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ADM 1 PROJECT
ON
COMPARATIVE ANALYSIS BETWEEM
JSW AND SAIL
(Under the able guidance of Prof. Reena Agarwal)

SUBMITTED BY:-
ANKIT TRIPATHI-029
ARSHI SHAMEEM-040
ATEENDRA MISHRA-048
ATINDRA KUMAR SHUKLA-049
CHANDRA MOHAN MOHANTO-054
DAOOD ALI QIDWAI-055

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INDIAN STEEL INDUSTRY BirDs EYE viEw


India has indeed emerged in the global steel scenario. It has climbed to fourth spot for crude
steel production in 2011 from 8th in a span of few years and is now moving to take second
spot in net few years, second only to China.

Indian growth story, although driven by inherent demand potential and sustained economic
growth, has many other facets also, which are typical, as in any other part of the globe.

On the demand side, Indian steel sector probably holds the top spot as the fundamentals for
economic growth in India are better than most parts of the world. The potential in Indian steel
sector growth is also reflected in scope of increase in usage from the large gap between the
current per capita consumption vis a vis global average.

Indian steel majors have taken lead in creating capacities 3-4 years ago and the result is visible
now. Many more projects are underway and in next two to three years, they are likely to come
on stream propelling India to number two spot globally.

But the road of progress is never made of roses and Indian steel growth story also has hurdles
and blocks with raw material linkages, land availability, inadequate infrastructure and funding
issues being at the forefront. Another critical issue is the mismatch between the rate of demand
growth and rate of addition of capacities.

The country has acquired a central position on the global steel map with its giant steel mills,
acquisition of global scale capacities by players, continuous modernization & up gradation of
old plants, improving energy efficiency, and backward integration into global raw material
sources. Global steel giants from across the world have shown interest in the industry due to its
phenomenal performance.
Despite all these odds, India remains the shining star in the steel sector globally.



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Jindal steel works
JSW is part of US $16.5 billion O.P.Jindal Group. It has grown to US$ 9 billion in little over a
decade and has presence across various sectors Steel, Energy, Minerals, Port & Infrastructure,
Cement, Aluminium.
JSW Steel, the flagship company of the JSW Group, is today an integrated steel manufacturer.
JSW Steel is the largest private sector steel manufacturer in terms of installed capacity.
The Group set up its first steel plant in 1982 at Vasind near Mumbai. Soon after, it acquired
Piramal Steel Ltd., which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, who
had wide experience in the steel industry, renamed it as Jindal Iron and Steel Co. Ltd. (JISCO).
In 1994, in order to achieve the vision of moving up the value chain and building a strong,
resilient company, Jindal Vijayanagar Steel Ltd. (JVSL) was setup, with its plant located at
Toranagallu in the Bellary-Hospet area of Karnataka, the heart of the high-grade iron ore belt
and spread over 3,700 acres of land. It is just 340 kms from Bangalore, and is well connected
with both the Goa and Chennai ports. In 2005, JISCO and JVSL merged to form JSW Steel Ltd.
JSW Steel is one of the lowest cost steel producers in the world. It has established a strong
presence in the global value-added steel segment with the acquisition of steel mill in US and a
service center in UK. JSW Steel has also formed a joint venture for setting up a steel plant in
Georgia. The Company has also tied up with JFE Steel Corp, Japan for manufacturing the high
grade automotive steel. JSW Steel has acquired a majority stake in Ispat Industries Ltd. Making
JSW Steel Indias largest steel producer with a combined capacity of 14.3 MTPA. The Company
has also acquired mining assets in Chile, USA and Mozambique.
JSW Steel offers the entire gamut of steel products Hot Rolled, Cold Rolled, Galvanized,
Galvalume, Pre-painted Galvanised, Pre-painted Galvalume, TMT Rebars, Wire Rods & Special
Steel Bars, Rounds & Blooms. JSW Steel has manufacturing facilities at Toranagallu in
Karnataka, Vasind & Tarapur in Maharashtra and Salem in Tamil Nadu.
By 2020, the Company aims to produce 34 million tons of steel annually with Greenfield
integrated steel plants coming up in West Bengal and Jharkhand.

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Steel authority of India
Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully
integrated iron and steel maker, producing both basic and special steels for domestic
construction, engineering, power, railway, automotive and defence industries and for sale in
export markets. SAIL is also among the five Maharatnas of the country's Central Public Sector
Enterprises.
SAIL manufactures and sells a broad range of steel products, including hot and cold rolled
sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars
and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated
plants and three special steel plants, located principally in the eastern and central regions of
India and situated close to domestic sources of raw materials, including the Company's iron
ore, limestone and dolomite mines. The company has the distinction of being Indias second
largest producer of iron ore and of having the countrys second largest mines network. This
gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and
dolomite which are inputs for steel making.
The Government of India owns about 86% of SAIL's equity and retains voting control of the
Company. However, SAIL, by virtue of its Maharatna status, enjoys significant operational and
financial autonomy








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SOLVENCY RATIOS
Liability to equity ratio
It expresses the relationship between long-term capital contributions of creditors as related to
that contributed by owners (investors). As opposed to DEBT TO EQUITY, Long-Term Debt to
Equity expresses the degree of protection provided by the owners for the long-term creditors. A
company with a high long-term debt to equity is considered to be highly leveraged. But,
generally, companies are considered to carry comfortable amounts of debt at ratios of 0.35 to
0.50, or $0.35 to $0.50 of debt to every $1.00 of book value (shareholders equity). These could
be considered to be well-managed companies with a low debt exposure. It is best to compare
the ratio with industry averages.
LiaBiLitY to EquitY ratio = aLL LiaBiLitiEs / sharEhoLDErs
equity where as all liabilities = total liabilities
sharEhoLDErs EquitY

Liability to equity ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 0.79 1.01 1.34 1.23 0.72 0.65
SAIL 0.22 0.12 0.21 0.39 0.32 0.29

JSW-INTRA ANALYSIS
In 2007-2008, liability to equity ratio has inceased from .79 in 2006-2007 to 1.01 in
2007-2008 because of the increase in total liabilities from 9767.08 crores to 15223.78
Here liability to equity ratio is increased to it shows that dependence on liabilities is
increased.


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SAIL-INTRA ANALYSIS
In 2007-2008, Here as we can see that liability to equity ratio has dereased from .22 to
.12 because of the decrease in total liabilities.
A decrease liability to equity ratio shows decreasing dependence on liabilities.

Jsw-sail Inter analysis
Comparing both SAIL and JSW we can see here that SAIL is doing better job as
compared to JSW in the year 2007-2008 because liability to equity ratio of JSW has
increased to 1.01 while for SAIL it is decreased to .12 which means SAIL dependence on
liability is decreased because total liabilities have decreased.

Interest coverage ratio
This ratio also known as times interest earned ratio indicates the firms ability to meet interest
(and other fixed-charges) obligations. This ratio is computed as :

Interest coverage ratio = profit before interest and tax /
interest expense
Profit before interest and taxes are used in the numerator of this ratio because the ability to pay
interest is not affected by tax burden as interest on debt funds is deductible expense. This ratio
indicates the extent to which earnings may fall without causing any embarrassment to the firm
regarding the payment of interest charges.
A high interest coverage ratio means that an enterprise can easily meet its interest obligations
even if earnings before interest and taxes suffer a considerable decline. A lower ratio indicates
excessive use of debt or inefficient operations.
Interest coverage ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 5.85 6.13 3.00 3.84 4.44 3.43
SAIL 30.64 48.48 40.02 26.26 15.86 9.00
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JSW-INTRA ANALYSIS
In 2006-2007, In 2006-07 interest coverage ratio increases, which means that there is
adequate safety for payment of interest even if there were to be a drop in the co.
earnings.
In 2007-2008, we see that JSW has a marginal increase in interest coverage ratio i.e.
6.13 because profit before tax has increased from INR 1915.18 crores to INR 2484.12
crores and interest expense change marginally.
High interest coverage ratio means that there is safety in the payment of interest.
In 2008-2009, a significant decrease in the PBIT has caused a change on the lower side
to the Interest Coverage Ratio.
SAIL-INTRA ANALYSIS
In 2006-2007, there is increase in ratio, which means that there is adequate safety of
interest, even if there were to be a drop in the co. earnings.
In 2007-2008, there is huge change in the interest coverage ratio of SAIL to 48.48 from
30.64 because profit before tax has increased from INR 9381.02 crores to INR
11406.82 crores and interest expence has decreased. A high interest coverage ratio
leads adequate safety in the payment of interest.
Jsw-sail Inter analysis
Between SAIL and JSW, SAIL has better standing as compared to JSW as percentage
change in profit and interest expense is greater for SAIL than JSW.

Debt equity ratio
The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's assets.
[1
Closely related to leveraging,
the ratio is also known as Risk, Gearing or Leverage. The two components are often taken from
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the firm's balance sheet or statement of financial position (so-called book value), but the ratio
may also be calculated using market values for both, if the company's debt and equity are
publicly traded, or using a combination of book value for debt and market value for equity
financially.
A measure of a company's financial leverage calculated by dividing its total
liabilities by stockholders' equity. It indicates what proportion of equity and debt the company
is using to finance its assets.

Debt equity ratio = debt / equity
Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the
calculation.

Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial
statements as well

Debt equity ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 0.84 1.06 1.59 1.26 0.74 0.69
SAIL 0.24 0.13 0.27 0.5 0.34 0.40

JSW-INTRA ANALYSIS
In 2007-2008, there is an in increase in the debt equity ratio, because there is an
increase in the debt of secured and unsecured loan in 2007-2008 as compared to
previous year i.e. from INR 4173.03 crores to INR 7546.53 crores.
As debt equity ratio is high so aggressive use of leverage is done but a highly leverage
company is more risky for creditors.
In 2008-2009, there is an in increase in the debt equity ratio, because there is an
increase in the debt in 2008-2009 as compared to previous year i.e. from INR 7, 546.53
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crores to INR 11, 272.63 crores., which in turn is mainly due to a significant increase in
rupee term loans from INR 3, 300.48 crores to INR 4, 712.71 crores.
SAIL-INTRA ANALYSIS
In 2007-2008, there is a decrease in the debt equity ratio, because there is a decrease in
the debt of secured and unsecured loan in 2007-2008 from INR 4180.52 crores to INR
3045.24 crores.
Debt equity ratio is decreased and a small degree of leverage is used here and the
company is too constructive.










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Capital market RATIOS
Price earning ratio
The price earning ratio indicates the expectation of equity investors about the earnings of the
firm. It relates earnings to market price and is generally taken as a summary measure of
growth potential of an investment, risk characteristics, shareholders orientation, corporate
image and degree of liquidity. It is calculated as:

Price earning ratio = average stock price / earning per share
Price earning ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 11.48 8.45 26.39 10.93 9.43 9.68
SAIL 12.49 9.42 10.48 13.02 11.05 11.17

JSW-INTRA ANALYSIS
In 2006-2007, price earning ratio increases, which means that stock market is
confident in the co. future earning growth.
In 2007-2008, price earning ratio is decreased from 11.48 in 2006-07 to 8.45 in
2007-2008 because EPS is increased from 77.09 to 90.84 and market price has
remained the same. As price earning ratio is decreased in 2007-08 so there is less faith
of stock market in companys future growth.
In 2008-2009, a sudden decrease in the EPS from Rs. 90.84 In 2007-2008, to Rs.
22.96, had caused a significant decrease in Price Earning Ratio.
SAIL-INTRA ANALYSIS
In 2006-2007, price earning ratio decreases which means, that stock market is not
confident in the co. future earning growth.
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In 2007-2008, price earning ratio is decreased from 12.49 in 2006-07 to 9.42 in
2007-08 because EPS is increased from 15.02 to 18.25 and average stock price is
decreased.
Decrease price earning ratio shows lower faith of stock market in companys future
growth.

Jsw-sail Inter analysis
Between SAIL and JSW, SAIL is better as compared to JSW because percentage fall of
price earning ratio is greater in JSW than SAIL so stock market will have lower faith in
JSWs future growth as compared to SAIL.


Dividend yield
This ratio indicates return on investment; this may be on average investment or closing
investment. Dividend (%) indicates return on paid up value of shares. But yield (%) is the
indicator of true return in which share capital is taken at its market value.

Dividend yield = dividend per share / average stock price
Dividend yield (in PERCENTAGE)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 1.41 1.87 0.16 0.81 1.46 1.08
SAIL 1.65 2.15 1.65 1.54 1.82 2.08

JSW-INTRA ANALYSIS
In 2007-2008, dividend yield is increased from 1.41 in 2006-07 to 1.87 in 2007-08
because dividend income has increased and average stock price has remained same.
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As dividend yield is increased in 2007-08 so it shows that cash return on shares has
gone up.
In 2008-2009, dividend per share came to a low of Rs 1 as compared to previous year
dividend per share of Rs. 14, it is because of this reason that the dividend yield
decreased so considerably.
SAIL-INTRA ANALYSIS
In 2007-2008, dividend yield is increased from 1.65 in 2006-07 to 2.15 in 2007-08
because dividend income has increased and average stock price has remained same.
Increase dividend yield of 2.15 shows a higher cash return on shares.
Jsw-sail Inter analysis
SAIL will be in better position here as compared to JSW because percentage increase of
dividend yield is greater for SAIL than JSW so SAIL will have higher cash return on
sales.

Price to book ratio
This ratio indicates market response of the shareholders investment. Undoubtedly, higher the
ratios better is the shareholders position in terms of return and capital gains.

Price to book ratio = Market price per share / book value per
share
Price to book ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 2.74 1.94 1.47 2.31 1.13 0.84
SAIL 4.47 3.07 2.31 2.64 1.46 0.99

JSW-INTRA ANALYSIS
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In 2007-2008, price to book ratio has decreased from 2.74 in 2006-07 to 1.94 in
2007-08 because market price per share is decreased and book value per share has
remained same.
A lower price to book ratio indicates here under pricing of shares but the market
expects the stock to earn higher as expected because it is greater than 1.
In 2008-2009, an increase in the average market price from Rs. 606.07 in 2007-2008
to Rs. 768.05 has caused a decrease in the price to book ratio.
SAIL-INTRA ANALYSIS
In 2007-2008, price to book ratio has decreased from 4.47 in 2006-07 to 3.07 in
2007-08 because market price per share is decreased marginally and book value per
share has remained same.
As price to book ratio has decreased so it indicates that under pricing of shares has been
done but the market expects the stock to earn higher as expected because it is greater
than 1.
Jsw-sail Inter analysis
JSW have better standing as compared to SAIL because percentage decrease in price to
book ratio is lesser for JSW than SAIL so JSW will earn higher stock than SAIL in the
year 2007-2008.






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profitability RATIOS
Profit margin/return on sales
The net profit margin is simply the after-tax profit a company generates for each rupee of
revenue. Net profit margins vary across industries, making it important to compare a potential
investment against its competitors. Although the general rule of-thumb is that a higher net
profit margin is preferable, it is not uncommon for management to purposely lower the net
profit margin in a bid to attract higher sales.

Profit margin = [pat / sales] * 100
Net profit margin is a safety cushion; the lower the margin, the less room for error. A business
with 1% margins has no room for flawed execution. Small miscalculations on managements
part could lead to tremendous losses with little or no warning.

Profit margin/ return on sales (in percentage)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 14.98 14.92 3.23 11.09 8.64 5.05
SAIL 17.38 18.16 13.40 15.73 13.03 7.44


JSW-INTRA ANALYSIS

In 2006-2007, profit margin increases from 14.14% to 14.98% which means that the
co. is going in a right direction.
In 2008-2009, we see very bad profit margin as compared to the previous year because
of the reason that the PAT decreased considerably, from INR 1728.19 crores to INR
458.50 crores, which was mainly due to huge increase of expenditure in materials i.e.
from INR 5693.85 crores to INR 8450.10 crores.
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Also the turnover had increased from INR 11, 572.25 crores to INR 14, 260.81 crores.
In 2010-2011, the PAT has increased from Rs 5961 crores to Rs 7338 crores. On the
other hand Sales has increased from Rs. 18202 crores to Rs. 23,435 crores. So because
of the higher percentage change in Sales as compared to the change in PAT, the profit
Margin has decreased.
The fall in profit margin shows that profitability has gone down and it shows that the
company has not generated the same level of profit in proportion to the sales this year
as compare to the previous year.
In 2011-2012, the material cost of JSW has increased from INR 15995.19 crores to INR
22397.47 crores leading to decrease in the profit margin.

SAIL-INTRA ANALYSIS
In 2006-2007, Profit margin decrease from 36% to 23%, so we should check the
material cost, salaries and wages, other operating exp.(advertisement).
In 2010-2012, the return on sales has reduced as compared to last year because there
has been an increase of 7.02% in Sales whereas the PAT has decreased by 23% in this
year.
The amount of net profit earned per rupee has declined. This shows that the companys
profitability has decreased.
In 2011-2012, the material cost of SAIL has increased from INR 2264.47 crores to INR
25186.22 crores leading to decrease in the profit margin.

Asset turnover
The asset turnover ratio is a measure of how effectively a company converts its assets into sales.
It is calculated as follows:

Asset turnover = [sales / average total assets]
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The asset turnover ratio tends to be inversely related to the net profit margin; i.e., the higher the
net profit margin, the lower the asset turnover. The result is that the investor can compare
companies using different models (low-profit, high-volume vs. high-profit, low-volume) and
determine which one is the more attractive business.

Asset turnover (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 0.82 0.82 0.83 0.83 0.84 1.07
SAIL 1.16 1.31 1.35 1.20 1.16 0.81


JSW-INTRA ANALYSIS
For 2011-2012, the ratio of JSW has increased showing that the company is managing
its asset in an efficient manner.
SAIL-INTRA ANALYSIS
For 2011-2012, the ratio of SAIL has shown a decrease and therefore a low ratio
represents presence of more assets than the business needs for its operation.

Return on assets
The profitability ratio is measured in terms of relationship between net profits and assets
employed to earn that profit. This ratio measures the profitability of the firm in terms of assets
employed in the firm. The ROA may be measured as follows:

Return on assets = [pat / average total assets]*100

Return on assets (in percentage)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 31.09 39.5 41.00 50.4 73.58 81.6
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SAIL 41.60 55.69 67.75 80.66 89.75 96.38

JSW-INTRA ANALYSIS
In 2007-2008, return on assets has marginally from 31.09 to 39.5 in 2007-2008
because of the increase in profit after tax from INR 1292.00 crores in 2007 to INR
1728.19 crores in 2008.
Return on assets is lower because of lower profit margin and asset turn over.
In 2010-2011, the drastic rise in ROI is due to the increase in Total average asset of the
firm which has raised Rs.8341 crores on Rs. 31493.5 crores. Whereas the PAT has
increased by Rs .1456 crores on Rs 3883 crores. Thus due a greater % rise in PAT the
ROI has risen so drastically.
The company has invested its funds very carefully and smartly which is showing in the
returns that it is earning on the same. Thus the overall profitability has increased by a
great margin.
SAIL-INTRA ANALYSIS
In 2007-2008, return on assets has significantly increased to 55.69 from 41.60 in
2006-07 because PAT has increased from INR 6202.29 crore in 2007 to INR 7536.78
crore in 2008. Higher return on assets here shows that profit margin and assets turn
over have increased.
In 2010-2011, In this year the profit after tax has increased from 6794 crores to 4904
crores and on the other hand average total assets has increased from 51272 to 58765
but the percentage rise in PAT is greater than percentage change in average total assets.
Hence this rise in ROI.The companys profitability from its investments has gone up,
indicating that the companys investments is bearing fruits and giving higher and
higher returns.



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Return on equity
Return on Equity measures the profitability of equity funds invested in the firm. This ratio
reveals how profitably of the owners funds have been utilized by the firm. This ratio is
computed as:

rEturn EquitY = [pat / avEragE sharEhoLDErs EquitY] * 100
Return on equity is one of the most important indicators of a firms profitability and potential
growth. Companies that boast a high return on equity with little or no debt are able to grow
without large capital expenditures, allowing the owners of the business to withdraw cash and
reinvest it elsewhere. Many investors fail to realize, however, that two companies can have
the same return on equity, yet one can be a much better business.

Return on equity (in percentage)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 23.10 22.99 5.59 21.14 12.07 8.77
SAIL 35.82 32.76 2.06 20.27 13.23 8.89


JSW-INTRA ANALYSIS
In 2007-2008, we see a negligible change in the Return on Equity, because there is a
big downslide in the PAT from INR 1728.19 crores to INR 458.50 crores.
If ROE decreases then it may imply lack of opportunities that would yield higher
returns.
In 2008-2009, we see a huge change in the Return on Equity, because there is a big
downslide in the PAT from INR 1728.19 crores to INR 458.50 crores, which was mainly
due to huge increase of expenditure in materials i.e. from INR 5693.85 crores to INR
8450.10 crores.
In 2010-2011, The average shareholders Equity has doubled from Rs. 9706 crores to
Rs. 17255 crores. Whereas the PAT has risen from Rs 5905 crores to Rs. 7338 crores.
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Due to this huge rise in Shareholders Equity and a comparatively smaller rise in PAT
has led to the fall in Return on Equity. The companys ROE has taken a drastic dip
showing that the firm has used shareholders funds on unproductive activities and
hence the ROE has gone down.

SAIL-INTRA ANALYSIS
In 2007-2008, it is seen here a negligible change in the Return on Equity, because PAT
has increased from INR 6202.29 crores to INR 7536.78 crores but average shareholder
equity is decreased considerably.
Shareholders` expect managers to earn a ROE higher than the firm's cost of equity but if
ROE decreases it means that there were lack of opportunities that would have yield
higher return.
In 2010-2011,The average shareholder Equity in this year has decrease from 37019 crores to
33316 crores and so is the case with PAT which decreased from 6794 crores to 4904 crores.
Therefore we can see a fall in the ROE.
The company hasnt utilized shareholders funds carefully and tactfully and the implications has
shown by way of fall in ROE.

Earnings per share
The profitability of a firm from the point of view of ordinary shareholders can be measured in
terms of number of equity shares. This is known as Earnings per share:

Earnings per share = net profit after tax attributable to
equity shareholders / no. of equity shares o/s during that
period
Earnings per share (in Indian rupees)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 77.09 90.84 22.96 106.59 88.87 71.62
SAIL 15.02 18.25 14.95 16.35 11.87 8.58

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JSW-INTRA ANALYSIS
In 2007-2008, a substantial increase in the EPS, is because of the reason that the PAT
had increased from INR 1292.00 crores to INR 1728.19 crores. It also means that the
company is doing better.
Here a high EPS is showing that the company is doing better than before.
In 2008-2009, a substantial change in the EPS is because of the reason that the PAT had
decreased from INR 1728.19 crores to INR 458.50 crores, which was mainly due to
huge increase of expenditure in materials i.e. from INR 5693.85 crores to INR 8450.10
crores.
In 2010-2011, although the profit has increased from Rs 5905 crores to Rs. 7338
crores. But due simultaneous and a larger rise in the total number of shares, the forced
the EPS to come down.
The profitability of the firm has gone down due to increase in the liabilities and hence
has a lesser profit after tax to distribute amongst its shareholders.
SAIL-INTRA ANALYSIS
In 2007-2008, EPS is increased from 15.02 to 18.25 because PAT had increased from
INR 6168.82 crores to INR 7534.08 crores.
From the shareholders perspective the company did better because EPS is higher than
the previous year.
In 2010-2011, the number of shares (4130400545) has remained the same where as
the profit has decreased from Rs 6794 crores to Rs 4904 crores. therefore the fall in EPS
of this year.
This year the firm has not done its business in the manner they would have wanted and
the implication is that the profit has decreased.



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liquidity RATIOS
CURRENT RATIO
The Current Ratio is one of the beat known measures of financial strength. The main question
this ratio addresses is: "Does your business have enough current assets to meet the payment
schedule of its current debts with a margin of safety for possible losses in
current assets?"
A generally acceptable current ratio is 2 to 1.
But whether or not a specific ratio is satisfactory depends on the nature of the business and
the characteristics of its current assets and liabilities.
Current Ratio = Current Assets / Current Liabilities
Current ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 0.64 0.51 0.44 0.58 0.78 0.76
SAIL 1.52 1.68 1.61 1.60 1.21 1.22

JSW-INTRA ANALYSIS
In 2007-2008, current ratio decreases from .64 to .51 which shows that it does not
satisfy the ratio of 2:1 and also the company dont have sufficient current assets to meet
its current liabilities.
Here current assets are lesser to clear of the current liabilies because current asset ratio
is less than 1.
In 2008-2009, we see a decrease in the current ratio, because there is a significant
increase in the acceptances i.e., from INR 2060.26 crore to INR 5293.09 crore.
In 2010-2011, The current liabilities has increased from Rs 7621 crores to Rs 10045
crores. Whereas the Current assets has increased from Rs. 23356 crores to Rs. 31493
crores. Thus due a larger increase in current assets as compared to current liabilities the
Current ratios has shown a positive growth. The liquidity of the firm has decreased and
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this indicates that the company has lesser current assets per rupee of current liabilities.
Which has happened because of the sale of assets and increase in current liabilities.
Although the firm anyways dint have enough current assets to payoff its current
liabilities .

SAIL-INTRA ANALYSIS
In 2007-2008, current ratio has increased from 1.52 to 1.68 which tells that the
company has sufficient current assets to satisfy its current liabilities.
From here it is clear that the companys current assets are greater than the current
liabilities to clear of the current liabilities as current ratio is greater than 1.
In 2010-2011, current assets in the year 2011 has decreased from (39154.1 to
38090.5 crores) as compared to the current assets of the year 2010, whereas the
liabilities has remained almost the same for both the year. Therefore the fall in current
ratio. The firms liquidity has increased and its capacity to pay off its liabilities which is
a very good sign for the firm.

Quick ratio
The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of
liquidity.
The Quick Ratio is a much more conservative measure than the Current Ratio. It helps answer
the question: "If all sales revenues should disappear, could my business meet its current
obligations with the readily convertible `quick' funds on hand?"
quick ratio = quick assets / current liabilities
where as quick assets = current assets inventories
Quick Assets consist of only cash and near cash assets. Inventories are deducted from current
assets on the belief that these are not near cash assets. But in a sellers market
inventories are also near cash assets.
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An acid-test of 1:1 is considered satisfactory unless the majority of "quick assets" are in
accounts receivable, and the pattern of accounts receivable collection lags behind the
schedule for paying current liabilities.
Quick ratio/acid test ratio (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 0.43 0.28 0.28 0.31 0.49 0.54
SAIL 1.01 1.23 1.24 1.53 1.35 0.82

JSW-INTRA ANALYSIS
In 2006-2007, we see a significant decrease in the Quick ratio, because of an decrease
in the Loans and Advances i.e. from INR 789.80 crores to INR 549.28 crores, and also a
decrease in other current liabilities.
In 2007-2008, we see a significant decrease in the Quick ratio, because of decrease in
the loans and advances from INR 1008.75 crores to INR 997.26 crores whereas the
current liabilities have increased by greater percentage than current assets therefore
ratio has fall.
It indicates lower quick assets to pay off current liabilities.

SAIL-INTRA ANALYSIS
In 2007-2008, quick ratio is increased from 1.01 to 1.23 because loans and advances
have increased from INR 3097.70 crores to INR 3644.22 crores while current assets
have increased at a greater percentage than current liabilities.
Increase in quick ratio here indicates satisfactory ratio of 1:1 which shows higher quick
ratio to pay off current liabilities.
In 2010-2011, Because of the fall in cash and bank balance of Rs .50672 crores this
year as compared to the last year the quick ratio has come down a little bit. Current
Liability changing by a very small amount. It shows that cash and bank balance has
reduced which has decreased the liquidity of the firm.

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Debtor turnover
In case firm sells goods on credit, the realization of sales revenue is delayed and the receivables
are created. The cash is realized from these receivables later on.
The speed with which these receivables are collected affects the liquidity position of the firm.
The debtors turnover ratio throws light on the collection and credit policies of the firm. It is
calculated as follows:
Debtor turnover = sales / average debtors
Debtor turnover (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 36.24 39.11 38.09 37.79 32.95 29.12
SAIL 16.36 14.90 14.43 14.46 11.11 10.30

JSW-INTRA ANALYSIS
In 2007-2008 debtor turnover has quite increased from 36.24 in 2006-07 to 39.11 in
2007-2008 which means that sales have increased while average debtor have
decreased marginally.
Here a high debtor turn over means debtors are being converted rapidly into cash and
the quality of the company's portfolio of debtors is good.

SAIL-INTRA ANALYSIS
In 2007-2008, debtor turnover ratio has decreased from 16.36 to 14.90 because sales
have remain constant while the average debtor have grown.
Debtor turnover is low so it means debtors are not rapidly converted to cash and quality
of company portfolio is not good.


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Inventory turnover
This ratio also known as stock turnover ratio establishes the relationship between the cost of
goods sold during the year and average inventory held during the year. It is calculated as
follows:
Inventory turnover = cost of goods sold / average
inventories
This ratio indicates that how fast inventory is used/sold. A high ratio is good from the view
point of liquidity and vice versa. A low ratio would indicate that inventory is not used/ sold/ lost
and stays in a shelf or in the warehouse for a long time.

Inventory turnover (in times)
YOY
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
JSW 8.52 9.26 8.75 8.95 7.10 7.97
SAIL 5.36 8.62 5.86 6.02 5.13 3.71

JSW-INTRA ANALYSIS
In 2007-2008, the inventory turnover has increased marginally and that has
happened because of the average inventory holding period is less(38.87 days) as
compared from previous year(42.25) days.
If the inventory turnover is high then it indicates inventory management is efficient
and It runs lower risk of obsolescence and reduces interest, insurance and storage
charges.
SAIL-INTRA ANALYSIS
In 2007-2008, the inventory turnover has increased from 5.36 to 8.62 because the
inventory has also increased from 6412.77 to 6754.35 and inventory holding period is
decreased from 67.16 days to 41.76 days.
Same is the case here, inventory turnover is high so inventory management is efficient
and It runs lower risk of obsolescence and reduces interest, insurance and storage
charges.