History of Steel Industry and its Development in India

1.
1 STEEL INDUSTRY PROFILE

History of the Steel Industry dates back to the ancient times in Armenia which is approximately around three thousand and five hundred Before Christ. Steel is nothing but the alloy of iron and carbon. But the History of the Steel Industry in the modern times was initiated during the medium half of nineteenth century (during 1850s to be precise). The initiator of it was a person named Mr. Henry Bessemer of England. At the same time, another person named Mr. William Kelly, a resident of United States, has also started the production of steel and was completely an independent approach from Mr. Bessemer. The process in which the first ever production of steel was carried out came to be known as Bessemer process. This helped the steel industries to produce steel in large quantities and also at comparatively low costs.
History Of the Steel Industry was enriched and modernized through the introduction of Open-Hearth process of steel production which made the industries to produce steel out of domestic iron ores. This process was first adopted by the steel industries situated in United States of America in the year 1888. This time saw rapid innovations in the processes of steel production which got its impetus from the increased want for steel from various industries namely, railway industry, automobile industry, industry involved in construction of bridges, etc. During this time period, the enhanced demand as well as supply of steel pushed the ranking of USA to the first position, in terms of the steel production.
1 Financial Statement analysis of Indian steel Industry
1.1.1 DEVELOPMENT OF STEEL INDUSTRY IN INDIA:

The significant recent developments in The Development of Steel Industry in India should be viewed in conjunction with the type and system of Government that has been ruling the country. However, its production in significant quantity started only after 1900. The growth of steel industry can be studied by dividing the period into pre and post independence era. By 1950, the total installed capacity of ingot steel production was 1.5 million tons per year. In a short span of about 3 decades or so the capacity was increased 11 folds to about 16 MT by the 90s. In F i r s t F i v e - Y e a r P l a n ( 1 9 5 1 t o 1 9 5 6 ) No new steel plant came up, as the first plan was mainly agriculture oriented. However, IISCO was allowed to expand form 1MT/year to 2 MT/year of ingots, and from 0.5 MT/year to 1.0 MT/year of steel. And, the First Five-Year Plan contemplated a new Steel Plant to be erected in Public Sector. Thus the Hindustan Steel Limited (HSL) was born on 19th Jan 1954 with the decision of setting up three steel plants each with one million tons ingot steel per year at Rourkela, Bhilai and Durgapur. Though TISCO and IISCO were scheduled to expand, TISCO started its expansion program. During SECOND FIVE-YEAR PLAN (1956 TO 1961), a d d i t i o n a l s t e e l p r o d u c i n g c a p a c i t y w a s a d d e d a n d a decision was taken to increase the ingot steel output in India to 6 million tons per year. The three one million ton steel plant one each at Rourkela, Bhilai and Durgapur were completed during this period. They started production during the end of this plan. The salient features are given below:
In addition to the above BSP and DSP each were having the capacity to produce 300,000 tons of pig iron for sale. During THIRD FIVE-YEAR PLAN (1961 TO 1966), the three steel plants under HSL, TISCO, and IISCO were expanded as shown below. However, these could be completed only by 1968 1969.
The ambling expansion program taken up during the Third Five-Year Plan could not be completed during that period. All the expansion programs were actively executed during this period. During FOURTH FIVE-YEAR PLAN (1969 1974), Balancing facilities were incorporated in all the steel plants. Salem Steel Plant work was taken up during this period. Licenses were given for setting up of many Mini Steel Plants and Rolling Mills. Government accepted the idea of setting up two more Steel Plants in the South one at Visakhapatnam a n d o t h e r a t H o s p e t i n Karnataka. Both of them were envisaged to produce plain low Carbon Steel Products initially with a capacity of 2 MT/year of ingots. Steel authority of India Ltd., was also formed during this period on 2nd Jan 1973. Central Research and Development Organization was set up in June, 1973 to tackle the research and development problems of Iron and Steel Industry. During the FIFTH FIVE-YEAR PLAN (1974 TO 1979), Work on Salem project progressed well. Bokaro with 1.7 MT capacities started in Feb 1978. The expansions of Bhilai Steel Plant form 2.5 MT to 4 MT and Bokaro from 1.7 MT to 4.0 MT picked up momentum. The idea of setting up the 5thintegrated steel plant at Vizag took a definite shape. By the end of fifth five-year plan the total installed capacity from six integrated plants was 10.6 MT/year. During the Annual plans 1979 to 1980, various plans named above were reviewed and the progress on different plants consolidated. Soviet Union has agreed to help in setting up the Vizag steel plant. During SIXTH FIVE-YEAR PLAN (1980 1985), Work in expansion of Bhilai and Bokaro Plant was progressed. Bokaro's intermediate stage of 2.5 MT completed. Many of the units were commissioned e.g. a)Salem steel plant was commissioned b) on 31.9.81 work on Vizag Steel Plant started with a bang and c) top priority was accorded to modernize the plant at TISCO. Schemes for modernization of BSP, RSP, DSP, and IISCO were initiated at the end of sixth fiveyear plan. The capacity from six integrated steel plants stood at 11.56 MT. During SEVENTH FIVE-YEAR PLAN (1985 TO 1991), almost all the units in the expansion work of Bhilai and Bokaro to 4 MT completed. Progress of Vizag Steel Plant picked up and the rationalized concept has been introduced to commission the plant with 3 MT liquid steel capacities by 1990. In EIGHTH FIVE-YEAR PLAN (1992 TO 1997), all units of Vizag Steel Plant were commissioned by July, 1992. Government of India has given permission to set up Mini Steel Plants in Private Sectors. IN NINTH FIVE-YEAR PLAN
(1998 TO 2002), National Development Council under Central Government has deposited Rs.859.200 corers in ninth five year plan that targets an overall 6.5% growth gross domestic production and will necessitate a 7% growth in the remaining years of plan.
1.1.2 GLOBAL SCENARIO

As per IISI In March 2005 World Crude Steel output was 92.8MT when compared to March 2004 (87.2 MT), the change in percentage was 6.5%. China remained the worlds largest Crude Steel producer in 2005 also (27.5MT) followed by Japan (9.6MT) and USA (8.1MT). India occupied the8thposition (8.8MT) USA remained the largest importer of semi-finished and finished steel products in 2002 followed by China and Germany. the global steel scenario have been: Under the auspices of the OECD (Organization for Economic Co-operation &Development), the negotiations among the major steel producing countries for a Steel Subsidy Agreement (SSA) held in 2003 with the objective to agree on a complete negotiating text for the SSA by the middle of 2004. It also set subsidies for the Steel Industry of a ceiling of 0.5% of the value of production to be used exclusively for Research & Development. The global economy witnessed a gradual recovery from late 2003 onwards. China has become one of the major factors currently driving the world economy As a result of these economic developments IISI has projected an increase by6.2% or 53 million metric tones in 2004 in the global consumption of finished steel products. IISI has split the growth into two separate areas, China and the Rest of the World (ROW). Steel consumption in China has been estimated to increase by 13.1% or 31 met in 2004.
USA has repealed the safeguard measures on import of steel as a result of a ruling, by a WTO Dispute Resolution Panel, which held these measures to be illegal under the WTO regime.
1.1.3 PRESENT SCENARIO OF INDIAN STEEL INDUSTRY:

India is uniquely placed to become a very large producer and consumer of finished steel products in the world. Substantial reserves of high grade iron ore, low wage rates; technical and managerial skills of a high order have all enabled India to gain this stature, by becoming 10thlargest producer of steel in the world. Unfortunately for the Indian steel industry, the price and distribution controls to which it was subjected till about economic liberalization process began in the early1990s did not permit the large integrated steel plants to modernize their steel manufacturing facilities or to upgrade their technologies to the state of art levels from time to time. With the economic liberalization that was initiated in 1992, Indian Steel Industry has to accept the inevitable i.e. to appreciate the implications of low import duty rated, face foreign competition and somehow improve its strengths and competitive edge to produce good quality products at lower prices and learn to survive in the market place. Following liberalization, the steel Industry is well set on the path of globalization. The dynamics of the World Steel Industry has a close relation with Indian steel Industry. Presently in India, Steel products are being produced from four different sources viz. Integrated Steel Plants Mini Steel Plants Re-rolling Mills Alloy & Special Steel Plants Integrated Steel Plants have larger capacity and produce Steel from basic raw materials and the other three categories mentioned are characterized by low investment and low break-even point
1.1.4
CHARACTERISTICS
OF
INTEGRATED
STEEL
PLANTS:
Highly capital intensive. They have long gestation period. Labour intensive. They have large capacities They would have all facilities including raw materials resources, water supply, power supply, testing and inspection facilities, township facilities, medical, educational and recreational etc. Inter dependency of all the processing units on the proceeding and succeeding units in the path of materials flow. A potential source for earning foreign exchange through exports. They serve as centers for the development of ancillary industries. They are major consumer of refractory materials. The integrated Steel Plants in India are: Rourkela Steel Plant Bhilai Steel Plant Bokaro Steel Plant Durgapur Steel Plant Indian Iron and Steel Company (IISCO) Tata Iron and Steel Company (TISCO) Visakhapatnam Steel Plant (VSP)
1.1.5 EXIM POLICY (2002-2007):

To facilitate sustained growth in exports to attain a share of 1% of global merchandise trade. To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services.
To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities, and to encourage the attainment of internationally accepted standards of quality. To provide consumers with good quality goods and services at internationally competitive prices while at the same creating a level playing field for the domestic producers
1.1.6 THE NEW INDUSTRIAL POLICY REGIME:

The New Industrial policy has opened up the iron and steel sector for private investment by (a)Removing it from the list of industries reserved for public sector and (b)Exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
1.2.1 GROWTH AND PRESENT STATUS OF THE STEEL INDUSTRY

1.2.2 THE GROWTH PROFILE:
STEEL: The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/ expanded, a large number of new/green field steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. At present, total (crude) steelmaking capacity is over 34 million tons and India, the 8thlargest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious World Steel Dynamics, Indian HR products are classified in the Tier II
category quality products- a major reason behind their acceptance in the world market. EU, Japan has qualified for the top slot, while countries like South Korea, USA share the same class as India. In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs has sanctioned 21 new projects with a total capacity of approx 3.9 million tones. Of these, 16 units have already been commissioned. The production of millions in 2002-0n ton3. During the year 2003-04, the production of Pig Iron was 5.221 million tones.
1.2.3 GROWTH POTENTIAL OF INDIAS STEEL INDUSTRY

India has traditionally been one of the major producers of steel in the world. Till the 1990s the steel industry of India was regulated and controlled by government policies. After the economic reforms of the early 1990s, the Indian steel industry has evolved significantly to conform to global standards. India has set a vision to be an economically developed nation by 2020. The steel industry is expected to play a major role in India's economic development in the coming years. The steel industry of India has a very high growth potential and is expected to register significant growth in the coming decades. India is expected to emerge as a strong force in the global steel market in coming years. The two major aspects that are expected to play a significant role in the growth of the steel industry in India are
. Steel production in India has grown from 17 MT in 1990 to 36 MT in 2003. It is expected that by 2011, the steel production in India will grow to 66 MT.
The major sectors where consumption of steel is expected to grow in the coming years are -
-tech engineering industries such as power generation, petrochemicals, fertilizers. The current scenario of the Indian steel industry indicates that there is huge growth potential in this industry. The per capita-consumption of steel in India, according to latest available estimates, is only 29 kg. This is much less compared to the global average of 140kg. The per capita consumption level of developed nations like the United States of America is 400kg. In this respect, one of the major initiatives that need to be taken is to focus on increasing the consumption of steel in the rural areas of India. The potential for the growth of consumption of steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high which needs to be tapped efficiently. In order to realize the growth potential in the steel industry of India, it is essential to ensure that the industry can remain competitive. One of the major aspects in this regard is the availability of inputs. Shortage of inputs like coke has led to increase in costs earlier. Moreover proper infrastructure facilities like transport infrastructure, power etc are of prime importance in maintaining the competitiveness of the industry.
Most developed countries have regulations that are aimed to protect the domestic steel industry. The Indian steel industry has comparatively much lesser protection through regulations. Proper regulatory measures should be adopted by the government to protect the domestic steel industry.
1.2.4 PRESENT STATUS

Indian Steel Industry Outlook to 2012
Indian steel industry plays a significant role in the countrys economic growth. The major contribution directs the attention that steel is having a stronghold in the traditional sectors, such as infrastructure & constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainless steel is finding innovative applications due to its corrosion resistive property. India is the fifth largest steel producer at the global front and struggling to become the second largest producer in the coming years.
The country has acquired a central position on the global steel map with its giant steel mills, acquisition of global scale capacities by players, continuous modernization & up gradation of old plants, improving energy efficiency, and backward integration into global raw material sources. Global steel giants from across the world have shown interest in the industry due to its phenomenal performance. For instance - the crude steel production in India registered a year-on-year growth of 6.4% in 2010 and reached 66.8 Million Metric Tons. New research report Indian Steel Industry Outlook to 2012 says that the, Indian crude steel production will grow at a CAGR of around 10% during 20102013. Moreover, with the government proactive incentive plans to boost economic growth by injecting funds in various industries, such as construction, infrastructure, automobile, and power will drive the steel industry in future. The report also reveals that, steel consumption in India is expected to grow significantly in coming years as per capita finished steel consumption is far less than its regional counterparts. Indian Steel Industry Outlook to 2012 is an outcome of an extensive research and conceptual analysis of the Indian steel industry. The report provides detail information on steel industry in India. The report also presents an insight into the future outlook of various vertical industry segments, including automotive, aerospace, marine, consumer durables, power, railways, telecom, and housing. The report classifies the finished steel product market into two categories - Alloy and Non-alloy. The report also covers information on industry-wise steel demand, overall steel consumption, production, and trading market. Besides, it provides industry forecast for different market segments.
1.2.5 INDIAN STEEL INDUSTRY: GLORIOUS PRESENT, GLITTERING FUTURE

Indias target for 100 Mt steel production by 2018. The National Steel Policy has set a target of 60 Mt of steel production by 2010 and to further increase it to a level of 100 Mt by 2018. The major steel producers in India are planning to expand their capacities in tune with the National Steel Policy formulations. Some major expansion programmes of the leading steel producers in the country are mentioned below: (i) Steel Authority of India (SAIL) has planned to add 1 Mtpy of its 12 Mtpy capacity by 2004-05. The company has planned a seven million tonne capacity addition by 2011-12
to take its total capacity to 20 Mtpy by that period. SAIL has decided to spend Rs. 25,000 crore by 2011-12. The capital expenditure envisaged would double SAILs finished steel output to 16.6 Mtpy from the present level of 8.6 Mtpy. While the hot metal production will reach about 20 Mtpy by 2011-12 crude steel output will be around 28.7 Mtpy from the present level of 11.83 Mtpy. SAIL has earmarked Rs. 4,300 crore for its priority schemes to be completed by 2006-07. The hot metal production at SAILs Bhilai Steel
Plant will rise to 7 Mtpy from the current level of 4 Mtpy and that Durgapur Steel Plant will increase to 3.2 Mtpy from the present 1.98 Mtpy. Similarly, Rourkelas hot metal production will go up to 3 Mtpy by 2011-12 from 1.73 Mt at present and the same for Bokaro will reach 6.5 Mtpy from 4.1 Mtpy at present. Mr. V. S. Jain, Chairman, SAIL, has explained that the massive growth plan would not affect the companys financials as the SAIL Board has already envisaged a policy to maintain the debt-equity ratio at 1:1. The capital expenditure will be financed through internal accruals and will be aided by market borrowings, if required. SAIL has planned to gradually reduce the volume of semi-finished steel products share in the total production of saleable steel to 4 percent by 2011-12 as against 20 percent at present. The capital expenditure plan includes up gradation and modernization of some of the existing assets as well as installation of new facilities. SAIL will develop and modernize its iron ore mines with special thrust on Chirra mines. An extensive plan has also been drawn up to revamp the companys iron and steel units at its plants at Bhilai, Durgapur and Bakaro.
(ii)Tata Steel is implementing an expansion of 1 Mtpy to be completed by the end of

2005 which will take into capacity at Jamshedpur to 5 Mtpy. The company has planned to invest Rs. 7,800 crore over the next five year to raise its capacity by another 2.4 Mtpy to a total of 7.4 Mtpy by 2009. The bulk of the cost will be met through long-term internal accruals and long term borrowings. Tata steel will also invest between Rs. 12,000 to 15,000 crore to set up a 6 Mtpy steel plant Duburi in Orissa. The company has also planned on developing the Rs.2.000 crore Dhurma Part projects which will be built along with Larsen and Toubro and other partners. The company will also play a railway line to connect it to the Paradip port.
(iii) RINLs Vizag Steel Plant has decided to take its present rated capacity of 3.5 Mtpy of liquid steel to 5 Mtpy by 2007-08 in its phase I expansion plan at a cost of Rs. 2,500 crore mainly through internal accruals and process up gradations. (iv) Ispat Industries Ltd has planned to increase its production capacity at its Dolvi plant in Maharashtra from 2.5 Mtpy to 3.2 Mtpy in 2004-05 at an investment of Rs. 1,000 crore. With balancing and de-bottlenecking, the capacity for production of hot-rolled steel will reach 3.6 Mtpy by 2005-06. (v) JVSL is installing a new Blast Furnace and has planned to expand its hot metal capacity from the existing 1.6 Mtpy to 2.5 Mtpy by 2004-05 and further to 4.0 Mtpy by 2005-06 at an investment of Rs. 2,500 crore. (vi) Essar Steel Ltd is setting up a 1 Mtpy capacity Blast Furnace to expand its existing capacity to 3.4 Mtpy by 2005-06. SMS Demag AG of Germany will provide the expertise in the expansion and modernization. (vii) Jindal Steel & Power Ltd. (JSPL) will expand the steelmaking capacity from 1.15 Mtpy to 2.15 Mtpy at an investment of Rs. 1,200 crore. The company is also expanding its DRI production capacity from the existing 6.5 lakh tonnes per year to 1.31 lakh tonnes per year and will increase its power generation capacity from 205 MW to 255 MW. (viii) Bhushan Steel & Strips will expand the production of its Khopoli Plant by 0.5 Mtpy for production of CRCA Coils and Sheets GP/GC sheets and coils, precision tubes and CDW tubes for application in the automotive industry. (ix) Jindal Stainless is expanding its capacity to 0.5 Mtpy by 2004-05 at an investment of Rs. 350 crore to manufacturer value added cupro nickel coins for use in mints. (x) Tinplate Company of India (TICL) will expand its capacity from 90,000 tpy to 125,000 tpy at an investment of Rs. 46 crore. The company will also invest Rs. 110 crore for the installation of a new tinning line. ORISSA ATTRACTS GREEN FIELD STEEL PROJECTS, In addition to the Tata Steel projects at Duburi in Orissa mentioned above, many new greenfield projects are to be setup in the state. Some of which are mentioned below : (a) BHP Billiton Australia in collaboration with Posco of South Korea will set up a 10 Mtpy plant at Duburi at an investment of Rs. 39,000 crore. Which will include the cost of power plants also.
(b) SPS sponge Iron Ltd will install a Rs. 400 crore sponge iron / steelmaking plant in Jharsguda in Orissa. The first phase costing about Rs. 62 crore is likely to go on stream soon. The company intends to set up a 2.2 lakh tonne sponge iron plant and then add a 2.6 lakh tonne capacity billet caster for making steel in the second phase. In the third phase, SPS will install a Blast Furnace as to produce 200,000 tpy of cold pig and a rolling mill to produce one lakh tonnes of finished steel per year and a 20 MW captive power plant. (c)Sunflag Iron & Steel Co will set up a 1 Mtpy plant at Sambalpur district at an investment of Rs. 937 crore. The first phase may be commissioned in 2007. (d) Orissa Sponge Iron Ltd has proposed to invest Rs. 1,037 crore in two phase for its plants at Gurla and Govindpur in Sambalpur district. The first phase of the project is likely to commission in 2007. (e)Bhushan Steel and Strips Ltd has planned to install a 1.2 Mtpy capacity hot strip plant at Lapanga in Jharsguda district at a cost of Rs. 1,650 crore in the first phase. A further investment of Rs. 1,850 in the second phase will take the capacity to 2.8 Mtpy by 200607. (f) Jindal Stainless is setting up a 0.8 Mtpy capacity by 2009. The company 2006-07 and may add a further 0.8 Mtpy capacity by 2009. The company is likely to invest Rs. 1,146 crore in 2004-05. According to media reports some Rs. 50,000 crore worth of investments are proposed to be made in steel in Orissa. If all plans work right, Orissa could be Indias steel capital in future.
Conclusion
The Indian steel industry has made marginal additions to its capacities in the decade up to 2003-04. The new green field projects and the massive expansions announced by leading producers may take the countrys production capacity to a level by 2011-12 that will help the consumption level to 60 Mtpy as envisaged in the National Steel Policy. Removal of infrastructure bottlenecks in railway and road transportation, speedy up gradation of ports and supply of uninterrupted power with consistent frequency will help the steel industry grow at a rapid space. The government should take a pragmatic view of the problems faced by the steel industry and take proactive steps in consultation with the Indian Steel Alliance so that it may become a major global player by 2011-12
CHAPTER 2
PROFILE OF THE ORGANIZATION
2.1 ORIGIN OF THE ORGANIZATION

2.1.1 RashtriyaIspat Nigam Limited:
The foundation stone for RashtriyaIspat Nigam Limited was laid in the year 1971 and this organization is the corporate body of Visakhapatnam Steel Plant. They have three different mines under their control being the blast furnace grade limestone mine, manganese mine and dolomite mine. They are specialized in the production of the following products: Rounds Beams Wire rods Squares Billets Channels Blooms Rebars or reinforcement bars
History
The plans for a steel plant in Visakhapatnam were announced in 1971 by then Prime Minister of India, Indira Gandhi. Originally, intended as a plant of the state-owned Steel Authority of India Limited, RINL was established as a separate company in 1982, just before the start of its operations. RINL is wholly owned by the Government of India. In November 2010, the company was granted the Navratna status by the Government of
India.[4] RINL union to protest against the disinvestment by going on strike on 28-29 June 2012.[5] In September 2011, the government announced plans to divest 10% of its stake in RINL via an initial public offerings
Operations
RINL operates a 3 million tonne per annum capacity steel plant in Visakhapatnam. RINL is investing 125 billion (US$2.26 billion) in the first phase of expanding its capacity, to
target production of 6.3 million tonnes of steel a year by 2012.In the next phase of its expansion to be completed by 2015, it plans to invest 70 billion (US$1.27 billion) to 250
add another 4 million tonnes to its annual capacity. In addition, it plans to invest
billion (US$4.53 billion) to add capacity for the production of 4 million tonnes of specialized steel. Its annual capacity is expected to reach almost 15 million tonnes by 2015.
2.1.2 Steel Authority of India:

Steel Authority of India shortly called as SAIL is one of the top public sector steelmakers in India and they produce steel products both for export and for domestic consumption as well. SAIL holds the pride of being one among the four Maharatnas in the Central Public Sector Enterprises in India. They are the major manufacturers and sellers of the following steel products: Alloy steel Stainless steel Rods and bars Railway products Structurals
Electrical sheets Galvanized steel Cold and hot coils and rolled sheets
2.1.3 Tata Steel:

Tata Steel is a part of the Indias popular Tata group and they are one among the global steel service and manufacturing companies in India. They have a balance presence in over 50 developed countries in the continent of Europe and they have manufacturing units in 26 different countries all over the world.
2.1.4 Visveswarayya Steels:

Visveswarayya Steels is actually a unit of the Steel Authority of India and they are dealing in the production of pig iron and alloy steels. The company began as a separate entity in the year 1923 and it has now come under the SAIL.
2.1.5 Bokaro Steel Plant:
Bokara Steel Plant began its journey as a limited company in the year 1964 and the company is situated in the Bokaro District of the state of Jharkhand. The plant holds the pride of being the countrys first Swadeshi Steel Plant. Even though, the company began its journey as a separate entity, it is now merged with the Steel Authority of India. Bokaro
Steel Plant is located in the Bokaro district of Jharkhand. It is the fourth integrated public sector steel plant in India built with Soviet help. It was incorporated as a limited company in 1964. It was later merged with the state-owned Steel Authority of India Limited (SAIL). Formerly it was known as Bokaro Steel Limited (BSL). Bokaro Steel Plant is hailed as India's first Swadeshi movement steel plant. Its first blast furnace was started on 2 October 1972. At present it houses five blast furnaces with total capacity to produce 4.5 MT of liquid steel. The plant is undergoing a mass modernisation drive after which its output capacity is expected to cross 10 MT. The first shop of Bokaro Steel Plant got the ISO 9001 certification way back in 1994, and its SAIL JYOTI products enjoy a loyal market. The plant's yearly profit stood at 1,120 crores Indian rupee (INR) for the financial year 200304 and has increased every year since then reaching to 8,426 crores INR in the financial year 200708.
ENVIRONMENT MANAGEMENT As a responsible corporate citizen, BSL has taken effective measures in the area of pollution control in By-Product Coke Oven Batteries, Battery No: 1 & 2. BSL has taken adequate steps to check emissions from Coke Ovens and has installed Air cooled self sealing doors resulting in significant reduction in door emissions; Doors designed, manufactured and supplied by Simplex Castings Ltd, Bhilai India.
CHAPTER-3
RESEARCH METHODOLOGY
Study of the selected Research Problem

3.1: Statement of the Research Problem
To identify the areas of financial strength and financial weakness of the Steel industry in India by analyzing the financial health in terms of the liquidity position, solvency position, efficiency level and the profitability position of the company by using the technique of Ratio Analysis.
3.2: Statement of the Research objectives

1. To know the short term liquidity position of the major players in the Indian Steel Industry. 2. To know the profitability position of the major players in the Indian Steel Industry. 3. To know the solvency position of the major players in the Indian Steel Industry.
4.
To find the efficiency in terms of the utilization of the resources of the major players in the Indian Steel Industry.
3.3: Research design and the Methodology

Ration analysis is being used as the technique for checking the financial health of the Steel Companies. Secondary data in the form of income statement & the balance sheets of the company have been taken for 5 years (2007 to 2011). The data has been analyzed by taking the relevant ratios for achieving the research objectives. Ratio analysis is the process of determining and interpreting numerical relationships based on financial statements. A ratio is simply one number expressed in terms of another. It shows the arithmetical relationship between any two figures. A ratio, in general, is a statistical yardstick by means of which the relationship between the figures can be compared and measured. The financial ratios focus attention on the interrelationship between the figures appearing in the financial statements. Ratio may be expressed in the following three ways: (A) Ratio. Specially the simple division of one number by another, e.g., current assert to current liability ratio is 2:1 (B) Rate. The ratio between two numerical facts, usually ossver a period of time, e.g., stock turnover is three times a year. (C) Percentage. A special type of rate which expresses the relation in hundredth, e.g., gross profit is 25% on sales. The technique of ratio analysis is the most important tool of financial analysis. It helps in comparison of the performance of various firms and judging their financial soundness, profitability and efficiency. Ratios must be worked out on the basis of figures which are related to each other in a significant manner. Computations of ratios of unrelated figures do not serve any purpose. For example, there is no meaningful relationship between total debtors and paid-up capital. But there is a definite relationship between debtors and credit sales or between current assets and current liabilities
ADVANTAGES OF RATIO ANALYSIS The ratio analysis is very useful because of the following reasons: Helpful in simplifying financial data : Ratio analysis is helpful in simplifying the complex and large figures of financial statements which enable to understand their relative importance. Helpful in determining trends: by the use of ratio analysis, the trend in profit, sales, cost, etc. of the previous year can be determined by analyzing the financial statement and future forecasts can be made accordingly. Helpful in controlling: by comparing the ratio regarding efficiency and financial position with the standard ratios, unfavorable results can be controlled. Helpful in locating weak spots : with the help of ratio analysis, management can find out which activities are being operated successfully and which are not and where more control is required. Helpful in measuring operating efficiency; ratio analysis is also helpful to asses the managerial efficiency. It helps in determining whether the assets are being used optimally or not. Benefits to other parties interested in the business: creditors can determine short term solvency of business with the help of ratio analysis. Financial institutions and long term creditor can determine whether the business is capable to repay their loan and interest in time.
LIMITATIONS OF RATIO ANALYSIS There are certain limitations of the ratio analysis technique and they should be kept in mind while using them in interpreting financial statements: Limited use of single ratio: whether the conclusions are drawn from analyzing the financial statements, they should not be based on single ratio, rather all the related ratios should be considered for this purpose. Single ratio cannot provide all information on a particular aspect. Wrong ratios based on wrong data: ratios are determined on the basis of information presented in financial statements, but financial statements are also affected by a number of limitations which affect the quality of ratios. Incorrect comparison: all ratios are not appropriate for all firms because the circumstances are different for different industries. Accordingly, their standards are also different. Different meaning: different persons interpret the ratios in different ways. For example, profit may mean profit before interest or after interest or profit before tax or after tax. Difficulty in forecasting: ratios are calculated on the basis of previous years performance. Forecasting the future on their basis is difficult because it is not necessary that the past events like managerial policies, economic circumstances will continue in future also. Lack of proper standards: there is no such standard which applies to all firms and industries and on the basis of which comparative study can be made because the nature of the firm and circumstances for each firm are different. Different ratios need to be identified for them.
CLASSIFICATION OF RATIOS The following classification is based on the financial statement from which the ratios are calculated. Thus, there are: (A) Liquidity Ratios (B) Leverage or Capital Structure Ratios (C) Activity Ratios (D) Profitability Ratios or Income Ratios Examples of ratios that can be calculated under each of the above categories are as follows: (A) Liquidity Ratios Current ratio Liquid ratio
(B) Leverage or Capital Structure Ratios Debt Equity Ratio Debt to Total Funds Ratio Proprietary Ratio Fixed Assets to Proprietors Fund Ratio Capital Gearing Ratio Interest Coverage Ratio
(C) Activity Ratios

Stock Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Working Capital Turnover Ratio Fixed assets-turnover ratio
(D) Profitability Ratios Gross Profit Ratio Net Profit Ratio Operating Ratio Expenses Ratio Return on Capital Employed
ANALSIS FOR SHORT-TERM CREDITORS The analysis is also called analysis for short-term solvency of the company. Short-term creditors of the company are primarily interested in knowing the companys ability to pay its short-term creditors as and when they become due. For this purpose creditors focus their attention on the companys cash- generation power and on companys total current assets in relation to its total current liabilities. Company must have as much as total current assets as to be able to meet its obligation on account of current liabilities and have something to meet day to day requirements of the business. Ratios calculated for this purpose are liquidity ratios.
(i) LIQUIDITY RATIOS Liquidity refers to the ability of the company to meet its current obligations. The liquidity ratios, therefore, have to do with the size and relationships of current liabilities, which are the obligations soon becoming due, and current assets, which presumably provide the source from which these obligations will be met. A companys financial position is not sound unless it has adequate liquidity. Liquidity ratios include two ratios: (a) Current ratio. (b) Quick ratio. (a) Current ratio The current ratio is computed by dividing current assets by current liabilities. The formula for its computation is as follows: Current assets/ Current liabilities OBJECTIVES: Current ratio is the relation of a companys current assets to its current liabilities. This ratio establishes the ability of the business to meet its short-term obligations and is, therefore, of particular significance to short-term creditors. It is always desirable that in a business there should be a considerable excess of current assets over current liabilities. In a business, a 2:1 ratio of current assets to current liabilities is treated a satisfactory relation, which may vary from business to business. The idea of having almost twice as much asset as liabilities is only to tide over the contingency loss on account of realization of assets in order to meet liabilities and leave some amounts as working capital in the business. For example, there may be large amounts of bad debts or stocks may become unsalable or losses may occur in realization of short-term investments.
(b)QUICK RATIO Quick ratio is calculated by dividing quick current assets by current liabilities. The formula for its computation is as follows: Quick current assets Current liabilities OBJECTIVES: This ratio is a better test of financial strength than the current ratio as its gives no consideration to stocks which may be very slow moving and may not be easily convertible into cash. Stock in trade may take a lot of time before it is converted into debtors or bill receivable and finally into cash. Similarly, prepaid or unexpired expenses do not provide cash at all; they merely reduce the amount of cash required in one period because of payment in a prior period. Quick ratio is a measure of the instant debt paying capacity of the business enterprise. It is, therefore, a measure of the extent to which liquid resources are immediately available to meet current obligations. It is a supplementary measure of liquidity and places more emphasis on immediate conversion of assets into cash than does the current ratio. A quick ratio of 1:1 has usually been considered favorable since for every rupee of current liabilities there is a rupee of quick assets. But accounts receivable (or sundry debtors) may not be convertible into cash at face value on a short notice. SOLVENCY RATIO- AN ANALYSIS FOR LONG-TERM CREDITORS Long-term creditors include debenture holders, vendors selling equipment in installment basis and other financiers supplying long-term loans. Long- term creditors are primarily interested in whether the company has ability to pay regular interest due to them and to repay the principal at the maturity date. Solvency ratios indicate ability of the company to meet its interest costs and repayment schedules associated with its long-term indebt ness. The lenders are mainly interested in:
Security of their loans Interest payable thereon Repayment of their loans at maturity date Thus, solvency ratios primarily include. (a) Debt-equity ratio (b) Interest coverage ratio (c) Debt to total fund ratio. (a) DEBT-EQUITY RATIO This ratio expresses the relationships of long term liability to net worth. Long-term liabilities are those which are repayable after one year and these are other than those appearing under current liabilities. The long-term or term liabilities include debentures and other secured and unsecured loans which are repayable after one year. Net worth or equity represents equity share capital, reserves, irredeemable preference share capital and preference share capital not redeemable within a period of 12years from the date of the balance sheet. Preference shares redeemable within 12 years are considered as debt. It is computed as follows:
Debt Equity
OBJECTIVES: This ratio is a measure of owners stake in the business. Proprietors are always keen to have more funds from borrowings because: 1. Their stake in the business is reduced and subsequently their risk too.
2. Interest on loans or borrowings is a deductible expenditure while computing taxable profits. Dividend on shares is not so allowed by income tax authorities. But creditors always like proprietors to have more stakes in the venture, because it provides a margin of safety to them. Moreover, excessive outside debt may cause insolvency of the business and is harmful. The normally acceptable debt-equity ratio is 2:1 but relaxations are allowed. If an analyst looks at this ratio and finds that the debt has reached its maximum level, he may expect rights issue of shares depending upon the companys expansion/ modernization performance. On net worth is possible, provided the growth plans are to be funded from untapped borrowings. The other aspect of high debt is that profits would be adversely affected in case of a fall in sales. (b)INTEREST COVERAGE RATIO Here, net income stands for net income before charging income tax and interest on long-term debts and debt service stands for interest on long-term debts. This ratio is calculated as follows Net income before charging interest and income tax Periodic interest on long-term debt
OBJECTIVES: Since the borrower has earned 5 times the fixed interest to be paid to long-term creditors after meeting out his usual business expenses, he is likely to pay off his liability on account of interest and other periodic fixed profits are calculated keeping future in mind, this type of ratio can serve as a good index on long-term solvency. The interest coverage ratio of debt-service ratio indicates how much interest charges are covered by operating profits available to pay the interest charges. A higher ratio is desirable, but too higher a ratio indicates that the firm is very conservative in using debt and that it is not using credit to the best advantage of shareholders. A low ratio indicates excessive use of debt or
inadequate operations. Thus, both these ratios- debt-equity ratio and interest coverage ratio- help the creditors and investors of the company to assess the financial status of the company in order to take a rational decision for long-term investment of their funds in the business. (c) DEBTS TO TOTAL FUNDS RATIO The ratio compares the total liabilities to total assets. it is computed by the formula: DEBT *100 Debt to total funds ratio = OBJECTIVES: This ratio indicates the extent of trading on equity and measures the percentage of assets financed through borrowings. ACTIVITY RATIOS- AN ANALSIS FOR MEASURING THE MOVEMENT OF CURRENT ASSETS Both the current ratio ant the acid test ratio will be misleading if debtors are too high because of slow credit collections. Similarly, the current ratio will be misleading if stock is too high because it is not being turned over (sold) as fast as it should be. Since liquidity ratio (i.e., current ratio and acid test ratio) ignore the movement of current assets, it is necessary for short-term creditors to focus their attention on the analysis of policy for collection of debtors and turnover of stock. Activity ratios signify the effective utilization of a concern of its available resources. Mainly, activity ratios include: Capital Turnover Ratio Fixed Assets Turnover Ratio Net Working Capital Turnover Ratio Stock Turnover Ratio Debtors Turnover Ratio
total assets
A. CAPITAL TURNOVER RATIO: This ratio is computed by the following formula:
Net sales or cost of good sold Capital employed
OBJECTIVES: This ratio measures the effectiveness with which a firm uses financial resources as its disposal. An enterprise must make full use of fixed assets at its disposal, must maintain stocks at proper levels and debts must be realized in time. Variations in capital turnover ratio must be properly looked into. A low ratio may signify that the capital is lying idle or that there is a fall In sales have been suppressed or that any of the constituents of capital employed has been inflated. Management sometimes suppresses sales by resorting to deliberate manipulation. Sales relating to current year may be shown as sales of the next accounting period. A high capital turnover ratio indicates that either the business firm is overtrading to an extent that its financial health is in risk or danger or there is manipulation in the figures.
B. FIXED ASSETS TURNOVER RATIO This ratio is computed by dividing the net sales or cost of sales of the concern bt its net fixed assets. The formula used is: NET SALES, i.e., total sales less sales returns Fixed assets less depreciation OBJECTIVES: This ratio is expressed in as number of times. Examples of fixed assets are land and buildings, plant and machinery, furniture, etc. this ratio shows the efficiency of the business house in utilizing its fixed assets. Higher this ratio, better it is because it indicates higher efficiency, i.e., every rupee invested in fixed assets generates higher sales. A lower ratio signifies inefficiency of assets. It may also point to the underutilization or non-utilization of certain assets. With the help of this ratio, arrangement for disposal or alternative uses of such unutilized or underutilized assets may be made.
C. NET WORKING CAPITAL TURNOVER RATIO This ratio is computed by dividing the net sales, i.e., total sales less returns by net working capital. The term net working capital means the excess of current assets over current liabilities. The formula is: Net sales or cost of sales Net working capital
Net working capital signifies the excess of current assets over current liabilities. Examples of current assets are cash in hand, cash at work, bill receivable, sundry debtors, stock in trade, short-term investments. Current liabilities include sundry creditors, bill payable, bank overdraft etc. OBJECTIVES: The objectives of this ratio are: The efficiency of the use of working capital in the unit can be measured. For an expected increase in sales, the requirement of working capital can be calculated by computing this ratio. A high working capital turnover ratio (if it is expressed in %) indicates efficient use of working capital and quick turnover of current assets like stock and debtors. A low ratio indicates low turnover of these assets. D. STOCK TURNOVER RATIO How many times stock is purchased during the year is an important calculation because this depends on the companys purchase policy. Buying in small lots results in repeated buying and buying in bulk results in infrequent buying. Bulk buying though gives various advantages of external and internal economies, yet results in heavy carrying costs and blocking of funds and thus limiting liquidity of the concern. Buying in small lots keep funds quite free but gives the danger of going out of stock at any time and reduces the bargaining power of the company. But high turnover of stock does not necessarily mean that the company buys in small lots. It may be that the company is efficient and sells it always quickly. It is calculated as under: Cost of good sold Average stock held during the year
This ratio is best calculated by dividing annual turnover by the average of the stock figures at the end month, as ratios based upon opening or closing stock for the year, or the average of these, may be misleading, unless stocks are constant throughout the year. The ratio signifies the number of times, on an average, the inventory or stock turned over or sold during the period. A higher stock turnover ratio is desirable because it leads to higher liquidity. It indicates efficient sales performance. Care should be taken to ensure that turnover of stock does not rise too much signified by a very low ratio, otherwise it may become difficult to fulfill customers order promptly. A low stock turnover indicates that stock does not sell quickly and remains in the go down for a long time. This will lead to excessive blocking up of working capital in inventories. Moreover, slower stock turnover will reduce liquidity. E. DEBTORSS TURNOVER RATIO: Debtors turnover ratio establishes the relationship of receivables to net credit sales. Debtors, as used in this context, include bills receivable bur exclude debtors which are not on account of goods, e.g., debtors arising out of sale of furniture will not be included in this list of debtors for this purpose. This is calculated as follows: Net credit sales Average of debtors OBJECTIVES: The collection period so calculated is compared with the credit period allowed and then conclusions are drawn. This shows, the rate at which customer are paying for credit sales. This ratio should approximate to the credit terms allowed by the business and is, therefore, a comment on the efficiency of credit control. If 90 days credit is extended to customers, then the normal ratio should be 4:1. the higher the ratio, the more favorable the effect upon working capital, because outsiders are being financed to a lesser extent while liquid resources will, other things being equal, increase.
PROFITABILITY RATIOS The main object of every business concern is to earn profits. A business must be able to earn adequate profits in relation to the risk and capital invested in it. The efficiency and the success of a business can be measured with the help of profitability ratios. Profitability Ratios are calculated to provide answers to the following questions: 1. Is the firm earning adequate profits? 2. What is the rate of gross profit and net profit on sales? 3. What is the rate of return on capital employed in the firm? 4. What is the rate of return on proprietors funds? 5. What are the earnings per share? (A) GROSS PROFIT RATIO: This ratio shows the relationship between gross profit and sales. computing this ratio is: Gross Profit X 100 Net Sales Net Sales = Sales Sales Return Significance: This ratio measures the margin of profit available on sales. The higher the gross profit ratio the better it is. No ideal standard is fix for this ratio, but the gross profit ratio should be adequate enough not only to cover the operating expenses but also to provide for depreciation, interest on loans, dividends and creation of reserves. The formula for
(B) NET PROFIT RATIO: This ratio shows the relationship between net profit and sales. computing this ratio is: Net Profits X 100 Net Sales Significance: This ratio measures the rate of net profit earned on sales. It helps in determining the overall efficiency of the business operations. An increase in the ratio over the previous year shows improvement in the overall efficiency and the profitability of the business. (C) RETURN ON CAPITAL EMPLOYED: This ratio reflects the overall profitability of the business. It is calculated by comparing the profit earned and the capital employed to earn it. This ratio is usually in percentage and is also known as Rate of Return or Yield on Capital. The formula for computing this ratio is: Profit before interest, tax and dividends X 100 Capital Employed Capital employed can be computed by any of the following two methods: 1. Capital Employed = Equity share capital + Preference share capital + All The formula for
reserves + P&L Balance+ Long term loans - Fictitious Assets - Non Operating Assets 2. Capital Employed = Fixed Assets + Current Assets - Current Liabilities
(D) RETURN ON TOTAL SHAREHOLDERS FUNDS: For calculating this ratio Net Profit after interest and tax (but before preference dividend) is divided by total shareholders funds. The formula for computing this ratio is: Net Profit after interest and tax Total Shareholders Funds Here, Total Shareholders Funds = Equity Share capital + Preference share capital + All reserves + P&L a/c Balance - Fictitious Assets
CHAPTER-4
DATA ANALYSIS
4.1 ANALYSIS OF DATA

Ration Analysis of Steel Authority of India
Mar 11 '
Ratio
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
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) 11.13 14.72 11.87 15.47 2.40 16.86 89.75 89.75 15.35 18.61 16.35 19.62 3.30 22.31 80.66 80.66 15.18 18.60 14.95 18.37 2.60 21.65 67.75 67.75 17.70 20.87 18.25 21.42 3.70 27.28 55.69 55.69 14.70 17.95 15.02 18.26 3.10 23.35 41.60 41.60 83.11 30.72
102.98 98.29 78.84 69.93
106.04 96.74 57.16 45.02
Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) 16.37 12.88 11.03 22.69 19.40 15.73 20.41 17.48 13.40 28.19 25.10 18.16 28.09 24.56 17.38
Ratio
Mar 11 13.68 12.39 13.23 15.10
'
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%)
17.91 19.03 20.27 21.97
16.67 22.40 22.06 28.98
20.77 31.77 32.76 44.47
20.77 35.34 36.09 45.55
Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio 0.31 0.54 64.76 1.16 0.39 0.49 66.86 1.20 0.20 0.26 78.77 1.35 0.12 0.13 88.33 1.31 0.22 0.24 80.54 1.16
Liquidity ratios Current ratio 1.97 2.05 1.82 1.73 1.59
Current ratio (inc. st loans)
1.21
1.60
1.61
1.68
1.52
Quick ratio Inventory turnover ratio
1.35 5.13
1.53 6.02
1.24 5.86
1.23 8.62
1.01 7.50
Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit) 23.49 18.04 23.54 19.63 20.32 16.54 23.71 20.19 23.83 19.60
Ratio
Mar 11 74.93 81.05
'
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Earning retention ratio Cash earnings retention ratio
74.92 79.32
79.99 83.67
75.56 79.28
75.66 80.06
Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 3.32 18.66 14.46 2.15 28.71 21.15 0.98 44.31 30.96 0.35 51.04 36.26 0.56 33.12 23.71
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 (%) 53.23 2.91 2.30 62.00 0.48 45.84 2.77 1.92 61.27 0.40 54.60 2.13 1.84 63.36 0.34 43.18 2.86 3.08 50.93 0.34 47.34 3.10 3.40 54.52 0.37 -
Ratios of Tata Steel ltd
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 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(%) 34.09 38.11 33.82 34.20 23.28 23.28 23.16 23.16 13.48 14.22 11.91 35.70 30.95 31.36 20.65 20.65 19.96 19.96 13.06 13.45 11.00 37.68 33.27 33.69 23.83 23.83 21.09 21.09 15.01 21.10 19.87 41.94 37.04 37.70 26.41 26.41 23.43 23.43 17.11 21.52 20.42 10.00 12.00 10.00 12.00 10.00 8.00 10.00 16.00 10.00 16.00
118.79 116.45 100.38 348.41 305.53 281.11 -26.04 454.52 392.98 26.36 28.50
125.60 112.85 333.27 269.02 309.18 275.25 34.61 34.61
Profit Before Interest And Tax Margin(%) 29.90 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 (%) 30.69 21.12 21.12 19.28 19.28 14.84 12.82 11.84
Return on Assets Excluding Revaluations 537.64 503.19 418.94 Return on Assets Including Revaluations 537.64 503.19 418.94 Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio 0.91 0.67 0.45 0.45 1.78 1.45 0.59 0.58 1.12 0.76 0.68 0.68 14.84 13.54 13.06
330.24 296.65 330.24 296.65 15.21 17.16
0.91 0.57 1.34 1.31
3.81 3.52 1.08 1.07
Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding 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 20.11 17.16 78.23 81.65 3.23 19.04 16.32 77.27 81.05 4.10 16.64 13.68 79.66 83.92 4.83 27.15 22.80 71.16 76.03 4.58 29.39 24.93 69.02 73.94 3.41 29.30 60.55 -5.46 32.05 60.95 0.37 8.10 33.50 59.69 0.32 8.41 35.19 68.85 0.25 13.85 30.85 50.51 0.26 11.64 7.62 50.80 7.62 1.48 0.45 1.48 --9.85 67.93 9.85 1.29 0.38 1.29 81.57 24.02 10.90 46.58 10.90 1.12 0.40 1.12 60.63 21.78 9.36 41.29 9.36 1.22 0.43 1.22 74.12 27.88 -4.56 10.84 33.45 10.84 1.20 0.43 1.20 71.68 29.45 520.93 5.85 0.45 6.45 5.08 6.14 0.59 6.82 5.75 4.41 0.68 5.00 4.32 5.71 1.34 6.37 5.15 8.35 1.08 9.25 6.94
-19.12 140.11 20.53
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08 Earnings Per Share Book Value 68.95 71.58 56.37 69.70 63.85
537.64 503.19 418.94
331.68 298.78
Profitability Ratios Operating Profit Margin (%) 34.09 38.11 33.82 34.20 23.28 23.28 23.16 23.16 13.48 14.22 11.91 35.70 30.95 31.36 20.65 20.65 19.96 19.96 13.06 13.45 11.00 37.68 33.27 33.69 23.83 23.83 21.09 21.09 15.01 21.10 19.87 41.94 37.04 37.70 26.41 26.41 23.43 23.43 17.11 21.52 20.42
Profit Before Interest And Tax Margin(%) 29.90 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 (%) 30.69 21.12 21.12 19.28 19.28 14.84 12.82 11.84
RATIO ANALYSIS OF RINL
:
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
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) 164.43 221.12 162.92 219.61 16.30 171.39 267.82 316.99 273.13 322.31 27.30 281.23 394.81 491.25 397.30 493.74 530.43 295.86 367.76 278.83 350.73 400.59 254.72 343.42 256.12 344.81 386.84
Book value (excl rev res) per share (Rs) 2,034.32 1,939.21 1,747.21 1,346.83 1,065.75 Book value (incl rev res) per share (Rs.) 2,034.32 1,939.21 1,747.21 1,346.83 1,065.75 Net operating income per share (Rs) Free reserves per share (Rs) 2,006.02 1,866.80 1,858.62 1,617.61 1,494.06 -3.06 -5.09
Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) 8.54 5.71 7.53 10.23 15.06 12.43 13.21 15.33 28.53 23.35 19.44 24.03 24.76 20.31 15.90 20.98 25.89 20.20 16.13 21.63
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) 8.08 8.00 9.33 13.81 14.08 15.72 22.59 22.73 25.38 21.96 20.70 21.69 23.90 24.03 22.17
Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio 0.41 0.41 70.46 1.04 0.41 0.41 70.61 1.01 0.39 0.39 71.66 1.02 0.58 0.58 63.13 0.89 0.64 0.64 60.66 0.82
Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio 2.17 2.17 1.61 4.34 2.75 2.75 2.01 3.24 3.52 3.52 2.99 5.92 4.36 4.36 3.86 7.60 4.33 4.33 3.69 6.97
Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio 41.75 30.97 58.63 69.24 29.71 25.17 69.70 74.40 100.00 100.00 100.00 100.00 100.00 100.00
Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 1.14 20.57 14.85 0.65 26.68 18.88 0.18 110.80 77.47 0.50 54.11 36.42 0.27 75.58 55.28
Component ratios Material cost component (% earnings) 60.74 Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets 3.18 3.58 56.43 0.48 69.66 3.13 0.86 55.09 0.33 50.67 3.37 6.11 42.13 0.22 53.68 3.98 5.38 49.59 0.18 53.70 0.06 0.21 -
Bonus component in equity capital (%) -
CURRENT RATIO
Chart Title
RINL Tata steel SAIL 4.33 4.36 3.52 2.75
2007-08 2008-09 2009-10 2010-11 2011-12
1.59 1.52 1.73 1.68 1.82 1.61 1.6 1.21 2.05 2.17 1.97
Graph1: Current ratios comparative analysis
INTERPETATION
This graph shows that the current ratio of the accounting year 2007-08 are 4 .33, 1.59& 1.52. In year 2008-09 CR are 4.36, 1.37 & 1.68. In year 2009 CR are 3.52,1.82 & 1.61. In year 2010-11 CR are 2.75,2.09 & 1.6.In year 2011-12 CR are 2.17, 1.97 & 1.21.Thus,this figure depicts that CR is higher in the year 2008-09.
QUICK RATIO
Chart Title
RINL TATA steel SAIL
2007-08 2008-09 2009-10 2010-11 2011-12 0.67 0.57 0.76
1.01 1.23 2.99 1.24 1.45 1.53 1.61 1.35 2.01
3.69 3.52 3.86
Graph2: Quick ratios comparative analysis
INTERPETATION This figure shows that the Quick ratio of accounting year 2007-08 are 3.69,3.52,1.01. In year 2008-09 QR are 3.86,0.57,1.23. In year 2009-10 QR are 2.99, 0.76, & 1.24. In year 2010-11 QR are 2.01,1.45,&1.53. In year 2011-12 QR are 1.61,0.67,& 1.35.l Thus, this figure depicts that the QR is higher of RINL in year 2008-09, TATA steels QR in 2007-08. Sails QR in year 2010-11.
CASH RATIO
Chart Title
RINL TATA steel SAIL
6.97 2007-08 7.5 7.6 2008-09 5.92 2009-10 3.24 2010-11 4.34 2011-12 5.13 6.02 7.62 5.86 9.85 8.62 9.36
10.84
10.9
Graph3: Cash ratios comparative analysis
INTERPETATION
This Liquidity Ratios depicts that the cash ratio of RINL is higher in2008-09, TATA steels cash ratio higher in 2007-08, SAILs cash ratio is higher in year 2008-09. Liquidity is the measure of cash and in the analysis RINL has shown the highest liquidity followed by SAIL. Tata Steel has the least liquidity but considering the cash and cash like assets only, the performance is best for Tata Steel indicating high availability of cash
LEVERAGE RATIO
0.64 2007-08 1.07 0.22 0.58 2008-09 1.31 0.12 0.39 2009-10 0.68 0.2 0.41 2010-11 0.58 0.39 0.41 0.45 0.31 0 0.2 0.4 0.6 0.8 1 1.2 1.4 RINL TATA steel SAIL
2011-12
Graph4: leverage ratios comparative analysis INTERPETATION This figure depicts that the leverage ratio of 2007-08 are 0.64,1.07,0.22,In 2008-09 are 0.58,1.31,0.12.The LR of 2009-10 are 0.39,0.68,0.2.the LR of 2010-11 are 0.41,0.58,0.39 and for the year 2011-2012 are 0.41,0.45,0.31.Thus the LR is higher of RINL in 2007-08 and in 2008-09 the LR of TATA STEEL and SAIL. Financial leverage is highest for the Tata Steel followed by RINL and SAIL has the least financial leverage. High financial leverage indicated the low financial cost but it is also associated with high financial risk of interest payment. Thus it is expected that Tata Steel will be having low financial cost and maximum financial risk
DEBT RATIO
2007-08 2008-09 2009-10 2010-11 2011-12 0 0.2
0.64 0.24 0.58 0.13 0.39 0.26 0.68
1.08 1.34 RINL TATA steel SAIL
0.41 0.59 0.49 0.41 0.45 0.54 0.4 0.6 0.8 1 1.2 1.4
Graph5: debt ratios comparative analysis
INTERPETATION Higher debt indicates high financial risk and low financial cost structure. This figure depicts that the total debt ratio of 2007-08 are 0.64,1.08,0.24,In 2008-09 are 0.58,1.34,0.13.The TDR of 2009-10 are 0.39,0.68,0.26.the TDR of 2010-11 are 0.41,0.59,0.49 and for the year 2011-2012 are 0.41,0.45,0.54.Thus the TDR is higher of RINL in 2007-08 and in 2008-09 the TDR of TATA STEEL is higher.TDR of SAIL is higher in 2011-12.
DEBT-EQUITY RATIO
25.89 2007-08 28.09 24.76 2008-09 28.19 28.53 2009-10 15.06 2010-11 8.54 2011-12 0 10 16.37 20 30 22.69 20.41
41.94
37.68 RINL 35.7 TATA steel SAIL 38.11
34.09 40 50
Graph6: Debt / equity ratios comparative analysis INTERPRETATION This figure depicts that the debt equity ratio of 2007-08 are 25.89,41.94,0,28.09,In 200809 are 24.76,37.68,28.19.The DER of 2009-10 are 28.53,35.7,20.41.the DER of 2010-11 are 15.06,38.11,22.69 and for the year 2011-2012 are 8.54,34.09,16.37.Thus the DER is higher of RINL in 2009-10 and in 2008-09 the DER of SAIL is higher.TDR of TATA steel is higher in 2007-08.
ADJUSTED CASH MARGIN
2007-08 2008-09 2009-10 2010-11 2011-12 0 5 10 10.23 13.68 15 20
21.63 20.77
26.41
20.98 23.83 20.77 16.67 15.33 17.91 20.65 24.03 RINL TATA steel SAIL 23.28 21.12 25 30
Graph7: Cash Margin comparative analysis
INTERPETATION
This figure depicts that the adjusted cash margin of 2007-08 are 21.63, 26.41, 20.77.In 2008-09 are 20.98, 23.83, 20.77.The adjusted cash margin of 2009-10 are 24.03, 20.65, 16.67 and the adjusted cash margin of 2010-11 are 15.33,23.28,17.91 and for the year 2011-2012 are 10.23, 21.12,13.68.Thus the adjusted cash margin is higher of RINL in 2009-10 and in 2008-09 the adjusted cash margin of SAIL is higher. adjusted cash margin of TATA steel is higher in 2007-08.
RETURN ON LONG TERM FUND
2007-08 2008-09 2009-10 2010-11 2011-12 0 9.33
17.16 15.21 13.06 15.72 13.54 14.84 15.1 20
22.17 45.55 44.47 25.38 28.98 RINL TATA steel SAIL
21.69
21.97
10
30
40
50
Graph8: Return on total fund comparative analysis INTERPRETATION This figure depicts that the Return on total fund of 2007-08 are 22.17,17.16,45.55.In 2008-09 are 21.69,15.21,44.47.The Return on total fund of 2009-10 are
25.38,13.06,28.98 and the Return on total fund of 2010-11 are 115.72,13.54,21.97 and for the year 2011-2012 are 9.33,14.84,15.1.Thus the Return on total fund is higher of RINL in 2009-10 and in 2007-08 the Return on total fund of SAIL is higher. Return on total fund of TATA steel is higher in 2007-08. The utilization of long term assets is a measure of effiency of the utilization of resources/ Capital. SAIL has shown the best performance in terms of utilization of long term funds, followed by RINL and Tata Steel has shown the minimum efficiency in terms of long term fund utilization.
NET PROFIT RATIO
2007-08 2008-09 2009-10 2010-11 2011-12 0
16.13 17.38 15.9 18.16 19.44 13.4 13.21 15.73 7.53 11.03 10 20 30
37.04 33.27 RINL 30.95 33.82 29.9 40 TATA steel SAIL
Graph9: profit margin ratios comparative analysis
INTERPETATION It measures the net profit of a firm with respect to sale. A firm should neither have a high ratio nor a low. This figure depicts that profit margin ratios of 2007-08 are 16.13,37.04,17.38.In 2008-09 are 15.9,33.27,18.16.The profit margin ratios of 2009-10 are 19.44,30.95,13.4and the Return on total fund of 2010-11 are 13.21,33.82,15.73and for the year 2011-2012 are 7.53,29.9,11.03.Thus profit margin ratios is higher of RINL in 2009-10 and in 2007-08 profit margin ratios of SAIL is higher. Profit margin ratios of TATA steel is higher in 2007-08. The Tata Steel has shown highest profitability, followed by SAIL and RINL has shown the minimum profitability. It may be because of the higher sales and with better cost management.
COMPARATIVE RATIO-ANALYSIS
45 40 35 30 25 20 15 10 5 0
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
Graph10: profitability ratios comparative analysis
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Long Term Debt Equity Ratio Quick Ratio Debt Equity Ratio Current Ratio
Graph11: Liquidity ratios comparative analysis
10 9 8 7 6 5 4 3 2 1 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax
Graph12: Leverage ratios comparative analysis
80 70 60 50 40 30 20 10 0
Graph13: turn over ratios comparative analysis
90 80 70 60 50 40 30 20 10 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
Graph14: Profitability Ratios comparative analysis
500 450 400 350 300 250 200 150 100 50 0 Face Value Dividend Operating Net Free Bonus in Per Share Profit Per Operating Reserves Equity Share (Rs) Profit Per Per Share Capital Share (Rs) (Rs)
Graph15: Earning Ratio comparative analysis
CHAPTER-5
SUMMARY & CONCLUSION
SUMMARY & CONCLUSION

This Liquidity Ratios depicts that the cash ratio of RINL is higher in2008-09, TATA steels cash ratio higher in 2007-08, SAILs cash ratio is higher in year 2008-09. Liquidity is the measure of cash and in the analysis RINL has shown the highest liquidity followed by SAIL. Tata Steel has the least liquidity but considering the cash and cash like assets only, the performance is best for Tata Steel indicating high availability of cash. Financial leverage is highest for the Tata Steel followed by RINL and SAIL has the least financial leverage. High financial leverage indicated the low financial cost but it is also associated with high financial risk of interest payment. Thus it is expected that Tata Steel will be having low financial cost and maximum financial risk The utilization of long term assets is a measure of efficiency of the utilization of resources/ Capital. SAIL has shown the best performance in terms of utilization of long term funds, followed by RINL and Tata Steel has shown the minimum efficiency in terms of long term fund utilization. The Tata Steel has shown highest profitability, followed by SAIL and RINL has shown the minimum profitability. It may be because of the higher sales and with better cost management.
APPENDIX:
Financial Statements of Rashtriya Ispat Nigam Ltd Balance sheet
Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus 4,889.85 4,889.85 4,889.85 4,889.85 4,889.85 -
2,937.47 2,937.47 2,937.47 2,937.47 2,937.47 5,057.68 4,592.59 3,653.72 1,710.88 346.38
Loan funds Secured loans Unsecured loans Total 407.28 825.27 907.72 100.04 332.78 107.95 604.45 312.51 88.15 369.44
14,117.55 13,427.67 11,921.77 10,455.16 8,631.29
Uses of funds Fixed assets Gross block Less : revaluation reserve 9,473.90 9,005.99 8,900.83 8,875.62 8,832.13 -
Mar ' 11 Less : accumulated depreciation Net block Capital work-in-progress Investments
Mar ' 10
Mar ' 09
Mar ' 08
Mar ' 07
8,008.55 7,749.74 7,516.19 7,085.16 6,753.87 1,465.35 1,256.25 1,384.64 1,790.46 2,078.26 7,506.90 4,617.81 2,087.19 597.19 0.25 0.05 0.05 0.05 180.74 -
Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total 9,550.71 11,859.37 11,804.63 10,448.10 8,252.00 4,405.66 4,305.81 3,354.74 2,395.59 1,904.58 5,145.05 7,553.56 8,449.89 8,052.51 6,347.42 14.95 24.87
14,117.55 13,427.67 11,921.77 10,455.16 8,631.29
Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities 0.25 0.05 0.05 -
8,414.98 9,164.05 9,145.37 3,755.36 488.98 488.98 488.98 488.98
Number of equity sharesoutstanding (Lacs) 488.98
Profit loss account
(Rs crore)
Income Operating income 9,809.15 9,128.38 9,088.37 7,909.87 7,305.71
Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT 6,373.68 5,442.77 4,261.96 4,270.07 3,989.42 476.36 543.12 384.60 352.65 349.03 572.34 503.34 -
1,399.74 1,156.68 1,030.72 740.94 312.65 408.67 286.53 324.12 306.96 510.41 315.26 272.15 -
8,971.10 7,753.22 6,494.65 5,951.07 5,414.13 838.05 757.53 1,375.16 2,593.72 1,958.80 1,891.58 976.33 904.37 660.97 455.88
1,595.58 2,351.49 3,498.09 2,619.77 2,347.46 77.55 277.17 88.14 240.46 31.57 471.55 48.42 351.60 31.06 415.57 18.14
1,240.86 2,022.89 2,994.97 2,219.75 1,882.69
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 436.81 804.05 -7.38 796.67 713.30 1,064.39 773.05 637.14
1,309.59 1,930.58 1,446.70 1,245.55 25.98 12.16 -83.27 -
1,335.57 1,942.74 1,363.43 1,245.55
2,450.50 4,988.12 3,652.55 1,709.81 1,252.37 285.29 47.38 339.18 57.64 -
2,117.83 4,591.30 3,652.55 1,709.81 1,252.37
RashtriyaIspat Nigam Ltd. Balance Sheet
Mar '11 Mar '10 12 mths 12 mths Sources Of Funds Total Share Capital Equity Share Capital 4,130.40 4,130.40
Mar '09 12 mths
Mar '08 12 mths
Mar '07 12 mths
4,130.40 4,130.40 4,130.40 4,130.40 0.00 0.00 0.00 0.00
4,130.40 4,130.40 4,130.40 4,130.40 0.00 0.00 0.00 0.00

66
Share Application Money 0.00 Preference Share Capital 0.00
Financial Statement analysis of Indian steel Industry
Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities
32,939.07 0.00 37,069.47 11,813.91 8,351.58 20,165.49 57,234.96 Mar '11 12 mths
29,186.30 23,853.70 0.00 0.00
18,933.17 13,182.75 0.00 0.00
33,316.70 27,984.10 7,755.90 1,473.60 8,755.35 6,065.19 16,511.25 7,538.79 49,827.95 35,522.89 Mar '10 12 mths Mar '09 12 mths
23,063.57 17,313.15 925.31 1,556.39
2,119.93 2,624.13 3,045.24 4,180.52 26,108.81 21,493.67 Mar '08 12 mths Mar '07 12 mths
Application Of Funds Gross Block Less: Depreciation Net Block Accum. 38,260.60 23,180.54 15,080.06 35,382.49 21,780.91 13,601.58 15,039.83 668.83 9,027.46 3,493.90 230.76 12,752.12 5,155.32 22,205.61 40,113.05 0.00 13,383.67 6,211.67 19,595.34 20,517.71 32,728.69 20,459.86 12,268.83 6,544.24 652.70 10,121.45 3,024.36 347.94 13,493.75 4,292.50 17,880.59 35,666.84 0.00 10,201.51 9,408.21 19,609.72 16,057.12 30,922.73 29,912.71 19,351.42 18,315.00 11,571.31 11,597.71 2,389.55 538.20 6,857.23 3,048.12 470.17 1,236.04 513.79 6,651.47 2,314.75 437.36
Capital Work in Progress 22,228.43 Investments Inventories Sundry Debtors 684.14 11,302.79 4,161.30
Cash and Bank Balance 143.99 Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & 15,608.08 6,175.81 17,334.87 39,118.76 0.00 13,994.33 5,882.10 19,876.43 19,242.33
10,375.52 9,403.58 3,644.22 3,097.70
13,289.27 9,172.47 27,309.01 21,673.75 0.00 0.00
Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets
8,960.91 8,105.99 6,797.83 5,550.78 15,758.74 13,656.77 11,550.27 8,016.98

67
Miscellaneous Expenses 0.00 Total Assets Contingent Liabilities Book Value (Rs) 57,234.96 30,519.80 89.75
0.00 49,827.95 28,382.46 80.66
0.00 35,522.89 32,193.13 67.75
59.48
129.15
26,108.81 21,493.67 17,143.54 5,605.90 55.84 41.92
Mar '11 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Expenses Selling Expenses Miscellaneous Expenses Preoperative Capitalized Total Expenses Exp and admin Manufacturing
Mar '10 12 mths
Mar '09 12 mths
Mar '08 12 mths
Mar '07 12 mths
47,156.25 44,059.72 49,331.47 46,175.85 39,722.59 4,621.95 3,463.82 5,532.89 6,217.18 5,393.82
42,534.30 40,595.90 43,798.58 39,958.67 34,328.77 2,038.97 1,471.69 2,557.00 2,002.77 1,701.59 436.28 1,408.71 289.15
-1,157.45 1,872.87
46,044.96 41,995.45 47,674.22 42,096.54 36,026.63
22,642.47 18,611.12 23,915.45 17,257.67 16,252.28 3,586.07 7,530.24 1,310.00 3,364.30 5,417.00 870.35 3,119.42 8,401.73 643.35 2,825.56 7,919.28 492.18 2,578.84 5,087.76 346.59
1,927.46 45.42 0.00
1,754.02 206.62 0.00
1,701.52 878.94
1,727.55 737.79
1,602.31 528.71
-1,930.40 -1,832.22 -1,423.08
37,041.66 30,223.41 36,730.01 29,127.81 24,973.41 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07
12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items 6,964.33 9,003.30 474.61 8,528.69 1,482.20 1.12 7,045.37 163.71
12 mths 9,215.04
12 mths 8,941.44
12 mths
12 mths
11,267.14 9,644.51
11,772.04 10,944.21 12,968.73 11,053.22 402.01 253.24 250.94 332.13
11,370.03 10,690.97 12,717.79 10,721.09 1,337.24 10.33 1,285.12 128.02 1,235.48 75.49 1,211.48 128.59
10,022.46 9,277.83 184.80 181.26
11,406.82 9,381.02 64.61 60.57
PBT (Post Extra-ord Items) 7,209.08 Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earnings Per Share (Rs) Equity Dividend (%) Book Value (Rs) 2,304.34 4,904.74
10,207.26 9,459.09 3,452.89 6,754.37 3,284.28 6,174.81
11,471.43 9,441.59 3,934.65 7,536.78 3,253.80 6,202.29
14,399.19 11,612.29 12,814.56 11,870.14 8,721.13 0.00 991.30 161.15 0.00 1,363.03 227.52 0.00 1,073.90 181.26 0.00 1,528.25 258.91 0.00 1,280.42 197.98
41,304.01 41,304.01 41,304.01 41,304.01 41,304.01 11.87 24.00 89.75 16.35 33.00 80.66 14.95 26.00 67.75 18.25 37.00 55.84 15.02 31.00 41.92
Balance Sheet of Tata Steel
12 mths Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 971.41 971.41 0.00 0.00 51,245.05 0.00 52,216.46 4,190.47 19,503.35 23,693.82 75,910.28 Mar '11 12 mths Application Of Funds Gross Block
12 mths 12 mths 12 mths 959.41 959.41 178.20 0.00 887.41 887.41 0.00 0.00 6,203.45 730.79 0.00 5,472.66
12 mths 6,203.30 730.78 0.00 5,472.52 21,097.43 0.00 27,300.73 3,520.58 14,501.11 18,021.69 45,322.42 Mar '07 12 mths
47,307.02 36,281.34 23,501.15 0.00 0.00 0.00
48,444.63 37,168.75 29,704.60 2,009.20 2,259.32 3,913.05 26,291.94 22,979.88 23,033.13 28,301.14 25,239.20 26,946.18 76,745.77 62,407.95 56,650.78 Mar '10 12 mths Mar '09 12 mths Mar '08 12 mths
23,081.58 22,846.26 22,306.07 20,057.01 16,479.59
Less: Accum. Depreciation 11,715.32 11,041.16 10,143.63 9,062.47 8,223.48 Net Block Capital Work in Progress Investments 11,366.26 11,805.10 12,162.44 10,994.54 8,256.11 16,058.49 6,969.38 3,843.59 3,487.68 4,367.45
50,282.52 46,564.94 44,979.67 42,371.78 4,103.19

70
Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans &
4,858.99 904.08 3,946.99 9,710.06 8,366.07 2.76
3,953.76 428.03 512.76 4,894.55
3,077.75 434.83 500.30 4,012.88
3,480.47 2,604.98 635.98 463.58 543.48 465.00
4,580.03 3,613.46 5,884.61 34,582.84 1,127.02 0.04
16,814.04 6,678.55 3,628.78 2,733.84
Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
18,078.89 25,337.37 13,425.27 11,591.66 38,196.34 0.00 0.00 0.00 0.00 0.00
15,958.34 10,383.04 8,699.34 3,917.54 3,547.98 3,303.68
8,965.76 6,842.26 2,934.19 2,913.52
19,875.88 13,931.02 12,003.02 11,899.95 9,755.78 -1,796.99 0.00 11,406.35 1,422.25 0.00 0.00 -308.29 105.07 28,440.56 155.11
75,910.28 76,745.77 62,407.95 56,650.78 45,322.42 23,225.49 537.64 12,582.24 13,184.61 12,188.55 9,250.08 503.19 418.94 331.68 298.78
Source : Dion Global Solutions Limited
Bibliography
Books Referred
1. I. M. Pandey - Financial Management - Vikas Publishing House Pvt. Ltd. - Ninth Edition 2006 1. Financial Management: Theory & Practice (4thEdition) Eugene F. Brigham and Michael C. Gerhardt
Websites:

www.working capitalanalysis.com http://steel.nic.in/ http://www.tatasteel.com http://www.answer.com

www.google.co.in
http://www.Steelworld.com

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1.

1 STEEL INDUSTRY PROFILE

1 Financial Statement analysis of Indian steel Industry

1.1.1 DEVELOPMENT OF STEEL INDUSTRY IN INDIA:

1.1.2 GLOBAL SCENARIO

4 Financial Statement analysis of Indian steel Industry

1.1.3 PRESENT SCENARIO OF INDIAN STEEL INDUSTRY:

5 Financial Statement analysis of Indian steel Industry

1.1.5 EXIM POLICY (2002-2007):

6 Financial Statement analysis of Indian steel Industry

1.1.6 THE NEW INDUSTRIAL POLICY REGIME:

1.2.1 GROWTH AND PRESENT STATUS OF THE STEEL INDUSTRY

1.2.3 GROWTH POTENTIAL OF INDIAS STEEL INDUSTRY

8 Financial Statement analysis of Indian steel Industry

1.2.4 PRESENT STATUS

9 Financial Statement analysis of Indian steel Industry

1.2.5 INDIAN STEEL INDUSTRY: GLORIOUS PRESENT, GLITTERING FUTURE

(ii)Tata Steel is implementing an expansion of 1 Mtpy to be completed by the end of

11 Financial Statement analysis of Indian steel Industry

2.1 ORIGIN OF THE ORGANIZATION

2.1.2 Steel Authority of India:

16 Financial Statement analysis of Indian steel Industry

2.1.3 Tata Steel:

2.1.4 Visveswarayya Steels:

2.1.5 Bokaro Steel Plant:

17 Financial Statement analysis of Indian steel Industry

18 Financial Statement analysis of Indian steel Industry

19 Financial Statement analysis of Indian steel Industry

Study of the selected Research Problem

20 Financial Statement analysis of Indian steel Industry

3.2: Statement of the Research objectives

21 Financial Statement analysis of Indian steel Industry

3.3: Research design and the Methodology

22 Financial Statement analysis of Indian steel Industry

23 Financial Statement analysis of Indian steel Industry

24 Financial Statement analysis of Indian steel Industry

(C) Activity Ratios

26 Financial Statement analysis of Indian steel Industry

27 Financial Statement analysis of Indian steel Industry

A. CAPITAL TURNOVER RATIO: This ratio is computed by the following formula:

Net sales or cost of good sold Capital employed

32 Financial Statement analysis of Indian steel Industry

33 Financial Statement analysis of Indian steel Industry

34 Financial Statement analysis of Indian steel Industry

35 Financial Statement analysis of Indian steel Industry

36 Financial Statement analysis of Indian steel Industry

37 Financial Statement analysis of Indian steel Industry

38 Financial Statement analysis of Indian steel Industry

39 Financial Statement analysis of Indian steel Industry

4.1 ANALYSIS OF DATA

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

102.98 98.29 78.84 69.93

106.04 96.74 57.16 45.02

40 Financial Statement analysis of Indian steel Industry

Mar 11 13.68 12.39 13.23 15.10

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

17.91 19.03 20.27 21.97

16.67 22.40 22.06 28.98

20.77 31.77 32.76 44.47

20.77 35.34 36.09 45.55

Liquidity ratios Current ratio 1.97 2.05 1.82 1.73 1.59

Current ratio (inc. st loans)