Equity Shares-1

A
PROJECT REPORT
ON
“ANALYSIS OF EQUITY SHARES WITH
RESPECT TO STEEL SECTOR”
UNDER
RELIGARE ENTERPRISE LIMITED, PUNE
SUBMITTTED TO
UNIVERSITY OF PUNE
SUBMITTTED BY
MANDAR MANOHAR TEREDESAI
UNDER THE GUIDANCE OF

MR. PROF. HAJERI
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR

THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(2007-2009)
THROUGH
SAHYADRI INSTITUTE OF MANAGEMENT STUDIES,
PUNE.
1
ACKNOWLEDGEMENT
I take this opportunity of submitting this report to express our regards
towards those who offered their invaluable guidance in the hour of need.
I sincerely acknowledge with deep sense of gratitude and indebtedness

to my Director, Dr. Nitin Mankar, and my internal guide Mr.Prof. Hajeri, who
has guided me with valuable inputs throughout the project. He gave
knowledgeable insights about the topic, which helped me throughout the
project.
I also would like to thank Mr. Ashish Pardesi, Branch Manager,

Religare.
I also thank Mr. Saket Aaglave, HR Manager, Religare & Mr. Abhijit Khasnis,
Sr. Delar, Religare, for giving me this opportunity to work on this topic; it was
really wonderful and challenging to work on this project. It surely has given me
insights into areas I was not much familiar with earlier. I have tried to share
those insights with you in this report.
This project was really worthwhile to work on because it encompassed

all the learning for a management student. Thus it provided a ground to
implement what is learned and also depicted the real tasks that have to be
undertaken in the nitty-gritty's involved in a system.
Signature
Mandar M. Teredesai.
(SIMS)
2
DECLARATION
I hereby declare that the project report entitled "Analysis of Equity

Shares With Respect to Steel Sector" is an independent analysis work carried
out by me as a part of MBA Curriculum, University of PUNE, under the
guidance of Mr. Prof. Hajeri. This report has not been submitted for any award
of any degree of this or any other university.
Date: Mr. Mandar M. Teredesai.

(SIMS, Pune)
3
INDEX
Chapter Page No.
1. EXECUTIVE SUMMARY 1-4
2. OBJECTIVE & SCOPE 5-7
3. COMPANY PROFILE 8-23

3.1 History of the Organization
3.2 Business of the Company
3.3 Company Offerings
3.4 Company Background
3.5 Current Scenario
3.6 Share Holding pattern
3.7 Group Structure
3.8 New Initiatives
3.9 Vision & Mission
4. THEORETICAL BACKGROUND 24-26
5. FUNDAMENTAL ANALYSIS 27-32
6. RESEARCH METHODOLOGY 33-39

6.1 Fundamental Analysis
6.2 Technical Analysis
7. 5 KEY CASES FROM INDIAN AUTOMOBILE 40-50
SECTOR
8. DATA INTERPRETATION 51-56

8.1 Introduction
8.2 Current Scenario
8.3 Production, Consumption, Export & Investment
9. DATA ANALYSIS 57-82
10. FINDINGS 83-86
11. CONCLUSION 87-88
12. BIBLIOGRAPHLY 89-90
4
EXECUTIVE
SUMMARY
5
CHAPTER-1
EXECUTIVE SUMMARY
PROJECT TITLE:
“ANALYSIS OF EQUITY SHARES WITH RESPECT TO STEEL SECTOR”
INTRODUCTION TO THE PROJECT:
OBJECT OF THE PROJECT
In today's competitive world, management has to perform variety of functions

and responsibilities. Theoretical knowledge of such functions and responsibilities can
be obtained in the institute. But, practically when this knowledge is applied in the
corporate world, the mangers face many difficulties. One has to get an insight into the
practical knowledge, communication skills and develop the analytical aspects.
Working for such objective will definitely help to polish us and once accomplished it
provides a great satisfaction.
Hence in order to get all the above said, the institute has provided an
opportunity to work in a company and acquire skills, which will help in future course
of time.
SELECTION OF THE TOPIC
This project is titled as Analysis of equity shares with respect to Steel

Sector'. It is an attempt made to help individual investor study about a particular
company and take a decision whether to invest in it or not.
6
Financial statement analysis is the biggest part of fundamental analysis. Also
known as quantitative analysis, it involves looking at historical performance data to
estimate the future performance of stocks.The massive amount of numbers in a
company's financial statement can be bewildering and intimidating to many investors.
On the other hand, if one knows to read them, if financial statements are a gold mine
of information.
This research helps to throw light on some important aspects that should be
considered while selecting any stock and in the process various tools available for
Fundamental Analysis have been used.
The study has focused on Key Players on Indian Steel sector and thereby a
study of current trends and future prospects of Indian Steel Sector is done.
During the study the 5 key players of Indian Steel sector which were
considered were:
1) Tata Steel Ltd.
2) Ispat Industries Ltd.
3) Uttam Galva Steel Ltd.
4) Steel Authority of India Ltd. (SAIL)
5) JSW Steel Ltd.
During the study the stock movements of the companies for a period spanning
two months i.e. June and July 2008 was considered. The current happening and news
and future plans were evaluated to help to come to findings in respect of the
individual companies. Various tools of Fundamental analysis have been used in this
process to study these key players so as to understand these companies' future
prospects, which would help make decisions of either buying or selling the stocks of
these companies.
The tools used are:
 Earnings per Share - EPS
 Price to Earnings Ratio - P/E
 Projected Earning Growth - PEG
7
 Price to Book - P/B
 Dividend Payout Ratio
 Dividend Yield
Book Value
These are the most popular tools of fundamental analysis. They focus on
Earnings, growth, and value in the market.
REASON FOR CHOOSING A COMPANY AND THE PROJECT
1) Religare Enterprise Ltd. is one of the major player in stockbroking.
2) I am pursuing M.B.A. in Finance; this project gives me a brief idea about

stockbroking.
DURATION OF THE PROJECT
Two Months
8
OBJECTIVE
&
SCOPE
9
CHAPTER-2
OBJECTIVE & SCOPE OF PROJECT
OBJECTIVES OF THE STUDY:
 To study various tools used in Fundamental Analysis to help

investors.
 To analyze Indian Steel sector taking into consideration its current status and
future prospects.
 To study the stocks of 5 key players of Indian Automobile Sector viz.
1) Tata Steel Ltd.
4) Steel Authority of India Ltd.(SAIL)
5) JSW Steel Ltd.
SCOPE OF THE STUDY:
This Study was Analysis of Equity shares with respect to steel sector.
10
The study gave a chance to know about Fundamental Analysis and various tools used
in Fundamental Analysis.
Fundamental analysis helps to understand the basics of financial statements

and gives you the tools that help to decide which companies make worthwhile
investments.
It is a process of looking at a business at the basic or fundamental financial

level. This type of analysis examines key ratios of a business to determine its financial
health and gives you an idea of the value its stock.
The scope of Project extends to the study of 5 key players of Indian Steel Sector:
1) Tata Steel Ltd.
4) Steel Authority of India Ltd.(SAIL)
5) JSW Steel Ltd.
The study covers stock price movements and financials of these companies
relevant to the months of June and July 2008.
11
COMPANY
PROFILE
12
CHAPTER-3
COMPANY PROFILE
RELIGARE ENTERPRISES LTD.
3.1 History of the organization:
 The Company was originally incorporated as 'Vajreshwari Cosmetics Private

Limited' on January 30, 1984. In January 2006.
 The company name was subsequently changed to 'Religare Enterprises Private

Limited.' Subsequently, the status of the company was changed to a Public
Limited Company by a special resolution of the members dated July 14, 2006.
 Religare Enterprises Limited (REL), promoted by Ranbaxy Laboratories

Limited is one of the leading integrated financial services groups of India.
REL’s businesses are broadly clubbed across three key verticals, the Retail,
Institutional and Wealth spectrums, catering to a diverse and wide base of
clients.
 Religare Securities Limited (RSL) is a leading equity and securities firm in

India. The company currently handles sizeable volumes traded on NSE and in
the realm of online trading and investments it currently holds a reasonable
share of the market.
 The major activities and offerings of the company today are,
13
 Equity broking,
 Depository Participant Services,
 Portfolio Management Services,
 Institutional Brokerage & Research,
 Investment Banking and Corporate Finance.
 RSL is a member of the National Stock Exchange of India, Bombay Stock

Exchange of India, Depository Participant with National Securities Depository
Limited and Central Depository Services (I) Limited, and SEBI approved
Portfolio Manager.
 Religare has been constantly innovating in terms of product and services and
to offer such incisive services to specific user segments it has also started the
NRI, FII, HNI and Corporate Servicing groups.
Our Brand Identity:
Name
Religare is a Latin word that translates as 'to bind together'. This name
Religare was chosen to reflect the integrated nature of the financial services
the company offers. The name is intended to unite and bring together the
phenomenon of money and wealth to co-exist and serve the interest of
individuals and institutions, alike.
Symbol
The name is paired with the symbol of a four-leaf clover , a rare mutation of
the common three-leaf clover. Traditionally, it is considered good fortune to
find a four leaf clover as there is only one four-leaf clover for every 10,000
three-leaf clovers found.
Each leaf of the four-leaf clover has a special meaning in the sphere of
Religare.
The first leaf of the clover represents Hope. The aspirations to

succeed. The dream of becoming. Of new possibilities. It
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is the beginning of every step and the foundations on which a person
reaches for the stars.
The second leaf of the clover represents Trust. The ability to place ones
own faith in another. To have a relationship as partners in a team. To
accomplish a given goal with the balance that brings
satisfaction to all not in the binding but in the bond that is built.
The third leaf of the clover represents Care. The secret ingredient that is
the cement in every relationship. The truth of feeling
that underlines sincerity and the triumph of diligence
in every aspect. From it springs true warmth of service and the ability
to adapt to Evolving environments with consideration to all.
The fourth and final leaf of the clover represents Good Fortune.
Signifying that rare ability to meld opportunity and
planning with circumstance to generate those often
looked for remunerative moments of success.
Hope.Trust.Care.Good fortune.All elements perfectly combine in the

emblematic and rare,four-leaf clover to visually symbolize the values
that bind together and form the core of the Religare vision.
3.2 Business of the Company:
The company’s principal business includes:
Retail Spectrum- To cater to a large number of retail clients by offering all

products under one roof through the Branch Network and Online mod
 Equity and Commodity Trading
 Personal Financial Services
 Mutual Funds
 Insurance
 Saving Products
 Personal Credit
15
 Personal Loans
 Loans against Shares
 Online Investment Portal
Institutional Spectrum- To Forge & build strong relationships with

Corporate Client and Institutions
 Institutional Equity Broking
 Investment Banking
 Merchant Banking
 Transaction Advisory
 Corporate Finance
Wealth Spectrum - To provide customized wealth advisory services to High

Net worth Individuals
 Wealth Advisory Services
 Portfolio Management Services
 International Advisory Fund Management Services
 Priority Client Equity Services
 Arts Initiative
3.3 Company Offerings:
1. Equity & Derivatives
16
Trading in Equities with Religare truly empowers you for your investment
needs. We ensure you have a superlative trading experience through –
 A highly process driven, diligent approach
 Powerful Research & Analytics and
 One of the “best in class” dealing rooms
How will we make trading easier and better?
 Personal Assistance
 Dedicated Relationship Managers
 Dedicated dealers who facilitate trading and serve your post trade needs
Research and Advisory
We at Religare believe in providing research services for clients to facilitate

their investment decisions, with strict emphasis on self-regulation, avoiding
possible conflict of interest in objectivity. Driven by ethical business practices,
we keep a hawk’s eye on the market with consistent tracking of our
recommendations to provide our clients suitable & timely insights.
The research team at Religare has close to 100 man years of experience &
covers a large basket of companies from different categories.
Varied Research Products -
 Fundamental research
 Technical research
 Daily reports
 Intra-day trading tech calls
 Intra-day Derivative calls
 Directional F&O calls
 Structured products
17
 Index Arbitrage
 Volatility Trading.
2. Portfolio Management Services (PMS)
Religare offers PMS to address varying investment preferences. As a focused

service, PMS pays attention to details, and portfolios are customized to suit
the unique requirements of investors.
Religare PMS currently extends five portfolio management schemes, viz

Panther, Tortoise, Elephant, Caterpillar and Leo. Each scheme is designed
keeping in mind the varying tastes, objectives and risk tolerance of our
investors.
Investment Philosophy
We believe that our investors are better served by a disciplined investment

approach, which combines an understanding of the goals and objectives of the
investor with a fine tuned strategy backed by research.
 Stock specific selection procedure based on fundamental research for

making sound investment decisions.
 Focus on minimizing investment risk by following rigorous valuation

disciplines.
 Capital preservation.
 Selling discipline and use of Derivatives to control volatility.
 Overall to enhance absolute return for investors.
Our Schemes
Panther
The Panther portfolio aims to achieve higher returns by taking aggressive

positions across sectors and market capitalizations. It is suitable for the “High
18
Risk High Return” investor with a strategy to invest across sectors and take
advantage of various market conditions.
Tortoise
The Tortoise portfolio aims to achieve growth in the portfolio value over a
period of time by way of careful and judicious investment in fundamentally
sound companies having good prospects. The scheme is suitable for the
“Medium Risk Medium Return” investor with a strategy to invest in
companies which have consistency in earnings, growth and financial
performance.
Elephant
The Elephant portfolio aims to generate steady returns over a longer period by
investing in Securities selected only from BSE 100 and NSE 100 index. This
plan is suitable for the “Low Risk Low Return” investor with a strategy to
invest in blue chip companies, as these companies have steady performance
and reduce liquidity risk in the market.
Caterpillar
The Caterpillar portfolio aims to achieve capital appreciation over a long

period of time by investing in a diversified portfolio. This scheme is suitable
for investors with a high risk appetite. The investment strategy would be to
invest in scrips which are poised to get a re-rating either because of change in
business, potential fancy for a particular sector in the coming years/months,
business diversification leading to a better operating performance, stocks in
their early stages of an upturn or for those which are in sectors currently
ignored by the market.
Leo
Leo is aimed at retail customers and structured to provide medium to long-

term capital appreciation by investing in stocks across the market
capitalization range. This scheme is a mix of moderate and aggressive
investment strategies. Its aim is to have a balanced portfolio comprising
selected investments from both Tortoise and Panther. Exposure to Derivatives
is taken within permissible regulatory limits.
19
3. International Advisory
International Advisory Fund Management Services (AFMS) - A new
horizon for international investments
We provide our wealth clients an opportunity to invest in international
financial instruments (currently limited to the US). Equities, Mutual Funds and
Debts are some of the key instruments available and the clients have the
option to choose from various asset allocation modules.
Why Invest Overseas?
 Avenues for enhancing returns, minimizing risk and portfolio

diversification
 Global outreach of opportunities
 Pre-approved route for resident individuals to invest (Healthy Govt.

Patronage and favorable regulatory developments)
4. Investment Banking
We provide innovative, integrated and best-fit solutions to our corporate

customers. It is our continuous endeavor to provide value enhancement
through diverse financial solutions on an ongoing basis, through offerings like
Corporate Debt, Private Equity, IPO, ECB, FCCB, GDR/ADR.
Investment Banking with Religare offers the following services:
Corporate Finance
We focus on finding right and relevant partners for our clients, who not only
help in adding value but also improve the future valuation of the organization.
We specialize in structured financing and providing advisory services related
to financial planning, modeling and advising on financial requirements.
Corporate finance products offered by us:
Placement of Debt:
 Syndication of Domestic Loan / Foreign Currency Loan
 Securitization
20
 Debt Swap & Loan Restructuring
 Short Term Corporate Debt
 Working Capital (Cash Credit & Short term Loan)
 Capital Market Instruments
 Overseas Acquisition
Placement of Equity (Private Equity):
 Both for listed and unlisted companies
Merchant Banking
 IPO/FPO/RIGHTS
 Mergers & Acquisitions
 Corporate Advisory Services
 ADR/GDR/FCCB
3.4 Company Background:
Name of the Organization Religare Enterprises Private Limited
Registered Offices Address 19, Nehru Place, New Delhi – 110019
Tel 91-11-30815100/66552200
Fax 91-11-30815288
Email investorservices@religare.in
Website http://www.religare.in/
Chairman Malvinder Mohan Singh
Managing Director Sunil Godhwani
Company Secretary Ravi Batra
Auditor Price Waterhouse
Registrar & Share Transfer Agent Karvy Computershare Private Ltd
21
Religare Stock Brokers
Ground Floor, Amar Calibre,
C.T.S No. 911,Bhamburda,
Branch Office Address
Shivaji Nagar,Pune – 411004.
Phone:+91-20-39841500
Central Leadership Team:
 Mr. Sunil Godhwani - CEO & Managing Director, Religare Enterprises

Limited
 Mr. Shachindra Nath - Group Chief Operating Officer, Religare Enterprises

Limited
 Mr. Anil Saxena- Group Chief Finance Officer, Religare Enterprises Limited
22
Directors of Religare:
 Mr. Malvinder Mohan Singh - Chairman (Non Executive)

 Mr. Sunil Godhwani - CEO & Managing Director
 Mr. Shivinder Mohan Singh - Non Executive Director
 Mr. Harpal Singh - Non Executive Director
 Mr.Deepak Ramchand Sabnani - Independent Director
 Mr.Padam Bahl - Independent Director
 Mr.J.W. Balani - Independent Director
 Mr. Baldev Singh Johal - Independent Director
 Mr. R. K. Shetty - Alternate to Mr. J. W. Balani
 Capt.G.P.S.Bhalla - Alternate to Mr. Deepak Sabnani
3.5 Current Scenario:
 REL offers a multitude of investment options and a diverse bouquet of

financial services and has a pan India reach in more than 1550 locations across
more than 460 cities and towns.
.
 The group has also started expanding globally and has acquired London’s
oldest brokerage & investment firm, Hichens, Harrison & Co. plc. Following
this acquisition Religare now proposes to operate out of
10 countries.
 Religare has entered into joint ventures with the global major- Aegon for its
Asset Management and Life Insurance businesses in India.
.
 Religare’s wealth management subsidiary is now rechristened as Religare

Macquarie Wealth Management Limited, following a joint venture with the
Australia based financial services major, Macquarie Bank.
23
 Religare has also partnered with Vistaar Entertainment to launch India’s first
Film Fund.
3.6 SHARE HOLDING PATTERN
Share Holding Pattern as on

30/06/2008 31/03/2008 31/12/2007
Face Value 10.00 10.00 10.00

No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
PROMOTER'S HOLDING
Indian Promoters 41187500 54.11 41187500 54.13 41187500 54.27
Sub Total 41187500 54.11 41187500 54.13 41187500 54.27
NON PROMOTER'S HOLDING
Institutional Investors
Mutual Funds and UTI 9000 0.01 16523 0.02 73470 0.10
Banks Fin. Inst. and
12223 0.02 12973 0.02 79437 0.10
Insurance
FII's 2287417 3.01 2299417 3.02 1427811 1.88
Sub Total 2308640 3.03 2328913 3.06 1580718 2.08
Other Investors
Private Corporate Bodies 6344913 8.34 6212995 8.17 6438772 8.48
NRI's/OCB's/Foreign Others 9236287 12.13 9195045 12.09 9012569 11.87
Directors/Employees 1000000 1.31 1000000 1.31 1000000 1.32
Others 543165 0.71 682305 0.90 616018 0.81
24
Sub Total 17124365 22.50 17090345 22.46 17067359 22.49
General Public 15495689 20.36 15477101 20.34 16064431 21.17
GRAND TOTAL 76116194 100.00 76083859 100.00 75900008 100.00
3.7 Group Structure:
Religare Enterprises Limited:
 Religare Securities Limited -
 Equity Broking
 Portfolio Management Services
 Depository
 Online Investment Portal
 Institutional Equity Broking
 Religare Finvest Limited -
 Lending and Distribution business
 Religare Commodities Limited -
 Commodity Business
 Religare Insurance Broking Limited -
 Life and Non Life Insurance
 Reinsurance
 Religare Capital Markets Limited -
 Investment Banking
 SEBI Registered Merchant Banker
 Acquisition in UK through an international arm
 Religare Arts Initiative Limited -
 Art Fund and other businesses of Art
25
 Gallery to be launched soon
 Religare Realty Limited -
 Real Estate Management Company
 Religare Venture Capital Private Limited -
 Private Equity and Investment Manager
Joint Ventures:
AEGON Religare Life Insurance - Life Insurance Company, Joint Venture

between REL, Aegon and BCCL for Life insurance business in India.
Religare AEGON AMC - 50:50 Joint Venture between REL and Aegon for
Asset Management business in India.
50: 50 joint ventures with Macquarie for wealth management business.
Religare Enterprises Limited and Vistaar Entertainment Ventures Private

Limited launched India’s first ever film fund - Vistaar Religare Film Fund
(VRFF) for the Film/Media business.
26
3.8 New Initiatives:
Religare Capital Markets Limited, the wholly owned subsidiary of Religare

Enterprises Limited (REL), the holding company for financial services
businesses of the group has proposed to acquire London’s oldest brokerage firm
- Hichens Harrison & Co Plc. This acquisition will provide Religare with the
opportunity of creating a global distribution and execution platform within
emerging countries and surely help the Group to emerge as a global player in the
financial services market to provide small and medium Indian corporate with
much needed access to capital.
Hichens Harrison is well placed in the emerging markets of Johannesburg, Cape

Town, Jakarta, Kuala Lumpur, Buenos Aires, Rio de Janeiro, Dubai and
Mumbai.
 Religare recently launched Femme Power - a financial advisory platform

managed by women, for women.
 Religare has created an alternative career path keeping in mind the needs,
wants and desires of today’s woman. Femme Power provides an
27
opportunity for the contemporary Indian woman who strives to strike a
balance between work and family life.
 The primary focus of Femme Power is to provide a single point of

contact from which women across India can access their financial
investments and transactions, in addition to providing timely lifestyle
tips.
3.9 Vision and Mission of the Organization:
VISION
To build Religare as a globally trusted brand in the financial services domain and
present it as the ‘Investment Gateway of India’.
MISSION
To provide financial care driven by the core values of diligence & transparency.
Brand Essence
Diligent, dynamic & ethical processes for wealth creation.
28
THEORETICAL
BACKGROUND
29
CHAPTER-4
THEORETICAL BACKGROUND
INTRODUCTION:
The stock markets are the most volatile markets and are as difficult to understand as
the weather. Though this does not mean that the markets cannot be predicted but it
only means that trends may change without warning, as with weather.
The stock markets are characterized by almost all factors, again starting right from
weather and ending at the political environment. Effects of one market also causes a
spillover into the other and an external cause in one market can lead to the reaction in
another market. For instance, it's been proved that a delayed monsoon in India will
create the problems of flooding in the European countries, effecting adversely
economies of both the regions.
The pulse of the market also depends upon timely exit and entry. For arriving at a
correct conclusion reasonable data is required to understand the mechanics of the
stock and the industry - viz-a-vis global and local in which the company operates.
While a practical long-term view will help reduce risks, marrying the stock on the
other hand may totally increase risks.
By going through the Industry Reports. Financials the investor can arm himself with
reasonable information about the stocks, which are being tracked by the investor.
However, for consistent monitoring of stocks, it is imperative that the investor has
limited exposure to the stocks, which are being capable of being tracked by him - a
too big a portfolio will divert attention and ultimately harm investor interests.
30
Capital Market:
The term capital market indicates it is the market, which deals with capital. Capital
market is concern with the raising of money capital. It is the place where different
types of securities are bought and sold. Those who purchase or own security must be
assured of fast, fair, orderly and open system for purchases and sales at known prices,
which is provided by stock exchanges.
Types of Capital Market:

Primary Market:
A primary market is one. Which a borrower issues new securities in exchange for
cash from an investor (buyer). New issue market is a primary market where issuer can
sell securities but cannot buy. Securities available for the first time are offered
through primary market. The issuer may be a brand new company or one that has
been in business for many years. The securities issued in primary market provide new
funds to the issuer.
If the issuer is selling securities for the first time, these are referred to as "Initial
Public Offerings" MPOs). Once the original purchasers sell the securities, they trade
in secondary markets. New securities may trade repeatedly in the secondary market,
but the original issuers will be unaffected in the sense that they receive no additional'
cash from these transactions.
Secondary Market:
In the Secondary Market existing securities are simply being transferred between
different parties and issuer is not receiving any new funds. After the purchase in
primary market securities are subsequently traded in the secondary market. Secondary
markets exits for the trading of common and preferred stock, warrants bonds and puts
and calls. Stock exchange like Bombay Stock Exchange (BSE) or National Stock
Exchange (NSE) organizes all these trading.
Organized Stock Exchange:
As per securities contract and Relations Act, 1956 "Stock Exchange is an association,
organization or Body of Individuals whether incorporated or not and controlling the
business in buying, selling and dealing in securities."
31
The stock Exchange serves as a trading center for stocks, shares and bond. The Stock
Exchange is considered to be most important constituent of capital market. They act
as "Weather cock' of the economic climate of the country. The Stock Exchange serves
as a mirror of the investor's confidence in the financial position of the economy. The
stock exchange is physical market piece where the agent or broker of buyers and
sellers operate through auction process. Bombay and National stock Exchange of
India are important stock exchange in India among total 24 stock exchanges.
32
FUNDAMENTAL
ANALYSIS
33
CHAPTER-5
FUNDAMENTAL ANALYSIS
Fundamental analysis is the process of looking at a business at the basic or

fundamental financial level. This type of analysis examines key ratios of a business to
determine its financial health and gives you an idea of the value its stock.
Many investors use fundamental analysis alone or in combination with other
tools to evaluate stocks for investment purposes. The goal is to determine the current
worth and, more importantly, how the market values the stock.
Fundamental analysis is about using real data to evaluate a security's value.
Although most analysts use fundamental analysis to value stocks, this method of
valuation can be used for just about any type of security.
It is the method of evaluating a security by attempting to measure its intrinsic
value by examining related economic, financial and other qualitative and quantitative
factors. Fundamental analysts attempt to study everything that can affect the security's
value, including macroeconomic factors (like the overall economy and industry
conditions) and individually specific factors (like the financial condition and
management of companies.
For example, an investor can perform fundamental analysis on a stocks value by

looking at economic factors, .aid, as interest rates and the overall state of the
economy, and information about the bond issuer, such as potential changes in credit
ratings. For assessing stocks, this method uses revenues, earnings, future growth,
return on equity, profit margins and other data to determine a company's underlying
value and potential for future growth. In terms of stocks, fundamental analysis focuses
on the financial statements of the Company being evaluated.
The end goal of performing fundamental analysis is to produce a value that an

investor can compare with the security's current price in hopes of figuring out what
sort of position to take with that security (under priced = buy, overpriced = sell or
short).
Earnings
34
It's all about earnings. When you come to the bottom line, that's what investors
want IV, know. How much money is the company making and how much is it going
to make in the future. Earnings are profits, it may be complicated to calculate, but
that's what buying a company is about. Increasing earnings generally leads to a higher
stock price and, in some cases, a regular dividend. When earnings fall short, the
market may hammer the stock. Every quarter, companies report earnings. Analysts
follow major companies closely and if they fall short of projected earnings, sound the
alarm. While earnings are important, by themselves they don't tell you anything about
how the market values the stock. To begin building a picture of how the stock is
valued you need to use some fundamental analysis tools
Step-1: POLITICO-ECONOMIC ANALYSIS
Politico-economic factor affect an industry and a country. Stable political

environment necessary for steady, balanced growth. International events impact
industries and companies. Countries need foreign exchange reserves to meet its
commitments, pay for imports and service foreign debts.
The possibility of the devaluation of one's currency / the appreciation of

another currency is a real risk. One can hedge tiles by entering into forward contracts.
Restrictive practices or cartels imposed by countries can affect companies and
industries. Investors must determine how sensitive a company is to a governmental
policies and restrictive policies. Foreign debt can be an enormous burden, which
would eat into a company's results. Inflation erodes purchasing power. Low inflation
indicates stability and companies prosper at such times.
Low interest and taxation rates stimulate investment and industry.
Domestic savings can accelerate economic growth.
Development of a country is dependent on its infrastructure.
Budgetary deficits resulting from excess governmental spending stimulate the

economy, also gives this to increasing demand and increasing inflation.
ECONOMIC CYCLE
Business or economic cycle has direct impact on industry and individual

companies. It affects investment decisions, employment, demand and profitability.
Four stages of economics cycle are depression, recovery, boom, and
35
recession. Investors should determine the stage of the economic cycle before
investing. Investors should invest just before or during a boom.
STEP-2: INDUSTRY ANALYSIS
Importance of industry can never be understated. State of industry will affect

the company performance. It is important to determine cycle. These are
entrepreneurial or sunrise, expansion or growth, stabilization or maturity and decline
or sunset stage. Investors should purchase in the first two stages and disinvest at the
maturity stage. It is better to invest in evergreen industries. Results of cyclical
industries are volatile. Investors should consider competition as the greater the
competition lower the profit. It is safer to invest in industries not subject to
government controls. Export oriented industries currently favored by the government
STEP 3: COMPANY ANALYSIS
Final stage of fundamental analysis is company analysis.
Areas to be examined are the company, the results, ratios and cash flow.
MANAGEMENT
Management is the single most important factor to consider in a company.

Upon its quality rests the future of the company. In India two main types of the
management - family and professional. Investors must check on integrity of
managers, proven competence, how high is it rated by its peers, how did it performs at
times of adversity, the management's depth of knowledge, its innovativeness and
professionalism.
THE COMPANY
It is important to check how company is perceived by its competition and

weather it is the market leader in its products or in its segments. The investor must
study the policy a company follows and its plans for growth. Labaure relations are
important.
ANNUAL REPORT
The annual report is the primary and most important source of information on
a company. The investor must read between and beyond the lines of an annual report
to determine the state of the company being considered. The annual report is broken
36
into the director's report, the auditor's report, the financial statements and the
schedules.
DIRECTORS REPORT
This report gives investors insights into the company. It enunciates the
opinions of the directors on the company, the industry and the political situation. It
explains the performance of the company, its plans for diversification, modernization
and expansion. It discusses the profits earned and states the dividend proposed. The
report, if read properly, can give the investor a good grasp of the working of the
company.
AUDITORS REPORT
The auditor represents shareholders and reports to them on the stewardship of

the directors and whether the accounts presented do present a true and fair view of the
company.
Auditors will comment on any changes made in accounting principles and the
effect of the changes on the results. Auditors will also comment on any action or
method of accounting they do not agree with. Investor must read the auditor report in
detail and in depth as the results can materially change if adjustments are made based
on the notes or the comments in the auditor's report.
FINANCIAL STATEMENTS
Financial statements of a company in an annual report consist of the balance

sheet and profit and loss account. These detail the financial health and the
performance of the company.
The balance sheet details all the assets and liabilities a company has on a
particular date. Assets are those that the company owns suckle as fixed assets
(Buildings, cars etc), investments and current assets (stock, debtors, and cash). I
liabilities are those that the company owes (trade creditors, loans etc) and the
shareholders investment in the company (share capital and reserves). The profit and
loss account details numerically the activities the company had undertaken during the
accounting period and the result of these activities(profit or loss).
Contingent liabilities are also detailed. These are liabilities that may arise on the
happening of event that may never arise (guarantees, bill discounted). The liability
37
crystallizes on the happening of the event. The profit and loss account also details the
dividend given (interim) and proposed.
RATIOS
No investment should be made without analyzing the financial statements of

the company and comparing the company's results with that of earlier years. Ratios
express mathematically the relationship between the performance figures and / or
assets / liabilities in a form that can be easily understood and
Interpreted. No single ratio tells the complete story.
Ratios can be broken into four broad categories:-
A. Profit and loss ratios
B. Balance sheet ratios
C. Balance sheet and profit and loss ratios, and
D. Financial statements to market ratios.
Ratios may also be grouped into categories that will enable investors to easily
determine the company's strengths and weaknesses.
38
RESEARCH
METHODOLOGY
39
CHAPTER-6
RESEARCH METHODOLOGY
6.1 FUNDAMENTAL ANALYSIS:
1. EARNINGS PER SHARE
One of the challenges of evaluating stocks is establishing an "apples to apples"

comparison. What is meant here is setting up a comparison that is meaningful so that
the results help make an investment decision.
Similarly, comparing the earnings of one company to another really doesn't make any
sense. Using the raw numbers ignores the fact that the two companies undoubtedly
have a different number of outstanding shares. For example, companies A and B both
earn Rs.100, but company A has 10 shares outstanding, while company B has 50
shares outstanding. It makes more sense to look at earnings per share (EPS) for use as
a comparison tool. Earnings per share is calculated by taking the net earnings and
divide by the outstanding shares.
EPS = Net Earnings / Outstanding Shares
Using the example above, Company A. had earnings of Rs. 100 and 10 shares
outstanding, which equal an EPS of 10 (Rs.100 / 10 = 10). Company B had earnings
of Rs.100 and 50 shares outstanding, which equal an EPS of 2 (Rs.100/50 = 2). So,
one should go buy Company A with an EPS of 10. The EPS is helpful in comparing
one company to another, assuming they are in the same industry.
2. PRICE EARNINGS RATIO (P/E Ratio)
If there is one number that peop1^ look at than more any other it is the Price to
Earning Ratio (P/E). The P/E looks at the relationship between the stock price and the
company's earnings. The P/E is the most popular metric of stock analysis. You
calculate the P/E by taking the share price and dividing it by the company's EPS.
40
P/E = Stock Price / EPS
For example, a company with a share price of Rs.40 and an EPS of 8 would
have a P/E of 5 (Rs.40 / 8 = 5). What does P/E tell you?
The P/E gives you an idea of what the market is willing to pay for the company's
earnings. The higher the P/E the more the market is willing to pay for the company's
earnings. Some investors read a high P/E as an overpriced stock and that may be the
case, however it can also indicate the market has high hopes for this stock's future and
has bid up the price. Conversely, a low P/E may indicate a "vote of no confidence" by
the market or it could mean this is a sleeper that the market has overlooked.
What is the "right" P/E? There is no correct answer to this question, because
part of the answer depends on your willingness to pay for earnings. The more you are
willing to pay. Which means you believe the company has good long term prospects
over and above its current position, the higher the "right" P/E is for that particular
stock in your decision-making process. Another investor may not see the same value
and think your "right" P/E is all-wrong.
3. PROJECTED EARNINGS GROWTH
The P/E is the most popular way to compare the relative value of stocks based
on earnings because you calculate it by taking the current price of the stock and divide
it by the Earnings per Share (EPS). This tells you whether a stack's price is high or
low relative Tc its earnings.
Some investors may consider a company with a high P/E overpriced and they
may be correct. A high P/E may be a signal that traders have pushed a stock's price
beyond the point where any reasonable near term growth is Probable.
However, a high P/E may also be a strong vote of confidence that the
Company still has strong growth prospects in the future, which should mean
An even higher stock price.
Because the market is usually more concerned about the future than the
present, it is always looking for some way to project out.
41
Another ratio you can use will help you look at future earnings growth is
called the PEG ratio. The PEG factors in projected earnings growth rates to the P/E
for another number to remember.
You calculate the PEG by taking the P/E and dividing it by the projected
growth in earnings.
PEG = P/E / (projected growth in earnings)
For example, a stock with a P/E of 30 and projected earning growth next year
of 15% would have a PEG of 2 (30 / 15 = 2). What does the "2" mean?
Like all ratios, it simply shows you a relationship. In this case, the lower the
number the less you pay for each unit of future earnings growth. So even a stock with
a high P/E, but high projected earning growth may be a good value.
Looking at the opposite situation; a low P/E stock with low or no projected
earnings growth, you see that what looks like a value may not work out that way. For
example, a stock with a P/E of 8 and flat earnings growth equals a PEG of 8. This
could prove to be an expensive investment
A few important things to remember about PEG:
It is about year-to-year earnings growth
It relies on projections, which may not always be accurate
4. PRICE TO BOOK
Value investors look for some other indicators besides earnings growth and so
on. One of the metrics they look for is the Price to Book ratio or P/B. This
measurement looks at the value the market places on the book value of the company.
The calculation of the P/B Ratio is by taking the current price per share and dividing
by the book value per share.
P/B = Share Price / Book Value per Share
Like the P/E, the lower the P/B, the better the value. Value investors would
use a low P/B is stock screens, for instance, to identify potential candidates.
42
5. DIVIDEND PAY OUT RATIO.
The DPR measures what a company's pays out to investors in the form of dividends.
DPR is calculated by dividing the annual dividends per share by the Earnings per
Share.
DPR = Dividends per Share / EPS
Growing companies will typically retain more profits to fund growth and pay
lower or no dividends.
Companies that pay higher dividends may be in mature industries where there
is little room for growth and paying higher dividends is the best use of profits.
6. DIVIDEND YEILD RATIO
This measurement tells you what percentage return a company pays out to
shareholders in the form of dividends. Older, well-established companies tend to
payout a higher percentage then do younger companies and their dividend history can
be more consistent.
You calculate the Dividend Yield by taking the annual dividend per share and
divide by the stock's price. Dividend Yield = annual dividend per share / stock's price
per share
7. BOOK VALUE
How much is a company worth and is that value reflected in the stock price?
There are several ways to define a company's worth or value. One of the ways you
define value is market cap or how much money would you need to buy every single
share of stock at the current price.
43
Another way to determine a company's value is to go the balance statement
and look at the Book Value. The Book Value is simply the company's assets minus its
liabilities.
Book Value = Assets - Liabilities
In other words, if you wanted to close the doors, how much would be left after
you settled all the outstanding obligations and sold off all the assets. A company that
is a viable growing business will always be worth more than its book value for its
ability to generate earnings and growth. To compare companies, you should convert
to book value per share, which is simply the book value divided by outstanding
shares.
CASH FLOW
Cash flow statements will enable an investor to determine how is the

company's cash earnings, how the company is being financed and how it uses the
finance received. The statement begins with the cash in hand at the beginning of the
period. It then details the sources and the amount of the funds received and the
manner they were applied ending with the final cash in hand.
6.2 TECHNICAL ANALYSIS:
Technical analysis involves a study of market-generated data like prices and

volumes to determine the future direction of price movements. Following are the
basic premises underlying technical analysis, articulated by Robert. A. Levy:
Market prices are determined by interaction of supply and demand forces.

Supply and demand is influenced by a variety of factors, rational and
Irrational. These include fundamental and psychological factors.
Barring minor deviation, stock prices tend to move in fairly persistent trends.
Shifts in demand and supply bring about changes in trends
They can be detected with the help of charts of market actions.
44
Analysis of past market data can be used to predict future price behavior
Because of persistence in trends and pattern.
Following are some of the techniques for technical analysis:
 Dow Theory.
 Japanese Candle Stick Theory.
 Advance Decline Ratio.
 Changes in volumes.
 Open, High, Low, Closing prices.
 ROC Method etc.
DIFFERENCE BETWEEN FUNDAMENTAL AND TECHNICAL
ANALYSIS
• Technical analysis mainly seeks to predict short-term price movement, whereas

fundamental analysis tries to establish long-term values.
• The focus of technical analysis is mainly on internal market data, particularly price
and volume data. The focus of fundamental analysis is on fundamental factors
relating to the economy, industry and firm.
• Technical analysis appeals mostly to short-term traders, whereas fundamental

analysis appeals primarily to long-term investors.
45
FIVE KEY CASES
FROM INDIAN
STEEL SECTOR
46
CHAPTER-7
FIVE KEY CASES FROM INDIAN STEEL SECTOR
1. TATA STEEL
Business Profile:
Tata Steel, the flagship company of the Tata Group, Established in 1907, is the
world's 6th largest steel company with an existing annual crude steel capacity of 30
million tonnes. Asia's first integrated steel plant and India's largest integrated private
sector steel company is now the world's second most geographically diversified steel
producer, with operations in 26 countries and commercial presence in over 50
countries.
Tata Steel completed 100 glorious years of existence on August 26, 2007 following
the ideals and philosophy laid down by its Founder, Jamsetji Nusserwanji Tata. The
first private sector steel plant which started with a production capacity of 1,00,000
tonnes has transformed into a global giant .
Management:
BOARD OF DIRECTORS
(As on 14th April, 2008)
Mr. R N Tata (Chairman)

Mr. James Lang (Non-Executive Deputy Chairman)
Mr. Nussle N Wadia (Company Director)
Mr. S M Palia (Company Director)
Mr. Suresh Krishna (Financial Institutions' Nominee)
Mr. Ishaat Hussain (Board Member)
Dr Jamshed J Irani (Board Member)
Mr. Subodh Bhargava (Board Member)
Mr. Jacques Schraven (Non-Executive Independent Director)
Dr Anthony Hayward (Non-Executive Independent Director)
47
Mr. Philippe Varin (Non-Executive Non independent
Director)
Mr. B Muthuraman (Managing Director)
Dr T Mukherjee (Non Executive Director)
Mr. Andrew Robb (Non Executive Independent Director)
Registered Office
Bombay House, 24, Homi Mody Street,
Fort, Mumbai 400 001.
Tel : (022) 6665 8282.
Fax : (022) 6665 7724 / 6665 7725
E-mail : cosectisco@tata.com
Investments:
National International
Jharkhand Vietnam
Chhattisgarh South Africa
Orissa - Kalinganagar Australia
- Dhamra Port Mozambique
Tamil Nadu Ivory Coast
Oman
Vision:
We aspire to be the global steel industry benchmark for Value Creation and Corporate
Citizenship.
We make the difference through:
 Our people, by fostering team work, nurturing talent, enhancing leadership

capability and acting with pace, pride and passion.
 Our offer, by becoming the supplier of choice, delivering premium products

and services, and creating value with our customers.
 Our innovative approach, by developing leading edge solutions in

technology, processes and products.
 Our conduct, by providing a safe working place, respecting the environment,

caring for our communities and demonstrating high ethical standards.
48
2. ISPAT INDUSTRIES LTD.
Business Profile:
Ispat Industries Limited (IIL) is one of the leading integrated steel makers and
the largest private sector producer of hot rolled coils in India. Set up as Nippon Denro
Ispat Limited in 1985 by founding Chairman Mr. M L Mittal, IIL has steadily grown
into an Rs 9,400-crore company, assuming its position as flagship of the reputed Ispat
Group. A corporate powerhouse with operations in iron, steel, mining, energy and
infrastructure, the Group today figures among The top 20 business houses in the
country.
Headquartered at Mumbai, IIL employs a total of 3000 people and is the
leader in the national speciality steel market. It produces world-class sponge iron,
galvanized sheets and cold rolled coils, in addition to hot rolled coils, through its two
state-of-the art integrated steel plants, located at Dolvi and Kalmeshwar In the state of
Maharashtra.
The complex also has a 1.6 million tonne per annum sponge iron (DRI) plant,
which was commissioned in 1994 as the world's largest and most efficient gas-based
single mega module plant. Moreover, the Dolvi complex is home to a 2 million tonne
blast furnace and also boasts a mechanized multi-functional jetty situated nearby, that
facilitates the automation of raw material handling.
Ispat is the only steel maker in India and among a few in the world to have
total flexibility in choice of steel making route, be it the conventional blast furnace
route or the electric arc furnace route. Its dual technology allows Ispat the freedom to
choose its raw material feed, be it pig iron, sponge iron, iron ore, scrap or any
combination of various feeds.
The Kalmeshwar complex houses Ispat's 0.4 million tonnes cold rolling
complex, which also includes the galvanized plain/ galvanized corrugated (GP/GC)
lines and India's first colour coating mill.
49
Management:
BOARD OF DIRECTORS
Mr. Pramod Mittal (Chairman)

Mr. Vinod Mittal Vice Chairman & Managing Director
Mr. Anil Sureka Executive Director (Finance)
Mr. Vinod Garg Executive Director (Commercial)
Mr. B K Singh Executive Director (Steel Plant)
Mr. Udipi Mahesh Rao Director
Dr Besant C Raj Director
Mr. Manu Chadha Director
Mr. K M Jayarao Nominee (ICICI)
Mr. Sanjoy Chowdhury Nominee (IFCI)
Mr. B P Singh Nominee (IDBI)
Mr. M Sankaranarayanan Nominee (UTI)
Dr Basudeb Sen Board Member
Mr. Satya Pal Talwar Board Member
Registered Office
Park Plaza,
71, Park Street,
Kolkata, West Bengal- 700016.
Phone: 91-033-22495102/3119/2213
Fax: 91-033-22291956
E-Mail : ispatcal@vsnl.com/vinod_mittal@ispatind.com
Vision:
To be an organization that continuously achieves economic value by optimizing

resources through operational excellence enable technology and driven by motivation
to meet customer satisfaction.
50
3. UTTAM GALVA STEEL LTD.
Business Profile:
The visionary in Mr. Rajinder Miglani saw this necessity and pioneered the Company
Uttam Galva Steels Limited in 1985. The CR Steel Galvanizing line at Khopoli, near
Mumbai has turned into one of the largest producers of CRCA And Galvanized Steel
in India.
Uttam has crossed several milestones in its journey from a small beginning
with 30,000 MT per year of galvanizing capacity in the year 1985 to more than
seventy lakh tons per year capacity for galvanizing today. It has gone for backward
integration to cold rolling of steel and also for down-stream value addition such as
colour-coated products etc.
Uttam Galva Steels Limited is one of the largest manufacturers of cold rolled steel
("CR") and galvanized steel (GP) in Western India.
Management:
BOARD OF DIRECTORS
Mr. Rajinder K Miglani Chairman & Managing Director

Mr. Vinod Mittal Director
Mr. Ramesh K Miglani Director
Mr. M N Kampani Director
Mr. S P Chhibber Director
Mr. N S Datar Director
Mr. S T Parikh Director
Mr. O P Ahuja Director
Mr. Praveen K Miglani Director
Mr. V R Bhayana Director
Mr. S P Bhansali Director
Mr. S G Tudekar Director
Mr. D A Dadachanji Nominee (ICICI)
Mr. Bhaskar P Yerunkar Company Secretary
Mr. Ankit Miglani Director (Commercial)
51
Registered Office
Uttam House,Carnac Bandar,
69, P. D. mello Road,
Mumbai, Maharashtra- 400009.
Phone: 91-22-66563500/23420557/23421968
Fax: 91-22-23430765/23415025/23441383
E-Mail : info@uttamgalva.com
Vision:
Become the world’s favoured flat steel products brand.
4. STEEL AUTHORITY OF INDIA (SAIL)
Business Profile:
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 industrialization 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 Be half of the people
of india.
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.
Major Units:
Integrated Steel Plants:

 Bhilai Steel Plant (BSP) in Chhattisgarh
 Bhilai Steel Plant (BSP) in Chhattisgarh
 Rourkela Steel Plant (RSP) in Orissa
52
 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
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
Management:
BOARD OF DIRECTORS
Mr. S K Roongta Chairman

Mr. Arvind Pande Vice Chairman
Mr. G Ojha Director (Personnel)
Mr. Soiles Bhattacharya Director (Finance)
Mr. Shoeb S Ahmed Director (Commercial)
Mr. S B Singh Managing Director
Mr. V Shyamsundar Managing Director
Mr. B N Singh Managing Director
Mr. V K Srivastava Managing Director
Mr. R Ramaraju Managing Director
Mr. P N Singh Director
Mr. G Elias Director
Mr. S C Jain Director
Mr. R P Sengupta Director
Mr. Velu Annamalai Director
Mr. Siddharth Kak Director
Mr. Shyamal Ghosh Director
Mr. Mohammad Yusuf Khan Director
53
Mr. Deepak Navyar Director
Mr. Javaid Akhtar Director
Mr. P K Sengupta Director
Mr. Vinayshil Gautam Director
Mr. B S Meena Director
Mr. S N Dash Director
Mr. Devinder Kumar Company Secretary
Registered Office
Ispat Bhawan,
Lodi Road,
New Delhi- 110003.
Phone: 91-011-24367481-86
Fax: 91-011-24367015
E-Mail : secy.sail@sailex.com
Vision:
To be a respected world class corporation and the leader in Indian steel business in
quality, productivity, profitability and customer satisfaction.
5. JSW STEEL
Business Profile:
JSW Group is one of the fastest growing business conglomerates with a strong
presence in the core economic sector. This Sajjan Jindal led enterprise has grown
from a steel rolling mill in 1982 to a multi business conglomerate worth Rs. 14700
Crore(US$3.7billion).
As part of the US $ 8 billion O. P. Jindal Group, JSW Group has diversified interests
in Steel, Energy, Minerals and Mining, Aluminum, Infrastructure and Logistic,
Cement and Information Technology. The Group has grown to US $ 3.7 billion within
a short span of time.
54
Management:
BOARD OF DIRECTORS
Mrs. Savitri Devi Jindal Chairperson

Mr. Sajjan Jindal Vice Chairman & Managing Director
Mr. Y Siva Sagar Rao Jt. Managing Director & CEO
Mr. Seshagiri Rao M.V.S. Director (Finance)
Dr. Vinod Nowal Director (Commercial)
Mr. Biswadip Gupta Director
Mrs. Zarin Daruwala Nominee (ICICI)
Mr. V. Madhu, IAS Nominee (KSIIDC)
Mr. S. Jambunathan, IAS Nominee (UTI)
Dr. S.K.Gupta Director
Mr. Nagesh D Pinge Director
Mr. Anthony Paul Pedder Director
Mr. Uday M. Chitale Director
Mr. Sudipto Sarkar Director
Mr. K.Vijayaraghavan Director
Mr. Ajay Shah Director
Mr. Lancy Varghese Company secretary
M/s. Deloitte Haskins & Statutory Auditors
Sells
Registered Office
Jindal Mansion,
5A, Dr G Deshmukh Marg,
Mumbai, Maharashtra- 400026.
Phone: 91-022-23513000
Fax: 91-022-23526400
E-Mail : corporate@jsw.in
55
Vision:
 Preparation and grooming of the next generation of young thinkers.

 Continuous improvement of cost stewardship in the value chain.
 Ability to nurture lasting customer relationships, by anticipating needs and
delivering beyond expectations.
 Catalyst for growth amongst the nation’s steel industries.
 Marketing of value added branded products for both domestic and global
markets.
56
Data Interpretation
57
CHAPTER-8
Data Interpretation
8.1 Introduction:
INDIAN STEEL SECTOR

India, with the production of about 24 million tonnes (MT) of crude steel annually is
the tenth largest producer of steel in the world. The aggregate crude steel capacity of
working units at present is nearly 34 MT per annum which is shared by the Integrated
Steel Plants and Electric Furnace Units. Besides, there are a large number of steel
processing units, merchant pig iron plants (cap: 3.66 MT) and sponge iron plants (cap:
6.3MT). India continues to be the second largest producer of sponge iron in the world.
The India steel industry is one of the major industries in India and the Indian
government plays a very important role in the development of the steel industry in
India. The India steel industry is experiencing a slow but steady growth. The steel
industry in India has huge scopes in the future with massive scale of infrastructural
development happening all across the country. The India steel industry caters to many
other industrial sectors such as construction industry, mining industry, transportation
industry, automobile industry, engineering industry, chemical industry, etc.
The India steel industry has further plans of development. Plans are being
chalked out for setting up of 3 pig iron manufacturing units of a combined capacity of
6 lakh tons per year and a steel manufacturing unit of the capacity of producing 1
million tons yearly in West Bengal, with the technical and financial support of China.
With all these developments, India steel industry is all set to become one of the most
reputed industries not only in India but also in the international market.
8.2 Current Scenario:
1. Indian economy growing @ 8 to 9 %, is one of the fastest growing economies

in the world.
2. Industrial prodn. showing encouraging trends. Index of industrial production

for Capital goods is growing @ 8.4% CAGR and growth in index for
58
consumer durables was @10.5% CAGR during 2005-06.
3. The 10th plan investment in infrastructure has been envisaged at around

Rs.880,550 crores.
4. During 11th plan (2007-08 to 2011-12), the projected investment towards

infrastructure is likely to be Rs. 2027000 crores, an increase of 180% over
10th plan.
5. Per capita steel consumption at 35 kg low as compared to world average of

150 kg. and 300kg for china.
8. As per the news paper reports (Eco. Times dt.14-11-07), Steel Minister has
projected India's steel production to be around 124 million tones by 2012 and
a capacity of around 275 million tones by 2019-20.
9. Imports at 4.1 million tones during 06-07 was higher by 6.5%. Exports at 4.7
million tones grew by 6.1% during 06-07.
8.3 Production, Consumption, Export & Investments:
Production
The rapid rise in production has resulted in India becoming the world’s 5th largest
producer of steel, up by two places, on the back of 50.71 million tons (MT)
production of crude steel and 51.9 MT of finished steel. India is set to achieve 124
million tonnes of steel capacity by 2011-12, far exceeding the requirement that would
be to the tune of about 110 million tonnes. In March 2008, finished steel led the pack
by registering 21.8 per cent growth compared to 16.6 per cent in March 2007. For the
whole year though, finished steel production, with a weightage of 5.13 per cent in the
IIP, grew by 5.1 per cent.
59
During April-February 2007-08, production of finished carbon steel was
estimated at 49.67 MT - against 46.75 MT in the same period of the previous year -
recording a growth rate of 6.2 per cent. Similarly, production of pig iron amounted to
4.39 mt during April-January 2007-08.
Presently, the government plans to increase production from the present 53

MT to 124 MT by 2011 and 200 MT by 2020, so as to narrow the gap between supply
and demand. However, access to coking coal will be the key to the success of this
strategy.
Global Production
 World steel production increased 2.9% from 116.1 million metric tons in April
2008 to 119.5 million metric tons in May 2008.
 China remains the largest steel producer worldwide with a May 2008
production level of 46.0 million metric tons, a 10.5% increase from April
2008. The European Union 27 remains the second largest producer with a May
2008 production level of 18.4 million metric tons.
Share of Crude Steel Production - May 2008
17% 16%
European Union (27)
Russia
4% 6% United States
China
9% 8% India
Japan
4%
South Korea
Other
36%
60
Consumption
Driven a booming economy and concomitant demand levels, consumption of

steel has grown by 12.5 per cent during the last three years, well above the 6.9 per
cent envisaged in the National Steel Policy. For 2008 it has been forecast that the
apparent steel use point in India will increase by 11.8 per cent in 2008.
Steel consumption amounted to 46.78 MT in 2006-07, against 41.43 MT in

2005-06, recording 11.36 per cent growth – higher than the world average. During the
first half of 2007, steel consumption has grown by 13 per cent. For the period of
April-September 2007-08, the total consumption (excluding double counting) of steel
is 21.998 MT as compared to the 19.819 MT in the same period last year (as per data
from the joint parliamentary committee).
Exports
Along with growth in production, exports have increased by 6.26 per cent in 2006-07
over 2005-06 to touch 4.92 MT. Exports accelerated in the first six months of FY07,
growing by 7.4 per cent to 2.6 MT – from 2.42 per cent in 2006. Yet, the Indian Steel
Ministry has proposed an ad valorem export duty on chrome ore (Union Budget
2008), fearing fast depletion due to phenomenal rise in exports. The government aims
to first meet the needs of the domestic industry.
Data relating to production, consumption, import and export of finished steel

(alloy & non-alloy) from the year 2002-03 onwards are reflected in the table below:
(in million tonnes)

2003- 2004- 2005- 2006- 2007-08
04 05 06 07 (APR -
DEC)
Finished Steel Production 40.71 43.51 46.57 52.53 40.117
including Consumption 33.12 36.38 41.43 46.78 36.992
Alloy Steel Import 1.753 2.293 4.305 4.927 5.325
Export 5.207 4.705 4.801 5.242 3.850
61
Investment
A host of steel companies have lined up major investment proposals. Furthermore,

with 13 billion tons of iron ore deposits, 5th largest in the world, and an expanding
consumer market, the Indian steel industry is likely to receive huge domestic and
foreign investments.
China’s largest investment in India – more than US$ 1.999 billion over 5-10
years – is slated to come up in Karnataka with the setting up of Xindia Steels. And
going by the ball park estimate of US$ 1.01 billion investment per MT of additional
capacity, the steel industry is likely to attract an investment of US$ 69.97 billion by
2011-12 and US$ 220.02 billion by 2019-20.
In fact, during the last quarter of 2007-08, the industry announced capacity
expansion plans of nearly 31 million tones (mt) to meet the growing demand. This is
likely to result in an additional investment of US$ 21.21 billion.
 Indian steel firms plan to invest US$ 20.96 billion in the coming months to
expand capacity by 31 million tones (mt) to meet rising demand in a fast
growing economy.
 ArcelorMittal, the world's largest steel maker, is "very bullish" about India and
is committed to invest nearly US$ 25 billion in India.
 Tata Steel, whose capacity will touch 7 million tones (mt) by mid-July, will
spend US$ 18.79 billion on three of its greenfield projects which will take its
total capacity in India to 35 million tones.
A shower of steel plants
While some of the investment is directed at modernisation and upgradation of existing

steel plants, a major share of it is to either set up new plants or expand existing
capacities. From the biggest players like Arcelor Mittal and Tata Steel, to mid-level
62
players like Bhushan Steel and Welspun, the next few years are a time to ramp up
production capacity.
DATA ANALYSIS
63
CHAPTER-9
DATA ANALYSIS
1. TATA STEEL LTD.
PRICE CHANGE FROM 01/06/08 TO 31/07/08
Date Open High Low Close Volume

Value
02/06/08 Rs.906.00 Rs.915.95 Rs.864.00 Rs.869.00 1629341
09/06/08 Rs.819.40 Rs.833.00 Rs.790.00 Rs.823.20 2546404
16/06/08 Rs.849.40 Rs.865.00 Rs.845.15 Rs.848.95 1149960
23/06/08
' Rs.714.00 Rs.795.00 Rs.730.40 Rs.745.75 1798484
30/06/08 Rs.744.00 Rs.744.00 Rs.715.15 Rs.728.85 3323535
07/07/08 Rs.644.50 Rs.666.00 Rs.644.50 Rs.651.90 2899312
14/07/08 Rs.646.00 Rs.699.90 Rs.646.00 Rs.683.40 2117548
21/07/08 Rs.615.00 Rs.615.00 Rs.581.50 Rs.599.05 1998695
28/07/08 Rs.614.50 Rs.624.00 Rs.602.10 Rs.604.05 2273772
Latest Quarterly/Half yearly:
30-Jun- 30-Jun- % Change

2008(3) 2007(3)
Sales of Products/Services 61650.30 41975.80 46.87
Other Income 122.20 1461.20 -91.64
Total Income 61772.50 43437.00 42.21
Total Expenses 31404.50 24984.10 25.70
Stock Adjustments 0.00 0.00 --
OPBDIT 30368.00 18452.9 64.57
Interest 2417.30 799.90 202.20
Depreciation 2168.00 2112.40 2.63
Extraordinary Items 0.00 3484.40 --
Prior Period Adjustments 0.00 0.00 --
64
Provision for Tax 7864.50 6803.90 15.59
After Tax Profit 14884.00 12221.10 21.79
Equity Capital 7307.80 6091.70 19.96
Reserves 0.00 0.00 --
Balance Sheet:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
SOURCES OF FUNDS:
Share Capital 6203.30 580.67 553.67
Reserves & Surplus 21097.43 13368.42 9201.63
Total Shareholders Funds 27300.73 13949.09 9755.30
Secured Loans 3520.58 3758.92 2191.74
Unsecured Loans 14501.11 5886.41 324.41
Total Debt 18021.69 9645.33 2516.15
Total Liabilities 45322.42 23594.42 12271.45
APPLICATION OF FUNDS:
Gross Block 16479.59 16029.49 15407.17
Less: Accum. Depreciation 8223.48 7486.37 6699.85
Net Block 8256.11 8543.12 8707.32
Capital Work in Progress 4367.45 2497.44 1157.73
Investments 4103.19 6106.18 4069.96
Inventories 2604.98 2332.98 2174.75
Sundry Debtors 543.48 631.63 539.40
Cash and Bank Balance 465.04 7681.35 288.39
Loans and Advances 34582.84 4025.95 2006.21
Current Liabilities 5770.96 5389.22 4564.14
Provisions 3984.82 3037.54 2361.44
Net Current Assets 28440.56 6245.15 -1916.83
Miscellaneous Expenses not w/o 155.11 202.53 253.27
Total Assets 45322.42 23594.42 12271.45
Contingent Liabilities 2756.54 5072.96 2209.45
Income Statement:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
Net Sales 19654.41 17452.66 15132.09
Other Income 586.41 362.12 252.58
PBDIT 8830.95 7275.87 6136.80
Net Profit 4687.03 4222.15 3506.38
65
Share Statistics:
Mar 2008 Mar 2007 Mar 2006

EPS (Rs.) 63.85 72.74 63.48
Book Value (Rs.) 296.65 236.82 171.68
DPS (Rs.) 16.00 15.50 13.00
Ratio Analysis:
Mar 2008 Mar 2007 Mar 2006

Profitability ratios:
Operating margin (%) 41.94 39.61 38.88
Gross profit margin (%) 37.70 34.91 33.76
Net profit margin (%) 23.43 23.53 22.78
Adjusted cash margin (%) 26.41 28.47 27.54
Adjusted return on net worth (%) 20.42 31.19 36.44
Reported return on net worth (%) 21.52 30.71 36.90
Return on long term funds (%) 17.16 28.11 43.93
Leverage ratios:
Long term debt / Equity 1.07 0.67 0.25
Total debt/equity 1.08 0.69 0.25
Owners fund as % of total source 48.16 59.12 79.49
Fixed assets turnover ratio 1.20 1.09 0.98
Liquidity ratios:
Current ratio 3.92 1.77 0.72
Current ratio (inc. st loans) 3.81 1.69 0.71
Quick ratio 3.52 1.37 0.29
Inventory turnover ratio 10.84 10.81 9.89
Payout ratios:
Dividend payout ratio (net profit) 29.39 26.15 23.39
Dividend payout ratio (cash profit) 24.93 21.90 19.16
Earning retention ratio 69.02 74.25 76.32
Cash earnings retention ratio 73.94 78.38 80.65
Coverage ratios:
Adjusted cash flow time total debt 3.41 1.89 0.59
Financial charges coverage ratio 9.25 29.45 36.46
Fin. charges cov.ratio (post tax) 6.94 21.07 26.42
Component ratios:
Material cost component (% 30.85 33.01 31.49
earnings)
66
Selling cost Component 0.26 0.37 0.53
Exports as percent of total sales 11.64 12.05 13.94
Import comp. in raw mat. consumed 50.51 48.93 40.42
Long term assets / total Assets 0.30 0.53 0.73
Bonus component in equity capital 34.61 43.56 45.68
(%)
Tata Steel Price Change From 01/06/08 to 31/07/08
1000
900
800
700
600
Price
500
400
300
200
100
0
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 /7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
Tata Steel Analysis
GENARAL OBSERVATION:
 Current Ratio has increased to 3.92 from 1.77 in 2007 but has improved from the
0.72 in the 2006, the liquidity position has not improved but still the company is
maintaining light liquidity situation.
 Sales have shown an increase by 12.6% in 2008 as compared to 2007 and an

increase in 29.89% with respect to 2006 figures but over all there is an decrease in
sales as compared to the sales rise of last year which was 15.33%.
 Profits have shown an increase by 11.01% in 2008 as compared to 2007 and an

profits as compared to the profits rise of last year which was 20.40%.
 Earning per share (EPS) showed an increase from 63 times in 2006 to 73 times in
2007 but decrease to approx 64 times in 2008.
67
ANALYSIS OF TATA STEEL USING TOOLS OF FUNDAMENTAL
ANALYSIS
1. P/E RATIO (PRICE EARNINGS RATIO):
P/E = Stock Price / EPS = 604.05 / 63.85 = 9.46
2. PEG RATIO (PROJECTED EARNIGS GROWTH RATIO):
PEG = P/E / (Projected growth in earnings) = 9.46 / 10 = 0.946
(NOTE: The projected growth in earnings is taken at a conservative 10%

which is from the Indian Steel industry's growth figures which are 10 to
12%)
3. P/B RATIO (PRICE TO BOOK RATIO):
68
P/B = Share Price / Book Value Per Share = 604.05 / 296.65 = 2.04
4. D/P RATIO (DIVIDEND PAY-OUT RATIO):
D/P = Dividend per Share / EPS = 16 / 63.85 * 100 = 25.05 %
5. D/Y RATIO (DIVIDEND YIELD RATIO):
D/Y = Annual DPS / Stock Price = 15 / 604.05 * 100 = 2.64 %
2. ISPAT INDUSTRIS LTD.

Value
02/06/08 Rs.31.60 Rs.32.05 Rs.29.70 Rs.30.00 26537855
09/06/08 Rs.27.50 Rs.27.60 Rs.26.70 Rs.27.30 19526097
16/06/08 Rs.29.00 Rs.29.50 Rs.28.55 Rs.28.85 11153204
23/06/08
' Rs.26.50 Rs.26.75 Rs.25.55 Rs.25.85 16955234
30/06/08 Rs.24.05 Rs.24.25 Rs.21.45 Rs.21.65 13016115
07/07/08 Rs.21.00 Rs.22.35 Rs.20.80 Rs.21.40 19070145
14/07/08 Rs.22.20 Rs.23.60 Rs.21.90 Rs.22.80 23728181
21/07/08 Rs.21.90 Rs.22.35 Rs.21.35 Rs.21.85 12578180
28/07/08 Rs.25.50 Rs.26.70 Rs.25.50 Rs.26.05 29722418

2008(3) 2007(3)
Other Income 879.70 459.20 91.57
69
Total Income 28757.80 18592.60 54.67
Total Expenses 22386.20 15251.50 46.78
OPBDIT 6371.60 3341.1 90.70
Interest 4307.30 1651.40 160.83
Depreciation 1606.60 1544.10 4.05
After Tax Profit 287.30 83.70 243.25
Equity Capital 12215.90 12184.00 0.26
Reserves 0.00 0.00 --
Balance Sheet:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
SOURCES OF FUNDS:
Share Capital 2294.03 2288.74 2288.70
Reserves & Surplus 607.58 652.93 -238.89
Secured Loans 6940.05 7849.07 8241.06
Unsecured Loans 284.99 466.43 20.03
Total Debt 7225.04 8315.50 8261.09
Gross Block 13167.93 13067.37 11455.71
Net Block 9206.01 9823.33 8901.44
Investments 118.04 113.59 113.32
Inventories 1368.38 1056.19 985.61
Sundry Debtors 579.83 645.02 594.13
Provisions 33.34 28.81 12.42
70
Net Current Assets 694.35 1265.57 680.30
Miscellaneous Expenses not 0.00 0.00 0.00
w/o
Total Assets 10126.65 11257.17 10310.90
Income Statement:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
Net Sales 8362.19 7527.76 5053.87
Other Income 580.29 79.25 -507.21
PBDIT 1850.18 1678.06 -151.00
Net Profit 34.80 -9.53 -812.67
Share Statistics:
Mar 2008 Mar 2007 Mar 2006

EPS (Rs.) 0.28 -0.08 -6.65
Book Value (Rs.) 5.54 5.16 5.33
DPS (Rs.) 0.00 0.00 0.00
Ratio Analysis:
Mar 2008 Mar 2007 Mar 2006

Gross profit margin (%) 7.55 12.95 -4.25
Net profit margin (%) 0.41 -0.12 -15.99
Adjusted cash margin (%) 1.26 6.85 -4.30
Adjusted return on net worth (%) -78.58 -16.69 -121.40
Reported return on net worth (%) 5.13 -1.50 -124.83
Return on long term funds (%) 7.66 10.71 -1.98
Leverage ratios:
Liquidity ratios:
Quick ratio 0.53 0.80 0.58
71
Payout ratios:
Dividend payout ratio (net profit) - - -
Dividend payout ratio (cash profit) - - -
Earning retention ratio 100.00 - -
Cash earnings retention ratio 100.00 100.00 -
Coverage ratios:
Adjusted cash flow time total debt 68.22 16.04 -
Component ratios:
Material cost component (% earnings) 59.03 54.77 65.10
Bonus component in equity capital (%) - - -
Ispat Industries Ltd. Price Change From 01/06/08 to 31/07/08
35
30
25
20
Price
15
10
5
0
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 /7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
Ispat Industries Ltd. Analysis
 Current Ratio has increased from 2006 to 2007 i.e.1.30 to 1.58, But from 2007 to
2008 there has been decrease in the current ratio i.e. from 1.58 to 1.25, which
shows that the liquidity position has to be improved and the ratio should be more
or less up to the standard 2:1.
72
 Profits have shown substantial growth as company is coming out of losses & book
the profits as compare to last year.
 EPS in 2006 was in negative rose and increased to about 0.28 times in 2008. This
shows increase in the value of company as the value of the shares has increased.
ANALYSIS OF ISPAT INDUSTRIES LTD. USING TOOLS OF

FUNDAMENTAL ANALYSIS:

12%)
P/B = Share Price / Book Value Per Share = 26.05 / 5.54 = 4.70
73
(Not Applicable as dividend is not declared)
3. UTTAM GALVA STEEL LTD.
74
Date Open Value High Low Close Volume
02/06/08 Rs.39.00 Rs.39.85 Rs.39.00 Rs.39.55 124718

09/06/08 Rs.37.80 Rs.39.60 Rs.37.60 Rs.38.90 180632
16/06/08 Rs.41.80 Rs.43.00 Rs.40.50 Rs.40.85 165086
23/06/08
' Rs.42.00 Rs.42.00 Rs.36.70 Rs.36.90 85401
30/06/08 Rs.35.60 Rs.42.40 Rs.35.60 Rs.35.90 98039
07/07/08 Rs.36.50 Rs.37.35 Rs.36.00 Rs.36.45 57326
14/07/08 Rs.35.75 Rs.37.20 Rs.35.75 Rs.36.65 35867
21/07/08 Rs.36.05 Rs.37.50 Rs.36.05 Rs.37.30 30058
28/07/08 Rs.37.95 Rs.38.30 Rs.37.45 Rs.38.14 33622

2008(3) 2007(3)
Other Income 3.20 8.10 -60.49
Total Income 8032.90 7227.90 11.14
Total Expenses 6971.90 6562.80 6.23
OPBDIT 1061.00 665.1 59.52
Interest 524.40 264.90 97.96
Depreciation 213.00 143.00 48.95
After Tax Profit 265.90 227.50 16.88
Equity Capital 1139.70 1052.90 8.24
Reserves 0.00 0.00 --
Balance Sheet:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
SOURCES OF FUNDS:
75
Share Capital 115.47 108.29 87.93
Secured Loans 830.23 763.34 608.03
Unsecured Loans 217.92 219.60 248.99
Total Debt 1048.15 982.94 857.02
Gross Block 1710.37 1121.61 973.99
Net Block 1319.73 795.52 696.79
Investments 51.13 3.13 0.11
Inventories 847.98 527.14 330.55
Sundry Debtors 241.65 243.43 117.03
Provisions 14.55 13.28 7.33
w/o
Total Assets 1759.19 1532.43 1200.65
Income Statement:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
Net Sales 3157.95 2580.45 1788.56
Other Income 29.83 6.28 16.81
PBDIT 332.87 278.84 204.71
Net Profit 123.87 113.06 74.33
Share Statistics:
Mar 2008 Mar 2007 Mar 2006

EPS (Rs.) 10.87 10.74 8.91
Book Value (Rs.) 62.25 51.90 40.65
DPS (Rs.) 0.00 0.00 0.00
Ratio Analysis:
Mar 2008 Mar 2007 Mar 2006
76
Leverage ratios:
Liquidity ratios:
Quick ratio 0.49 0.78 1.05
Payout ratios:
Dividend payout ratio (net profit) - - -
Dividend payout ratio (cash profit) - - -
Coverage ratios:
Component ratios:
earnings)
Bonus component
Uttam Galva in equity capital
Steel Ltd. Price Change From- 01/06/08 To - -
(%) 31/07/08
44
42
40
Price
38 Series1
36
34
32
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 77/7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
Uttam Galva Steel Ltd. Price Change From 01/06/08 to 31/07/08
42
41
40
39
38
Price
37
36
35
34
33
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 /7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
Uttam Galva Steel Ltd. Analysis
 Current ratio has decreased in 2008 to 1.08 as compared to 2007 when it was 1.26
and in 2006 when it was 1.56.


 Earning per share (EPS) showed a marginal increase to 10.87 times in 2008 from
10.74 times in 2007.
78
ANALYSIS OF UTTAM GALVA STEEL LTD. USING TOOLS OF

12%)
79
P/B = Share Price / Book Value per Share = 38.14 / 62.25 = 0.61
4. SAIL

Value
02/06/08 Rs.165.63 Rs.166.45 Rs.152.00 Rs.153.60 10861218
09/06/08 Rs.148.00 Rs.155.50 Rs.146.50 Rs.153.95 9725690
16/06/08 Rs.161.15 Rs.164.20 Rs.160.30 Rs.162.90 5065754
23/06/08
' Rs.151.00 Rs.155.45 Rs.144.25 Rs.147.20 9449781
30/06/08 Rs.144.20 Rs.145.65 Rs.136.60 Rs.139.50 9734651
07/07/08 Rs.129.50 Rs.134.70 Rs.129.00 Rs.130.05 6159250
14/07/08 Rs.135.15 Rs.147.30 Rs.134.60 Rs.139.20 10536882
21/07/08 Rs.124.80 Rs.128.05 Rs.121.30 Rs.125.00 9684527
28/07/08 Rs.139.75 Rs.144.00 Rs.135.70 Rs.137.05 5053664
80
30-Jun-2008(3) 30-Jun- % Change
2007(3)
Other Income 3925.50 3069.30 27.90
Total Income 114219.90 83464.00 36.85
Total Expenses 79393.50 56565.90 40.36
OPBDIT 34826.40 26898.1 29.48
Interest 567.60 796.40 -28.73
Depreciation 3165.20 3011.90 5.09
After Tax Profit 18351.90 15251.20 20.33
Equity Capital 41304.00 41304.00 0.00
Reserves 0.00 0.00 --
Balance Sheet:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
SOURCES OF FUNDS:
Share Capital 4130.40 4130.40 4130.40
Secured Loans 925.31 1556.39 1122.16
Unsecured Loans 2119.93 2624.13 3175.46
Total Debt 3045.24 4180.52 4297.62
Gross Block 30922.73 29912.71 29360.46
Net Block 11571.31 11597.71 12162.14
Investments 538.20 513.79 292.00
Inventories 7018.10 6814.10 6371.66
Sundry Debtors 3048.12 2314.75 1881.73
81
Provisions 6958.70 5676.32 5645.14
w/o
Total Assets 26108.81 21493.67 16899.03
Income Statement:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
Net Sales 39958.67 34328.77 28200.48
Other Income 1701.59 1408.71 937.94
PBDIT 12968.73 11053.22 7492.71
Net Profit 7536.78 6202.29 4012.97
Share Statistics:
Mar 2008 Mar 2007 Mar 2006

EPS (Rs.) 18.25 15.02 9.72
Book Value (Rs.) 55.69 41.27 29.65
DPS (Rs.) 3.70 3.10 2.00
Ratio Analysis:
Mar 2008 Mar 2007 Mar 2006

Leverage ratios:
Liquidity ratios:
82
Quick ratio 1.23 1.01 0.72
Payout ratios:
Coverage ratios:
Component ratios:
earnings)
Bonus component in equity capital - - -
(%)
SAIL Price Change From 01/06/08 to 31/07/08
180
160
140
120
100
Price
80
60
40
20
0
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 /7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
SAIL Analysis
GENERAL OBSERVATION:
 The Current ratio has been improving since 2006 and 2007 & it continuing to
increase to 1.73 in 2008.
83
increase in 41.70% with respect to 2006 figures but over all there is a decrease in

 Earning per share (EPS) showed an increase from 10 times in 2006 to 15 times in
2007 further increase to approx 18 times in 2008.
ANALYSIS OF STEEL AUTHORITY OF INDIA LTD. USING TOOLS OF


12%)
84
D/P = Dividend per Share / EPS = 3.70 / 18.25 * 100 = 20.27 %
D/Y = Annual DPS / Stock Price = 3.70 / 137.05 = 2.70 %
5. JSW STEEL LTD.

Value
02/06/08 Rs.1164.00 Rs.1187.95 Rs.1135.20 Rs.1146.35 1200926
09/06/08 Rs.1045.35 Rs.1097.00 Rs.1045.35 Rs.1089.40 625387
16/06/08 Rs.1094.70 Rs.1794.70 Rs.946.00 Rs.993.60 743381
23/06/08
' Rs.990.00 Rs.994.00 Rs.945.00 Rs.955.60 801818
30/06/08 Rs.985.00 Rs.997.90 Rs.892.00 Rs.900.60 784784
07/07/08 Rs.731.00 Rs.822.00 Rs.731.00 Rs.800.75 1410977
14/07/08 Rs.800.00 Rs.827.90 Rs.765.25 Rs.798.75 465774
21/07/08 Rs.745.00 Rs.759.40 Rs.703.65 Rs.729.45 920538
28/07/08 Rs.780.10 Rs.792.00 Rs.771.10 Rs.776.55 146888

2008(3) 2007(3)
85
Other Income 273.00 1364.80 -80.00
Total Income 36987.90 23272.00 58.94
Total Expenses 30387.00 14958.00 103.15
OPBDIT 6600.90 8314 -20.61
Interest 1531.40 859.90 78.09
Depreciation 1852.10 1321.90 40.11
Provision for Tax 1023.90 1854.40 -44.79
After Tax Profit 2193.50 4277.80 -48.72
Equity Capital 1870.50 1639.80 14.07
Reserves 0.00 0.00 --
Balance Sheet:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
SOURCES OF FUNDS:
Share Capital 537.01 504.04 497.06
Secured Loans 5497.08 3632.50 4058.71
Unsecured Loans 2049.45 540.53 37.34
Total Debt 7546.53 4173.03 4096.05
Gross Block 13952.32 10512.76 8368.43
Net Block 10955.49 8189.10 6517.98
Investments 923.53 192.94 85.08
Inventories 1549.16 1011.35 924.23
Sundry Debtors 337.39 245.16 241.26
86
Provisions 436.01 68.77 224.27
Net Current Assets -2267.67 -834.52 -316.78
Miscellaneous Expenses not w/o 0.00 194.87 304.04
Total Assets 15223.78 9745.32 8452.27
Income Statement:
(In Rs.Cr.)
Mar 2008 Mar 2007 Mar 2006
Net Sales 11391.05 8595.03 6092.39
Other Income 309.91 110.60 360.11
PBDIT 3666.14 2929.24 2053.23
Net Profit 1728.19 1292.00 864.29
Share Statistics:
Mar 2008 Mar 2007 Mar 2006

EPS (Rs.) 90.84 78.79 54.56
Book Value (Rs.) 394.99 310.77 240.37
DPS (Rs.) 14.00 12.50 8.00
Ratio Analysis:
Mar 2008 Mar 2007 Mar 2006

Leverage ratios:
Liquidity ratios:
87
Quick ratio 0.27 0.43 0.59
Payout ratios:
Coverage ratios:
Component ratios:
earnings)
Import comp. in raw mat. 64.89 74.12 71.98
consumed
Bonus component in equity capital - - -
(%)
JSW Steel Ltd. Price Change From 01/06/08 to 31/07/08
1400
1200
1000
800
Price
600
400
200
0
08 08 08 08 08 08 08 08 08
/ 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20
6 6 /6 /6 /6 7 /7 /7 /7
2/ 9/ 16 23 30 7/ 14 21 28
Date
JSW Steel Ltd. Analysis
 Current ratio has been decreased in 2008 to 0.58 as compared to 2007,

which was 0.76 and 2006 position of 0.89. This shows that the
88
liquidity position of the company is improving and is near about the
standards of 2:1

increase in 86.97% with respect to 2006 figures but over all there is a decrease in

 Earnings per Share have seen an increase to nearly 91 times in 2008 as

compared to 79 times in 2007 and 54 times in 2006.
ANALYSIS OF JSW STEEL LTD. USING TOOLS OF FUNDAMENTAL

ANALYSIS:

12%)
89
D/P = Dividend per Share / EPS = 14 / 90.84 * 100 = 15.41 %
D/Y = Annual DPS / Stock Price = 14 / 776.55 * 100 = 1.80 %
FINDINGS
90
CHAPTER-10
FINDINGS
Analysis of Ratios:
TATA ISPAT UTTAM SAIL JSW

STEEL IND. GALVA STEEL
LTD. STEEL LTD.
LTD.
SALES 12.62 % 11.08 % 22.37 % 16.40 % 28.06 %
PROFITS 11.01 % 465.16 % 9.56 % 21.52 % 33.76 %
CURRENT 3.92 1.25 1.08 1.73 0.58

RATIO
EPS 63.85 0.28 10.87 18.25 90.84
P/E RATIO 9.46 93.03 3.50 7.50 8.54
PEG RATIO 0.946 9.30 0.35 0.75 0.854
91
P/B RATIO 2.04 4.70 0.61 2.46 1.96
D/P RATIO 25.05 % - - 20.27 % 15.41 %
D/Y RATIO 2.64 % - - 2.70 % 1.80 %
BOOK VALUE 296.65 5.54 62.25 55.69 394.99
WHAT CAN BE INFERED FROM THE COMPANY

INFORMATION?
P/E RATIO: Ispat Industris has the highest P/E Ratio of 93.03 followed by Tata Steel
and JSW at 9.46 & 8.54 respectively. Then SAIL with 7.50 is followed by Uttam
Galva at 3.50. It can be inferred from this that Uttam Galva is the company which is
expected to have a appreciation in stock prices as higher the P/E Ratio less
appreciation of price is expected. (In this case it indicate that the market has high
hopes for Ispat Industris stocks.)
PEG RATIO: Even in this case the highest PEG Ratio is of Ispat Industries 9.30, the
next highest ratio is Tata Steel at 0.95 followed by JSW 0.85, SAIL 0.75 and Uttam
Galva 0.35. It is considered that the lower the PEG Ratio the better it is. The lower the
number the less you pay for each unit of future earnings growth. So Uttam Galva have
the better PEG Ratio as compared to others in this category.
P/B RATIO : A Lower P/B Ratio is said to to be a better for the company. Value
Investors prefer top consider P/B Ratio to identify potential candidates for future
growth. Uttam Galva has the lowest P/B ratio at 0.61, followed by JSW 1.96 and Tata
92
Steel at 2.04 follows. SAIL has a higher F/B Ratio of 2.46 but the highest P/B Ratio is
Ispat Industries at 4.70.
DP RATIO : Tata Steel and SAIL have the hignest Dividend Payout Ratio at 25.05%
and 20.27% respectively, followed by JSW at 15.41%. The ratio is not applicable to
Ispat Industries & Uttam Galva as both the companies have not declared the
dividends.
DY RATIO : SAIL have the highest dividend yield ratio of 2.70%. Tata Steel 2.64%,
JSW at 1.80%, dividend yield Ratios. The ratio is not applicable to Ispat Industries &
Uttam Galva as both the companies have not declared the dividends.
So taking into consideration the above ratios and various tools of fundamental
analysis we can say the following preference can be made according to the order:
In Steel the preferred investment would be,
1. Tata Steel
2. SAIL
3. JSW Steel Ltd.
4. Uttam Galva Steel Ltd.
5. Ispat Industries Ltd.
93
CONCLUSION
94
95
CHAPTER-11
CONCLUSION
Fundamental analysis is a security or stock valuation method that uses financial and
economic analysis to evaluate businesses or to predict the movement of security
prices such as stock prices. The fundamental information that is analyzed can include
a company's financial reports, and non-financial information such as estimates the
growth of demand for competing products, industry comparisons, analysis of the
effects of new regulations or demographic changes, and economy-wide changes. It is
commonly contrasted with so-called technical analysis which analyzes security price
movements without reference to factors outside of the market itself.
A potential (or current) investor uses fundamental analysis to examine a company's
financial results, its operations and the market(s) in which the company is competing
to understand the stability and growth potential of that company. Company factors to
consider might include dividends paid, the way a company manages its cash, the
amount of debt a company has, and the growth of a company's revenues, expenses
and earnings.
Fundamental Analysis helps in determining the Fair value of the stock.. It helps
investors on a large scale. There are various tools used in fundamental analysis and
these tools help the investor to analyze the company and know about its current status
and future prospects. Still it should always be kept in mind that though there are
various tools used in Fundamental Analysis, and these tools help to give a better
picture about the company and its future but still none of these tools should be used in
isolation. These tools have significance when the) are analyzed taking into
consideration other tools. There are certain combinations, which are considered, and
finally Fundamental Analysis is the analysis, which is culmination of information, and
analysis from these tools individually.
The end goal of performing fundamental analysis is to produce a value that an
investor can compare with the security's current price in hopes of figuring out what
sort of position to take with that security
96
BIBLIOGRAPHY
97
CHAPTER-12
BIBLIOGRAPHY
WEBSITES:
 www.nseindia.com
 www.sifyfinance.com
 www.myiris.com
 www.moneycontrol.com
 www.idbipaisabuilder.com
 www.money.rediff.com
 www.google.com
98

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A

UNDER THE GUIDANCE OF

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR

I sincerely acknowledge with deep sense of gratitude and indebtedness

I also would like to thank Mr. Ashish Pardesi, Branch Manager,

This project was really worthwhile to work on because it encompassed

I hereby declare that the project report entitled "Analysis of Equity

Date: Mr. Mandar M. Teredesai.

1. EXECUTIVE SUMMARY 1-4

2. OBJECTIVE & SCOPE 5-7

3. COMPANY PROFILE 8-23

5. FUNDAMENTAL ANALYSIS 27-32

6. RESEARCH METHODOLOGY 33-39

8. DATA INTERPRETATION 51-56

10. FINDINGS 83-86

11. CONCLUSION 87-88

12. BIBLIOGRAPHLY 89-90

“ANALYSIS OF EQUITY SHARES WITH RESPECT TO STEEL SECTOR”

INTRODUCTION TO THE PROJECT:

OBJECT OF THE PROJECT

In today's competitive world, management has to perform variety of functions

SELECTION OF THE TOPIC

This project is titled as Analysis of equity shares with respect to Steel

1) Tata Steel Ltd.

2) Ispat Industries Ltd.

3) Uttam Galva Steel Ltd.

4) Steel Authority of India Ltd. (SAIL)

5) JSW Steel Ltd.

The tools used are:

 Earnings per Share - EPS

 Price to Earnings Ratio - P/E

 Projected Earning Growth - PEG

 Dividend Payout Ratio

Earnings, growth, and value in the market.

REASON FOR CHOOSING A COMPANY AND THE PROJECT

1) Religare Enterprise Ltd. is one of the major player in stockbroking.

2) I am pursuing M.B.A. in Finance; this project gives me a brief idea about

DURATION OF THE PROJECT

OBJECTIVES OF THE STUDY:

 To study various tools used in Fundamental Analysis to help

 To study the stocks of 5 key players of Indian Automobile Sector viz.

1) Tata Steel Ltd.

2) Ispat Industries Ltd.

3) Uttam Galva Steel Ltd.

4) Steel Authority of India Ltd.(SAIL)

5) JSW Steel Ltd.

SCOPE OF THE STUDY:

Fundamental analysis helps to understand the basics of financial statements

It is a process of looking at a business at the basic or fundamental financial

1) Tata Steel Ltd.

2) Ispat Industries Ltd.

3) Uttam Galva Steel Ltd.

4) Steel Authority of India Ltd.(SAIL)

5) JSW Steel Ltd.

RELIGARE ENTERPRISES LTD.

3.1 History of the organization:

 The Company was originally incorporated as 'Vajreshwari Cosmetics Private

 The company name was subsequently changed to 'Religare Enterprises Private

 Religare Enterprises Limited (REL), promoted by Ranbaxy Laboratories

 Religare Securities Limited (RSL) is a leading equity and securities firm in

 The major activities and offerings of the company today are,

 Depository Participant Services,

 Portfolio Management Services,