whereas secondary producers contributed the rest. 'ith reference in changes in economy Indian steel industry is poised for massive e.pansion. Dramatic consumption growth over the last few years has stimulated enormous e.pansion plans, facilitated by a relatively une.ploited iron ore raw material base. India is now being hailed as the new !hina, where crude steel production soared from less than 22m tonnes in FF4 to over 322m tonnes in +225.This report focuses on detailed study about the Indian &teel Industry. &teel became an integral part of development. It discusses basic steel manufacturing processes like "last Furnace and, ,lectric arc Furnace, industry value chain with a special reference to ma7or raw material trends and price trends of steel products. Demand >supply dynamics has been discussed along with key growth drivers and ,.port;Import scenario. It also talks about Issues 9 challenges of the steel industry, mergers and ac%uisitions, government policies and regulations. Top 2 *eading 0layers in steel Industry have been profiled namely &teel -uthority of India (&-I*), BI*, ,&&-= &teel and I&' &teel in this report and analyzed on the basis of financial and operational performance and compares their !ompetitive 0ositioning along with future outlook in the light of increasing trend in investments in the domestic industry .&teel Industry in India is on an upswing because of the strong global and domestic demand. India6s rapid economic growth and soaring demand by sectors like infrastructure, real estate and automobiles, at home and abroad, has put Indian steel industry on the global map. -ccording to the latest report by International Iron and &teel Institute (II&I), India is the seventh largest steel producer in the world. 'ith reference to development which revised Indian infrastructure, the origin of the modern Indian steel industry can be traced back to F4/ when a contract for the construction of an integrated steelworks in =ourkela, #rissa was signed between the Indian government and the Perman companies Fried Jrupp und Demag -P. The initial plan was an annual capacity of 422,222 tonnes, but this was subse%uently raised to million tonnes. The capacity of =ourkela &teel 0lant (=&0), which belongs to the &-I* (&teel -uthority of India *td.) group, is presently about + million tonnes. -t a very early stage the former H&&= and a "ritish consortium also showed an interest in establishing a modern steel industry in India. This resulted in the &oviet;aided building of a steel mill with a capacity of million tonnes in "hilai and the "ritish;backed construction in Durgapur of a foundry which also has a million /D

tone capacity. The Indian steel industry is organized in three categories i.e., main producers, other ma7or producers and the secondary producers. The main producers and other ma7or producers have integrated steel making facility with plant capacities over 2.4 mT and utilize iron ore and coal8gas for production of steel. The main producers are BI*, &-I*, and =I1*, while the other ma7or producers are ,&&-=, I&0-T and I:&*. The secondary sector is dispersed and consists ofA ( ) "ackward linkage from about +2 sponge iron producers that use iron ore and non;coking coal, providing feedstock for steel producersC (+) -ppro.imately 542 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces that use iron ore, sponge iron and melting scrap to produce steelC and (/) Forward linkage with about consumer use. &tructural 'eaknesses of Indian &teel Industry -lthough India has modernized its steelmaking considerably, however, nearly 5< of its crude steel is still produced using the outdated open;hearth process. *abour productivity in India is still very low. -ccording to an estimate crude steel output at the biggest Indian steelmaker is roughly 33 tonnes per worker per year, whereas in 'estern ,urope the figure is around 522 tonnes. India is deficient in raw materials re%uired by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India6s hard coal deposits are of low %uality. Insufficient freight capacity and transport infrastructure impediments too hamper the growth of Indian steel industry. &trengths of Indian &teel Industry S S S S S *ow labour wage rates -bundance of %uality manpower Mature production base 0ositive stimuli from construction industry "ooming automobile industry ,+22 re;rollers that roll out semis into finished steel products for

#utlook The outlook for Indian steel industry is very bright. India6s lower wages and favourable energy prices will continue to promise substantial cost advantages compared to production facilities in ('estern) ,urope or the H&. It is also e.pected that steel industry will undergo a process of consolidation since industry players are engaged in an unfettered rush for scale. This is evident from the recent ac%uisition of !orus by Tata. The deployment of steel.

/E

-sbestos is a group of minerals with long, thin fibrous crystals. The word TasbestosT is derived from a Preek ad7ective meaning ine.tinguishable. The Preeks termed asbestos the Tmiracle mineralT because of its soft and pliant properties, as well as its ability to withstand heat. -sbestos became increasingly popular among manufacturers and builders in the late Fth century due to its resistance to heat, electricity and chemical damage, its sound absorption and tensile strength. 'hen asbestos is used for its resistance to fire or heat, the fibers are often mi.ed with cement or woven into fabric or mats. -sbestos was used in some products for its heat resistance, and in the past was used on electric oven and hotplate wiring for its electrical insulation at elevated temperature, and in buildings for its flame;retardant and insulating properties, tensile strength, fle.ibility, and resistance to chemicals. The main product -&",&T#& !,M,1T &B,,T is primarily a cement based product were about 2; 4< asbestos fiber is needed to reinforce the cement is weather proof, even through it absorbs moisture, the water will not pass through the product. -sbestos cement is used for corrugated sheets, slates, flat sheet for animal pens, cladding molded fitting, water system rain water gutters, down pipes, under ground pipes and sewer pipes, skills, chalkboards. Most of the asbestos consumed globally is chrysolite. =ussia, Jazakhstan is ma7or producers of asbestos. The studies across the globe had not found any increased risk of carrier to the workers even at the levels of fiber8cubic centimeter, whereas the Indian chrysolite cement industry works well bellow 2.4 fiber8cubic centimeter. /.3.3 6i"tori !"#%e -sbestos was named by the ancient Preeks who also recognized certain hazards of the material. The Preek geographer &trabo and the =oman naturalist 0liny the ,lder noted that the material damaged lungs of slaves who wove it into cloth. !harlemagne, the first Boly =oman ,mperor, is said to have had a tablecloth made of asbestos. 'ealthy 0ersians, who bought asbestos imported over the Bindu Jush, amazed guests by cleaning the cloth by simply e.posing it to fire. -ccording to "iruni in his book of Pems, any cloths made of asbestos were called shastakeh. &ome of the

/F

0ersians believed the fiber was fur from an animal named samandar that lived in fire and died when e.posed to water. &ome archeologists believe that ancients made shrouds of asbestos, wherein they burned the bodies of their kings, in order to preserve only their ashes, and prevent their being mi.ed with those of wood or other combustible materials commonly used in funeral pyres. #thers assert that the ancients used asbestos to make perpetual wicks for sepulchral or other lamps. In more recent centuries, asbestos was indeed used for this purpose. -lthough asbestos causes skin to itch upon contact, ancient literature indicates that it was prescribed for diseases of the skin, and particularly for the itch. It is possible that they used the term asbestos for alumen plumosum, because the two terms have often been confused throughout history. -sbestos became more widespread during the industrial revolutionC in the E52s it was used as insulation in the H.&. and !anada. Development of the first commercial asbestos mine began in EDF in the -ppalachian foothills of Kuebec. "y the mid +2th century uses included fire retardant coatings, concrete, bricks, pipes and fireplace cement, heat, fire, and acid resistant gaskets, pipe insulation, ceiling insulation, fireproof drywall, flooring, roofing, lawn furniture, and drywall 7oint compound. -ppro.imately 22,222 people in the Hnited &tates have died, or will die, from asbestos e.posure related to ship building. In the Bampton =oads area, a shipbuilding center, mesothelioma occurrence is seven times the national rate. Thousands of metric tons of asbestos were used in 'orld 'ar II ships to wrap the pipes, line the boilers, and cover engine and turbine parts. There were appro.imately 3./ million shipyard workers in the Hnited &tates during ''IIC for every thousand workers about fourteen died of mesothelioma and an unknown number died from asbestosis. -sbestos fibers were once used in automobile brake pads and shoes. &ince the mid; FF2s, a ma7ority of brake pads, new or replacement, have been manufactured instead with linings made of ceramic, carbon, metallic and -ramid fiber (Twaron or JevlarUthe same material used in bullet;proof vests). Jent, the

32

first filtered cigarette on the market, used crocidolite asbestos in its TMicroniteT filter from F4+ to F45. The first documented death related to asbestos was in F25. In the early F22s researchers began to notice a large number of early deaths and lung problems in asbestos mining towns. The first diagnosis of asbestosis was made in ,ngland in F+3."y the F/2s, ,ngland regulated ventilation and made asbestosis an e.cusable work related disease, about ten years sooner than the H.&. The term Mesothelioma was not used in medical literature until F/ , and was not associated with asbestos until sometime in the F32s. The Hnited &tates government and asbestos industry have been criticized for not acting %uickly enough to inform the public of dangers, and to reduce public e.posure. In the late FD2s court documents proved that asbestos industry officials knew of asbestos dangers and tried to conceal them. In Iapan, particularly after 'orld 'ar II, asbestos was used in the manufacture of ammonium sulphate for purposes of rice production, sprayed upon the ceilings, iron skeletons, and walls of railroad cars and buildings (during the F52s), and used for energy efficiency reasons as well. 0roduction of asbestos in Iapan peaked in FD3 and went through ups and downs until about FF2, when production began to drop severely.

CO--ERCIALL+ AVAILABLE ROOFING -ATERIALS

The weather proofing material is the topmost or outermost layer, e.posed to the weather. Many different kinds of materials have been used as weather proofing materialA Thatch is roofing made of plant stalks in overlapping layers. 'heat &traw, widely used in ,ngland, France and other parts of ,urope. &ea grass, used in coastal areas where there are estuaries such as &cotland. Bas a longer life than straw. !laimed to have a life in e.cess of 52 years. &hingles, called shakes in 1orth -merica. &hingles is the generic term for a roofing material that is in many overlapping sections, regardless of the nature of the material. The word is also used specifically to denote shingles made of wood. =ed cedar. *ife e.pectancy, up to /2 years. Bowever, young growth red cedar has a short life e.pectancy. Bigh cost. &hould be allowed to breathe. Bardwood. :ery durable roofing found in !olonial -ustralian architecture, its use now limited to restorations. &late. Bigh cost with a life e.pectancy of up to +22 years. &late cleaves into thin sheets, making it much lighter than concrete tiles, though heavier than sheet steel and other light roof coverings. &tone slab. Beavy stone slabs (not to be confused with slate) T;+T thick were

formerly used as roofing tiles in some regions in ,ngland. &tone slabs re%uire a very heavyweight roof structure, but their weight makes them storm proof. -n obsolete roofing material. !eramic tile. Bigh cost, life of more then 22 years. Imbre. and tegula, style dating back to ancient Preece and =ome. Metal shakes or shingles. *ong life. Bigh cost, suitable for roofs of /8 + pitch or greater. "ecause of the fle.ibility of metal, they can be manufactured to lock together, giving durability and reducing assembly time. Mechanically seamed metal. *ong life. Bigh cost, suitable for roofs of low pitch such as 2.48 + to /8 + pitch. !oncrete, usually reinforced with fibres of some sort. !oncrete tiles re%uire a stronger roof structure than slate, as some owners have found to their cost. 3+

A",h#&t "hi$%&e0 made of bitumen embedded in an organic or fiberglass mat, usually covered with colored, man;made ceramic grit. !heaper than slate or tiles. :arious life span e.pectancies.

A"be"to" "hi$%&e". :ery long lifespan, fireproof and low cost but now rarely used because of health concerns. -embr#$e. Membrane roofing is in large sheets, generally fused in some way at the 7oints to form a continuous surface. Thermo"etti$% ,&#"ti (e.g. ,0DM rubber). &ynthetic rubber sheets adhered together with contact adhesive or tape. 0rimary application is big bo. store with large open areas and little vertical protrusions.

Thermo,&#"ti (e.g. 0:!, T0#, !&0,). 0lastic sheets welded together with hot air creating one continuous sheet membrane. !an be rewelded with the e.ception of !&0,. *ends itself well to both big bo. and small roof application because of its hot air weld ability.

-odified bit!me$ ; heat welded, asphalt adhered or installed with adhesive. -sphalt is mi.ed with polymers such as -00 or &"&, then applied to fiberglass and8or polyester mat, seams sealed by locally melting the asphalt with heat, hot mopping of asphalt, or adhesive. *ends itself well to all applications.

B!i&t1U, Roof 1 Multiple plies of asphalt saturated organic felt or coated fiberglass felts. 0lies of felt are adhered with hot asphalt, coal tar pitch or adhesive. S,r#yed1i$1P&# e Po&y!reth#$e Fo#m ?SPUF@ ; Foam sprayed in;place on the roof, and then coated with a wide variety of coatings, or in some instances, covered with gravel.

Po&ye"ter. PTFE ?"y$theti F&!or ,o&ymer@ embedded in fibre glass. -et#& roofi$%. Penerally a relatively ine.pensive building material, unless copper is used. G#&(#$i>ed "tee& fre%uently manufactured with wavy corrugations to resist lateral fle.ing and fitted with e.posed fasteners. 'idely used for low cost and durability. &heds are normally roofed with this material. Jnown as Pal iron, it was the most e.tensively used roofing material of +2th century -ustralia, now replaced in

3/

popularity by steel roofing coated with an alloy of zinc and aluminum, claimed to have up to four times the life of galvanized steel. St#$di$%1"e#m met#& with concealed fasteners. -e h#$i #&&y "e#med met#& with concealed fasteners contains sealant in seams for use on very low sloped roofs. F&#t1"e#m met#& with soldered seams. G&#"" !lear windows have been used since the invention of glass to cover small openings in a building. They provided humans with the ability to both let light into rooms while at the same time keeping inclement weather outside. Plass is generally made from mi.tures of sand and silicates, and is very brittle. Modern glass Tcurtain wallsT can be used to cover the entire facade of a building. Plass can also be used to span over a wide roof structure in a Tspace frameT. Cer#mi "0 these are such things as tiles, fi.tures, etc. !eramics are mostly used as fi.tures or coverings in buildings. !eramic floors, walls, counter;tops, even ceilings. Many countries use ceramic roofing tiles to cover many buildings. !eramics used to be 7ust a specialized form of clay;pottery firing in kilns, but it has evolved into more technical areas. Fo#m More recently synthetic polystyrene or polyurethane foam has been used on a limited scale. It is light weight, easily shaped and an e.cellent insulator. It is usually used as part of a structural insulated panel where the foam is sandwiched between wood or cement.

33

CO-PAN+ PROFILE
The year F35 saw the birth of India. It was also the year BGD,=-"-D I1DH&T=I,& *IMIT,D was founded. #ver the decades, it has blazed a pioneering path in the fibre cement industry and has grown into a formidable player. The corporate office of BI* is situated at Byderabad. The BI* = 9 D centers situated at Byderabad and Faridabad support all its manufacturing units to achieve e.cellency in its manufacturing activities. The Manufacturing facilities are at Byderabad, Faridabad 9 Daruhera (Baryana), !hennai (T1), Iasidih (Iharkhand), 'ada (Maharashtra), :i7ayawada, Timmappur (-0),sutariya (H0), "alasore(#rissa) and Thrissur (kerala). The company has four regional offices 9 over 35 sales depots all over India, all with the purpose of providing convenient services to customers. BGD,=-"-D I1DH&T=I,& *IMIT,D is a flagship !ompany of the !.J."irla group of !ompanies, incorporated on Dth Iune F35. BI* has blazed a pioneering path in the building products industry. BI* has led the cement industry for well over five decades. Today BI* is a multi product, multi locational organization with a formidable network of branches, depots, stockiest and personnel spread all over India.

BI* being backed by the organizational and technical e.pertise of the "irlas, also has a "oard of directors comprising e.perienced personnel from "usiness, Finance and Industry. The "oard is chaired by Mr.!.J."irla. BI*$s product range include Fibre !ement roofing sheets in the name of !B-=MI1-= and M-*-"-=, -utoclaved -erated !oncrete "locks and 0anels called -,=#!#1, !alcium &ilicate insulation product called BG&I*, Iointing material for Paskets and 0lant and machinery for these products. The BGD,=-"-D I1DH&T=I,& *IMIT,D, Thrissur is situated 2 km away from the Thrissur town. The e.act place where the company is situated is -thani, which is an industrial area. This company was incorporated in the year FE4 and commenced production in FE5 in the name as M-*-"-= "HI*DI1P 0=#DH!T&, which was a 7oint venture by BI* and J&ID! (Jerala &tate 34

Industries Development !orporation. *ater in the year +224 -pril the company was merged with the BI* completely from the J&ID!. -nd in the same year the company changed its name to BGD=-"-D I1DH&T=I,& *IMIT,D. -bout +22 employees are working in BI*, Thrissur as a whole. In that 2

employees are working in plant, D+ are office staffs and E are bargaining staffs. The plant is working for +3 hours and there are three shifts per day. The whole plant is completely automated. The BI* Thrissur plant is producing only the -! roofing sheets in the name of !B-=MI1-=. !harminar -! =oofing &heets have been the 1o. roofing sheets of choice for more than 42 years now, providing roofing to millions of low cost houses and to industries, commercial businesses and for several public utilities. !harminar sheets are widely known for their superior %uality and durability. The raw materials used in the production process are Fibre, fly ash, rag pulp and cement. -mong these raw materials Fibre is importing from "razil and !anada and cement is mainly bought from -!! cements. The !ompany mainly sells their products through dealers who are selected by the company. The finished products are mainly sold in the south India, especially in Tamil 1adu. The company has a visionary management and motivated team of dynamic workers sharing common vision and working in the union. The company is moving ahead with to innovate and provide e.cellent production. BI* is providing to have an operational efficiency compactable with global standards. -s a socially organization, it has contributed significantly towards eco;friendliness and various social causes. The company has involved in conducting a lot of community welfare programme. In this year the company conducted a welfare programme named O&#HB=HTB-M +22E$.

35

-i""io$ #$d Vi"io$ of 6yder#b#d I$d!"trie" Limited To m#i$t#i$ &e#der"hi, i$ Fibre b!i&di$% ,rod! t". Fulfilment of market needs with cost effective solutions for enduring and enhanced customer satisfaction. &triving for e.cellence in all the area of company$s operation. Innovative solutions to create world class products and services fostering collective wisdom and commitment of employees to create corporate and group culture and values which they are proud to be part of. Maintain e%uitable balance between development and environmental needs of the society. eme$t ,rod! t" i$d!"try #$d de(e&o, ore b!"i$e"" of

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

/.3.4 *!#&ity Po&i y 0rovide products and services that ade%uately and consistently meet specified and identified needs of customers by

!ontinues upgrade of product value and by "uilding customer responsive environment

In making and deliverance of the products and services

/.3./ Re"e#r h A De(e&o,me$t.

=esearch and Development !enter of Byderabad Industries *imited is fully e%uipped with latest state;of;art technology, e%uipment and test facilities including 0ilot 0lants situated in ultra modern spacious building covering an area of about 222 sft of main "uilding and about 5222 sft area of 0ilot 0lant. BI*, = 9 D center is recognized by Department of &cience and Technology Povernment of India.

3D

6IL h#(e bee$ o$ferred with the DSIR N#tio$#& Aw#rd for R A D effort" i$ i$d!"try for the ye#r 4BBB i$ the #re# of $ew m#teri#&" for CAEROCON INSTA PANELC Dedicated team of scientists and engineers are constantly working for product upgradation, optimum utilization of raw materials, development of substitute materials, new products and new product applications, saving substantial amount of foreign e.change for the country.The = 9 D Division has contributed in the following specific areasA

Identification and development of environment friendly building products with emerging market needs. ,mphasis on process optimization, cost reduction and development of value added products. ,ffective utilization of energy, water and waste material. -bsorption of imported technical know;how. Development of new products i.e., -erocon Insta ; 0anels, -ccess Flooring system, pressed sheets, fire protection boards, *ight weight --! "locks, non;asbestos 7ointing material for automobile industry etc.

*!#&ity Po&i y 0rovide products and services that ade%uately and consistently meet specified and identified needs of customers by

!ontinues upgrade of product value and by "uilding customer responsive environment In making and deliverance of the products and services

Phi&o"o,hy
BGD,=-"-D I1DH&T=I,& *IMIT,D is committed to good !orporate Povernance. The !ompany has been following good principles of business over the years by following all the laws and regulations of the land with an emphasis on accountability, trusteeship, and integrity. It is our responsibility to ensure that the

3E

organization is managed in a manner that protects and furthers the interests of our stakeholders.

DEPART-ENT PROFILE
The organization has mainly 4 departments. They are . BHM-1 =,&#H=!, D,0-=TM,1T +. FI1-1!, D,0-=TM,1T /. 0H=!B-&, D,0-=TM,1T 3. M-=J,TI1P D,0-=TM,1T. 4. 0=#DH!TI#1 D,0-=TM,1T /./.3 ORGANIDATION C6ART OF 6U-AN RESOURCE DEPART-ENT Peneral Manager

Manager Industrial =elations Ir. Manager ,stablishment &r. #fficer B= &ecurity Time #ffice -ssistants

The managing human resource in the organization is an important task. Buman resource department is doing the management of human resource in the organization. Byderabad Industries *imited follows a system in B= department 3F

that each authority coming under the Peneral Manager (works) has to report directly to Peneral Manager ('orks) in the hierarchy. This will helps to speed up the communication flow in the organization. /./.4 ORGANISATION C6ART OF FINANCE DEPART-ENT

Deputy Manager -ccounts -ssistant manager

&r. -ccounts #fficer -ssistants

&ound financial decisions have been one of the critical practices in the success of Byderabad Industries *imited, Thrissur proper planning and long vision of the financial managers help the company to undergo to smooth sail. -ll monetary transactions of the company are handled and brought to account by the finance department. /././ ORGANISATION C6ART OF PURCA6SE DEPART-ENT

&r. 0urchase Manager -ssistant Manager 0urchase 0urchase #fficer

42

-ssistants The purchase manager is the only person who is the having the prime authority to make orders for the purchase of raw materials. -fter referring the stock report of raw materials and finished goods, the purchase manager purchase the raw; materials in order to ensure the continuous flow of production. /./.= ORGANISATION C6ART OF PRODUCTION DEPART-ENT

0roduction Manager

Deputy Manager 0roduction Ir. Manager 0roduction

Deputy Manager Maintenance Ir. Manager 0roduction

&hift in charge

The production manager and his team are responsible for realizing the visions of the company within constraints of technical possibility. This involves coordinating the operations of various production activities and maintains a good flow of work without any blockage.

/./.5 ORGANISATION C6ART OF -ARKETING DEPART-EN

Marketing Manager

&ales Manager

=egional &ales Manager -rea &ales Manager &ales #fficer

/.=. Prod! t Profi&e

/.=.3 Ch#rmi$#r Aero o$ ,#$e&". !harminar -erocon 0anel is a uni%ue factory developed product that fulfills the following Preen "uilding concept. =aw material contains up to 32< Fly -sh (recycled power plant waste). ,.cellent Thermal and &ound Insulation. - good fire rating up to + hrs. ;Depending upon thickness. Factory cured panel ;Dry construction at site. !ompletely re;locatable. 0roven suitable for seismic and cyclone prone zones

Other Be$efit") 4+

Fast track construction ;Tongue and groove 7oining system allows faster construction. *ight weight ;allows easy handling and erection. ,.cellent water 9 termite resistance. !an be given any surface finish

A,,&i #tio$") !harminar =oofing &heets are an ideal building material for roofing and side; cladding inA Industrial8 0ower 0lant !ladding !ontrol =oom 0refabricated site offices 0refabricated Bouses, !anteens and =est =ooms 0artitions 0olice &tations &chool "uildings Telephone ,.changes -TM !ubicles

/.=.4 Ch#rmi$#r AC roofi$% Sheet". !harminar -! =oofing &heets have been the 1o. roofing sheets of choice for more than 42 years now. 0roviding roofing to millions of low cost houses and to industries, commercial businesses and for several public utilities. !harminar sheets are widely known for their superior %uality and durability. S,e i#& Fe#t!re" &trong 9 durable 'eather;proof *ess noise during rains 1on;corrosive

!harminar !oncreted =oofing &heets are made from Fibre, 0ortland cement and "inder. Fibre in these sheets acts as reinforcement like steel in =!!. These are 4/

owing to their %uality, strength 9 durability. These are manufactured to e.ceed the re%uirements of strength specified in the relevant Indian standards. St#$d#rd" I&A 34F; FF+ &pecification for !orrugated and &emi;!orrugated -sbestos !ement &heets. I&A /22D ; FFF !ode of practice for laying of -sbestos !ement &heets, 0art;I, !orrugated &heets. I&A 5+5 (0art/) FF3 ; =oofing fittings.

A,,&i #tio$" !harminar =oofing &heets are an ideal building material for roofing and side; cladding inA Industrial buildings of all types Food &torage Podowns 'arehouses 9 !old &torages 0oultry farms, dairy farms and other agricultural sheds Parages, :erandahs and #uthouses Bouses &chool buildings 0ublic Htility &heds !ooling Towers !inema Balls &tadiums =ailway 9 "us &tations

43

44

DATA ANAL+SIS
BI* :&. &-I* #0,=-TI1P M-=PI1A
#0,=-TI1P M-=PI1 (<) FG +2 ; FG +22F; 2 FG +2 2; + 3 . /E.EE /F.5 3 .F3 /5.4/ +/.+3 +E.2F +E. F

G,-=& BI* &-I*

FG +22D;2E FG+22E;2F /+.3D +2.D

-1-*G&I&A From the above graph, it is clear that BI* has been always in a better position in terms of operating margin profit (<) when compared to &-I*. From /+.3D< in +22D;2E to 3 .F3< in +22F; 2 BI* has proved itself. 'hereas &-I*Os operating margin profit< has been 7ust +2.D < in year +22D;2E to 3+. F< in +22E;2F.

45

TREND OF CURRENT RATIO IN LAST FIVE +EARS

CURRENT RATIO +EARS BI* &-I*

FG +22D;2E
2.5E 2.F

FG+22E;2F
2.D . E

FG +22F; 2
2.D+ .+/

FG +2 2;
.DD .4F

FG +2

; +
/.F+ .D/

ANAL+SIS) -n ideal current ratio is A . 'hen compared to &-I*, current ratio of BI* is not a desirable one. In the year +22D;2E the ratio is very high which is not desirable since it means there was less efficient use of funds which was lowering down the profitability of the concern. In case of &-I* the ratio is almost coming closer to the ideal ratio.

4D

*UICK RATIO
*UICK RATIO +EARS 6IL SAIL FG +22D; 2E 2./F 2.4D FG+22E; 2F 2.// 2.D5 FG +22F; 2 2.+F 2.D+ FG +2 2; ./D .2 FG +2 ; + /.4+ .+/

-1-*G&I&A Kuick ratio shows short;term solvency of a business in a true manner. It is also called acid; test ratio and li%uid ratio. It is calculated in order to know how %uickly current liabilities can be paid with the help of %uick assets. Kuick assets mean those assets, which are %uickly convertible into cash. 'hile comparing BI* with &-I* it can be clearly seen that BI* is in a better position. &-I*$s ratio as on +22D;2E was 2.4D which increased to .+/ in +22E;2F. 'hen compared to BI* it is clear that the increase in the ratio is more than that of &-I*.

4E

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO

FG +2 2;
+EARS 6IL SAIL

FG +22D;2E
34.=E 3/.2=

FG+22E;2F
35.E/ 32.2=

FG +22F; 2
32.54 35.34 3E./4 32.EE

FG +2 +
34.E= 35.54

-1-*G&I&A
Debtors turnover ratio indicates the relation between net credit sales and average accounts receivables of the year. This ratio is also known as Debtors$ :elocity. This ratio indicates the efficiency of the concern to collect the amount due from debtors. It determines the efficiency with which the trade debtors are managed. Bigher the ratio, better it is as it proves that the debts are being collected very %uickly. BI* and &-I* both has an increasing trend in debtor$s turnover ratio when compared to last five years.

4F

TREND AVERAGE COLLECTION PERIOD IN LASTFIVE +EARS

AVERAGE COLLECTION PERIOD

+EARS 6IL SAIL

FG +22D; 2E
4F.4= 42.E5

FG+22E;2F
4/.3F 43.F/

FG +22F; 2
44.BGF 4=.34

FG +2 2; FG +2
43.B2 43.E5 4G.2= 4/.53

; +

-1-*G&I&A
This ratio indicates how %uickly and efficiently the debts are collected. The shorter the period the better it is and longer the period more the chances of bad debts. -lthough no standard period is prescribed anywhere, it depends on the nature of the industry. In case of BI* 9 &-I*, the average collection period has decreased when compared to +22D;2E to +22E;2F, but &-I* has less chance of bad debt since its average collection is +/.4 days as9 when compared to BI*$s average collection period of +E.53 days.

52

6IL(". ARCELOR -ITTAL ?-ITTAL STEEL@

T=,1D #F !H==,1T =-TI# I1 *-&T FI:, G,-=&
CURRENT RATIO +EARS 6IL -ITTAL STEEL

FG +22D;2E
B.2G 3.5=

FG+22E;2F
B.E3 4.B4

FG +22F; 2
B.E4 3.2

FG +2 2;
3.EE 3.=3

FG +2
/.F4 3.==

; +

-nalysisA
!urrent ratio shows the short;term financial position of the business. The current ratio of -=!,*#= MITT-* is better when compared to BI*. The ideal current ratio is A .this signifies the ability of the company to pay off its current liabilities. More the ratio indicates idleness of working capital.

DEBTORS TURNOVER RATIO

Debtor" T!r$o(er R#tio

+EARS 6IL -ITTAL STEEL

FG +22D;2E
34.=E 3/.5/

FG+22E;2F
35.E/ 33.E3

FG +22F; 2
32.54 3B.B=

FG +2 2;
3E./4 3B.FF

FG +2

; +

34.E= 3=.2=

-nalysisA
Debtors turnover ratio indicates the relation between net credit sales and average accounts receivables of the year. This ratio is also known as Debtors$ :elocity. This ratio indicates the efficiency of the concern to collect the amount due from debtors. It determines the efficiency with which the trade debtors are managed. Bigher the ratio, better it is as it proves that the debts are being collected very %uickly. BI* and -=!,*#= MITT-* both have an increasing trend in debtors turnover ratio when compared to last five years. "ut MITT-* has a better turnover ratio than BI*.

5+

AVERAGE COLLECTION PERIOD

A(er#%e Co&&e tio$ Period +EARS 6IL -ITTAL STEEL

FG +22D;2E FG+22E;2F
4F.4= 42.FE 4/.3F /3.3=

FG +22F; 2 FG +2 2;
44.BGF /2./= 43.B2 //.43

FG +2
4G.2= 4=.F3

; +

-nalysisA This ratio indicates how %uickly and efficiently the debts are collected. The shorter the period the better it is and longer the period more the chances of bad debts. -lthough no standard period is prescribed anywhere, it depends on the nature of the industry. In case of BI* 9 &-I*, the average collection period has decreased when compared to +22D;2E to +22E;2F.

5/

6IL (". 7INDAL STEEL A PO9ER LTD #0,=-TI1P M-=PI1 0=#FIT

OPERATING -ARGIN PROFIT ?H@ +EARS 6IL 7INDAL STEEL AND PO9ER LTD

FG +22D; 2E
/4.=E /E.=4

FG+22E; 2F
=3.3 =B.25

FG +22F; 2
/G.GG =B.42

FG +2 2;
/F.23 =B.B3

FG +2 +
=3.F= =4.E2

-nalysisA
The trend shows there is an almost stagnant range for I&0. From /D.3+< in the year +22D; 2E,it increased to 3+.D5< in +22E;2F. In case of BI* there was a steep increase in +22F; 2 but then the operating margin profit decreased for two consecutive years and finally in the year +22E;2F it reached to 3 .F3<.from /+.3D< in year +22D;2E,it increased more than F< till +22E;2F.

53

TREND OF SALES IN LAST FIVE +EARS

SALES 6IL 7SPL

F+ 4BBE1BG
34/E4.5/ 355B.4=

F+4BBG1BF
3E=3=.54 4EE5./4

F+ 4BBF13B
444E4.3= /4E/.F/

F+ 4B3B133
4E=/E.4F =//G.5=

F+ 4B33134
3/=BGF.B4 2G44.=4

-1-*G&I&A
The trend of sales of BI* -1D II1D-* &T,,* -1D 0#',= *TD. has been increasing year after year, but when both are compared, the increase in sales of BI* is more than II1D-*. From =s. +/D+.4/ crores in year +22E;2F, BI* Osales has reached =s. /32EF.2+ crores in +22F; 2.whereas in case of II1D-* &T,,* -1D 0#',= *TD. the sales was=s. 442.+3 crores in +22E;2F which increased only to =s.5E++.3+ crores.

54

TREND OF CURRENT RATIO

CURRENT RATIO 6IL 7INDAL STEEL AND PO9ER LTD

F+ 4BBE1 BG
2.5E .+

F+4BBG1 BF
2.D ./4

F+ 4BBF1 3B
2.D+ .+5

F+ 4B3B1 33
.DD . /

F+ 4B331 34
/.F+ .45

-nalysisA
This ratio is also called working capital ratio. This ratio e.plains the relationship between current assets and current liabilities of a business, where current assets are those assets which are either in the form of cash or easily convertible into cash within a year. &imilarly, liabilities, which are to be paid within an accounting year, are called current liabilities. !urrent ratio shows the short;term financial position of the business. This ratio measures the ability of the business to pay its current liabilities.

55

DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO 6IL 7INDAL STEEL AND PO9ER LTD

F+ 4BBE1 BG
34.=E G.3F

F+4BBG1 BF
35.E/ 3=.//

F+ 4BBF1 3B
32.54 3/.EE

F+ 4B3B1 33
3E./4 3/.GE

F+ 4B331 34
34.E= 3F.F2

-nalysisA
Debtors turnover ratio indicates the relation between net credit sales and average accounts receivables of the year. This ratio is also known as Debtors$ :elocity. This ratio indicates the efficiency of the concern to collect the amount due from debtors. It determines the efficiency with which the trade debtors are managed. Bigher the ratio, better it is as it proves that the debts are being collected very %uickly. BI* and I&0* both have an increasing trend in debtors turnover ratio when compared to last five years. "ut I&0* has shown a better performance in last five years.

5D

AVERAGE COLLECTION PERIOD

A(er#%e Co&&e tio$ Period +EARS 6IL 7SPL

F+ 4BBE1 BG
4F.4= ==.55

F+4BBG1BF
4/.3F 45.=2

F+ 4BBF13B
44.BGF 42.=F

F+ 4B3B1 33
43.B2 42./

F+ 4B331 34
4G.2= 3G.4G

-1-*G&I&A
This ratio indicates how %uickly and efficiently the debts are collected. The shorter the period the better it is and longer the period more the chances of bad debts. -lthough no standard period is prescribed anywhere, it depends on the nature of the industry. In case of BI* 9 I&0*, the average collection period has decreased when compared to +22D;2E to +22E;2F.but Iindal has decreased more than half of the average period from +22D;2E, which was 33.44days to E.+E days in +22E;2F. 'hereas in case of BI*, the average collection period was +F.+3 days in+22D;2E which reduced to +E.53 days only in +22E;2F.

5E

SUGGESTIONS
. Though &-0 is implemented in the company, it is not fully implemented in town division, because of which lot of manual work is done. If &-0 is implemented then this problem would be solved. +. The state government 9 other government departments are another problem area in town division. The company must send fre%uent reminders, e.;once in 4 days that they have to pay their dues. The company must negotiate with the government about their repayment of dues. /. The company is facing problem in collecting the medical bills from corporate customers. The company must make the list of defaulter in medical bills, which must be kept with the concern authority. The person in charge must see that the defaulter must not be entertained, even though it is an emergency case, until he pays his old dues. 3. The selection of customer must be done carefully, by properly checking the company$s background, its repayment capacity etc. The company should rate the parties by seeing its past performances. These ratings must be updated every year. 4. !hannel financing is a way through which problems of dues can be controlled to a great e.tent but it should be taken care that the company won$t be liable for any default made by the middle person. 5. 1ow a day, it has become a normal practice of appointing a third party for collection of dues which should be taken into account as it removes the burden of collection for the company. 0roper agreement between the third party and the company should be formulated in which all the terms and conditions must be mentioned. It should be without recourse and a third party should be legally appointed, thus not hampering the goodwill of the company and also taking care of the collection process.

5F

SU--AR+ OF FINDINGS
. Most of the customers belong to the category of manufacturers i.e. they are using secondary and by;products of BI* as a raw material.

+. Ma7ority of customers prefer to purchase secondary and by;products from "okaro steel 0lant because of local market and %uality but they find price is higher compared to the %uality.

/. Ma7ority of the customers are satisfied with the %uality of the secondary and by; products of BI* and that is a big advantage for BI*.

3. #f the four ma7or types of products produced by BI* in &econdary and by; products division, most of the customers are purchasing secondary steel and by; products from BI*.

4. Most of the customers deal with "okaro steel plant and BI* for purchase of secondary and by;products.

5. *ow price, better service and high %uality are the ma7or concerns that the customers looks into for preferring a particular steel plant for secondary and by; products.

D. Ma7ority of customers responded that other steel plants are providing secondary and by;products at a lower rate.

D2

CONCLUSION
1evertheless, since industries do provide credit, they do so as optimally as possible. The word used is 6optimal6 before and let me confirm that it doesn6t necessarily mean the best possible, but the best possible under the circumstances. - key strategy in lowering bad debt is reducing the time to recover the invoiced amounts.Together with stock daysC debtor and creditor days are a crucial link between the company6s income statement, its balance sheet and its cash;flow. 'hile in the income statement a company can book sales and profits to its heart6s content, if it is slower than before at collecting its bills and suppliers demand faster payment, then cash receipts will not reflect the trend in profits. It is this divergence between profits and cash that is often the biggest and best signal that a company might be in trouble. -s with some other ratios, the absolute level of debtor and creditor days is less important than the trend over time and how the company compares with its competitors, particular the leader in the industry. If a company6s performance in this area is inferior to its competitors (that is, it collects its overdue invoices slower and is forced to pay its own debts faster) it is a sign of weakness. Deterioration in credit control over time is a worrying trend in any business. It merits closer monitoring by investors than it sometimes gets.

BIBLIOGRAP6+
9eb"ite" www.hil.com www.economywatch.com www.businesslink.gov.uk www.studyfinance.com www.financiale.press.com www.worldsteel.org8RactionVprograms9idV53 www.indianindustry.com httpA88steel.nic.in8 httpA88en.wikipedia.org8wiki8steel www.newssteel.com

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