s f eporting ate ugust jayaswal neco …...f/8 midc industrial area, company background hingna road,...
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STAKEHOLDERS EMPOWERMENT SERVICES
1 | P A G E
SECTOR: CASTINGS, FORGINGS & FASTNERS REPORTING DATE: 14TH AUGUST, 2017
JAYASWAL NECO INDUSTRIES LTD. www.jayaswalneco.com
Jayaswal Neco Industries Ltd. NSE Code - JAYNECOIND TABLE 1 - MARKET DATA (STANDALONE) (AS ON 10TH AUGUST 2017)
Sector - Castings, Forgings & Fastners NSE Market Price (`) 7.65 NSE Market Cap. (₹ Cr.) 489.19
Face Value (`) 10.00 Equity (` Cr.) 638.63
Business Group – N.A. 52 week High/Low (₹) 11.5/5.8 Net worth (₹ Cr.)* 1,881.72
Year of Incorporation - 1972 TTM P/E (TTM) N.A. Traded Volume (Shares) 58,682
TTM P/BV 0.30 Traded Volume (lacs) 4.49
Registered Office - Source - Capitaline, TTM - Trailing Twelve Months, N.A.- Not Applicable, *As on 30th September 2016
F/8 MIDC Industrial Area, COMPANY BACKGROUND
Hingna Road, Jayaswal Neco Industries Limited is an India-based holding company. The Company's
principal products include Iron and Steel Castings, Pig Iron/Skull, Sponge Iron and
Billets/Rolled Products. The Company manufactures and supplies Centrifugal Cast iron
Pipe & Fitting, Centrifugal Cast Iron Hubless Pipe & Fitting, Sand Cast Iron Pipe & Fitting,
and Cast Iron & Ductile Iron Manhole Covers, Frames & Gratings.
The Company's segments include Steel, Iron & Steel Castings and Others. The Steel
Segment is engaged in manufacture and sale of Pig Iron, Billets, Rolled Products, Sponge
Iron and includes its captive Power Plants at its unit located at Siltara, Raipur and Mining
activities in the state of Chhattisgarh and Maharashtra. The Iron and Steel Castings
Segment comprises of manufacture and sale of Engineering and Automotive Castings
with production facilities at Nagpur, Bhilai and Anjora.
Nagpur - 440 016, Maharashtra
Company Website:
www.necoindia.com
Revenue and Profit Performance
The revenue of the Company decreased from ₹714.66 crores to
₹630.53 crores from quarter ending Sep’15 to quarter ending
Sep’16. The Company made a loss of ₹99.04 crores in quarter
ending Sep’16 vis-a-vis making a profit of ₹0.69 crores in quarter
ending Sep’15.
Source- Money Control
Performance vis-à-vis Market
Source- Capitaline
TABLE 2- Returns
1-m 3-m 6-m 12-m
Jayaswal Neco Industries -2.55% -26.80% -8.38% 3.38%
Nifty -0.72% 3.00% 12.56% 13.63%
Nifty Metal 5.56% 8.95% 10.54% 30.53%
-
0.50
1.00
1.50
Aug16
Sep16
Oct16
Nov16
Dec16
Jan17
Feb17
Mar17
Apr17
May17
Jun17
Jul17
Jayaswal Neco Industries Ltd NIFTY NIFTY METAL
630.53 639.69 714.66
-99.04 -89.7 0.69
-500
0
500
1000
Sep'16 Mar'16 Sep'15
Quarterly revenue and Profit (₹ CRORE)
Revenue Profit
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2 | P A G E
SECTOR: CASTINGS, FORGINGS & FASTNERS REPORTING DATE: 14TH AUGUST, 2017
JAYASWAL NECO INDUSTRIES LTD. www.jayaswalneco.com
TABLE 3 - FINANCIALS
(₹ Cr.) Sep’16 Mar’16 Sep’15 % Change
Sep ’16 vs Mar’16 Mar’16 vs Sep’15
Net Worth 1,881.72 2,131.58 2,228.23 -11.72% -4.34%
Current Assets 1,439.56 1,334.73 1,630.51 7.85% -18.14%
Non-Current Assets 5,653.43 5,745.51 5,498.14 -1.60% 4.50%
Total Assets 7,092.99 7,080.24 7,128.65 0.18% -0.68%
Investments 1.09 0.94 14.62 15.96% -93.57%
Finance Cost 138.61 62.04 51.81 123.42% 19.75%
Long Term Liabilities 3,094.06 3,205.88 3,025.71 -3.49% 5.95%
Current Liabilities 2,117.21 1,742.78 1,874.71 21.48% -7.04%
Turnover 630.5 639.66 714.63 -1.43% -10.49%
Profit After Tax (PAT) -99.04 -89.7 0.69 N.A. -13,100.00%
EPS (₹) -1.54 -1.40 0.01 N.A. -14,100.00%
Source - Money Control/Stock exchange filing
AUDIT QUALIFICATIONS
Audit Qualifications: (FY 2015-16 and FY 2014-2015)
Qualified Opinion for the financial year 2015-16 on Internal Financial Control
According to the information and explanations given to us and based on our audit, the following material weaknesses have been
identified in the operating effectiveness of the company's internal financial control over financial reporting as on 31st March, 2016
in respect of: a) Monitoring of EPC contract for projects under implementation, which could potentially result in excess advances to
contractors and related monitoring issues. b) The information technology used by the company does not have stringent controls in
respect of modification / editing of transactions, which may lead to incorrect reporting of information.
Management Response:
a) The advances had been given to the EPC contractor for implementation of various projects / capex. All the project / capex (except
the DRI & CPP unit at Bilaspur) have been completed and have been capitalized. However, there was some time delay in raising of
the Running Account Bills and its certification by the Company for the completed projects / capex. The same has been rectified now
and the Company has established suitable controls, checks and balances in place to ensure advances strictly as per the contract
terms, ensure prompt completion of project work by the Contractor, timely raising of Running Account Bills by it and its prompt
approval by the Company.
b) Your Company is actively pursuing improvement and up gradation of its information and technology systems and is working to
have an effective mechanism in place to ensure editing of transactions only as per the prescribed Standard Operating Procedures.
Basis for Qualified Opinion for the financial year 2014-15
As mentioned in Note No. 12.11 to the standalone financial statements, during the year the Hon'ble Supreme Court of India
cancelled 3 coal blocks of the Company and subsequently these blocks have been allotted to different bidders in the E-auction by
the Ministry of Coal, Government of India. The Company has filed a writ petition before the Hon'ble Delhi High Court challenging
the provision of ordinance and tendering process and no adjustments have been made in the value of these 3 coal mining assets for
the reasons mentioned therein. We were unable to determine whether any adjustments to these amounts were necessary.
Management Response:
1. That the Hon'ble Supreme Court of India by its Order dated 24th September, 2014 had cancelled number of coal blocks allotted
to various entities which included three coal blocks of the Company consisting of one operational coal block at Gare Palma
IV/4, Raigarh, Chhattisgarh and two under development coal blocks at Gare Palma IV/8, Raigarh, Chhattisgarh and Moitra at
North Karanpura, Jharkhand allotted by the Ministry of Coal, Government of India.
2. That subsequently, the Government of India, issued Second Ordinance on 26th December, 2014 for implementing the order of
the Hon'ble Supreme Court and fixation of Compensation etc.
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3. That the above mines of the Company were allotted to other bidders in the e-auction, of the Schedule II (Operational) and
Schedule III (Under Advanced Development Stage) of the coal blocks, conducted by the Nominated Authority, Ministry of Coal,
Government of India.
4. That the Company had filed a Writ Petition (WP) before the Hon'ble Delhi High Court, challenging the provisions of above
Ordinance and Tender process. The Hon'ble Delhi High Court was pleased to issue Notice to the Central Government (Union of
India) on its WP. Subject to outcome of the WP, no adjustment was made in the value of the mining assets by the Company as
the value of compensation to be received could not be determined at that stage. In the opinion of Directors, the losses/gains,
if any on account of transfer of mining assets would be recognized as and when determined. Directors wish to inform that as
on 30th June, 2015, the Company's net investment in the value of mining assets in the three coal blocks was Rs. 220.13 crore
and it had also made provision for Rs. 26.94 Cr. for site restoration expenses.
Response Comment
Frequency of Qualifications Auditors have given a Qualified opinion in FY 15-16 and FY 14-15
Have the auditors made any adverse remark in last 3 years? No -
Are the material accounts audited by the Principal Auditors? Yes -
Do the financial statements include material unaudited
financial statements? No
-
Source - Annual Report
TABLE 4: BOARD PROFILE (AS PER ANNUAL REPORT 2015-16)
Regulatory Norms Company
% of Independent Directors on the Board 50% 50%
% of Promoter Directors on the Board - 25%
Number of Women Directors on the Board At least 1 1
Classification of Chairman of the Board - Non-Executive Promoter Director
Is the post of Chairman and MD/CEO held by the same person? - No
Average attendance of Directors in the Board meetings (%) - 93.75%
Composition of Board: As per Regulation 17(1)(b) of the Listing Regulations, 2015, the Company should have at least 50%
Independent Directors as the Chairman of the Board is a Promoter/Executive Director. The Company has 50% of Independent
Directors and hence, it meets the regulatory requirements.
Board Diversity: The Company has 12 directors out of which 11 are male and 1 female.
TABLE 5 - FINANCIAL RATIOS
Ratios Sep’16 Mar’16 Sep’15
% Change
Sep ’16 vs
Mar’16
Mar’16 vs
Sep’15
Turn
ove
r
Rat
ios
Inventory Turnover 0.92 1.01 0.98 -8.83% 3.54%
Debtors Turnover 1.67 2.04 2.13 -18.03% -4.24%
Fixed asset Turnover 0.11 0.11 0.13 0.17% -14.34%
Current Asset Turnover 0.44 0.48 0.44 -8.61% 9.34%
Ret
urn
Rat
ios Operating Profit Margin 14.71% 7.58% 9.16% 94.07% -17.22%
Net Profit Margin -15.71% -14.02% 0.10% N.A. -14,623.64%
Return on Assets (ROA) N.A. N.A. 0.01% N.A. N.A.
Return on Equity (ROE) N.A. N.A. 0.03% N.A. N.A.
Return on Capital Employed (ROCE) N.A. N.A. 0.01% N.A. N.A.
Liq
uid
ity
Rat
ios
Current Ratio 0.68 0.77 0.87 -11.22% -11.94%
Quick Ratio 0.36 0.40 0.48 -11.41% -15.94%
Cash Ratio 0.18 0.22 0.30 -19.74% -25.70%
Working Capital Turnover ratio N.A. N.A. -0.00 N.A. N.A.
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So
lven
cy
Rat
ios Debt to equity ratio 2.02 1.84 1.65 9.83% 11.58%
Interest Coverage Ratio 0.67 0.78 1.26 -14.38% -38.12%
Trad
ing
Rat
ios
Market Cap / Sales 0.70 0.69 0.68 2.19% 0.77%
Market Cap/ Net Worth 0.24 0.21 0.22 14.10% -5.71%
Market Cap/PAT N.A. N.A. 708.04 N.A. N.A.
Market Cap/EBITDA 4.79 9.09 7.47 -47.35% 21.73%
Source - Money Control
TABLE 6 - TRADING VOLUME
Ratios Jun’17 Dec’16 Jun’16
% Change
Jun’ 17 vs
Dec’ 16
Dec’ 16 Vs
Jun’ 16
Trading Volume (shares) (avg. of 1 qtr) 1,24,109 59,258 59,007 109.44% 0.43%
Trading Volume (shares) (high in 1 qtr) 10,80,472 9,76,293 6,59,581 10.67% 48.02%
Trading Volume (shares) (low in 1 qtr) 21,772 4,360 7,777 399.36% -43.94%
Ratio - High/low trading volume 49.63 223.92 84.81 -77.84% 164.02%
Ratio - High/average trading volume 8.71 16.48 11.18 -47.16% 47.39%
Source- Capitaline
TABLE 7 (A): OWNERSHIP & MANAGEMENT RISKS
Jun’17 Dec’16 Jun’16 Comments
Shar
eho
ldin
g (%
)
Promoter shareholding 68.78 68.78 68.78 • No new equity shares were issued during
the period from June - 16 to June - 17.
• There was no major change in the promoter
shareholding during the said period.
• No major change was observed in the
shareholding pattern during the said
period.
• The promoters have pledged/ encumbered
13.71 % of their shareholding.
Public - Institutional shareholding 2.15 2.16 2.19
Public - Others shareholding 29.07 29.06 29.03
Non-Promoter Non-Public
Shareholding 0.00 0.00 0.00
Source – NSE
MAJOR SHAREHOLDERS (AS ON 30th JUNE 2017)
S. No. Promoters Shareholding
S. No. Public Shareholders Shareholding
1 Jayaswal Holdings Pvt. Ltd 8.31%
1 Efficient Structures Pvt. Ltd. 4.36%
2 Karamveer Impex Pvt. Ltd. 7.40%
2 Rajvardhan Tradezone Pvt. Ltd. 3.99%
3 Nine Star Plastic Packaging Services
Pvt. Ltd. 6.94%
3 Costal Multitrading Pvt. Ltd. 3.91%
4 Jayaswal Neco Metallics Pvt. Ltd. 6.37%
4 Salmon Developers Pvt. Ltd. 2.64%
5 Jayaswal Neco Energy Pvt. Ltd. 6.22%
5 Darshan Gems Pvt. Ltd. 2.59%
Source – NSE
TABLE 7 (B): OWNERSHIP & MANAGEMENT RISKS
Market Activity of Promoters The promoters have not sold/bought any shares in last one year.
Preferential issue to promoters No preferential issue of shares was made to the promoters in last one year
Preferential issue to others No preferential issue of shares was made to other shareholders during FY 15-16
GDRs issued by the Company The Company did not issue any GDRs during FY 15-16
Issue of ESOPs / Issue of shares
other than Preferential allotment
The Company did not issue any shares to the employees under its any ESOP Scheme in FY
15-16
Source- NSE/ Annual Report FY 15-16
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TABLE 8: PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
Sr. No. Name and Description of main products / services % to Total turnover of the Company
1 Billets/Rolled Products 49.46
2 Pig Iron/Skull 21.91
3 Iron and Steel Castings 13.79
4 Sponge Iron 12.10
Source - Annual Report 2015-16
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Glossary
Equity: The equity shares capital of the Company
Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company
Turnover: The revenue earned from the operations of the Company
EPS: Earning Per Share is net profit earned by the Company per share
𝐸𝑃𝑆 =Profit After Tax
Number of outstanding shares
P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company
𝑃/𝐸 𝑟𝑎𝑡𝑖𝑜 =Price of each share
Earnings per share
Current Assets: Cash and other assets that are expected to be converted to cash in one year
Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land,
buildings, and equipment
Total Assets: Current Assets + Fixed Assets
Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in
the future.
Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges
incurred during the year in relation to borrowed money.
Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year.
Current Liabilities: A company's debts or obligations that are due within one year.
Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced
over a period.
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Inventory
Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business
can turn its accounts receivable into cash during a period
𝐷𝑒𝑏𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Accounts recievables
Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Fixed Assets
Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Current Assets
Operating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after
paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating
income (also known as “operating profit”) during a given period by its sales during the same period.
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Operating profit
Sales Turnover
Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Net profit
Sales Turnover
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Return on Assets: ROA tells you what earnings were generated from invested capital (assets)
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 =Net profit
Total Assets
Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’
equity.
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 =Net profit
Net worth
Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability
and the efficiency with which its capital is employed.
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 =Net profit
Total Debt + Equity share capital
Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts
over the next 12 months. It compares a firm's current assets to its current liabilities.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =Current Assets
Current Liabilities
Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities.
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories
Current Liabilities
Cash ratio: The ratio of the liquid assets of a Company to its current liabilities.
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories − Account Recievables
Current Liabilities
Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates
a Company's effectiveness in using its working capital.
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Current Assets − Current Liabilities
Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's assets.
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =𝑆ℎ𝑜𝑟𝑡 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 + 𝐿𝑜𝑛𝑔 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡
𝑁𝑒𝑡 𝑊𝑜𝑟𝑡ℎ
Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a
Company can pay interest on outstanding debt.
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 =𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥
𝐹𝑖𝑛𝑎𝑛𝑐𝑒 𝐶𝑜𝑠𝑡
Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is
calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-
share stock price by the per-share revenue.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑆𝑎𝑙𝑒𝑠 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ
Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑃𝐴𝑇 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA.
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𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝐸𝐵𝐼𝑇𝐷𝐴 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝐸𝐵𝐼𝑇𝐷𝐴
Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year
Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year
Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year
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9 | P A G E
SECTOR: CASTINGS, FORGINGS & FASTNERS REPORTING DATE: 14TH AUGUST, 2017
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