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Submitted By
Shorya Gupta (45)
Ishan Gupta (16)
Mohit Mahajan (25)
Udit Bhatia (51)
Tata Steel
JSW Steel
Visa Steel
Mar-11 Mar-10
5.85
6.26
15.86
26.26
3.43
4.44
2.14
2.22
6.82
9.795
Mar-14
Tata Steel
Mar-13
SAIL
Mar-12
JSW Steel
Mar-11
Visa Steel
Mar-10
Industry Average
Analysis-We can see that there is a falling trend in the interest coverage ratio of
SAIL which is consistent with the industry average. This indicates that the
industry as a whole is suffering from higher interest payment for the debt raised
as a component of its revenues. It is seen that the industry as a whole is
becoming strained on debt financing.
In case of SAIL, in 2010, its EBIT were 26.26 times its interest expense which
today has remained 3.19 times only. This is due to its debt increasing from Rs.
16,000 crores In 2010 to Rs. 24,000 crores in 2014. Simultaneously, its EBIT also
declined in the same period.
Debt-To-Capital Ratio
Debt to Capital ratio is a measurement of a company's financial leverage,
calculated as the company's debt divided by its total capital. Debt includes all
short-term and long-term obligations. Total capital includes the company's debt
and shareholders' equity, which includes common stock, preferred stock,
minority interest and net debt.
Calculated as:
Mar-14 Mar-13
0.57
0.52
0.39
0.43
1.06
1.09
6.33
4.25
2.0875 1.5725
Mar-13
SAIL
Mar-12
JSW Steel
Mar-11
Visa Steel
Mar-10
Industry Average
Analysis- SAIL has kept its Debt to Capital structure significantly lower than the
industry average. This has been possible due to higher reserves accumulation
over the years.
Financial Charges
Coverage Ratio Post Tax
Tata Steel
SAIL
JSW Steel
Visa Steel
Industry Average
Mar-13
SAIL
Mar-12
JSW Steel
Mar-11
Visa Steel
Mar-10
Industry Average
Ts iraR revonru
Inventory Turnover Ratio
A ratio showing how many times a company's inventory is sold and replaced
over a period. The days in the period can then be divided by the inventory
turnover formula to calculate the days it takes to sell the inventory on hand or
"inventory turnover days."
Mar14
3.45
5.87
5.79
6.78
5.47
Mar13
2.79
7.31
7.71
3.62
5.35
Mar12
3.37
7.40
8.05
3.87
5.67
Mar11
5.13
7.97
7.62
3.57
6.07
Mar10
6.02
7.10
7.44
3.64
6.05
9
8
7
6
SAIL
JSW Steel
TATA Steel
VISA Steel
2
1
0
Mar'14
Mar13
Mar12
Mar11
Mar10
Analysis- SAILs inventory ratio used to be high in previous years but with time
it has come down. This show increase in its inventory, that is less sales. However
for Mar14 it has slightly increased showing increase in sales. Also difference in
value of this ratio w.r.t industry average has increased.
Mar14
9.43
21.71
66.21
20.41
29.44
Mar13
9.71
22.20
53.21
9.23
23.58
Mar12
10.39
22.02
44.91
27.44
26.19
Mar11
11.11
29.12
51.10
23.00
28.58
Mar10
12.46
32.95
68.46
15.72
32.39
80
70
60
50
SAIL
JSW Steel
40
TATA Steel
30
VISA Steel
20
10
0
Mar'14
Mar'13
Mar'12
Mar'11
Mar'10
Mar14
0.72
0.91
0.46
0.38
0.61
Mar13
0.75
1.06
0.50
0.25
0.64
Mar12
0.82
1.06
0.49
0.85
0.80
Mar11
0.79
1.07
0.45
0.81
0.78
Mar10
0.95
0.92
0.43
0.88
.79
1.2
1
0.8
SAIL
JSW Steel
0.6
TATA Steel
VISA Steel
0.4
0.2
0
Mar'14
Mar'13
Mar'12
Mar'11
Mar'10
Analysis- This ratio for SAIL has continuously been declining indicating
decrease in its sales. Although this ratio is decreasing but SAIL continues to
maintain it above industry standards.
SAIL
JSW Steel
Tata Steel
Visa Steel
Industry
Average
Mar 14
0.79
1.02
0.62
0.33
0.69
Mar 13
1.01
0.82
0.57
0.46
0.465
Mar 12
1.22
0.88
0.86
0.29
0.8125
Mar 11
1.21
0.76
0.93
0.47
0.8425
Current Ratio
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Mar' 14
Mar' 13
SAIL
JSW Steel
Mar' 12
Tata Steel
Mar' 11
Visa Steel
Analysis The average of the 4 players comes out to be =0.765, thus we can see that For SAIL,
it is 0.79 which is greater than the average. SAIL is in good position in paying out its obligation.
Quick Ratio
An indicator of a companys short-term liquidity. The quick ratio measures a
companys ability to meet its short-term obligations with its most liquid assets. For
this reason, the ratio excludes inventories from current assets, and is calculated as
follows:
Quick ratio = (current assets inventories) / current liabilities, or Quick ratio
= (cash and equivalents + marketable securities + accounts receivable) /
current liabilities.
The quick ratio measures the dollar amount of liquid assets available for each dollar
of current liabilities.
SAIL
JSW Steel
Tata Steel
Visa Steel
Industry
Average
Mar 14
0.62
0.67
0.27
0.27
0.4575
Mar 13
0.68
0.71
0.32
0.40
0.5275
Mar 12
0.82
0.69
0.61
0.19
0.5775
Mar 11
1.35
0.54
0.69
0.25
0.7075
Quick Ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Mar' 14
Mar' 13
SAIL
JSW Steel
Mar' 12
Tata Steel
Mar' 11
Visa Steel
AnalysisThe average of the 4 players comes out to be = 0.5675, thus we can see that For
SAIL, it is 0.62, which is greater than the average. A quick ratio of 0.8675 of SAIL
means that the company has Re 0.8675 of liquid assets available to cover each Re
1 of current liabilities. The higher the quick ratio, the better the companys
liquidity position. Also known as the acid-test ratio or quick assets ratio.
Mar 14
0.57
1.06
0.39
6.33
2.0875
Mar 13
0.52
1.09
0.43
4.25
1.5725
Mar 12
0.40
0.86
0.47
5.13
1.715
Mar 11
0.54
0.69
0.45
3.99
1.4175
Mar' 13
SAIL
JSW Steel
Mar' 12
Tata Steel
Mar' 11
Visa Steel
AnalysisThe average of the 4 players comes out to be = 1.691875, thus we can see that
For SAIL, it is 0.57, which is lesser than the average. A high debt/equity ratio
generally means that a company has been aggressive in financing its growth with
debt. This can result in volatile earnings as a result of the additional interest
expense. Generally auto manufacturing companies tend to have this ratio>2.
High debt to equity is not preferred as the cost of this debt financing may
outweigh the return that the company generates on the debt through investment
and business activities and become too much for the company to handle.
Profitability Ratios
For SAIL, operating profit margin decreased from 11.26 % in 2013 to 9.23% in
2014.
It is the amount of profit realized from a business's operations after taking out
operating expenses - such as cost of goods sold (COGS) or wages - and
depreciation. Operating income takes the gross income (revenue minus COGS)
and subtracts other operating expenses and then removes depreciation. It is
given by:
Operating Income = Gross Income Operating expenses Depreciation &
Amortization
Year
Mar '14
SAIL
Mar '13
Mar '12
Mar '11
Mar '10
JSW
8.39
10.34
13.04
16.37
22.89
19.24
19.38
17.77
17.42
20.08
TATA
23.95
30.72
29.12
33.99
39.06
VISA
3.72
-8.81
5.86
15.41
17.25
50
40
30
20
10
0
Mar'14
Mar'13
Mar'12
Mar'11
-10
-20
SAIL
JSW
TATA
VISA
Mar'10
Year
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
SAIL
6.12
5.59
8.92
13.34
20.29
JSW
8.56
5.55
9.02
8.77
12.07
TATA
9.65
10.48
9.17
12.72
14.68
VISA
-41.55
-17.52
-50.69
14.54
15.18
30
20
10
0
-10
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
SAIL
JSW
-20
TATA
-30
VISA
-40
-50
-60
YEAR
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
SAIL
5.75
8.05
JSW
12.79
14.08
12.99
13.56
12.08
TATA
9.25
13.38
12.81
14.78
14.93
VISA
0.33
-3.08
4.74
11.56
12.36
12.02 --
20.4
25
20
15
SAIL
JSW
10
TATA
VISA
5
0
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
-5
Analysis- Taking the example of the last 2 years we see that SAILs earning to
Long term debt ratio has come down slightly. This can be attributed to
Year
Mar '14
SAIL
Mar '13
Mar '12
Mar '11
Mar '10
5.62
5.16
15.41
15.37
13.25
19.73
23.35
JSW
4.7
2.94
5.07
5.07
8.7
VISA
-14.8
-17.09
-8.7
3.95
4.02
TATA
STEEL
7.7 --
15.93
30
25
20
15
SAIL
10
TATA STEEL
JSW
0
-5
Mar '14
Mar '13
Mar '12
Mar '11
Mar '10
VISA
-10
-15
-20
Analysis- The increase in profit for the year was mainly due to the increase in
the EBITDA and also decrease in the prior period adjustment, reduction due to
the extra ordinary items and also lesser deferred tax vis-a-vis 2013.