CONSOLIDATED BALANCE SHEET OF JSW STEEL LIMITED PARTICULARS SOURCES OF FUND Shareholders Fund Equity Sh. Capital Pref.

Sh. Capital Share Warrants Reserves & Surplus Total Shareholder's Fund 284.15 279.03 16,186.39 16,749.57 284.15 279.03 529.38 15,436.77 16,529.33 248.08 279.03 8,730.04 9,257.15 248.08 288.93 7,266.94 7,803.95 248.08 288.93 7,351.83 7,888.84 2012 2011 2010 2009 2008

(In Cars.) 2007

246.77 279.03

5,133.02 5,658.82

Minority Interest Loan Fund Secured Loan Unsecured Loan Long Term Provisions

217.67

235.83

218.65

273.20

191.88

3,632.50 540.53 -

13,361.33 35.03

12,172.76 4,301.60 -

13,454.07 2,718.97 -

13,470.78 3,079.44 -

10,083.03 2,053.19 -

Total Borrowed Fund

13,396.36

16,474.36

16,173.04

16,550.22

12,136.22

4,173.03

Deferred tax liability

3,041.19

2,325.63

1,964.95

1,421.32

1,251.84

1,012.53

TOTAL SOURCES OF FUND APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress Net Assets

33,404.79

35,565.15

27,613.79

26,048.69

21,468.78

10,844.38

35,399.79 35,399.79

32,683.89 6,873.23 25,810.66 6,507.68 32,318.34

26,792.05 5,339.26 21,452.79 6,956.18 28,408.97

22,388.91 4,079.75 18,309.16 9,585.18 27,894.34

18,105.12 3,074.25 15,030.87 5,770.80 20,801.67

10,513.39 2,323.90 8,189.49 2,012.47 10,201.96

Goodwill on Consolidation

1,243.98

1,093.20

899.19

783.13

783.13

3.91

Investments

4,488.47

2,913.83

628.20

396.60

469.58

245.00

Deferred Tax Assets Current Assets, Loan & Advances Unbilled Revenue Inventories Sundry Debtors Cash & Bank Balances Loan & Advances Other Current Assets Total Current Assets Less: Current Liabilities & Provisions Liabilities Provisions

316.21

276.23

280.17

144.50

0.13

5,789.26 1,539.39 3,046.97 2,391.09 14.36 12,781.07

17.11 4,409.70 933.30 2,048.00 2,156.82 9,564.93

2,866.74 696.39 303.04 1,603.79 5,469.96

2,924.56 399.05 509.30 1,242.79 17.24 5,092.94

2,181.74 539.06 471.48 908.60 19.81 4,120.69

1,012.11 245.96 339.46 546.24 342.04 2,485.81

20,593.89 230.84 20,824.73

10,201.93 399.45 10,601.38

7,807.83 264.87 8,072.70

8,179.88 82.94 8,262.82

4,340.22 366.20 4,706.42

2,212.03 75.28 2,287.31

Net Current Assets miscellaneous expenditure TOTAL APPLICATIONS OF FUND

(8,043.66)

(1,036.45)

(2,602.74)

(3,169.88)

(585.73)

198.50 195.01

33,404.79

35,565.15

27,613.79

26,048.69

21,468.78

10,844.38

NOTE Sundry Creditors Average Stock Average Debtors Average Creditors 9,705.20 5,099.48 1,236.35 6,096.32 2,487.43 3,638.22 814.85 2,096.86 1,706.28 2,895.65 547.72 1,746.52 1,786.75 2,553.15 469.06 1,641.93 1,497.11 2,181.74 392.51 1,003.99 510.87 1,012.11 122.98 255.44

CONSOLIDATED PROFIT & LOSS ACCOUNT OF JSW STEEL LTD PARTICULARS INCOME Domestic Turnover Export Turnover Contract Revenue Sale of Carbon Credit 36,719.83 Less : Excise Duty Net Turnover 2,596.18 34,123.65 22,190.88 3,617.30 20.95 38.67 25,867.80 1,967.56 23,900.24 17,202.35 2,948.77 60.21 20,211.33 1,254.16 18,957.17 13,383.76 3,680.54 48.58 17,112.88 1,178.04 15,934.84 10,377.99 3,176.46 111.11 13,665.56 1,208.91 12,456.65 2012 2011 2010 2009 (In Cars.) 2008

5,743.

3,593.

9,337.

742.90

8,594.

Other Income

321.25

284.03

532.16

271.66

153.70

105.15

Total Income Expenditures Increase/Decrease in Stock Purchase of Traded Good Power & Fuel Raw Materials Cost of Construction Employees Remuneration & Benefit Manufacturing & Other Expenses Net Finance Charges Depreciation & Amortisation Miscellaneous expenditure

34,444.90

24,184.27

19,489.33

16,206.50

12,610.35

8,699.

(443.65)

11,231.24 479.54 3,175.72 1,104.17 1,298.66

9,619.31 518.58 2,815.11 1,155.62 987.77

6,244.03 392.15 2,342.43 573.00 741.94

77.50 1,751.87 22,294.17 846.39 3,739.88 1,427.30 1,933.15 14,685.05 20.21 636.75 3,895.49 945.41 1,559.71

4,026.

175.81

1,574.

399.59

498.25

109.68 31,626.61 21,742.62 17,289.33 15,096.39 10,293.55

6,784.

Profit Before Exceptional Items Exceptional/Exchange Fluctuation

2,818.29 824.94

2,441.65 -

2,200.00 -

1,110.11 794.78

2,316.80 (107.45)

1,915.

Profit Before Taxation Provision For Taxation Profit After Tax before Minority Interest Share of losses/profit of minority Share of profit/losses of associates Profit After Taxation Profit brought forward from earlier yr Amount available for appropriation Appropriations: Transferred to Debenture Red. Res. Transfer to Capital Redemption Reserve Dividend on Preference Shares Proposed Final Dividend on Equity Shares Corporate Dividend Tax Transfer to General Reserve Interim dividend on equity shares Balance Carried to Balance Sheet Earning Per Share (In Rs.) Basic Diluted

1,993.35 500.15

2,441.65 782.27

2,200.00 646.71

315.33 72.60

2,424.25 765.78

1,915.

623.25

1,493.20

1,659.38

1,553.29 (33.21) (11.05) 1,597.55

242.73 (20.53) (11.65) 274.91

1,658.47 4.14 14.29 1,640.04

1,291.

18.92 (23.87) 936.60 537.68 (70.73) 1,753.98

(12.00

1,303.

1,899.35 2,437.03

4,695.46 6,449.44

3,676.02 5,273.57

3,482.32 3,757.23

2,332.26 3,972.30

1,384.

2,688.

(27.90) -

(27.90) (273.32) (48.87) (4,200.00)

(125.00) (9.90) (28.92) (177.70) (34.31) (202.28)

20.45 (28.99) (18.71) (8.11) (45.85)

23.30 (29.06) (261.87) (49.53) (172.82)

39.48

(27.90

(33.49

(129.2

(204.9 2,409.13 1,899.35 4,695.46 3,676.02 3,482.32

2,332.

22.65 84.56 22.65 83.83

83.61 83.29

12.88 12.88

90.30 89.26

80.86 79.62

Financial Indicators 'March 31' JSW STEEL LTD. (CONSOLIDATED DATA) 2012 AUDITED 'March 31' 2011 AUDITED 'March 31' 2010 AUDITED 'March 31' 2009 AUDITED 'March 31' 2008 AUDITED March 31' 2007 AUDITED

LIQUIDITY RATIO 1. Current ratio (Current assets/Current liability) 2. Liquidity ratio (Liquid assets/Current liability) 0.34 0.49 0.32 0.26 0.41 0.64 0.61 0.90 0.68 0.62 0.88 1.09

SOLVENCY RATIO 1. Debt Equity ratio (Debt/Equity) 2.Proprietry ratio (Proprietors fund/Total assets) 3. Debt to Total assets ratio (Total debt/Total assets) 4. Interest coverage ratio (Earning before interest & tax/Interest Expenses) 0.25 0.36 0.45 0.48 0.46 0.32 0.31 0.36 0.26 0.23 0.30 0.44 0.80 1.00 1.75 2.12 1.54 0.74

2.40

3.58

2.99

1.27

5.23

5.79

TURNOVER RATIO 1. Stock turnover ratio (Cost of goods sold/Average stock) 2. Debtors turnover ratio (Net credit sales/Average debts) 3. Creditors turnover ratio (Net credit purchase/Average creditors) 4. Capital turnover ratio (Cost of goods sold/Total capital employed)

5.38

5.11

4.98

4.87

3.94

5.53

27.60

29.33

34.61

33.97

31.74

69.88

3.66

7.00

6.43

5.86

6.22

15.77

1.64

1.13

1.56

1.59

1.09

0.99

PROFITABILITY RATIO 1. Gross Profit ratio (Gross profit/Net sales) 2. Net Profit ratio (Net profit/Net sales) 3. Return on Capital employed (Net profit/Capital employed) 4. Return on Capital (PAT-Pref. dividend/Equity share capital) 5. Earning Per Share (NPAT-Pref. dividend/No.of equity share) 6. P/E Ratio (MPS/EPS) 1.58 7.34 8.43 1.73 13.17 15.17 19.65 22.17 24.00 21.97 31.07 34.83

11.90

14.77

23.77

4.04

30.73

33.84

3.43

10.97

18.12

4.04

21.96

24.76

22.65

84.56

83.61

12.88

90.30

80.86

RATIO ANALYSIS OF JSW STEEL LTD

LIQUIDITY RATIO 1) CURRENT RATIO Current ratio/formula Current assets/current liability MAR-12 0.61 MAR-11 0.90 MAR-10 0.68 MAR-09 0.62 MAR-08 0.88 MAR-07 1.09

Comment: Current ratio indicates the ability of the firm to meet its short-term obligations. Current ratio should be 2:1. Current ratio is less than industrial norm 2:1 for 2008 to 2012 and in 2012 it shows the highest fall in current ratio (i.e.2012 = 0.61) Investment in inventory, increase in debtors, cash & bank has increased which indicates growth in production rate, growth in sales and increase in cash & bank balance. On the other hand liability side of the company is also increasing at a double rate as compared to the current assets of the company which is not good sign of financial development. Financial liquidity growth is very slow, companys liquidity position was weak in 2008-2009 due to recession which company tried to cover up in 2010-2011 but again it came down in 2012.

As we can see in the statement that our sales are increasing & in the same way creditors are also increasing which indicates inadequate availability of cash with company.

Recommendation Company has to work on liability side

b) Liquid ratio

Liquid ratio/formula Liquid assets/current liability

MAR-12 0.34

MAR-11 0.49

MAR-10 0.32

MAR-09 0.26

MAR-08 0.41

MAR-07 0.64

Comment: Liquidity ratio represents solvency position of the firm. Liquidity ratio showing decreasing in trend for 2008-2009, Due to unfavourable condition of the economy. But again it showing sign of improvement, for 2010-2011.in 2012 the ratio came down to 0.34. The liquidity ratio is less than the standard ratio 1:1 which indicate financial difficulty. There is tremendous increase in net current liabilities in 2009 & in 2012 which leads to fall in ratio Creditors of the company are increasing at a double rate for every year which is not good sign for the immediate liquidity position of the company.

Recommendation:

SOLVENCY RATIO 1) Debt equity ratio Debt equity ratio/formula Debt/equity 2012 0.80 2011 1.00 2010 1.75 2009 2.12 2008 1.54 2007 0.74

Comment: The ratio indicates the firms capital structure & financial risk of company, a high ratio is unfavourable from the firms point of view. The ratios shows decreasing trend from 2008 which indicates very favourable position of company. In 2009 companies borrowed fund was very high as compared to the debt fund which leads to increase in ratio.

From 2008 the proportion of debt fund & reserves of company are increasing for every year as compared to the debt fund which is a good sign for the company. The company also made a fresh issue of shares in 2011 which leads to increase in shareholders fund.

Recommendation:

2) Proprietory ratio:

Proprietory ratio/formula Proprietors fund/total assets

2007 0.44

2008 0.30

2009 0.23

2010 0.26

2011 0.36

2012 0.31

Comment: Proprietary ratio shows to what extent firm is using the external equity to finance its total assets. It indicates the long term solvency position. It shows the proportion of assets financed by the proprietors.

The ratio is very low in 2008 & in 2009 due to recession all over the ratio is showing ups & down in the owners fund holding in total assets. The proprietary ratio is less than the industrial norms (i.e, 60% to 75%) for every year which mean that the company is more dependent on the external sources i.e, unsound financial position.

Recommendation:

3) Debt to total assets ratio: Debt to total assets rato/formula Total debt/total assets 2007 0.32 2008 0.46 2009 0.48 2010 0.45 2011 0.36 2012 0.25

Comment: This ratio indicates the percentage of companys assets that are provided by debt. Debt fund was very high for 2008 to 2010, which means company is more dependent on debt & their is high proportion of debt fund in total assets. The higher the ratio, the greater risk will be associated with the firms operations.

In 2012 their is a decrease in debt fund in total assets which leads to lower in debt to total assets ratio i.e, 0.25 which is good sign for firms. As it indicates company is less dependent on debt & in future if condition demanded then the company has a high borrowing capacity.

Recommendation:

4) Interest coverage ratio: Interest coverage ratio/formula Earning before interest & tax/interest exp 2007 5.79 2008 5.23 2009 1.27 2010 2.99 2011 3.58 2012 2.40

Comment: This ratio measures the number of times the interest charged are covered by the funds of a company. The ratios shows ups & down, the coverage ratio was very high in 2008 & in 2007 due to the high profit earned by the company.

Then the ratio came down in 2009 due to recession which leads to generate low profit before tax. In the year 2010-2011 the ratio again shoots up because of the high profit earned by the company, but in 2012 the profit before tax again came down which leads to fall in ratio. Another reason for falling in the coverage ratio is that, the amount of interest paid is increasing for every year due to which the EBT is unfavourably affected.

Recommendation:

TURNOVER RATIO: 1) Stock turnover ratio: Stock turnover ratio/formula Sales/average stock 2007 5.53 2008 3.94 2009 4.87 2010 4.98 2011 5.11 2012 5.38

Comment:

This ratio indicates how efficiently the firm is managing its inventory. Normally high ratio indicates better inventory management. The standard industrial norm for stock turnover ratio is 5 to 6 times. Although the company is showing a good stock turnover ratio for all financial year, but it is showing a decline trend for two financial year (i.e. 2008-2009). For this year company has made an over investment in inventory and in 2009 the gross profit also came down which means the sale is also came down and it leads to stock of unsaleable goods. Over investment in inventory indicates excessive capital/cash blockage, risk of damage of inventory & loss of quality of inventory. However the company tried to overcome from this crises and we can see their is an increase in stock turnover ratio from 2010 & it is in between the industrial standard i.e. 5 to 6.

Recommendation:

2) Debtors turnover ratio: Debtors turnover ratio/formula Net credit sales/average debtors 2007 69.88 2008 31.74 2009 33.97 2010 34.61 2011 29.33 2012 27.60

Comment: Debtors turnover ratio indicates the no: of times the debtors are turned over a year. The ratio is showing decreasing trend for every year which is not good sign for company as it implies inefficient management of debtors or less liquid debtors. Companies net sales are increasing every year and in the same ratio debtors are also increasing at a faster rate which is not good.

Recommendation:

3) Creditors turnover ratio:

Creditors turnover ratio/formula Net credit purchase/average creditors

2007 15.77

2008 6.22

2009 5.86

2010 6.43

2011 7.00

2012 3.66

Comment: It is a ratio of net credit purchase to average trade creditors. It indicates the speed with which the payments are made to the trade creditors. The ratio is showing decreasing trend for 2009 due to recession which is not good. However after 2009 the ratio shows increasing trend shows positive sign, in this period company enjoys the higher creditors turnover ratio. It shows that the company is paying of suppliers at a faster rate and It may be due to the fact that business has better liquidity position. Higher creditors turnover ratio is good because it will decrease the average payment period. But again the ratio falls in 2012 to 3.66 which is not good representation of company. This shows that the company is taking longer time to pay off its suppliers than it was before.

Recommendation:

4) Capital turnover ratio: Capital turnover ratio/formula 2007 2008 2009 2010 2011 2012

Cost of goods sold/total capital employed

0.52

0.40

0.48

0.52

0.52

0.82

Comment: Capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio represents the no: of times the working capital is turned over in the course of year. The ratio shows increasing trend which shows positive sign for company. The cost of goods sold and capital employed is also increasing every year which indicates that the capital is turned at a faster rate in a given year. It indicates that the company is efficiently utilizing its working capital.

PROFITABILITY RATIO

1) Gross profit ratio: Gross profit ratio/formula Gross profit/ net sales*100 2007 34.83 2008 31.07 2009 21.97 2010 24.00 2011 22.17 2012 19.65

Comment: Gross profit ratio is a key financial indicator used to asses the profitability of a company's core activity. The ideal level of gross profit margin depends on the industries, how long the business has been established and other factors. Gross profit ratio measures company's manufacturing and distribution efficiency during the production process. The gross profit ratio shows decreasing trend which indicates that the business is unable to control its production cost or weak operation management. Cost of goods sold is showing increasing trend i.e the cost of manufacturing is increasing due to inflation and other operating activities and cost of good sold is increasing with out much increase in selling price. This must be due to Inability of management to improve sales volume, or
omission of sales.Over valuation of opening stock or under valuation of closing stock.

Mining issues - higher cost of raw material

2) Net profit ratio: Net profit ratio/formula Net profit/net sales * 100 2007 15.17 2008 13.17 2009 1.73 2010 8.43 2011 7.34 2012 1.58

Comment: Net profit ratio is used to measure the overall profitability of a firm. Net profit margin is an indicator of how efficient a company is and how well it controls its costs. The ratio is showing decreasing trend after 2007, however the company tried to come up in 2010-2011 but again it goes down to lowest point in 2012. Decreasing trend of net profit ratio is not good symbol for the profitability position of company. As we can see in profit & loss a/c that the net profit (profit after tax) was very low for 2 years i.e. (for 2009 & 2012) this shows the direct effect on ratios. Net sales is showing increasing trend which is good but the proportion of increase in companies other expenses, interest is much higher than the net sales. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will
erase profits and result in a net loss. Recommendation: Company should try to make changes in its pricing policies, cost structure and production efficiency. And try to increase its profit and other income.

3) Return on capital employed: Return on capital employed/formula Net profit/capital employed * 100 2007 17.66 2008 11.29 2009 1.21 2010 7.97 2011 6.87 2012 5.97

Comment: Return on capital employed establishes the relationship between the profit

and the capital employed. It indicates the percentage of return on capital employed in the business. Return on capital employed shows decreasing trend for every yea r and it was

lowest in 2009.
Lowering of return on capital employed for every year indicates that the management is not using properly the invested fund made by the owners and creditors of firm. Borrowed fund (i.e. creditors) is also low for 2012. However Investment in owners fund is increasing which is use full for the production capacity of company. But companys net profit is decreasing which is not good it shows that the operating cost is very high due to which profit is low.

Recommendation:

Company should make a proper planning regarding the owners fund & try to use in more accurate way. Company should try to minimize its operating coast so as to increase profit margin.

4) Return on shareholders fund: Return on shareholders fund/formula NPAT-pref dividend/shareholders fund * 100 2007 23.53 2008 21.16 2009 3.89 2010 17.57 2011 10.78 2012 3.38

Comment: The ratio measure of how effectively a company uses the money of owners invested in its operations. Return on shareholders fund is showing fluctuating trend for every year and it shows

lowest point in 2012. It may be due to the decrease in profit after tax which is low for 2009 and 2012. Companys manufacturing expenses is increasing for every year which leads to decrease in profit. However the investment in shareholders fund is increasing which will show positive impact in future.

Recommendation: Company should try to increase profitability margin by reducing operating cost. Company try to generate more returns so as to win the confidence of investors.

5) Earnings per share:

Earning per share/formula NPAT-pref. Dividend/no: of equity shares

2007 80.86

2008 90.30

2009 12.88

2010 83.61

2011 84.56

2012 22.65

Comment:

The term earnings per share (EPS) represents the portion of a company's earnings, net of taxes and preferred stock dividends, that is allocated to each share of common stock. Earning per share shows fluctuating figure for every year. It shows very low point for 2009 & 2012 as the net profit after tax has reduced due to increase in manufacturing coast. & year 2009 records the lowest earning per share due to the recession impact. These fluctuating figures of earning per share makes the investors confuse regarding the investment in company. It also affects the market price of shares of jsw in stock market.

2008-09- market fall & 2011-12 also global market crises Recommendation: