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Topics: Efficiency and Proper efficiency of KDS Group.(Major in KY Steel Mills Ltd.)ase on !.". Models

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Term Paper Report 2006

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Under the Guidance of& Submitted To:

Md. Rezaul arim!""ociate Profe""or#epartment of !ccountin$& %nformation ""tem"Uni'er"it of (hitta$on$(hitta$on$) *an$lade"h.

Submitted *:

Md. Mazharul %"lam*.*.!. +,th-ear(la"" Roll/1,34am Roll/20005,#epartment of !ccountin$& %nformation ""tem"Uni'er"it of (hitta$on$(hitta$on$) *an$lade"h.

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4/53

Date: &'#$&'

To

Md. "e*aul Kari+

,ssociate Professor

Depart+ent of ,ccountin-

/nfor+ation syste+s

0ni1ersity of 23itta-on-

23itta-on- an-lades3.

Subject: Submission of Term Paper on Efficiency and Properefficiency of KDS Steel Division.

Sir

/ 4ould li5e to su6+it +y ter+ paper on Efficiency and Proper

efficiency of KDS Steel Di1ision. / 3a1e prepared t3is ter+ paper 6ecause

of a course re7uire+ent. /t rat3er produced on +y t4o days practical and

t3eoretical 4or5s roo+ed 4it3 all re7uired data and infor+ation t3at / 3a1e

-at3ered 4it3 all of +y 6est possi6le +eans.

/ 3ope t3at +y ter+ paper 4ill satisfy you and +eet your

re7uire+ents 6y ser1in- its proposed.

T3an5in- you 4it3 3i-3 re-ards.

Sincerely Yours

Md. Ma*3arul /sla+

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5/53

My 3i-3ly pleasin- e9pression to +y re1erent super1ision of +y

3onora6le teac3er Mr. "e*aul Kari+ Depart+ent of ,/S 2.0. for t3eir

cordial -uidance e9cellent super1ision +ental encoura-e+ent and

de1elop+ent and de1elopin- i+pression durin- t3e period of study 4or5

and repairin- t3is assi-n+ent.

/ also deeply -rateful to Mr. Sultan actory Mana-er and Mr.

,na4ar ;ossain Plant Mana-er of KY Steel Mills for 3elpin- +e to 6rin-

out t3is Ter+ Paper.

inally +y all praise is due to t3e almighty God and for y

Parents.


6/53

!ur acade+ic study is li+ited in t3eories. ut t3e proper educationalperfectness depends on practical 5no4led-e 43ic3 is 7uite 1ital for all

..,. students. T3e 6usinesses of t3e 4orld are sure to 6e c3an-in- 6y

c3aracter in t3is century. Today t3e 4orld perfor+s practical 5no4led-e to

t3eoretical 5no4led-e.

/n out 23itta-on- 0ni1ersity all t3e Depart+ents of ..,.

encoura-e t3e students to +a5e ter+ paper in order to +a5e us closer to

t3e 6usiness 4orld 6ot3 t3eoretically practically. ;ere / o6ser1ed t3at

t3eoretical study s3ould 6e supported 6y practical study.

,fter t3e ac7uisition of 6ot3 acade+ic t3at is t3eoretical education

as 4ell as practical education 4e +ust 3a1e to 5no4 t3e process of

applyin- t3is 5no4led-e in t3e co+ple9 situation of practical life. T3e

Ter+ Paper is a so=called practical learnin- t3rou-3 pro-ra+.

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7/53

Ter+ paper is a co+pulsory paper of ac3elor of usiness

,d+inistration De-ree. / decided to underta5e t3e pro-ra+ at KDS STEEL

Di1ision so t3at / 3a1e an idea o1er financial syste+ of t3e co+pany.

Durin- +y study KDS STEEL Di1ision / o6ser1e t3e follo4in-.

Generation of financial data.

inancial reports and state+ent preparation.

Sources of finance.

2ollection of fund.

0ses of fund.

Stren-t3 and 4ea5ness of t3e co+pany.

Project plannin- and +ana-e+ent.

ot3 t3e pri+ary and secondary data 3a1e 6een used to prepare t3is

report. T3e +ain source of pri+ary data 4as aut3orities in1ol1ed in

accountin- and finance acti1ities. T3is data are collected fro+ t3e

i++ediate report.

T3e +ain source of secondary data 3as 6een t3e annual report

annual state+ent special report and or-ani*ational +anual etc. T3ey are

collected fro+ KDS STEEL Di1ision=;ead >uarter.

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8/53

T3e +ain o6jecti1e of t3is study is to fulfill t3e acade+ic

re7uire+ent as 4ell as to -at3er practical and t3eoretical 5no4led-e a6out

t3e financial acti1ities to t3e co+pany. T3is practical 5no4led-e 4ill 3elp

us face c3allen-es in our future 6usiness career. /n addition to t3e principal

o6jecti1e t3e follo4in- are so+e of t3e co++on 6ut si-nificant o6jecti1e

of t3is type of study.

To e9a+ine t3e annual report preparation.

To study t3e for+al financial data.

To study t3e financial aspects of KDS STEELDi1ision.

To study t3e financial 1ia6ility of KDS STEEL

Di1ision.

To e9a+ine 43et3er t3ere is any confor+ity

6et4een t3eory and practice.

To study t3e 3istory and current strate-ic and

operational position of t3e co+pany.

To e9a+ine t3e or-ani*ational structure of t3e

finance depart+ent.

To e1aluate t3e flo4 of recordin- process.

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9/53

T3e aut3ority of t3e KDS STEEL Di1ision 3as 5indly accorded

per+ission to prepare +y Ter+ paper on Efficiency and Proper Efficiency

of KDS STEEL Di1ision. T3e co+pany for+ulated a pro-ra+ sc3edule for

+e to o6ser1e different di1ision and tal5 to different officials of KDS

STEEL Di1ision. ,ccordin- to t3e sc3edule / o6ser1ed different di1isions

of t3e co+pany. T3e preparation and presentation of +y ter+ paper is 1ery

i+ple+entin- to +en 6ecause it -i1es +e a clear idea a6out t3e co+pany

and to see 3o4 t3e t3eoretical 5no4led-e fit in t3e real 6usiness

en1iron+ent.

/n 1ie4 of t3e 6usiness strate-ic di1ision t3e co+pany 3as 6een

found to 6e 3esitant in furnis3in- rele1ant data. So+e of t3e officials of t3e

co+pany 4ere reluctant to supply t3e re7uired infor+ation. eside all t3e

data in t3is report are not pri+ary and ne4 data. So / donAt 5no4 t3e

present financial situation of t3e co+pany.

T3e ti+e to prepare paper is li+ited.

Despite of t3e s3ortco+in-s / recei1ed a -reat 3elp fro+ t3e officials

of t3e co+pany.

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10/53

T3e topic of +y ter+ paper is speciali*ed on Efficiency and Proper

Efficiency Steel Di1isions of KDS -roup. So it is necessary to -i1e an

introduction a6out t3e KDS Steel Di1ision.

The Purpose

KDS Steel Di1ision esta6lis3ed on #BB< under t3e +ot3er plant

KDS Group Ltd. Cit3 t3e -ro4in- difficulties faced 4it3 t3e i+port of

al+ost #&& ra4 +aterials. or t3is reason KDS Group setup t3e Steelproduction plant. o4 KDS Steel Di1ision is one of t3e +ajor role players

in Steel sector in an-lades3.

The Strategy

Cit3 t3e -ro4in- difficulties faced 4it3 t3e i+port of al+ost #&&

Steel ra4 +aterials KDS strate-y for esta6lis3in- an Steel di1ision to -et

rid of t3ose pro6le+s and to operate a s+oot3 6usiness and to de1elop

itself as one of t3e leadin- solution pro1ider firstly in an-lades3 and t3ere

after in ,sia=pacific re-ion.

The People

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T3e people 43o are +a5in- it 3appen=t3e e+ployees are dedicated

and ener-etic and e9perienced in t3eir 4or5. Cit3 6ot3 -ender and

+inority -roups in an-lades3 are 6ein- 4ell represented 3ere.

The Technology

KDS is usin- 1arious types of tec3nolo-y in t3eir productions.

Manual and auto+atic 6ot3 are used 3ere. KDS Steel Di1ision is used to

use orei-n Tec3nolo-y in production purpose.

Products

T3e products of KDS Steel Di1ision are

Plain S3eet.

Tin.

2oil.

Delivery and Dispatch!

KDS Steel Di1ision 3as fi1e 1e3icles for deli1erin- finis3ed -oods

to consu+ers. T3e deli1ery 4it3in 23itta-on- is conducted 6ased on fi1e

route plans. Deli1ery arran-e+ents are 6ein- +ade 6ased on finis3ed

-oods report and consu+er ur-ency. T3e +ain pro6le+ faced 6y deli1ery

dispatc3 ser1ice depart+ent is deli1ery location and lac5 of contact

infor+ation. T3e process is desi-ned to ser1e a consu+er in one -o. ut it

pro6le+ persists in deli1ery instruction t3e process incurs +ore cost and

reduces profita6ility.

The "esult

Steel dept is 1ery +uc3 successful in ac3ie1in- its o6jecti1e. /t 3as

succeeded to +eet a lar-e portion of local de+and as 4ell as 3as ac3ie1ed

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12/53

-ood fa+e in t3e international Steel +ar5et. T3rou-3 its operational

process KDS is restructurin- its 6usiness in recent days and tar-eted @'

-ro4t3 durin- t3e year $&&


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#ame *+ $TES %&&' %&&( %&&)

Total ,ssets ?


14/53

"atios +ormula %&&' %&&( %&&)

2urrent

"atioLi7uid assets

2urrent Lia6ilities

B.@

@:# %.':# #%.8:#

>uic5 "atio2urrent ,ssets=stoc5

2urrent Lia6ilities$.


15/53

"atio2urrent Lia6ilities

uic5 "atio2urrent ,ssets=stoc5

2urrent Lia6ilities#.%?:# %.88:# %.?#:#

De6t E7uity"atio

De6tE7uity


16/53

2urrent Lia6ilities

De6t E7uity

"atio

De6t

E7uity&.%'$:# &.%&:# &.#&:#

E7uity "atioE7uity

Total ,ssets

&.?% &.


17/53

respecti1ely. So t3e position of t3e co+pany at $&&% and $&&< is not -ood

and position of $&&8 is satisfactory.

,ong Term +inancial Stability

T3e ratio pro1es t3e efficiency on t3e part of t3e +ana-e+ent if

for+ulatin- financial plannin-. To deter+ine t3e lon-= ter+ financial

sta6ility of t3e co+pany 4e calculate t3e proprietor "atio (P. ") and De6t

E7uity ratio (DE. ".) of t3e co+pany. Most con1entional ratio is %< t3for

t3e Proprietor "atio and % to # for De6t E7uity "atio.

ro+ t3e a6o1e ta6le 4e s3o4 t3e lon-= ter+ financial sta6ility

position of t3e co+pany. T3e Proprietor "atio De6t E7uity "atio re1eals

t3e co+panyAs a6ility to +eet its proprietor funds and lon-=ter+ fund 6y its

total assets and e7uity. Most e9pected ratio of t3e Proprietor "atio and

De6t E7uity "atio is %


18/53

t3e co+panyAs to +eet its proprietor funds and lon-= ter+ fund 6y its total

assets and e7uity. Most e9pected ratio of t3e Proprietor ratio and De6t

e7uity ratio is %


19/53

ro+ t3e -i1en ta6le 4e can see t3e standard ratio and t3e 6oo5

ratio is not close one anot3er. T3e standard ratio of -ross profit ratio and

net profit ratio is to earn 3i-3 profit. ,ny one of t3e co+panies is not

earnin- +ore profit. #@ or #B profit earnin- capacity is not -ood one.

So t3e position of t3e co+pany is not satisfactory.

inally it can say t3at financial +ana-ers re1ie4 and analy*e t3e

co+panyAs financial state+ent periodically 6ot3 to unco1er de1elopin-

pro6le+s and to assess t3e co+panyAs pro-ress to4ard ac3ie1in- its -oals.

T3ese actions are ai+ed at preser1in- and creatin- 1alue for t3e fir+As

o4ners. inancial ratios ena6le financial +ana-ers to +onitor t3e pulse of

t3e co+pany and its pro-ress to4ard its strate-ic -oals. ,lt3ou-3 financial

state+ent and financial ratios rely on accrual concepts t3ey can pro1ide

useful insi-3ts into i+portant aspects of ris5 and return (cas3 flo4) t3at

affect s3are price 43ic3 +ana-e+ent is atte+ptin- to +a9i+i*e. ion and

different asset a-es can distort ratio co+parison.

o4 a dayAs +any co+panies include c3arts -rap3s Dia-ra+s in t3eir

pu6lis3ed accounts. /t is 5no4n as -rap3ic +et3od of presentation of

infor+ation. /t is an i+portant +et3od of presentin- infor+ation 6ecause it

attracts t3e eye of t3e recipient +ore 7uic5ly forci6ly.

/ssets and ,iabilities /nalysis:

K0 Steel ills ,td.

#B


20/53

K0" oil $ndustry ,td.

K$0 Steel ills. ,td.

K0 Steel ills ,td.

$&


21/53

K0" oil $ndustries ,td.

K$0 Steel ills ,td.

2onsiderin- t3e situation it can say t3at doin- 6usiness t3rou-3 t3e

re7uire+ent of t3e /nternational Standard KDS 3as its a6ility stren-t3 to

o1erco+e any non profit situation 4it3 1ariety of efficiency.

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22/53

Propo"ed 7peration Re"earch Model 8ith computer ba"ed

"olution

T3e co+pany does not apply any !peration "esearc3As Model and

Tools and / 4as too +uc3 interested to o6ser1e so in +y 1isit to t3e KY

Steel Mills Li+ited.

T3erefore for consideration of t3e KY Steel Mills Li+ited 6yapplyin- 43ic3 t3e co+pany can find suita6le in1est+ent sector and can

+a9i+i*e t3eir return fro+ t3e in1est+ent a proposed linear pro-ra++in-

+odel alon- 4it3 co+puter 6ased solution 3as 6een de1eloped assu+in-

necessary input and out put for t3e Steel Di1ision.

Suppose t3e KY Steel Mills Li+ited 3as T5. % && &&&&& 6y 43ic3

it can produce si9 different products coil plain S3eet ten industrial s3ade

Steel Tenser input fro+ per +etric ton inc Sulp3er ,cid in-ots Soda arerespecti1ely %& 5- 8&& 5- 8&& 5- B@& 5- t3e co+pany 3as so+e

production loss for inc and Soda 43ic3 are respecti1ely $ and %. T3e

co+pany 3as a fi9ed esta6lis3+ent cost is T5.


23/53

Ea+

eofproducts

2os

tofc3e+ical

Transportationcost

Stora-ecost

2usto+sdutiesand1at

23e+icalcosti+ported

cost 2

ostofelectricityand-as

Maintenancecost

La6ourcost

Man

a-e+entcost

Deli1erycost

"eturn(Per+etricto)

2oil $$@&& '


24/53

Step #: /dentify t3e un5no4n 1aria6les to 6e deter+ined (decision

1aria6les) and represent t3e+ in ter+s of al-e6raic sy+6ols.

Step $: /dentify all t3e restrictions or constraints in t3e pro6le+ and

e9press t3e+ as liner e7uations or ine7ualities 43ic3 are linear functions

of t3e un5no4n 1aria6les.

Step %: /dentify t3e o6jecti1e or criterion and represent it as a ratio of t4o

linear functions of t3e decision 1aria6les 43ic3 is to 6e +a9i+i*ed (or

+ini+i*ed).

o4 4e s3all for+ulate a6o1e pro6le+ as follo4s:

Step #: (/dentify t3e Decision 1aria6les)

or t3is pro6le+ t3e un5no4n 1aria6les are t3e per tons of Steel produced

for different product.

So let

H#I T3e 7uantity of per tons of coil to 6e refined.

H$I T3e 7uantity of per tons of plain s3eet to 6e refined.

H%I T3e 7uantity of per tons of Tin to 6e refined.

H8I T3e 7uantity of per tons of /ndustrial s3ade to 6e refined.

H


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$$@&&


26/53

Ce +ust assu+e t3at t3e 1aria6les Hi iI#$%============' are t3e not

allo4ed to 6e ne-ati1e. T3at is 4e do not +a5e ne-ati1e 7uantities of any

product.

Step %: (/dentify t3e o6jecti1e)

/n t3is case t3e o6jecti1e is to +a9i+i*e t3e ratio of total return and

in1est+ent 6y different crops. T3at is

Ma9i+i*e

(9) I'


27/53

%&H#F %$H$F $@H%F %


28/53


29/53

2/S$S S*,1T$*#

Y (#) I .&&&&&&&&&&

Y ($) I .&&&&&&&&&&

Y (%) I .&&&&&&&&&&

Y (8) I .&&&&&&&&&&

Y (


30/53

20""ET ,L0E ! T;E !E2T/E 02T/! /S .B@BB#

2/S$S S*,1T$*# (

Y (#) I .&&&&&&&&&&

Y ($) I .&&&&&&&&&&

Y (%) I .&&&&&&&&&&

Y (8) I .&&&&&&&&&&

Y (


31/53

20""ET ,L0E ! T;E !E2T/E 02T/! /S #.&&%@'

2/S$S S*,1T$*#

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