A Project Report on

“A STUDY OF RATIO ANALYSIS– A CASE STUDY OF SUNFLAG IRON &

STEEL CO. LTD BHANDARA”

A Project Report submitted for the award of degree of Master of Business Administration
(MBA) in Faculty of Commerce Under Business Administration and Management BOS of
Rashtrasant Tukdoji Maharaj Nagpur University, Nagpur.

Ankit Shioahankar varade

Researcher

Dr. Prashant A.Manusmre

Guide

Dr. Prashant A. Manusmare Dr. Vikas P. Dhomne

HOD/ coordinator Principal/ Director

Department of management science & research

J.M.PATEL COLLEGE, BHANDARA
(2023-24)
 Declaration

I hereby declare that the research work presented in this Project

Report entitled: “A STUDY OF RATIO ANALYSIS – A CASE STUDY
OF SUNFLAG IRON & STEEL CO. LTD BHANDARA.” has been
carried out under the supervision of Dr. P.A. Manusmare during
the session 2023-24.

This work which or any part of this work is based on original

research and has not been submitted by me to any University/
Institution for the award of any diploma or degree.
The source of material, data used in this research study have been
duly acknowledged.

Place: Bhandara Mr. Ankit Shioshankar Varade

Date: Researcher
 Acknowledgement
Each steps in learning of life is an opportunity which adds to our
personality. A research project is usually never one man shows, but it is
very much the product of collectively efforts.
I would like to add a few heartful words for the people who were
the part of this work in numerous ways ,people who gave unending support
right for the stage the ideas was conceived.
Behind every successful work there are some sort of impetus
provided by some . my guide Dr. P. A. Manusmare has help me
immensely on accomplishing this research project. For providing me all
possible help and facility which are available at their disposal.
This work could not have been completed without the active
support and encouragement of my professor and colleagues of J.M. Patel
college Bhandara
I express my sincere thanks to you all

Mr. Ankit Shioshankar varade

Place: - Bhandara

Date:-
 INDEX
Sr .No CHAPTER
1 Introduction
2 Objectives
3 Research methodology
4 Hypothesis
5 Data collection & Analysis
6 Conclusion
7 Suggestions
8 Limitation
9 Bibliography
10 Annexure
CHAPTER -1

INTRODUCTION TO COMPANY
Company Profile:-

“SUNFLAG IRON AND STEEL COMPANY LIMITED”

Sunflag steel is one-of India’s leading integrated steel manufactures. Producing

high-quality steel products with a strong focus on innovation, quality, and
sustainability. The company has a history of over 35 years of operation, and today
it is a well- established and respected name in the Indian steel industry.
This company profile provides an in-depth analysis o Sunfalg steel, covering its
history, operation, corporate social responsibility initiative, and outlook.
History
Sunflag steel was founded in 1984 by the Oswal family in bhandara, Maharashtra.
The company started with a small plant producing 60,000 tons of steel per annum.
Over the years, Sunflag steel has expected its operation and today has three
manufacturing facilities located in Maharashtra and Punjab, with a total installed
capacity of 1.5 million tones per annum.
Sunflag steel has grown into a large conglomerate with diversified business
interests, including power generation, textile, and engineering.
Operations
Sunflg steel is an integrated steel manufacturer, with a focus on producing high-
quality steel products using state-of-the-art technology. The company’s
operations are divided into two main segments: steel and powder.
The steel segment steel segment is further divided into two sub-segments: long
product and short products. The long products like bars, wire rods, and structural
steel, while the flat products segment includes products like coils, sheets, and
plates. The company
Long Products
Sunflag Steel produces a range of long steel products, including TMT bars, wire
rods, bright bars, and structural steel. These products are used in construction,
infrastructure, and other industrial applications.
TMT Bars: Sunflag Steel produces TMT (Thermo-
Mechanically Treated) bars, which are widely used in
construction. The company's TMT bars have high
strength and are resistant to corrosion and
earthquakes.

Wire Rods: Sunflag Steel's wire rods are used in

various applications, including wire mesh, cables,
and welding electrodes. The company's wire rods
have high strength, good ductility, and excellent
surface quality.

Bright Bars: Sunflag Steel produces bright bars,

which are used in various applications, including
automotive components, fasteners, and machinery
parts. The company's bright bars have good surface
quality and excellent dimensional accuracy.

Structural Steel: Sunflag Steel produces structural steel products like angles,
channels, and beams, which are used in construction and infrastructure projects.
 Flat Products:
Sunflag Steel also produces a range of flat steel
products, including hot-rolled coils, cold-rolled coils,
galvanized coils, color-coated coils, and plates. These
products are used in various applications, including construction, automotive, and
consumer goods.
Hot-Rolled Coils: Sunflag Steel produces hot-rolled coils, which are used in
various applications, including construction and infrastructure. The company's
hot-rolled coils have high strength and excellent formability.

Cold-Rolled Coils: Sunflag Steel produces cold-

rolled coils, which are used in various applications,
including automotive components and consumer
goods. The company's cold-rolled coils have excellent surface quality and
dimensional accuracy.

Galvanized Coils: Sunflag Steel produces

galvanized coils, which are used in various
applications, including roofing

The main processes at the plant are,

 Iron making (Mini Blast Furnace, Sponge Iron

Plant, Sinter plant).
 Steel Making
 Continuous Casting
 Ingot Casting
 Rolling Mills
 Heat Treatments
 Bright Bar Making
 Inspection
 Quality Assurance
Sunflag steel was incorporated as a public Ltd company in the year
1984. Started as a Spring steel producer, the company has been
continuously upgrading its Manufacturing and Quality Assurance
Facilities. The
company acquired technical skills to produce a verity of steel grades
conforming to various national and international specification and
customer-specific requirements in categories of carbon steels, alloy
steel, free & semi free cutting steels, micro-alloyed steels, stainless
steels, spring steel, bearing steel, tool steel, high strength steel, valve
steel s. In order to
meet the market demands for new application, improve processes and
products and to support our esteemed customer in their for
localization of their steel requirement, Sunflag Iron & Steel Co.Ltd. Has
entered into technical collaboration with Daido Steel Company, Japan
in the year 2010. This association has proven useful for improvement
in production process and product quality, development of new
grades, localization of steel by automobile OEMs. Apart from catering
to the domestic steel requirement , Sunflag steel also export to
southeast Asian countries, Middle Eastern Countries, European
Countries and The United states. At Sunfalg , steel is producing using
100% Iron Ore as a basic raw south east no scrap is sourced from
outside. The steel has very low contents of the tramp element and is
free from radioactive contamination or other harmful and hazardous
chemicals. The Manufacturing and Quality Management Systems has
been standardized and certified under ISO 9001, IATF 16949, ISO
14001, OHSAS 118001, AD-2000-Markblatt WO. The in-house testing
laboratories are certified under ISO/IEC 17025 Standard by the
National Accreditation Board for Testing and Calibration Laboratories
(NABL).
Application of Sunfalg Steel:-
 Stainless steel for Industrial Application.

 Defense equipment’s wise point bomb shell manufactured by

ordnance factory.
 Industrial Fasteners.
 Rear excels commercial wire.
 Gears opinions and forgings for automobile application.
 Seamless tubes races and rings for bearing .
 Spring for freight cars.
Organization Structure:

NAME DESIGNATION

Mr. Ravi Bhushan Non-Executive-Non-Independent Director-

Bhardwaj Chairperson

Mr. Pranav Ravi Executive Director-MD

Bhardwaj
Mrs. Neelam Kothari Non-Executive - Independent Director
Mr. Anand Sadashiv Non-Executive - Independent Director
Kapre
Mr. Surendra Kumar Executive Director-MD
Gupta
Mr. Suhrit Ravi Bhushan
Non-Executive – Non-Independent Director
Bhardwaj
Mr. Rambhatla Executive Director
Muralidhar
Mr. Ramchandra Vasant
Executive Director
Dalvi
Mr. Sajiv Dhawan Non-Executive - Independent Director
Mrs. Vinita Bahri Non-Executive - Independent Director
Mr. M.A.V. Goutham Non-Executive - Independent Director
Mr. S. Mahadevan Iyer Chief Financial Officer
Mr. Tirthnath Indranath Non-Executive - Independent Director
Jha
Mr. Ashutosh Mishra Company Secretary & Compliance Officer
INTRODUCTION OF TOPIC:
Ratio analysis is used to evaluate various aspects of a company’s
operating and financial performance such as efficiency, liquidity,
profitability and solvency. The trend of these ratios over time is
studied to check whether they are improving or deteriorating. Ratio
analysis is a form of financial statement analysis that is used to obtain
a quick indication of firm’s financial performance in several key areas.
Ratio
analysis is quantitative analysis technique that establishes the
relationship between two or more than two items of financial
statement both are balance sheet, income statement, and cash flow
statement. It is usually used to evaluate various aspects of a
company’s operating and financial performance.
Ratio analysis helps stakeholder, including investor, creditors, and
management, assess a company’s financial health, performance, and
efficiency. However, it’s essential to compare ratios over time, against
industry benchmark, and with competitors for a meaningful analysis.
This
case study aims to conduct comprehensive ratio analysis of Sunflag
iron and steel company limited to assess its financial position and
performance.
Ratio Analysis:-
1. Current Ratio:

This ratio establishes a relationship between current Assets and

current liabilities. This ideal current ratio is 2:1. The objective of
computing this ratio is to measure the ability of the firm to meets
its short-term obligation and to reflect the short-term financial
solvency/strength of the firm.
Current Ratio = Current Assets/ Current Liability
1. For the year 2021:
Current Ratio= 915.83/445.52=2.06
2. For the year 2022:
Current Ratio= 1343.59/877.83=1.53
3. For the year 2023:
Current Ratio= 1386.04/887.19=1.56

Current Ratio

2021
2022
2023

INTERPRTATIONS:
The total current assets which are in the form of cash, near cash
or convertible into the cash within a period of 1 year. The term
current assets include prepaid expenses & short-term investment,
if any. The current includes all type of liability which will
matured for the payment within a period of 1 year e.g., bank
overdraft bills payable etc. The ratio throws fight on the firm
ability to pay its current liability out of its current assets.
2. Acid Test Ratio:
Acid test ratio = liquid asset/ liquid liability
1. For the year 2021:
Acid test ratio= 870.92/262.17= 3.23:1
2. For the year 2022:
Acid test ratio= 859.77/283.89= 3.03:1
3. For the year 2023:
Acid test ratio= 850.11/262.73= 3.24:1

Acid Test Ratio

2021
2022
2023

INTERPRETATION
This ratio established the relationship between the liquid current
assets & liquid liability. Current assets consider to be liquid if it is
convertible into cash without loss of time and value. The
inventory is singled out of the total current assets as the inventory
potentially illiquid.
 3. Debt Turnover Ratio:

Debt turnover ratio= sales/ debtors

1. For the year 2021:
Debt turnover ratio= 3334.89/706.43= 4.72 times
2. For the year 2022:
Debt turnover ratio= 4140.7/586.03= 7.07 times
3. For the year 2023:
Debt turnover ratio= 3217.84/686.39 = 4.69 times

Debt Turnover Ratio

2021
2022
2023

INTERPRETATION:
Company should be prompt to realization of the sales amount
from the debtors in four year.
4. Inventory Turnover Ratio:

Inventory turnover ratio= cost of sale/average inventory

1. For the year 2021:
Inventory turnover ratio= 3217.08/0426.76= 7.54 times
2. For the year 2022:
Inventory turnover ratio= 4044.36/0593.81= 6.81 times

3. For the year 2023:

Inventory turnover ratio= 3180.88/0826.47= 3.84 times

Inventory Turnover Ratio

2021
2022
2023

INTERPRETATION:

This turnover ratio is also known as stock turnover ratio

established relation between the COGS during the year & average
inventory held during the year by the firm.
5.Average Collectio Period:

Average collection period= debtors/sales×365 days

1. For the year 2021:
Average collection period=706.43/3334.89× 365 = 77 days

2. For the year 2022:

Average collection period=586.03/4140.7×365 = 52 days

3. For the year 2023

Average collection period=686.39/3217.84×365=78 days

Average Collection Period

2021
2022
2023

Interpretation:

In the average collection period relation between debtors & sales

should be consider in to credit sales & according to balance sheet
are having 365 days in 2023 recovery period is more.
6. Proprietary Ratio:

Proprietary ratio= shareholder fund/ total assets

1. For the year 2021:

proprietary ratio= 1219.3/2237.6= 0.54

2. For the year 2022:

proprietary ratio= 1234.38/2640.4= 0.47

3. For the year 2023:

proprietary ratio= 1162.91/2785= 0.42

Properietary Ratio

2021
2022
2023

Interpretation:
In this ratio right of shareholder in total value of assets.
Therefore, gather the ratio better it in 2021 is greater than
2022,2023.
7. Fixed Assets Turnover Ratio:

Fixed asset turnover ratio=sales/net fixed assets

1. For the year 2021:

Fixed asset turnover ratio=3334.89/1045.77= 3.19 times

2. For the year 2022:

Fixed asset turnover ratio=4140.7/1326.48= 3.12 times

3. For the year 2023:

Fixed asset turnover ratio=3217.84/1489.73= 2.16 times

Fixed Asset Turnover Ratio

2021
2022
2023

Interpretation:
Company should increase the fixed assets in 2019 compared to
2022, 2023.
8. Current Asset Turnover Ratio:

Current assets turnover ratio= sales/ current assets

1. For the year 2021:

Current assets turnover ratio= 3334.89/1045.77= 3.19 times

2. For the year 2022:

Current assets turnover ratio= 4140.7/1326.48= 3.12 times

3. For the year 2023:

Current assets turnover ratio= 3217.84/1489.73= 2.16 times

Sales

2021
2022
2023

Interpretation:
Current asset turnover ratio is highest in 2021 than 2022, 2023.
9 .Gross Profit Ratio:

Gross profit ratio= gross profit/sales×100

1. For the year 2021:

gross profit ratio= 117.81/3334.89×100= 3.53%
2. For the year 2022:
gross profit ratio= 96.34/4140.7×100= 2.33%
3. For the year 2023:
gross profit ratio= 36.96/3217.84×100= 1.24%

Sales

2021
2022
2023

INTERPRETATION:
The gross profit ratio is also called the average mark-up
ratio. It is calculated by the comparing the gross profit of
the firm the with the net sales. Profit of the company whole
three years is highest in 2021 and lowest in 2023.
10. Debt Equity Ratio:
Debt equity ratio= total debt/ shareholder fund
1. For the year 2021:
Debt equity ratio= 1018.26/1219.3= 0.83
2. For the year 2022:
Debt equity ratio= 1362.24/1234.38= 1.10
3. For the year 2023:
Debt equity ratio= 1622.08/1162.91= 1.40

Sales

2021
2022
2023

INTERPRETATION:
The debt equity ratio is the basic & most common measure
of the studying indebt ness of the firm. This ratio shows the
relationship between lenders &owners.
 Chapter-2
Scope & Significance
SCOPE:
 Financial Ratio: -
Analysing financial ratio such as current ratio, quick ratio,
debt-to-equity ratio, and other key relation provides an
understanding of a company financial health, liquidity and
profitability.

 Cash Flow Analysis: -

Analysing cash flow can help understand a company’s
ability to generate profit and grow.

 Profitability Analysis: -
Analyzing profitability can provide insights into a
company’s ability generate profits and grow.
 SIGNIFICANCE:
 Assessing the operational efficiency and managerial effectiveness
of the company.

 Analysing the financial strength and weakness credit worth ness

of the company.

 Assessing the types of assets owned by business enterprises and

the liabilities which are due to the enterprises
.
 Providing information about the cash position of company is
holding and how much debt the company has in relation to equity.
 Chapter-3
Review of Literature
Review of Literature:
This chapter presents a board review of existing literature and
research completed in the various aspects of ratio analysis.

Bollen (1999) conducted a study on ratio variables on which he

found three different uses of ratio variables in aggregate data
analysis: (1) as measure of theoretical concepts, (2) as a means
to control an extraneous factor and (3) as a correction for
heterosecedasticity. In the use of ratios as indices of concept, a
problem can arise if it is regressed on other indices or variables
that contain a common component.

Cooper (2000) conducted study on financial intermediation on

which he observed that the quantitative behaviour of business-
cycle models in which the intermediation process acts either as a
source of fluctuation or as propagator of real shocks. In neither
case do we find convincing evidence that the intermediation
process is an important element of aggregate fluctuation.

Murinde (2003) conducted study on corporate financial

structures on which he observed that the financial structure of a
sample of India non-financial companies using a new and unique
data set consisting of a panel contains the published accounts of
an almost 900 companies that published a full set of accounts
every year during 1989-99.

McMahon(2005) conducted a study on financial information on

which he found that financial statements mean little to the
uninitiated. This paper, explains, in layman’s teams, how to
understand financial information.

Lee (2008) conducted study on financial risk on which he

observed that financial researcher, those concentrating on the
loading industry, use various financial risk measures for their
studies. The finding of this study suggest that strategic and stock
performance risk factors better represent a loading firm’s
financial risk than do bankruptcy and firm performance risk
factors.

Johnson (2009) conducted a study on financial ratio patterns on

which he found that the properties and characteristics of
financial ratio have received considerable attention in recent
years with interest primarily focused on demining the predictive
ability of financial ratios and related financial data.
Chapter-4
Objectives
Objectives of the study:
 To analyse the liquidity position of sunflag iron and steel
company using liquidity ratios.

 To evaluate the profitability of the company using

profitability ratio.

 To provide recommendation based on the finding of ratio

analysis.

 To measure company’s financial leverage and solvency.

 To assess the past performance.

To know the current position of the company.

 To study monitoring the credit collection.

 To ensure sufficient liquidity.

 Chapter-5
Research Methodology
 Research Methodology:
Research is a logical and systematic search for new and useful
information on a particular topic. Research methodology is a way to
systematically solve the research problem. Research is common terms
refers to a search for knowledge. Research methodology consists of
different steps that are generally adopted by a researcher to study the
research problem along with the logic behind them.

Nature of Data:

The data required for the study has been collected from
secondary sources and relevant information is taken from annual
reports and internet etc.

Collection of data:

1. Primary data: Surveys, interviews annual report 2021,2022 &

2023.

2. secondary data: Books.

Primary Data:
 Observation.
 Surveys.
 To fine-tune experienced gained by researcher, would like
to take the expertise opinion to shape the project report,
Secondary Data:

The data was collected through financial statements like…

1) Annual report.

2) Balance sheet.

3) profit and loss account.

Chapter-6
Hypothesis
Hypothesis:
Hypothesis is usually considered as the principal instrument. Its
main function is to suggest new experiment and observation.

1. Null hypothesis (H0): There is no significant relationship

between sunfalg iron and steel company limited financial ratios
and its financial performance.

Alternative hypothesis (H1): Sunflag iron and steel company

limited financial ratios significantly influence its financial
performance.

2. Null hypothesis (H0): There is no significant change in the

liquidity position of sunflag iron and steel company limited over
the study period.

Alternative hypothesis (H1): There is significant change in the

liquidity position of sunflag iron and steel company limited over
the study period.

3. Null hypothesis (H0): The leverage or financial risk of sunflag

iron and steel company limited has remained constant over the
study period.

Alternative hypothesis (H1): The leverage or financial risk of

sunflag steel company limited has changed over the study
period.
 Chapter-7
Data Collection & Analysis
 Data Collection:
Data collection is the process of gathering and measuring
information on variables of interest, in an established systematic
fashion that enables one to answer stated research questions, test
hypothesis, and evaluate outcomes. The data collection component of
research is common to all fields of study including physical and social
sciences, humanities, business, etc. while methods vary by discipline,
the emphasis on ensuring accurate and honest collection remains the
same.
 Balance Sheet:

particular 2023(in cr) 2022(in cr) 2021 (in cr)

Shareholders’ Funds
a) share capital 180.22 180.22 180.22
b)Reserve and surplus 3148.29 15556.22 1340.56
Non-current liabilities
a) Long term borrowings 377.33 188.93 129.51
b) deffered tax liabilities 233.99 166.47 172.52
c) other long term liabilities 61.08 64.72 73.06
d) Long term provisions 34.68 34.04 39.09
Current liabilities
a) Short term borrowing 167.23 334.81 31.46
b) Trade payable 563.78 453.19 274.76
c) Other current liabilities 156.18 89.83 139.3
d) Short term provisions 0 0 0
Total Liabilities 4922.78 3068.23 2380
Assets
Non-current assets
a) Fixed assets
1. Tangible assets 1759.63 1250.04 1131.71