Kirloskar FerrorsI ndustries Ltd (project)

PART – A

1. INDUSTRY PROFILE

India is gifted with large quantity of iron ore with high ferrous content, which is

the crucial raw material for producing the steel. Hence India is one of the largest

producers of steel in the world.

With the help of liberalization, globalization of economy in the process, there

is a scope for economic development, which means there will be focus on

infrastructure. This will lead to considerable demand for steel. As its main

applications are in the construction, engineering and automobile sectors, which are

the key elements in building infrastructure, steel is universal intermediate and has

very strong forward and backward linkages hence steel industry has become one of

the core sector of the economy.

Though India one of the large steel producers, it has low percepts

consumption of steel in comparison with order developing and developed countries.

India is fortunate in having intensive iron ore deposits with reserves estimated

at 10.3 billion, which is more than 1/4th of the world reserves. Further the average

iron ore content of Indian ore is above 60% in India, the iron ore reserves are mainly

found in the states like Orissa, Karnataka, Bihar, M.P, Goa, A.P., Rajasthan and

some parts of Western Maharashtra.

When, we think of the steel Industry, the first thing that comes in to our mind

is pig iron. This is because of its name. When metal from blast furnace is paired in to

Moulds and solidifies it assumes a shape which resembles the back of a pig, hence

called as pig iron.

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GLOBAL SCENARIO OF PIG IRON:

The demand for the international has a sharp rise, the total production of pig

iron. It is estimated at 500MT, in which developed nation accounts for 45% of the

total production seeing the potential demand many mills in USA such as a Nucor,

Norigstar, Steel and Max steel are switching over to pig iron production.

DEMAND AND AVAILABILITY OF PIG IRON ( ‘000 Units)

Years Demand Availability

1996-97 2400 3224

1997-98 2900 3469

1998-99 2700 3733

1999-00 2900 4016

2000-01 3100 4322

2001-02 3300 4650

2002-03 3600 4900

2003-04 3800 5750

2004-05 4100 5233

2005-06 4400 5474

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GROWTH OF PIG IRON IN INDIA:

Before liberalization the pig iron industry was monopolized by the integral

steel plants to utilize the liberalization policy initiated by the Government. Decline in

the pig iron production and paved the way of helping the ISP’s be utilize pig iron for

making steel to gain value addition.

The integrated steel plant (ISP) is the major supplier of pig iron. Public sector

contributes up to 90% of the Pig Iron supply. According to the Steel Ministry Report,

demand for pig iron is estimated to increase by 37% over next 8 years.

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Steel – a versatile commodity, most widely used metal in the world,

forms a core constituent of all major economies. . Accordingly, Steel Consumption is

a derivative of the growth pattern of its various end-use sectors viz. manufacturing,

housing, infrastructure, automobile etc. that ultimately steer the country’s economy.

The steel industry is believed to have been operating at around 90 per cent

capacity utilization factor in 2004. As per International Iron and Steel Institute

estimates, global steel demand has increased by around 8.8 per cent. The growth in

demand was an outcome of strong demand from almost all major consuming

centers. The strongest increase in steel consumption was recorded in North America

(+15%) while the rest of the OECD consumption increased by 3.4%, China recorded

close to 11% increase in consumption. The Indian steel industry is almost 100 years

old now. Till 1990, the Indian steel industry operated under a regulated environment

with insulated markets and large-scale capacities reserved for the public sector.

Production and prices were determined and regulated by GOI. The steel

sector was deregulated in 1991-92, when controls on capacity and prices were

abolished along with quantitative trade restrictions. Import tariffs were also brought

down substantially. In 2000-01, the Indian steel industry operated at finished steel

production level of 26.7 million tones with apparent finished steel consumption at

26.9 million tones. . However, with the onset of liberalization, the Indian steel sector

witnessed entry of several domestic private players and large private investments

flowed into the sector to add fresh capacities. In 2004-05, the indigenous production

of steel was38.4 million tones along with apparent finished steel consumption at 33.4

million tones.

Today, India produces steel of international standards conforming to almost

all grades and varieties and has been a net exporter for the past few years, which

shows the growing acceptability of its products in the global market, and most

importantly it’s increasing global competitiveness.

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World Steel Industry

Steel, the recycled material is one of the top products in the manufacturing

sector of the world. The Asian countries have their respective dominance in the

production of the steel all over the world. India being one among the fastest growing

economies of the world has been considered as one of the potential global steel hub

internationally. Over the years, particularly after the adoption of the liberalization

policies all over the world, the World steel industry is growing very fast.

The following table gives a clear picture upon the major crude steel producers

in the world as of the year 2005:

CountryCrude Steel Production

(Million Tonnes / Pa)

China 272.5

Japan 112.7

United State 98.9

Russia 65.6

South Korea 47.5

Germany 46.4

Ukraine 38.7

Brazil 32.9

India 32.6

Italy 28.4

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STEPS TAKEN TO BOOST STEEL INDUSTRY IN INDIA:

In budget 2004-05, the customs duty on non alloy steel was reduced from

15 % to 10 per cent and on alloy steel from 20 per cent to 15 per cent. In August

2004, the customs duty on non-alloy steel was further reduced from 10 per cent to 5

per cent; on melting scrap from 5 per cent to 'zero' and on ships for breaking from 15

per cent to 5 per cent.

Further, customs duty on several raw materials used by the steel sector like

non-coking coal, met coke and nickel has been reduced to 5 per cent and on coking

coal to 'zero'.

To bring down the prices of steel, the excise duty on steel products was

reduced from 16 per cent to 8 per cent with effect from February 28, 2004 with a

caveat that the duty regime will be reviewed. Budget 2004-05 revised this partially by

increasing the duty from 8 per cent to 12 per cent, as the intended impact of duty cut

on moderating prices was not achieved.

STRUCTURE OF INDIAN STEEL INDUSTRY:

The Indian steel industry can be divided into two distinct producer groups:

1) Major Producers: Integrated Steel Producers (ISPs) includes large steel

producers with high levels of backward integration and capacities of over 1 MT.

Steel Authority of India Limited (SAIL), Tata Steel, Rashtriya Ispat Nigam Limited

(RINL), JSW Steel Limited (JSWSL), Essar Steel Limited (Essar) and Ispat

Industries Limited (Ispat) form this group. SAIL, TISCO and RINL produce steel

using the blast furnace/basic oxygen furnace (BF/BOF) route that uses iron ore,

coal/coke as the basic input mix for producing finished steel, Essar and Ispat employ

Electric Arc Furnace (EAF) route that uses sponge iron, melting scrap or a mix of

both as input and JSWSL uses COREX, a revolutionary technology for making steel

using basically iron-ore and coal.

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2) Other Producers: This group consists of smaller stand-alone steel plants

that include producers and processors of steel.

Processors/Enrollers: Units producing small quantities of steel (flat/long

products) from materials procured from the market or through their own

backward integration system.

Stand alone units making pig iron and sponge iron.

Small producers using scrap-sponge iron-pig iron combination produce steel

ingots (for long products) using Electric Arc Furnace (EAF) or Induction Arc

Furnace (IAF) route.

The steel industry, in general, is on the upswing, due to strong growth in

demand propelled particularly by the demand for steel in China. The world scenario

coupled with strong domestic demand has benefited the Indian steel Industry.

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2. COMPANY PROFILE

Kirloskar Ferrous Industries (KFIL) is the youngest company in the Kirloskar

group. The company is the large-scale industry to begin operations in the rural &

industrially backward district of Koppal. It began manufacturing Foundry Grad Pig

Iron in April 1994 and Automotive Castings in April 1995.The company’s Pig Iron &

Casting are well known for their quality throughout the country. The company was

awarded ISO 9002 Quality Certificate in January 1996 & was awarded QS-9000 in

December 2001 the first QS-9000 certified company for manufacture & selling of pig

iron in India. The manufacturing facilities at the company are of world standard & the

market for its automotive castings is growing steadily.

All required environmental control equipments were planned at the planning

stage itself & are in operation now. This very well within the limits prescribes Govt.,

authorities the pollutions. The success of this company is that industrially backward

rural area has led to high-level industrial activity & it is not surprising that the new

Koppal District has found its due place in the industrial map of Karnataka.

The company is located on the banks of Tungabhadra reservoir, near to the

rich iron belt of the Hospet – Bellary range, adjacent to NH –63 connecting Hospet-

Hubli passing through Koppal & Gadag. The plant is 16k.m. from Hospet & Koppal.

NH-13 is connecting Chitradurga & Solhapur passes by the side of the plant

(approx., 1.0k.m.) the nearest railway station is Ginigera, which is 5.0 Km away from

the plant.

The industry was born with unique advantage of having behind the immense

accumulated experience of the group in the field of foundry business, at a time when

the de-licensing and liberalization policies of the government were resulting in rapid

growth in automotive and farm mechanization.

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The plant has two mini blast furnaces of 350MT capacity each, capable of

producing 1,20,000MT/year. This amounts to a total installed capacity of

2,40,000MT/year. The plant manufactures foundry grade pig iron suitable for

automotive casting & other grades such as basic grade & special grade pig iron to

meet the requirement of other steel industries. The plant has a foundry unit, quipped

to produce 30,000 MT/year of Grey Iron casting for a variety of applications such as

cylinder heads & different types of Housings required by automotive sector tractor

division, commercial vehicles & Diesel engine industries.

The company has engaged 873 direct employees & about 800 peoples are

working through contract for effective functioning of the day-to-day activities, with an

annual turnover of Rs.2500 million per annum. The company is committed to

achieve total consumer satisfaction through adoption state-of-the-art manufacturing

technologies & 7 processes with continue improvements. The company is also

committed to improve quality of work life of its employees through improved work

practices. The company is responsible for the coming up of many ancillaries present,

there are around 20 ancillary units spreads over Koppal. The company has provided

direct employment to about 1000 people & indirect employment to about 10,000

people.

Iron ore is brought from the mine owners in the calibrated from Hospet &

Bellary Iron ore belt within the distance of 50 kms. Coke is mostly imported from

China. Other minerals like Limestone, Dolomite, Manganese ore, Quartz etc., are

produced locally.

Almost all foundries and pig iron users in the country are purchaser of pig iron

from the company supplies quality castings to all renowned automobile

manufacturers like Mahindra & Mahindra, Marti Udyog, Escorts, Tafe and Simpson

to name few.

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A. BACKGROUND AND INCEPTION OF THE COMPANY:

History

The vision of Mr. Laxmanrao Kirloskar, which is being respected world wide

for engineering excellence, can be traced to have its beginning of having cast the

casting of a humble plough.

All though the passing years the Kirloskar group has had a long & close

relationship with the foundry business with several group units specializing in the

manufacture of high quality ferrous & non-ferrous casting.

Kirloskar Ferrous Industries Limited was born with the unique advantage of

having been conceived with ideas accumulated through experience & expertise of

the group in the field of foundry business, at a time when the de-licensing and

liberalization policies of the government came forth in the year 1992 resulting in the

rapid growth in automotive and farm mechanization sectors.

The Kirloskar Group of Companies :

Kirloskar in made up of 8 major group companies, who players in major

sectors like manufacturing, oil and gas, power, construction and mining, agriculture,

industry and transport each led by the engineering and managerial talent in India. In

addition to engineering, Kirloskar also have interests in civil utility systems and in

Information Technology and communication. These 8 companies are from the core

of Kirloskar group. Each company is a renowned name in its own area of operation

and is respected world wide for its services and products.

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Kirloskar Brother Limited (KBL)

Kirloskar Ferrous Industries Limited (KFIL)

Kirloskar Middle East FZE (KMEF)

Kirloskar oil Engines Limited (KOEL)

Kirloskar Pneumatic Limited (KPCL)

Kirloskar Proprietary Limited (KEPL)

Kirloskar is also partner in joint venture with companies as Copeland Limited.

This is a joint venture between Kirloskar Brother Limited, India’s leading engineering

company and Copeland Corporation of the USA, the world leader in air- conditioning

and refrigeration compressors. Also Kirloskar Ebara and Toyota Kirloskar Motors her

prestigious joint ventures.

Kirloskar Copeland Limited (KCL)

Kirloskar Ebara Pumps Limited (KEPL

Kirloskar has shaping capable managers and dedicated human beings at

Kirloskar Institute of Advanced Management Studies. It is Kirloskar education center

for imparting knowledge to the managers of tomorrow.

Kirloskar Institute of Advanced Management Studies (KIAMS)

B. NATURE OF BUSINESS CARRED:

The company manufactures the Pig Iron in three different grades, by

Calibrated Iron-ore brought from mine owners in the Hospet & Bellary Iron-ore belt

within the distance of 50 kms. Coke is imported from China.

Iron Ore, Limestone, Coke & Dolomite are the raw materials for the

manufacturing Pig Iron.

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C. VISION, MISSION & QUALITY POLICY

Vision:

“To be a world class product leader through the state of art manufacturing

technologies & process”

Values:

To achieve the MISSION & VISION, the company derived following values:

1. Customer Orientation

2. Vendor Development

3. Development of HR

4. Process & product excellence

5. Responsible corporate neighbor

Mission:

“A family committed to Growth & prosperity of the organization through

leadership activities attributes & quality orientation of people & process that

continuously satisfy the customers with their ever changing needs”.

1. The company is a family to growth & prosperity of the organization through

team work.

2. Family that is committed to growth & prosperity leadership is promoting tool.

3. People & processes in place to satisfy customers & shareholders through

continuous improvements.

4. Committed to total quality through systems & institutionalization.

5. Integration of people and processes to bring about the rate of internal

changes faster than that of external change.

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Quality Policy:

The company is committed to achieve total customer satisfaction through

adoption of state of the art manufacturing technologies and process with continuous

improvements. The company is also committed to improve quality of work life of its

employees through improved work particles.

Quality objectives:

Customer Satisfaction: Maximization of customer satisfaction by consistent

supply of quality casting pig iron.

Supplies Quality Assurance: provide technical support and guidance to their

suppliers through quality assurance programmers to ensure highest quality of

purchased materials suppliers it is a critical link in company quality system.

Employee Development: development and motivation of all employees by

providing necessary training and support to bring out their full potential.

Product Excellence: continuously technical and managerial innovation and

continuous improvement our endeavor is to push themselves till our company

process and products are finest in the country and compare with the best in the

world.

D. PRODUCT PROFILE:

The following are the three different grades of Pig Iron manufacturing by the

company. They are:

1. Foundry grade Pig Iron

2. S.G. grade

3. Basic grade

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Pig Iron

Casting of Pig Iron

The company’s products are used in the following industries.

They are:

Textiles

Pumps

Automobiles

Pipes & Fittings

Fans

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Engines and Compressors

others

The following table represents the basis of products differentiation and the list

of industries where these products are used:

Chemical composition of the product is the reason for production for different

kinds of products.

Mainly products are differentiated on the basis of silicon compensation.

Company has got different kinds of customers varying between with high or low

range of silicon contents.

“Keeping the wheels of progress turning in every way always that is, how we

operate”.

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Product Mix:

Product / GradeDifferentiator

W.R.T. Chemistry

Application Industry

(Examples)

Foundry Grade Si 2.0- 2.5%

General Engineering,

Automobile, Sanitary,

Castings

High Manganese

GradeMn > 0.9 % High Tensile Castings

High Phosphorous

GradeP : 0.2 – 0.4% Spun Pipes

Ultra High

Phosphorous GradeP > 0.5% Rodding Room Applications

High Silicon Grade Si : 2.5 – 3.0% Fan Body

Ultra High Silicon

GradeSi > 3.0% Rodding Room Applications

Spheroidal Graphite

GradeP<0.08%, S<0.05% Ductile Iron Castings

Special Spheroidal

Graphite Grade

P < 0.08%,

S<0.025%

Ductile Iron Pipes, Automobile

Engine Block

E. AREA OF OPERATION:

The area of operation of the company is global; it has its branches in other

countries also. Namely:

GLOBAL:

Indo-Malaysia Engineering Co., Malaysia

Kirloskar Industries, Philippines

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Kirloskar Kenya Ltd., Kenya

The Main & Subsidiary branch of the company is as under,

NATIONAL :

KFIL Main Office address: REGISTERED OFFICE

Laxman Rao Kirloskar Road

Khadki – Pune 411003 (INDIA)

The main production unit of the company is situated in Bevenahalli (Koppal District),

which is surrounded by the rich resources, in terms of raw materials, water, human

resources & a transportation facility. The exact address is as follows,

REGIONAL :

KFIL Address:

Village : Bevenahalli

Post : Hitnal (PIN 583234)

Dist : Koppal

State : Karnataka (INDIA)

ZONAL LEVEL :

Zone A Karnataka Belgaum, Shimoga, Bangalore

Zone B Andhra Pradesh Hyderabad, Vijaywada

Zone C Maharastra Kolhapur, Pune, Mumbai, Nagpur, Solhapur

Zone D Gujarat Ahmedabad, Rajkot, Surat

Zone E Rajastan Jaipur

Zone F Delhi Delhi, Faridabad, Zodhinoor, Agra

Zone G Tamil Nadu Chennai, Coimbatore, Mudurai

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F. OWNERSHIP PATTERN:

The Kirloskar Ferrous Industries Ltd. is Public Limited Company. It has

issued shares to the general public. It gives regular dividend to share holders.

Shareholding Pattern as on 31st March, 2007

Category No. of Shares% of Share

Holding

Promoter

Persons Acting in concert

Financial Institutions

Nationalized Banks

Non Nationalized Banks

Non Resident Indians

Mutual Funds

Fll

Domestic Companies

General Public

In Transit

34,750,485

1,107,592

4,100,000

800

900

1,705,265

30,700

2,489,109

5,522,969

22,503,776

10,804

48.12

1.53

5.68

0.00

0.00

2.36

0.04

3.45

7.65

31.16

0.01

TOTAL 72,222,400

100.00

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G. COMPETATORS INFORMATION:

As the company has got two kinds of main products the competitors of the

company are broadly divided according to their type of procurement. They are as

follows,

Foundry:

1. Ashok iron works Pvt. Ltd.,

2. DGP foundry

3. Nalcast

Pig Iron:

1. Sesa Goa Industries Ltd., Goa

2. Kudhuremukha Iron Ore Ltd

3. Kalyani steels Ltd

4. USHA Steels Ltd

5. Jindal Vijaynagar Steels Ltd

H. INFRASTRUCTURE FACILITIES:

The following are the infrastructure facilities provided by the company. They

are:

1. Power: KFIL has the following facilities for getting the required amount of

power.

State electricity boards

Two steam turbines/ Generators (capacity 3.5 mw each) using blast

furnaces gas as fuel.

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Kirloskar power supply Pvt. Ltd is established adjacent to KFIL and has

the total installed capacity 19.5mw.

2. Water: Major requirements of water are being pumped from nearly Tungabhadra

reservoir by laying a pipeline for almost 7km.

3. Transportation: It have a wide transportation facility, it has linkage with NH-63.

4. Hospital: A hospital is build to cater the medical needs of employees.

5. Canteen: The KFIL has a good canteen facility.

6. Furniture: In KFIL every department has well equipped furniture and computers.

I. AWARDS:

The following are certificates of awards given to the company. They are as

under:

ISO – 14001 Certificate

TS-16949 Certificate

QS-9000 Certificate

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J. WORK FLOW MODEL:

If Weightment required If Weightment not required

Found ok If damaged /shortage/excess

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inspection

Any rework or modification Quality up dation & GRR information

Raise discrepancy note

If damaged/excess qty returned to party through NRGP

I.O.M by concern dept thurogh purchase

GRR prining singing & sorting

Preparation of RGP for sending the material for rework

Stacking the material at appropriate location

Raising the disturbancy for rejection to inmate to purchase & supplier

Rejected material stored in rejection room

Material sent to party through NRGP

Issue the material against the prescribed material requested slip with authorized signature

Entry of inward material

Entry of inward material

STORES

Store Entry & Physical inspection

SE Report generating for a quality inspection Raise discrepancy note

K. FUTURE GROWTH AND PROSPECTUS:

GLOBAL SCENARIO OF PIG IRON:

The demand for the international has a sharp rise, the total production of pig

iron estimated at 500mt. Developed nation accounts for 45% of the total production

seeing the potential demand many mills in USA such as a Nucor, Norigstar, Steel

and Max steel are switching over to pig iron production.

GROWTH TREND OF PIG IRON SECTOR IN INDIA:

Before liberalization the pig iron industry was monopolized by the integral

steel plants to utilize the liberalization policy initiated by the government. Decline the

pig iron production and paved the way of helping the ISP’s be utilize pig iron for

making steel to gain value addition.

The integrated steel plant (ISP) is the major supplier of pig iron. Public sector

(ISP) contributes up to 90% of the pig iron supply.

GROWTH TREND OF THE COMPANY:

As the company is committed to produce quality products, it results in

attracting more number of customers & to beat the competition.

As per the infrastructure is concerned, the company has a well equipped &

sophisticated infrastructure which helps the company to meet the customers

demand in time.

By looking at the present infrastructure, skilled workforce, technology &

emerging demand condition, company is planning to put one step ahead i.e. by

diversifying to steel manufacturing industry.

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As the demand for the automobile’s are increasing the demand for

the products of the company is also increasing, so the company has got a clear &

bright future.

PART – B

McKinsey’s 7-S FRAME WORK

INTRODUCTION

Japanese first introduced this model. The 7-S model is better known as

McKinsey’s 7-S. This is because the two persons who developed this model. Tom

peters and Robert Waterman, have been consultants at Mc Kinsey and company at

that time. They published their 7-S model in their article “Structure is not

organization” (1980) and in their books “The art of Japan management” (1981) and

‘in search of excellent (1982)’. The model starts on the precise that an organization

is not first structure, but consists of seven elements:

Structure

Skill

Style

Strategy

System

Staff

Shared value.

They argued that when things went wrong, these Ss were manipulated to

give a solution. Out of the 7, the three Ss across the top of the model are described

as “Hard Ss” strategy, structure and system. The 4Ss across the bottom of the

model skills, staff, style, shared value are less tangible, more cultural in nature, and

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were termed ‘soft Ss’ by McKinsey. These are difficult to describe since

capabilities, values and elements of corporate culture are continuously developing

and changing. They are highly determined by the people at work in organization.

The McKinsey’s 7-S model is widely discussed framework for viewing the

interrelationship of strategy formulation and implementation.

It helps to focus on manager’s attention on the importance of linking the

chosen strategy to a variety of activities that can affect the implementation of that

strategy.

Originally developed as a way of thinking more broadly about the

problems of organizing effectively, the 7-S framework provides a tool for judging the

strategies.

It is much more difficult to plan or to influence the characteristics of the

soft elements. Although the soft factors are below the surface, they can have a great

impact of the hard structures, strategies and systems of the organization.

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1. STRUCTURE:

It is the part for specialization and co-ordination. It comprises of the basis

organization of the company, its departments, reporting lines areas of expertise, and

responsibility (and how they inter-relate), and the way in which the parts of a thing

are arranged or organized.

a) Overall organizational structural details – Board of Directors/Functional heads

etc.

b) Sub structure detailing with each functional discipline. Detailed study of

various departments& their functions.

BOARD OF DIRECTORS

Mr. Atoll C. Kirloskar Chairman

Mr. R.V. Gumaste Managing Director

Mr. Sanjay C. Kirloskar Directors

Mr. A.R. Jimenez Directors

Mr. C.V. Ticker Directors

Mr. S.N. Inamdar Directors

Mr. S.G. Chitnis Directors

Mr. A.N. Alawani Directors

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The main theme of the organization structure is comprehend all the

possible dimensions of the organization structure as in developing the ability to focus

on these dimensions which are currently important to the organization’s evaluations -

and to be ready to refocus as a crucial dimensions shift.

THE ORGANIZATION STRUCTURE OF THE COMPANY AS FOLLOWS:

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I. HRM & General Administration Department:

HRM & General Administration is everything to do with people recruitment,

induction, training & development, employee discipline & separation. This

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department is taking care of employee from his joining to separation.

Department consciously cares for each employee right from induction to his

performance recognition.

HRM and General Administration Department Structure:

The HRM Department here at the company considers the employees the best

foremost & major resources of the company upliftment of employee’s growth are at

the center of an organization philosophy of growth. This aims at providing a career in

which the individual can make the maximum contribution to the organization and

employee standard of living.

Company has taken care of employee’s welfare by providing medical facilities

and subsidized canteen facilities to all employees. Free transportation, The KFIL

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Sr.Gen.ManagerHRM and GA

Sr.ManagerAdmin

ManagerPMU

Safety Manager

ManagerHR & IR

Manager HRD (Payroll)

Dy. Mgr. G.A & Security

Manager Environment

Sr.OfficerCatering

EngineerCivil

Security Officers

Club- Where all the employees and their family member’s recreation

activities are carried out oftenly.

II. PURCHASE DEPARTMENT:

The main function of purchase department is to purchase raw material after

concerning with the production dept and storage dept of raw materials is made

depending on the demand of the pig iron in the market and orders from the buyers.

The main ingredients, which are prepared by the company, are as follows.

A] Ores: This includes iron and manganese ore, which are brought from the

Hospet and Bellary iron ore belt.

B] Fuels: which includes low ash metallurgical coke as low ash content in

Indian coke there, coke is imported from china and Japan fluxes are purchased from

the Bagalakot and other nearby places they are totally cost about 150 lacks per

month.

C] Others: consumable and spares, diesel furnaces oil etc these are

purchased at required time and they cost about 50 lacks / per month [approximately]

III. STORES DEPARTMENT:

In the stores department the items are stored depending upon their time of

utilization.

A] Slow moving: This includes the items which are used very slowly or very

rarely as per the requirements these includes such motors, insure spares capital

items.

B] Non-moving: These items are purchased only at once these items are

fixed up to the liquidation of the company.

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C] Fast moving: These items are regularly used and items are must be

stored at regularly used and items are must be stored a regularly intervals of time

these items stored under this category includes raw materials, consumables spares,

production consumable such as landing pipes hock mats, minimize and reordering

quantity, mechanical spares such as oil seals bearing, drill bits etc.,

All the items, which are stored room, are consumed on the basis of FIFO the

items which are stored are utilized first depending on their requirements the items

which are stored in stores are first inspected and after inspection tag is attached to

that item.

IV. PRODUCTION DEPARTMENT:

An innovative technology from KTS [KORF TECHNOLOGIA SIDERVRGICA

LTD] Brazil has helped the company to design and develop a mini blast furnace to

enable medium size entrepreneurs to manufacture pig iron. Mini blast furnace has

come a long way and has enabled many entrepreneurs to produce more than 500

million tones of pig iron world over.

The company is among the first in India to adopt this state of the art

technology with computer controls to produce consistent quality of pig iron. The

company also boasts of a record of projects completion of electing the first mini blast

furnace within 18 months and second mini blast furnace within 9 months.

Its has got uniform crystalline pearl tic structure it is slag free and made from

the riches grade of iron ore and imported coke. It is supplied to the company valued

customer of the engineering industry who cater to automotive, tractor, textile, pumps,

and spun pipe segments as well as the steel industry.

V. QUALITY ASSURANCE DEPARTMENT:

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The company is committed to achieve total customer satisfaction

through adoption of state of the art manufacturing technologies and process with

continuous improvements. The company is also committed to improve quality of

work life of its employees through improved work practices.

Quality objectives:

The following are the objectives of quality assurance department. They are as

under:

A] Customer Satisfaction: Maximization of customer satisfaction by

consistent supply of quality casting and pig iron.

B] Supplies Quality Assurance: provide technical support and guidance to

our suppliers through quality assurance programmers to ensure highest quality of

purchased materials suppliers it is a critical link in company quality system.

Quality System:

To provide guidelines to establish, Document & maintain a quality a means to

ensure that product conforms to requirements. To outline structure of documentation

in quality system, Trade line document the quality planning is done to meet the

requirements of product.

Methods:

31

A. Quality Assurance Manual (QAM):

There is “Top Ties” document primarily conveying the Organization’s

commitment to quality & maximizing customer Satisfaction. This is maintained

customer satisfaction. MR.) maintains this as a reference document during.

Divisional produce & report procedure (HRM is Training) for reference.

B. Common Procedure (CPM) Manual:

This is second tier document prepared by MR. Issues these to all dept. heads

for common procedure.

C. Departmental Procedure (DPM) Manual:

This is also second tier document prepared by divisional Heads dealing how a

Job is done with responsibility Specified Department procedures of HRM & TRG are

prepared by respective department heads.

D. Work Instruction:

This is third tier document primary to operate with specify work details there

are generally issued by department or sectional heads & when required they are

translated in vernacular language (Kannada)

E. Forms/ Formats:

Standard check seats supporting documents etc., these are primarily

designed by departments taking into consideration.

Production control requirements and issued to users who would be recording

the status as a Monitoring sequence & this is used for verification & process /

product quality.

VI. SAFETY DEPARTMENT:

32

Safety department is mainly concerned with the safety of employees

and the surrounding environment.

Safety Function Chart

Environmental: Occupational Health and Safety Policy:

In accordance with the vision, “To be a world class product leader through a

state of the art manufacturing technologies and process”

Manufacturers of pig iron and gray iron castings are committed to protect and

up grade our environment and safety of human life through.

Systematic and cost effective methods for waste management are providing

safe and wholesale healthy environment to prevent accidents and occupational

33

Managing Director

SBO-Foundry SBU-HRM and GA SBU-PIP

Central Safety Committee

Sr. Safety Officer

Safety committee Foundry

Safety committee Gen Area Safety Committee PIP

health hazards. Controlling all pollutants and hazards with in prevailing

acceptable limits through best available technology, resources periodic reviews are

helps to enabling continuous improvements. There is optimal utilization and

conservation of resources through effective recycling and practices of reuse of those

materials.

Complying with all applicable legal and other requirements of environments,

occupational health and safety concerns. Improving environmental, occupational

health and safety awareness to all employees through training. Communication of

this policy to interested parties for their participation and involvement to maintain the

environmental, occupational health and safety norms.

VII. MARKETING DEPARTMENT:

The marketing department is mainly focus on the activities of Marketing

products, Pricing, Promotion and Distribution of products. These activities

collectively called as 4 Ps in Marketing.

Products: The Company has following products in its Product Line.

They are:

1. Basic Grade Pig Iron.

2. Foundry Grade Pig Iron.

3. Spheroidal Grade Pig Iron.

Pricing:

The name “Kirloskar” itself is the mark of quality for the customer. The

company has left the opinion of transporting Pig Iron to the Buyers site to the Buyer.

So one can buy the Pig Iron at the Company’s Site or can order.

The company has come across different Prices terminologies.

34

They are:

List Price

Discount

Allowance

Payment Periods

Credit Terms

List price is nothing but the selling price. It is also called as Basic Price.

Basic Price = Production Cost + Profit

Production cost includes both variable cost and fixed cost.

If the transport is undertaken by the company then boarded price is calculated

according to sites mentioned in receipt.

Recorded Price = Basic + Freight + CED (Central Excise Duty)

A discount of Rs. 100/- PMT is given to the regular and bulk buyers.

Price of this company pig iron are comparatively more when compound to

competitions, even with this more price also the company has succeeded in

reaching top market share holding position in the Pig Iron market & Foundry. People

prefer this company Pig Iron because the following reasons:

a. High Quality

b. Fixed Chemical Composition

c. Test Certificates are issued with every load

d. Almost 0% impurities & slag mix up

If customer demands for 2.25% silicon, Then the company will supply exactly

with this proportion, where as others supply with range between i.e., 2.25% silicon

etc.

35

In this company, Pig Iron is melted once, almost 98-99% pure molten

metal is obtained while as in it is 97% size is almost comfortable for feeding into less

opening firmness. The company brand name helps in attracting customers. From the

above points is clear that the company is not using any mark penetrating pricing

strategy to penetrate the market instead it is using skimming price strategy.

Promotion

The company has appointed number of dealers throughout India for its

marketing purpose. Each dealer will get Rs. 100 PMT, as commission for the pit iron

is sells.

Credit notes are given to these dealers for their commission. Pig iron is also

sold on credit as one of the promotion tools to attract customers. Credit time

depends on areas (less credit period is for North Zone) and order they give.

Distribution:

The company has got distribution network spread allover India in form of

dealership and also through company’s employees, the company has divided its

market into 7 Zones:

Zone A Karnataka Belgaum, Shimoga, Bangalore

Zone B Andhra Pradesh Hyderabad, Vijaywada

Zone C Maharashtra Kolhapur, Pune, Mumbai, Nagpur, Solhapur

Zone D Gujarat Ahmedabad, Rajkot, Surat

Zone E Rajastan Jaipur

Zone F Delhi Delhi, Faridabad, Zodhinoor, Agra

Zone G Tamil Nadu Chennai, Coimbatore, Mudurai

36

VIII. FINANCE DEPARTMENT:

Finance departments will acts as major part of every industry. It is the basic

necessity of every organization and these controls in flows and out flows of funds in

an industry.

The finances department is treated as the one of the most significant

departments. Finances are the basic necessity to run each and every single activity

of organization.

Finance Department Chart:

37

GENERAL MANAGER (FINANCE)

DEPUTY GENERAL MANAGER

SR. MANAGER

ACCOUNTS OFFICER

ACCOUNTSASST

ACCOUNTSASST

ACCOUNTSASST

IX. ENVIRONMENT CONTROL DEPARTMENT:

“6 ‘C’ + 5 ‘S’ = Goals”

To achieve the predetermined objectives, the company made an

environmental friendly policy i.e., “6 ‘C’ & 5 ‘S’ model.

6’C’ Models

1. Cost effective waste management

2. Communication to interested parties

3. Control of pollution within prevailing norms

4. Compliance to legal requirements

5. Conservation of resources

6. Conduction training to all employees

5 ‘S’ Models

1. Seiri – sort (separate unwanted and waste)

2. Seiton –store (a place for every thing and everything in its place)

3. Seiso – Clean (to keep things shining)

4. Seiketser – Maintain (orderliness of things)

5. Shitsuke – Statuesque (training and discipline)

2. SKILL :

It consists of the capabilities and competencies that exist within the company.

It is the talent, craft or accomplishment, naturally acquired or developed through

training and abilities appropriate for a specific job. The employees need to have both

specific as well generic skills. Generic skills mean problem solving skills, decision-

making skills, communication etc. Specific skill like time management, shop floor

management, building teams, leadership and motivation, creativity, advances safety

and environment, industrial safety and environment.

38

Training:

The company being a young company with the history of 11 years is set to

develop a full-fledged training department. The training to an employee shall be of

three types. They are:

a) On the job training by concerned supervision.

b) Off the job training.

c) For training program most of the engineers, officers are sent to

various institutions where training programs are conducted time to

time as per the

training needs identified by the concerned department head looks after

the training.

Training process of the company:

1. Identification of training needs

2. Selection of trainees

3. Training Budget

4. Selection of trainers

5. Training Calendar

6. Conducting the training program

7. Feedback from participants

3. STYLE:

This includes the Leadership style of top management and the overall

operating style of the organization. Style impacts the norms people follow and how

they work and interact with each other and with customer.

The management training is totally democratic there are no restrictions to any

employee to express his opinion. The company has got open door policy i.e. any

level of employee can meet directly to his superior or managing director with out any

hesitation.

39

Strategy refers to the systematic action and allocation of resources to achieve

the companies aim. The integrated vision and direction of the company as well as

the manner, in which it drives, articulate, communicates and implements that vision

and direction. It can also be defined as the choice of direction and action that the

company adopts to achieve its objectives in a competitive situation.

4. SYSTEM:

Systems are formal and informal procedures that govern everyday activity,

covering everything from management information systems, through to the point of

contact with the customer. Finance department is doing enough to properly plan and

control the funds. There is regular program verification.

In the company is followed purely on basis of merit basis. Promotion will be

given on the basis of pure merit system.

The company follows inventory control system,

Raw materials will be held in the stores for 15 days only.

Finished goods will be held in the stores for 2 days.

Training System:

The following factors are considered for training:

1) Strategic plans of the organization and meet operational areas as

estimated by the top management.

2) Training requirements as projected by the departmental heads and

individual employees.

3) Reporting officer remarks in performance appraisal reports.

4) Refresher training requirements in critical area.

5) Career planning and succession planning inputs.

6) Inputs required by new entrants.

7) Training arising out of promotions and transfer.

40

Various training programs conducted for the supervisors in the company are

as follows:

- Decision making skill

- Managerial skill

- Computer

- Kaizan principals

Various training programs conducted for the operators. They are as follows:

1) Operative Training:

2) Safety, first aid and fire fighting

5. STAFF:

It refers to the people working in an organization. The company’s people

resources and how they are developed, trained and motivated. The process of

staffing includes various processes like recruitment and selection procedures,

training etc. It refers to how the people are developed, trained, socialized, integrated,

motivated and how the employee’s career is shaped in an organization.

Technical Staff:

These are the staffs they are responsible for the work related to technical

aspect. In this company they are appointing well-qualified and experienced persons

as technical staff. So these staff will have good knowledge about the working

environment.

Supervisory Staff:

These are the person who is in charge with supervising the other employees

in the organization. In this company they are employing experienced staff as

supervisor. So they can observe the fellow workers and guide them as per the

companies need. The experienced supervisors are one of the key assets of this

company.

41

Clerical Staff:

These assets are responsible for the office work. These people are the

backbone of the company. If they work well, it will be an asset to the company. In

this company they are employed will & qualified employees for office work. These

staffs are working together for achieving companies objectives.

Man Power:

Designation No. of Employees

Managing Director 1

General Manager 2

Sr. / Corporate V.P. 1

Department General Manager 10

Senior Manager 5

Manager 20

Dept. Manager 30

Sr. Engineer/Sr. Officers 92

Engineers / Officers 24

Asst. Officers 12

Charge Men 49

Assistants 64

Operator 523

Total - 833

6. STRATEGY:

Strategy refers to the systematic action and allocation of resources to achieve

the companies aim. The integrated vision and direction of the company as well as

the manner, in which it drives, articulate, communicates and implements that vision

and direction. It can also be defined as the choice of direction and action that the

company adopts to achieve its objectives in a competitive situation.

42

Waste Control Strategy:

In order to survive in the market company follows waste control strategy.

The company maintains all the materials in a systematic & in a scientific way,

the best example is, company generates electricity by making use of the waste gas

i.e. CO2 produced during the production process.

Pricing Of Kirloskar:

The name “Kirloskar” itself is the mark of quality for the customer. The

company has left the opinion of transporting Pig Iron to the Buyers site to the Buyer.

So, one can buy the Pig opinion of transporting Pig Iron to the Buyers site to the

Buyer. So one can buy the Pig Iron at the company Site or can order.

The company has across different Price terminologies/ Price Strategies.

They are as follows:

1) List Price

2) Discount

3) Payment periods

4) Credit Terms

5) Seasonal Pricing

6) Area wise pricing

7) Pricing on demand

List price is nothing but the selling price. It is also called as Basic Price.

Basic Price = Production + Profit

Production cost includes both variable cost and fixed cost.

If the transport is undertaken by the company then boarded price is calculated

according to sites mentioned in receipt.

Recorded Price = Basic Price + Freight + CED (Central Excise Duty)

A discount of Rs. 100/- PMT is given to the regular and bulk buyers.

43

Price of the company’s pig iron has succeeded in reaching top market share

holding position in the Pig Iron market & Foundry. People prefer their company Pig

Iron because of the following reasons:

High Quality

Fixed Chemical Composition

Test Certificates are issued with every load

Almost 0% impurities & slag mix up

If customer demands for 2.25% silicon then the company will supply exactly

with this proportion, where as others supply with range between i.e., 2.225% silicon

etc., Pig Iron is melted once, almost 98-99% pure molten metal is obtained while as

in it is 97% size is almost comfortable for feeding into less opening furnaces. The

company is not using any mark penetrating pricing strategy to penetrate the market

instead it is using skimming price strategy.

7. SHARED VALUES:

It refers to the core or fundamental values that are widely shared in the

organization and serve as guiding principle that are important. These values have

great meaning because they focus attention and provide a broader sense of

purpose.

Values are things that you would strive for even if they were demonstrably not

profitable. Values act as an organization’s conscience, providing guidance in time of

crisis.

The values and beliefs of the company ultimately they guide employees

towards valued behavior. It refers to the simple goal statements in determining

corporate destiny to fit the concept; most people in an organization must share these

values.

44

As per the value of the company “Lets make everyone’s life, an enriched one”

the company has implemented many techniques to see that this values are

implemented.

The company tries to satisfy every which is dependent directly or indirectly

with it.

The company has sponsored many schools and colleges through the trust

started by.

The company tries to satisfy employees, shareholders, customers,

government, families of employee, community.

45

PART – C

SWOT ANALYSIS

STRENGTHS:

The company has some its own strengths and competencies. They are

as under:

Good brand image in the market

Market leader in quality

Delivery to customer as per schedule

Nearer to iron source

Well trained and flexible manpower

Good dealership network and area officer

Base load with institutional customer

Low power cost in manufacturing

Near to the transportation – railways as well as road transportation

Quality is established presence in all market eastern zones,

reasonable transportation facilities available for all area 25% of

production is tied up with institutional customer.

WEAKNESS:

Every one should have its own weaknesses like this company also has some

weaknesses. They are:

Transportation problem during harvest season

Inconsistency in appearance

Already at peak utilization of current capacity

Weakness core expertise on prevention maintenance

Total dependence on imported Coke

High coke consumption due to higher fines and handing costs due to

multiple handling

Higher basic coke consumption due tousle of metallic blast preheated in

place of stove.

46

OPPORTUNITIES:

The company has some opportunities in future for its growth. They are

mentioned as under:

The company has a good share in the market.

The company has opportunities to tie up with customers.

Can capitalize an upswing in market demand because of all India

presence

Possible tie-ups with major foundries in Gujarat market.

As the company good market edge, it can market 20000 per month of

foundry grade pig iron every month.

Can capitalize on up swings in market demand because of all India

presence.

THREATS:

The company has some threats by competitors, market environment and

some legal & political changes. They are mentioned as under:

New foundry grade production entry

Increase price in coke

New constricts in market

Imposition of sales tax and VAT.

Threats of using substitute products like plastic and fiber.

Non exclusively with dealers

47

PART-D

SUMMARY OF ANNUAL REPORT

Balance Sheet as at 31 st March 2007

Schedule 31st March 07 31st March 06I. SOURCES OF FUNDS: ( Rs.)1. Shareholders funds:

a) Capital b) Reserves ad surplus.

12

685,025,8251,946,327,875

1,407,974,530---

2,631,353,700 1,407,974,5302. Loan funds: (a) Secured loans 3 201,083,342 160,233,338(b) Unsecured loans. 4 --- 163,333,341

201,083,342 323,566,6793. Deferred tax liability- net. 5 100,909,721 ---TOTAL 2,933,346,763 1,731,541,209

II. APPLICATION OF FUNDS: Fixed assets:

(a) Gross block(b) Less: dep.(c) Net block(d) Capital work in progress.

62,860,861,5761,333,991,1041,526,870,472

198,558,638

2,400,708,5771,196,752,7071,203,955,870

43,105,8921,725,429,110 1,247,061,762

Investments. 7 100 --- Deferred tax assets – net. 5 --- 82,351,690 Current assets, loans and

advances:(a) Inventories(b) Sundry debtors(c) Cash and bank balances(d) Other current assets.(e) Loans and advances

89

10

11

12

527,744,888739,999,601

1,105,445,460

18,688,202

223,113,520

430,241,368450,794,052

83,433,695

8,276,716

279,849,140

48

(a) 2,668,991,671 1,252,594,971Less: current liabilities and provisions

Liabilities Provisions

131,444,053,376

17,020,742962,343,408267,241,261

(b) 1,461,074,118 1,229,584,669Net current assets (a)-(b) 1,207,917,553 23,010,302Profit& loss account --- 379,117,455Total 2,933,346,763 1,731,541,209

Summary of the Balance Sheet:

The company’s reserves and surplus is Rs-1,946,327,875 during the year

ending 31stmarch 2007.

The company fixed assets has been increased by 38.35% over its previous

year figure.

There is no unsecured loan during the year ending 31st march 2007.

49

Profit and Loss Account for the year ended 31 st March 20007

Schedule

31st March 07 31st March 06

INCOME Sales & operating income Sale of by products, waste &

scrap

5,798,692,850333,702,566

5,318,547,952289,730,585

6,132,395,416 5,608,278,537Less: excise duty & education cess on excise duty.

881,080,042 780,816,881

Net salesOther income.

145,251,315,374

36,256,3604,827,461,656

44,517,6075,287,571,734 4,871,979,263

EXPENDITUREMaterial consumedEmployees remuneration & benefits.Operational & establishment exp.Interest.Dep. & amortization.

1516

17

1819

3,590,344,241184,826,905

632,815,548

69,318,326139,885,814

3,690,576,962134,462,950

459,557,659

69,937,829119,809,133

4,617,190,834 4,474,344,533Profit for the yearPrior period exp./ (income) (net)

670,380,9004,785,487

397,634,73037,079

Profit before tax 665,595,413 397,597,651

Provision for taxation : Deferred tax.Fringe benefit tax.MAT.Wealth tax.Adjustment of previous year (net).

183,261,4111,341,036

39,620,000145,512

(3,400,000)

131,762,8361,509,8043,400,000

108,803 ---

Profit after tax. 444,627,454 260,816,208Appropriation

Dividend on: 12% cumulative redeemable

preference shares 1% cumulative redeemable

preference shares

35,864,091

6,648,197

38,959,503

188,830,677

42,512,288 227,790,180Tax on above dividend 5,962,348 31,947,573

48,474,636 259,737,753

50

Profit after appropriation.Balance of profit/ (loss) brought forward form previous year.

396,152,818(379,117,455)

1,078,455(380,195,910)

Balance of profit / (loss) carried to balance sheet.

17,035,363 (379,117,455)

Earning per share:Basic & diluted EPS.

5.24 2.88

Summary of the Profit & Loss Account:

The KFIL net sales for the year 2006-07 registered a growth of 8.78 % over

its previous year.

The other incomes decreased by 18.55% over its previous year.

The KFIL profit after tax is also increased by 70.47% over its previous year.

EPS of the company during the year 2007 is increased by 2.36, it was 2.88 in

previous year.

51

PART – E

LEARNING EXPERIENCE

During the course of study the application of managerial theories into practice

has been understood. It helped to link the theories, techniques and practices of

management with different activities of the organization. Kirloskar Ferrous Industries

Ltd. Has a wide range of products, this plant is dealing with Manufacturing of Pig

Iron in three different grades namely, Foundry Grade Pig Iron, S.G. Grade and Basic

Grade.

During the period the Production process and the systematic layout of the

machineries was learnt. The plant is systematically designed so that the production

process is carried out without any delay. The various departments like the

production, testing and quality control are systematically arranged. The production

plant is close to the stores so that the materials can be issued and stored in time.

The organization provides all necessary facilities like water facility, Power, and

provides Safety Tools & Equipments like gloves, Court, Helmet, masks and etc. in

order to safeguard the health of the workers.

The functions of various departments were learnt. How the production

planning & control issues the orders to the purchase department to procure the raw

materials in order to produce the requisite number of products. How the stores

department issues the raw materials to the production department and how the

production takes place from the various stages in the process.

The functions of various administrative departments of the company like

Finance, HR, Sales, etc. were studied. The finance department is entrusted with the

function of paying the suppliers bills, wages and salaries of the employees and

52

maintaining the proper books of account etc. The HR department is

concerned with the function of Recruitment Process, Selection, Training &

Development,

Performance Appraisal, Promotion, Incentive System etc. and to develop the overall

performance of the employees. The sales department is concerned with the

dispatching of the products as per the orders received from the customers.

The leadership styles, working style and communication flow were

understood from the overall study of each department. The company follows

participative leadership style. The decisions are taken only after concerning all the

departments. The functions, authorities and responsibilities of the employees were

also learnt during this period.

As part of the McKinsey’s 7-S framework the following things have been

studied:

The authority, responsibility, relationship and information flow etc. prevailing

in the company were studied. How the training techniques like on the job training

and off the training are adopted in the organization was learnt. The organization

undertakes executive development, supervisory development and workmen

development programs.

The strategies such as Waste Control Strategy, Pricing Strategy, etc. were

studied. Kirloskar Ferrous Industries Ltd. is one organization which follows high

values towards its customers and employees. The social responsibility programs

and the corporate governance of the company were studied during the period. The

company maintains good relation with its employees.

53

During the In-plant training the various theories learned in the

classroom were linked with the practical application of those followed in the

organization. It was a good exposure to know the working of the organization.

54