ABOUT THE COMPANY

Bhushan Steel Limited is a public limited company which was incorporated on 7 January 1983

whose registered office is in Delhi which is now known as Tata Steel B S Limited as it was

acquired by Tata Steel in 2018 through its wholly owned subsidiary Bamnipal Steel Limited after

the proceedings of insolvency approved by National Company Law Tribunal. Bhushan Steel

Limited is one of the prominent players in the Indian steel industry. With the 27 years of experience

now Bhushan Steel Limited is the 3rd largest secondary steel producing company with the capacity

of 5.6 million tons per annum.

Currently, Mr. T. V. Narendran is the Chairman and Rajeev Singhal is the Managing Director of

Bhushan Steel Limited.

Bhushan Steel Limited is a highly leveraged company with debt-equity ratio of 33.810 times on

the back of total borrowings. The company has earned the operating margin of 18.7 per cent but

suffered the net loss margin of 6.9 per cent during the year ended 31 March 2019.

Being in the largest producer of steel, Bhushan Steel Limited is having the variety of products such

as Hot Rolled Coil, CRCA, CRFH, Galvanized Coil and Sheet, Galume Coil and Sheet, Color

coated coils, Color coated tiles, High Tensile Steel Strips, Hardened and Tempered Steel Strips,

Precision Tubes, HFW/ERW Pipe (API Grade), 3LP Coated Pipes, Billets and Sponge Iron.
 FINANCIAL ANALYSIS OF LAST 20 YEARS

NET SALES ASSET PAT EQUITY DEBT EXPENSES

YEAR (% CHANGE) (% CHANGE) (% CHANGE) (% CHANGE) (% CHANGE) (% CHANGE)

2000 24.22 11.33 10.02 10.12 5.91 27.81

2001 10.18 9.49 2.06 7.67 9.38 10.00

2002 7.70 2.05 -11.80 -6.19 -3.26 7.63

2003 13.60 21.52 -47.58 10.59 30.70 12.91

2004 38.30 25.65 329.18 17.97 19.48 40.13

2005 71.05 30.54 69.82 24.11 41.39 66.43

2006 4.40 40.17 0.72 22.26 54.87 -1.06

2007 37.11 52.71 102.82 35.96 59.22 42.34

2008 9.10 63.05 35.26 33.83 76.43 10.96

2009 18.84 37.95 -0.57 25.16 47.91 8.83

2010 13.18 42.71 100.76 96.23 34.91 13.50

2011 23.38 45.74 18.83 46.00 46.00 27.68

2012 43.62 32.43 0.59 25.44 32.46 38.83

2013 7.64 29.32 -10.10 22.38 29.67 11.54

2014 -9.86 18.03 -93.18 1.15 23.28 -3.86

2015 9.55 3.63 -2123.61 -14.36 12.44 20.74

2016 11.30 15.82 165.58 -71.22 28.18 29.82

2017 16.21 9.64 5.14 -157.37 - 15.16

2018 24.62 -32.90 608.73 1936.04 - 121.54

2019 22.46 0.64 -106.90 -103.90 -32.43 -46.16

Findings of Financial Statement of last 20 years:

 Looking at the net sales of the company we can see that in last 20 years it has reduced

during 2006 and 2008 which was the time of recession in our country after that it started

falling from 2013. Simultaneously if we look at the Profit after tax of the company it has

fallen in the same year.

 Despite of fall in sales the company has always maintained the asset of the company

throughout the years but still in some years it has decreased by huge percentage. In 2018

the percentage change in asset was -32% which shows huge fall in asset. During that time

insolvency case was going on because of which it reduced but after the acquisition by Tata

Steel it again recovered that fall and increased by 0.64% which is still very minimal change.

 Shareholders fund has increased after the acquisition by Tata Steel with huge percentage

which was very less during the year 2014-2017 and it was inferred that net worth was

reducing means liabilities exceeding asset (negative shareholders fund). Looking at the

balance sheet it can be inferred that the outstanding loans were converted into equity after

acquisition.

 Till 2016 we can see that debt are more or less increasing and simultaneously expenses are

also increasing which led the company to come at the insolvency stage as the company was

not capable in repayment of borrowings and interests on it after which the company was

taken into National Company Law Tribunal.

 DUPONT ANALYSIS

ASSET TURNOVER PAT/SALES ASSET/EQUITY ROE

YEAR (1) (2) (3) (1) *(2) *(3)

2000 0.84 4.66 2.54 9.98

2001 0.85 4.30 2.58 9.46

2002 0.90 3.52 2.81 8.90

2003 0.82 1.67 3.08 4.22

2004 0.90 5.17 3.28 15.34

2005 1.14 5.35 3.45 20.99

2006 0.87 5.03 3.96 17.29

2007 0.78 7.45 4.45 25.79

2008 0.53 9.07 5.42 26.07

2009 0.45 7.79 5.97 20.71

2010 0.35 14.09 4.34 21.19

2011 0.30 13.27 4.34 17.25

2012 0.32 9.37 4.58 13.83

2013 0.27 7.70 4.84 10.16

2014 0.21 0.58 5.65 0.68

2015 0.22 -10.68 6.83 -16.18

2016 0.21 -25.44 27.48 -149.26

2017 0.22 -23.30 -52.52 273.53

2018 0.39 -142.57 -1.73 95.21

2019 0.46 8.20 44.66 168.53

Findings of DuPont Analysis:

 ASSET TURNOVER: Asset Turnover tells about the efficiency of the company to generate

sales in respect to asset. Looking at the data from 2000-2010 the average of asset turn over

is 0.81 and from 2011-2019 is 0.30 which means that company needs to improve the asset

utilization in year 2011-2019.

 PROFIT MARGIN: Profit margin reflects the company’s strength for generating profit for

every sales. In Bhushan Steel Limited the average profit margin of year 2011-2019 has

went to -14.88% whereas from 2000-2010 average profit margin was 5.40% which means

the company is not much strengthen to create money from their sales in last 10 years.

 FINACIAL LEVERAGE: This ratio shows the company’s ability to utilize debt financing.

The greater the value, greater the risk and uncertainty can prevail. Here in 2000-2010 the

average of ratio is 3.75 and from 2011-2019 the average is in creasing to 4.85 which shows

the risk in the company and the uncertainty which may prevail in ROE of the company.

So, to improve the ROE of the company, company needs to strengthen the profit margin, improve

the utilization of asset and reduce the reduce leverage.