Project Report On GENERAL MANAGEMENT AT ESSAR

A Summer Project Report On “GENERAL MANAGEMENT” AT

ESSAR PROJECTS (I) LTD.,

LIST OF CONTENT Sr. no .

Content

1

Certificate form faculty guide

2

Declaration

3

Acknowledgement

4

Executive summery

5

History

6

Mission and vision

7

Profile

8

Essar Group

9

Operations

10

12

Finance Ratio analysis Cash management Banking transaction Inventory management SAP Human resource management General information Recruitment process Interviews at EPL Induction program Welfare facility and safety SWOT analysis

13

Bibliography

11

Page no.

CERTIFICATE

This is to certify that Mr. XYZ MBA semester 4 student of XYZ institute of Business Administration XYZ University, has done summer internship from Essar Projects (I) Limited. He successfully completed his project under my guidance.

Date:

Place:

(Faculty Guide)

DECLARATION

I XYZ, Student of Master of Business Administration, declare that the summer internship project entitled to me in EP(I)L under the guidance of Mr. XYZ is my own work and all information given in this project is true and correct to the best of my knowledge.

ACKNOWLEDGEMENT

I am very much thankful to the management of Essar Projects (I) Limited for permitting me to go through my summer training.

I express my heartfelt gratitude and thanks to Mr. XYZ, Head of Department (Finance) EP(I)L XYZ for his constant encouragement, guidance and advice at every stage of my training.

I am extremely thankful to all the employees of EP(I)L, who has provided me a kind and nice environment for making my training successfull.

I am also thankful to the college for providing me good opportunity in management field.

Suggestions for improvement are invited and would be thankfully accepted.

PREFACE

The construction industry is the second largest industry in India after agriculture. It accounts for about 11% of India’s GDP. It makes significant contribution to the national economy and provides employment to large number of people.

There are mainly 3 segments in the construction which includes residential and commercial construction, infrastructure building which includes roads, railways power etc, and industrial constructions that consist of oil and gas refineries, pipelines, jetties textiles etc.

According to study by ASSOCHAM the burgeoning Indian construction industry, currently worth $70 billion, will rise to US $ 120 billion by 2010.

Essar is high performance multinational organization, providing world class services and products. Delighting millions of customers daily home to a dynamic team of employees. A committed corporate citizen, enriching the community. Those are just some ways to describe the Essar group. The group has as enterprise value of US $ 15 billion and employees over 500000 people across the world.

Company emphasis on massive investment and high value addition has catapulted into a powerful phase of rapid growth businesses span a wide variety of industries right at the heart of the economy ie steel, energy, power, communications, shipping, ports and logistics and projects. Essar is also venturing into new businesses in the verticals of mining, reality, infrastructure and financial services. In every one of these major industries, company’s goal is a market share of 20 percent or more.

Executive Summery

The report presented in “ESSAR Group” and working of ESSAR POJECTS INDIA LTD” at Vadinar Site.

ESSAR group of industries owned by the Ruia brothers is engaged in high priority sectors like oil refining, steel, shipping, construction, telecom, BPO and financial services. ESSAR POJECTS INDIA LTD is the company that made the project ESSAR Oil Ltd Refinery, Vadinar a success. Basically this company performs most of the construction work for refinery at Vadinar, 39km from Jamnagar. It is also involved in the construction of new deep water port near to the refinery capable very large crude services (VLCS).

To develop nation like India it constructs road & bridges & development of real estate has always been a priority sector. ESSAR has contributed to those from many years from pipelines to parts from industrial projects to intelligent buildings & own to canals, township, highways etc. ESSAR POJECTS INDIA LTD as a rich & varied track record as a premier construction.

This report will give you idea about how this company EPIL is managing their working capital and also comparison with peer company analysis has also done in this project.

ESSAR GROUP HISTORY

The Ruia family’s 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 India’s 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 India’s 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 & 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 India’s first mobile phone service in Delhi (branded Essar Cellphone) 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.

MISSION AND VISION

Our vision We will be a respected global entrepreneur, through the power of positive action.

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

Our spirit The 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 fulfill 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 endeavor 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 ‘positive attitude’ 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.

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.

PROFILE The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction and Minerals.

With operations in more than 20 countries across five continents, the group employs 60,000 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 selfemployment.

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 Group’s people strategy is focused on promoting a learning culture that continually enhances the professional skills of its employees.

BOARD OF DIRECTORS

Promoter Directors

Mr. Shashi Ruia Chairman Essar Group

Mr. Ravi Ruia Vice Chairman Essar Group

Mr Prashant Ruia Group Chief Executive Essar Group

Mr Anshuman Ruia Promoter Director Essar Group

Ms Smiti Kanodia Promoter Director Essar Group

Mr Rewant Ruia Promoter Director Essar Group

Management team Mr. Malay Mukherjee — CEO, Steel Business Group Mr Naresh Nayyar — CEO, Energy Business Group Mr Shishir Agarwal — CEO, Exploration & Production Business Mr Sanjay Mehta — CEO, Shipping & Logistics Business Group Mr Rajiv Sawhney — CEO, Telecom Business Group Mr Aparup Sengupta — CEO, Aegis Mr Alwyn Bowden — CEO, Projects Business Group Mr Pradeep Mittal — CEO, Minerals & Mining Business Mr Vikash Saraf — Director, Strategy & Planning, Essar Group Mr VG Raghavan — CFO, Essar Group Mr Adil Malia — Group President, Human Resources Mr SM Lodha — Group President, Assurance and Cost Control Mr Sunil Bajaj — Head, Corporate Relations Group

STEEL

We are a fully integrated flat carbon steel manufacturer — from iron ore to ready-to-market products with a current capacity of 8.6 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 India's 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 integration A 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 beneficiation At Bailadilla, where some of the world's richest and finest ore is available, we have set up a beneficiation plant of 8 MTPA capacity, 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: Pelletization The 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 facility Our steel complex at Hazira, Gujarat, houses a 5.0 MTPA sponge iron plant, the world's largest gas-based sponge iron plant in single location. The plant provides raw materials for our state-of-the-art 4.6 MTPA hot rolled coil (HRC) plant, the first and largest of India's new generation steel mills. This plant is fed with inputs from four electric arc furnaces and three

casters. The complex's 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 0.6 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.

Cold rolling complex At the other end of the value chain, our downstream facilities include a 1.4 MTPA cold rolling complex, which adds further muscle to our steel making facilities. The complex comprises two pickling lines of 1.4 MTPA capacity, a reversing mill and a 1.2 MTPA tandem mill, two galvanizing lines of an aggregate capacity of 0.5 MTPA, a batch annealing furnace of 0.7 MTPA, and a skin pass mill of 1.0 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, Maharashtra We have a 0.6 MTPA cold rolling plant, a 0.5 MTPA galvanising plant, a 0.4 MTPA colour coating plant, and a 0.7 MTPA pickling line.

Distribution outlets Essar Steel is the first steel company to set up an end user distrubution 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 Center facilities in India with an annual capacity of 2.6 million tonnes located in Pune (Maharashtra), Hazira (Gujarat), Bahadurgarh (National Capital Region), and Chennai (Tamil Nadu).

Canada facility: Essar Steel Algoma Established in 1901, Essar Steel Algoma is an integrated steel producer based in Sault Ste. Marie, Ontario, Canada. The plant's current production capacity is 4 MTPA. Some of the key equipment at the plant include a low-cost, technologically advanced Direct Strip Production

Complex (DSPC), a slabcaster, 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 Indonesia PT Essar is Indonesia's 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 0.4 MTPA and its newly set up galvanizing capacity is 0.15 MTPA.

OIL AND GAS

Essar Oil's assets include developmental rights in proven exploration blocks, a 10.5 mtpa refinery on the west coast of India and over 1,300 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 3,000 outlets countrywide.

Our global portfolio of onshore and offshore oil and gas blocks, with about 70,000 sq km is available for exploration. We have over 300,000 bpd (barrels per day) of crude refining capacity that is being expanded to 750,000 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 80,000 bpd.

Our Exploration and Production (E&P) 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 E&P 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 E&P blocks in Assam, India. The overseas E&P assets include three onshore oil and gas blocks in Madagascar, Africa, and one offshore block each in Vietnam and Nigeria.

We have a 10.5 mmtpa 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 — 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 1,010 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 India’s crude imports. Post its expansion to 36 mtpa, the refinery will run at a Nelson Complexity of 12.8. 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.

Essar Oil serves retail customers through a modern, countrywide network of over 1,000 retail outlets. We were the first private Indian company to enter petro retailing, looking beyond urban markets and reaching out to consumers in India’s heartland.

We offer a wide range of products to bulk customers in the industrial and transport sectors.

EOL has product off take and infrastructure sharing agreements with oil PSUs, namely Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation (IOCL). We have received approvals to supply Aviation Turbine Fuel (ATF) to the Indian Armed Forces.

POWER

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 1,220MW to

6,100MW by 2012, with a target to reach 11,470MW in the near future. The company will set up three coal-based plants of 1,200MW each in Gujarat, Madhya Pradesh and Jharkhand, aggregating 3,600 MW. An additional 1,280MW is also under construction – 1160 MW in Gujarat and 120MW in Orissa – to supply power and steam to the expanded refinery.

An additional 5,370 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 Protocol's 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. ..

Vodafone-Essar is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone Group. It is one of India’s 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 40,000 employees in India and the US, with expertise in the telecom, insurance, banking and healthcare domains.

We have launched India's first countrywide chain of multi-brand and multiservice outlets in the telecom retail space. The MobileStore Ltd currently runs 1,300 outlets, branded “The MobileStore”. In the next two years, over 2,500 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 4,500 telecom towers operational. Essar has a 14 per cent stake in Indus Towers, India’s largest tower company, which has over 100,000 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' — Kenya’s third mobile cellular network.

This is a GSM-based mobile services network in Kenya with close to a million subscribers.

SHIPPING PORTS & LOGISTICS

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

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 India’s 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 upto 6.5mmtpa.

The dry bulk port being constructed at Hazira involves setting up a 30mtpa allweather, deep-draft port and jetty facility. The port will have a berth of 550 meters length, and an alongside depth of 12.5 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.

Essar's logistics business provides end-to-end logistics services – from ships to ports, lighterage services, intraplant logistics and dispatch of finished products. We own trans-shipment assets to provide lighterage support services, and onshore and offshore logistics services. We also operate a fleet of 4,200 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 0.6 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.

PROJECTS

With over 5,000 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 Group’s 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 320,000 bpd of refining capacity and developed over 10 million tons of steel capacity. We have laid more than 5,000 km of pipelines and developed 1,200 MW of power projects, and are developing another 4,800 MW. Our offshore EPCI capabilities currently execute a USD 220 million project for ONGC. We own over 3,000 nos. construction equipment worth over USD 250 million.

We have 12,000tpa (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 1,200 engineers.

With over USD 6 billion procurement capability, we have global procurement support in the Middle East and China.

The ISO 9001:2000 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 world’s second

longest slurry pipeline – Essar Steel’s 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.

Board of Directors Mr Shashi Ruia — Promoter, Director Mr Rewant Ruia — Director Mr VN Paradkar — Executive Director Mr TK Nagraj — Director Mr SV Venkatesan — Director

Management team Mr Alwyn Bowden — CEO, Projects Business Group Mr JK Singh — CEO, Constructions Mr Tapash Bhattarcharya — CFO, Constructions Cmdr. PCB Nair — CEO, Offshore Subsea Mr Anand Sonthalia — CEO, Essar Heavy Engineering Mr K Ravindran — Head, New EPC Projects Mr KBM Swamy — Sr Vice President, Human Resources

OTHER BUSINESSES Besides leadership in its core businesses, the Essar Group is building a strong presence in several other key sectors of India's growing economy. These are: information technology, realty, mining and minerals, financial services, publishing, and agribusiness

Information technology We have an IT-enabled vision for each of our businesses .

Realty Set up in 2007, our realty business is led by a strong team with over 200 man-years of relevant experience

Mining and minerals We are actively engaged in the acquisition and operations of coal and metal mines in India and overseas .

Publishing Launched in 2004, Paprika Media is the result of our foray into publishing

Agribusiness We grow flowers, herbs and vegetables primarily for markets in Europe, Australia, New Zealand and the Middle East

A glimpse of our clientele: Director General Naval Projects, Mumbai Mazgaon Docks Ltd. Essar Oil Ltd. / Abb Lummus Crest Mormugao Port Trust Essar Power Ltd. National Highway Authority of India Essar Steel Ltd. New Mangalore Port Gas Authority Of India Ltd. Nhava-Sheva Port Trust Govt. of Orissa Oil and Natural Gas Commission Govt. of Srilanka P.T. Essar Indonesia

Gujarat Water Supply & Sewerage Board Qatar General Petroleum Corporation Hindustan Petroleum Corporation Ltd. Royal Dutch Shell Gujarat Water Infrastructure Ltd. Sardar Sarovar Narmada Nigam Ltd. Kakinada Port Trust Tamil Nadu Cement Corporation Kandla Port Trust Tuticorin Port Trust Madras Port Trust Vishakhapatnam Port Trust Indian Oil Corporation Gujarat State Petronet Ltd.

Gujarat Heavy Chemicals Ltd.

Tamil Nadu Water Supply & Administration

Polyolefins Industries Ltd.

Operations of Essar Projects

Essar Projects is a 5,000 people strong, global engineering, procurement and construction (EPC) company headquartered in Dubai, with offices in India, Beijing and Prague.

Some of the large projects executed by us include a 5.5mtpa sponge iron plant, a 4.6mtpa steel mill and a 1,000MW power plant at Hazira; an 8mtpa pelletization plant in Vishakhapatnam, a 0.4mtpa cold rolling mill in Indonesia and a 10.5mtpa oil refinery at Vadinar, Gujarat.

We operate through five main businesses: Essar Projects (India) has over four decades of experience in executing projects involving industrial plants, civil and irrigation projects, laying of pipelines, and highways and expressways. The ISO 9001 certified Pipeline division is a specialist in onshore, offshore and cross-country pipelines, from construction to commissioning. We are one of the pioneers in laying offshore gas, oil and deep-water pipelines. We also have the capability to execute entire water systems, from intake well to distribution. We have 12,000tpa (tons per annum) of fabrication facility with waterfront load-out facility.

Essar Offshore Subsea: Marine construction is one of our special strengths. We provide engineering, procurement, construction and installation (EPCI) services in this sector, in domestic as well as overseas markets, in addition to offshore platform maintenance services. In the high-growth oil and gas sector, we provide EPC services for offshore logistics support and marine construction projects. We are currently executing a USD 220 million project for ONGC. Global supplies: We specialize in procurement in the power, steel and hydrocarbon sectors. With over USD 6 billion procurement capability, we have established offices in the Middle East, China and India, and have developed excellent relationships with leading equipment vendors across the globe. The centralized procurement also enables timely completion of projects and economies in purchase.

Essar Heavy Engineering Services (EHES) is a manufacturing facility of Essar Constructions (India) Ltd and a key business vertical of Essar Projects Ltd, an Essar Group company. We have world-class facilities for manufacturing a range of heavy equipment, with a capacity of 12,000 tons per annum. We are strategically located at Hazira on the banks of river Tapi, and have our own jetty for sea transport.

Our products include: • Pressure vessels and heat exchangers Columns, towers and reactors Specialized custom built equipment Steel plant equipment and machinery Material handling equipment Technological structures Among our world-class facilities are: Heavy fabrication shops, two bays with 150-ton EOT cranes Medium fabrication shops, two bays with 60-ton EOT cranes Heavy and medium machine shops, one bay each with specialized machinery Gantry bay, 270 meter long with 2 nos. 60 ton gantry cranes Open fabrication yard with mobile cranes CNC profile cutting machines Plate bending machines with maximum capacity of 120mm x 4,000mm wide plates Hydraulic press of 1,000 tons with five meter span Stress relieving modular furnace of size 9 x 9 x 36 meters We have manufactured several critical equipment and machinery, for oil refineries, steel plants, as well as power and other core sector industries over the last three years, meeting stringent quality and delivery requirements. The equipment meet the design specifications of internationally reputed licensers / consultants, like ABB, Siemens VAI, DuPont, Belco Technologies, UOP, EIL, Toyo, SMS Demag, Technip and Kvaerner.

Project Management Consultancy: An independent team of project management consultants ensures compliance to processes in project execution. The team is also pitching for third-party projects.

We own over 3,000 nos. construction equipment worth over USD 250 million. Our vast bank of sophisticated construction equipment includes niche technology equipment like the 250T Horizontal Directional Drilling Rig, and Scanlay sub-sea pipe laying barge capable of handling pipes of 38" diameter. We are also Asia’s largest owner of cranes in numbers and capacity.

FINANCE AND ACCOUNTING DEPARTMENT Activities: •

Maintenance of accounts

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Reimbursement

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Cash disbursement

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Budgeting

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Business plans

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Indirect taxes

Finance Department at Essar Project (I) Limited Functions of Finance & Account department at Essar Project (I) Ltd. All expenses incurred are book under a project code. Common expenses eg. Administrative expenses are booked in a common code and these expenses are appointed at the year end.

The procedure for processing of various types of bills is enumerated under: (1) Accounts payable:-

A. Major Contractor Bills: - These bills are submitted by major contractors to NES (TCE,EIL or HIPL). NES after checking forward the bills to ABB with their recommendation. ABB after further scrutiny sends these bills to EPIL. The bills are checked by contracts and finance department. Finance department affects necessary statutory and other deductions that is TDS, WTDS, Retention, Advance, Chargeable issues as advised by stores/HED & P&A department. Validity of various bank guarantees as per contract is also check finance department before processing bills.

B. Procurement Bills: - The bills are received in finance department and are processed based on material received report (MRR) & PO bills for advanced against drawing approval and processed after certification by procurement department all the material received and payments made against a particular PO are updated in PO file. Accounts department processes the bills after verifying the validity of the various banks guarantee as required by PO. There is a separate program for controls in respect of bank guarantees.

C. EG, MG, PRW Contractors: - These bills are sent to account departments by respective area managers. Here again the bills received and paid are endorsed in the

respective WO files maintain for the purpose of various recoveries towards TDS, WTDS, Chargeable Issues retention money etc. are affected by accounts department.

D. Administration Bills: - Similar as followed above.

(2) Treasury Functions: As soon as the payment is a made, the bills and supporting vouchers are stamped paid. Cash books are updated daily and physically cash balance is tallied with cash book. Daily cash book is signed by the cashier and the HOD. All the payment made by the cheques/drafts is updated online. Bank book is generated and bank reconciliation statements prepared monthly in respect of all bank account operated.

(3) Budget Updating along with contract department:All the general vouchers are generated with budget code. The budget code has been made mandatory for all expenses, income and payment vouchers, without budget code system will not allow the generation of records. Budget codes for various budget heads entered in budget master. Report for expenses incurred and payment made for a particular budget head can be generated through the system.

(4) Accounts payable:Sale in Transit: - There is a separate program for generation of in transit sale invoice. There is one to one link between equipment procured (Procurement Budget) invoices for sale in transit. This data is automatically updated in sale register which is required to be presented to sales tax authorities at the time of assessment.

(5) Others:Inter Site (Company Conciliation):- Debit/Credit notes are raised as when transaction is affected. Reconciliation is done a quarterly basis with the sites can having few transactions.

In other cases it is done on monthly basis.

Inventory Valuation: - As per the accounting policy followed by the company inventory is valued on weighted average method. Physical verification is carried out on 31st March of every financial year and as a when required.

Maintenance of Fixed Assets Register: - We are maintaining fixed asset registers at site.

Pertaining to furniture and fixture, motor, vehicle and office equipments. Company is following the straight line method for department on plant and machinery. All other assets are depreciated or written down valve method. Details for edition to deletion from fixed assets are entered their in manually. System has a proven of calculating depreciation as per WDV and SLM methods. Also historical information about any item can be obtained and book value can be obtained at any given point of time for any assets or class of assets.

Further in case of sale of furniture to employees prerequisites value as per income tax act can be obtained through the system.

Other Miscellaneous Function: - All the payments to contractor’s vendors and other creditors are made by the F&A department previously, all the payments were made through cheques. But recently the company adopted the policy of transferring the amount directly to the bank account of concern party.

The task issuing TDS certificated preparing vouchers etc. to the related parties and employees also falls under theses departments.

RATIO ANALYSIS CALCULATION OF RATIO’S FOR THE YEAR 2006-07, 2007-08 AND 2008-09 (1) Net Profit Ratio = net profit/sales*100 2006-07 =1159126/16322244*100 = 7.10% 2007-08 =1755817/21911960*100 = 8.01% 2008-09 =2692979/35069937*100 = 7.68% INTERPRETATION:The ratio measures the relationship between net profit and sales of the firm. The net profit is obtained after charging operating expense, interest, depreciation and taxes to the gross profit.

The reasonable ratio ensures adequate return to the owners.

The net profit margin indicate management’s ability to operate the business with the sufficient success not only to recover from the incomes of the period, the cost of goods and services, the expenses of the operating the business and the cost of the borrowed funds, but leave a margin of reasonable compensation to the owners for providing capital.

There are many factors which affect the net profit margin while comparing the net profit, there is provision for depreciation, which is calculated different in different company. There are various method for calculating depreciation. It might happen that the method of depreciation adopted might deduct more amount of profit. So it should be taken into consideration that by which method the company is computing the depreciation.

The high ratio implies that the business will withstand adverse economic condition, when selling prices is declining, cost of production is rising and the demand for the product is falling.

Now it may happen that gross profit and net profit figures differ. Gross profit may rise and net profit margin may remain steady or may decline it might be because of the proportion of administrative as well as selling and distribution expenses may have risen considerably.

Looking at the net profit ratio’s calculated, the net profit margin was 7.10% in the year 2006-07 and rose to 8.01% in the year 2007-08, even though the sales increased considerably. The net profit also increased after deducting the administrative, selling and distribution expenses from the gross profit.

In the year 2008-09 the net profit ratio decreased to 7.68%from 8.01% (2) Current Ratio = current assets/current liability 2006-07 = 10601636/8313115 = 1.27 times 2007-08 = 24261120/14917811 = 1.63 times 2008-09 =33444343/18667118 = 1.79 times INTERPRETATION:This is the most widely used ratio shows the proportion of current assets and current liabilities it is also known as working capital ratio.

The current ratio is one of the best known measures of financial strength. The main question addresses is; “does your business have enough current assets to meet the payment schedule of its current debts with a margin of safety for possible losses in current asset, such as inventory shrinkage or collectable accounts?�

A generally acceptable current ratio is 2:1. But whether or not a specific ratio is satisfactory depends on the nature of the business and the characteristics of its current assets and

liabilities. The minimum acceptable current ratio is obviously 1:1, but that relationship is usually playing it too close for comfort. If your business’s current ratio is too low, you raise it by:

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Paying some debts.

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Increasing your current assets form loans or other borrowings with a maturity of more than one year.

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Converting non-current assets into current assets.

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Increase your current assets form new equity contributions.

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Putting profit back into the business.

Company is trying to maintain the current ratio in recent year because it is showing nearness to the ideal ratio. Current ratio of EPIL is not an ideal one which means that if in any case company is not able to realize some of its current liabilities from the fixed assets which can be harmful for the company.

(3) Liquid Ratio = liquid assets/liquid liabilities 2006-07 = 6602496/8313115 = 0.79 times 2007-08 = 19367413/14917811 = 1.30 times 2008-09 = 27160481/18667118 = 1.46 times INTERPRETATION:The liquid ratio is also known as “acid test ratio” is one of the best measures of liquidity.

By excluding inventories, it concentrates on real liquid assets, with value that is fairly certain. It helps answer the question “if all sales revenues disappear, could my business meet its current obligations with the readily convertible quick funds on hand?”An acid test of 1:1

is considered satisfactory unless the majority of your “quick assets� are in accounts receivables, and the pattern of accounts receivable collection lags behind the schedule for paying current liabilities.

Liquid ratio for the year 2006-07 was less than the ideal ratio 1:1 but it rose after that year by year. It was 1.30 in 2007-08 and 1.46 in 2008-09 which shows that both these years are above the ideal ratio and it is good for EPIL. (4) Total Asset Turnover Ratio = sales/total asset 2006/07 = 16322344/14522727 = 1.12 times 2007-08 = 21911960/29762424 = 0.74 times 2008-09 = 35069937/43635418 = 0.80 times INTERPRETATION:The return on total assets implies how the fund supplied by both owner and creditors are utilized in business. Thus it measures the overall profitability of the business.

It refers to how many times assets are turned over in the period.

High ratio: company can manage its assets efficiently.

Low ratio: company has more assets than it really needs for its operations.

(5) Fixed Asset Ratio = sales/fixed assets 2006-07 =16322344/3921091 = 4.16 times 2007-08 = 21911960/5501304 = 3.98 times

2008-09 = 35069937/9741575 = 3.60 times INTERPRETATION:The more the sales in relation to the amount invested in fixed assets, the more efficient is the use of fixed assets. It indicates higher efficiency. If sales are less as compared to investment in fixed assets are not adequately utilized in the business of course, excessive sale is an indication of over trading and is dangerous.

(6) Debt Equity Ratio = total debt/equity capital 2006-07 = 3526008/2683604 = 1.31 2007-08 = 9881523/4963090 = 1.99 2008-09 = 18968095/6000205 = 3.16 INTERPRETATION:This ratio establishes relationship between the outside long term liabilities and owner’s fund.

It shows proportion of funds provided by long term creditors and that provided by the shareholder or proprietors.

We can see from calculation the amount of long term debt is high than the owner’s fund in all three years, where as it is very high in the year 2008-09 compared to last two years. It means that the outside creditors have a larger claim than the owner’s of the business. The pressure from the creditors would increase and their interference in management will also increase. The company with high debt position will have to accept stricter condition from the lenders, while borrowing money.

The company will have to bear the burden of interest payments. This would put the company in difficulties in raising further funds in future. But high ratio is beneficial from the point of view of shareholder. With limited investment they would retain control over the company.

Beside their return would become higher, if debt funds are obtained at lower rates.

At the time of low demand and profits it would be difficult for the company to raise further funds.

(7) Proprietary Ratio

= shareholders fund/total assets 2006-07 = 2683604/14522727 = 0.18 2007-08 = 4963090/29762424 = 0.17 2008-09 = 6000205/43635418 = 0.14 INTERPRETAION:Higher the ratio, stronger the financial position of the enterprise, as it signifies that the proprietary have provided larger funds to purchase the assets. This ratio cannot exceed 100%. If it is 100%, it means that the business does not use any outside fund. There no outside liabilities. Purchase is made for cash only and the company carries on business entirely with owned funds. A very high ratio is therefore not desirable, because it means that insufficient use is made of outside funds. There can be no standard ratio for all types of business, but it can be said that the proprietary funds should be enough to cover the fixed assets.

The figures show that the proprietary ratio for the year 2006-07 was greater than the year 2008-09, which implies that the shareholders fund are more used for acquiring the fixed assets.

CASH MANAGEMENT Cash is money that is easily accessible either in the bank or in the business. It is not inventory, it is not accounts receivable, and it is not property. These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not always mean more cash.

Profit is the amount of money you expect to make if all customers paid on time and if your expenses were spread out evenly over the time period being measured. However, it is not your day-to-day reality. Cash is what you must have to keep the doors of your business open.

Over time, a company's profits are of little value if they are not accompanied by positive net cash flow. You can't spend profit; you can only spend cash.

Cash Flow refers to the flow of cash into and out of a business over a period of time. The outflow of cash is measured by the money you pay every month to salaries, suppliers, and creditors. The inflows are the cash you receive from customers, lenders, and investors.

Positive Cash Flow If the cash coming into the business is more than the cash going out of the business, the company has a positive cash flow. A positive cash flow is very good and the only concern here is managing the excess cash prudently.

Negative Cash Flow If the cash going out of the business is more than the cash coming into the business, the company has a negative cash flow. A negative cash flow can be caused by a number of problems that result in a shortage of cash, such as too much or obsolete inventory, or poor collections on accounts receivable. If the company doesn't have money in the bank or can't borrow additional cash at this point, it may be in serious trouble.

Managing cash in an organization is an essential part for the finance department. It is because it ensures the procurement and allocation of money to achieve organizational goal.

Efficient cash management processes are pre-requisites to execute payments, collect receivables and manage liquidity. Managing the channels of collections, payments and accounting information efficiently becomes imperative with growth in business transaction volumes. This includes enabling greater connectivity to internal corporate systems, expanding the scope of cash management services to include “full-cycle” processes (i.e., from purchase order to reconciliation) via ecommerce, or cash management services targeted at the needs of specific customer segments. Cost optimization and value-add services are customer demands that necessitate the creation of a mechanism to service the various customer groups.

Banks are increasingly becoming innovative and anticipating the needs of corporates towards standardization, ERP integration, reconciliation, real-time reporting, providing an end-to-end view of cash management value chain besides offering the ability to reach and be reached by their own customers. The mounting pressure from competitors forces the Banks to look for an Information Technology vendor who can offer better solutions and services in Cash Management and Internet Banking.

An organization requires cash for almost all its activities and to run its day to day activities.

Finance department at Essar Projects decides the level at which the cash is maintained.

For any organization it is advisable to have cash at a level what it has decided to maintain.

An organization which needs cash more than or less than what it has decided to maintain will be unfavorable to the organization.

For example: 1. Company A maintains cash at a level of Rs 200 Company B maintains cash at a level of Rs 20.

Company A need cash to carry on its operation is Rs100 and Company B needs Rs50.

We can say that both the companies are not good in terms of its cash management.

Company A is maintaining excess level of cash even though it does not require it.

Whereas company B is maintaining cash at very low level and needs cash at very high level to carry on its operation.

Following are the tools that are used in an organization for the cash management •

Operating cycle

Cash is maintained on the basis of how the organization is going to operate or what will be requirement of the organization for the near future for its operations.

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Company’s policy

Company maintains cash according to its policy that is framed by its management. •

Past experience

Here, the organization reviews the past experiences and past requirements what it has faced and according to that it decides the level at which the cash will be maintained.

Banking verticals

Cash credits With many of the advantages of a standard line of credit, cash credit is the issuance of a short term cash loan to a business. A cash loan of this type if often utilized to meet the expenses associated with a specific task or project, with repayment expected within a period of one year or less. Successfully receiving cash credit and paying off the loan within terms can open the way for the business to be extended a more liberal line of credit for future use.

Cash credit works in a manner that is very similar to that of a line of credit. The difference is that cash credit establishes a cash account with the lender institution that can be drawn upon by the debtor. This is different from a conventional loan, in that the debtor does not have to receive the entire amount of the loan at one time. Cash credit is also different from a line of credit, as the amount of resources extended are pre-approved and the repayment schedule is the same whether the debtor is actively using the cash credit or not.

As with many types of financial assistance, cash credit is extended under terms that are set and controlled by the institution that provides the loan. Typically, cash credit involves the presentation of some form of security in order to be cover the amount of cash credit that is extended by the bank or loan agency. The security of collateral remains accessible to the lender until the cash credit is repaid in full.

One of the advantages for a new company is that cash credit can be an excellent way of setting the stage for a long term working relationship with a lender. Upon successfully complying with the terms of the cash credit agreement, the company may become eligible for other forms of assistance from the financial institution, including other forms of cash loans and the establishment of a conventional line of credit.

This account is the primary method in which Banks lend money against the hypothecation of securities. It runs like a current account except that the money that can be withdrawn from this account is not restricted to the amount deposited in the account.

Essar Projects (I) Ltd. is also availing the benefit of this service.

Short term loans This type of loan is provided for specific purpose, for predetermine amount, installments and interest.

Overdraft The word overdraft means the act of overdrawing from a Bank account. In other words, the account holder withdraws more money from a Bank Account than has been deposited in it.

How does this account then differ from a Cash Credit Account?

The difference is very subtle and relates to the operation of the account. Overdraft is allowed against a host of other securities including financial instruments like shares, units of mutual funds, surrender value of LIC policy and debentures etc. Some overdrafts are even granted against the perceived "worth" of an individual. Such overdrafts are called clean overdrafts.

Overdrafts against fixed deposits Tide over your urgent cash requirements without breaking your Fixed Deposit This option allows company to continue earning the higher rate of interest on an FD and at the same time, company can meet its monetary requirements. An overdraft of up to 90% of the FD/Multiple FDs held with the bank.

Letter of credit A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking.

A letter of credit is a promise to pay. Banks issue letters of credit as a way to ensure sellers that they will get paid as long as they do what they've agreed to do.

Letters of credit are common in international trade because the bank acts as an uninterested party between buyer and seller. For example, importers and exporters might use letters of credit to protect themselves. In addition, communication can be difficult across thousands of miles and different time zones. A letter of credit spells out the details so that everybody's on the same page Executing a Letter of Credit

A seller only gets paid after performing specific actions that the buyer and seller agree to.

For example, the seller may have to deliver merchandise to a shipyard in order to satisfy requirements for the letter of credit. Once the merchandise is delivered, the seller receives documentation proving that he made delivery. The letter of credit now must be paid even if something happens to the merchandise. If a crane falls on the merchandise or the ship sinks, it's not the seller's problem.

To pay on a letter of credit, banks simply review documents proving that a seller performed his required actions. They do not worry about the quality of goods or other items that may be important to the buyer and seller.

Process

After a contract is concluded between buyer and seller, buyer's bank supplies a letter of credit to seller.

Seller consigns the goods to a carrier in exchange for a bill of lading.

Seller provides bill of lading to bank in exchange for payment. Seller's bank exchanges bill of lading for payment from buyer's bank. Buyer's bank exchanges bill of lading for payment from the buyer.

Buyer provides bill of lading to carrier and takes delivery of goods.

INVENTORY MANAGEMENT Inventory Management and Inventory Control must be designed to meet the dictates of the marketplace and support the company's strategic plan. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations.

The basic building blocks for the Inventory Management system and Inventory Control activities are: Sales Forecasting or Demand Management Sales and Operations Planning Production Planning Material Requirements Planning Inventory Reduction

The emphases on each area will vary depending on the company and how it operates, and what requirements are placed on it due to market demands. Each of the areas above will need to be addressed in some form or another to have a successful program of Inventory Management and Inventory Control.

Inventories constitute the most significant part of current assets in the construction industry.

Inventories are approximately 60% of the current assets because a large size of inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is therefore, absolutely imperative to manage inventories efficiently and effectively in order to avoid unnecessary investment. A firm neglecting the management of inventories will be jeopardizing its long time profitability and may fail ultimately. It is possible for a company to reduce its level of inventories to a considerable degree.

Objective of Inventory Management •

To maintain a large size of inventories of raw material and work in progress for efficient and smooth production and of finished goods for uninterrupted sales operations.

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To maintain a minimum investment in inventories to maximize profitability.

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Ensure a continuous supply of raw material to facilitate the production.

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Maintain sufficient stock of raw material in period of short supply and anticipate price changes.

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Minimize the carrying cost and time.

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Control investment in inventories and keep it at an optimum level.

As being the construction company most of materials are sand cement, bricks etc. Decision regarding the inventory are taken by the stores department. As per the requirements they purchase the material and if they have in their stores they will supply materials.

At EPIL level as being the construction company the material are in less no’s and its value is more, material is unpredictable in nature and price is very important. They need to see the time factor because as being the construction company to complete the product it would take more time to complete mean while if the price go up it is very difference to purchase and manage the inventory.

At site engineers are working on various sites as per their requirement and planning they have to: 1. Fill the material requirement form.

2. It should be sent to the area manager and he will check the details and forward that form to the stores.

3. If the stores department having that specific material then they will assess it and if they do not have that material than it goes to the procurement department.

PROCUREMENT OF MATERIAL The following procedures are to be followed.

1. Firstly the material specification is submitted to the head engineer.

2. Then they will analyze the potential vendors.

3. There would be bidding for the price of the material.

4. At last they will decide the price and the vendor for that specific material.

5. One slip of the purchase or acknowledgement slip is submitted to the finance and accounts department and they will pass out that acknowledgement and make payment to the vendor.

6. And they will take received note from material storage department.

There are various codes for the various materials as per their codes order are submitted.

For quality purpose they first send our engineers for inspection of the materials, they will submit the quality and inspection report to the procurement department.

SAP Finance

The SAP finance module has the capability of meeting all the accounting and financial needs of an organization. It is within this module that financial manager as well as others managers

within your business can review the financial position of the company in real time as compared to legally systems which often times require overnight updates before financial statements can be generated and run for management review The real time finality of the SAP modules allows for better decision making and strategic planning. The finance module (F M) integrates with other SAP modules such as MM (Mate Management), PP (Production Planning), SD (Sales and Distribution), PM (Plant Maintenance) and PS (Project Systems).

The financial module also integrates with HR which includes PM (personal management), Time Management, Travel Management and Payroll. Document Transportation occurring within the specific modules generate account postings via accounting determination tables.

Profit Center Accounting provides visibility of an organization’s profit and losses by profit center. The methods which can be utilized for EC-PCA (Profit Center Accounting) are period accounting or by the cost-of-sales approach. Profit Centers can be set-up to identify product lines, divisions, geographical regions, offices, production sites or by functions.

Profit Centers are used for Internal Control purposes enabling management the ability to review areas of responsibility within their organization. The difference between a Cost Center and a Profit Center is that the Cost Center represents individual costs incurred during a given period and Profit Centers contain the balances of costs and revenues.

The financial module comprises several sub modules as follows.

Accounts receivables records all accounting postings generated as a result of customer sales activity.

These posting are automatically updated in the general ledger. It is within the accounts receivable modules that you can monitor aging of the receivable and generates customer analysis. The accounts receivable module also integrates with the general ledger, sales and distribution and cash management module.

Accounts payable records accounting postings generated as a result of vendor purchasing activity. Automatic posting are generated in the general ledger as well. A payment program within SAP enables the payment of payable document by cheques EDI or transfers.

Primary configuration considerations Client, companies and company codes.

Once a business has decided to use the SAP modules, there are several configurations prerequisite steps that must be completed. Determining the organizational structure is one of the first step in setting up the business functions in SAP as well as your reporting requirements. the organizational structures created by defining the organizational units consisting of the following, A client is the highest unit within SAP system and contains master records and tables. Data entered at this level are valid for company code data and organizational structures allowing

for data consistency. User access and authorizations are assigned to each client created. User must specify which client are working in at the point of log on to the SAP system.

A company is a unit to which your financial statements are created and can have one to many company codes assigned to it. A company is equivalent to your legal business organization consolidated financial statements are based on the company’s financial statements. Companies are designed in configuration and assigned to company codes. Each company codes must use the same COA (chart of accounts) and fiscal year. Also note that local currency for the company can be different.

Company codes are the smallest unit within an organizational structure and are used for internal and external reporting purposes. Company codes are not optional within SAP and are required to be defined. Financial transaction are viewed at the company code level.

Company codes can be created for any business organization, whether national or international. It is recommended that once a company code has been defined in configuration with all the required settings then other company codes letter created should be copied from the existing company code. You can make changes as needed. This reduces repetitive input of information that does not change form company code to company code as well eliminate the possibility of missed data input.

When defining company codes the following key areas must be updated.

Company code key indentifies the company code and consist of four alpha numeric characters. Master data and business transactions are created by this key.

Company code name – Identifies the name of business organization within organizational structure.

Address – Identifies the street address, city, state, zip code for all the company code created.

This information is also used on correspondence and reports.

Country – Indentifies the country to which your business is based. Country codes within SAP are based on ISO standards.

Country Currency – Identifies the local currency for the company code that have been defined.

Language – Identifies the language to be used for company code and is also used for for text in your document.

HUMAN RESOURCE

“MANAGE YOUR MAN, YOUR MAN WILL MANAGE YOUR WORK”

Human resource is such an asset which never depreciates

“The human resource department is concerned with the function of procurement, development, compensation, integration and maintenance of the personnel of an organization for the purpose of contributing the accomplishment of the organizational objectives.

Therefore, human resource management is the planning, directing and controlling of the performance of the people working in an organization.�

Human resource management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.

The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. In simple words, HRM means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirement.

Sometimes even employee and industrial relations are confusingly listed as synonyms, although these normally refer to the relationship between management and workers and the behavior of workers in companies.

The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.

Human Resource Management (HRM) is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall. HRM is also seen by many to have a key role in risk reduction within organizations.

HRM strategy An HRM strategy pertains to the means as to how to implement the specific functions of HRM. An organization’s HR function may possess recruitment and selection policies, disciplinary procedures, reward/recognition policies, an HR plan, or learning and development policies, however all of these functional areas of HRM need to be aligned and

correlated, in order to correspond with the overall business strategy. An HRM strategy thus is an overall plan, concerning the implementation of specific HRM functional areas.

An HRM strategy typically consists of the following factors: "Best fit" and "best practice" - meaning that there is correlation between the HRM strategy and the overall corporate strategy. As HRM as a field seeks to manage human resources in order to achieve properly organizational goals, an organization’s HRM strategy seeks to accomplish such management by applying a firm's personnel needs with the goals/objectives of the organization. As an example, a firm selling cars could have a corporate strategy of increasing car sales by 10% over a five year period. Accordingly, the HRM strategy would seek to facilitate how exactly to manage personnel in order to achieve the 10% figure.

Specific HRM functions, such as recruitment and selection, reward/recognition, an HR plan, or learning and development policies, would be tailored to achieve the corporate objectives.

Close co-operation (at least in theory) between HR and the top/senior management, in the development of the corporate strategy. Theoretically, a senior HR representative should be present when an organization’s corporate objectives are devised. This is so, since it is a firm's personnel who actually construct a good, or provide a service. The personnel's proper management is vital in the firm being successful, or even existing as a going concern. Thus, HR can be seen as one of the critical departments within the functional area of an organization.

Continual monitoring of the strategy, via employee feedback, surveys, etc.

The implementation of an HR strategy is not always required, and may depend on a number of factors, namely the size of the firm, the organizational culture within the firm or the industry that the firm operates in and also the people in the firm.

An HRM strategy can be divided, in general, into two facets - the people strategy and the HR functional strategy. The people strategy pertains to the point listed in the first paragraph, namely the careful correlation of HRM policies/actions to attain the goals laid down in the corporate strategy. The HR functional strategy relates to the policies employed within the HR functional area itself, regarding the management of persons internal to it, to ensure its own departmental goals are met.

Human resource department is one of the most important departments of each and every company whether they are small, medium or large scale. Human resource department has an important role to play and ahs to fulfill the different functions.

At the Essar Group they believe that excellent individuals build excellent companies. And by transforming each employee into a highly motivated, satisfied and productive team member, they will create an outstanding organization. They also understand that each individual ahs unique talents and expectations from the organization. Based on those principles, human resource development at Essar is customized, flexible and well planned. Every Essar employee is meticulously selected and given the freedom to be innovative, within a work

culture that is non bureaucratic and result oriented. They work with employees to develop personalized and flexible individual plans for career growth, retention and compensation within a carefully structured work framework.

Through extensive career mapping, they offer a choice of career paths that could include job rotation across functions and group companies Essar’s wide range of businesses and exciting pace of growth presents a range of opportunities and exposer that only a few others can match. The group has a very serious commitment to continue training and development.

Essar Learning centre provides year round training. Thus a career with Essar will offer a unique opportunity to unlock your own potential and realize excellence.

MANAGEMENT GRADE STRUCTURE

Level

Designation

M1

P&D (Promoters and directors)

M2

Senior Vice President

M3

Vice President

M4

General Manager

M5

Joint General Manager

M6

Deputy General Manager

M7

Senior Manager

M8

Manager

M9

Deputy Manager

M10

Assistant Manager

M11

Officer

General Information

Office timing

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General shift: 8:30 a.m. to 5:30 p.m.

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Hospitalization scheme and reimbursement

The hospitalization expenses incurred by the employees or the dependent of the employees are reimbursed as per his or her entitlement •

Hospitalization expenses would cover self, spouse and dependent parent, who are staying with the employee. Dependent parent of the only child (where employee is the only child) will be eligible for the amount at actual, or as per the entitlement, whichever is lower.

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Whereas dependent parent of more than one child (where employee is the only child) will be eligible for 50% of the amount at actual or entitlements whichever is lower.

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Family means  Employees spouse  Dependent children who are not married and not employed  Dependent parent living with the employee.

In case of spouse is employed, eligibility under this scheme will be reduced to the extent: she is entitled to from his/her employer. The employee will have to submit the terms of contract by which his spouse is governed in his organization for the time being.

Personal accident insurance The company has a group personal accident insurance covering all employees.

Personal accident insurance, covers risk of death or disablement of the insured person arising directly or indirectly connected or traceable to employment or otherwise anywhere in the world for all the 24 hours a day and 365 days a year. This will also cover air travel insurance.

Salary structure EPIL has flexible CTC concept, which offers employees to modify their CTC component, CTC include basic, PF, superannuation, gratuity, food allowanced, conveyance allowance, HRA, LTA, medical, variable allowance etc. once in a year.

Recruitment and selection Recruitment and selection are one of the vital functions of HRM. It is discovering of the potential applicant and the anticipated organizational vacancies.

Recruitment at EPIL For new position arising due to project expansion and for other higher position EPIL first prefer department candidates if they are suitable to the job. Then priority is given to the relatives of employees. If still suitable candidate s are not found then it goes for other source of recruitment.

Recruitment process

Identify Manpower Requirement.

↓ Issuing Employee Requisition Form.

↓ Acquire approval for budget manpower requirement.

↓ • • • • • •

Acquire approval through: Available application data bank.

Contacts/references/head hunting.

By absorbing P.R. to R.R. Campus interview.

Advertisement.

Executive search firm.

↓ Screening short listing of resumes.

↓ Receipt of application from candidates.

↓ Interviews.

↓ Reference check.

↓ Selection.

↓ Issuing offering letter.

Interviews at EPIL

At Essar, usually interviews are conducted so as to know the inside out of the candidate.

Interviewers often make observations and take notes of candidate’s response given during the interview, body language, subject knowledge, way of reply and behavior, nervousness, aggression, overall impression created by the candidate, check leadership qualities, analytical skills, communication skills, personality and attitude, etc. past work experience is given due weightage.

Types of appointment

Permanent appointment: all the regular role employees are permanent employees and are employed in different levels i.e. M11 to M01 (lower to higher).

Service of such employees are transferable to any part of India as per requirement of company.

Contractual appointment: such employees are appointed for a particular project. As soon as the project gets complete, they are released, or the company may enter their services for another project if they are suitable to job. They are known as project roll employees. Their services are non transferable.

Consultant / Advisers: Certain highly experience personnel, are appointed on contractual basis for specific project or assignment in different functional areas for specific time duration to guide existing employees and share their experience and impart knowledge of respective field.

Trainees: Fresh graduate / post graduate engineers, diploma engineers and fresher from management field are appointed as trainees by campus interviews. If they succeed in training which last usually for one year they will be absorbed in the management cadre as per their qualification.

Induction & Orientation: The objective of induction & orientation program is to introduce the new employee and the organization with each other, to help them become acquainted and explain upcoming one what is expected from him on the job. New employees are introduced with various department personals, he is made familiar with the work culture so that he can adopt and adjust himself in the time as early as possible. Sometimes few materials like handbooks etc. may be provided which contain information related to business group, ongoing projects, employee compensation benefits, personnel policies, source of information, employee daily routine and inside out of the company.

Check list for induction program at EPIL

1. Briefing about company objectives, policies and regulation.

2. Introduce new employee to his colleagues.

3. Provide assistance for any query like accommodation etc.

4. Explain working conditions.

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Methods and mode of reporting.

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Safety and accident preventions.

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Holydays and leaves.

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Transaction facility

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Working hours and break time.

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Security formalities for entry and exit.

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Communication system.

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Overtime policy.

5. Explain company standards as to the follow.

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Handling confidential information.

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Attendance and punctuality.

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Performance norms.

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Wearing uniform.

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Discipline and behavior, safety rules.

Induction Program

Complete joining formalities.

↓ Briefing about business group/company objectives.

↓ Explain company’s standard.

↓ Explain working conditions.

↓ Introduction to staff.

↓ Offer assistance for accommodation etc.

↓ Release employee to his department.

WELFARE FACILITY

 Canteen facility

 Three canteens are functioning at site where breakfast/snacks are available and lunch from 12:30 p.m. to 02:30 p.m. at fix charge.  Tea and coffee is served any time of office working hours and for that there is a coupon system which is provided by the company. Any employee who needs it will have to give coupon.

 Transport facility

 Free bus service to all the employees from all the corner of Jamnagar, Sikka and Khambhaliya is available.

 Bachelors accommodation facility

 Employees are provided with the accommodation facility at Vadinar site. They are accommodated at bachelors colony, where they have cricket ground, volley ball ground, having their own recreation hall that consist of TV Sets, carom board etc.

 Labour colony

 EPIL has arranged labour colonies for workers.

 Different awareness and educational programmes are arranged for them like AIDS awareness, medical camp etc.

 Employee entitlements

 Leave rules: all the employees will be entitled to get 24 working days leave in a year and 12 working days as medical/ casual leaves.  Bank accounts: all employees have salary account in ICICI bank, SBI and Standard Charter bank.

 Medical facility

 Hospitalization scheme and reimbursement provided by the company to employees and their dependents according to the rules.

SAFETY

“It takes a minute to write a safety rule, It takes an hour for safety meeting, It takes a week to plan a safety program, It takes a month to pull all to operation, It takes a lifetime to make a work safe, But It takes a fraction of a second to destroy it with one accident.”

“Think Safety Now”

Safety means freedom from occurrence or risk of injury or loss. Industries safety refers to the protection of workers from the danger of industrial accident. Accidents may cause deaths and that is why they should be minimized by rigorous efforts.

Safety equipments Essar provides all the safety equipments that are needed at the site for the safety of the workers. They also appoint safety officers for that.

Safety equipments includes following 1. Helmet - for the protection of head on the site.

2. Goggles - for the protection of eyes.

3. Face shield - for the protection of the entire face.

4. Ear plugs - for the protection of irrelevant noise that can damage ears.

5. Hand gloves - for the protection of hands from chemicals.

6. Safety belts – for protection of fall from height 7. Safety shoes – for foot protection 8. Protective clothing. – for protecting body 9. Wind sock. – to see the wind direction in emergency.

Smoking at workplace Smoking at workplace is strictly prohibited. If you are working at refinery site you should be extremely careful.

SWOT ANALYSIS SWOT is used to evaluate the impact that each possible strategic opportunity can have on a company.

Strength A company’s strength is its core competencies and resources in which it is one of the market or industry leaders.

1. It has got very large infrastructure manpower and resources to complete the work undertaken.

2. With this rich resource EPIL is capable of handling construction business even for other companies like ONGC, GPCL and many others.

3. It’s also playing a major role in construction of roads, airways and jetty.

4. To plan for expansion or invest in new projects.

Weakness These are the areas of substandard performance compared to other industry or market segment.

1. The overheads of the company are high.

2. There are exists number of layers in the organizational hierarchy.

Opportunities There are the potential for new business markets or innovative break through that might greatly expand present markets.

1. Since Essar in booming in the fields of Power, Oil, Energy, Steel and telecommunication EPIL has got wider opportunities as a group company of Essar.

2. EPIL is one of the groups attached with all Essar companies it will be definitely benefited from other growing sectors.

Threats These are the potentials for business and markets losses posed by the actions of the competitors and other competitive forces, changes in government policies, disruptive new technologies and so on.

1. The organization faces companies from Reliance infra, Reliance engineering associated ltd., L&T, Punj Loyd and foreign source in terms of prices and payment terms.

2. With the liberation of customs imports multinationals are coming into the Indian and international market and the competition is very severe.

3. The organization is also influenced by government policies and there is a threat of experienced hands being loss.

BIBLIOGRAPHY

WWW.ESSAR,COM WWW.GOOGLE.COM