strategy project.docx

8/14/2019 strategy project.docx

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A

PROJECT REPORT

ON

BUSINESS POLICY AND STRATEGIC MANAGEMENT

SUBMITTED BY:

RAHMATULLAH KHAN

MANISH KUMAR BARUI

SRIDEB SAHA

SUBHADIP MITRA

DIPANJAN DE


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Definition

The P/E ratio (price-to-earnings ratio) of a stock (also called its "P/E", or simply "multiple") is a

measure of the price paid for a share relative to the annual net income orprofit earned by the firm pershare. The P/E ratio can therefore alternatively be calculated by dividing the company's marketcapitalizationby its total annual earnings.Unlike theEV/EBITDA multiple, the price-to-earnings ratio reflects thecapital structure of the companyin question. The price-to-earnings ratio is a financial ratio used for valuation: a higher P/E ratio meansthat investors are paying more for each unit of net income, so the stock is moreexpensive compared toone with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that itshows the number of years of earnings which would be required to pay back purchase price, ignoringinflation.The P/E ratio also shows current investor demand for a company share. Thereciprocal of theP/E ratio is known as theearnings yield.The P/E ratio is defined as:

P/E Ratio= Price per Share/ Annual Earnings per Share

Interpretation using P/E Ratio

Normally, stocks with high earning growth are traded at higher P/E values. From the previous example,stock a, trading at $24 per share, may be expected to earn $6 per share the next year. Then the forwardP/E ratio is $24/6 = 4. So, you are paying $4 for every one dollar of earnings, which makes the stockmore attractive than it was the previous year.The P/E ratio implicitly incorporates the perceived risk of a given company's future earnings. For a stockpurchase, this risk includes the possibility ofbankruptcy.For companies with highleverage (that is, highlevels of debt), the risk of bankruptcy will be higher than for other companies. Assuming the effect ofleverage is positive, the earnings for a highly-leveraged company will also be higher. In principle, the P/E

ratio incorporates this information, and different P/E ratios may reflect the structure of thebalance sheet.

Variations on the standard trailing and forward P/E ratios are common. Generally, alternative P/Emeasures substitute different measures of earnings, such as rolling averages over longer periods of time(to "smooth" volatile earnings, for example), or "corrected" earnings figures that exclude certainextraordinary events or one-off gains or losses. The definitions may not be standardized.

Various interpretations of a particular P/E ratio are possible, and the historical table below is justindicative and cannot be a guide, as current P/E ratios should be compared to currentreal interest rates(seeFed model):

It is usually not enough to look at the P/E ratio of one company and determine its status. Usually, an

analyst will look at a company's P/E ratio compared to the industry the company is in, the sector thecompany is in, as well as the overall market (for example theS&P 500 if it is listed in a US exchange).Sites such asReuters offer these comparisons in one table.Example of SPY Often, comparisons will alsobe made between quarterly and annual data. Only after a comparison with the industry, sector, and marketcan an analyst determine whether a P/E ratio is high or low with the above mentioned distinctions (i.e.,undervaluation, over valuation, fair valuation, etc). Usingdiscounted cash flow analysis, the impact ofearnings growth and inflation can be evaluated
http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Share_%28finance%29http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Profit_%28accounting%29http://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/EV/EBITDAhttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Financial_ratiohttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Multiplicative_inversehttp://en.wikipedia.org/wiki/Earnings_yieldhttp://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Leverage_%28finance%29http://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Real_interest_ratehttp://en.wikipedia.org/wiki/Fed_modelhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/List_of_recognized_economic_sectorshttp://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/Reutershttp://www.reuters.com/finance/stocks/financialHighlights?symbol=SPYhttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://www.reuters.com/finance/stocks/financialHighlights?symbol=SPYhttp://en.wikipedia.org/wiki/Reutershttp://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/List_of_recognized_economic_sectorshttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Fed_modelhttp://en.wikipedia.org/wiki/Real_interest_ratehttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Leverage_%28finance%29http://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Earnings_yieldhttp://en.wikipedia.org/wiki/Multiplicative_inversehttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Financial_ratiohttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/EV/EBITDAhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Profit_%28accounting%29http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Share_%28finance%29http://en.wikipedia.org/wiki/Stock


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Industries Selected

TELECOM INDUSTRY (Telecom operators)

Telecom industry analysisuncovers the fact that this industry has a huge business potentiality and isgoing to be a booming industry. Telecom industry analysis also reveals that this industry will provide animmense employment opportunity in the coming years.

Phoenix Center research revealed that in the coming years, there will be a healthy competition among theproviders of telecommunication services. At the same time, the price will be lower and quality will behigher. The new telecommunications technologies will replace the traditionaltelecom services.Statisticaldata also reveals that the telecommunications industry is going to be a dynamic and booming industry inthe near future. The telecom industry comprises of complex network of services like telephones, mobilephones and internet services. Throughout the world, telecom industries are being controlled by privatecompanies instead of government monopolies. Traditionaltelecom technologiesare also being replacedby modern wireless technologies, specifically in case of mobile services. One of the major objectives of

telecom industry is to enhance the quality and speed of Internet technology.These days, telecom industryis more concerned with texts and images (Internet technologies), rather than voice (telephone service).Most of the research works are going on Internet accessibility, specifically on data applications andbroadband services. The other major division of telecom industry is mobile network sector, where lots ofinnovative research works are going on. Previously the traditional telephone calls used to earn themaximum revenues, but these days mobile service is going to replace traditional telephone services.

GSM SectorIn terms of the Global System for Mobile Communication (GSM) subscriber base this now places Indiathird after China and Russia. China had 401.7 million GSM subscribers

CDMA ServicesCDMA technology was introduced in India as a limited mobility solution. The introductionof CDMA services has created competition, lowered tariffs and offered many citizens accessto communication services for the first time

Internet ServicesInternet services were launched in India on August 15, 1995. In November 1998 the government openedup the sector to private operators. A liberal licensing regime was put in place to increase Internetpenetration across the country. The growth of IP telephony or grey market is also a serious concern.Government loses revenue, while unlicensed operation by certain operators violates the lawand depletes licensed operators market share.

New services like IP-TV and IP-Telephony are becoming popular with the demand likely to

Increase in coming years. The scope of services under existing ISP license conditions isUnclear.
http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.htmlhttp://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html


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POWER SECTOER (Generation & Distribution Industries)

Electricity is one of the most vital infrastructure inputs for economic development of a country. There is astrong demand for electricity in India and it is steadily growing with the countrys economic growth andrising consumerism. The Indian electricity market today offers one of the highest growth potential for

private players. Government reforms, e.g. distribution network Reforms Program, would be the key factordriving the power sector. Reforms such as The Electricity Act and National Electricity Policy will giveimpetus to the Indian power sectorIndia has the worlds 5th largest electricity generation capacity and it is the 6th largest energy consumeraccounting for 3.4% of global energy consumption. Due to the fast-paced growth of the Indian economy,the countrys energy demand has grown at an average of 3.6% p.a. over the past 30 yearsThere is a huge demand for power in some Indian states due to rapid urbanization and industrialization.Besides, opportunities for private players are increasing with high energy shortage and governmentsupport in the form of incentives to set up power plants. We have found that the number of merchantpower plants will increase in the years to come with state governments inviting private players to invest inthe power sector e.g. Gujarat, Maharashtra, Andhra Pradesh, etcAs per the latest Report of CEA (Central Electricity Authority) i.e. as on 31-03-2011, the Total InstalledCapacity of Power in India is 173626.40 MW. Of this, more than 75% of the installed capacity is with thepublic sector (state and central), the state sector having the largest share of 48%.The report has also revealed that un-conventional energy sources such as nuclear, wind and solar willfulfill a large chunk of Indias energy need in coming years. Many states are formu lating exclusivepolicies for renewable energies in order to promote and develop these energy sources. Our report focuseson the growing power sector in India. It thoroughly investigates the current market trends, evolvingmarkets and growth prospects for the power industry. It will help clients to analyze the driving forces andleading-edge opportunities critical to the success of the power industry.

PHARMA AND HEALTH CARE (Pharmaceutical)

Indias pharmaceutical industry is the third largest in the world in terms of volume and stands 14th in

terms of value. The domestic pharma sector continued its strong show in 2010 and recorded a 16.5 percent growth during January-December. India will join the league of top 10 global pharmaceuticalsmarkets in terms of sales by 2020 with the total value reaching USD 50 billion by then, according to areport by PricewaterhouseCoopers (PwC). The pharmaceutical industry of India also ranks very high interms of technology, quality and range of medicines manufactured. The pharmaceutical industry in Indiaalso fulfills around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceuticalformulations, chemicals, tablets, capsules, orals and injectibles.

Indias pharmaceutical industry is the third largest in the world in terms of volume and stands 14th interms of value. The domestic pharma sector continued its strong show in 2010 and recorded a 16.5 percent growth during January-December. The Indian pharmaceutical industry forms around 8 per cent ofworld pharmaceutical production. The trend of Indian companies being increasingly targeted by

multinationals (MNCs) for both collaborative agreements and acquisitions has been picking up over acouple of years.

The Indian Pharmaceutical market is poised to grow to US$ 55 billion by 2020 from the 2009 levels ofUS$ 12.6 billion, as per a report by McKinsey & Company - India Pharma 2020: Propelling access andacceptance realizing true potential. The industry further holds potential to reach US$ 70 billion, at acompound annual growth rate (CAGR) of 17 per cent.


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The Indian pharma companies on back of a strong and growing domestic market, robust pipeline ofgeneric drugs (cheaper versions of patented drugs) and an ability to service, developed markets abroad,has invariably become the most sought-after in the mergers and acquisitions (M&A) space.

Due to increase in the population of high income group, there is every likelihood that they will open apotential US$ 8 billion market for multinational companies selling costly drugs by 2015. This was

estimated in a report by Ernst & Young. The domestic pharma market is estimated to touch US$ 20billion by 2015. The healthcare market in India to reach US$ 31.59 billion by 2020. The sale of all typesofpharmaceutical drugs and medicines in the country stands at US$ 9.61 billion, which is expected toreach around US$ 19.22 billion by 2012. Thus India would really become a lucrative destination forclinical trials for global giants. .

AUTO (Car/LCV/HCV)The automotive industry is primary source of in-depth research and quantitative analysis on theautomobile industry, covering industry segments like Hybrid Car Market, Passenger Car Market, and

Automotive Specialty Equipment Market. Each report is a rich source of analytical and statisticalinformation on the automobile sector of a region or a country. Our unmatched team of industry expertiseconstantly tracks recent developments in the automotive industry, particularly in emerging markets, likeCzech Republic, Brazil, Vietnam and Russia, to identify growth opportunities for clients.We carry out intensive research on the automotive industry to identify market drivers, opportunities, andchallenges of every related sector/industry and formulate specific strategic recommendations to supportclients in decision-making process. The cumulative growth of the Passenger Vehicles segment duringApril 2007March 2008 was 12.17 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by10.57 percent and Multi Purpose Vehicles by 21.39 percent in this period.

The Commercial Vehicles segment grew marginally at 4.07 percent. While Medium & HeavyCommercial Vehicles declined by 1.66 percent, Light Commercial Vehicles recorded a growth of 12.29percent

Automobile Exports registered a growth of 22.30 percent during the current financial year. Commercialvehicles and Passenger Vehicles exports grew by 19.10 percent and 9.37 percent respectively

METAL AND MINING (Steel industry)

Indian steel industry plays a significant role in the countrys economic growth. The major contributiondirects the attention that steel is having a stronghold in the traditional sectors, such as infrastructure &constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainlesssteel 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, acquisitionof global scale capacities by players, continuous modernization & up gradation of old plants, improvingenergy efficiency, and backward integration into global raw material sources. Global steel giants fromacross 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 66.8Million Metric Tons.
http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-drugs/http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-drugs/


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Indian Steel Industry Outlook to 2012 says that the, Indian crude steel production will grow at aCAGR of around 10% during 2010-2013. Moreover, with the government proactive incentive plans toboost 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, steelconsumption in India is expected to grow significantly in coming years as per capita finished steelconsumption is far less than its regional counterparts

India was the worlds fifth largest producer of crude steel in 2009 and is expected to become the worldssecond largest producer by 20152016.c

ANALYSIS OF ALL INDUSTRIES

TELECOM INDUSTRY (Telecom operators)

Particulars P/E ratioMarketCapital

2007 2008 2009 2010 2011 (Rs. Cr)

TELECOM INDUSTRY(Telecom operators)

AIRTEL 35.91 25.11 15.34 12.59 20.23 1,65,952

RELIANCE 35.73 40.68 7.81 73.25 -25.5 20,960

IDEA 48.76 25.92 15.51 20.53 33.36 31,171

TATA COM 24.47 48.03 28.64 16.56 39.22 6,341

Looking into the telecom sector we see that there is a huge scope for developmentso hereby

we have chosen 4 key players i.e. Airtel, reliance, idea and Tata.

They all occupy a major portion of the share market through their fast and efficientserviceamong these standing tall and strong are Airtel with a sales turnover of RS. 35,609.54for the yr 2011 march followed by reliance i.e. Rs. 2, 76,371.78 followed by Idea i.e. Rs.11,850.24. And lastly Tata i.e. Rs. 3,218.04

Particulars Revenue (Rs. Cr) Net Profit Total Debt EPS

Debt-Equity

Ratio

2010 2011 (Rs. Cr) (Rs. Cr)

TELECOM INDUSTRY(Telecom

operators)

AIRTEL 34,014.29 35,609.54 9,426.15 5,038.92 20.32 0.12

RELIANCE 2,11,727.07 2,76,371.78 19,293.68 84,106.19 -3.67 0.38

IDEA 9,857.08 11,850.24 1,053.66 6,526.41 2.56 0.57

TATA COM 3,749.43 3,218.04 483.18 2,638.91 5.62 0.35


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POWER SECTER (Generation & Distribution Industries)


2007 2008 2009 2010 2011 (Rs. Cr)

POWER SECTOER (Generation & DistributionIndustries)

CESC 10.57 14.49 6.43 11.04 7.94 4,218

TATA POWER 14.46 29.72 18.45 34.4 32.16 30,518

ENERGY 13.54 15.45 6.61 13.08 13.55 91

NTPC 18.04 21.87 18.08 19.57 16.22 1,45,368

Now we taking of the power generation sector of India. The hugeness of the sector can be depicted fromthe total installed generation capacity amounting to about165000 MW. The sector average P/E Ratio is19.83 x. We have selected 4 industries in this sector. The market leader and the PSU giant NTPC Ltdhave a market capital of Rs, 145615 crores. Looking at its P/E ratio which is lowering down year afteryear and so too consistent gives an impression of the trustworthiness of the company. Moreover a highEPS, low share price with its huge revenue generation and good profit generation give the idea of the wellfunctioning of the company. So its a investors den of faith to invest in a venture like NTPC Ltd.

But not far behind is CESC Ltd, with a low and decent P/E Ratio, a high EPS and a low debt- equity ratio.An acceptable net profit of Rs. 487 crore on a average revenue shows the companys ability to managefunds. So CESC Ltd can also a good choice for investors.

NHPC Ltd, a new PSU hydro power master which is doing quite well recently. Low share price with lowP/E ratio after its formation gives a good idea on it. But the only concern being the EPS which is stillquite low and the reason can be because of generation of low profit because of its newness in the market.

TATA Power Company Ltd on the other hand draws a good profit from decent revenue. So we see a highEPS but practically the company is overvalued with regularly high P/E Ratio. The share price is still toohigh even though lower of revenue has happened this year. So this overvaluation is harming investorsdilemma on TATA Power Company Ltd

Particulars Revenue (Rs. Cr)Net

Profit Total Debt EPS

Debt-EquityRatio

2010 2011 (Rs. Cr) (Rs. Cr)

POWER SECTOER (Generation &

Distribution Industries)

CESC 4,266.20 5,013.74 278.38 5,576.93 39.09 0.74

TATA POWER 7,150.51 6,964.44 941.49 6,989.28 40.87 0.55

ENERGY 117.24 31.58 11.41 56.73 2.52 0.39

NTPC 42,196.80 46,623.60 8,728.20 37,797.00 11.32 0.59


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PHARMA AND HEALTH CARE (Pharmaceutical)


2007 2008 2009 2010 2011 (Rs. Cr)

PHARMA AND HEALTH CARE(Pharmaceutical)

CIPLA 27.57 24.39 22.03 25.12 26.7 24,589

RANBAXY 25.11 -9.73 38.13 21.94 102.02 22,711

SUN PHARNA 32.49 25.11 18.19 41.3 38.34 53,519

LUPIN 9.23 13.6 22.3 22.96 24.91 20,289

Particulars

Revenue

(Rs. Cr) Net Profit Total Debt EPS

Debt-Equity

Ratio2010 (Rs. Cr) (Rs. Cr)

PHARMA AND HEALTH CARE

(Pharmaceutical)

CIPLA 6,179.83 989.57 571.89 12.04 0

RANBAXY 8,897.33 1,496.75 4,334.81 5.32 0.57

SUN PHARNA 2,568.82 898.65 29.49 13.36 NIL

LUPIN 5,742.17 862.55 1,162.41 18.17 0.06

An important industry in India, as from an net exported India now is a manufacturer of medicines andmedical products. We really get afraid when we look at RANBAXY Ltd, as consistently lowering down

of Profit even loss in the year 2011 kept down there EPS which eventually reached a negative value of -24.85 in the year 2008. The upward tending P/E ratio and a very high one of 102.02x in the year 2011take RANBAXY Ltd in the overvaluation zone.The only best player in the industry is CIPLA Ltd, with low P/E Ratio, moderate EPS and good profitgeneration with no debt capital at present is a good speculation.

AUTO (Car/LCV/HCV)

Particulars P/E ratio

Market

Capital2007 2008 2009 2010 2011 (Rs. Cr)

AUTO(Car/LCV/HCV)

MARUTI 15.17 13.8 18.49 16.4 14.91 34,897

TATA motors 14.67 11.83 9.26 19.3 43.73 51,001

ESCORTS -154.35 45.8 11.16 16.51 6.36 1,041

Hindustan Motors Ltd 41.28 16.91 -5.46 -6.61 304 279


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ParticularsRevenue(Rs. Cr) Net Profit Total Debt EPS

Debt-EquityRatio

2010 (Rs. Cr) (Rs. Cr)

AUTO(Car/LCV/HCV)

MARUTI 31,947.70 2,497.60 821.4 79.21 0.04TATA motors 31,947.70 2,497.60 821.4 28.55 0.8

ESCORTS 3,394.54 132 405.32 16.79 0.13

Hindustan Motors Ltd 861.69 -32.17 133.7 0.05 2.41

Automobile industry is the most prospecting industry of India. Although the price of fuel is high but theeasy financing facilities have given a boom to this industry. We have selected 3 players and they areMaruti Udyog Ltd, TATA Motors Ltd and Escort Ltd. TATA Motors Ltd with the largest market capitalis not the market leader. As the net loss of Rs. 31.24 crore occurred in the year 2011 which lowered theEPS and so too the P/E Ratio got too high. But the share price of the company stayed up, so the company

finally reached the overvalues state. And so presently its not a good place for investment.Escort Ltd too suffering from loss for last 3 years and which has affected there EPS and too their

business. The companys P/E ratio fluctuated a lot reaching negative too but in the year the company gotovervalued making the P/E ratio go very up. So its a worst place to invest.Only difference in the market leader Maruti Udyog Ltd, who with their strategy to reach the niche marketare doing best. A huge revenue generation and a high profit made the EPS to go high. The investorshaving a confidence on the company made the P/E Ratio to remain low and consistent. So its the bestplace for the inventors to invest within this sector.

Strategic nalysis of Steel Industries in IndiaMETAL AND MINING (Steel industry)


2007 2008 2009 2010 2011 (Rs. Cr)

METAL AND MINING(Steel industry)

JINDAL 10.41 25.77 12.13 44.25 28.4 57,350

TATA 6.81 10.87 2.95 11.21 8.69 54,545

SAIL 7.61 10.15 6.45 15.45 11.28 52,745

BHUSHAN 6.96 6.68 3.99 8.44 8.98 8,464ADHUNIK 16.68 27.26 8.62 15.49 4.1 938

TULSYAN NEC 3.37 3.08 1.91 4.35 2.6 66

JSW Steel Ltd 6.4 9.02 10.14 11.58 10.31 18,278

VISA STEEL 9.68 9.84 -3.04 11.28 14.14 643

STEELCO -2.81 -3.24 -1.87 7.46 9.32 22

UTTAM GALVA BLANK 2.88 3.35 13.37 16.95 1,267


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When we talk of risk, high profit/ loss, huge market capital, we only talk of the Steel Sector. And Jamshed Ji Tata had made us believe that anything big is possible in this industry. And when we are spellingthe name of Jam shed Ji we have to think of the concern established by him, i.e, TATA Steel Ltd. Hugerevenue generation and low debt- equity ratio makes the company a star in the sector. But our expectationgets hit when we look at the huge loss of Rs. 2009.22 crore incurred by them in the year 2010. And so theP/E ratio shows a upward trend as there is also a sharp fall of EPS in the year 2009. The investors still had

a great faith on the TATAs and so the share price traded in its glory. But latter recovering from such asituation TATA Steel Ltd in the year 2011 made a profit of Rs. 8982.69 crore also lowering down thedebt- equity ratio as well as the P/E ratio with rise in EPS. This only depicts the skill of the TATAs.

Next we talk of Jindal Steel and Power Ltd; unlike TATA Steel Ltd they never incurred a loss in the last 5years. Lowering down of EPS and fluctuating P/E ratio gives us an impression that the investors faith onthe company changes time by time. The company has taken a huge debt and so its a big concern forJindal Steel and Power Ltd in the near future.

Come to the PSU, SAIL Ltd, a star company with sectors largest revenue and profit generation. But lookat it fluctuating P/E ratio and low EPS of about 16.35 in the year 2011. So Sail Ltd has inefficiency inefficiently managing profit. Apart from it SAIL Ltd took a huge debt of about Rs. 8972.46 crore in the

year span 2020-11, which shows that it is suffering from shortfall of cash. More over they kept down thedebt- equity ratio to 0.68 only that means they also collected money by release of equity shares in themarket.

Looking at the other players like JSW Steel Ltd, who have unorganized P/E ratio, huge debt- equity ratiobut huge profit and revenue made us fell the company likes to run business by debt capital. And so asinvestors its very difficult to participate with JSW Steel Ltd with equity holding.

Particulars Revenue (Rs. Cr) Net ProfitTotalDebt EPS

Debt-EquityRatio

2010 2011 (Rs. Cr) (Rs. Cr)

METAL AND MINING(Steelindustry)

JINDAL 7895.58 9,534.89 1,479.68 8383.26 15.89 0.84

TATA 26757.6 31,902.14 -2,009.22 25239.2 71.58 0.68

SAIL 43934.7 42,720.19 6,754.37 16511.25 16.35 0.39

BHUSHAN 6003.07 7,000.46 845.8 11404.11 199.09 2.76

ADHUNIK 1258.59 1,443.75 53.91 1218.48 4.36 1.04

TULSYAN NEC 648 785.35 8.49 223.78 18.56 1.41

JSW Steel Ltd 12,628.91 9,337.34 1,597.55 11585.1 2.12 1.41

VISA STEEL 1198.31 1,332.88 49.01 1141.74 4.31 3.39STEELCO 484.77 536.39 4.84 75.47 1.14 BLANK

UTTAM GALVA 4673.87 5,034.80 102.47 2043.49 8.38 1.82


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Bhushan Steel Ltd on the other had of sky touching EPS of about 119.09 but high P/E ratio shows that thecompany is practically overvalued and although with high profit we cant grant it as investors. Moreoverthe high debt- equity ratio shows the companys unwillingness to work with equity holders.

Generic Products Products manufacture by all the companies which is shown in theweightage table

Weightage Table

Generic Products

OperatorsRAILS COILS BEARINGS SEMI

FINISHEDPRODUCTS

WIRE

RODS

TMT

BARS

POWER FERRO

CHROME

SPONGE

IRON

SILICON

MAGNESEWeights

JINDAL

9

TATA

10

SAIL

5

BHUSHAN

3

ADHUNIK

4

TULSYAN NEC

2

JSW STEEL

Ltd

5

VISA STEEL

1

STEELCO

2

UTTAM GALVA

1


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GEOGR PHIC COVER GEGeographic Coverage-Area cover by all the companies in domestic and global.

STEEL PRODUCTION CAPACITY OF ALL COMPANIES IN YEAR

Companies Operating areas

Domestic International

JINDAL

TATA

SAIL

BHUSHAN

ADHUNIK

TULSYANNEC

JSW Steel

Ltd

VISA STEEL

STEELCO

UTTAM

GALVA


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Strategy Group mapping for steel industry in India

Here, orange arrow colour is product range and bubble show market capital of the

company.

17%

14%

4%

8%

2%

55%

STEEL PRODUCTION CAPACITY(TOTAL STEEL PRODUCTION OF INDIA STEEL INDUSTRY

57661MILLION METRIC TON YEARLY)

SAIL

TATA

JINDAL

JSW STEEL

BHUSHAN

0THERS


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From the above map its clear that various steel companies operators in India fall in

different strategy groups. According to their generic product range, market capital and

geographic coverage.

In this map TATA steel is a leader of steel industry because its product range is more than all the

companies. And also the revenue of in 2011 is at second position but EPS is more than all

companies. Market capital of TATA steel is slightly lower than JINDAL but geographical

coverage is more than all companies in steel industry because TATA is operating in almost

whole of world.

Strategic Analysis of Steel Industries in India

Steel Industry in India

-10,000.00

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

-2 0 2 4 6 8 10 12

No. of Products

RevenueofFY2011(Rs.

Crore)

JINDAL TATA SAIL BHUSHAN ADHUNIK

TULSYAN NEC JSW Steel Ltd VISA STEEL STEELCO UTTAM GALVA


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In this chart, X-axis shows the product range, Y-axis shows revenue and bubbleshows the market capital of companies (Its means big bubble have more marketshare and small bubble have low market share).

After analysis we found that this chart which show that SAIL has more market share than all the

companies and product range is 5 but it is safe zone there is competition between TATA and JINDALWhich has almost equal market capital but these product ranges almost double than SAIL. SAIL revenueis higher than TATA. JINDAL revenue 5 times less than SAIL. So, in this group competition is less.But if we see other section where all the small market capital company is operating like VISA

ADHUNIK, STEELCO, and TULSYAN etc. They have more competition between them every companywant over take the market share of other company. Here, more competition between TULSYAN andSTEELCO there product range is same but TULSYAN market capital and revenue is very high thanSTEELCO and also EPS of TULSYAN is very high than STEELCO. UTTAM which has 1 product rangebut market capital is high than all the minimum product range of company and also revenue is very highthan all of these.

REFERENCES

1. www.equitymaster.com

2. www.ey.com

3. www.economywatch.com

4. www.rncos.com

5. www.siamindia.com

6. www.cci.in

7. www.carfreaks.info

8. www.marketresearch.com

9. stockshastra.moneyworks4me.com

10.www.krishnaninc.com

11.www.pharmaceutical-drug-manufacturers.com

12.www.ibef.org

13.www.espicom.com

14.www.moneycontrol.com

15.www.moneysights.com

16.www.edelwiess.com
http://www.equitymaster.com/http://www.ey.com/http://www.economywatch.com/http://www.rncos.com/http://www.siamindia.com/http://www.cci.in/http://www.carfreaks.info/http://www.marketresearch.com/http://www.krishnaninc.com/marketing.htmhttp://www.krishnaninc.com/marketing.htmhttp://www.espicom.com/http://www.espicom.com/http://www.moneycontrol.com/http://www.moneycontrol.com/http://www.moneysights.com/http://www.moneysights.com/http://www.edelwiess.com/http://www.edelwiess.com/http://www.edelwiess.com/http://www.moneysights.com/http://www.moneycontrol.com/http://www.espicom.com/http://www.krishnaninc.com/marketing.htmhttp://www.marketresearch.com/http://www.carfreaks.info/http://www.cci.in/http://www.siamindia.com/http://www.rncos.com/http://www.economywatch.com/http://www.ey.com/http://www.equitymaster.com/


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