Professional Documents
Culture Documents
ON
“The Financial Analysis of Maharashtra Elektrosmelt
Ltd.”
(To understand the financial viability of the Unit)
Internship Project
3rd SEM
(2008 – 2010)
For
Sd/-
DECLARATION
CHANDRAPUR
MAHARASHTRA
ACKNOWLEDGEMENT
CHANDRAPUR (M.S)
Preface
Many students may have done work on this project in different way or styles. I have also
tried to work on this project in a different way. It was for the first time I got the
opportunity to work in such a prestigious and well known organization. And things
which I have experienced in my training period are going to help me through-out my life
time. I have worked on this project with great enthusiasm & Zeal. I have experienced
and learned during the training period. To run a giant organization each & every
department has to play its role effectively. In this era of cut throat competition there is
no room for complacency every aspect of life.
The main goal of my project is the “The Financial Analysis of Maharashtra
Elektrosmelt Ltd.”(To understand the financial viability of the Unit)
This project has been undertaken to study the challenges faced by the typical
government owned organization MEL.To understand the financial viability of the Unit
(Ratio Analysis).To discuss the competitive strategic of MEL in the light of changes in
the business environment .The M.E.L Plant is divided into various sections & each
section specializes in different activities. This report is prepared on the basis of the
extensive study carried out at Finance & Account Department of M.E.L Plant.
CHANDRAPUR (M.S)
Table of Contents
Certificate of approval
Acknowledgement
7. Production Review
8. Financial Review
13. Bibliography
Annexure……………………………………………………………………….
1. THE GLOBAL STEEL INDUSTRY
Steel is by far the most important and one of the most multifunctional materials
without which development of mankind would have taken on entirely new facet. The
performance of the steel industry is often considered as an indicator of economic
progress, particularly in developing countries.
Global steel production has increased by 59 per cent over a period of seven years. Rapid
growth and industrialization achieved in China and India along with an impetus to
infrastructure development after 2003 has led to a rise in steel production. China is the
largest producer of steel turning out more than 400 million tonnes followed by the EU-
27, Japan, US, Russia and India. The production of world crude steel is projected to
touch 1,410 million tonnes in 2008. This increase is due to expected rise in Chinese and
EU-27 production.
WORLD TRADE SCENARIO
The demand for steel is directly co-related with economic growth. With the world
economy entering into an expansionary phase since 2003, demand for steel has been on
the rise and so has trading in the commodity. The leader in world steel exports is China
followed by Japan, Ukraine, Germany and Russia. The US followed by Germany, South
Korea, Italy, and France are the major importers.
Steel has long remained out of the purview of futures markets. However, trading in steel
futures commenced on the London Metal Exchange on April 28. Two regional steel
billet contracts have been launched, for Mediterranean and Far East delivery. Each
contract is for 65 tonnes of billets.
INDIA
India is the sixth largest producer of steel. After India's iron and steel industry was
delicensed in 1991-92, the country has added capacity in private sector. However,
compared to world production, India's production is a mere 4 per cent (2007). Though
India produces various varieties of steel, mild steel predominates in the production
share. For the 2001-2007 period, production has increased by 94 per cent.
The major Indian companies producing steel are Tata Steel, SAIL, RINL, ESSAR, Jindal
Steel and ISPAT.
The ministry of steel has predicted a slight increase in exports to 6.58 million tonnes in
2007-08 and a decrease in imports to 7.83 million tonnes in the same period.
2. INDIAN STEEL INDUSTRY
The Indian Steel industry is almost 100 years old now. Till 1990, the Indian steel
industry operated under a regulated environment with insulated markets and large scale
capacities reserved for the public sector. Production and prices were determined and
regulated by the Government, while SAIL and Tata Steel were the main producers, the
latter being the only private player. In 1990, the Indian steel Industry had a production
capacity of 23 MT. 1992 saw the onset of liberalization and the Indian economy was
opened to the world. Indian steel sector also witnessed the entry of several domestic
private players and large private investments flowed into the sector to add fresh
capacities.
The last decade saw the Indian steel industry integrating with the global economy and
evolving considerably to adopt world-class production technology to produce high
quality steel. The total investment in the Indian steel since 1990 is over Rs 19,000 crores
mostly in plant equipments, which have been installed after 1990. The steel industry
also went through a turbulent phase between 1997 and 2001 when there was a downturn
in the global steel industry. The progress of the industry in terms of capacity additions,
production, consumption, exports and profitability plateaued off during this phase. But
the industry weathered the storm only to recover in 2002 and is beginning to get back
on its feet given the strong domestic economic growth and revival of demand in global
markets.
With a currant capacity of 35MT the Indian steel industry is today the 8th largest
producer in the world. Today India produce international standard steel of all most all
grades/ varieties and has been net exporter for the last few years, underlying the
growing acceptability of its product in the global market.
Steel is a highly capital intensive industry and cyclical in nature. Its growth is
intertwined with the growth of economy at large and in particular the steel consuming
industries such as manufacturing, housing and infrastructure. Steel given its backward
and forward linkages has its large multiplier effect.
With capital investments of over Rs 100, 000 crores, the Indian steel industry currently
provides direct/indirect employment to over 2 million people. As India moves ahead in
the new millennium, the steel industry will play a critical role in transforming India into
an economic superpower.
1. The demand for steel is dependent on the overall health of the economy and the
infrastructure developmental activities being undertaken.
2. Steel prices in the Indian market primarily depend on domestic demand and supply
conditions and international prices.
3. Government and different producer and consumer associations regularly monitor
steel prices, with government intervention quite routine. Government intervention often
has a major influence on domestic prices.
4. The duty imposed on import of steel and its fractions, and on the export of iron ore
also have an impact on steel prices.
5. The price trend in steel has been a function of domestic as well as world economic
activity.
6. Prices of input materials for iron and steel such as power tariff, freight rates and coal
prices, also contribute to the rise in the input costs for steel making.
The main crisis in the steel industry is spiralling costs and availability of
coal and iron ore. High crude oil prices, besides raising prices of other
energy commodities like coal and gas, are also leading to high shipping
freight rates, pushing up steel costs.
UPCOMING STEEL PLANTS: DESTINATION INDIA
India has finally emerged as a steel making location for global players. The global
steel industry appears to be in a race to invest in high-growth zones, such as, India. The
amount of activity in the sector has picked up speed in the past few years. The sector has
received investments of US$ 5994 million lined up through 102 memorandum of
understanding (MoUs) signed by different state governments to add 103 Mt in steel
capacity4.
Much has happened ever since SAIL’s Corporate Plan was announced in 2004.
Investment plans for the three specialty steel plants have been firmed up. The company
has grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant).
Production targets have been revised from 19 Mt of steel to about 24 Mt. Estimated
investments have increased from Rs 250 000 million to around Rs 400 000 million.
And the time period has been squeezed by two years, bringing the targeted year of
completion of major projects5 from 2012 to 2010.
Besides expanding its existing facilities at Jamshedpur, Tata Steel plans three new
Greenfield projects in Orissa, Chhattisgarh and Jharkhand. It is also investing almost
$100 million in a ferro-chrome project in South Africa.
The single biggest foreign investment proposal in India relates to steel. Posco, the
South Korean steel giant, had announced an $11.3 billion project in the eastern state of
Orissa, where it hopes to put up a 12 Mt steel plant in phase-wise manner. However, the
project has run into controversies, with some political parties raising objections to the
state government’s plans to hand over captive iron ore mines to the company. Mittal has
announced plans for an $8.7 billion, 12 Mt steel plant in the neighboring state of
Jharkhand. Japan’s Nisshin Steel Company also plans to start a unit in India, to meet
the growing demand from Japanese automobile companies. The US$ 5.25 billion
Russian major Magnitogorsk Iron and Steel Company (MMK) plans to set up a 10 Mt
Greenfield steel plant in Orissa.
3. STEEL AUTHORITY OF INDIA LIMITED
(SAIL)
INTRODUCTION:
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.
Ranked amongst the top ten public sector companies in India in terms of
turnover, SAIL manufactures and sells a broad range of steel products, including hot
and cold rolled sheets and coils, galvanized sheets, electrical sheets, structural, 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 India’s largest producer of iron ore and of having
the country’s 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.
SAIL's wide range of long and flat steel products are much in demand in the
domestic as well as the international market. This vital responsibility is carried out by
SAIL's own Central Marketing Organization (CMO) and the International Trade
Division. CMO encompasses a wide network of 34 branch offices and 54 stockyards
located in major cities and towns throughout India. With technical and managerial
expertise and know-how in steel making gained over four decades, SAIL's Consultancy
Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and Steel
(RDCIS) at Ranchi which helps to produce quality steel and develop new technologies
for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and
Technology (CET), Management Training Institute (MTI) and Safety Organization at
Ranchi. Our captive mines are under the control of the Raw Materials Division in
Kolkata. The Environment Management Division and Growth Division of SAIL operate
from their headquarters in Kolkata. Almost all our plants and major units are ISO
Certified.
SAIL VISION:
To be a respected word class corporation and leader in Indian Steel Business in quality,
productivity, profitability and customer satisfaction.
MAJOR UNITS
JOINT VENTUERS
SAIL has promoted joint ventures in different areas ranging from power plants to e-
commerce.
¾ NTPC SAIL Power Company Pvt. Ltd: A 50:50 joint venture between Steel
Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd.
(NTPC Ltd.), it manages the captive power plants at Rourkela, Durgapur and
Bhilai with a combined capacity of 314 megawatts (MW)
¾ Bokaro Power Supply Company Pvt. Limited: This 50:50 joint venture
between SAIL and the Damodar Valley Corporation formed in January 2002 is
managing the 302-MW power generation and 1880 tonnes per hour steam
generation facilities at Bokaro Steel Plant.
¾ Mjunction Services Limited: A joint venture between SAIL and Tata Steel on
50:50 basis, this company promotes e-commerce activities in steel and related
areas.
¾ SAIL-Bansal Service Center Ltd.: SAIL has formed a joint venture with
BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with
the objective of adding value to steel.
¾ Bhilai JP Cement Ltd: SAIL has also incorporated a joint venture company
with M/s Jaiprakash Associates Ltd to set up a 2.2 MT cement plant at Bhilai.
¾ SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint
venture company to produce Ferro-manganese and silico-manganese at Bhilai.
SAIL today is one of the largest industrial entities in India. Its strength has been the
diversified range of quality steel products catering to the domestic, as well as the export
markets and a large pool of technical and professional expertise.
YEAR EVENTS
1974 - The company was incorporatated on 17th April, at Maharashtra.
1986 - Production and turnover were higher at 41,470 tonnes and respectively
despite a hike in the cost of power and non-availability of superior grades of
manganese ore.
a) Technical know-how and engineering package were received from Uddeholm.
b) With effect from 1st January, the company was physically taken over by Steel
Authority of India Ltd. Legal transfer of 82% of the shares were finalised on
18th October, and the company became the subsidiary of SAIL from that date.
1987 - A large number of high pressure sintering trials on manganese Ore were
conducted by the R & D division in the high pressure iron ore sintering pilot
plant which helped to establish basic process parameters for installation of a
demonstration plant with a capacity of 100 tonnes per day for high pressure
sintering of manganese ore.
1988 - Authentic grades of stainless steel using cupola-LD CLU Process was
produced after the successful commission of stainless steel plant on 20th
February.
1992 - With the support of RICIS, SAIL the company carried out dephosphorisation
of molten high carbon ferro manganese using various reagents on laboratory
scale.
- As on 31st March, SAIL holds 47,87,935 No. of equity shares of the company.
1994 - During the year, low carbon silico manganese with carbon content less than
0.5% was successfully produced.
1995 - All round improvement was achieved by the company in terms of highest
production, sales volume and productivity inspite of escalation in input
prices and highest provision for salaries and wages.
MEL has an installed capacity of 1,00,000 TPY equivalent Ferro Manganese. The
product range of MEL includes High Carbon Ferro Manganese, Silico Manganese and
Medium/Low Carbon Ferro Manganese. It is accredited with Quality Assurance
Certificate ISO 9001:2000.
MEL's major infrastructure facilities include two nos. of 33 MVA Submerged Electric
Arc Furnaces for the production of ferro alloys, Manganese Ore Sintering Plants,
Furnace gas based Power Plant and one small Electric Arc Furnace for the production of
MC/LC Ferro Manganese with Lime Calcination and Manganese Ore Roasting Unit.
The Board of Directors consists of Chairman, Directors from SAIL and Independent
Director appointed by the Holding Company and one Nominee Director appointed by
the Govt of Maharashtra.
The Company has its Registered Office at SAIL, International Building, 3rd Floor, Off:
MK Road, Churchgate, Mumbai 400 020 and One Unit Office each at Nagpur and
Bhilai. The major production / service units of the Plant have ISO-9001-2000
accreditation.
The Plant is located at Chandrapur in Maharashtra State. Executive Director appointed
by the Holding Company stationed at Chandrapur is the CEO of the organization. He is
assisted by the Head of Departments of Works, Finance, Personnel & Administration,
Commercial, Marketing, Vigilance, Board & Company Affairs, Law, Internal Audit and
Public Relations.
The Production facilities in the Plant consist of two Submerged Arc Furnaces (annual
production rated capacity – 1,00,000 tonnes of equivalent Ferro Manganese) for
production of Manganese based ferro alloys; one Electric Arc Furnace for production of
medium carbon Ferro Manganese (annual production capacity – 2,500 tonnes); one
Power Plant of 4.2 MW capacity producing electric power; two Sinter Plants (annual
production capacity – 30,000 tonnes) for producing Manganese ore sinter from
Manganese ore fines.
Other Service Departments include Raw Material Yard, finished Product Handling Yard,
Maintenance Departments, Environment Management Dept, Energy Management
Dept, QMS Dept, Safety Engineering Dept, Commercial Dept, Personnel &
Administration Dept, Finance & Accounts Dept etc.
a. Production and selling of High Carbon Ferro Manganese, Medium / low Carbon
Ferro Manganese and Silico Manganese to the integrated steel plants of SAIL and
others in private sector.
b. To help SAIL plants in formulating policies with respect to procurement of ferro
alloys, a major raw material, for their steel plants.
c. To help SAIL in conducting R&D activities with respect to ferro alloys and
developing new grades of ferro alloys
Over the years, MEL has emerged as a leader in ferroalloy technology with
technological developments in many areas like raw material preparation, raw material
substitution, furnace operation, ferroalloy casting and processing etc.
Cost Reduction through utilization of wastes has been the area of prime concern at
MEL. Utilisation of Ferro Manganese Slag in the production of Silico Manganese,
Sintering of Manganese Ore Fines and its use in production process, Utilisation of
furnace gas as fuel for power generation, lime calcinations and manganese ore roasting
are some of the major areas of waste utilization.
Technology Development in the field of Ferro alloys and raw material preparation has
been made as follows.
Safety :
The company has gained a prestigious position in the area of safety and
environment. It has been awarded with various international and national awards
from British Safety Council, London, National Safety Council USA, Govt. of India etc.
MEL has also made great strides in establishing industrial safety consciousness in
the industrial belt of Vidarbha.
Community :
Under the Corporate Social Responsibility, MEL has taken up several schemes and
projects in and around the villages of its Plant. Some of them are donation of
stationery items and bags to the school children, providing street light fittings,
organizing medical check up camps for women and children, training the youth in
the villages for getting self-employment and beautification of Chandrapur city etc. In
addition, plans are made to provide a mobile Ambulance with medical staff and
medicine and also constructing a market yard for small vendors in the villages in the
vicinity of the plant for the benefit of the villagers.
Figure 2 : Flow Chart of Ferro-Manganese/Silicon Manganese Manufacturing Process
Figure 3: Utilization Of Waste Furnace Gas
Figure 4 : Pollution Control Measures at MEL
6.Powers & Duties of Officers & Employees
INTRODUCTION:
- Co-ordination with all external agencies, Central & State Govt. offices, etc. in order to
improve overall operations of the Company.
- Projection of image of the Company through various media to the public in general.
The functions of the different departments are detailed in the subsequent pages.
• General
• Budgeting
• Control of Cost
• Financial Accounting : Taxation & Audit / Others
• Financial concurrence
• Expenditure monitoring
• Quarterly / Annual Accounts
• Compliance of various rules, regulations and Acts relating to direct & indirect
taxes, etc.
Works & Projects:
Marketing:
• Evolve and implement Marketing Plan for sale of prime products and by-
products of the Company under Conversion Agreement to SAIL plants and other
consumers in open market including export as per APP.
• Develop and improve customer base on regular basis.
• Study market and regularize pricing of products periodically and as & when
required.
• Co-ordinate between SAIL Plant, Buyers and Production and Despatch Depts.
• Hold Board meetings, Audit Committee meetings, AGM as required under the
Act.
• Advise the Board of Directors on various issues provided under Company Law.
• Comply with Corporate governance and Secretarial standards.
• Comply with all legal requirements of the Company.
Communication/PR Dept :
All the Executives to work according to the powers delegated to them as per the
Delegation of Powers.
All the Executives to work according to the powers delegated to them under the
Delegation of Powers.
The norms set in the various Procedures, Rules, Manuals, Acts and Laws are followed to
discharge the functions.
List of Rules,Regulations,Instructions,Manuals &Records,held
by it or under its control or used by its employess for discharging
its functions:
2) Annual Report:
The Report contains Director’s Report on the Company’s overall performance during the
preceding financial year, including production and financial performances. The Report
also contains the Company’s audited financial accounts, expenditure and profit / loss
statement.
A) BOARD OF DIRECTORS
Minutes of the Board Meeting and its Sub-Committee Meeting are confidential in nature and it is
not open for public access.
D) OTHER COMMITTEES
MEL Employees’
Pricing Committee
Welfare Committee
Capital Investment
Canteen Committee
Committee
Indent Screening Quarter Allotment
Committee Committee
House Building Advance Shops Allotment
Committee Committee
Committee for Telephone
Management of Idle Allotment
Assets Committee
Rajbhasha Karyanwayan Vendor Registration
Samiti Committee
Directory of Total Numbers Officers & Employees of MAHARASHTRA
ELEKTROSMELT LTD :
Non-
S. No Name of Department Executives Total
Executives
1 Board, Co. Affairs & Legal 1 1 2
2 Civil Maintenance 3 11 14
3 Contract Cell 3 2 5
4 Computer & IT Cell 2 - 2
5 Cost Control 1 - 1
6 Electric Arc Furnace 1 14 15
7 Electrical Maintenance 9 35 44
Energy Management & Internal
8 2 - 2
Audit
9 Environment Management 1 2 3
10 Executive Director’s Office 3 1 4
11 Ferro Alloy Division 9 139 149
12 Finance & Accounts 11 9 20
Dy General Manager (Works)
13 1 1 2
Office
14 Hindi Cell 1 0 1
15 HRD & Training 1 1 2
16 Instrumentation 2 5 7
17 Laboratory 5 19 24
18 Marketing 2 3 5
19 Material Management 6 6 12
20 Mechanical Maintenance 6 30 36
21 Medical & Health Services 2 10 12
22 Personnel & Administration 5 16 21
23 Power Plant 7 18 25
24 Product Handling 7 13 20
25 Production Planning & Control 1 4 5
26 Projects 3 2 5
27 Public Relations 2 1 3
28 Quality Management System 1 1 2
29 Raw Material Yard 4 17 21
30 Registered Office at Mumbai 2 4 6
31 Right to Information Cell 2 - 2
32 Sinter Plant – I 2 23 25
33 Sinter Plant – II & SP Maintenance 1 26 27
34 Safety Engineering 1 1 2
35 Security & Fire Services 6 32 38
36 Stores 2 19 21
37 Time Office 2 7 9
38 Transport 4 83 87
39 Utilities 2 29 31
40 Unit Office at Nagpur 1 3 4
41 Unit Office at Bhilai 1 2 3
42 Vigilance 3 1 4
43 Workshop & Yard Maintenance 1 32 33
Chemical specification
Product Size in mm
Manganese Carbon Silicon Phosphorous
High Carbon 10-150
70-74 % and 74-
Ferro 40-100 6-8 % 1.5 % max 0.43 % max
78 %
Manganese 12-25
Low Carbon
10-150 70-74 % and 74-
Ferro 1.5 % max 2 % max 0.4 % max
40-100 78 %
Manganese
Medium
10-150 70-74 % and 74-
Carbon Ferro 1-3% 2 % max 0.4 % max
25-50 78 %
Manganese
10-150
Silico 60-65 % and 65
40-100 2 % max 15-20 % 0.35 % max
Manganese % Min
12-25
Location :
Production Review (Total)
Material 2008‐09 (MT) 2007‐08 (MT)
High carbon Ferro Managanese 68789 64584
Silico Managanese 35640 37640
Medium / Low Carbon Ferro Managanese 1763 1941
Sales & Marketing Review to SAIL Steel Plants
Material 2008‐09 (MT) 2007‐08 (MT)
High carbon Ferro Managanese 61015 59129
Silico Managanese 29662 32197
Medium / Low Carbon Ferro Managanese 1448 1554
B. Other Customers
The Company continued to achieve a growth in terms of sales realization through sale of
ferro alloys to the customers other than the sail plants. The details of sales performance
in 2007-09 / 2008-09 are as under :
Sales & Marketing Review to Other Customers
Material 2008‐09 (MT) 2007‐08 (MT)
Value Value
Quantity Value per Quantity Value per
(MT) (RS./Lacs) Tonn (MT) (RS./Lacs) Tonn
High carbon Ferro Managanese 3127 2123 67891 8504 4918.45 57836.9
Silico Managanese 4710 2785 59139 7525 3795.68 50440.9
Medium / Low Carbon Ferro
Managanese 16 22.88 1E+05 237 218.62 92244.7
Others (Slags/others) N.A 257.8 N.A 185.15
Application for ‘prospecting License’ for Iron ore has been submitted to the office of
District Mining Officer, Chandrapur.
Application for ‘prospecting License’ for Manganese ore has been submitted to the office
of District Mining Officer, Chandrapur. Mel is pursuing the matter with District mining
officier & Directors, Geology & Mining, Nagpur , for both the cases.
8.Financial Review
The Financial year started with uptrend in demand for Iron & Steel products and
buoyancy in the steel prices during the 1st half. However, the unprecedented global
economic slow down & the financial crisis in the second half forced the steel industries
to curtail production in line with market demand. Since ferro alloys are exclusively
utilized as raw material in steel industry , the Ferro alloys industry witnessed uptrend
in the demand & better prices for Ferro alloys during the first half, had to curtail the
production in the second half in line with market demand & to take various measures to
improve the performance.
Earning Per Share
Profit After Tax 40.89 36.32
Average Number of Equity shares 24000000 24000000
Basic & Diluted Earning Per Share 17.04 15.13
NOTE :
Proposed Dividend @ 3.50 per Share for
A. 240,00,000 Shares
9. Financial Statement Analysis
Financial statement analysis involves the application of analytical tools and techniques
to the financial data to get information that is useful in decision making. The foundation
of any good analysis is a thorough understanding of the objectives to be achieved and
the uses to which it is going to be put. Such understanding leads to economy of effort as
well as to a useful and most relevant focus on the points that need to be clarified and the
estimates and projections that are required.
The analysis of a ratio gives the relationship between two variables at a point of time and
over a period of time. There are three kinds of ratios and they are liquidity ratios,
profitability ratios, ownership ratios. Liquidity ratios measure the short-term liquidity
of the firm with the help of ratios like current ratio, quick ratio and turnover ratios.
Profitability ratios measure the operational efficiency of the firm. They give the details of
how efficient the firm is in applying its resources to get the maximum returns.
Ownership ratios help the present or future stockholder in assessing the value of his
investment. Earning ratios, leverage ratios (capital structure and coverage ratios) and
dividend ratios fall into the category of ownership ratios. Leverage ratios measure the
long-term solvency of the firm. They are further divided into capital structure ratios and
coverage ratios.
Balance Sheet of Maharashtra Elektrosmelt Ltd
Sources Of Funds
------------------- in Rs. Cr. -------------------
Application Of Funds
Income
Expenditure
Per share data (Annualized)
Net Cash From Operating
37.01 23.70 ‐10.73 87.60 ‐16.37
Activities
Net Cash (used in)/from
5.61 ‐1.21 ‐2.62 ‐2.40 ‐1.54
Investing Activities
Net Cash (used in)/from
‐41.41 ‐6.26 ‐1.25 ‐6.30 ‐8.29
Financing Activities
Net (decrease)/increase In
1.21 16.22 ‐14.60 78.91 ‐26.20
Cash and Cash Equivalents
Opening Cash & Cash
4.36 5.57 21.79 7.19 86.10
Equivalents
Closing Cash & Cash
5.57 21.79 7.19 86.10 59.90
Equivalents
Accounting Policy Year : Mar '09
1.1 BASIS OF ACCOUNTING:
Assets retired from active use are shown separately under fixed assets
at lower of net book value and estimated realizable value.
Software which is not an integral part of related hardware, is treated
as intangible asset and amortized over a period of five years or its
licence period, whichever is less
1.5 DEPRECIATION:
Raw Materials, Stores & spares and finished/semi- finished products are
valued at lower of cost and net realisable value. In case of identified
obsolete / surplus/ non-moving items, necessary provision is made and
charged to revenue.
Finished/Semi-finished Products
1.7 GRANTS
Sales* include excise duty, packing charges and are net of rebates.
Sales are recognised at the time of despatch of materials to the buyers
including the cases where delivery documents are endorsed in favour of
the buyers. Marine Export sales are recognized on :
Claims for liquidated damages are accounted for as and when these are
deducted and / or considered recoverable by the company. These are
adjusted to the capital cost or recognised in profit and loss account,
as the case may be, on final settlement.
The deferred tax on timing differences between book profit and taxable
profit for the year is accounted for applying the tax rates and laws
that have been enacted or substantively enacted as on the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is a reasonable certainty that the
assets can be realised in future.
10. Maharashtra Elektrosmelt Ltd.
Ratio Analysis
Ratios are quantities that establish relationship between two variables. Ratio analysis
helps in studying various aspects like liquidity, efficiency, profitability and solvency of
the firm.
1. Liquidity ratios: Liquidity ratios measure the ability of the firm to meet
its current obligations.
The ratios that come under this category are:
a. Current ratio: Current ratio measures the short-term solvency of the
firm.
a. Average receivables turnover ratio: Accounts receivables indicate
the credit sales of the company. The debtors turnover ratio or the
receivables turnover ratio gives the number of times receivables are
generated and collected during the year.
i. Gross Profit Margin: It indicates the efficiency with which the firm
produces each unit of the product.
ii. Net Profit margin: It indicates the overall efficiency of the firm in
manufacturing, administering and selling the product.
c. Return on Equity (ROE): ROE indicates how well the firm has used the
resources of the owners.
• Earnings Ratios
• Leverage Ratios
• Dividend Ratios
4.Earnings ratios: These ratios help in indicating the earnings of the firm and its
effect on the price of the share.
6.Dividend Ratios: The equity holders of a firm are interested in the dividend policy
of the firm. The two dividend ratios i.e. Dividend Payout ratio (D/P ratio) and the
Dividend Yield ratio help the shareholders in evaluating the dividend policy of the firm.
11. KEY FINANCIAL RATIOS OF MAHARASHTRA
ELEKTROSMELT LTD
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Operating Profit Per Share (Rs) 28.06 13.78 11.55 22.90 20.51
Free Reserves Per Share (Rs) 4.07 12.42 17.96 29.62 42.61
B. Profitability Ratios :
Profitability Ratios
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
(In Days) (In Days) (In Days) (In Days) (In Days)
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
H. Risk Ratios:
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
a. Sales Growth: Sales of M.E.L had a growth rate of 7.2% over the last
financial year & an increasing trend of +0.6 % from the prior period.
This shows the ability of the management to control the sales through
efficient marketing & product mix strategies and good control over
the Human resource & timely production, as there was an economic
slowdown during the second half.
b. Income Growth: Income of M.E.L had a growth rate of 11.1% over the
last financial year & a decreasing trend of -1.4% from the prior period.
This may be due to the changes in the product mix & during the 2nd
half much of the concentration was put to fulfill the SAIL Plants
demand which only pays the conversion rate & difference in the raw
material prices may also be the another factor.
c. Asset Growth : Assets of M.E.L had a growth rate of 12.5% over the last
financial year & a decreasing trend of -1.8% from the prior period.
This may be due to the decision of control over the funds outgo of the
management. As the company has purchased all the necessary asset
during the year.
d. Gross Profit Margin : Gross Profit Margin of M.E.L had a growth rate
of 14.46% over the last financial year & a decreasing trend of -2.08%
from the prior period. This is due the increase in the direct expenses
such as prices of the raw material and power & Fuel.
e. Net Profit Margin : Net Profit Margin of M.E.L had a growth rate of
11.98% over the last financial year & an increasing trend of +0.77 %
from the prior period. This is due to the income from other source in
excess as compared to last year i.e from Term Deposits (587.06
Lakhs) & from sale of Sundries Items / Miscellaneous items(695.58
Lakhs)
g. Current Ratio: Current Ratio of M.E.L had a growth rate of 1.70 over
the last financial year & a increasing trend of +0.18 from the prior
period. This shows the short term solvency & liquidity position of the
company. As MEL is the subsidiary of the SAIL unit and its major
customer is also SAIL so any diversion in it is consider to be the Low
fear factor.
h. Quick Ratio :Quick Ratio of M.E.L had a growth rate of 1.07 over the
last financial year & a increasing trend of +0.01 from the prior period.
This shows that the liquidity position is maintained as per the
Budgeted expenses all over the year. Also the comparision of both the
current ratios & Quick ratios tell us that the increasing trend of +0.18
in the current ratio consist of increase in inventories value and not
the liquid cash. So the actual liquid cash asset is less as per the
standard ratio.
i. Debt Equity Ratio: Debt Equity Ratio of M.E.L is 0.01 .This shows that
in the capital structure of the company the proportion of the debt is
negligible as compared to the Equity. Also 41% of the equity share is
allocated with SAIL (up till 1996).
j. Inventory Turnover Ratio: Inventory Turnover Ratio of M.E.L had a
growth rate of 7.82 over the last financial year & a decreasing trend of
-2.99 from the prior period. It indicates the efficiency of the firm in
producing and selling its product. This shows that the inventory
holding of MEL is more as compared to last year and this may be due
of the market volatility in the second half of the year.
k. Debtors Turnover Ratio : Debtors Turnover Ratio of M.E.L had a
growth rate of 10.68 over the last financial year & a decreasing trend
of -1.87 from the prior period. This may be due of the market volatility
in the second half of the year.
BIBLIOGRAPHY
A. Websites :
• www.sail.co.in
• www.indiansteelindurties/review/report.com
B. Books :
• Financial Management (ICFAI University Study material)
C. References :
• Departmental Journals
• Balance Sheet Statement
• Directors Report
• Steel Industry Report (Steel Ministry)
Annexure
InPlant Training Programme
Sr
No. Department Days Report To
1 RM Yard 2 Shri. PK Sharma AGM(RM)
2 SP‐I & II 2 Shri. KM DEO AGM(SP‐I &II)
3 Furnance Operation & Control 2 Shri. SS Bhondhkar AGM(FAD)
4 ARC Furnance/Refactory/Lime Kiln 2 Shri.PB Fating Sr Mgr (FAD)
5 PH Yard 2 Shri.PM Phophali AGM (PH)
6 Maintance 2 Shri. SD Warbhle AGM (MM)
7 Instrumental/Electrical 2 Shri.NL Sharma AGM (E&I)
8 Auto Daepartment/Workshop 2 Shri.P.M Prasad SM (YM,T&W)
9 Marketing 2 Shri.R.N Kancharlawar AGM (Marketing)