GROUP ASSIGNMENT - 1

INVESTMENT AND RISK MANAGEMENT

(Financial Analysis of TATA Steel Ltd. vis-à-vis JSW Steel Ltd.)

Submitted to:
Prof. Abhinav Kumar Rajverma

Submitted by:
Ashish Kumar P42065
Gali Suresh P42068
Pranay Dasarwar P42091
Sneha Gavit P42111
Yogesh Joshi P42169
Robin Ghotia P42209
Sujata Patil P42231
Gopalika Gupta P42234
Salil Sharma F2001

INSTITUTE OF RURAL MANAGEMENT ANAND

 Income Statement (TATA Steel Ltd.)
Particulars in Rs. Crores
40%
  FY21 FY20 Average Growth
REVENUE        
60435.9
Gross Sales 64869 7 62652.485 90816.6
GST & Other Levies 0 0 0 0
60435.9
Net Sales 64869 7 62652.485 90816.6
Other Income 3943.63 815.88 2379.755 3943.63
61251.8
Net Revenue 68812.63 5 65032.24 94760.23
         
EXPENSES        
46662.9
Material 42141.81 6 44402.385 52677.263
Salary & other expenses 7582.35 4300.45 5941.4 9098.82
55072.4
Total Expense 53741.89 5 54407.17 61776.083
         
EBITDA 15070.74 6179.4 10625.07 32984.148
Depreciation & Amortisation Expenses 4017.73 4109.04 4063.385 4821.276
EBIT 11053.01 2070.36 6561.685 28162.872
Interest Expense 0 0 0  
PBT 11053.01 2070.36 6561.685 28162.872
Corporate Tax -2553.61 -4673.44 -3613.525 -6477.4604
PAT 13606.62 6743.8 10175.21 21685.411
Extra Income (Discontinuing Operations etc.)        
         
Net income (for the period) 13606.62 6743.8 10175.21 21685.411
Dividend Payout (Including DDT)        
Transfer to Reserves & Surplus        
Retention Ratio        

Assumptions
Growth 40%
Salary and others will grow by 20% cause the major expense is material cos t
On unitary basis for every 1 cr increase in sales material cost increase by 20 Lakh so we expext 25% increase in
Material cost
Depreciation expenses to go up by 20% due investments in Fixed assets
Corporate Tax 11% past year basis
Balance Sheet (TATA Steel Ltd.)
In Rs. Cr.
%
Particulars FY21 FY20 Average 40% Growth Growth
NON-CURRENT ASSETS          
Fixed Assets 68777.62 71233.38 70005.5 116926 70%
Non-current Investments 51066.27 46860.91 48963.59 57290 12%
Other Non-current Assets 27481.54 18167.43 22824.485 35343 29%
TOTAL NON-CURRENT ASSETS 147325.43 136261.72 141793.575 209558 42%
           
CURRENT ASSETS          
Cash and Cash Equivalents 1226.87 1671.71 1449.29 1227 0%
Inventory 8603.79 10716.66 9660.225 12045 40%
Accounts Receivable 3906.35 1049.89 2478.12 5469 40%
Current Investments 6404.46 3235.16 4819.81 7685 20%
Other Current Assets 3827.54 3519.84 3673.69 3828 0%
TOTAL CURRENT ASSETS 23969.01 20193.26 22081.135 30254 26%
TOTAL ASSETS 171294.44 156454.98 163874.71 239812 40%
           
SHAREHOLDER’S FUND          
Equity Share Capital 1973.78 3421.13 2697.455 1974 0%
Reserves and Surplus 89289.55 73416.99 81353.27 110975 24%
Other Reserves 0 0 0 0  
TOTAL SHAREHOLDER’S FUND 91263.33 76838.12 84050.725 112949 24%
           
NON-CURRENT LIABILITIES          
Long-term Borrowings 27313.8 31381.96 29347.88 60099 120%
Other Non-current Liabilities 23187.5 17179.53 20183.515 23188 0%
TOTAL NON-CURRENT
LIABILITIES 50501.3 48561.49 49531.395 83286 65%
           
CURRENT LIABILITIES          
Short-term Borrowings 0 7857.27 3928.635 14051  
Accounts Payable 10638.59 10600.96 10619.775 10639 0%
Other Current Liabilities 18887.44 12597.14 15742.29 18887 0%
TOTAL CURRENT LIABILITIES 29526.03 31055.37 30290.7 43577 48%
TOTAL CAPITAL AND LIABILITIES 171294.44 156454.98 163874.71 239812 40%
 Assumption
To increase Sales by 40% TA will grow by 40%
Fixed assets will grow by 60%
Extended Funded needed Rs 46836 cr.
Looking at the uncertanity in the market it would be better go for Debt funding instead of FPO
or IPO

Q
1 Ratios      
         
a) Net Profit margin      
Equity Multiplier (Total assets/
  Equity)     60.7516
0.39684
  Asset Turnover ratio     1
         
0.14909
b) Return on equity     2
0.07943
  Return on asset     4
         
c) Finacial Leverage      
0.46719
  Debt ratio     2
40.5452
  DE ratio     1
  Solvency ratios      
3.25678
Q  2 ICR     6
   DSCR              0.18832
IGR=(ROA*b)/(1-ROA*b)      
           
           
b=1-(dividend payout ratio)     b=1
b=1-(Dividend per/earning per share)  
           
           
IGR 9%        
           
           
SGR=b*ROE/(1-(b*ROE)          
        b=1  
           
SGR 18%        
 Looking at current market scenario and debt to equity ratio of less than 2:1 it is better go for
debt funding instead of going for IPO/FPO.

Income Statement (JSW Steel Ltd.)

Particulars in Rs. Crores
  FY21 FY20 Average 40% growth
REVENUE        
Gross Sales 69964 63395 66679.5 97949.6
GST & Other Levies 0 0 0 0
Net Sales 69964 63395 66679.5 97949.6
Other Income 1752 1821 1786.5 1752
Net Revenue 71716 65216 68466 99701.6
         
EXPENSES        
Material 52294 50918 51606 65367.5
Salary & other expenses 7696 3866 5781 9235.2
Total Expense 59990 54784 57387 74602.7
         
EBITDA 11726 10432 11079 25098.9
Depreciation & Amortisation Expenses 4205 5168 4686.5 5046
EBIT 7521 5264 6392.5 20052.9
Interest Expense 0 0    
PBT 7521 5264 6392.5 20052.9
Corporate Tax -872 -27 -449.5 -2205.819
PAT 8393 5291 6842 17847.081
Extra Income (Discontinuing Operations etc.) 0 0 0 0
         
Net income (for the period) 8393 5291 6842 17847.081
Dividend Payout (Including DDT)     0  
Transfer to Reserves & Surplus     0  
Retention Ratio     0

Assumptions
Growth 40%
Salary and others will grow by 20% cause the major expense is material cos t
On unitary basis for every 1 cr increase in sales material cost increase by 20 Lakh so we expext 25% increase in
Material cost
Depreciation expenses to go up by 20% due investments in Fixed assets
Corporate Tax 11% past year basis

Balance Sheet (JSW Steel Ltd.)

In Rs. Cr.
Particulars FY21 FY20 Average Growth 40% % Change
NON-CURRENT ASSETS          
Fixed Assets 51942 50542 51242 81708 57%
Non-current Investments 12458 5999 9228.5 13053 5%
Other Non-current Assets 46692 44539 45615.5 50661 8%
TOTAL NON-CURRENT ASSETS 111092 101080 106086 145422 31%
           
CURRENT ASSETS          
Cash and Cash Equivalents 11746 11401 11573.5 15148 29%
Inventory 10692 9623 10157.5 17496 64%
Accounts Receivable 3525 3319 3422 8628 145%
Current Investments 0 0 0 0  
Other Current Assets 4687 5866 5276.5 4687 0%
TOTAL CURRENT ASSETS 30650 30209 30429.5 45958 50%
TOTAL ASSETS 141742 131289 136515.5 198439 40%
           
SHAREHOLDER’S FUND          
Equity Share Capital 302 301 301.5 302 0%
Reserves and Surplus 46675 38061 42368 64522 38%
Other Reserves 0 0 0 0  
TOTAL SHAREHOLDER’S FUND 46977 38362 42669.5 64824 38%
           
NON-CURRENT LIABILITIES          
Long-term Borrowings 42268 42276 42272 69463 64%
Other Non-current Liabilities 14601 14308 14454.5 14601  
TOTAL NON-CURRENT LIABILITIES 56869 56584 56726.5 84064 48%
           
CURRENT LIABILITIES          
Short-term Borrowings 2210 7586 4898 9203 316%
Accounts Payable 18141 18939 18540 22803 26%
Other Current Liabilities 17545 9818 13681.5 17545  
TOTAL CURRENT LIABILITIES 37896 36343 37119.5 49551 31%
TOTAL CAPITAL AND LIABILITIES 141742 131289 136515.5 198439 40%
Q1 Ratios

Net Profit
a) margin
Equity Multiplier (Total assets/ 469.344
Equity) 4
0.50596
Asset Turnover ratio 2

0.17866
b) Return on equity 2
0.05921
Return on asset 3

c) Finacial Leverage
0.66857
Debt ratio 4
2.01726
DE ratio 4
Solvency ratios
0.66141
ICR 9
0.11805
DSCR 5

Q2
IGR=(ROA*b)/(1-ROA*b)

b=1-(dividend payout ratio) b=1

b=1-(Dividend per/earning per share)

IGR 0.06294

SGR=b*ROE/(1-(b*ROE)
 b=1

0.21752
SGR 5

Looking at current market scenario and debt to equity ratio of less than 2:1 it is better go for
debt funding instead of going for IPO/FPO.