A

Project Report

On

”Analysis of Indian Steel industry and financial statement analysis"

Submitted to

VIJAYANAGARA SRI KRISHNADEVARAYA UNIVERSITY, BALLARI

Submitted in partial fulfillment of the requirement for the Award of Degree of

Bachelor of Business Administration

KM REYAZ FATIMA

Reg No: N1711248

Under the Guidance of

Miss. Nuzahth Farheen

ASSISTANT PROFESSOR

BELLARY BUSINESS COLLEGE

WARD NO 35, GANESH NAGAR, OPP KSRTC BUS DEPOT

SIRUGUPPA ROAD,BALLARI - 583103

2019-20

1
 DECLARATION

I, the undersigned, here by declare that the Project report entitled

“Analysis of Indian Steel industry and financial statement analysis"at J ”

written and submitted by me to Vijayanagara Sri Krishnadevaraya

University, Bellary in the partial fulfillment of requirements of “ Bachlor
of Business Administrtaion “, under the Guidance of Miss NUZHATH
FARHEEN is my original work and the conclusions drawn therein are
based on the date and information collected by me.

Signature
KM REYAZ FATIMA

Register Number N1711248

Place: Bellary

Date:

2
 Basavarajeswari Group of Institutions

BALLARI BUSINESS COLLEGE, BELLARY

(Recognised By Govt.Of Karnataka, and Affiliated To Vijayanagara Sri
Krishnadevaraya University, Ballari.)

Ward No.35, Ganesh Nagar, Opp.Ksrtc Bus Depot, Siruguppa Road, Ballari-583103.

CERTIFICATE

This is to certify that this project report is entitled ”Analysis of Indian Steel industry
and financial statement analysis" is being submitted as a practical fulfillment for the
award of Bachelor degree of Bussiness Administration of Vijayanagara Sri
Krishnadevaraya University, Ballari. This work has done by the candidate Miss.KM
REYAZ FATIMA bearing Reg. No. N1711248 .Under my supervision and guidance and
to the best of my knowledge the work done is original and is not submitted earlier
for the award of any degree of any university or examination board.

Signature of the Research

. Guide.

Signature of the Head of the Department.

Signature of the principal

DECLARATION II

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 III
ACKNOWLEDGEMENT

IV
LIST OF TABLES

V
LIST OF FIGURES
5-9
CHAPTER I Introduction
Profile of the 10-46
CHAPTER II Organization
/Theoretical
Background
47-49
CHAPTER III Research Design and
Methodology
50-60
CHAPTER IV Data Presentation,
Analysis and
Interpretation
61-0-68
CHAPTER V Findings ,suggestions
and
Conclusion
68-69
BIBLIOGRAPHY

ANNEXURE 70-71

CONTENTS
ITEMS CONTENTS PAGE NUMBER

I
CERTIFICATES

4
CHAPTER 1

INTRODUCTION

5
INTRODUCTION
The process of critical evaluation of the financial information contained in the
financial statements in order to understand and make decision regarding the operation
of the firm is called financial statement analysis. It is basically a study of relationship
among various financial facts and figures as given in asset of financial statement and
interpretation thereof to gain an insight into the profitability and operational
efficiency of the firm to assess its financial health and future prospects.

The term financial analysis includes both analysis and interpretation. The term
analysis means simplification of financial data by methodical classification given in
the financial data by methodical interpretation means explaining the meaning and
significance of the data. These two are complimentary to each other. Analysis is
useless without interpretation, and interpretation without analysis is difficult or even
impossible.

TOPIC CHOSEN FOR THE STUDY:

“ANALYSIS OF INDIAN STEEL INDUSTRY & FINANCIAL STATEMENT
ANALYSIS AT JSW SEVERFIELD STRUCTURES LTD (JSSL)”

STATEMENT OF THE PROBLEMS:

How the measure the financial positions of the company with the of Financial
Statement Analysis?

The analysis is undertaken to the serve the following purposes such as:
 To assess the current profitability and operational efficiency of the firm as a
whole as well as its different departments as so to judge the financial health of
the firm.
 To ascertain the relative importance of the different components of the
financial position of the firm.
 To identify the reasons for change in the profitability/ financial positions of
the firms.
 To judge the ability of the firms to repay its debt and assessing the short-term
as well as the long-term liquidity position of the firm.

Through the analysis of financial statements of various firms an economist can judge
the extent of concentration of the economic power and pitfalls in the financial policies
pursued. The analysis also provides the basis for many governmental actions relating
to licensing, controls, fixing of prices, ceiling on profits, dividend freeze, tax subsidy
and other concessions to the corporate sector.

NEED FOR THE STUDY

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  It helps us to know the reasons for relative changes either in
profitability or in the financial position as a whole.
 It also help to know both the short-term liquidity position and
working capital position and also the long-term liquidity and
solvency position of a firm.
 It also highlights the operating efficiency and the present profits
earning capacity of the firm as a whole.

OBJECTIVES OF THE STUDY

 To ascertain short-term liquidity position of JSSL

 0To evaluate the long term solvency position by the application of
various solvency ratios
 To assess the risk involved with JSSL
 To assess the present earning capacity of the JSSL
 To evaluate the efficiency of the firm for proper utilisation of
financial resources.
 To study the reason for increase or decrease in financial position of
JSSL
 To study the influence of factors over the financial performance of
JSSL
 To study the comparative financial statement analysis of JSSL
 To assess the working capital position of the JSSL
 To find out the problems if any and suitable suggestions to overcome
such problems.

SCOPE OF THE STUDY

This project is vital to me in a significant way. It does have
some important for the company too. These are as follows:

 This project will be a learning device for the financial student.

 Through the project I would study the various methods of the financial
statement analysis.
 This will show the liquidity position of the company and also how do they
 The project would also be an effective tool for the credit policies of the
companies
 The study is based on the financial position of the company by using
comparative statements, ratio analysis, and trend analysis.
 Financial statements help the management to analyze profit, solvency,
liquidity and efficiency etc.
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  This analysis will give the exact picture of the company

RESEARCH METHODOLOGY
A research designs is the arrangement of situation for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economyin
procedure. Research Design is the conceptual structure with in which research in
conducted.
Types of research design
1. Experimental research design
2. Exploratory research design
3. Descriptive& diagnostic research
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Descriptive research design is used in this study because this will ensure the
reliability of the data collected. The researcher has to use the data which is already
available to make the evaluation of the available material. Hence the study is
descriptive in nature.
To achieve a fore said objective the following methodology has been adopted. The
information for this report has been collected through the Primary and Secondary
sources.
1. Primary Data Sources
2. Secondary Data Sources

PRIMARY DATA
It is also called as first handed information the data is collected through the
observation in the organisation and discussions with the accounts and the persons in
the financial department.

SECONDARY DATA
Secondary data has been obtained from published reports like annual reports of the
company, balance sheets, and profit and loss account, booklets, records such as files,
reports, website of JSSL maintained by the company. Mainly the annual report
consists of two parts;
1) Profit and Loss Account
2) Balance Sheet

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Profit and loss account reveals the income and expenditure of the company. Balance
Sheet reveals the financial position of the organization. Those two statements are
prepared by the highly qualified and experts with the help of available information or
data.
LIMITATIONS OF THE STUDY
1. This study is generally based on secondary data as well as primary data also.
2. This study is mainly based on financial statements, and it has its own limitations.
3. There are many different aspects to measure financial performance and expert’s
views are different from one another in this regard.
4. The financial statements are based on historical data.
5. This study is limited to financial performance only. The study has been covered
for 5 years of duration from 2013-14 to 2017-18

9
CHAPTER-2

PROFILE OF THE ORGANIZATION

& THEORETICAL BACKGROUND

INDUSTRY PROFILE
10
INTRODUCTION

India was the world’s third-largest steel producer@ and third-largest steel consumer
in 2017%. The growth in the Indian steel sector has been driven by domestic
availability of raw materials such as iron ore and cost-effective labour. Consequently,
the steel sector has been a major contributor to India’s manufacturing output.

The Indian steel industry is very modern with state-of-the-art steel mills. It has always
strived for continuous modernisation and up-gradation of older plants and higher
energy efficiency levels.Indian steel industries are classified into three categories such
as major producers, main producers and secondary producers.

STRUCURAL STEEL
Structural steel is steel construction material which fabricated with a specific shape
and chemical composition to suit a project’s applicable specifications.

Depending on each project’s applicable specifications, the steel sections might have
various shapes, sizes and gauges made by hot or cold rolling, others are made
by welding together flat or bent plates. Common shapes include the I-beam, HSS,
Channels, Angles and Plate.

Main structural types

 Frame structures: Beams and columns

 Grids structures: latticed structure or dome
 Prestressed structures
 Truss structures: Bar or truss members
 Arch structure
 Arch bridge
 Beam bridge
 Cable-stayed bridge
 Suspension bridge
 Truss bridge: truss members

EVOLUTION OF THE INDIAN STEEL SECTOR

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  Production of steel started in India (TISCO was setup in 1907)
 IISC was set up in 1918 to compete with TISCO
 Mysore Iron and Steel Company was set up in 1923
 According to the new Industrial Policy Statement (1948), new ventures were
only undertaken by the central government
 Hindustan Steel Ltd and Bokaro Steel Ltd were setup in 1954 and 1964,
respectively
 In the early 1990s, the public sector dominated steel production
 Private players were in downstream production mainly producing finished
steel using crude steel products
 SAIL was created in 1973 as a holding company to oversee most of India's iron
and steel production
 In 1989, SAIL acquired Vivesvata Iron and Steel Ltd
 In 1993, the government set plans in motion to partially privatise SAIL
 Foreign players began entering the Indian steel market
 No license requirement for capacity creation
 Imposition of export duty on iron ore, to focus more on catering growing
domestic demand
 Decontrol of domestic steel prices
 Launch of Scheme for promotion of Research and Development in Iron and
Steel sector
 In 2017, India ranked as the 3nd largest crude steel producer in the world,
leaving behind United States.
 During FY17, 8.24 MT of steel was exported from India.

STRUCTURE OF THE STEEL SECTOR

12 Steel
 Form Composition End Use

Alloy Non- Alloy Structural Steel

Liquid Crude Finished
Steel Steel Steel
Stainless Low Carbon Construction
Ingots Flat Steel
Silicon Medium
Electrical Carbon Rail Steel
Semis Non- Flat
High High
Speed Carbon

MARKET SIZE

India’s finished steel consumption grew at a CAGR of 5.69 per cent during FY08-
FY18 to reach 90.68 MT.

India’s crude steel and finished steel production increased to 102.34 MT and 104.98
MT in 2017-18, respectively.

In 2017-18, the country’s finished steel exports increased 17 per cent year-on-year to
9.62 million tonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports
of finished steel stood at 4.33 MT and 5.41 MT, during Apr-Nov 2018 (P).

INVESTMENTS

Steel industry and its associated mining and metallurgy sectors have seen a number of
major investments and developments in the recent past.According to the data released
by Department of Industrial Policy and Promotion (DIPP), the Indian metallurgical
industries attracted Foreign Direct Investments (FDI) to the tune of US$ 10.84 billion
in the period April 2000–June 2018.

Some of the major investments in the Indian steel industry are as follows:

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As of December 2018, Vedanta Group is going to set up a one million tonne capacity
steel plant in Jharkhand with an investment of Rs 22,000 crore (US$ 3.13 billion).

JSW Steel will be looking to further enhance the capacity of its Vijayanagar plant
from 13 MTPA to 18 MTPA. In June 2018, the company had announced plans to
expand the plant’s production capacity to 13 MTPA by 2020 with an investment of Rs
7,500 crore (US$ 1.12 billion).

Vedanta Star Ltd has outbid other companies to acquire Electro steel Steels for US$
825.45 million.

Tata Steel won the bid to acquire Bhushan Steel by offering a consideration of US$
5,461.60 million.

JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase
its overall steel output capacity from 18 million tonnes to 23 million tonnes by 2020.

Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel
plant from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64 billion.

GOVERNMENT INITIATIVES

Some of the other recent government initiatives in this sector are as follows:

An export duty of 30 per cent has been levied on iron ore^ (lumps and fines) to ensure
supply to domestic steel industry.Government of India’s focus on infrastructure and
restarting road projects is aiding the boost in demand for steel. Also, further likely
acceleration in rural economy and infrastructure is expected to lead to growth in
demand for steel.

The Union Cabinet, Government of India has approved the National Steel Policy
(NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP
2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita
steel consumption by 2030-31.

The Ministry of Steel is facilitating setting up of an industry driven Steel Research

and Technology Mission of India (SRTMI) in association with the public and private
sector steel companies to spearhead research and development activities in the iron
and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).

LIBERALISATION OF THE INDIAN STEEL SECTOR

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The important policy measures, which have been taken for the growth
anddevelopment of the Indian iron and steel sector, are as under:
 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.
 With effect from 24.5.92, iron and steel industry was included in the list of
‘high priority’
 Industries for automatic approval for foreign equity investment up to 51%.
This limit has since been increased to 100%.
 Pricing 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, besides strategic sectors such as Defence and Railways.
 The import regime for iron and steel has undergone major liberalisation
moving gradually from a controlled import by way of import licensing, foreign
exchange release, canalization and high import tariffs to total freeing of iron
and steel imports from licensing, canalization and lowering of import duty
levels. Export of iron and steel items has also been freely allowed.
 Import duty on capital goods was reduced from 55% to 25%. Duties on raw
materials for steel production were reduced. These measures reduced the
capital costs and production costs of steel plants
 Freight equalization scheme was withdrawn in January 1992. However, with
the coming up of new steel plants in different parts of the country, iron and
steel materials are freely available in the domestic market. Levy on account of
Steel Development Fund was discontinued from April, 1994 thereby providing
greater flexibility to main producers to respond to marketforces.

ROAD AHEAD
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India is expected to overtake Japan to become the world's second largest steel
producer soon. The National Steel Policy, 2017, has envisaged 300 million tonnes of
production capacity by 2030-31.

In 2018, steel consumption of the country is expected to grow 5.7 per cent year-on-
year to 92.1 MT*. Further, India is expected to surpass USA to become the world’s
second largest steel consumer in 2019*.

Huge scope for growth is offered by India’s comparatively low per capita steel
consumption and the expected rise in consumption due to increased infrastructure
construction and the thriving automobile and railways sectors.

Exchange Rate Used: INR 1 = US$ 0.0142 as of Q2 FY19.

COMPANY PROFILE
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JSW Severfield Structures Ltd (JSSL), is a Joint Venture company between JSW
Steel, India’s largest pvt. sector Integrated steel manufacturer with a capacity of
18MN MTPA and Severfield plc., U.K., the largest steel fabricator in UK with a
production capacity of over 1,50,000 MTPA.

This partnership makes JSSL, one of the leading companies in India to offer complete
Structural Steel Building Solutions with an annual capacity of 60,000 MTPA.

JSSL WITH ITS RICH EXPERTISE SERVES THE FOLLOWING SECTORS

 COMMERCIAL
 RESIDENTIAL
 INDUSTRIAL
 INFRASTRUCTURE

JSSL’s team comprises of expats from Severfield and highly qualified personnel in
strategic business areas. Our European partners provide significant benefit to the
business given their design, fabrication and erection expertise associated with the
development of complex engineering solutions.

JSW Steel Ltd, India´s largest steelmaker in terms of its installed capacity, has
entered into a joint venture with Severfield-Rowen PLC, the largest steel fabricator
in Europe, to form JSW Severfield Structures Ltd (JSSL). This partnership makes
JSSL; the first company in India to offer complete structural steel building solutions.
Managed by a group of highly qualified engineers from Europe and the subcontinent,
JSSL offers innovative solutions.

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18
19
What separates JSSL from others, is the speed of construction.  Accelerating the
entire construction process, thereby reducing the fabrication and construction time to
half than what a traditional concrete construction would have taken. This proves to be
a great advantage to builders as it reduces costs and enables a fast return on their
investment. In addition, the need for onsite skilled workers and inconsistency in the
quality of work is highly reduced with JSSL due to fabrication being carried out
offsite.
 
JSSL brings into the country a technology in high rise construction and other
important construction sectors, which has not been seen before. This technology
provides clients with an overall package that has not been available until now. The
kind of combination that JSSL provide with Severfield’s technology and JSW’s
domestic presence is the best the country has seen. JSSL is totally different to any
other fabrication organization currently operating in India. JSSL has a facility which
is fully CNC controlled and managed by skilled staff with many years experience in
the operation of fabrication plants.  JSSL also retains a design capability which is
responsible for some of the iconic structures of the world. These skills are used to the
full to develop and demonstrate our competitiveness and expertise.

JSW Severfield Structures Limited (Regd. Office)

401, Grande Palladium, 4th Floor, 175, CST Road, Kalina, Santacruz East, Mumbai-
400098.Tel: 022-67317000, Fax: 022-67317070, info@jssl.in

JSW Severfield Structures Ltd Works

Near 10 MT Gate, Beside Cement Plant II,P.O. Vidyanagar, Toranagallu- 583275,

Dist. Ballari, Karnataka. Tel: 08395-660000

VISION
JSSL vision is to be recognized as world-class leaders in structural steel, known for
JSSL ability to deliver any project, to the highest possible standards.

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 1)
2) MISSION
3) As ambitious, innovative leaders in a demanding and ever developing
industry, JSSL will use JSSL collective strengths and resources to build
the capacity required to deliver the structures of the future.

VALUES
Safety
There’s a reason it’s known as "safety first". JSSL make no apologies for the fact that
profit and loss, deadlines and headlines, all come second to making sure everyone
goes home safely.

Customer focus
JSSL clients are paramount in all that JSSL do.JSSL are here to understand their
requirements and meet their aspirations. Together JSSL will deliver projects of which
JSSL can all be proud.
Integrity
JSSL operate in a complex and challenging industry, one that often
requires innovative thinking and a flexible approach to deliver successful
outcomes. The one thing we’ll never compromise on though is JSSL integrity, which
ensures we’re able to maintain the exceptionally high standards JSSL set for
ourselves.
Commitment
Article II. JSSL may move with the times, but JSSL long and rich history means
that JSSL have a few old-fashioned beliefs. One of those beliefs is that you stand by
your word. When Severfield say we’ll deliver, whatever challenges lie ahead, you
can depend on us to deliver, and to the highest possible standard.

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Section II.01

Section II.02

Section II.03

DETIALS OF PROMOTERS

 Dr. Derek Randall(Managing Director)

Section II.04 Dr Derek Randall is the Managing Director of JSW Severfield

Structures Ltd (JSSL), since 2013. Derek is on the main board of Severfield Plc, the
JSSL JV Board, and he is Chairman of JSWSMD.

Section II.05 He is a Master of Business Administration (Warwick Business

School), a Doctor of Business Administration (Nottingham Business School) and he
has been involved on the advisory boards of a number of UK universities.Before
joining Severfield, much of Derek’s career was connected to the British steel and
construction industries where his last position before joining Severfield plc was
Commercial Director of the Long Products Division, responsible for a sales portfolio
of circa £5 billion.Derek has held numerous international board positions and served
on the Executive Council of the Steel Construction Institute.

 Mr. Santanu Choudhury (Chief Financial Officer)

Section II.06 Santanu is the Chief Financial Officer of JSSL since January 2016.He
is a Chartered Accountant and Cost Accountant from The Institute of Chartered
Accountant and The Institute of Cost and Works Accountants of India respectively.

Section II.07 Before joining JSSL, Santanu was CFO for UGL India. Earlier to this,
he was involved in various roles in finance at Leighton’s India business. He has also
worked in the consulting space with the Big 4 audit firms and was involved in
advising transnational corporations on various financial aspects of doing business in
India.He has been in various roles including business management, controllership,
taxation, and transaction structuring, strategy and stakeholder oversight.

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23
LOCATIONS WITHIN INDIA:

LOCATIONS WITHIN INDIA:

24
25
26
 Mr. Luke Ellision (Head – Erection)

Section II.08 Luke Ellison was appointed Head of Construction of JSW Severfield
Structures Ltd. (JSSL) in November 2009. Prior to his appointment in JSSL, Luke
was the Erection Manager for Severfield Plc, U.K. from 1995 to 2009.Luke is a result
oriented professional with technical knowledge backed with a 26-year experience of
project erection & operations of mega critical projects like Airports, Warehouses,
Sport Stadiums, Power & Chemical Plants, Data Centers, etc. for Severfield UK and
JSW Severfield Structures Ltd., India.Luke brings with him expertise in handling a
diverse range of mega projects. Under his leadership, JSSL has received many awards
for safety as well as performance.

Section II.09 He comes with an excellent track record of planning, execution and
working under tight deadlines. In addition to that, Luke has also developed procedures
and operational policies, planning and implementing effective strategies to increase
revenue, optimization of resources and value engineering for clients.

 Mr. Tirthankar Roy(National Head - Sales & Marketing)

Section II.10 Tirthankar has been with JSSL for over 6 years heading Sales &
Marketing and Projects. He comes with a rich track record of over 15 years in the
construction and infrastructure sector, having worked in leading business
conglomerates like Essar Projects, SREI Infrastructure, ICICI Bank, Ambuja Cement.
In JSSL his focus is to continually drive the Indian construction industry to adapt to
an offsite steel construction model with a pro-steel mind-set and then deliver a great
project to the client as per commitments.

Section II.11 M.Phil and MBA Finance, Tirthankar has been a faculty of Finance in
a leading Business School and has to his credit several publications in international
magazines and journals.

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 Mr. Ranjitkumar Pillai (Vice President – Human Resources/EHS/IT)

Section II.12 Ranjitkumar heads Human Resources/EHS/IT at JSSL since April,

2009. Prior to this he was in the Corporate HR department of JSW Steel Limited.He is
a Commerce graduate (Honors) from Mumbai University with an MBA from Mumbai
University specializing in Human Resources and Industrial Relations. He has cleared
the first group of Company Secretary Course (CS) and also done a certification course
from Indian Society of Training &Development (ISTD), New Delhi.

Section II.13 Before joining JSW, Ranjit was with Crompton Greaves, heading the
HR Operations and L&D Functions at Corporate office for the entire group. Prior to
this assignment he was associated with Proctor and Gamble, leading the Sales HR
Function.Ranjit is a keen sportsman and is actively involved in the group’s Cricket
and other sports Initiatives.

 Mr. Jayaprakash Reddy (GM – Project Management)

Section II.14 JP Reddy is the General Manager - Project Management of JSSL, since
2013. He comes with a rich experience of over 30 years in the field of civil
construction, Pre-Engineered Building and Steel Structures construction in both
Project Management and Site Execution.JP Reddy has completed his Bachelors of
Engineering in the field of Civil Engineering from Vijayanagar Engineering College,
Karnataka.

Section II.15 In his past experience he has worked with leading multinational
organizations which are specialized in the Steel Fabrication and Erection of
Commercial and Industrial buildings pan India such as Zamil Steel Buildings India
Pvt. Ltd. and Japan Metal Building Systems Pvt. Ltd.He is also a member of ‘Shine
India Rural’, community propaganda to develop villages in terms of child education,
hospitals and sanitation construction in India.
 Mr. Srinivasa Rao(Head - Business Planning & Estimation Division)

Srinivasa Rao has been with JSSL for over 7 years and currently heading Business
Planning and Estimation division. He comes with over 13 years of experience in
Estimation and Construction Planning Industry. He has worked with leading
companies like Reliance Industries, L&T Limited, Dodsal PTE Limited and

28
Jaiprakash Associates Limited. In JSSL his role to coordinate with Design, Detailing
and Plant operations to ensure that strategic, business and commercial sales plans are
properly co-ordinated, actioned and driven. He is also responsible for cost estimation
and techno-commercial proposals of all the tenders.

Srinivasa holds a bachelor degree in Mechanical Engineering and Post graduate

degree in Piping Engineering.

QUALITY POLICY:

JSSL as a major Structural Steel work Fabricator and Engineer are committed
to achieve, sustain and enhance customer satisfaction by continually improving the
effectiveness of Quality Management System and mutually beneficial relationship
with following groups

 CUSTOMERS: To fulfill and exceed customer need by delivering quality in

the manufacturing, engineered products and services in a consistent and
timely manner in accordance with their specified requirements.
 SUPPLIERS: Work closely with JSSL suppliers to ensure that the raw
materials that they supply or service provided are of the required Quality, and
the most suitable for JSSL purpose.
 EMPLOYEE: To develop the competencies (both work skill and life skill) of
employee, endow with a healthy working environment for all employee and
foster their continuing dedication and involvement in all aspects of JSSL
business.

Management strategy is to endeavour to create a working environment in which

teamwork and commitment are encouraged and recognized.

The Company’s quality policy is initiated and led through “top down” management
commitment and is operated throughout by highly qualified and experienced
personnel.
JSW Sever field will improve existing quality standards in India. The process based
quality management System the objective and encompasses will be certified to the
international Quality Standard BSEN ISO 9001:2000. Continual improvement is a

29
management development of modern systems and techniques to assist in the
attainment of continued customer satisfaction

PRODUCT OR SERVICES PROFILE

1. STRUCTURAL STEEL DESIGN & ENGINEERING
 Structural Design
Complete Design & Analysis of Steel and RCC structures complying with Indian &
International Standards. Capable of acting as an Engineer of Record on Indian
Projects.
 Connection Design
JSSL’s Engineers are specialized in Structural steel connection design as per LRFD,
ASD, BS, Euro and IS Standards. In house spreadsheets, hand calculations and
Master-series program is frequently used.
 3D Modeling& Detailing
JSSL provides comprehensive solutions for structural steel detailing and drawing
services for industrial, commercial, infrastructure and plant structure. JSSL has expert
detailers with vast and rich experience working on international projects
 Deck Detailing
JSSL’s team is well versed with the structural steel metal decking layout; detailed
drawings, connection details and material take off activities. JSW-Severfield-SMD is
the leading composite metal decking company in India.
2. STRUCTURAL FABRICATION
The entire fabrication process starts with an architect’s design that is technically
interpreted by the consulting engineer or the JSSL in-house design team and broken
down in detail into steel construction drawings.
The drawings are converted to a virtual 3D model of the structure using the state-of-
the-art Tekla software and then these are electronically fed into the CNC controlled
machines on the shop floor.
In the raw material yard at the JSSL factory in Bellary, JSSL’s own information
management software is used to manage material take off on a job specific basis.

30
Section II.16 JSSL is the only company to install online abrasive shot blasting
machines in the fabrication lines. It can clean the surface of steel materials to SA2.5
standard. The blasting is done prior to welding and painting to ensure high quality
fabrication.

Section II.17 The Bit Shop complements the fabrication line. The Shop contains
computer controlled gas and plasms cutting machines, angle cropping machine,
bevelling machines & stamping and marking machines. All fittings created by the Bit
Shop are also shot blasted to SA2.5 standards.

Section II.18 JSSL uses one-of-a-kind motorised Bogey lines capable of carrying a
20 ton load which pass through an assembly area, welding area and painting area with
inspection being carried out after each step. The painting is done within 8 hours of the
shot blasting thus ensuring optimum quality and comes with a guarantee of 15 years.

Section II.19 Indisec is the name of a new and innovative family of structural steel
product for the steel construction sector in India. Indisec is the unrivalled market
leader in the design and fabrication of long span cellular and bespoke plated beams
which are not readily available in the market. It is a new technology which can
substitute rolled sections for lighter, stronger and longer spanning plated sections.
JSSL has the complete knowledge to design and manufacture such plated sections.

Section II.20 JSSL also has in-house metal deck profiling machines. It can
manufacture 2 set of profile sheets TR60 and TR80 catering to different requirements
of multi storey constructions. This can provide longer spans of up to 4.5 m and create
composite slabs which save 50% reinforcement and 30% concrete. The decking also
reduces the hook time during erection and hence ensures fast track construction.

Section II.21 The steelwork is fabricated, loaded and finally delivered to site in an
erectable sequence.

3. STRUCTURAL ERECTION

Section II.22 Prior to any work or deliveries being accepted onto site, a survey is
conducted by the JSSL team to check alignment of foundations and the structure’s
footprint. Any discrepancies established can then be corrected before deliveries and
construction commencement.

31
Section II.23 Our use of the finest precision technology means that our careful
process of production, all the way through to site assembly is made as simple as
possible. As seen in any practice, the most sophisticated achievements stem from
simple ideas.

AREAS OF OPERATION:
1. Bridges
2. City Centre and Retail
3. Commercial Offices
4. Education
5. Hospitals
6. Industrial and Warehousing
7. Power and Energy
8. Residential and Hotels
9. Stadia and Leisure
10. Transport and Car Parks

INFRASTRUCTURE FACILITIES:

 Separate building for every department

 Canteen facilities
 Waste recycling systems
 In plant Hospital: Sanjeevani Hospital in collaboration with Apollo hospitals
 OPG center for training
 Separate infrastructure to produce power for the own consumption of the
factory
 Hi-Fi restaurants for the people who live in the township
 Shopping complex in township
 Jindal Education and Medical Trust
 Jindal Adarsha Vidyalaya
 Sharamasadhana Vocational Training Centre
 Narl Vikas Kendra
 Health and Education Initiatives
 Community Initiatives

32
  Infrastructure Development (Roads and Garbage Disposal)
 Jindal Squash Academy Vijayanagar Sports Club
 Jindal Swimming Academy
 Art, Culture and Heritage Initiatives
 Sports initiatives

COMPETITORS INFORMATION:

1. Kirby Building Systems

Kirby Building Systems is one of the largest pre-engineered steel building (PEB)
companies in the world and is a 100% subsidiary of Kuwait- based multinational and
multi-billion dollar business conglomerate - Alghanim Industries, one of the largest
privately-owned companies in the Middle East.

Kirby pioneered the PEB technology first in Middle East in 1976 and later in India in
1999. Its product list consists of pre-engineered steel buildings (PEB) applicable for
factories, warehouses, metro rails, supermarkets, aircraft hangars, sports stadiums,
auditoriums, etc. Other products include structural steel, sandwich panels, and storage
solutions, Kirby Roof (KR), Kirby Wall (KW), Kirby Deep Decking Panel and Kirby
Standing Seam Panel (KSS-600).

2. Pennar Engineered Building Systems Limited

Pennar Engineered Building Systems Limited is an India-based company, which

engaged in manufacture and erection of steel products. It is engaged in designing,
fabricating and installing pre-engineered steel buildings, supplying structural steel and
components for manufacturing industries, warehouses, aircraft hangars, commercial
buildings, high-rises, metro stations, stadiums and power plants, among others.

It is also engaged in designing, fabricating and installing solar module mounting

structures, telecom transmission towers and cold-form buildings for low-cost housing
projects, among others

3. Zamil Steel Buildings India Private Limited

Zamil Steel Buildings India Private Limited operates as a steel contractor. The
company offers design and fabrication of steel buildings, building components,
firefighting, and fire alarm systems.
33
4. Eversendai Construction Private Limited

Eversendai Construction Private Limited is engaged in providing and manufacturing

of structural fabrication, building construction projects, residential building
construction projects, commercial building construction projects, high rise building
and airports services. Operations and Branches: At the address, B-402, Katiyani
Residency, Malgon, Back Of M.i.d.c. Buc Stop, Bus Depo, Mahakali Road, Andheri
East, Mumbai, 400093, Maharashtra, India, we find head office of the company. At
the address, Plot No. 1 2, The Lords, 5th Floor, Thiruvika Industrial Estate,
Ekkatuthangal, Guindy, Chennai, 600032, Tamil Nadu, India, the company maintains
its registered office. The company maintains its branch office at: Kotak Kunj, K M
Munshi Marg, Grant Road, Mumbai, 400007, India

SWOT ANALYSIS:
STRENGTHS:
 Robust Technology
 Sustainability of steel
 Advanced software and Advanced Hardware
 Integration of processes
 Highly Trained workforce
 Experienced management
 Accustomed to Handling complex projects
 Proximity to Raw Materials

WEAKNESS:
 High material cost
 Unexpected Shutdown and Plant Breakdown
 High cost of debt
 Machine breakdowns
 Delays in Raw Material
 Higher duties and taxes

34
OPPORTUNITIES:
 High demand in public sector
 Expansion facility
 Increasing demand for fabrication
 Huge and growing domestic demand

THREATS:
 Environmental degradation
 Competitors
 Global economic slow down
 Indians notion towards concrete structures

FUTURE GROWTH AND PROSPECTS:

FUTURE GROWTH:

India remains primarily a concrete construction market which presents great

opportunity for steel. The Indian market is now more buoyant after the recent change
in government with market prospects forecast to improve. The addressable
opportunity for steel fabrication in construction remains large and the prospects for
conversion from concrete to steel are expected to improve. The market potential
continues to be reaffirmed in all the market research that JSSL carries out, both
formal and informal.

Severfield and its joint venture partner JSW Steel are optimistic that the joint venture
will improve performance and will grow through market demand overall improving
and through market penetration as the benefits of total delivered value are appreciated
by clients.

35
PROSPECTS:

JSW Severfield is now operating at full capacity with significant improvements in

productivity. Operational performance continues to improve in the Ballari plant and
on all of Project sites. Quality is best in class. The awareness for JSSL products and
services is growing in the market place and there are many short, medium and long
term business opportunities estimated about 65kt (Rs 780 Crores), which are likely to
be added to the order book in near future. Longer term prospects are also look equally
strong.

The Venture partners have agreed to an expansion plan by extending the existing
Ballari facility to increase the Capacity presently from 35,000 Tones to 55,000 Tones
to be financed fully by additional equity. Concurrently, the company is working on
identifying Land near western or northern India for next phase of future expansion.

36
THEORETICAL BACKGROUND

FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is a judgemental process which aims to estimate current

and past financial positions and the results of the operation of an enterprise, with
primary objective of determining the best possible estimates and predictions about the
future conditions. It essentially involves regrouping and analysis of information
provided by financial statements to establish relationships and throw light on the
points of strengths and weaknesses of a business enterprise, which can be useful in
decision-making involving comparison with other firms (cross sectional analysis) and
with firms’ own performance, over a time period (time series analysis).

According to Kennedy and Muller

“The analysis and interpretation of financial statements are an attempt to determine
the significance and meaning of financial statement data so that the forecast may be
made of the prospects for future earnings, ability to pay interest and debt maturities
and profitability and sound dividend policy”

TYPES OF FINANCIAL STATEMENTS ARE

1. Comparative Balance Sheet

2. Comparative Income Statement
3. Trend Analysis
4. Ratio Analysis

MEANING OF COMPARATIVE FINANCIAL STATEMENTS

The comparative financial statements are statements of the financial position at

different periods of time. The elements of financial position are shown in a
comparative form so as to give an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in comparative
statements.

From practical point of view, generally, two financial statements (balance sheet and income
statement) are prepared in comparative form for financial analysis purposes. Not only the
comparison of the figures of two periods but also be relationship between balance sheet and
income statement enables an in depth study of financial position and operative results

37
Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in depth study of financial
position and operative results.

The Comparative Statement May Show:

1. Absolute figures (Rupee amounts)
2. Changes in absolute figures i.e., increase or decrease in absolute
3. Absolute data in terms of percentages
4. Increase or decrease in terms of percentages

1. COMPARATIVE BALANCE SHEET

The comparative balance sheet analysis is the study of the trend of the same items,
group of items and computed items in two or more balance sheets of the same
business enterprise on different dates.’ The changes in periodic balance sheet
items reflect the conduct of a business.
The changes can be observed by comparison of the balance sheet at the beginning
and at the end of a period and these changes can help in forming an opinion about
the progress of an enterprise. The comparative balance sheet has two columns for
the data of original balance sheets. A third column is used to show increases in
figures. The fourth column may be added for giving percentages of increases or
decreases.

The analysis and interpretation of balance sheet will involve the following steps:

 Current financial position and liquidity position

 Long term financial position
 Profitability of the concern

2. COMPARATIVE INCOME STATEMENT

The Income statement gives the results of the operations of a business. The
comparative income statement gives an idea of the progress of a business over a
period of time. The changes in absolute data in money values and percentages can
be determined to analyze the profitability of the business. Like comparative
balance sheet, income statement also has four columns. First two columns give

38
 figures of various items for two years. Third and fourth columns are used to show
increase or decrease in figures in absolute amounts and percentages respectively.

The analysis and interpretation of income statement will involve the following
steps:

 The increase or decrease in sales should be compared with the increase or

decrease in cost of goods sold. An increase in sales will not always mean an
increase in profit. The profitability will improve if increase in sales is more than
the increase in cost of goods sold. The amount of gross profit should be studied in
the first step.
 The second step of analysis should be the study of operational profits. The
operating expenses such as office and administrative expenses, selling and
distribution expenses should be deducted from gross profit to find out operating
profits.
An increase in operating profit will result from the increase in sales position and
control of operating expenses. A decrease in operating profit may be due to an
increase in operating expenses or decrease in sales. The change in individual
expenses should also be studied. Some expenses may increase due to the
expansion of business activities while others may go up due to managerial
inefficiency.
 The increase or decrease in net profit will give an idea about the overall
profitability of the concern. Non-operating expenses such as interest paid, losses
from sale of assets, writing off of deferred expenses, payment of tax, etc. decrease
the figure of operating profit. When all non-operating expenses are deducted from
operational profit, we get a figure of net profit. Some non-operating incomes may
also be there which will increase net profit. An increase in net profit will gave us
an idea about the progress of the concern.
 An opinion should be formed about profitability of the concern and it should be
given at the end. It should be mentioned whether the overall profitability is good
or not.

39
3. REND ANALYSIS
The financial statements may be analysed by computing trends of series of
information. Trend analysis determines the direction upwards or downwards and
involves the computation of the percentage relationship that each item bears to the
same item in the base year. In case of comparative statement, an item is compared
with itself in the previous year to know whether it has increased or decreased or
remained constant.

Procedure for Calculating Trend Percentage

One year is taken as the base year. Generally, the first year is taken as the base year.
The figure of base year is taken as 100. The trend percentages are calculated in
relation to this base year. If a figure in other year is less than the figure in base year,
the trend percentage will be less than 100 and it will be more than 100 if figure is
more than the base year figure. Each year’s figure is divided by the base year figure.

Trend Percentage = Present year value / Base year value*100

The accounting procedures and conventions used for collecting data and preparation
of financial statements should be similar; otherwise the figures will not be
comparable.

4. RATIO ANALYSIS

Ratio analysis is one of the most powerful tools of financial analysis. It is used as a
device to analyze and interpret the financial health of the enterprise. Ratio are
considered as one of the useful aids available to the management in assessing the
position and drawing conclusions regarding efficiency and financial status of a
business concern.

According to Myers, “Ratio analysis of financial statements is a study of relationship

among various financial factors in a business as disclosed by a single set of statements
and a study of trend of these factors as shown in a series of statements.”

40
Classification of Ratio Analysis

1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio

PROFITABILITY RATIO

Profitability ratio is used to evaluate the company’s ability to generate income as

compared to its expenses and other cost associated with the generation of income
during a particular period. This ratio represents the final result of the company.

TYPES OF PROFITABILITY RATIO

1. Net Profit Ratio:

This ratio tells us the overall efficiency in operating the business. It is used to
measure the relationship between net profit and sales. It includes non-operating
incomes and profits.
FORMULA
Net Profit Ratio= Net Profit ÷ Sales × 100
2. Gross Profit Ratio:
Gross Profit Ratio is the formative component in relationship between gross
profit and net sales. HigherGross Profit Ratio is a precursor to the business
concern that the firm has higher profitability. It is alsoreflective of the standard

of performance of firm’s business apropos to its effectiveness.

FORMULA
Gross Profit Ratio= Gross Profit ÷ Sales × 100
3. Operating Profit Ratio:
It indicates the operational efficiency of the firm and is a measure of the firm’s
ability to cover the totaloperating expenses.
FORMULA
Operating Profit Ratio= Operating Profit ÷ Sales × 100

41
 4. Return On Assets:
This ratio measures the earning per rupee of assets invested in the company. A
high ratio represents better the company is.
FORMULA
Return On Assets= Net Profit ÷ Total Assets
5. Return On Equity:
This ratio measures Profitability of equity fund invested the company.  It also
measures how profitably owner’s funds have been utilized to generate
company’s revenues. A high ratio represents better the company is.
FORMULA
Return On Equity= Net Profit After Taxes ÷ Equity
6. Return On Capital Employed:
This ratio computes percentage return in the company on the funds invested in
the business by its owners. A high ratio represents better the company is. 
FORMULA
Return On Capital Employed= Net Operating Profit ÷ Capital Employed ×
100  
LITERATURE REVIEW
1. Nizam Mohammed (1985) in his study entitled “Indian Paper Industry:
Heading for a Bright Future” has analyzed the causes of low capacity
utilization during the 1970s. He observes that the major problem which
causes the relatively low capacity utilization include the shortage of raw
materials, inadequate supply of power, coal and transport bottlenecks.
2. Gangadhar (1998) 10 has made an attempt on “Financial Analysis of
Companies in Criteria: A Profitability and efficiency focus” one of the
objectives of the study is to analyze the liquidity position of the companies
and to point out the factors responsible for such a position. It is concluded
that the liquidity position was quite alarming since these are facing chronic
liquidity problems. Their proportion current assets in relation to the current
liabilities are very low.
3. Harris (2001) 12 analyses the link between market orientation and
performance has been claimed largely on the basis of the analysis of
subjective measures of performance. Consequently, the aim of this study is
42
 to examine the links between market orientation and objectively measured
financial performance. The paper begins with a brief examination of the
definition and components of market orientation.
4. Mahes Chand Garg and Chander Shekhar (2002)13 found that the asset
composition is to be significantly negatively related with total Debt equity
and long term dept equity in cement industries. Value of the assets and life of
the company were significantly positively related to total debt equity. Life of
the 24 company was significantly positively related with long term debt
equity in cement industries.
5. Bortolotti & et al. (2002) 14 examine the financial and operating
performance of thirty one national telecommunication companies in twenty
five countries that were fully or partially privatized through public share
offering. Using conventional pre-versus post-privatization comparisons and
panel data estimation techniques, they find that the financial and operating
performance of telecommunications companies improves significantly after
privatization, but that a sizable fraction of the observed improvement results
from regulatory changes-alone or in combination with major ownership
changes-rather than from privatization alone.
6. Sahu (2002)15 in his article titled “A Simplified Model for Liquidity
Analysis of Paper Industry” has examined the liquidity of paper industry.
The model developed by him has been based on the assumption that the
liquidity management of a company in a particular year is effective if its‟
earnings before depreciation is positive and not effective if its‟ earnings
before depreciation is negative.
7. Anshan Lakshmi (2003) 17 made “A Study of the Financial Performance
with Reference to Steel Industries Kerala Ltd”. This study covered from
1977-1998 to 2001-2002. The objectives of the study was to analyze and
evaluate the working capital management, to analyze the liquidity position of
the company, to evaluate the receivables, payables and cash management and
to suggest ways and means to improve the present date of working capital.

8. Sudarsana Reddy (2003) 18 under took a study on “Financial Performance

of Paper Industry in Andhra Pradesh” for the period from 1989-90 to 1998-
99. The primary objective of the study was to analyze the investment pattern
43
 and utilization of fixed assets, ascertaining the working capital condition,
reviewing the profitability performance and suggesting measures to improve
the profitability.
9. Sukudev Singh & et al. (2003) 19 undertook a study entitled “Status and
Growth of Paper and Pulp Board Industry in North India – A Case study”.
The study has revealed that due to the availability of raw materials and
labour, eighty per cent of the mills are running with the optimum capacity
utilization. The authors have observed that more than three thousand people
have got employment in ten paper and paper board mills with proporation of
thousand eight hundred skilled workers and thousand two hundred unskilled
labours.
10. Sudarsana Reddy & et al. (2006)22 Examined the internal funds
availability for financing fixed assets in paper industry in Andhra Pradesh.
The study found that the owner funds were insufficient to finance fixed
assets and observed that fixed assets did not have significant relationship
with the sales.
11. Vishnani and Shah (2007) 23 investigated the impact of working capital
management policies on the corporate performance of the India consumer
electronics industry. They noted that inventory holding period, debtors‟
collection period and net working capital cycle had negative relationship on
the profitability of firms. Whereas, the average payment periods positive
correlation with profitability.
12. Krishnaveni (2008) 24 studied the performance appraisal might be said that
the adoption of liberalization measure and above suggestions would
doubtlessly help the Indian chemical industry to improve their performance
individually and other industry as a whole. This study also suggests that the
policy of liberalization should further be strengthened. Thus, the dreams of
our planners to accelerate the economic growth in the country are still
possible to be translated into reality
13. Adolphus (2008) 25 showed that there was a statistically significant
relationship between measure of liquidity and selected measures of
profitability, efficiency and indebtedness in Nigerian quoted manufacturing
companies. The impact of one per cent increase in average liquidity

44
 measures produces a more significant increase in average profitability (21.9
per cent), efficiency (16.1 per cent) and indebtedness (16.6 per cent).
14. Burange & et al. (2008)26 deals with the “Performance of Indian Cement
Industry - The Competitive Landscape”. The Cement Industry is
experiencing a boom on account of the overall growth of the Indian
Economy primarily because of increased industrial activity, and expanding
investment in the cement sector.
15. Neha Mittal (2011)37 studies the determination of capital structure choice
of the selected Indian industries. The main objective is to investigate whether
and to what extent the main structure theories can explain the capital
structure choice of Indian firms. It has applied multiple regression models on
the selected industries by taking data for the period 2001-2008.
16. Velmathi and Ganesan (2012)38 in their article entitled “Inventory
Management of Commercial Vehicle Industry in India” reported that the
overall analysis of inventory management of all units in the Indian
commercial vehicle industry is very good. Among the firms in the
commercial vehicle industry TML occupies the first place in the
management of inventory.
17. Venkataramana and Ramakrishnan (2012) 44 evaluate the profitability
and financial position of selected cement companies in India through various
financial ratio and applied correlation, mean, standard deviation and
variance. The study uses liquidity and profitability ratios for assessment of
impact of liquidity ratios on profitability performance of selected cement
companies.
18. Hari Govinda Rao & et al. (2013)46 in their study entitled “An Empirical
Analysis on Financial Performance of Public Sector Housing Corporation in
India: A Case Study of HUDCO”, stated that the main concept of their study
is Profitability and liquidity management is of crucial importance in financial
management decision. The most favourable financial performance could be
achieved by a company that can trade off between profitability and liquidity
performance indicators.
19. Dharmaraj and Kathirvel (2013) 48 in their study related to “Analysing
the Financial Performance of Selected Indian Automobile Companies”,
suggested that the financial performance of Atul Auto Ltd, Ashok Leyland,
45
 HMT Ltd, Tata Motors Ltd, and SML ISUZU Ltd are highly improved as
compared to the group average value for all ratios.
20. Moses Joshuva Daniel (2013) 49 in his study “A Study on Financial Status
of TATA Motors Ltd” stated the main objectives to analyzing the overall
financial status of the TATA Motors Ltd by using various financial tools. In
order to analyze financial status in terms of Profitability, Solvency, Activity
and Financial stability various accounting ratios have been used. It is cleared
from the study that the company‟s financial performance is satisfactory. The
company has stable growth and it shows a greater status in all the areas it
works

46
CHAPTER 3

REASERCH DESIGN AND METHODOLOGY

47
INTRODUCTION
Financial analysis refers to the purpose of examining minutely and evaluating the
financial condition and the results of operations (i.e., the performance) of a business
enterprise. In other words, financial analysis is an in-depth study of a firm's financial
position (i.e., capital, assets and liabilities of a firm at a point of time) and its financial
performance (i.e., income, profitability, solvency, earnings per share, dividend payout
etc.,) over a period of time.

The accounts of various financial items as referred to above are recorded and
compiled in a set of statement and reports periodically in the form of the Balance
sheet and Profit and loss Account. These financial reports and statements provide the
accounting data and relevant information, which forms the basis for undertaking
financial analysis.

Financial Statements which in fact reflect a firm's financial position and performance
and a better underwriting of the financial condition and performance of a firm would
necessitate study and evaluation of relationships between component parts of these
final. A research designs is the arrangement of situation for collection and analysis
data in a manner that aims to combine relevance to the research purpose with
economy in procedure. Research Design is the conceptual structure with in which
research in conducted.

Sample design
Research design is the plan and structure of investigation so as to obtain the answer to
research questions. The plan is the overall program of the research. It includes an
outline of what the investigation will do from writing the problems and their
implication to final analysis of data earlier part of my project is exploratory research
design as the topic demands exploration the various terminologies in the Financial
Statement Analysis. While exploration I will come to know about the various
concepts associated with Financial Statement Analysis. Even collection of data also
demands exploration through various books and websites sample.

48
Research Methodology
A research designs is the arrangement of situation for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economyin
procedure. Research Design is the conceptual structure with in which research in
conducted.

SOURCES OF DATA COLLECTION

Primary Data
Secondary Data
Primary data was collected by means of survey. Questionnaires were prepared and
department of the company JSSL and their financial department were approached to
fill up the questionnaires.
In order to have a proper understanding of third party production in private sectors

Secondary Data refers to data that is collected by someone other than the user. Here
data has collected through the financial management Book published by M Y khan
and P K Jain, through newspaper The Economic Time (February 5th 2020), Websites
like www.jssl.in , www.wikipedia.com , www.worldsteel.org , www.steel.gov.in

SAMPLE UNIT:
Toranagallu area was surveyed i.e. the branch of the Toranagallu city.

Sample size:
30 samples from the financial and accountant department of the company are to be
surveyed and analyzed.

49
CHAPTER 4
DATA PRESENTATION ,ANALYSIS
AND INTERPRETATION

50
COMPARATIVE BALANCE SHEET FOR THE YEAR 2016-2017
& 2017-2018
2016-2017 2017-2018 Absolute Percentage
PARTICULARS Change Change(%)
Assets
(1) Non-current asset

a. Property, plant and 19,569.75 18,734.42 835.33 (4.46%)

equipment
b. Capital work-in-progress 146.59 1.90 (144.69) (7615.26%)
c. Intangible assets 81.20 48.73 (32.47) (66.63%)
d. Financial assets
 Investments 896.59 896.59 o -
 Loans 176.06 197.45 21.39 10.83%
 Other financial 102.00 102 1
assets
e. Current tax assets (net) 1,058.93 836.89 ( 222.04) (26.53%)
f. Other non-current assets 115.67 71.47 (44.2) (61.84%)
Total Non-Current Assets 22,044.79 20,889.45 (1155.34) (5.53%)
(2) Current assets
a. Inventories 1,805.88 2,233.38 427.5 19.4%
b. Financial assets
 Trade receivables 4,932.97 16,387.88 11454.91 69.89%
 Cash and cash
equivalents 9.97 25.29 15.32 60.58%
 Bank balances other
2,405.46 2,235.54 (169.92) (7.60%)
than cash and cash
9.16 0.66
equivalents
 Loans
c. Other current assets 27,555.25 22,117.70 (5437.55) (24.58%)
Total Current Assets 36,718.69 43,000.45 6281.76 14.61%
Total Assets 58,763.48 63,889.90 5126.42 8.02%
Equity And Liabilities
(1) Equity
a. Equity share capital 23,087.59 32,087.59 9000 28.05%
b. Other equity (16,468.92) (15456.10)
Total Equity 6,618.67 16,631.49 10012.82 60.20%
(2) Non-Current Liabilities
a. Financial liabilities
 Borrowings 4,593.76 - 4593.76 5.12%
 Other financial liabilities 284.63 300.00 15.37
b. Provisions 102.52 114.08 11.56 10.13%
Total Non-Current Liabilities 4,980.91 414.08 (4566.83) (11.03%)
(3) Current Liabilities
a. Financial liabilities
 Short term borrowings 14,813.35 6,706.88 (8106.47) (120.87%)
 Trade payables 15,475.81 19,179.12 3703.31 19.31%

51
  Other financial liabilities 4,796.75 214.48 (4555.27) (21.24%)
b. Short term provisions 1,432.82 2,423.57 990.75 40.87%
c. Other current liabilities 10,645.17 18,320.28 7675.11 41.89%
Total Current Liabilities 47,163.90 46,844.33 (319.57) (0.68%)
Total Liabilities 52,144.81 47,258.41 (4886.4) (10.34%)
Total Equity And Liabilities 58,763.48 63,889.90 5126.42 8.02%

INTERPRETATION

1. The comparative balance sheet of the company reveals that during 2019 there
has been an increase in current assets of Rs.6281.76lacs i.e, 14.61% in the
current liabilities have decreased by Rs.319.57lacs i.e, 0.68% , so the current
financial position has increased in current assets where as current liabilities is
decreased.
2. The liquid assets i.e, cash in hand and cash in bank shows an increase in 2019
over 2018 this will improve the liquidity position of the concern.
3. The other assets loans and advances have increase by Rs.21.39lacs it show that
business improved and equity shares capital is increased by Rs.10012.82lacks
which is utilized for the purchase of assets for improving he business concern.
4. The overall financial position of the company is satisfactory.

52
COMPARATIVE INCOME STATEMENT FOT THE YEAR 2016-
2017 & 2017-2018
Absolute Percentage
PARTICULARS 2016-2017 2017-2018 Change Change (%)
1. Revenue from operation 37,013.70 40,489.57 3,475.87 8.58%
2. Other income 853.78 276.93 (576.85) (2.08%)
TOTAL REVENUE 37,867.48 40,766.50 2,899.02 7.11%
EXPENSES
1. Cost of construction 26,279.45 28,800.88 2,521.43 8.75%
2. Employee benefits expenses 5,086.11 5,470.09 383.98 7.02%
3. Finance costs 3,659.35 2,609.23 (1,050.12) (40.24%)
4. Depreciation and amortization 1,391.24 1,399.30 8.06 0.576%
expenses 1,359.19 1,389.95 30.76 2.21%
5. Other expenses
TOTAL EXPENSES 37,775.34 39,669.45 1,894.11 4.77%
Profit before tax 92.14 1,097.05 1,004.91 91.60%
TAXES EXPENSES
1. Current tax
2. Deferred tax 3.24 4.91 1.67 34.01%
PROFIT FOR THE YEAR 88.90 1,092.14 1,003.24 91.86%

INTERPRETATION

1. The comparative income statement reveals ha here has been increase in revenue
8.58% there by resulting in an increase in the gross profit of 7.11%
2. Although the expenses have increased by 4.77% he increase in gross profit is
sufficient to compensate for the increase in expenses and hence there has been an
overall increase in profits amounting Rs.1,004.91 i.e, 91.60%.
3. There is an increase in net profits after tax amounting to Rs. 1003.24 i.e, 91.86%
4. It may be concluded that there is a sufficient progress in the company and the
overall profitability of the company is good.

53
 YEAR REVENUE EXPENDITURE NET PROFIT
Rs Trend Rs Trend Rs Trend (%)
(%) (%)
2013-14 25938.92 100% 34613.35 100% 8585.07 100%
2014-15 41591.75 160% 41819.02 121% 145.99 17%
2015-16 38351.49 148% 40377.52 117% 1139.51 13.27%
2016-17 37013.70 143% 37775.34 109% 88.90 10%
2017-18 40489.57 156% 39669.45 115% 1092.14 12.72%
TREND ANALYSIS

INTERPRETATION

It is found that the revenue is fluctuating for the year 2014 to 2018 and the
expenditure is also fluctuating for the year 2014 to 2018. The net profits are below the
base year it is down trend. The company should look after the expenses to increase the
profits.

54
RATIO ANALYSIS

1. NET PROFIT RATIO

FORMULA
Net Profit Ratio= Net Profit ÷ Sales × 100

100%

90%

80%

70%

60%

INTERPRETATION
50%

This Ratio measures the rate of net profit earned on sales. It helps in determining the
overall efficiency of the business operations. An increase in the ratio over the
40%
previous year shows improvement in the overall efficiency and profitability of the
business.
30%

20%

10%

0%
2013-14 2014-15 2015-16 2016-17 2

55
 2. GROSS PROFIT RATIO
FORMULA
Gross Profit Ratio= Gross Profit ÷ Sales × 100
year Gross Profit Net Sales Gross Profi Ratio
2013-14 260.28 25938.92 1.003%
2014-15 419.65 41591.75 1.009%
2015-16 392.38 38351.49 1.02%
2016-17 378.67 37013.7 1.023%
2017-18 407.66 40489.57 1.01%

45000

40000

35000

30000

25000 Gross Profi Ratio

20000 Net Sales
Gross Profit
15000

10000

5000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

The gross profit margin ratio is an indicator of a company’s financial health. It tells investors

how much gross profit every dollar of revenue a company is earning. Compared with
industry average, a lower margin could indicate a company is under-pricing. A higher gross
profit margin indicates that a company can make a reasonable profit on sales, as long as it
keeps overhead costs in control. Investors tend to pay more for a company with higher gross
profit.

56
 3. OPERATING PROFIT RATIO
FORMULA
Operating Profit Ratio= Operating Profit ÷ Sales × 100

Year Operating Profit Net Sales Operating Profit Ratio

2013-14 -8172.82 25938.92 -31.5%
2014-15 145.99 41591.75 0.35%
2015-16 1139.51 38351.49 2.97%
2016-17 92.14 37013.49 0.25%
2017-18 1097.05 40489.57 2.71%

50000

40000

30000

20000
INTERPRETATION

By observing the operating profit ratio it was -31.5%% in 2014 and went up in the
year 2015 at 0.35%but again it was negative ratio in 2016 i.e, -2.97%, in the year
2017 and 2018
10000the profits were increased by 0.25%, 2.71%

0
2013-14 2014-15 2015-16 2016-17

-10000

-20000

57
 4. RETURN ON ASSETS
FORMULA
Return On Assets= Net Profit ÷ Total Assets
Year Net Profit Total Assets ROA
2013-14 -8585.07 46299.8 -18.5%
2014-15 145.99 49944.77 0.29%
2015-16 -1139.51 48572.89 -2.35%
2016-17 88.9 58763.48 0.15%
2017-18 1092.14 63889.9 1.71%

100%
90%
80%
70%
60%
Net Profit Ratio
50%
Net Sales
40% Net Profit
30%
20%
10%
0%
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

By observing the Return on asset ratio it was -18.5% in 2014 and went up in the year
2015 at 0.29%but again it was negative ratio in 2016 i.e, -2.35%, in the year 2017 and
2018 the asset where increased by 0.15%, 1.71%

58
5. RETURN ON EQUITY
FORMULA
Return On Equity= Net Profit After Taxes ÷ Equity

Year Net Profit After Taxes Equity ROE

2013-14 -8585.07 3833.15 -224.0%
2014-15 145.99 7338.32 1.99%
2015-16 -1139.51 6198.8 -18.38%
2016-17 88.9 6618.67 1.34%
2017-18 1092.14 16631.49 6.57%

100%

90%

80%

70%

60%

INTERPRETATION
50%
By observing the Return on equity ratio it was -224.0% in 2014 and went up in the
year 2015 at 0.29%but again it was negative ratio in 2016 i.e, -18.38%, in the year
2017 and 2018 the investment were increased by 1.34%, 6.57%
40%

30%

20%

10%

0%
2013-14 2014-15 2015-16 2016-17 2017-1
59
 RETURN ON CAPITAL EMPLOYED
FORMULA
Return On Capital Employed= Net Operating Profit ÷ Capital Employed × 100
Year Net Operating Profit Capital Employed ROC
2013-14 -8172.82 18539.37 -44.08%
2014-15 145.99 20215.16 0.72%
2015-16 1139.51 15570.89 7.32%
2016-17 92.14 11599.58 0.79%
2017-18 1097.05 17045.57 6.44%

100%

90%

80%

70%

60%

INTERPRETATION
50%
By observing the Return on capital employed it was -44.08% in 2014 and went up in
the year 2015 at 0.72%but again it was negative ratio in 2016 i.e, -7.32%, in the year
2017 and 2018 the investment were increased by 0.79%, 6.44%
40%

30%

20%

10%
60

0%
CHAPTER 5
FINDINGS, SUGGESTIONS AND
CONCLUSION

61
FINDINGS
1. The comparative income statement reveals ha here has been increase in revenue
8.58% there by resulting in an increase in the gross profit of 7.11%
2. Although the expenses have increased by 4.77% he increase in gross profit is
sufficient to compensate for the increase in expenses and hence there has been an
overall increase in profits amounting Rs.1,004.91 i.e, 91.60%.
3. There is an increase in net profits after tax amounting to Rs. 1003.24 i.e, 91.86%
4. The comparative balance sheet of the company reveals that during 2018 there
has been an increase in current assets of Rs.6281.76lacs i.e, 14.61% in the
current liabilities have decreased by Rs.319.57lacs i.e, 0.68% , so the current
financial position has increased in current assets where as current liabilities is
decreased.
5. The liquid assets i.e, cash in hand and cash in bank shows an increase in 2018
over 2017 this will improve the liquidity position of the concern.
6. The other assets loans and advances have increase by Rs.21.39lacs it show that
business improved and equity shares capital is increased by Rs.10012.82lacks
which is utilized for the purchase of assets for improving he business concern.
7. According to trend analysis the revenue is fluctuating compare to expenses and
the net profits is decreased and having negative values
8. Profitability ratios by comparing the previous years in 2014 it was having a
negative margins and it was increased in 2015 again in 2016 it was having
negative margins in the ratio after that the company has looked after the assets,
returns and profits and have increased in the year 2017 and 2018

62
SUGGESTIONS
 It is advisable for the company to select only those projects which are
favorable in terms of returned earned by them, the number of years it takes to
generate positive cash flows and to recover it initial investment within short
period of time, and also on the basis of their overall performance.
 It is advised to look after the investment, profits and returns on the projects
which is chosen by the company.
 After the analysis of financial statements, it is clear that the company’s status
is good, because the net working capital of the company has increase from last
2 years.
 Company’s profits are huge in the current year, it is better to declare dividend
to shareholders.
 Percentage of debt to equity can be reduced so as to reduce the financial risk.
 To run of business smoothly working capital plays a major role, hence
company should focus to increase Working capital turnover ratio.
 Credit policy to be revised on timely basis so as to maintain cash requirements
on time, so that the company will not face any problems in managing its day-
to-day operations
 Neither too high level of inventory, not too low level of inventory is good.
Hence, it is suggested to maintain an optional level of inventory.

63
CONCLUSION
 This plant training enables me to understand the fabrication business, the
present scenario, the different competitors with “JSSL” and the strategies of
them.
 The effective growth of the company depends upon the efficient utilisation of
its various components such as long term and short term capital (equity and
debt capital).
 The work environment is friendly; the swot analysis helps the company to take
necessary action to reach greater level than it is today and also reach the
heights and become world leader in fabrication related business.
 The comparative statement helps to analyze the absolute change and
percentage change
 The ratio is most powerful tool of the financial analysis; the analysis of
financial information indicates the operating and financial efficiency and
growth of the firm.
 The assets of a company can be financed by increasing the owners’ claims or
the creditors’ claims. The owners’ claims increase when the firm raises funds
by issuing ordinary shares or by retaining the earnings; the creditors’ claims
increase by borrowing.
 All together it was a good learning experience and as I could see theory which
JSSL study in class is being put in practical use.

64
BIBLIOGRAPHY
BOOKS

 Financial Management
Published by M Y Khan & P K Jain
 Strategic Financial Management
Published by Dr. Monika Aggarwal

NEWSPAPER:

 The economic Time- February 5th 2020

WEBSITES

 www.jssl.in
 www.wikipedia.com
 www.worldsteel.org
 www.steel.gov.in

65
QUESTIONNAIRE

NEME:-

PROFESSION:-

QUALIFICATION:-

CONTECT NUMBER:-

1. What is not of the four different methods of analyzing financial

statement?

a. Ratio Analysis

b. Trend Analysis

c. Lateral Analysis

d. Leverage Ratios

2. What type of ratio helps determine a company’s ability to generate

sufficient cash to meet its obligations?

a. Liquidity Ratio
b. Profitability Ratio
c. Activity Ratio
d. Leverage Ratio

3. What types of ratio helps assess how effectively a company uses its assets?

a. Liquidity ratio
b. Profitability Ratio
c. Activity Ratio
d. Leverage Ratio

4. Which of the following is the correct calculation for the contribution

margin ratio?

a. Revenue dividend by variable costs.

b. Revenue dividend by contribution margin.
c. Contribution margin dividend by revenue
d. Contribution margin dividend by variable costs.

5. Total assets turnover ratio is calculated by dividing----by total assets

66
 a. Average inventory
b. Accounts receivable
c. Sales
d. Total Expenses

6. ------- Of the profitability of the firm over a period of time such as a year.

The balance sheet is a summary

a. That statement of cash flows is a summary
b. The audit report is a summary
c. None of the above is a summary

7. Return on total assets is a function of -----

a. Interest rates and pre-tax profits

b. The debt-equity ratio
c. The after tax profits margin and the assets turnover ratio
d. Sales and fixed assets

8. An example of a liquidity ratio is---

a. Fixed assets turnover

b. Current ratio
c. B and C
d. Acid test or quick ratio
e.

9. a snapshot of the financial condition of the firm at a particular time.

a. The balance sheet provides

b. The income statement provides
c. The statement of cash flows provides
d. All of the above provide

10. -------- Of the cash flow generated by the firm’s operations, investments
and financial activities.

a. The balance sheet is a report

b. The income statement is a report
c. The statement of cash flows is a report
d. The auditor’s statement of financial condition

11. If firm wish to compute economic earning and trying to decide how to
account for inventory

67
 a. FIFO is better than LIFO
b. LIFO is better than FIFO
c. FIFO and LIFO are equally good
d. FIFO and LIFO are equally bad

12. A firm has a higher asset turnover ratio than the industry average, which
implies

a. The firm has higher profit earnings ratio that other firms in the industry
b. The firm is more likely to avoid insolvency in the short run than other firms in
the industry
c. The firm is more profitable than other firms in the industry
d. The firms is utilizing assets more efficiently than other firms in the industry

13. A firm has a lower assets turnover ratio than the industry average, which
implies

a. The firm has a lower profit earnings ratio than other firms in the industry.
b. The firm is less likely to avoid insolvency in the short run than other firms in
the industry
c. The firm is less profitable than other firms in the industry
d. The firm is utilizing assets less efficiently than other in the industry.

14. In periods of inflation, accounting depreciation is----relative to

replacement cost and real economic income is .

a. Overstated, Overstated
b. Overstated, Understated
c. Understated, Overstated
d. Understated, Understated

15. The percentage of debt and equity utilized by a firm is called the

a. Equity multiplier
b. Capital structure weight
c. Weighted average cost of capital
d. Debt ratio

68
BIBLIOGRAPHY

1.JSSL DOCUMENTARY.

2.Development of Steel Industry in India.

3.Memories : Steel Industry Perspectives.

4.NewsPapers .

5Magzines.

69
 ANNEXURE

70
THANK YOU

71