OBJECTIVE OF STUDY

Analysis of fundamental to acquire a deep knowledge of the Steel Sector which I

am studying.

To find out how the judgment is taken by the analyst on the basis of fundamental

analysis of the company.

To establish link between expected share price with the projected company’s

financial performance (2008-2009)

To study the demand of Steel sector particularly land-building, Commercial

purposes and Real Estate.

To calculate a company's credit risk

To make projection on its business performance and in the bad condition to

improve the performance of company.

To evaluate its management and make internal business decisions,

To make the company's stock valuation and predict its probable price evolution.

Investors may use fundamental analysis to determine future growth rates for

buying high priced growth stocks

1

EXECUTIVE SUMMERY

Fundamental analysis is very helpful to the investor, which is reflected in the investment

purpose. Fundamental analysis consist of three parts, they are economic, industry and

company. Any investors who go to systematic investment, he/she would like to know, the

complete scenario of the industry. It is interesting to know the how the fundamental

analysis helps to forecast the price of equity.

The fundamental analysis consists of three parts; they are economic, industry and

company. All the factors are involved in this analysis were identified and studied

carefully to identify the factors in the existing environment. The data or information

collected was based on the personal interaction with the guide of the company.

Economic analysis was a task to be studied as it affected the company’s tax, and it will

effect on the revenue of the industry. Also other factors are considered in the economic

analysis. And it will interpret for the fundamental analysis.

Industry analysis was a challenging factor for the research of the fundamental analysis.

All the sub-factors of the industry analysis were taken up from the secondary source to

analyses the each factor with the industry. And was related those factors with the

company. It also analyses the competitiveness of the each company’s strength, like.

Quality, services, cost of R/m, etc.

Company analysis is last factors of the fundamental analysis and it is one of the most

important parts of the company. An approach was made to understand the existing

company and its impact on company’s market share an its performance.

2

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. The

research methodology using for find out the solution of the research problem is analytical

research methodology and some extend descriptive research methodology.

Primary Data

To solve the problems on fundamental analysis on cement sector:-

Primary data collect by discussing with my guide and other staff member of the

company

Observation

Secondary Data

The sources of secondary data for solve the problems are:-

Company Annual Report

Company Internal Data

Internet-Websites

3

HISTORY OF ANGEL BROKING

4

Mr. Dinesh Thakkar

Promoter and Managing Director

In a short span of 18 years since inception, The Angel Group has emerged as one of the 5

retail stock broking houses in India, having membership BSE, NSE and the two leading

commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also

registered as a depository participant with CDSL.

The group is promoted by Mr. Dinesh Thakkar, who started this enterprise as a small sub-

broker in 1987 with staff strength of 3 personnel. As on date, the group is managed by a

team of 1589 + direct employees and a nation wide network comprising 12 Regional

Centers , 58 branches, 2014 + registered sub brokers and business associates and 5552+

active trading terminals which cater to the requirements of 162085 + retail clients.

At Angel, It habitually generate value added features without the cost burden being

passed onto the clients as we strongly believe that better understanding of clients needs

and wants is our top priority. Our e-broking facility is one such effort, which gives you a

platform to access state of art trading facility at the click of a button.

MANAGEMENT

5

Professional and highly experienced people headed by Mr. Dinesh Thakkar manage the

group. He has 14 years experience in the field of stock broking. He is well supported by

Mr.Mukesh R. Gandhi , a 19 years veteran in stock markets & Mr. Lalit Thakkar with 10

years experience in the field of equities research team and dependable operation team.

GROUP ACTIVITIES

Angel group has very well set research division managed by strong professional team.

They provide fundamental as well as technical analysis to clients. They have subscribed

to various software packages including cline 2000,capita Clips, Trends,

DART,VITAL,INFAC reports ,CMIE reports fundamental package form internet

securities etc.Angel Group has 165 Bolt terminals spread all over the country amongst its

branches and sub-brokers Angel has expanded their might in to institutional broking

segment also to provide the highest level of services to Indian financial institutions,

banks, mutual funds and foreign institutional investors.

MISSION STATEMENT

The main mission statement of Angel broking Ltd. Is to be on the top in and around

Rajkot and SAURASTRA peninsula with the help of retail, bulk business within three

years.

For FY 2007-08 will be on Bulk business from existing sub-brokers of competitors by

giving those competitive pricing, better connectivity and Post trading Back-up software

in post centralized and direct billing era.

VISION STATEMENT

6

To provide best value for money to investor through innovative products, trading or

investment strategies, state of the art technology and personalized services.

BUSINESS PHILOSOPHY

Ethical practices & transparency in all our dealings

Customer interest above our own

Always deliver what we promise

Effective cost management

ACHIEVEMENT

Angel Broking has once again been awarded the prestigious ‘Major Volume Driver’

award for the second consecutive year of 2005-2006 by The Bombay Stock Exchange.

This coveted title was earlier conferred upon Angel by the BSE for the year 2004-2005

QUALITY ASSURANCE POLICY

We are committed to being the leader in providing world class product & services which

exceed the expectations of our customers achieved by teamwork and a process of

continuous improvement.

CORE COMPETENCE

7

Top quality research & portfolio advisory services for equities

Retail focused research products

Robust internet trading facility

Commodities research & broking services

Depository services through CDSL

Web based 24 x 7 back office software

Good understanding the sub-broker and retail customer needs

Professional work culture with a personal touch

Cost effective processes

State-of-the-art technology

Streaming quotes & real time charts for BSE/NSE [cash / derivatives]

Single connectivity and speedy execution of trades

Private V-sat network for remote areas

Online technical support & help desk

CRM POLICY

A Customer Is A Most Important Visitors On Our Promises He Is Not Depend On Us But

We Are Dependant On Him He Is Not Interruption In Our Work But Is The Purpose Of It

We Are Not Doing Him A Favour By Serving He Is Doing Us A Favour By Giving Us

An Pportunity To Do So.

8

BUSINESS NETWORK

Regional Offices

(1) Ahmedabad (7) Kolkata

(2) Bangalore (8) Mumbai

(3) Chennai (9) New Delhi

(4) Hyderabad (10) Pune

(5) Indore (11) Rajkot

(6) Jaipur (12) Surat

Branch Offices

Andheri(W) GandhinagarBandra(W) – 2 Offices GondalBorivali(W) – 2 Offices IndoreChembur JalgaonFort JamnagarGhatkopar(E) JodhpurGoregaon(W) JunagadhKalbadevi MehsanaKandivali NadiadLokhandwala NasikMalad(W) New Delhi – 4 OfficesMalad(E) PalanpurMulund(W) Patan Santacruz(W) PorbandarThane(W) PuneVile Parle(W) Rajkot - 4 OfficesAhmedabad – 7 Offices SecunderabadAmreli SuratAnand SurendranagarAnkaleshwar ValsadBaroda VapiBhavnagar Vijayawada

9

VishakhapatnamPRODUCT OFFERED BY ANGEL

Angel Broking Ltd. Provides its best services by its products which represent the whole

image of the mind of clients and those products are:

OFFLINE

The Off-Line account is trading account through which one can buy and sell through

his/her telephone or by personal visit at Angel shop.

This facility is for those who are not comfortable with computer and want to trade.

ONLINE

10

ANGEL

OnlineOffline

Angel Diet Angel AnywhereAngel Trade

The Online trading facilities provided by Angel is basically divided into three types i.e.

Angel Diet, Angel Anywhere, and Angel Trade.

oAngel-DIET

Application based ideal for traders

User friendly & simple navigation

Robust & Speedier execution of trade

5 segment BSE, NSE, F&O, MCX, and NCDEX

oAngel Trade

Browser based for investors

No installation required

Advantage of mobility

Trading as simple as internet surfing

5 segment BSE, NSE, F&O, MCX, and NCDEX

oAngel Anywhere

Application based ideal for traders using technical tools

Intraday / Historical charts with various indicators

3 segment BSE, NSE, Derivatives

11

STOCK ANALYSIS

Indian Securities markets are touching new heights as it has surpassed 15,000 marks.

More and more investors are attracting towards equity investment and trading. But this is

not always the case that no one can assure you certain returns there is always essence of

uncertainty and risk in investment and that push investors on back seats. Sometimes it

becomes very difficult for investors to predict the share price of the particular company in

this very volatile market. It raises questions in investor’s mind that

At what price I should buy? When to sell it... hold?

But as trading and investments are increasing on the markets as SEBI had taken stern

steps to disclose important information to its Shareholder and investor. So they can get as

possible as information about the companies of which they are holding the shares or

going to buy. And now-a-days brokers and some analyst providing some future

predictions of stocks price movements. So now investment has become somewhat easy

for investors.

How they get it? This is done with a Stock Analysis getting the information about

company and its price movements on stock markets and try to predict how would behave

on stock markets. So, there is great importance of stock analysis among investors done

brokers, experts, analyst, etc.

Types of Stock Analysis:-

The methods used to analyze securities and make investment decisions fall

into two very broad categories: fundamental analysis and technical analysis

1. TECHNICAL ANALYSIS

2. FUNDAMENTAL ANALYSIS

Here we have selected a Fundamental analysis as subject of our project so

we would do it in detail with practical analysis of two companies. And we would get

12

only some flavor of technical analysis and then we would understand about

fundamental analysis.

13

What Is Technical Analysis?

“Technical analysis is a method of evaluating securities by analyzing the statistics

generated by market activity, such as past prices and volume. Technical analysts do not

attempt to measure a security's intrinsic value, but instead use charts and other tools to

identify patterns that can suggest future activity.”

Just as there are many investment styles on the fundamental side, there are also many

different types of technical traders. Some rely on chart patterns; others use technical

indicators and oscillators, and most use some combination of the two. In any case,

technical analysts' exclusive use of historical price and volume data is what separates

them from their fundamental counterparts. Unlike fundamental analysts, technical

analysts don't care whether a stock is undervalued - the only thing that matters is a

security's past trading data and what information this data can provide about where the

security might move in the future.

The field of technical analysis is based on three assumptions:

1.     The Market discounts everything.

2.     Price moves in trends.

3.     History tends to repeat itself.

The Market Discounts Everything

A major criticism of technical analysis is that it only considers price

movement, ignoring the fundamental factors of the company. However, technical

analysis assumes that, at any given time, a stock's price reflects everything that has or

could affect the company - including fundamental factors. Technical analysts believe that

the company's fundamentals, along with broader economic factors and market

psychology, are all priced into the stock, removing the need to actually consider these

factors separately. This only leaves the analysis of price movement, which technical

theory views as a product of the supply and demand for a particular stock in the market.

14

Price Moves in Trends

In technical analysis, price movements are believed to follow trends. This means that

after a trend has been established, the future price movement is more likely to be in the

same direction as the trend than to be against it. Most technical trading strategies are

based on this assumption.

History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly

in terms of price movement. The repetitive nature of price movements is attributed to

market psychology; in other words, market participants tend to provide a consistent

reaction to similar market stimuli over time. Technical analysis uses chart patterns to

analyze market movements and understand trends. Although many of these charts have

been used for more than 100 years, they are still believed to be relevant because they

illustrate patterns in price movements that often repeat themselves.

Other Usage

Technical analysis can be used on any security with historical trading data. This includes

stocks, futures and commodities, fixed-income securities, forex, etc. In this tutorial, we'll

usually analyze stocks in our examples, but keep in mind that these concepts can be

applied to any type of security. In fact, technical analysis is more frequently associated

with commodities and forex, where the participants are predominantly traders.

Now that you understand the philosophy behind technical analysis, we'll

get into explaining how it really works. One of the best ways to understand what

technical analysis is (and is not) is to compare it to fundamental analysis. We'll do this in

the next section. 

15

Strengths of Technical Analysis

Focus on Price

If the objective is to predict the future price, then it makes sense to focus on price

movements. Price movements usually precede fundamental developments. By focusing

on price action, technicians are automatically focusing on the future. The market is

thought of as a leading indicator and generally leads the economy by 6 to 9 months. To

keep pace with the market, it makes sense to look directly at the price movements. More

often than not, change is a subtle beast. Even though the market is prone to sudden knee-

jerk reactions, hints usually develop before significant moves. A technician will refer to

periods of accumulation as evidence of an impending advance and periods of distribution

as evidence of an impending decline.

Supply, Demand, and Price Action

Many technicians use the open, high, low and close when analyzing the price action of a

security. There is information to be gleaned from each bit of information. Separately,

these will not be able to tell much. However, taken together, the open, high, low and

close reflect forces of supply and demand.

The annotated example above shows a stock that opened with a gap up. Before the open,

the number of buy orders exceeded the number of sell orders and the price was raised to

attract more sellers. Demand was brisk from the start. The intraday high reflects the

strength of demand (buyers). The intraday low reflects the availability of supply (sellers).

The close represents the final price agreed upon by the buyers and the sellers. In this case,

the close is well below the high and much closer to the low. This tells us that even though

demand (buyers) was strong during the day, supply (sellers) ultimately prevailed and

forced the price back down. Even after this selling pressure, the close remained above the

open. By looking at price action over an extended period of time, we can see the battle

between supply and demand unfold. In its most basic form, higher prices reflect increased

demand and lower prices reflect increased supply.

16

Support/Resistance

Simple chart analysis can help identify support and resistance levels. These are usually

marked by periods of congestion (trading range) where the prices move within a confined

range for an extended period, telling us that the forces of supply and demand are

deadlocked. When prices move out of the trading range, it signals that either supply or

demand has started to get the upper hand. If prices move above the upper band of the

trading range, then demand is winning. If prices move below the lower band, then supply

is winning.

Pictorial Price History

Even if you are a tried and true fundamental analyst, a price chart can offer plenty of

valuable information. The price chart is an easy to read historical account of a security's

price movement over a period of time. Charts are much easier to read than a table of

numbers. On most stock charts, volume bars are displayed at the bottom. With this

historical picture, it is easy to identify the following:

Reactions prior to and after important events.

Past and present volatility.

Historical volume or trading levels.

Relative strength of a stock versus the overall market.

Assist with Entry Point

Technical analysis can help with timing a proper entry point. Some analysts use

fundamental analysis to decide what to buy and technical analysis to decide when to buy.

It is no secret that timing can play an important role in performance. Technical analysis

can help spot demand (support) and supply (resistance) levels as well as breakouts.

Simply waiting for a breakout above resistance or buying near support levels can improve

returns.

17

Weaknesses of Technical Analysis

Analyst Bias

Just as with fundamental analysis, technical analysis is subjective and our personal biases

can be reflected in the analysis. It is important to be aware of these biases when analyzing

a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis.

On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will

probably have a bearish tilt.

Open to Interpretation

Furthering the bias argument is the fact that technical analysis is open to interpretation.

Even though there are standards, many times two technicians will look at the same chart

and paint two different scenarios or see different patterns. Both will be able to come up

with logical support and resistance levels as well as key breaks to justify their position.

While this can be frustrating, it should be pointed out that technical analysis is more like

an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in

the eye of the beholder.

Too Late

Technical analysis has been criticized for being too late. By the time the trend is

identified, a substantial portion of the move has already taken place. After such a large

move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow

theory.

Always Another Level

Even after a new trend has been identified, there is always another "important" level

close at hand. Technicians have been accused of sitting on the fence and never taking an

unqualified stance. Even if they are bullish, there is always some indicator or some level

that will qualify their opinion.

18

Trader's Remorse

Not all technical signals and patterns work. When you begin to study technical analysis,

you will come across an array of patterns and indicators with rules to match. For instance:

A sell signal is given when the neckline of a head and shoulders pattern is broken. Even

though this is a rule, it is not steadfast and can be subject to other factors such as volume

and momentum. In that same vein, what works for one particular stock may not work for

another. A 50-day moving average may work great to identify support and resistance for

IBM, but a 70-day moving average may work better for Yahoo.

19

20

Meaning :-

Fundamental analysis is the examination of the underlying forces that affect the well

being of the economy, industry groups, and companies. As with most analysis, the goal is

to derive a forecast and profit from future price movements.

o At the company level, fundamental analysis may involve examination of

financial data, management, business concept and competition.

o At the industry level, there might be an examination of supply and demand

forces for the products offered.

o For the national economy, fundamental analysis might focus on economic

data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry,

and company analysis to derive a stock's current fair value and forecast future value. If

fair value is not equal to the current stock price, fundamental analysts believe that the

stock is either over or under valued and the market price will ultimately gravitate towards

fair value. Fundamentalists do not heed the advice of the random walkers and believe that

markets are weak-form efficient. By believing that prices do not accurately reflect all

available information, fundamental analysts look to capitalize on perceived price

discrepancies.

Overview:-

“Fundamental analysis is the study of economic, industry, and company conditions

in an effort to determine the value of a company's stock. Fundamental analysis typically

focuses on key statistics in a company's financial statements to determine if the stock

price is correctly valued.”

The main principle of fundamental analysis is to find profitable companies to

invest in by comparing revenues, sales, management, etc. Fundamentals include earnings

report, dividends, sales, inventories, profit margins, P/E ratio, market share , etc.Those

looking to invest in a company will be the most likely to use fundamental analysis. This

21

is because the research is used to not just look at the value of the company, but to look at

the company itself. This includes the results of its finances and its potential to grow. The

fundamentals can give a better picture the entire company, not just a snapshot. This

means that analysis is used to look at the long term of a company not just the short term.

The basic idea is if you put a rupee into the business (in the form of buying the

stock) how much of a return can you expect. How much yield you will likely see and / or

how much growth you will experience based on the operation, markets, competitors and

costs of the business. Obviously, not all aspects of these fundamentals can be quantified.

Fundamentals are associated with the economic health of a company, measured in terms

of revenues, earnings, assets, liabilities, Return on Equity (ROE), Return on Assets

(ROA), Return on Investments (ROI), growth prospects and cash flows, etc. The

fundamentals tell you about a company. You can say a company is having robust

fundamentals if it is growing at a nice pace, generating a profit, has limited debts and

abundant cash.

The analysis of a company's fundamentals involves getting deep into its

financials, rather than day-to-day movement in its share price. Equity researchers

normally do fundamental analysis in order to calculate the intrinsic value of a company's

stock. If a company's stock is trading above the intrinsic value or fair value, then the

stock is overvalued. If a company's stock is trading below the intrinsic value, then the

stock is undervalued. However, if you watch the stock markets very closely, the share

price of most companies never matches the fair value. Often, day traders and investors

who would prefer short term investment options invest in those stocks, regardless of the

companies' long term growth prospects. However, long term investors generally prefer to

invest in companies with robust fundamentals and ignore near-term share price

movements.

22

Objectives:-

There are several possible objectives:

Analysis of fundamental to acquire a depth knowledge of the Steel Sector which I

am studying.

To find out how the judgment is taken by the analyst on the basis of fundamental

analysis of the company.

To establish link between expected share price with the projected company’s

financial performance (2008-2009)

To study the demand of Steel sector particularly land-building, Commercial

purposes and Real Estate.

To calculate a company's credit risk

To make projection on its business performance and in the bad condition to

improve the performance of company.

To evaluate its management and make internal business decisions,

To make the company's stock valuation and predict its probable price evolution.

Investors may use fundamental analysis to determine future growth rates for

buying high priced growth stocks

23

Approaches of Fundamental Analysis:

Investors can use either a top-down or bottom-up approach:

The top-down investor starts his analysis with global economics, including both

international and national economic indicators, such as GDP growth rates,

inflation, interest rates, exchange rates, productivity, and energy prices. He

narrows his search down to regional/industry analysis of total sales, price levels,

the effects of competing products, foreign competition, and entry or exit from the

industry. Only then does he narrow his search to the best business in that area.

The bottom-up investor starts with specific businesses, regardless of their

industry/region.

24

Strengths of Fundamental Analysis

Long-term Trends

Fundamental analysis is good for long-term investments based on long-term trends, very

long-term. The ability to identify and predict long-term economic, demographic,

technological or consumer trends can benefit patient investors who pick the right industry

groups or companies.

Value Spotting

Sound fundamental analysis will help identify companies that represent a good value.

Some of the most legendary investors think long-term and value. Graham and Dodd,

Warren Buffett and John Neff are seen as the champions of value investing. Fundamental

analysis can help uncover companies with valuable assets, a strong balance sheet, stable

earnings, and staying power.

Business Acumen

One of the most obvious, but less tangible, rewards of fundamental analysis is the

development of a thorough understanding of the business. After such painstaking

research and analysis, an investor will be familiar with the key revenue and profit drivers

behind a company. Earnings and earnings expectations can be potent drivers of equity

prices. Even some technicians will agree to that. A good understanding can help investors

avoid companies that are prone to shortfalls and identify those that continue to deliver. In

addition to understanding the business, fundamental analysis allows investors to develop

an understanding of the key value drivers and companies within an industry. A stock's

price is heavily influenced by its industry group. By studying these groups, investors can

better position themselves to identify opportunities that are high-risk (tech), low-risk

(utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer

staples), cyclical (transportation) or income-oriented (high yield).

Knowing Who's Who

25

Stocks move as a group. By understanding a company's business, investors can better

position themselves to categorize stocks within their relevant industry group. Business

can change rapidly and with it the revenue mix of a company. This happened to many of

the pure Internet retailers, which were not really Internet companies, but plain retailers.

Knowing a company's business and being able to place it in a group can make a huge

difference in relative valuations.

Weaknesses of Fundamental Analysis

Time Constraints

Fundamental analysis may offer excellent insights, but it can be extraordinarily time-

consuming. Time-consuming models often produce valuations that are contradictory to

the current price prevailing on Wall Street. When this happens, the analyst basically

claims that the whole street has got it wrong. This is not to say that there are not

misunderstood companies out there, but it is quite brash to imply that the market price,

and hence Wall Street, is wrong.

Industry/Company Specific

Valuation techniques vary depending on the industry group and specifics of each

company. For this reason, a different technique and model is required for different

industries and different companies. This can get quite time-consuming, which can limit

the amount of research that can be performed. A subscription-based model may work

great for an Internet Service Provider (ISP), but is not likely to be the best model to value

an oil company.

Subjectivity

Fair value is based on assumptions. Any changes to growth or multiplier assumptions can

greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and

use sensitivity analysis to present a base-case valuation, a best-case valuation and a

worst-case valuation. However, even on a worst-case valuation, most models are almost

26

always bullish, the only question is how much so. The chart below shows how stubbornly

bullish many fundamental analysts can be.

Time Constraints

Fundamental analysis may offer excellent insights, but it can be extraordinarily time-

consuming. Time-consuming models often produce valuations that are contradictory to

the current price prevailing on Wall Street. When this happens, the analyst basically

claims that the whole street has got it wrong. This is not to say that there are not

misunderstood companies out there, but it is quite brash to imply that the market price,

and hence Wall Street, is wrong.

Industry/Company Specific

Valuation techniques vary depending on the industry group and specifics of each

company. For this reason, a different technique and model is required for different

industries and different companies. This can get quite time-consuming, which can limit

the amount of research that can be performed. A subscription-based model may work

great for an Internet Service Provider (ISP), but is not likely to be the best model to value

an oil company.

Subjectivity

Fair value is based on assumptions. Any changes to growth or multiplier assumptions can

greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and

use sensitivity analysis to present a base-case valuation, a best-case valuation and a

worst-case valuation. However, even on a worst-case valuation, most models are almost

always bullish, the only question is how much so. The chart below shows how stubbornly

bullish many fundamental analysts can be.

Steps to fundamental Analysis:

27

The most common way that fundamental analysis is done in is in three steps:

1. Economic Analysis:-

The first step to this type of analysis includes looking at the macroeconomic

situation. This includes GDP, growth rates, inflation, interest rates, exchange rates,

productivity and energy prices.

2. Industry Analysis: -

The next step taken in analysis in this category is looking at the industry as a

whole. This includes total sales, price levels, competition and their effects, foreign

competition as well as any entrances or exits from the industry.

3. Company Analysis:-

Last in this process of studying the fundamentals includes looking at the company

individually. This includes looking at unit sales, prices, new products, earnings and any

chance of debt or equity occurring.

Fundamental vs. Technical Analysis

28

Technical analysis and fundamental analysis are the two main schools of thought

in the financial markets.

As we've mentioned, technical analysis looks at the price movement of a security

and uses this data to predict its future price movements. Fundamental analysis, on the

other hand, looks at economic factors, known as fundamentals. Let's get into the details

of how these two approaches differ, the criticisms against technical analysis and how

technical and fundamental analysis can be used together to analyze securities. 

The Differences

Charts vs. Financial Statements

At the most basic level, a technical analyst approaches a security from the

charts, while a fundamental analyst starts with the financial statements.

Time Horizon

Fundamental analysis takes a relatively long-term approach to analyzing the

market compared to technical analysis. While technical analysis can be used on a

timeframe of weeks, days or even minutes, fundamental analysis often looks at

data over a number of years.

Trading Versus Investing

Not only is technical analysis more short term in nature that fundamental

analysis, but the goals of a purchase (or sale) of a stock are usually different for

each approach. In general, technical analysis is used for a trade, whereas

fundamental analysis is used to make an investment. Investors buy assets they

believe can increase in value, while traders buy assets they believe they can sell

to somebody else at a greater price. The line between a trade and an investment

can be blurry, but it does characterize a difference between the two schools.

29

The purpose of analyze economic condition of the country in fundamental

analysis to asses the general economic situation both within the country and inter

nationally.

The economy is like the tide and the various industry groups and individual

companies are like boats. When economy expands most industry groups and companies

benefits and grows. When the economy decline, most sectors and companies usually

suffer. The stock market does not operate in a vacuum it is an integral part of ht whole

economy of a country, more so in a free economy that of United States and to some

extent in mixed economy like ours.

To gain an insight into the complexities of stock market. One needs to develop a

sound economic understanding and be able to interpret the impact of important economic

indicators on stock markets.

The following are some important factors which should be taken into account while

doing fundamental analysis:

Economic Growth

Per capita income

Industrial Production

Inflation

Interest Rates

Foreign Exchange Reserves

Budgetary Deficit

Domestic Savings and Investment

Tax Rates

Infrastructure

Political Situation

Introduction of Indian Economy:

30

The economic history of India since Indus Valley Civilization to 1700 AD can be

categorized under this phase. During Indus Valley Civilization Indian economy was very

well developed. It had very good trade relations with other parts of world, which is

evident from the coins of various civilizations found at the site of Indus valley.

Before the advent of East India Company, each village in India was a self sufficient

entity. Each village was economically independent as all the economic needs were

fulfilled with in the village. Then came the phase of Colonization. The arrival of East

India Company in India ruined the Indian economy. There was a two-way depletion of

resources. British used to buy raw materials from India at cheaper rates and finished

goods were sold at higher than normal price in Indian markets. During this phase India's

share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. After India got

independence from this colonial rule in 1947, the process of rebuilding the economy

started. For this various policies and schemes were formulated. First five year plan for the

development of Indian economy came into implementation in 1952. These Five Year

Plans, stared by Indian government, focused on the needs of Indian economy. If on one

hand agriculture received the immediate attention on the other side industrial sector was

developed at a fast pace to provide employment opportunities to the growing population

and to keep pace with the developments in the world. Since then Indian economy has

come a long way. The Gross Domestic Product (GDP) at factor cost, which was 2.3 % in

1951-52 reached 9.4% in financial year 2006-07.

1. GDP:

31

GDP of India at factor cost (in percent)

6.14.4

5.83.8

8.5 7.59 9.6

0

2

4

6

8

10

12

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

Year

GD

P G

roth

Ra

te

GDP of India at factor cost (in percent)

According to some experts, the share of the US in world GDP is expected to fall (from 21

per cent to 18 per cent) and that of India GDP to rise (from 6 per cent to 11 per cent in

2025), and hence the latter will emerge as the third pole in the global economy after the

US and China.

India's greater integration with the world economy was reflected by the trade openness

indicator, the trade to GDP ratio, which increased from 22.5 per cent of GDP in 2000-01

to 34.8 per cent of GDP in 2006-07.  The exports and imports grew by 22.6 per cent and

24.5 per cent respectively in 2006-07, recording the lowest gap between growth rates

after 2002-03.  In the first nine months of the current year, exports reached US$111

billion, nearly 70 per cent of the year's export target.  Imports grew by 25.9 per cent

during April-December 2007 due to non-POL imports growth of 31.9 per cent, implying

strong industrial demand by the manufacturing sector and for export activity.  

2. Per capita income

32

The 9.4 per cent GDP growth during 2006-07, fastest since 1988-89 and second-fastest

since the country achieved independence, has translated into a per capita income of Rs

29,382 a year or Rs 2,448.5 a month.

Per capita income at current prices rose by 14.3 per cent in 2006-07 against Rs 25,716 in

the previous fiscal, according to figures released by Central Statistical Organization.

Notwithstanding the rise in per capita income, it still stands much below the international

standards. A person with an annual income of Rs 29,382 ranks 50,411,696th in the world.

On the other hand, India also houses the most number of billionaires in Asia-36, ahead of

economic powerhouse Japan, according to Forbes magazine. These billionaires together

control a wealth of Rs 8,60,000 crore.

3. Inflation

Inflation is no stranger to the Indian economy. In fact, till the early nineties Indians were

used to double-digit inflation and its attendant consequences. But, since the mid-nineties

controlling inflation has become a priority for policy framers.

The natural fallout of this has been that we, as a nation, have become virtually intolerant

to inflation. While inflation till the early nineties was primarily caused by domestic

factors (supply usually was unable to meet demand, resulting in the classical definition of

inflation of too much money chasing too few goods), today the situation has changed

significantly.

Inflation today is caused more by global rather than by domestic factors. Naturally, as the

Indian economy undergoes structural changes, the causes of domestic inflation too have

undergone tectonic changes.

Needless to emphasise, causes of today's inflation are complicated. However, it is indeed

intriguing that the policy response even to this day unfortunately has been fixated on the

traditional anti-inflation instruments of the pre-liberalisation era.

33

Inflation

0123456

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Year

% o

f c

ha

ng

e

% of change

India Annual Inflation RatesThe following table shows the rate of India annual inflation in recent years.

Year % of change

1999-00 4.7

2000-01 4.0

2001-02 3.8

2002-03 4.3

2003-04 3.8

2004-05 3.8

2005-06 4.4

2006-07 5.5

2007-08 5.4

4.

Interest Rates

A low interest rate of is a must for economic development. the finance minister assured

the industry that interest rates would be brought down in India the target interest appears

to be the inflation rate plus 3%.thus,if inflation settles at 5%, the interest rate should be

approximately 8%.

5. Foreign Exchange Reserves

34

The level of foreign exchange reserves has steadily increased from US$ 5.8 billion as at

end-March 1991 to US$ 113.0 billion by end-March 2004 and further to US$ 151.6

billion by end- March 2006. It stood at US$ 165.3 billion as at end-September 2006

(Table). Although both US dollar and Euro are intervention currencies, the foreign

exchange reserves are denominated and expressed in US dollar only.

6. Budgetary Deficit

A budget deficit arises out of an imbalance between the receipts and payments of the

Government. Huge budget deficits have a variety of harmful consequences. Another

adverse consequence of a huge budget deficit is the build-up of the ‘national debt’.

The total revenue receipts of the Central Government is estimated to be Rs. 486,422 crore

and the revenue expenditure at Rs. 557,900 crore. The revenue deficit is estimated at Rs.

71,478 crore, which is 1.5 per cent of GDP. The fiscal deficit is estimated at Rs. 150,948

crore, which is 3.3 per cent of GDP in 2007-08.

7. Industrial production

35

With 7.3 per the manufacturing sector recorded a lower growth of 9.8 per cent during

April-November 2007 as compared with 11.8 per cent during April-November2006.

Mining sector recorded a growth of 4.9 per cent as compared with 4.2per cent, while the

electricity sector moderated to 7.0 per cent as compared cent during April-November

2006.

The moderation in manufacturing sector growth was due to decelerated/negative growth

of eleven out of the seventeen manufacturing industry groups for 49.3 per cent weight in

the IIP (Table 7). These, among others, included 'machinery and equipment', 'basic metal

and alloy industries', 'rubber, plastic, petroleum and coal products', 'cotton textiles', 'non-

metallic mineral products', and 'transport equipment and parts'. 'Metal products and parts'

group recorded a decline due to the performance of tin metal containers, welded link

chains and razor blades. The 'leather and leather and fur products' group, however, made

a turnaround to register positive growth during the period. In terms of use-based

classification, the capital and intermediate goods sectors recorded double-digit growth

during April-November 2007.

8. Infrastructure

36

Different constituents of infrastructure have shown improvement in the current financial

year. In the power sector, power generation and plant load factor are on course to achieve

their annual targets. In the transport sector, the total earnings of the railways have shown

an increase close to 11% during April-September 2007, while passenger traffic handled at

domestic air terminals grew by about 28% during April-August 2007. An ambitious

National Highway Development Programme (NHDP), involving a total investment of

Rs.220,000 crore up to 2012, has been established. In telecommunications, telephone

connections have increased by 65% while cell phone connections have grown by 53%

during April-August 2007. India Post launched its first aircraft, with a 15 tonne load

capacity, in August 2007.   Needless to say, India must make enormous investments in its

social and economic infrastructure in the near future. The Planning Commission has

estimated that the total investment in infrastructure in the 11th Five Year Plan must

increase from 4.5% to around 8% of the GDP. Under the governing rules of fiscal

management in the FRBM regime, budgetary deficits are being strictly monitored,

restricting the scope for unlimited fiscal expansion. Hence, the solution to the challenge

of infrastructure is partly located in public-private partnerships, which not only bridge the

gap in resources but also bring in private sector expertise and efficiency in the operation

and maintenance of assets. During a decade of experience with PPPs in India, The

Government of India has taken several initiatives like viability gap funding, Public

Private Partnership Appraisal Committee (PPPAC) and India Infrastructure Finance

Company Ltd. (IIFCL) to promote PPPs. 

37

The purpose of industry analysis is to review prevailing conditions within specific

industry and its segments. The company's industry obviously influences the outlook for

the company. Even the best stocks can post mediocre returns if they are in an industry

that is struggling.

“It is often said that a weak stock in a strong industry is preferable to a strong stock in a

weak industry.”

To assess the industry group potential, an investor would want to consider the overall

growth rate, market size, and its importance to economy. While the individual company

is still important, its industry group is likely to exert as much as, or more, influence on

the stock price. When stock move the usually move as groups; there are very few lone

guns out there. An understanding of the industry sector involved, including the maturity

of the sector and any cyclical effects that the overall economies have on it, is also

necessary.

The followings are some important factors which should be considered in

Fundamental Analysis

Growth: A growing industry gives room for profitability.

Profitability: Average profitability of the industry should be attractive.

Demand-Supply: the wider demand supply gap, the better is the industry’s

fortune in the future

Entry barrier

Competition and Market share:

Technology trends

Government Policy

Capacity Utilization

Bargaining power of buyers

BRIEF HISTORY

38

The history of steel-making in India can be traced back to 400 BC when the Greek

emperors used to recruit Indian archers for their army who used arrows tipped with steel.

Many more evidences are there of Indians’ perfect knowledge of steel-making long

before the advent of Christ. Archaeological finds in Mesopotamia and Egypt testify to the

fact that use of iron and steel was known to mankind for more than six thousand years

and that some of the best products were made in India. Among the widely-known relics is

the Iron Pillar near Qutab Minar in Delhi. The pillar, built between 350 and 380 AD, did

not rust so far -----an engineering marvel that baffles the scientists even today. Yet

another engineering feat is the famous Sun Temple at Konark in Orissa, built around

1200 AD, where steel structurals were used for the first time in the world.

These were the halcyon days when India flourished in all directions and when its

prosperity was a matter of envy for the foreigners. But as ill luck would have it, India’s

prosperity gave way to poverty after the advent of the foreign rule. India’s indigenous

industry languished because of a deliberate policy of the colonial rulers to make the

country only a supplier of raw materials.

Steel Role plays a vital role in the development of any modern economy. The per capita

consumption of steel is generally accepted as a yardstick to measure the level of socio-

economic development and living standards of the people. As such, no developing

country can afford to ignore the steel industry.

BEGINNINGS

The first notable attempt to revive steel industry in India was made in 1874 when the

Bengal Iron Works (BIW) came into being at Kulti, near Asansol in West Bengal.

However, forty-four years before that, in 1830 to be precise, a foreigner, named Joshua

Marshall Heath, had set up a small plant at Porto Novo on Madras Coast. Heath produced

in his plant pig iron at the rate of forty tonnes a week. His method of iron-making needed

approximately four tonnes of charcoal to produce one tonne of low quality pig iron which

proved to be too expensive for Heath to carry on in the face of stiff competition from the

British steel industry. The BIW made considerable improvement in the process of iron

and steel making. It used coke as the fuel instead of charcoal. But the plant fell sick as the

source of funds dried up. It was taken over by the Bengal Government and was

39

rechristened as Barakar Iron Works. In 1889 the Bengal Iron and Steel Company

acquired the plant and by the turn of the century the Kulti plant became a success story. It

produced 40,000 tonnes of pig iron in 1900 and continued to produce the metal until it

was taken over by Indian Iron and Steel Company (IISCO) in 1936.

For modern India’s iron and steel industry August 27, 1907 was a red-letter day when the

Tata Iron and Steel Company (TISCO) was formed as a Swadeshi venture to produce

120,000 tonnes of pig iron. The TISCO plant at Sakchi (renamed Jamshedpur) in Bihar,

started pig iron production in December 1908 and rolled out its first steel the following

year. TISCO had expanded its production capacity to one million tonnes ingot by the

time the country achieved freedom. The Tatas, as Gandhiji said, represented the "spirit of

adventure" and Jamsetji Tata, in the words of Jawaharlal Nehru," laid the foundation of

heavy industries in India". The British rulers disfavoured this and other attempts to start

indigenous industry. It was chiefly with the help of American experts that the Tatas

started their industry. Its childhood was precarious but the war of 1914-18 gave it a fillip.

Again it languished and was in danger of passing into the hands of British debenture

holders. But nationalist pressure saved it. In 1918, soon after the war, Indian Iron and

Steel Company (IISCO) was formed. The then Mysore government also decided to start

an iron works at Bhadravati. While IISCO started producing pig iron at Burnpur in 1922,

the Mysore Iron and Steel Works took about 18 years to start its plant. Meanwhile, the

Bengal Iron Works went into liquidation and merged with IISCO. The Steel Corporation

of Bengal (SCOB) formed in 1937, started making steel in its Asansol plant. Later in

1953, SCOB merged with IISCO.

Prime Minister Nehru firmly believed that "no country can be jpolitically and

economically independent unless it is highly industrialised and has developed its

resources to the utmost". Nehru’s ideas about India’s development were broadly

incorporated in free India’s first Industrial Policy Resolution adopted by the Contituent

Assembly in 1948. The resolution officially accepted the principle of mixed economy.

Industries were divided into four categories. In the first category were strategic industries

which were made the monopoly of the Government. In the second category were six

industries which included, among others, coal, iron and steel.

40

It was decided that new units would be started exclusively by the government in the

public sector without disturbing the existing ones in the private sector. Eighteen

industries, including heavy castings and forings of iron and steel, ferro alloys and tool

steel were covered by the third category and the rest of the industries by the fourth. In

sum, the government committed itself to the development of basic steel industry while

the private sector was to benefit through the establishment of downstream units which

would use pig iron, billets, blooms and flat products to be made by the public sector steel

plants.

In keeping with the spirit of the resolution the Government decided to start a chain of

steel plants all over the country in the public sector. The first such plant was set up at

Rourkela in Orissa. The second came up at Bhilai in Madhya Pradesh. It was followed by

a third at Durgapur in West Bengal. Each of these three plants had an initial production

capacity of one million tonne ingot. Durgapur was followed by a steel plant at Bokaro in

Bihar. The onward march of Indian steel did not stop at Bokaro. The fifth public sector

steel plant was set up at Visakhapatnam in andhra Pradesh. As a matter of fact, the

country was dotted with steel and steel-related plants in public and private sectors, like

Alloy Steel Plant, Salem Steel Plant, Kalinga Iron Works, Malavika Steel Ltd., Jindal

Vijaynagar Steel Ltd., to name only a few. About the same time TISCO launched its two-

million-tonne expansion programme.

The Government’s Industrial Policy had undergone changes ____ once in 1956 and then

in 1991. The resolution modified in 1956 brought changes in the category pattern and

listed more industries for the public sector than did the earlier one, though it was not

harsher towards the private enterprise. In the new industrial policy announced in 1991

iron and steel industry, among others, was included in the list of industries reserved for

the public sector and exempted from the provision of compulsory licensing. With effect

from May 24, 1992 iron and steel industry was included in the list of ‘high priority’

industry for automatic approval for foreign equity upto 51% (now 74%). Export-import

regime for iron and steel has also undergone major liberalisation. The freight equalisation

scheme was withdrawn removing freight disadvantage to States located near steel plants.

41

The new policy has already borne fruit. The finished steel pdroduction in India has gone

up from mere 1.1 million tonnes in 1951 to 23.37 million tonnes in 1997-98 despite

overall economic slow-down in the country.

It has been estimated that the demand for finished steel in 2001-02 would touch 38.68

million tonnes and the projected availability of 38.01 tonnes is almost adequate to meet

the domestic demand along with export of six million tonnes. Similarly, by 2006-07, the

final year of the tenth plan, the demand for finished steel would be around 48.80 million

tonnes, providing adequate surplus for meeting the projected export potential of nine

million tonnes.

However, there is hardly any scope for complacence over the fact that India continues to

be the 10th largest steel producer in the world. In 1997 India’s per capita steel

consumption was only 22 kg which was much below the world average of about 126 kgs.

Even if the domestic demand grows up from 34.5 million tonnes to 100 million tonnes in

2025 the industry is unlikely to catch up with the production in the developed countries.

The redeeming feature is the cost competitiveness of Indian steel in the global market.

According to World Steel Dynamics, the total cost of steel production in the USA is $510

per metric tonne while in Japan it is $550, in Germany $557, in Canada $493 and in India

it is $497. This is because of high material cost due to high excise and import duties.

Reduction of cost on these accounts will make Indian steel more competitive in the world

market. Indian steel can reasonably expect a good market in the neighbouring countries

now that the Asian economy is looking up.

In conclusion, it can be said with a certain measure of confidence that India’s iron and

steel industry which had a glorious past and has an uncertain present may now look

forward to a bright future.

42

AN OVERVIEW OF STEEL SECTOR

Global Scenario

" In 2005 World Crude Steel output at 1129.4 million metric tonne was 5.9% more than

the previous year. (Source: IISI)

" China remained the world's largest Crude Steel producer in 2005 also (349.4 million

metric tonne) followed by Japan (112.47 million metric tons) and USA (93.89 million

metric tons). India occupied the 8th position (38.08 million metric tons). (Source: IISI)

The International Iron & Steel Institute (IISI) in its forecast for 2006 has confirmed the

trend of recent years of an increase in steel use in-line with general economic growth and

with the fastest growth occurring in the countries with the highest GDP growth such as

India and China. Apparent world-wide Steel Demand is forecast to grow to between

1,040 and 1,053 million tonnes in 2006 from a total of 972 million tonnes in 2004. This is

a growth of 4-5% over the two year period. However, according to IISI the cost of raw

materials and energy would continue to represent a major challenge for the world steel

industry.

Market Scenario After liberalization, there have been no shortages of iron and steel materials in the

country.

Apparent consumption of finished (carbon) steel increased from 14.84 Million

Tonnes in 1991-92 to 43.471 million tonnes (Provissional) in 2006-07. During

April-June, 2007, apparent consumption of finished (carbon) steel was 10.103

million tonnes(Provisionally estimated)

Steel industry that was facing a recession for some time has staged a turnaround

since the beginning of 2002.

Efforts are being made to boost demand.

China has been an important export destination for Indian steel.

The steel industry is buoyant due to strong growth in demand particularly by the

demand for steel in China.

The boom in the steel sector is being driven by growth in its user industries -- construction and automobiles.

43

Giving a huge fillip to the infrastructure sector, the Indian government has announced

plans to spend at least US$17 billion to upgrade roads, airports and ports by 2010.

The heightened activity in sectors such as roads, ports and sea-bridges is attracting

international attention. It has drawn at least two dozen foreign giants in civil engineering,

construction and infrastructure consultancy services to the country. During the last six

months, around 20 civil engineering and construction companies have entered India or

have stepped up their activity, while some big names in the infrastructure consultancy

sector are ramping up their operations here.

These trends are expected to send annual consumption rocketing from current levels of

about 36 million tonnes per year. Steel producers also hope the steel industry will become

another sunshine industry, fuelled by a rapid rise in the demand for washing machines,

fridges, TV sets and other consumer items using steel as a major ingredient.

Similarly, the automobile sector has been abuzz with activity. The total number of

passenger vehicles manufactured during 2004-05 was 1,209,654 units, an increase of 22

per cent over the previous year.

Production

44

Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.

Today, India is the 7th largest crude steel producer of steel in the world.

In 2007-08(Apri-June''07), production of Finished (Carbon) Steel was 12.088

million tonnes(Prov).

Production of Pig Iron in 2007-08(April-June'07) was 1.165 Million Tonnes

(Prov).

The share of Main Producers (i.e SAIL, RINL and TSL) and secondary producers

in the total production of Finished (Carbon) steel was 33% and 67% respectively

during the period 2007-08 (April-June, 2007).  

Last 4 year's production of pig iron and finished (carbon) steel is given below:

45

(in million tonnes)

Category 2003-

04

2004-

05

2005-

06

2006-07

(Provisional)

2007-08 (April-June'07)

(Prov.estimated)

Pig Iron 3.764 3.228 4.695 4.960 1.165

Finished

Carbon Steel

36.957 40.055 44.544 49.391 12.088

(Source: Joint Plant Committee)

                                                                                                             

Contribution of Different Companies in Production

Demand - Availability Projection

Demand – Availability of iron and steel in the country is projected by Ministry of

Steel annually.

Gaps in Availability are met mostly through imports.

46

Interface with consumers by way of a Steel Consumer Council exists, which is

conducted on regular basis.

Interface helps in redressing availability problems, complaints related to quality.

Pricing & Distribution

Price regulation of iron & steel was abolished on 16.1.1992.

Distribution controls on iron & steel removed except 5 priority sectors, viz.

Defence, Railways, Small Scale Industries Corporations, Exporters of

Engineering Goods and North Eastern Region.

Allocation to priority sectors is made by Ministry of Steel.

Government has no control over prices of iron & steel.

Open market prices are generally on rise.

Price increases of late have taken place mostly in long products than flat products.

Imports of Iron & Steel Iron & Steel are freely importable as per the extant policy.

Last four years import of Finished (Carbon) Steel is given below:-

Year Qty. (In Million Tonnes)

2003-2004 1.540

2004-2005 2.109

2005-2006 3.850

2006-07(Prov. estimated) 4.100

2007-08 (Apr-June, 2007) (Prov. estimated)

0.800

            (Source:  JPC)

Exports of Iron & Steel

Iron & Steel are freely exportable.

Advance Licensing Scheme allows duty free import of raw materials for

exports.

Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. 

Under this scheme exporters on the basis of notified entitlement rates, are granted

due credits which would entitle them to import duty free goods.  The DEPB

47

scheme was temporarily suspended from 27th March 2004 to 12 July, 2004 for

export of steel items.  The Scheme has since been restarted.  The DEPB rates have

also been substantially reduced.

Exports of finished carbon steel and pig iron during the last four years and the

current year is as :

(Qty. in Million Tonnes)

    Finished (Carbon) Steel      Pig Iron2002-2003 4.506 0.6292003-2004 4.835 0.5182004-2005 4.381 0.3932005-2006 4.478 0.440

2006-2007(Prov.estimated) 

4.750 0.350

2007-2008(April-June 07) (Prov.estimated) 

1.310 0.120

         (Source : Joint Plant Committee)

Government Policy on Steel Industry

a. Steel industry : Important Policy Measures In the new Industrial Policy announced in July, 1991 Iron and Steel industry,

among others, was removed from the list of industries reserved for the public

sector and also exempted from the provisions of compulsory licensing under the

Industries ( Development and Regulation) Act, 1951.

48

With effect from 24.5.92, Iron and Steel industry has been included in the list of

`high priority' industries for automatic approval for foreign equity investment

upto 51%. This limit has been recently increased to 74%.

Price and distribution of steel were deregulated from January, 1992. At the same

time, it was ensured that priority continued to be accorded for meeting the

requirements of small scale industries, exporters of engineering goods and North

Eastern Region of the country, besides strategic sectors such as Defence and

Railways

The trade policy has been liberalised and import and export of iron and steel is

freely allowed. There are no quantitative restrictions on import of iron and steel

items, covered under Chapter No. 72 of the ITC(HS) Code. The only mechanism

regulating the imports is the tariff mechanism. Tariffs on various items of iron and

steel have drastically come down since 1991-92 levels and the government is

committed to bring them down to the international levels.

Freight equalisation scheme was modified in January'92, removing freight

disadvantage to states located near steel plants in the country. At the same time, it

was ensured that far-flung areas and distant states were protected by stipulating

that the main producers charge either actual freight or freight element existing

prior to withdrawal of the scheme, whichever is less.

Levy on account of Steel Development Fund was discontinued from April'94

providing greater flexibility to main producers to respond to market forces.

Iron & Steel are freely importable as per the Extant Policy

To check unbridled cheap imports of steel the Government has fixed floor prices

for seven items of finished steel viz. HR coils, HR sheets, CR coils, Tinplates,

CRNO and ASBR.

Iron & Steel are freely exportable

b. Policy on Iron Ore Exports

The existing Export & Import Policy (Exim Policy) permits direct exports of iron

ore from Goa and Redi sector to all destinations by the iron ore producers,

irrespective of the iron content. The Kudremukh Iron Ore Company Ltd.

49

(KIOCL) is the canalising agency for its own products (iron ore concentrates and

iron ore pellets) since it is a 100% Export-Oriented Unit (EOU). Iron ore of Fe

content upto 64% is completely decanalised. Exports of ore with iron content

exceeding 64% from other sectors of the country are canalised through a

Government agency, namely MMTC. The major buyers of Indian Iron Ore are the

Japanese Steel Mills (JSMs).

The earlier contract for supply of iron ore by MMTC/KIOCL to the Japanese

Steel Mills (JSMs) terminated on 31.3.96. The Cabinet in its meeting held on

8.12.95 approved the proposal of Ministry of Commerce for entering into another

five year contract with Japan for export of iron ore.

Iron ore surplus to domestic requirement may continue to be exported; and

The export of high grade ore (run of mine Fe content above 65%) would be within

the prescribed ceilings.

Cabinet Ceilings on export of high grade are :

The cabinet in its meeting held on 21.7.98 approved the following ceilings

proposed by Ministry of Commerce w.e.f. 1.4.1998 and which would be valid for

a period of three years.

From 1.4.1998 ( in million tonne/annum )

Grade Quantity Range

Bailadila lumps Not exceeding 3.0

Bailadila fines Not exceeding 3.8

High grade lumps (Bellary-Hospet) Not exceeding 1.2

High grade fines (Bellary-Hospet) Not exceeding 2.0

c. Manganese Ore

50

Export policy of manganese ore is decided keeping in view the need for

conserving high grade ores. Alongwith this, effort is also made to replace the

export of ores with export of value added items For the year 1999-2000 the

maximum ceilings of manganese ore allowed for export are as follows :

ITEM Ceiling for 1998-

99 (in lakh tonnes)

Medium Grade Manganese Ore/blended ore containing 38% to 46% manganese and more than

0.15% Phos. 1.00

Medium Grade Manganese ore/blended ore containing 38% to 46% manganese and more than

0.10 % Phos.0.50

Low grade manganese ore/blended ore containing less than 38% manganese.

4.00

Manganese ore fines below 12mm in size containing less than 44% manganese.

1.50

d. Chromite Ore

Keeping in view the limited reserve of Chromite ore in the country, only certain

grades of ore are allowed for export. Emphasis has been laid on export of

beneficiated chromite concnetrates. From the year 1997-98, a five year Export

policy has been decided upon by Government so us to enable the exporters to

establish their presence in the international market.

Steel in Budget 2008-09

Government’s increased emphasis on infrastructure coupled with the strong demand from

housing and automobile sectors will ensure that the steel consumption reaches a few

hundred million tonnes a few decades from now. Infact, if we are to bridge the gap

between the domestic per capita consumption of 39 kgs and global average of 150 kgs,

then demand will have to grow by atleast 10% to achieve the target by the year 2020.

Further, with the supply not in a position to be able to catch up with the demand atleast

until few years from now, we could see the continuation of the current robust steel cycle

in the medium term. Availability of iron ore, however, may come under threat if the

government continues to permit indiscriminate exports of the same.

51

Budget Measures

Steel melting scrap will be exempt from customs duty

Excise duty reduction in select segments of automobile manufacturing

Continuation of power sector reforms

Coal regulator to be appointed

Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary

 Budget Impact

Reduction in customs duty on scrap will help steel manufacturers that use the electric arc furnace route for steel manufacturing lower their costs. On the other hand, it will be a negative for manufacturers that use the blast furnace route.

If auto manufacturers pass on the reduced excise benefits in the form of lower prices, it will help spur demand for automobiles, which in turn will drive steel demand

Increased investment in the power sector will also help boost demand for steel

The proposed coal regulator will help ease the process of allocating coal blocks, a key raw material in the steel manufacturing process

 Company Impact

Reduction in excise duties on automobiles will help companies that supply steel to auto makers. Key beneficiary would be Tata Steel

Players that supply steel to the power equipment companies like SAIL and JSW Steel will benefit from increased investments in the power sector

Better access to coal mines will be a positive for all the players that do not have their own captive mines

DEVELOPMENT OF INDIAN STEEL SECTOR SINCE 1991

Production of Iron & Steel

(a)Finished Carbon Steel Production

PRODUCTION OF FINISHED CARBON STEEL  (In million tonnes)

YearMain

ProducersSecondaryProducers

GrandTotal

% of share ofSecondary Producers

1991-92 7.96 6.37 14.33 14.5%

1992-93 8.41 6.79 15.20 44.7%

52

1993-94 8.77 6.43 15.20 42.3%

1994-95 9.57 8.25 17.82 46.3%

1995-96 10.59 10.81 21.40 50.6%

1996-97 10.54 12.18 22.72 53.6%

1997-98 10.44 12.93 23.37 55.32%

1998-99 9.86 13.24 23.82 57.32%

1999-2000 11.20 15.51 26.71 58.07%

2000-2001 12.51 17.19 29.7 57.88%

2001-2002 13.05 17.58 30.63 57.4 %

2002-03 14.39 19.28 33.67 57.27 %

2003-04 15.19 21.00 36.19 58.03 %

2004-05 15.61 24.44 40.05 61.02 %

2005-06 (Prov.) 16.236 26.400 42.636 61.92 %

2006-07 17.390 32.000 49.390 64.79 %

2007-08 (Apr-August 07) 6.901 15.600 20.501 76.09 %

53

(b) Pig Iron Production

PRODUCER - WISE PRODUCTION OF PIG IRON (In million tonnes)

YearMain

producersSecondaryproducers

Grandtotal

%age share of theSecondary Producers

1991-92 1.49 0.10 1.59 6.3%

1992-93 1.68 0.17 1.85 9.2%

1993-94 1.98 0.27 2.25 12.0%

1994-95 2.01 0.78 2.79 28.0%

1995-96 1.74 1.06 2.80 37.9%

1996-97 1.73 1.57 3.30 47.5%

1997-98 1.70 1.68 3.39 49.5%

1998-99 1.37 1.60 2.97 53.87%

1999-2000 1.24 1.94 3.18 61.08%

2000-2001 0.96 2.15 3.11 69.13%

2001-2002 1.02 3.05 4.07 75.04 %

2002-2003 1.11 4.18 5.29 79.05 %

2003-04 0.97 4.25 5.22 81.48 %

2004-05 0.625 2.603 3.228 80.63 %

2005-06 (Prov) 1.006 2.850 3.856 73.91 %

2006-07 0.860 4.100 4.960 82.66%

2007-08 (Apr-August 07) 0.414 1.750 2.154 81.24 %

54

 (c) DRI Production

PRODUCTION OF DRI (In million tonnes)

Year Production % increase

1991-92 1.31 -

1992-93 1.60 22.1%

1993-94 2.40 50 %

1994-95 3.39 41.3%

1995-96 4.34 28.02%

1996-97 5.05 16.4 %

1997-98 5.32 5.34%

1998-99 5.12 (-)3.8%

1999-2000 5.34 4.30%

2000-2001 5.44 1.90%

2001-2002 5.40 (-) 0.70 %

2002-2003 6.91 27.96 %

2003-04 8.08 16.93 %

2004-05 10.296 -

2005-06 (Apr-Dec) 12.50 21.4 %

2006-07 15.75 -

2007-08 (Apr-August 07)

7.750  

55

GROWTH OF STEEL INDUSTY IN INDIA

Demand Scenario Source: IISI

56

37.6

212.7

268.6

280.2

382.1

468.7

648.5

0 100 200 300 400 500 600 700

India

U.K.

China

France

U.S.

Germany

J apan

Steel Consumption per capita (Kg)

As demand is very less as compare to others in India so there is a huge opportunity for

the manufacturers of India to capture the more market share by increasing capacity.

SWOT ANALYSIS

Strengths

1. Availability of iron ore and coal

2. Low labour wage rates

3. Abundance of quality manpower

4. Mature production base

Weaknesses

1. Unscientific mining

2. Low productivity

3. Coking coal import dependence

4. Low R&D investments

5. High cost of debt

6. Inadequate infrastructure

Opportunities

1. Unexplored rural market

2. Growing domestic demand

3. Exports

4. Consolidation

Threats

1. China becoming net exporter

2. Protectionism in the West

3. Dumping by competitors

57

Current Problems of Steel Industry

Shortage of quality raw materials.

Inadequate ‘enabling’ infrastructure.

High cost of basic inputs like power and tariff.

High cost of capital.

High tariff/non-tariff barriers imposed by on Indian exports by Developed

Nations.

Indian Railways : Comparatively High Tariffs

PPP * US Cents / thkm

Power Costs : High in India

PPP US Cents/ KiloWattHr

58

Tariff at Indian and Foreign Ports

Source: ESCAP and KMI report

Inefficiency costs at Indian Ports

Based on total employees,traffic, productivity/man , output per day , container

moves per hour, idle time at berth , india is incurring rs 4000 crores extra

compared to world average on exim trade

Indexed at Osaka = 100

59

Opportunities of Steel Industry:

Low Per Capita Consumption

Per capita steel consumption in the country is a mere 29 kgs.

Source: JPC

Raw Material Resources

Iron Ore

Coal

Limestone

Dolomite

Refractory

60

140

550

450

150

29

0

100

200

300

400

500

600

World Japan USA China India

Kg

s

The purpose of company analysis to analyze the financial and non-financial

aspects of a company to determine whether to buy, sells, or holds onto the shares of a

particular company

After determining the economic and industry conditions, the company itself is

analyzed to determine its financial health. This is usually done by studying the company's

financial statements. From these statements a number of useful ratios can be calculated.

The ratios fall under five main categories: profitability, price, liquidity, leverage, and

efficiency. When performing ratio analysis on a company, the ratios should be compared

to other companies within the same or similar industry to get a feel for what is considered

"normal." These are quantitative factors of company analysis; there are also some

qualitative factors which should be considered also.

Find out as much as possible about the company and their products.

Do they have any “core competency” or “fundamental strength” that puts them ahead of all the other competing firms?

What advantage do they have over their competing firms?

Do they have a strong market presence and market share? Or do they constantly

have to employ a large part of their profits and resources in marketing and finding

new customers and fighting for market share?

Following are some more important aspects about company

Shareholding pattern

Growth

Technology

61

Expansion Plan

Profitability

Capital History

Marketing Capabilities

Most important its financial statement

After you understand the company & what they do, how they relate to the

market and their customers, you will be in a much better position to decide whether

the price of the companies stock is going to go up or down.

So fundamental analysts use different tools and ratios to compare all sorts

of companies no matter what business they are in or what they do!

62

SAIL's Background and History

The Precursor

SAIL traces its origin to the formative years of an emerging nation - India. After

independence the builders of modern India worked with a vision - to lay the infrastructure

for rapid industrialisaton of the country. The steel sector was to propel the economic

growth. Hindustan Steel Private Limited was set up on January 19, 1954. The President

of India held the shares of the company on behalf of the people of India.

Expanding Horizon (1959-1973)

Hindustan Steel (HSL) was initially designed to manage only one plant that was coming

up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by

the Iron and Steel Ministry. From April 1957, the supervision and control of these two

steel plants were also transferred to Hindustan Steel. The registered office was originally

in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December

1959.

A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to

construct and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela

Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur

Steel Plant was completed in January 1962 after commissioning of the Wheel and Axle

plant. The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT.

The second phase of Bhilai Steel Plant was completed in September 1967 after

commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the

Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur

Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS.

Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT

63

at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in

1968-69 and subsequently to 4MT in 1972-73.

Holding Company

The Ministry of Steel and Mines drafted a policy statement to evolve a new model for

managing industry. The policy statement was presented to the Parliament on December 2,

1972. On this basis the concept of creating a holding company to manage inputs and

outputs under one umbrella was mooted. This led to the formation of Steel Authority of

India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of

Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai,

Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel

Plant. In 1978 SAIL was restructured as an operating company.

Since its inception, SAIL has been instrumental in laying a sound infrastructure for the

industrial development of the country. Besides, it has immensely contributed to the

development of technical and managerial expertise. It has triggered the secondary and

tertiary waves of economic growth by continuously providing the inputs for the

consuming industry.

Company Profile

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It

is a fully integrated iron and steel maker, producing both basic and special steels for

domestic construction, engineering, power, railway, automotive and defence industries

and for sale in export markets.

Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL

manufactures and sells a broad range of steel products, including hot and cold rolled

sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates,

bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five

integrated plants and three special steel plants, located principally in the eastern and

central regions of India and situated close to domestic sources of raw materials, including

the Company's iron ore, limestone and dolomite mines. The company has the distinction

of being India’s largest producer of iron ore and of having the country’s second largest

64

mines network. This gives SAIL a competitive edge in terms of captive availability of

iron ore, limestone, and dolomite which are inputs for steel making.

SAIL's wide range of long and flat steel products are much in demand in the domestic as

well as the international market. This vital responsibility is carried out by SAIL's own

Central Marketing Organisation (CMO) and the International Trade Division. CMO

encompasses a wide network of 34 branch offices and 54 stockyards located in major

cities and towns throughout India.

With technical and managerial expertise and know-how in steel making gained over four

decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and

consultancy to clients world-wide.

SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS)

at Ranchi which helps to produce quality steel and develop new technologies for the steel

industry. Besides, SAIL has its own in-house Centre for Engineering and Technology

(CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our

captive mines are under the control of the Raw Materials Division in Kolkata. The

Environment Management Division and Growth Division of SAIL operate from their

headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

Incorporation Year

Registered Office Ispat Bhawan, Lodi Road, New Delhi - 110003, New Delhi

Telephone 91-011-24367481-86 (14 Lines)

Fax 91-011-24367015

Industry Steel - Large

House Govt of India

Chairman S K Roongta

Managing Director V Gujral

Company Secretary Devinder Kumar

Auditor S K Mittal & Co/Ray & Ray/Dass Maulik Mahenra K Ag

Face Value 10

Market Lot 1

Listing London, Mumbai, NSE

Registrar MCS Ltd

65

Sri Venkatesh Bhawan, W-40 Okhala Indus Ar, Phase - II, New Delhi 110048

Production Facilities:

5 Integrated Steel Plants

3 Special Steel Plants

1 Subsidiary - Ferro Alloy Plant (under merger)

Marketing Network:

34 Branch Sales office

14 Customer Contact Office (CCO)

42 Warehouses (Departmental 24 & Consignment Agencies 18)

Captive Mines:

9 Iron Ore Mines

5 limestone mines

2 Dolomite Mines

3 Collieries

Major Units 

Integrated Steel Plants

Bhilai Steel Plant (BSP) in Chhattisgarh

Durgapur Steel Plant (DSP) in West Bengal

Rourkela Steel Plant (RSP) in Orissa

Bokaro Steel Plant (BSL) in Jharkhand

IISCO Steel Plant (ISP) in West Bengal

66

Special Steel Plants

Alloy Steels Plants (ASP) in West Bengal

Salem Steel Plant (SSP) in Tamil Nadu

Visvesvaraya Iron and Steel Plant (VISL) in Karnataka

Subsidiary

Maharashtra Elektrosmelt Limited (MEL) in Maharashtra

Joint Ventures

SAIL has promoted joint ventures in different areas ranging from power plants to e-

commerce.

NTPC SAIL Power Company Pvt. Ltd

A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal

Power Corporation Ltd. (NTPC Ltd.), it manages the captive power plants at Rourkela,

Durgapur and Bhilai with a combined capacity of 314 megawatts (MW)

Bokaro Power Supply Company Pvt. Limited

This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in

January 2002 is managing the 302-MW power generation and 1880 tonnes per hour

steam generation facilities at Bokaro Steel Plant.

Mjunction Service Limited

A joint venture between SAIL and Tata Steel on 50:50 basis, this company promotes e-

commerce activities in steel and related areas.

SAIL-Bansal Service Center Ltd.

SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a

service centre at Bokaro with the objective of adding value to steel.

Bhilai JP Cement Ltd

67

SAIL has also incorporated a joint venture company with M/s Jaiprakash Associates Ltd

to set up a 2.2 MT cement plant at Bhilai

SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint

venture company to produce ferro-manganese and silico-manganese at Bhilai.

Ownership and Management

The Government of India owns about 86% of SAIL's equity and retains voting control of

the Company. However, SAIL, by virtue of its ‘Navratna’ status, enjoys significant

operational and financial autonomy

SAIL Today

SAIL today is one of the largest industrial entities in India. Its strength has been the

diversified range of quality steel products catering to the domestic, as well as the export

markets and a large pool of technical and professional expertise.

Today, the accent in SAIL is to continously adapt to the competitive business

environment and excel as a business organisation, both within and outside India.

SAIL - Into the Future

SAIL’s Growth Plan 2010

Much has happened ever since SAIL’s Corporate Plan was announced in 2004.

Investment plans for the three speciality steel plants have been firmed up. Company has

grown in size with the amalgamation of IISCO (now renamed as IISCO Steel Plant).

Production targets have been revised from 19 million tonnes (MT) of steel to about 24

MT. Estimated investment has increased from Rs 25,000 crore to around Rs 40,000 crore.

And the time period has been squeezed by two years, bringing the targeted year of

completion of major projects from 2012 to 2010.

68

Saleable Steel Capacities (MT)

PLANT 2010

Bhilai Steel Plant 6.21

Durgapur Steel Plant 2.85

Rourkela Steel Plant 2.90

Bokaro Steel Plant 6.50

IISCO Steel Plant 2.37

Alloy Steels plant 0.43

Salem Steel Plant 0.36

Visvesvaraya Iron & Steel Plant

0.22

Growth of SAIL

Maintaining thrust on production to meet the growing demand for steel in the domestic

market, Steel Authority of India (SAIL) achieved best-ever February performance by

producing 1.1 million tons of saleable steel, a growth of 7% over February `07, with

capacity utilization of the SAIL plants going up to 122%. The company also recorded

best-ever February production of hot metal at 1.24 million tons and 1.14 million tons of

crude steel, both showing 6% growth over the corresponding period last year (CPLY).

69

Consequently, during the period April `07-February `08 of the current financial year,

SAIL produced 11.8 million tonnes of saleable steel, an increase of over 4 lakh tonnes

over CPLY, with an average capacity utilisation of 117%.

Key techno-economic parameters also improved in February`08. Coke rate at 524 kg per

tonne of hot metal was 3% lower and energy consumption at 7.05 giga calories per ton of

crude steel reduced by 1% over CPLY. Production through the energy-efficient

continuous casting route crossed 7.5 million tonnes, 9% higher than February`07. With

thrust maintained on production of value-added and special steels, the SAIL plants

produced nearly 3.6 million tonnes of such items in February`08, an increase of 49% over

CPLY.

The captive mines of SAIL produced 2.2 million tons of iron ore in February`08 and met

100% requirement of the plants. Coal production from captive collieries was increased

during the year (April `07-February`08) by 50% over CPLY.

During February `08, SAIL`s Central Marketing Organisation achieved sales of 1.03

million tonnes, 3.7% higher than CPLY.

With SAIL entering its 50th year of production, February 08 was a memorable month for

the company. The month`s other highlights included payment of Rs 6,734.9 million to the

Government by SAIL as interim dividend for the financial year 2007-08, inauguration of

Bhilai Steel Plant`s Rs 112.62 billion expansion and modernisation programme by Union

Minister for Chemicals & Fertilisers and Steel Mr Ram Vilas Paswan, presentation of the

FICCI Annual Award 2006-07 to SAIL for outstanding achievement in the category of

Rural & Community Development Initiatives.

70

Share Holding Pattern

86%

5%5% 3%1%

Govt. of India

Domestic FinancialInstitute

Foreign Institutional Investor

Individuals (Incl.Employees, NRIs,GDRs)Others

Share Holding Pattern

SAIL is a public sector undertaking of the Government of India which holds 85.82% of equity. Other major shareholders are

Domestic Financial institutions with 4.73% stake and Foreign Institutional Investor with 5.08 % individuals with 3.16% stake

and others 1.21%

Category of Share Holders % Holding

Govt. of India 85.82

Domestic Financial Institute 4.73

Foreign Institutional Investor 5.08

Individuals (Incl. Employees, NRIs, GDRs) 3.16

Others 1.21

Major Products Manufactured/  Traded(03,2007)

Product Name Sales (Rs.in Crores) Steel-Main-Saleable 34,620.81 Alloy Steel-Saleable 2,387.37 Others 1,480.51 Pig Iron 618.34 Finished Prod.Internally Cons. 410.00 Pig Iron(Alloy) 69.88 Steel Ingots 5.64 Middling/Rejects 5.15 

Balance Sheet

71

(Rs. In Crore)

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03Share Capital 4,130.40 4,130.40 4,130.40 4,130.40 4,130.40Reserves & Surplus 13,182.75 8,471.01 6,176.25 907.27 -1,605.16Total Shareholders Funds 17,313.15 12,601.41 10,306.65 5,037.67 2,525.24Secured Loans 1,556.39 1,122.16 1,603.98 3,400.78 5,511.59Unsecured Loans 2,624.13 3,175.46 4,165.81 5,289.28 7,416.35Total Debt 4,180.52 4,297.62 5,769.79 8,690.06 12,927.94Total Liabilities 21,493.67 16,899.03 16,076.44 13,727.73 15,453.18Gross Block 29,912.71 29,360.46 28,043.48 27,683.63 27,534.61Less: Accum. Depreciation 18,315.00 17,198.32 15,558.41 14,515.73 13,498.75Net Block 11,597.71 12,162.14 12,485.07 13,167.90 14,035.86Capital Work in Progress 1,236.04 757.94 366.48 382.20 361.25Investments 513.79 292.00 606.71 543.17 543.17Inventories 6,814.10 6,371.66 4,220.69 3,057.06 3,744.37Sundry Debtors 2,314.75 1,881.73 1,908.45 1,549.96 1,660.09Cash and Bank Balance 9,609.83 6,172.64 6,132.12 2,035.82 512.91Loans and Advances 3,097.70 2,771.47 3,260.11 1,603.36 1,373.33Current Liabilities 8,105.99 8,081.23 7,812.72 4,412.32 4,492.71Provisions 5,713.41 5,645.14 5,385.40 4,577.92 2,821.40Net Current Assets 8,016.98 3,471.13 2,323.25 -744.04 -23.41Miscellaneous Expenses not w/o

129.15 215.82 294.93 378.50 536.31

Total Assets 21,493.67 16,899.03 16,076.44 13,727.73 15,453.18Contingent Liabilities 3,635.18 3,730.45 4,056.90 3,159.22 2,853.25

Profit & Loss Account (Rs. In Crore)

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03

72

Sales Turnover 39,481.8032,686.8932,023.8724,137.02 19,262.02Other Income 1,708.15 1,151.99 1,072.69 976.05 795.89Stock Adjustments 289.15 1,131.31 367.72 -485.84 -433.00Total Income 41,479.1034,970.1933,464.2824,627.23 19,624.91Raw Materials 13,276.2012,391.12 9,358.92 6,904.25 6,234.03Excise Duty 5,393.82 4,605.48 3,455.12 2,881.66 2,370.56Power & Fuel Cost 2,613.94 2,526.97 2,227.62 2,187.95 2,061.32Other Manufacturing Expenses 3,662.77 3,268.56 2,607.77 2,164.42 1,965.95Employee Cost 5,086.81 4,156.28 3,811.91 4,757.90 3,722.87Selling and Administration Expenses 1,417.61 1,467.62 1,167.04 1,176.07 1,176.43Miscellaneous Expenses 484.80 525.41 613.33 741.80 737.38Less: Preoperative Expenditure Capitalised

1,423.08 1,352.05 921.71 893.07 856.21

Profit before Interest, Depreciation & Tax

10,966.23 7,380.8011,144.28 4,706.25 2,212.58

Interest & Financial Charges 332.13 467.76 651.98 955.45 1,381.79Profit before Depreciation & Tax 10,634.10 6,913.0410,492.30 3,750.80 830.79Depreciation 1,211.48 1,207.30 1,126.95 1,122.59 1,146.66Profit Before Tax 9,422.62 5,705.74 9,365.35 2,628.21 -315.87Tax 3,220.33 1,692.77 2,548.38 116.13 -11.56Profit After Tax 6,202.29 4,012.97 6,816.97 2,512.08 -304.31Growth of Company

Year 2007 2006 2005 2004 2003Sales 39,481.80 32,686.89 32,023.87 24,137.02 19,262.02Var % 20.78% 2.07% 32.67% 25.30% --Profit After Tax 6,202.29 4,012.97 6,816.97 2,512.08 -304.31Var % 54.55% -41.13% 171.37% 925.50% --

Sales Chart

19,262.0224,137.02

32,023.87 32,686.89

39,481.80

0.00

5,000.0010,000.00

15,000.00

20,000.0025,000.00

30,000.00

35,000.0040,000.00

45,000.00

2003 2004 2005 2006 2007

73

Profit Chart

-304.31

2,512.08

6,816.97

4,012.97

6,202.29

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

2003 2004 2005 2006 2007

Current Price 190.40

52 Week High 292.50

52 Week Low 106.10

Face Value 10

Year end Mar 07 Mar 06 Mar 05

EPS(Rs) 14.54 9.44 16.06

Book value(Rs) 41.92 30.51 24.95

NPM(%) 15.71 12.28 21.29

ROCE(%) 51.28 38.03 68.77

ROE(%) 41.47 35.04 88.85

Debt/equity 0.28 0.44 0.94

P/E 7.85 8.82 3.92

Here from the above information I found that the Sales, EPS, Book value, Net Profit

Margin are increased continuously in 2007 as compared to 2006 and 2005 but SAIL

74

should concentrate on PE Ratio because it has decreased in 2007. The debt-equity ratio is

decreased which is good sign and under controlled which is good sign. The investor of

this company should take hold position of this company for the long period for good

dividends and good market price in future.

TATA STEEL LIMITED

Background

Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) was established in

1907. It represents the country's single largest, integrated steel plant in the private sector.

The company has a wide product portfolio, which includes flat and long steel, tubes,

bearings, ferro-alloys and minerals as well as cargo handling services. While in terms of

size,Tata Steel ranks 34th in the world; it was ranked first (for the second time) among 23

75

world class steel companies by World Steel Dynamics in June 2005. With its plant

located in Jamshedpur (Jharkhand) and captive iron ore mines and collieries in the

vicinity,Tata Steel enjoys a distinct competitive advantage. The main plant at Jamshedpur

manufactures 5 MTPA of flat and long products, while its recently acquired Singapore-

based company, NatSteel Asia, manufactures 2 MTPA of steel across Singapore, China,

Philippines, Malaysia and Vietnam.Apart from the main steel division, Tata Steel's

operations are grouped under strategic profit centres like tubes, growth shop, bearings,

ferro alloys and minerals, rings, agrico and wires.

Incorporation Year 1907

Registered Office Bombay House, 24 Homi Mody Street Fort, Mumbai - 400001, Maharashtra

Telephone 91-22-66658282

Fax 91-22-66658113/66657725

Industry Steel - Large

House Tata

Chairman Ratan N Tata

Managing Director B Muthuraman

Company Secretary J C Bham

Auditor Deloitte Haskins & Sells

Face Value 10

Market Lot 1

Listing Kolkata, Luxembourg, Mumbai, NSE

Registrar TSR Darashaw Ltd6-10 Haji Moosa, Patrawala Ind.Estate, DrEMoses Rd Mahalaxm, Mumbai - 400 011

Production Highlights

• Major Products Manufactured/  Traded

(03,2007)

Product Name Sales (Rs.in Crores)

Steel-Saleable 14,511.03 

76

Other Raw Mtls. 1,471.86 

Tubes-Welded-Steel 999.45 

Charge/Ferro Chrome 596.98 

Power & Water-Sales 513.96 

Steel & Scrap-Semi finished 486.29 

Other Products 260.61 

Services 230.41 

Bearings 162.78 

Ferro Manganese 129.76 

By Products 111.85 

Metallurgial Machinery 95.52 

Agricultural Products 84.65 

Ball Bearing Rings-Alloy Steel 75.59 

Bearing Rings-Cast & Alloy St. 20.48 

Scrap/Othr Mtls/Raw Mat.- Sale 6.16 

Steel-Saleable-Finished/Conver 5.19 

Business Results

The Company achieved the best ever sales turnover and profitability during the year

under review. A robust Indian economy, firm steel prices, higher volumes and several

improvement initiatives contributed to the record performance. Finished steel sales were

higher by 11.33% at 4.51 million tones over the previous year. Export turnover was lower

by about 5% due to lower volumes. Average price realization improved mainly due to

higher prices of hot rolled coils/sheets. Operating profit was higher by over Rs.1,000

crores at Rs. 6,973 cores (2005-06: Rs. 5,938 crores), an increase of 17% over the

previous year. Net interest charges were higher at Rs. 174 crores (2005-06: Rs.

125crores),due to additional borrowings for the Company’s domestic expansion programs

and funding Company’s contribution for financing the acquisition of Corus Group plc.

After providing for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and Rs. 152

77

crores towards employee separation scheme (2005 06: Rs. 53 crores), the profi t before

tax rose by 20% to Rs. 6,262 crores (2005-06: Rs. 5,240 crores). Net Profit after taxes

was higher at Rs. 4,222 crores (2005-06: Rs. 3,506 crores), an increase of 20% compared

to the previous year. The record financial results would not have been possible without a

matching performance by the operating departments including the raw materials division.

The year witnessed the best ever crude steel production by the Company at 5.05 million

tonnes, an increase of 6.7% over the previous year. Jamshedpur Plant became the fi rst

plant in India to produce more than 5 million tonnes of crude steel in a year. The

upgraded “G” Blast Furnace produced over 2 million tonnes of hot metal, as against its

rated capacity of 1.8 million tonnes. Among the Finishing Mills, the output at the Cold

Rolling Mill and the Hot Strip Mill exceeded their rated capacities. The all-round

increase in production was backed by improvements in operating practices and

productivity resulting in a reduction in consumption of raw materials, energy,

refractoriness etc. The Company’s Collieries, for the first time, produced 1.9 million

tonnes of clean coal at a reduced level of ash content, which has contributed significantly

in substituting the more expensive imported low ash coal. A modern beneficiation plant

for iron ore fines has been set up to reduce the aluminum content in iron ore.

BALANCE SHEET (in crore)

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03Share Capital 580.67 553.67 553.67 369.18 369.18Reserves & Surplus 13,368.42 9,201.63 6,506.25 4,146.68 2,816.84Total Shareholders Funds 13,949.09 9,755.30 7,059.92 4,515.86 3,186.02Secured Loans 3,758.92 2,191.74 2,468.18 3,010.16 3,667.63Unsecured Loans 5,886.41 324.41 271.52 372.05 557.98Total Debt 9,645.33 2,516.15 2,739.70 3,382.21 4,225.61Total Liabilities 23,594.42 12,271.45 9,799.62 7,898.07 7,411.63Gross Block 16,029.49 15,407.17 13,179.26 12,505.83 12,192.71Less: Accum. Depreciation 7,486.37 6,699.85 5,939.68 5,411.62 4,849.99Net Block 8,543.12 8,707.32 7,239.58 7,094.21 7,342.72Capital Work in Progress 2,497.44 1,157.73 1,872.66 763.64 201.08Investments 6,106.18 4,069.96 2,432.65 2,194.12 1,194.55Inventories 2,332.98 2,174.75 1,872.40 1,249.08 1,152.95

78

Sundry Debtors 631.63 539.40 581.82 651.30 958.47Cash and Bank Balance 7,681.35 288.39 246.72 250.74 373.12Loans and Advances 4,025.95 2,006.21 2,160.63 1,508.00 2,000.08Current Liabilities 5,389.22 4,564.14 4,297.24 3,900.00 3,594.23Provisions 3,037.54 2,361.44 2,524.42 2,068.99 2,217.11Net Current Assets 6,245.15 -1,916.83 -1,960.09 -2,309.87 -1,326.72Miscellaneous Expenses not w/o 202.53 253.27 214.82 155.97 0.00Total Assets 23,594.42 12,271.45 9,799.62 7,898.07 7,411.63Contingent Liabilities 5,072.96 2,209.45 1,911.12 1,508.01 1,316.22

Turnover

The company said that excluding the turnover of Tata Steel UK of Rs 23,867 crore for

the quarter, the group turnover registered an increase of Rs 2,157 crore. This was mainly

due to increases in Tata Steel’s Indian operations (Rs 472 crore), Natsteel (Rs 1,135

crore) and Tata Steel Thailand (Rs 554 crore). The increase in Tata Steel’s India

operations was primarily due to increase in prices, whereas the rise in Natsteel and Tata

Steel Thailand was attributed to increase in price and volume.

Total Expenditure

Total expenditure for the quarter ended December 31, 2007 was Rs 28,967 crore,

(including a total expenditure of Rs 22,808 crore of Tata Steel UK), against Rs 4,325

crore during the previous year.

The material cost, excluding that of Tata Steel UK of Rs 11,253 crore, rose to Rs 3,003

crore from Rs 1,919 crore.

The other expenditure, excluding that of Tata Steel UK (Rs 5,053 crore) was Rs 1,395

crore in Q3 FY08 against Rs 1,133 crore in Q3 FY07.

Due to rupee appreciation against major foreign currencies in Q3 FY08, the company had

a net exchange gain of Rs 45 crore.

79

The actuarial gain on funds for employee benefits amounted to Rs 145 crore for the

quarter ended December 31, 2007. The gain represents reduction in pension liability

arising out of higher discount rate, reflecting improved yields on bonds.

On Wednesday, the company stock closed at Rs 766.45, down 6.42 per cent over

previous close.

Profit & Loss Account (in crore)

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03Sales Turnover 19,757.8017,140.2415,871.0811,920.96 9,793.27Other Income 573.08 356.24 305.19 293.38 134.18Stock Adjustments 82.47 104.91 289.55 80.31 15.03Total Income 20,413.3517,601.3916,465.8212,294.65 9,942.48Raw Materials 3,572.06 3,024.38 3,020.42 2,245.42 1,749.97Excise Duty 2,304.18 2,004.83 1,377.92 1,218.57 1,071.95Power & Fuel Cost 1,027.84 897.57 778.30 724.62 787.75Other Manufacturing Expenses 2,500.00 2,090.67 1,948.00 1,549.92 1,317.36Employee Cost 1,598.96 1,397.39 1,403.84 1,575.71 1,444.96Selling and Administration Expenses 1,491.57 1,373.71 1,304.05 1,055.47 972.29Miscellaneous Expenses 822.57 735.89 693.25 558.59 498.60Less: Preoperative Expenditure Capitalised

236.02 112.62 204.82 151.84 60.79

Profit before Interest, Depreciation & Tax

7,332.19 6,189.57 6,144.86 3,518.19 2,160.39

Interest & Financial Charges 251.25 174.51 228.80 227.12 342.41

80

Profit before Depreciation & Tax 7,080.94 6,015.06 5,916.06 3,291.07 1,817.98Depreciation 819.29 775.10 618.78 625.11 555.48Profit Before Tax 6,261.65 5,239.96 5,297.28 2,665.96 1,262.50Tax 2,039.50 1,733.58 1,823.12 919.74 250.19Profit After Tax 4,222.15 3,506.38 3,474.16 1,746.22 1,012.31

How fast is the company growing?

Companies are judged by their sales and earnings growth rates than on the absolute value of their sales and earnings. Look for

companies that consistently grow faster than there peers.

Year 2007 2006 2005 2004 2003Sales 19,757.80 17,140.24 15,871.08 11,920.96 9,793.27Var % 15.27% 8.00% 33.13% 21.72% --Profit After Tax 4,222.15 3,506.38 3,474.16 1,746.22 1,012.31Var % 20.41% 0.93% 98.95% 72.50% --

81

Profit

1,012.31

1,746.22

3,474.16 3,506.38

4,222.15

0.00500.00

1,000.00

1,500.002,000.002,500.003,000.00

3,500.004,000.004,500.00

2003 2004 2005 2006 2007

Sales Chart

9,793.2711,920.96

15,871.08 17,140.2419,757.80

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

2003 2004 2005 2006 2007

Year

Current Price 698.00

52 Week High 969.80

52 Week Low 399.21

Face Value 10

Share Holding Pattern

82

%

Foreign Holdings 17.42 Govt. / Financial Institutions 21.85 Corporate Bodies(not covered above) 3.98 Directors and their Relatives 30.52 Other including Indian Public 25.32

Share Holding

18%

22%

4%30%

26%

Foreign Holdings

Govt. / FinancialInstitutions

Corporate Bodies(notcovered above)

Directors and theirRelatives

Other including IndianPublic

Year end Mar 07 Mar 06 Mar 05

EPS(Rs) 69.95 61.51 60.91

Book value(Rs) 240.22 176.19 127.51

NPM(%) 21.37 20.46 21.89

ROCE(%) 36.79 50.13 63.79

ROE(%) 35.62 41.70 60.02

Debt/equity 0.51 0.31 0.53

P/E 6.43 8.72 6.58

Here from the above information I found that the Sales, EPS, Book value, Net Profit

Ratio are increased continuously in 2007 as compared to 2006 and 2005 but TATA

should concentrate on PE Ratio because it has decreased in 2007. The debt-equity ratio is

decreased which is good sign and under controlled which is good sign. The investor of

this company should buy and hold the shares of this company for long period because

this company can give good dividend and investor can get arbitrage profit for short period

of time. This shares are for long term investmentpurpose.

83

JINDAL STEEL

Companies of Jindal Group

Jindal Stainless Ltd.:

Jindal Stainless is the largest integrated stainless steel producer in India and the flagship

company of the Jindal Group. It is an ISO: 9001 & ISO: 14001 company. Jindal Stainless

Ltd. has plants at Hisar and Vizag and is setting up a Greenfield integrated Stainless Steel

project in Orissa with capacity of 1.6 million tones per annum. Jindal's plant at Hisar is

India's only composite stainless steel plant for the manufacture of Stainless Steel Slabs,

Blooms, Hot rolled and Cold Rolled Coils, 60% of which are exported worldwide. At

Vizag, Jindal has a Ferro Alloy Plant with an installed capacity of 40,000 metric tones

per annum.

Jindal Steel & Power Ltd:

JSPL is one of the leaders in Steel Manufacturing and Power Generation in India. JSPL

is the largest private sector investor in the State of Chhattisgarh with a total investment

commitment of more than Rs. 10,000 crores. It is also setting up a 6 million tonne steel

plant in Orissa with an investment of Rs. 13,500 crores and a 6 million tonne steel plant

in Jharkhand with an investment of Rs. 15,000 crores. Jindal Power Limited, wholly

owned subsidiary of JSPL, is setting up a 1000 MW O P Jindal Super Thermal Power

Plant at Raigarh, with an investment of over Rs. 4500 crores. JSPL has also ventured into

exploration and mining of high value minerals and metals, like diamond, precious stones,

gold, platinum group of minerals, base metals, tar sands etc.

84

JSW Steel Limited:

JSW Steel Ltd is a fully integrated steel plant having units across Karnataka and

Maharashtra producing from pellets to colour coated steel. JSW was founded in1982,

when the Jindal Group acquired Piramal Steel Ltd which operated a mini steel mill at

Tarapur in Maharashtra. The Jindals, renamed it as Jindal Iron and Steel Co Ltd (JISCO)

now known as JSW Steel Limited (Downstream). In 1994, to achieve the vision of

moving up the value chain and building a strong, resilient company, JISCO promoted

Jindal Vijayanagar Steel Ltd (JVSL) now known as JSW Steel Limited (Upstream).

Jindal Steel

Jindal Steel is amongst the largest corporate groups in India. Jindal Group is presently a

US $5 billion conglomerate and ranks fourth amongst the top Indian Business Houses in

terms of assets. Jindal Steel is one of the largest steel producers in India with 12 plants in

India and 2 in USA.

O.P. Jindal is the founder of Jindal Group. He started by trading in steel pipes in Nalwa, a

village in the present-day Haryana. In 1952, O.P. Jindal set up the group's first factory at

Liluah, near Calcutta for the manufacturing of steel pipes, bends and sockets. Soon

thereafter, he set up a similar manufacturing unit at Hisar. In the early 1960s Jindal Steel

achieved a breakthrough when it developed India's first 100% indigenous pipe mill at

Hisar. In 1970, O.P. Jindal established Jindal Strips Limited and set up a mini steel plant

at Hisar to manufacture coils and plates through the electric and furnace route. Since

then, Jindal Steel has not looked back and has gone from strength to strength. Today, the

group has developed into a multi-faceted organization with revenues in excess of US $5

billion.

85

Background

Jindal Steel and Power Limited (JSPL), part of the O P Jindal group was formed in April,

1998 by hiving off the Raigarh and Raipur manufacturing facilities of Jindal Strips

Limited (JSL) into a separate company. Currently the company is engaged in

manufacture of sponge iron, steel, pig iron, ferro-chrome and power. JSPL is largest, and

amongst the lowest cost, coal based producer of sponge iron in India with an installed

capacity of 1,370,000 MTPA. JSPL’s operations are headed by Mr. Naveen Jindal,

Executive Vice Chairman and Managing Director of the company.

Operations of the company

JSPL is engaged in manufacturing of iron & steel products and power. JSPL’s product

mix includes sponge iron, power and value added steel products, such as rounds, billets,

beams, blooms and slabs. During FY’06, JSPL undertook capacity expansions across

various divisions at Raigarh. Post expansions, the installed capacities of various products

include 1,370,000 tpa of sponge iron, 24,00,000 tpa of mild steel, 36,000 tpa of ferro

Alloy, hot metal capacity of 250,000 tpa, power generation of 295 MW, coal washery

with capacity of 60 lakh tpa and a Rail and Universal Beam Mill (RUBM) of 750,000 tpa

capacity. The company has mining rights for coal in Gare area in Raigarh with estimated

reserves of 62 mn tonnes and iron ore at Tensa mines Orissa (estimated reserves 20 mn

tonnes). Sales of the company registered an 18% rise to Rs 2877 cr in FY’06 over

previous year. Capacity augmentation coupled with improved realizations, on account of

increase in sales of value added products, helped the company achieve the growth.

Sponge iron had been the major contributor to the total sales (23%) followed by beams

and columns (22%) and iron ore/fines (18%).

Export sales registered 14% rise and stood at Rs 371 cr in FY’06, mainly made to UAE,

China & Korea. JSPL’s coal requirement is met through company’s own mines. JSPL’s

requirement of iron ore is partially sourced from captive iron ore mine in Tensa and

balance through term contract from external source. Currently, company imports its

entire requirement of coke from China and is setting up an in-house coke oven plant to

86

reduce its costs. Captive power generation plant is based on the utilization of waste heat

of the flue gases from the sponge iron kilns as well as steam from coal fired FBC boilers,

which in turn utilizes the ejects from the coal washery and char generated from the

sponge iron plants. The power generation apacity as on December 31, 2006 stood at 315

MW. Apart from captive use, JSPL sells power to hattisgarh State Electricity Board,

through a firm PPA, and neighboring industrial units.

Registered Office O P Jindal Marg, Hisar - 125005, Haryana

Telephone 91-01662-222471-75

Fax 91-01662-222476

Industry Steel - Sponge Iron

House Jindal Om Prakas

Chairman Savitri Jindal

Managing Director  

Company Secretary T K Sadhu

Auditor S S Kothari Mehta & Co

Face Value 1

Market Lot 1

Listing Mumbai, NSE

Registrar Alankit Assignments Ltd2E/21 Alankit House, Anarkali Market, Jhandewalan Extn, New Delhi - 110055

Major Products Manufactured/  Traded (03,2007)

Product Name Sales (Rs.in Crores) Sponge Iron 794.54 Other Semi Steel Products 685.21 Parallel Flange/Beam/Columns 624.19 Rounds 574.72 Iron Ore-Fines 443.25 Power 285.69 Pig Iron 218.96 Ferro Chrome 123.44 Others 58.48 Other Finished Steel Products 57.08 Machinery 33.95 

Share Holding Pattern

87

  %

Foreign Holdings 24.49

Govt. / Financial Institutions 4.55

Corporate Bodies(not covered above) 1.88

Directors and their Relatives 59.05

Other including Indian Public 9.93

Share Holding Pattern

25%

5%

2%

58%

10%

Foreign Holdings

Govt. / FinancialInstitutions

CorporateBodies(not coveredabove)

Directors and theirRelatives

Other includingIndian Public

Balance Sheet ( in Crore)

88

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03Share Capital 16.40 16.40 16.40 16.40 25.63Reserves & Surplus 2,462.01 1,823.26 1,302.98 839.80 558.18Total Shareholders Funds 2,478.41 1,839.66 1,319.38 856.20 583.81Secured Loans 2,115.61 1,780.77 1,159.51 988.53 813.96Unsecured Loans 1,392.11 964.60 336.35 37.43 71.29Total Debt 3,507.72 2,745.37 1,495.86 1,025.96 885.25Total Liabilities 5,986.13 4,585.03 2,815.24 1,882.16 1,469.06Gross Block 4,929.03 3,243.05 2,530.28 1,677.94 1,011.22Less: Accum. Depreciation 781.75 542.33 361.76 247.00 179.31Net Block 4,147.28 2,700.72 2,168.52 1,430.94 831.91Capital Work in Progress 937.84 1,146.27 345.70 289.03 492.78Investments 709.82 430.30 33.38 49.66 42.23Inventories 642.44 568.65 257.55 196.51 101.95Sundry Debtors 320.31 299.54 172.91 211.16 165.12Cash and Bank Balance 52.97 31.30 33.29 21.90 18.64Loans and Advances 819.59 606.32 575.09 218.64 150.67Current Liabilities 1,261.88 926.67 592.22 448.45 276.88Provisions 385.48 272.14 180.00 88.56 59.00Net Current Assets 187.95 307.00 266.62 111.20 100.50Miscellaneous Expenses not w/o 3.24 0.74 1.02 1.33 1.64Total Assets 5,986.13 4,585.03 2,815.24 1,882.16 1,469.06Contingent Liabilities 1,578.03 679.59 597.68 273.85 130.85

Profit & Loss Account ( in Crore)

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03

89

Sales Chart

0

2000

4000

6000

2003 2004 2005 2006 2007

Year

Sale

s

Sales Turnover 3,899.81 2,877.46 2,448.17 1,390.20 993.18Other Income 72.34 37.25 23.10 24.84 13.75Stock Adjustments 56.86 183.98 13.85 42.38 17.92Total Income 4,029.01 3,098.69 2,485.12 1,457.42 1,024.85Raw Materials 783.38 450.35 341.67 233.37 164.47Excise Duty 396.71 312.91 196.26 131.08 112.58Power & Fuel Cost 341.27 428.89 429.07 233.00 159.55Other Manufacturing Expenses 502.98 394.59 280.19 155.12 107.26Employee Cost 93.70 72.81 48.45 31.04 24.67Selling and Administration Expenses 378.36 323.99 212.76 99.84 75.67Miscellaneous Expenses 78.41 66.09 60.99 29.63 61.04Less: Preoperative Expenditure Capitalised 0.00 0.00 0.00 0.00 0.00Profit before Interest, Depreciation & Tax 1,454.20 1,049.06 915.73 544.34 319.61Interest & Financial Charges 173.19 102.24 85.63 83.01 82.95Profit before Depreciation & Tax 1,281.01 946.82 830.10 461.33 236.66Depreciation 336.47 219.17 152.48 106.23 57.64Profit Before Tax 944.54 727.65 677.62 355.10 179.02Tax 241.55 154.71 161.91 49.64 33.94Profit After Tax 702.99 572.94 515.71 305.46 145.08

Current Price 828.50

52 Week High 1389.70

52 Week Low 470.10

Face Value 10

Growth of Company

Year 2007 2006 2005 2004 2003Sales 3,899.81 2,877.46 2,448.17 1,390.20 993.18Var % 35.52% 17.53% 76.10% 39.97% --Profit After Tax 702.99 572.94 515.71 305.46 145.08Var % 22.68% 11.10% 47.74% 110.55% --

90

Profit Chart

0200400600800

2003 2004 2005 2006 2007

Year

Pro

fit

Year end Mar ' 07 Mar ' 06 Mar ' 05

EPS (Rs) 225.36 183.92 165.38

Book value (Rs) 804.35 596.97 428.05

Net Profit Margin (%) 18.03 19.91 21.07

P/E 10.55 10.32 6.33

ROCE (%) 21.15 22.43 32.51

ROE (%) 32.58 36.30 47.45

Debt/equity 1.45 1.34 1.16

Here from the above information I found that the Sales, EPS, Book value, PE Ratio are

increased continuously in 2007 as compared to 2006 and 2005 but jindal should

concentrate on Net Profit margin because it has decreased in 2007. The debt-equity ration

is increased which is not good sign but in this company in is under controlled which is

good sign. The investor of this company should take some preventive step before invest

in this company for longer period of time. Investor can hold this share but should not buy.

FINDINGS

Comparative Profitability Ratio of Three Companies

YearTATA Steel SAIL

Jindal Steel

2003 10.33 0 14.62004 14.64 10.4 21.972005 21.88 21.23 21.062006 20.45 16.94 19.912007 21.37 15.7 18.03

91

Comparative Ratio

0

5

10

15

20

25

2003 2004 2005 2006 2007

Year

Rat

io

TATA Steel SAIL Jindal Steel

As we can see above graph of three companies as the initial stage of the SAIL it were met

the very low ratio due to loses and the Jindal steel was quite in struggle stage and its gone

towards the down size as year ahead, and the most profitable company as we can say is

that the Tata steel because of its highly increasing mode of the ratio. And we compare the

all three company the Tata steel company is quite preferable for the selection of the

investment.

CONCLUSION

Company

Share price

Adjusted EPS PE Target

Rating

FY06

FY07

FY08

FY06

FY07

FY08

(Rs)

SAIL 174.50 14.70 9.43 16.12 7.85 8.82 3.92 182 Hold

Tata Steel

667.40 14.70 9.43 16.12 6.43 8.72 6.58 687 Buy

Jindal 825.70 14.70 9.43 16.12 10.34 10.18 6.26 637 Hold

92

Steel

Valuation

We retain our HOLD rating for Tata Steel and BUY rating on SAIL and Jindal Steel to HOLD from BUY as we feel the share price of the company reflect possible upside in cement prices and gains from fuel price reductions.

BIBLIOGRAPHY

Reference book: -

- Avdhani- Fisher & Jordan

Web-sites: -

- www.google.com

93

- www.angeltrade.com

- www.moneycontrol.com

- www.cmlinks.com

- www.rediff.com

94