Project Report on F

8/13/2019 Project Report on F

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Project Report

(Submitted for the Degree of B.Com. Honors in Accounting & Finance

Under the University of Calcutta

WORKING CAPITAL OF JINDAL STEEL & POWER LIMITED

Submitte b!

N"me o# t$e C"% i "te TAN'J SARAF

Re(i)tr"tio% No*

Ro++ No*

N"me o# t$e Co++e(e 'MES,C,ANDRA COLLEGE

Super-i)e b!

N"me o# t$e Super-i)or

N"me o# t$e Co++e(e

JAN'AR./0123

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Ac4%o5+e (eme%t

! "ould li#e to e$%ress my gratitude to"ards all the %eo%le "ho guided methroughout and "ithout "hose guidance and su%%ort this %ro'ect "ould not havebeen com%leted successfully

! "ould li#e to than# my Su%ervisor rof. )))))))))))) for his su%%ort and#no"ledge. !t hel%ed me throughout the %ro'ect and also guided me in various"ays.

! en'oyed "or#ing on this %ro'ect title because ! gained #no"ledge about *or#ingCa%ital +anagement of ,indal Steel & o"er -imited.

! had throughout hel% of my friends and ! also too# hel% from internet anddifferent boo#s for ma#ing this %ro'ect.

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S'PER6ISOR/S CERTIFICATE

his is to certify that +r. anu' Saraf a student of B.Com. Honours in Accounting& Finance of U+/SHCHA0D1A C2--/3/ under the University 2f Calcuttahas "or#ed under my su%ervision and guidance for his ro'ect "or# and %re%areda ro'ect re%ort "ith the itle

4*215!03 CA ! A- 2F ,!0DA- S //-6

he %ro'ect re%ort "hich he is submitting is his genuine and original "or# to thebest of my #no"ledge.

Signature7

lace7 52-5A A 0ame7

Date7 Designation7

0ame of College7 U+/SH CHA0D1A College

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ST'DENT/S DECLARATION

! hereby declare that the %ro'ect "or# "ith the title *215!03 CA ! A- 2F ,!0DA- S //- submitted by me for the %artial fulfillment of the degree of B.Com. Honours in Accounting & Finance under the University 2f Calcutta is myoriginal "or# and has not been submitted earlier to any otherUniversity8!nstitution for the fulfillment of the re9uirement of any course of study.

! also declare that no cha%ter of this manuscri%t in "hole or in %art has beenincor%orated in this re%ort from any earlier "or# done by others or me. Ho"evere$tracts of any literature "hich has been used for this re%ort has been dulyac#no"ledged %roviding details of such literature in the references.

Signature7

lace7 52-5A A 0ame7

Date7 Address7

1egistration 0o.7

1oll 0o.

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E7ecuti-e Summ"r!

,indal Steel & o"er limited (,S - is one of the leading %o"ers in steel industry"ith interests s%anning across the s%ectrum from mining iron ore to manufacturingvalue:added steel %roducts. he com%any has a ca%acity of %roducing ; + A

steel and has %lans to e$%and further. roduction is very im%ortant for any

com%any but the management of the %roducts is also very im%ortant.he steel industry is gro"ing at a very ra%id rate and technological changes arevery fre9uent today. he com%etition is getting fierce as com%ared to earlier daysas every com%any is designing its o"n strategies to gro" at a ra%id rate. +ergersand ac9uisitions are also very common in steel industry. he need for a better andim%roved system is a must for any industry.

*or#ing ca%ital is commonly used to meet the ca%ital re9uirements of day:to:day"or#ings in a business concern. ,ust as blood is essential in human body formaintaining life "or#ing ca%ital is very essential for maintaining smooth

functioning of the business. 0o business can run successfully "ithout an ade9uateamount of "or#ing ca%ital. Hence in the current economic scenario "here there is

shortage in the economy o%timum use of "or#ing ca%ital become critical ascom%ared to long term borro"ings.

So "or#ing ca%ital "as chosen as the to%ic to deal "ith as efficient utili. !t de%icts the effect of increase 8decrease in Current Assets or Current -iabilities on *or#ing Ca%ital.

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I have done the analysis of the ratios, which have been calculated by me. Ihave taken data of three financial years, i.e. 2012-2013, 2011-2012 2010-

2011.

Along "ith the calculation of ratios ! have also %lotted gra%hs for bettere$%lanation in inter%retation and analysis. he analysis of different ratios de%icts"hether these ratios are near the ideal values or not and if not "hat can be the

%ossible reasons for these variations. !f the ratios are near the ideal values it isconsidered good for a com%any>s gro"th.

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T"b+e o# Co%te%t)

IND'STR. O6ER6IEW

"

S N o

Co%te%t) P( No

2 I% u)tr! o-er-ie5 9

0 Comp"%! o-er-ie5 :

; T$e Project 20

3 Project Report 2s shar% focus on customer relationshi%management and manufacturing e$ecution systems ensures delivery of customised

solutions to the customer needs.

Power: ,S - has a ;J@ +* %o"er generation facility !n 1aigarh based on"aste heat recovery from rotary #ilns "ashery re'ects and coal fines to meet theca%tive re9uirements as "ell as su%%ly to the State /lectricity Boards ofChhattisgarh. ,S - have e$%ansion %lans of e$%anding the %o"er generation

facility to @@ +*. ,indal o"er limited (, - 7 , - a "holly o"ned subsidiary of ,S - is setting u% a @@@ +* 2. . ,indal Su%er hermal o"er lant at 1aigarh Chhattisgarh "ith an investment of over 1s. J?@@ crores. he %ro'ecthas been accorded +ega o"er ro'ect status by the +inistry of o"er3overnment of !ndia .

Coal mining: ,S - has its ca%tive Coal +ines at Dongamahua Chhattisgarh.

Since the coal is of very %oor grade and 9uality it has to be beneficiated. Hence acoal "ashery "ith ca%acity of + A to "ash J :JI coal ash to has beencommissioned and is o%erating successfully. he com%any has been allottedadditional Coal Bloc# to meet increased re9uirement of coal for its e$%ansion

%ro'ect.

Iron-ore mining: ,S - has ca%tive !ron 2re +ines at ensa 2rissa to meetthe %art re9uirement of its S%onge !ron lant. Accoutered "ith fully mechani


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Chhattisgarh %arts of ,har#hand and Democratic 1e%ublic of Congo.S%onge !ron7 ,S - has "orlds largest coal:based s%onge iron manufacturing facility"hich uses indigenously develo%ed rotary #ilns.

Ferro chrome: +anufacturing of stainless and s%ecial steel re9uires anim%ortant com%onent called Ferro chrome. Ferro chrome is the result of acontinuous smelting of chrome ore co#e coal and 9uart< at the Submerged Arc

Furnace (SAF .

achiner! Division 7 ,S - has set u% a state:of:the:art +achinery Divisionat1ai%ur Chhattisgarh "hich caters to the in:house machinery & com%onentsre9uirements of the 1aigarh %lant and other grou% com%anies. he unit is

!S2E@@ has machinery:manufacturing ca%acity of ?@@ + and %roductionca%acity of ;@ @@@ + of steel ingots and castings.

C"R initiative 7 ,S - has from the very beginning devoted itself entirely to thecause of u% liftment of bac#"ard areas of the country. he com%any has ta#en u%a number of %rogrammes to im%rove the lives of the under%rivileged. 1aigarh atribal district in Chhattisgarh is one such e$am%le. 2ne of the #ey %riority areashas been education as it has a direct im%act on nation building. he @K co:educational 2. . ,indal School "ith an investment of over 1s. ? crore iso%erational at 1aigarh. he oldest girlsL school has been renovated. !n additionJ villages have been ado%ted contributing to the develo%ment of the region

through a more holistic effort. From %roviding se"age and sanitation facilitiesbuilding and maintaining roads and %ar#s to healthcare and education facilities ,S - is leaving no stone unturned in serving the society. Availability of medical facilities by setting u% charitable clinics and hos%itals is yet another as%ect of our social initiative. ,S - is constantly "or#ing to"ards %roviding "orld:class health facilities to the %eo%le of 1aigarh at the @@:bedmulti:s%ecialty 2. . ,indal Hos%ital & 1esearch Centre. he hos%ital has four "ell:e9ui%%ed 2%eration

heatre !ntensive care units medical teams for various s%ecialty includingortho%edics and %ediatrics. +edical cam%s are regularly organi


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accountability system the SAI@@@ is a measure to"ards becoming anincreasingly a"are and conscientious cor%orate member of society .

Expansion Pro#ects

Chhattisgarh /stablishing a + A steel %lant in %hases a + A cement %lant and a @@ +* ca%tive %o"er %lant "ith a total investment of over US G billion (1s. ;@ @@@crore .

$rissa A .? + A integrated steel %lant and @@ +* ca%tive %o"er %lant in %hases

"ith a total investment of US G @ billion (1s. ?@ @@@ crore .he com%any is investing close to 1s J? @@@ crore (USG @ billion on Coal to

-i9uid %ro'ect in 2rissa to %roduce an estimated I@ @@@ barrels of crude %er day(J.@ ++ A using environment:friendly indirect coal li9uefaction technology.

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T,E PROJECT

Objecti-e) o# t$e Stu !

o study the need and im%ortance of "or#ing ca%ital.

o study the various sources of "or#ing ca%ital in ,.S. .-.

o study the methods ado%ted by the organi


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enter%rises on SA!- in the year @@@:@ has revealed that a large amount of fund"as loc#ed in the "or#ing ca%ital this results in over ca%itali


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Project Report

FN: @ : ;

PARTIC'LARS AMO'N T

AMO'N T

C%RRE&' (""E'":

Debtors ;@ . ?

!0 /0 21!/S ; ? E.?;

SH21 : /1+ -2A0S & AD A0C/S E ;? . @

CASH & BA05 BA-A0C/S JE.TOTAL C'RRENT ASSETS J ;E . E

C%RRE&' )I(BI)I'IE": *less+

-!AB!-! !/S E?.?;

12 !S!20S J JJ.I

TOTAL C'RRENT LIA?ILITIES @ [email protected]@

NET WORKING CAPITAL ;


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!0 /0 21!/S ;.J;

SH21 : /1+ -2A0S & AD A0C/S JI . I

CASH & BA05 BA-A0C/S ? .

TOTAL C'RRENT ASSETS @ III.


-!AB!-! !/S J .J

12 !S!20S J .J

TOTAL C'RRENT LIA?ILITIES I .

NET WORKING CAPITAL ; 121

1"

FN: @ @:

PARTIC'LARS AMO'NT AMO'NT

C%RRE&' (""E'":

Debtors ?;.;

!0 /0 21!/S J;@.I

SH21 : /1+ -2A0S & AD A0C/S J J .

CASH & BA05 BA-A0C/S II.I

TOTAL C'RRENT ASSETS E;E.?


-!AB!-! !/S ; E . J

12 !S!20S @? .

TOTAL C'RRENT LIA?ILITIES @ ;.E

NET WORKING CAPITAL >2


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RATIO ANAL.SIS

Fi%"%ci"+ A%"+!)i)

Financial analysis is the %rocess of identifying the financial strengths and"ea#nesses of the firm and establishing relationshi% bet"een the items of thebalance sheet and %rofit & loss account.

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R"tio A%"+!)i)

he term 41atio6 refers to the numerical and 9uantitative relationshi% bet"eent"o items or variables. his relationshi% can be e$%ressed as7

ercentages

Fractions

ro%ortion of numbers.

1atio analysis is defined as the systematic use of the ratio to inter%ret the

financial statements so that the strengths and "ea#nesses of a firm as "ell as itshistorical %erformance and current financial condition can be determined. 1atioreflects a 9uantitative relationshi% and hel%s to form a 9uantitative 'udgment.

1atio analysis is one of the techni9ues of financial analysis to evaluate the financial condition and %erformance of a business concern. Sim%ly ratio meansthe com%arison of one figure to other relevant figure or figures.

According to !ers ," Ratio analysis of financial statements is a study of

relationship among various financial factors in a business as disclosed by a singleset of statements and a study of trend of these factors as shown in a series ofstatements."

Financial ratio analysis is the calculation and com%arison of ratios "hich arederived from the information in a com%any>s financial statements. he level andhistorical trends of these ratios can be used to ma#e inferences about a com%any>s

financial condition its o%erations and attractiveness as an investment. heinformation derived from 1atio Analysis is used by7

rade creditors to identify the firm>s ability to meet their claims i.e. li9uidity %osition of the com%any.

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!nvestors to #no" about the %resent and future %rofitability of the com%anyand its financial structure.

+anagement in every as%ect of the financial analysis. !t is the res%onsibility

of the management to maintain sound financial condition in the com%any.

Step) i% R"tio A%"+!)i)

1atio Analysis mainly involves the follo"ing three ste%s7

he first tas# of financial analysis is to select the information relevant to the

decision under consideration from the statements and calculates a%%ro%riateratios.

o com%are the calculated ratios "ith the ratios of the same firm relating tothe %ast or future (%ro'ected or "ith the ratios of another firm of the sameindustry. !t facilitates in assessing success or failure of the firm.

hird ste% is inter%retation dra"ing of inferences and re%ort "riting.Conclusions are dra"n after com%arison in the sha%e of re%ort or

recommended courses of action.

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?")i) or )t"% "r ) o# comp"ri)o%

1atios are relative figures reflecting the relation bet"een variables. hey enableanalyst to dra" conclusions regarding financial o%erations. he use of ratios as atool of financial analysis involves the com%arison "ith related facts "hich is thebasis of ratio analysis. he basis of ratio analysis is of four ty%es7

ast ratios7 calculated from %ast financial statements of the same firm.

Com%etitor>s ratio7 ratios of some %rogressive and successful com%etitor firm at the same %oint of time.

!ndustry ratio7 ratios of the industry to "hich the firm belongs.

ro'ected ratios7 ratios of the future develo%ed from the %ro'ected or %ro forma financial statements.

I%terpret"tio% o# R"tio)

he inter%retation of ratios is an im%ortant factor. he inherent limitations of ratioanalysis should be #e%t in mind "hile inter%reting them. he im%act of factors suchas %rice level changes change in accounting %olicies "indo" dressing etc. shouldalso be #e%t in mind "hen attem%ting to inter%ret ratios. he inter%retation of ratioscan be made in the follo"ing "ays7

Single absolute ratio

3rou% of ratios Historical com%arison

ro'ected ratios

!nter:firm com%arison.

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Gui e+i%e) or Prec"utio%) #or t$e u)e o# R"tio)

he calculation of ratios may not be a difficult tas# but their use is not easy. Follo"ing guidelines or factors may be #e%t in mind "hile inter%reting variousratios7

A%%ro%riation of data used

2b'ective or %ur%ose of analysis

Selection of ratios

Use of standardsCaliber of the analyst.

A -"%t"(e) "% ')e) o# R"tio A%"+!)i)

There are various groups of people who are interested in analysis of financial position of a company. They use the ratio analysis to work out a particular financial

characteristic of the company in which they are interested. Ratio analysis helps thevarious groups in the following manner: -

To 5or4out t$e pro#it"bi+it! Accounting ratio hel% to measure the %rofitability of the business by calculating the various %rofitability ratios. !thel%s the management to #no" about the earning ca%acity of the businessconcern. !n this "ay %rofitability ratios sho" the actual %erformance of thebusiness.

To 5or4out t$e )o+-e%c! *ith the hel% of solvency ratios solvency of thecom%any can be measured. hese ratios sho" the relationshi% bet"een theliabilities and assets. !n case e$ternal liabilities are more than that of theassets of the com%any it sho"s the unsound %osition of the business. !n thiscase the business has to ma#e it %ossible to re%ay its loans.

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To $e+p i% "%"+!)i) o# #i%"%ci"+ )t"teme%t 1atio analysis hel% the outsiders 'ust li#e creditors shareholders debenture:holders ban#ers to #no" aboutthe %rofitability and ability of the com%any to %ay them interest and dividendetc.

To $e+p i% comp"r"ti-e "%"+!)i) o# t$e per#orm"%ce *ith the hel% of ratioanalysis a com%any may have com%arative study of its %erformance to the

%revious years. !n this "ay com%any comes to #no" about its "ea# %ointsand is able to im%rove them.

To )imp+i#! t$e "ccou%ti%( i%#orm"tio% Accounting ratios are very usefulas they briefly summari


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n spite of many advantages, there are certain limitations of the ratio analysistechni!ues and they should be kept in mind while using them in interpretingfinancial statements. The following are the main limitations of accounting ratios:

Limite Comp"r"bi+it! Different firms a%%ly different accounting %olicies.herefore the ratio of one firm can not al"ays be com%ared "ith the ratioof other firm. Some firms may value the closing stoc# on -!F2 basis "hile

some other firms may value on F!F2 basis. Similarly there may bedifference in %roviding de%reciation of fi$ed assets or certain of

%rovision for doubtful debts etc.

I%"ppropri"te Re)u+t) Accounting ratios are based on data dra"n from

accounting records. !n case that data is correct then only the ratios "ill becorrect.

E##ect o# Price Le-e+ C$"%(e) rice level changes often ma#e thecom%arison of figures difficult over a %eriod of time. Changes in %riceaffect the cost of %roduction sales and also the value of assets. herefore itis necessary to ma#e %ro%er ad'ustments for %rice:level changes before anycom%arison.

u"+it"ti-e #"ctor) "re i(%ore 1atio analysis is a techni9ue of9uantitative analysis and thus ignores 9ualitative factors "hich may beim%ortant in decision ma#ing. For e$am%le average collection %eriod maybe e9ual to standard credit %eriod but some debtors may be in the list ofdoubtful debts "hich is not disclosed by ratio analysis.

E##ect o# 5i% o5B re))i%( 7 !n order to cover u% their bad financial %osition some com%anies resort to "indo" dressing. hey may record theaccounting data according to the convenience to sho" the financial

%osition of the com%any in a better "ay.

Mi)+e" i%( Re)u+t) 7 !n the absence of absolute data the result may bemisleading. For e$am%le the gross %rofit of t"o firms is ? "here the

%rofit earned by one is 'ust 1s. ? @@@ and sales are 1s. @ @@@ and %rofit

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earned by the other one is 1s. @ @@ @@@ and sales are 1s. J@ @@ @@@. /venthe %rofitability of the t"o firms is same but the magnitude of their businessis 9uite different.

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C$"rt S$o5i%( 6"riou) R"tio) o# J*S*P*L* #or ; !e"r)

S*No * RATIO 0120B2; 0122B20 0121B222 LI 'IDIT. RATIOS a. Current 1atio .; .;I . ?b. Ouic# 1atio .@ .@; @.EJ

0 LE6ERAGE RATIOS a. Debt:/9uity 1atio @.I @.EE @.I;b. !nterest Coverage 1atio ?.J .? @. C. Ca%ital /m%loyed to 0et *orth 1atio .I .EE .I;

; PROFITA?ILIT. RATIOS a. 3ross rofit 1atio E.@ ;E.EJ JI.b. 0et rofit 1atio @.J@ . ; . ;c. 2%erating rofit 1atio ;J. ; J?.E@ [email protected]. 1eturn on !nvestment (12! . J.E .I;e. 1eturn on /9uity (12/ . @ .E ;?.;E

3 ACTI6IT.8T'RNO6ER RATIOS a. Inventory %urnover &atio !.1# times !.!! times #." times

b. 'et assets %urnover &atio 0.!4 times 0.55 times 0.!3 timesc. %otal assets %urnover &atio 0.5" times 0.4$ times 0.!1 timesd. (urrent assets %urnover &atio 1.32 times 1.2$ times 1.!" timese. )orkin* (a+ital %urnover &atio 1#.11 times 21.54 times ".##times

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C"+cu+"tio% o# r"tio) o# J*S*P*L* "% A%"+!)i) b")e o% t$em

2* Curre%t R"tio

Curre%t R"tio Curre%t A))et) 8 Curre%t Li"bi+itie)*

P"rticu+"r) 0120B2; i%

R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr*Curre%t A))et) 23;>0*2> 21:::*90 9 >;>*


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current obligations (liabilities has gone do"n. he reason "hy this ratiodecreases mainly is more than %ro%ortionate decrease in Current Assets "hencom%ared to Current -iabilities. !t may be due to initiation of ne" %ro'ects.

. uic4 R"tio

uic4 R"tio Curre%t A))et) I%-e%torie) 8 Curre%t Li"bi+itie)*


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr*

Curre%t A))et) I%-e%torie) 21:2; :22< 5508.75

Curre%t Li"bi+itie) 21:31*3 =:=0*=0 9 10;*>9

uic4 R"tio 2*1= 2 2*1; 2 1*>3 2

0.85

0.9

0.95

1

1.05

1.1

2010-11 2011-12 2012-13

Quick Ratio

Quick Ratio

A%"+!)i) Ouic# 1atio re%resents a firm>s ability to meet its current obligations

"ithin a very short %eriod of time i.e. "ithin one month. A Ouic# 1atio of 7 isconsidered to be ideal.

Ouic# 1atio of ,.S. .-. in the year @ : ; is . 7 "hich sho"s that thecom%any>s financial %osition is 9uite strong. he com%any is ca%able of meeting

2#


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its current obligations "ithin a short %eriod of time. he ratio has gone u% from.@;7 in @ : to .@ in @ : ;.

;* Debt EHuit! R"tio

DebtBEHuit! R"tio Lo%( term ebt 8 S$"re$o+ er)/ #u% ) eHuit! *


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr*

Lo%( term ebt 2 2;>== :913

EHuit! 2:222 23221 2132=

DebtBEHuit! R"tio 1*:= 2 1*>> 2 1*:0 2

0

0.5

1

1.5

2010-11 2011-12 2012-13

D/ E Ratio

D/E Ratio

A%"+!)i) his ratio offers one of the best %ictures of a com%any>s leverage. hehigher the figure the higher is the leverage the com%any en'oys. !t is a relationshi%describing the lenders> contribution for each ru%ee of the o"ners> contribution. !treflects the relative claim of the creditors and o"ners against the assets of the firm.

Alternatively it also indicates the relative %ro%ortion of the debt and e9uity in financing the assets of the firm.

he Debt:/9uity 1atio of ,.S. .-. has sho"n a decreasing trend over the years sho"ing that the com%any has focused more on financing its gro"th "ith e9uity ascom%ared to debt. he com%any has a better su%%ort from the shareholders. A ratio

2$


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of @.I 7 sho"s that the claim of the o"ners is greater than those of the creditors. From the %oint of vie" of creditors it re%resents a satisfactory situation since ahigh %ro%ortion of e9uity %rovides a larger margin of safety to them.

3*C"pit"+ Emp+o!e to Net Wort$ R"tio

C 8 N R"tio C"pit"+ Emp+o!e 8 Net Wort$*


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr*

C"pit"+ Emp+o!e

Debt Net Wort$

;;:91 0:1:= 2>102

Net Wort$ 2:222 23221 2132=

C 8 N R"tio 2*:= 2 2*>> 2 2*:; 2

1.751.8

1.851.9

1.952

2.05

2010-11 2011-12 2012-13

C/ N Ratio

C/N Ratio

A%"+!)i) his ratio sho"s the amount of funds being contributed together bylenders and o"ners for each ru%ee of the o"ners> contribution. !t is an alternative"ay of e$%ressing the basic relationshi% bet"een debt and e9uity.

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he ratio of .I times sho"s that the net "orth of the com%any is a%%ro$imatelyhalf of the total investment in the com%any and hence com%any has very sound

financial %osition. *e can also say that o"ners finance around ?@ of the totalinvestment in the com%any.


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"hich can be inflation . !n s%ite of this decrease the ratio is still high and satisfactory. his sho"s the firm>s efficiency of %roduction. !t re%resents that ,.S. .-. has been able to ma#e good %rofits although not as high as %revious years.

=*Net Pro#it M"r(i%

Net Pro#it M"r(i% Pro#it "#ter t"7 PAT 8 Net S"+e) 211*

P"rticu+"r) 0120B2; i% R)*

Cr*

0122B20 i% R)*

Cr*

0121B22 i%

R)* Cr* PAT 3110*09 ;:13*12 ;9:=*12

Net S"+e) 2>929*39 2;>>:*3 2292>*s efficiency in manufacturing administering and selling the %roducts.

he 0 1atio of ,S - in @ : ; i.e. @.J@ is 9uite im%ressive and sho"s thatthe com%any is %erforming "ell and has high level of efficiency. he com%any isable to achieve satisfactory return on shareholders> funds. Also the firm has the

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ca%acity to "ithstand adverse economic conditions. A is sho"ing an do"n"ardtrend "hich is not good.

:*Oper"ti%( Pro#it M"r(i%

Oper"ti%( Pro#it M"r(i% Oper"ti%( Pro#it 8 Net S"+e) 211*


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i% R)*

Cr*Oper"ti%( Pro#it 9=>;*2= 930


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firm>s good earning ca%acity solely from its business o%erations leaving asideearnings from other sources.

>*Retur% o% I%-e)tme%t ROI

ROI PAT I%tere)t 8 Net A))et) 211*


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr* PAT I%tere)t 3;90*; 30;:*:> 32:>*39

Net A))et) ;329=*23 0:;01*;3 2>2:9*>: ROI 20*== 23*>= 02*:;

05

1015

2025

2010-11 2011-12 2012-13

ROI

R&I

A%"+!)i) 1eturn on investment or 1eturn on ca%ital em%loyed measures the %rofit"hich a firm earns on investing a unit of ca%ital. he %rofit being the net result of allo%erations the return on ca%ital e$%resses all efficiencies and inefficiencies of abusiness. o shareholders it indicates ho" much their ca%ital is earning and to themanagement as to ho" efficiently it has been "or#ing. his ratio influences themar#et %rice of the shares. he higher the ratio the better it is.

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he 12! of . signifies that ,S - is getting good return on its investments.he consistency in good value of this ratio is sho"ing that the com%any>s #ey

decision ma#ers are doing a great 'ob.

21* Retur% o% EHuit! ROE

ROE PAT 8 EHuit! S$"re$o+ er)/ #u% ) 211*


R)* Cr*

0122B20 i%

R)* Cr*

0121B22 i%

R)* Cr* PAT 3 110*09 ; :13*12 ; 9:=*12

EHuit! S$"re$o+ er)/ #u% ) 2: 222*21 23 221*;1 21 329*=: ROE 00*21 09*>9 ;

0

10

20

30

40

2010-11 2011-12 2012-13

ROE

R&E

A%"+!)i) 1eturn on /9uity 'udges the %rofitability from the %oint of vie" of e9uity shareholders. his ratio has great interest to e9uity shareholders. he return one9uity measures the %rofitability of e9uity funds invested in the firm. he investors

favor the com%any "ith higher 12/.

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he 12/ of . @ for @ : ; is 9uite good and it sho"s that the com%any isutili


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,S ->s efficiency in turning its inventories is continuously im%roving the value for@ @: being I. times. he com%any has been able to sell its stoc# or convert itsinventories into receivables I. times a year "hich can be considered to be moderatede%ending on the nature of manufacturing sector. Also the com%any>s utili929*39 2;>>:*3 2292>*


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2929*39 2;>>:*3 2292>*


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CONCL'SION

By studying the financial statements "or#ing ca%ital schedules ratios and otheravailable facts and figures of ,S - ! made certain conclusions "hich are as

follo"s7

,S - has been successful in maintaining sufficient "or#ing ca%ital duringthe %ast. here "as tremendous increase in "or#ing ca%ital value in @ :

as com%ared to the %revious year ( E . here "as also increase in@ : ; ad ,S - "as able to maintain the high value of ;?? .I in @ : ;"hich is very good and sho"s com%any>s efficient "or#ing ca%italmanagement.

Current Assets of ,S - has been increasing significantly over the years. From a value of E;E.? Cr in @ @: it reached @III. Cr in @ :

and finally it attained the value of J;E . E Cr in @ : ; (; . gro"th . his is really a%%reciable.

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!n s%ite of such high increase in current assets "or#ing ca%ital increasedin last t"o years but not to the e$tent as com%ared to current assets Sincethere "as a %ro%ortionate gro"th in current liabilities of the com%any.

he li9uidity ratios have sho"n a increase.But Current ratio is still belo"the ideal value ( .JE7 in @ : ;. his has led to the conclusion that theli9uidity of the com%any has deteriorated.

Decrease in Debt:/9uity ratio over the years is a re%resentative of higher

focus of the com%any on financing its re9uirements "ith e9uity ascom%ared to debt.

Decrease in 3ross %rofit 0et %rofit and 2%erating %rofit margin ratios sho" that the increase in %rofits is not u% to the mar# "ith the increase in sales. his is due to increase in e$%enditure along "ith increase in sales.

he value of 12! is also sho"ing that the investment decisions made by themanagement "ere not good fetching better returns for the com%any.

he value of 12/ is sho"ing that the com%any is not able to utili


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*or#ing ca%ital turnover is I. times sho"ing that the com%any managesits "or#ing ca%ital very efficiently.

,S - has been #ee%ing sufficient "or#ing ca%ital "ith it. !t %rovides a strong financial base for the com%any. !t has been rising in relations to the gro"th of thecom%any. he "or#ing ca%ital investment decisions made by the com%any have

also hel%ed it to gain a strong financial status in a mar#et "here strong and "ellestablished mar#et leaders li#e A A Steel are its com%etitors. !t "ill not be"rong to conclude "ith saying that the com%any>s financial management is highlya%%reciable and it is assumed that this "ould hel% the com%any to continue itsrace on the %ath of continuous success.

LIMITATIONS

*hile carrying out my study ! came across certain limitations "hich the com%anymight face. hese limitations are7

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here is very high level of com%etition in the mar#et as ,S - has strongmar#et leaders li#e A A Steel and SA!- as its com%etitors. So carryingout business %rocesses in such a "ay so as to increase the %rofit margins ofthe com%any and ma#e its hold on the mar#et stronger is the %rimechallenge for ,S -.

ro%er o%eration of the *or#ing Ca%ital Cycle is very im%ortant for %ro%er functioning of a business. herefore if anything goes "rong "ith any ste%of the "or#ing ca%ital cycle of ,S - and this cycle is interru%ted business"ill be ham%ered drastically.

As ,S - has become one of the biggest industries today "ith a big andcontinuously o%erating manufacturing unit it needs to maintain a sufficientamount of "or#ing ca%ital "ith it al"ays to meet its current and emergencyneeds and to %revent any adverse situation.

RECOMMENDATIONS

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Based on the study and the conclusions dra"n ! "ould li#e to %ut for"ard somerecommendations "hich are as follo"s7

he com%any should either try to bring about an increase in its currentassets or a decrease in its current liabilities to %ull u% its current ratio nearthe ideal value. his "ill result in an increase in the li9uidity of the firmand "ill ma#e its %osition safer.

+anagement should ta#e ste%s to reduce the e$%enditure or cost of

%roduction in order to increase %rofit margins. For this com%any should go for better 9uality ra" materials and im%roved technology. ,S - isalready %lanning to ado%t 3as Based D1! "hich "ill hel% to reduce thecost of %roduction of steel significantly.

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?I?LIOGRAP,.

Annual 1e%ort of ,S - P @ : ;.

Annual 1e%ort of ,S - P @ : .

Annual 1e%ort of ,S - P @ @: .

""".'indalsteel%o"er.com

""".'s%l.com

""".indiansteel.com
http://www.jindalsteelpower.com/http://www.jspl.com/http://www.indiansteel.com/http://www.jindalsteelpower.com/http://www.jspl.com/http://www.indiansteel.com/

Project Report on F

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