PROJECT FINANCE

STEEL INDUSTRY IN INDIA

SUBMITED TO: Prof. Shyam Ji Mehrotra

SUBMITED BY: Gaurav Gupta(FS19) Himanshu Sharma(FS20) Ishan Gupta(FS21) Sharvil V. Singh(FS45)

Table of Contents
INTRODUCTION ....................................................................................................................................... 3 INDIAN STEEL INDUSTRY ................................................................................................................ 5 Comparative Financial Analysis of SAIL and TATA STEEL LTD ................................................................. 9 Financial Analysis Of Tata Steel Ltd....................................................................................................... 17 Comparative Analysis For The Year Endings ......................................................................................... 23 FINANCIAL RATIOS ................................................................................................................................ 27 BALANCE SHEET OF TATA STEEL'S COMPETING COMPANIES ............................................................... 30 Conclusion ............................................................................................................................................. 32

INTRODUCTION
India is the fifth largest steel-producing nation in the world, and is expected to become the worlds second largest producer by 20152016.The Indian steel industry accounts for over 7% of the worlds total steel production. The domestic crude steel production grew at a compounded annual growth rate of 8.6% during 20042005 to 20082009.

The National Steel Policy of the Government of India has a target for taking steel production up to 110 MT by 20192020. While 2007 was an exciting period in the history of Indian steel industry, corresponding to 7% growth over 2006; 2008 witnessed an unprecedented global economic meltdown with only a marginal growth of 3.7%. Consumption declined, in fact, from July 2008 onwards. However, 2009 was a year of great resilience and recovery for the Indian steel industry. For AprilDecember 2009, the provisional data released by Joint Plant Committee indicates a 7.8% rise in consumption of total finished steel. World Steel Association forecasts Indias Apparent Steel Usage (ASU) to increase at 13.9% during 20092010, over 20082009, to reach 63 MT compared to the forecast of 10.7% for the world and 6.7% for China for the same period. Similar figure for 20102011 over 2009 2010 stand at 13.7% for India, 2.8% for China and 5.3% for World.

The prospective increase in the ASU figures are substantiated through a scrutiny of the consumption patterns in India. While the per capita demand in India, at around 50 kg, is nowhere near to the world average of around 150 kg, or, about 400 kg for developed countries; the rural India, at around 5 kg per person, lags even farther behind in comparison to urban India.

However, in consideration of the extensive infrastructure development planned by the government in both rural and urban areas, these consumption figures have a strong scope to increase.

Accordingly, a number of major Indian and Global steel players are into a massive capacity expansion mode in India, either through Brownfield or Greenfield route. On a conservative estimate, the steel demand in India is expected to touch around 90 MTPA by 2015 and around 150 MTPA by 2020. Steel supply is, however, expected to reach only around 88 MTPA by 2015 and around 145 MTPA by 2020.While the demand for steel will continue to grow in traditional sectors, specialized steel is also increasingly being employed in various hi-tech engineering industries. Globally, a relation can be observed between steel consumption and the GDP growth rate.

Overall, India, being in a high growth phase with huge planned infrastructure development, is bound to witness sustained growth in the steel requirement in the years to come. Expected capacity additions

Crude steel capacity 2007 2008 2009 2010 2012E (millions of tonnes) Year-ending 31 March 5 5 6.8 6.8 6.8 Tata Steel (India) 4.6 4.6 4.6 4.6 9.2 Essar Steel (India) 3.6 3.6 3.6 3.6 3.6 Ispat 3.8 3.8 3.8 7.8 11 JSW Steel 3.5 3.5 3.5 3.5 3.5 RINL 2.9 2.9 2.9 2.9 4.9 JSPL 13.8 13.8 13.8 13.8 15.9 SAIL 0.3 0.3 0.3 0.3 2.2 Bhushan Steel 1.4 1.4 1.4 1.4 1.4 Bhushan Power& Steel 17.9 20.9 25.6 28 28 Others 56.8 59.8 66.3 72.8 86.6 Total crude steel capacity

2015E

12.7 9.2 3.6 11 6.3 6.9 24.7 5.1 1.4 31.6 112.5

Being a core sector, steel industry tracks the overall economic growth in the long term. Also, steel demand, being derived from other sectors like automobiles, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries.

INDIAN STEEL INDUSTRY The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is also available in abundant quantities. This provides major cost advantage to the domestic steel industry, with companies like Tata Steel being one of the lowest cost producers in the world. The Indian steel industry is largely iron-based through the blast furnace (BF) or the direct reduced iron (DRI) route. Indian steel industry is highly consolidated. About 60% of the crude steel capacity is resident with integrated steel producers (ISP). But the changing ratio of hot metal to crude steel production indicates the increasing presence of secondary steel producers (non integrated steel producers) manufacturing steel through scrap route, enhancing their dependence on imported raw material. Key Points of Industry Analysis:Supply With trade barriers having been lowered over the years, imports play an important role in the domestic markets. Currently India is net importer of steel. The demand is derived from sectors that include infrastructure, consumer durables and automobiles. High capital costs, technology, economies of scale, government policy. Low for fully integrated players who have their own mines for raw materials. High, for non integrated players who have to depend on outside suppliers for sourcing raw materials. High, presence of a large number of suppliers and access to global markets. High, presence of a large number of players in the unorganized sector.

Demand Barriers to entry Bargaining power of suppliers

Bargaining power of customers Competition

STRENGTH, WEAKNESS, OPPORTUNITY & THREATS: (SWOT) ANALYSIS Indian steel Industry is evolving itself to become global leader in terms of product quality and overall efficiency. Its growth objective can be attained efficiently by addressing the present issues and challenges and building the growth strategies in cohesion with its strength.

STRENGTH

pulation driving steel demand

OPPORTUNITY

t volume: so potential for growth in exports is considerable

THREAT

producers

WEAKNESS

Key Growth drivers:

Economic Growth Industrial, Construction & manufacturing growth Growth in population Rising middle class population and per capita steel consumption Infrastructure development

The Major bottlenecks:

Government delays in allocating coal blocks for captive consumption by steel manufactures is seriously hurting the competitive edge of Indian steel sector. The same story is with iron ore. There are delays in allocating iron ore mines as well as approval for mining licenses. As a result no new investment on the ground in the steel sector is happening to add new steel capacities .

There are delays in land acquisition for Greenfield projects and environment approvals in India. There is thus delay in converting the intent into project on ground especially in the area of expansion and modernisation. This impedes growth of domestic steel capacity creation.

The Indian steel sector may face threat from cheap imports, now that the import duties on steel in India are amongst the lowest in the world. Import pressures could consequently lead to pressure on margins of the domestic companies on account of lower steel realisations

Indian steel industry requires reliable and economical raw material supplies to remain competitive on global platform. Being deficient in coking coal and rich in iron ore fines India needs to adapt steel making technologies which are suitable for low grade Indian coal and iron ore fines. India requires technology inputs and investments to increase sintering and pelletisation facility for making use of iron ore fines. Indian companies needs to acquire coking coal assets overseas to assure uninterrupted and economic supply of coking coal for its steel Industry.
7

Steel industry is heavily dependent on raw material and bulk movement. For every tonne of steel produced about four tonnes of raw materials requires to be transported. Indian steel industry is facing difficulties and delays caused due to inadequate infrastructure for transportation and handling bulk materials. Most of the steel plant does not have proper connectivity through rail network to mines and ports. Bulk handling facility at majority of the ports, mines and steel plants are of low capacity causing delays in loading & unloading. In most cases road networks connecting steel plants to mines and ports are congested leading to delays in supply and delivery of raw material and other items.

Overall low level of advanced technological exposure, Indian steel industry faces issues of quality, efficiency, hazards and process standards. The overall use of latest and modern technologies is inadequate in the entire steel industry value chain comprising of raw material mining and processing, transportation and steel making. This leaves a broad scope for process improvement through introduction of latest and efficient technology.

LEADING STEEL PRODUCERS IN INDIA

Steel making in India is concentrated along mineral rich belt of India, as vicinity to supply of raw materials like iron ore and coal provides considerable economic advantage. Most of the large scale steel making facilities is concentrated in state of Jharkhand, Orissa, West Bengal, Chhattisgarh and Karnataka. Steel production in India is leaded by SAIL, Tata Steel, JSW and others, while SAIL continues to be the largest steel producer in India.

Leading steel producers in India and their production share: FY 2007 to FY 2011 Producer SAIL RINL Tata Steel JSW ISPAT ESSAR JSPL Others-1 FY 07 13.51 3.50 5.17 2.64 2.76 3.01 4.84 FY 08 13.96 3.13 5.01 3.15 2.83 3.56 5.28 FY 09 13.41 2.96 5.65 3.22 2.20 3.34 1.46 8.15
8

FY 10 13.51 3.21 6.56 5.26 2.69 3.47 1.96 9.36

FY 11(P) 13.76 3.24 6.86 5.85 2.38 3.37 2.27 9.79

Others-2 Total

15.39 50.82

16.93 53.86

18.05 58.44

19.82 65.84

22.07 69.58

Steel production in India which was primarily reserved for government companies till liberalisation now sees dominance of private companies in terms of production share. Share of private sector companies in crude steel production rose from 49 % in FY 01 to 75 % in FY 11. While the share of private sector companies in finished steel production increased from 68 % in FY 01 to 80 % in FY 11.

Comparative Financial Analysis of SAIL and TATA STEEL LTD

Current Ratio: One of important function of the financial manager is to maintain sufficient liquidity. Current ratio is an important criterion to test the liquidity and also the short term solvency. The ratio of 2:1 is considered as standard of current ratio. Current Ratio (In Times) Year/Company 2008 2009 2010 2011 2012 SAIL 1.73 1.82 2.05 1.97 1.49 TATA STEEL LTD 3.92 0.97 1.12 1.82 0.79

INTERPRETATION From the above table and graph it is clear that SAIL have 1.73 times current ratio in the year 2008. It became 2.05 times in the year 2010 but in the last year of the study i.e. in the 2012 the current ratio of SAIL is 1.49 times. On the other hand current ratio of TATA STEEL LTD. is 3.92 times in 2008 and 0.79 times in 2012. From the above it can be concluded that

the financial position of SAIL is better than the TATA STEEL LTD. In terms of current ratio because TATA STEEL LTD. has more variation in current ratio as compared to SAIL.

Quick Ratio: This ratio also tests liquidity. But it is a more refined test of liquidity and solvency. This ratio takes into consideration the liquid assets only which are directly convertible into cash. The current assets like inventories which are two steps away from the cash are excluded. The quick ratio is computed by dividing liquid assets by current liabilities. A quick ratio of 1:1 is considered adequate.

Quick Ratio (In Times) Year/Company 2008 2009 2010 2011 2012 SAIL 1.23 1.24 1.53 1.35 0.81 TATA STEEL LTD. 3.52 0.57 0.76 1.45 0.51

INTERPRETATION It is clear from the above table and graph it is clear that SAIL have 1.23 times quick ratio in the year 2008. It became 1.35 times 2011. But in the last year of the study i.e. in 2012 the quick ratio of SAIL is 0.81 times. This decrease only once time during the study period. On the other hand quick ratio of TATA STEEL LTD. is 3.52 times in 2008 and 0.51 times in 2012. From the above it can be concluded that the financial position of SAIL is better than the TATA STEEL LTD. in terms of quick ratio. TATA STEEL LTD. has more variations in quick ratio as compare to SAIL.

Inventory Turnover Ratio: This ratio indicates whether stock has been efficiently used or not. A high ratio is considered better.
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Table No.3: Inventory Turnover Ratio Year/Company SAIL 2008 8.62 2009 5.86 2010 6.02 2011 5.13 2012 3.71

(In Times) TATA STEEL LTD 10.84 9.36 10.90 9.85 9.40

INTERPRETATION This ratio indicates whether stock has been efficiently used or not. It shows the speed with the stock is rotated into sales or the number of times the stock is turned into sales during the year. Above chart & graph shows that inventory turnover ratio of SAIL is 8.62 times in the year 2008 & 3.71 times in the year 2012 it is very low. On the other hand the TATA STEEL LTD. is 10.84 times in the year 2008 & the remaining year it is maximum the 9 times and the last year of the study i.e. 2012 this is 9.40 times .In the term of Inventory turnover ratio the TATA STEEL LTD.S financial position is better than SAIL.

Dividend per Share: Dividend per share means how much dividend per share the company is paying to its shareholders. Table: Dividend per Share Ratio Year/ Company 2008 2009 2010 2011 2012 SAIL 3.70 2.60 3.30 2.40 2.00 (In Rs.) TATA STEEL LTD. 16.00 16.00 8.00 12.00 12.00

INTERPRETATION From the above table & graph it is clear that SAIL have Rs. 3.70 dividend per share in the year 2008. It became Rs. 3.30 in the year 2010 but in the last year of the study i.e. in 2012 the dividend per share of SAIL is Rs. 2.00. On the other hand the dividend per share of TATA STEEL LTD. is Rs. 16.00 in 2008 and 12.00 in 2012. From the above it can be concluded that the TATA STEEL LTD. is paying the more dividend than to SAIL. Operating Ratio: A low operating ratio is better because it reflects the efficiency of management the lower the ratio, higher would be the profitability.
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Table & Graph No.5: Operating Ratio Year/Company SAIL 2008 2009 2010 2011 2012 INTERPRETATION 28.19 20.41 22.69 16.37 13.15

(in %) TATA STEEL LTD. 41.94 37.68 35.70 38.11 35.49

From the above table & graph it is clear that SAIL have 28.19% operating ratio in the year 2008. It became 22.69 % in the year 2010 but in the last year of the study i.e. in 2012 the operating ratio of SAIL is 13.15 %. On the other hand operating ratio of TATA STEEL LTD. is 41.94 % in 2008 and 35.49 % in 2012. From the above it can be concluded that the financial position of SAIL is better than the TATA STEEL LTD. in the terms of operating ratio because the operating ratio of SAIL is low, as compare to TATA STEEL LTD. Gross Profit Ratio: This ratio measures the gross margin of profit from sales. The higher the gross profit ratio the better it is. Table & Graph No.6: Gross Profit Ratio Year/Company SAIL TATA STEEL LTD. (%)

2008 2009 2010 2011 2012

25.10 17.48 19.40 12.88 9.74

37.70 33.69 31.36 34.20 32.09

(Source: Compile Personally from Annual Reports)

INTERPRETATION From the above table & graph it is clear that SAIL have 25.10% gross profit in the year 2008. It becomes 19.40% in the year 2010, but in the last year of the study i.e. in 2012 the gross profit of SAIL is 9.74%. On the other hand gross profit of TATA STEEL LTD. Is 37.70% in 2008 and 32.09% in the year 2012. From the above it can be calculated that the financial position of TATA STTEL is better than the SAIL in term of gross profit because SAIL has more variation in Gross Profit as compared to TATA STEEL LTD.
12

13

Net Profit Ratio: This is the ratio of net profit to sales. The greater the ratio, the more profitable the business will be. Table & Graph No.7: Net Profit Ratio Year/Company SAIL 2008 18.16 2009 13.40 2010 15.73 2011 11.03 2012 7.44 (Source: Compiled Personally from Annual Reports) (%) TATA STEEL LTD. 23.43 21.09 19.96 23.16 19.47

INTERPRETATION Above chart shows that net profit ratio SAIL is 18.16% in the year 2008 and 7.44% in the year 2012. It is very low. On the other hand the TATA STEEL LTD. 23.43% in the year 2008 it become 19.96% in the year 2010 but in the last year of the study i.e. in 2012 the net profit of TATA STEEL LTD. 19.47%. The financial position of TATA STEEL LTD. is better than the SAIL in terms of net profit.

Dividend Payout Ratio: Dividend payout ratio shows that how much dividend the company is paying to its Shareholders out of net earnings available to shareholders. Table & Graph No.8: Dividend Payout Ratio (%) Year/Company SAIL 2008 23.71 2009 20.32 2010 23.54 2011 23.49 2012 27.10 (Source: Compiled Personally from Annual Reports)

TATA STEEL LTD. 29.39 27.15 16.44 19.04 20.11

INTERPRETATION Above chart indicates that the dividend payout ratio of SAIL is 23.71% in the year 2008. In the year 2009 it has 20.32% & the year 2010 & 2011 it almost stable but in the last year of the study 2012 the dividend payment ratio was 27.10%. On the other hand the dividend payout ratio of TATA STEEL LTD. was 29.39% in the year 2008 & in 2011 it was 19.04%. In the last year of the study it becomes 20.11%. From the above it can be concluded that the financial position of SAIL is better than the TATA STEEL LTD. (In terms of dividend Payout Ratio).
14

Return on long term funds: This ratio shows that how much return is earned from long term funds. If this ratio is higher than this is consider better. Table & Graph No.9: Return On Long Term Funds Ratio Year/Company SAIL 2008 44.47 2009 28.98 2010 21.97 2011 15.10 2012 11.87 (Source: Compiled Personally from Annual Reports) (%) TATA STEEL LTD. 17.16 15.21 13.06 13.54 15.04

INTERPRETATION From the above table & graph it is clear that SAIL have 44.47% returns on their long term funds in the year 2008. It became 21.97% in the year 2010. But in the last year of the study i.e. 2012 the return on long term funds was 11.87%. On the other hand it is clear that TATA STEEL LTD. have 17.16% returns on their long term funds in the year 2008. It became 13.06% in the year 2010. But in the last year of the study i.e. 2012 the return on long term funds was 15.04%. During the study period the SAIL earn more return on their long term assets but in the last year this became low but the TATA STEEL return have stable. From the above it can be concluded that both companies have more variations. But the last year of the study the TATA STEEL LTD. have better position than the SAIL.

Total Debt/Equity Ratio: This ratio expresses the relationship between long term debts & shareholders funds. It indicates the proportion of funds which are acquired by long term borrowings in comparison to shareholders funds. Table & Graph No.10: Total Debt/Equity Ratio Year/Company SAIL 2008 0.12 2009 0.20 2010 0.39 2011 0.31 2012 0.29 (Source: Compile Personally from Annual Reports) INTERPRETATION (%) TATA STEEL LTD. 1.07 1.31 0.67 0.58 0.46

15

From the above table & graph it is clear that SAIL have 0.12% debt equity ratio in the year 2008, it become 0.20% in the year 2010. But in the last year of the study i.e. 2012 the debt/equity ratio was 0.29%. On the other hand debt/equity ratio of the TATA STEEL LTD. is 1.07% in 2008 & the last year of the study i.e. 2012 is 0.46%.

16

Financial Analysis Of Tata Steel Ltd.

17

P&L a/c For The Year Endings

Particulars Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses

Mar '12

*rupees in crores Mar '11 Mar '10

135,975.56 3,075.86 132,899.70 4,934.95 785.93 138,620.58

121,345.75 2,686.43 118,659.32 3,687.41 1,355.98 123,702.71

104,229.83 1,924.00 102,305.83 -61.87 -660.04 101,583.92

74,555.02 5,935.48 17,228.64 7,456.60

61,193.71 4,889.18 15,286.92 6,606.07

51,855.32 4,885.05 16,462.99 6,053.34

0 16,950.73

11,009.76 4,978.70

9,599.68 4,687.37

Preoperative Exp Capitalized Total Expenses Operating Profit

-857.63

-219.63

-165.47

121,268.84 12,416.79

103,744.71 16,270.59

93,378.28 8,267.51

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PBDIT Interest PBDT Depreciation Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Minority Interest Share Of P/L Of Associates

17,351.74 4,250.11 13,101.63 4,516.65 8,584.98 0 8,584.98 3,636.46 4,948.52 -173.14 -268.11

19,958.00 3,426.67 16,531.33 4,414.82 12,116.51 18.5 12,135.01 3,247.26 8,856.05 -60.28 -66.36

8,205.64 3,659.77 4,545.87 4,491.73 54.14 14.72 68.86 2,153.46 -2,120.84 15.24 -126.86

Net P/L After Minority Interest & Share Of Associates Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earnings Per Share (Rs)

5,389.77

6,653.98

-340.22

46,713.82 0.21 1,165.46 185.71

42,551.00 NIL 1,150.25 163.22

41,522.96 45.88 709.23 154.33

9,712.14 50.95

9,585.43 92.39

8,865.43 -24.44

19

BALANCESHEET AS ON 31ST MARCH ------------------ in Rs. Cr. -----------------Mar '12 (in rupees)

PARTICULARS

Mar '11 (in rupees)

Mar '10 (in rupees)

Mar '09 (in rupees)

Mar '08 (in rupees)

12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 971.41 971.41 0 0 51,245.05 52,216.46 1,919.27 21,774.55 23,693.82 75,910.28

12 mths 959.41 959.41 178.2 0 47,307.02 48,444.63 2,013.00 26,288.14 28,301.14 76,745.77

----- in Rs. Cr. -----12 mths 12 mths 12 mths 887.41 887.41 0 0 36,281.34 37,168.75 2,259.32 22,979.88 25,239.20 62,407.95 6,203.45 730.79 0 5,472.66 23,501.15 29,704.60 3,913.05 23,033.13 26,946.18 56,650.78 6,203.30 730.78 0 5,472.52 21,097.43 27,300.73 3,520.58 14,501.11 18,021.69 45,322.42

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories 23,485.63 12,119.37 11,366.26 18,506.63 50,282.52 4,858.99
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22,846.26 11,041.16 11,805.10 6,969.38 46,564.94 3,953.76

22,306.07 10,143.63 12,162.44 3,843.59 44,979.67 3,077.75

20,057.01 9,062.47 10,994.54 3,487.68 42,371.78 3,480.47

16,479.59 8,223.48 8,256.11 4,367.45 4,103.19 2,604.98

Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

904.08 30.82 5,793.89 6,935.20 3,918.93 16,648.02 16,975.61 3,917.54 20,893.15 -4,245.13 0 75,910.28

428.03 512.76 4,894.55 16,814.04 3,628.78 25,337.37 10,383.04 3,547.98 13,931.02 11,406.35 0 76,745.77

434.83 500.3 4,012.88 6,678.55 2,733.84 13,425.27 8,699.34 3,303.68 12,003.02 1,422.25 0 62,407.95

635.98 463.58 4,580.03 5,884.61 1,127.02 11,591.66 8,965.76 2,934.19 11,899.95 -308.29 105.07 56,650.78

543.48 465 3,613.46 34,582.84 0.04 38,196.34 6,842.26 2,913.52 9,755.78 28,440.56 155.11 45,322.42

15,270.84 537.64

12,582.24 503.19

13,184.61 418.94

12,188.55 331.68

9,250.08 298.78

Analysis: Borrowings have been consistent. The way the company managed its borrowings was amazing. From negative balances, they turned into Rs 5000 crore positive balances; this was as a result of loans taken to finance Corus deal Investments increased significantly. It can be seen that investments in the last year has increased drastically from negative cash flows to positive cash flows in investment.

21

Trend analysis of balance sheet as on 31st march

PARTICULARS

Mar '09 (in rupees) 12 mths

Mar '10 (in rupees) 12 mths 887.4 887.4 NIL NIL 36,281.3 0.0 37,168.8 2,259.3 22,979.9 25,239.2 62,408.0

Mar '11 (in rupees) 12 mths 959.4 959.4 NIL NIL 47,307.0 0.0 48,444.6 2,013.0 26,288.1 28,301.1 76,745.8

Mar '12 (in rupees) 12 mths 971.4 971.4 NIL NIL 51,245.1 0.0 52,216.5 1,919.3 21,774.6 23,693.8 75,910.3

Mar '09 %

Mar '10 %

Mar '11 %

Mar '12 %

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances 20,057.0 9,062.5 10,994.5 3,487.7 42,371.8 3,480.5 636.0 463.6 4,580.0 5,884.6 22,306.1 10,143.6 12,162.4 3,843.6 44,979.7 3,077.8 434.8 500.3 4,012.9 6,678.6 22,846.3 11,041.2 11,805.1 6,969.4 46,564.9 3,953.8 428.0 512.8 4,894.6 16,814.0
22

6,203.5 730.8 0.0 5,472.7 23,501.2 0.0 29,704.6 3,913.1 23,033.1 26,946.2 56,650.8

100 100 NIL NIL 100

14.3 121.4 NIL NIL 154.4

15.5 131.3 NIL NIL 201.3

15.7 132.9 NIL NIL 218.1

100 100 100 100 100

125.1 57.7 99.8 93.7 110.2

163.1 51.4 114.1 105.0 135.5

175.8 49.0 94.5 87.9 134.0

23,485.6 12,119.4 11,366.3 18,506.6 50,282.5 4,859.0 904.1 30.8 5,793.9 6,935.2

100 100 100 100 100 100 100 100 100 100

111.2 111.9 110.6 110.2 106.2 88.4 68.4 107.9 87.6 113.5

113.9 121.8 107.4 199.8 109.9 113.6 67.3 110.6 106.9 285.7

117.1 133.7 103.4 530.6 118.7 139.6 142.2 6.6 126.5 117.9

Fixed Deposits Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Analysis:

1,127.0 11,591.7 8,965.8 2,934.2 11,900.0 -308.3

2,733.8 13,425.3 8,699.3 3,303.7 12,003.0 1,422.3

3,628.8 25,337.4 10,383.0 3,548.0 13,931.0 11,406.4

3,918.9 16,648.0 16,975.6 3,917.5 20,893.2 -4,245.1

100 100 100 100 100 100

242.6 115.8

322.0 218.6 115.8 120.9 117.1 3699.9 NIL 135.5

347.7 143.6 189.3 133.5 175.6 1377.0 NIL 134.0

97.0 112.6 100.9 Comparative Analysis For The Year Endings 461.3 105.1 NIL NIL NIL 100 NIL 56,650.8 62,408.0 76,745.8 75,910.3 100 110.2

Total share capital of the company saw a great dip due to redemption of preference shares in the year 2009. Reserves are maintained at progressively healthy rate which is clear indication of good profits. Liabilities have shown dip resulting in reduction of liabilities. Company has acquired some new plants which are yet to be completed so capital work in progress has increased substantially. Although there is arise in total assets net current assets have diminished marginally due to heavy provisions. Contingent liabilities thereon has also increased in terms of 2-3% per year

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Particulars

Mar '11

Mar '12

Absolute Increase /Decrease (Rupees)

Absolute Increase /Decrease In %

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Networth Secured loans Unsecured Loans Total Debt Minority Interest Policy Holders Funds Group Share in Joint Venture Total Liabilities

958.74 958.74 195.66 NIL 35,926.97 37,081.37 28,604.40 32,079.94 60,684.34 888.9 NIL NIL 98,654.61

993.84 971.41 17.46 22.43 41,644.81 42,656.11 27,482.74 24,729.58 52,212.32 1,091.15 NIL NIL 95,959.58

35.1 12.67 (-178.2) 22.43 5717.84 5574.74 (-1121.66) (-7350.36) (-8472.02) 202.25 NIL NIL (-2695.03)

3.66 1.32 (-91.08) NIL 15.92 15.03 (-3.92) (-22.91) (-13.96) 22.75 NIL NIL (-2.73)

Application Of Funds
Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories 113,399.58 61,592.15 51,807.43 15,884.17 7,847.34 24,055.24
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129,093.78 69,638.85 59,454.93 20,039.71 4,021.25 25,598.00

15694.2 8046.7 7647.5 4155.54 (-3826.09) 1542.76

13.84 13.06 14.76 26.16 (-48.76) 6.41

Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets Minority Interest Miscellaneous Expenses Total Assets

14,816.28 10,892.60 49,764.12 10,180.08 0 59,944.20 29,738.61 7,089.92 36,828.53 23,115.67 NIL NIL 98,654.61

14,878.48 10,801.58 51,278.06 12,001.92 39.39 63,319.37 42,790.58 8,085.10 50,875.68 12,443.69 NIL NIL 95,959.58

62.2 (-91.02) 1513.94 1821.84 39.39 3375.17 13051.97 995.18 14047.15 (-10671.9) NIL NIL (-2695.03)

0.42 (-0.84) 3.04 17.90 0.00 5.63 43.89 14.04 38.14 (-46.17) NIL NIL (-2.73)

Analysis: The company has shown progressive report in terms of reserves as compared to 201112.reserves has increased 15.92% which indicates healthy profits and a good backup. Net block too has increased at substantial rate. Investments have gone at dip & provisions are raised more affecting the profits directly.

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Cash Flow for the Year Endings as On 31st March

Particulars

Mar '12

Mar '11

Mar '10

12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 9857.35 10256.47 (-2859.11) (-7599.35) (-201.99) 4102.52 3900.53

12 mths 9776.85 8542.72 (-13288.13) 5652.81 907.4 3234.14 4141.54

12 mths 7214.3 8369.22 (-5254.8) (-1473.1) 1641.25 1592.89 3234.14

Analysis: Cash from financing activities is constantly negative because of heavy dividend payment during the year. Company declared 120% dividend for the years 2011-12 & 2012-13 each respectively whereas it declared 80% dividend in the year 2010-11 resulting in a dip in cash from financial activities. Cash from operational cycle has increased due to functional or cyclical changes in debtors, creditors or stock of goods. Although cash from investing activities is in adverse sense it has recovered a good amount as compared to the previous years Investments increased significantly. It can be seen that investments in the last year has increased drastically from negative cash flows to positive cash flows in investment.

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FINANCIAL RATIOS
Mar '12 Mar '11 Mar '10

Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin (%) Profit Before Interest And Tax Margin (%) Gross Profit Margin (%) Cash Profit Margin (%) Adjusted Cash Margin (%) Net Profit Margin (%) Adjusted Net Profit Margin (%) Return On Capital Employed (%) Return On Net Worth (%) Adjusted Return on Net Worth (%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds (%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio
27

10 10 --127.85 169.36 1,368.39 1,237.91 -332.25 26.04 26.38 9.34 5.87 5.94 4.53 4.53 4 4 9.98 12.64 3.72 438.79 438.79 9.98 1.24 0.74 1.23 1.23 2.23 1.23 5.31 8.95 5.31 13.68 9.93 9.96 8.33 8.33 7.54 7.54 12.46 24.35 14.94 384.81 384.81 12.54 1.59 0.97 1.65 1.63 3.56 1.65 5.46 8.98 5.46

10 -92.85 1,153.99 264.37 28.52 8.04 3.63 3.65 2.87 2.63 -1.95 -1.95 5.62 -8.92 -7.97 259.67 259.67 5.29 1.33 0.77 2.31 2.3 1.17 2.31 6.14 8.3 6.14

Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio Adjusted Cash Flow Times

1.22 1.76 1.37 -33.71 56.09 --NIL 25.07 13.63 14.83 77.87 8.55

1.24 1.47 1.24 28.21 70.13 51.57 -5.57 NIL 14.62 9.8 76.17 86.77 6.11

1.07 1.64 1.07 24.82 39.65 50.68 -5.68 NIL NIL 35.44 -67.49 19.66

Analysis: Financial ratios are clear indicators of the company performance Net operating profit per share is more or less increased by 100 rs per share which easily satisfies investors. All profitable ratios are increased at substantial growth rate. Quick ratio also known as immediate solvency ratio is at a 3year low point. It is a concern for short term liquidity payment. Investment ratio is a lot fluctuating in nature. Is is low as compared to previous years figure but more than the preceding previous years. Working capital ratio has improved by a very good margin indicating good and efficient use of technology and other variables. Earning retention ratio has decreased because of declaration of higher dividends during the year. All cash flow ratios have more or less improved in some manner.

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BALANCE SHEET OF TATA STEEL'S COMPETING COMPANIES

Tata Steel Mar '12 SAIL Mar '12 JSW Steel Mar '12 Visa Steel Mar '12

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance 23,485.63 12,119.37 11,366.26 18,506.63 50,282.52 4,858.99 904.08 30.82 41,367.19 24,239.81 17,127.38 28,049.14 684.94 13,742.37 4,761.32 6,415.70 35,118.06 8,000.44 27,117.62 3,153.51 4,413.42 5,179.08 1,362.06 1,259.47 991.29 209.45 781.84 1,777.68 61.04 352.51 51.58 76.65 971.41 971.41 0 0 51,245.05 52,216.46 1,919.27 21,774.55 23,693.82 75,910.28 4,130.53 4,130.53 0 0 35,680.79 39,811.32 7,481.91 8,615.30 16,097.21 55,908.53 563.18 284.15 0 279.03 17,934.31 18,497.49 9,495.46 2,806.76 12,302.22 30,799.71 110 110 0 0 124.43 234.43 1,127.59 75.64 1,203.23 1,437.66

Total Current Assets

5,793.89

24,919.39

7,800.61

480.74

Loans and Advances

6,935.20

5,556.17

6,407.82

234.09

Fixed Deposits

3,918.93
30

1,698.13

Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions

16,648.02

30,475.56

15,906.56

714.83

16,975.61 3,917.54 20,893.15

14,606.26 5,822.23 20,428.49

19,531.58 259.82 19,791.40

1,891.28 6.45 1,897.73

Net Current Assets Total Assets

-4,245.13 75,910.28

10,047.07 55,908.53

-3,884 30,799.71

-1,182.90 1,437.66

Analysis: Even though SAIL has much more total share capital amount than that of Tata steel the strength and progress of Tata steel is much healthier than later. Increasing provisions is the only growing concern for Tata steel as it is directly affecting NET CURRENT ASSETS and its profit margins. Inner strength and basics of Tata steel is much more profit generating than that of others.

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Conclusion
As for summing up we can say that the steel and coal ministry had issued notices to 11 companies including JSPL, Monnet Ispat and Energy Ltd, NTPC, and GVK Power and Infrastructure Ltd for not developing the blocks allotted to them. The company has obtained all the relevant permits and approvals from both state and central governments for commencement of mining operations at the allotted coal block. The delay in development of coal block was beyond the control of the company; nonetheless the coal mine as well as the power plant will be ready for commissioning, shortly. SAIL failed to meet the milestone of developing the Sitanala block in Jharkhand. The notices to firms were issued for 12 coal mines allotted between June 2003 and July 2007. Other metal companies such as Tata Steel, Jindal Stain, Uttam Galva and SAIL traded with deep cuts post the development. The ongoing investigation is likely to lead to slower/stricter clearances in the coal sector, which will adversely impact sector growth. Hindalco and Tata Steel are some of the big companies waiting for clearance of coal blocks. According to Comptroller and Auditor General of India in its incisive audit report noted that India`s echequer suffered a massive loss of 1.86 lakh croresdue to thr distribution of coal blocks without bidding, another report stated that $210 billion in revenues have been lost in a coal scam of "epic proportions. The most important assertion of the CAG Report is that the government had legal authority to auction the coal but chose not to do so. In order to encourage private sector investment in the coal sector, the Coal Mines (Nationalisation) Act, 1973 was amended with effect from June 9, 1993 for operation of captive coal mines by companies engaged in the production of iron and steel, power generation and washing of coal in the private sector." The operative words here are the need to "encourage private sector investment in coal mining. A year ago, 21 of the 51 projects under implementation were hit by such delays and the average time and cost overruns for each of those projects were 32-40 months and Rs 80 crore, respectively. So it was clear to the government that the state-owned Coal India's efforts to produce about 238 million tonnes of coal in 1992-93 were not enough to meet the country's rising demand for fuel to run its power and steel plants. The pace of coal mining projects undertaken by Coal India was also slow. Coal is currently being produced only from 29 of the 195 blocks earmarked for captive mining, and production in 2010-11 was estimated at 34 million tonnes compared to over 400 million tonnes of coal in the remaining blocks. The reality all governments in the past two decades refused to see was that the policy of captive coal mining could not be a solution to industry's coal shortage problem. Worse, without regulation and competitive bidding, it paved the way for discretionary allotment of coal blocks to industry and, therefore, was an invitation to scams which has resulted in weakening in working of the major player.

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