Financial Structure of RSRM Steel

INDUSTRIAL TOUR REPORT

ON
FINANCIAL STRUCTURE OF RSRM STEELS LTD.

DEPARTMENT OF MANAGEMENT STUDIES

UNIVERSITY OF CHITTAGONG

I
Financial Structure of RSRM Steel

II
 Financial Structure of RSRM Steel

Letter of Submission

To
Md. Sahidur Rahman
Associate Professor
Department of Management studies
University of Chittagong.

Subject: Prayer to accept my Industrial Tour Report.

Dear Sir,
I have great pleasure to submit you Industrial Tour Report.
During preparation of this report, I have tried my best to ensure completeness.

I have put my best effort to overcome my shortcoming and prepare the report to the
best of my ability. However, if any clarifications are required, I would be glad to
provide them as best as I can.

Yours sincerely,

Md. Akter Faruk

4th Year BBA (Hon’s)
ID: 07302073
Session: 2006-2007
Department of management Studies
University of Chittagong.

III
 Financial Structure of RSRM Steel

PREFACE

Industrial tour is one of the most important part of B.B.A program. Now the world is
competitive. We have need to learn vast knowledge about the critical environment of
business. This type of report helps the student to acquire practical knowledge about the
modern business organization. It will also help the student to perform efficiently in job
market. Different organizations take different kind of policies to operate their business. The
industrial tour is program that is essential for gathering practical knowledge of B.B.A.
students. As student of the business faculty, we got the adventurous touch of the program
under our Department of Management Studies. The program intends to provide practical
training in handling of managing jobs as well as to integrate the knowledge of management
theories, formulas, frameworks and models with current management practices in business
community. The tour title is “FINANCIAL STRUCTURE OF RSRM STEELS LTD.”. It is conducted
as a part of the industrial tour program arranged by department of Management Studies,
University of Chittagong. This report is prepared on the basis of the practical study in
Ratanpur Steel Re-Rolling Mills Ltd (RSRM). and submitted in partial fulfillment of B.B.A.
program.

IV
 Financial Structure of RSRM Steel

ACKNOWLEDGEMENT

It is a great pleasure for me to submit the report which is an outcome of my preparing

Ratanpur Steel Re-Rolling Mills Limited (RSRM) while conducting. The gain of this
report depends on the contribution of many people, especially those who spare time to
share their mindful art of judging of merits and faults and suggestions.

At first, I would like to express my gratitude to almighty Allah for giving me the
strength to perform my responsibilities and complete the tour report.
Secondly, I would like to express my heartiest gratitude to my honorable teacher and
tour supervisor Professor Md. Sahidur Rahman. I was enriched by his kinds
encouragement and co-operation. I could not complete this tour report successfully
without his responsible guidance, instruction, persuasion and advice.
I would like also to express my gratitude to Obaidur Rahman ACA, Chief Finanical
Officer and Company Secretary of RSRM.

Yours sincerely,

Md. Akter Faruk

4th Year BBA (Hon’s)
ID: 07302073
Session: 2006-2007
Department of management Studies
University of Chittagong.

V
 Financial Structure of RSRM Steel

Financial Structure of RSRM Steel

Table of Content

CHAPTER 1: OVERVIEW OF RSRM STEEL

1.1 History ...................................................................................................................1
1.2 Values and Purposes ..............................................................................................2
1.3 Vision and Mission ................................................................................................2

CHAPTER 02: INTRODUCTION

2.1 Prelude....................................................................................................................3
2.2 Review of Literature...............................................................................................4
2.3 Statement of the Problems .....................................................................................7
2.4 Objective of the Study............................................................................................9
2.5 Scope of the Study..................................................................................................9
2.6 Methodology of the Study......................................................................................9
2.6.1 Collection of Primary Data ........................................................................10
2.6.2 Collection of Secondary Data ....................................................................10
2.7 Organization of the Study.......................................................................................10
2.8 Limitation of the Study..........................................................................................11

CHAPTER 03: FINANCIAL POLICIES & PROGRAMS OF RSRM

STEELS LTD.
3.1 Introduction............................................................................................................12
3.2 Financial Policies & Practices of RSRM Steels Ltd..............................................13
3.3 Financial Programs of RSRM Steels Ltd...............................................................14

CHAPTER 04: WORKING CAPITAL MANAGEMENT

4.1 Introduction of working capital management........................................................15
4.2 Definition of working capital management............................................................16
4.3 Importance of working capital management..........................................................17
4.4 Theoretical Framework of W.K.M.........................................................................17
4.5 Planning of working capital...................................................................................19
4.6 Working capital cycle.............................................................................................20

VI
 Financial Structure of RSRM Steel

4.6.1Operating cycle........................................................................................20
4.6.2 Operating cycle includes of the following..............................................22
4.7 Requirements of funds of RSRM steel...................................................................24
4.8 Sources of working capital of RSRM steel............................................................25
4.9 Cash Management..................................................................................................25
4.9.1 Objectives of cash management................................................................25
4.9.2 Determining the cash needs.......................................................................26
4.9.3 Optimal cash balance................................................................................26
4.9.4 Debtors Management................................................................................26
4.10 Problems in Collecting debts................................................................................27
4.11 Creditors Management.........................................................................................28
4.12 Inventory Management........................................................................................28
4.13 Factors When Determining Optimum Stock Levels:...........................................29

CHAPTER 05: FINANCING FINANCIAL STRUCTURE OF RSRM

STEELS LTD.
5.1 Introduction............................................................................................................30
5.2 Evaluation of Pro-Forma Financial Structure Of RSRM Steels Ltd......................32
5.3 Evaluation of Financial Structure by Financial Ratios:.........................................33
5.4 Evaluation of Leverage..........................................................................................39

CHAPTER-06: DETERMINANTS OF CAPITAL STRUCTURE

6.1 Identification of Determinants of Capital Structure of RSRM Steels Ltd.............46

CHAPTER-07: PROBLEMS ASSOCIATED WITH FINANCIAL

STRUCTURE OF RSRM STEELS LTD.
7.1 Introduction............................................................................................................48
7.2 Problem Associated with Financial Structure of RSRM Steels Ltd.......................48

VII
 Financial Structure of RSRM Steel

CHAPTER-08: SUMMARY POLICY IMPLICATION &

SUGGESTIONS.

8.1 Introduction............................................................................................................52
8.2 Summary of the All Findings:................................................................................52
8.3 Policy Implication..................................................................................................54
8.4 Conclusion..............................................................................................................55
REFERENCES...........................................................................................................56

VIII