PROJECT REPORT ON MATERIAL S MANAGEMENT

ESSAR STEEL ORISSA LIMITEDPARADEEP ORISSA

8 MTPA INTEGRATED IRON ORE PELLET PLANT

UNDER THE GUIDANCE OF

MR Ravindra Moharana (SrManager)

RAVENSHAW MANAGEMENT CENTRE

For the partial fulfilment of Master of Business Administration

Session 2009-11

PREPAIRED BY - SAYED MUNIR NOOR

1 | P a g e

Acknowledgement

This project report in its present form and state is the outcome of the study of the ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo Paradeep to understand the process of materials management as part of our summer training

I am grateful to Mr ParthaSarthi Mishra HR (Head) who gave me the golden opportunity to do our project in a company like ESSAR STEEL

I would like to thank Mrs Raj Laxmi HR manager who gave me this opportunity to do my project in ESSAR STEEL

I am very much thankful to my guide Mr Ravindra Moharana SnrManager (Stores) who has been a constant source of inspiration and learning With his guidance and support I could successfully complete my project

I would like to thank all the members of ESSAR STEEL Paradeep who gave their valuable time and helped us in completing my project in due time

I would also like to thank Mr Sashi Bhusan Mohanty who helped me to do my project in a company like ESSAR STEEL

Finally I like to thank my family and friends who helped me in completing this project successfully

2 | P a g e

CERTIFICATE

This is to certify that Mr Sayed Munir Noor bearing roll

no RMC-MBA 02809-11 a first year student of Ravenshaw

Management Centre Cuttack has successfully completed

summer internship report on the project titled ldquoMATERIALS

MANAGEMENT IN ESSAR STEELrdquo at ESOL Paradeep for partial

fulfilment of the award of MBA degree under my guidance

To the best of my knowledge and belief the work has not been

submitted anywhere else for the award of any degree or

discipline

Date Ravindra Moharana

Place Paradeep SnrManager (stores)

ESSAR STEEL

3 | P a g e

DECLARATION

I do hereby declare that this piece of Project Report entitled

ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo is being submitted by

me in partial fulfilment of the MBA programme in Ravenshaw

Management Centre Ravenshaw University

This report is my original piece of work done for my academic

purpose only and no part of it has been submitted for any other

purpose nor published anywhere else in any form till date

Place

Date Sayed Munir Noor

4 | P a g e

Contents

ESSAR AT A GLANCE2

Genesis and evolution2

Corporate profile5

Project7

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment7

Power9

Communications10

Shipping ports amp logistics11

Current status14

layout of ESSAR paradeep plant17

MATERIALS MANAGEMENT17

Areas of Concentration18

Goals18

Quality Assurance18

Standards18

Promoting Sustainability18

Improving circulation infrastructure18

Benefits19

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-23

standard operating procedure27

Safety measures29

Perpetual Inventory39

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule39

Inventory Count Sheets39

Cut Off Procedures40

Third Party Stocks40

Comparison with System Stock40

Variance Analysis40

5 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

Acknowledgement

This project report in its present form and state is the outcome of the study of the ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo Paradeep to understand the process of materials management as part of our summer training

I am grateful to Mr ParthaSarthi Mishra HR (Head) who gave me the golden opportunity to do our project in a company like ESSAR STEEL

I would like to thank Mrs Raj Laxmi HR manager who gave me this opportunity to do my project in ESSAR STEEL

I am very much thankful to my guide Mr Ravindra Moharana SnrManager (Stores) who has been a constant source of inspiration and learning With his guidance and support I could successfully complete my project

I would like to thank all the members of ESSAR STEEL Paradeep who gave their valuable time and helped us in completing my project in due time

I would also like to thank Mr Sashi Bhusan Mohanty who helped me to do my project in a company like ESSAR STEEL

Finally I like to thank my family and friends who helped me in completing this project successfully

2 | P a g e

CERTIFICATE

This is to certify that Mr Sayed Munir Noor bearing roll

no RMC-MBA 02809-11 a first year student of Ravenshaw

Management Centre Cuttack has successfully completed

summer internship report on the project titled ldquoMATERIALS

MANAGEMENT IN ESSAR STEELrdquo at ESOL Paradeep for partial

fulfilment of the award of MBA degree under my guidance

To the best of my knowledge and belief the work has not been

submitted anywhere else for the award of any degree or

discipline

Date Ravindra Moharana

Place Paradeep SnrManager (stores)

ESSAR STEEL

3 | P a g e

DECLARATION

I do hereby declare that this piece of Project Report entitled

ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo is being submitted by

me in partial fulfilment of the MBA programme in Ravenshaw

Management Centre Ravenshaw University

This report is my original piece of work done for my academic

purpose only and no part of it has been submitted for any other

purpose nor published anywhere else in any form till date

Place

Date Sayed Munir Noor

4 | P a g e

Contents

ESSAR AT A GLANCE2

Genesis and evolution2

Corporate profile5

Project7

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment7

Power9

Communications10

Shipping ports amp logistics11

Current status14

layout of ESSAR paradeep plant17

MATERIALS MANAGEMENT17

Areas of Concentration18

Goals18

Quality Assurance18

Standards18

Promoting Sustainability18

Improving circulation infrastructure18

Benefits19

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-23

standard operating procedure27

Safety measures29

Perpetual Inventory39

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule39

Inventory Count Sheets39

Cut Off Procedures40

Third Party Stocks40

Comparison with System Stock40

Variance Analysis40

5 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

CERTIFICATE

This is to certify that Mr Sayed Munir Noor bearing roll

no RMC-MBA 02809-11 a first year student of Ravenshaw

Management Centre Cuttack has successfully completed

summer internship report on the project titled ldquoMATERIALS

MANAGEMENT IN ESSAR STEELrdquo at ESOL Paradeep for partial

fulfilment of the award of MBA degree under my guidance

To the best of my knowledge and belief the work has not been

submitted anywhere else for the award of any degree or

discipline

Date Ravindra Moharana

Place Paradeep SnrManager (stores)

ESSAR STEEL

3 | P a g e

DECLARATION

I do hereby declare that this piece of Project Report entitled

ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo is being submitted by

me in partial fulfilment of the MBA programme in Ravenshaw

Management Centre Ravenshaw University

This report is my original piece of work done for my academic

purpose only and no part of it has been submitted for any other

purpose nor published anywhere else in any form till date

Place

Date Sayed Munir Noor

4 | P a g e

Contents

ESSAR AT A GLANCE2

Genesis and evolution2

Corporate profile5

Project7

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment7

Power9

Communications10

Shipping ports amp logistics11

Current status14

layout of ESSAR paradeep plant17

MATERIALS MANAGEMENT17

Areas of Concentration18

Goals18

Quality Assurance18

Standards18

Promoting Sustainability18

Improving circulation infrastructure18

Benefits19

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-23

standard operating procedure27

Safety measures29

Perpetual Inventory39

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule39

Inventory Count Sheets39

Cut Off Procedures40

Third Party Stocks40

Comparison with System Stock40

Variance Analysis40

5 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

DECLARATION

I do hereby declare that this piece of Project Report entitled

ldquoMATERIALS MANAGEMENT IN ESSAR STEELrdquo is being submitted by

me in partial fulfilment of the MBA programme in Ravenshaw

Management Centre Ravenshaw University

This report is my original piece of work done for my academic

purpose only and no part of it has been submitted for any other

purpose nor published anywhere else in any form till date

Place

Date Sayed Munir Noor

4 | P a g e

Contents

ESSAR AT A GLANCE2

Genesis and evolution2

Corporate profile5

Project7

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment7

Power9

Communications10

Shipping ports amp logistics11

Current status14

layout of ESSAR paradeep plant17

MATERIALS MANAGEMENT17

Areas of Concentration18

Goals18

Quality Assurance18

Standards18

Promoting Sustainability18

Improving circulation infrastructure18

Benefits19

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-23

standard operating procedure27

Safety measures29

Perpetual Inventory39

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule39

Inventory Count Sheets39

Cut Off Procedures40

Third Party Stocks40

Comparison with System Stock40

Variance Analysis40

5 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

Contents

ESSAR AT A GLANCE2

Genesis and evolution2

Corporate profile5

Project7

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment7

Power9

Communications10

Shipping ports amp logistics11

Current status14

layout of ESSAR paradeep plant17

MATERIALS MANAGEMENT17

Areas of Concentration18

Goals18

Quality Assurance18

Standards18

Promoting Sustainability18

Improving circulation infrastructure18

Benefits19

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-23

standard operating procedure27

Safety measures29

Perpetual Inventory39

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule39

Inventory Count Sheets39

Cut Off Procedures40

Third Party Stocks40

Comparison with System Stock40

Variance Analysis40

5 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

physical verification of capital goods 41

inventory of steel54

figures56

physical verification of steel58

inventory of cement60

stacking procedure of cement61

inventory of diesel64

stacking procedure of diesel64

problems65

suggestions65

stores credit to management66

references67

6 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

ESSAR AT A GLANCE

Genesis and evolution

The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses

The Ruia familyrsquos origins are in Rajasthan Sometime in the 19th century they moved to Mumbai and set up their own business In 1956 Mr Nandkishore Ruia father of Mr Shashi Ruia and Mr Ravi Ruia moved to Chennai capital of the south Indian state of Tamil Nadu to begin independent business activities He mentored his two sons in the intricacies of business When Mr Nandkishore Ruia passed away in 1969 the brothers laid the foundation of the Group

The Essar Group began its operations with the construction of an outer breakwater in Chennai port It quickly moved to capitalize on every emerging business opportunity becoming Indiarsquos first private company to buy a tanker in 1976 The Group also invested in a diverse shipping fleet and oilrigs when the Government of India opened up the shipping and drilling businesses to private players in the 1980s

Then in the 1990s Essar began its steelmaking business by setting up Indiarsquos first sponge iron plant in Hazira a coastal town in the western Indian state of Gujarat The Group went on to build a pellet plant in Visakhapatnam and eventually a fully integrated steel plant in Hazira

Through the 1990s with the gradual liberalization of the Indian economy Essar seized every opportunity that came its way It diversified its shipping fleet started oil amp gas exploration and production laid the foundation of its oil refinery at Vadinar Gujarat and set up a power plant near the steel complex in Hazira The construction business helped the Group build most of its business assets Essar also entered the GSM telephony business establishing Indiarsquos first mobile phone service in Delhi (branded Essar Cell phone) with Swiss PTT as the joint venture partner

The 21st century for the Essar Group has been all about consolidating and growing the businesses with mergers and acquisitions new revenue streams and strategic geographical expansion

7 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

The Essar spirit

The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing

VISIONwe will be a respected global entrepreneur through the power of positive action

MISSION We are committed to innovative growth through our personal passion reinforced by a professional mindset creating value for all those we touch

SpiritThe Essar Group has changed significantly in recent years and continues to evolve to keep pace with the changing times We have undertaken a sustainable journey of transformation by foraying into new international markets and exploring new business areas in a bid to keep our entrepreneurial spirit alive and to continue growing

To mark the phenomenal growth witnessed over the last four decades the Group recently unveiled its new brand identity marking a very important milestone in its journey and reflecting a new beginning for the Group A new brand identity reinforces all the positives to fulfil our vision to be a global entrepreneur through the power of positive action

We aim to have a robust value system comprising positive attitude positive action and positive achievement

We endeavour to create enduring value for customers and stakeholders in core manufacturing and service businesses through world-class operating standards state-of-the-art technology and the lsquopositive attitudersquo of our people

Privately owned and professionally managed the Group is judiciously invested in the commodity annuity and services businesses Forward and backward integration the use of state-of-the-art technology in-house research and innovation have made Essar Global a force to reckon with in each of its businesses

8 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

Finally the Essar way is all about keeping its entrepreneurial spirit alive and to keep growing with a passion to progress and the power to succeed with a renewed strength of purpose and commitment

Corporate profile

Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel Oil amp Gas Power Communications Shipping Ports amp Logistics Construction and Minerals With operations in more than 20 countries across five continents the group employs 60000 people with revenues of about USD 15 billion

Essar began as a construction company in 1969 and diversified into manufacturing services and retail Over the last decade it has grown

through strategic global acquisitions and partnerships or through Greenfield and Brownfield development projects capturing new markets and discovering new raw material sources

Today the Group continues to expand its global footprint focusing on markets in Asia Africa Europe the Americas and Australia Essar invests significantly in the latest technology to drive forward and backward integration in its businesses and on leveraging synergies between these businesses It also focuses on in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings

Alongside its ambitious business pursuits Essar has been committed to its social responsibility The Group runs community outreach initiatives in all its plant locations with a focus on education healthcare environmental and agricultural development and self-employment

Essar is committed to sustainable business practices Our HSE (Health Safety and Environment) management system is on par with global standards We are also taking climate change initiatives to reduce our carbon footprint This includes several CDM (Clean Development Mechanism) projects that can earn the company CER (Certified Emission Reduction) credits A growing number of our businesses with new businesses joining the list every year are certified to international environment standards like ISO 9001 14001 and health and safety standards like OHSAS 18001

The Essar Group is widely regarded as a responsible and conscientious global employer It has experience in managing businesses in different geographies with a culturally diverse workforce This is why its people practices are sensitive to cross-cultural nuances The Grouprsquos people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees

9 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

Board of directors

Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals

promoter Directors

Mr Shashi RuiaChairman

Essar Group

Mr Ravi RuiaVice ChairmanEssar Group

Mr Prashant RuiaGroup Chief Executive

Essar Group

10 | P a g e

Mr Anshuman RuiaPromoter Director

Essar Group

Ms Smiti KanodiaPromoter Director

Essar Group

Mr Rewant RuiaPromoter Director

Essar Group

Management teamMr J Mehra mdash Director Essar Group

Mr Malay Mukherjee mdash CEO Steel Business Group

Mr Naresh Nayyar mdash CEO Energy Business Group

Mr Shishir Agarwal mdash CEO Exploration amp Production Business

Mr Sanjay Mehta mdash CEO Shipping amp Logistics Business Group

Mr Rajiv Sawhney mdash CEO Telecom Business Group

Mr Aparup Sengupta mdash CEO Aegis

Mr Alwyn Bowden mdash CEO Projects Business Group

Mr Pradeep Mittal mdash CEO Minerals amp Mining Business

Mr Vikash Saraf mdash Director Strategy amp Planning Essar Group

Mr VG Raghavan mdash CFO Essar Group

Mr Adil Malia mdash Group President Human Resources

Mr SM Lodha mdash Group President Assurance and Cost Control

Mr Sunil Bajaj mdash Head Corporate Relations Group

11 | P a g e

Project

Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment

With over 5000 people we are a global engineering procurement and construction (EPC) company headquartered in Dubai with offices in India China and the Czech Republic

We honed our skills in the construction of industrial plants and infrastructure as the turnkey EPC Company for most of the Essar Grouprsquos world-class projects and supporting infrastructure Marine construction is one of our special strengths Indeed the very origin of

the Essar Group was in specialized marine construction

We have built 320000 bpd of refining capacity and developed over 10 million tons of steel capacity We have laid more than 5000 km of pipelines and developed 1200 MW of power projects and are developing another 4800 MW

Our offshore EPCI capabilities currently execute a USD 220 million project for ONGC We own over 3000 nos construction equipment worth over USD 250 million

We have 12000tpa (tons per annum) of fabrication facility with waterfront load-out facility and also have a dedicated Engineering Centre specializing in Engineering and Design for the Process and Industrial sectors with over 1200 engineers With over USD 6 billion procurement capability we have global procurement support in the Middle East and China

The ISO 90012000 certified pipeline division of our construction business unit is a specialist in onshore offshore and cross-country pipelines from construction to commissioning The pipeline division holds the distinction of building the worldrsquos second longest slurry pipeline ndash Essar Steelrsquos 267km Bailadilla-Vizag slurry pipeline

Our customers can rely on our skilled engineering team large bank of the latest construction equipments and our talent for scouting the globe to procure the best materials and equipment at competitive prices

Our long and impressive list of clients includes most major Indian ports the National Highway Authority of India the Gujarat Water Supply and Sewerage Board the Gas Authority of India Hindustan Petroleum and ONGC Our expertise is also internationally recognized whether for the pipelines we laid in Qatar or the cold rolling mill we built in Indonesia

We have won contracts from government agencies through local and international competitive bidding meeting the stringent requirements of the World Bank and the Asian Development Bank

With four decades of project management expertise Essar Projects Limited is strategically placed to support the infrastructure explosion in India and abroad

Oil and Gas

12 | P a g e

Essar Oil operates a fully integrated oil company of international size and scale in India

Essar Oils assets include developmental rights in proven exploration blocks a 105 mtpa refinery on the west coast of India and over 1300 Essar-branded oil retail outlets across India Plans are under way to increase its exploration acreage in various parts of the globe expand its refinery capacity to 36 mtpa and open 3000 outlets countrywide

Our global portfolio of onshore and offshore oil and gas blocks with about 70000 sq km is available for exploration We have over 300000

bpd (barrels per day) of crude refining capacity that is being expanded to 750000 bpd with a goal to reach a global refining capacity of 1 million bpd We have a 50 percent stake in Kenya Petroleum Refineries Ltd which operates a refinery in Mombasa Kenya with a capacity of 80000 bpd Our Exploration and Production (EampP) business has participating interests in several hydrocarbon blocks for exploration and production of oil and gas This includes the Ratna and R-Series blocks on Bombay High and an EampP block in Mehsana Gujarat which has currently started commercial production It has also been awarded a Coal Bed Methane (CBM) block at Raniganj in West Bengal and two more EampP blocks in Assam India The overseas EampP assets include three onshore oil and gas blocks in Madagascar Africa and one offshore block each in Vietnam and Nigeria

We have a 105 mtpa refinery at Vadinar in Gujarat which started commercial production on May 1 2008 It has been built with state-of-the-art technology and has the capability to produce petrol and diesel suitable for use in India as well as advanced international markets

It will also produce LPG Naphtha light diesel oil Aviation Turbine Fuel (ATF) and kerosene The refinery has been designed to handle a diverse range of crude mdash from sweet to sour and light to heavy It is supported by an end-to-end infrastructure setup including SBM (Single Buoy Mooring) crude oil tankage water intake facilities a captive power plant (currently 120 MW being expanded to 1010 MW) product jetty and dispatch facilities by both rail and road

The refinery is strategically located in Vadinar a natural all-weather deep-draft port that can accommodate Very Large Crude Carriers (VLCCs) Vadinar also receives almost 70 percent of Indiarsquos crude imports Post its expansion to 36 mtpa the refinery will run at a Nelson Complexity of 128 This means it will be able to refine all varieties of crude producing Euro 5 grade fuels It will also be among the largest single location refineries in the world thus leveraging on economies of scale

Power

13 | P a g e

Essar Power operates four power plants with a combined capacity of 1220 MW in three locations across India

Essar Power has two gas-based plants of 500MW and 515MW capacities in Bhander and Hazira respectively a 120MW co-generation plant in Vadinar and an 85MW plant in Algoma

Work is currently under way to expand the current generation capacity of 1220MW to 6100MW by 2012 with a target to reach 11470MW in the near future The company will set up three coal-based plants of 1200MW each in Gujarat Madhya Pradesh and Jharkhand

aggregating 3600 MW An additional 1280MW is also under construction ndash 1160 MW in Gujarat and 120MW in Orissa ndash to supply power and steam to the expanded refinery

An additional 5370 MW is under development

As the first private company with a license to enter the transmission and power trading segments we are now a fully integrated end-to-end player in the power sector By using the latest technology and equipment we generate and supply power at very competitive price points Essar currently has complete fuel linkages secured for all projects under execution We also have the capability to execute power projects for other companies

Essar power is exploring opportunities for new projects based on thermal wind and hydro energy We are also committed to reducing emissions from our plants and earning carbon credits The 500MW combined cycle power plant at Hazira is eligible for Certified Emission Reductions (CERs) under the Kyoto Protocols Clean Development Mechanism (CDM)

The investments made towards the projects under execution are over USD 4 billion

Communications

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country

14 | P a g e

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group It is one of Indiarsquos largest cellular service companies We have over 100 million telecom subscribers in India and Kenya We have majority stake in the telecom assets of the Dhabi Group in Uganda and the Republic of Congo

We operate integrated IT enabled services through the Aegis brand name with a presence in interaction services back office services and value-added services Aegis operates in 40 locations and employs over 40000 employees in India and the US with expertise in the telecom insurance banking and healthcare domains

We have launched Indias first countrywide chain of multi-brand and multi-service outlets in the telecom retail space The MobileStore Ltd currently runs 1300 outlets branded ldquoThe MobileStorerdquo In the next two years over 2500 outlets will come up across 650 cities

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country It builds telecom tower infrastructure and shares it with several telecom

operators in India It has a pan-India presence in telecom tower infrastructure with more than 4500 telecom towers operational Essar has a 14 per cent stake in Indus Towers Indiarsquos largest tower company which has over 100000 towers

Essar Communications Holdings Limited acquired a 49 per cent stake in Econet Wireless International Limited by subscribing to fresh capital in the company EWI has a 70 per cent shareholding in Econet Wireless Kenya Essar and Econet Wireless Kenya have launched yu mdash Kenyarsquos third mobile cellular network This is a GSM-based mobile services network in Kenya with close to a million subscribers

Shipping ports amp logistics

Essar is an end-to-end logistics services provider with investments in ports and terminals logistics services sea transportation and oilfield drilling services

15 | P a g e

Our integrated business model provides opportunities to cater to the complete supply chain management services to clients in oil and gas steel and power generation industries We are one of Indiarsquos largest operator of ports and building a cargo handling capacity (both dry and bulk cargo) of over 150 million tons

Our ports and terminals business operates a crude oil and petroleum products terminal at Vadinar and includes the construction of a dry bulk

port at Hazira and a coal jetty at Salaya all in the state of Gujarat The Vadinar terminal is an all-weather deep-draft port which provides crude oil and petroleum products storage handling and terminal services The port has a Single Point Mooring system capable of handling crude capacity of up to 27mmtpa and marine facility for export of petroleum products of up to 65mmtpa

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather deep-draft port and jetty facility The port will have a berth of 550 meters length and an alongside depth of 125 meters The proposed berth will handle the import of iron ore pellets coal limestone and export of finished steel products The port facility at Salaya comprises setting up a 10mtpa marine material handling facilities to cater to the need of imported coal requirement and export of petroleum coke

Essars logistics business provides end-to-end logistics services ndash from ships to ports lighter age services intra-plant logistics and dispatch of finished products We own trans-shipment assets to provide lighter age support services and onshore and offshore logistics services We also operate a fleet of 4200 trucks (38 of which we own) to provide inland transportation of steel and petroleum products

Our sea transportation business provides transportation management services for crude oil and petroleum products and dry bulk cargo to the global energy steel and power industries With an experience of more than 220 ship years we own a diverse fleet of 25 vessels and a further 12 new building vessels are on order at an investment of over USD 06 billion

Our oilfields drilling business offers onshore and offshore contract drilling and offshore construction services We offer contract drilling services to global oil majors with a fleet of 13 onshore rigs and one super-specialty semi-submersible offshore rig 2 new jack-up rigs on order

STEEL

Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia

16 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

Essar Oil operates a fully integrated oil company of international size and scale in India

Essar Oils assets include developmental rights in proven exploration blocks a 105 mtpa refinery on the west coast of India and over 1300 Essar-branded oil retail outlets across India Plans are under way to increase its exploration acreage in various parts of the globe expand its refinery capacity to 36 mtpa and open 3000 outlets countrywide

Our global portfolio of onshore and offshore oil and gas blocks with about 70000 sq km is available for exploration We have over 300000

bpd (barrels per day) of crude refining capacity that is being expanded to 750000 bpd with a goal to reach a global refining capacity of 1 million bpd We have a 50 percent stake in Kenya Petroleum Refineries Ltd which operates a refinery in Mombasa Kenya with a capacity of 80000 bpd Our Exploration and Production (EampP) business has participating interests in several hydrocarbon blocks for exploration and production of oil and gas This includes the Ratna and R-Series blocks on Bombay High and an EampP block in Mehsana Gujarat which has currently started commercial production It has also been awarded a Coal Bed Methane (CBM) block at Raniganj in West Bengal and two more EampP blocks in Assam India The overseas EampP assets include three onshore oil and gas blocks in Madagascar Africa and one offshore block each in Vietnam and Nigeria

We have a 105 mtpa refinery at Vadinar in Gujarat which started commercial production on May 1 2008 It has been built with state-of-the-art technology and has the capability to produce petrol and diesel suitable for use in India as well as advanced international markets

It will also produce LPG Naphtha light diesel oil Aviation Turbine Fuel (ATF) and kerosene The refinery has been designed to handle a diverse range of crude mdash from sweet to sour and light to heavy It is supported by an end-to-end infrastructure setup including SBM (Single Buoy Mooring) crude oil tankage water intake facilities a captive power plant (currently 120 MW being expanded to 1010 MW) product jetty and dispatch facilities by both rail and road

The refinery is strategically located in Vadinar a natural all-weather deep-draft port that can accommodate Very Large Crude Carriers (VLCCs) Vadinar also receives almost 70 percent of Indiarsquos crude imports Post its expansion to 36 mtpa the refinery will run at a Nelson Complexity of 128 This means it will be able to refine all varieties of crude producing Euro 5 grade fuels It will also be among the largest single location refineries in the world thus leveraging on economies of scale

Power

13 | P a g e

Essar Power operates four power plants with a combined capacity of 1220 MW in three locations across India

Essar Power has two gas-based plants of 500MW and 515MW capacities in Bhander and Hazira respectively a 120MW co-generation plant in Vadinar and an 85MW plant in Algoma

Work is currently under way to expand the current generation capacity of 1220MW to 6100MW by 2012 with a target to reach 11470MW in the near future The company will set up three coal-based plants of 1200MW each in Gujarat Madhya Pradesh and Jharkhand

aggregating 3600 MW An additional 1280MW is also under construction ndash 1160 MW in Gujarat and 120MW in Orissa ndash to supply power and steam to the expanded refinery

An additional 5370 MW is under development

As the first private company with a license to enter the transmission and power trading segments we are now a fully integrated end-to-end player in the power sector By using the latest technology and equipment we generate and supply power at very competitive price points Essar currently has complete fuel linkages secured for all projects under execution We also have the capability to execute power projects for other companies

Essar power is exploring opportunities for new projects based on thermal wind and hydro energy We are also committed to reducing emissions from our plants and earning carbon credits The 500MW combined cycle power plant at Hazira is eligible for Certified Emission Reductions (CERs) under the Kyoto Protocols Clean Development Mechanism (CDM)

The investments made towards the projects under execution are over USD 4 billion

Communications

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country

14 | P a g e

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group It is one of Indiarsquos largest cellular service companies We have over 100 million telecom subscribers in India and Kenya We have majority stake in the telecom assets of the Dhabi Group in Uganda and the Republic of Congo

We operate integrated IT enabled services through the Aegis brand name with a presence in interaction services back office services and value-added services Aegis operates in 40 locations and employs over 40000 employees in India and the US with expertise in the telecom insurance banking and healthcare domains

We have launched Indias first countrywide chain of multi-brand and multi-service outlets in the telecom retail space The MobileStore Ltd currently runs 1300 outlets branded ldquoThe MobileStorerdquo In the next two years over 2500 outlets will come up across 650 cities

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country It builds telecom tower infrastructure and shares it with several telecom

operators in India It has a pan-India presence in telecom tower infrastructure with more than 4500 telecom towers operational Essar has a 14 per cent stake in Indus Towers Indiarsquos largest tower company which has over 100000 towers

Essar Communications Holdings Limited acquired a 49 per cent stake in Econet Wireless International Limited by subscribing to fresh capital in the company EWI has a 70 per cent shareholding in Econet Wireless Kenya Essar and Econet Wireless Kenya have launched yu mdash Kenyarsquos third mobile cellular network This is a GSM-based mobile services network in Kenya with close to a million subscribers

Shipping ports amp logistics

Essar is an end-to-end logistics services provider with investments in ports and terminals logistics services sea transportation and oilfield drilling services

15 | P a g e

Our integrated business model provides opportunities to cater to the complete supply chain management services to clients in oil and gas steel and power generation industries We are one of Indiarsquos largest operator of ports and building a cargo handling capacity (both dry and bulk cargo) of over 150 million tons

Our ports and terminals business operates a crude oil and petroleum products terminal at Vadinar and includes the construction of a dry bulk

port at Hazira and a coal jetty at Salaya all in the state of Gujarat The Vadinar terminal is an all-weather deep-draft port which provides crude oil and petroleum products storage handling and terminal services The port has a Single Point Mooring system capable of handling crude capacity of up to 27mmtpa and marine facility for export of petroleum products of up to 65mmtpa

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather deep-draft port and jetty facility The port will have a berth of 550 meters length and an alongside depth of 125 meters The proposed berth will handle the import of iron ore pellets coal limestone and export of finished steel products The port facility at Salaya comprises setting up a 10mtpa marine material handling facilities to cater to the need of imported coal requirement and export of petroleum coke

Essars logistics business provides end-to-end logistics services ndash from ships to ports lighter age services intra-plant logistics and dispatch of finished products We own trans-shipment assets to provide lighter age support services and onshore and offshore logistics services We also operate a fleet of 4200 trucks (38 of which we own) to provide inland transportation of steel and petroleum products

Our sea transportation business provides transportation management services for crude oil and petroleum products and dry bulk cargo to the global energy steel and power industries With an experience of more than 220 ship years we own a diverse fleet of 25 vessels and a further 12 new building vessels are on order at an investment of over USD 06 billion

Our oilfields drilling business offers onshore and offshore contract drilling and offshore construction services We offer contract drilling services to global oil majors with a fleet of 13 onshore rigs and one super-specialty semi-submersible offshore rig 2 new jack-up rigs on order

STEEL

Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia

16 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

Essar Power operates four power plants with a combined capacity of 1220 MW in three locations across India

Essar Power has two gas-based plants of 500MW and 515MW capacities in Bhander and Hazira respectively a 120MW co-generation plant in Vadinar and an 85MW plant in Algoma

Work is currently under way to expand the current generation capacity of 1220MW to 6100MW by 2012 with a target to reach 11470MW in the near future The company will set up three coal-based plants of 1200MW each in Gujarat Madhya Pradesh and Jharkhand

aggregating 3600 MW An additional 1280MW is also under construction ndash 1160 MW in Gujarat and 120MW in Orissa ndash to supply power and steam to the expanded refinery

An additional 5370 MW is under development

As the first private company with a license to enter the transmission and power trading segments we are now a fully integrated end-to-end player in the power sector By using the latest technology and equipment we generate and supply power at very competitive price points Essar currently has complete fuel linkages secured for all projects under execution We also have the capability to execute power projects for other companies

Essar power is exploring opportunities for new projects based on thermal wind and hydro energy We are also committed to reducing emissions from our plants and earning carbon credits The 500MW combined cycle power plant at Hazira is eligible for Certified Emission Reductions (CERs) under the Kyoto Protocols Clean Development Mechanism (CDM)

The investments made towards the projects under execution are over USD 4 billion

Communications

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country

14 | P a g e

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group It is one of Indiarsquos largest cellular service companies We have over 100 million telecom subscribers in India and Kenya We have majority stake in the telecom assets of the Dhabi Group in Uganda and the Republic of Congo

We operate integrated IT enabled services through the Aegis brand name with a presence in interaction services back office services and value-added services Aegis operates in 40 locations and employs over 40000 employees in India and the US with expertise in the telecom insurance banking and healthcare domains

We have launched Indias first countrywide chain of multi-brand and multi-service outlets in the telecom retail space The MobileStore Ltd currently runs 1300 outlets branded ldquoThe MobileStorerdquo In the next two years over 2500 outlets will come up across 650 cities

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country It builds telecom tower infrastructure and shares it with several telecom

operators in India It has a pan-India presence in telecom tower infrastructure with more than 4500 telecom towers operational Essar has a 14 per cent stake in Indus Towers Indiarsquos largest tower company which has over 100000 towers

Essar Communications Holdings Limited acquired a 49 per cent stake in Econet Wireless International Limited by subscribing to fresh capital in the company EWI has a 70 per cent shareholding in Econet Wireless Kenya Essar and Econet Wireless Kenya have launched yu mdash Kenyarsquos third mobile cellular network This is a GSM-based mobile services network in Kenya with close to a million subscribers

Shipping ports amp logistics

Essar is an end-to-end logistics services provider with investments in ports and terminals logistics services sea transportation and oilfield drilling services

15 | P a g e

Our integrated business model provides opportunities to cater to the complete supply chain management services to clients in oil and gas steel and power generation industries We are one of Indiarsquos largest operator of ports and building a cargo handling capacity (both dry and bulk cargo) of over 150 million tons

Our ports and terminals business operates a crude oil and petroleum products terminal at Vadinar and includes the construction of a dry bulk

port at Hazira and a coal jetty at Salaya all in the state of Gujarat The Vadinar terminal is an all-weather deep-draft port which provides crude oil and petroleum products storage handling and terminal services The port has a Single Point Mooring system capable of handling crude capacity of up to 27mmtpa and marine facility for export of petroleum products of up to 65mmtpa

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather deep-draft port and jetty facility The port will have a berth of 550 meters length and an alongside depth of 125 meters The proposed berth will handle the import of iron ore pellets coal limestone and export of finished steel products The port facility at Salaya comprises setting up a 10mtpa marine material handling facilities to cater to the need of imported coal requirement and export of petroleum coke

Essars logistics business provides end-to-end logistics services ndash from ships to ports lighter age services intra-plant logistics and dispatch of finished products We own trans-shipment assets to provide lighter age support services and onshore and offshore logistics services We also operate a fleet of 4200 trucks (38 of which we own) to provide inland transportation of steel and petroleum products

Our sea transportation business provides transportation management services for crude oil and petroleum products and dry bulk cargo to the global energy steel and power industries With an experience of more than 220 ship years we own a diverse fleet of 25 vessels and a further 12 new building vessels are on order at an investment of over USD 06 billion

Our oilfields drilling business offers onshore and offshore contract drilling and offshore construction services We offer contract drilling services to global oil majors with a fleet of 13 onshore rigs and one super-specialty semi-submersible offshore rig 2 new jack-up rigs on order

STEEL

Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia

16 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group It is one of Indiarsquos largest cellular service companies We have over 100 million telecom subscribers in India and Kenya We have majority stake in the telecom assets of the Dhabi Group in Uganda and the Republic of Congo

We operate integrated IT enabled services through the Aegis brand name with a presence in interaction services back office services and value-added services Aegis operates in 40 locations and employs over 40000 employees in India and the US with expertise in the telecom insurance banking and healthcare domains

We have launched Indias first countrywide chain of multi-brand and multi-service outlets in the telecom retail space The MobileStore Ltd currently runs 1300 outlets branded ldquoThe MobileStorerdquo In the next two years over 2500 outlets will come up across 650 cities

Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country It builds telecom tower infrastructure and shares it with several telecom

operators in India It has a pan-India presence in telecom tower infrastructure with more than 4500 telecom towers operational Essar has a 14 per cent stake in Indus Towers Indiarsquos largest tower company which has over 100000 towers

Essar Communications Holdings Limited acquired a 49 per cent stake in Econet Wireless International Limited by subscribing to fresh capital in the company EWI has a 70 per cent shareholding in Econet Wireless Kenya Essar and Econet Wireless Kenya have launched yu mdash Kenyarsquos third mobile cellular network This is a GSM-based mobile services network in Kenya with close to a million subscribers

Shipping ports amp logistics

Essar is an end-to-end logistics services provider with investments in ports and terminals logistics services sea transportation and oilfield drilling services

15 | P a g e

Our integrated business model provides opportunities to cater to the complete supply chain management services to clients in oil and gas steel and power generation industries We are one of Indiarsquos largest operator of ports and building a cargo handling capacity (both dry and bulk cargo) of over 150 million tons

Our ports and terminals business operates a crude oil and petroleum products terminal at Vadinar and includes the construction of a dry bulk

port at Hazira and a coal jetty at Salaya all in the state of Gujarat The Vadinar terminal is an all-weather deep-draft port which provides crude oil and petroleum products storage handling and terminal services The port has a Single Point Mooring system capable of handling crude capacity of up to 27mmtpa and marine facility for export of petroleum products of up to 65mmtpa

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather deep-draft port and jetty facility The port will have a berth of 550 meters length and an alongside depth of 125 meters The proposed berth will handle the import of iron ore pellets coal limestone and export of finished steel products The port facility at Salaya comprises setting up a 10mtpa marine material handling facilities to cater to the need of imported coal requirement and export of petroleum coke

Essars logistics business provides end-to-end logistics services ndash from ships to ports lighter age services intra-plant logistics and dispatch of finished products We own trans-shipment assets to provide lighter age support services and onshore and offshore logistics services We also operate a fleet of 4200 trucks (38 of which we own) to provide inland transportation of steel and petroleum products

Our sea transportation business provides transportation management services for crude oil and petroleum products and dry bulk cargo to the global energy steel and power industries With an experience of more than 220 ship years we own a diverse fleet of 25 vessels and a further 12 new building vessels are on order at an investment of over USD 06 billion

Our oilfields drilling business offers onshore and offshore contract drilling and offshore construction services We offer contract drilling services to global oil majors with a fleet of 13 onshore rigs and one super-specialty semi-submersible offshore rig 2 new jack-up rigs on order

STEEL

Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia

16 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

Our integrated business model provides opportunities to cater to the complete supply chain management services to clients in oil and gas steel and power generation industries We are one of Indiarsquos largest operator of ports and building a cargo handling capacity (both dry and bulk cargo) of over 150 million tons

Our ports and terminals business operates a crude oil and petroleum products terminal at Vadinar and includes the construction of a dry bulk

port at Hazira and a coal jetty at Salaya all in the state of Gujarat The Vadinar terminal is an all-weather deep-draft port which provides crude oil and petroleum products storage handling and terminal services The port has a Single Point Mooring system capable of handling crude capacity of up to 27mmtpa and marine facility for export of petroleum products of up to 65mmtpa

The dry bulk port being constructed at Hazira involves setting up a 30mtpa all-weather deep-draft port and jetty facility The port will have a berth of 550 meters length and an alongside depth of 125 meters The proposed berth will handle the import of iron ore pellets coal limestone and export of finished steel products The port facility at Salaya comprises setting up a 10mtpa marine material handling facilities to cater to the need of imported coal requirement and export of petroleum coke

Essars logistics business provides end-to-end logistics services ndash from ships to ports lighter age services intra-plant logistics and dispatch of finished products We own trans-shipment assets to provide lighter age support services and onshore and offshore logistics services We also operate a fleet of 4200 trucks (38 of which we own) to provide inland transportation of steel and petroleum products

Our sea transportation business provides transportation management services for crude oil and petroleum products and dry bulk cargo to the global energy steel and power industries With an experience of more than 220 ship years we own a diverse fleet of 25 vessels and a further 12 new building vessels are on order at an investment of over USD 06 billion

Our oilfields drilling business offers onshore and offshore contract drilling and offshore construction services We offer contract drilling services to global oil majors with a fleet of 13 onshore rigs and one super-specialty semi-submersible offshore rig 2 new jack-up rigs on order

STEEL

Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia

16 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

We are a fully integrated flat carbon steel manufacturer mdash from iron ore to ready-to-market products with a current capacity of 86 million tonnes per annum (MTPA) With our aggressive expansion plans in India as well as Asia and the Americas we aim to achieve a capacity of 14 MTPA by 2011-12 Our products find wide acceptance in highly discerning consumer sectors such as automotive white goods construction engineering and shipbuilding

Essar Steel is one of Indias largest exporters of flat products exporting to the highly demanding US and European markets and to the growing markets of South East Asia and the Middle East

A number of major client companies have approved our steel for their use including Caterpillar Hyundai Swaraj Mazda the Konkan Railway and Maruti Suzuki Essar Steel has acquired extensive quality accreditations Our lean team gives us one of the highest productivities

and lowest manpower costs among steel plants internationally

Seamless integrationA major strategic advantage is our high level of forward and backward integration We are totally integrated - from raw material to finished products adding value at every stage of the manufacturing process

Bailadilla facility Iron ore beneficiationAt Bailadilla where some of the worlds richest and finest ore is available we have set up a beneficiation plant of 8 MTPA capacities which ensures the highest quality iron ore The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant yielding advantages in quality cost and real time inventory management

Visakhapatnam facility PelletisationThe slurry is received at our pellet plant at Visakhapatnam which has a capacity of 8 MTPA providing vital raw material for the steel plant at Hazira

Hazira facilityOur steel complex at Hazira Gujarat houses a 50 MTPA sponge iron plant the worlds largest gas-based sponge iron plant in single location The plant provides raw materials for our state-of-the-art 46 MTPA hot rolled coil (HRC) plant the first and largest of Indias new generation steel mills This plant is fed with inputs from four electric arc furnaces and three casters The complexs sophisticated infrastructure includes independent water supply and power oxygen and lime plants a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes

Hazira Pipe Mill Hazira Pipe Mill is located at Hazira Gujarat has a combined capacity of 06 MTPA of helical submerged arc welded (HSAW) and longitudinal submerged arc welded (LSAW) steel pipes along with internal and external coating facilities of up to 2mn square meters annually This pipe making facility is backed by external and internal anti corrosion coating facilities

17 | P a g e

Cold rolling complexAt the other end of the value chain our downstream facilities include a 14 MTPA cold rolling complex which adds further muscle to our steel making facilities The complex comprises two pickling lines of 14 MTPA capacity a reversing mill and a 12 MTPA tandem mill two galvanizing lines of an aggregate capacity of 05 MTPA a batch annealing furnace of 07 MTPA and a skin pass mill of 10 MTPA This enables us to get into the genre of products that are tailor-made for the automotive white goods shipbuilding agriculture and construction industries - segments that had been the exclusive domain of a few international manufacturers Essar now holds the leadership position in the cold rolling galvanizing and pre-coated segments

Pune MaharashtraWe have a 06 MTPA cold rolling plant a 05 MTPA galvanising plant a 04 MTPA colour coating plant and a 07 MTPA pickling line

Distribution outletsEssar Steel is the first steel company to set up an end user distribution chain for steel products under the brand name Essar Hypermart It has a strong network of over 474 steel retail outlets These outlets are conveniently located across the length and breadth of the country to cater to the customized requirements of small and medium enterprises

The hypermarts offer a comprehensive range of flat steel products for a variety of applications Other product lines like longs structural and tubular are also being developed to make Essar Hypermart a one-stop-shop for steel products

Services (across India)Largest Steel Service Centre facilities in India with an annual capacity of 26 million tonnes located in Pune (Maharashtra) Hazira (Gujarat) Bahadurgarh (National Capital Region) and Chennai (Tamil Nadu)

Canada facility Essar Steel AlgomaEstablished in 1901 Essar Steel Algoma is an integrated steel producer based in Sault Ste Marie Ontario and Canada The plants current production capacity is 4 MTPA Some of the key equipment at the plant includes a low-cost technologically advanced Direct Strip Production Complex (DSPC) a slab caster a 106-inch strip mill (one of the widest in North America) a 166-inch plate mill a cold mill and blanking facility that helps produce steel customized for client requirements and a welded beam division

Indonesia facility PT Essar IndonesiaPT Essar is Indonesias largest private sector flat products company with a domestic market share of 35 percent and a history of process and product innovation After a major expansion drive its CR capacity has been enhanced to 04 MTPA and its newly set up galvanizing capacity is 015 MTP

Current status

Algoma currently is the third largest steel producer in Canada (behind Dofasco and Stelco) both of which proved stronger corporate entities than Algoma It remains the largest employer in Sault Ste Marie and currently has 3500 employees at the main plant Algoma

18 | P a g e

now produces steel strip (ie plate and sheet type) which forms its main money maker along with its blanking operations and welded beams

Essar Steel is a worldwide producer of steel selling to countries such as India Canada United States and Asia It is a fully integrated steel producer with a raw steel production capacity of approximately 28 million tons per year Many of its products are sold in consumer sectors such as automotive white goods construction engineering and shipbuilding [4] The plants current production capacity is 4 million tonnes per annum (MTPA) Some of the key equipment at the plant includes a low-cost technologically advanced Direct Strip Production Complex (DSPC) a slab caster a 106-inch strip mill (one of the widest in North America) a 166-inch plate mill a cold mill and blanking facility that helps produce steel customized for client requirements and a welded beam division Revenues are primarily derived from the manufacture and sale of hot and cold rolled sheet and plate Algomas products are used in the automotive construction energy manufacturing pipe and tube and steel distribution industries [1] The Direct Stripe Production Complex is a new addition to Essar Steel DSPC is the newest thin slab caster coupled with direct hot rolling in North America The Heat-Treated Plate facility provides heat treated products for abrasion resistant ballistic and other specialty plate applications First stage configured blanks and large profile welded shapes and profiles are also made [4]

Essar Steel Algoma confirmed June 15 2009 they have successfully started up a new 70 MW Cogeneration Facility A final performance test on Saturday June 13 confirmed the facility meets all necessary operating standards as required by the Ontario Power Authority The cogeneration facility converts by-product fuels from the coke making and iron making processes into electricity and steam for the steelworks [3]

It features two 375000 lbhr boilers and a 105MW turbine combined with other related components such as a generator a blast furnace gas holder condensate and feed-water systems a water treatment plant a cooling tower a transformer and a distributed control system Essar has set a precedent as the first integrated steel manufacturer in Canada to construct a cogeneration facility fuelled with by-product gas from the operation [3]

Essar Steel is the biggest employer in Sault Ste Marie Ontario and Canada They currently employ around 3500 workers and have a major effect in the economy

ESSAR ORISSA

The Essar group plans to invest Rs15000 crores for its upcoming steel plant in Orissa with works for the plant set to start in January a senior official said

19 | P a g e

The 6 million tonne integrated steel plant will be commissioned in 2011 B K Panda project director of Essar Steel Orissa Ltd (ESOL) told reporters The project would need some 2000 acres of land The company is negotiating with local landowners for acquiring some 1100 acres of land The Orissa government has given it 103 acres of land and the company expects some 200 acres from the government Panda said ESOL general manager Bikram Mohanty said local people have welcomed the plant The state government and the district administration are also supportive he said Panda said the company plans to have socio-economic development programs in the region to help the living standard of the people Essar also will follow the government guidelines in the rehabilitation of the people The company would function in an eco-friendly fashion using even low grade iron ore for making pellets which would be fed in blast furnaces Currently steel makers in the country dump low-grade iron ore which can cause environmental pollution

PROGRESS OF ESSAR STEEL ORISSA LTD(ESOL)

A road has come up which is in its final stage it is expected to be completed within 3months It will link the plant with the National HighwayA new helipad has been built which allows the landing of the chopper within ESSAR premisesA chimney has come up into existence and the 4mt pallete plant will be operational soonThe laying down of the pipeline is in the final stages It will facilitate the the flow of slurry from paradip to dabuna which is around 250 kmsA conveyer belt has come into existenceThe work of filtration building is in the final stagesThe work of BALLI building is in the final stagesThe captive power plant will soon be operational it is on its finishing stagesThe CRS building has been completed and is operational nowThe MRS building work is on the final stagesThe land acquisition process is going on at a rapid speed We will soon acquire most of the land Essar is paying a handsome amount of rupees 20 lakh per acre of land

20 | P a g e

MATERIALS MANAGEMENT

21 | P a g e

Big text Materials management is the branch of logistics that deals with the tangible

components of a supply chain Specifically this covers the acquisition of spare parts and

replacements quality control of purchasing and ordering such parts and the standards

involved in ordering shipping and warehousing the said parts

Areas of Concentration

Goals

The goal of materials management is to consolidate and efficiently handle core services It

creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and

pedestrians Delivery sites and loading docks are more effective and reduce redundancy

Cost is reduced when it comes to solid and hazardous waste removal storage and

recycling Utility infrastructure and service equipment relocation can improve aesthetics

Quality Assurance

A large component of materials management is ensuring that parts and materials used in the

supply chain meet minimum requirements by performing quality assurance (QA) While most

of the writing and discussion about materials management is on acquisition and standards

much of the day to day work conducted in materials management deals with QA issues

Parts and material are tested both before purchase orders are placed and during use to

ensure there are no short or long term issues that would disrupt the supply chain This

aspect of material management is most important in heavily automated industries since

failure rates due to faulty parts can slow or even stop production lines throwing off

timetables for production goals

Standards

The other major component of materials management will be gradual movement toward

compliance There are standards that are followed in supply chain management that are

important to a supply chains function For example a supply chain that uses just-in-time or

lean replenishment requires clarity in the shipping of parts and material from purchasing

agent to warehouse to place of destination Systems reliant on vendor-managed inventories

may begin to acquire up-to-date computerized inventories and begin to explore robust

ordering systems for outlying vendors to place orders on

Promoting Sustainability

Many business and institutional campuses have cluttered noisy and oftentimes inefficient

service environments Delivery trucks compete with pedestrians loading docks are in plain

22 | P a g e

now produces steel strip (ie plate and sheet type) which forms its main money maker along with its blanking operations and welded beams

Essar Steel is a worldwide producer of steel selling to countries such as India Canada United States and Asia It is a fully integrated steel producer with a raw steel production capacity of approximately 28 million tons per year Many of its products are sold in consumer sectors such as automotive white goods construction engineering and shipbuilding [4] The plants current production capacity is 4 million tonnes per annum (MTPA) Some of the key equipment at the plant includes a low-cost technologically advanced Direct Strip Production Complex (DSPC) a slab caster a 106-inch strip mill (one of the widest in North America) a 166-inch plate mill a cold mill and blanking facility that helps produce steel customized for client requirements and a welded beam division Revenues are primarily derived from the manufacture and sale of hot and cold rolled sheet and plate Algomas products are used in the automotive construction energy manufacturing pipe and tube and steel distribution industries [1] The Direct Stripe Production Complex is a new addition to Essar Steel DSPC is the newest thin slab caster coupled with direct hot rolling in North America The Heat-Treated Plate facility provides heat treated products for abrasion resistant ballistic and other specialty plate applications First stage configured blanks and large profile welded shapes and profiles are also made [4]

Essar Steel Algoma confirmed June 15 2009 they have successfully started up a new 70 MW Cogeneration Facility A final performance test on Saturday June 13 confirmed the facility meets all necessary operating standards as required by the Ontario Power Authority The cogeneration facility converts by-product fuels from the coke making and iron making processes into electricity and steam for the steelworks [3]

It features two 375000 lbhr boilers and a 105MW turbine combined with other related components such as a generator a blast furnace gas holder condensate and feed-water systems a water treatment plant a cooling tower a transformer and a distributed control system Essar has set a precedent as the first integrated steel manufacturer in Canada to construct a cogeneration facility fuelled with by-product gas from the operation [3]

Essar Steel is the biggest employer in Sault Ste Marie Ontario and Canada They currently employ around 3500 workers and have a major effect in the economy

ESSAR ORISSA

The Essar group plans to invest Rs15000 crores for its upcoming steel plant in Orissa with works for the plant set to start in January a senior official said

19 | P a g e

The 6 million tonne integrated steel plant will be commissioned in 2011 B K Panda project director of Essar Steel Orissa Ltd (ESOL) told reporters The project would need some 2000 acres of land The company is negotiating with local landowners for acquiring some 1100 acres of land The Orissa government has given it 103 acres of land and the company expects some 200 acres from the government Panda said ESOL general manager Bikram Mohanty said local people have welcomed the plant The state government and the district administration are also supportive he said Panda said the company plans to have socio-economic development programs in the region to help the living standard of the people Essar also will follow the government guidelines in the rehabilitation of the people The company would function in an eco-friendly fashion using even low grade iron ore for making pellets which would be fed in blast furnaces Currently steel makers in the country dump low-grade iron ore which can cause environmental pollution

PROGRESS OF ESSAR STEEL ORISSA LTD(ESOL)

A road has come up which is in its final stage it is expected to be completed within 3months It will link the plant with the National HighwayA new helipad has been built which allows the landing of the chopper within ESSAR premisesA chimney has come up into existence and the 4mt pallete plant will be operational soonThe laying down of the pipeline is in the final stages It will facilitate the the flow of slurry from paradip to dabuna which is around 250 kmsA conveyer belt has come into existenceThe work of filtration building is in the final stagesThe work of BALLI building is in the final stagesThe captive power plant will soon be operational it is on its finishing stagesThe CRS building has been completed and is operational nowThe MRS building work is on the final stagesThe land acquisition process is going on at a rapid speed We will soon acquire most of the land Essar is paying a handsome amount of rupees 20 lakh per acre of land

20 | P a g e

MATERIALS MANAGEMENT

21 | P a g e

Big text Materials management is the branch of logistics that deals with the tangible

components of a supply chain Specifically this covers the acquisition of spare parts and

replacements quality control of purchasing and ordering such parts and the standards

involved in ordering shipping and warehousing the said parts

Areas of Concentration

Goals

The goal of materials management is to consolidate and efficiently handle core services It

creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and

pedestrians Delivery sites and loading docks are more effective and reduce redundancy

Cost is reduced when it comes to solid and hazardous waste removal storage and

recycling Utility infrastructure and service equipment relocation can improve aesthetics

Quality Assurance

A large component of materials management is ensuring that parts and materials used in the

supply chain meet minimum requirements by performing quality assurance (QA) While most

of the writing and discussion about materials management is on acquisition and standards

much of the day to day work conducted in materials management deals with QA issues

Parts and material are tested both before purchase orders are placed and during use to

ensure there are no short or long term issues that would disrupt the supply chain This

aspect of material management is most important in heavily automated industries since

failure rates due to faulty parts can slow or even stop production lines throwing off

timetables for production goals

Standards

The other major component of materials management will be gradual movement toward

compliance There are standards that are followed in supply chain management that are

important to a supply chains function For example a supply chain that uses just-in-time or

lean replenishment requires clarity in the shipping of parts and material from purchasing

agent to warehouse to place of destination Systems reliant on vendor-managed inventories

may begin to acquire up-to-date computerized inventories and begin to explore robust

ordering systems for outlying vendors to place orders on

Promoting Sustainability

Many business and institutional campuses have cluttered noisy and oftentimes inefficient

service environments Delivery trucks compete with pedestrians loading docks are in plain

22 | P a g e

The 6 million tonne integrated steel plant will be commissioned in 2011 B K Panda project director of Essar Steel Orissa Ltd (ESOL) told reporters The project would need some 2000 acres of land The company is negotiating with local landowners for acquiring some 1100 acres of land The Orissa government has given it 103 acres of land and the company expects some 200 acres from the government Panda said ESOL general manager Bikram Mohanty said local people have welcomed the plant The state government and the district administration are also supportive he said Panda said the company plans to have socio-economic development programs in the region to help the living standard of the people Essar also will follow the government guidelines in the rehabilitation of the people The company would function in an eco-friendly fashion using even low grade iron ore for making pellets which would be fed in blast furnaces Currently steel makers in the country dump low-grade iron ore which can cause environmental pollution

PROGRESS OF ESSAR STEEL ORISSA LTD(ESOL)

A road has come up which is in its final stage it is expected to be completed within 3months It will link the plant with the National HighwayA new helipad has been built which allows the landing of the chopper within ESSAR premisesA chimney has come up into existence and the 4mt pallete plant will be operational soonThe laying down of the pipeline is in the final stages It will facilitate the the flow of slurry from paradip to dabuna which is around 250 kmsA conveyer belt has come into existenceThe work of filtration building is in the final stagesThe work of BALLI building is in the final stagesThe captive power plant will soon be operational it is on its finishing stagesThe CRS building has been completed and is operational nowThe MRS building work is on the final stagesThe land acquisition process is going on at a rapid speed We will soon acquire most of the land Essar is paying a handsome amount of rupees 20 lakh per acre of land

20 | P a g e

MATERIALS MANAGEMENT

21 | P a g e

Big text Materials management is the branch of logistics that deals with the tangible

components of a supply chain Specifically this covers the acquisition of spare parts and

replacements quality control of purchasing and ordering such parts and the standards

involved in ordering shipping and warehousing the said parts

Areas of Concentration

Goals

The goal of materials management is to consolidate and efficiently handle core services It

creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and

pedestrians Delivery sites and loading docks are more effective and reduce redundancy

Cost is reduced when it comes to solid and hazardous waste removal storage and

recycling Utility infrastructure and service equipment relocation can improve aesthetics

Quality Assurance

A large component of materials management is ensuring that parts and materials used in the

supply chain meet minimum requirements by performing quality assurance (QA) While most

of the writing and discussion about materials management is on acquisition and standards

much of the day to day work conducted in materials management deals with QA issues

Parts and material are tested both before purchase orders are placed and during use to

ensure there are no short or long term issues that would disrupt the supply chain This

aspect of material management is most important in heavily automated industries since

failure rates due to faulty parts can slow or even stop production lines throwing off

timetables for production goals

Standards

The other major component of materials management will be gradual movement toward

compliance There are standards that are followed in supply chain management that are

important to a supply chains function For example a supply chain that uses just-in-time or

lean replenishment requires clarity in the shipping of parts and material from purchasing

agent to warehouse to place of destination Systems reliant on vendor-managed inventories

may begin to acquire up-to-date computerized inventories and begin to explore robust

ordering systems for outlying vendors to place orders on

Promoting Sustainability

Many business and institutional campuses have cluttered noisy and oftentimes inefficient

service environments Delivery trucks compete with pedestrians loading docks are in plain

22 | P a g e

MATERIALS MANAGEMENT

21 | P a g e

Big text Materials management is the branch of logistics that deals with the tangible

components of a supply chain Specifically this covers the acquisition of spare parts and

replacements quality control of purchasing and ordering such parts and the standards

involved in ordering shipping and warehousing the said parts

Areas of Concentration

Goals

The goal of materials management is to consolidate and efficiently handle core services It

creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and

pedestrians Delivery sites and loading docks are more effective and reduce redundancy

Cost is reduced when it comes to solid and hazardous waste removal storage and

recycling Utility infrastructure and service equipment relocation can improve aesthetics

Quality Assurance

A large component of materials management is ensuring that parts and materials used in the

supply chain meet minimum requirements by performing quality assurance (QA) While most

of the writing and discussion about materials management is on acquisition and standards

much of the day to day work conducted in materials management deals with QA issues

Parts and material are tested both before purchase orders are placed and during use to

ensure there are no short or long term issues that would disrupt the supply chain This

aspect of material management is most important in heavily automated industries since

failure rates due to faulty parts can slow or even stop production lines throwing off

timetables for production goals

Standards

The other major component of materials management will be gradual movement toward

compliance There are standards that are followed in supply chain management that are

important to a supply chains function For example a supply chain that uses just-in-time or

lean replenishment requires clarity in the shipping of parts and material from purchasing

agent to warehouse to place of destination Systems reliant on vendor-managed inventories

may begin to acquire up-to-date computerized inventories and begin to explore robust

ordering systems for outlying vendors to place orders on

Promoting Sustainability

Many business and institutional campuses have cluttered noisy and oftentimes inefficient

service environments Delivery trucks compete with pedestrians loading docks are in plain

22 | P a g e

Big text Materials management is the branch of logistics that deals with the tangible

components of a supply chain Specifically this covers the acquisition of spare parts and

replacements quality control of purchasing and ordering such parts and the standards

involved in ordering shipping and warehousing the said parts

Areas of Concentration

Goals

The goal of materials management is to consolidate and efficiently handle core services It

creates truck deliveries and service vehicle routes that reduce conflicts for vehicles and

pedestrians Delivery sites and loading docks are more effective and reduce redundancy

Cost is reduced when it comes to solid and hazardous waste removal storage and

recycling Utility infrastructure and service equipment relocation can improve aesthetics

Quality Assurance

A large component of materials management is ensuring that parts and materials used in the

supply chain meet minimum requirements by performing quality assurance (QA) While most

of the writing and discussion about materials management is on acquisition and standards

much of the day to day work conducted in materials management deals with QA issues

Parts and material are tested both before purchase orders are placed and during use to

ensure there are no short or long term issues that would disrupt the supply chain This

aspect of material management is most important in heavily automated industries since

failure rates due to faulty parts can slow or even stop production lines throwing off

timetables for production goals

Standards

The other major component of materials management will be gradual movement toward

compliance There are standards that are followed in supply chain management that are

important to a supply chains function For example a supply chain that uses just-in-time or

lean replenishment requires clarity in the shipping of parts and material from purchasing

agent to warehouse to place of destination Systems reliant on vendor-managed inventories

may begin to acquire up-to-date computerized inventories and begin to explore robust

ordering systems for outlying vendors to place orders on

Promoting Sustainability

Many business and institutional campuses have cluttered noisy and oftentimes inefficient

service environments Delivery trucks compete with pedestrians loading docks are in plain

22 | P a g e

sight trash dumpsters sprout up and lobbies hallways and stairwells are cluttered with

unplanned storage With forethought and creativity these systems can reduce energy use

and carbon emissions minimize traffic congestion streamline operational flows and

enhance aesthetics

Improving circulation infrastructure

Redundancy can be reduced and effectiveness is increased when service points are

clustered to reduce the amount of redundancy An effective materials management program

can also resolve ldquoislandrdquo approaches to shipping receiving and vehicle movement

Solutions can include creating a new central loading location as well consolidating service

areas and docks from separate buildings into one Developing better campus circulation

infrastructure also means re-evaluating truck delivery and service vehicle routes Vehicle

type size and schedules are studied to make these more compatible with surrounding

neighbourhoods This will reduce truck traffic creating a safer environment for pedestrians

and a more attractive environment for other uses

Benefits

An effective materials management plan builds from and enhances an institutional master

plan by filling in the gaps and producing an environmentally responsible and efficient

outcome An institutional campus office or housing complex can expect a myriad of benefits

from an effective materials management plan For starters there are long-term cost savings

as consolidating reconfiguring and better managing a campusrsquo core infrastructure reduces

annual operating costs An institutional campus office or housing complex will also get the

highest and best use out of campus real estate

An effective materials management plan also means a more holistic approach to managing

vehicle use and emissions solid waste hazardous waste recycling and utility services As

a result this means a ldquogreenerrdquo more sustainable environment and a manifestation of the

many demands today for institutions to become more environmentally friendly In fact

thanks to such environmental advantages creative materials management plans may qualify

for LEED Innovation in Design credits

And finally an effective materials management plan can improve aesthetics Removing

unsafe and unsightly conditions placing core services out of sight and creating a more

pedestrian-friendly environment will improve the visual and physical sense of place for those

who live and work there

Introduction - Why Stocks are Held

Virtually every enterprise finds it necessary to hold lsquostocksrsquo (or lsquoinventoryrsquo) of various items and materials That is because it would be practically impossible to operate with only one of

23 | P a g e

each item to be sold or used in manufacture or used in office work A lsquoreserversquo or a lsquofundrsquo or lsquoinventoryrsquo of each item or material used or sold frequently is therefore lsquomaintainedrsquo so that as items or materials are sold or used they can be replaced or replenished from the stocks lsquoheld in reserversquoLet us take a footwear shop as an example to make these matters quite clear to you-

There will be a variety of different shoes boots etc on display - both in the shoprsquos windows and inside the shop itself It would be very inconvenient and time-consuming for a shop assistant to have to remove the footwear from the display each time a customer wished to try on a pair And in any case only one size and colour of each style or type of shoe boot sandal etc is likely to be on display at any one time Instead when a customer expresses interest in a particular style a shop assistant will ask the size he or she usually wears and the colour preferred and will then try to find the right size and colour from the pairs of footwear held in reserve In many cases pairs of popular items in the most commonly asked for sizes will be kept inside the shop itself on shelves or in cabinets But other pairs will be kept in another room - or perhaps in more than one room - to which the shop assistant can go to find the footwear concerned that room is the lsquostore roomrsquo or lsquostock roomrsquo When a pair of shoes or other footwear is sold from those inside the shop it must be possible to replace that pair quickly whenever possible by another pair held in the store or stock room No business could operate efficiently if every time it sold an item or used up an item in manufacture it had to order a replacement from the supplier or manufacturer Of course from time to time items can lsquorun out of stockrsquo but as you will learn during this Program efficient stock control will reduce or eliminate such happenings and ensure that replacements are received in good time and are available when required to replace those items sold or used

Why Stores are needed

In some countries the word ldquostorerdquo is used to refer to a retail outlet - such as a ldquogeneral storerdquo or a ldquodepartment storerdquo - from which goods are sold mainly to individuals who are commonly called ldquoconsumersrdquo However in this Program on Stores Management amp Stock (Inventory) Control we define a ldquoStorerdquo (with a capital lsquoSrsquo) as an area set aside into which all the items and materials required for production andor for saledistribution are received where they are housed for safekeeping and from which they will be issued as required in only a tiny minority of cases are sales made directly from Stores and even in such cases those sales are merely a ldquosubsidiaryrdquo activity and are not the primary functions of the Stores as given in our definition The various items and materials received into housed in and issued from Stores are commonly referred to collectively as being lsquostockrsquo or lsquoinventoryrsquo hence the use of the term lsquostock controlrsquo

THE TERM STORES STOREHOUSE WAREHOUSE ETC REFER TO THE PHYSICAL PLACE BE IT A BUILDING OR A ROOM ETC WHERE MATERIALS OF ALL VARIETY ARE KEPT

THE FUNCTION OF STORES IS TO RECEIVE STORE AND ISSUE MATERIALS

STORES ARE NORMALLY DIVIDED INTO VARIOUS SECTIONS SUCH AS -

RECEIVING SECTION

TOOL STORES

GENERAL STORES

24 | P a g e

RAW MATERIALS STORES

FINISHED PARTS STORES ETC

STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY

STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE OPPORTUNITY OF IMPROVEMENT

At this stage the following serve as a few examples to ldquointroducerdquo the need for Stores to us-

Retail shops such as the footwear shop (or store) need Stores to house reserves of goods for sale to customers and from which to replace those soldWholesale businesses (often called simply lsquowholesalersrsquo) purchase goods in large quantities from the producers or manufacturers of them so they need Stores in which to hold the goods until they are required for supply in smaller quantities to retailersA manufacturing concern for example a steel industry must hold stocks of all the items (materials and components) which are used in making the different types of steel An office is likely to need stocks of printed and plain paper envelopes pins clips and other itemsEven an enterprise which provides a service like a garage for example must hold stocks of spare parts for vehicles consumables like oil and of course tools for use by its mechanics In many cases the ldquoStorerdquo might be quite small perhaps no more than a stock cupboard in a small service concern such as an estate agency or a small office Other enterprises however require huge Stores to hold the vast stocks of items of many different kinds and sizes which they must have available if they are to be able to run efficiently and successfully In between the two extremes there is an enormous range of different enterprises with Stores of different sizes Whatever the situation you will find that the Stores of most enterprises fall within the definition we have given you A Store might be a department or section of an enterprise and be its lsquoStores Departmentrsquo often that name is shortened simply to lsquoStoresrsquo (with a final letter lsquosrsquo) For example a person might work ldquoin the Storesrdquo

StocksThe range of items and materials - stocks - which might be held in Stores is huge The variety and quantity of items and materials held in the Store of a particular enterprise will depend on its size and on its range of activities Broadly speaking the various activities of different enterprises can be divided according to the three main groups of enterprises-

What is involved in Storekeeping-

25 | P a g e

The term storekeeping covers the actual handling of the items or materials received into held in and issued from the Store The work involves

receiving items and materials including the inspection of themstoring the various stock items in the most appropriate fashion binning andor racking them by the best methods and placing them in such a way that any item or material in the Store can be located quickly and easily when it is requiredensuring the safety of all items and materials whilst in the Store - that is protecting them from pilfering theft damage and deterioration Ensuring when necessary that items issued from the Store are so packed that they will not be damaged or caused to deteriorate whilst in transit to their destinations

What is Involved in Stock Control (also known as lsquoInventory Controlrsquo )

What we refer to as stock control comprises mainly the clerical and administrative functions of stores work It involves

ensuring that the right types and qualities of items needed for production sale and distribution are always available when requiredensuring that stock is issued in the correct sequence that is ldquofirst in first outrdquo so that ldquoolderrdquo stock is not allowed to deteriorate by being kept too long in the Store for instance because it has been hidden from view by more recently received stockmaintaining records showing the ldquomovementrdquo of items into and out of the Store controlling and monitoring those movements and maintaining full records of the items in the Storeensuring that the correct ldquostock levelsrdquo of the various items are set and are maintained that orders and reorders are made (or requested to be made) in good time and that what is ordered is receivedchecking counting or otherwise measuring stock to ensure that records are accurate and that no losses are occurring due to pilfering theft damage or poor storagepricing and valuing the items in the Store

The Importance of Efficient Stores ManagementIn an enterprise with a small quantity of stock one person might be placed in charge of it if the ownermanager does not look after it himself Where the volume of stock is too large to be handled on a part-time basis one or more storekeepers will be required Enterprises with large quantities of stock must employ trained stores personnel (storekeepers clerks etc) under the control of a Storersquos Manager (who might go by the designation of Head or Chief Storekeeper Stock Controller stores administrator)It is impossible to state at what stage a Storersquos Manager will be appointed by a particular enterprise as circumstances and sizes vary so greatly But whatever its size and the volume of its stocks the success of the enterprise can depend to a large extent on the efficient management of its Store and stocks

26 | P a g e

Let us now examine why that is so

All the possessions of an enterprise - that is what it owns - are called its lsquoassetsrsquo Frequently the value of the stocks of goods andor materials held in its Store is as great as - if not greater than - the total value of all its other possessions - eg land andor buildings plant machinery motor vehicles equipment etc and of course money and investments - added togetherThe items andor materials in the Store cost money if through bad Stores Management there are too many held in the Store or if the wrong items or materials are being held money will be ldquotied uprdquo - money which might be required to buy other needed items andor materials or to pay the many expenses involved in running the enterpriseConversely if poor stores management has led to shortages of needed items and materials there will be hold-ups and interruptions in production or losses of production andor losses of sales to customers and indeed losses of the customers themselves and losses of profits which can in turn lead to job losses and - in extreme cases - to the collapse of the enterpriseIf items in the Store are lost stolen or damaged in any way the enterprise loses moneyAnd it costs money to run the Store - on building maintenance andor rent on salaries of stores personnel on containers and equipment on heating or cooling on lighting and power etc ndash and the enterprise must receive a ldquoreturnrdquo from its expenditure in terms of efficiency particularly as its Stores is ldquonon-productiverdquo

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-

You will have noted that earlier I stated that the Stores Department has a non-productiveFunction I can now explain what I meantDepartments of an enterprise such as its Sales Department andor its Production department are directly involved in the primary or revenue-earning functions of that enterprise Their functions - or activities - are designed to bring money into the enterprise as the result of producing andor selling goods or services

For example if an enterprise has a Production Department its function is to make or manufacture goods or other items which will be sold to bring in money The whole function of the Sales department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) andor services in return for which customers will pay money to the enterpriseIn contrast the Stores Department of an enterprise does NOT make or - in general - sell goods or services to customers

Its function is to

27 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

each item to be sold or used in manufacture or used in office work A lsquoreserversquo or a lsquofundrsquo or lsquoinventoryrsquo of each item or material used or sold frequently is therefore lsquomaintainedrsquo so that as items or materials are sold or used they can be replaced or replenished from the stocks lsquoheld in reserversquoLet us take a footwear shop as an example to make these matters quite clear to you-

There will be a variety of different shoes boots etc on display - both in the shoprsquos windows and inside the shop itself It would be very inconvenient and time-consuming for a shop assistant to have to remove the footwear from the display each time a customer wished to try on a pair And in any case only one size and colour of each style or type of shoe boot sandal etc is likely to be on display at any one time Instead when a customer expresses interest in a particular style a shop assistant will ask the size he or she usually wears and the colour preferred and will then try to find the right size and colour from the pairs of footwear held in reserve In many cases pairs of popular items in the most commonly asked for sizes will be kept inside the shop itself on shelves or in cabinets But other pairs will be kept in another room - or perhaps in more than one room - to which the shop assistant can go to find the footwear concerned that room is the lsquostore roomrsquo or lsquostock roomrsquo When a pair of shoes or other footwear is sold from those inside the shop it must be possible to replace that pair quickly whenever possible by another pair held in the store or stock room No business could operate efficiently if every time it sold an item or used up an item in manufacture it had to order a replacement from the supplier or manufacturer Of course from time to time items can lsquorun out of stockrsquo but as you will learn during this Program efficient stock control will reduce or eliminate such happenings and ensure that replacements are received in good time and are available when required to replace those items sold or used

Why Stores are needed

In some countries the word ldquostorerdquo is used to refer to a retail outlet - such as a ldquogeneral storerdquo or a ldquodepartment storerdquo - from which goods are sold mainly to individuals who are commonly called ldquoconsumersrdquo However in this Program on Stores Management amp Stock (Inventory) Control we define a ldquoStorerdquo (with a capital lsquoSrsquo) as an area set aside into which all the items and materials required for production andor for saledistribution are received where they are housed for safekeeping and from which they will be issued as required in only a tiny minority of cases are sales made directly from Stores and even in such cases those sales are merely a ldquosubsidiaryrdquo activity and are not the primary functions of the Stores as given in our definition The various items and materials received into housed in and issued from Stores are commonly referred to collectively as being lsquostockrsquo or lsquoinventoryrsquo hence the use of the term lsquostock controlrsquo

THE TERM STORES STOREHOUSE WAREHOUSE ETC REFER TO THE PHYSICAL PLACE BE IT A BUILDING OR A ROOM ETC WHERE MATERIALS OF ALL VARIETY ARE KEPT

THE FUNCTION OF STORES IS TO RECEIVE STORE AND ISSUE MATERIALS

STORES ARE NORMALLY DIVIDED INTO VARIOUS SECTIONS SUCH AS -

RECEIVING SECTION

TOOL STORES

GENERAL STORES

24 | P a g e

RAW MATERIALS STORES

FINISHED PARTS STORES ETC

STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY

STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE OPPORTUNITY OF IMPROVEMENT

At this stage the following serve as a few examples to ldquointroducerdquo the need for Stores to us-

Retail shops such as the footwear shop (or store) need Stores to house reserves of goods for sale to customers and from which to replace those soldWholesale businesses (often called simply lsquowholesalersrsquo) purchase goods in large quantities from the producers or manufacturers of them so they need Stores in which to hold the goods until they are required for supply in smaller quantities to retailersA manufacturing concern for example a steel industry must hold stocks of all the items (materials and components) which are used in making the different types of steel An office is likely to need stocks of printed and plain paper envelopes pins clips and other itemsEven an enterprise which provides a service like a garage for example must hold stocks of spare parts for vehicles consumables like oil and of course tools for use by its mechanics In many cases the ldquoStorerdquo might be quite small perhaps no more than a stock cupboard in a small service concern such as an estate agency or a small office Other enterprises however require huge Stores to hold the vast stocks of items of many different kinds and sizes which they must have available if they are to be able to run efficiently and successfully In between the two extremes there is an enormous range of different enterprises with Stores of different sizes Whatever the situation you will find that the Stores of most enterprises fall within the definition we have given you A Store might be a department or section of an enterprise and be its lsquoStores Departmentrsquo often that name is shortened simply to lsquoStoresrsquo (with a final letter lsquosrsquo) For example a person might work ldquoin the Storesrdquo

StocksThe range of items and materials - stocks - which might be held in Stores is huge The variety and quantity of items and materials held in the Store of a particular enterprise will depend on its size and on its range of activities Broadly speaking the various activities of different enterprises can be divided according to the three main groups of enterprises-

What is involved in Storekeeping-

25 | P a g e

The term storekeeping covers the actual handling of the items or materials received into held in and issued from the Store The work involves

receiving items and materials including the inspection of themstoring the various stock items in the most appropriate fashion binning andor racking them by the best methods and placing them in such a way that any item or material in the Store can be located quickly and easily when it is requiredensuring the safety of all items and materials whilst in the Store - that is protecting them from pilfering theft damage and deterioration Ensuring when necessary that items issued from the Store are so packed that they will not be damaged or caused to deteriorate whilst in transit to their destinations

What is Involved in Stock Control (also known as lsquoInventory Controlrsquo )

What we refer to as stock control comprises mainly the clerical and administrative functions of stores work It involves

ensuring that the right types and qualities of items needed for production sale and distribution are always available when requiredensuring that stock is issued in the correct sequence that is ldquofirst in first outrdquo so that ldquoolderrdquo stock is not allowed to deteriorate by being kept too long in the Store for instance because it has been hidden from view by more recently received stockmaintaining records showing the ldquomovementrdquo of items into and out of the Store controlling and monitoring those movements and maintaining full records of the items in the Storeensuring that the correct ldquostock levelsrdquo of the various items are set and are maintained that orders and reorders are made (or requested to be made) in good time and that what is ordered is receivedchecking counting or otherwise measuring stock to ensure that records are accurate and that no losses are occurring due to pilfering theft damage or poor storagepricing and valuing the items in the Store

The Importance of Efficient Stores ManagementIn an enterprise with a small quantity of stock one person might be placed in charge of it if the ownermanager does not look after it himself Where the volume of stock is too large to be handled on a part-time basis one or more storekeepers will be required Enterprises with large quantities of stock must employ trained stores personnel (storekeepers clerks etc) under the control of a Storersquos Manager (who might go by the designation of Head or Chief Storekeeper Stock Controller stores administrator)It is impossible to state at what stage a Storersquos Manager will be appointed by a particular enterprise as circumstances and sizes vary so greatly But whatever its size and the volume of its stocks the success of the enterprise can depend to a large extent on the efficient management of its Store and stocks

26 | P a g e

Let us now examine why that is so

All the possessions of an enterprise - that is what it owns - are called its lsquoassetsrsquo Frequently the value of the stocks of goods andor materials held in its Store is as great as - if not greater than - the total value of all its other possessions - eg land andor buildings plant machinery motor vehicles equipment etc and of course money and investments - added togetherThe items andor materials in the Store cost money if through bad Stores Management there are too many held in the Store or if the wrong items or materials are being held money will be ldquotied uprdquo - money which might be required to buy other needed items andor materials or to pay the many expenses involved in running the enterpriseConversely if poor stores management has led to shortages of needed items and materials there will be hold-ups and interruptions in production or losses of production andor losses of sales to customers and indeed losses of the customers themselves and losses of profits which can in turn lead to job losses and - in extreme cases - to the collapse of the enterpriseIf items in the Store are lost stolen or damaged in any way the enterprise loses moneyAnd it costs money to run the Store - on building maintenance andor rent on salaries of stores personnel on containers and equipment on heating or cooling on lighting and power etc ndash and the enterprise must receive a ldquoreturnrdquo from its expenditure in terms of efficiency particularly as its Stores is ldquonon-productiverdquo

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-

You will have noted that earlier I stated that the Stores Department has a non-productiveFunction I can now explain what I meantDepartments of an enterprise such as its Sales Department andor its Production department are directly involved in the primary or revenue-earning functions of that enterprise Their functions - or activities - are designed to bring money into the enterprise as the result of producing andor selling goods or services

For example if an enterprise has a Production Department its function is to make or manufacture goods or other items which will be sold to bring in money The whole function of the Sales department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) andor services in return for which customers will pay money to the enterpriseIn contrast the Stores Department of an enterprise does NOT make or - in general - sell goods or services to customers

Its function is to

27 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

RAW MATERIALS STORES

FINISHED PARTS STORES ETC

STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY

STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE OPPORTUNITY OF IMPROVEMENT

At this stage the following serve as a few examples to ldquointroducerdquo the need for Stores to us-

Retail shops such as the footwear shop (or store) need Stores to house reserves of goods for sale to customers and from which to replace those soldWholesale businesses (often called simply lsquowholesalersrsquo) purchase goods in large quantities from the producers or manufacturers of them so they need Stores in which to hold the goods until they are required for supply in smaller quantities to retailersA manufacturing concern for example a steel industry must hold stocks of all the items (materials and components) which are used in making the different types of steel An office is likely to need stocks of printed and plain paper envelopes pins clips and other itemsEven an enterprise which provides a service like a garage for example must hold stocks of spare parts for vehicles consumables like oil and of course tools for use by its mechanics In many cases the ldquoStorerdquo might be quite small perhaps no more than a stock cupboard in a small service concern such as an estate agency or a small office Other enterprises however require huge Stores to hold the vast stocks of items of many different kinds and sizes which they must have available if they are to be able to run efficiently and successfully In between the two extremes there is an enormous range of different enterprises with Stores of different sizes Whatever the situation you will find that the Stores of most enterprises fall within the definition we have given you A Store might be a department or section of an enterprise and be its lsquoStores Departmentrsquo often that name is shortened simply to lsquoStoresrsquo (with a final letter lsquosrsquo) For example a person might work ldquoin the Storesrdquo

StocksThe range of items and materials - stocks - which might be held in Stores is huge The variety and quantity of items and materials held in the Store of a particular enterprise will depend on its size and on its range of activities Broadly speaking the various activities of different enterprises can be divided according to the three main groups of enterprises-

What is involved in Storekeeping-

25 | P a g e

The term storekeeping covers the actual handling of the items or materials received into held in and issued from the Store The work involves

receiving items and materials including the inspection of themstoring the various stock items in the most appropriate fashion binning andor racking them by the best methods and placing them in such a way that any item or material in the Store can be located quickly and easily when it is requiredensuring the safety of all items and materials whilst in the Store - that is protecting them from pilfering theft damage and deterioration Ensuring when necessary that items issued from the Store are so packed that they will not be damaged or caused to deteriorate whilst in transit to their destinations

What is Involved in Stock Control (also known as lsquoInventory Controlrsquo )

What we refer to as stock control comprises mainly the clerical and administrative functions of stores work It involves

ensuring that the right types and qualities of items needed for production sale and distribution are always available when requiredensuring that stock is issued in the correct sequence that is ldquofirst in first outrdquo so that ldquoolderrdquo stock is not allowed to deteriorate by being kept too long in the Store for instance because it has been hidden from view by more recently received stockmaintaining records showing the ldquomovementrdquo of items into and out of the Store controlling and monitoring those movements and maintaining full records of the items in the Storeensuring that the correct ldquostock levelsrdquo of the various items are set and are maintained that orders and reorders are made (or requested to be made) in good time and that what is ordered is receivedchecking counting or otherwise measuring stock to ensure that records are accurate and that no losses are occurring due to pilfering theft damage or poor storagepricing and valuing the items in the Store

The Importance of Efficient Stores ManagementIn an enterprise with a small quantity of stock one person might be placed in charge of it if the ownermanager does not look after it himself Where the volume of stock is too large to be handled on a part-time basis one or more storekeepers will be required Enterprises with large quantities of stock must employ trained stores personnel (storekeepers clerks etc) under the control of a Storersquos Manager (who might go by the designation of Head or Chief Storekeeper Stock Controller stores administrator)It is impossible to state at what stage a Storersquos Manager will be appointed by a particular enterprise as circumstances and sizes vary so greatly But whatever its size and the volume of its stocks the success of the enterprise can depend to a large extent on the efficient management of its Store and stocks

26 | P a g e

Let us now examine why that is so

All the possessions of an enterprise - that is what it owns - are called its lsquoassetsrsquo Frequently the value of the stocks of goods andor materials held in its Store is as great as - if not greater than - the total value of all its other possessions - eg land andor buildings plant machinery motor vehicles equipment etc and of course money and investments - added togetherThe items andor materials in the Store cost money if through bad Stores Management there are too many held in the Store or if the wrong items or materials are being held money will be ldquotied uprdquo - money which might be required to buy other needed items andor materials or to pay the many expenses involved in running the enterpriseConversely if poor stores management has led to shortages of needed items and materials there will be hold-ups and interruptions in production or losses of production andor losses of sales to customers and indeed losses of the customers themselves and losses of profits which can in turn lead to job losses and - in extreme cases - to the collapse of the enterpriseIf items in the Store are lost stolen or damaged in any way the enterprise loses moneyAnd it costs money to run the Store - on building maintenance andor rent on salaries of stores personnel on containers and equipment on heating or cooling on lighting and power etc ndash and the enterprise must receive a ldquoreturnrdquo from its expenditure in terms of efficiency particularly as its Stores is ldquonon-productiverdquo

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-

You will have noted that earlier I stated that the Stores Department has a non-productiveFunction I can now explain what I meantDepartments of an enterprise such as its Sales Department andor its Production department are directly involved in the primary or revenue-earning functions of that enterprise Their functions - or activities - are designed to bring money into the enterprise as the result of producing andor selling goods or services

For example if an enterprise has a Production Department its function is to make or manufacture goods or other items which will be sold to bring in money The whole function of the Sales department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) andor services in return for which customers will pay money to the enterpriseIn contrast the Stores Department of an enterprise does NOT make or - in general - sell goods or services to customers

Its function is to

27 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

The term storekeeping covers the actual handling of the items or materials received into held in and issued from the Store The work involves

receiving items and materials including the inspection of themstoring the various stock items in the most appropriate fashion binning andor racking them by the best methods and placing them in such a way that any item or material in the Store can be located quickly and easily when it is requiredensuring the safety of all items and materials whilst in the Store - that is protecting them from pilfering theft damage and deterioration Ensuring when necessary that items issued from the Store are so packed that they will not be damaged or caused to deteriorate whilst in transit to their destinations

What is Involved in Stock Control (also known as lsquoInventory Controlrsquo )

What we refer to as stock control comprises mainly the clerical and administrative functions of stores work It involves

ensuring that the right types and qualities of items needed for production sale and distribution are always available when requiredensuring that stock is issued in the correct sequence that is ldquofirst in first outrdquo so that ldquoolderrdquo stock is not allowed to deteriorate by being kept too long in the Store for instance because it has been hidden from view by more recently received stockmaintaining records showing the ldquomovementrdquo of items into and out of the Store controlling and monitoring those movements and maintaining full records of the items in the Storeensuring that the correct ldquostock levelsrdquo of the various items are set and are maintained that orders and reorders are made (or requested to be made) in good time and that what is ordered is receivedchecking counting or otherwise measuring stock to ensure that records are accurate and that no losses are occurring due to pilfering theft damage or poor storagepricing and valuing the items in the Store

The Importance of Efficient Stores ManagementIn an enterprise with a small quantity of stock one person might be placed in charge of it if the ownermanager does not look after it himself Where the volume of stock is too large to be handled on a part-time basis one or more storekeepers will be required Enterprises with large quantities of stock must employ trained stores personnel (storekeepers clerks etc) under the control of a Storersquos Manager (who might go by the designation of Head or Chief Storekeeper Stock Controller stores administrator)It is impossible to state at what stage a Storersquos Manager will be appointed by a particular enterprise as circumstances and sizes vary so greatly But whatever its size and the volume of its stocks the success of the enterprise can depend to a large extent on the efficient management of its Store and stocks

26 | P a g e

Let us now examine why that is so

All the possessions of an enterprise - that is what it owns - are called its lsquoassetsrsquo Frequently the value of the stocks of goods andor materials held in its Store is as great as - if not greater than - the total value of all its other possessions - eg land andor buildings plant machinery motor vehicles equipment etc and of course money and investments - added togetherThe items andor materials in the Store cost money if through bad Stores Management there are too many held in the Store or if the wrong items or materials are being held money will be ldquotied uprdquo - money which might be required to buy other needed items andor materials or to pay the many expenses involved in running the enterpriseConversely if poor stores management has led to shortages of needed items and materials there will be hold-ups and interruptions in production or losses of production andor losses of sales to customers and indeed losses of the customers themselves and losses of profits which can in turn lead to job losses and - in extreme cases - to the collapse of the enterpriseIf items in the Store are lost stolen or damaged in any way the enterprise loses moneyAnd it costs money to run the Store - on building maintenance andor rent on salaries of stores personnel on containers and equipment on heating or cooling on lighting and power etc ndash and the enterprise must receive a ldquoreturnrdquo from its expenditure in terms of efficiency particularly as its Stores is ldquonon-productiverdquo

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-

You will have noted that earlier I stated that the Stores Department has a non-productiveFunction I can now explain what I meantDepartments of an enterprise such as its Sales Department andor its Production department are directly involved in the primary or revenue-earning functions of that enterprise Their functions - or activities - are designed to bring money into the enterprise as the result of producing andor selling goods or services

For example if an enterprise has a Production Department its function is to make or manufacture goods or other items which will be sold to bring in money The whole function of the Sales department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) andor services in return for which customers will pay money to the enterpriseIn contrast the Stores Department of an enterprise does NOT make or - in general - sell goods or services to customers

Its function is to

27 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

Let us now examine why that is so

All the possessions of an enterprise - that is what it owns - are called its lsquoassetsrsquo Frequently the value of the stocks of goods andor materials held in its Store is as great as - if not greater than - the total value of all its other possessions - eg land andor buildings plant machinery motor vehicles equipment etc and of course money and investments - added togetherThe items andor materials in the Store cost money if through bad Stores Management there are too many held in the Store or if the wrong items or materials are being held money will be ldquotied uprdquo - money which might be required to buy other needed items andor materials or to pay the many expenses involved in running the enterpriseConversely if poor stores management has led to shortages of needed items and materials there will be hold-ups and interruptions in production or losses of production andor losses of sales to customers and indeed losses of the customers themselves and losses of profits which can in turn lead to job losses and - in extreme cases - to the collapse of the enterpriseIf items in the Store are lost stolen or damaged in any way the enterprise loses moneyAnd it costs money to run the Store - on building maintenance andor rent on salaries of stores personnel on containers and equipment on heating or cooling on lighting and power etc ndash and the enterprise must receive a ldquoreturnrdquo from its expenditure in terms of efficiency particularly as its Stores is ldquonon-productiverdquo

FUNCTIONS AND DUTIES OF STORES DEPARTMENT-

You will have noted that earlier I stated that the Stores Department has a non-productiveFunction I can now explain what I meantDepartments of an enterprise such as its Sales Department andor its Production department are directly involved in the primary or revenue-earning functions of that enterprise Their functions - or activities - are designed to bring money into the enterprise as the result of producing andor selling goods or services

For example if an enterprise has a Production Department its function is to make or manufacture goods or other items which will be sold to bring in money The whole function of the Sales department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) andor services in return for which customers will pay money to the enterpriseIn contrast the Stores Department of an enterprise does NOT make or - in general - sell goods or services to customers

Its function is to

27 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

Provide a SERVICE to the rest of the enterprise of which it is partThe SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise because it is basically intended to ensure that all other sections or departments of the enterprise are furnished when required with the correct items in the correct quantities and of the correct qualities As I explained earlier the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part Obviously the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments Furthermore it must work closely in co-operation and co-ordination with those other departments The departments with which the Stores will have contact will of course depend on the activities in which an enterprise is engaged However we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary

The complete control on the materials is vested in the Stores Department The field of materials Management covers the following functions

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

TO RECEIVE RAW MATERIALS COMPONENTS TOOLS SPARES SUPPLIES EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM

TO PROVIDE ADEQUATE PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS

PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS

ARRANGE FOR INSPECTION OF INCOMING MATERIALS

ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY

ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME

MAINTAIN ACCURATE AND UP ndash TO ndash DATE RECORDS OF MATERIAL RECEIVED ISSUED REJECTED DISPOSED AND QUANTITY ON HAND OF ALL THE ITEMS

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE

ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL ACCOUNTS AND OTHER CONCERNED DEPARTMENTS

UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE

TO HIGHLIGHT STOCK ACCUMULATION DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION WHEREVER NECESSARY

TO MINIMISE OBSOLESCENCE SURPLUS AND SCRAP THROUGH PROPER CODIFICATION STANDARDIZATION PRESERVATION AND HANDLING

28 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING

TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY

TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS

DEPENDING UPON THE NATURE OF BUSINESS (IE MANUFACTURING TRADING SERVICES ETC) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST

Basically the functions of store are as follows-

i) Materials planning and programming of procurement and suppliesii) Purchasingiii) Inventory controliv) Store keeping and warehousingv) Materials handling and transportationvi) Codification and standardizationvii) Value Analysisviii) Identification Disposal of supplies obsolete and scrap materials etc

The Production Department

As the Stores Department must ensure that all items materials and tools as well as spare parts for machinery are always available for continuous uninterrupted production it requires adequate warning about expected future needs in terms of types quantities qualities (and possibly even colours) Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which again must work closely with the Stores)

The relationship between the Stores and Production Departments

RAW MATERIALS

COMPONENTS

TOOLS ETC

SCRAP AND

BY PRODUCTS

FINISHED PRODUCTS

REJECT AND DAMAGED

PRODUCTS

29 | P a g e

STORES

Dept

PRODUCTION

DEPT

QUALITY CONTROL

INSPECTION

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

STANDARD OPERATING PROCEDURE

An SOP is a written document or instruction detailing all steps and activities of a process or

procedure These should be carried out without any deviation or modification to guarantee

the expected outcome Any modification or deviation from a given SOP should be thoroughly

investigated and outcomes of the investigation documented according to the internal

deviation procedure

All quality impacting processes and procedures should be laid out in Standard Operating

Procedures (SOPs) These SOPs should form the basis for the routine training program of

each employee SOPs should be regularly updated to assure compliance to the regulatory

requirements and the working practice A minimum review schedule of 3 years is

recommended Changes of SOPs are in general triggered by process or procedural

changes adjustments The internal site change-control procedure should manage these

changes

Part of the activity list of such changes should be to update the related SOP SOPs should

be in place for all quality systems plus the specific operational activities on site The

structure of an SOP System and the total amount of individual SOPs should be carefully

taken into consideration too many SOPs could lead to a collapse of the SOP System

System SOPs should not be mixed up to keep systems and interaction between quality

systems easy

ISO 22000 essentially requires the documentation of all procedures used in any

manufacturing process that could affect the quality of the product

30 | P a g e

STANDARD OPERATING PROCEDURE OF Essar Projects India limited (Paradeep)

FREE

CHRG NO

YES

31 | P a g e

REJECTION

Receiving of materials

Document checking

Material weighment

Final weighment

GRN(USING)

IS THE QUALITY

WAREHOUSE

VENDOR

IS MIN AVAILABLE

DEPARTMENT

ISSUED

PHYSICAL

VERIFICATIO

WEEKL QUATER

AGEING

SLOW MOVING

SELF LIFE ITEMS

SALES REPORT

RECONCILATION STATEMENT

RECONCILATION WITH DEPT

RECONCILATION WITH VENDORS

Layout of ESSAR

SOPLAYOUTdocx

SAFETY MEASURES FOLLOWED IN ESSAR

Safety is the state of being safe (from French sauf) the condition of being protected against physical social spiritual financial political emotional occupational psychological educational or other types or consequences of failure damage error accidents harm or any other event which could be considered non-desirable This can take the form of being protected from the event or from exposure to something that causes health or economical losses It can include protection of people or of possessions

Safety measures

Safety measures are activities and precautions taken to improve safety ie reduce risk

related to human health Common safety measures include

Root cause analysis to identify causes of a system failure and correct deficiencies

Visual examination for dangerous situations such as emergency exits blocked

because they are being used as storage areas

Visual examination for flaws such as cracks peeling loose connections

Chemical analysis

X-ray analysis to see inside a sealed object such as a weld a cement wall or an

airplane outer skin

32 | P a g e

Layout of ESSAR

SOPLAYOUTdocx

SAFETY MEASURES FOLLOWED IN ESSAR

Safety is the state of being safe (from French sauf) the condition of being protected against physical social spiritual financial political emotional occupational psychological educational or other types or consequences of failure damage error accidents harm or any other event which could be considered non-desirable This can take the form of being protected from the event or from exposure to something that causes health or economical losses It can include protection of people or of possessions

Safety measures

Safety measures are activities and precautions taken to improve safety ie reduce risk

related to human health Common safety measures include

Root cause analysis to identify causes of a system failure and correct deficiencies

Visual examination for dangerous situations such as emergency exits blocked

because they are being used as storage areas

Visual examination for flaws such as cracks peeling loose connections

Chemical analysis

X-ray analysis to see inside a sealed object such as a weld a cement wall or an

airplane outer skin

32 | P a g e

Destructive testing of samples

Stress testing subjects a person or product to stresses in excess of those the person or

product is designed to handle to determining the breaking point

Safety marginsSafety factors For instance a product rated to never be required to

handle more than 200 pounds might be designed to fail under at least 400 pounds a

safety factor of two Higher numbers are used in more sensitive applications such as

medical or transit safety

Implementation of standard protocols and procedures so that activities are conducted

in a known way

Training of employees vendors product users

Instruction manuals explaining how to use a product or perform an activity

Instructional videos demonstrating proper use of products

Examination of activities by specialists to minimize physical stress or increase

productivity

Government regulation so suppliers know what standards their product is expected to

meet

Industry regulation so suppliers know what level of quality is expected Industry

regulation is often imposed to avoid potential government regulation

Self-imposed regulation of various types

Statements of Ethics by industry organizations or an individual company so its

employees know what is expected of them

Drug testing of employees etc

Physical examinations to determine whether a person has a physical condition that

would create a problem

Periodic evaluations of employees departments etc

Geological surveys to determine whether land or water sources are polluted how firm

the ground is at a potential building site etc

SAFETY COMPLIANCE1 THE SERVICE PROVIDER AND HIS MEN SHOULD COMPLY WITH PPE REQUIREMENT DECIDED BY THE ORGANIZATION SAFETY DEPARTMENT LIKE CUT RESISTANT HAND GLOVES SAFETY HELMETS AND SAFETY SHOES

2 ALL THE PPErsquoS MUST BE WORN WHILE WORKING ON JOB

3 THE SERVICE PROVIDER SHOULD BE COMPETENT ENOUGH TO SUPERVISE HISMEN

JOB DESCRIPTION

33 | P a g e

1 THE SUPERVISOR HAS TO ENSURE PROPER PLANNING OF COMPETENT MANPOWER AS DESIRED BY THE ORGANIZATION

2 PLANNING OF COIL ON SADDLE AS PER PLAN RECEIVED FROM THE ORGANIZATION

3 ISSUING AND SHIFTING OF WOODEN PALLETS FROM THE ORGANIZATION AS PER SIZE

4 SEGMENT REMOVAL AND FIXING AS PER COIL ID

5 SHEAR GAP SETTING AS PER THICKNESS

6 UNLOADING OF PACKETS FROM THE STACKER THROUGH EOT CRANE

7 WEIGHMENT OF PACKET AND REPORTING TO THE SHIFT ENGINEER

8 PACKET SHIFTING AND PROPER STACKING

9 READINESS AND PLACING OF LOGO ON THE SHEET

10 BARREL CORRUGATION MC SETTING AND CORRUGATION COMPLIANCE AS PER IS 277 AND JIS STANDARD

11 MAINTENANCE KNOWLEDGE OF ALL MCs IS MUST

ESSAR SCOPE OF WORK

1 CRANE HYDRA amp TAILOR FOR SHIFTING DIS-MANTLING amp ERECTION WILL BE PROVIDED BY ESSAR

2 ALL RAW MATERIALS POWER amp CONSTRUCTION WATER WILL BE PROVIDED BY ESSAR

GENERAL SAFETY GUIDELINES

1 Service Provider must not operate any equipment in manual mode without permission from authorized engineer

2 Service Provider must not go to any equipment while moving

3 No person is allowed to stand on coil car slitting line

4 No By-passing of interlocks and no pre assumptions for any equipment operation

5 Use Proper PPE amp Safety platform while packing

6 Ensure that fingers should be away from strapping procedure and while working with tensioner

7 Service Provider trained operator should handle consumables for packing of Coils

8 Operators should be away from under crane while crane carrying the Coil Plates to packing saddle packing area

34 | P a g e

9 Service Provider must remove the waste consumables immediately disposal to specified scrap bin and keep the area NEAT amp CLEAN

10 Service Provider must keep only good quality wooden logs for packing

11 Service Provider must always wear sufficient PPErsquos inside the plants

12 Service Provider must keep safe distance to the coils amp packs while packing

13 Service Provider must not modify any tools or equipments

14 Service Provider must not touch any movable parts

15 Service Provider must riggers must be alert while pack stacking procedure in yard

16 Extra care to taken while packing with fork lifter The signal should be given to fork lifter driver by standing at least one meter away from pack

17 Service Provider must keep the packs stack height maximum 6 feet and must not stack the packs more than 6 feet height

18 Rigger must ensure as coil properly gripped in sling-goferc-hook than after give the signal to the crane operator

19 Service Provider must not put wooden blocks for packing while the crane is moving with load

20 Service Provider must maintain good housekeeping standards and keep ldquoYellow pathwayrdquo should be neat amp clean

21 Housekeeping is mandatory at each packing area All loose wooden logs straps etc to be removed from site in frequent intervals

22 Ensure sling offer should be locked with bolt in main hoist of crane

23 Service Provider must not pack the packs very near to the rollers on the floor area in flying shear line There may be a chance of slipping amp falling down

24 Service Provider must ensure all hooks are properly hooked with chains while lifting with spreader beams The lifting signal to crane operator to be given after counter checking the hooks position There may be chance of hooks slipped off from chain

25 Service Provider must not work near the stacker area in flying shear line

SPECIAL OHSAS AND ISO CONDITIONS

1048729 All safety rules codes applied by respective government agencies both in India and foreign countries regarding safety and environmental shall be observed and complied to by the Bidder service Provider and his workmen without exception

35 | P a g e

1048729 The following Health and Safety points for OHSAS 18001 FOR OCCUPATIONAL HEALTH amp SAFETY MANAGEMENT SYSTEM are required to be complied by the bidder service Provider

i To ensure the health safety and well being of all workmen and compliance to applicable legislative requirements

ii To include all resource requirements for accident prevention during preparation of estimates

iii To ensure proper briefing to workmen

iv Not to do wilfully any act which may cause injury to himself or to others

v Not to interfere unless duly authorized remove or interfere with any moving stationary machine equipment or facility

vi To use only the authorized means of access provided in the site

vii The bidder service Provider shall have full responsibility and accountability of safe execution of job at work place site and safety of the personnel conducted inside the premises of ESSAR Hazira

viii To maintain up-to-date list of employed workman at the work site and maintain identity cards

ix To undertake immediate action to correct all unsafe conditions practices as identified reported

x To ensure that all sub - service providers are provided the necessary documentation ISI approved or equivalent standards PPE and informed of their obligations

xi To issue standing instructions for prohibition of drugs and alcohol fighting gamblinghorse play or keeping weapons at various worksite (any violation will result in disciplinary action)

xii Not to employ workmen with epilepsy deafness color blindness night blindness in any site activities All personnel deployed at their site shall have medical fitness certificate issued by registered medical practitioner

xiii Ensure that employees are provided with appropriate ISI approved or equivalent standards personal protective equipment PPErsquos and these should be at no cost to the employees These PPErsquos should be used in accordance with job requirements and replaced as necessary

TRAINING amp PPE

bull To provide adequate information training to workmen safety equipment of Indian standard approved (IS) or any other equivalent specifications and ensure their proper

36 | P a g e

ENVIVORNMENT SAFETY HEALTH RULES REGULATIONS AND MEASURES TAKEN-

1048729 Service Provider shall conduct their activities such that the personnel equipments working methods conditions are safe and without risk to health injury accidents etc for their own personnelequipments of our or other business associates at the site

1048729 Service Provider shall ensure that all the employees deputed by Service Provider at our site are medically fit to carry out the activities in order to ensure that the jobs entrusted are completed safely in time and without any hindrances For this it is necessary for Service Provider to submit medical fitness certificate for all their employees deputed at our site to our fire and safety department In case at any time the persons deputed are found medically unfit they shall be denied entry in our premises and not allowed to carry out their jobs

1048729 Service Provider shall ensure safety of their personnel amp follow all safety measures prescribed Service Provider shall provide for all safety requirements as per the demands of the services rendered at their own cost

1048729 Service Provider shall ensure that all the tools and tackles deployed by Service Provider are certified by competent authority for use in factory Such certificate should be duly valid at all points of time

1048729 For the works to be carried out Service Provider shall be deploying qualifiedSupervisors who shall be qualified and who shall have knowledge and shall co-ordinate and supervise all the works including but not limited to the following activities-

i Lifting and shifting of big vesselpipesgear boxesbig armaturemotors etc where chain pulley blocks cranes winch machines loaders etc are used

ii Activitiesworks being carried out at critical heights like crane girder levels false ceiling

amp roof jobs

iii Activitiesworks being carried out at environment having health andor fire hazards

iv Activitiesworks being carried out in confined spacevessel entrylocations

v Activities being carried out on gas lineoil cellarshydraulic stationscable tunnelscable galleriesconveyors

vi Works being carried out near workingrunning machines

vii Excavation works where UGC system (pipes + cables) exist

37 | P a g e

1048729 If their personnel are deployed in dustynoisyoily areas Service Provider must ensure and practice the following-

i Observe the condition of hoseso-ringsseals If it is not in a good condition then inform the immediate supervisorconcerned officials to prevent the leakage

ii Immediately arrest the leakages and recovercollect the maximum amount of spilled oil in the drum during the leakages

iii Put the filled-in drums at designated storage area

iv Wear ear plugsmuffs while working in the high dust areas

v Ensure proper handling of materials like scrap during bucket preparation

vi Ensure proper handling of materials like lime dolime etc while feeding

vii Ensure materials like scrap etc are charged into the bucket from lesser height

viii Keep the fixed and movable elbow 100 clean

ix Arrest any leakage immediately

x Ensure proper handling of raw materials to minimize dust emissions

xi Load the materials like lime-stone etc from lesser height

xii Ensure periodical cleaning of joints and gaskets

xiii Ensure proper screening of oxide before charging to hopper

1048729 All vehicles entering ESSAR complex must have current and valid PUC certificate without which vehicle shall not be permitted for entry1048729 For jobs carried out in the plant Service Provider shall obtain proper work permit as per requirements1048729 For all the jobs done Service Provider shall be compulsorily deploying a qualified competent safety supervisor1048729 All scaffolding should be as per satisfaction of department engineer in-charge should be done1048729 All their employees worker staff will have to undergo a safety and environment training1048729 Service Providertheir supervisor should positively attend the safety and environment meetingother meetings conducted periodically1048729 Service Provider should comply with all safety and environment requirementsrules and regulations as per guide lines of fire amp safety environment department1048729 Service Provider shall maintain and ensure continuous availability of First ndashAid facilities for all their personnel1048729 Service ProviderTheir personnel shall be restricted to the areas required for the performance of their jobs Wandering of their personnelrepresentatives through plant areas other than the immediate

38 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

9 Service Provider must remove the waste consumables immediately disposal to specified scrap bin and keep the area NEAT amp CLEAN

10 Service Provider must keep only good quality wooden logs for packing

11 Service Provider must always wear sufficient PPErsquos inside the plants

12 Service Provider must keep safe distance to the coils amp packs while packing

13 Service Provider must not modify any tools or equipments

14 Service Provider must not touch any movable parts

15 Service Provider must riggers must be alert while pack stacking procedure in yard

16 Extra care to taken while packing with fork lifter The signal should be given to fork lifter driver by standing at least one meter away from pack

17 Service Provider must keep the packs stack height maximum 6 feet and must not stack the packs more than 6 feet height

18 Rigger must ensure as coil properly gripped in sling-goferc-hook than after give the signal to the crane operator

19 Service Provider must not put wooden blocks for packing while the crane is moving with load

20 Service Provider must maintain good housekeeping standards and keep ldquoYellow pathwayrdquo should be neat amp clean

21 Housekeeping is mandatory at each packing area All loose wooden logs straps etc to be removed from site in frequent intervals

22 Ensure sling offer should be locked with bolt in main hoist of crane

23 Service Provider must not pack the packs very near to the rollers on the floor area in flying shear line There may be a chance of slipping amp falling down

24 Service Provider must ensure all hooks are properly hooked with chains while lifting with spreader beams The lifting signal to crane operator to be given after counter checking the hooks position There may be chance of hooks slipped off from chain

25 Service Provider must not work near the stacker area in flying shear line

SPECIAL OHSAS AND ISO CONDITIONS

1048729 All safety rules codes applied by respective government agencies both in India and foreign countries regarding safety and environmental shall be observed and complied to by the Bidder service Provider and his workmen without exception

35 | P a g e

1048729 The following Health and Safety points for OHSAS 18001 FOR OCCUPATIONAL HEALTH amp SAFETY MANAGEMENT SYSTEM are required to be complied by the bidder service Provider

i To ensure the health safety and well being of all workmen and compliance to applicable legislative requirements

ii To include all resource requirements for accident prevention during preparation of estimates

iii To ensure proper briefing to workmen

iv Not to do wilfully any act which may cause injury to himself or to others

v Not to interfere unless duly authorized remove or interfere with any moving stationary machine equipment or facility

vi To use only the authorized means of access provided in the site

vii The bidder service Provider shall have full responsibility and accountability of safe execution of job at work place site and safety of the personnel conducted inside the premises of ESSAR Hazira

viii To maintain up-to-date list of employed workman at the work site and maintain identity cards

ix To undertake immediate action to correct all unsafe conditions practices as identified reported

x To ensure that all sub - service providers are provided the necessary documentation ISI approved or equivalent standards PPE and informed of their obligations

xi To issue standing instructions for prohibition of drugs and alcohol fighting gamblinghorse play or keeping weapons at various worksite (any violation will result in disciplinary action)

xii Not to employ workmen with epilepsy deafness color blindness night blindness in any site activities All personnel deployed at their site shall have medical fitness certificate issued by registered medical practitioner

xiii Ensure that employees are provided with appropriate ISI approved or equivalent standards personal protective equipment PPErsquos and these should be at no cost to the employees These PPErsquos should be used in accordance with job requirements and replaced as necessary

TRAINING amp PPE

bull To provide adequate information training to workmen safety equipment of Indian standard approved (IS) or any other equivalent specifications and ensure their proper

36 | P a g e

ENVIVORNMENT SAFETY HEALTH RULES REGULATIONS AND MEASURES TAKEN-

1048729 Service Provider shall conduct their activities such that the personnel equipments working methods conditions are safe and without risk to health injury accidents etc for their own personnelequipments of our or other business associates at the site

1048729 Service Provider shall ensure that all the employees deputed by Service Provider at our site are medically fit to carry out the activities in order to ensure that the jobs entrusted are completed safely in time and without any hindrances For this it is necessary for Service Provider to submit medical fitness certificate for all their employees deputed at our site to our fire and safety department In case at any time the persons deputed are found medically unfit they shall be denied entry in our premises and not allowed to carry out their jobs

1048729 Service Provider shall ensure safety of their personnel amp follow all safety measures prescribed Service Provider shall provide for all safety requirements as per the demands of the services rendered at their own cost

1048729 Service Provider shall ensure that all the tools and tackles deployed by Service Provider are certified by competent authority for use in factory Such certificate should be duly valid at all points of time

1048729 For the works to be carried out Service Provider shall be deploying qualifiedSupervisors who shall be qualified and who shall have knowledge and shall co-ordinate and supervise all the works including but not limited to the following activities-

i Lifting and shifting of big vesselpipesgear boxesbig armaturemotors etc where chain pulley blocks cranes winch machines loaders etc are used

ii Activitiesworks being carried out at critical heights like crane girder levels false ceiling

amp roof jobs

iii Activitiesworks being carried out at environment having health andor fire hazards

iv Activitiesworks being carried out in confined spacevessel entrylocations

v Activities being carried out on gas lineoil cellarshydraulic stationscable tunnelscable galleriesconveyors

vi Works being carried out near workingrunning machines

vii Excavation works where UGC system (pipes + cables) exist

37 | P a g e

1048729 If their personnel are deployed in dustynoisyoily areas Service Provider must ensure and practice the following-

i Observe the condition of hoseso-ringsseals If it is not in a good condition then inform the immediate supervisorconcerned officials to prevent the leakage

ii Immediately arrest the leakages and recovercollect the maximum amount of spilled oil in the drum during the leakages

iii Put the filled-in drums at designated storage area

iv Wear ear plugsmuffs while working in the high dust areas

v Ensure proper handling of materials like scrap during bucket preparation

vi Ensure proper handling of materials like lime dolime etc while feeding

vii Ensure materials like scrap etc are charged into the bucket from lesser height

viii Keep the fixed and movable elbow 100 clean

ix Arrest any leakage immediately

x Ensure proper handling of raw materials to minimize dust emissions

xi Load the materials like lime-stone etc from lesser height

xii Ensure periodical cleaning of joints and gaskets

xiii Ensure proper screening of oxide before charging to hopper

1048729 All vehicles entering ESSAR complex must have current and valid PUC certificate without which vehicle shall not be permitted for entry1048729 For jobs carried out in the plant Service Provider shall obtain proper work permit as per requirements1048729 For all the jobs done Service Provider shall be compulsorily deploying a qualified competent safety supervisor1048729 All scaffolding should be as per satisfaction of department engineer in-charge should be done1048729 All their employees worker staff will have to undergo a safety and environment training1048729 Service Providertheir supervisor should positively attend the safety and environment meetingother meetings conducted periodically1048729 Service Provider should comply with all safety and environment requirementsrules and regulations as per guide lines of fire amp safety environment department1048729 Service Provider shall maintain and ensure continuous availability of First ndashAid facilities for all their personnel1048729 Service ProviderTheir personnel shall be restricted to the areas required for the performance of their jobs Wandering of their personnelrepresentatives through plant areas other than the immediate

38 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

1048729 The following Health and Safety points for OHSAS 18001 FOR OCCUPATIONAL HEALTH amp SAFETY MANAGEMENT SYSTEM are required to be complied by the bidder service Provider

i To ensure the health safety and well being of all workmen and compliance to applicable legislative requirements

ii To include all resource requirements for accident prevention during preparation of estimates

iii To ensure proper briefing to workmen

iv Not to do wilfully any act which may cause injury to himself or to others

v Not to interfere unless duly authorized remove or interfere with any moving stationary machine equipment or facility

vi To use only the authorized means of access provided in the site

vii The bidder service Provider shall have full responsibility and accountability of safe execution of job at work place site and safety of the personnel conducted inside the premises of ESSAR Hazira

viii To maintain up-to-date list of employed workman at the work site and maintain identity cards

ix To undertake immediate action to correct all unsafe conditions practices as identified reported

x To ensure that all sub - service providers are provided the necessary documentation ISI approved or equivalent standards PPE and informed of their obligations

xi To issue standing instructions for prohibition of drugs and alcohol fighting gamblinghorse play or keeping weapons at various worksite (any violation will result in disciplinary action)

xii Not to employ workmen with epilepsy deafness color blindness night blindness in any site activities All personnel deployed at their site shall have medical fitness certificate issued by registered medical practitioner

xiii Ensure that employees are provided with appropriate ISI approved or equivalent standards personal protective equipment PPErsquos and these should be at no cost to the employees These PPErsquos should be used in accordance with job requirements and replaced as necessary

TRAINING amp PPE

bull To provide adequate information training to workmen safety equipment of Indian standard approved (IS) or any other equivalent specifications and ensure their proper

36 | P a g e

ENVIVORNMENT SAFETY HEALTH RULES REGULATIONS AND MEASURES TAKEN-

1048729 Service Provider shall conduct their activities such that the personnel equipments working methods conditions are safe and without risk to health injury accidents etc for their own personnelequipments of our or other business associates at the site

1048729 Service Provider shall ensure that all the employees deputed by Service Provider at our site are medically fit to carry out the activities in order to ensure that the jobs entrusted are completed safely in time and without any hindrances For this it is necessary for Service Provider to submit medical fitness certificate for all their employees deputed at our site to our fire and safety department In case at any time the persons deputed are found medically unfit they shall be denied entry in our premises and not allowed to carry out their jobs

1048729 Service Provider shall ensure safety of their personnel amp follow all safety measures prescribed Service Provider shall provide for all safety requirements as per the demands of the services rendered at their own cost

1048729 Service Provider shall ensure that all the tools and tackles deployed by Service Provider are certified by competent authority for use in factory Such certificate should be duly valid at all points of time

1048729 For the works to be carried out Service Provider shall be deploying qualifiedSupervisors who shall be qualified and who shall have knowledge and shall co-ordinate and supervise all the works including but not limited to the following activities-

i Lifting and shifting of big vesselpipesgear boxesbig armaturemotors etc where chain pulley blocks cranes winch machines loaders etc are used

ii Activitiesworks being carried out at critical heights like crane girder levels false ceiling

amp roof jobs

iii Activitiesworks being carried out at environment having health andor fire hazards

iv Activitiesworks being carried out in confined spacevessel entrylocations

v Activities being carried out on gas lineoil cellarshydraulic stationscable tunnelscable galleriesconveyors

vi Works being carried out near workingrunning machines

vii Excavation works where UGC system (pipes + cables) exist

37 | P a g e

1048729 If their personnel are deployed in dustynoisyoily areas Service Provider must ensure and practice the following-

i Observe the condition of hoseso-ringsseals If it is not in a good condition then inform the immediate supervisorconcerned officials to prevent the leakage

ii Immediately arrest the leakages and recovercollect the maximum amount of spilled oil in the drum during the leakages

iii Put the filled-in drums at designated storage area

iv Wear ear plugsmuffs while working in the high dust areas

v Ensure proper handling of materials like scrap during bucket preparation

vi Ensure proper handling of materials like lime dolime etc while feeding

vii Ensure materials like scrap etc are charged into the bucket from lesser height

viii Keep the fixed and movable elbow 100 clean

ix Arrest any leakage immediately

x Ensure proper handling of raw materials to minimize dust emissions

xi Load the materials like lime-stone etc from lesser height

xii Ensure periodical cleaning of joints and gaskets

xiii Ensure proper screening of oxide before charging to hopper

1048729 All vehicles entering ESSAR complex must have current and valid PUC certificate without which vehicle shall not be permitted for entry1048729 For jobs carried out in the plant Service Provider shall obtain proper work permit as per requirements1048729 For all the jobs done Service Provider shall be compulsorily deploying a qualified competent safety supervisor1048729 All scaffolding should be as per satisfaction of department engineer in-charge should be done1048729 All their employees worker staff will have to undergo a safety and environment training1048729 Service Providertheir supervisor should positively attend the safety and environment meetingother meetings conducted periodically1048729 Service Provider should comply with all safety and environment requirementsrules and regulations as per guide lines of fire amp safety environment department1048729 Service Provider shall maintain and ensure continuous availability of First ndashAid facilities for all their personnel1048729 Service ProviderTheir personnel shall be restricted to the areas required for the performance of their jobs Wandering of their personnelrepresentatives through plant areas other than the immediate

38 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

ENVIVORNMENT SAFETY HEALTH RULES REGULATIONS AND MEASURES TAKEN-

1048729 Service Provider shall conduct their activities such that the personnel equipments working methods conditions are safe and without risk to health injury accidents etc for their own personnelequipments of our or other business associates at the site

1048729 Service Provider shall ensure that all the employees deputed by Service Provider at our site are medically fit to carry out the activities in order to ensure that the jobs entrusted are completed safely in time and without any hindrances For this it is necessary for Service Provider to submit medical fitness certificate for all their employees deputed at our site to our fire and safety department In case at any time the persons deputed are found medically unfit they shall be denied entry in our premises and not allowed to carry out their jobs

1048729 Service Provider shall ensure safety of their personnel amp follow all safety measures prescribed Service Provider shall provide for all safety requirements as per the demands of the services rendered at their own cost

1048729 Service Provider shall ensure that all the tools and tackles deployed by Service Provider are certified by competent authority for use in factory Such certificate should be duly valid at all points of time

1048729 For the works to be carried out Service Provider shall be deploying qualifiedSupervisors who shall be qualified and who shall have knowledge and shall co-ordinate and supervise all the works including but not limited to the following activities-

i Lifting and shifting of big vesselpipesgear boxesbig armaturemotors etc where chain pulley blocks cranes winch machines loaders etc are used

ii Activitiesworks being carried out at critical heights like crane girder levels false ceiling

amp roof jobs

iii Activitiesworks being carried out at environment having health andor fire hazards

iv Activitiesworks being carried out in confined spacevessel entrylocations

v Activities being carried out on gas lineoil cellarshydraulic stationscable tunnelscable galleriesconveyors

vi Works being carried out near workingrunning machines

vii Excavation works where UGC system (pipes + cables) exist

37 | P a g e

1048729 If their personnel are deployed in dustynoisyoily areas Service Provider must ensure and practice the following-

i Observe the condition of hoseso-ringsseals If it is not in a good condition then inform the immediate supervisorconcerned officials to prevent the leakage

ii Immediately arrest the leakages and recovercollect the maximum amount of spilled oil in the drum during the leakages

iii Put the filled-in drums at designated storage area

iv Wear ear plugsmuffs while working in the high dust areas

v Ensure proper handling of materials like scrap during bucket preparation

vi Ensure proper handling of materials like lime dolime etc while feeding

vii Ensure materials like scrap etc are charged into the bucket from lesser height

viii Keep the fixed and movable elbow 100 clean

ix Arrest any leakage immediately

x Ensure proper handling of raw materials to minimize dust emissions

xi Load the materials like lime-stone etc from lesser height

xii Ensure periodical cleaning of joints and gaskets

xiii Ensure proper screening of oxide before charging to hopper

1048729 All vehicles entering ESSAR complex must have current and valid PUC certificate without which vehicle shall not be permitted for entry1048729 For jobs carried out in the plant Service Provider shall obtain proper work permit as per requirements1048729 For all the jobs done Service Provider shall be compulsorily deploying a qualified competent safety supervisor1048729 All scaffolding should be as per satisfaction of department engineer in-charge should be done1048729 All their employees worker staff will have to undergo a safety and environment training1048729 Service Providertheir supervisor should positively attend the safety and environment meetingother meetings conducted periodically1048729 Service Provider should comply with all safety and environment requirementsrules and regulations as per guide lines of fire amp safety environment department1048729 Service Provider shall maintain and ensure continuous availability of First ndashAid facilities for all their personnel1048729 Service ProviderTheir personnel shall be restricted to the areas required for the performance of their jobs Wandering of their personnelrepresentatives through plant areas other than the immediate

38 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

1048729 If their personnel are deployed in dustynoisyoily areas Service Provider must ensure and practice the following-

i Observe the condition of hoseso-ringsseals If it is not in a good condition then inform the immediate supervisorconcerned officials to prevent the leakage

ii Immediately arrest the leakages and recovercollect the maximum amount of spilled oil in the drum during the leakages

iii Put the filled-in drums at designated storage area

iv Wear ear plugsmuffs while working in the high dust areas

v Ensure proper handling of materials like scrap during bucket preparation

vi Ensure proper handling of materials like lime dolime etc while feeding

vii Ensure materials like scrap etc are charged into the bucket from lesser height

viii Keep the fixed and movable elbow 100 clean

ix Arrest any leakage immediately

x Ensure proper handling of raw materials to minimize dust emissions

xi Load the materials like lime-stone etc from lesser height

xii Ensure periodical cleaning of joints and gaskets

xiii Ensure proper screening of oxide before charging to hopper

1048729 All vehicles entering ESSAR complex must have current and valid PUC certificate without which vehicle shall not be permitted for entry1048729 For jobs carried out in the plant Service Provider shall obtain proper work permit as per requirements1048729 For all the jobs done Service Provider shall be compulsorily deploying a qualified competent safety supervisor1048729 All scaffolding should be as per satisfaction of department engineer in-charge should be done1048729 All their employees worker staff will have to undergo a safety and environment training1048729 Service Providertheir supervisor should positively attend the safety and environment meetingother meetings conducted periodically1048729 Service Provider should comply with all safety and environment requirementsrules and regulations as per guide lines of fire amp safety environment department1048729 Service Provider shall maintain and ensure continuous availability of First ndashAid facilities for all their personnel1048729 Service ProviderTheir personnel shall be restricted to the areas required for the performance of their jobs Wandering of their personnelrepresentatives through plant areas other than the immediate

38 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

job area is not permitted except without prior written permission from concerned Head of Department1048729 Service Provider shall provide following personal safety gears and safety equipment with specifications mentioned or as per latest rules and regulations Also Service Provider shall take adequate steps to ensure proper use by those concerned-1048729 Safety goggles - toughened polycarbonate scratch resistant lenses with side shield Optically correct zero power impact resistant and approved by BIS specification no IS 7524 part -1 and further applicable amendments1048729 Hand gloves1048729 Safety helmet ndash of yellow colour - moulded out of high impact heat and chemical resistant HDPE with brim for additional side protection with 6 point ergonomic adjustable head band and chin strap and approved by BIS specification no IS 2925 -1984 and further applicable amendments1048729 Safety harness with double lifeline - waist belt with shoulder strap 6 mm thick coated friction buckle and joint less d-ring 44 mm wide nylon webbing padded back nylon stitched along with copper rivets for additional safety quick fit spring loaded hook and approved by BIS specification no IS 35211048729 Safety shoes - high ankle shoes made from fine quality plain black leather padded Collar Drings full below attached tongue with steel toe cap as per is 5852 with direct Injection PVC nit rile heel sole1048729 Orange Fluorescent jackets for personnel deployed for up-keeping cleaning Housekeeping jobs1048729 DungareesAprons of specified colours and make

For the mobileheavy mobile equipments deployed Service Provider shall ensure

following -

i Equipments should work for 20 hours in a dayas per requirements amp availability for each equipment must be there accordingly

ii Deduction on pro-rata basis shall be made for breakdown hours or for non-availability of equipment

iii Copy of a current and valid PUC certificate for the equipment should be provided by

Service Provider and operators should have valid driving license

iv Service Provider shall keep and have all valid documents as per Motor Vehicle Act as applicable in the stateregion

v The above mentioned documentscertificates must be available at all times

vi Head light tail light reverse horn and rear view mirror of the equipment should be in working condition for safe operation

vii If Service Provider are replacing any regular equipment deployed then Service Provider shall inform the user department in writing

39 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

1048729 Service Provider shall keep proper supervision round the clock for optimum utilisation1048729 Inside the plant premises the speed of the vehicle should not exceed 20 KM per hourthe limits defined at various places in the plant

Service Provider shall comply with the following-

Housekeepingcleaning of the area including cleaningremoving the debrisscrapwaste and shifting the samesurplus materials to the location specifiedshown by the engineer-in charge shall be carried out by Service Provider Disposal of these should not be done to areas which will create environment hazards and the disposal should not create damage to environment ndash land water air presently or in future Service Provider shall dispose off waste or scrap generated dust only to designated areas and ensure that these are not disposed off at any area

1048729 Minimize pollution at source through environment-friendly processes techniques and processes1048729 Reduce fugitive emission from loadingunloading and transportation of materials (where applicable)

1048729 Developencourage adequate greenbelt in and around the plant1048729 Educate and develop an environmentally aware contractual workforce at all levels

ESSAR celebrates this year as the accident free year as no life lost during the commencement of the project and bags the safety award

SAP IN ESSAR

Mill ProductsThe Essar group is one of Indiarsquos largest business houses with an asset base of US $ 3 billion and interests in core industries like Steel Shipping Oil and Gas Power Telecom and Finance Essar entered the Iron and Steel business in 1989 by setting up a 176 million tonnes per annum facility to produce Hot Briquetted Iron (HBI) This plant is the largest in the world Essar has also set up a 2 million tonne flat products steel plant Simultaneously a backward integration project in the shape of a 33 million tpa iron ore pelletisation plant has been set up to manufacture and supply high quality iron ore pellets Essar has emerged as the largest fully integrated manufacturer of high-quality flat products in the western region of India the hub of industrial activity in the country Essar needed a fully integrated IT system to manage this huge set up

The right data at the right place

According to Anil Kastuar CIO Steel Business Essar had a non-integrated system focused solely on finance It was not linked to Production Planning Materials Management or Sales amp Distribution Management This is not an era when decisions can be taken based on standalone solutions They must be based

40 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

on inputs from other business areas We needed a solution and we looked at SAPs R3 which fulfilled our objective

Integration is of the essence in aComplicated industry

To produce high-quality steel with the best ingredients accuracy in the product mix was crucial To enable this there was a need for an integrated and live information system Dr P Bhattacharya Chief Operations Officer explains We deal with complex products sizes 10 grades The wrong slab in the wrong furnace could create havoc We needed a system to manage all this We also had to track everything from raw material to production and finally its shipment The transportation by road of say 250 tonnes of steel a day is dependent on a powerful information system Essar selected SAPs R3 based on the strengths of the system and on its success elsewhere Our corporate culture is driven by respect for the best available in the market SAPs R3 turned out to be the most powerful proven software that could run a complicated business such as oursSAP is able to provide solutions for a variety of industries It is not an industry-specific solution It is not a hardware-specific solution It is an enterprise-wide solution with industry specific components for businesses like ours

A live system is needed to facilitate each step in production planningDr Bhattacharya explains It is imperative that we know right from the time we take orders what our likely delivery schedule will be All information from raw material procurement to inventory of finished products should be absolutely live We were looking for a solution that would give us all thisWhat I like about the SAP R3 solution is that it binds every individual and every department with one objective- Efficiency There can be no conflict of data If there is a problem it surfaces the same day

Implementation with a Big BangAnil Kastuar explains why Essar chose to unfold the entire R3 suite in one goes calling it their Big Bang approach Our steel plant was close to being commissioned and we needed to take care of each business process Which is why we decided to go for the Big Bang approach Arun K Tiwary GM Information Technology explains further Our modules included Finance Asset-Management Product Planning Plant Maintenance Sales and Distribution Quality Management Controlling Commitment Accounting The first 12 months saw the implementation of 3 modules Finance Material Management and Controlling All the production related modules went live in the 2nd phase 3 months laterSAP Indiarsquos support is fantastic Sometimes I wonder whether theyre a part of Essar Steel or SAP IndiaEssar had the help of their respected business managers in the implementation stages They also had the assistance of a team of IT professionals and implementation consultants from Coopers amp Lybrand Avers D Ashok Executive Director Coopers amp Lybrand (India) We believe this Big Bang implementation was successful primarily because of the clients confidence in jointly taking a

41 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

seeming risk Our well qualified dedicated and experienced consultants with guidance from CampLs global SAP Centre of Excellence Hamburg were able to meet the stringent deadline because of team spirit and dedicated client users and IT professionalsSAP were supportive and responsive For example when we had a problem with our Commitment Accounting they flew down a consultant from Singapore to helpWe can promise much shorter deliveriesAccording to Dr Bhattacharya the cycle of customer enquiry to delivery has been reduced Essar truck turnaround time is reducing The ERP facility that SAP offers as a part of its production planning module is used extensively We are able to accurately plan our procurement of spares and goods raw materials and stocks Accounting has become totally decentralised Every transaction that takes place in the plant updates the book of accounts automaticallyFor the first time we are likely to close the first half of our balance sheets within 25 days of our closing

INVENTORIES OF ESSARSince the ESSAR ORISSA STEEL LTD (ESOL) is in project state the inventories are huge The inventory basically consists of capital goods steel items (like bars angle beams channel and plate) cement and diesel These items are used for the purpose of the construction of the plant The inventories are of A category the capital goods lying in the helipad crs building mrs building balli building store yard store shed worth more than 400croresthe steel items like bar angle channel plate also worth in crores Steel items are stacked near crs building Weigh Bridge near chimney etc Stores department is responsible for the stacking handling and maintaining this high value items

42 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

THE WORK THAT I UNDER TOOK DURING MY INTERNSHIP

PHYSICAL VERIFICATION OF CAPITAL GOODS PHYSICAL VERIFICATION OF STEEL ITEMS PHYSICAL VERIFICATION OF CEMENT PHYSICAL VERIFICATION OF DIESEL TAGGING OF STORE MATERIALS STORE RACK BINNING

Physical verification of inventory

Inventory is physically verified by organizations to ascertain its existence and accuracy Depending on the size and nature of the organization it is verified either frequently or once annually Given below are steps which can be used to design the physical verification of inventory process These need to be fine tuned according to the nature of industry

Perpetual InventoryMedium to large organizations having high quantity of stocks must design a perpetual inventory count system Physical verification of inventory on a perpetual basis helps to monitor and control the stocks effectively A perpetual inventory system can be either weekly or monthly An annual verification of stocks during year end audits can reveal differences between physical and book quantities which would be difficult to identify and a rectification at that stage may not be possible leading to an excessive write off

weekly stock take procedure needs to be carried out on the day of the week when the operations are expected to be at a minimum ie here is minimum movement of inventory Monthly physical verification needs to be carried out on the last day of the month after all the invoices have been recorded and the inventory is dispatched

A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter

Inventory ScheduleThe inventory schedule must be prepared prior to the stock count It must specify the date and time of the count and the staff who will be participating in the stock count The schedule must be communicated to the staff involved in the stock take

43 | P a g e

Inventory Count SheetsArea wise inventory count sheets must be available for the stock take The inventory count sheets need to be numbered and should have a complete list of all items in stock as per the stock records on the computer system The unit of measurement specified on the count sheet should match the unit of measurement in which stock is required to be recorded in the books This will enable to compare the book stock with the physical stocks counted and would reduce errors of conversion For example if the book stock is in Cartons and Pieces the physical stock needs to be counted and recorded as Cartons and Pieces If the book stock is in kilograms then the physical stock needs to be weighed and recorded in kilograms A blind count is always beneficial ie the system stock should not be mentioned on the inventory count sheetThe staff involved in the stock count must initial sign each and every page of the inventory count sheet

Cut Off ProceduresAdequate cut off procedures need to be followed For instance GRN (goods receipt note) for all raw materials received need to be accounted prior to counting and included in the stock count during physical stock take Similarly finished goods for which invoices are entered need to be segregated and transferred to dispatch section and should not be counted during physical stock take All pending sales invoices and GRNrsquos need to be entered before generating the stock count sheets from the systemSummarizing the above all goods just received for which GRN is not prepared and all sales invoices entered which are not yet dispatched should be segregated and not counted during the physical stock take

Third Party StocksDuring stock counts inventory belonging to third parties in our stores need to be identified Similarly on a monthly or quarterly basis it is important to obtain a confirmation from third parties with whom our stocks are kept For example obtaining a confirmation for stocks kept on consignment basisComparison with System StockThe physical stock must be entered in the system to compare with the book stock The stocks must be entered in the same unit of measurement as present on the system If possible the staff entering the stock needs to be different from the staff involved in the stock count to ensure segregation of duties This would depend on the size of the organization and the staff available Entry should be done from the count sheets page by page to ensure all items are entered Any items which were not present in the count sheets and written manually during physical stock should be entered with care and checked with similar items in the systemSubsequent data entry of sales invoices and GRN can be done only after comparing the system stocks with the physical stockVariance AnalysisAfter entering the physical stocks the variances if any must be analyzed Huge variances must be investigated by performing a recount of those items verifying whether the entry of physical stock was correctly done whether any errors are present in data entry of invoices stock receipts and stock issueThe variances need to be accounted for such that the system stock reflects the result of the physical stock count

44 | P a g e

CAPITAL GOODS LISTxlsx

INVENTORY OF STEEL AS ON 310310

MAIN SHEET OF STEELxlsx

2185

2977

17334

091

12958

22482

612

QTY of TMT BARS IN MT

TMT 08MM

TMT 10MM

TMT 12MM

TMT 16MM

TMT 20MM

TMT 25MM

TMT 28MM

TMT 30MM

TMT 32MM

45 | P a g e

MS

PLA

TE 02M

M

MS

PLA

TE 03

2MM

MS

PLA

TE 06M

M

MS

PLA

TE 10M

M

MS

PLA

TE 16M

M

MS

PLA

TE 25M

M

MS

PLA

TE 36M

M

MS

PLA

TE 50M

M

MS

PLA

TE 63M

M

SAIL H

ARD PLA

TE5MM

000

10000

20000

30000

PLATE QNTY

Series1

QUANTITY OF BEAM

ISMB 250 1468ISMB 200 1143

46 | P a g e

QUANTITY OF CHANNEL

ISM

C 400

ISM

C 200

ISM

C 250

ISM

C 300

ISM

C 150

ISM

C 100

ISM

C 75

ISM

C 125

ISM

C 175

ISM

C 160

ISM

C 180

0

20

40

60

80

100

120

140

160

180

200

Series1

PHYSICAL VERIFICATION OF STEEL

STEEL INVENTORYxlsx

INVENTORY OF CEMENT AS ON 220410

LOCATION QUANTITY

GODOWN NO 4 1583 BAGS

BALLING BUILDING

2703 BAGS

GOWODN NO 3 1810 BAGS

GOWODN NO 2 1060 BAGS

ISSUED 400 BAGS

TOTAL 6756 BAGS

47 | P a g e

QUANTITY OF CHANNEL

ISM

C 400

ISM

C 200

ISM

C 250

ISM

C 300

ISM

C 150

ISM

C 100

ISM

C 75

ISM

C 125

ISM

C 175

ISM

C 160

ISM

C 180

0

20

40

60

80

100

120

140

160

180

200

Series1

PHYSICAL VERIFICATION OF STEEL

STEEL INVENTORYxlsx

INVENTORY OF CEMENT AS ON 220410

LOCATION QUANTITY

GODOWN NO 4 1583 BAGS

BALLING BUILDING

2703 BAGS

GOWODN NO 3 1810 BAGS

GOWODN NO 2 1060 BAGS

ISSUED 400 BAGS

TOTAL 6756 BAGS

47 | P a g e

GRAPHICAL REPRESENTATION OF INVENTORY IN TERMS OF QUANTITY

TMT BARS5

ROUND BARS5

PLATE57ANGLE

4

CHANNEL21

BEAM1

CEMENT7

QTY IN MT

GHRAFICAL REPRESENTATION OF INVENTORY IN TERMS OF INR

TMT BARS 260737304ROUND BARS 286397542

PLATE 4045017230

ANGLE 417077856

CHANNEL 1720577931

BEAM 80616966CEMENT 7955969HSD 29324414

48 | P a g e

STACKING PROCEDURE OF CEMENT

IMPORTANCE OF PROPER STORAGE OF CEMENT

The binding property and strength of cement depend upon its capacity for chemical reaction which can take place in the presence of water Cement if not stored properly can absorb moisture from the atmospheric air or any other source and react with it chemically The strength of such type of cement when used would be adversely affected to the extent such reaction would have taken place

For prevention of cement against deterioration and retaining its freshness its storage should be such that no dampness or moisture is allowed to reach cement either from the ground walls or from the environment This becomes particularly important during the humid season and in coastal regions when atmospheric air contains higher amount of moisture in it

CEMENT GODOWN AT SITE

In most construction projects godowns are constructed at site for storage of a few days requirement of cement Even though such godowns are temporary in nature they must conform to the following requirement

The walls must be plastered and made damp proof The roof must be given an appropriate water proofing treatment The floor must be raised by atleast 80 cm above the ground level to prevent any

inflow of water The flooring may consist of a 15 cm thick layer of dry bricks laid in two courses over a layer of earth consolidated to a thickness of 15cm above the ground level

For further protection cement bags should be stacked at least 10-20 cm clear above the floor by providing wooden battens and planking arrangement For saving timber concrete may be used

If any windows are provided these should be few and small and normally kept tightly closed to prevent entry of atmospheric moisture from outside

A newly constructed godown should not be used for storage of cement unless its interior is thoroughly dry

PROPER METHOD FOR STACKING OF CEMENT BAGS

The arrangement should be such that it is convenient both for stacking and removal of cement bags and it also leaves adequate space for movement and inspection of bags for counting purposes etc No cement bags should be stacked in contact with an external wall A clear space of at least 60 cm should be left between the exterior wall and the stacks

Cement bags should be placed closely together in the stack to reduce circulation of air as much as possible Cement bags should not be stacked more than ten bags high to avoid lumping or lsquowarehouse packrsquo under pressure If the stack is more than seven bags high arrange the bags in header and stretcher fashion (ie) alternately length-wise and cross-wise

49 | P a g e

to achieve interlocking between them and lessening the danger of toppling over the arrangement of two stacks with a height of seven bags and ten bags respectively

For extra safety during rainy season the stacks of cement bags should be enclosed completely in polythene sheets (atleast 700 gauge thick) or similar material if it is anticipated that cement would not be required for a prolonged period This can be achieved by making a large loose sack of the polythene sheet and arranging cement bags within it with flaps of the sheet closing on the top of the pile Care should be taken to ensure that the polythene sheet is not damaged any time while in use

TEMPORARY STORAGE AT SITE

Sometimes cement requirement of a day or two may have to be stored at site in the open In such cases cement bags should be laid on a dry platform made of wooden planks resting over brick-masonry concrete dry sand agregates raised about 15 cms above the ground level The stack must be kept fully covered with tarpaulin or polythene sheet and protected against atmospheric moisture The covering sheets must overlap each other properly Temporary storage on open storage should not be adopted in wet weather

PROPER METHOD FOR REMOVAL OF CEMENT BAGS

When removing bags from storage cement bags should be removed from upto two or three tiers on the backside rather than only from one tier on the front as shown in the figure If the rows are thus stepped back there is less chance of over-turning of bags

Stepping of Tiers while Removing Cement Bags

When removing bags for use apply the ldquoFirst in First outrdquo (FIFO) principle ie take out the oldest cement first Each consignment of cement should be stacked separately in the godown so as to permit easy access for inspection and to facilitate removal in a proper sequence It would be desirable to pin a play card on each pile of cement indicating the date of its arrival in the Godown

STORAGE CAPACITY OF A CEMENT GODOWN

While working out the inside dimensions of a cement godown for storage of specified quantity of cement filled bags the following dimensions may be considered Length of Cement bags 70 cm (average)Width 35 cm (average)Thickness 14 cm (average) Clearance and passages 60 cm (average)

50 | P a g e

EFFECT OF STORAGE ON STRENGTH OF CEMENT

The cement when stored for longer period of time loses its strength characteristics The strength of cement when used after one year of its production loses its strength by about 40-50 on application as compared to that of freshly produced cement The loss of strength characteristic of cement at different interval of times is as given below in the table

Age of cement Reduction in its strength

3Months 20-30

6Months 30-40

12 Months 40-50

TIPS FOR PROPER STORAGE OF CEMENT

Do not store in a building where walls roof and floor are not completely weather proof

Do not store in a new warehouse until the interior is thoroughly dried out Do not make contact with a badly fitted windows and doors and see that they are kept

closed Do not stack against the wall Always pile on the floor on wooden planks Do not forget to pile bags together Do not pile more than 15 bags high and arrange the bags in header and stretcher

fashion Do not take cement from one tier Step back to three or four tiers Do not keep dead storage Do not keep bags on the grounds for temporary storage at work site Pile on raised dry

platform and cover with tarpaulin or Polythene sheets

INVENTORY OF DIESEL AS ON 220410

OPENING BALANCE-7390 LTRS

51 | P a g e

LOCATION- BROWSERISSUED-2708 LTRSTOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1 Diesel is kept in an container in ESSAR steel2 Then it is transported through a truck3 It moves to different areas inside the project site and deliver fuel to the

vehicles4 It takes the MIN while refuelling the vehicle is done5 By this process fuel is efficiently supplied to different department who

need it

52 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

STACKING PROCEDURE OF CEMENT

IMPORTANCE OF PROPER STORAGE OF CEMENT

The binding property and strength of cement depend upon its capacity for chemical reaction which can take place in the presence of water Cement if not stored properly can absorb moisture from the atmospheric air or any other source and react with it chemically The strength of such type of cement when used would be adversely affected to the extent such reaction would have taken place

For prevention of cement against deterioration and retaining its freshness its storage should be such that no dampness or moisture is allowed to reach cement either from the ground walls or from the environment This becomes particularly important during the humid season and in coastal regions when atmospheric air contains higher amount of moisture in it

CEMENT GODOWN AT SITE

In most construction projects godowns are constructed at site for storage of a few days requirement of cement Even though such godowns are temporary in nature they must conform to the following requirement

The walls must be plastered and made damp proof The roof must be given an appropriate water proofing treatment The floor must be raised by atleast 80 cm above the ground level to prevent any

inflow of water The flooring may consist of a 15 cm thick layer of dry bricks laid in two courses over a layer of earth consolidated to a thickness of 15cm above the ground level

For further protection cement bags should be stacked at least 10-20 cm clear above the floor by providing wooden battens and planking arrangement For saving timber concrete may be used

If any windows are provided these should be few and small and normally kept tightly closed to prevent entry of atmospheric moisture from outside

A newly constructed godown should not be used for storage of cement unless its interior is thoroughly dry

PROPER METHOD FOR STACKING OF CEMENT BAGS

The arrangement should be such that it is convenient both for stacking and removal of cement bags and it also leaves adequate space for movement and inspection of bags for counting purposes etc No cement bags should be stacked in contact with an external wall A clear space of at least 60 cm should be left between the exterior wall and the stacks

Cement bags should be placed closely together in the stack to reduce circulation of air as much as possible Cement bags should not be stacked more than ten bags high to avoid lumping or lsquowarehouse packrsquo under pressure If the stack is more than seven bags high arrange the bags in header and stretcher fashion (ie) alternately length-wise and cross-wise

49 | P a g e

to achieve interlocking between them and lessening the danger of toppling over the arrangement of two stacks with a height of seven bags and ten bags respectively

For extra safety during rainy season the stacks of cement bags should be enclosed completely in polythene sheets (atleast 700 gauge thick) or similar material if it is anticipated that cement would not be required for a prolonged period This can be achieved by making a large loose sack of the polythene sheet and arranging cement bags within it with flaps of the sheet closing on the top of the pile Care should be taken to ensure that the polythene sheet is not damaged any time while in use

TEMPORARY STORAGE AT SITE

Sometimes cement requirement of a day or two may have to be stored at site in the open In such cases cement bags should be laid on a dry platform made of wooden planks resting over brick-masonry concrete dry sand agregates raised about 15 cms above the ground level The stack must be kept fully covered with tarpaulin or polythene sheet and protected against atmospheric moisture The covering sheets must overlap each other properly Temporary storage on open storage should not be adopted in wet weather

PROPER METHOD FOR REMOVAL OF CEMENT BAGS

When removing bags from storage cement bags should be removed from upto two or three tiers on the backside rather than only from one tier on the front as shown in the figure If the rows are thus stepped back there is less chance of over-turning of bags

Stepping of Tiers while Removing Cement Bags

When removing bags for use apply the ldquoFirst in First outrdquo (FIFO) principle ie take out the oldest cement first Each consignment of cement should be stacked separately in the godown so as to permit easy access for inspection and to facilitate removal in a proper sequence It would be desirable to pin a play card on each pile of cement indicating the date of its arrival in the Godown

STORAGE CAPACITY OF A CEMENT GODOWN

While working out the inside dimensions of a cement godown for storage of specified quantity of cement filled bags the following dimensions may be considered Length of Cement bags 70 cm (average)Width 35 cm (average)Thickness 14 cm (average) Clearance and passages 60 cm (average)

50 | P a g e

EFFECT OF STORAGE ON STRENGTH OF CEMENT

The cement when stored for longer period of time loses its strength characteristics The strength of cement when used after one year of its production loses its strength by about 40-50 on application as compared to that of freshly produced cement The loss of strength characteristic of cement at different interval of times is as given below in the table

Age of cement Reduction in its strength

3Months 20-30

6Months 30-40

12 Months 40-50

TIPS FOR PROPER STORAGE OF CEMENT

Do not store in a building where walls roof and floor are not completely weather proof

Do not store in a new warehouse until the interior is thoroughly dried out Do not make contact with a badly fitted windows and doors and see that they are kept

closed Do not stack against the wall Always pile on the floor on wooden planks Do not forget to pile bags together Do not pile more than 15 bags high and arrange the bags in header and stretcher

fashion Do not take cement from one tier Step back to three or four tiers Do not keep dead storage Do not keep bags on the grounds for temporary storage at work site Pile on raised dry

platform and cover with tarpaulin or Polythene sheets

INVENTORY OF DIESEL AS ON 220410

OPENING BALANCE-7390 LTRS

51 | P a g e

LOCATION- BROWSERISSUED-2708 LTRSTOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1 Diesel is kept in an container in ESSAR steel2 Then it is transported through a truck3 It moves to different areas inside the project site and deliver fuel to the

vehicles4 It takes the MIN while refuelling the vehicle is done5 By this process fuel is efficiently supplied to different department who

need it

52 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

to achieve interlocking between them and lessening the danger of toppling over the arrangement of two stacks with a height of seven bags and ten bags respectively

For extra safety during rainy season the stacks of cement bags should be enclosed completely in polythene sheets (atleast 700 gauge thick) or similar material if it is anticipated that cement would not be required for a prolonged period This can be achieved by making a large loose sack of the polythene sheet and arranging cement bags within it with flaps of the sheet closing on the top of the pile Care should be taken to ensure that the polythene sheet is not damaged any time while in use

TEMPORARY STORAGE AT SITE

Sometimes cement requirement of a day or two may have to be stored at site in the open In such cases cement bags should be laid on a dry platform made of wooden planks resting over brick-masonry concrete dry sand agregates raised about 15 cms above the ground level The stack must be kept fully covered with tarpaulin or polythene sheet and protected against atmospheric moisture The covering sheets must overlap each other properly Temporary storage on open storage should not be adopted in wet weather

PROPER METHOD FOR REMOVAL OF CEMENT BAGS

When removing bags from storage cement bags should be removed from upto two or three tiers on the backside rather than only from one tier on the front as shown in the figure If the rows are thus stepped back there is less chance of over-turning of bags

Stepping of Tiers while Removing Cement Bags

When removing bags for use apply the ldquoFirst in First outrdquo (FIFO) principle ie take out the oldest cement first Each consignment of cement should be stacked separately in the godown so as to permit easy access for inspection and to facilitate removal in a proper sequence It would be desirable to pin a play card on each pile of cement indicating the date of its arrival in the Godown

STORAGE CAPACITY OF A CEMENT GODOWN

While working out the inside dimensions of a cement godown for storage of specified quantity of cement filled bags the following dimensions may be considered Length of Cement bags 70 cm (average)Width 35 cm (average)Thickness 14 cm (average) Clearance and passages 60 cm (average)

50 | P a g e

EFFECT OF STORAGE ON STRENGTH OF CEMENT

The cement when stored for longer period of time loses its strength characteristics The strength of cement when used after one year of its production loses its strength by about 40-50 on application as compared to that of freshly produced cement The loss of strength characteristic of cement at different interval of times is as given below in the table

Age of cement Reduction in its strength

3Months 20-30

6Months 30-40

12 Months 40-50

TIPS FOR PROPER STORAGE OF CEMENT

Do not store in a building where walls roof and floor are not completely weather proof

Do not store in a new warehouse until the interior is thoroughly dried out Do not make contact with a badly fitted windows and doors and see that they are kept

closed Do not stack against the wall Always pile on the floor on wooden planks Do not forget to pile bags together Do not pile more than 15 bags high and arrange the bags in header and stretcher

fashion Do not take cement from one tier Step back to three or four tiers Do not keep dead storage Do not keep bags on the grounds for temporary storage at work site Pile on raised dry

platform and cover with tarpaulin or Polythene sheets

INVENTORY OF DIESEL AS ON 220410

OPENING BALANCE-7390 LTRS

51 | P a g e

LOCATION- BROWSERISSUED-2708 LTRSTOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1 Diesel is kept in an container in ESSAR steel2 Then it is transported through a truck3 It moves to different areas inside the project site and deliver fuel to the

vehicles4 It takes the MIN while refuelling the vehicle is done5 By this process fuel is efficiently supplied to different department who

need it

52 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

EFFECT OF STORAGE ON STRENGTH OF CEMENT

The cement when stored for longer period of time loses its strength characteristics The strength of cement when used after one year of its production loses its strength by about 40-50 on application as compared to that of freshly produced cement The loss of strength characteristic of cement at different interval of times is as given below in the table

Age of cement Reduction in its strength

3Months 20-30

6Months 30-40

12 Months 40-50

TIPS FOR PROPER STORAGE OF CEMENT

Do not store in a building where walls roof and floor are not completely weather proof

Do not store in a new warehouse until the interior is thoroughly dried out Do not make contact with a badly fitted windows and doors and see that they are kept

closed Do not stack against the wall Always pile on the floor on wooden planks Do not forget to pile bags together Do not pile more than 15 bags high and arrange the bags in header and stretcher

fashion Do not take cement from one tier Step back to three or four tiers Do not keep dead storage Do not keep bags on the grounds for temporary storage at work site Pile on raised dry

platform and cover with tarpaulin or Polythene sheets

INVENTORY OF DIESEL AS ON 220410

OPENING BALANCE-7390 LTRS

51 | P a g e

LOCATION- BROWSERISSUED-2708 LTRSTOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1 Diesel is kept in an container in ESSAR steel2 Then it is transported through a truck3 It moves to different areas inside the project site and deliver fuel to the

vehicles4 It takes the MIN while refuelling the vehicle is done5 By this process fuel is efficiently supplied to different department who

need it

52 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

LOCATION- BROWSERISSUED-2708 LTRSTOTAL-4682 LTRS

STACKING PROCEDURE OF DIESEL

1 Diesel is kept in an container in ESSAR steel2 Then it is transported through a truck3 It moves to different areas inside the project site and deliver fuel to the

vehicles4 It takes the MIN while refuelling the vehicle is done5 By this process fuel is efficiently supplied to different department who

need it

52 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

PROBLEMS-

1 NO PERMANENT PLACE FOR STACKING OF GOODS2 ITS NOT ESAY TO PICK UP ITEMS3 MANY OF THE CAPITAL GOODS ARE EXPOSED TO SUNLIGHT

AND MOISTURE RESULTING IN RUSTING4 REGULAR DISPLACEMENT OF ITEMS FROM ONE PLACE TO

ANOTHER CAUSING AMBIGUITY IN FINDING THE REQUIRED ITEM

5 REGULAR CHANGE IN THE POSITION OF GOODS RESULTS IN THE LOSS OF TIME LOSS OF MONEY LOSS OF MAN HOUR AND OPORTUNITY COST IS ALSO INVOLVED

6 NO SHED FOR STACKING OF MATERIALS7 MANY OF THE WOODEN BOXES ARE BROKEN AND THE

ELECTRICAL MACHINERY INSIDE IS EXPOSED TO ATMOSPHERE

8 AS THE MACHINES ARE PACKED IN WOODEN BOX WE NEVER KNOW THAT WHETHER THEY ARE IN WORKING CONDITION OR NOTWE ALSO HAVE TO VERIFY THAT THE ITEMS INSIDE THE BOXES ARE NOT MISSING AND THEY ARE NOT PURSUING ANY MERCHANDISE DAMAGE

9 THE CONTRACTERS PICK UP ITEM WITHOUT MIN WHICH CAUSES PROBLEM WHILE RECONCILIATION

10 CEMENT BAGS SHOULD BE ISSUED WITHIN ITS LIFE PERIOD

SUGGESTIONS-

1 ACQUIRING OF SPACE FOR STACKING OF MATERIALS2 THERE SHOULD BE SPECIFIC PLACE FOR STACKING

DIFFERENT ITEMS EXAMPLE-ONE AREA FOR STACKING OF CAPITAL GOODS ANOTHER FOR STEEL ANOTHER FOR AGGREGATE

3 REVIEW OF MATERIAL REQUIREMENT PLANNING4 WE SHOULD VERIFY THAT PRODUCTS ARE USED AT THE

PROJECTED TIME PERIOD5 FIXED POSITION LAYOUT SHOULD BE PREPARED6 A BIGGER WARE HOUSE NEEDED FOR STACKING

53 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

7 ADDITIONAL EMPLOYEES SHOULD BE RECRUITED

STORES CREDIT TO MANAGEMENT-

Complete inventory visibility the most Himalayan task for the management

Judicious use of the inventory FIFO model used Itrsquos a cyclone prone area still then stores department is

efficient in material management Packing and stacking of material is done periodically Reallocation plan is always happening 24 hr service to facilitate uninterrupted work to drive

optimal internal customer satisfaction Prevention of revenue leakage in term of astringent

source of revenue Satisfying external financial audit Bring in transparent material management practice Helps in knowing obsolete items Helps in procurement demand forecasting Curving practise of inferior suppliers Claim management Reconciliation with vendors and suppliers Goods receipt note (GRN) preparation against the actual

receipt

54 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

REFERENCES-

WEBSITE- WWWESSARCOM

BOOKS ndash

OPERATIONS MANAGEMENT FOR COMPETITIVE STUDY Manual of instructions for purchase and maintenance of stores of NCSM

Price lists and vocabulary of stationery stores and forms issued by the

Department of Stationery and Printing Govt of India Books on materials management Inventory Control by famous authors

including publications of National Productivity Council New Delhi

Introduction to Materials Management by J R Tony Arnold Lloyd M Clive Stephen N Chapman PhD

Material Flow Management Improving Cost Efficiency and Environmental Performance by Bernd Wagner (Editor) Stefan Enzler (Editor)

Applied Materials Management by S Chatterjee

Excellence In Warehouse Management Minimizing Costs And Maximizing Value by Stuart Emmett

55 | P a g e

56 | P a g e

• ESSAR AT A GLANCE
• Genesis and evolution
• • The Essar Group was founded in 1969 by brothers Mr Shashi Ruia and Mr Ravi Ruia The 21st century for the Group has been all about consolidating and growing the businesses
  • The Essar Group has been foraying into new international markets and exploring new business areas in a bid to keep its entrepreneurial spirit alive and to keep growing
  • • Corporate profile
    • • Moving beyond Indian frontiers the Essar Group continues to grow internationally through focused strategies
      • Listed here are the promoter directors of the Essar Group Each company under the Group is independently run by a team of professionals
      • • Project
        • Essar Projects Limited drives our businesses in the construction sector We own one of Asiarsquos largest banks of sophisticated construction equipment
        • • With over 5000 people we are a global engineering procurement and construction (EPC) company headquartered in Dubai with offices in India China and the Czech Republic
          • Essar Oil operates a fully integrated oil company of international size and scale in India
          • • Power
            • • Essar Power operates four power plants with a combined capacity of 1220 MW in three locations across India
              • • Communications
                • • Essar Telecom Infrastructure is one of the largest independent telecom infrastructure service provisioning companies in the country
                  • • Shipping ports amp logistics
                    • • Essar is an end-to-end logistics services provider with investments in ports and terminals logistics services sea transportation and oilfield drilling services
                      • Essar Steel is a global producer of steel with a footprint in India Canada USA the Middle East and Asia
                      • • Current status
                        • MATERIALS MANAGEMENT
                        • • Areas of Concentration
                          • • Goals
                            • Quality Assurance
                            • Standards
                            • Promoting Sustainability
                            • Improving circulation infrastructure
                            • Benefits
                            • FUNCTIONS AND DUTIES OF STORES DEPARTMENT-
                            • • Safety measures
                              • • Perpetual Inventory
                                • A monthly stock count procedure would involve a complete stock count ie counting the entire inventory A weekly perpetual inventory system on the other hand would involve counting some of the quantity on a weekly basis such that the entire stocks are counted at least twice a year or once every quarter Inventory Schedule
                                • Inventory Count Sheets
                                • Cut Off Procedures
                                • Third Party Stocks
                                • Comparison with System Stock
                                • Variance Analysis