ABC Business Blueprint-Kremikovtzi

8/4/2019 ABC Business Blueprint-Kremikovtzi

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Activity Based ManagementActivity Based ManagementGetting the act togetherGetting the act together

Concluding Presentation at KremikovtziConcluding Presentation at Kremikovtzi

On 18On 18thth July, 2007July, 2007


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2

Agenda

Objective & Scope of the exercise

Departmental Cost Summary

Methodology

Departmental Activity Cost Pool

Core / Non-Core Activity focus

Process View

Common activity analysis

People deployment analysis

Unabsorbed costs

Supply chain analysis

Savings Potential

Going forward


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3

Objective & Scope

Cost considered for the period

Oct. 06 to Dec.06

Million BGN

Employee cost 26.023

Expenses 149.830

Total 175.853

Business Functions covered

Production -

Blast Furnace

Blooming & Slabbing

Coke Plant

Cont. Caster CRM

HSM

Power Plant

Refractory

Scrap yard

Sinter Plant

SMS

Utilities

Maintenance

These are dividedbetween 37distinct plots

Support -

Production support

Accounting

Administration

Audit Finance

HRD

IT

Logistics

Marketing

Procurement

Stores

To institute Activity Based Cost Management at

Kremikovtzi AD


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Methodology

Finalized Cost trial balance divided among departments

One-to-one meetings with departmental heads

Definition of activities

Identification of personnel with departments

Identification of Expenses with departmentsAllocation of people time to activities

Allocation of expenses to activities


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Methodology

Constructing the Activity Cost Pool

Definition of Core & Essential activities

Definition of Business processes

Definition of Activity Drivers

Deriving the Transaction Costs of ActivitiesAllocation of Activities to Cost Objects


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Departmental Activity cost pool

A few summary ABCM plots

Sales & Marketing (refer annexure for summary)

Financial Accounting (refer annexure for summary)

SMS (refer annexure for summary)


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Transaction cost

Financial Accounting department

ParticularsBank

accounting

Payroll

accounting

Cost

accounting

Asset

accounting

Plant

accounting

Material

accounting

Customer

accounting

Vendor

accounting

Financial

reporting

Cost Driver No of Bankentries

No ofemployees

No of plantscovered

No of Fixedasset items

No ofplants

covered

No ofitems in

inventory

No ofexport

invoices

No ofpurchase

invoices

No offinalization

sValue of Driver 7,602 7,362 24 19,335 24 17,683 818 3,979 1Total - activity cost (BGN) 31,366 25,334 46,290 23,758 72,349 77,323 32,735 46,239 37,397

Total transaction cost

(BGN/cost driver)4.13 3.44 1,929 1.23 3,015 4.37 40.02 11.62 37,397


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Core & non-core activities focus

CORE / NON CORE ACTIVITY SUMMARY

Type of Activity

(BGN) (BGN) (BGN)

ce Core Essential Activities 23,412,566 90% 148,190,545 99% 171,603,111 98%

ne Non Core Essential Activities 2,532,887 10% 1,346,984 1% 3,879,872 2%

nn Non Core Non Essential Activities 77,739 0% 292,138 0% 369,877 0%

Total of above common activities 26,023,193 100% 149,829,667 100% 175,852,860 100%

ce : Core & Essential

ne : Non-core & Essential

nn : Non-core & Non-essential

Core

/ Non-

core

Employees Cost Other Cost Total Cost

50% of Non-core Essentialemployee cost shouldmigrate to customercentric core activities

P Vi


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Process View

PROCESS COST SUMMARY

No Process Employee Cost

BGN BGN BGN

1 Production 10,201,096 39% 93,197,920 62% 103,399,016 59%

2 Logistics 1,098,296 4% 28,939,367 19% 30,037,663 17%3 Business sustaining 5,029,169 19% 11,186,389 7% 16,215,558 9%

4 Maintenance 7,805,444 30% 8,141,420 5% 15,946,863 9%

5 Procurement 160,095 1% 4,201,994 3% 4,362,089 2%

6 Sales & Marketing 309,903 1% 3,337,030 2% 3,646,933 2%

7 HRD 630,257 2% 512,793 0% 1,143,050 1%8 Development 572,621 2% 227,289 0% 799,910 0%

9 Technological Support 216,312 1% 85,464 0% 301,776 0%

Total 26,023,193 100% 149,829,667 100% 175,852,860 100%

Other Cost Total Cost

C A ti it A l i


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Common Activity Analysis

ACTIVITY COST SUMMARY

Activities BGN BGN BGN

nn Free-time 52,693 1% 12,280 1% 64,972 1% 23 0% 2,291ce Training 284,066 7% 56,416 5% 340,482 7% 107 1% 2,655

ne Administration 1,094,451 28% 318,038 28% 1,412,489 28% 283 4% 3,867ne Reporting & review 1,375,954 36% 372,531 33% 1,748,485 35% 265 4% 5,192ce Management Initiatives 1,039,023 27% 366,074 33% 1,405,097 28% 291 4% 3,571

Total of above common activities 3,846,187 100% 1,125,339 100% 4,971,526 100% 969 13% 3,969Percentage to total cost 15% 1% 3%

Total cost 7,560 100% 3,442

ce : Core & Essential

ne : Non-core & Essential

nn : Non-core & Non-essential

Avg.CTC of

FTE

No. ofemployees

FTE

Total Cost

26,023,193 175,852,860

ce /

ne /

nn

Employees Cost Other Cost

149,829,667

Training is hardly1% of total

employee cost

At least 50% of the

employees time inReporting & review needsto migrate to management

initiatives

P l d l t l i


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Activities Employee Cost( Million BGN)

% No.of Employees

(FTE)

%

Top 151 20.94 80% 6,330 83%

Total 364 26.02 100% 7,624 100%

Particulars No.of

Production

Employees

FTE

No.of

Maintenance

Employees

FTE

%

9 Production Activities 392 455 116%

All 109 Production Activities 2,498 1,451 58%

12

People deployment analysis

Top 151 activitiesconsume 80% of

employeeresource

Employee cost ofmaintenance vis--

vis production is59%.

Particulars Employee Cost

( Million BGN)

% No.of

Employees

FTE

%

Maintenance

activities 4.78 59% 1,451 58%Production

Activities 8.17 100% 2,498 100%

The same ratio

is 116% for top9 production

activities

FTE Full Time Equivalent

U b b d C t


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13

Unabsorbed Costs

Cost in Million BGNDepartment Total Cost Fixed Cost Variable Cost Unabsorbed

Capacity

Unabsorbed

CostCRM 9.71 4.44 5.27 56% 2.47SMS 16.36 5.97 10.38 39% 2.34Repair Shops 5.59 3.83 1.76 52% 2.00Caster 4.68 2.91 1.78 28% 0.81Blast Furnace 14.63 6.41 8.22 12% 0.79HSM 16.25 4.79 11.46 15% 0.73Blooming & Slabbing Mill 4.52 1.54 2.98 43% 0.66Sinter 14.24 3.27 10.97 18% 0.59

Total 85.97 33.16 52.81 10.38

S l Ch i l i


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14

Supply Chain analysis

Supply ChainCosts (39 million

BGN) accounts

for 22% of Total

Costs (176 million

BGN)

6 million BGN is Interest

costs

27 million BGN is for

Freight & forwarding costs

Procurement million BGN

People cost 221,973Other expenses 160,796Interest on Raw

Material 4,080,540Total 4,463,309

Inbound

Logistics million BGNPeople cost 42,616Other expenses 174,898

Inward Freight costs 15,156,800Total 15,374,313

Outbound

Logistics million BGNPeople cost 45,746Other expenses 291,882

Outward Freight costs 11,339,551

Total 11,677,179

Internal Railways million BGN

People cost 1,451,800Other expenses 2,702,904Total 4,154,703

Sales million BGNPeople cost 422,377Other expenses 1,476,579Interest onReceivables &

Finished Goods 1,919,429Total 3,818,385

Savings Potential


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Savings Potential

Savings Potential Value in

millions

BGN per

annum

Process 21.63Other areas 12.75

Energy 26.10

Total 60.48

Savings Potential in process


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S. No Action Plan Annual Savings in

Millions BGN

1 Using VAD facility at EAF for LF treatment of Convertor heats 8.44

2 To collect scrap spread across the plant & unused structurals etc for

using in SMS

1.50

3 Recovering iron bearing material from slurry of Gas Cleaning Plants of

BF & SMS for Sintering

1.29

4 Using dust from Dust Catcher at Sinter Plant in raw mix for Sintering 0.80

5 Liquidating 400 Tons of High Sulphur Scrap (dead inventory for about 2years) by using in SMS in small doses. 0.20

6 Providing Ultrasonic Thickness Gauage for profile measurement of HR

Coils for CRM, thus dispensing with the need of cutting 10m long strip

piece.

0.13

7 Use of Special additives to reduce fuel consumption of Railway

Engines

0.13

8 To provide Pendant / Radio Control on EOT crains at Maintenance

Shops, eliminating dedicated crane operators for 17 cranes identified

for this purpose..

0.13

9 Use of Phenol contaminated water from Coke Plant's Gas Cleaning

Plant for slag grannulation

0.01

Total 12.70

A. Plans requiring NO or Minor Investments


(Refer annexure for details)

S i P t ti l i


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Millions BGN

10 Dry Quenching of Coke (Utilizing Nitrogen produced in Oxygen Plant

that is in excess of present plant requirement)

7.00

11 Briquetting of Lime Fines for use in SMS (This will also help in

addressing Environmental issues of EU compliance)

0.40

Total 7.40

B. Plans with Major Investments

C. Plans in case Blooming Mill continues to operate


Millions BGN

12 To operate Blooming & Slabbing Mill fully for 10 days a month &

completely shut shop for 20 days a month.

1.10

13 Improving condition of Ingot Moulds & Slide Gates 0.43

Total 1.53

Grand Total 21.63


(Refer annexure for details)

Savings Potential in other areas


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Savings Potential in other areas

Areas having other Savings potential

Sr.

No.

Action Plan

ESTIMATED

SAVINGSPOTENTIAL (Million

Leva per annum)

1 Reduce heat loss in reheating furnace of HSM by insulating skid pipes.

Expected investment is 200,000 BGN

0.72

2 Switching over to high Chromium work rolls & 3% Chromium back-uprolls to save roll consumptions in HSM 2.80

3 Improve HSM yield percentage from 97% to 97.5% for slabs from Caster.

This could be achieved by reduction in scale loss, cropping loss from

1.7% to 1.4% and oxygen in flue gases from 4% to about 3%.

6.43

4 Take heavy machinery on lease instead of hire at the Scrapyard 2.305 A target to reduce natural gas consumption in Refractory by 5% based

chemical additives trial conducted earlier.

0.50

Total in Million BGL 12.75

Savings Potential - Energy


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SUMMARY OF COST SAVINGS PROPOSALS FOR POWER PLANT


S.N. AREAS WITH POTENTIAL FOR ENERGY CONSERVATION

ESTIMATED

SAVINGS

POTENTIAL

(Million Leva per

annum)A THERMAL POWER PLANT

1 Oxygen Trim Control System for TPP Boilers to monitor and control excess air levels 1.0

2 Change of present burners with low emission burners 3.0

(a)Automatic blowdown control system with blowdown heat recovery.

(b)Appropriate water treatment system for silica removal from make up water 2.54 Use of Turbine exhaust H.P.heaters for feed water heating 2.1

5 (a)Appropriate monitoring and control of 1.2 ata L.P.steam for deaerator

(b)Optimization of steam requirement for hot water system 4.0

6 Cooling tower performance enhancement 1.0

7 Provision of Insulation for cold blast duct 1.3

(a)Appropriate metering of various utliies to include fuel,compressed air, steam,

water etc.

(b)Provision of essential automation for controling utility consumption

9 Enhance insulation and avoid leakages in steam distribution liness 2.0

10 Recover consensate from coke drying plant 1.0

11 Provision of desuperheater at consumption points 0.8

12

Install cogeneration system with back pressure turbine for chemical plant (Benzol

recovery)steam at Coke plant 0.4Total for power plant in Million BGL 19.1

3

8



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SUMMARY OF COST SAVINGS PROPOSALS FOR COMPRESSED AIR SYSTEM


ESTIMATED

SAVINGS

POTENTIAL

(Million Leva per

annum)

COMPRESSED AIR SYSTEM

13

Independant circuit for instrument air with reduced pressure and dryers.ALTERNATELY, Usage of Nitrogen (produced in Qxygen plant presently vented) for

instrument air 0.3

14 Decentralization of compressors 0.5

15 Provision of air receivers at consumption points

16 Avoid distribution leakages and isolate redundant piping 0.3

17 Provide appropriate meters for metering generation and consumptionTotal in Million BGL 1.1



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SUMMARY OF COST SAVINGS PROPOSALS FOR WASTE HEAT RECOVERY SYSTEM


ESTIMATED

SAVINGS

POTENTIAL(Million Leva per

annum)

FURNACES AND WASTE HEAT RECOVERY SYSTEM

18

HRM furnaces and waste heat recovery boiler --improve performance through

detailed study and implementing measures for loss reduction 3.1

19 Waste heat recovery with cogeneration for HRM furnace gases 1

20

SMS waste heat recovery boilers - Revamp the boilers for better efficiency Feasibility

of cogeneration 1.5

21

Optimize operation of waste heat boilers in Refractory plant (Lime calcination ).

through detailed study for reduction of losses 0.3

Total in Million BGL 5.9


Total Savings for the whole Energy Coverage above in Million BGL 26.1

Payback is less than 18

months

Our observations in some ABCM plots to be addressed


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p

under Management initiatives

S.No Observations

1

Multiple databases (mostly unidentical) exist in various departments for the same information (eg.

Receivables, Invoicing, Payroll etc)

2 Duplication of payroll work between HR and Accounts departments

3

Possible reduction in personnel in Accounts department with cross-training (Material accounting,

Plant accounting, Cost accounting) and integrated software

4

Lack of appropriate Information systems causing almost 250,000 BGN p.a. worth of manpower in

Reporting & reviews in Finance department

5 Disproportionate stocking of Raw material between Port and Plant

6

Lack of (and delay in presenting) original clearing documents causes inordinate delay in clearing

and movement of goods at Ports

7

Copies of documents, instead of originals for consignment clearance, will not suffice in the light of

strict EU norms

8

Non- Payment issues leads to re-negotiations and change in Documentation and therefore further

delays in movement between port and plant

9

Providing clear dispatch details, access to common database and documentation will lead to faster

movement of goods

10 Gradual phasing out of Blooming & Slabbing Mill and using only caster route at the earliest

11

Better co-ordination needed on logistics & planning between SMS & Caster activities to reduce re-

arcing loads as well as caster productivity

12

EAF is presently run without coke injection due to lack of spares therefore power, refractory life and

productivity is adversely affected.

13

Increase focus of Internal audit department from routine transactions to system controls (High-risk-

high-value)

14

Minor repairs (30,000 BGN) in Railways (locomotives) could give payback of less than 1 year in fuel

savings

Our observations in some ABCM plots to be addressed


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23

p

under Management initiatives

S.No Observations

15

Nearly 60% of people in Sales & Marketing department are involved in Warehouse and despatch

activities. Focus should be more on demand creation and receivables

16

Over half a million BGN p.a. are spent on reporting & reviews, documentation (including QA

documentation, order processing and re-negotiation of financial documents in Sales & Marketing

department. Major restructuring is called for based on expected deliverables.

17

Water consumption in the plant is above 35m3per tonne of saleable steel. This is less than 10 for

most integrated steel plants

18

Raw material handling costs in Blast furnace is over 0.8 million BGN per annum. The department is

ill-equipped for coke handling of wagons

19 Project for Natural gas mixing with BF gas for stove heating to be attempted with 1 year payback

20

Reduction of Tuyere burnout with Tuyere cooling flow measurement system. Investment required is

0.5 million BGN. Incidence of around 15 failures per annum will come down by by half. This will also

improve continuity of operation.

21

Double chamber Tuyeres (investment of 0.2 million BGN) will help reducing furnace downtime.

Payback is 2 years. Savings are to the extent of 0.1 million every year.

22

Increased water pressure (3.5 bar to 4.5 bar) will lead to more granulation & product quality.

Investment of 30,000 BGN for 1 high pressure pump & line. Payback is less than a year.

23

No acid recovery plant in CRM pickling. Project initiated to recover acid to meet environment

requirement and reduce acid consumption

24 No automation of 4 stand mill, Galvanizing & Pickling lines,with total dependance on operator skills

25

Campaign production approach for CRM is desirable in the light of low volumes & high capacity.

This will reduce II choice volumes.

26 There is no central information on availability of maintenance Spares & consumables

Going Forward


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24

Going Forward

Circulate the Departmental Costs (People costs and other

expenses) in the ABC format every month

Maintain records for accurate cost driver data

Driver data to be collated Cost-object wise

Internal ABCM team should collect plots from all departments and

consolidate

Compare transaction costs with those of the previous period as

well as internal benchmarks

Replicate the ABCM exercise every quarter

Q & A


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Q & A

Any Questions?

Thank you


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Thank you

Thank you for your time

and attention

Annexure


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1. Using VAD facility at EAF for LF Treatment of Converter Heats

Department SMS / Caster

Issues Ingot casting of LD heats: with only 1 Ladle Furnace at CC for LDheats, some LD heats have to be diverted to uneconomical ingotroute.

How to resolve /what needs to bedone.

VAD facility at EAF is used as LF treatment of EAF heats. As it isnot fully utilized VAD can be used for LF treatment of LD heats.Clearance of pit side area for crane movement, propercoordination between SMS, Caster & Planning would berequired.

Investmentrequired Nil

Benefits Additional CC slabs of lower cost & better quality.$5.9m (BGN 8.44 m)Annual savings

Based on routing 3 LD heats per day to VAD & cost differential of

$47 per ton between Cost of CC Slabs & Ingot route slabs.Final Discussionswith

Mr. Tripathy

Action by SMS & CasterSupport required

from

PPIC

Back

Annexure


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2. To collect scrap spread across the plant for using in SMS

Department Scrap Yard

Issues Large quantity of steel scrap is laying in the variousdepartments of the plant. The approximate quantity of

such scrap is 3000 tonnes.How to resolve/what needsto be done.

To collect this scrap in consultation with the heads ofthe departments, as regular activity of the Scrap Yarddepartment. The steel scrap so collected could beconverted to saleable steel in EAF.

Investment required Cost of collection from various departments.Benefits Will liquidate dead inventory

Improved house keeping.

$ 1.05mOne Time Savings

Based on replacement of purchased scrap at presentprice of $350/- per ton. Cost involved in collection andprocessing will not be significant vis--vis savings.

Final Discussions with Mr KS Sokhi

Action by Scrap Yard

Support required from

Back


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Annexure


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4. Using dust from Dust Catcher at Sinter Plant

in raw mix for Sintering

Department Technical Issues & Technology

Issues Disposal of the fines from the ESP (Electro StaticPrecipitators) at sinter plant by flushing with fresh

water to a pond.How to resolve/what needs tobe done.

1. Collect the fines from ESP's at sinter plant in Bagfilters and use in raw material mix for sintering.2. Take slurry to a classifier and recover sinter fines& recirculate the water. (Ref: Discussion with Mr.

Gogov).Investment required

Benefits About 750t/month of dust collected would be usedas a replacement of purchased Fe-concentrate. Inaddition fresh water used for flushing will be saved.

$0.56mAnnualized savings.Based on replacement of Ukraine Concentrate. (ref:Jan-Mar07 data)

Final Discussions with Mr. Gogov, Manager (Technical Issues &Technology) ;Ms. Radoslava Jeliazkova, Director

(Environment); Ms. Stanka Milkova (Environment)Action by Environment , Sinter Plant

Support required from Technical Issues & Technology,

Back

Annexure


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5. Liquidating 400 Tons of High Sulphur Scrap.

Department Scrap Yard

Issues Salvaging of 400tonnes of briquette iron lying in thescrap for last 2.5 years, because of high Sulphurcontent (1%).

How to resolve/what needsto be done.

1. To sell to Steel Plants/Mini Steel Plants making LongSteel Products. Plants making Forging Quality Steel canuse it for Sulphur bearing Free Cutting Steels.2. Alternately Free Cutting heats can be made in EAF &roll the blooms for sale.

3. Consume internally by using at SMS in small doses.Investment required

Benefits Will liquidate dead inventory ($ 100,000/- i.e. 400t @ $250 per ton purchase cost.

$ 0.14mOne Time Realization

Based on present price of purchased scrap at theworks.

Final Discussions with Mr. GogovAction by Scrap YardSupport required from Technical Issues & Technology, SMS

Back

Annexure


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6. Providing Ultrasonic Thickness Gauge for profile

measurement of HR Coils

Department QC / Hot Strip MillIssues Cutting of 10m long strip piece from HR

coils for CRM to verify strip profile bymaking thickness measurements acrossthe strip width.

How to resolve/what needs to be done. Portable Ultrasonic Thickness Meter canbe used to make thickness measurements

across the width without cutting thesample.Investment required About $3000/-Benefits Scrap generation of 10m length for every

200t of HR Coils for CRM will be avoided.$0.14m to $0.19mAnnualized savings.

Based on Scrap reduction & Additionalcontribution as of GP Coils.

Final Discussions with Mr. GorchevAction by QC Dept

Support required from Hot Strip Mill

Back

Annexure


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7. Use of Special additives to reduce fuel consumptionof Railway Engines

Department Railway

Issues Reduce consumption of Diesel used asfuel for loco engines.

How to resolve/what need to be done. Use of special fuel additive to extent of0.10% on volume basis. This would reducefuel consumption to the extent of 10%.

Investment requiredBenefits Cost Reduction

$ 0.09mSavings

Based on 10% reduction in consumption

vis--vis that in year 2006 & price of DieselPerformance Enhancer, REDEX.Final Discussions with Mr. Ivanov, Director (Railway)Action by Railways.Support required from

Back

Annexure


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8. To provide Pendant / Radio Control on EOT cranes

at Maintenance Shops

Department Mechanical and Electrical repair shops.

Issues Mechanization of the EOT cranesoperation.

How to resolve/what needs to be done. 1. Mechanization of the EOT cranes canbe achieved by providing a pendent switch/Radio Control on each crane, which can beused by the shop floor machine operator.

Investment required BGN 85000/- for installing pendent switch/Radio Control & electrical modification as

needed, on 17 cranes identified.Benefits Manpower Redeployment &

Corresponding cost reduction.

$ 0.09m (payback Period 1 year)Savings

Based avg manpower cost of BGN 545 permonth for the crane drivers(Oct-Dec06data)

Final Discussions with Mr. Nikolay SavovAction by Maintenance Dept.Support required from Management-for minor investment.

Back

Annexure


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9. Use of Phenol contaminated water from Coke Plant's

Gas Cleaning Plant for Slag GranulationDepartment Environment and Utilities Water.Issues To reduce / stop the use of fresh water from reversable cycle

of BF (50 m3/hr) for quenching / cooling of blast and steelmolten slag.

How to resolve/what

need to be done.

1. Part of the contaminated water (165m3/hr) generated in

the direct cooling of C.O. gas), 50m3/hr can be used for BFslag quenching / cooling. The contaminants - Ammonia,Phenol, cyanide etc) break into elements when sprayed onthe hot molten slag, there by will avoid air pollution.

2. Balance of 110m3/hr of the contaminated water could beBiologically treated to neutralize the contaminants and

recirculate the treated water, as envisaged in InvestmentProgram.

Investment required No major expense is involved in diverting contaminated waterfor slag granulation.

$ 11,000

Based on consumption of 50 3/hr & fresh water price of 0.037BGN/m3

$ 2.5m

Benefits

With reduction of volume of contaminated water from CokePlant, The existing scheme of 10million BGN for biologicalmight be completed in 5.0 million BGN ($3.5m).

Final Discussions with Mr. LR Singh, Director (BF); Mr. KS Sokhi, Director (Opn);

Mr. Nikoloy, Head (Utility: Water); Ms. Radoslava Jeliazkova,Director (Environment); Ms. Stanka Milkova (Environment)Action by Environment Dept.Support required from Blast Furnace, Coke Plant &

Back

Annexure


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10. Dry Quenching of Coke

Department Coke Plant.

Issues Red hot Coke is quenched/cooled with water. Part of the water islost due to evaporation and made up by fresh water.Substantial quantity of heat is lost in the atmosphere.

The suspended particulate matter in the hot gases-steam goes tothe atmosphere-causing air pollution.

Amount of fresh water used is 1.02 m3

/t of coke produced.How toresolve/what needto be done.

The red hot coke can be cooled by nitrogen in a speciallydesigned chamber. The process is called Dry Quenching ofCoke.

Investmentrequired

(Ref :The Coke DryQuenching Projectof Xingtai Iron andSteel GroupCompany Limited)

Coke production 1.0MT/YearCapital expenditure - 19 million $

(Nippon Steel Corporation technology, include CDQ equipmentand CDQ waste heat electricity generation system, and one setof grounding dust collecting station will be built to catch a greatlot of dust and powder from CDQ production and cokeconveyance)

Benefits 1. The total power generation capacity is 66.75106kWh peryear.

2. The proposal project will annually save 39597.65 ton of coaland reduce 66, 750 tCO2-equivalent emission, meanwhile, thecoke quality is improved and coke ratio is reduced by 2.0%.

Savings Payback period of 3 to 3.5 years has been reported on suchprojects. Reported

Final Discussionswith

Mr. KS Sokhi, Director (Opn)

Action by Management for CAPEXSupport requiredfrom

Project Dept.

Back


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Annexure


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12. Operational Strategy for Blooming & Slabbing Mill

Department Blooming & Slabbing MillIssues Uneconomical Operation at B&SM : Presently quantity of Slabs

to be rolled is quite low and would be progressively decreasing. Itis, therefore, uneconomical to run the mill in all 3 shifts.Plan A:1.To adopt 1SHIFT OPERATION at B&SM for rolling. Productionof slabs would probably be limited to 20,000T per month with 6soaking pits in operation as as present.2.Though Soaking Pits would be running all the 3 shifts, Pit

charging & discharging could be limited to 2 shifts.3. There would be some charging of COLD INGOTS which willneed extra gas. However Hours of Pits on gas without Ingots,i.e. Empty Pit will be more or less same.4.There would be some savings in power but will not besubstantial (Ref discussion with Chief Power Engineer).

How toresolve/what needsto be done.

Plan B: (Ref discussion with Chief Power Engineer).1.Limit working in the department for 10 days in all 3 shift.2. Nearly all power & Natural gas supply can be totally shut off for20 non-operating days.3. Ingots cast during non-operating days would have to bestocked & charged cold in the pit.4. To sustain present level of production operating soaking pitsmay have to be increased to 12 or so.5. This would reduced heat losses from pit side walls & overallgas consumption may remain more or less same at the presentlevel..6. Power requirement will be 1/3rd of present consumption.

InvestmentrequiredBenefits 1.Manpower deployed for rolling & soaking pits can be reduced.

2.Saving on power consumption.3.Continuous running of Slabbing Mill instead of interruptedrunning as of today.

$ 1.1mSavingsBased on Power Saving & credit for redeployment of manpoweron non-operating days.

Final Discussionswith Mr. Nikolay Savov.

Action by Blooming & Slabbing MillSupport requiredfrom

SMS, PPIC

Back

Annexure


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13. Improving condition of Ingot Moulds & Slide Gates

Department 6 Sigma group

Issues 1.Unsatisfactory condition of Ingot Moulds at SMS

teeming platform.2. Trickling of molten steel from slide gate duringmovement from one mould to another.Above two are major contributors for rejection of strips atHR & CR stages. Sliver rejection in total for December06was 2419T which works out to 6.56% of HR Slabs rolled.

How to resolve/what needto be done.

It is suggested to take up this as 6 sigma project to properinspection procedures.

Investment required

Benefits Reduction in Non prime generation.$0.3mSavings

Based on contribution differential between 1st

Choice &2nd Choice HR Coils.Final Discussions with Mr. JosephAction by 6 SigmaSupport required from SMS

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Summary


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Sales & Marketing PlotBack

Activities Employees

Cost/

Other Cost/

Total Cost/

Employees

Cost/

Other Cost/

Total Cost/

nn Free Time - - -

ce Training 715 465 1,179 0% 0% 0%ne Administration 21,144 10,534 31,678 5% 0% 1%

ne Reporting & reviews 89,691 47,317 137,008 21% 1% 4%ce Management initiatives 924 662 1,586 0% 0% 0%

ce Enquiry generation 31,127 39,886 71,013 7% 1% 2%ce Order booking 16,548 365,670 382,218 4% 11% 10%

ne Unplanned Sales booking 8,727 4,816 13,544 2% 0% 0%ce Order processing 36,387 18,708 55,095 9% 1% 1%

ne Re-negotiation of Financial documents 12,300 6,833 19,133 3% 0% 1%

ce Documentation & despatch 129,809 536,385 666,194 31% 16% 17%

ce Recievables monitoring 18,807 1,929,423 1,948,229 4% 57% 51%

ne Customer Complaints & claims 8,429 4,595 13,024 2% 0% 0%ce Customer visits 14,386 289,857 304,243 3% 9% 8%

ce Business development 8,953 105,296 114,249 2% 3% 3%

ce Customer meetings 24,430 35,559 59,989 6% 1% 2%

Total 422,377 3,396,008 3,818,385 100% 100% 100%

ce /

ne /

nn

%BGN /

Summary


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Financial AccountingBack


Cost/

Other Cost/

Total Cost/

Employees

Cost/

Other Cost/

Total Cost/

nn Free Time 1,798 583 2,381 0% 0% 0%

ce Training 9,486 5,381 14,867 2% 2% 2%ne Administration 26,235 8,916 35,151 5% 3% 4%

ne Reporting & reviews 66,595 26,895 93,490 13% 9% 12%

ce Management initiatives 2,716 881 3,597 1% 0% 0%

ce Bank accounting 23,493 7,873 31,366 5% 3% 4%

ce Payroll accounting 19,054 6,280 25,334 4% 2% 3%

ce Cost accounting 34,957 11,333 46,290 7% 4% 6%

ce Asset accounting 17,941 5,817 23,758 4% 2% 3%ce Plant accounting 54,636 17,713 72,349 11% 6% 9%

ce Material accounting 58,392 18,931 77,323 12% 6% 10%

ce Customer accounting 24,720 8,014 32,735 5% 3% 4%

ce Vendor accounting 34,531 11,708 46,239 7% 4% 6%

ce Financial reporting 27,660 9,737 37,397 6% 3% 5%

ce Taxation matters 16,290 5,640 21,930 3% 2% 3%

ce Co-ordination with internal auditors 13,203 4,281 17,484 3% 1% 2%ce Co-ordination with external auditors 5,069 131,961 137,030 1% 43% 17%

ce Co-ordination with govt auditors 14,300 4,687 18,987 3% 2% 2%

ne Account reconciliation 23,200 7,522 30,722 5% 2% 4%

nn Group companies accounting 17,806 8,338 26,144 4% 3% 3%

nn Group companies reconciliation 3,286 1,065 4,351 1% 0% 1%

Total 495,368 303,556 798,924 100% 100% 100%

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nn

%BGN /

Summary


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SMSBack


Cost/

Other Cost/

Total Cost/

Employees

Cost/

Other Cost/

Total Cost/

nn Free Time 1,367 115 1,482 0% 0% 0%ce Training 1,367 115 1,482 0% 0% 0%

ne Administration 65,270 22,895 88,165 3% 0% 0%

ne Reporting & reviews 6,157 1,808 7,965 0% 0% 0%

ce Management initiatives 118,757 12,984 131,741 5% 0% 1%

ce Run mixer 79,597 764,119 843,716 3% 4% 4%

ce Run converter 371,861 4,813,992 5,185,853 15% 25% 24%

ce Run EAF 74,418 3,059,128 3,133,546 3% 16% 14%ce Run laddle furnace 49,860 209,874 259,734 2% 1% 1%

ce Mould preparation 186,846 4,154,506 4,341,352 8% 22% 20%

ce Filling of moulds 101,539 391,160 492,699 4% 2% 2%

ce Stripping 48,235 92,228 140,463 2% 0% 1%

ce Dispatch ingots 16,286 82,901 99,187 1% 0% 0%

ce Putting refractory lining 28,462 964,865 993,327 1% 5% 5%

ce Gas cleaning 16,205 860,944 877,149 1% 4% 4%ce Manage local store 64,736 69,526 134,261 3% 0% 1%

ce Run heat recovery boile 117,651 330,832 448,483 5% 2% 2%

ce Manage slag 88,611 144,540 233,151 4% 1% 1%

ce Repair & maintenance 753,769 1,954,962 2,708,731 31% 10% 13%

ce Run QC laboratory 12,081 140,645 152,726 1% 1% 1%

ce Laddle preparation 202,477 1,176,561 1,379,038 8% 6% 6%

Total 2,405,551 19,248,698 21,654,248 100% 100% 100%

ce /

ne /

nn

%BGN /

Documents

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