AA SYNOPSIS

ON“WORKING CAPITAL”

SUBMITTED IN THE PARTIAL FULFILLMENT OF REQUIREMENT FOR THE DEGREE

MASTER OF BUSINESS ADMINISTRATION(2010-2012)

   

UNDER THE SUPERVISION OF;                 SUBMITTED BY;                                                                                                                                            MR.  J.S. RAUTELA                                     POONAM CHAUHANTRANING OFFICER,JSL                                 M.B.A(FINAL)HR                                                                      ROLL NO: 10061114026

                  DIRECTOR OF DISTANCE EDUCATIONGURU JAMBHESHWAR UNIVERSITY OF

SCIENCE & TECHNOLOGY,HISAR-125001(HARYANA)

            

“Financial Modeling “                                                    TRAINING EXECUTED AT

Submitted towards the partial fulfillment of the award of the                                             degree of

                       Bachelor of Business Administration At

GURU JAMBESWAR UNIVERSITY, HISSARAugust 2009

 

                                                                                      SUBMITTED BY                            VIKRAM NEGI                                                                                                                                                                                                                                                                                                                                                                                                 ACKNOWLDGEMENTA project report is never the sole product of a person whose name appears on the cover. There is always the help, guidance and suggestions of many in preparation of such a report. So, I have indebted to several people who have helped me in completing my project “Financial Modeling Of the Company for Last Five Years”.I wish to express my sincere thanks to Mr. D.B. Gupta, Executive, Finance & Accounts Department, JSL Limited, Hissar for his valuable guidance and pain taking supervision during course of my present work. His keen interest, timely and constant encouragement and generous cooperation gave me confidence and strength to progress this report.

His valuable advice, constructive criticism and suggestion during course of my study really helped me a lot. I also thank him for providing full facilities required in submitting my report within a limited time span.

Iam also thankful to Mr. M.P.Gupta (Associates Vice President) and all the employees working in the finance department for their continuous help and advice at different times.

I also want to express my thanks to HRM Deptt. of JSL, Hisar for their cooperation as and when needed. We would be failing our duty if we don’t mention our seniors who helped us at various moments, during our project.

Specially, I am thankful to my parents and God for their blessings and showing me the right way at all moments                                                                                VIKRAM NEGI

PREFACEThis department is intended for the experience gained by me during Summer Training in JSL Limited, Hissar.

While making this project I became familiar with the financial terms that are usually used in a company and the different functions that a Finance Manager has to perform. I have learnt how to analyze Ratio.

I have also gained confidence to interact with different persons working at reputed positions during the summer training, in preparing the project report. I have tried my level best effort to make it reliable, compact and accurate organization.

VIKRAM NEGI

Executive Summary This  project has been prepared under the title of ‘Financial Modeling Of the company for last five years “. In this project I  have done the analysis of the financial statement and also the ratio analysis of the JSL limited so that I can  take reliable financial information about economic resources and obligation of JSL  other needed information about charges in such economic resources and obligation.  reliable information about change in net resources (recourses less obligations) missing out of business activities. It helps me to know about the profitability and financial position of the company.                                Stainless steel is crucial to the growth and development of any economy. The importance of stainless steel is evident from the facts the existence of a strong stainless steel industry determines the pace  of the development of major industrial economics.JSL limited has mentioned its dominance in the domestic stainless steel production with share of around 35% . International market has shown a shift of stainless steel demand towards 200 series from 300 series due to rising nickel price. Being the pioneer , experienced and cost competitive in 200 series manufacturing ,JSL  limited is able to further consolidate its position in international market

                                                  A financial model is a set of assumptions about future business conditions that drive projections of a company's revenue, earnings, cash flows and balance sheet accounts.                                                 Financial statements of an organization give the details o the financial performance of the organization  as well as financial standing of the organization . the organization carries out the process  of accounting which effectively result into the preparation the financial statements .These financial statements are basically in two forms namely the Balance sheet and Profit and Loss account . Balance sheet gives details of the various sources used by the organization to raise the funds and the various assets in with these funds are deployed . the result of operation of the business during the specific period i.e. whether the operation have resulted into a profit or loss and by what amount is given by the profit and loss account .                                                   A company is required to prepare and present its financial statements in accordance with the provisions of Schedule VI of the Company Act ,1956 Schedule VI lays down various discloser requirements which the companies are required to follow while preparing their financial statements .The financial statements of the company are used by the shareholder , creditors, banks , financial institutions ,employees and government agencies for decision making in dealing with the company. It is by way of financial statements the the organization  gives the report about the performance and financial position of itself. Financial statements are analysis and interpreted ti arrive at logical conclusions regarding the performance and financial position of the company.                             With the analysis of the financial statement of JSL Limited it shows that during the year 2004 ,the  assets of the company is increased with the percentage of 6.17% , 35.87%and 1.79%  .On the other ,the  liabilities of the company is also increased with the percentage of 45.09% and 5.15 %., the sales were increased with 30.91% but expenses also increased with 18.90% .On the other hand ,net  profit of the company was increased with 73.98% which was very good but this net  profit was because of non-operating income During the year 2005 ,there is increase in assets with the percentage of 12.80% ,20.07% ,and 126.07% . on the other hand , liabilities also increase with 10.01%and 76.00% ..So this improved the financial position of the company. Year ending 31st March’2005 has been a landmark year for Jindal Stainless Ltd. as the company  surpassed all its previous best achieved in terms of physical & financial performance.                             In 2006 ,assets and liabilities are increased with the higher percentage than the previous year expect the sundry debtors. The sundry debtors was increased with very less percentage which was 7.29%. This means that in this year the company sold less stock because its stock was increased with 31.94% and whatever stock it had sold that was on cash bases there was an decrease in sales with -0.85% on the other hand expenses were increased 0.56%. That why there was decreased in net profit by -35.03%. so in this year the company should look into the causes of increase in the expenses and control the same..This will  improve the liquidity position of the company.During the year 2007,there was increased in assets with very high percentages .But the liabilities showed increase with less percentage than the previous years the profitability of the company has increased with very high rate with the percentage of 124.33 %. This has been possible  for two reasons .First the sales of the company has increased with the percentage of 54.25% .However the expenses of the company were increased with47.28% but higher the assets over the liabilities made this year very good and profitable for the company..So this shows very good  financial position of the company because in this year assets are greater than liabilities. During the year 2008 , the current assets have increased with the

percentage of 25.27% ,105.16% and 29.86% in which inventories were increased with very high percentage than the previous years .The liabilities of the company were also increased with 11.86% and 61.50%. the sales were increased with very less percentage which was 4.78% but the expenses were increased with the percentage of 22.91%.in this year the company’s financial position was not very good that’s why net profit of the company was decreased with the percentage of -32.69%.  this confirms that the company has raised long term finances for the current assets resulting into the improvement in the liquidity position of the company.                                     I have also done the ratio analysis which is a technique of the interpretation of financial statements deals with the computation of various ratios , by groping or regrouping the various figures and information appearing on the financial statements . ratio analysis aids in assessing the firms in terms of their profitability and efficiency of performance , either individually in relation to those of other firms in the same industry . the ratios are broadly classified in six groups                                                  i)liquidity group :- the ratios computed under this group indicate the short term position of the organization and also indicate the efficiency with which the working capital is used .ii)Turnover Group :- the ratio computed under this group indicate the efficiency of the organization to use the various kind of assets by converting them in the form of sales .iii)Solvency Group :- the ratio computed under this group indicate the long term financial prospects of the firm. iv)Profitability Group :- these ratio are calculated to know the profitability of the organization .v) Overall Profitability Group :-   the ratio computed under this group indicate the relationship between the profit of the firm and investment of the firm .vi) Miscellaneous Group :- this group include Earning per share , Dividend payment ratio .The ratio analysis of JSL Limited shows following results

 

1. Liquidity Ratios-The ideal current ratio & quick ratio is to 2:1 & 1:1 respectively. But current ratio, quick ratio & other liquidity ratio decreasing from ideal ratio. Thus we cans ay that liquidity position of a company is not satisfactory.

    2. Leverage Ratios-

All ratios under leverage ratios are increasing which shows that share holders share in total fund of the company is decreasing & Debt share is increasing. it is not good for company.

3. Activity Ratios-

Activity ratios are decreasing rapidly. This shows that company is not using its resources efficiently.

4. Profitability Ratios-

Profitability ratios are showing excellent performance of the company. Profits of the company the company are increasing at an increasing rate.

                                        The current ratio of company is low, as the amount of assets are more than liability but the difference between the two is much low. The inventory conversion period is very high as more time is taken by the company to convert inventory into cash. The amount of working capital required by the company is .14 for making          sale of rs.1 The operating ratio

is much high as the company should control there operations The company long-term solvency is more satisfactory, since the proportion of debt to equity is low The company is among the world top ten steel manufacturing lists, and will increase the good position by 2011.The profit of the company is low as net profit margin is 10%and PAT is decreased by 11,183.85 lakh in year 08.The company is holding high amount of inventory and having huge debtor.

                                    As JSL Limited is India’s largest stainless and manufacturing with integrated facilities of hot rolling and cold rolling .India has a large consumption potential of stainless steel the company should increase the market size . Apart for producing the standard grades , company should cater special stainless steel market Company should increase the reduction capacity and also the production facilities . company should also focus on high customer services and should maintain the focus on export to international markets .so that the company can improve its financial position and can be able to make high profits .

CONTENTSCertificate IAcknowledgement IIPreface                                                                                              111Executive Summary 1v

Chapter No. Topic

1. Introduction

General Introduction

Organization Profile  

Company Profile

2.

Research Methodology

       2.1objective

       2.2Research Methodology

3.

Results and Analysis

Ratio Analysis

     3.2 Interpretation

    3.3 Graphical representation

4.

5.

6.

Conclusions and Recommendations

4.1 Conclusions

Recommendations

APPENDICES & ANNEXURE

          5.1 Balance sheet

         5.2 Profit and Loss account

BIBLIOGRAPHY

INTRODUCTION

1.1   General Introduction1.2   Industry profile1.3   Company profile

INTRODUCTIONFinance refers to an extremely large research field. It has both a strong theoretical foundation and an unusually broad empirical basis. From a material view it deals with basic problems of individual decisions on risky financial instruments. From a classical and behavioral view, it discusses why financial institutions like banks and insurance companies exist and how they should be optimally managed, it analyzes the structure of optimal financial contracts and their values under different market regimes. Under methodological aspects it combines fruitfully advanced mathematical modeling techniques with numerical solution procedures, econometric estimation methods and statistical tests of the results. No other field in economics has confronted its theoretical results with empirical facts as much as Finance. The reason for this strong empirical orientation of Finance is the availability of excellent databases. These market data were supplemented by data on individual decision making and by data on non-traded financial contracts.

Fields of ResearchThe research of the Finance Group covers Asset Pricing, Banking, Behavioral Finance and Decision Making, Corporate Finance, Insurance and Risk Management and therefore important subfields of Finance from a theoretical and an empirical perspective. Asset pricing deals with theories of fair values of financial instruments and the impact of credit and liquidity risk on prices. The analysis of credit risk is of special importance for banks. Behavioral finance has become increasingly popular in recent years. This field addresses the problems of how individuals behave and how they build their expectations. Corporate finance deals with the optimal structuring of contracts with agents, equity and debt holders of a firm under symmetric and asymmetric information. Risk management is strongly related with asset pricing, banking and corporate finance. It studies the exposure of financial and non-financial firms to market, credit, liquidity, operational and economic risk.

Financial Modeling DefinedTheoretically, a financial model is a set of assumptions about future business conditions that drive projections of a company's revenue, earnings, cash flows and balance sheet accounts.

In practice, a financial model is a spreadsheet (usually in Microsoft's Excel software) that analysts use to forecast a company's future financial performance. Properly projecting earnings and cash flows into the future is important since the intrinsic value of a stock depends largely on the outlook for financial performance of the issuing company.

A financial model spreadsheet usually looks like a table of financial data organized into fiscal quarters and/or years. Each column of the table represents the balance sheet, income statement and cash flow statement of a future quarter or year. The rows of the table represent all the line items of the company's financial statements, such as revenue, expenses, share count, capital expenditures and balance sheet accounts. Like financial statements, one generally reads the model from the top to the bottom, or revenue through earnings and cash flows. History as a GuideWhen trying to predict the future, a good place to start is the past. Therefore, a good first step in building a model is to fully analyze a set of historical financial data and link projections to the historical data as a base for the model. If a company has generated gross margins in the 40% to 45% range for the past ten years, then it might be acceptable to assume that, with other thinbeing equal, a margin of this level is sustainable into the future.

Consequently, the historical track record of gross margin can become somewhat of a basis for a future income projection., financial model spreadsheets usually incorporate a set of historical financial data and related analytical measures from which analysts derive assumptions and projections.

Financial modeling is the task of building an abstract representation (a model) of a financial decision making situation. This is a mathematical model, such as a computer simulation, designed to represent (a simplified version of) the performance of a financial asset or a portfolio, of a business, a project, or any other form of financial investment.

            Financial modeling is a general term that means different things to different users. For some, it means the development of a mathematical model to predict a fair equilibrium price for an asset. For others, it means the development of a mathematical model and the associated computer implementation to simulate scenarios of financial events, such as asset prices, market movements, portfolio returns and the like. Or it might mean the development of optimization models for managing and controlling the risk of a financial investment.

While there has been some debate in the industry as to the nature of financial modeling : whether it is a tradecraft, such as welding, or a science, such as metallurgy, the task of financial modeling has been gaining acceptance and rigor over the years. Several scholarly books have been written on the topic, in addition to numerous scientific articles, and the definitive series Handbooks in Finance by Elsevier contains several volumes dealing with financial modeling issues.

There are non-spreadsheet software platforms available on which to build financial models. However, the vast proportion of the market is spreadsheet-based, and within this market Microsoft

Excel now has by far the dominant position, having overtaken Lotus 1-2-3 in the 1990s. From this it is easy to see how the uninformed can equate Financial modeling competency with 'learning Excel'.

Thus financial modeling is a set of assumptions about the future. To predict these type of assumptions the analysis of past financial statements have become more important. So, I have done ratio analysis and the analysis of the capital structure which will help me to predict the assumption about the future.

 

            PROFILE OF THE ORGANIZATION

                                                                 Shri O.P.JindalAugust 7, 1930-Mar 31, 2005

O.P. Jindal Group – Founder & Futurist

Vision-

“The seed of change is condensed inOne single moment that heralds

Tomorrow’s hope and way into newerhorizons”

About Jindal Group

Jindal Organization, set up in 1970 by the steel visionary Mr. O.P. Jindal, has grown from an indigenous single-unit steel plant in Hisar, Haryana to the present multi-billion, multi-national and multi-product steel conglomerate. The organization is still expanding, integrating, amalgamating and growing. The group places its commitment to sustainable development, of its people and the communities in which it operates, at the heart of its strategy and aspires to be a benchmark for players in the industry the world over. The Jindal Organization today is a global player. It's relentless quest for excellence has reaped rich benefits and it is today one of the worlds most admired and respected groups within the steel fraternity.

HISTORY OF STEEL

In 1913, when steel researchers were experimenting with different types and qualities of alloys, Harry Brearley, in Scheffield, England, discovered stainless steel. While experimenting with increasing levels of chromium, he found out that at over 12 percent chromium, the steel gained an exceptional resistance to acid corrosion. It was his work that found the foundation for the development of a range of steel grades particularly resistant to corrosion.

By the late 1920’s, two types of stainless steel had been found to be most versatile and useful; martensitic stainless steel (chromium content of 13-18 percent) and austenitic stainless steel (18 percent chromium and 8 percent nickel). Today, stainless steel is a generic term given for a group of corrosion resistant steels containing a minimum of 10.5 percent of chromium, which creates a passive, self renewing film of chromium oxide around the steel at the atomic level, thereby impeding the iron from rusting.

Technical development over the decades has followed two paths: the incremental improvement of the standard grades invented in the 1920s as well as the development of entirely new grades. However, the core attributes of stainless steel i.e. strength, heat and corrosion resistance, strength; formability, aesthetic appearance and low maintenance have not changed with technical developments. Stainless steel producers still continue to do research into chemical composition, innovations in stainless steel making technologies, new rolling technologies, quality control and lower costs.

About JSL LTD

Basic Information

Company Name:

JSL Limited

Business Type:Manufacturer

Product/Service:Stainless Steel Strips and coils

Number of Employees:Above 1000 People

Trade & MarketMain Markets :               North America

Factory Information

Number of R&D Staff:               11 - 20 People

Contract Manufacturing:              OEM Service Offered

Jindal Stainless Limited (JSL) is India's largest and only integrated Stainless Steel manufacturer. With a turnover of Rs. 5700 cr. it captures 35% of the domestic market share and has a strong global presence in 40 countries worldwide. Its manufacturing plants are located in Hisar (Haryana), Kalinganagar (Orissa), Vizag and Indonesia for manufacture of stainless steel flat products in Austenitic, Ferritic and Martenistic grades as well as high value added precision strips. JSL ranks among the four global specialty steel producers and is also the world leader in producing 200 series Cr-Mn Stainless grade.

                 JSL  is in many ways very much like the material it produces. Like stainless steel the company is versatile in its thought process, strong and unrelenting in its operations, environment friendly in its manufacturing process, bright, shining and beautiful in its community support

activities. The list of the properties of stainless steel is endless, just as our values are all encompassing.

JSL Limited  has always been committed to innovation and progression, research and development. Our innovations are admired beyond the geographical boundaries of our country. No wonder we are the strategic partners of global leaders by choice. Our achievements narrate a story of our determination to succeed and our passion to win. We will continue to leverage our opportunities in creating excellence that the world cannot even think about. Today we are the largest integrated stainless steel producer in India, tomorrow we will rule the world.

JSL  is a ISO: 9001 & ISO: 14001 company is the flagship company of the Jindal Organization. The company today, has come a long way from a single factory establishment, started in 1970. As the numero uno it has taken on the task of making stainless steel a part of everybody's life by taking a 360 degrees approach from production of raw materials to supply of architecture and lifestyle related products.

Mission of the company

A decade of liberalization has redefined business parameters. Jindal Stainless, the flagship company of the Jindal organisation has harnessed these winds of change by offering world class products and services, not only in India but around the world."

Vision 2010

To be amongst the top 10 stainless steel producers in  the worldTo gain international recognition for cost leadership, Product  innovation and Customer SatisfactionTo be admired as a socially responsible Corporate and a  sustained value creator for all its stakeholders

Management of JSL LTD.

Board of Directors

Chairperson                                                                      Savitri JindalVice Chairman & Managing Director                                Ratan JindalManaging Director & Chief Operating Officer      R.G. GargDirector - Strategy & Business Development                  Arvind ParakhDirector - Corporate Affairs                                              N.C. Mathur Directors                                                                           Naveen Jindal                                                                                         Suman Jyoti Khaitan                                                                                        L.K. Singhal                                                                                        T.R. SridharanExecutive Directors                                                          Rajinder Parkash                                                                                        N.P. Jayaswal

Company Secretary                                                         Jitendar Gupta

Management TeamDirector - Operations                                                       S. BhattacharyaDirector - Commercial                                                      R.K. GoyalDirector - Projects                                                            P.N. Kapur

 R.S. RaviExecutive Director - Minerals                                           P. Roy

BankersState Bank of IndiaState Bank of PatialaPunjab National BankCanara BankStandard Chartered BankICICI BankAxis BankExport Import Bank of IndiaBank of Baroda

Statutory AuditorsMessrs Lodha & Co., Chartered Accountants

Messrs S.S. Kothari Mehta & Co., Chartered Accountants

Cost AuditorsMessrs Ramanath Iyer & Co., Cost Accountants

Registered OfficeO.P. Jindal Marg, Hisar -125 005 (Haryana)

WorksHisar (Haryana), Kothavalasa (A.P.), Danagadi, Dist. Jajpur (Orissa)

Change Of Name Detail

Date Particulars

29th September, 1980 Incorporated as JINDAL CERAMICS LTD.

24th July, 1981

Certificate of Commencement of Business was issued to JINDAL CERAMICS LTD.

29th January, 2001 Name of JINDAL CERAMICS LTD. Changed to

JINDAL INT.COM. LTD

1st April, 2002 Acquire Stainless Steel undertaking from JINDAL STRIPS LTD.

Through Scheme of Arrangement & Demerger

28th January, 2008 Name of JINDAL INT. COM. LTD Changed to JINDAL STAINLESS LTD.

23rd September, 2008 Name of JINDAL STAINLESS LTD. Changed to JSL LTD.

JSL Ltd. Subsidiaries

JSL Ltd. presence in India

JSL Ltd. DIVISIONS

Hisar Division (Haryana)

At Hisar lies India's only fully integrated Stainless Steel plant. The present production capacity of HR plant is 7,20,000 TPA. Success of JSL Ltd.  is the fact that everything from the conversion of raw material into blooms and slabs to hot rolling of strips and plates and cold rolling is done in-house. During the year the hot rolling division produced 580,554 tons of hot liquid and rolled around 561,129 tons of hot rolled coils.The cold rolling division consisting of 4 cold rolling lines with total capacity of 250,000 tons per annum. During the year the CR division produced 156,759 tons of cold rolled stainless steel. During the year 1137 tons of coin blanks and 13854 tons of special steel were produced.

              The Cold Rolling Division at Hisar                                          The Hot Rolling Division at Hisar.

            

At Hisar, Jindal Stainless has India's only composite stainless steel plant for the manufacture of Stainless Steel Slabs, Blooms, Hot rolled and Cold Rolled Coils, 60% of which are exported worldwide.

Precision StripsThe company produces stainless steel precision strips in various grades. These strips are produced in narrow 20-Hi mills in the precision cold rolling unit.

Blade SteelThe company is the exclusive producer of stainless steel strips for making razor and surgical blades in India.

Coin BlanksBesides supplying CR Strips to the Government of India, the plant at Hisar houses a coin blanking line for supply of coin blanks to the Indian Mint and Mints in the global markets.

                                     Vizag Division (Andhra Pradesh)

          Vizag plant produces high carbon Ferro chrome with annual capacity of 40000 tons per annum. Vizag unit uses chrome ore supplied from captive sukhinda chrome mines and sell output to Hisar plant as well as in the export market. The division has worked at 84% of the installed capacity and has produced 33,504 tons of high carbon Ferro chrome during year 07-08 as compared to 1,414 tons during the preceding year.                                      

                               Orissa – Ferro Alloy Division & Chromite Mines

      Orissa Ferro alloys division consists of Ferro alloys manufacturing facilities including Ferro chrome, Ferro manganese & silicon manganese and waste heat recovery based and thermal captive power plants. During the year Ferro alloys division has produced 1,09,908 tons of Ferro chrome 686 tons of Ferro manganese and 1,886 tons of silico manganese and generated 13.3 million units of power from waste heat recovery plant and 95 million units of power from thermal power plant.         During the current financial year, the company chromites mine division has produced 57,079 tons & 25,070 tons of chrome ore and chrome ore concentrate respectively. A project for beneficiation of low grade/tailings has been started during the year.

                                            Orissa plant

               JSL Ltd. - Key Milestones

1970 - Jindal Strips Limited incorporated to manufacture hot rolled steel          strips with facilities at Hisar in State of Haryana.

1978 - Started manufacturing stainless steel.

1998 - Undertook its first stage restructuring to hive off the sponge iron &          Carbon steel business.

2002 - Undertook second restructuring to hive off the entire stainless steel          business to Jindal Stainless Limited with effect from 1st April 2002.

2004 - Started work on green field stainless steel project at Orissa        - Acquired cold rolling unit in Indonesia        - Technological Collaboration with Nisshin Steel Co. Ltd for process up          Gradation & training of personnel        - 0.5% $ 60 million convertible bonds issue

2005 - Enhanced stainless steel melting capacity to 550,000 mt        - Started work for further stainless steel capacity expansion to 720,000                        mt at Hisar

2006 - Enhanced stainless steel melting capacity to 550,000 mt        - Enhanced hot rolling capacity to 750,000 mt        - Commissioned Ferro Chrome facility at Orissa

2007 - Started phase II nd of Orissa project envisaging 8,00,000 MTPA                               Stainless steel capacity.

JSL Ltd. Current Capacities

Current Steel melting capacity of JSL is 0.72 MTPA. The capacity of Hot Rolling Mills i.e. Tandem Mill and Stackel Mill are 0.25 MTPA and 0.47 MTPA respectively and of Cold Rolling Mill is 0.25 MTPA. The Capacity of coin blanking line is 10000 tons/annum and special product division is 12000 tons/annum. The capacity of HC Ferrochrome is 0.19 MTPA(including Orissa and Vizag) Plant.

Increase in capacity in current yearThe increase in sales this year is due to increase in steel melting capacity in Hisar from 0.6 MTPA to 0.72 MTPA and start of Ferro Manganese plant of capacity 0.05 MTPA and Captive Power Plant of capacity 125MW in Orissa Plant. Both these plants came into operation in December 2007.

JSL HUMAN CAPITAL

JSL limited believe that employees are the key to success and the most important assets . Company’s partnership with people is deeply rooted to the work ethos and organization value .The innate values of ‘Respect and Care’ and sustainable growth through people is demonstrated in the way the company builds teams , creates shared vision ,execute its growth plans and nutures human talents to address the busyness challenges.The company is systematically focusing on Talent Management initiative and building a robust pipeline of talent at all levels to drive aggressive business growth .the quality focus on hiring both at entry and lateral levels present a very rich complement of professionals.70% of the workforce is  professional qualified .51% of the management staff comprise of engineering background.At entry level the company hire Graduate Engineer from permier engineer campus .

ProductsContinuous cast products

Slabs: Cast in single strand slab caster of steel melt shop I. Liquid steel is produced through electric arc furnace-AOD Convertor/VOD-Ladle refining furnace route.

Blooms: Cast from twin stand bloom caster at Steel Melt Shop II. Liquid steel is produced through electric arc furnace-AOD convertor- ladle refining furnance route.

Size: 160 mm sq.          200 mm sq.Hot rolled products

HR coils: As cast/ ground slabs are first heated and soaked in reheating furnace, rolled in roughing mill to intermediate thickness and then to the final thickness in the steckel mill.

HRAP Coils: Hot rolled annealed pickled coils are produced after continuous annealing and pickling.

HRAP Plates: No1 finish plates are produced after annealing and pickling or by cutting hot rolled annealed pickled coils to desired lengths.

Cold rolled products

Cold rolled coils and sheets are produced after being processed in the 20 Hi Mill, continuous anneal & pickle line, skin pass mill slitting line and cut to length lines. Absolute flat sheets are produced after being put through the Voss leveller. Sheets & cold rolled coils are available in different finishes 2D, 2B, No3, No4 and BABlade steel

The company is the exclusive producer of stainless teel strips for making razor blades and surgical blades in India. The plant has a capacity to produce 10,000 metric tonnes per annum.

JSL can readily supply Stainless Razor Blade Steel as per the broad material specifications / details given below :

(a) Size :Thickness = 0.10 mm (+/- 0.007 mm)Width = 22.40 mm (+/- 0.03 mm) and upto 340 mm (Max.) Chemical Composition :

C=0.6 to 0.7 %

Mn=0.5 to 0.8 %

P=0.028% Max.

S=0.02 % Max.

Si=0.2 to 0.5 %

Cr=12.5 to 13.5 %

Ni=0.5 % Max.

(c) Rolled Hardness = 280 to 330 HV(d) Tensile Strength = 95 to 120 Kg/mm sq.(e) Coil I. D. = 280 mm

Customised products

Jindal Stainless Has developed the capability to supply customized products for critical

applications. This has helped customers in their indigenisaation efforts.

Nuclear applicationsSpecial stainless steel was developed for critical components in nuclear applications (304 L, 321 etc.) having very low inclusion content, high corrosion resistance (<10 MPY), ultrasonically sound (w.r.t. angular & straight beam probe testing), high temper tensile strength and impact strength.

Tailor made productsNiobium stabilized special grade austenitic stainless steel was developed for critical components to be used in steam and gas turbines and other engine components. This steel was required to have specified chemical compositions with mechanical and impact properties.

Duplex Stainless Steel JSL 2205, a ferritic-austentic stainless steel having a high chloride pitting resistance is the new entrant in the product mix. Cold Rolled annealed strips find extensive application as tubular material in sea water, chemical and paper & pulp plants

Stock Market DataFrom April 07-March 08

Corporate Social ResponsibilityShri OP Jindal, had a vision of a progressive state - a state where men and women worked shoulder to shoulder towards a happier tomorrow. Jindal Stainless constantly echoes those thoughts and takes its role as a responsible corporate citizen very seriously. Giving back to the community at large has been an objective from the very beginning.

Schools at various levels have been set up to educate the specifiers of the future. The Vidya Devi Jindal and The Jindal Modern School, at Hisar, is fully child oriented and ensures ‘holistic development’ of a student’s mental and physical potential.

Adopting villages and thus contributing to the development of a region has also been part of the overall Jindal plan. Improving of medical facilities is yet another field of endeavor. NC JIM Care, at Hisar offers the entire range of diagnostic, treatment and surgical facilities.

Immunization drives and free healthcare camps on different medical aspects are also conducted from time to time

Eco -friendliness.At  Stainless Steel plants, the challenge faced is to make and process stainless steel without

adversely impacting the environment. Jindal Stainless has a formal environmental protection program in place since inception. We recognize the importance of protecting our environment,

and that of our children and our commitment is unwavering in this respect.JSL complies with the requirements of the State Pollution Control Board. Having received the ISO 14001 certification, the company has a full-fledged environment department that manages

the existing facilities for pollution control.It has a sewage treatment plant for domestic affluent whose treated water is reused for

horticulture purposes as well as in industrial applications. With greater efforts being made to achieve low long-term maintenance costs, less environmental impact and greater concern with

life cycle costs, the market for stainless steel continues to improve.

                         Research & Development          The R&D division at JSL, Hisar plays a pivotal role in retaining and consolidating company's leadership role in stainless steel business by continuous up gradation of quality, process and services, and innovating development strategies to come up with new products with cost competitiveness. Cross-fertilization of knowledge between production, quality control and commercial units in order to maintain world class standard has been the guiding principle of R&D functions.

Major tasks1. Developments of high value products to serve niche market.2. Quality up gradation of existing products enabling global acceptance.3. Cost reduction by process development, optimization and refinement to improve competitive edge 4. Technology enhancement to increase production with quality.5. Market segment improvement by interacting and sharing knowledge with customers and assisting them in trouble shooting operation.

In addition to the above, R&D division closely interacts with reputed national and international laboratories/scientific institution/universities to avail expert services for critical investigation.

Quality assurance

          Understanding Customers requirement and ensuring to supply as per these requirements is realized with the help of Quality Assurance and Quality Control group at Jindal Stainless Limited. Across the entire business chain of supplies, operations and marketing appropriate quality assurance systems are in place to ensure correctness at each step of the cycle. ISO-9001-2000 Certification of the Plant is a testimony to this. Alongside ISO14001 and OHSAS 18001 Systems certification of the plan assure concern and protection towards environment and for providing a safe working for the employees.

For ensuring the quality at every step well equipped Laboratories are in place with a battery of modern equipments such as X-Ray Analysers, Spectrometers, Leco Analysers, Metallurgical Microscopes, Image Analyser, Universal Testing Machines etc to name a few. Well-documented procedures ensure correctness in testing and certification of the products. The production process are constantly monitored and controlled to ensure the finished products as per customer's requirements.

TESTING EQUIPMENTS & FACILITIES IN QUALITY ASSURANCE LABORATORIES:

Number of QA Laboratories: 4;Two Chemical Analysis Laboratories and 02 Metallurgical Testing Laboratories.

Quality Certification: Our hot rolling division and cold rolling division have the following quality certifications for operations.

Certificate

TypeArea

Certificate numberCertificate

ISO 9001:2000QMSHot Rolling Division*FM 53939 January 16,2004

ISO 14001:1996

EMSHot Rolling DivisionEMS 53940March 02,2000

OHSAS 18001:1999OHSMSHot Rolling DivisionOHS73386February 28,2003

ISO 9001:2000

QMSCold Rolling Division FM 82772April 14,2004

ISO 14001:1996EMS

Cold Rolling Division EMS 76327

July 02,2003

OHSAS 18001:1999OHSMSCold Rolling Division

OHS 73387February 28,2003

* ISO 9002 from 1994 through March 7,2000QMS = Quality Management SystemEMS = Environmental Management SystemOHSAS = Occupational Health and Safety Management System

JSL - S.W.O.T ANALYSIS

RESEARCH METHODOLOGY

2.1  Objective of the Study2.2  Research Methodology

Objective of the ProjectThe project ‘Financial Modaling of the Company for last five years’ is based on the analysis of financial statements and calculate the Ratios of  the company . The main objective of this project is to know about the following things of the JSL :-1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use

of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

RESEARCH METHODOLOGY

Research is a one kind of process to get knowledge about some topic. Research is done so that systematic analysis can be done and problem can also be solved.

TITLE OF STUDYHere it is “FINANCIAL MODALING OF THE COMPANY FOR LAST FIVE

YEARS.”

BENEFITS FROM THE STUDY

It helps me to know about  the financial position of the company JSL Limited.. It helps me to know the strategies adopted by company to improve  the situations.It helps me to know about the profitability, liquidity position of the company.It helps me to know about the financial soundness of the company.It helps me to bring out the mystery behind the figures of the financial statements of the company         It helps me to   study the significant development in the Steel manufacturing

               sector.       It helps me to study of various reasons of using Steel.

RESEARCH PROBLEMFinancial position of the company   always affect the profit of company  and also the

prestige of company . So here the research problem is to diagnose the information contained in the financial statements  of the company so as to judge the profitability and financial soundness of the company and to identify the action plans  to improve the financial position of the company .

RESEARCH DESIGNHere the research design is exploratory which helps me to explore the Financial Modeling of JSL limited

RESEARCH INSTRUMENTAs a research instrument I have taken guidance from the Accountant of the JSL Limited and also my faculty of college.

DATA COLLECTION

Primary Data Secondary Data Hence it is an exploratory research their is not any dependence on primary data.Sources of secondary data Annual reportJournalsWebsitesBooks

ANALYSIS AND REPORT WRITINGHere I have done ratio analysis  and the analysis of the capital structure of the company  and used various charts for analysis purpose. And also I have written report on it.

ANALYSIS & INTERPRETATION OF DATA

Data Collection & Analysis

RATIO ANALYSIS

INTRODUCTIONA single figure by itself has no meaning but when expressed in terms of related figure, it yields significant inferences. For instance, the fact that the net profits of a firm amount to, say, Rs.250000/- throws no light on its adequacy or otherwise. The figure of net profit has to be considered in relation to other variables. How does it stand in relation to sales, does not represent by way of return of total assets used or total capital employed. If therefore, net profits are shown in terms of their relationship with items such as sales, assets, capital employed, equity capital and so on, a meaningful conclusion can be drawn regarding their adequacy.

For this purpose we used to do financial analysis. A financial analysis of a company includes

Ratio Analysis,

Break -Even –Point,

Analysis of financial statements of the company

Ratio Analysis- It is defined as the systematic use of ratio to interpret the financial statement so that the strength and weakness of a firm as well as its historical performance and current Financial Condition can be determined. Ratio helps to summarize the large quantities of financial data and to make qualitative judgment about the companies financial position. Ratio indicates a quantitative relationship, which in turn used to make a qualitative judgment. The term Ratio refers to the numerical or quantitative relationship between two items/variables. This relationship can be expressed as (1) percentages, say net profits are 25% of sales (assuming net profits of Rs.50000/- and sales of Rs.200000/-), (2) Fraction (Net Profit is one fourth of sales) and (3) proportion of numbers (the relationship between net profits and sales is 1:4). This point is to be noted that the ratios do not add any information not already inherent in the above figures of profits and sales. What the ratios do is that they reveal the relationship in a more meaningful way so as to enable us to draw conclusions from them. The rationale of ratio analysis lies in the fact that it makes related information comparable. A single figure by itself has no meaning but when expressed in terms of related figure, it yields significant inferences.

OBJECTIVES AND SIGNIFICANCE OF RATIO ANALYSIS

Ratio analysis is an important technique of analysis of financial statements. Ratio analysis helps determine the efficiency of the business as well as short-term and long-term financial soundness of the business on basis of which management can take various important decisions. Ratio helps explain complex and large numbers in precise form. Ratio analysis is not only significant for management, but it is also significant to all the parties including creditors, investors, and financial institutions. They can easily take decisions about the profitability and financial position of business with the help of ratios.

                         

 Main uses of ratio analysis:

Helps in simplifying financial data:  Ratio analysis simplifies the complex and large figures of financial statements which enable to understand their relative importance.

Helpful in controlling: By comparing the ratios regarding efficiency and financial position with the standard ratios, unfavorable results can be controlled.

Helpful in determining trends: By the use of ratio analysis, the trend in profit, sales, cost, etc. of  the  previous year can be determined by analyzing the financial statements and future forecasts can be made accordingly.

Helpful in locating weak spots: With the help of ratio analysis, management can find out which activities are being operated successfully and which are not and where more control is required.Benefits to other parties interested in the business: Creditors can determine short-term solvency of business with the help of ratio analysis. Financial institutions and long-term creditors can determine whether the business is capable to repay their loan and interest in time. Investors can decide about future investments in the firm. Overall Profitability: Overall profitability can also be determined by the management with the help of ratio analysis.Managerial uses of ratio analysis:Helps in decision making: Financial statements are prepared primarily for decision making. But the information provided in financial statements is not an end itself and no meaningful conclusion can be drawn from these statements alone. Ratio analysis helps in decisions from the information provided in these financial statements.Helps in financial forecasting and planning: Financial analysis is of much help in financial forecasting and planning. Planning is looking ahead and the ratio calculated for a number of years work as a guide for the future. Meaningful conclusion can be drawn for future from these ratios. Thus, ratio analysis helps in forecastingHelps in communicating: The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of ratio. The information contained in the financial statements is conveyed in a meaningful manner to the one whom it is meant. Thus, financial analysis helps in communication and enhance the value of the financial statements.Helps in co-ordination: Ratio analysis even helps in co-ordination, which is important in effective business management. Better, communication of efficiency and weakness of an enterprise result in better co-ordination in the enterprise.

Helps in control: Ratio analysis even helps in making effective control of the business. Standard ratios can be based upon performed statements and variances or deviations. If any, can be found by comparing the actual with the standards so as to take a corrective action at the right time. The weakness or otherwise if any, come to the knowledge of the management can be removed which helps in effective control of the business.

LIQUIDITY  RATIO:

Liquidity ratio measures the ability of the firm to meet its current obligations. Lack of liquidity or excess liquidity,  both conditions are harmful for the health of company. If the company is having excess liquidity then in that case some funds remain idle, on the other hand if the company is suffering from lack of liquidity then in that case it might be possible that it will not be able to meet its obligations at time.

“ Liquidity is the ability of the firm to meet its current obligations as they fall due”.

To find out the liquidity position of the company we generally use Current  ratio or Quick ratio, these are the most common ratios that indicate the extent of liquidity or lack of it. There are some other ratios these are as follows :

CURRENT RATIO

QUICK RATIO

CASH  RATIO

NET WORKING CAPITAL RATIO

CURRENT RATIO  

This ratio explain the relationship between current assets and current liabilities of a business. This ratio is used to assess the firm’s ability to meet its short term liabilities on time. According to accounting principles, current ratio of 2:1 is supposed to be an ideal ratio. The formula for calculating this ratio is:

                   CURRENT RATIO=CURRENT ASSETS\CURRENT LIABILITIES.

Current Assets includes:

Cash &bank balance

Current investment

Inventories

Loans & Advances

Sundry Debtors

Current Liabilities  Includes:

Creditors

Bills payable

Accrued expenses

Income Tax liability

Long term debts maturing in current year (1/3rd)

Working capital loan

Provisions

As a conventional rule, a current ratio of 2:1 or more is considered satisfactory. However is should be blindly followed because the current ratio is a test of quantity, not quality.

FOR JINDAL STAINLESS LTD.

Particulars 2004

2005 2006

2007 2008

Current ratio 0.73:1 1.04:1 1.03:1 0.94:1 1.07:1

   As  the current ratio of the Jindal company is fluctuating each year and the ratio’s are less than ideal ratio. Current ratio’s are less than ideal ratio because of increase in current liabilities is much faster than current assets of  the  company.  

QUICK RATIO:

This ratio explain the relation between liquid asset and current liabilities. Liquid asset means those assets which will yield cash very shortly. All current assets except stock and prepaid expenses are included in liquid assets. Inventory normally require some time for realizing into cash. So inventory consider being less liquid. An ideal quick ratio is said to be 1:1.  Quick ratio is calculated by dividing liquid assets by current liabilities:

                QUICK RATIO=LIQUID ASSETS\CURRENT LIABILITEIS         where  Liquid asset = current asset - inventoriesFOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Quick ratio 0.48:1 0.73:1

0.86:1 0.6:1 0.71:1

As the ratio of the company is again fluctuating and in 2006 it has reached  near to its ideal ratio and in others it is about to  reach to ideal ratio. It means quick ratio of the company is good which shows the company sound  position. It is because of company’s good cash balance available and the other reason for decreased quick ratio is increase in current liabilities of the company.   

CASH RATIO:

Cash ratio is the most liquid asset, it is very important for all firms. Cash ratio shows that how much cash is available with the firms to meet its current obligations. Trade investments or marketable securities are equivalent to cash, therefore it may also be included in the computations of cash ratio.

    CASH RATIO=CASH+MARKETABLE SECURIRIES\CURRENT LIABILITIES

This ratio shows the amount of cash, which is available to meet the current liabilities. But only on the basis of this, we can’t say about the firms liquidity position i.e. whether the company will be able to meet the current liabilities in future or not, because there are many companies which have small amount of cash in their hand and still they are prospering, just of because their good borrowing power and knowledge of effective utilization .The acceptable norm for this ratio is 50% or 0.5 :1 or 1:2 i.e Re.1 worth absolute liquid assets are considered to pay Re.2worth current liabilitiesin ime as all the creditors are not accepted to demand cash at the same time.

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Cash ratio 0.73:1

1.04:1 1.03:1

0.94:1 1.07:1

This ratio of the company is fluctuating  which is not a good indicator for the creditors of the company. It is because of not availability of good cash balance and increase in current liabilities. But as the company has good borrowing power therefore company has to increase the cash balance.NET WORKING CAPITAL RATIO:Net working capital ratio is used as a measure of a firm’s liquidity ,it measure the firm’s potential reserve of funds .Net working ratio can be calculated by dividing the networking capital by an assets or the capital employed.

Formula:                     N.W.C.R. =   current asset- current liabilities

                                                                              Total assets     

Where total asset = (current assets + investment + fixed assets- current liabilities)

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

N.W.C.R -0.65 -0.37 -0.24 -0.51 -0.24

LEVERAGE OR CAPITAL STRUCTURE RATIOS:

These ratios are calculated to assess the ability of the firm to meet its long-term liabilities as and when they become due. Long term creditors including debenture holders are primarily interested to know whether the company has ability to pay regularly interest due to them and to repay the principal amount when it becomes due. Usually the long-term lenders, debenture holders and financial institutions are interested in these ratios. These ratios are as    DEBT-EQUITY  RATIOTOTAL DEBT RATIOEQUITY RATIO or PROPRIETER  RATIO

FIXED ASSET  RATIOINTEREST COVERAGE  RATIOTOTAL ASSET LIABILITIES\ NET WORTH

DEBT-EQUITY  RATIO:

This  ratio express the relationship between long-term debts and share holder funds. It indicates the proportion of funds which are acquired by long-term borrowings in comparison to share holder’s funds. This ratio is calculated to assess the ability of the firm to meet its long term liabilities. Generally, the debt-equity ratio of 2:1 is considered safe. If the debt-equity ratio is more than that, it shows a rather risky financial position from long term point of view, as it indicates that more and more funds invested in the business are provided by long-term lenders.

            DEBT-EQUITY RATIO=DEBT\EQUITYDebt =secured loans +unsecured loans +preference share capital –working capital loansEquity =share capital equity +equity share warrants +reserves & surplus –Misc. exp. w/offWhere debt is total long term debts .Where equity is shareholders funds &Misc.exp. w/of: FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Debt-equity  ratio 1.37:1 1.70:1 2.19:1 1.88:1 2.36:1

In 2004 debt equity ratio was less than the ideal ratio and same the case in 2005 but in this year ratio is little greater than the previous year.

In 2006 debt equity ratio was greater than the ideal ratio &in 2007 debt equity ratio is lower than ideal ratio i.e. 2:1.It is good for long term lenders because they are more secure in this case.  In 2008 it has increased  not so much than the ideal ratio but it can show risky financial position from the long term point of view. Because a high debt equity ratio is a danger  signal for long term lenders.

TOTAL DEBT RATIO:

It   is also known as obligation to income ratio or back end ratio it is equal to the total debt over total debt plus net worth

 Formula:                                                         Total debt ratio = Total debt                                                             Total debt + Net worth

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Total Debt  ratio 0.58:1 0.63:1 0.69:1 0.65:1 0.70:1

Generally, total debt ratio of 0.67:1 is considered satisfactory. Here we see in 2004 the ratio is very less than the ideal ratiobut in other years it is near the ideal ratio. In  2008 it is greater than the ideal ratio .This is not good from the solvency point of view. Because a higher ratio indicates a burden of payments of large amount  of interest.EQUITY RATIO:

Equity ratio is a financial ratio indicating the financial proportion of equity to all used to finance the company assets. The equity ratio is the good indicator of leverage used by the company. The equity ratio measure the total assets That are financed by share holder not the creditors. A low equity ratio will produce good result for share holder as well as the company earns a rate of return on assets greater than the interest rate paid to the creditors.                     

Formula:                                        Equity ratio = Total debt +net worth                                                                     Net worth

Where net worth include share holder funds , misc.exp.not.w/off

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Equity  ratio 2.37:1

2.69:1 3.19:1 2.88:1 3.36:1

INTEREST COVERAGE RATIO:

This ratio is also termed as debt service ratio. This ratio indicates how many times the interest charges are covered by the profits available to pay interest charges. A long-term lender is interested in founding out whether the business will earn sufficient profits to pay the interest charges regularly. This ratio measures the margin safety for long-term lenders. An interest coverage ratio of  6 to 7 times is considered appropriate.

INTEREST COVERAGE  RATIO= EBIT / FIXED INTEREST CHARGES  

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Interest coverage ratio

5.12 times 8.34 times 4.21 times 4.94 times 2.97 times

In year 2004 this ratio of the company was very less it shows that in that year the company was not able to pay its interest charges regularly out of its profit available. But in its next years it has improved and crossed the appropriate ratio. But again in year 2006 its ratio was  less than the appropriate ratio and in 2008 it becomes very less than the ideal ratio. Long term lenders were not secure in respect of  payment of interest regularly. Overall we can predicate that the long term solvency position of the company was fluctuating.

PROFITABILITY RATIO: The main object of every business concern is to earn profits. A business must be able to earn to adequate profits in relation to the risk and capital invested in it. The efficiency and success of a business can be measured with the help of profitability ratios.

Profitability ratios based on sales:

Gross Profit RatioNet Profit Ratio

Operating  profit Ratio

GROSS PROFIT RATIO:

     This ratio shows the relationship between gross profit and sales.  Gross profit margin reflects the efficiency of the management with which it produces each unit of product .The formula for computing this ratio is:

                         GROSS PROFIT RATIO= GROSS PROFIT \ NET SALESGross profit=net profit after tax+provision for current tax+provision for deffered tax +provisios for fringe benefit tax+interest &bank charges+loan under scheme of arrangement+Misc. exp. w/off+depriciation-MAT credit entitlement-extra ordinary items Net sales=sales/service(net of E.D.)+other income

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Gross profit ratio 15.64%

15.4% 12.04% 16.01% 10.45%

Gross profit ratio of the company is not  a sign of good management. This ratio of the company is very low. It is because of  price of materials purchased, freight, wages and other direct charges may have gone up but the selling price may not have gone up in proportion to the increase in cost. The company is not taking the benefit of cash purchase.

NET PROFIT RATIO:

  This ratio explain the relationship between net profit and sales. This indicates the company’s efficiency in manufacturing, administrating, and selling the product. This ratio is the overall measures of the ability to turn each rupee sales into net profit.

      NET PROFIT RATIO= PAT\ NET SALES

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Net Profit Ratio 6.64%

7.63% 4.98% 7.2%

4.66%

This ratio of the company is very less and it is because of more charges of interest and tax payments. It means that profitability position of the company is not good.OPERATING  PROFIT  RATIO:  

Operating profit includes only operating incomes and operating expenses of the company, other non operating expenses and non operating incomes are not included I  in calculating this ratio.OPERATING PROFIT RATIO=OPERATING PROFIT /SALE(NET OF E.D)Operating ratio=PAT+provision for current tax+provision for deffer tax+provision for fringe benefit tax+loss under scheme of arrangement-MAR credit entitlement-extra ordinary items –other income.FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Operating profit ratio

16.54% 16% 13.3% 17.33% 15.4%

Operating profit ratio of the company is not good but it is more than profit ratioof this company. It means the reason for declining in the profit ratio is more of non operating expenses available than the non operating income in the company. And the reason for  less operating profit ratio can be more interest charges and tax payments.  

PROFITABILITY RATIOS BASED ON INVESTMENT IN THE BUSINESS

These ratios reflect the true earning capacity of the resources employed  in the enterprise. Sometimes the profitability ratios based on sales are high whereas profitability ratios based on investment are low. Since the capital employed to earn profit, these ratios are the real measure of the success of the business and managerial efficiency. These ratios are classified into two categories:

Return on capital employedReturn on share holder’s funds  

Return on capital employed:  This ratio reflect the overall profitability of the business. It is calculated by comparing the profit earned and the capital employed. It measures how efficiently the capital employed in the business. This ratio helps in taking decisions regarding capital investment in new projects and also helps in effecting  the necessary changes in the financial policies of  the firm.

RETURN ON CAPITAL EMPLOYED= EBITD\ CAPITAL EMPLOYEDCapital employed =shareholders funds +loan funds

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Return on capital employed 26.11% 19.37% 10.2%

17.83% 10.35%

This ratio shows that how efficiently the company has utilized its capital in the business. In 2005&2007 there was improvement in the ratio. But in 2008 this ratio was not good. This shows fluctuation in this ratio every year.

RETURN ON SHARE HOLDER’S FUNDS:

Return on share holders funds measures only the profitability of the funds invested by share holder’s. It reveals how profitably the proprietor’s funds have been utilized in the business.   

    RETURN ON SHARE HOLDER’S FUNDS=NET PROFIT AFTER INTEREST AND TAX \ TOTAL SHARE HOLDER’S HUNDSTotal shareholders funds=shareholders fuds-Misc. exp. Not w/off

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Return on share holders funds 29.39%

20.12% 10.93% 18.47%

11.31%

This ratios shows that company is utilizing share holder’s funds more efficiently. As the return on share holder’s funds has been increased  up to two years after that in its next year it has decreased, it is because of increase in the interest, tax and other expenses payments, because of that profit of that year has also reduced. But in its next year again it has increased. So overall we can say that company’s is utilizing its shareholder’s funds efficiently.

EARNING PER SHARE:

This ratio measures the profit available to the equity share holder’s on a per share basis. All profits left after payment of tax and preference dividend are available to equity share holder’s. This ratio is calculated by dividing the net profits available to equity shareholders by the number of equity shares issued.

EARNING PER SHARE=NET PROFIT-DIVIDEND ON PERFERNCE SHARES\NO OF EQUITY SHARE

 FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

EPS

16.41% 22.37%

12.23% 25.92% 15.6%

Earning per share of the company has been increasing up to two years and in its next year it has reduced because of less profit available but in its next year again it has increase.  In 2008 it decreased again because of less profit available,Earning per share of the  company has been good and it has increased the capacity of the  company in declaring the dividend on equity shares.

DIVIDEND PER SHARE:

Profits remaining after payment of tax and preference dividend are available to equity shareholders. But all of these are not distributed among them as dividend. Out of these profits, a portion is retained in the business and the remaining is distributed among equity shareholders as dividend. D.P.S.  is the dividend distributed to equity shareholders divided by the number of equity shareholders.

 D.P.S.=DIVIDEND PAID TO EQUITY SHAREHOLDERS/ NUMBER OF SHAREHOLDERS Dividend paid to equity sharholders includes :Propose dividend on equity sharesDividend for equity share for previous yearsInterim dividend on equity shares

FOR JSL LIMITED

Particulars

2004 2005

2006 2007

2008

D.P.S.

2 2.4 1.6 1.6 2

Dividend per share of the company has been fluctuating and it has been seen that company has adopted  nearby constant dividend policy per share and with constant dividend per share plus some growth is also there. It is maintaining goodwill of the company in market and among the shareholders also.

ACTIVITY  RATIO’S:

These ratios measures how well the resources at the disposal of the concern are being utilized. These ratios are known as turnover ratios as they indicate the rapidity with which resources available to the concern are being used to produce sales. These ratios measure the efficiency and rapidity of the resources of the company like stock, debtors, fixed assets, working capital etc.

These ratios are as follows:

Inventory turnover ratioDebtors turnover ratioFixed asset turnover ratioTotal assets turnover ratio

INVENTORY TURNOVER RATIO:

This ratio indicates the relationship between the cost of goods sold during the year and average stock kept during that year. It indicates whether stock has been efficiently used or not. It shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the  year.

STOCK TURNOVER RATIO=COST OF GOODS SOLD\AVERAGE OF STOCKCost of goods sold= net sale – gross profitAverage stock= opening stock+closing stock/2

FOR JSL LIMITED

Particular 2004

2005 2006 2007

2008

S.T.R 5.69

6.18 4.66

4.65 2.77

This ratio of the company shows that company is converting its stock into sales rapidly but its ratio has decreased in its  2008 year. It shows that in 2008 there is inefficient management of inventory. The other  cause behind it that there may be over investment in inventories in this year.

DEBTORS TURNOVER RATIO:

This ratio indicates the relationship between credit sales and average debtors during the year. This ratio indicates the speed with which the amount is collected from  the debtors. The higher the ratio, the  better it is, since it indicates that amount from debtors is being  collected more quickly. The more quickly the debtors pay, the less the risk from bad debts, and so the lower the expenses of collection and increase in the liquidity of the firm.

Through this ratio we can know  whether the sales policy of  the management is efficient or not.

DEBTORS TURNOVER RATIO=NET CREDIT SALES\AVERAGE OF DEBTORS

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

D.T.R. 16.88 13.53 9.4 10.8 7.8

This ratio of the company shows that in the starting  company  was collecting money from its debtors very rapidly but after that its ratio has decreased. It may be because of increase in sales. The company may have made the liberal policy of collection to increase it sales in terms of credit.

FIXED ASSET TURNOVER RATIO:

This ratio is of particular importance in manufacturing concern where investment in fixed asset is quite high. This ratio reveals how efficiently the fixed assets are being utilized. If there is increase in this ratio, it will indicate that there is better utilization of fixed assets.

FIXED ASSET TURNOVER RATIO=COST OF GOODS SOLD\NET FIXED ASSET

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

F .A.T.R

1.95 2.1 1.53 1.58 1.22

This ratio of the company is not good. It is very low and it shows that fixed assets of the company is not utilized efficiently. So there is a need of proper management of the fixed assets so that fixed assets can be used efficiently which will be very profitable for the company.

TOTAL ASSET TURNOVER RATIO:

This ratio indicates the relationship between cost of goods sold and total assets. How efficiently the total assets of the company has been utilized in making the sales of the company.

TOTAL ASSETS TURNOVER RATIO=COST OF GOODS SOLD\TOTAL ASSETS

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

T.A.T.R. 1.83 1.49

0.99 1.2 0.83

This ratio of  the company is not good and it shows that the company is  not  utilizing  its assets efficiently in making the sales of the company. So there should be proper management in case of the use of assets.

INVENTORY HOLDING PERIOD

This ratio tell for how much period the company holds its stock. If this ratio is less  it shows that its stock is converting into sales very quickly and it is good for the company.

INVENTORY HOLDING PERIOD=12MONTHS OR 365 DAYS\ INVENTORY TURNOVER RATIO

FOR JSL LIMITED

Particulars 2004

2005 2006

2007 2008

Inventory holding period ratio 64 days 59 days 78 days 78 days 131 days

This ratio of the company shows that  in starting years company is converting its stock into sales very easily. It is saving the holding cost of the company.But after that the no. of days of converting are increasing and in 2008 it becomes 131 days which is a very long time .It is not good for the company as if affects the profitability of the company.

BREAK EVEN POINT :- – No profit no loss point

It is that sales point where company cover all its variables costs and fixed costs but left nothing. Company can increase its profits by increasing the sales level.

FIXED EXPENSES

B.E.P. =

CONTRIBUTION

For the calculation of this point we need

Fixed expensesVariable expenses and Contribution (sales-variable expenses)

FIXED EXPENSES :

( Depreciation + Personnel expenses + Misc. expenses)

Year 2004-(106.91 +49.79+6.99)=16369.55Lacs

Year 2005-(130.99+12.44 +35.88)= 17931.33Lacs

Year 2006 - (13611.43+5347.27+36.14)  =18994.84 Lacs

Year 2007 - (21609.96+7351.58+46.86)  =29008.40 Lacs   

Year2008  -(25238.18+10361.78+38.51) =35638.47Lacs

VARIABLE EXPENSES :

(Material-manufacturing expenses + Excise Duty  +  Administrative and selling expenses + interest and Bank charges )

Year 2004-(188.69+164.85+76.94+625.90)=105638.11

Year 2005-(230.84+180.79+57.38+493.36)=96237.22

Year 2006 - (257446.92+31146.66+14037.89+5503.85)  =308135.32Lacs

Year 2007 - (373069.88+39030.31+24757.43+7035.15)  =443892.77 Lacs

Year2008 –(404912.22+53384.77+23196.32+14934.93) =496428.24Lacs

CONTRIBUTION :

(Sales – Variable expenses)

Year2004-(241689.22-105638.11)=136051.11lacs

Year 2005-(318573.52-96237.22)=222336.3Lacs

Year  2006  - (349460.55 - 308135.32) = 41325.23 Lacs

Year 2007  - (526780.09 -443892.77) = 82887.32 Lacs

Year2008   -  (569820.47-496428.24)  =73392.23Lacs

BREAK EVEN POINT IN :

Year 2004 -            33.54%

Year 2005-              42.67%

Year 2006  -         45.96%       

Year  2007  -         34.99%

Year  2008  -         48.56%

From the above analysis we can say that B.E.P. is  getting good position in 2008 comparatively to year 2007.

Analysis  of financial statements of a company FINANCIAL STATEMENTS: Financial statement is a collection of data organized according to logical and consistent accounting procedure to convey an under-standing of some financial aspects of a business firm. It may show position at a moment in time, as in the case of balance sheet or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term ‘financial statements’ generally refers to the two statements (1) The position statement or Balance sheet. (2) The income statement or the profit and loss Account.

OBJECTIVES OF FINANCIAL STATEMENTS: According to accounting Principal Board of America (APB) states The following objectives of financial statements: - 1. To provide reliable financial information about economic resources and obligation of a business firm. 2. To provide other needed information about charges in such economic resources and obligation. 3. To provide reliable information about change in net resources (recourses less obligations) missing out of business activities. 4. To provide financial information that assets in estimating the learning potential of the business.

LIMITATIONS OF FINANCIAL STATEMENTS: Though financial statements are relevant and useful for a concern, still they do not present a final picture a final picture of a concern. The utility of these statements is dependent upon a number of factors. The analysis and interpretation of these statements must be done carefully otherwise misleading conclusion may be drawn. Financial statements suffer from the following limitations: -

1. Financial statements do not given a final picture of the concern. The data given in these statements is only approximate. The actual value can only be determined when the business is sold or liquidated. 2. Financial statements have been prepared for different accounting periods, generally one year, during the life of a concern. The costs and incomes are apportioned to different periods with a view to determine profits etc. The allocation of expenses and income depends upon the personal judgment of the accountant. The existence of contingent assets and liabilities also make the statements imprecise. So financial statement are at the most interim reports rather than the final picture of the firm. 3. The financial statements are expressed in monetary value, so they appear to give final and accurate position. The value of fixed assets in the balance sheet neither represent the value for which fixed assets can be sold nor the amount which will be required to replace these assets. The balance sheet is prepared on the presumption of a going concern. The concern is expected to continue in future. So fixed assets are shown at cost less accumulated depreciation. Moreover, there are certain assets in the balance sheet which will realize nothing at the time of liquidation but they are shown in the balance sheets. 4. The financial statements are prepared on the basis of historical costs Or original costs. The value of assets decreases with the passage of time current price changes are not taken into account. The statement are not prepared with the keeping in view the economic conditions. the balance sheet loses the significance of being an index of current economics realities. Similarly, the profitability shown by the income statements may be represent the earning capacity of the concern. 5. There are certain factors which have a bearing on the financial position and operating result of the business but they do not become a part of these statements because they cannot be measured in monetary terms. The basic limitation of the traditional financial statements comprising the balance sheet, profit & loss A/c is that they do not give all the information regarding the financial operation of the firm. Nevertheless, they provide some extremely useful information to the extent the balance sheet mirrors the financial position on a particular data in lines of the structure of assets, liabilities etc. and the profit & loss A/c shows the result of operation during a certain period in terms revenue obtained and cost incurred during the year.

This comparison tells about the increase or decrease in currents year results from the past year results. It helps a manager in checking the impact of his decisions on the performances of the company.

Ratio analysis is a technique of analyzing financial statements. It helps in estimating financial soundness or weakness. Ratio is quantitative relationship between two items for the purposes of comparison. A single figure by itself has no meaning but when expressed in terms of related figure, it yields significant inferences. For instance, the fact that the net profits of a firm amount to, say, Rs. 250000/- throws no light on its adequacy or otherwise. The figure of net profit has to be considered in relation to other variables. How does it stand in relation to sales, does not represent by way of return of total assets used or total capital employed. If therefore, net profits are shown in terms of their relationship with items such as sales, assets, capital employed, equity capital and so on, a meaningful conclusion can be drawn regarding their adequacy.

                        That’s  why Balance Sheet and Income statements are prepared in comparative form for  financial analysis purpose. Not only the comparison of the figures of five periods but also be relationship between balance sheet and income statements enables an in-depth study  of financial position and operative results.

COMPARATIVE STATEMENT ANALYSIS

COMPARATIVE BALANCE SHEET

Particulars

2004 2005

2006 2007

2008

Net Block

6.74% 12.80%

28.46% 53.27% 25.27%

Inventories 35.87%

20.07% 31.94% 55.63% 105.16%

Sundry Debtors

1.79% 126.07% 7.29% 65.63% 29.86%

Shareholder’s funds 45.09% 10.01%

18.79% 5.85% 11.86%

Loans 5.15%

76.00% 62.90% 21.08% 61.50%

Interpretations:-

During the year 2004 ,the  assets of the company is increased with the percentage of 6.17% , 35.87%and 1.79%  .On the other ,the  liabilities of the company is also increased with the percentage of 45.09% and 5.15 %.But the amount of  the increase in  assets is mostly same as the increase in liabilities. So this shows that there is no improvement of  financial position of the company in this year.

2) During the year 2005 ,there is increase in assets with the percentage of 12.80% ,20.07% ,and 126.07% . on the other hand , liabilities also increase with 10.01%and 76.00% .Thus these assets and liabilities show increase in this year over the year 2004 .So this improved the financial position of the company.

3) In 2006 ,assets and liabilities are increased with the higher percentage than the previous year expect the sundry debtors. The sundry debtors was increased with very less percentage which was 7.29%. This means that in this year the company sold less stock because its stock was increased with 31.94% and whatever stock it had sold that was on cash bases .This improved the liquidity position of the company.

4) During the year 2007,there was increased in assets with very high percentages than the previous years. But the liabilities showed increase with less percentage than the previous years .So this shows very good  financial position of the company because in this year assets are greater than liabilities.

5) During the year 2008 , the current assets have increased with the percentage of 25.27% ,105.16% and 29.86% in which inventories were increased with very high percentage than the previous years .The liabilities of the company were also increased with 11.86% and 61.50%. this confirms that the company has raised long term finances for the current assets resulting into the improvement in the liquidity position of the company.

COMPARATIVE PROFIT & LOSS ACCOUNT

Particulars

2004 2005

2006 2007

2008

Sales 30.91%

31.81% -0.85% 54.25% 4.78%

Expenses 18.90% 38.01%

0.56% 47.28% 22.91%

Net Profit 73.98%

49.74% -35.03% 124.33% -32.69%

Interpretations:-

1)During the year 2004, the sales were increased with 30.91% but expenses also increased with 18.90% .On the other hand ,net  profit of the company was increased with 73.98% which was very good but this net  profit was because of non-operating incomes. This shows us the progress stage of the company.

In year 2005 ,the sales were increased by 31.81% but on the other hand expenses were also increased by 38.01%.There is an increase in net profit 49.74%.It may be conclude that there was a sufficient progress in the company the overall profitability of the company is good.3)During the year 2006 ,there was an decrease in sales with -0.85% on the other hand expenses were increased 0.56%. That why there was decreased in net profit by -35.03%. so in this year the company should look into the causes of increase in the expenses and control the same.

4)During the year 2007, the profitability of the company has increased with very high rate with the percentage of 124.33 %. This has been possible  for two reasons .First the sales of the company has increased with the percentage of 54.25% .However the expenses of the company were increased with47.28% but higher the assets over the liabilities made this year very good and profitable for the company.

5)In 2008 ,the sales were increased with very less percentage which was 4.78% but the expenses were increased with the percentage of 22.91%.in this year the company’s financial position was not very good that’s why net profit of the company was decreased with the percentage of -32.69%.                 Thus the overall profit has been decreased in the year 2008 because  of increase in liabilities and expenses. So company should take strong steps to control these causes .

GRAPHICAL REPRESENTATIOn1- Earning per share                                                 (rs in lakh)

2- PAT & ebidta                           (rs in crore)

Inventories                    (rs in lakh)                    Interpretation:Inventories are a major part of current assets. If any company wants to manage its working capital efficiency, it has to manage its inventories efficiently. The graph shows that inventory in FY 2005 is 39%, in 2006 is 35% in 2007 is 42% and in 2008 is 48% of their current assets. The company should try to reduce the inventory upto 10% or 20% of current assets.

Cash bANk balance                                          (rs in lakh)

Interpretation: Cash is basic input or component of working capital. Cash is needed to keep the business running on a continuous basis. So the organization should have sufficient cash to meet various requirements. The above graph is indicate that the company has increasing cash from year to year in 2005 the cash is 5677 lakh but in 2006 it has increase to 19707. In 2008, the company has no problem for meeting its requirement as compare to 2005.

debtors:

Interpretation: Debtors constitute a substantial portion of total current assets. In India it constitute one third of current assets. The above graph is depict that there is increase in debtors. It represents an extension of credit to customers. The reason for increasing credit is competition and company liberal credit policy.  

current assets                                                                             Interpretation: This graph shows that there is approx 70% increase in current assets from 2005 to 2008.This increase is arise because there is approx. 50% increase in inventories, 90% increase in cash & bank. Increase in current assets shows the liquidity soundness of company.CURRENT LIABILITY:

Interpretation: Current liabilities shows company short term debts pay to outsiders. Approx 31% increase in C.L from 2005 to 2008. But still increase in current assets is more than its current liabilities. In 2008 % diff in current assets & current liability is 62%.

net working capital:

Interpretation:Working capital is required to finance day to day operations of a firm. There should be an optimum level of working capital. It should not be too less or not too excess. In the company there is increase in working capital. The increase in working capital arises because the company has expanded its business.

FINDINGS & RECOMMENDATIONS

4.1 Conclusion/Findings4.2 Recommendations

Conclusion/Findings

Post restructuring, JSL better placed in achieving operational efficiency and improving financial indicators.

JSL is positioned as the largest integrated stainless steel manufacturer in India with 40 % market share.

After proposed expansion, JSL will become a major producer of Stainless Steel coils/sheets with gauge thickness of 0.25 mm and width of 1500 mm. These products command a good premium in the domestic and international markets. The company is among the world top ten steel manufacturing lists, and will increase the good position by 2011.The profit of the company is low as net profit margin is 10%and PAT is decreased by 11,183.85 lakh in year 08.The company is holding high amount of inventory and having huge debtor.In 2008 company made very less profit because of shut down of production facilities .Sluggish demand across globle markets during second half of the year resulting in lower sale realization and loss of margin .

RECOMMENDATIONS

JSL Limited is India’s largest stainless and manufacturing with integrated facilities of hot rolling and cold rolling .

India has a large consumption potential of stainless steel the company should increase the market size .

Apart for producing the standard grades , company should cater special stainless steel market

Company should increase the production capacity and also the production facilities .

company should also focus on high customer services and should maintain the focus on export to international markets .so that the company can improve its financial position and can be able to make high profits .

APPENDICES & ANNEXURE

Profit & Loss account of JSL(in Rs. Cr. )Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 2,605.58 3,416.57

3,496.59 5,269.29 5,699.17

Excise Duty

188.69 230.84 338.18

397.13 593.9

Net Sales

2,416.89 3,185.73 3,158.41 4,872.16 5,105.27

Other Income 18.27 36.52 36.91 86.55 63.38

Stock Adjustments 15.59 129.14 83 127.33 787.98

Total Income 2,450.75 3,351.39 3,278.32 5,086.04 5,956.63

Expenditure

Raw Materials

1,613.76 2,381.46 2,270.62 3,357.16 4,150.51

Power & Fuel Cost

182.69 210.04 300.74 436.13

561.78

Employee Cost

35.88 49.79 53.47 73.52 103.62

Other Manufacturing Expenses

105.55 55.3 58.08 57.23 64.12

Selling and Admin Expenses

87.63 96.06 128.45 218.22 209.16

Miscellaneous Expenses

6.99 12.44 9.68 12.73 17.73

Preoperative Exp Capitalised 0 0 0 0 0

Total Expenses 2,032.50

2,805.09 2,821.04 4,154.99 5,106.92

Operating Profit 399.98

509.78 420.37 844.5 786.33

PBDIT

418.25 546.3 457.28 931.05 849.71

Interest 76.74 57.38 84.17 157.45 229.2

PBDT 341.51 488.92

373.11 773.6 620.51

Depreciation 106.91 130.99 136.11 216.1 252.38

Other Written Off 1.71 0.39 0.36 0.47 0.39

Profit Before Tax 232.89 357.54

236.64 557.03 367.74

Extra-ordinary items

-0.03 0.24

3.44 -4.63 2.6

PBT (Post Extra-ord Items) 232.86 357.78 240.08

552.4 370.34

Tax 68.58 111.92 80.35 199.41 129.36

Reported Net Profit 164.19 245.85 159.73 358.32 241.17

Total Value Addition 418.74 423.63 550.42

797.82 956.41

Preference Dividend 0.21

0 0 0 0

Equity Dividend 19.38 26.38 20.89 27.78 32.43

Corporate Dividend Tax

2.51 3.57 2.93 4.06 5.54

Per share data (annualised)

Shares in issue (lakhs)

999.12 1,099.10 1,305.52

1,382.21 1,545.85

Earning Per Share (Rs) 16.41 22.37 12.23 25.92 15.6

Equity Dividend (%)

100 120

80 80 100

Book Value (Rs) 55.77 72.13 77.3 101.42 115.67

BIBILOGRAPHY

Company Article/Journal     Company Balance sheet (2004-05,2005-06, 06-07, 07-08)      Other reports & financial data of JSL ltd.

Websites    www.Investopedia.com.    www.valueresearchonline.com    www.wikepedia.com    www.jindalstainless.com    www.financialmodeling.net    www.knowledgenetwork.com     www.moneycontrol.com     www.managementparadise.com      www.fmsinc.com       www.ask.com     www.soluationmatrix.com     www.answer.com

Books   Research Methodology, C.R.Kothari, Vishwa Prakashan, 6 th edition.    Financial Management,Dr.S.N.Maheshwari,Tata McGraw-Hill,4 thedition    Management Accounting ,Shashi.k.Gupta,Kalyani Publisher ,4 th edition    Financial management ,I>M>Panday ,4th editions

Submerged Arc Welded Pipes

HR/CR Sheets, Integrated Steel Plant

Sponge Iron, Power RUBM, MS Slabs

Stainless Steel HR/CR CoilsHigh Carbon Ferro Chrome

JINDAL SAW LTD.

JINDAL JSW LTD.

JSPL LTD.

JSL LTD.

P.R.JINDAL

SAJJAN JINDAL

NAVEEN JINDAL                         L

RATAN JINDAL

O.P.JINDAL   GROUP

                      Strength                                Weakness

High Backward Integration                                     1. Debt Amount is LargeEconomies of Scale                                               2. Capacity Utilization is not up to mark      Proximity to Raw Material                                      3. Less benefited by the Freight charged                Specialized Product                                                   reduction.                               Large Domestic Market Share                               4. Small capital   Strong R&DExpanding FootprintsCost leadership Product Innovation

Opportunity                                                        Threat

High Economic Growth                                          1. Raw Material constraint          Infrastructure Boom                                               2. Increase in supply of Stainless Steel due to Demand of Stainless Steel from Growing                 capacity expansion by competitors

    Automobile sector and Other end use                   3. Cyclical nature of Steel Industry           Requirement (Retail Sector).                                 4. Restriction on Export of Steel4.  Less Domestic per capita consumption of             5. Problem of land Acquisition for Orissa Plant     Stainless Steel.                                                      6. Rising Global Energy Cost

European producers un competitiveness due           To volatile nickel prices, high overhead and          Manpower costs.