ANALYSIS OF BALANCE SHEET OF JSW STEEL

1. There has been a substantial increase in the borrowed fund which includes
both secured loan and unsecured loans which has helped the company to
increase their expenditure in fixed asset which is a positive sign that the
company is trying to expand at a rapid pace.

2. As most of the amount which is borrowed is from debt it will help the
company in saving their taxes and thus help in increasing the profitability this
also resembles the creditworthiness of the company.

3. The current liabilities has gone up substantially by 80% which is also a

matter of concerns as company needs to keep so much amount of cash so as to
meet these liabilities.

RATIO ANALYSIS:

1. The ROI, RONW has gone down substantially this will create a obstacle in
attracting the investors from investing in this company.

2. Company has raised debt capital from the market because of which there is
increase in the debt equity ratio this will help the company in claiming the tax
benefits and increase its growth rate.

3. Debt service coverage ratio refers to the capacity of the company to pay the
debt against its income here the company`s debt service ratio has gone down
because of which the company won’t be able to draw large amount of funds.

4. In fixed asset turnover ratio the company has improved its efficiency in using
its assets.

5. Net worth turnover ratio has gone up which means that the capital
employed is being used more effectively than the previous year.

6. The margin both the gross and net have come down because of the various
factors like increase in raw material, factors of production etc.
 ANALYSIS OF PROFIT AND LOSS OF JSW STEEL:
Observation:

1. The sales has increased by an average of 23% but there is a substantial

decrease in income from other sources which is -296% because of which
the total income decreased to 14%
2. There has been spectacular rise in the prices of raw material and other
cost which contribute to the production cost because of which the total
expenses has increased by 37%.

Interpretation:

The income from the core business has not fallen though the net growth
in the total income is not that great which is due to the fall in income
from other sources which is a positive sign as far as fundamentals of the
companies are concerned.

Though the rise in expenditure is more than the rise in total income this
is mainly because the production cost such as raw material and power
which cannot be controlled by company has rose substantially while the
other cost have increased marginally.

Conclusion:

The company has maintained the growth but because of the increase in
uncontrollable cost the profitability has gone down and the company
should focus on also improving its other income sources which might be
income from investment etc.

There are still cost which have increased like selling and distribution
greater than the past records company should try and reduce such cost
so as to improve the profitability of the company.
ANALYSIS OF BALANCE SHEET OF STERLITE STEEL

Observation:

1. There is a marginal change in net worth that is also as the reserves have
increased by 6% and the reserves are revalued which has cause charge by 90%.

2. The company on one hand is repaying the secured loans and while on the
other hand is taking loans in the form of unsecured type because of which the
total debt has increased by 17 % which amount to 40 % of the total liabilities.

3. There is an increase in accumulated depreciation and the capital work in

progress has decreased by 38% which is a substantial decrease because of
which the total fixed assets have gone down by 3%.

4. Company has sold its investments about 5 %which amount to decrease in

total fixed assets by 48%.

5.In Current Assts the company has invested a huge amount in fixed deposits
and also provided loan and advances while on the other hand the inventories
and sundry debtors have decreased in comparison with the previous year by
38%.

6. Net Current Assets have increased by 93% which contribute to great extend
to the total assets.

Interpretation:

1. From the observation of the statement we can come to know that the
companies sales has decreased as the debtors and inventories has
decreased substantially.
2. The company is also trying to the raise the capital in the form of
unsecured loans, selling its investments and also repaying the secured
loan on the other hand so as to maintain a balance between the two and
strike a balance in the amount of owned and borrowed funds.
3. The company seems to be in an expansion phase as it is trying to raise
large amount of capital from the make.
 RATIO ANALYSIS:

1. The ROI has increased marginally, while there is a considerable growth in

RONW which will attract the investors in investing and also boost up
their confidence.
2. Debt equity ratio is normal which indicates that this is a low risk bearing
company and also DER and DSCR both are same for the two years as
there is no debt taken.
3. Current ratio denotes the number of assets on liabilities the higher the
ratio the better for the company this shows that the company is
successful in meeting its daily obligations in the form of current
liabilities.
4. Quick ratio has also increased to a great extend which shows that the
company will be able to generate this ratio of revenue quickly.
5. There is decrease in the asset turnover ratio and capital turnover ratio
which means that the efficiency of the company in utilizing the assets,
capital is decreasing.
6. Gross Margin and Net margin have grown marginally which will help the
company to increase their profits.
 ANALYSIS OF PROFIT AND LOSS OF STERLITE STEEL:
Observation:

1. Company’s sales has gone down by 8% while its other income gone up
by 46%.
2. Raw Material, Selling and dist. cost have decreased by 14% this is mainly
because of decrease in the production capacity because of decrease in
sales while the power and fuel, other manufacturing, employees prices
have gone high.
3. The % total expenses have increased more than the total income in
comparison to its previous year still the company is able to generate a
profit of 1236 CR as the amount has also decreased parallel.

Interpretation:

1. Though the sales has gone down the income from other sources have
gone up high this is mainly because of the investments made by the
company which helps them to gain additional revenue though the
amount is much lower than the sales.
2. The cost which is variable in nature like Raw Material has gone down but
other costs that are fixed have continued to rise.
3. The company has also successfully reduced its expenditure which has
helped it to generate profits.
 ANALYSIS OF BALANCE SHEET OF TATA STEEL

Observation:

1. In owned funds there has only been a change of 11% in the reserves and
surplus which have contributed to increase in net worth by 8%.
2. There has been a phenomenal increase in the unsecured loans by 58% as
a result the total debt has increased by 49%.
3. The net block has increased by 33% which means that there is
introduction of new assets in the company.
4. There is a tremendous increase in the investment by 932%from the
previous year.
5. Company`s Total CA have gone by 69%while the fixed deposits have
increased to 2817450% which amount to 9% of the total assets.

Interpretation:

The company is in a high growth phase for which it has borrowed huge
amount of capital so as to meet its expansion strategies.

RATIO ANALYSIS

1. There is a marginal change in ROI and RONW.

2. There is an increase in debt equity ratio from0.66 to 0.91 which is due to the
heavy borrowings made by the company in the form of debt because of which
the risk of the company has gone high on one hand while this also helps the
company in getting the leverage benefit.

3. Because of the high borrowings the debt service ratio has gone down to 0.31
which indicates that the company`s power to raise more capital has decreased.

4. Current ratio and quick ratios have fallen to a great extend which mean that
the company`s capacity to pay its liabilities have gone down considerably and it
may also prove competitive for the company to recover cash quickly.
5. Fixed asset turnover ratio has increased considerably from 2 to 45% which
states that the efficiency of the company has increased considerably which is a
positive aspect of the company.

6. Net worth turnover has increased from 0.72 to 0.82 which indicates that the
net worth profitability has gone high.

7. Net margin has decreased because of the mainly because of several factors
like increase in cost of production, power and other aspects.
 ANALYSIS OF PROFIT AND LOSS OF TATA STEEL:

Observation:

There has been an increase in sales by 20% which have contributed to

the increase in total revenue by 24%. Because of the phenomenal
increase in the Raw Material, Employee, Selling & Admin expenses the
total expenses has increased by 35%.

Interpretation:

Though the sales has increased by24% but due to the increase in raw
material expenses which are variable in nature the expenses has also
increased by 35%.Still they have managed to increase the profit by 11 %.
There has also been a sudden increase in the selling and admin exp. By
61%while the sales has only increased by 24%.
From this analysis we come to know that most of the increase
in expenses is due to the increase in expenses of variable nature.

Conclusion:

1. Expenses like selling and admin should be reduced so as to minimize

the expenses and thus increase the profitability.
2. Employee expenditure which is supposed to be fixed in nature has
also increased by 45% which should not have been done.