INDEX

Chapter PARTICULA PAGE

No. RS NO.

Certificate 2

Declaration 3

Acknowledgement 4

1 Introduction of Steel Industry in India 6-8

2 Objective 9

3 Tata Steel & Jindal Steel 10-20

4 Theoretical Framework 21-29

5 Research Methodology 30-31

6 Data Analysis And Interpretation 32-41

7 Conclusion 42

8 Recommendation 43

9 Bibliography 44

10 Annexure 45-48

5
 INTRODUCTION OF STEEL INDUSTRY IN INDIA
INTRODUCTION
India was the world’s third-largest steel producer in 2016. The growth
in the Indian steel sector has been driven by domestic availability of
raw materials such as iron ore and cost-effective labour. Consequently,
the steel sector has been a major contributor to India’s manufacturing
output.
The Indian steel industry is very modern with state-of-the-art steel
mills. It has always strived for continuous modernisation and up-
gradation of older plants and higher energy efficiency levels.
Indian steel industries are classified into three categories such as major
producers, main producers and secondary producers.

MARKET SIZE
India’s crude steel output grew 5.87 per cent year-on-year to 101.227
million tonnes (MT) in CY 2017. Crude steel production during April-
December 2017 grew by 4.6 per cent year-on-year to 75.498 MT.
India’s finished steel exports rose 102.1 per cent to 8.24 MT, while
imports fell by 36.6 per cent to 7.42 MT in 2016-17. Finished steel
exports rose 52.9 per cent in April-December 2017 to 7.606 MT, while
imports increased 10.9 per cent to 6.096 MT during the same period.
Total consumption of finished steel grew by 5.2 per cent year-on-year
at 64.867 MT during April-December 2017.

6
INVESTMENTS
Steel industry and its associated mining and metallurgy sectors have
seen a number of major investments and developments in the recent
past.
According to the data released by Department of Industrial Policy and
Promotion (DIPP), the Indian metallurgical industries attracted Foreign
Direct Investments (FDI) to the tune of US$ 10.419 billion in the period
April 2000–September 2017.
Some of the major investments in the Indian steel industry are as
follows:
JSW Steel has planned a US$ 4.14 billion capital expenditure
programme to increase its overall steel output capacity from 18 million
tonnes to 23 million tonnes by 2020.
Rashtriya Ispat Nigam Ltd (RINL) has signed a Memorandum of
Understanding (MOU) with Kudremukh Iron Ore Company Ltd for
setting up of a 1.2 million ton per annum (MTPA) plant project at
Vishakhapatnam.
Tata Steel has decided to increase the capacity of its Kalinganagar
integrated steel plant from 3 million tonnes to 8 million tonnes at an
investment of US$ 3.64 billion.
GOVERNMENT INITIATIVES
Some of the other recent government initiatives in this sector are as
follows:
• Government of India’s focus on infrastructure and restarting road
projects is aiding the boost in demand for steel. Also, further
likely acceleration in rural economy and infrastructure is
expected to lead to growth in demand for steel.

7
 • The Union Cabinet, Government of India has approved the
National Steel Policy (NSP) 2017, as it seeks to create a globally
competitive steel industry in India. NSP 2017 targets 300 million
tonnes (MT) steel-making capacity and 160 kgs per capita steel
consumption by 2030
• Metal Scrap Trade Corporation (MSTC) Limited and the Ministry
of Steel have jointly launched an e-platform called 'MSTC Metal
Mandi' under the 'Digital India' initiative, which will facilitate sale
of finished and semi-finished steel products.
• The Ministry of Steel is facilitating setting up of an industry driven
Steel Research and Technology Mission of India (SRTMI) in
association with the public and private sector steel companies to
spearhead research and development activities in the iron and
steel industry at an initial corpus of Rs 200 crore (US$ 30 million).

ROAD AHEAD
India is expected to overtake Japan to become the world's second
largest steel producer soon, and aims to achieve 300 million tonnes of
annual steel production by 2025-30.
India is expected to become the second largest steel producer in the
world by 2018, based on increased capacity addition in anticipation of
upcoming demand, and the new steel policy, that has been approved
by the Union Cabinet in May 2017, is expected to boost India's steel
production.* Huge scope for growth is offered by India’s comparatively
low per capita steel consumption and the expected rise in consumption
due to increased infrastructure construction and the thriving
automobile and railways sectors.

8
 OBJECTIVES OF STUDY

The present study “A COMPARATIVE FINANCIAL PERFORMANCE

ANALYSIS OF TATA STEEL & JINDAL STEEL AND POWER BY
MEANS OF RATIOS.”

Has been designed to achieve the following objectives:-

1. To study the financial position of Tata steel and Jindal steel.

2. in respect of above objective we are trying to judge the financial performance

of Tata steel and Jindal steel.

SCOPE OF THE STUDY

The present study is confined to the two leading units in steel industry namely
JINDAL STEEL LTD and TATA STEEL LTD. The study covers a period of five years
from 2013-14 to 2016-17.

This period is enough to cover both the short and medium terms fluctuations and
to set reliability.

9
COMPANY PROFILE

10
 INTRODUCTION
Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an
Indian multinational steel-making company headquartered in Mumbai,
Maharashtra, India, and a subsidiary of the Tata Group.

It is one of the top steel producing companies globally with annual crude steel
deliveries of 27.5 million tonnes (in FY17), and the second largest steel company
in India (measured by domestic production) with an annual capacity of 13 million
tonnes after SAIL.

Tata Steel has manufacturing operations in 26 countries, including Australia,

China, India, the Netherlands, Singapore, Thailand and the United Kingdom, and
employs around 80,500 people. Its largest plant located in Jamshedpur,
Jharkhand. In 2007 Tata Steel acquired the UK-based steel maker Corus.

It was ranked 486th in the 2014 Fortune Global 500 ranking of the world's biggest
corporations. It was the seventh most valuable Indian brand of 2013 as per Brand
Finance.

Tata Steel is headquartered in Mumbai, Maharashtra, India and has its marketing
headquarters at the Tata Centre in Kolkata, West Bengal. It has a presence in
around 50 countries with manufacturing operations in 26 countries including:
India, Malaysia, Vietnam, Thailand, UAE, Ivory Coast, Mozambique, South Africa,
Australia, United Kingdom, The Netherlands, France and Canada.

11
Tata Steel primarily serves customers in the automotive, construction, consumer
goods, engineering, packaging, lifting and excavating, energy and power,
aerospace, shipbuilding, rail and defence and security sectors.

Tata Iron and Steel Company was founded by Jamshedji Tata and established by
Dorabji Tata on 26 August 1907, as part of his father Jamshetji's Tata Group. By
1939 it operated the largest steel plant in the British Empire. The company
launched a major modernization and expansion program in 1951. Later in 1958,
the program was upgraded to 2 million metric tonnes per annum (MTPA) project.
By 1970, the company employed around 40,000 people at Jamshedpur, with a
further 20,000 in the neighbouring coal mines. In 1971 and 1979, there were
unsuccessful attempts to nationalise the company. In 1990, it started expansion
plan and established its subsidiary Tata Inc. in New York. The company changed
its name from TISCO to Tata Steel in 2005.

Tata Steel on Thursday, 12 February 2015 announced buying three strip product
services centres in Sweden, Finland and Norway from SSAB to strengthen its
offering in Nordic region. The company, however, did not disclose value of the
transactions. In September 2017, ThyssenKrupp in Germany and Tata Steel
announced plans to combine their European steelmaking businesses. The deal
will structure the European assets as ThyssenKrupp Tata Steel, a 50-50 joint
venture. The announcement estimated that the company would be Europe’s
second-largest steelmaker.

12
 HERITAGE
Jamsetji Nusserwanji Tata (1839 – 1904)
The foundation of what would grow to become the
Tata group was laid in 1868 by Jamsetji Nusserwanji
Tata – then a 29-year-old who had learned the ropes
of business while working in his father’s banking firm
– when he established a trading company in
Bombay.
A visionary entrepreneur, an avowed nationalist and
a committed philanthropist, Jamsetji Tata helped
pave the path to industrialisation in India by seeding
pioneering businesses in sectors such as steel,
energy, textiles and hospitality.

Ratan Tata (1937)

The beginning of the 1990s ushered in plenty of

change in Indian business. Economic reforms
opened up many sectors, signalling increased
competition and the arrival of foreign companies.
JRD Tata’s death, in 1993, symbolised the end of an
era in more ways than one.
Ratan Tata, who took over as chairman in 1991,
guided the Tata group in a fast-changing business
environment where old rules did not apply and new
realities were taking hold.
Mr Tata retired as Chairman of Tata Sons on
December 28, 2012.

13
Natarajan Chandrasekaran (1963)

Natarajan Chandrasekaran (53) is Chairman of the board

of Tata Sons, the holding company and promoter of more
than 100 Tata operating companies with aggregate
annual revenues of more than US $100 billion. He joined
the board of Tata Sons in October 2016 and was
appointed Chairman in January 2017.

Chandra also chairs the boards of several group

operating companies, including Tata Steel, Tata Motors,
Tata Power, Indian Hotels and Tata Consultancy Services
(TCS) — of which he was chief executive from 2009-17.

His appointment as chairman followed a 30-year

business career at TCS, which he joined from university.
Chandra rose through the ranks at TCS to become CEO
and managing director of the leading global IT solutions
and consulting firm.

Mission Statement: Consistent with the vision and values of the

founder Jamsetji Tata, Tata Steel strives to strengthen India’s industrial
base through effective utilization of staff and materials. The means envisaged
to achieve this are best technology and high productivity, consistent with
modern management practices.

Tata Steel recognizes that while honesty and integrity are essential ingredients of
a strong and stable enterprise, profitability provides the main spark for economic
activity.

Overall, the Company seeks to scale the heights of excellence in all it does in an
atmosphere free from fear, and thereby reaffirms its faith in democratic values.

14
 Products and brands
Tata Steel’s products include hot and cold rolled coils and sheets, galvanised
sheets, tubes, wire rods, constructions re-bars, rings and bearings. The products
are targeted at automobiles, white goods, construction and infrastructure
markets. In an effort to de-commoditise steel, the company has introduced
brands like

• Tata Wiron (wire rods for farming and fencing segment),

• Tata Steelium (cold rolled steel for auto ancillaries and the general
engineering segments),
• Tata Shaktee (corrugated galvanised sheets for rural house builder
segments),
• Tata Tiscon (re-bars for individual house-builder semi-urban segment)
• Tata Pipes (pipes for individual house builder and farming segments),
• Tata Bearings (bearings for Original equipment manufacturer and
replacement market) and
• Tata Agrico (agricultural equipment for farming and construction
segment).

The company has focused on increasing the sale of its branded products and
the sale of its branded products and the sales of these products as a proportion
of its total sales has shown a constant increase over the last few years.

15
COMPANY PROFILE

16
 INTRODUCTION
Jindal Steel and Power Limited (JSPL) is an Indian steel and energy company based

on New Delhi, India. With turnover of approx. US$ 3.3 billion, JSPL is a part of

about US$18 billion diversified Jindal Group conglomerate. JSPL is a leading

player in steel, power, mining, oil and gas and infrastructure in India. The

company produces steel and power through backward integration from its own

captive coal and iron-ore mines.

In terms of tonnage, it is the third largest steel producer in India. The company

manufactures and sells sponge iron, mild steel slabs, Ferro chrome, iron ore, mild

steel, structural, hot rolled plates and coils and coal-based sponge iron plant.

In 1969, O. P. Jindal (1930–2005) started Pipe Unit Jindal India Limited at Hisar,
India. After Jindal's death in 2005, much of his assets were transferred to his wife,
Savitri Jindal. Jindal Group's management was then split among his four sons with
Naveen Jindal as the Chairman of Jindal Steel and Power Limited. His elder
brother, Sajjan Jindal is the head of JSW Group, part of O.P. Jindal Group.

17
 HERITAGE
OM PRAKASH JINDAL (1930 – 2005)

Shri. Om Prakash Jindal, Founder Chairman of the

Jindal Group was born on August 7, 1930, to a farmer
in Nalwa village of Hisar district in Haryana. Having
interest in technology from a young age, he started
his industrial career with a humble bucket-
manufacturing unit in Hisar in 1952. In 1964, he
commissioned a pipe unit, Jindal India Limited
followed by a large factory in 1969 under the name
of Jindal Strips Limited.
Shri. Jindal envisioned a self-reliant India in every sector of industry. To fructify this
vision, he gathered the latest technical know-how from around the world and
strengthened his industrial establishment.

Recognising his outstanding contribution to the Indian steel industry, Shri. O. P. Jindal
was conferred the prestigious "Life Time Achievement Award" by the Bengal Chamber
of Commerce & Industry in November 2004.

A visionary who is remembered for his business excellence and social responsibilities
alike, Shri Jindal believed that without the upliftment of weak and backward sections of
the society, a nation can never prosper. Thus, he spent a lot of time in taking steps to
alleviate poverty and boost the backward sections of the society.

He was above caste politics and wanted to ensure a rightful place for every individual in
politics, regardless of his caste, colour and creed. He firmly believed that all differences
could be amicably resolved through meaningful dialogues. With this conviction, he
forayed into politics and attained great success there as well. He was elected a Member
of the Haryana Legislative Assembly three times and a Member of Parliament in the
11th Lok Sabha, from the Kurukshetra constituency of Haryana, with a landslide victory
in 1996. He also served as the Minister of Power, Govt. of Haryana. His multifarious
career was tragically cut short with his accidental death on March 31, 2005.

"Where others saw walls, he saw doors" - that is how Shri. Jindal's vision has been
expressed. His journey from a humble origin to being a successful industrialist, a
philanthropist, a politician and a leader, will be a great source of inspiration for
generations to come.

18
 PRODUCTS
Jindal Steel and Power products are energised by the buoyancy of innovation that
enables the distinction of being a trailblazer. Customisation is at the core of all
our product development and our global technology excellence ensures the best
in class offerings for the valued customers. The company's continuous growth
and enhanced capabilities stand testimony of the ceaseless drive for excellence.
• RAILS
The rails can be supplied in a customised finished lengths ranging from 13
meter to 121 meter, a modern flash-butt welding plant equipped to
produce up to 484 meter long flash butt welded rail panels is also available.
The company has the facility for transporting such long rails to the
construction sites.
The manufacturing plant is equipped with state-of-the-art facilities that aid
continuous on-line inspection and quality control, helping to adhere to
specifications laid down by the Indian Railways and other international
organisations.

• PARALLEL FLANGE BEAMS AND COLUMNS

The use of these parallel flange sections in the infrastructure, oil & gas and
construction sectors such as refineries, metro rail projects, airports,
flyovers, power plants, highways, malls and high rise buildings provides
ample proof of its superior product quality, product range and customer
service.

• PLATES AND COILS

The plate-cum-coil mill (steckle mill) of 1 MTPA capacity located at Raigarh,
Chhattisgarh produces plates ranging from 8 mm to 120 mm in thickness
in widths of 1500 mm to 3500 mm and coils in thickness range of 8 mm to
25 mm in widths of 1500 mm to 2500 mm.
The plate mill at Angul, Odisha of 1.5 MTPA capacity produces plates in the
thickness range of 5-150 mm with a width of up to 5000 mm. The mill is
equipped with latest equipment and technology like MULPIC cooling,
online ultrasonic testing, trimming shear, slitting unit to produce plates of
high strength and excellent surface finish.

19
• ANGLES AND CHANNELS
This continuous mill is a first-of-its-kind in India, equipped with advanced
rolling mill technology and equipment from Danieli, Italy. These sections
are used in infrastructure, industrial construction and light construction
segments such as power plants, transmission line towers / telecom line
towers, fabrication, bus / truck bodies, electrical towers (SEBs / railways),
industrial sheds, commercial and individual houses, portable houses and
so on.
• TMT REBARS
The production of TMT rebars involve a combination of plastic deformation
of steel in austenitic stage followed by quenching and further tempering.
The process controls at each critical operation ensure uniform properties
in each rebar and provides the TMT rebars with a soft ferrite and pearlite
fine grained core, a strong and tough tempered marten site layer imparting
it with high ductility as well as strength thus making it ideal for high rises,
dams, bridges, individual houses and any critical structures where high
yield strength is required without compromising on the elongation
properties.
• WIRE RODS
The wire rods come with the promise of high quality and dimensional
precision. The latest technology that comes with Morgan mill assures high
degree of thermos mechanical properties along with unparalleled
dimensional accuracy, providing consistency of mechanical properties
within a coil and from coil to coil. Therefore, the wire rods are the material
of choice among wire drawers across the country.
• SPONGE IRON
The company has the world's largest coal-based sponge iron
manufacturing facility at Raigarh, Chhattisgarh and stands out as the
market leader in coal-based sponge iron industry within India. Efficient
backward integration has rendered it as the only sponge iron manufacturer
in the country, with its own captive raw material resources and power
generation capacity helping the company to monitor both price and quality
of its products.

20
 THEORITICAL FRAMEWORK
INTRODUCTION
Finance is life blood of the business. The financial management is the
study about the process of procuring and judicious use of financial
resources is a view to maximize the value of the firm. There by the
value of the owners i.e. the example of equity shareholders in a
company is maximized. The traditional view of financial management
looks into the following function that a finance manager of a business
firm will perform.
1. Arrangement of short-term and long-term funds from the
financial institutions.
2. Mobilization of funds through financial instruments like equity
shares, bond Preference shares, debentures etc.
3. Orientation of finance with the accounting function and
compliance of legal provisions relating to funds procurement, use
and distribution. With increase in complexity of modern business
situation, the role of the financial manager is not just confirmed
to procurement of funds, but his area of functioning is extended
to judicious and efficient use of funds available to the firm,
keeping in view the objectives of the firm and expectations of
providers of funds.

Definition:
Financial Management has been defined differently by different
scholars.
1. Howard and Upton:- “Financial Management is the application
of the planning and control function to the finance functions”

21
RATIO
A ratio is a number expressed in terms of another. It is a fraction whose
numerator is the antecedent and denominator is the consequent. A ratio
indicates the quantitative relationship between two figures. It may be expressed
in different forms like –
1. Pure Ratio
2. Rates
3. Percentage
FINANCIAL RATIO
It is a ratio between two accounting figures or data expressing the relationship
between the two. It is an expression of the relation between different relevant
accounting variables.
The Financial statements of a business comprise of (1) the Revenue
Statement or the Profit & Loss Account and (2) The Balance Sheet. These include
a mass of figures which make it difficult to deduce any inference or decision. An
accounting ratio is used to gauge the financial solvency and profitability of the
business. It is computed from the basic financial statements periodically
published by the business and it highlights in arithmetical terms, the relationships
that exist between various items from the financial statements.
FINANCIAL RATIO ANALYSIS
It is an analytical tool used for financial analysis. It is a process of determination
and interpretation of the numerical relationships between the financial data
published by business in periodical statement. It aims at facilitating comparisons
with the positions of other business firms as well as of the same business firm
over a number of financial periods. It is done mainly for the following groups:
1. The Management – which, for internal use, wants to ascertain the
profitability and solvency of the business. The extended areas over which
the Management becomes interested are over or under-trading, over or
under-investments, over or under-capitalisation and useful credit policy.
2. The outsiders who are interested in the solvency, liquidity and profitability
of a business. Outsiders include creditors, debenture holders, employees,
Government and useful credit policy.

22
 3. Others like Distress Analysts, Credit Rating Agencies and Auditors also used
as financial ratios.
IMPORTANCE OF FINANCIAL RATIO ANALYSIS
1. It helps the management to gauge the efficiency of performance and
assess the financial health of the business.
2. It is an essential tool for checking the efficiency with which the working
capital is being used and managed.
3. Comparative ratio analysis injects trend analysis. The improvement or
deterioration of a business is clearly disclosed by ratio analysis.
4. It helps to make financial forecasts.
5. It is an integral part of introduction of standard costing and budgetary
control.
6. Its inherent feature ‘easiness’ is its greatest advantage. Ratio analysis can
be easily made and easily understood.
7. It helps to make inter-firm comparisons, that is, to know the relative
position of a firm vis-à-vis its competitors.
8. The ability of a firm to pay its short debts denotes its liquidity positions.
LIMITATIONS OF RATIO/RATIO ANALYSIS
1. The result expressed by the application of a ratio may be misleading.
Accounting data may remain over or understated in financial statements.
2. The ratio becomes misleading where inconsistent methods are applied for
valuations of stock, etc.
3. It is difficult to set up any standard or Ideal Ratio as the basis of
comparison.
4. The same ratio may bear different interpretations for two separate
business or even, for the same business, in separate years.
5. Ratio analysis is mainly based on past performances. So, its application for
the future may lead to erroneous decisions.

23
CLASSIFICATION OF ACCOUNTING RATIOS
Accounting Ratios may be classified or grouped in different ways depending on
the results or information expected. But the widely used classifications are made
as –
1. Classification on the basis of source; and
2. Classification on the basis of purposes or economic aspects or operations of
the firm.
Source wise classification refers to the sources from which the accounting figures
used in the ratio have been derived. Such classification may be made as –
A. Balance Sheet Ratios [between accounting figures taken from the Balance
sheet]
B. Revenue Statement (Profit & Loss Account) Ratios [between accounting
figures taken from the Profit & Loss Account]
C. Mixed Ratios [between accounting figures taken both Profit & Loss Account
and Balance Sheet]
Purpose or aspect wise classification refers to the purpose of computing a ratio.
It generally involves information about particular economic aspects of the
operations of a firm. Such classification may be made to know –
1. Short-term solvency.
2. Long-run solvency.
3. Efficiency / turnovers.
4. Profitability.
This classification may also be called as – ‘on the basis of uses.’

24
BALANCE SHEET RATIOS
������� ������
1. Current ratio =
������� �����������

To be noted that:
(a) This ratio measures the ability of an enterprise to meet its short-term
liabilities.
(b) The Standard Ratio is considered as 2:1. It means perfect ability of the
business is existing after keeping funds to meet day to day expenses.

2. Quick ratio or Liquid Ratio or Acid Ratio

����� �� ������
Quick Ratio = ������
�����
or �����������
Current Assets−Inventory−Prepaid Expenses
Current Liabilities−Bank ��e������

To be noted that:
(a) Quick Ratio is used to ascertain the immediate solving of a firm.
(b) The minimum desired ratio is 1:1. A firm must have at least one rupee to
pay one rupee of its quick liabilities.

Cash+Bank+Marketable Securities Quick

3. Super Quick Ratio =
Liabilities

To be noted that:
(a) It measures the very immediate ability of a firm to meet its quick liabilities.
(b) It comes to use in banks and other financial institutions.

25
 ���� ���� ����� [��������
4. Debt Equity Ratio = ��������]
����������� ′ � �����
[������]

To be noted that:
(a) This ratio is used to ascertain the respective claims of the outsiders and
the owners like Equity Shareholders within the assets of a firm.
(b) If this ratio is high that may indicate – (i) Too much dependence on
outside funds; (ii) Greater financial risks in payment of interests and
repayment of the loans taken in due time; (iii) Reduced margin of safety
of creditors.

5. Fixed Asset-proprietorship Ratio

����� ������
Or =
���������� ′ � �����
Net Block to Proprietorship Ratio

To be noted that:
(a) This ratio indicates how much of the proprietor’s funds has been
blocked by fixed assets.
(b) The result should be less than 1.

�������
6. Current Assets Proprietorship Ratio = ������
���������� ′ �
�����

To be noted that:
(a) This ratio indicates how much of the proprietor’s funds have been used
for current-trading of the concern.

���������� �������
7. Capital Gearing Ratio = ����� �������
������ ����������� ′ �
�����

To be noted that:
(a) Securities bearing fixed charges = Preference Share Capital + Debenture
+ Long-term Debts; AND
(b) Equity Shareholder’s Funds = Equity Share Capital + Reserves & Surplus
– Fictitious assets.
26
 ����� ������
8. Total Assets to Debt Ratio =
����−����
�����

To be noted that:
(a) Total Assets means Non-Current Assets + Current Assets. But fictitious
assets and Deferred Tax Assets (Advance Payment of Tax) should not be
included within total Assets.
(b) Long-term Debts should be including – (i) Long-term borrowings (like
Debenture and Bank Loan); (ii) Other Non-Current Liabilities; and (iii)
Long-term Provisions.

Cash + Cash Equivalent

9. Cash Position Ratio =
Total Assets

Where cash equivalent = Bank Balance + Marketable Securities readily

convertible into known amount of cash.

To be noted that:
(a) It indicates how much (portion) of the total assets is represented by
cash and cash equivalent.
(b) If the ratio is high, that indicates availability of sufficient cash to meet
the dues in time.

10. Cash to Current Liabilities Ratio

���� + ����
Or = ����������
Absolute Cash Ratio �������
�����������

To be noted that:
(a) This ratio shows how much liquid funds are available for paying each
rupee of current liabilities. So, it is a measure of available cash to
discharge current liabilities.

27
 ����� ������
11. Cash Interval /Cash Defensive Interval= ������� ��������� �����
���� ��������

Where
(a) Quick Assets = Cash + Bank + Marketable Securities + Receivables; AND
������ ���� ��������� ��������
(b) Projected Daily Cash Expense =
365
To be noted:
(a) Here ‘Interval’ denotes the time gap during which further cash may not
be generated.
(b) The ratio shows how long the normal activities of a concern can be
carried on with the available quick assets, even if cash is not generated.

��������� �������
12. Cash Burn Ratio = 365 ���� ����������� ��� ����� ��
� ���� ������ ���� �������
���������

Or
���� ������ ���� ������� ���������
365 ���� �
��������� ����� �� �������
�����������
To be noted that:
(a) At the initial or formative stage of a company, its management should
know how long the business can run with the limited amount of money it
has been able to raise from the initial public offer. In other words, they
must know the length of the period till which the company resumes normal
earning. This ratio confirms such period of waiting.
(b) Its correct calculation can help to avoid disturbances in normal function or
shutdown of the business due to dearth of funds.

28
13. Other Ratios

����� �����
(a) Debts to Capital Employed =
����� �������
��������

Owners prefer high debts ratio, but creditors like low debt ratio.

�������
(b) Current Assets to Fixed Assets = ������
�����
������

Helps to locate position of storage of stock, trend of collection from

debtors, etc.

���������
(c) Inventory to Working Capital =
�������
�������

It shows the portion of working blocked within working capital and

the nature of movement of stock.

29
 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.

1. Research Design
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
analyse 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.
From the study, the type of data to be collected and the procedure to
be used for this purpose were decided.

2. Data Collection
The required data for the study are basically secondary in nature
and the data are collected from the audited reports of the
company.
a) Primary Data:
Primary data are those data, which is originally collected
afresh.
In this project, Websites and Books has been used for
gathering required information.
b) Sources of Data:
The sources of data are from the annual reports of the
company from the year 2013-2014 to 2016-2017.

30
 3. Methods of Data Analysis
The data collected were edited, classified and tabulated for
analysis. The analytical tools used in this study.

a) Analytical Tool Applied

The study employs the following analytical tools:

• Comparative Statement
• Graph
• Trend Percentage
• Ratio Analysis

31
 DATA ANALYSIS AND INTERPRETATION
A COMPARATIVE FINANCIAL PERFORMANCE ANALYSIS OF
TATA STEEL & JINDAL STEEL AND POWER BY MEANS OF
RATIOS
����� ������
1) Gross Profit Ratio = ���
× 100
�����

Gross profit = Sales – Material Consumed – Manufacturing Expense

TATA STEEL LTD

YEAR 2017 2016 2015 2014 2013

GROSS 30,311.98 22,069.54 25,124.13 26,452.33 23,672.23

PROFIT
NET 47,993.02 38,210.34 41,785 41,711.03 38,199.43
SALES
GROSS 63.16% 57.76% 60.13% 63.42% 61.97%
PROFIT
RATIO

JINDAL STEEL
YEAR 2017 2016 2015 2014 2013

GROSS 4,659.79 6,921.38 6,040.82 6,853.98 7,235.98

PROFIT
NET SALES 13848.10 12548.39 13390.35 14544.02 14954.70
GROSS 33.65% 55.16% 45.11% 47.13% 48.38%
PROFIT
RATIO
32
 Gross Profit
70
Ratio
60

50

40

30

20

10

201 201 201 201 201

3 4 5 6 7
TATA STEEL JINDAL
STEEL

Changes in Gross Profit Ratio

YEAR 2013 & 2013 & 2013 & 2013 &

2014 2015 2016 2017
TATA STEEL 2.34% -2.96% -6.79% 1.92%
LTD (Increase) (Decrease) (Decrease) (Increase)
JINDAL -2.58% -6.76% 14.01% -30.45%
STEEL (Decrease) (Decrease) (Increase) (Decrease)

INTERPRETATION
The above chart shows that in Tata Steel, gross profit ratio is decreasing
in 2016 as compared to the year 2015 but in year 2014 & 2017 profit
gradually increasing this is due to decrease in cost of sales and in Jindal
steel, gross profit ratio is increasing gradually in year 2016 as compared
to previous years.

33
 ���������
2) Operating profit Ratio = ������ × 100
��� �����

TATA STEEL LTD

YEAR 2017 2016 2015 2014 2013
OPERATING 11,875.95 7211.75 10008.80 12,816.90 11,126.24
PROFIT
NET SALES 47993.02 38,210.34 41,785 41,711.03 38,199.43

OPERATING 24.74% 18.87% 23.95% 30.73% 29.13%

PROFIT RATIO

JINDAL STEEL
YEAR 2017 2016 2015 2014 2013

OPERATING 2,858.19 2,177.24 3,705.68 3,758.86 3,938.45

PROFIT
NET SALES 13,848.10 12,548.39 13,390.35 14,544.03 14,954.70

OPERATING 20.64% 17.35% 27.67% 25.84% 26.33%

PROFIT RATIO

34
 Operating Profit
35
Ratio
30

25

20

15

10

201 201 201 201 201

3 4 5 6 7
TATA STEEL JINDAL
STEEL

Changes in Operating Profit Ratio

YEAR 2013 & 2013 & 2013 & 2013 &

2014 2015 2016 2017
TATA STEEL 5.49% -17.78% -35.22% -15.07%
LTD (Increase) (Decrease) (Decrease) (Decrease)
JINDAL -1.86% 5.08% -34.10% -21.61%
STEEL (Decrease) (Increase) (Decrease) (Decrease)

INTERPRETATION
This ratio is used to measure the operational efficiency of the management. In
both companies, the ratio is fluctuating from 2013 – 2017 due to changes in sales.
There is an increase in operating ratio in 2017 comparison to 2015 and 2016. So,
we can say that the operating efficiency of Tata Steel has actually decreased for
the current year 2017 and in Jindal Steel, there is an increase in operating ratio
in 2017 comparison to 2016. So, we can say that the operating efficiency of Jindal
Steel has actually decrease for the current year 2017.

35
 ������
3) Net Profit Ratio = ����� ��� × 100
��� ����

TATA STEEL LTD

YEAR 2017 2016 2015 2014 2013
PROFIT 4147.93 6483.50 4548.27 6553.95 5737.50
AFTER TAX
NET SALES 47993.02 38,210.34 41,785 41,711.03 38,199.43

NET PROFIT 8.64% 16.96% 10.88% 15.71% 15.02%

RATIO

JINDAL STEEL
YEAR 2017 2016 2015 2014 2013

PROFIT -986.45 -1018.88 497.09 1291.95 1592.55

AFTER TAX
NET SALES 13848.10 12548.39 13390.35 14544.02 14954.70

NET PROFIT -7.12% -8.12% 3.71% 8.88% 10.65%

RATIO (Loss) (Loss)

36
 Net Profit
20
Ratio

15

10

0
201 201 201 201 201
3 4 5 6 7
-5

-
10
TATA STEEL JINDAL
STEEL

YEAR 2013 & 2013 & 2013 & 2013 &

2014 2015 2016 2017
TATA STEEL 4.59% -27.56% -12.92% -42.48%
LTD (Increase) (Decrease) (Decrease) (Decrease)
JINDAL -16.62% -65.16% -176.24% -166.85%
STEEL (Decrease) (Decrease) (Decrease) (Decrease)

INTERPRETATION
We can see that there is a decrease in the Net Profit margin from 2013 to 2017
except in the year 2016. So, we can see that the profitability of Tata Steel has
actually decreased in 2017 than of 2016, 2015, 2014 and 2013. And in Jindal
Steel, the Net Profit margin is decreasing constantly from 2013 to 2017.

37
 �����−������
4) Return on Capital Employed = ������ × 100
�������
��������

TATA STEEL LTD

YEAR 2017 2016 2015 2014 2013
PBDIT 12290.41 11102.45 10591.5 13604.54 12028.28
8
DEPRECIATION 3541.55 1933.11 1997.59 1928.70 1640.38

CAPITAL 79868.05 101470.5 92874.1 87274.77 81121.19

EMPLOYED 1 4

RETURN ON 10.95% 9.04% 9.25% 13.38% 12.80%

CAPITAL
EMPLOYED

JINDAL STEEL
YEAR 2017 2016 2015 2014 2013
PBDIT 2867.07 2481.31 4002.12 3905.71 4097.73

DEPRECIATION 2043.65 1492.10 1785.56 1221.44 1048.46

CAPITAL 45929.54 35356.50 38626.26 35731.24 31849.01

EMPLOYED
RETURN ON 1.79% 2.79% 5.74% 7.51% 9.57%
CAPITAL
EMPLOYED

38
 Return on Capital
16
Employed
14

12

10

201 201 201 201 201

3 4 5 6 7
TATA STEEL JINDAL
STEEL

YEAR 2013 & 2013 & 2013 & 2013 &

2014 2015 2016 2017
TATA STEEL 4.53% -27.73% -29.37% -14.45%
LTD (Increase) (Decrease) (Decrease) (Decrease)
JINDAL -21.52% -40.02% -70.85% -81.29%
STEEL (Decrease) (Decrease) (Decrease) (Decrease)

INTERPRETATION
Return on capital employed measures the efficiency with which
investment made by the shareholders. In Tata Steel Ltd, this ratio is
fluctuating. In 2013 and 2014, it is increased but next two years, it is
decreasing. And in Jindal Steel Ltd, this ratio is decreasing continuously
from 2013 to 2017.

39
 �����−������������
5) Return on Long Term Fund = �������
× 100
����+��������� ����

TATA STEEL LTD

YEAR 2017 2016 2015 2014 2013
PBDIT 12290.41 11102.45 10591.58 13604.54 12028.28

DEPRECIATION 3541.55 1933.11 1997.59 1928.70 1640.38

SECURED LOAN 4826.77 4613.91 4507.64 4400.55 4311.02

UNSECURED 25382.27 26379.88 21702.61 21726.23 21600.49

LOAN
RETURN ON 28.96% 29.58% 32.78% 44.68% 40.08%
LONG TERM
FUND

JINDAL STEEL
YEAR 2017 2016 2015 2014 2013

PBDIT 2867.07 2481.31 4002.12 3905.71 4097.73

DEPRECIATION 2043.65 1492.10 1785.56 1221.44 1048.46

SECURED LOAN 18860.54 23915.03 17705.89 12707.31 11577.42

UNSECURED 5302.80 0 8409.16 9959.60 7923.52

LOAN
RETURN ON 3.41% 4.14% 8.49% 11.84% 15.64%
LONG TERM
FUND

40
 Return on Long Term
50
Fund
45
40
35
30
25
20
15
10
5
0
201 201 201 201 201
3 4 5 6 7
TATA STEEL JINDAL
STEEL

YEAR 2013 & 2013 & 2013 & 2013 &

2014 2015 2016 2017
TATA STEEL 11.47% -18.21% -26.19% -27.74%
LTD (Increase) (Decrease) (Decrease) (Decrease)
JINDAL -24.29% -45.72% -73.53% -78.19%
STEEL (Decrease) (Decrease) (Decrease) (Decrease)

INTERPRETATION
Return on long term measures the efficiency with which the
investment made by the debenture holders & long term debt is used
in the business. In Tata Steel Ltd & Jindal Steel Ltd, this ratio is
constantly decreases and it is not good for the company.

41
 CONCLUSION
• The Tata Steel Ltd is in sound solvency position.
• The Year 2015, 2016 and 2017 shows the higher loss for both
company.
• Gross profit ratio are increased during the period of 2015-2016,
which indicates that firm’s efficient management in
manufacturing and trading operations.
• Operating profit ratio are increased during the period of 2016-
2017 and decreased during the period 2014-2016 which indicates
the operating efficiency of both company.
• Net profit ratio are decreased during the period of 2013-2017.
• Return on capital employed are increased during the period of
2013-2014 and decreased during the period of 2015-2016 in Tata
Steel Ltd. In Jindal Steel Ltd, the ratio is decreasing continuously
from 2013-2017.
• Return on long term fund are decreased during the period of
2013-2017 which indicates the investment made by the
debenture holders and long term debt is used in the business.

42
 RECOMMENDATION
• All operational and related activities should be performed
efficiently and effectively.
• Both company have to utilize their capital assets in a proper way
that they have to purchase less capital assets in coming year.
• The stability of the Tata Steel Ltd has declined from base year
2015 to current year 2017.
• Tata Steel Ltd have sound solvency position but the company
have to avail on the benefit of trading on equity and has to use
cheaper debt capital.
• The government intervention in promoting ‘Make in India’ in
public procurement has resulted in Indian companies garnering
over Rs 50 billion in projects.
• One of the beneficiaries is Jindal Steel and Power Ltd (JSPL). It had
earlier been kept out of procurement for rails, but is likely to
receive 20 per cent of the tendered volume under the new policy.
The size of the tender is estimated to be around Rs 30 billion, of
which JSPL may receive orders worth Rs 6 billion.

43
 BIBLIOGRAPHY

Following books are referred for carrying out the project:-

1. Amitabha Basu, Financial Accounts, Volume – 3, Edition - August-

2017, accounting ratios for financial statement analysis, page –
829 – 835.
2. Annual reports of Tata Steel LTD and Jindal Steel.

Following websites are referred:-

1. https://www.ibef.org/industry/steel.aspx
2. http://www.tatasteel.com/
3. http://www.jindalsteelpower.com/
4. https://www.wikipedia.org/
5. https://money.rediff.com/index.html
6. http://www.business-standard.com/article/companies/make-in-
india-in-public-procurement-companies-bag-rs-50-bn-govt-
contracts-118040301360_1.html

44
 ANNEXURE
Balance Sheet of Tata Steel Ltd ZZZZZZ..in Rs. Cr. ZZZZZZ..
March March '16 March March March
'17 '15 '14 '13
Sources of Funds
Owner's Fund
Equity share capital 971.41 971.41 971.41 971.41 971.41
Share application money - - - - -
Preference share capital - - - - -
Reserve & surplus 48,687.60 69,505.31 65,692.48 60,176.58 54,238.27
Loan funds
Secured loans 4,826.77 4,613.91 4,507.64 4,400.55 4,311.02
Unsecured loans 25,382.27 26,379.88 21,702.61 21,726.23 21,600.49
Total 79,868.05 1,01,470.51 92,874.14 87,274.77 81,121.19
Uses of funds
Fixed assets
Gross block 80,728.28 43,791.68 41,791.52 39,019.72 38,056.28
Less : revaluation reserve
Less : accumulated depreciation 8,161.13 18,363.09 16,543.00 14,753.97 13,181.23
Net Block 72,567.15 25,428.59 25,248.52 24,265.75 24,875.05
Capital work-in-progress 6,163.96 26,982.37 23,036.67 18,509.40 8,722.29
Investments 13,665.71 56,680.59 53,164.32 54,661.80 50,418.80
Net current assets
Current assets, loans & advances 19,068.59 14,116.60 14,227.61 13,603.46 17,860.79
Less: current liabilities & 31,597.36 21,737.64 22,802.98 23,765.64 20,755.74
provisions
Total net current assets -12,528.77 -7,621.04 -8,575.37 -10,162.18 -2,894.95
Miscellaneous expenses not - - - - -
written
Total 79,868.05 1,01,470.51 92,874.14 87,274.77 81,121.19
Notes:
Book value of unquoted 42,249.89 55,564.84 52,088.86 53,615.18 49,434.56
investments
Market value of quoted 6,475.22 4,745.79 11,528.97 8,390.72 4,904.96
investments
Contingent liabilities 44,298.52 38,595.95 14,610.35 17,398.71 18,999.02
Number of equity 9,712.15 9712.15 9712.15 9712.15 9712.15
shareoutstanding(Lacs)
45
Profit loss account of Tata Steel Ltd ZZZZZ..in Rs. Cr. ZZZZZ.
March' March' March' March' March'
17 16 15 14 13
Income
Operating income 47,993.0 38,210.3 41,785.0 41,711.0 38,199.4
2 4 0 3 3
Expenses
Material consumed 14,800.1 13,259.6 13,956.4 12,486.3 12,017.0
2 3 5 9 3
Manufacturing expenses 2,880.92 2,881.17 2,704.42 2,772.31 2,510.17
Personnel expenses 4,605.13 4,324.90 4,601.92 3,673.08 3,608.52
Selling expenses - - - - -
Adminstrative expenses 13,830.9 10,532.8 10,513.4 9,962.35 8,937.47
0 9 1
Expenses capitalised - - - - -
Cost of sales 36,117.0 30,998.5 31,776.2 28,894.1 27,073.1
7 9 0 3 9
Operating profit 11,875.9 7,211.75 10,008.8 12,816.9 11,126.2
5 0 0 4
Other recurring income 414.16 3,890.70 582.78 787.64 902.04
Adjusted PBDIT 12,290.4 11,102.4 10,591.5 13,604.5 12,028.2
1 5 8 4 8
Financial expenses 2,688.55 1,460.27 1,975.95 1,820.58 1,876.77
Depreciation 3,541.55 1,933.11 1,997.59 1,928.70 1,640.38
Other write offs - - - - -
Adjusted PBT 6,060.31 7,709.07 6,618.04 9,855.26 8,511.13
Tax charges 1,912.38 1,225.57 2,069.77 3,301.31 2,773.63
Adjusted PAT 4,147.93 6,483.50 4,548.27 6,553.95 5,737.50
Non recurring items -703.38 -1,582.55 1,890.85 -141.76 -674.53
Other non cash adjustments - - - - -
Reported net profit 3,444.55 4,900.95 6,439.12 6,412.19 5,062.97
Earnings before 13,520.3 38,893.2 35,869.7 31,401.6 26,208.0
appropriation 0 9 0 2 1
Equity dividend 987.42 627.67 623.95 905.02 776.97
Preference dividend - - - - -
Dividend tax 55.65 149.30 153.02 66.19 128.73
Retained earnings 12,477.2 38,116.3 35,092.7 30,430.4 25,302.3
3 2 3 1 1
46
 Balance sheet of Jindal Steel Ltd ZZZZZZ..in Rs. Cr. ZZZZZZ..
March March '16 March March March
'17 '15 '14 '13
Sources of Funds
Owner's Fund
Equity share capital 91.5 91.49 91.49 91.49 91.49
Share application money - - - - -
Preference share capital - - - - -
Reserve & surplus 21,674.70 22,974.18 12,419.72 12,972.84 12,254.59
Loan funds
Secured loans 18,860.54 23,915.04 17,705.89 12,707.31 11,577.42
Unsecured loans 5,302.80 - 8,409.16 9,959.60 7,923.52
Total 45,929.54 46,980.71 38,626.26 35,731.24 31,849.01
Uses of funds
Fixed assets
Gross block 45,678.07 45,144.21 34,763.80 24,150.58 18,821.38
Less : revaluation reserve - - - - -
Less : accumulated depreciation 4,202.19 2,120.90 7,548.72 5,891.25 4,665.19
Net Block 41,475.88 43,023.31 27,215.08 18,259.33 14,156.19
Capital work-in-progress 7,529.37 5,685.88 3,563.12 11,663.17 11,483.94
Investments 1,485.25 1,476.94 2,486.96 1,350.52 1,330.72
Net current assets
Current assets, loans & advances 9,626.31 10,410.62 12,905.07 14,876.64 12,839.08
Less: current liabilities & 14,187.27 13,616.04 7,543.97 10,418.42 7,960.92
provisions
Total net current assets -4,560.96 -3,205.42 5,361.10 4,458.22 4,878.16
Miscellaneous expenses not - - - - -
written
Total 45,929.54 46,980.71 38,626.26 35,731.24 31,849.01
Notes:
Book value of unquoted 243.23 232.84 1,828.05 1,691.61 1,330.72
investments
Market value of quoted - - 1,108.13 - -
investments
Contingent liabilities 13,849.85 15,629.63 15,057.15 15,349.60 13,356.75
Number of equity 9,150.24 9,149.04 9,149.04 9,148.86 9,348.34
shareoutstanding(Lacs)
47
Profit loss account of Jindal Steel Ltd ZZZZZZin Rs. Cr. ZZZZZZ.
Mar' 17 March' March' March' March' 13
16 15 14
Income
Operating income 13,848.10 12,696.44 13,390.35 14,544.02 14,954.70
Expenses
Material consumed 6,844.96 6,926.38 6,085.64 6,763.29 6,780.34
Manufacturing expenses 2,343.35 2,193.76 1,263.89 926.75 939.34
Personnel expenses 531.60 553.82 650.52 552.32 447.89
Selling expenses - - - - -
Adminstrative expenses 1,270.00 581.40 1,684.62 2,542.80 2,848.64
Expenses capitalised - - - - -
Cost of sales 10,989.91 10,255.36 9,684.67 10,785.16 11,016.25
Operating profit 2,858.19 2,441.08 3,705.68 3,758.86 3,938.45
Other recurring income 8.88 23.47 296.44 146.85 159.28
Adjusted PBDIT 2,867.07 2,464.55 4,002.12 3,905.71 4,097.73
Financial expenses 2,280.40 2,646.48 2,048.20 1,083.63 820.77
Depreciation 2,043.65 2,148.14 1,785.56 1,221.44 1,048.46
Other write offs - - - - -
Adjusted PBT -1,456.98 -2,330.07 168.36 1,600.64 2,228.50
Tax charges -470.53 -911.54 -328.73 308.69 635.95
Adjusted PAT -986.45 -1,418.53 497.09 1,291.95 1,592.55
Non recurring items - - -807.77 - -
Other non cash - - - - -
adjustments
Reported net profit -986.45 -1,418.53 -310.68 1,291.95 1,592.55
Earnings before 19,125.99 20,349.98 10,074.50 11,176.66 10,339.60
appropriation
Equity dividend - - - 136.01 149.57
Preference dividend - - - - -
Dividend tax - - - 1.22 3.32
Retained earnings 19,125.99 20,349.98 10,074.50 11,039.43 10,186.71

48