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Project Appraisal at Durgapur Steel Plant

Tamma Koti Reddy*, Praveen Sharma**

* Associate Professor, Economics, IBS, Hyderabad.

** MBA, IBS, Hyderabad.

Periodicity:September - November'2014
DOI : https://doi.org/10.26634/jmgt.9.2.2989

Abstract

This research paper studies the tools and techniques used in investment appraisal in Steel Authority Of India Limited using a live modernization project at SAIL “ the rebuilding of coke oven battery # 4”. It is observed that Investment decisions are the most important and crucial decisions of the corporate world owing to the large amount of risk involved. They affect the value of the firm and thus they need to be critically analyzed both technically and financially. To investigate the feasibility of a proposal, project appraisal techniques like Net Present Value (NPV) method, Internal Rate of Return (IRR) method and Sensitivity Analysis were employed. The authors opine that the NPV comes out to be `. 296.20 crores (posttax) and IRR 26.81% and 33.75% for post- tax and pre- tax respectively which is well above the hurdle rate, hence the project is feasible and recommended for implementation.

Keywords

Investment Appraisal, Internal Rate of Return, Cash Flows, Techno-Economics Analysis.

How to Cite this Article?

Tamma Koti Reddy and Praveen Sharma (2014). Project Appraisal at Durgapur Steel Plant. i-manager’s Journal on Management, 9(2), 13-23. https://doi.org/10.26634/jmgt.9.2.2989

References

[1]. About Durgapur Steel Plant, April 12 2014, Retrieved from Steel Authority of India ltd . Website :http://www.sail.co.in/pnu.php?tag=durgapur

[2]. SAIL's Company Details, April 10 2014, Retrieved from Steel Authority of India ltd.Website: http://sail.co.in/aboutus.php?tag=company-aboutus

[3]. SAIL, Guidelines for Formulation of Investment Proposals for Appraisal, SAIL

[4]. Indian steel industry facts and figures, May 8 2014, Retrieved from India Brand Equity Foundation, Website: http://www.ibef.org/industry/steel.aspx

[5]. Data from working group report on Indian steel industry, May 8 2014, retrieved from Report of the working group on steel industry for the twelfth five year plan (2012 – 2017)Website:http://planningcommission.gov.in/aboutus /committee/wrkgrp12/wg_steel2212.pdf

[6]. Global steel industry report, (2014). Retrieved from Global Steel 2014, Planning To Profit From Opportunity: Preparing For Future Demand ,Website: http:// www.ey.com / Publication /vw LUAs sets / EY _- _Global_steel_2014/$FILE/EY-Global-steel-2014.pdf

[7]. Global steel data and facts, (2014). retrieved from World Steel Association Website : http://www.worldsteel.org/

[8]. Pandey I.M., (2011). Financial Management 10th edition (Vikas Publishing House Reprint 2011), Chapter No. 8, In text reference: Project Appraisal Techniques.

[9]. Pamela P. Peterson, Frank J. Fabozzi, (2002). Capital Budgeting: Theory and Practice volume 10 (Wiley, 2002), in text reference : Capital Budgeting.

[10]. Pandey I.M., (2011). Financial Management 10th edition (Vikas Publishing House) Reprint 2011, In text reference: Sensitivity Analysis.

[11]. SAIL's Directors, (6th August 2012). SAIL's Annual Report 2011-12, and SAIL's Directors, 22nd July 2013, SAIL's Annual Report 2012-13, retrieved May 11 2014, from Website: http://sail.co.in/financial-list/103.

[12]. Singh Shveta, Jain P.K., Yadav Surendra S., (2014). Department of Management Studies, Indian Institute of Technology Delhi, New Delhi, India (2012), Capital Budgeting Techniques, (publisher: Emerald Group Publishing Limited ) retrieved May 132014, http://www.emeraldinsight.com/journals.htm?articleid=1 7035911

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