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COMPANYFINANCIALSANALYSIS:STEEL AUTHORITY
OF INDIA LTD
A LOOK AT THE TRENDS IN THE FINANCIAL STATEMENTS AND RATIOS OVER THE PERIOD O
U113019 HARSH MOHAPATRA
U113028 MANEESHA SAHOOU113057 VASUDHA SINGH
U113020 HARS
U113118 TARUU113098 POO
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OVERVIEW: INDIAN STEEL INDUSTRY
The Indian steel industry has achieved
significant milestones in terms of growth in
capacity, production and exports to become
a major player in the global steel industry.
Between FY2008 and FY2013, Indias steel
production has grown at a compound annual
growth rate (CAGR) of about 7 percent
The Indian steel industry is divid
PRIMARY
The primary sectorcomprises a few largeintegrated steel providersproducing billets, slabs and
hotrolled coils, among others
The secompon thadderolledangle
otheriron u
The private sectordominates productionaccounting for almost 78percent of the finishedsteel outputwhile thepublic sector has highercapacity utilizations.
Total finished steel production for India (inmillion ton)*
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OVERVIEW: Steel Authority of India Li
The leading steel-making company in India.
A fully integrated iron and steel maker, producing both basic and spedomestic construction, engineering, power, railway, automotive and defeand for sale in export markets.
Among the seven Maharatnas of the country's Central Public Sector Enterpris
Indias second largest producer of iron ore and of having the countrys semines network. This gives SAIL a competitive edge in terms of captive avaiore, limestone, and dolomite which are inputs for steel making.
Operates and owns 5 integrated steel plants at Rourkela, Bhilai, DurgapuBurnpur and 3 special steel plants at Salem, Durgapur and Bhadravathi.
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Mar '14 Mar '13 Mar '12 Mar '11
Sources Of Funds
Total Share Capital 4,130.53 4,130.53 4,130.53 4,130.40
Equity Share Capital 4,130.53 4,130.53 4,130.53 4,130.40
Share Application
Money0 0 0 0
Preference Share
Capital0 0 0 0
Reserves 38,535.82 36,894.11 35,680.79 32,939.07
Revaluation Reserves 0 0 0 0
Networth 42,666.35 41,024.64 39,811.32 37,069.47
Secured Loans 11,560.89 8,746.16 7,481.91 11,813.91
Unsecured Loans 12,705.81 12,754.41 8,615.30 8,351.58
Total Debt 24,266.70 21,500.57 16,097.21 20,165.49
Total Liabilities 66,933.05 62,525.21 55,908.53 57,234.96
Mar '14 Mar '13
Application Of Funds
Gross Block 53,874.36 42,461.1
Less: Accum.
Depreciation27,103.71 25,683.7
Net Block 26,770.65 16,777.4
Capital Work in
Progress33,650.54 35,890.8
Investments 720.2 718.36
Inventories 15,200.82 16,008.2
Sundry Debtors 5,481.98 4,424.18
Cash and Bank
Balance2,855.95 3,850.35
Total Current Assets 23,538.75 24,282.7
Loans and Advances 7,281.75 6,549.1
Fixed Deposits 0 0
Total CA, Loans &Advances
30,820.50 30,831.8
Deffered Credit 0 0
Current Liabilities 19,105.61 14,976.3
Provisions 5,923.23 6,716.86
Total CL & Provisions 25,028.84 21,693.2
Net Current Assets 5,791.66 9,138.60
Miscellaneous
Expenses0 0
Total Assets 66,933.05 62,525.2
BALANCE SHEET
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Mar '14 Mar '13 Mar '12 Mar '1
Income
Net Sales 46,698.41 44,598.26 46,341.79 42,534.
Other Income 1,840.53 735.12 1,500.13 2,038.9
Total Income 47,644.31 47,349.47 49,210.43 46,044.
Expenditure
Raw Materials 21,611.97 23,334.91 24,804.77 22,642.
Power & Fuel Cost 4,942.15 4,830.44 4,469.74 3,586.0
Employee Cost 9,578.51 8,637.20 7,932.05 7,530.2
Miscellaneous Expenses 5,752.88 5,197.15 4,458.56 45.42
Total Expenses 41,885.51 41,999.70 41,665.12 37,041.
Operating Profit 3,918.27 4,614.65 6,045.18 6,964.3
PBDIT 5,758.80 5,349.77 7,545.31 9,003.3
Interest 967.64 747.66 677.7 474.6
PBDT 4,791.16 4,602.11 6,867.61 8,528.6
Depreciation 1,716.69 1,402.98 1,567.03 1,482.2
Profit Before Tax 3,074.47 3,199.13 5,300.58 7,045.3
Extra-ordinary items 150.08 41.53 -10.54 163.7
PBT (Post Extra-ord Items) 3,224.55 3,240.66 5,290.04 7,209.0
Tax 608.07 1,070.31 1,608.15 2,304.3
Reported Net Profit 2,616.48 2,170.35 3,681.89 4,904.7
Equity Dividend 834.35 826.1 826.1 991.3
Per share data (annualised)
Shares in issue (lakhs) 41,305.25 41,305.25 41,305.25 41,304.
Earning Per Share (Rs) 6.33 5.25 8.91 11.87
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RATIO ANALYSIS PROFITABILIT
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RATIO ANALYSIS: PROFITABILIT
Consistent decline in profitability ratios. Could be attributed to high incre
Miscellaneous Expenses from 45cr in FY10-11 to 5752 cr in FY13-14.
RATIO ANALYSIS LIQUIDITY DE
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RATIOANALYSIS: LIQUIDITY & DE
Observations: Quick ratio has declined to und
1.
D/E has improved as debt portihas increased to arrange funds
available opportunities (capex
increase).
Although the Interest Coverage
ratio is still safe, we see a sharp
decline due to fall in company
profit generating ability.
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RATIO ANALYSIS: OTHER KEYRATIOS
Observations:
Management efficiency ratshow a gradual decline ovthe years.
EPS shows a sharp decline dto decline in profitability.
INTER FIRM COMPARISON
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INTER-FIRM COMPARISON
SAIL(FY13-14)
Tata Steel(FY13-14)
Gross Profit Margin(%) 4.71 26.1
Net Profit Margin(%) 5.49 15.08
ROCE(%) 4.6 13.37
RONW(%) 6.13 10.48
D/E 0.57 0.43
Interest Coverge Ratio 3.19 6.41
Asset Turnover Ratio 0.72 0.5
EPS 6.33 66.02
Observations:
Tata Steel has betterprofitability ratios.
Reserves of Tata Steehave doubled in 4 yewhereas not muchchange in SAIL reser
D/E for both is aroundthe industry averageTata Steel improvedtheir debt equityposition over the yea
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FINANCIAL RISK INDICA
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LIQUIDITY and SOLVENCY
17480
6415 3850
1.35
0.820.68
0
5000
10000
15000
20000
2011 2012 2013
Liquidity
Cash ( INR Cr) Quick
15.86
9
5.59
0
5
10
15
20
Mar '11 Mar '12 Mar '13
Interest Cover
The Cash and Equivalents decreased from 17480 Crsin 2011 to 2855 Cr in 2014 with a CAGR of -36.43% dueto the Diversion of Cash Flow into CAPEX andExpansion plans.
The Future credit-worthiness seems to have noimprovement till Cash Flows increase again.
EBIT has decreased consistently and interest expenseshas increased consistently due to increase inleverage.
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CONTINGENTS & LIABILITIES AND
INVESTMENTS
28000
29000
30000
31000
32000
33000
34000
35000
36000
2011 2012
C&L(INR Cr
C&L(INR Cr)
Investment were made to acquire extra Equity Shares in its JVs like NSPCL. Hence
investment cannot be seen as contributing to Finance risk but more to Market Risk
o Pending decision on Levy of Entry Tax in states ofChhattisgarh, Odisha and UP.
o Pending decision in determination of ElectricityTariff by DVC.
o Future Cash Flows have a chance to be affectedadversely.
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PROFIT vs CASH FLOW
7194.31
5150.87
3240.66 3224.55
17479.26
6416.1
277.23 214.91
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2011 2012 2013 2014
PROFIT vs CASH FLOW (INR Cr)
PBT Cash Flow
PBT
CAGR -18%
So we can conclud
drop in profitability dshow the severity of as the Cash Flow ovshown a more intense
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COMPANY PROFILE
Company
Name
Industry Instrument Rating Outlo
SAILIron and Steel
Manufacturer
Long-term corporate
credit ratingS&P BBB- Negati
Non-FB WC limits IND A1+ Strong
ST debt/CP programme IND A1+ Strong
Medium-term debt
programmeIND TAAA Strong
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THE
END
Thank you for your time.
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ADDITIONAL INFORMATION
Market Value of Equity= 35,687.69 Cr.
Dividend Yield= 2.34%
Average Payout Ratio for the last Four years= 0.282
Cost-of-equity (COE) as per the DDM (dividend discount model) is6.605%
DDM-COE (6.605%) obtained is lowerthan the earnings-yield (7.33%
Beta of SAIL= 1.68((Source: Reuters)
CAPM-Cost Of Equity is 13.76%
CAPM-COE is higheras compared to DDM-COE. The difference is 7Percentage points