REPORT ON HRD AT

NEO STRUCTO
CONSTRUCTION
LIMITED

Submitted to: Prepared BY:

Prof. Dr. S.U. Sharma Digesh C. Shah
Roll No. 29
MBA-Ist Yr(2009-‘11)
F.M.S. Baroda (M.S.U.)

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 DECLARATION

I, undersigned, Shah Digesh Chandreshbhai, declare that this

project report on “HUMAN RESOURCE MANAGEMENT” for NEO

STRUCTO CONSTRUCTION LIMITED is the result of the

research work carried out during 26th Oct, 2009 to 31st Oct, 2009.

The information collected from the company has been used for

academic purpose only.

Date: 30th Nov, 2009.

Place: SURAT DIGESH C. SHAH

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1
CHAPTER - 1

INTRODUCTION

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 INTRODUCTION

Neo Structo Construction Limited is an ISO 9001:2008

Accredited Mechanical Engineering Company, specialized in the
field of Construction of Refineries, Petrochemicals, Fertilizers,
Steel & Metallurgical, Chemical, Oil & Gas, Power, Cryogenic
and other core industries.

The company have been in this field for the last 30 years
executing various jobs involving fabrication & erection of
reformers, heaters, vessels, tanks, erection of heavy static &
rotary equipments, cryogenics plants, piping & structures, etc
for Indian & International customers under the stringent
supervision of renowned consultants & inspection agencies like
EIL, Lloyds, Mecon, PDIL, SNAMPROGETTI, DCL, FEDO, KELLOGS,
KPG, BV, TPL, FW, UOP, SGS, ABS, etc.

The company also has executed many critical plant shutdown

jobs for refineries, petrochemicals, steel plants, fertilizer,
cryogenic plants and oil & gas industries ahead of tight delivery
targets getting high appreciation.

The company has maintained a wonderful reputation for

quality, safety, timely delivery and efficient management which
is a critical factor attributable to the success in Construction
Industry.

The company’s backbone is a team of highly professional and

experienced Managers, Engineers, Technical and Non-Technical
staff backed up with a very strong resources comprising of
Fleet of Cranes, Power generators, Welding machines, Electric
Winches, Lifting Tackles and all the required tools and tackles
required for the Construction Industry.

Neo Structo set up fully equipped fabrication shop under its

sister concern Spetech Plant Equipments Private Limited which
is a fully fledged heavy engineering shop, involved in
fabrication of pressure vessels columns, towers, modules, skids,
special equipments, piping etc. Spetech is certified by ASME &
NB for manufactures of boiler & pressure vessels with 'U' & 'S'
stamp and carrying out repair & alteration with 'R' stamp.

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Established in 1996, its mission was to meet the growing Indian
Heavy Engineering Industry’s need for fabrication of high
quality equipments within the stipulated delivery period. This
fabrication shop is working as an in-house equipment
manufacturer to cater to clients requirement in specialized
fabrication shop where complicated products are fabricated
with technical skill.

The company’s aim is to provide innovative and practical

solutions to meet the requirements of its clients. Their
objectives are to develop a strong commitment to a project and
to ensure that all key decisions are made on a fully informed
basis.

ORGANISATION

BOARD OF DIRECTORS:

Chairman & Managing

Mr. N Syamaprakash
Director
Mr. N Suseelan Director
Mr. N Surendran Director
Mr. K B Viswanathan Director
Mr. Deepu
Director
Syamaprakash

SENIOR MANAGEMENT:

Mr. S L Varma Sr. Vice President

Mr. S R Srinivasan Vice President (Projects)

Mr. S Vijayaraghavan Sr. General Manager

(Contracts)

FIELD OF OPERATIONS

• Fabrication & Erection of Reformers, Heaters & Furnaces.

• Complete construction works of Cryogenic Plants &
Package Units.
• CCR Modules, Skids, Offshore Decks.

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 • Erection of Heavy Static and Rotary Equipments.
• Fabrication & Erection of Plant Piping Structures.
• Fabrication of Pressure Vessels, Columns, Reactors, HRSG
& WHR Modules.
• Shutdown / Revamp jobs.
INDUSTRIES WE SERVE

1. REFINERIES & PETROCHEMICAL:

Refineries being the most important area of operation for

Neo Structo, the company have executed a large number of
composite works, huge quantity of piping and major
shutdown and revamp jobs in various refineries.

Among the recent job executed by the company is the

Heaters for Reliance Jamnagar Export Refinery Project in
Gujarat, a milestone is the history so far for the company.
The job involved detailing, supply of non pressure parts,
fabrication, and erection, testing and commissioning
assistance of Heaters for a package construction.

A breakthrough as one of the only company which has

executed the maximum number of CCR (Continuous Catalyst
Regenerator) Modules in India. These process modules have
recently been put up in various refineries as a part of plant
modernization projects.

• Indian Oil Corporation Ltd., Baroda/Panipat/Guwahati.

• Hindustan Petroleum Corporation Ltd., Mumbai.
• Kochi Refineries Ltd., Kerala.
• Chennai Petroleum Corporation Ltd., Chennai
• Reliance Petroleum Ltd., Jamnagar.
• Reliance Industries Ltd., Hazira.
• Essar Oil Refinery Ltd, Vadinar.
• UOP India Pvt. Ltd, New Delhi.

2. OIL & GAS / OFFSHORE:

Neo Structo provides all services associated with process

plants including engineering procurement, manufacturing
&construction of oil & gas industries. The company has
executed various LTSK projects successfully for hydro carbon

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 process by planning controlling and implementing project,
maintaining schedules, quality, cost and safety objectives.

• Oil and Natural Gas Corporation Ltd., Mumbai.

• Clough Offshore Engineering Ltd., Australia.
• Cairn Energy India Pty Ltd., Chennai.
• Gujarat Gas Co. Ltd., Surat.
• LNG Petronet Ltd., Dahej.
• Hazira LNG Terminal Ltd., Shell, Surat.
• GSPC Niko Resources Ltd., Vadodara.

3. CRYOGENIC PLANTS:
Neo Structo has fabricated and erected or installed over 20
cryogenic plants across the country mainly for Air Separation
Plants, Oxygen Plants, Argon Recovery Plants, Purge Gas
Recovery units etc. for Praxair, Hitachi, Air Liquide, etc. to
the Asia’s biggest Oxygen Plant for Jindal Praxair, Bellary and
Karnataka which produces oxygen, nitrogen, argon in both
gaseous and liquid forms. Thus Neo has been associated with
all the leading technologists like Praxair, Linde, Air Liquide
and Hitachi.

• Praxair India Ltd., Bangalore.

• Bharat Heavy Plate & Vessels Ltd., Visakhapatnam.
• Hitachi, Japan.
• Air Liquide India Ltd., Hyderabad.
• Jindal Praxair Oxygen Company Ltd., Bellary
• Goyal Gas, New Delhi.

4. FERTILISERS & CHEMICALS:

By volume Neo Structo has executed large amount of

shutdown or revamp in Fertilizer plants. They include
reversals of Urea Stripper, Energy Saving Projects, Revamp
of Ammonia, methanol Reformer Units, Replacement of Coils
and Tubes in Hydrogen Reformer, De-bottlenecking projects
etc. at various fertilizer units like KRIBHCO, IFFCO, GNFC,
INDO – Gulf, Tata Chemicals.

• Krishak Bharati Co-Operative Ltd., Surat.

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 • Indo Gulf fertilizer & Chemicals Corporation Ltd.,
Jagdishpur.
• National Fertilisers Ltd., Guna.
• Zuari Agro Chemicals, Goa.
• Gujarat Narmada Valley Fertilisers & Chemicals Ltd.,
Bharuch
• Chambal Fertilisers & Chemicals Ltd., Kota.
• Rashtriya Chemicals & Fertilisers Ltd., Thal, Chembur.
• Gharda Chemicals Ltd., Panoli.
• Indian Farmers & Fertilisers Co-operative Ltd.,
Phulpur/Kalol.

5. STEEL & METALLURGICAL:

Neo Structo has significant experience in executing projects
for Steel industry including supply and installation of
equipments. Neo Structo has specialized team for the
execution of Steel plant projects. Neo has installed various
units in steel plants like Reformer, Sinter plant, Furnace,
Oxygen plant.

• Essar Steel Ltd., Hazira.

• Kalyani Steel Plant, Hospet.
• Jindal Steel Plant, Bellary.
• Ispat Industries Ltd., PEN
• Vikram Ispat Ltd., Alibagh.
• Hindalco Industries Ltd., (Birla Copper), Dahej.

6.POWER:
Power is the most crucial ingredient that keeps the
wheel of Industry moving and it’s also helps in
the growth of infrastructure of any economy.

Power sector has been striving since 2003. to position

their selves in the proper niche, Neo Structo ventured
into Power sector. Now, Neo Structo plays a major role in
execution of power as well as downstream activities of
power generation.

• National Thermal Power Corporation, Gandhar.

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 • Maharashtra State Electricity Board, Chandrapoor.
• Essar Power Ltd. Surat.
• Suzlon Energy Ltd. Pune.

7. OTHERS:

• Larsen & Toubro Ltd. Hazira, Mumbai.

• Essar Construction Ltd., Hazira.
• ION Exchange (India) Ltd., Mumbai.
• Ballast Nedam International, Netherlands.
• Afcons Infra Structure Ltd., Mumbai.
• Daelim Engineering Ltd., South Korea.
• Hyundai Heavy Industries Ltd., South Korea
• Technip Italy Spa., Italy.
• Technip KTI, New Delhi.
• Toyo Engineering India Ltd., Mumbai.
• Kvaerner Power Gas Ltd., Mumbai.
• Tata Honeywell Ltd., Pune.
• L'Oreal India Pvt. Ltd., Pune.

CAPABILITIES
• Equipped with its own cranes for heavy erection of various
capacities up to 500T SWL to handle heavy erection.

• Full range of machinery & infrastructure as required for

executing any mechanical construction jobs.

• Construction Managers, Engineers, technical & non-

technical staff are highly professional & experienced in
multiple projects of various areas of operations. Regular
training is imparted to all the employees for executing
their jobs as per the latest technical advancements.

• Mobilization capacity of more then 4000 skilled / semi-

skilled / unskilled work crew at a given point of time.

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 • Qualified over 100 Welding procedures during execution of
various projects involving, CS, AS, SS, Duplex/ Super
Duplex Steels, Urea Grade Steel, Inconel, Monel, Cupro-
Nickel, Aluminum, etc and IBR approved.

• Rich working experience with various Indian &

International clients and renowned consultants, with full
understanding of their technical requirements & systems.

• Expertise in executing challenging & critical shutdown/

revamp jobs with tight delivery schedules.

QUALITY ASSURANCE

NEO STRUCTO CONSTRUCTION LTD. is committed to meet

customer requirements and specifications to achieve
maximum customer satisfaction with unerring regularity on
lasting basis.

The company tries for continual improvement by following

P.D.C.A. Cycle (Plan, Do, Check, Act) and by following Quality
Management Principles.

The company endeavor to provide efficient leadership,

encourage creativity and training to keep pace with the latest
advances for growth of the organization and the employees.

The company endeavor to maintain highest standards of

safety, health and environment.

The company shall try to maintain our position as one of the

leaders in the Construction Industry.

HSE POLICY AND AWARDS

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It is the endeavor of NEO STRUCTO CONSTRUCTION LIMITED to
maintain the highest standard of Health, Safety & Environment
for all our operations.

Safety is considered of prime importance and gets riding

priority over all other activities

The company shall comply with all legal and other statutory
requirements and shall prevent pollution and safeguard
environment by minimizing use of natural resources, recycle
and re-use options.

The Company believes in Zero Accident and Maximum

Productivity and enforces it by educating, constant monitoring
and giving full backup to our managerial and down the line
Engineers, Technicians and Others involved in the operations.

SITE ORGANISATION CHART

PROFILE OF THE COMPANY:

 CORPORATE OFFICE:
3RD Floor, Mahaan Terrace,
Adajan Road,
Surat -395 009.
Gujarat, INDIA.

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 PROJECT OFFICE:
Mezzanine Floor, Rekha Park Building,
Near Pal Octroi,
Adajan Road,
Surat - 395 009.
Gujarat, INDIA.

 REGISTERED OFFICE:
“STRUCTO HOUSE”
A1 – A4, Narayan Park,
Icchapore.
Surat – 395 510.
Gujarat, INDIA.

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 CHAPTER - 2

OVERVIEW OF DIFFERENT
SECTIONS

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1. Salary Section:

The income under the head salaries means the

remuneration received by a person in any form from his
employer for the services rendered by him. The total
salary takes into account the following:-

• Salary

• Perquisites

• Allowances

The main function of salary section can be divided into the

following:-

1. Salaries allowances and other employee’s payment.

2. Payment / recovery / reconciliation of employee’s loans

and advances.

3. Deduction of tax at source. Remittances and filing of

return of the income tax.

4. Separation / transfer of employees.

5. Traveling payment bills.

6. 50% of basic salary plus Leave Travel Allowance plus

50% of medical expenses employee’s is eligible.

During Onam time 8.33% of basic salary is given as bonus.

During Diwali time 12% of basic salary is given as bonus
ex-gratia and medical and leave travel allowance i.e. half
of basic salary is given.

If a trainee joins the Company and if he is GET (Graduate

Engineer Trainee) his salary and allowances are as follows
–
Basic salary Rs. 10,500
+ Rs. 500 House Rent Allowance (HRA)

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 +Rs.200 Food Allowance, no other benefit is provided to
trainee.
If a trainee joins the Company and if he is DET (Diploma
Engineer Trainee) his salary and allowances are as follows
–
Basic salary Rs. 7500
+ Rs. 500 House Rent Allowance (HRA)
+Rs.200 Food Allowance.

If the person is the permanent staff then following

benefits are provided to them –

Salary is given according to scale

Basic salary + General allowances

Add:
+ 30% House Rent Allowance (HRA)
+ Rs.200 Food Allowance
+ 10% washing allowance
+ Updation i.e. given according to salary scale of
employees
+ Personal pay i.e. also given according to salary scale of
employees
+ Special allowance is given depending on the
performance of employee
= Gross Salary

Deduct / Less:
- Provident Fund
- Professional tax
= Net Salary

2. Provident Fund:

The objective of provident fund is to provide future benefit

to the employees after retirement from service or financial
security for his beneficiaries in the event of his death while
in the service. For this, both the employee and the
employer have to forego certain percent of their
respective basic salary as a contribution towards the
provident fund scheme.

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 Contribution:

Both the employer & employee make certain amount of

contribution towards PF scheme. In case of employee 12%
of salary is to be contributed. In case of employers, equal
amount is contributed but out of which 3.67% is
contributed towards PF & rest 8.33% is contributed
towards family pension scheme where the maximum
amount is Rs. 780 and the basic salary limit is Rs. 6500.

Nomination:

Every employee is required to fill the nomination form

giving details of the person/persons who would receive the
amount standing to his credit in event of his death.

Interest:

An employee gets interest on the deposits he makes

towards Provident fund. This interest is applicable to both
employee and employer’s contribution. The rate of interest
is fixed by the central government. For a particular
financial year, interest is calculated on 1st April. 8.5% is
the current interest rate.

Withdrawal:

Form 19 is used by employee to withdraw amount.

Form 20 is used by nominee to withdraw amount.
Form 31 is used by employee to take advance amount.

Under certain conditions and provisions an employee can

withdraw money from his PF account.

3. PAYROLL:

The term 'payroll' encompasses every employee of a

company who receives a regular wage or other

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 compensation. Some employees may be paid a steady
salary while others are paid for hours worked. All of these
different payment methods are calculated by a payroll
specialist and the appropriate paychecks are issued.

After a payroll accountant multiplies an employee's hours

by his or her pay rate, the gross income amount is entered
into a calculator or computer program. Regular deductions
such as tax withholdings, social security and medical
insurance and so on are then categorized and subtracted.
The remaining balance is then converted to a check and
becomes the employee's net pay for that time period.
Payroll departments also identify the employer and
employees by a federal code and keep a running tally on
total income and deductions for the year.

Setting up an effective payroll system is not especially

difficult for trained accountants, but it can be very time
consuming.

In a company, payroll is the sum of all financial records of

salaries, wages, bonuses and deductions.

FUNCTIONS OF PAYROLL:

1. Receiving of inputs:

The preparation of payroll starts with the receipt of inputs

from various departments. These inputs are received from
the personnel & administration department.

2. Checking against eligibility:

Once information is received they are checked against

eligibility before approval. The criteria for eligibility are
mentioned in the company’s policies, circulars and notes.
If the inputs received are not eligible, then the concerned
employee and the personnel and administration
department is informed about it. If the inputs fulfill the
eligibility criteria, they are further processed for
settlement. If required these inputs are matched with the
pay roll history of the employees, stored in the data base
files.

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3. Consolidation:

The inputs which are found eligible are then entered in the
system, which contains all the relevant information about
the employees. Once the statement has been entered in
the computer they are checked again to make sure that
there are no errors. They are checked against the inputs
receiving and eligibility criteria for each input. Checking
the input is an important step in the preparation of payroll
because any mistakes while entering the data into the
computer system will result in miscalculation of the
employees pay.

4. Processing:

The reconciled statements are then processed. This step

involves matching of the bank statement with pay and
reimbursement registers. In case of adjustment of excess
advance taken by an employee a negative pay slip is
prepared.
Preparation of head count report is a vital task as this
gives the total number of employees. Other functions
carried out during processing include the preparation of
salary comparison statement, etc.

While processing claims and reimbursement some of them

are approved and sent back to the concerned employee
and administrative department. The processed information
is stored in files or system for use in future.

5. Reporting:

The processed information is used to generate various

reports. These reports are sent to the concerned
departments, employees, etc.

The pay register, reimbursement register, provident fund

register are prepared and information of these registers is
sent to the administration department and employees.
Bank statement along with floppy is sent to the bank

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concerned. Professional statements are sent to the
government and income tax statements to income tax
department. Pay slips are prepared and distributed to all
the employees.

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6. INSURANCE

Insurance section deals with

• Adequate protection of company property.

• Proper loss assessment and recovery of the claim from the

insurer.

Objective:

The insurance section of the Finance & Accounts

department has to safeguard its property against various
types of losses by taking various policies. The philosophy
of the company is also to prevent losses by getting
adequate cover at optimum premium. The premium is
charged as per risks involved.

Controls Tools of Insurance Section:

1. All the vehicles owned by the Company are only

insured.

2. Employees can claim the entire amount in case of

accident policy. Medical insurance is applicable only
in case of accident no diseases are covered.

Various Insurance Policies taken by Company:

• Building insurance policy.

• Equipment insurance policy.

• Vehicle insurance policy.

• Employees and workers policy.

• Personal Accident insurance.

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 FUNCTIONS OF INSURANCE SECTION:

1. Adequate protection of property - The property

owned by the Company is protected by getting insurance
cover under various policies of the company.

2. Optimum cost – To obtain insurance cover at an

optimum cost.

3. Recovery of claims from insurer – Insurance

sections deals with the measures regarding recovery of
claims for the losses and damages.

4. Constant interaction with official of the insurer –

Insurance section interacts with the official of the insurer
by arranging visits of senior executives and arranging
seminars / presentations / workshops.

5. Policy selection - To avail opinion experts regarding

the public liability, selection of coverage. This helps the
insurance section in selecting the best policy available
to them.

7. COSTING & BUDGETING:

Costing refers to the collection and analysis of expenses

that includes direct cost, indirect cost, fixed cost,
variable cost, operating cost, standard and actual cost.

Cost accounting provides information for both

management and financial accounting. It measures
both financial and non-financial reports relating to the
cost of acquiring or consuming the resources by the
company.

The section deals with the following major

activities:

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 1. Revenue Budgeting

2. Capital Budgeting

3. Costing and related MIS

4. Excise, custom duty and service tax

Revenue Budget:

Revenue budget involves collection of estimates of

expenditure from all the cost centers and compiling the
same to present to the top management for approval.
Budget control involves activities like monitoring the
budgeted cost v/s actual cost throughout the year with
suitable reports for emphasizing the stand of each cost
center / responsibility center to the management.

Revenue Budget includes the following:

• Stores, Spares and Consumables budget

• Salaries and Wages budget

• Repairs and Maintenance budget

• Administration expenses budget

Capital Budgeting:

Capital Expenditure involves huge amounts of investment.

Thus a long term planning is required while undertaking
new project.
Some projects may take longer time for completion thus
capital expenditure may be extended beyond the
estimated budget period. In such cases the expenditure
requirement has to be fragmented financial year wise,
specifying the starting date and the estimated date of
completion.

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 Operation and Maintenance Budget:

Repairs and maintenance expenses are one of the major

expenses that are incurred in the organization / company.
It includes three types of maintenance such as predictive
maintenance, preventive maintenance and breakdown
maintenance.

The repairs and maintenance expenses incurred are

determined by analyzing the condition of the equipments
and also by checking the routine activities of the
maintenance. The estimate for each other cost center is
calculated on the probable maintenance work that may be
taken during the year. This budget is decided by mutual
discussion between Finance & Accounts department and
top management.

Control Tools of Costing and Budgeting Section:

1. Budgets for every plant / site should be maintained by

the technical department.

2. Monthly Performance Review meeting should be held

every month in order to improve the performance.

3. If there is any difference between budgeted and actual

cost, then justification should be given to the higher
authorities.

4. Budgets given at the beginning of the year should be

spent economically.

8. Human Resource Department / Section:

Human resource department / section mainly take care of

the requirement of manpower according to site’s
requirement. They train manpower for whatever work they
are going to do. If the employees are facing any problem

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from administrative point of view is to be studied and
taken care of.

This department also takes care of time keeping, salary

administration, recruitment, training and development etc.

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CHAPTER – 4

STUDY

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4.1 STUDY OF MANAGEMENT:
Management has these days become a crucial issue for
every organization. There are 4 M’s of Business
Composition:

1.MAN / HUMAN RESOURCE :

Man i.e. the human resource is considered to be the most

important and valuable asset of an organization. It is very
difficult to replace human resource i.e. it is irreplaceable.
Now a days in each and every organization there is a
Human Resource department who takes care of employee
needs their problems etc. To retain human resource in an
organization these days has become a matter of concern,
so all the facilities are to be provided to them so that they
are satisfied with the organization and give their best to
fulfill the organizational needs.

Human resource is the most important element or

component irrespective of the nature of industry.
Importance of human resource may vary from industry to
industry i.e. it depends on type of industry. In every
industry human resource is considered as mind of
company.
In software development industries human resources are
very important in the same way in industries where work
is mainly carried out through machines. Now a day’s
human resource plays an important role in every
organization, the manpower employed or recruited should
have high technical knowledge and it is mainly found in
mechanical driven industries.

Human resource departments look after the problems of

the employees and provide them with facilities so that
they can deliver their expertise in their jobs without any
mental worry for their personal needs. Labour turnover is
also considered a crucial component these days in every
organization. Qualified and experienced manpower are
difficult to retain. Sometimes it is found that the
manpower is qualified but does not have the experience
and vice-versa. Thus the growth of the company depends

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 on the qualified and experienced manpower or staff
recruited by company.

2. MATERIAL:

Material is also an important factor for producing a

product. If input is of good quality then output will also be
good.
E.g. Garbage in Garbage out (GIGO) i.e. what you put you
get back. The better quality product you use the better
output you get.

There are two major categories of material:-

1) INPUT RAW MATERIAL - which are mainly found in the

final product.

2) CONSUMABLES - which are consumed and loose their

entity while producing final product.

Quality of material used is in direct proportion to the

product cost.
Lower the quality - lower is the cost.
Higher the quality - higher is the cost.
However quality pays in long run i.e. long term benefit is
to be seen.
E.g. suppose if we are going to buy a product, the quality
is low and the price is also low, so looking to the price we
may buy the product initially but we are not able to get
the benefit in long run.

But next time while buying product we may look high

quality though the price may be somewhat higher than the
previous purchase we made, but it will give us long run
benefit that we are looking for.

According to the requirement of industry materials are

required, different industries require different materials to
produce the product.

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3.MACHINERY:

Humans help produce the final product, raw material serve

as an input to final product, but it is the machines which
shape and formally manufacture the final product.
Different industries require different types of machinery to
produce products. The organization or industry has to
continuously keep themselves updated according to the
changes taking place in the market, otherwise the
technology used in machinery will become obsolete and
the organization will not be aware of it if it is not in touch
with the changes taking place around the world. Thus to
survive in cut-throat competition these days, the
industries have to keep a track record of all the
technological changes taking place around. Lot of funds is
to be blocked by the company in purchasing machinery, so
decisions are to be taken carefully. Hi-tech machines
require highly skilled, expertise and experienced people to
handle it.

These machines need to be over hauled regularly so as to

maintain its productivity i.e. regular maintenance is
needed.

4.MONEY:

Money is considered as last M and to be the most

important component in a business or organization,
without money no activity takes place. It is money for
which the business is been started and it is money which
actually helps the business runs like we have an old saying
– “Money makes the mare go”.
The purpose for which money is required may be short
term, medium term and long term.
For short term, money is required for working capital
requirements and for meeting day to day expenses. The
organization should have surplus funds with themselves to
run the routine business cycle i.e. for meeting daily
business requirements.

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 For medium term, money is required for purchasing stock
(inventory), tools, insurance etc.

For long term money is required to purchase heavy

machinery, equipments. The company can take loan for
this purpose. To collect funds from public the company
can issue equity shares, preference shares and can come
out with a public issue etc.
Without money the business cannot function smoothly.
From profits of the company or organization some portion
or proportion is to be kept aside as reserve so that it can
be used during time of contingency or emergency etc. The
organization has to keep a strict watch on where the
amounts of funds are spent.

For purchasing heavy machinery huge amount of funds

are required mortgage loans can be taken, hypothecation
can be done etc. Thus proper records are to be maintained
for the inflow and outflow of funds.

4.2 RECEIPT SIDE (From where does the Company

receives the funds):

1. Refund of Earnest Money Deposit (EMD).

2. Mobilization Advance.

3. Billing.

4. Refund of Security deposit.

5. Refund of Retention money.

1. Refund of Earnest Money Deposit :-

If the contract is cancelled then Earnest Money Deposit is

refunded. It means after the technical bid is opened and
after evaluating and ascertaining the technical
compatibility of the party/contractor, if the contractor is
found to be technically unqualified then the Earnest Money
Deposit collected from the contractor is returned back or
refunded. Thus it acts as receipt for the Company.

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2. Mobilization Advance :-

The money paid in advance of a transaction to protect the

seller against damage or non-payment is called
mobilization advance.
In other words, mobilization advance is needed to meet
the expenses and it is mainly provided to facilitate
liquidity. Normally the advance is 10% of contract value
against Bank Guarantee.

3. Billing :-

Normally the duration period of raising bills by the

Company is usually 30 to 45 days.
E.g. Suppose the Company does the first transaction on 1st
May it raises bill up to 30th May, thus it is called Running
Account Bills.

4. Refund of Security deposit :-

When the contract is awarded that time Earnest Money

Deposit is not refunded, it is converted into Security
deposit. But after successful completion of the contract
the amount that was submitted by the contractor to the
client will be refunded by the client to the contractor. Thus
it will be receipt for the Company.

5. Refund of Retention Money :-

Retention money is that money that is held back that

would otherwise be paid until the other party performs
some service or task.
E.g. Normally in construction business it is common that a
series of payments is made overtime that time certain
percentage (%) depending on the work order is withheld
by the client until the job is complete. This way the
contractor can pay his costs during construction of the
project, but obviously he does not get the entire amount
until the job is done. But after successful completion of the
contract the amount that was submitted by the contractor

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 to the client will be refunded by the client to the
contractor. Thus it will be receipt for the Company.

4.3 PAYMENT SIDE (To whom the Company makes

payments):

1. While filling up tender Earnest Money Deposit is paid i.e.

expenses are to be made.

2. Mobilization expenses.

3. Purchase of Consumables.
4. Hire of equipment.

5. Staff salary/wages.

6. Overheads.

7. Fixed expenses.

8. Deduction of Retention money.

9. Deduction of Security deposit.

10. Installment of loans.

1. While filling up tender Earnest Money Deposit is

paid i.e. expenses are to be made :-

While filling the tender the Company/Contractor has to

give the Earnest Money Deposit to the client, the client
collects the amount because the client intends that those
who are the genuine contractors i.e. only those who are
interested in contract only they should apply for the
tender and submit the bid, the uninterested parties should
not apply for tender and submit the bid.

2. Mobilization expenses :-

It means the expenses for mobilizing at the site i.e. man,

material and machinery for the site, all these expenses are

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 related to 3 M’s hence depending on the conditions of
work order mobilization expenses are made.

3. Purchase of Consumables :-

It is an expense for the Company. Consumables are those

which are consumed and loose their identity while
producing the final product.
E.g. Fleet of cranes, Power generators, Welding machines,
Electric winches, Lifting tackles and other required tools
and tackles this entire are the consumables for the
Company and to acquire all this expenses are to be made
by the Company.

4. Hire of equipment :-

As the Company has to go to the client’s site and

manufacture according to client’s requirement, different
clients have different requirement so the Company may
not have all the equipments with them, sometimes the
Company may have to hire the equipments.

E.g. Hiring of equipments like heavy machinery, hydra

cranes etc all this are the equipments hired by the
Company to do the work and according to client’s
requirements the equipments are hired by the Company,
for hiring the equipments all this expenses are to be made
by the Company.

5. Staff salary / wages :-

The Company has to give salary to employees and wages

to the workers who are working at the site. Payment of
wages and salaries to the employees and workers are to
be made accurately then only they will work efficiently and
contribute their best to the Company. Hence minimum
wages are to be paid to workers irrespective of whether
they are skilled, semi-skilled, unskilled etc.

6. Overheads :-

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 It refers to an ongoing expense of operating a business.
Overheads is usually used to group expenses that are
necessary to the continued functioning of the business,
but do not directly generate profits.
E.g. Insurance, interest, legal fees, rent, repairs, taxes,
travel and utility bills etc.

7. Fixed expenses :-

It includes office rent, electricity bill, telephone charges

and mobile bills, Xerox charges, courier charges, erection
and fabrication work done etc.

8. Deduction of Retention money :-

Certain percentage (%) is deducted depending on the

work order. In case if any defective work is there or the
work done is not according to the requirement of the
client, then the deducted retention money is not
repayable.

9. Deduction of Security deposit :-

The Company / contractor have to submit security deposit

to the client when the contract is awarded to them.
Certain percentage (%) of security deposit is deducted
depending on the work order / requirement by the client.

10. Installment of loans:-

The purpose for which the Company has to take loans may
be to purchase heavy equipments, machines, cranes etc.
The interest rates on loan amount are higher, so the
Company has to pay a huge amount of installments on
loan.

4.4 HOW THE COMPANY IS MANAGING ITS

FUNDS:

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The Company normally manages its funds through the
receipts received from the clients, but the Company
cannot wait till they get payment from the client before
that what all are the expenses that the Company has to
incur i.e. paying wages, salaries, etc that they have to
make.

The Company has got a credit limit of Rs.10 crores from

bank and has to pay 15 -16 % interest on it.

The Company normally takes long term loans to purchase

hydra cranes, heavy equipments and vehicles that are
used at the site like cars, jeeps, buses, trailers etc.

Thus the fund requirements are met by the unsecured

loans taken from the Directors of the Company as public
money is not involved in the Company.

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CHAPTER – 5

CONCLUSION

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COMPANY’S VISION:

The Company’s vision is to continue to generate strong

financial returns and create a world class engineering
procurement and construction company. With a particular
focus in Oil & Gas, Power, Refineries, Petrochemicals, Steel
& Metallurgical, etc. The objective is to expand and
enhance their presence throughout India and abroad by
capitalizing on competitive strengths, local experience,
and familiarity with local working conditions and
relationships with clients and strategic partners. The
company intends to target specific project segments and
industries where they believe there is high potential for
growth and where they enjoy competitive advantages.

OVERVIEW:

Neo Structo has since its inception grown steadily and it

enjoys a prominent position as one of the leading medium
scale Lump sum Turnkey (LSTK) Company having
multifaceted operation and division.

Neo Structo is continuously striving for adapting with the

global challenges for the growth and development of the
industries and provides the clients innovative and optimal
solutions. The company is always committed for
services/materials of best quality with high safety
standards and as well as timely delivery with efficient
management.

PLANT & MACHINERY:

Neo Structo has a full range of mechanical construction

equipment and machineries including one of the largest
fleet of cranes in India, welding machines and mobile
offices to undertake fabrication and erection of heavy
equipment at client’s site at any place. The fleet
comprises of wide range of sophisticated and specialized

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 equipment contributing in timely completion with high
standard of quality and cost effectiveness of our projects.

The asset base includes Heavy duty cranes, core drilling

machines, welding machines, compressors, DG sets, plate
rolling machines (semi automatic as well as automatic) up
to 80 mm thick.

The equipment management activity at job site like

mobilization, commissioning, operation & periodic
maintenance, repairs are undertaken through well defined
operation procedures. These activities are handled by
dedicated teams located at sites which consist of
competent manpower; required materials and technical
support by over own expertise technical persons as well as
third party consultants to carry out major repairs and
overhauls for the equipments.

GROWTH PLANS:

Expanding global operations and to enter into other

vertical mechanical engineering field like designing,
detailed engineering and take up more Lump Sum Turn
Key (LSTK) jobs. With success in India, Neo Structo is
venturing into overseas markets. With a vision to
ultimately become a Global Project Engineering and
Construction Company.

Like any other competitive markets, Middle East, Far East,

South East and African markets too are highly receptive to
innovative ideas, refreshing outlooks, pioneering
experimentations of high quality and competitive priced
services, which Neo Structo promises to offer. Bearing that
newer markets bring in newer challenges and concerns,
like culture and federal policies, Neo Structo is prepared to
handle these challenges with its competence, expertise
and experience.

FINDINGS:

 Very good unity among staff.

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 Friendly working atmosphere.

 Good record keeping.

 Good inter-personal relations.