• Analysis of fundamental to acquire a deep knowledge of the Steel Sector which I am
studying. • To find out how the judgment is taken by the analyst on the basis of fundamental analysis of the company. • To establish link between expected share price with the projected company’s financial performance (2008-2009) • To study the demand of Steel sector particularly land-building, Commercial purposes and Real Estate. • • To calculate a company's credit risk

To make projection on its business performance and in the bad condition to improve the performance of company.

• • •

To evaluate its management and make internal business decisions,

To make the company's stock valuation and predict its probable price evolution.

Investors may use fundamental analysis to determine future growth rates for buying high priced growth stocks


Fundamental analysis is very helpful to the investor, which is reflected in the investment purpose. Fundamental analysis consist of three parts, they are economic, industry and company. Any investors who go to systematic investment, he/she would like to know, the complete scenario of the industry. It is interesting to know the how the fundamental analysis helps to forecast the price of equity. The fundamental analysis consists of three parts; they are economic, industry and company. All the factors are involved in this analysis were identified and studied carefully to identify the factors in the existing environment. The data or information collected was based on the personal interaction with the guide of the company. Economic analysis was a task to be studied as it affected the company’s tax, and it will effect on the revenue of the industry. Also other factors are considered in the economic analysis. And it will interpret for the fundamental analysis. Industry analysis was a challenging factor for the research of the fundamental analysis. All the sub-factors of the industry analysis were taken up from the secondary source to analyses the each factor with the industry. And was related those factors with the company. It also analyses the competitiveness of the each company’s strength, like. Quality, services, cost of R/m, etc. Company analysis is last factors of the fundamental analysis and it is one of the most important parts of the company. An approach was made to understand the existing company and its impact on company’s market share an its performance.


Research methodology is a way to systematically solve the research problem. The research methodology using for find out the solution of the research problem is analytical research methodology and some extend descriptive research methodology.

 Primary Data
To solve the problems on fundamental analysis on cement sector:• • Primary data collect by discussing with my guide and other staff member of the company Observation

 Secondary Data
The sources of secondary data for solve the problems are:• • • Company Annual Report Company Internal Data Internet-Websites



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The group is promoted by Mr. Dinesh Thakkar, who started this enterprise as a small subbroker in 1987 with staff strength of 3 personnel. As on date, the group is managed by a team of 1589 + direct employees and a nation wide network comprising 12 Regional Centers , 58 branches, 2014 + registered sub brokers and business associates and 5552+ active trading terminals which cater to the requirements of 162085 + retail clients. At Angel, It habitually generate value added features without the cost burden being passed onto the clients as we strongly believe that better understanding of clients needs and wants is our top priority. Our e-broking facility is one such effort, which gives you a platform to access state of art trading facility at the click of a button.


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Indian Securities markets are touching new heights as it has surpassed 15,000 marks. More and more investors are attracting towards equity investment and trading. But this is not always the case that no one can assure you certain returns there is always essence of uncertainty and risk in investment and that push investors on back seats. Sometimes it becomes very difficult for investors to predict the share price of the particular company in this very volatile market. It raises questions in investor’s mind that At what price I should buy? When to sell it... hold? But as trading and investments are increasing on the markets as SEBI had taken stern steps to disclose important information to its Shareholder and investor. So they can get as possible as information about the companies of which they are holding the shares or going to buy. And now-a-days brokers and some analyst providing some future predictions of stocks price movements. So now investment has become somewhat easy for investors. How they get it? This is done with a Stock Analysis getting the information about company and its price movements on stock markets and try to predict how would behave on stock markets. So, there is great importance of stock analysis among investors done brokers, experts, analyst, etc. ♦ Types of Stock Analysis:The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis



Here we have selected a Fundamental analysis as subject of our project so we would do it in detail with practical analysis of two companies. And we would get only some flavor of technical analysis and then we would understand about fundamental analysis.


 What Is Technical Analysis? “Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.” Just as there are many investment styles on the fundamental side, there are also many different types of technical traders. Some rely on chart patterns; others use technical indicators and oscillators, and most use some combination of the two. In any case, technical analysts' exclusive use of historical price and volume data is what separates them from their fundamental counterparts. Unlike fundamental analysts, technical analysts don't care whether a stock is undervalued - the only thing that matters is a security's past trading data and what information this data can provide about where the security might move in the future. The field of technical analysis is based on three assumptions: 1. 2. 3. The Market discounts everything. Price moves in trends. History tends to repeat itself.

The Market Discounts Everything
A major criticism of technical analysis is that it only considers price movement, ignoring the fundamental factors of the company. However, technical analysis assumes that, at any given time, a stock's price reflects everything that has or could affect the company - including fundamental factors. Technical analysts believe that the company's fundamentals, along with broader economic factors and market psychology, are all priced into the stock, removing the need to actually consider these factors


separately. This only leaves the analysis of price movement, which technical theory views as a product of the supply and demand for a particular stock in the market.

Price Moves in Trends
In technical analysis, price movements are believed to follow trends. This means that after a trend has been established, the future price movement is more likely to be in the same direction as the trend than to be against it. Most technical trading strategies are based on this assumption.

History Tends To Repeat Itself
Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Technical analysis uses chart patterns to analyze market movements and understand trends. Although many of these charts have been used for more than 100 years, they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves.

 Other Usage Technical analysis can be used on any security with historical trading data. This includes stocks, futures and commodities, fixed-income securities, forex, etc. In this tutorial, we'll usually analyze stocks in our examples, but keep in mind that these concepts can be applied to any type of security. In fact, technical analysis is more frequently associated with commodities and forex, where the participants are predominantly traders. Now that you understand the philosophy behind technical analysis, we'll get into explaining how it really works. One of the best ways to understand what technical analysis is (and is not) is to compare it to fundamental analysis. We'll do this in the next section. 15

 Strengths of Technical Analysis

Focus on Price

If the objective is to predict the future price, then it makes sense to focus on price movements. Price movements usually precede fundamental developments. By focusing on price action, technicians are automatically focusing on the future. The market is thought of as a leading indicator and generally leads the economy by 6 to 9 months. To keep pace with the market, it makes sense to look directly at the price movements. More often than not, change is a subtle beast. Even though the market is prone to sudden kneejerk reactions, hints usually develop before significant moves. A technician will refer to periods of accumulation as evidence of an impending advance and periods of distribution as evidence of an impending decline.

Supply, Demand, and Price Action

Many technicians use the open, high, low and close when analyzing the price action of a security. There is information to be gleaned from each bit of information. Separately, these will not be able to tell much. However, taken together, the open, high, low and close reflect forces of supply and demand. The annotated example above shows a stock that opened with a gap up. Before the open, the number of buy orders exceeded the number of sell orders and the price was raised to attract more sellers. Demand was brisk from the start. The intraday high reflects the strength of demand (buyers). The intraday low reflects the availability of supply (sellers). The close represents the final price agreed upon by the buyers and the sellers. In this case, the close is well below the high and much closer to the low. This tells us that even though demand (buyers) was strong during the day, supply (sellers) ultimately prevailed and forced the price back down. Even after this selling pressure, the close remained above the open. By looking at price action over an extended period of time, we can see the battle between supply and demand unfold. In its most basic form, higher prices reflect increased demand and lower prices reflect increased supply.



Simple chart analysis can help identify support and resistance levels. These are usually marked by periods of congestion (trading range) where the prices move within a confined range for an extended period, telling us that the forces of supply and demand are deadlocked. When prices move out of the trading range, it signals that either supply or demand has started to get the upper hand. If prices move above the upper band of the trading range, then demand is winning. If prices move below the lower band, then supply is winning.

Pictorial Price History

Even if you are a tried and true fundamental analyst, a price chart can offer plenty of valuable information. The price chart is an easy to read historical account of a security's price movement over a period of time. Charts are much easier to read than a table of numbers. On most stock charts, volume bars are displayed at the bottom. With this historical picture, it is easy to identify the following:
• • • • •

Reactions prior to and after important events. Past and present volatility. Historical volume or trading levels. Relative strength of a stock versus the overall market.

Assist with Entry Point

Technical analysis can help with timing a proper entry point. Some analysts use fundamental analysis to decide what to buy and technical analysis to decide when to buy. It is no secret that timing can play an important role in performance. Technical analysis can help spot demand (support) and supply (resistance) levels as well as breakouts. Simply waiting for a breakout above resistance or buying near support levels can improve returns.


 Weaknesses of Technical Analysis

Analyst Bias

Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis. It is important to be aware of these biases when analyzing a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have a bearish tilt.

Open to Interpretation

Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns. Both will be able to come up with logical support and resistance levels as well as key breaks to justify their position. While this can be frustrating, it should be pointed out that technical analysis is more like an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in the eye of the beholder.

Too Late

Technical analysis has been criticized for being too late. By the time the trend is identified, a substantial portion of the move has already taken place. After such a large move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow theory.

Always Another Level

Even after a new trend has been identified, there is always another "important" level close at hand. Technicians have been accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish, there is always some indicator or some level that will qualify their opinion.


Trader's Remorse

Not all technical signals and patterns work. When you begin to study technical analysis, you will come across an array of patterns and indicators with rules to match. For instance: A sell signal is given when the neckline of a head and shoulders pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as volume and momentum. In that same vein, what works for one particular stock may not work for another. A 50-day moving average may work great to identify support and resistance for IBM, but a 70-day moving average may work better for Yahoo.



 Meaning :Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast and profit from future price movements.

o At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. o At the industry level, there might be an examination of supply and demand forces for the products offered. o For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Fundamentalists do not heed the advice of the random walkers and believe that markets are weak-form efficient. By believing that prices do not accurately reflect all available information, fundamental analysts look to capitalize on perceived price discrepancies.  Overview:“Fundamental analysis is the study of economic, industry, and company conditions in an effort to determine the value of a company's stock. Fundamental analysis typically focuses on key statistics in a company's financial statements to determine if the stock price is correctly valued.” The main principle of fundamental analysis is to find profitable companies to invest in by comparing revenues, sales, management, etc. Fundamentals include earnings report, dividends, sales, inventories, profit margins, P/E ratio, market share , etc.Those looking to invest in a company will be the most likely to use fundamental analysis. This


is because the research is used to not just look at the value of the company, but to look at the company itself. This includes the results of its finances and its potential to grow. The fundamentals can give a better picture the entire company, not just a snapshot. This means that analysis is used to look at the long term of a company not just the short term. The basic idea is if you put a rupee into the business (in the form of buying the stock) how much of a return can you expect. How much yield you will likely see and / or how much growth you will experience based on the operation, markets, competitors and costs of the business. Obviously, not all aspects of these fundamentals can be quantified. Fundamentals are associated with the economic health of a company, measured in terms of revenues, earnings, assets, liabilities, Return on Equity (ROE), Return on Assets (ROA), Return on Investments (ROI), growth prospects and cash flows, etc. The fundamentals tell you about a company. You can say a company is having robust fundamentals if it is growing at a nice pace, generating a profit, has limited debts and abundant cash. The analysis of a company's fundamentals involves getting deep into its financials, rather than day-to-day movement in its share price. Equity researchers normally do fundamental analysis in order to calculate the intrinsic value of a company's stock. If a company's stock is trading above the intrinsic value or fair value, then the stock is overvalued. If a company's stock is trading below the intrinsic value, then the stock is undervalued. However, if you watch the stock markets very closely, the share price of most companies never matches the fair value. Often, day traders and investors who would prefer short term investment options invest in those stocks, regardless of the companies' long term growth prospects. However, long term investors generally prefer to invest in companies with robust fundamentals and ignore near-term share price movements.


 Objectives:There are several possible objectives: • • • • • • • • • Analysis of fundamental to acquire a depth knowledge of the Steel Sector which I am studying. To find out how the judgment is taken by the analyst on the basis of fundamental analysis of the company. To establish link between expected share price with the projected company’s financial performance (2008-2009) To study the demand of Steel sector particularly land-building, Commercial purposes and Real Estate. To calculate a company's credit risk To make projection on its business performance and in the bad condition to improve the performance of company. To evaluate its management and make internal business decisions, To make the company's stock valuation and predict its probable price evolution. Investors may use fundamental analysis to determine future growth rates for buying high priced growth stocks


 Approaches of Fundamental Analysis:
Investors can use either a top-down or bottom-up approach: • The top-down investor starts his analysis with global economics, including both international and national economic indicators, such as GDP growth rates, inflation, interest rates, exchange rates, productivity, and energy prices. He narrows his search down to regional/industry analysis of total sales, price levels, the effects of competing products, foreign competition, and entry or exit from the industry. Only then does he narrow his search to the best business in that area. • The bottom-up investor starts with specific businesses, regardless of their industry/region.


 Strengths of Fundamental Analysis • Long-term Trends
Fundamental analysis is good for long-term investments based on long-term trends, very long-term. The ability to identify and predict long-term economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies.

• Value Spotting
Sound fundamental analysis will help identify companies that represent a good value. Some of the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and staying power.

• Business Acumen
One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such painstaking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. A stock's price is heavily influenced by its industry group. By studying these groups, investors can better position themselves to identify opportunities that are high-risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income-oriented (high yield).


• Knowing Who's Who
Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group. Business can change rapidly and with it the revenue mix of a company. This happened to many of the pure Internet retailers, which were not really Internet companies, but plain retailers. Knowing a company's business and being able to place it in a group can make a huge difference in relative valuations.

 Weaknesses of Fundamental Analysis • Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily timeconsuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on Wall Street. When this happens, the analyst basically claims that the whole street has got it wrong. This is not to say that there are not misunderstood companies out there, but it is quite brash to imply that the market price, and hence Wall Street, is wrong.

• Industry/Company Specific
Valuation techniques vary depending on the industry group and specifics of each company. For this reason, a different technique and model is required for different industries and different companies. This can get quite time-consuming, which can limit the amount of research that can be performed. A subscription-based model may work great for an Internet Service Provider (ISP), but is not likely to be the best model to value an oil company.

• Subjectivity
Fair value is based on assumptions. Any changes to growth or multiplier assumptions can greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use sensitivity analysis to present a base-case valuation, a best-case valuation and a


worst-case valuation. However, even on a worst-case valuation, most models are almost always bullish, the only question is how much so. The chart below shows how stubbornly bullish many fundamental analysts can be.

• Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily timeconsuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on Wall Street. When this happens, the analyst basically claims that the whole street has got it wrong. This is not to say that there are not misunderstood companies out there, but it is quite brash to imply that the market price, and hence Wall Street, is wrong.

• Industry/Company Specific
Valuation techniques vary depending on the industry group and specifics of each company. For this reason, a different technique and model is required for different industries and different companies. This can get quite time-consuming, which can limit the amount of research that can be performed. A subscription-based model may work great for an Internet Service Provider (ISP), but is not likely to be the best model to value an oil company.

• Subjectivity
Fair value is based on assumptions. Any changes to growth or multiplier assumptions can greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use sensitivity analysis to present a base-case valuation, a best-case valuation and a worst-case valuation. However, even on a worst-case valuation, most models are almost always bullish, the only question is how much so. The chart below shows how stubbornly bullish many fundamental analysts can be.


 Steps to fundamental Analysis:
The most common way that fundamental analysis is done in is in three steps:

1. Economic Analysis:The first step to this type of analysis includes looking at the macroeconomic situation. This includes GDP, growth rates, inflation, interest rates, exchange rates, productivity and energy prices.


Industry Analysis: The next step taken in analysis in this category is looking at the industry as a

whole. This includes total sales, price levels, competition and their effects, foreign competition as well as any entrances or exits from the industry.

3. Company Analysis:Last in this process of studying the fundamentals includes looking at the company individually. This includes looking at unit sales, prices, new products, earnings and any chance of debt or equity occurring.


Fundamental vs. Technical Analysis
Technical analysis and fundamental analysis are the two main schools of thought in the financial markets. As we've mentioned, technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals. Let's get into the details of how these two approaches differ, the criticisms against technical analysis and how technical and fundamental analysis can be used together to analyze securities.

♦ The Differences
• Charts vs. Financial Statements

At the most basic level, a technical analyst approaches a security from the charts, while a fundamental analyst starts with the financial statements. • Time Horizon

Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis. While technical analysis can be used on a timeframe of weeks, days or even minutes, fundamental analysis often looks at data over a number of years. • Trading Versus Investing

Not only is technical analysis more short term in nature that fundamental analysis, but the goals of a purchase (or sale) of a stock are usually different for each approach. In general, technical analysis is used for a trade, whereas fundamental analysis is used to make an investment. Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price. The line between a trade and an investment can be blurry, but it does characterize a difference between the two schools.


The purpose of analyze economic condition of the country in fundamental analysis to asses the general economic situation both within the country and inter nationally. The economy is like the tide and the various industry groups and individual companies are like boats. When economy expands most industry groups and companies benefits and grows. When the economy decline, most sectors and companies usually suffer. The stock market does not operate in a vacuum it is an integral part of ht whole economy of a country, more so in a free economy that of United States and to some extent in mixed economy like ours. To gain an insight into the complexities of stock market. One needs to develop a sound economic understanding and be able to interpret the impact of important economic indicators on stock markets. The following are some important factors which should be taken into account while doing fundamental analysis: • • • • • • • • • Economic Growth Per capita income Industrial Production Inflation Interest Rates Foreign Exchange Reserves Budgetary Deficit Domestic Savings and Investment Tax Rates


• •

Infrastructure Political Situation

Introduction of Indian Economy:
The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world, which is evident from the coins of various civilizations found at the site of Indus valley. Before the advent of East India Company, each village in India was a self sufficient entity. Each village was economically independent as all the economic needs were fulfilled with in the village. Then came the phase of Colonization. The arrival of East India Company in India ruined the Indian economy. There was a two-way depletion of resources. British used to buy raw materials from India at cheaper rates and finished goods were sold at higher than normal price in Indian markets. During this phase India's share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. After India got independence from this colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. First five year plan for the development of Indian economy came into implementation in 1952. These Five Year Plans, stared by Indian government, focused on the needs of Indian economy. If on one hand agriculture received the immediate attention on the other side industrial sector was developed at a fast pace to provide employment opportunities to the growing population and to keep pace with the developments in the world. Since then Indian economy has come a long way. The Gross Domestic Product (GDP) at factor cost, which was 2.3 % in 1951-52 reached 9.4% in financial year 2006-07.


1. GDP:
According to some experts, the share of the US in world GDP is expected to fall (from 21 per cent to 18 per cent) and that of India GDP to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China.
GDP of India at factor cost (in percent)
GDP Groth Rate 12 10 8 6 4 2 0 1999- 2000- 2001- 2002- 2003- 2004- 2005- 20062000 01 02 03 04 05 06 07 Year 6.1 8.5 4.4 5.8 3.8 7.5 9 9.6

GDP of India at factor cost (in percent)

India's greater integration with the world economy was reflected by the trade openness indicator, the trade to GDP ratio, which increased from 22.5 per cent of GDP in 2000-01 to 34.8 per cent of GDP in 2006-07. The exports and imports grew by 22.6 per cent and 24.5 per cent respectively in 2006-07, recording the lowest gap between growth rates after 2002-03. In the first nine months of the current year, exports reached US$111 billion, nearly 70 per cent of the year's export target. Imports grew by 25.9 per cent during April-December 2007 due to non-POL imports growth of 31.9 per cent, implying strong industrial demand by the manufacturing sector and for export activity.


2. Per capita income
The 9.4 per cent GDP growth during 2006-07, fastest since 1988-89 and second-fastest since the country achieved independence, has translated into a per capita income of Rs 29,382 a year or Rs 2,448.5 a month. Per capita income at current prices rose by 14.3 per cent in 2006-07 against Rs 25,716 in the previous fiscal, according to figures released by Central Statistical Organization. Notwithstanding the rise in per capita income, it still stands much below the international standards. A person with an annual income of Rs 29,382 ranks 50,411,696th in the world. On the other hand, India also houses the most number of billionaires in Asia-36, ahead of economic powerhouse Japan, according to Forbes magazine. These billionaires together control a wealth of Rs 8,60,000 crore.

3. Inflation
Inflation is no stranger to the Indian economy. In fact, till the early nineties Indians were used to double-digit inflation and its attendant consequences. But, since the mid-nineties controlling inflation has become a priority for policy framers. The natural fallout of this has been that we, as a nation, have become virtually intolerant to inflation. While inflation till the early nineties was primarily caused by domestic factors (supply usually was unable to meet demand, resulting in the classical definition of inflation of too much money chasing too few goods), today the situation has changed significantly. Inflation today is caused more by global rather than by domestic factors. Naturally, as the Indian economy undergoes structural changes, the causes of domestic inflation too have undergone tectonic changes. Needless to emphasise, causes of today's inflation are complicated. However, it is indeed intriguing that the policy response even to this day unfortunately has been fixated on the traditional anti-inflation instruments of the pre-liberalisation era. 33

India Annual Inflation Rates
The following table shows the rate of India annual inflation in recent years.
Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 % of change 4.7 4.0 3.8 4.3 3.8 3.8 4.4 5.5 5.4
% of change


4. n e Rates

6 5 4 3 2 1 0 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200700 01 02 03 04 05 06 07 08 Year

% of change

I ter st

A low interest rate of is a must for economic development. the finance minister assured the industry that interest rates would be brought down in India the target interest appears to be the inflation rate plus 3%.thus,if inflation settles at 5%, the interest rate should be approximately 8%.

5. Foreign Exchange Reserves


The level of foreign exchange reserves has steadily increased from US$ 5.8 billion as at end-March 1991 to US$ 113.0 billion by end-March 2004 and further to US$ 151.6 billion by end- March 2006. It stood at US$ 165.3 billion as at end-September 2006 (Table). Although both US dollar and Euro are intervention currencies, the foreign exchange reserves are denominated and expressed in US dollar only.

6. Budgetary Deficit
A budget deficit arises out of an imbalance between the receipts and payments of the Government. Huge budget deficits have a variety of harmful consequences. Another adverse consequence of a huge budget deficit is the build-up of the ‘national debt’. The total revenue receipts of the Central Government is estimated to be Rs. 486,422 crore and the revenue expenditure at Rs. 557,900 crore. The revenue deficit is estimated at Rs. 71,478 crore, which is 1.5 per cent of GDP. The fiscal deficit is estimated at Rs. 150,948 crore, which is 3.3 per cent of GDP in 2007-08.

7. Industrial production


With 7.3 per the manufacturing sector recorded a lower growth of 9.8 per cent during April-November 2007 as compared with 11.8 per cent during April-November2006. Mining sector recorded a growth of 4.9 per cent as compared with 4.2per cent, while the electricity sector moderated to 7.0 per cent as compared cent during April-November 2006. The moderation in manufacturing sector growth was due to decelerated/negative growth of eleven out of the seventeen manufacturing industry groups for 49.3 per cent weight in the IIP (Table 7). These, among others, included 'machinery and equipment', 'basic metal and alloy industries', 'rubber, plastic, petroleum and coal products', 'cotton textiles', 'nonmetallic mineral products', and 'transport equipment and parts'. 'Metal products and parts' group recorded a decline due to the performance of tin metal containers, welded link chains and razor blades. The 'leather and leather and fur products' group, however, made a turnaround to register positive growth during the period. In terms of use-based classification, the capital and intermediate goods sectors recorded double-digit growth during April-November 2007.

8. Infrastructure


Different constituents of infrastructure have shown improvement in the current financial year. In the power sector, power generation and plant load factor are on course to achieve their annual targets. In the transport sector, the total earnings of the railways have shown an increase close to 11% during April-September 2007, while passenger traffic handled at domestic air terminals grew by about 28% during April-August 2007. An ambitious National Highway Development Programme (NHDP), involving a total investment of Rs.220,000 crore up to 2012, has been established. In telecommunications, telephone connections have increased by 65% while cell phone connections have grown by 53% during April-August 2007. India Post launched its first aircraft, with a 15 tonne load capacity, in August 2007. Needless to say, India must make enormous investments in its social and economic infrastructure in the near future. The Planning Commission has estimated that the total investment in infrastructure in the 11th Five Year Plan must increase from 4.5% to around 8% of the GDP. Under the governing rules of fiscal management in the FRBM regime, budgetary deficits are being strictly monitored, restricting the scope for unlimited fiscal expansion. Hence, the solution to the challenge of infrastructure is partly located in public-private partnerships, which not only bridge the gap in resources but also bring in private sector expertise and efficiency in the operation and maintenance of assets. During a decade of experience with PPPs in India, The Government of India has taken several initiatives like viability gap funding, Public Private Partnership Appraisal Committee (PPPAC) and India Infrastructure Finance Company Ltd. (IIFCL) to promote PPPs.


The purpose of industry analysis is to review prevailing conditions within specific industry and its segments. The company's industry obviously influences the outlook for the company. Even the best stocks can post mediocre returns if they are in an industry that is struggling. “It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry.” To assess the industry group potential, an investor would want to consider the overall growth rate, market size, and its importance to economy. While the individual company is still important, its industry group is likely to exert as much as, or more, influence on the stock price. When stock move the usually move as groups; there are very few lone guns out there. An understanding of the industry sector involved, including the maturity of the sector and any cyclical effects that the overall economies have on it, is also necessary. The followings are some important factors which should be considered in Fundamental Analysis • • • • • • • • • Growth: A growing industry gives room for profitability. Profitability: Average profitability of the industry should be attractive. Demand-Supply: the wider demand supply gap, the better is the industry’s fortune in the future Entry barrier Competition and Market share: Technology trends Government Policy Capacity Utilization Bargaining power of buyers



The history of steel-making in India can be traced back to 400 BC when the Greek emperors used to recruit Indian archers for their army who used arrows tipped with steel. Many more evidences are there of Indians’ perfect knowledge of steel-making long before the advent of Christ. Archaeological finds in Mesopotamia and Egypt testify to the fact that use of iron and steel was known to mankind for more than six thousand years and that some of the best products were made in India. Among the widely-known relics is the Iron Pillar near Qutab Minar in Delhi. The pillar, built between 350 and 380 AD, did not rust so far -----an engineering marvel that baffles the scientists even today. Yet another engineering feat is the famous Sun Temple at Konark in Orissa, built around 1200 AD, where steel structurals were used for the first time in the world. These were the halcyon days when India flourished in all directions and when its prosperity was a matter of envy for the foreigners. But as ill luck would have it, India’s prosperity gave way to poverty after the advent of the foreign rule. India’s indigenous industry languished because of a deliberate policy of the colonial rulers to make the country only a supplier of raw materials. Steel Role plays a vital role in the development of any modern economy. The per capita consumption of steel is generally accepted as a yardstick to measure the level of socioeconomic development and living standards of the people. As such, no developing country can afford to ignore the steel industry.

The first notable attempt to revive steel industry in India was made in 1874 when the Bengal Iron Works (BIW) came into being at Kulti, near Asansol in West Bengal. However, forty-four years before that, in 1830 to be precise, a foreigner, named Joshua Marshall Heath, had set up a small plant at Porto Novo on Madras Coast. Heath produced in his plant pig iron at the rate of forty tonnes a week. His method of iron-making needed approximately four tonnes of charcoal to produce one tonne of low quality pig iron which proved to be too expensive for Heath to carry on in the face of stiff competition from the British steel industry. The BIW made considerable improvement in the process of iron and steel making. It used coke as the fuel instead of charcoal. But the plant fell sick as the source of funds dried up. It was taken over by the Bengal Government and was


rechristened as Barakar Iron Works. In 1889 the Bengal Iron and Steel Company acquired the plant and by the turn of the century the Kulti plant became a success story. It produced 40,000 tonnes of pig iron in 1900 and continued to produce the metal until it was taken over by Indian Iron and Steel Company (IISCO) in 1936. For modern India’s iron and steel industry August 27, 1907 was a red-letter day when the Tata Iron and Steel Company (TISCO) was formed as a Swadeshi venture to produce 120,000 tonnes of pig iron. The TISCO plant at Sakchi (renamed Jamshedpur) in Bihar, started pig iron production in December 1908 and rolled out its first steel the following year. TISCO had expanded its production capacity to one million tonnes ingot by the time the country achieved freedom. The Tatas, as Gandhiji said, represented the "spirit of adventure" and Jamsetji Tata, in the words of Jawaharlal Nehru," laid the foundation of heavy industries in India". The British rulers disfavoured this and other attempts to start indigenous industry. It was chiefly with the help of American experts that the Tatas started their industry. Its childhood was precarious but the war of 1914-18 gave it a fillip. Again it languished and was in danger of passing into the hands of British debenture holders. But nationalist pressure saved it. In 1918, soon after the war, Indian Iron and Steel Company (IISCO) was formed. The then Mysore government also decided to start an iron works at Bhadravati. While IISCO started producing pig iron at Burnpur in 1922, the Mysore Iron and Steel Works took about 18 years to start its plant. Meanwhile, the Bengal Iron Works went into liquidation and merged with IISCO. The Steel Corporation of Bengal (SCOB) formed in 1937, started making steel in its Asansol plant. Later in 1953, SCOB merged with IISCO. Prime Minister Nehru firmly believed that "no country can be jpolitically and economically independent unless it is highly industrialised and has developed its resources to the utmost". Nehru’s ideas about India’s development were broadly incorporated in free India’s first Industrial Policy Resolution adopted by the Contituent Assembly in 1948. The resolution officially accepted the principle of mixed economy. Industries were divided into four categories. In the first category were strategic industries which were made the monopoly of the Government. In the second category were six industries which included, among others, coal, iron and steel.


It was decided that new units would be started exclusively by the government in the public sector without disturbing the existing ones in the private sector. Eighteen industries, including heavy castings and forings of iron and steel, ferro alloys and tool steel were covered by the third category and the rest of the industries by the fourth. In sum, the government committed itself to the development of basic steel industry while the private sector was to benefit through the establishment of downstream units which would use pig iron, billets, blooms and flat products to be made by the public sector steel plants. In keeping with the spirit of the resolution the Government decided to start a chain of steel plants all over the country in the public sector. The first such plant was set up at Rourkela in Orissa. The second came up at Bhilai in Madhya Pradesh. It was followed by a third at Durgapur in West Bengal. Each of these three plants had an initial production capacity of one million tonne ingot. Durgapur was followed by a steel plant at Bokaro in Bihar. The onward march of Indian steel did not stop at Bokaro. The fifth public sector steel plant was set up at Visakhapatnam in andhra Pradesh. As a matter of fact, the country was dotted with steel and steel-related plants in public and private sectors, like Alloy Steel Plant, Salem Steel Plant, Kalinga Iron Works, Malavika Steel Ltd., Jindal Vijaynagar Steel Ltd., to name only a few. About the same time TISCO launched its twomillion-tonne expansion programme. The Government’s Industrial Policy had undergone changes ____ once in 1956 and then in 1991. The resolution modified in 1956 brought changes in the category pattern and listed more industries for the public sector than did the earlier one, though it was not harsher towards the private enterprise. In the new industrial policy announced in 1991 iron and steel industry, among others, was included in the list of industries reserved for the public sector and exempted from the provision of compulsory licensing. With effect from May 24, 1992 iron and steel industry was included in the list of ‘high priority’ industry for automatic approval for foreign equity upto 51% (now 74%). Export-import regime for iron and steel has also undergone major liberalisation. The freight equalisation scheme was withdrawn removing freight disadvantage to States located near steel plants.


The new policy has already borne fruit. The finished steel pdroduction in India has gone up from mere 1.1 million tonnes in 1951 to 23.37 million tonnes in 1997-98 despite overall economic slow-down in the country. It has been estimated that the demand for finished steel in 2001-02 would touch 38.68 million tonnes and the projected availability of 38.01 tonnes is almost adequate to meet the domestic demand along with export of six million tonnes. Similarly, by 2006-07, the final year of the tenth plan, the demand for finished steel would be around 48.80 million tonnes, providing adequate surplus for meeting the projected export potential of nine million tonnes. However, there is hardly any scope for complacence over the fact that India continues to be the 10th largest steel producer in the world. In 1997 India’s per capita steel consumption was only 22 kg which was much below the world average of about 126 kgs. Even if the domestic demand grows up from 34.5 million tonnes to 100 million tonnes in 2025 the industry is unlikely to catch up with the production in the developed countries. The redeeming feature is the cost competitiveness of Indian steel in the global market. According to World Steel Dynamics, the total cost of steel production in the USA is $510 per metric tonne while in Japan it is $550, in Germany $557, in Canada $493 and in India it is $497. This is because of high material cost due to high excise and import duties. Reduction of cost on these accounts will make Indian steel more competitive in the world market. Indian steel can reasonably expect a good market in the neighbouring countries now that the Asian economy is looking up. In conclusion, it can be said with a certain measure of confidence that India’s iron and steel industry which had a glorious past and has an uncertain present may now look forward to a bright future.


 Global Scenario " In 2005 World Crude Steel output at 1129.4 million metric tonne was 5.9% more than the previous year. (Source: IISI) " China remained the world's largest Crude Steel producer in 2005 also (349.4 million metric tonne) followed by Japan (112.47 million metric tons) and USA (93.89 million metric tons). India occupied the 8th position (38.08 million metric tons). (Source: IISI) The International Iron & Steel Institute (IISI) in its forecast for 2006 has confirmed the trend of recent years of an increase in steel use in-line with general economic growth and with the fastest growth occurring in the countries with the highest GDP growth such as India and China. Apparent world-wide Steel Demand is forecast to grow to between 1,040 and 1,053 million tonnes in 2006 from a total of 972 million tonnes in 2004. This is a growth of 4-5% over the two year period. However, according to IISI the cost of raw materials and energy would continue to represent a major challenge for the world steel industry.  Market Scenario • After liberalization, there have been no shortages of iron and steel materials in the country.

Apparent consumption of finished (carbon) steel increased from 14.84 Million Tonnes in 1991-92 to 43.471 million tonnes (Provissional) in 2006-07. During April-June, 2007, apparent consumption of finished (carbon) steel was 10.103 million tonnes(Provisionally estimated)

Steel industry that was facing a recession for some time has staged a turnaround since the beginning of 2002. Efforts are being made to boost demand. China has been an important export destination for Indian steel. The steel industry is buoyant due to strong growth in demand particularly by the demand for steel in China.

• • •

The boom in the steel sector is being driven by growth in its user industries -construction and automobiles. 43

Giving a huge fillip to the infrastructure sector, the Indian government has announced plans to spend at least US$17 billion to upgrade roads, airports and ports by 2010. The heightened activity in sectors such as roads, ports and sea-bridges is attracting international attention. It has drawn at least two dozen foreign giants in civil engineering, construction and infrastructure consultancy services to the country. During the last six months, around 20 civil engineering and construction companies have entered India or have stepped up their activity, while some big names in the infrastructure consultancy sector are ramping up their operations here. These trends are expected to send annual consumption rocketing from current levels of about 36 million tonnes per year. Steel producers also hope the steel industry will become another sunshine industry, fuelled by a rapid rise in the demand for washing machines, fridges, TV sets and other consumer items using steel as a major ingredient. Similarly, the automobile sector has been abuzz with activity. The total number of passenger vehicles manufactured during 2004-05 was 1,209,654 units, an increase of 22 per cent over the previous year.



• • •

Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. Today, India is the 7th largest crude steel producer of steel in the world. In 2007-08(Apri-June''07), production of Finished (Carbon) Steel was 12.088 million tonnes(Prov). Production of Pig Iron in 2007-08(April-June'07) was 1.165 Million Tonnes (Prov). The share of Main Producers (i.e SAIL, RINL and TSL) and secondary producers in the total production of Finished (Carbon) steel was 33% and 67% respectively during the period 2007-08 (April-June, 2007).


Last 4 year's production of pig iron and finished (carbon) steel is given below: (in million tonnes)





2006-07 (Provisional )

2007-08 (April-June'07) (Prov.estimated)

Pig Iron Finished Carbon Steel

3.764 36.957

3.228 40.055

4.695 44.544

4.960 49.391

1.165 12.088

(Source: Joint Plant Committee) Contribution of Different Companies in Production

 Demand - Availability Projection

Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually.


• •

Gaps in Availability are met mostly through imports. Interface with consumers by way of a Steel Consumer Council exists, which is conducted on regular basis. Interface helps in redressing availability problems, complaints related to quality.

 Pricing & Distribution
• •

Price regulation of iron & steel was abolished on 16.1.1992. Distribution controls on iron & steel removed except 5 priority sectors, viz. Defence, Railways, Small Scale Industries Corporations, Exporters of Engineering Goods and North Eastern Region.

• • • • 

Allocation to priority sectors is made by Ministry of Steel. Government has no control over prices of iron & steel. Open market prices are generally on rise. Price increases of late have taken place mostly in long products than flat products.

Imports of Iron & Steel • Iron & Steel are freely importable as per the extant policy.

Last four years import of Finished (Carbon) Steel is given below:Year 2003-2004 2004-2005 2005-2006 2006-07(Prov. estimated) 2007-08 (Apr-June, 2007) (Prov. estimated) (Source: JPC) Qty. (In Million Tonnes) 1.540 2.109 3.850 4.100 0.800

 Exports of Iron & Steel
• •

Iron & Steel are freely exportable. Advance Licensing Scheme allows duty free import of raw materials for exports.


Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB scheme was temporarily suspended from 27th March 2004 to 12 July, 2004 for export of steel items. The Scheme has since been restarted. The DEPB rates have also been substantially reduced.

Exports of finished carbon steel and pig iron during the last four years and the current year is as : (Qty. in Million Tonnes) Pig Iron 0.629 0.518 0.393 0.440 0.350

Finished (Carbon) Steel 2002-2003 4.506 2003-2004 4.835 2004-2005 4.381 2005-2006 4.478 2006-2007(Prov.estimated) 4.750 2007-2008(April-June 07) 1.310 0.120 (Prov.estimated) (Source : Joint Plant Committee)

 Government Policy on Steel Industry

a. Steel industry : Important Policy Measures

In the new Industrial Policy announced in July, 1991 Iron and Steel industry, among others, was removed from the list of industries reserved for the public sector and also exempted from the provisions of compulsory licensing under the Industries ( Development and Regulation) Act, 1951. 48

With effect from 24.5.92, Iron and Steel industry has been included in the list of `high priority' industries for automatic approval for foreign equity investment upto 51%. This limit has been recently increased to 74%.

Price and distribution of steel were deregulated from January, 1992. At the same time, it was ensured that priority continued to be accorded for meeting the requirements of small scale industries, exporters of engineering goods and North Eastern Region of the country, besides strategic sectors such as Defence and Railways

The trade policy has been liberalised and import and export of iron and steel is freely allowed. There are no quantitative restrictions on import of iron and steel items, covered under Chapter No. 72 of the ITC(HS) Code. The only mechanism regulating the imports is the tariff mechanism. Tariffs on various items of iron and steel have drastically come down since 1991-92 levels and the government is committed to bring them down to the international levels.

Freight equalisation scheme was modified in January'92, removing freight disadvantage to states located near steel plants in the country. At the same time, it was ensured that far-flung areas and distant states were protected by stipulating that the main producers charge either actual freight or freight element existing prior to withdrawal of the scheme, whichever is less.

Levy on account of Steel Development Fund was discontinued from April'94 providing greater flexibility to main producers to respond to market forces. Iron & Steel are freely importable as per the Extant Policy To check unbridled cheap imports of steel the Government has fixed floor prices for seven items of finished steel viz. HR coils, HR sheets, CR coils, Tinplates, CRNO and ASBR.

• •

Iron & Steel are freely exportable

b. Policy on Iron Ore Exports

The existing Export & Import Policy (Exim Policy) permits direct exports of iron ore from Goa and Redi sector to all destinations by the iron ore producers, irrespective of the iron content. The Kudremukh Iron Ore Company Ltd. 49

(KIOCL) is the canalising agency for its own products (iron ore concentrates and iron ore pellets) since it is a 100% Export-Oriented Unit (EOU). Iron ore of Fe content upto 64% is completely decanalised. Exports of ore with iron content exceeding 64% from other sectors of the country are canalised through a Government agency, namely MMTC. The major buyers of Indian Iron Ore are the Japanese Steel Mills (JSMs).

The earlier contract for supply of iron ore by MMTC/KIOCL to the Japanese Steel Mills (JSMs) terminated on 31.3.96. The Cabinet in its meeting held on 8.12.95 approved the proposal of Ministry of Commerce for entering into another five year contract with Japan for export of iron ore.

• •

Iron ore surplus to domestic requirement may continue to be exported; and The export of high grade ore (run of mine Fe content above 65%) would be within the prescribed ceilings. Cabinet Ceilings on export of high grade are : The cabinet in its meeting held on 21.7.98 approved the following ceilings proposed by Ministry of Commerce w.e.f. 1.4.1998 and which would be valid for a period of three years.

From 1.4.1998 ( in million tonne/annum ) Grade Bailadila lumps Bailadila fines High grade lumps (Bellary-Hospet) High grade fines (Bellary-Hospet) Quantity Range Not exceeding 3.0 Not exceeding 3.8 Not exceeding 1.2 Not exceeding 2.0

c. Manganese Ore


Export policy of manganese ore is decided keeping in view the need for conserving high grade ores. Alongwith this, effort is also made to replace the export of ores with export of value added items For the year 1999-2000 the maximum ceilings of manganese ore allowed for export are as follows : ITEM Medium Grade Manganese Ore/blended ore containing 38% to 46% manganese and more than 0.15% Phos. Medium Grade Manganese ore/blended ore containing 38% to 46% manganese and more than 0.10 % Phos. Low grade manganese ore/blended ore containing less than 38% manganese. Manganese ore fines below 12mm in size containing less than 44% manganese. Ceiling for 199899 (in lakh tonnes) 1.00

0.50 4.00 1.50

d. Chromite Ore
Keeping in view the limited reserve of Chromite ore in the country, only certain grades of ore are allowed for export. Emphasis has been laid on export of beneficiated chromite concnetrates. From the year 1997-98, a five year Export policy has been decided upon by Government so us to enable the exporters to establish their presence in the international market.

Steel in Budget 2008-09
Government’s increased emphasis on infrastructure coupled with the strong demand from housing and automobile sectors will ensure that the steel consumption reaches a few hundred million tonnes a few decades from now. Infact, if we are to bridge the gap between the domestic per capita consumption of 39 kgs and global average of 150 kgs, then demand will have to grow by atleast 10% to achieve the target by the year 2020. Further, with the supply not in a position to be able to catch up with the demand atleast until few years from now, we could see the continuation of the current robust steel cycle in the medium term. Availability of iron ore, however, may come under threat if the government continues to permit indiscriminate exports of the same. 51

Budget Measures Steel melting scrap will be exempt from customs duty Excise duty reduction in select segments of automobile manufacturing Continuation of power sector reforms Coal regulator to be appointed Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary Budget Impact Reduction in customs duty on scrap will help steel manufacturers that use the electric arc furnace route for steel manufacturing lower their costs. On the other hand, it will be a negative for manufacturers that use the blast furnace route. If auto manufacturers pass on the reduced excise benefits in the form of lower prices, it will help spur demand for automobiles, which in turn will drive steel demand Increased investment in the power sector will also help boost demand for steel The proposed coal regulator will help ease the process of allocating coal blocks, a key raw material in the steel manufacturing process Company Impact Reduction in excise duties on automobiles will help companies that supply steel to auto makers. Key beneficiary would be Tata Steel Players that supply steel to the power equipment companies like SAIL and JSW Steel will benefit from increased investments in the power sector Better access to coal mines will be a positive for all the players that do not have their own captive mines

 Production of Iron & Steel (a)Finished Carbon Steel Production PRODUCTION OF FINISHED CARBON STEEL (In million tonnes) Year Main Secondary Grand % of share of


Producers Producers 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-03 2003-04 2004-05 2005-06 (Prov.) 2006-07 2007-08 (Apr-August 07) 7.96 8.41 8.77 9.57 10.59 10.54 10.44 9.86 11.20 12.51 13.05 14.39 15.19 15.61 16.236 17.390 6.901 6.37 6.79 6.43 8.25 10.81 12.18 12.93 13.24 15.51 17.19 17.58 19.28 21.00 24.44 26.400 32.000 15.600

Total 14.33 15.20 15.20 17.82 21.40 22.72 23.37 23.82 26.71 29.7 30.63 33.67 36.19 40.05 42.636 49.390 20.501

Secondary Producers 14.5% 44.7% 42.3% 46.3% 50.6% 53.6% 55.32% 57.32% 58.07% 57.88% 57.4 % 57.27 % 58.03 % 61.02 % 61.92 % 64.79 % 76.09 %


(b) Pig Iron Production PRODUCER - WISE PRODUCTION OF PIG IRON (In million tonnes) Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-04 2004-05 2005-06 (Prov) 2006-07 2007-08 (Apr-August 07) Main Secondary Grand %age share of the producers producers total Secondary Producers 1.49 1.68 1.98 2.01 1.74 1.73 1.70 1.37 1.24 0.96 1.02 1.11 0.97 0.625 1.006 0.860 0.414 0.10 0.17 0.27 0.78 1.06 1.57 1.68 1.60 1.94 2.15 3.05 4.18 4.25 2.603 2.850 4.100 1.750 1.59 1.85 2.25 2.79 2.80 3.30 3.39 2.97 3.18 3.11 4.07 5.29 5.22 3.228 3.856 4.960 2.154 6.3% 9.2% 12.0% 28.0% 37.9% 47.5% 49.5% 53.87% 61.08% 69.13% 75.04 % 79.05 % 81.48 % 80.63 % 73.91 % 82.66% 81.24 %


(c) DRI Production PRODUCTION OF DRI (In million tonnes) Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-04 2004-05 2005-06 (Apr-Dec) 2006-07 2007-08 (Apr-August 07) Production 1.31 1.60 2.40 3.39 4.34 5.05 5.32 5.12 5.34 5.44 5.40 6.91 8.08 10.296 12.50 15.75 7.750 % increase 22.1% 50 % 41.3% 28.02% 16.4 % 5.34% (-)3.8% 4.30% 1.90% (-) 0.70 % 27.96 % 16.93 % 21.4 % -



♦ Demand Scenario

Source: IISI

Steel Consumption per capita (Kg)
J apan Germ any U.S. France China U.K. India

648.5 468.7 382.1 280.2 268.6 212.7 37.6 0 100 200 300 400 500 600 700

As demand is very less as compare to others in India so there is a huge opportunity for the manufacturers of India to capture the more market share by increasing capacity.


1. Availability of iron ore and coal 2. Low labour wage rates 3. Abundance of quality manpower 4. Mature production base

1. Unscientific mining 2. Low productivity 3. Coking coal import dependence 4. Low R&D investments 5. High cost of debt 6. Inadequate infrastructure

1. Unexplored rural market 2. Growing domestic demand 3. Exports 4. Consolidation

1. China becoming net exporter 2. Protectionism in the West 3. Dumping by competitors


 Current Problems of Steel Industry
• • • • • Shortage of quality raw materials. Inadequate ‘enabling’ infrastructure. High cost of basic inputs like power and tariff. High cost of capital. High tariff/non-tariff barriers imposed by on Indian exports by Developed Nations.

 Indian Railways : Comparatively High Tariffs
9 8 7 6 5 4 3 2 1 0

PPP * US Cents / thkm

5.5 3.7 2 2 2.6







 Power Costs : High in India
7 6 5 4 3 2 1 0

PPP US Cents/ KiloWattHr
5.9 4.7 3.8 2.2 4 4.3

South Africa







 Tariff at Indian and Foreign Ports





Indexed at Osaka = 100 165 100 187





Singapore Hongkong




Source: ESCAP and KMI report

 Inefficiency costs at Indian Ports
• Based on total employees,traffic, productivity/man , output per day , container moves per hour, idle time at berth , india is incurring rs 4000 crores extra compared to world average on exim trade


 Opportunities of Steel Industry:  Low Per Capita Consumption
Per capita steel consumption in the country is a mere 29 kgs.

600 500 400 300 200 100 0 World
Source: JPC

550 450



150 29 Japan USA China India

 Raw Material Resources
• • • • •

Iron Ore Coal Limestone Dolomite Refractory


The purpose of company analysis to analyze the financial and non-financial aspects of a company to determine whether to buy, sells, or holds onto the shares of a particular company After determining the economic and industry conditions, the company itself is analyzed to determine its financial health. This is usually done by studying the company's financial statements. From these statements a number of useful ratios can be calculated. The ratios fall under five main categories: profitability, price, liquidity, leverage, and efficiency. When performing ratio analysis on a company, the ratios should be compared to other companies within the same or similar industry to get a feel for what is considered "normal." These are quantitative factors of company analysis; there are also some qualitative factors which should be considered also. • • • • Find out as much as possible about the company and their products. Do they have any “core competency” or “fundamental strength” that puts them ahead of all the other competing firms? What advantage do they have over their competing firms? Do they have a strong market presence and market share? Or do they constantly have to employ a large part of their profits and resources in marketing and finding new customers and fighting for market share? Following are some more important aspects about company • • Shareholding pattern Growth


• • • • • •

Technology Expansion Plan Profitability Capital History Marketing Capabilities Most important its financial statement After you understand the company & what they do, how they relate to the

market and their customers, you will be in a much better position to decide whether the price of the companies stock is going to go up or down. So fundamental analysts use different tools and ratios to compare all sorts of companies no matter what business they are in or what they do!


SAIL's Background and History
The Precursor SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialisaton of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954. The President of India held the shares of the company on behalf of the people of India. Expanding Horizon (1959-1973) Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel Ministry. From April 1957, the supervision and control of these two steel plants were also transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December 1959. A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to construct and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January 1962 after commissioning of the Wheel and Axle plant. The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT. The second phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur


Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73. Holding Company The Ministry of Steel and Mines drafted a policy statement to evolve a new model for managing industry. The policy statement was presented to the Parliament on December 2, 1972. On this basis the concept of creating a holding company to manage inputs and outputs under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as an operating company. Since its inception, SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Besides, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry. Company Profile Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including


the Company's iron ore, limestone and dolomite mines. The company has the distinction of being India’s largest producer of iron ore and of having the country’s second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) and the International Trade Division. CMO encompasses a wide network of 34 branch offices and 54 stockyards located in major cities and towns throughout India. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified. Incorporation Year Registered Office Telephone Fax Industry House Chairman Managing Director Company Secretary Auditor Face Value Market Lot Ispat Bhawan, Lodi Road, New Delhi - 110003, New Delhi 91-011-24367481-86 (14 Lines) 91-011-24367015 Steel - Large Govt of India S K Roongta V Gujral Devinder Kumar S K Mittal & Co/Ray & Ray/Dass Maulik Mahenra K Ag 10 1 65

Listing Registrar

London, Mumbai, NSE MCS Ltd Sri Venkatesh Bhawan, W-40 Okhala Indus Ar, Phase - II, New Delhi 110048

♦ Production Facilities:
• • • 5 Integrated Steel Plants 3 Special Steel Plants 1 Subsidiary - Ferro Alloy Plant (under merger)

♦ Marketing Network:
• • • 34 Branch Sales office 14 Customer Contact Office (CCO) 42 Warehouses (Departmental 24 & Consignment Agencies 18)

♦ Captive Mines:
• • • • 9 Iron Ore Mines 5 limestone mines 2 Dolomite Mines 3 Collieries

 Major Units  Integrated Steel Plants ♦ Bhilai Steel Plant (BSP) in Chhattisgarh ♦ Durgapur Steel Plant (DSP) in West Bengal ♦ Rourkela Steel Plant (RSP) in Orissa ♦ Bokaro Steel Plant (BSL) in Jharkhand ♦ IISCO Steel Plant (ISP) in West Bengal


 Special Steel Plants • • • Alloy Steels Plants (ASP) in West Bengal Salem Steel Plant (SSP) in Tamil Nadu Visvesvaraya Iron and Steel Plant (VISL) in Karnataka

 Subsidiary
Maharashtra Elektrosmelt Limited (MEL) in Maharashtra

 Joint Ventures
SAIL has promoted joint ventures in different areas ranging from power plants to ecommerce. ♦ NTPC SAIL Power Company Pvt. Ltd A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.), it manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 megawatts (MW) ♦ Bokaro Power Supply Company Pvt. Limited This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power generation and 1880 tonnes per hour steam generation facilities at Bokaro Steel Plant. ♦ Mjunction Service Limited A joint venture between SAIL and Tata Steel on 50:50 basis, this company promotes ecommerce activities in steel and related areas. 67

♦ SAIL-Bansal Service Center Ltd. SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel. ♦ Bhilai JP Cement Ltd SAIL has also incorporated a joint venture company with M/s Jaiprakash Associates Ltd to set up a 2.2 MT cement plant at Bhilai SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint venture company to produce ferro-manganese and silico-manganese at Bhilai. ♦ Ownership and Management The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its ‘Navratna’ status, enjoys significant operational and financial autonomy

SAIL Today
SAIL today is one of the largest industrial entities in India. Its strength has been the diversified range of quality steel products catering to the domestic, as well as the export markets and a large pool of technical and professional expertise. Today, the accent in SAIL is to continously adapt to the competitive business environment and excel as a business organisation, both within and outside India.

SAIL - Into the Future
 SAIL’s Growth Plan 2010 Much has happened ever since SAIL’s Corporate Plan was announced in 2004. Investment plans for the three speciality steel plants have been firmed up. Company has grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant). Production targets have been revised from 19 million tonnes (MT) of steel to about 24 MT. Estimated investment has increased from Rs 25,000 crore to around Rs 40,000 crore. And the time period has been squeezed by two years, bringing the targeted year of completion of major projects from 2012 to 2010.


Saleable Steel Capacities (MT) PLANT Bhilai Steel Plant Durgapur Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Alloy Steels plant Salem Steel Plant 2010 6.21 2.85 2.90 6.50 2.37 0.43 0.36

Visvesvaraya Iron & Steel 0.22 Plant

Growth of SAIL
Maintaining thrust on production to meet the growing demand for steel in the domestic market, Steel Authority of India (SAIL) achieved best-ever February performance by producing 1.1 million tons of saleable steel, a growth of 7% over February `07, with capacity utilization of the SAIL plants going up to 122%. The company also recorded best-ever February production of hot metal at 1.24 million tons and 1.14 million tons of crude steel, both showing 6% growth over the corresponding period last year (CPLY).


Consequently, during the period April `07-February `08 of the current financial year, SAIL produced 11.8 million tonnes of saleable steel, an increase of over 4 lakh tonnes over CPLY, with an average capacity utilisation of 117%. Key techno-economic parameters also improved in February`08. Coke rate at 524 kg per tonne of hot metal was 3% lower and energy consumption at 7.05 giga calories per ton of crude steel reduced by 1% over CPLY. Production through the energy-efficient continuous casting route crossed 7.5 million tonnes, 9% higher than February`07. With thrust maintained on production of value-added and special steels, the SAIL plants produced nearly 3.6 million tonnes of such items in February`08, an increase of 49% over CPLY. The captive mines of SAIL produced 2.2 million tons of iron ore in February`08 and met 100% requirement of the plants. Coal production from captive collieries was increased during the year (April `07-February`08) by 50% over CPLY. During February `08, SAIL`s Central Marketing Organisation achieved sales of 1.03 million tonnes, 3.7% higher than CPLY. With SAIL entering its 50th year of production, February 08 was a memorable month for the company. The month`s other highlights included payment of Rs 6,734.9 million to the Government by SAIL as interim dividend for the financial year 2007-08, inauguration of Bhilai Steel Plant`s Rs 112.62 billion expansion and modernisation programme by Union Minister for Chemicals & Fertilisers and Steel Mr Ram Vilas Paswan, presentation of the FICCI Annual Award 2006-07 to SAIL for outstanding achievement in the category of Rural & Community Development Initiatives.


Share Holding Pattern
SAIL is a public sector undertaking of the Government of India which holds 85.82% of equity. Other major shareholders are Domestic Financial institutions with 4.73% stake and Foreign Institutional Investor with 5.08 % individuals with 3.16% stake and others 1.21% Category of Share Holders Govt. of India Domestic Financial Institute Foreign Institutional Investor Individuals (Incl. Employees, NRIs, GDRs) Others % Holding 85.82 4.73 5.08 3.16 1.21

Share Holding Pattern

Govt. of India Domestic Financial Institute Foreign Institutional Investor Individuals (Incl. Employees, NRIs, GDRs) Others

1% 5% 3% 5%


Major Products Manufactured/ Traded (03,2007) Product Name Steel-Main-Saleable Alloy Steel-Saleable Others Pig Iron 71 Sales (Rs.in Crores) 34,620.81 2,387.37 1,480.51 618.34

Finished Prod.Internally Cons. Pig Iron(Alloy) Steel Ingots Middling/Rejects

410.00 69.88 5.64 5.15

Balance Sheet
(Rs. In Crore) Year Share Capital Reserves & Surplus Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Current Liabilities Provisions Net Current Assets Miscellaneous Expenses not w/o Total Assets Contingent Liabilities Mar 07 4,130.40 13,182.75 17,313.15 1,556.39 2,624.13 4,180.52 21,493.67 29,912.71 18,315.00 11,597.71 1,236.04 513.79 6,814.10 2,314.75 9,609.83 3,097.70 8,105.99 5,713.41 8,016.98 129.15 Mar 06 4,130.40 8,471.01 12,601.41 1,122.16 3,175.46 4,297.62 16,899.03 29,360.46 17,198.32 12,162.14 757.94 292.00 6,371.66 1,881.73 6,172.64 2,771.47 8,081.23 5,645.14 3,471.13 215.82 Mar 05 4,130.40 6,176.25 10,306.65 1,603.98 4,165.81 5,769.79 16,076.44 28,043.48 15,558.41 12,485.07 366.48 606.71 4,220.69 1,908.45 6,132.12 3,260.11 7,812.72 5,385.40 2,323.25 294.93 Mar 04 4,130.40 907.27 5,037.67 3,400.78 5,289.28 8,690.06 13,727.73 27,683.63 14,515.73 13,167.90 382.20 543.17 3,057.06 1,549.96 2,035.82 1,603.36 4,412.32 4,577.92 -744.04 378.50 Mar 03 4,130.40 -1,605.16 2,525.24 5,511.59 7,416.35 12,927.94 15,453.18 27,534.61 13,498.75 14,035.86 361.25 543.17 3,744.37 1,660.09 512.91 1,373.33 4,492.71 2,821.40 -23.41 536.31 15,453.18 2,853.25

21,493.67 16,899.03 16,076.44 13,727.73 3,635.18 3,730.45 4,056.90 3,159.22


Profit & Loss Account
Year Sales Turnover Other Income Stock Adjustments Total Income Raw Materials Excise Duty Power & Fuel Cost Other Manufacturing Expenses Employee Cost Selling and Administration Expenses Miscellaneous Expenses Less: Preoperative Expenditure Capitalised Profit before Interest, Depreciation & Tax Interest & Financial Charges Profit before Depreciation & Tax Depreciation Profit Before Tax Tax Profit After Tax

(Rs. In Crore) Mar 07 Mar 06 Mar 05 Mar 04 Mar 03 39,481.80 32,686.89 32,023.87 24,137.02 19,262.02 1,708.15 1,151.99 1,072.69 976.05 795.89 289.15 1,131.31 367.72 -485.84 -433.00 41,479.10 34,970.19 33,464.28 24,627.23 19,624.91 13,276.20 12,391.12 9,358.92 6,904.25 6,234.03 5,393.82 4,605.48 3,455.12 2,881.66 2,370.56 2,613.94 2,526.97 2,227.62 2,187.95 2,061.32 3,662.77 3,268.56 2,607.77 2,164.42 1,965.95 5,086.81 4,156.28 3,811.91 4,757.90 3,722.87 1,417.61 1,467.62 1,167.04 1,176.07 1,176.43 484.80 525.41 613.33 741.80 737.38 1,423.08 1,352.05 921.71 893.07 856.21

10,966.23 7,380.80 11,144.28 4,706.25 2,212.58 332.13 10,634.10 1,211.48 9,422.62 3,220.33 6,202.29 467.76 651.98 6,913.04 10,492.30 1,207.30 1,126.95 5,705.74 9,365.35 1,692.77 2,548.38 4,012.97 6,816.97 955.45 1,381.79 3,750.80 830.79 1,122.59 1,146.66 2,628.21 -315.87 116.13 -11.56 2,512.08 -304.31

Growth of Company
Year Sales Var % Profit After Tax Var % 2007 39,481.80 20.78% 6,202.29 54.55% 2006 32,686.89 2.07% 4,012.97 -41.13% 2005 32,023.87 32.67% 6,816.97 171.37% 2004 24,137.02 25.30% 2,512.08 925.50% 2003 19,262.02 --304.31 --


Sales C hart 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 1 5,000.00 1 0,000.00 5,000.00 0.00 2003 2004 2005 2006 2007 1 9,262.02 32,023.87 32,686.89 24,1 37.02

39,481 .80

Profit C hart 8000 7000 6000 5000 4000 3000 2000 1 000 0 -1 000 2003 -304.31 2004 2005 2006 2007

6,81 6.97

6,202.29 4,01 2.97

2,51 2.08

Current Price 52 Week High 52 Week Low Face Value

190.40 292.50 106.10 10


Year end EPS(Rs) Book value(Rs) NPM(%) ROCE(%) ROE(%) Debt/equity P/E

Mar 07 14.54 41.92 15.71 51.28 41.47 0.28 7.85

Mar 06 9.44 30.51 12.28 38.03 35.04 0.44 8.82

Mar 05 16.06 24.95 21.29 68.77 88.85 0.94 3.92

Here from the above information I found that the Sales, EPS, Book value, Net Profit Margin are increased continuously in 2007 as compared to 2006 and 2005 but SAIL should concentrate on PE Ratio because it has decreased in 2007. The debt-equity ratio is decreased which is good sign and under controlled which is good sign. The investor of this company should take hold position of this company for the long period for good dividends and good market price in future.


Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) was established in 1907. It represents the country's single largest, integrated steel plant in the private sector. The company has a wide product portfolio, which includes flat and long steel, tubes, bearings, ferro-alloys and minerals as well as cargo handling services. While in terms of size,Tata Steel ranks 34th in the world; it was ranked first (for the second time) among 23 world class steel companies by World Steel Dynamics in June 2005. With its plant located in Jamshedpur (Jharkhand) and captive iron ore mines and collieries in the vicinity,Tata Steel enjoys a distinct competitive advantage. The main plant at Jamshedpur manufactures 5 MTPA of flat and long products, while its recently acquired Singaporebased company, NatSteel Asia, manufactures 2 MTPA of steel across Singapore, China, Philippines, Malaysia and Vietnam.Apart from the main steel division, Tata Steel's operations are grouped under strategic profit centres like tubes, growth shop, bearings, ferro alloys and minerals, rings, agrico and wires.

Incorporation Year Registered Office Telephone Fax Industry House Chairman Managing Director Company Secretary Auditor Face Value Market Lot Listing

1907 Bombay House, 24 Homi Mody Street Fort, Mumbai - 400001, Maharashtra 91-22-66658282 91-22-66658113/66657725 Steel - Large Tata Ratan N Tata B Muthuraman J C Bham Deloitte Haskins & Sells 10 1 Kolkata, Luxembourg, Mumbai, NSE



TSR Darashaw Ltd 6-10 Haji Moosa, Patrawala Ind.Estate, DrEMoses Rd Mahalaxm, Mumbai - 400 011

Production Highlights
• Major Products Manufactured/ Traded (03,2007) Product Name Steel-Saleable Other Raw Mtls. Tubes-Welded-Steel Charge/Ferro Chrome Power & Water-Sales Steel & Scrap-Semi finished Other Products Services Bearings Ferro Manganese By Products Metallurgial Machinery Agricultural Products Ball Bearing Rings-Alloy Steel Bearing Rings-Cast & Alloy St. Scrap/Othr Mtls/Raw Mat.- Sale Steel-Saleable-Finished/Conver Sales (Rs.in Crores) 14,511.03 1,471.86 999.45 596.98 513.96 486.29 260.61 230.41
162.78 129.76 111.85 95.52 84.65 75.59 20.48 6.16 5.19

Business Results The Company achieved the best ever sales turnover and profitability during the year under review. A robust Indian economy, firm steel prices, higher volumes and several improvement initiatives contributed to the record performance. Finished steel sales were higher by 11.33% at 4.51 million tones over the previous year. Export turnover was lower by about 5% due to lower volumes. Average price realization improved mainly due to higher prices of hot rolled coils/sheets. Operating profit was higher by over Rs.1,000 crores at Rs. 6,973 cores (2005-06: Rs. 5,938 crores), an increase of 17% over the previous year. Net interest charges were higher at Rs. 174 crores (2005-06: Rs.


125crores),due to additional borrowings for the Company’s domestic expansion programs and funding Company’s contribution for financing the acquisition of Corus Group plc. After providing for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and Rs. 152 crores towards employee separation scheme (2005 06: Rs. 53 crores), the profi t before tax rose by 20% to Rs. 6,262 crores (2005-06: Rs. 5,240 crores). Net Profit after taxes was higher at Rs. 4,222 crores (2005-06: Rs. 3,506 crores), an increase of 20% compared to the previous year. The record financial results would not have been possible without a matching performance by the operating departments including the raw materials division. The year witnessed the best ever crude steel production by the Company at 5.05 million tonnes, an increase of 6.7% over the previous year. Jamshedpur Plant became the fi rst plant in India to produce more than 5 million tonnes of crude steel in a year. The upgraded “G” Blast Furnace produced over 2 million tonnes of hot metal, as against its rated capacity of 1.8 million tonnes. Among the Finishing Mills, the output at the Cold Rolling Mill and the Hot Strip Mill exceeded their rated capacities. The all-round increase in production was backed by improvements in operating practices and productivity resulting in a reduction in consumption of raw materials, energy, refractoriness etc. The Company’s Collieries, for the first time, produced 1.9 million tonnes of clean coal at a reduced level of ash content, which has contributed significantly in substituting the more expensive imported low ash coal. A modern beneficiation plant for iron ore fines has been set up to reduce the aluminum content in iron ore.

BALANCE SHEET Year Share Capital Reserves & Surplus Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities Gross Block Less: Accum. Depreciation Mar 07 580.67 13,368.42 13,949.09 3,758.92 5,886.41 9,645.33 23,594.42 16,029.49 7,486.37 Mar 06 553.67 9,201.63 9,755.30 2,191.74 324.41 2,516.15 12,271.45 15,407.17 6,699.85 Mar 05 553.67 6,506.25 7,059.92 2,468.18 271.52 2,739.70 9,799.62 13,179.26 5,939.68 Mar 04 369.18 4,146.68 4,515.86 3,010.16 372.05 3,382.21 7,898.07 12,505.83 5,411.62

(in crore) Mar 03 369.18 2,816.84 3,186.02 3,667.63 557.98 4,225.61 7,411.63 12,192.71 4,849.99


Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Current Liabilities Provisions Net Current Assets Miscellaneous Expenses not w/o Total Assets Contingent Liabilities

8,543.12 2,497.44 6,106.18 2,332.98 631.63 7,681.35 4,025.95 5,389.22 3,037.54 6,245.15 202.53 23,594.42 5,072.96

8,707.32 1,157.73 4,069.96 2,174.75 539.40 288.39 2,006.21 4,564.14 2,361.44 -1,916.83 253.27 12,271.45 2,209.45

7,239.58 1,872.66 2,432.65 1,872.40 581.82 246.72 2,160.63 4,297.24 2,524.42 -1,960.09 214.82 9,799.62 1,911.12

7,094.21 763.64 2,194.12 1,249.08 651.30 250.74 1,508.00 3,900.00 2,068.99 -2,309.87 155.97 7,898.07 1,508.01

7,342.72 201.08 1,194.55 1,152.95 958.47 373.12 2,000.08 3,594.23 2,217.11 -1,326.72 0.00 7,411.63 1,316.22

The company said that excluding the turnover of Tata Steel UK of Rs 23,867 crore for the quarter, the group turnover registered an increase of Rs 2,157 crore. This was mainly due to increases in Tata Steel’s Indian operations (Rs 472 crore), Natsteel (Rs 1,135 crore) and Tata Steel Thailand (Rs 554 crore). The increase in Tata Steel’s India operations was primarily due to increase in prices, whereas the rise in Natsteel and Tata Steel Thailand was attributed to increase in price and volume.

Total Expenditure
Total expenditure for the quarter ended December 31, 2007 was Rs 28,967 crore, (including a total expenditure of Rs 22,808 crore of Tata Steel UK), against Rs 4,325 crore during the previous year. The material cost, excluding that of Tata Steel UK of Rs 11,253 crore, rose to Rs 3,003 crore from Rs 1,919 crore. The other expenditure, excluding that of Tata Steel UK (Rs 5,053 crore) was Rs 1,395 crore in Q3 FY08 against Rs 1,133 crore in Q3 FY07.


Due to rupee appreciation against major foreign currencies in Q3 FY08, the company had a net exchange gain of Rs 45 crore. The actuarial gain on funds for employee benefits amounted to Rs 145 crore for the quarter ended December 31, 2007. The gain represents reduction in pension liability arising out of higher discount rate, reflecting improved yields on bonds. On Wednesday, the company stock closed at Rs 766.45, down 6.42 per cent over previous close.

Profit & Loss Account Year Sales Turnover Other Income Stock Adjustments Total Income Raw Materials Excise Duty Power & Fuel Cost Other Manufacturing Expenses Employee Cost Selling and Administration Expenses Miscellaneous Expenses Less: Preoperative Expenditure

(in crore) Mar 07 Mar 06 Mar 05 Mar 04 19,757.80 17,140.24 15,871.08 11,920.96 573.08 356.24 305.19 293.38 82.47 104.91 289.55 80.31 20,413.35 17,601.39 16,465.82 12,294.65 3,572.06 3,024.38 3,020.42 2,245.42 2,304.18 2,004.83 1,377.92 1,218.57 1,027.84 897.57 778.30 724.62 2,500.00 2,090.67 1,948.00 1,549.92 1,598.96 1,397.39 1,403.84 1,575.71 1,491.57 1,373.71 1,304.05 1,055.47 822.57 735.89 693.25 558.59 236.02 112.62 204.82 151.84 80 Mar 03 9,793.27 134.18 15.03 9,942.48 1,749.97 1,071.95 787.75 1,317.36 1,444.96 972.29 498.60 60.79

Capitalised Profit before Interest, Depreciation & Tax Interest & Financial Charges Profit before Depreciation & Tax Depreciation Profit Before Tax Tax Profit After Tax How fast is the company growing?

7,332.19 6,189.57 6,144.86 3,518.19 2,160.39 251.25 7,080.94 819.29 6,261.65 2,039.50 4,222.15 174.51 6,015.06 775.10 5,239.96 1,733.58 3,506.38 228.80 227.12 342.41 5,916.06 3,291.07 1,817.98 618.78 625.11 555.48 5,297.28 2,665.96 1,262.50 1,823.12 919.74 250.19 3,474.16 1,746.22 1,012.31

Companies are judged by their sales and earnings growth rates than on the absolute value of their sales and earnings. Look for companies that consistently grow faster than there peers. Year Sales Var % Profit After Tax Var % 2007 19,757.80 15.27% 4,222.15 20.41% 2006 17,140.24 8.00% 3,506.38 0.93% 2005 15,871.08 33.13% 3,474.16 98.95% 2004 11,920.96 21.72% 1,746.22 72.50% 2003 9,793.27 -1,012.31 --


Profit 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1 ,500.00 1 ,000.00 500.00 0.00 4,222.1 5 3,474.1 3,506.38 6

1 ,746.22 1 2.31 ,01






Sales Chart
25,000.00 20,000.00 1 5,000.00 1 0,000.00 5,000.00 0.00 2003 2004 2005 Y ear 2006 2007 9,793.27 1 ,920.96 1 7,1 1 5,871 .08 1 40.24

1 9,757.80

Current Price 52 Week High 52 Week Low Face Value

698.00 969.80 399.21 10


Share Holding Pattern Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public
Share Holding

% 17.42 21.85 3.98 30.52 25.32



Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public




Year end EPS(Rs) Book value(Rs) NPM(%) ROCE(%) ROE(%) Debt/equity P/E

Mar 07 69.95 240.22 21.37 36.79 35.62 0.51 6.43

Mar 06 61.51 176.19 20.46 50.13 41.70 0.31 8.72

Mar 05 60.91 127.51 21.89 63.79 60.02 0.53 6.58

Here from the above information I found that the Sales, EPS, Book value, Net Profit Ratio are increased continuously in 2007 as compared to 2006 and 2005 but TATA should concentrate on PE Ratio because it has decreased in 2007. The debt-equity ratio is decreased which is good sign and under controlled which is good sign. The investor of


this company should buy and hold the shares of this company for long period because this company can give good dividend and investor can get arbitrage profit for short period of time. This shares are for long term investmentpurpose.


Companies of Jindal Group
Jindal Stainless Ltd.: Jindal Stainless is the largest integrated stainless steel producer in India and the flagship company of the Jindal Group. It is an ISO: 9001 & ISO: 14001 company. Jindal Stainless Ltd. has plants at Hisar and Vizag and is setting up a Greenfield integrated Stainless Steel project in Orissa with capacity of 1.6 million tones per annum. Jindal's plant at Hisar is India's only composite stainless steel plant for the manufacture of Stainless Steel Slabs, Blooms, Hot rolled and Cold Rolled Coils, 60% of which are exported worldwide. At Vizag, Jindal has a Ferro Alloy Plant with an installed capacity of 40,000 metric tones per annum. Jindal Steel & Power Ltd: JSPL is one of the leaders in Steel Manufacturing and Power Generation in India. JSPL is the largest private sector investor in the State of Chhattisgarh with a total investment commitment of more than Rs. 10,000 crores. It is also setting up a 6 million tonne steel plant in Orissa with an investment of Rs. 13,500 crores and a 6 million tonne steel plant in Jharkhand with an investment of Rs. 15,000 crores. Jindal Power Limited, wholly owned subsidiary of JSPL, is setting up a 1000 MW O P Jindal Super Thermal Power Plant at Raigarh, with an investment of over Rs. 4500 crores. JSPL has also ventured into 84

exploration and mining of high value minerals and metals, like diamond, precious stones, gold, platinum group of minerals, base metals, tar sands etc. JSW Steel Limited: JSW Steel Ltd is a fully integrated steel plant having units across Karnataka and Maharashtra producing from pellets to colour coated steel. JSW was founded in1982, when the Jindal Group acquired Piramal Steel Ltd which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, renamed it as Jindal Iron and Steel Co Ltd (JISCO) now known as JSW Steel Limited (Downstream). In 1994, to achieve the vision of moving up the value chain and building a strong, resilient company, JISCO promoted Jindal Vijayanagar Steel Ltd (JVSL) now known as JSW Steel Limited (Upstream).

Jindal Steel
Jindal Steel is amongst the largest corporate groups in India. Jindal Group is presently a US $5 billion conglomerate and ranks fourth amongst the top Indian Business Houses in terms of assets. Jindal Steel is one of the largest steel producers in India with 12 plants in India and 2 in USA. O.P. Jindal is the founder of Jindal Group. He started by trading in steel pipes in Nalwa, a village in the present-day Haryana. In 1952, O.P. Jindal set up the group's first factory at Liluah, near Calcutta for the manufacturing of steel pipes, bends and sockets. Soon thereafter, he set up a similar manufacturing unit at Hisar. In the early 1960s Jindal Steel achieved a breakthrough when it developed India's first 100% indigenous pipe mill at Hisar. In 1970, O.P. Jindal established Jindal Strips Limited and set up a mini steel plant at Hisar to manufacture coils and plates through the electric and furnace route. Since then, Jindal Steel has not looked back and has gone from strength to strength. Today, the group has developed into a multi-faceted organization with revenues in excess of US $5 billion.


Jindal Steel and Power Limited (JSPL), part of the O P Jindal group was formed in April, 1998 by hiving off the Raigarh and Raipur manufacturing facilities of Jindal Strips Limited (JSL) into a separate company. Currently the company is engaged in manufacture of sponge iron, steel, pig iron, ferro-chrome and power. JSPL is largest, and amongst the lowest cost, coal based producer of sponge iron in India with an installed capacity of 1,370,000 MTPA. JSPL’s operations are headed by Mr. Naveen Jindal, Executive Vice Chairman and Managing Director of the company.

Operations of the company
JSPL is engaged in manufacturing of iron & steel products and power. JSPL’s product mix includes sponge iron, power and value added steel products, such as rounds, billets, beams, blooms and slabs. During FY’06, JSPL undertook capacity expansions across various divisions at Raigarh. Post expansions, the installed capacities of various products include 1,370,000 tpa of sponge iron, 24,00,000 tpa of mild steel, 36,000 tpa of ferro Alloy, hot metal capacity of 250,000 tpa, power generation of 295 MW, coal washery with capacity of 60 lakh tpa and a Rail and Universal Beam Mill (RUBM) of 750,000 tpa capacity. The company has mining rights for coal in Gare area in Raigarh with estimated reserves of 62 mn tonnes and iron ore at Tensa mines Orissa (estimated reserves 20 mn tonnes). Sales of the company registered an 18% rise to Rs 2877 cr in FY’06 over previous year. Capacity augmentation coupled with improved realizations, on account of increase in sales of value added products, helped the company achieve the growth. Sponge iron had been the major contributor to the total sales (23%) followed by beams and columns (22%) and iron ore/fines (18%). Export sales registered 14% rise and stood at Rs 371 cr in FY’06, mainly made to UAE, China & Korea. JSPL’s coal requirement is met through company’s own mines. JSPL’s requirement of iron ore is partially sourced from captive iron ore mine in Tensa and


balance through term contract from external source. Currently, company imports its entire requirement of coke from China and is setting up an in-house coke oven plant to reduce its costs. Captive power generation plant is based on the utilization of waste heat of the flue gases from the sponge iron kilns as well as steam from coal fired FBC boilers, which in turn utilizes the ejects from the coal washery and char generated from the sponge iron plants. The power generation apacity as on December 31, 2006 stood at 315 MW. Apart from captive use, JSPL sells power to hattisgarh State Electricity Board, through a firm PPA, and neighboring industrial units. Registered Office Telephone Fax Industry House Chairman Managing Director Company Secretary Auditor Face Value Market Lot Listing Registrar T K Sadhu S S Kothari Mehta & Co 1 1 Mumbai, NSE O P Jindal Marg, Hisar - 125005, Haryana 91-01662-222471-75 91-01662-222476 Steel - Sponge Iron Jindal Om Prakas Savitri Jindal

Alankit Assignments Ltd 2E/21 Alankit House, Anarkali Market, Jhandewalan Extn, New Delhi - 110055 Major Products Manufactured/ Traded (03,2007) Product Name Sponge Iron Other Semi Steel Products Parallel Flange/Beam/Columns Rounds Iron Ore-Fines Power Pig Iron Ferro Chrome Others Other Finished Steel Products Machinery 87 Sales (Rs.in Crores) 794.54 685.21 624.19 574.72 443.25 285.69 218.96 123.44 58.48 57.08 33.95

Share Holding Pattern
% Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public 24.49 4.55 1.88 59.05 9.93

Share Holding Pattern Foreign Holdings

10% 25%

Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public

5% 2% 58%


Balance Sheet Year Share Capital Reserves & Surplus Total Shareholders Funds Secured Loans Unsecured Loans Total Debt Total Liabilities Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Current Liabilities Provisions Net Current Assets Miscellaneous Expenses not w/o Total Assets Contingent Liabilities Mar 07 16.40 2,462.01 2,478.41 2,115.61 1,392.11 3,507.72 5,986.13 4,929.03 781.75 4,147.28 937.84 709.82 642.44 320.31 52.97 819.59 1,261.88 385.48 187.95 3.24 5,986.13 1,578.03 Mar 06 16.40 1,823.26 1,839.66 1,780.77 964.60 2,745.37 4,585.03 3,243.05 542.33 2,700.72 1,146.27 430.30 568.65 299.54 31.30 606.32 926.67 272.14 307.00 0.74 4,585.03 679.59 Mar 05 16.40 1,302.98 1,319.38 1,159.51 336.35 1,495.86 2,815.24 2,530.28 361.76 2,168.52 345.70 33.38 257.55 172.91 33.29 575.09 592.22 180.00 266.62 1.02 2,815.24 597.68

( in Crore) Mar 04 16.40 839.80 856.20 988.53 37.43 1,025.96 1,882.16 1,677.94 247.00 1,430.94 289.03 49.66 196.51 211.16 21.90 218.64 448.45 88.56 111.20 1.33 1,882.16 273.85 Mar 03 25.63 558.18 583.81 813.96 71.29 885.25 1,469.06 1,011.22 179.31 831.91 492.78 42.23 101.95 165.12 18.64 150.67 276.88 59.00 100.50 1.64 1,469.06 130.85

Profit & Loss Account

( in Crore)


Mar 07 Mar 06 Mar 05 Mar 04 Mar 03 Sales Turnover 3,899.81 2,877.46 2,448.17 1,390.20 993.18 Other Income 72.34 37.25 23.10 24.84 13.75 Stock Adjustments 56.86 183.98 13.85 42.38 17.92 Total Income 4,029.01 3,098.69 2,485.12 1,457.42 1,024.85 Raw Materials 783.38 450.35 341.67 233.37 164.47 Excise Duty 396.71 312.91 196.26 131.08 112.58 Power & Fuel Cost 341.27 428.89 429.07 233.00 159.55 Other Manufacturing Expenses 502.98 394.59 280.19 155.12 107.26 Employee Cost 93.70 72.81 48.45 31.04 24.67 Selling and Administration Expenses 378.36 323.99 212.76 99.84 75.67 Miscellaneous Expenses 78.41 66.09 60.99 29.63 61.04 Less: Preoperative Expenditure Capitalised 0.00 0.00 0.00 0.00 0.00 Profit before Interest, Depreciation & Tax 1,454.20 1,049.06 915.73 544.34 319.61 Interest & Financial Charges 173.19 102.24 85.63 83.01 82.95 Profit before Depreciation & Tax 1,281.01 946.82 830.10 461.33 236.66 Depreciation 336.47 219.17 152.48 106.23 57.64 Profit Before Tax 944.54 727.65 677.62 355.10 179.02 Tax 241.55 154.71 161.91 49.64 33.94 Profit After Tax 702.99 572.94 515.71 305.46 145.08
Current Price 52 Week High 52 Week Low Face Value 828.50 1389.70 470.10 10


Growth of Company
Year Sales Var % Profit After Tax Var % 2007 3,899.81 35.52% 702.99 22.68% 2006 2,877.46 17.53% 572.94 11.10% 2005 2,448.17 76.10% 515.71 47.74% 2004 1,390.20 39.97% 305.46 110.55% 2003 993.18 -145.08 --

Sales Chart
6000 Sales 4000 2000 0 2003 2004


2005 Year



Year end EPS (Rs) 800 Book value (Rs) 600 400 Net Profit Margin (%) 200 P/E 0 ROCE (%) ROE (%) Debt/equity

Mar ' 07 Mar ' 06 225.36 183.92 804.35 596.97 18.03 19.91 10.55 10.32 21.15 22.43 2003 2004 2005 2006 2007 32.58 36.30 Year 1.45 1.34

Profit Cha rt

Mar ' 05 165.38 428.05 21.07 6.33 32.51 47.45 1.16

Here from the above information I found that the Sales, EPS, Book value, PE Ratio are increased continuously in 2007 as compared to 2006 and 2005 but jindal should concentrate on Net Profit margin because it has decreased in 2007. The debt-equity ration is increased which is not good sign but in this company in is under controlled which is good sign. The investor of this company should take some preventive step before invest in this company for longer period of time. Investor can hold this share but should not buy.

Comparative Profitability Ratio of Three Companies
Year 2003 2004 2005 2006 2007 TATA Steel 10.33 14.64 21.88 20.45 21.37 SAIL 0 10.4 21.23 16.94 15.7 Jindal Steel 14.6 21.97 21.06 19.91 18.03


Comparative Ratio
25 20 Ratio 15 10 5 0 2003 2004 2005 Year TATA Steel SAIL Jindal Steel 2006 2007

As we can see above graph of three companies as the initial stage of the SAIL it were met the very low ratio due to loses and the Jindal steel was quite in struggle stage and its gone towards the down size as year ahead, and the most profitable company as we can say is that the Tata steel because of its highly increasing mode of the ratio. And we compare the all three company the Tata steel company is quite preferable for the selection of the investment.

Comp any Share price Adjusted EPS FY 06 14.70 14.70 14.70 FY 07 9.43 9.43 9.43 FY 08 16.12 16.12 16.12 FY 06 7.85 6.43 10.34 PE FY 07 8.82 8.72 10.18 FY 08 3.92 6.58 6.26 Targ Ratin et g (Rs) 182 687 637 Hold Buy Hold

SAIL Tata Steel Jindal

174.50 667.40 825.70



We retain our HOLD rating for Tata Steel and BUY rating on SAIL and Jindal Steel to HOLD from BUY as we feel the share price of the company reflect possible upside in cement prices and gains from fuel price reductions.

Reference book: Avdhani Fisher & Jordan

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