New Nijam JSW-1

JSW STEEL LTD
EXECUTIVE SUMMARY
Through the Financial statement analysis the financial performance of the company can
be converted into meaningful information for the decision making an effort on a total
basis. When the company evaluate the current and past financial positions and results of
operations of an enterprise it can make strategic decisions for the internal management
& control purposes, the current financial condition, and results of an enterprise.It also
provides meaningful information to the shareholders in taking investment decisions.
They are also important to a company’s managers because by publishing financial
statements, management can communicate with interested outside parties about its
accomplishment running the companyas well as Judging the earning capacity or
profitability of a business concern ,anyzing the short term and long term solvency of the
business concern.It also Helps in making comparative studies between various
firms,asists in preparing budgets.They are used as a prediction the firm’s future incomes
distribution to shareholders members in terms of dividend.It is helpful to the government
agencies in analyzing the taxation owed to the firm. In this regard the present study is
focysed on the analysis of financial performance of JSW steels through using ratios,
comparative balance sheet and trend analysis. Financial information of the immediate 4
previous years have been taken for the study
JSW Steel Limited (JSW Steel) is one of India’s largest steel manufacturers with state-of-the-art
upstream and downstream operations. A flagship company of the US$ 12 billion JSW Group
with interests in mining, steel, cement, infrastructure, energy, among others, JSW Steel has
maintained its leadership position driven by its core strengths of quality, cost competitiveness
and sustainability, and guided by its philosophy of being #BetterEveryday.
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CHAPTER 1
INTRODUCTION
STEEL INDUSTRY PROFILE:
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilization. The level of per capita consumption of steel is treated as
an important index of the level of socioeconomics development and living standards of
the people in any country. It is a product of a large and technologically complex industry
having strong forward and backward linkages in terms of material flows and income
generation. All major economies are characterized by the existence of a strong steel
industry and the growth of many of these economies has been largely shaped by the
strength of their steel industries in their initial stages of development.
Steel has been part of some of the greatest achievement in history. Nearly 15 years ago
steel sparked off the industrial revolution, the steel industry has an important role to play
in the development of any industrial nation.
THE GLOBAL STEEL INDUSTRY

The Global Steel Industry has been going through major changes since 1970. China has
emerged as a major producer and consumer, as has India to a lesser extent. Consolidation
has been rapid in Europe.
Global Steel production grew enormously in the 20th century from a mere 28 million tons
at the beginning of the century to 7781 million tons at the end.
WORLD STEEL INDUSTRY PRODUCTION

The following table gives a clear picture upon the major steel producers in the world as
of the year.
COUNTRY STEEL PRODUCTION (mpta)
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China 272.5
Japan 112.7
USA 98.9
Russia 65.6
South Korea 47.5
Brazil 32.9
India 32.6
Italy 28.4
In the year 2018, the global steel production has made a record level by crossing the
1000 million tons .among the top producers in the steel production, china ranked 1 in the
world.
INDIAN STEEL INDUSTRY:

Steel Industry in India is on an upswing because of the strong global and domestic
demand. India's rapid economic growth and soaring demand by sectors like
infrastructure, real estate and automobiles, at home and abroad, has put Indian steel
industry on the global map. According to the latest report by International Iron and Steel
Institute (IISI), India is seven largest steel producers in the world The origin of the
modern Indian steel industry can be traced back to 1953 when a contract for the
construction of an integrated steelworks in Rourkela, Orissa was signed between the
Indian government and the German companies Fried Krupp und Demag AG.
The initial plan was an annual capacity of 500,000 tones, but this was subsequently
raised to1 million tones. The capacity of Rourkela Steel Plant (RSP), which belongs to
the SAIL(Steel Authority of India Ltd.) group, is presently about 2 million tonnes.
The last decade saw the Indian steel industry integrating with the global economy and
evolving considerably to adopt world class production technology to produce high
quality steel, the total investment in India since 1990 is over 19000 cr mostly in plant
equipments which have been installed after 1990
With a current capacity of 35mt the Indian steel industry is today the 8 th largest producer
of steel in the world .Today, India produces international standard steel of almost all
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grades and has been a net exporter for the past few years, underlining the growing
acceptability of its production in the global markets .steel is high capacity intensive
industry and cyclic in natural .its growth is intertwined with the consuming industries
such as manufacturing, housing and infrastructure.
In the initial years of economic planning, the state stepped in as regulator and a guide to
reconcile the interest of the producers and consumers of this vital economic input. The
change came in last decade of the 20th century with liberalization of the Indian iron and
steel industry.
THEORETICAL BACKGROUND OF THE STUDY
INTRODUCTION TO FINANCE
Finance is one of the major functional areas of management function of finance area
is the part at economic activity. Finance is the life blood of business.
Finance is the process of organization in which there is the flow of funds so that
business can carry out its objective in the efficient manner.
The scope of financial management that is the views about finance functions has
undergone remarkable changes over time. Till 1950, finance functions was regarded
as the function of only raising finance for business, and consequently the discussion
cantered round different sources of finance, financial institutions and financial
documents etc, since last 30-40 years, however an effective and efficient utilization
of finance has also been considered as an important function of financial
management.
In the words of Husbund and Dockey “Finance may be said to be the circulatory
system of the economic body making possible the needed co-operation between
many units of activity.
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MEANING OF FINANCIAL MANAGEMENT
In simple words, financial management means raising of adequate funds at the

minimum cost and using them effectively in business. In other words, financial
management is concerned with the financial problem of the business organization.
It is with the problems of raising finance to establish, expand and modernize
business unit, the problems of providing fixed and working capital, the problem of
distribution of income etc.
Hoagland says, “Financial management is concerned mainly with such

matters as, how a business corporation raises its finance and how it makes use of
it”.
According to Soloman, “Financial management it’s concerned with the

efficient use of an important economic resource, namely, capital funds”.
Thus, financial management does not stop at procuring the required finance. It has
also to see that it is effectively utilized in business. It is concerned with maintaining
adequate funds on hand to meet the expenses of both revenue and capital nature. It
has to manage the finances in such a way that the goal of business, say, profit
maximization, is realized.
UTILITIES OF FINANCIAL MANAGEMENT
Needless to say that without adequate finance, no business can succeed. It is easy to
imagine the plight of the management which due to insufficiency of finance cannot
make payment for raw materials and wages on time. It is not possible to avail of the
opportunities if adequate finance is not available.
The significance of financial management will be clear from the following points.
Success of promotion
Smooth running of the enterprise
Finance for expansion
Cash planning
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FINANCE FUNCTION
The principal contents of the modern approach to financial management can be said
to be.
How large should an enterprise be, and how fast should it grow?
In what form should it hold assets?
What should be the composition of its liabilities?
These three questions posed above cover between them the major financial
problems of a firm. In other words, finance according to the new approach is
concerned with the solution of three major problems relating to the question of
investment, financing and dividend decisions.
This financial management in the modern sense of the term can be categories into
three major decisions as function of finance.
The investment decision

The finance decision
The dividend policy decision
INVESTMENT DECISION
Investment decision is a long term financial decision. It is concerned with allocation

of capital. It has to invest the funds in such a way that it would be beneficial for the
organization. The assets, which can be acquired, fall into two broad groups:-1i)
long –term assets, which yield a return over a period of time in future. Ii) Short-
term assets or current assets, which on the normal course of the business are
convertible into cash without diminution in value usually with in a year. The first
category of assets is known as working capital budgeting. This aspect of financial
decision making with references to current assets of short-term assets is known as
working capital management. Investment decisions are considered to be risky
decision because uncertainly plays an important role in these decisions.
FINANCE DECISION
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The second major decision involved in financial management is financing decision.

The investment decision is more important compared to finance decision. The
concern of the financing decision is with the financing mix or capital structure of
average. The term capital structure refers to the proportion of the sources to finance
the investment requirements i.e. whether entire capital required should be raised by
equity shares or the aspects of the financial decision. The theory of capital structure
between equity and borrowed capital has to be decided. There are two ways of
talking financial decisions. First the theory of capital structure, which shows the
theoretical relationship between the employment of debt and the return to the
shareholders as also the financial risk. A proper balance between debt and equity to
ensure a trade off between and return to the shareholder is necessary for any capital
structure. The second aspect of the financial decision is the determination of an
appropriated capital structure. Thus the finance decision is concerned with major
two aspects namely capital structure and its decision.
DIVIDEND POLICY DECISION
It is also one of the most important financial decisions to be taken by the financial
managers. This decision is concerned with the divisible profits of the company.
a. They can be distributed to the shareholders in the form of dividend.
b. They can be retained in the business.
This decision is to be taken after taking into consideration the psychology of the
investors who wish to get a better yield on their investment. This decision helps in
deciding as to which course should be followed depending on the dividend pay-out ratio
i.e. what proportion of net profits should be paid to the shareholders. The final decision
will depend upon the preference of the shareholders and investments opportunities
available.
Accounting Policies And Notes
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Notes of account:-
 All the figures have been rounded off to the nearest rupee. The previous year’s
figures have been regrouped where ever necessary to facilitate comparison.
 Parities balance subject to confirm reconciliation of final statement, if any.
 Extra ordinary items represents adjustment of income relating to earlier year.
Accounting policies:-
1) Accounting Concept
 Accounting Policies not specifically refer to otherwise are consistent and in
consonance with generally accepted accounting principles end the accounting
standards pronounced by ICAI.
 The financial statements are prepared under the historical cost convention on the
basis of going concern with revenue recognized and expenses accented on there
actual unless otherwise specifically stated.
2) Sales turnover, duties and Taxes

Sales turnover is inclusive of excise duty payable by the company but excludes
all other taxes realized from the customers on account of the government. Excise
duty pay for on sales is accounted for when the finished products are dispatched
from bonded premises.
3) Valuation of inventories
 Raw materials, packing materials, stores and stores and spares and consumable
are valued at cost computed on FIFO basis.
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 Finished goods are valued at cost of manufactures or net realizable value, which
ever is lower and also includes the provision for excise duty likely to be payable
up on stock of finished goods lying at the year end in factory premises.
4) Fixed Assets and Depreciation

 Fixed assets are valued at cost, net of the credit set off, plus all other expenses
specifically incurred in their procurement and installation at factory premises.
The cost also includes preoperative expenses incurred during construction period
which are capitalized as per recognized accounting practices.
 Depreciation is provided for under written down value method at the rates
described under schedule 14 of Companies act 1956.
5) Contingent Liability
This are not provided for but disclosed by way of notes of Account.
6) Foreign Currency Transaction

Transaction denominated as in foreign currencies are normally recorded at exchange
rate prevailing at the time of transaction. Any income or exchange difference either
on settlement or on expense on account of exchange difference either on settlement
or on transaction is recognized in the P&L A/c exception cases where they relate to
the acquisition of fixed assets in which they are adjusted to the carrying cost of such
assets.
Financial statement:
A financial statement is an organized collection of data according to logical and

consistent accounting procedures. Its purpose is to convey an understanding of some
financial aspects of a business firm. It may show a position at a moment of time as in the
case of a balance sheet, or may reveal a series of activities over a given period of time, as
in the case of an income statement.
Financial Management is the crucial part of any business operations and it is

termed as, the application of the planning and control function to the finance
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functions. The financial performance of any company is crucial for its

survival, growth and excellence. It will be evaluated on the parameters like
profitability, utilization of assets, growth of performance, financial strength
and financial health.
Financial performance analysis is the process of identifying the financial strengths

and weaknesses of the firm by properly establishing the relationship between the
items of balance sheet and profit and loss account. It also helps in short-term and
long term forecasting and growth can be identified with the help of financial
performance analysis. This study concentrates on the financial aspects of JSW
steel and tries to analyses the financial performance of the company through trend
analysis, ratio analysis and cash flow statements.
Trend analysis evaluates an organization’s financial information over a period of

time. Periods may be measured in months, quarters, or years, depending on the
circumstances. The goal is to calculate and analyze the amount change and percent
change from one period to the next. Trend analysis is quite useful for examining
preliminary financial statements for inaccuracies, to see if adjustments should be
made before the statements are released for general use. When used internally (the
revenue and cost analysis function), trend analysis is one of the most useful
management tools available. By using Ratio analysis which is a quantitative
method to gain insight into a company's liquidity, operational efficiency, and
profitability by studying its financial statements such as the balance sheet and
income statement analysis of the performance will be done. A cash flow statement
is a financial statement that summarizes the amount of cash and cash equivalents
entering and leaving a company. The cash flow statement measures how well a
company manages its cash position, meaning how well the company generates
cash to pay its debt obligations and fund its operating expenses.
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Thus, the term financial statement generally refers to the basis statements;
i) The income statement

ii) The balance sheet
iii) A statement of retained earnings
iv) A statement of charge in financial position in addition to the above two
statement.
Financial statement analysis:
It is the process of identifying the financial strength and weakness of a firm from the
available accounting data and financial statement. The analysis is done by properly
establishing the relationship between the items of balance sheet and profit and loss
account the first task of financial analyst is to determine the information relevant to the
decision under consideration from the total information contained in the financial
statement. The second step is to arrange information in a way to highlight significant
relationship. The final step is interpretation and drawing of inferences and conclusion.
Thus financial analysis is the process of selection relating and evaluation of the
accounting data/information.
About comparative balance sheet
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About Trend analysis
COMPETITIVE STRENGTHS › Plant location catering to South and West zones, auto hub › Large
basket and wide range of products › Market leadership in auto sector › Market leadership in
bearing and forging segments › Single source supplier for many applications to various auto
OEMs › Only Indian supplier for rail steel to European market
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CLASSIFICATION OF RATIOS
MEANING OF RATIO ANALYSIS :-
One of the most important method of analysis of financial statement is

ratio analysis. Ratio analysis is a numerical figure which is used to find out relationship
between different statements, single statement carries no meaning.
Ratio is a term, which establishes the relationship between two figures.

It is relationship of one amount to another amount. It is numerator and denominator. It
can be expressed as a simple fraction, decimal fraction or percentage. The ratio can be
expressed as:
 PURE RATIO
 PERCENTAGE RATIO
 TIMES RATIO
1 Pure ratio is expressed as 2:1.

2 Percentage ratio is expressed as % (percentage)
3 Times ratio is expressed as – TIMES.
Any of these ratios can be adopted for studies depending upon the
characteristic of the items. For E.g.: Liquidity ratio is always expressed in pure form.
A ratio has to assess the performance and financial condition of an

organization. It is very important tool in financial analysis and controlling. It facilitates
the top management to pay sound managerial decision
CLASSIFICATION OF RATIO
On the basis of objectives and purposes ratio are classified as under:
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1. LIQUIDITY RATIO
2. PROFIRABILITY RATIO
3. LEVERAGE RATIO
4. ACTIVITY / EFFICINCY RATIO
5. COVERAGE RATIO.
LIQUIDITY RATIO
These ratios measure the firm’s ability to meet short term obligation as well as they
become due. This ratio shows short term financing solvency of the firm. Usually
following ratios are calculated:
# Current Ratio
# Quick Ratio
PROFITABILITY RATIO
This ratio measures management’s overall effectiveness as
shown by the returns generated on sales and investment usually three
types of profitability ratios are calculated. The various types of
profitability ratios are:
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1. IN RELATION TO SALES
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# Gross Profit Ratio

# Net Profit Ratio
2. IN RELATION TO INVEST.
# Return on total Assets

# Return on Capital Employed
# Return on Equity
3.IN RELATION TO EQ. SH. HOLDERS FUNDS
# Return on Equity Share Holder’s Fund

# Earning Per Share
# Dividend Per Share
# Price Earning Ratio
LEVERAGE RATIO
This ratio shows the long term financial solvency that measures the enterprise's
ability to pay the interest and to repay the capital amount on maturity or in pre-
determined installments at due dates. Usually, the following ratios are calculated to
judge the long term financial solvency of the firm.
# Dept Equity ratio

# Proprietary ratio
# Capital gearing ratio
# Long term funds to fixed assets ratio
ACTIVITY / EFFICIENCY RATIO
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This ratio measures the effectiveness with which a firm uses its available
resources. This ratio is also called efficiency ratio or turnover ratio. Since they
indicate the speed with which the resources are being turned into sales. Usually the
following turnover ratios are calculated:
# Stock Turnover Ratio
# Debtor’s Turnover Ratio
# Debt Collection Period
# Creditor’s Turnover Ratio
# Debt Payment Period OR Creditor’s Velocity
# Working Capital Turnover Ratio
# Book Value Per Share
# Total Assets Turnover Ratio
IMPORTANCE OF RATIO ANALYSIS
Importance of Ratios:
In application to studying the rupee amount shown in the

financial statements, relationships between different items may be established by
computing various ratios. The relation between two related items of financial
statement is known as Ratio. A ratio is thus, one number expressed in terms of other
Ratios are particularly useful in comparing one year’s performance with other years,
as well as one company’s performance with another’s. In many cases the average
ratios relating to companies in particular industries are available, and an individual
company’s ratio may be compared with such an average.
Ratios help to make qualitative judgments depending upon the

calculations made which are quantitative judgments. The ratio analysis involves
comparison for a useful interpretation of the financial statements. A single ratio in
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itself does not indicate favorable or unfavorable condition. It should be compare with
some standard. Standard of comparison may decided by the company or firm itself.
IMPORTANCE/UTILITY:
1) Profitability:
Useful information about the trend of profitability is available
from profitability ratios. The gross profit ratio, net profit ratio of return on
investment give a good idea of the profitability of business. On the basis of these
ratios, investors get an idea about the overall efficiency of business, the
management gets an idea about the efficiency of managers and bank as well as
other creditors draws useful conclusions about repaying capacity of the
borrowers.
2) Liquidity:
In fact, the use of ratios was made initially to ascertain the
liquidity of business. The current ratio, liquid ratio and acid test ratio will tell
whether the business will be able to meet its current liabilities as and when they
mature. Banks and other leaders will be able to conclude from these ratios
whether the firm will be able to pay regularly the interest & loan installments.
3) Efficiency:
The turnover ratios are excellent guides to measure the
efficiency of managers. E.g. the stock turnover will indicate how efficiently the
sale is being made, the debtors’ turnover will indicate the efficiency of collection
department and assets turnover shows the efficiency with which the assets are
used in business. All such ratios related to sales present a good picture of the
success or otherwise of the business.
4) Inter firm comparison:

The absolute ratios of a firm are not of much use,
unless they are compared with similar ratios of other firms belonging to the same
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industry. This is interring firm comparison, which shows the strength and
weakness of the firm as compared to other firms and will indicate corrective
measures.
5) Indicate trend:
The ratios of the last three to five years will indicate the
trend in the respective fields. For example, the current ratios of a firm are lower
than the industry average, but if the ratios of last five years show an improving
trend, it is an encouraging trend. Reverse may also be true. A particular ratio of a
company for one year may compare favorably with industry average but, of its
trend shows a deteriorating position, if is not desirable. Only ratio analysis will
provide this information.
6) Useful for Budgetary Control:

Regular budgetary reports are prepared in a business
where the system of budgetary control is in use. If various ratios are presented in
these reports, if will give a fairly good idea about various aspect of financial
position.
7) Useful for Decision making:

Ratio guide the management in making some of the
importation show an unsatisfactory position, the management may decide to get
additional liquid funds. Even for capital expenditure decisions, the ratio of return
on investment will guide the management can be judged on the basis and
efficiency of each department can thus be determined.
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CHAPTER-2
LITRATURE REVIEW
INTRODUCTION :
1)
2)
3) General Information JSW Steel Limited (“the Company”) is primarily engaged in the
business of manufacture and sale of Iron and Steel Products. The Company is an
integrated manufacturer of diverse range of steel products with its manufacturing
facilities located at Vijaynagar Works in Karnataka, Dolvi Works in Maharashtra and
Salem works in Tamil Nadu. JSW Steel Limited is a public limited company incorporated
in India on March 15, 1994 under the Companies Act, 1956 and listed on the Bombay
Stock Exchange and National Stock Exchange. The registered office of the Company is
JSW Centre, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051
4)
5)
6)
.
7) N
8) n
9)
10) N
11) N
12)
13)
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14) BASIS OF PREPARATION AND PRESENTATION The Standalone Financial Statements have
been prepared on the historical cost basis except for certain financial instruments
measured at fair values at the end of each reporting year, as explained in the
accounting policies below. Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or
a liability, the Company takes in account the characteristics of the asset or liability if
market participants would take those characteristics into account when pricing the
asset or liability at the measurement date. Fair value for measurement and/or
disclosure purposes in these financial statements is determined on such a basis, except
for share-based payment transactions that are within the scope of Ind AS 102, leasing
transactions that are within the scope of Ind AS 116, and measurements that have
some similarities to fair value but are not fair value, such as net realisable value in Ind
AS 2 or value in use in Ind AS 36. In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs
to the fair value measurements in its entirety, which are described as follows: › Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date; › Level 2 inputs are inputs, other
than quoted prices included within level 1, that are observable for the asset or liability,
either directly or indirectly; and › Level 3 inputs are unobservable inputs for the asset or
liability. The Financial Statement is presented in INR and all values are rounded to the
nearest crores except when otherwise stated.
15) Abuzar (2012) used current ratio and cash gap (cash conversion cycle) to
empirically examine the relation between liquidity and profitability. In this study
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the cash gap was 18 defined as the subtraction of days in accounts payable (DIP)
from the total of days in inventory (DII) and days in accounts receivable (DIR).
As a statistical tool correlation analysis was used to determine the association
between liquidity and profitability indicators along with other relevant related
variables. Having determined the variables the author applied regression analysis
to estimate the causal relationship between profitability variable, liquidity and
other chosen variables. Data of 29 joint stock companies which were publicly
traded and provided annual audited financial reports were selected. Certain
relationship between variables of profitability and liquidity were also identified.
A significant and negative relation between current ratio (CR) and Net Operating
Income (NOI) was established using the correlation coefficients. Another finding
was that a negative relation between NOI and cash gap existed however it was
not statistically significant. From the above two results it was concluded that
current ratio and cash gap measure liquidity differently. It was also found that a
significant and positive association existed between measures of size and
profitability. A strong and highly positive relation existed between sales and total
assets and was marked to be a substitute of measures of size. An effort was made
to examine profitability and liquidity functional relationship. It was also
examined in the study whether the relation between profitability, liquidity level
and cash gap existed as a function of the efficiency of managing cash cycle. From
the above exploration the study concluded that cash gap or CCC represented a
more important measure of liquidity as compared to affects of current ratio on
profitability. However, with more labour-intensive sector like services cash gap
tend to lose its importance as a measure of liquidity.
16) A study conducted by Nazir and Afza (2013) used the aggressive investment
policy similar to the study conducted by weinraub and visscher (1998). The basic
premise was that Aggressive Investment Policy (AIP) resulted in minimal level of
investment in current assets as compared to investment in fixed assets. At the
same time a Conservative Investment Policy (CIP) supposedly lead to more
capital in liquid assets and resulted in the opportunity cost of less profitability. In
the study the researchers measured the degree of AIP by using a ratio of Total
Current Assets (TCA) to Total Assets (TA). A lower ratio meant a relatively
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aggressive policy. Similarly for the measure of Aggressive Financing Policy

(AFP) the ratio of Total Current Liabilities (TCL) to Total Assets was used. A
higher ratio here meant a relatively aggressive policy. For the measure of
profitability ROA (Return on assets) calculated as ratio of NEAT (Net Earnings
after Taxes) and BVA (Book Value of Assets) was used. The value of a firm was
represented by TOBIN’s Q which was calculated as ratio of MVF (Market Value
of Firm) and BVA (Book Value of Assets). MVF was considered as the sum of
book value of all the short and long term debt combined with the market value of
equity. The market value of equity was represented as multiplication of number
of shares outstanding with the current market price of the stock in a particular
year. Certain control variables namely SIZE (Natural logarithm of total assets),
GROWTH (sales growth), LVRG (Financial leverage of the firms taken as debt
to equity ratio of each firm for the entire study period), GDPGR (Real annual
GDP growth rate of economy) were used. Findings arrived upon by using
regression equations showed that firms which adopted aggressive approach in
managing short-term liabilities were perceived as more valuable by investors.
More aggressive working capital policy did not result in generating more profit.
RESEARCH GAP
As stated earlier many authors have attempted to carry out research work on this subject
matter. However, most of the studies have been confined to the area of measuring impact
of liquidity management and its impact on profitability for one particular organization or
industry. Probably none of the authors attempted to select internationally rated Indian
companies and compare them on their working capital management policies. Therefore,
an attempt has been made in this doctoral research work to select top ten Indian firms
ranked by „Fortune Global 500 Rankings’ for the year 2014 and study them on the
perspective of working capital management policy.
TITLE OF THE STUDY

“A Study on the status of Financial Operations at JSW Steel”
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STATEMENT OF THE PROBLEM
Studying the financial performance of the present project on JSW steels

become imperative as the study has been taken up to evaluate the financial
status of the company and to suggest the company the measures to be taken
to improve the financial position. The study includes many financial tools
such as ratios, trend, cash flow etc to present the financial facts of a company
in a very accurate, precise and simple manner.
 A substantial portion of total investment is invested in current assets.

 Level of Current assets and Current liabilities will change quickly with the
Variation in Sales.
 The composition of Current assets and Current liabilities.
NEED OF THE STUDY :-
As finance is the lifeblood of any industry constant focus on the financial

performance of the company has to be monitored regularly to check the
uncertainties and also to keep track of the financial status of the company to
make any strategic decisions. It can be done by making a comparative study of
the financial status of previous years with reference to the current year to get the
accurate information about the increase or decrease in the volume of financial
activities. The present study is also conducted with the help of cash flow
statement and ratio analysis to analyze and interpret the short-term and long-term
financial solvency, profitability and growth performance of JSW Steel industry.
This will help the investors to take decisions on seeing the performance of the
company.
It can give understanding of practical approach or implementation overview. So,
the significance of the study is very high. Further some observation may be
useful to academicians, company people, and policy makers.
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JSW STEEL LTD
OBJECTIVES OF THE STUDY:-
 To analyze the overall financial performance of JSW Steel Ltd.
 To study the revenue from operations and profit earned to gain a fair market share.
 To check the position of assets and liabilities of the company.
 To determine the solvency position of the company.
 The basic objective of studying the ratios of the company is to know the financial
position of the company.
 To know the borrowings of the company as well as the liquidity position of the
company.
 To study the current assets and current liabilities so as to know the shareholders
could invest in JSW Steel Ltd or not.
 To study the profits of the business and net sales of the business and to know the
stock reserve for sales of the business.
 To know the solvency of the business and the capacity to give interest to the long
term loan lenders (debenture holders) and dividend to the share holders.
 To study the balance of cash and credit in the organization.
SCOPE OF THE STUDY:
Purpose of this study is to identify and analyze the overall financial performance of
JSW Steel Ltd. The study also focuses on the revenue earned by the company as
well as profit obtained to gain a fair market share. It also observes the solvency
position of the company and gives suggestions for the improvement of the
company’s overall financial position. The study is conducted based on the previous
three years i.e., from 2017-2020.
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JSW STEEL LTD
RESEARCH METHODOLOGY:
Research methodology is a way to systematically solve the research

problem. It may be understood as a science of studying how research is
done scientifically. So, the research methodology not only talks about the
research methods but also considers the logic behind the method used in
the context of the research study.
Research design:
The descriptive form of research method is adopted for study.
 Descriptive research is used in this study because it will ensure

the minimization of bias and maximization of reliability of data
collected. The researcher had to use fact and information already
available through financial statements of earlier years and
analyses these to make critical evaluation of the available
material. Hence by making the type of the research conducted to
be both Descriptive and Analytical in nature. The required data
for the study are basically secondary in nature and the data will
be collected from the audited reports of the company.
 The major purpose of descriptive research is description of state
of affairs of the institution as it exists at present. The nature and
characteristics of the financial statements of JSW Steel Ltd have
been described in this study.
Nature of data:
The data required for the study has been collected from secondary source .The relevant
information were taken from annual reports, journals and internet.
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JSW STEEL LTD
Methods of data collection:
This study is based on the annual report of JSW Steel Ltd. Hence the information related to,
profitability, short term and long term solvency and turnover were very much required for
attaining the objectives of the present study.
Tools applied:
To have a meaningful analysis and interpretation of various data collected, the following
tools were made for this study.
 Ratio analysis
 Comparative statement
 Trend analysis
LIMITATIONS OF STUDY:-
The limitation of study is as under:
 Study is undertaken by individual researcher therefore all the limitation of the
individual researcher exists here also.
 It is secondary data based study, so the limitations of the secondary data reveals
with this study.
 The project will be prepared based on the information given by the company and
ratio are limited only to that extent
 Time constraint.
 The study is limited to selected financial parameters of JSW Steel.
CREDIT RATING In April 2020, Moody’s Investors Service has placed Ba2 Corporate
Family Rating and Senior Unsecured Bond Rating due in 2022, 2024 and 2025,
respectively, under review for downgrade. Also in May 2020, Fitch Ratings has
downgraded the Company’s long-term Issuer Default Rating (IDR) and Senior Unsecured
Bond rating due in 2022, 2024 and 2025, respectively, to BB -, with negative outlook.
The short term debt / facilities of the Company continues to be rated at the highest
level of “A1+” by ICRA Ltd. and CARE Ratings. In March 2020, the domestic credit rating
for long term debt facilities/ NCD’s have been revised to “CARE AA-” with Stable
Outlook by CARE Ratings and “ICRA AA- “Negative Outlook by ICRA Ltd. India Ratings
has assigned long term issuer rating and rating for the outstanding non-convertible
debentures of the Company as “IND AA” with Negative Outlook.
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JSW STEEL LTD
CHAPTER-3
COMPANY PROFILE:
JSW is a part of the $ 4 billion O.P. Jindal group, the 4th largest business house in
India, with interests in mining, flat steel, and power, oxygen and port
facilities. It is a fully integrated steel plant with products ranging from pellets to
Galvanized Steel, a value addition of over 100 times.J S W u n d e r t h e l e a d e r s h i p o f
M r . S a j j a n J i n d a l s h a r e a c o m m o n m a n t r a f o r success. JSW is a
dynamic Rs.9000 crore integrated entity encompassing steel, power, industrial
gases, minerals and port business. It ranks among India's top business houses in t u r n
over, size and scale of operations. The focus, now, is to achieve a
p o s i t i o n o f excellence in the global arena and innovate the future for nation building
JSW Steel limited (JSW Steel) is engaged in the business of manufacturing and sale of
iron and steel products. The company operates in two segments: steel and power (used
mainly for captive consumption). the company’s products includes hot rolled steel strips
sheet / plates, MS cold rolled coils/sheet ,MS galvanized plain/corrugated/color coated
coils/sheet, bars and rods and power. As on March 31, 2014, JSW Steel had a steel
manufacturing capacity of 14.3 metric tons per annum (MTPA).
JSW Steel is India’s leading private sector steel producer and among the world’s most
illustrious steel company.JSW Steel is the largest private sector steel manufacturer in
terms of installed capacity, it is one of the lowest cost steel producers in the world. It has
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JSW STEEL LTD
established a strong presence in the global value-added steel segment with the
acquisition of steel mill in US and a service center in UK.
It is around $12 billion global conglomerate spread over six locations in India and a
footprint that extends to the US, south Americaand Africa .
BACKGROUND AND INCEPTION OF THE COMPANY:
In the 15th century, Krishnadevaraya (1509-29) ruled the royal Vijayanagara

dynasty located in southern India, famous for its peace and prosperity.
Reminiscing the past glory and grandeur of Vijayanagara, JINDAL VIJAYANAR
STEEL LTD., The principal promoter of JVSL is Jisco; both belong to Om Prakash
Jindal Group having 50 years of experience in steel industry. JVSL was set up as
backward integration facility for Jisco. All the units of Jindal organization are also
promoted by his son's namely-Prithviraj Jindal, Sajjan Jindal, and Rattan Jindal
& Naveen Jindal
JVSL has an interesting history. Mrs. Indira Gandhi inaugurated this site in 1971, for an
integrated steel plant, which was to be named Vijayanagra Steel Plant. From 1971 to
1994, public sector and several private sector units explored the possibility of putting up
the steel plant but none are succeeded, essentially due to inadequate
availability of themost basic inputs, like water and power.In 1994, Government of
Karnataka approached Mr. Jindal who succeeded in putting of JVSL, largely
because they dared to choose not so commercially but most e n v i r o n m e n t
friendly COREX technology for Iron making, as agai nstconventional
p r o c e s s o f b l a s t furnace The company was promoted by Jindal Group with
participation from Karnataka State Industrial Investment and Development Corporation
Ltd .Now the company is one of India’s largest manufacturers and exporters of
galvanized steel and export to over 80 c o u n t r i e s a n d t h e c o m p a n y
accredited with t h e ISO:9001certification for quality management
system, t h e ISO:14001f o r environment management system
a n d OHSAS:18001 for occupational health and safety management system.
Jindal group of industries was established by OMPRAKASH JINDAL in the year 1952
with a group from a single making steel pipes bends and sockets at Liluah near Kolkata
to the present multi location, multi product giant from the mining of iron
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JSW STEEL LTD
ore/coal/chrome-ore to the manufacturing of value added steel products. It has a

preeminent position in the flat steel segment in India and is today more than 20000
people are working in the organization. OMPRAKASH JINDAL has developed into a
multifaceted organization and is one of the largest steel producers in India. The steel
industry being a core sector, tracks the overall economic growth in the long term. Also,
the growth of steel industry is dependent on the development of steel consuming.
JSW is ranked 4 th amongst the top Indian business houses in terms of sales and profit
the Rs 19700 crores. Jindal has recognized in India and Asia pacific region. It is the 4 th
largest sales turnover in the private sector after reliance, Tata’s and Aditya Birla groups.
Jindal Vijaynagar Steel Ltd is located at Tornagallu in the Bellary-Hospet area the
heart of high grade iron-ore belt; spread over 3700 acres of land. The plant is 340km
from Bangalore and well connected from Goa & Chennai ports.
The steel industry bring them on the threshold of adopting new technology they took a
lead in adopting the latest technology of steel making as developed by vest alpine of
Austria. The JSW was the first Greenfield project to save COREX as a mainstream
facility.
Mining of iron ore to the manufacturing of value added steel products Jindal has a
preeminent position in the flat steel segment in India as is on its way to be a major global
layer, with its overseas manufacturing and marketing alliances with other world leader.
“Where there is a challenge there is Jindal”
“If it is Jindal, it must be first class”
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JSW STEEL LTD
NATURE OF THE BUSSINESS CARRIED:
India’s only fully intergrating stainless steel plant Until the mid 70's huge chunks of
India's stainless steel requirements were met by imports the challenge was to produce
high quality stainless steel at less than world steel prices. In 1979-80 the Jindal
were successful in using Argon Oxygen Decarburization c onverter, a state of art
technology development in house.
A process integrating of the different stages in the manufacturing of stainless

steel wassuccessfully done. As a result everything from the conversion of
raw material in thebillets and slabs, to hot rolling to strip and plates, as well
as cold rolling was done in houses.
Since then, Jindal strips ltd (JSL) has forged ahead and has become India’s
largest stainless steel produce in the countries private sector with a capacity
of 2 lakh.
India’s only integrated green-field steel project
JSW, a green field integrated steel plant with integrated steel plant with a capacity of
1.60million ton per annum of hot rolled coils. JSW has collaborated with, voest Alpine
of Australia, which will provide a unique advantage in manufacturing and technology.
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JSW STEEL LTD
JSW VISION, MISSION AND VALUES
VISSION:
TRANSFORM STEEL DOMAINTHROUGH INNOVATION JINDAL’S 5 YEAR

“
VISION:
 Value and groom people for innovating the future.
 Continuous improvement in the value chain for cost stewardship.
 Nature lasting customer relationship by anticipating their

needs and delivering beyond expectation.
 Catalyst for growth of India’s steel and power industries.
 Out of the box marketing of value added branded products

for domestic and global markets.
 Inspire community growth with utmost cost for the
environment in areas in which we operate.
 To achieve a turnover of rs20000 crores by march 2009
MISSION:
JSW corporate mission guide the approach to work and

environment, with transforms the way deliver our products and
services.
“MAXIMIZE CUSTOMER SATISFACTION AND

SHAREHOLDERS VALUE THROUGH HRD.”
With our young thinking we promise to innovate the future by

driving with leadership and a crystal clear focus while
differentiating the benefit of our deliverables to all stakeholders.
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JSW STEEL LTD
CORE VALUES:
JSW INFRASTRUCTURAL FACILITIES:
 Separate building for every department

 Canteen facilities
 Waste recycling systems
 In plant hospital sanjeevinihospital collaboration with Apollo hospitals
 OPG centre for training
i. Separate infrastructure to produce power for the own consumption
of the factory
 Hi-Fi restaurants for the people who live in township

 Shopping complex in township
 Jindal Education and Medical Trust
 DAV Jindal VidyaMandir
 Sharamasadhana Vocational Training Centre
 NarlVikas Kendra
 Jindal Sanjeevani Hospital
 Health and Education Initiatives
 Community Initiatives
 Infrastructure Development
1.Roads
2.Garbage disposal
 Jindal Squash Academy Vijayanagar Sports Club
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JSW STEEL LTD
 Jindal Swimming Academy

 Art, Culture and Heriage Initiatives
 Sports initiatives
 Jindal Art Foundations
1. Jindal Swimming Academy
2. The Art Creative Centre
 Apart from its quest to excel in its business activities, JSW has strong
commitment to social action as a part of its corporate social responsibility So,
corporate social responsibility at JSW as been taken up with great commitment
and imagination. Following the tradition of the Jindal organisation, JSW provides
housing colonies, medical benefit,recreational and facilities for its employees.
Such trend setting efforts have not been confined to the plant but also for to the
communities.especially in the area of education,health,sports,and culture and
infrastructure facilities. The township architecture inspired by Hampi,the
erstwhile capital of Vijayanagar Empire is equipped with all the modern facilities
for the well being of the emplyoees.
SIGNIFICIANT BREAKTHROUGH:
Jindal have also pioneered India’s first continuous slab casting machine and India’s first
hot stickle mill to produce hot rolled stainless steel coils.
Jindals are the people to have developed the Indian private sector, first DD (deep
drawing) and EDD(extra deep drawing) grade mill steel wide strips. The process of DD
and EDD grades of steel involves a consistent adeptness and knowledge; it calls for a
technology of higher order.
Jindals are also pioneers in India to use the newly introduced process of COREX c-2000
module, developed by voest Alpine of Australia to manufacturing pig iron. Jindal
breakthroughs are most limitless; it has become axiomatic to say.
“SUPPORTING INDIA’S GROWTH IN CORE ECONOMIC

SECTORS WITH SPEED AND INNOVATION”
Core value:
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JSW STEEL LTD
TRANSPARENCY
STRIVE FOR EXCELENCE
DYNAMISM
PASSION FOR LEARNING
SAFETY
CHAIRMAN AND MANAGING

DIRECTOR (JSW STEEL LTD):
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JSW STEEL LTD
Mr. SAJJAN JINDAL
VISION, MISSION & QUALITY POLICY:
 VISION STATEMENT
“BRING POSITIVE TRANSFORMATION TO EVERY LIFE WE TOUCH”
 MISSION STATEMENT
We Aspire to achieve business excellence through:
 BUILDING WORLD-CLASS INFRASTRUCTURE ,
PRODUCTS AND SOLUTION
 DEPLOYING WORLD-CLASS CAPABILITIES
 NURTURING OUR COMMUNITIES
 CONFIDENCE
 CORE VALUES
 COMMITMENT
 COURAGE
 CONFIDENCE
 COMPASSION
 COLLABORATION
 QUALITY POLICY
In our endeavour to become the most preferred global steel supplier.
JSW Steel shall strive to sustain organizational excellence by continuously
improving quality in all aspects of business.
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JSW STEEL LTD
We are committed to:

 Delivering Product and Services with “Zero Defects”.
 Implementing robust systems and processes to achieve
 “First Time Right”.
 Building an Engaged and Empowered Workforce to enable
innovation, problem solving, and value creation for
stakeholders.
 Achieve Customer Delight by proactively creating product
and service differentiators.
PRODUCT PORTFOLIO:
JSW Steel is globally recognised as a manufacturer of high-end, value-added

steel. The Company has a large bouquet of flat and long products to meet diverse global
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JSW STEEL LTD
needs. The Company is also strengthening its value-added product portfolio to address
the rising demand for such types of steel.
1. Flat Products:
 Hot Rolled
Applications:
Cold rolling and Galvanising
 Drawing and press forming

 Electrical stampings and forming
 Welded tubes and pipes
 Line pipes, structural and generalengineering
 High tensile structural applications
 Chequered sheets and plates for structural use
COLD ROLLED (CRCA COILS )
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JSW STEEL LTD
 Applications:
 Automobile
 White Goods
 Cold Formed Sections
 Drums and Barrels
 Furniture
GALVANISED
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JSW STEEL LTD
 Applications:
 Roofing and Cladding
 Ducting
 Boxes
 Coolers
 Heat Plates
 COLOUR COATED PRODUCTS
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JSW STEEL LTD
Applications:
 White Goods
 Construction
LONG PRODUCTS:
 TMT Bars
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JSW STEEL LTD
 Applications:
 Construction
 Infrastructure
 WIRE RODS
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JSW STEEL LTD
 Applications:
 Welding
 Wire Ropes
 Tools
 Heat Treatment
 Bearings
 Office & Household Equipment
AREA OF OPERATION:
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JSW STEEL LTD
Corporate Office:
Jindal Mansion
5A, Dr. G. Deshmukh Marg.
Mumbai-400026
Tel:23513000, fax: 23526400
JSW Steel Ltd JSW Steel Ltd
Village: Tornagallu B-6 Tarapur MIDC
P.O…. Vidaynagar 583275 Boisar-401506
Dist: Ballari (Karnataka) Dist:THANE,(Maharashtra)
Tel:08395-250120 to 30 Tel:02525-270147
Fax:08395-250138 Fax:125352701489
JSW Steel Ltd Jindal Thermal Power company Ltd.
Vilaage:Vasind,taluk:Shahapur Corporate Office:
Dist:THANE 421604,(Maharashtra) Raheja Towers, East Wing,
Tel: 02527-220162 to 025 6th Floor,M.G road, Bangalore
Fax:02527-220160/90
YEAR OF INCORPORATION
JVSL was incorporated on 15th march 1994 as a private limited company.
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JSW STEEL LTD
Head office: Mumbai.
JSW INFRACTURAL FACLITIES:
 Separate buildings for every department.

 Canteen facilities.
 Waste recycling systems.
 In plant hospital: sanjeevani hospital in collaboration with Apollo hospitals.
 OPG centre for training.
 Separate infrastructure to produce power for own consumption of the factory.
 Restraints for people who live in township.
 Jindal educational and medical trust
JSW STEEL COMPETITORS
Below are the top 3 JSW Steel competitors:

1. TATA STEEL
2. SAIL
3. ARCELORMITTAL
FUTURE GROWTH AND PROSPECTUS:
 JSW steel, India’s Third-Largest steel maker, plans to take its capacity to 40
million tonne over the next 10 years.
 On JSW brand royalty, the company needed to promote the brand, its board had
unanimously decided brand royalty of 0.25% of JSW steel’s consolidated net
profit would be given to promoter group company JSW investment.
 JSW steel plans to invest $22 billion by 2025.
 The JSW maintain market share of 13-14 %, has decided to invest tin the coming
years and be part of the government’s 300-mt-steel-capacity plan by 2025. They
will look to grow both organically, as well as inorganically to achieve this
capacity (40 MT).
LOOKING FORWARD IN FY 2019-20 (VIJAYANAGAR WORKS):
 Higher emphasis on Green initiative during technology upgrades.

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JSW STEEL LTD
 European Design for Steel loading (Logistic Project) – first ever in India to
reduce damage rate and improve dispatch efficiency.
 A Logistics Control Room to act as the central controlling node for all logistics –
inbound, in-plant and outbound.
 Generate applications to create wealth from wastes.
 Capacity augmentation to 13 MTPA (Expected Commissioning by March 2020).
 Cost reduction projects and manufacturing Integration (Expected Commissioning
by March 2020).
SWOT ANALYSIS OF JSW STEEL

SWOT analysis of JSW Steel analyses the brand/company with its strengths,
weaknesses, opportunities & threats. In JSW Steel SWOT Analysis, the strengths and
weaknesses are the internal factors whereas opportunities and threats are the external
factors.
SWOT Analysis is a proven management framework which enables a brand like JSW
Steel to benchmark its business & performance as compared to the competitors and
industry. JSW Steel is one of the leading brands in the industrial products and chemicals
sector.
JSW STEEL STRENGTHS

Below are the Strengths in the SWOT Analysis of JSW Steel:
 India’s third largest steelmaker with a combined capacity of 14+ MTPA hence
enjoys economies of scale
 High growth prospects with a consistently increasing revenue and strong
financial position
 One of the lowest cost steel producers in the world
 First steel producer in the world to use Corex Technology for producing hot
metals
 Operates in both upstream as well as downstream sectors
JSW STEEL WEAKNESSES

Here are the weaknesses in the JSW Steel SWOT Analysis:
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JSW STEEL LTD
 Limited portfolio diversification compared to industry leaders

 Less number of mines under its hood affects availability of raw materials
 Capacity utilization is not cent percent
JSW STEEL OPPORTUNITIES

Following are the Opportunities in JSW Steel SWOT Analysis:
 Increase in demand from all sectors in Indian & Global world
 Mergers & Acquisition to keep steady supply of raw materials
 Product development by investing more in R&D
JSW STEEL THREATS

The threats in the SWOT Analysis of JSW Steel are as mentioned:
1. Cyclical nature of steel industry needs to have efficient process of production
2. Competition from existing and foreign players
3. Government and environment regulations
4. Changes in the prices of raw materials & end products
ANALYSIS OF FINANCIAL STATEMENT
BALANCE SHEET AS AT 31ST MARCH 2017

(RS.’000)
ST
AS AT 31 2017 AS AT 31ST2017
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 5,00,00
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JSW STEEL LTD
Reserves and surplus 16,29,69

21,29,69
LOANS
Secured 12,13,48
Unsecured 3,67,99
15,81,47
DEFFERED TAX LIABILITY (NET) 1,06,85
TOTAL 38,18,01
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 15,90,33
Less: depreciation 10,32,96
Net block 5,57,37
Capital work in progress 54,36
6,11,73
INVESTMENT 1,22,32
CURRENT ASSESTS, LOANS &
ADVANCES
Inventories 19,09,77
Sundary debtors 18,49,35
Cash & bank balances 3,31,32
Loan & advances 5,80,36
46,70,80
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 15,36,09
Provisions 57,57
15,93,66
NET CURRENT ASSESTS 30,77,14
MISCELLANEOUS EXPENDITURE 6,84
Total 3818,01
PROFIT & LOSS ACCOUNT FOR THE ENDED 31ST MARCH 2017
(RS.’000)
AS AT 31-3- 2017 AS AT 31-3-2017

INCOME:
Sales and operating earnings 48,19,19
Other income 80,50
Variation in stock 1,31,07
50,30,76
EXPENCES:
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JSW STEEL LTD
Materials consumed 18,97,28

Purchase of trading goods 8,61,75
Payments to & provision for 9,95,04
Employees
Manufacturing expenses 2,21,37
Excise duty 65,05
Other expenses 5,76,71
Interest & finance charges 2,60,22
Depreciation 1,05,37
Less: transferred to revaluation 1,15 1,04,22
49,81,64
PROFIT BEFORE TAX 49,12
PRIOR YEAR ADJUSTMENT (NET)
PROVISION FOR TAXATION
Current tax 24,42
Deferred tax liability / (Assets) 4,02
PROFIT AFTER TAX 20,68
Balance brought forward from previous year 1
Balance available for appropriation 20,69
Appropriations:
General reserve 20,68
Surplus / (loss) carried to B/S 1
Proposed dividend
Tax on proposed dividend
20,69
Basic earning per share (rupee) 0.41 0.41

(RS.’000)
AS AT 31-3- 2018 AS AT 31-3- 2018

SOURCES OF FUNDS
SHAREHOLDERS FUND
21,55,19
LOANS
Secured 10,27,55
Unsecured 4,53,16
14,80,71
DEFFERED TAX LIABILITY (NET) 87,21
TOTAL 37,23,11
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JSW STEEL LTD
FIXED ASSETS
Net block 6,00,04
6,29,78
INVESTMENT 1,47,26
ADVANCES
51,02,42
PROVISIONS
Provisions 1,20,76
21,62,32
MISCELLANEOUS EXPENDITURE 5,97
TOTAL 37,23,11
(RS.’000)
AS AT 31-3- 2018 AS AT 31-3- 2018

INCOME:
Other income 15,04
Variation in stock (59,27)
59,17,99
EXPENCES:
Employees
Excise duty 72,69
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JSW STEEL LTD

Less: transferred to revaluation 1,03 1,06,94
57,91,50
PROFIT BEFORE TAX 1,26,49
Current tax 63,19
Deferred tax liability / (Assets) (19,64)
PROFIT AFTER TAX 82,94
Balance available for appropriation 82,95
Appropriations:
Proposed dividend 50,00
Tax on proposed dividend 6,41
82,95
Basic earning per share (rupee) 1.66

(RS.’000)
AS AT 31-3- 2019 AS AT 31-3- 2019

SOURCES OF FUNDS
SHAREHOLDERS FUND
22,42,59
LOANS
Secured 11,38,86
Unsecured 5,58,29
16,97.15
TOTAL 40,35,07
FIXED ASSETS
Net block 6,01,55
6,16,84
INVESTMENT 1,48,34
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JSW STEEL LTD

ADVANCES
Loan & advances 850,58
53,98,08
PROVISIONS
Provisions 3,12,02
21,28,19
TOTAL 40,35,07
(RS.’000)
AS AT 31-3- 2019 AS AT 31-3-2019

INCOME:
Other income 31,39
Variation in stock 53,99
74,75,85
EXPENCES:
Employees
Excise duty 70,08
Less: transferred to revaluation 93 1,09,96
72,00,99
PRIOR YEAR ADJUSTMENT (NET) 25,71
Current tax 1,19,50
Deferred tax liability / (Assets) 8,13
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JSW STEEL LTD
PROFIT AFTER TAX 17294

Balance available for appropriation 1,72,98
Appropriations:
Tax on proposed dividend 9,61
1,72,98

(RS.’000)
AS AT 31-3- 2020 AS AT 31-3- 2020

SOURCES OF FUNDS
SHAREHOLDERS FUND
24,14,91
LOANS
Secured 17,23,12
Unsecured 5,36,89
22,60,01
TOTAL 47,66,94
FIXED ASSETS
Net block 8,21,84
Capital work in progress -
8,21,84
INVESTMENT 2,32,91
ADVANCES
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JSW STEEL LTD
58,48,21
PROVISIONS
Provisions 4,80,87
21,36,02
TOTAL 47,66,19
(RS.’000)
AS AT 31-3- 2020 AS AT 31-3 2020
INCOME:
Other income 41,69
Variation in stock (38,45)
74,23,55
EXPENCES:
Employees
Excise duty 75,41
Less: transferred to revaluation 84 1,25,84
70,00,24
Current tax 1,50,84
Deferred tax liability / (Assets) (3,31)
PROFIT AFTER TAX 2,75,78
Balance available for appropriation 2,75,85
Appropriations:
General reserve 1,73,20
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2,75,85
CHAPTER – 4
DATA ANALYSIS AND INTERPRETATION
DATA ANALYSIS
Data analysis is the process is the process of critically examining in detail accounting
information given the financial statements, analyzing financial statement is process of evaluating
relationship between components parts financial statements to obtain a better understanding of
firms position and performance.
INTERPRETATION
Interpretation is the process of making sense of numerical data that been collected,
analyzed and presented.
FINANCIAL ANALYSIS
The process of evaluating business, projects, budget and other finance related entities to
determine their suitability of investment typically financial analysis is used to analyze
whether on entity is stable, solvent, liquid, or profitable enough to be invested in. when
looking at a specific company, the financial analyst will often focus on the income
statement, balance sheet, cash flow statement. In addition, one key area of financial
analysis involves extrapolating the company’s past performance into an estimate of the
company’s future performance.
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CALCULATIONS AND INTERPRETATION OF RATIO’S
1] CURRENT RATIO:
Formula:
Current assets
Current ratio =
Current liabilities
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020
Current assets 46,70,80 51,08,39 53,98,08 58,28,21
Current liabilities 15,93,66 21,62,32 21,28,19 21,36,02

Current ratio 2.93 2.36 2.53 2.72
COMMENTS:
In Jsw steels company the current ratio is 2.72:1 in 2019-2020. it means that for one
rupee of current liabilities, the current assets are 2.72 rupee are available to the them. In
other words the current assets are 2.72 times the current liabilities.
Almost 4 years current ratio is same but current ratio in 2019-2020 is bit higher, which makes
company more sound. The consistency increase in the value of current assets will increase the
ability of the company to meets its obligations & therefore from the point of view of creditors the
company is less risky.
The available working capital with the company is in increasing order.
2016-2017 - 30,77,14
2017-2018 - 29,46,07
2018-2019 - 32,69,89
2019-2020 - 36,92,19
The company has sufficient working capital to meets its urgency/ obligations. A company has a
high percentage of its current assets in the form of working capital, cash that would be more
liquid in the sense of being able to meet obligations as & when they become due. From this
working capital, the company meets its day-to-day financial obligations.
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Thus, the current ratio throws light on the company’s ability to pay its current liabilities out of its
current assets. The Jsw steels Company’s has a very good liquidity position of company.
2] LIQUID RATIO:
Formula:
Quick assets
Liquid ratio =
Quick liabilities
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Quick assets 21,80,67 23,01,01 24,01,30 29,11,31
Quick liabilities 15,93,66 21,62,32 21,28,19 21,36,02

Liquid ratio 1.36 1.06 1.12 1.36
COMMENTS:
The liquid or quick ratio indicates the liquid financial position of an enterprise. Almost in all 4
years the liquid ratio is same, which is better for the company to meet the urgency. The liquid
ratio of the Jsw steels Company has increased from 1.12 to 1.36 in 2019-2020. Day to day
solvency is more sound for company in 2019-2020 over the year 2018-2019.
This indicates that the dependence on the short-term liabilities & creditors are less & the
company is following a conservative working capital policy.
Liquid ratio of Company is favorable because the quick assets of the company are more than the
quick liabilities. The liquid ratio shows the company’s ability to meet its immediate obligations
promptly.
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3] PROPRIETORY RATIO:
Formula:
Proprietary fund
Proprietary ratio = OR
Total fund
Shareholders fund
Proprietary ratio=
Fixed assets + current liabilities
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020
Proprietary fund 21,29,69 21,55,19 22,42,59 24,14,91

Total fund 52,82,53 57,38,17 66,14,92 66,70,05
Proprietary ratio 40 37.55 33.90 36.20
COMMENTS:
The Proprietary ratio of the company is 36.20% in the year 2019-2020. It means that the
for every one rupee of total assets contribution of 36 paise has come from owners fund &
remaining balance 66 paise is contributed by the outside creditors. This shows that the
contribution by outside to total assets is more than the owners fund. This Proprietary
ratio of the Company shows a downward trend for the last 4 years. As the Proprietary
ratio is not favorable the Company’s long-term solvency position is not sound.
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4] STOCK WORKING CAPITAL RATIO:

Formula:
Stock
Stock working capital ratio =
Working Capital
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020
Stock 19,09,77 19,02,79 21,46,20 19,32,88

Working Capital 30,77,14 29,46,07 32,69,89 37,12,19
Stock working 62.06 64.58 65.63 52.06
capital ratio
COMMENTS:
This ratio shows that extend of funds blocked in stock. The amount of stock is increasing from
the year 2016-2017 to 2018-2019. However in the year 2019-2020 it has declined to 52%. In the
year 2018-2019 the sale is increased which affects decrease in stock that effected in increase in
working capital in 2019-2020.
It shows that the solvency position of the company is sound.
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5] CAPITAL GEARING RATIO:

Formula:
Preference capital+ secured loan
Capital gearing ratio =

Equity capital & reserve & surplus
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

12,13,48 10,27,56 11,38,86 1,72,312
Secured loan
Equity capital & 21,29,69 21,55,19 22,42,59 2,41,491
reserves & surplus
Capital gearing ratio 56.97 47.67 50.78 71
COMMENTS:
Gearing means the process of increasing the equity shareholders return through the use of debt.
Capital gearing ratio is a leverage ratio, which indicates the proportion of debt & equity in the
financing of assets of a company.
For the last 3 years [i.e.2016-2017 TO 2018-2019] Capital gearing ratio is all most same
which indicates, near about 50% of the fund covering the secured loan position. But in
the year 2019-2020 the Capital-gearing ratio is 71%. It means that during the year 2019-
2020 company has borrowed more secured loans for the company’s expansion.
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6] DEBT EQUITY RATIO:

Formula:
Total long term debt
Debt equity ratio =

Total shareholders fund
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020
Long term debt 15,81,47 14,80,70 16,97,15 22,60,01
Shareholders fund 21,29,69 21,55,19 22,42,59 24,14,91
Debt Equity Ratio 0.74 0.68 0.75 0.93
COMMENTS:
The debt equity ratio is important tool of financial analysis to appraise the financial structure of
the company. It expresses the relation between the external equities & internal equities. This ratio
is very important from the point of view of creditors & owners.
The rate of debt equity ratio is increased from 0.74 to 0.93 during the year 2016-2017 to 2019-
2020. This shows that with the increase in debt, the shareholders fund also increased. This
shows long-term capital structure. The lower ratio viewed as favorable from long term creditors
point of view.
7] GROSS PROFIT RATIO:

Formula:
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Gross profit
Gross profit ratio = * 100
Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Gross profit 24,54,48 37,65,90 45,57,45 42,37,52
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Gross profit Ratio 56.48 73.80 66.27 62.22
COMMENTS:
The gross profit is the profit made on sale of goods. It is the profit on turnover. In the
year 2016-2017 the gross profit ratio is 56.48%. It has increased to 73.80% in the year
2016-2017 due to increase in sales without corresponding increase in cost of goods sold.
However the gross profit ratio decreased to 66.27% in the year 2018-2019.
It is further declined to 62.22% in the year 2019-2020, due to high cost of purchases &
overheads. Although the gross profit ratio is declined during the year 2017-2018 to 2019-2020.
The net sales and gross profit is continuously increasing from the year 2016-2017 to 2019-2020.
8] OPERATING RATIO:
Formula:
COGS+ operating expenses
Operating ratio = *100

Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

COGS + Operating 18,90,98 + 21,96,32 + 28,33,02 + 2,57,226+
expenses
2,21,37 + 2,69,98 + 3,07,51 + 27,141+
5,76,71 7,62,23 9,17,94 84,478

Net sales 43,45,46 51,02,37 68,76,89 6,80,978
Operating ratio 61.88% 63.27% 59% 54.16%
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COMMENTS:
The operating ratio shows the relationship between costs of activities & net sales.
Operating ratio over a period of 4 years when compared that indicate the change in the
operational efficiency of the company.
The operating ratio of the company has decreased in all 4 year. This is due to increase in the cost
of goods sold, which in 2016-2017 was 61.88%, in 2017-2018 was 63.27%, in 2018-2019 was
59% & in 2019-2020 it is 54.16%. though the cost has increased in 2017-2018 as compared to
2016-2017, it is reducing continuously over the next two years, indicate downward trend in cost
but upward / positive trend in operational performance.
9] EXPENSE RATIO:
The ratio of each item of expense or each group of expense to net sales is known as ‘Expense
ratio’. The expense ratio brings out the relationship between various elements of operating cost
& net sales. Expense ratio analyzes each individual item of expense or group of expense&
expresses them as a percentage in relation to net sales.
A] MANUFACTURING EXPENSES:
Formula:
Manufacturing expenses
Manufacturing expense ratio = *100
Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Manufacturing 2,21,37 2,69,98 3,07,51 2,71,41
expenses
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Net sales 43,45,46 51,02,37 68,76,89 68,09,78

Manufacturing 5% 5.29% 4.47% 3.98%
expenses ratio
COMMENTS:
The manufacturing expense is shows the downward trend. During the year
2016–2017 to 2017-2018 the manufacturing expense increased because there is increase in the
charges like labour, rent , power & electricity, repair to plant & machinery & miscellaneous
works expenses. The manufacturing expense during the year 2016-2017 to 2019-2020 is
decreased from 5% to 3.96%. This indicates that the company has control over the manufacturing
expense.
B] OTHER EXPENSES:
Formula:
Other expenses
Other expense ratio = *100
Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

5,76,71 7,62,23 9,17,94 8,44,78
Other expenses
Net sales 43,45,46 51,02,37 68,76,89 68,09,78
Other expenses ratio 13.2% 14.93% 13.34% 12.40%
COMMENTS:
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The other expense of company is increased during the 2016-2017 to 2018-2019, because increase
in the charges of rent of office, equipment lease rental, printing & stationary, advertisement &
publicity, transport outward & other charges. But during the year 2019-2020 the other expenses
is decrease from 13.34% to 12.40%. Because decrease in equipment lease rental, advertisement
& publicity, transport charges, commission & discount, sales tax & purchase tax . This indicates
that the company also controlling the other expenses.
10) NET PROFIT RATIO

Formula:
NPAT
Net profit ratio = * 100
Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020
NPAT 20,98 82,94 1,72,94 2,75,78

Net sales 434546 51,02,37 68,76,89 68,09,78
Net profit ratio 0.48 1.6 2.5 4.04
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COMMENTS:
The net profit ratio of the company is low in all year but the net profit is increasing order from
this ratio of 4 year it has been observe that the from 2016-2017 to 2019-2020 the net profit is
increased i.e. in 2018 it is increased by 1.12 in 2018-2019 by 0.9 & in 2019-2020 by 1.54.
Profitability ratio of company shows considerable increase. Company’s sales have increased in
all 4 years & at the same time company has been successful in controlling the expenses i.e.
manufacturing & other expenses.
It is a clear index of cost control, managerial efficiency & sales promotion.
11] STOCK TURNOVER RATIO:

Formula:
COGS
Stock Turnover Ratio =
Average stock
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

COGS 18,90,98 21,96,32 28,33,02 25,72,26
Average stock 5,49,90 5,97,58 6,73,11 6,89,30
Stock Turnover 3.4 3.6 4.20 3.73
Ratio
COMMENTS:
Stock turnover ratio shows the relationship between the sales & stock it means how stock is
being turned over into sales.
The stock turnover ratio is 2016-2017 was 3.4 times which indicate that the stock is being turned
into sales 3.4 times during the year. The inventory cycle makes 3.4 round during the year. It
helps to work out the stock holding period, it means the stock turnover ratio is 3.4 times then the
stock holding period is 3.5 months [12/3.4=3.5months]. This indicates that it takes 3.5 months
for stock to be sold out after it is produced.
For the last 4 years stock turnover ratio is lower than the standard but it is in increasing order. In
the year 2016-2017 to 2019-2020 the stock turnover ratio has improved from 3.4 to 3.73 times, it
means with lower inventory the company has achieved greater sales. Thus, the stock of the
company is moving fast in the market.
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12] RETURN ON CAPITAL EMPLOYED:

Formula:
NPAT
Return on capital employed = *100

Capital employed
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

20,68 82,94 1,72,94 2,75,78
NPAT
Capital employed 38,18,01 37,23,11 40,35,07 47,66,93
Return on capital 0.54 2.23 4.28 5.79
employed
COMMENTS:
The return on capital employed shows the relationship between profit & investment. Its purpose
is to measure the overall profitability from the total funds made available by the owner &
lenders.
The return on capital employed of Rs.5 indicate that net return of Rs.5 is earned on a capital
employed of Rs.100. this amount of Rs.5 is available to take care of interest, tax,& appropriation.
The return on capital employed is show-increasing trend, i.e. from 0.54 to 5.79. All of sudden in
2016-2017 the return on capital employed increased from 0.54 to 5.79. This indicates a very high
profitability on each rupee of investment & has a great scope to attract large amount of fresh
fund.
13] EARNING PER SHARE:
Formula:
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NPAT
Earning per share =

Number of equity share
2016-2017 2017-2018 2018-2019 2019 -2020
NPAT 20,98,000 82,94,000 1,72,94,000 2,75,78,000

No.ofequity share 50,00,000 50,00,000 50,00,000 50,00,000
Earning per share 0.41 1.66 3.46 5.52
COMMENTS:
Earnings per share are calculated to find out overall profitability of the company. Earning per
share represents the earning of the company whether or not dividends are declared.
The Earning per share is 5.52 means shareholder gets Rs. 5.52 for each share of Rs. 10/-. In other
words the shareholder earned Rs. 5.52 per share.
The net profit after tax of the company is increasing in all years. Therefore the shareholders
earning per share is increased continuously from 2016-2017 to 2019-2020 by 0.41 to 05.52. This
shows it is continuous capital appreciation per unit share by 0.41 to 05.52.
14] DIVIDEND PAYOUT RATIO:
Formula:
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Dividend per share

Dividend Payout ratio = * 100
Earning per share
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Dividend per share - 1 1.50 1.80
Earning per share 0.41 1.66 3.46 5.52

Dividend payout - 60.24 43.35 32.60
ratio
COMMENTS:
In the year 2017-2018 and 2017-2018 the Dividend pay out ratio is 60.24 and 43.35 respectively.
In the year 2017-2018 the company has declared the dividend 60.24 and the balance 39.76 is
retained with them for the expansion. The company has not earned more profit in the year 2016-
2017 hence the company has not declared dividend in the year 2016-2017. However the
company has declared more dividends in the year 2017-2018 as the company has sufficient
profit. In the year 2019 the company has declared 1.50 dividends per share hence the earning per
share has doubled. From this one can say that the company is more conservative for expansion.
15] COST OF GOODS SOLD:

Formula:
COGS
Cost of goods sold Ratio = * 100
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Net sales
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

COGS 18,90,98 21,96,32 28,33,02 25,72,26
Net sales 43,45,46 51,02,37 68,76,89 68,09,78

Cost of goods sold 43.51 43.04 41.19 37.77
ratio
COMMENTS:
This ratio shows the rate of consumption of raw material in the process of production. In
the year 2016-2017 the cost of goods sold ratio is 43.51% so the gross profit is 56.49%. it
indicates that in 2016-2017, the 43% of raw material is consumed in the process of production.
16] CASH RATIO:

Formula:
Cash + Bank + Marketable securities
Cash ratio =
Total current liabilities
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Cash + Bank + 3,31,32 3,95,25 4,49,74 6,04,64
Marketable
securities
Total current 15,93,66 21,62,32 21,28,19 21,36,02
liabilities
Cash ratio 0.20 0.18 0.21 0.28
COMMENTS:
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This ratio is called as super quick ratio or absolute liquidity ratio. In the year 2016-2017 the cash
ratio is 0.20 & then it is decreased to 0.18 in the year 2017-2018. Then again it is increased to
0.21 in the year 2018-2019& 0.28 in the year 2019-2020.
This shows that the company has sufficient cash, bank balance, & marketable securities to meet
any contingency.
17] RETURN ON PROPRIETORS FUND:

Formula:
NPAT
Return on proprietors fund = * 100
Proprietors fund
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

NPAT 20,68 82,94 1,72,94 2,75,78
Proprietors fund 21,29,69 21,55,19 22,42,59 24,14,91
Return on 0.97 3.84 7.71 11.41
proprietors fund
COMMENTS:
Return on proprietors fund shows the relationship between profits & investments by proprietors
in the company. In the year 2017-2018 the return on proprietors fund is 3.84% it means the net
return of Rs. 3 approximately is earned on the each Rs. 100 of funds contributed by the owners.
During the last 4 years the rate of return on proprietors fund is in increasing order. The return on
proprietors fund during the year 2016-2017 to 2019-2020 is increased from 0.97% to 11.41%.
It shows that the company has a very large returns available to take care of high dividends, large
transfers to reserve etc. & has a great scope to attract large amount of fresh fund from owners.
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18] RETURN ON EQUITY:

Formula:
NPAT
Return on equity share capital = * 100
No. of equity share
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

NPAT 20,68 82,94 1,72,94 2,75,78
No. of equity share 50,000 50,000 50,000 50,000
Return on equity 4.13 16.5 34.58 55
share capital
COMMENTS:
This ratio shows the relationship between profit & equity shareholders fund in the
company. It is used by the present / prospective investor for deciding whether to
purchase, keep or sell the equity shares.
In the year 2017-2018 the return on proprietors fund is 16.5%, which means the net return of Rs.
16, is earned on the each Rs.100 of the funds contributed by the equity shareholders.
The rate of return on equity share capital is increased from4.13% to 55% during the year 2016-
2017 to 2019-2020. This shows that the company has a very large returns available to take care
of high equity dividend, large transfers to reserve, & also company has a great scope to attract
large amount to fresh funds by issue of equity share & also company has a very good price for
equity shares in the BSE.
19] OPERATING PROFIT RATIO:
Formula:
Operating profit
Operating profit ratio = *100

Net sales
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COMMENTS:
Operating profit ratio shows the relationship between operating profit & the sales. The
operating profit is equal to gross profit minus all operating expenses or sales less cost of
goods sold and operating expenses.
The operating profit ratio of 7.11% indicates that average operating margin of Rs.7 is
earned on sale of Rs. 100. this amount of Rs. 7 is available for meeting non operating
expenses. In the other words operating profit ratio 7.11% means that 7.11% of net sales
remains as operating profit after meeting all operating expenses.
During the last 4 years the operating profit ratio is increased from 7.11% to 9.38%. It
indicates that the company has great efficiency in managing all its operations of
production, purchase, inventory, selling and distribution and also has control over the
direct and indirect costs. Thus, company has a large margin is available to meet non-
operating expenses and earn net profit.
20] CREDITORS TURNOVER RATIO:
Formula:
Net credit purchase
Credit turnover ratio =
Average creditors
Months in a year
Average age of accounts payable =
Credit turnover ratio
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

Net credit purchase 21,21,43 22,71,80 29,08,61 25,29,04
Average creditors 5,88,42 7,91,21 6,96,86 7,80,39
Credit turnover ratio 3.6 times 3.6 times 4 times 3 times
Average age of 3.3 months 3.3 months 3 months 4 months
accounts payable
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COMMENTS:
The creditors turnover ratio shows the relationship between the credit purchase and
average trade creditors. It shows the speed with which the payments are made to the
suppliers for the purchase made from them.
The credit turnover ratio of 4, indicate that the creditors are being turned over 4times during the
year. It indicates the number of rounds taken by the credit cycle of payables during the year.
There is no standard ratio in absolute term. The creditors ratio for the year 2016-2017 and 2017-
2018 as good as the same, but it is increased by 3.6 to 4 in 2018-2019.this means the company
has settled the creditors dues very fastly than the previous year.
DEBTORS TURNOVER RATIO:
Formula:
Credit sales
Debtors turnover ratio =
Average debtors
Days in a year
Debt collection period =
Debtor’s turnover
YEAR 2016-2017 2017-2018 2018-2019 2019 -2020

47,77,48 55,21,33 74,87,36 68,09,78
Credit sales
Average debtors 18,49,35 19,05,76 19,51,56 23,06,67
Debtors turnover 2.5 times 2.8 times 3.8 times 2.9 times
ratio
Debt collection 146 days 130 days 96 days 125 days
period
COMMENTS:
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Debtor’s turnover ratio is alternative known as “ Accounts Receivable Turnover Ratio”. This
ratio measures the collectibility of debtors & other accounts receivable, it means the rate at which
the trade debts are being collected.
The Debtors turnover ratio of 2.5 indicates that the debtors are being turned over 2.5 times during
the year. It means that the credit cycle of debtors makes 2.5 rounds during the year. It helps to
workout the debt collection period i.e. 146 days [365/ 2.5 = 146]. This indicates that it take146
days on an average for the debtors to be settled. Debt collection period indicates the duration of
the credit cycle of the debtors.
The Debtors turnover ratio is almost same during the year 2016-2017 to
2019-2020, which indicates that the debts are being collected at a fast speed during the
year. The operating cycle of the debtors is short. In other words the debts collection
period is short which result into less chance of bad debts.
COMPRASION OF GROSS PROFIT RATION FROM 2016/17 To 2019/20.
Gross profit Ratio

80
70
60
50
40
30
20
10
0
2016-17 2017-2018 2018-2019 2019 -2020
COMMENTS:
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The gross profit is the profit made on sale of goods. It is the profit on turnover. In the
year 2016-2017 the gross profit ratio is 56.48%. It has increased to 73.80% in the year
2016-2017 due to increase in sales without corresponding increase in cost of goods sold.
However the gross profit ratio decreased to 66.27% in the year 2018-2019.
It is further declined to 62.22% in the year 2019-2020, due to high cost of purchases &
overheads. Although the gross profit ratio is declined during the year 2017-2018 to 2019-
2020. The net sales and gross profit is continuously increasing from the year 2016-2017
to 2019-2020.
COMPRASION OF NET PROFIT RATION FROM 2016/17 To 2019/20.
NET PROFIT
9
8
7
6
5
4
3
2
1
0
2016-2017 2017-2018 2018-2019 2019 -2020
COMMENTS:
The net profit ratio of the company is low in all year but the net profit is increasing order
from this ratio of 4 year it has been observe that the from 2016-2017 to 2019-2020 the
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net profit is increased i.e. in 2018 it is increased by 1.12 in 2018-2019 by 0.9 & in 2019-
2020 by 1.54.
Profitability ratio of company shows considerable increase. Company’s sales have

increased in all 4 years & at the same time company has been successful in controlling
the expenses i.e. manufacturing & other expenses.
It is a clear index of cost control, managerial efficiency & sales promotion.
COMPRASION OF ERARNING PER SHARE FROM 2016/17 To 2019/20.
0
2016-17 2017-18 2018-19 2019-20
COMMENTS:
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Earnings per share are calculated to find out overall profitability of the company. Earning per
share represents the earning of the company whether or not dividends are declared.
The Earning per share is 5.52 means shareholder gets Rs. 5.52 for each share of Rs. 10/-. In other
words the shareholder earned Rs. 5.52 per share.
The net profit after tax of the company is increasing in all years. Therefore the shareholders
earning per share is increased continuously from 2016-2017 to 2019-2020 by 0.41 to 05.52. This
shows it is continuous capital appreciation per unit share by 0.41 to 05.52.
COMPARATIVE BALANCE SHEET OF JSW STEEEL LTD
Calculation of Comparative balance sheet 2017/18.
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Particular 2017
Liabilites
Share holders funds
Calculation of Comparative balance sheet 2019/20.
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Particular 2019 2020 Absolute change Percentage %
Liabilites
Share holders funds

Eq share capital 50000 50000 - -
Non current liability

Reserve and surplus
secured loan 113886 172312 58426 51.3
Unsecured loan 55829 53689 -2140 -3.8
Current Liabilities
Current liability 181617 165515 -16102 -8.86
Provisions 31202 48087 16885 54.12

Total Liabilities 606793 681094 74301 12.29
Assets
Fixed assets
Gross Block 60155 82184 22029 36.6
Investment 14834 23291 8457 57.07
Current Assets
Stocks (Inventory) 214620 193288 -21332 -9.93
Debtors 195156 230667 35511 18.19
Cash 44974 60464 15490 34.44
Loans 85058 100402 15344 18.04
A)_Statement showing of Comparative balance sheet from 2017 To 2020
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B) Statement showing Trend analysis
CHAPTER – 5
FINDING AND SUGGESTION, CONCLUSION
FINDINGS
 In construction stage, high amount of capital is required for commissioning,
installing, erection of the unit. So loans are raised as per the requirements of the
project.
 There is no Repayment of borrowings in the current year; it will start after the
commissioning of first unit.
 The projection becomes more useful when the estimated information can be
compared with actual information as it develops. The company is Utilizing the cash
flow projection to assist in setting new goals and planning operations for more profit.
 Current liabilities are double than the current assets in the current year. This
confirms that the company has used long-term finances even for the current
assets resulting into an improvement in the liquidity position of the company.
 Subsidiary only but not for the long term as investments is not the core business of
the company. The amount invested in mutual funds is withdrawn at the end of the
year.
Page 80
JSW STEEL LTD
 Investing Activities have been the major source of outflow of cash due to purchase of
Fixed Assets. The cash inflow has been provided by operating and
financing activities.
 Issue of share capital and proceed from the long term borrowings are the major
source of financing inflow.
 Other income is higher predominantly on account of gain on exchange (net),

dividend and interest received during the year.
 The Company does not deal in stock market or securities.
 Different depreciation rates are charged as per the Companies Act, 1956 and W.D.V.
method is followed for calculation of depreciation.
Page 81
JSW STEEL LTD
SUGGESTIONS
 The JSW limited standard current ratio below the standard, so the company must
try to improve its liquidity position.
 The JSW must try maintaining its sufficient cash balance to its current needs or
liabilities
 The company must try to utilize its ratio analysis effectively minimizing the cost
production with compromise with quality
 The company must try to maintain a balance between outsider fund (debit) and
owned fund (equity) to increcese the earning to the share holder.
 The company needs to increase its inventory turnover ratio by converting more
stock into sales.
Page 82
JSW STEEL LTD
 CONCLUSION
The focus of financial analysis is on key figures contained in the financial statements and
the significant relationship that exits. The reliability and significance attach to the ratios
will largely on hinge upon the quality of data on which they are best. They are as good
for as bad as the data itself.
Financial ratios are a useful by product of financial statement and provide standardized
measures of firm’s financial position, profitability and riskiness. It is an important and
powerful tool in the hands of financial analyst. By calculating one or other ratio or group
of ratios he can analyze the performance of a firm from the different point of view.
The ratio analysis can help in understanding the liquidity and short-term solvency of the
firm, particularly for the trade creditors and banks. Long-term solvency position as
measured by different debt ratios can help a debt investor or financial institutions to
evaluate the degree of financial risk. The operational efficiency of the firm in utilizing its
assets to generate profits can be accessed on the basis of different turnover ratios. The
profitability of the firm can be analyzed with the help of profitability ratios.
However the ratio analyses suffer from different limitations also. The ratios need not be
taken for granted and accepted at face values. These ratios are numerous and there are
wide spread variations in the same measure. Ratios generally do the work of diagnosing
a problem only and failed to provide the solution to the problem.
This report includes in the depth analysis of ratio analysis on the basis of the following
conclusions has been made
 JSW is a growing company and the third largest producer of steel in India ,
production f other items is also increasing because in domestic and international
demand of steel products is continuously rising
 With the ongoing expansion activities, ratio analysis careers immense importance
in an organization such as JSW.
 JSW ltd is one of the leading steel companies in India which is rapidly growing
year by year compare to other steel industries. They manufacture in large quantity
so that they can easily reduce the manufacturing cost by this why they are able to
earn more from the above.
So I conclude that this company financially sounds.
Page 83
JSW STEEL LTD
BIBLIOGRAPHY
REFERENCE BOOKS –
SL NAME OF THE TEXT BOOK NAME OF

NO AUTHOR
1 FINANCIAL MANAGEMENT R.P.RUSTAGI Theory,
Concepts &
problems
2 FINANCIAL MANAGEMENT M.Y. KHAN Text &

P. K. JAIN Problems
3 MANAGEMENT ACCOUNTING AINAPURE
4 FINANCIAL MANAGEMENT L.N. CHOPDE

D.N. CHOUDHARI
S.L. CHOPDE
ANAUAL REPORTS OF JSW STEELS LIMITED
 2016-2017
 2017-2018
 2018-2019
 2019-2020
WEBSIDES -
 www.bizd.ac.uk/compfact/ratio
 www.cecunc.org.com/business/financial
 www.zeromillion.com.business/financial
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JSW STEEL LTD

STEEL INDUSTRY PROFILE:

THE GLOBAL STEEL INDUSTRY

WORLD STEEL INDUSTRY PRODUCTION

COUNTRY STEEL PRODUCTION (mpta)

INDIAN STEEL INDUSTRY:

THEORETICAL BACKGROUND OF THE STUDY

MEANING OF FINANCIAL MANAGEMENT

In simple words, financial management means raising of adequate funds at the

Hoagland says, “Financial management is concerned mainly with such

According to Soloman, “Financial management it’s concerned with the

UTILITIES OF FINANCIAL MANAGEMENT

The investment decision

Investment decision is a long term financial decision. It is concerned with allocation

The second major decision involved in financial management is financing decision.

DIVIDEND POLICY DECISION

Accounting Policies And Notes

 Parities balance subject to confirm reconciliation of final statement, if any.

 Extra ordinary items represents adjustment of income relating to earlier year.

2) Sales turnover, duties and Taxes

4) Fixed Assets and Depreciation

6) Foreign Currency Transaction

A financial statement is an organized collection of data according to logical and

Financial Management is the crucial part of any business operations and it is

functions. The financial performance of any company is crucial for its

Financial performance analysis is the process of identifying the financial strengths

Trend analysis evaluates an organization’s financial information over a period of

i) The income statement

Financial statement analysis:

About comparative balance sheet

About Trend analysis

MEANING OF RATIO ANALYSIS :-

One of the most important method of analysis of financial statement is

Ratio is a term, which establishes the relationship between two figures.

1 Pure ratio is expressed as 2:1.

A ratio has to assess the performance and financial condition of an

On the basis of objectives and purposes ratio are classified as under:

# Gross Profit Ratio

# Return on total Assets

3.IN RELATION TO EQ. SH. HOLDERS FUNDS

# Return on Equity Share Holder’s Fund

# Dept Equity ratio

ACTIVITY / EFFICIENCY RATIO

IMPORTANCE OF RATIO ANALYSIS

In application to studying the rupee amount shown in the

Ratios help to make qualitative judgments depending upon the

4) Inter firm comparison:

6) Useful for Budgetary Control:

7) Useful for Decision making:

aggressive policy. Similarly for the measure of Aggressive Financing Policy

TITLE OF THE STUDY

STATEMENT OF THE PROBLEM

Studying the financial performance of the present project on JSW steels

 A substantial portion of total investment is invested in current assets.

NEED OF THE STUDY :-

As finance is the lifeblood of any industry constant focus on the financial

OBJECTIVES OF THE STUDY:-

 To analyze the overall financial performance of JSW Steel Ltd.

 To check the position of assets and liabilities of the company.

 To determine the solvency position of the company.

 To study the balance of cash and credit in the organization.

SCOPE OF THE STUDY: