Financial Analysis of Sail and Tata Steel

November 6, 2017 Sports

Steel Authority of India Limited – A Maharatna Introduction Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the five Maharatnas of the country’s Central Public Sector Enterprises.

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structural, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company’s iron ore, limestone and dolomite mines. The company has the distinction of being India? s second largest producer of iron ore and of having the country? second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL’s wide range of long and flat steel products are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL’s own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions, 25 Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact Offices.

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CMO? s domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealers over 2000 , SAIL’s wide marketing spread ensures availability of quality steel in virtually all the districts of the country. SAIL’s International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAIL? s five integrated steel plants.

With technical and managerial expertise and know-how in steel making gained over four decades, SAIL’s Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata.

The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified. Major Units Integrated Steel Plants ? ? Bhilai Steel Plant (BSP) in Chhattisgarh Durgapur Steel Plant (DSP) in West Bengal Page 1 ? ? ? Rourkela Steel Plant (RSP) in Orissa Bokaro Steel Plant (BSL) in Jharkhand IISCO Steel Plant (ISP) in West Bengal Alloy Steels Plants (ASP) in West Bengal Salem Steel Plant (SSP) in Tamil Nadu Visvesvaraya Iron and Steel Plant (VISL) in Karnataka Chandrapur Ferro Alloy Plant Ventures NTPC SAIL Power Company Pvt.

Limited (NSPCL): A 50:50 joint venture between Steel Authority of India Ltd (SAIL) and National Thermal Power Corporation Ltd (NTPC Ltd); manages SAIL? s captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 814 megawatts (MW). Bokaro Power Supply Company Pvt. Limited (BPSCL): This 50:50 joint venture between SAIL and the Damodar Valley Corporation (DVC) is managing the 302-MW power generating station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant.

Mjunction Services Limited: A 50:50 joint venture between SAIL and Tata Steel; promotes e-commerce activities in steel and related areas. Its newly added services include e-assets sales, events & conferences, coal sales & logistics, publications, etc. SAIL-Bansal Service Centre Limited: A joint venture with BMW Industries Ltd. on 40:60 basis for a service centre at Bokaro with the objective of adding value to steel. Bhilai JP Cement Limited: A joint venture company with Jaiprakash Associates Ltd on 26:74 basis to set up a 2. million tonne (MT) slag-based cement plant at Bhilai. Bokaro JP Cement Limited: Another joint venture company with Jaiprakash Associates Ltd on 26:74 basis to set up a 2. 1 MT slag-based cement plant at Bokaro. SAIL & MOIL Ferro Alloys (Pvt. ) Limited : A joint venture company with Manganese Ore (India) Ltd on 50:50 basis to produce ferro-manganese and silicomanganese required in production of steel. S & T Mining Company Pvt.

Limited: A 50:50 joint venture company with Tata Steel for joint acquisition & development of mineral deposits; carrying out mining of minerals including exploration, development, mining and beneficiation of identified coking coal blocks. International Coal Ventures Private Limited: A joint venture company/SPV promoted by five central PSUs, viz. SAIL, CIL, RINL, NMDC and NTPC (with respectively 28. 7%, 28. 7%, 14. 3%, 14. 3% and 14. 3% shareholding) aiming to acquire stake in coal mines/blocks/companies overseas for securing coking and thermal coal supplies. SAIL SCI Shipping Pvt.

Limited: A 50:50 joint venture with Shipping Corporation of India for provision of various shipping and related services to SAIL for importing of coking coal and other bulk materials and other shipping-related business. SAIL RITES Bengal Wagon Industry Pvt. Limited: A 50:50 joint venture with RITES to manufacture, sell, market, distribute and export railway wagons, including high-end specialised wagons, wagon prototypes, fabricated components/parts of railway vehicles, rehabilitation of industrial locomotives, etc. , for the domestic market. Page 2 Special Steel Plants ? ? Ferro Alloy Plant ? Joint ? ? ? ? ? ? ? ? ? ? ? ? SAIL SCL Limited: A 50:50 JV with Government of Kerala where SAIL has management control to revive the existing facilities at Steel Complex Ltd, Calicut and also to set up, develop and manage a TMT rolling mill of 65,000 MT capacity along with balancing facilities and auxilliaries. Ownership and Management The Government of India owns about 86% of SAIL’s equity and retains voting control of the Company. However, SAIL, by virtue of its „Maharatna? status, enjoys significant operational and financial autonomy.

Corporate Social Responsibility As an organisation, SAIL also undertakes sponsorship of various major sporting events. To state some recent instances, SAIL has extended support/sponsorship for the Indian women? s weightlifting team to participate at international events, the Indian Davis Cup team, Chennai Open (lawn tennis), All India Jaipal Singh Gold Hockey Tournament at Rourkela, AITF–SAIL (India-Pakistan) Lawn Tennis Championships, All India Tennis Association, New Delhi, 7th World Korfball Championship, Jawaharlal Nehru Hockey Tournament, New Delhi etc. SAIL was the Presenting Partner for International Hockey Federation World Cup 2010.

SAIL is also supporting talented sportspersons like wrestler Sushil Kumar who made India proud by winning a gold at Common Wealth Games 2010 and bronze at the Beijing Olympics 2008. Wrestler Yogeshwar Dutt, who won gold at CWG 2010 and shooter Deepak Kumar, a silver medalist at CWG 2010 were also provided financial support for their training and other requirements. Apart from sponsoring major sports events like Durand Cup Football Tournament and Davis Cup Tennis Tournament for a number of years, the company has supported sportspersons of different hues in various ways.

Some of the sportspersons thus supported have done the country proud in international events. Leander Paes, Nisha Millet, Saheli Dhar Barua, Shiv Sunder Das, Satya Dev are just a few of the many who received support from SAIL and have risen to greater heights in their respective sports or games. Besides these, SAIL has also looked beyond the company to reach out to promising young sports talent at different regions and locations across the country by offering financial support for training and helping them achieve higher standards.

Arjuna/Dronacharya awardees presently within SAIL include Hanuman Singh in basketball, Rajendra Prasad in boxing, S. K. Patra in bodybuilding and Minati Mahapatra in cycling . Environment The issue of environment assumes special significance in this age of global warming. To give nature its due, extensive plantations are carried out by SAIL across all its plants and mines 200 acres of degraded land has been restored through afforestation at Purnapani flux mines of SAIL in Orissa by planting saplings which includes horticulture species, forest species and a variety of grasses.

Pisiculture has been done in the abandoned quarries at Purnapani and 300,000 fishlings have been released in the quarry waters. Further 30,000 saplings of 50 different species have been planted in this season and another 5 lakhs fishlings have been released in the quarry water. Plantation of 10,000 saplings in 10 acres of degraded land has been planned. Out of that, plantation of 4,000 saplings has been completed at Barsua Iron Ore Mines. Medicinal plantation of amla was undertaken in Chhatisgarh region recently.

Keeping in pace with 21st century environmental agenda of sustainable development, SAIL has signed an agreement Page 3 with Department of Bio-technology, Government of India and Centre for Environment Management for Degraded Eco-system, University of Delhi for ecological restoration of barren mined out areas and waste dump sites at SAIL mines The townships of SAIL are verdant with lush green trees and foliage, speaking aloud the devotion of SAIL to its environment. Several species of flora and fauna are also preserved in zoological and botanical parks maintained by SAIL in its townships.

Model steel villages SAIL has adopted 79 villages across 8 states (Chhattisgarh, West Bengal, Orissa, Bihar, Jharkhand, Karnataka, Tamil Nadu, Madhya Pradesh) to develop them as Model Steel Villages (MSVs) in a phased manner. The developmental activities undertaken in these villages include: • medical & health services • education • roads & connectivity • sanitation • community centres • livelihood generation • sports facilities By March 2010, the development of 54 MSVs has successfully been completed Family Welfare SAIL has been an active participant in the National RCH programme across all since 1995.

All SAIL hospitals have participated in the National RCH program. SAIL is also participating in other National Health Programmes like National Tuberculosis Program, anti-Malaria, Anti Leprosy Program etc. There are 20 hospitals including 4 state-of-art hospitals situated throughout the country having a total strength of around 4000 beds for the benefit of employees, their dependents and the peripheral population and are managed by trained medical staff of around 4000 people.

Various welfare activities under as part of Reproductory and Child Health Care (RCH) are FAMILY WELFARE (RCH) ACTIVITIES IN SAIL PLANTS YEAR FAMILY PLANNING. SAIL has promoted the Government? s Small Family Norms. A scheme for promoting small family norms have been in place since 1994. In the scheme for promoting family planning, an incentive of Rs. 400 is being provided for a tubectomy operation; Rs. 500 for a vasectomy operation and Rs. 50 to family planning motivator for each case.

These incentives are being provided to both employees and non-employees and these are over and above the incentives being given by the Government. Also, there is a scheme for employees with two or less children, in which Rs. 2000/- are given to an employee ( or spouse) for a sterilization operation. Various Health camps have been organized at hospitals of all plant/units like Tuberculosis Camp, Anti Leprocy Camp etc. To combat the threat of Tuberculosis and Leprocy, DOTS (Directly Observed Treatment) therapy and Anti Leprocy MDT has been made available free of cost at all Primary Health Centres etc.

SAIL has launched HIV/AIDS awareness and control program in partnership with National AIDS Control Organisation (NACO), Ministry of Health and Family Welfare. Till date about Rs. 32 million have been received for implementing the policies of NACP-II in all plants/units. Till date, 1. 1 Lakhs employees and around 6 Lakhs non-employees have been covered under Information, Education & Communication (IEC) Awareness Campaign. SAIL has launched School AIDS Education Programme covering 111 schools, 3000 teachers and 35,000 students. Page 4 FINANCIAL STATEMENTS Page 5 BALANCE SHEET

IN CRORES Particulars Sources of funds Owner’s fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Application of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity shares outstanding (Lacs) Mar ‘ 11 Mar ‘ 10 Mar ‘ 09 4,130. 40 32,939. 07 4,130. 40 29,186. 30 4,130. 40 23,853. 70 11,813. 91 8,351. 58 57,234. 96 7,755. 90 8,755. 35 49,827. 95 1,473. 60 6,065. 19 35,522. 89 38,263. 20 23,180. 54 15,082. 66 22,225. 83 684. 14 35,382. 49 21,780. 91 13,601. 58 15,039. 83 668. 83 32,728. 69 20,459. 86 12,268. 83 6,544. 24 652. 7 38,090. 36 18,848. 03 19,242. 33 57,234. 96 40,113. 05 19,595. 34 20,517. 71 49,827. 95 35,666. 84 19,609. 72 16,057. 12 35,522. 89 691. 56 7. 49 30,519. 80 41304. 01

Page 6 676. 25 6. 08 28,382. 46 41304. 01 660. 12 2. 7 32,193. 13 41304. 01 PROFIT OR LOSS ACCOUNT IN CRORES Particulars Income Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings Mar ‘ 11 Mar ‘ 10 Mar ‘ 09 42,599. 69 40,595. 90 43,798. 58 3,918. 68 3,995. 62 7,623. 33 210. 66 35,748. 29 6,851. 40 2,199. 96 9,051. 36 474. 95 1,485. 80 7,090. 61 2,304. 34 4,786. 27 118. 47 4,904. 74 29,679. 03 991. 3 161. 15 28,526. 58 19,768. 57 4,234. 65 5,417. 00 1,126. 12 834. 52 31,380. 86 9,215. 04 2,328. 11 11,543. 15 402. 01 1,337. 24 10. 33 9,793. 57 3,452. 89 6,340. 68 228. 89 184. 8 6,754. 37 27,099. 42 1,363. 03 227. 52 25,508. 87 22,042. 58 3,762. 77 8,401. 73 935. 68 1,644. 78 -1,930. 40 34,857. 14 8,941. 44 2,279. 89 11,221. 33 253. 24 1,285. 12 128. 02 9,554. 95 3,284. 28 6,270. 67 -277. 12 181. 26 6,174. 81 22,052. 47 1,073. 90 181. 26 20,797. 31 Page 7 CASH FLOW STATEMENT IN CRORES

Particulars Profit before tax Net cash flow-operating activity Net cash used in investing activity Net cash used in fin. activity Net inc/dec in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year Mar ‘ 11 7,194. 31 2,156. 02 -8,933. 28 1,817. 52 -4,959. 74 22,439. 00 17,479. 26 Mar ‘ 10 10,132. 03 4,800. 48 -8,021. 15 7,395. 00 4,174. 33 18,264. 67 22,439. 00 Mar ‘ 09 9,403. 45 6,124. 26 -4,406. 47 2,751. 30 4,469. 09 13,759. 44 18,228. 53 Page 8 FINANCIAL RATIOS Particulars Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs. Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio Payout ratios Page 9 Mar ‘ 11 Mar ‘ 10 Mar ‘ 09 11. 59 15. 19 11. 87 15. 47 2. 4 16. 59 89. 75 89. 75 103. 14 – 15. 35 18. 61 16. 35 19. 62 3. 3 22. 31 80. 66 80. 66 98. 29 69. 93 15. 18 18. 6 14. 95 18. 37 2. 6 21. 65 67. 75 67. 75 106. 04 57. 16 16. 08 12. 9 10. 94 14 12. 91 13. 23 13. 21 22. 69 19. 4 15. 73 17. 91 19. 03 20. 27 21. 97 20. 41 17. 48 13. 4 16. 67 22. 4 22. 06 28. 98 0. 54 0. 54 64. 76 1. 11 0. 39 0. 49 66. 86 1. 2 0. 2 0. 26 78. 77 1. 35 2. 02 2. 02 1. 42 4. 16 2. 05 1. 6 1. 53 6. 02 1. 82 1. 61 1. 24 5. 86 Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov. ratio (post tax) Component ratios Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. onsumed Long term assets / total Assets Bonus component in equity capital (%) 23. 49 18. 03 75. 93 81. 63 23. 54 19. 63 74. 92 79. 32 20. 32 16. 54 79. 99 83. 67 3. 22 19. 06 14. 46 2. 15 28. 71 21. 15 0. 98 44. 31 30. 96 59. 6 2. 3 62 0. 49 – 45. 84 2. 77 1. 92 61. 27 0. 4 – 54. 6 2. 13 1. 84 63. 36 0. 34 – Page 10 CALCULATION FORMULAE FOR RATIO ANALYSIS 1. EBITDA/Turnover : Earnings Before Interest Depreciation Tax and Exceptional Items/Turnover. (EBITDA : Profit before Taxes +/(-) Exceptional Items + Net Finance Charges + Depreciation). (Turnover : Sales & Other Operating Income less Excise Duty). 2. PBT/Turnover : Profit Before Tax/Turnover. Profit before Taxes +/(-) Exceptional Items). 3. Return on Average Capital Employed : EBIT/Average Capital Employed. (Capital Employed : Total Funds Employed – Miscellaneous Expenses to the extent not written off or adjusted – Foreign Currency Monetary Item Translation Difference Account)). (EBIT : Profit before Taxes +/(-) Exceptional Items + Net Finance Charges). 4. Return on Average Net Worth : Profit after Taxes/Average Net Worth. (Net Worth : Equity Share Capital + Preference Share Capital + Reserves & Surplus + Hybrid Perpetual Securities – Miscellaneous Expenses to the extent not written off or adjusted – Foreign Currency Monetary Item Translation Difference Account). 5.

Asset Turnover: Net Sales/(Total Assets – Investments – Misc Expenses to the extent not written off or adjusted – Foreign Currency Monetary Item Translation Difference Account – Advance Against Equity + Current Liabilities & Provisions). 6. Inventory Turnover: Average Inventory/Sale of Products in days. 7. Debtors Turnover: Average Debtors/Turnover in days. 8. Gross Block to Net Block : Gross Block/Net Block. 9. Net Debt to Equity : Net Debt/Average Net Worth. (Net Debt : Secured Loans + Unsecured loans – Cash & Bank – Current Investments). 10. Current Ratio : Current Assets (excluding advance against equity)/Current Liabilities. 11. Interest Cover Ratio : Earnings Before Interest and Tax/Net Finance Charges. 12.

Net Worth per share : Net Worth/Average Number of Equity Shares (post CCPS conversion). 13. Earnings per share(Basic) : Profit attributable to Ordinary Shareholders/Weighted average number of ordinary shares. 14. Dividend Payout : Dividend/Profit after Taxes. 15. P/E Ratio : Market Price/Earnings per share (Basic). Page 11 FINANCIAL STATEMENTS ANALYSIS The financial statements are indicators of the two significant factors: 1. Profitability and 2. Financial soundness Analysis and interpretation of financial statement therefore, refers to such a treatment of the information contained in the Income Statement and Balance Sheet so as to afford full diagnosis of the profitability and financial soundness of the business.

Balance Sheet A balance sheet is the basic financial statement. It presents data on a company? s financial conditions on a particular date, based on conventions and generally accepted principles of accounting. The amount shown in the statements on the balances, at the time it was prepared in the various accounts listed in the company? s accounting records, is considered to be a fundamental accounting statements. The income statement summarizes the business operations during the specific period and shows the results of such operations in the form of net income or net loss. By comparing the income statements of successive periods, it is possible to determine the progress of a business.

A statement is supplemented by a comparative statement of the cost of goods manufactured and sold. It is prepared at regular intervals and shows what a business enterprise owns and what it owes. It provides information which helps in the assessment of the three main aspects of an enterprises position – its profitability, liquidity and solvency. Of these, the later two are concerned with an enterprises ability to meet its liabilities, while profitability is most useful overall measure of its financial conditions, the balance sheet is a statements of assets, liabilities capital on specified date. It is therefore a static statement, indicating resources and the allocation of these resources to various categories of asset.

It is so to say financial photography finance. Liabilities show the claims against its assets. Page 12 The shareholders equity comprises the total owner ship claims in a firm. This claim includes net worth of shareholders equity and preferred stock. The traditional company balance sheet statement of assets valued on the basis of their original cost and the means by which they have been financed by its shareholders, lenders, suppliers and by the retention of income. This tool suffers from the following limitations: 1. A balance sheet gives only a limited picture of state of affairs of a company, because it Includes only those items which can be expressed in monetary terms. 2.

The values shown on the balance sheet for some of the assets are never accurate 3. A balance sheet assumes that the real value of money remain constant. 4. On the basis of balance sheet, it is not possible to arrive at any conclusion about the success of an enterprise in the future. 5. It is a detailed statement of the financial structure of a business. Income statement The results of operations of a business for a period of time are presented in the income statement. From the accounting point of view, an income statement is subordinate to the balance sheet because the former simply presents the details of the changes in the retained earnings in balance sheet accounts.

However, if vital source of financial information an income statement summarizes the results of business operations during specific period and shows in the form of net income or net loss by comparing income statements for successive periods, it is possible to observe the progress of the business the statement is supplemented by a comparative statement of cost of goods manufactured and sold. It summarizes firms operating results for the past period. Page 13 Cash flow statement A cash flow statement is the financial analysis of the net income or profit after including book expense items which currently do not use cash; for example, depreciation, depletion and amortization. Revenue items, which do not currently provide funds, are to be deducted. A gross cash flow is net profit after tax plus provision for depreciation. A net cash flow is arrived after deducting dividends from the gross cash flow. The cash flow is very significant because it represents the actual amount of cash available to the business.

Ratio Analysis Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company’s financial statements. The level and historical trends of these ratios can be used to make inferences about a company? s financial condition, its operations and attractiveness as an investment. Financial ratios are calculated from one or more pieces of information from company? s financial statements. For example, the “gross margin” is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information.

In context, however, a financial ratio can give a financial analyst an excellent picture of a company’s situation band the trends that are developing. A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company’s competitors have profit margins of 10%, we know that it is more profitable than its industry peers which are quite favorable. If we also know that the historical trend is upwards, for example has been increasing steadily Page 14 for the last few years, this would also be a favorable sign that management is implementing effective Business, policies and strategies. Classification f Ratios Financial ratio analysis involves the calculation and comparison of ratios which are derived from the information given in the company’s financial statements. The historical trends of these ratios can be used to make inferences about a company? s financial condition, its operations and its investment attractiveness. Financial ratio analysis groups the ratios into categories that tell us about the different facets of a company’s financial state of affairs. Some of the categories of ratios are described below: ? ? ? 1Liquidity Ratios give a picture of a company’s short term financial situation or solvency Turnover Ratios show how efficient a company’s operations and how well it is using its assets.

Solvency Ratios show the long term profitability of the company. Liquidity Ratios Liquidity Ratios are ratios that come off the Balance Sheet and hence measure the Liquidity of the company as on a particular day i. e. the day that the Balance Sheet was prepared. These ratios are important in measuring the ability of a company to meet both its short term and long term obligations. 1. Current Ratio 2. Liquid Ratio 3. Net working capital ratio 1. Current Ratio: An indication of a company’s ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the Page 15 urrent assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations. Current Ratio = Current assets / Current liability 2. Quick Ratio: Liquid ratio is also known as „quick? or „Acid test „ratio. Liquid assets refer to assets which are quickly convertible into cash. Current Assets other stock and prepaid expenses are considered as quick assets. The ideal liquid ratio accepted „norm? for liquid ratio „1?. Quick Ratio = Total Quick Assets/ Total Current Liabilities Quick Assets = Total Current Assets (minus) Inventory 3.

Net Working Capital Ratio Working Capital is more a measure of cash flow than a ratio. The result of this calculation must be a positive number. Companies look at Net Working Capital over time to determine a company’s ability to weather financial crises. Loans are often tied to minimum working capital requirements. Net working capital ratio = Net Working Capital / Capital Employed Turnover Ratios The turnover ratio is also known as activity or efficiency ratios. They indicates the efficiency with which the capital employed is rotated in the business (i. e. ) the speed at which capital employed in the business rotates. Higher the rate of rotation, the greater will be the profitability.

Turnover ratios indicate the number of times the capital has been rotated in the process of doing business. 1. Fixed Asset Turnover Ratio 2. Working Capital Turnover Ratio 3. Debtor Turnover Ratio 4 Stock Turnover Ratio Page 16 1. Fixed Assets Turnover Ratio Fixed asset turnover is the ratio of sales (on your Profit and loss account) to the value of your fixed assets (on your balance sheet). It indicates how well your business is using its fixed assets to generate sales. Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each dollar of sales revenue. A declining ratio may indicate that you’ve over-invested in plant, equipment, or other fixed assets.

Fixed Assets Turnover Ratio = Gross Sales / Net Fixed Assets 2. Working Capital Turnover Ratio Working capital refers to investment in current assets. This is also known as gross concept of working capital. There is another concept of working capital known as net working capital. Net working capital is the difference between current assets and current liabilities. Analysts intend to establish a relationship between working capital and salsas the two are closely related. Through this ratio we are attempting to see that one rupee blocked by the organization in net working capital is generating how much sales. Higher the ratio better it is. So, the orking capital can be defined either as a gross working capital, which include funds invested in all current assets, or as net working capital, which denotes the difference between the current assets current liabilities of an organization. Working Capital Turnover Ratio = Net Sales / Net Working Capital 3. Debtors Turnover Ratio Debtor? s turnover ratio measures the efficiency with which the debtors are converted into cash. This ratio indicates both the quality of debtors and the collection efforts of the business enterprise. This ratio is calculated as follows: I. Debtors? turnover ratio II. Debt collection period. Page 17 The numerator of this ratio should preferably be credit sales. This is so because the denominator is logically related to credit sales as it arises from credit sales only. Cash sales do not generate debtors.

However, as the information related to credit sales is not separately available in corporate accounts, so total sales could be taken in the numerator. Average debtors are calculated by dividing the sum of beginning-of-year and end-of-year balance of debtors by 2. Debtor’s Turnover Ratio = Credit sales / Average accounts receivables Debt collection period: The ratio indicates the extent to which the debt has been collected in time. It gives the average debt collection period. The ratio is very helpful to lenders because it explains to them whether their borrowers are collecting money within a reasonable time. An increase in the period will result in greater blockage of funds in debtors. Debt collection period = Months/Days in a year/ Debtor’s turnover ratio 4.

Stock Turnover Ratio: This ratio indicates whether investment in inventory is efficiently used or not. It is therefore explains whether investment in inventories is within proper limits or not. The Inventory turnover ratio signifies the liquidity of the Inventory. A high inventory turnover ratio indicates brisk sales. The ratio is, therefore a measure to discover the possible trouble in the form of over stocking or over valuation. It is difficult to establish a standard ratio of inventory because it will differ from industry to industry. Stock Turnover Ratio = Sales / Average Inventory Profitability Ratios Profitability is an indication of the efficiency with which the operation of the business is carried on.

Poor operational performance may indicate poor sales and hence poor profits. A lower profitability may arise due to lack of control over the expenses. Bankers, financial institutions and other creditors Page 18 look at the profitability ratios as an indicator whether or not the firm earns substantially more than it pays interest for the use of borrowed funds. 1. Return on Investment 2. Return on Shareholders? fund 3. Return on total asset 4. Earnings per Share 5. Net profit Ratio 6. Operating ratio 7. Payout ratio 8. Dividend yield ratio 1. Return on Investment: It is also called as “Return on Capital Employed”. It indicates the percentage of return on the total capital employed in the business.

The term „operating profit „ means „profit before interest and tax? and the term „capital employed „ means sum-total of long term funds employed in the business. i. e. Share capital + Reserve and surplus + long term loans – [non business assets +fictitious assets] Return on investment = Operating profit/ Capital employed *100 2. Return on Shareholder’s Fund: In case it is desired to work out the productivity of the company from the shareholder? s point of view, it should be computed as follows: Return on shareholder? s fund = Net profit after Interest and Tax/Shareholders? fund*100 The term profit here means „Net Income after the deduction of interest and tax?.

It is different from the “Net operating profit” which is used for computing the „Return on total capital employed? in the Page 19 business. This is because the shareholders are interested in Total Income after tax including Net nonoperating Income (i. e. Non- Operating Income -Non-Operating expenses). 3. Return on Total Assets: This ratio is computed to know the productivity of the total assets. The term „Total Assets? includes the fixed asset, current asset and capital work in progress of the company. The above table clearly reveals the relationship between the net profit and Total Assets employed in the business. Return on Total Assets = Net profit after Tax/Total Assets* 100 4.

Earnings per Share: In order to avoid confusion on account of the varied meanings of the term capital employed, the overall profitability can also be judged by calculating earnings per share with the help of the following formula: Earning Per Equity Share = Net Profit after Tax / Number of Equity Shares X 100 The earnings per share of the company helps in determining the market price of the equity shares of the company. A comparison of earning per share of the company with another will also help in deciding whether the equity share capital is being effectively used or not. It also helps in estimating the company? s capacity to pay dividend to its equity shareholders. Earning Per Equity Share = Net Profit after Tax / Number of Equity Shares X 100 5. Net Profit Ratio: This ratio indicates the Net margin on a sale of Rs. 100. This ratio helps in determining the efficiency with which affairs of the business are being managed.

An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business. The ratio is thus on effective measure to check the profitability of business. However, constant increase in the above ratio after year is a definite indication of improving conditions of the business. Page 20 Net Profit Ratio =Net Operating Profit/Net Sales*100 6. Operating Ratio: This ratio is a complementary of Net Profit ratio. In case the net profit ratio is20%. It means that the operating profit ratio is 80%. It is calculated as follows: Operating Ratio =Operating Cost/Net Sales*100 The operating cost include the cost of direct materials, direct labor and other overheads, viz. , factory, office or selling.

Direct Material cost to sales =Direct Material/Net Sales*100 This ratio is the test of the operational efficiency with which the business is being carried. The operating ratio should be low enough to leave a portion of sales to give a fair to the investors. 7. Payout Ratio: This ratio indicates what proportion of earning per share has been used for paying dividend. The payout ratio is the indicator of the amount of earnings that have been ploughed back in the business. The lower the payout ratio, the higher will be the amount of earnings ploughed back in the business and vice versa. Payout Ratio =Dividend per equity share/Earning per equity share*100 8. Dividend Yield

Ratio This ratio is particularly useful for those investors who are interested only in dividend income. The ratio is calculated by comparing the ratio of dividend per share with its market value. Dividend yield =Dividend per Share/Market price per share*100 And Dividend per share = Dividend paid/ Number of shares. Page 21 Long Term Financial Position or Solvency Ratios The term „solvency? refers to the ability of a concern to meet its long term obligations. The long term indebtedness of a firm includes debenture holders, financial institutions providing medium and long term loans and other creditors selling goods on installment basis. So, the long term Solvency ratios indicate a firm? ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. Two types of ratios are there: 1. Capital structure ratios-ex. Debt equity ratio 2. Coverage ratios-ex. Debt service ratio or Interest coverage ratio 1. Debt-Equity Ratio Debt –Equity ratio also known as External- Internal Equity Ratio is calculated to measure the relative claims of outsiders and the owners against the firm? s assets. The ratio is calculated as: Debt equity ratio = Outsider’s funds / Shareholder’s funds Outsiders fund includes all debts/liabilities to outsiders, whether long term or short term or whatever in the form of debentures bonds, mortgages or bills.

The shareholders fund consist of equity share capital, preference share capital , capital reserves, revenue reserves, and reserves representing accumulated profits and surpluses. 2. Interest Coverage Ratio This ratio is used to test the debt servicing capacity of a firm. The ratio is calculated as: Interest coverage ratio = EBIT/Fixed interest charge Page 22 RATIO ANALYSIS Liquidity ratios 1. Current Ratio: Table No. 1 Years 2009 2010 2011 Current Asset 35664. 84 40113. 05 38090. 3 Current Liabilities 19609. 72 19595. 34 18848. 03 Ratio 1. 82 2. 05 2. 02 An ideal current ratio is 2. The ratio of 2 is considered as a safe margin of solvency due to the fact that if current assets are reduced to half (i. e. 1 instead of 2, then also the creditors will be able to get their payments in full. Interpretation: Here, the current ratio fluctuates from year to year but has maintained the ratio above 2 from 2010 onwards which is positive consideration. CHART 1 CURRENT RATIO 2 1. 5 1 RATIOS 0. 5 0 2009 2010 2011 2. Quick Ratio: Table No. 2 Table showing Quick ratio Years 2009 2010 2011 Quick Asset 24316. 05 31085. 59 26787. 51 Current Liabilities 19609. 72 19595. 34 18848. 03 Ratio 1. 24 1. 58 1. 42 Page 23 Interpretation: The liquid ratio denotes the concern had achieved more than the ideal ratio of 1:1 in the years 2009 onwards. CHART 2 LIQUID RATIO 1. 5 1 0. 5 0 2009 2010 2011 RATIO 3. Net Working Capital Ratio: Table No. Table showing Net Working Capital Ratio Years 2009 2010 2011 Net Working Capital 6544. 24 15039. 83 22225. 83 Capital Employed 35522. 89 49827. 95 57234. 96 Ratio 0. 18 0. 3 0. 39 CHART 3 NET WORKING CAPITAL RATIO 0. 25 0. 2 0. 15 0. 1 0. 05 0 2009 2010 2011 RATIO Page 24 Interpretation: Net Working capital measures the firm? s potential reserve of funds. It can be related to net assets. This ratio represents the availability of working capital in relation with capital employed. Turnover Ratios 1. Fixed Assets Turnover Ratio: Table No. 3 Table showing fixed asset turnover ratio Years 2009 2010 2011 Gross Sales 48769. 05 43991. 02 47103. 09 Fixed Asset 12268. 83 13601. 58 15802. 66 Ratio 3. 98 3. 23 3. 12

Interpretation: Here, the value of fixed assets employed in the business shows a reducing trend which implies that company added fixed asset during the period 2009 –2011. Only the depreciation effect had been given to fixed asset. Fixed turnover ratio has been decreasing which is not a good sign because the gross sales have increased considerably with increase in the current assets. CHART 4 FIXED ASSET RATIO 4 3 2 1 0 2009 2010 2011 RATIOS Page 25 2. Working Capital Turnover Ratio: Table No. 5 Table showing Working capital turnover ratio Years 2009 2010 2011 Net Working Capital 6544. 24 15039. 83 22225. 83 Capital Employed 35522. 89 49827. 95 57234. 96 Ratio 0. 18 0. 3 0. 39

Interpretation: Here, the Working Capital ratio shows a increasing trend from 2009 to 2011, due to holding high current assets in the form of cash, bank balances and receivables in the year 2009 to 2011. CHART 5 NET WORKING CAPITAL RATIO 0. 25 0. 2 0. 15 0. 1 0. 05 0 2009 2010 2011 RATIO 1. Debtors Turnover Ratio Debtor? s turnover ratio measures the efficiency with which the debtors are converted into cash. This ratio indicates both the quality of debtors and the collection efforts of the business enterprise. This ratio is calculated as follows: I. Debtors? turnover ratio II. Debt collection period. The numerator of this ratio should preferably be credit sales. This is so because the denominator is logically related to credit sales as it arises from credit sales only. Cash sales do not generate debtors.

However, as the information related to credit sales is not separately available in corporate accounts, so Page 26 total sales could be taken in the numerator. Average debtors are calculated by dividing the sum of beginning-of-year and end-of-year balance of debtors by 2. Debtor’s Turnover Ratio = Credit sales / Average accounts receivables (Debtors) Year 2009 2010 2011 Credit Sales 43179. 34 40600. 15 42749. 62 Debtors NA 41613 34939 Ratio NA 0. 98 1. 22 Debt collection period: The ratio indicates the extent to which the debt has been collected in time. It gives the average debt collection period. The ratio is very helpful to lenders because it explains to them whether their borrowers are collecting money within a reasonable time.

An increase in the period will result in greater blockage of funds in debtors. Debt collection period = Months/Days in a year/ Debtor’s turnover ratio Year 2009 2010 2011 Days in a year 365 365 365 Debtor Turnover Ratio NA 0. 98 1. 22 Debt Collection Period NA 374. 11 298. 31 3. Stock Turnover Ratio: Table No. 6 Years 2010 2011 Sales 40600. 15 42749. 62 Average Inventory 9027. 46 11302. 79 Ratio 4. 5 3. 78 INTERPRETATION: There has been a decrease in the ratio in 2010 and 2011 ratio showed a decrease due to a large increase in sales. This can be attributed to uncertain economic situation and weak demand of steel in the market. The overall situation is still good enough. Page 27 Profitability Ratios 1.

Return on Investment: Table No. 7 Table showing Return on Investment Year 2009 2010 2011 Operating Profit 7788. 65 8650. 71 6234. 82 Capital Employed 35522. 89 49827. 95 57234. 96 Ratio(%) 21. 92 17. 96 10. 89 Interpretation: Return on investment shows a decreasing trend from 2009 to 2011. CHART 06 RETURN ON INVESTMENT RATIO 15. 00 10. 00 5. 00 0. 00 2009 2010 2011 RATIO 2. Return on Shareholder’s Fund: Table No. 8 Table showing return on Shareholders’ Fund Year 2009 2010 2011 Net Profit After Intrest and Tax 6217. 73 6790. 77 4937. 73 Shareholder’s Fund 4130. 4 4130. 4 4130. 4 Ratio(%) 150. 53 164. 41 119. 54 INTERPRETATION: Here, the Net Profit (i. e. Profit after Interest and Tax has been declining in the year 2011 due to a net loss in the corresponding year because of very high interest and finance charges of the company. But there was a huge jump in net profits in the year 2010 compared the shareholders funds which were responsible for increase in the return on investment. There has been a consistency in shareholder? s fund which has resulted in stabilizing return on investment. Page 28 CHART 07 RETURN ON SHAREHOLDER’S FUND RATIO 1000 800 600 400 200 0 -200 -400 RATIO 2009 2010 2011 3. Return on Total Assets: Table No. 07 Table showing return on Total Assets Year 2009 2010 2011 Net Profit After Intrest and Tax 6217. 73 6790. 77 4937. 73 Total Asset 35522. 89 49827. 95 57234. 96 Ratio(%) 17. 5 13. 63 8. 63

Interpretation: There has been a considerable in increase in total assets from 2009 to 2011 but the net profit has fluctuated which has resulted in the fluctuations in the return on total assets . CHART 08 RETURN ON TOTAL ASSET RATIO 10 5 RATIO 0 2009 -5 2010 2011 Page 29 4. Earnings per Share: Table No. 10 Table showing Earning per Share Year 2009 2010 2011 Ratio(%) 15. 05 16. 44 11. 95 Interpretation: Here the Earning per Share is the result of Net Profit after Tax. It shows the negative correlation during the period of study. It shows decreasing trend since the year 2009 and 2011 due to lower net profits than previous years. CHART 09 EARNING PER SHARE 100 50 RATIO 0 2009 2010 2011 5. Net Profit Ratio: Table No. 1 Table showing Net Profit Ratio Year 2009 2010 2011 Net Operating Profit 7788. 65 8650. 71 6234. 82 Net Sales 43179. 34 40600. 15 42749. 62 Ratio(%) 18. 04 21. 31 14. 59 Interpretation: The operating profit and value of sales are the causes for the fluctuation in the Net Profit ratio. While sales has constantly increased over the years operating profit has increased but shows some fluctuations. In 2011 the ratio is lower than in 2009 and 2010 due to lower operating profits. The reason can be attributed to uncertain economic situation and higher cost of goods sold as well as weak demand. Again there is a rise in sales in 2011. Page 30 CHART 10 NET PROFIT RATIO 15 10 5 0 2009 2010 2011 RATIO 6.

Operating Ratio: Table No. 12 Table showing Operating Ratio Year 2009 2010 2011 Operating Cost 35920. 53 32705. 79 37230. 9 Net Sales 43179. 34 40600. 15 42749. 62 Ratio(%) 83. 19 80. 55 87. 09 Interpretation: A comparison of operating ratio or expenses ratio will indicate whether the cost components is high or low in the figure of sales. The operating ratio shows a decrease in 2010 but shows a slight increase in 2011. Normally 75% to 85% is considered to be a good ratio for manufacturing undertakings. So the ratio is good in case for SAIL. CHART 11 OPERATING RATIO 100 95 90 85 2009 2010 2011 RATIO Page 31 Long Term Financial Position or Solvency Ratios 1.

Debt-Equity Ratio TABLE NO: 13 Table showing Debt-Equity ratio Year 2009 2010 2011 Outsider’s Fund 31392. 49 36106. 59 39013. 52 Shareholder’s Fund 23853. 7 33316. 7 37069. 47 Ratio 1. 32 1. 08 1. 05 CHART 12 DEBT EQUITY RATIO 4. 00 3. 50 3. 00 2. 50 2. 00 1. 50 1. 00 0. 50 0. 00 2009 2010 2011 RATIO Interpretation The debt-equity ratio is calculated to measure the extent to which debt financing has been used in a business. From 2009 onwards there has been a decrease in outsiders fund and a corresponding increase in shareholders? funds. This indicates that the firm is traditionally financed and it is considered to be favorable from a long term creditor? s point of view as a high proportion of owner? funds provide a larger margin of safety for them. Page 32 SWOT ANALYSIS Steel Authority of India Limited (SAIL) is one of the largest steel makers in India. With a turnover of Rs. 45,555 crore, the company is among the top five highest profit earning corporates of the country. It is a public sector undertaking wholly owned by Government of India and acts like an operating company. Incorporated on January 24, 1973, SAIL has more than 131,910 employees. The company’s current chairman is S. K. Roongta. With an annual production of 13. 5 million metric tons, SAIL is the 16th largest steel producer in the world. STRENGTHS Staffing is a big strength for SAIL as being a Govt. enture it is looked upon for generating and offering employment Customer base is another major strength for SAIL as it offers steel at subsidized rates and hence caters to high volume of clients Another strength for SAIL is its Market position which is on a very successful level and thus there is no hesitation in its clients Financial Resources also acts as a strength as it can use Govt funds for ventures. Sales Channels also is a strength as it uses all possible channels for promotion and Sales. Another Strength is the (product Steel) is core in nature and related to almost all development and infrastructure activities. Profitability is another strength as SAIL records astounding profit figures in spite of providing social benefit and subsidies to its clients. WEAKNESS Staff also posses as a weakness in a certain way as SAIL being a Govt. venture, targets and workload are not tight and job security leads to staff not being fully productive Another weakness is that higher profit margins are possible but not allowed since being a Govt venture.

Competitive Vulnerability is another weakness as competitors include private players with better quality manpower, strategies and policies. Another weakness is production of a single vertical (Steel) and no diversification. Also a major Weakness is completely answerable to the Central Govt. and hence exposed to corruption and mis-management. Page 33 OPPORTUNITIES However SAIL has certain opportunities as it is affiliated to the Central Govt. of India and hence expansion and growth is possible SAIL also can adopt globalisation with ease using Govt. support Also SAIL being financially sound can undertake merger and acquisition projects with weaker counterparts.

It can also involve in production of forward integration products and by-products apart from its core product (Steel) with the help of its healthy brand image THREATS Threats would include change in Govt Policies and Economy trend which can have a direct impact on the functioning of SAIL. Also emerging and existing private sector competitors who can steal market share. Also late implementation of technology and modern machinery as compared to counterparts can pose a potential threat. Apart from the above major threats, labour turnover can also cause problems due to existence of higher paying jobs with better benefits in the sector. Page 34 TATA STEEL Page 35 INTRODUCTION

Tata Steel has always believed that the principle of mutual benefit – between countries, corporations, customers, employees and communities – is the most effective route to profitable and sustainable growth. Established in 1907, Tata Steel is among the top ten global steel companies with an annual crude steel capacity of over 28 million tonnes per annum (mtpa). It is now one of the world’s most geographicallydiversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries. The Tata Steel Group, with a turnover of US$ 22. 8 billion in FY ’10, has over 80,000 employees across five continents and is a Fortune 500 company. Tata Steel? vision is to be the world? s steel industry benchmark through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency. Tata Steel? s larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia. Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel). CORPORATE SOCIAL RESPONSIBILTY

Tata Steel espouses the philosophy of creating a sustainable community in and around its areas of operation and considers this as an inherent part of the progress of the enterprise. Looking after the welfare of the people vis-a-vis their health and maintaining a clean and green environment has been one of the main concerns of the Company right from its inception. The Company has identified and is proactively engaged in addressing economic sustainability, environmental concerns and social needs of the less priviledged. FAMD as an extension of Tata Steel conforms to its vision of maintaining a sustainable community and society around its operational areas, and has taken up and fulfilled several commitments for the community around.

Apart from undertaking various Health & Hygiene programmes and contributing towards developing a healthy community, FAMD has also worked for the society in various other ways – in terms of empowerment of women through SHGs, capacity building, youth education, empowerment of farmers and others. Some of the endeavours undertaken by FAMD as part of their social responsibility are: 1. Immunisation “KHUSHI” 2. Family Planning “SUKHI” 3. Eye cure camp “DRISHTI” 4. Aids Awareness “SATHI” 5. Cleft lip & Palate operation “MUSKAN” 6. Tuberculosis “DOTS” 7. LIFE LINE EXPRESS (Ortho, Ear, Eye) 8. Leprosy “MDT” 9. Low cost toilets & Specific Toilet “PARISKAR” 10. Tube and Surface Wells “ JALJEEVAN” 1. Biogas “AGNI” Page 36 2. 3. 4. 5. 6. 7. 8.

Solar Cell “ALOK” School Construction & Repair “SHIKSHYA” Club houses & Community hall “EKTA” Roads, bridges, check dams & culverts “RASTA” Pani Panchayats & Ponds “SWAJAL” Self help groups “SHAKTI” Operation “BIJLI” 1. Waste land Development and Cash Crops Plantation “HARIYALI” 2. Operation “CHAYA” for tree Plantation 3. Dairy Farm, Piggery Farm, Bird Egg laying units, Goatery Farm and Poultry Farms under “ROZGAR” 4. Mushrooms spawn unit with ancillary farms “ANNAPURNA” 1. Regular camp residents meeting for safety communication. 2. Regular meeting with village representatives for cordial relationship. 3. Nearby villagers have been adopted by company officers. Page 37 FINANCIAL STATEMENTS Page 38 BALANCE SHEET

PARTICULARS Year ended on 31-03-2011 Year ended on 31-03-2010 Year ended on 31-03-2009 Shareholders’ Funds: (a) Capital (b) Share Warrants (c) Reserves and Surplus Hybrid Perpetual Securities Warrants Issued by a Subsidiary Company Minority Interests Loan Funds Deferred Tax Liability Foreign Currency Monetary Item Translation Difference Account Provision For Employee Separation Compensation TOTAL 958. 74 178. 20 34,426. 97 1,500. 00 17. 46 888. 90 60,684. 34 2,188. 18 879. 37 101,722. 16 886. 74 21,927. 15 17. 46 884. 07 53,100. 35 1,802. 94 206. 95 963. 67 79,789. 33 6,202. 78 21,511. 50 17. 46 894. 88 59,900. 50 1,785. 55 1,042. 41 91,355. 08

Fixed Assets Investments Goodwill on Consolidation Foreign Currency Monetary Item Translation Difference Account Deferred Tax Assets Current Assets, Loans And Advances (a) Inventories (b) Sundry Debtors (c) Cash and Bank balances (d) Other current assets (e) Loans and Advances Less: Current liabilities and provisions (a) Current liabilities (b) Provisions Miscellaneous Expenditure (Not Written off or Adjusted) TOTAL 52,393. 40 7,847. 34 15,298. 20 45,795. 83 5,417. 79 14,541. 82 45,305. 86 6,411. 10 15,364. 92 471. 66 76. 12 21,668. 42 13,031. 63 6,148. 36 6. 81 12,998. 73 23,093. 30 7,140. 71 105. 48 91,355. 08 175. 56 24,055. 24 14,816. 28 10,892. 60 9. 83 9,994. 69 26,671. 06 7,089. 92 101,722. 16 148. 83 18,686. 64 11,512. 44 6,815. 11 7. 63 6,849. 89 23,392. 49 6,594. 16 79,789. 33 Page 39 PROFIT OR LOSS ACCOUNT Particulars Year ended on 31-03-2011 117,149. 78 1,603. 34 118,753. 12 Year ended on 31-03-2010 101,757. 77 635. 35 102,393. 12 Year ended on 31-03-2009 145,704. 60 1,624. 66 147,329. 26 a) Net Sales / Income from Operations ` Crores b) Other Operating Income ” 2 Total Operating Income [ 1(a) + 1(b) ] ” 3 Total Expenditure a) (Increase) / decrease in stock-in-trade ” b) Purchases of finished, semi-finished steel & other products ” c) Raw materials consumed ” d) Staff Cost ” e) Purchase of Power ” f) Freight and handling ” g) Depreciation ” h) Other Expenditure ” i) Total Expenditure (3a to 3h) ” Profit / (Loss) from Operations before Other Income, Net Finance 4 Charges, Exceptional Items & Tax [ 2 – 3 ] ” 5 Other Income ” Profit / (Loss) from Operations before Net Finance Charges, 6 Exceptional Items & Tax [ 4 + 5 ] ” 7 Net Finance Charges ” 8 Profit / (Loss) before Exceptional Items & Tax [ 6 – 7 ] ” Page 40 -1,355. 98 15,890. 40 38,044. 12 15,288. 42 4,014. 76 6,389. 61 4,414. 82 24,486. 17 107,172. 32 11,580. 80 660. 04 13,110. 61 31,004. 49 16,475. 12 4,051. 26 5,553. 65 4,491. 73 23,495. 29 98,842. 19 3,550. 93 1,976. 22 31,405. 91 41,531. 74 17,975. 06 5,953. 49 6,026. 91 4,265. 39 24,332. 26 133,466. 98 13,862. 28 980. 98 12,561. 8 1,185. 85 4,736. 78 265. 67 14,127. 95 2,770. 04 9,791. 74 3,022. 06 1,714. 72 3,290. 18 10,837. 77 9 Exceptional Items : 2,310. 21 12,101. 95 3,245. 90 8,856. 05 60. 28 66. 36 8,982. 69 -1,683. 72 31. 00 2,151. 84 -2,120. 84 -15. 24 126. 86 -2,009. 22 -4,094. 53 6,743. 24 1,894. 00 4,849. 24 40. 94 60. 72 4,950. 90 Restructuring , Impairment & Disposals ” 10 Profit / (Loss) before Tax [ 8 + 9 ] ” 11 Tax Expense ” 12 Net Profit (+) / Loss (-) [ 10 – 11] ” 13 Minority Interest ” 14 Share of profit of associates ” Profit / (Loss) after Taxes, Minority Interest and Share of profit 15 of Associates [ 12 + 13 + 14 ] ” CASHFLOW STATEMENT IN CRORES

Particulars Profit before tax Net cash flow-operating activity Net cash used in investing activity Net cash used in fin. activity Net inc/dec in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year Mar ‘ 11 9,776. 85 8,542. 72 -13,288. 13 5,652. 81 907. 4 3,234. 14 4,141. 54 Mar ‘ 10 7,214. 30 8,369. 22 -5,254. 84 -1,473. 13 1,641. 25 1,592. 89 3,234. 14 Mar ‘ 09 7,315. 61 7,397. 22 -9,428. 08 3,156. 42 1,125. 56 465. 04 1,590. 60 Page 41 FINANCIAL RATIOS Particulars Mar ‘ 11 Mar ‘ 10 Mar ‘ 09 Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs. Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio Payout ratios Dividend payout ratio (net profit) 71. 58 83. 53 71. 58 83. 53 12 119. 19 487. 55 487. 55 305. 54 – 46. 12 58. 32 56. 37 68. 58 8 100. 38 418. 94 418. 94 281. 11 392. 98 65. 63 78. 95 69. 7 83. 02 16 125. 6 330. 24 330. 24 333. 27 309. 18 39 35. 09 22. 81 26. 61 14. 68 14. 68 14. 46 35. 7 31. 36 19. 96 20. 65 11 13. 45 13. 06 37. 68 33. 69 21. 09 23. 83 19. 87 21. 1 15. 21 0. 63 0. 63 61. 07 0. 98 0. 67 0. 67 59. 55 1. 12 1. 31 1. 34 42. 77 1. 22 1. 89 1. 89 1. 58 8. 07 1. 12 1. 12 0. 76 10. 9 0. 97 0. 91 0. 57 9. 36 19. 04 Page 42 16. 64 27. 15

Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov. ratio (post tax) Component ratios Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%) 16. 32 80. 96 83. 68 13. 68 79. 66 83. 92 22. 8 71. 16 76. 03 3. 72 9. 4 7. 16 4. 83 5 4. 32 4. 58 6. 37 5. 15 26. 8 8. 1 60. 95 0. 72 26. 36 33. 5 0. 32 8. 41 59. 69 0. 81 28. 5 35. 19 0. 25 13. 85 68. 85 0. 83 34. 61 Page 43 RATIO ANALYSIS Liquidity ratios 1. Current Ratio: Table No. 1 Years 2009 2010 2011 Current Asset 40855. 22 27021. 82 49773. 5 Current Liabilities 23093. 3 23392. 49 26671. 06 Ratio 1. 77 1. 16 1. 87 An ideal current ratio is 2. The ratio of 2 is considered as a safe margin of solvency due to the fact that if current assets are reduced to half (i. e. ) 1 instead of 2, then also the creditors will be able to get their payments in full. Interpretation: Here, the current ratio fluctuates from year to year but has maintained the ratio below 2 from 2009 onwards which is a kind of a warning consideration. CHART 1 CURRENT RATIO 2 1. 5 1 0. 5 0 2009 2010 2011 1. 77 1. 16 RATIOS 1. 86 2. Quick Ratio: Table No. 2 Table showing Quick ratio Years 2009 2010 2011 Quick Asset 19186. 8 18335. 8 25718. 71 Current Liabilities 23093. 3 23392. 49 26671. 06 Ratio 0. 83 0. 78 0. 96 Page 44 Interpretation: The liquid ratio denotes the concern had not yet achieved more than the ideal ratio of 1:1 in the years 2009 onwards. But it was very much near to 1:1 in 2011. CHART 2 LIQUID RATIO 1. 5 1 0. 5 0 2009 2010 2011 0. 83 0. 78 0. 96 RATIO 3. Net Working Capital Ratio: Table No. 3 Table showing Net Working Capital Ratio Years 2009 2010 2011 Net Working Capital 19147. 09 13665. 00 20887. 29 Capital Employed 91355. 08 79789. 33 101722. 16 Ratio 0. 21 0. 17 0. 21 CHART 3 NET WORKING CAPITAL RATIO 0. 3 0. 2 0. 1 0 2009 2010 2011 0. 21 0. 17 0. 21 RATIO

Interpretation: Net Working capital measures the firm? s potential reserve of funds. It can be related to net assets. This ratio represents the availability of working capital in relation with capital employed. Page 45 Turnover Ratios 1. Fixed Assets Turnover Ratio: Table No. 4 Table showing fixed asset turnover ratio Years 2009 2010 2011 Gross Sales 145704. 6 101757. 77 117149. 78 Fixed Asset 45305. 86 45795. 83 52393. 4 Ratio 3. 22 2. 22 2. 24 Interpretation: Here, the value of fixed assets employed in the business shows a reducing trend which implies that company added fixed asset during the period 2009 –2011. Only the depreciation effect had been given to fixed asset.

Fixed turnover ratio has been decreasing which is not a good sign because the gross sales have increased considerably with increase in the current assets. CHART 4 FIXED ASSET RATIO 4 3 2 1 0 2009 2010 2011 RATIOS 3. 22 2. 22 2. 24 2. Working Capital Turnover Ratio: Table No. 5 Table showing Working capital turnover ratio Years 2009 2010 2011 Net Sales 145704. 6 101757. 77 117149. 78 Net Working Capital 19147. 09 13665. 00 20887. 29 Page 46 Ratio 41. 78 26. 47 0. 00 Interpretation: Here, the Working Capital ratio shows a increasing trend from 2009 to 2010, due to holding high current assets in the form of cash, bank balances and receivables in the year 2009 to 2011. CHART 5 WORKING CAPITAL TURNOVER RATIO 8 6 4 2 0 7. 61 7. 45 5. 61 RATIO 2009 2010 2011 2.

Debtors Turnover Ratio Debtor? s turnover ratio measures the efficiency with which the debtors are converted into cash. This ratio indicates both the quality of debtors and the collection efforts of the business enterprise. This ratio is calculated as follows: I. Debtors? turnover ratio II. Debt collection period. The numerator of this ratio should preferably be credit sales. This is so because the denominator is logically related to credit sales as it arises from credit sales only. Cash sales do not generate debtors. However, as the information related to credit sales is not separately available in corporate accounts, so total sales could be taken in the numerator.

Average debtors are calculated by dividing the sum of beginning-of-year and end-of-year balance of debtors by 2. Debtor’s Turnover Ratio = Credit sales / Average accounts receivables (Debtors) Page 47 Year 2009 2010 2011 Credit Sales 145704. 6 101757. 77 117149. 78 Debtors 13031. 63 11512. 44 14816. 28 Ratio 11. 18 8. 84 7. 91 Debt collection period: The ratio indicates the extent to which the debt has been collected in time. It gives the average debt collection period. The ratio is very helpful to lenders because it explains to them whether their borrowers are collecting money within a reasonable time. An increase in the period will result in greater blockage of funds in debtors.

Debt collection period = Months/Days in a year/ Debtor’s turnover ratio Year 2009 2010 2011 Days in a year 365 365 365 Debtor Turnover Ratio 11. 18 8. 84 7. 91 Debt Collection Period 32. 65 41. 29 46. 14 3. Stock Turnover Ratio: Table No. 6 Years 2009 2010 2011 Sales 145704. 6 101757. 77 117149. 78 Average Inventory 21668. 42 18686. 64 24055. 24 Ratio 6. 72 5. 45 4. 87 INTERPRETATION: There has been a decrease in the ratio in 2010 and 2011 ratio showed a decrease due to a decrease in sales. This can be attributed to uncertain economic situation and weak demand of steel in the market. The overall situation is still good enough. Page 48 Profitability Ratios 7. Return on Investment: Table No. Table showing Return on Investment Year 2009 2010 2011 Operating Profit 6743. 24 31 12101. 95 Capital Employed 91355. 08 79789. 33 101722. 16 Ratio(%) 7. 38 0. 04 11. 90 Interpretation: Return on investment shows a decreasing trend from 2009 to 2010 but now in 2011 there is a sudden work. CHART 6 RETURN ON INVESTMENT RA

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