A

Summer Training Project Report

On
“Working Capital Management
in Bokaro Steel Plant”
INTRODUCTION TO TOPIC
The working capital management refers to
management of current assets. A firm is working
capital consists of its investment in current assets
which include short-term assets such as cash and bank
balance, inventories, receivable (including debtors and
bills,) and marketable securities. So, the working
capital management refers to the management of the
level of all these individual current assets.
INTRODUCTION TO COMPANY
Bokaro Steel Plant - the fourth integrated plant in the
Public Sector - started taking shape in 1965 in
collaboration with the Soviet Union. It was originally
incorporated as a limited company on 29th January
1964, and was later merged with SAIL, first as a
subsidiary and then as a unit, through the Public Sector
Iron & Steel Companies (Restructuring &
Miscellaneous Provisions) Act 1978. The construction
work started on 6th April 1968.
RESEARCH METHODOLOGY
Data Collection:
Data has been collected through secondary approach.

 Data Sources
The research involved gathering Secondary data.
Lot of data has been pooled from Bokaro Steel Plant to
use in the study.
RESEARCH OBJECTIVES
To Calculate comparative statement and ratio
analysis .
To calculate the Ratios in working capital
management-
Profitability ratio
Liquidity ratio
DATA INTERPRETATION
Current Ratio
YEAR 2007-08 2008-09
CURRENT RATIO 1.21 1.15
Quick ratio
YEAR 2007-08 2008-09
QUICK RATIO 0.43 0.28
Net Working Capital Ratio
YEAR 2007-08 2008-09
NET WORKING CAPITAL RATIO 0.11 0.08
Working capital turnover ratio
YEAR 2007-08 2008-09
WORKING CAPITAL TURNOVER RATIO 38.11 39.67
Fixed assets turnover ratio
YEAR 2007-08 2008-09

FIXED TURNOVER RATIO 4.53 3.46

Capital turnover ratio
YEAR 2007-08 2008-09

CAPITAL TURNOVER RATIO 4.63 4.66

FINDINGS
 Current ratio is decreasing because of increase in provisions ,
security & other deposits and decrease in loans & advances (due to
change in policies).
 Quick ratio is decreasing because of increase in inventory and
provisions.
 Net working capital ratio is decreasing because of decrease in
working capital (i.e. increase in provisions) and huge investment in
fixed assets.
 Capital turnover ratio is slightly increased because of decrease in
net block and working capital.
 Working capital turnover ratio is increasing because of decrease in
working capital .
 Fixed turnover ratio is decreasing because of huge investment in
fixed asset.
LIMITATIONS
 In my view my study of the working capital management
has certain limitations. Because I just spent only FOUR
WEEKS in the “BOKARO STEEL PLANT”, and whatever
information during that short period I could gather, I
worked upon that. Thus my study does not present the
overall view of the working capital management at
“BOKARO STEEL PLANT”.
 The present study is limited to Bokaro Steel Plant.
 The authenticity of the suggestions and recommendations
depend upon the rationality of the data provided to me.
 Have to rely upon the data supplied.
 Executives are not ready to part with the information
beyond a limit.
 
SUGGESTIONS
In view of the analysis and with the change in
industrial scenario it is felt that a company must
reorient its policies for betterment. BSL produces
flat product and now a days there is tough
competition in the market of flat product. Hence
company needs certain best policies for competition
with its competitor in domestic as well as global
market.

Company use perpetual inventory, which is very

costly. Hence the company should use both perpetual
and periodic inventory.
 
Besides automatic procurement items there is no
specific system for calculating reorder level, minimum
and maximum level. A proper system for different
items should be developed.
Lead time for receipt of stores and spare items is around
6 months, which is very high. The lead time should be
brought down by decreasing the time duration in paper
work.
As understand from the explanation of the management,
there is huge volume of non-moving and obsolete stores
and spare items which are yet to be disposed of.
 CONCLUSION
Summer internship has given lot of practical experiences
from on the job culture to theoretical implications at different
levels. There is a great learning in financing to corporate.
During 2008–09, profit before tax of Bokaro Steel Plant is
Rs. 1286.50 which is less as compared to profit before tax of
2007-08 that is Rs. 2830.43, although production has been
increased. It is because of decrease in price of flat product in
domestic and global market due to recession. Although the
market is dull, BSL is able to make profit which shows the
continuous strengthening of the company’s financial
fundamentals. This was the outcomes of multi-pronged
strategy – including increase in production and sales volume,
improvement in product mix, cost reduction major, reduction
in borrowing coupled with buoyancy in the steel market.