Group7 Company Financials Analysis Sail

8/10/2019 Group7 Company Financials Analysis Sail

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COMPANYFINANCIALSANALYSIS:STEEL AUTHORITY

OF INDIA LTD

A LOOK AT THE TRENDS IN THE FINANCIAL STATEMENTS AND RATIOS OVER THE PERIOD O

U113019 HARSH MOHAPATRA

U113028 MANEESHA SAHOOU113057 VASUDHA SINGH

U113020 HARS

U113118 TARUU113098 POO


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OVERVIEW: INDIAN STEEL INDUSTRY

The Indian steel industry has achieved

significant milestones in terms of growth in

capacity, production and exports to become

a major player in the global steel industry.

Between FY2008 and FY2013, Indias steel

production has grown at a compound annual

growth rate (CAGR) of about 7 percent

The Indian steel industry is divid

PRIMARY

The primary sectorcomprises a few largeintegrated steel providersproducing billets, slabs and

hotrolled coils, among others

The secompon thadderolledangle

otheriron u

The private sectordominates productionaccounting for almost 78percent of the finishedsteel outputwhile thepublic sector has highercapacity utilizations.

Total finished steel production for India (inmillion ton)*


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OVERVIEW: Steel Authority of India Li

The leading steel-making company in India.

A fully integrated iron and steel maker, producing both basic and spedomestic construction, engineering, power, railway, automotive and defeand for sale in export markets.

Among the seven Maharatnas of the country's Central Public Sector Enterpris

Indias second largest producer of iron ore and of having the countrys semines network. This gives SAIL a competitive edge in terms of captive avaiore, limestone, and dolomite which are inputs for steel making.

Operates and owns 5 integrated steel plants at Rourkela, Bhilai, DurgapuBurnpur and 3 special steel plants at Salem, Durgapur and Bhadravathi.


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Mar '14 Mar '13 Mar '12 Mar '11

Sources Of Funds

Total Share Capital 4,130.53 4,130.53 4,130.53 4,130.40

Equity Share Capital 4,130.53 4,130.53 4,130.53 4,130.40

Share Application

Money0 0 0 0

Preference Share

Capital0 0 0 0

Reserves 38,535.82 36,894.11 35,680.79 32,939.07

Revaluation Reserves 0 0 0 0

Networth 42,666.35 41,024.64 39,811.32 37,069.47

Secured Loans 11,560.89 8,746.16 7,481.91 11,813.91

Unsecured Loans 12,705.81 12,754.41 8,615.30 8,351.58

Total Debt 24,266.70 21,500.57 16,097.21 20,165.49

Total Liabilities 66,933.05 62,525.21 55,908.53 57,234.96

Mar '14 Mar '13

Application Of Funds

Gross Block 53,874.36 42,461.1

Less: Accum.

Depreciation27,103.71 25,683.7

Net Block 26,770.65 16,777.4

Capital Work in

Progress33,650.54 35,890.8

Investments 720.2 718.36

Inventories 15,200.82 16,008.2

Sundry Debtors 5,481.98 4,424.18

Cash and Bank

Balance2,855.95 3,850.35

Total Current Assets 23,538.75 24,282.7

Loans and Advances 7,281.75 6,549.1

Fixed Deposits 0 0

Total CA, Loans &Advances

30,820.50 30,831.8

Deffered Credit 0 0

Current Liabilities 19,105.61 14,976.3

Provisions 5,923.23 6,716.86

Total CL & Provisions 25,028.84 21,693.2

Net Current Assets 5,791.66 9,138.60

Miscellaneous

Expenses0 0

Total Assets 66,933.05 62,525.2

BALANCE SHEET


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Mar '14 Mar '13 Mar '12 Mar '1

Income

Net Sales 46,698.41 44,598.26 46,341.79 42,534.

Other Income 1,840.53 735.12 1,500.13 2,038.9

Total Income 47,644.31 47,349.47 49,210.43 46,044.

Expenditure

Raw Materials 21,611.97 23,334.91 24,804.77 22,642.

Power & Fuel Cost 4,942.15 4,830.44 4,469.74 3,586.0

Employee Cost 9,578.51 8,637.20 7,932.05 7,530.2

Miscellaneous Expenses 5,752.88 5,197.15 4,458.56 45.42

Total Expenses 41,885.51 41,999.70 41,665.12 37,041.

Operating Profit 3,918.27 4,614.65 6,045.18 6,964.3

PBDIT 5,758.80 5,349.77 7,545.31 9,003.3

Interest 967.64 747.66 677.7 474.6

PBDT 4,791.16 4,602.11 6,867.61 8,528.6

Depreciation 1,716.69 1,402.98 1,567.03 1,482.2

Profit Before Tax 3,074.47 3,199.13 5,300.58 7,045.3

Extra-ordinary items 150.08 41.53 -10.54 163.7

PBT (Post Extra-ord Items) 3,224.55 3,240.66 5,290.04 7,209.0

Tax 608.07 1,070.31 1,608.15 2,304.3

Reported Net Profit 2,616.48 2,170.35 3,681.89 4,904.7

Equity Dividend 834.35 826.1 826.1 991.3

Per share data (annualised)

Shares in issue (lakhs) 41,305.25 41,305.25 41,305.25 41,304.

Earning Per Share (Rs) 6.33 5.25 8.91 11.87

I

N

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O

M

E

S

T

A

TE

M

E

N

T

RATIO ANALYSIS PROFITABILIT


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RATIO ANALYSIS: PROFITABILIT

Consistent decline in profitability ratios. Could be attributed to high incre

Miscellaneous Expenses from 45cr in FY10-11 to 5752 cr in FY13-14.

RATIO ANALYSIS LIQUIDITY DE


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RATIOANALYSIS: LIQUIDITY & DE

Observations: Quick ratio has declined to und

1.

D/E has improved as debt portihas increased to arrange funds

available opportunities (capex

increase).

Although the Interest Coverage

ratio is still safe, we see a sharp

decline due to fall in company

profit generating ability.


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RATIO ANALYSIS: OTHER KEYRATIOS

Observations:

Management efficiency ratshow a gradual decline ovthe years.

EPS shows a sharp decline dto decline in profitability.

INTER FIRM COMPARISON


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INTER-FIRM COMPARISON

SAIL(FY13-14)

Tata Steel(FY13-14)

Gross Profit Margin(%) 4.71 26.1

Net Profit Margin(%) 5.49 15.08

ROCE(%) 4.6 13.37

RONW(%) 6.13 10.48

D/E 0.57 0.43

Interest Coverge Ratio 3.19 6.41

Asset Turnover Ratio 0.72 0.5

EPS 6.33 66.02

Observations:

Tata Steel has betterprofitability ratios.

Reserves of Tata Steehave doubled in 4 yewhereas not muchchange in SAIL reser

D/E for both is aroundthe industry averageTata Steel improvedtheir debt equityposition over the yea


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FINANCIAL RISK INDICA


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LIQUIDITY and SOLVENCY

17480

6415 3850

1.35

0.820.68

0

5000

10000

15000

20000

2011 2012 2013

Liquidity

Cash ( INR Cr) Quick

15.86

9

5.59

0

5

10

15

20

Mar '11 Mar '12 Mar '13

Interest Cover

The Cash and Equivalents decreased from 17480 Crsin 2011 to 2855 Cr in 2014 with a CAGR of -36.43% dueto the Diversion of Cash Flow into CAPEX andExpansion plans.

The Future credit-worthiness seems to have noimprovement till Cash Flows increase again.

EBIT has decreased consistently and interest expenseshas increased consistently due to increase inleverage.


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CONTINGENTS & LIABILITIES AND

INVESTMENTS

28000

29000

30000

31000

32000

33000

34000

35000

36000

2011 2012

C&L(INR Cr

C&L(INR Cr)

Investment were made to acquire extra Equity Shares in its JVs like NSPCL. Hence

investment cannot be seen as contributing to Finance risk but more to Market Risk

o Pending decision on Levy of Entry Tax in states ofChhattisgarh, Odisha and UP.

o Pending decision in determination of ElectricityTariff by DVC.

o Future Cash Flows have a chance to be affectedadversely.


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PROFIT vs CASH FLOW

7194.31

5150.87

3240.66 3224.55

17479.26

6416.1

277.23 214.91

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2011 2012 2013 2014

PROFIT vs CASH FLOW (INR Cr)

PBT Cash Flow

PBT

CAGR -18%

So we can conclud

drop in profitability dshow the severity of as the Cash Flow ovshown a more intense


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COMPANY PROFILE

Company

Name

Industry Instrument Rating Outlo

SAILIron and Steel

Manufacturer

Long-term corporate

credit ratingS&P BBB- Negati

Non-FB WC limits IND A1+ Strong

ST debt/CP programme IND A1+ Strong

Medium-term debt

programmeIND TAAA Strong


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THE

END

Thank you for your time.


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ADDITIONAL INFORMATION

Market Value of Equity= 35,687.69 Cr.

Dividend Yield= 2.34%

Average Payout Ratio for the last Four years= 0.282

Cost-of-equity (COE) as per the DDM (dividend discount model) is6.605%

DDM-COE (6.605%) obtained is lowerthan the earnings-yield (7.33%

Beta of SAIL= 1.68((Source: Reuters)

CAPM-Cost Of Equity is 13.76%

CAPM-COE is higheras compared to DDM-COE. The difference is 7Percentage points

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