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SUMMER TRAINING PROJECT REPORT

ON
WORKING CAPITAL MANAGEMENT AND RATIO ANALYSIS

AT
TATA STEEL LTD
Jamshedpur

Submitted in Partial fulfilment for the requirement for the award of post-graduate
Degree of

Master of Business Administration


2014-2016
Submitted By:
Md. Taj
MBA 3rd Semester
Roll No 140702530300040

Submitted to:
Acharya Vishnu Gupt Subharti institute of Management &Commerce

Swami Vivekananda Subharti University,


Meerut

DECLARATION

This is to certify that summer project entitled Working capital


management and Ratio analysis Submitted to Acharya Vishnu
Gupt Subharti institute of Management & Commerce SVSU, Meerut
(UP)

in the partial fulfilment of the requirement for the award of

Post Graduate degree in Management (Finance) of MBA in session


2015-2016 is an authentic record of my work carried during the
summer training at Tata Steel from 6th July 2015 to 13th August 2015
I declare that the work has not been submitted for the award of
degree or diploma anywhere else.

Md.Taj
Roll No 140702530300040

ACKNOWLEDGEMENT
The fundamental characteristic of summer internship program lies not just in the
successful completion of a given project but also in the positive expansion of the professional
business person inside a student.
I would like to extend my gratitude to Mr. Manoj Kumar Gupta (Head, finance and
accounts) for giving me opportunity to work in such an important sphere and sharing his
vision and experience.
I am thankful to Mr. ImtiazAhmed for his continuous support and guidance.
Mr.Gautam Ghosh (Tata Management Development Centre (TMDC) for providing me the
opportunity to learn and complete my summer internship in this esteemed organization.
I also take the opportunity to thanks Mr. Shubhojit Bhattacharya for his guidance
and valuable inputs in the development of the project, and interns of managing the real time
issues that we faced in the corporate world.
Last but not the least I would like to extend my thanks to all the employees at finance
department, my family and friends for their cooperation, valuable information and feedback
during my project.

CONTENT
S. No

PARTICULARS

PAGE NO

1.

INTRODUCTION

05

2.

COMPANY PROFILE

07

2.1

HISTORY OF THE ORGINAZATION

10

2.2

PRODUCT AND SERVICES

15

2.3

SWOT ANALYSIS

17 to 18

3.

RESEARCH METHODOLOGY

19 to 21

4.

OBJECTIVE OF THE STUDY

22

5.

COLLECTION OF DATA

23

6.

DATA ANALYSIS AND INTERPREATATION

24 to 34

7.

REVIEW OF LITERATURE
7.1

WORKING CAPITAL

37 to 45

7.2

NET WORKING CAPITAL

46 to 48

7.3

FINANCIAL RATIOS OF TATA STEEL

49 to 57

7.4

COMPARITIVE ANALYSIS OF TATA STEEL, SAIL,

58 to 69

JSW
7.5

FINANCIAL RATIOS OF TATA STEEL, SAIL, JSW

70 to 104

8.

RECOMMENDATION

105

9.

CONCLUSION

106

10.

BIBLIOGRAPHY

107

11.

ANNEXURE

108to 110

INTRODUCTION
Different businesses will have different working capital characteristics. There are 3 main
aspects to these differences:

a) Holding inventory
b) Taking time to pay suppliers and other accounts payable
c) Allowing customers (accounts payable) time to pay

a) Food supermarkets and other retailers receive most of their sales in the form of cash,
credit card or debit card. However, they will buy on credit from suppliers. They will therefore
have the benefit of significant cash holdings which they may chose to invest.

b) A wholesaler supplies other companies and is likely to buy and sell mainly on credit. The
flow of cash will have to be managed carefully. Such a company may have to rely on shortterm borrowings and overdrafts.

c) Small companies with a limited trading record may find it difficult to obtain trade credit.
At the same time customers will expect to receive the normal credit period to settle accounts.

Working capital is the capital required for maintenance of day-to-day business operations.
The present day competitive market environment calls for an efficient management of
working capital. The reason for this is attributed to the fact that an ineffective working capital
management may force the firm to stop its business operations, may even lead to bankruptcy.
5

Hence the goal of working capital management is not just concerned with the management of
current assets & current liabilities but also in maintaining a satisfactory level of working
capital. Holding of current assets in substantial amount strengthens the liquidity position &
reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return
trade off is significant in holding of current assets. While cash outflows are predictable it runs
contrary in case of cash inflows. Sales program of any business concern does not bring back
cash immediately. There is a time lag that exists between sale of goods & sales realization.
The capital requirement during this time lag is maintained by working capital in the form of
current assets. The whole process of this conversion is explained by the operating cycle
concept.
Working capital management involves the relationship between a firm's short-term
assets and its short-term liabilities. The goal of working capital management is to ensure that
a firm is able to continue its operations and that it has sufficient ability to satisfy both
maturing short-term debt and upcoming operational expenses. The management of working
capital involves managing inventories, accounts receivable and payable, and cash.

There are many ratios that can be calculated from the financial statements
pertaining to a company's performance, activity, financing and liquidity. Some common ratios
include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and
working capital.

COMPANY PROFILE
6

The Tata Group of Companies has always believed strongly in the concept of collaborative
growth, and this vision has seen it emerge as one of India's and the world's most respected
and successful business conglomerates. The Tata Group has traced a route of growth that
spans through six continents and embraces diverse cultures. The total revenue of Tata
companies, taken together, was 67.4 billion USD (around Rs319,534 crore) in 2009-10, with
57 per cent of this coming from business outside India. In the face of trying economic
challenges in recent times, the Tata Group has steered Indias ascent in the global map
through its unwavering focus on sustainable development. Over 395,000 people worldwide
are currently employed in the seven business sectors in which the Tata Group Companies
operate. It is the largest employer in India in the Private Sector and continues to lead with the
same commitment towards social and community responsibilities that it has shown in the
past.
The Tata Group of Companies has business operations (114 companies and subsidiaries) in
seven

defined

sectors

Materials,

Engineering,

Information

Technology

and

Communications, Energy, Services, Consumer Products and Chemicals. Tata Steel with its
acquisition of Corus has secured a place among the top ten steel manufacturers in the world
and it is the Tata Groups flagship Company. Other Group Companies in the different sectors
are Tata Motors, Tata Consultancy Services (TCS), Tata Communications, Tata Power,
Indian Hotels, Tata Global Beverages and Tata Chemicals.
Tata Motors is Indias largest automobile company by revenue and is among the top five
commercial vehicle manufacturers in the world. Jaguar and Landrover are now part of Tata
Motors portfolio.

Tata Consultancy Services (TCS) is an integrated software solutions provider with delivery
centres in more than 18 countries. It ranked fifth overall, and topped the list for IT services, in
Bloomberg Businessweek's 12th annual 'Tech 100', a ranking of the world's best performing
tech companies.

Tata Power has pioneered hydro-power generation in India and is the largest power
generator (production capacity of 2300 MW) in India in the private sector.

Indian Hotels Company (Taj Hotels, resorts and palaces) happens to be the leading chain of
hotels in India and one of the largest hospitality groups in Asia. It has a presence in 12
countries in 5 continents.

Tata Global Beverages (formerly Tata Tea), with its major acquisitions like Tetley and
Good Earth is at present the second largest global branded tea operation.

When Jamshedji Tata gave shape to his vision of nation building by forming what was to
become the Tata Group in 1868, he had envisaged India as an independent strength
politically, economically and socially. In order to become a force that the world has to reckon
with, the Tata Group has always ventured into path breaking territory and pioneered
developments in industries of national importance.
8

As a policy, the Tata Group Companies promote and encourage economic, social and
educational development in the community, returning wealth to the society they serve. Twothirds of the equity of Tata Sons is held in philanthropic trusts that take care of endowments
towards improvement programmes in these spheres.

Through the years, the Tata Group has been amongst the most prestigious corporate presences
in the world governed by its principles of business ethics. Its foray into international business
has been recognised by various bodies and institutions. Brand Finance, a UK based
consultancy firm after a recent valuation of the Tata brand at $11.22 billion has ranked it
65th among the world's top 100 brands. In Business Week magazine's list of the 25 most
innovative companies the Tata name appears 13 th and The Reputation Institute, USA has
evaluated the Tata Group as the 11th in a global study of the most reputed companies.

In the road ahead, the Tata Group is focusing on integration of new technologies in its
operations and breaking new grounds in product development. The Eka supercomputer had
been ranked the worlds fourth fastest in 2008 and the launch of the Nano has been a
benchmark for the auto industry specifically and the economy in general.

With a holistic approach in all its business operations, a loyal and dedicated workforce and its
rooted belief in value creation and corporate citizenship, the Tata Group is always ready to

realise its vision and objectives. The challenges of the future will only help to enhance the
Groups performance and transform newer dreams to reality.

HISTORY OF
THE
10

ORGANIZATION

HISTORY OF THE ORGANIZATION


JAMSEDJI NUSSERWANJI TATA (1839 1904)
He was a visionary behind Tata Steel .He realized that
Indias real freedom depended upon its self-sufficiency in
scientific knowledge, power and steel, thus devoted the
major part of his life, and his fortune to three great
enterprises-The Indian institute of Science at Bangalore, the
Hydro-electric schemes and the Iron & Steel Works at
Jamshedpur .He envisaged and conceived a steel town to
the very last detail, later to be named as Jamshedpur.
J.N. Tata had exhorted to his sons to pursue and develop his lifes work ; his elder son, Sir
Dorabji Tata(1859-1933) carried out the bequest with scrupulous zeal and distinction .Thus ,
even though it was Jamshedji Tata who had envisioned the mammoth projects, it was in fact
Dorabji Tata who actually brought the ventures to existence and fruition. He was the first
chairman of the gigantic Tata enterprises.
11

It was in 1907 that the village of Sakchi was discovered at the confluence of two rivers,
Subarnarekha and Kharkhai and the railways station of Kalimati .The Tata Iron and Steel
Company was floated.
SIR DORABJI TATA (1859 1933)
Sir DorabjiTata(1859-1933) carried out the bequest with
scrupulous zeal and distinction.
Thus , even though it was Jamshedji Tata who had
envisioned the mammoth projects, it was in fact Dorabji
Tata who actually brought the ventures to existence and
fruition. He was the first chairman of the gigantic Tata
enterprises.

BHARAT RATNA JEHANGIR RATANJI DADABHAI TATA (1904 1993)


J.R.D.Tata has been one of the greatest builders and
personalities of modern India in the twentieth century.
He assumed Chairmanship of Tata Steel at the young age of 34,
but his charismatic, disciplined and forward looking leadership
over the next 50 years led the Tata Group to new height of
achievement, expansion and modernization.
His style of management was to pick the best person for the job
at hand and let him have the latitude to carry out the job. He was
never interested for Micro- Management. It was he who zeroed
in on Sumant Moolgaokar, the engineering genius who successfully steered our company for
many years. He was a visionary whose thinking was far ahead of his time, which helped Tata
Group launching its own Airlines, now known as Air India. He was awarded the countrys
highest civilian honor, The Bharat Ratna in 1992.

12

RATAN NAVAL TATA


Ratan Navel Tata was born on December 28, 1937, in
Surat. He is the present Chairman of Tata Group, Indias
largest conglomerate founded by Jamshedji Tata and
consolidated and expanded by later generation of his
family. He is one of the most well-known and respected
industrialists in India.
Tata was born into wealthy and famous family of
Mumbai. His childhood was troubled as his parents
separated in the mid-1940s, when he was about seven and his younger brother was five. His
mother moved out and both he and his brother were raised by his grandmother Lady
Navarjbai.
Ratan Tata completed his degree in architecture with structural engineering from Cornell
University in 1962, and the Advance management Program from Harvard Business School in
1975. He joined the Tata Group in December 1962 on the advice of JRD Tata. He was first
sent to Jamshedpur to work at Tata steel. He worked on the floor with the other blue collar
employees, shoveling limestone and handling the blast furnaces. He was appointed the
Director In Charge of The National Radio & Electronics Company Limited (Nelco) in 1971
and was successful in turning Nelco around.

Backed by 100 glorious years of experience in steel making ,Tata Steel is the worlds
6th largest steel company with an existing annual crude steel production capacity of 30
Million Tones Per Annum (MTPA). Established in 1907, it is the first integrated steel plant in
Asia and is now the world`s second most geographically diversified steel producer and a
Fortune 500 Company.

13

Managing a global workforce and setting global


benchmarks is primarily about managing diversity. In a process of
inclusive growth, every person contributes to the blueprint of the
future and is truly committed to the stated objectives. And one of the
key requisites for successful diversity management is a shared vision.
The Tata Steel Group has always believed that mutual benefit of
countries, corporations and communities is the most effective route
to growth. Tata Steel has not limited its operations and businesses
within India but has built an imposing presence around the globe as well. With the acquisition
of Corus in 2007 leading to commencement of Tata Steel's European operations, the Company
today, is among the top ten steel producers in the world with an existing annual crude steel
production capacity of around 30 million tonnes per annum and employee strength of above
80,000 across five continents. The Group recorded a turnover of Rs.147,329 Crores (US$
28,962 million) in 2008 - 2009. The Company has always had significant impact on the
economic development in India and now seeks to strengthen its position of pre-eminence in
international domain by continuing to lead by example of responsibility and trust.
Tata Steels overseas ventures and investments in global companies have helped the
Company create a manufacturing and marketing network in Europe, South East Asia and the
Pacific-rim countries. The Groups South East Asian operations comprise Tata Steel Thailand,
in which it has 67.1% equity and Nat Steel Holdings, which is one of the largest steel
producers in the Asia Pacific with presence across seven countries.
The Tata Group of Companies has always believed strongly in the concept of collaborative
growth, and this vision has seen it emerge as one of India's and the world's most respected
and successful business conglomerates. The Tata Group has traced a route of growth that
spans through six continents and embraces diverse cultures. The combined market
capitalisation of 27 listed companies, being around $40.84 billion, the Groups present
shareholder base is 3.2 million. In the face of trying economic challenges in recent times, the
Tata Group has steered Indias ascent in the global map through its unwavering focus on
sustainable development. Over 350,000 people worldwide are currently employed in the
seven business sectors in which the Tata Group Companies operate. It is the largest employer
in India in the Private Sector and continues to lead with the same commitment towards social
and community responsibilities that it has shown in the past
14

TOP COMPETITORS OF TATA STEEL

Jindal Steel
SAIL
Essar steel

SOME OTHER MAJOR PLAYER IN THIS INDUSTRY

Saw pipes
Uttam steel Ltd
Ispat industry Ltd
Mukand Ltd
Mahindra Ugine steel co. Ltd
Ushaispat Ltd
Kalyani steel Ltd
Electro steel casting Ltd
Sesa Goa Ltd

PRODUCT AND SERVICES


Tata steel products name
Tata Shaktee GC sheet
Tata Steelium
Tata TISCON
Tata pipes
Tata AGRICO
Tata Wiron
Tata Bearings

15

Sales and Distribution


Approximately 91% of all saleable steel from TSL are to the Indian market.
The company has a strong sales and distribution channel as shown below.
Direct supply chain

15 external processing
25 consignments
agents
agencies

Wide network of
distributors and retailers

21 stockyards

Players

TATA

SAIL

JSW

ESSAR

1907

1954

2003(1984)

1975

Rods

Cold rolled sheets


and coils

Cold rolled sheets


and coils

Pipes

Hot rolled sheets


and coils

Hot rolled sheets


and coils

Year of
Establishment
Construction
Bars
Hot rolled
Products

sheets and coils

Cold rolled

Cold rolled

Galvanized

sheets and coils

sheets and coils

sheets and coils

Tata Motors is Indias largest automobile company by revenue and is among the top five
commercial vehicle manufacturers in the world. Jaguar and Landrover are now part of Tata
Motors portfolio.
16

Tata Consultancy Services (TCS) is an integrated software solutions provider with delivery
centres in more than 18 countries. It is currently ranked at no. 11 in the global market in
terms of revenue and aspires to be in the top 10 by 2010.
Tata Power has pioneered hydro-power generation in India and is the largest power
generator (production capacity of 2300 MW) in India in the private sector.
Indian Hotels Company (Taj Hotels, resorts and palaces) happens to be the leading chain of
hotels in India and one of the largest hospitality groups in Asia. It has a presence in 12
countries in 5 continents.
Tata Tea, with its major acquisitions like Tetley and Good Earth is at present the second
largest global branded tea operation.

17

SWOT ANALYSIS

SWOT ANALYSIS
STRENGTH:

Strong brand name like Tata Steel & Corus


Indian operation capable of meeting its own requirement
Strong supply chain for raw material leading sales & distribution
Low cost, high skilled labour.

WEAKNESS:

Low R & D Investment


Unscientific mining method
Technologically backward
Low productivity

OPPURTUNITY:
18

Unexplored rural markets


Growing domestic market
Growing global market
Carbon trade
High investment in infrastructure sector

THREATS:

Major player entering Indian market


China set to become a net exporter
High duties and taxes from the government
Environmental concerns & laws
Global slowdown

19

RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY
The study will be based on the QUANTATIVE and QUALITATIVE approach of the working
capital management model at TATA STEEL needs a thorough study. With the help of RATIO
ANALYSIS & TREND ANALYSIS the result of the control mechanism can be summarised
which will help in identifying the effectiveness of the system under the preview. The data for
the companies under analysis has been taken from their respective websites of the companies.
`MICROSOFT EXCEL has been used as a tool for different calculation purposes and
developing the charts.

20

A collaborative approach, cross-fertilisation of better practices and technology absorption


through integration of processes have led to measurable results in the Tata Steel Groups
performance in the direction of continuous improvement.
Technology Advancements
With globalisation and an increasing scale of operations, technological self-reliance has
become a necessity. Tata Steel with its plans for modernisation has ensured that it deploys the
best technologies to facilitate quality, cost-efficiency and environment-friendly processes.
Apart from its continuous endeavour to improve the quality and quantity of the steel
produced, Tata Steel has, over the years, undertaken extensive research in making the process
of steelmaking more energy efficient, economically viable and environmentally sustainable.
The goal is to foster a technology mindset amongst a cross-section of employees. The
ASPIRE T 3 Knowledge Management Programme provides the required platform as more
and more employees have been engaged in the process of knowledge creation and
dissemination.
The Tata Steel Groups programme of RD&T in Europe is funded by separate business units,
with breakthrough projects receiving direct corporate funding. Several such initiatives have
successfully added value to customers leading to enhanced profitability as a consequence.
In the last few years, Tata Steel has taken a number of initiatives that would consolidate its
position as a leader in select technologies. These include:

Formalising the continuous improvement process under ASPIRE.

Identifying key thrust areas of strategic technology development.

A focus on the Intellectual Property Rights in Tata Steel.

21

A number of individual projects have been taken up in each of the thrust areas and definite
benefits have ensued in many significant ways, some of which include:

8% ash in coal without reduction in yield.

Complete beneficiation of iron ore.

Improving blast furnace productivity.

Development of advanced coatings.

Evolving the next generation high strength steels.

Lowering phosphorus in steel making.

Research and Development is carried out in the areas of raw materials, blast furnace
productivity, steel making, product development, process improvement etc, keeping these
operations in readiness for any challenge.

OBJECTIVES OF THE STUDY

TATA STEEL has been managing the various aspect of working capital through
continuous efforts over a long period of time.
The present study is trying to investigate the different aspects of working capital
management at TATA STEEL. Working capital is generally the net difference

22

between the total assets and the liabilities of the company. So an attempt to
understand as to how the company manages the working capital has been done.
In my project work we are trying to identify the various systematic processes in
managing the working capital.
The study is trying to identify the various liquidity, profitability, solvency and the
turnover positions of the company as a tool of performance which will lead us to
identify the financial soundness of the company.

COLLECTIONS OF DATA
The data has been collected from the primary and secondary sources:
i) Primary data
(1) Department visit- discussion with the concerned person and interviewing
officers in accounts and finance sector.
(2) Observation method.
ii) Secondary data
(1) Annual reports
(2) Journals and magazines
23

(3) Study of files and office documents


(4) Websites of TATA STEEL and other steel companies.

DATA ANALYSIS
24

&
INTERPRETATION

DATA ANALYSIS AND INTERPRETATION


The project report is prepared by surveying on a good number of employees
from various departments of Tata steel, Joda east. Those departments are as follows.
Departments
1. V.T.C, Joda
2.

Electrical Department And Water Supply

3.

Geological Department

4.

Hospital

5.

JCO Administration

6.

Security Department

7.

Civil Department

25

8.

TSRDS (Tata Steel Rural Development Service)

9.

JEIM (Joda East Iron Mines)

10. Joda East Time Office


11. Joda East Processing Plant
12. Joda East Equipment
13. Chief, Joda
14. Khondbond Iron Mine
15. JCO land and Lease
16. JCO Estate & GR
17. HR/IR Department
1. Are you satisfied with the accommodation facility, provided by the company ?

PERCENTAGE
SATISFIED
NOT SATISFIED

80% are satisfied in the first basic need of a human. Accommodation should be situated in a
good environment and should be in a good area where one can survive easily. There are so
many big concerns who does not provide accommodation facility to their employees, but TSL
provides accommodation facility to their employees. TSL has its own township. There
employees has no problem for accommodation in TSL, Joda east. This is the first theory of

26

motivation. Theemployees of TSL, Joda are satisfied with the accommodation facility
provided by the company.
2. Are you satisfied with the health care facility?

PERCENTAGE
SATISFIED
NOT SATISFIED

68% are satisfied in the health care is one of the important factor life. TSL has its own
township, so the company provides Hospital for the employees, with a good number of
doctors for all diseases. There are 11 doctors and 14 nurses available at Joda East. The
employees are satisfied for a certain limit, they has a complain also and that is, the health care
facility is only for small and normal diseases, if there is a measure disease arise then there is
no arrangements for that. They have to go for other Hospitals like District Headquarter
Hospital, Keonjhar or to Tata Hospital, Jamshedpur. Both those hospitals are nearest to Joda
but those has a long distance.
3.Are you feeling secure about your job?
This is another factor of motivational theory. 72% are feeling secure about the increases the
morale of the employee. TSL employees are feeling secure about their jobs. The officers of
TSL are experienced and permanent.

27

PERCENTAGE

SECURED
NOT SECURED

4.Are you satisfied with the educational facilities available at Joda for your
children ?

PERCENTAGE
SATISFIED
NOT SATISFIED

88% are satisfied with the education of life now a days. Every parents want to send their
children to a standard school rather than an ordinary school. All parents wants that their
children should know all the aspects that how to cope with the competitive world. TSL
provides schooling facility for the children of the employees, but employees of TSL, Joda are
not satisfied with the schooling facility available at Joda. The various educational institutions
are, Govt. M.E School, Tata Primary School, Joda East UP,ME School, Girls High School,
Joda High School, Hill Top Primary School, Saraswati Sishu Mandir, Womens College, etc.
The school at Joda is an ordinary one, and they want that the company should provide a
standard schooling facility.
28

5.Does the company provides you the standard safety appliances?

PERCENTAGE

YES
NO

The first policy of TSL is safety, and we could see the hoardings of safety principle every
where at TSL, Joda. Joda is the mines division of TSL . The companys management focused
its best in providing the safety appliances to the employees. The employees of Joda, TSL are
very much satisfied with the safety appliances provided by the company.

6. Are you feeling safe at your work place with the safety standards maintained at
present ?

29

PERCENTAGE

YES
NO

The company provides safety appliances as well as maintains the safety standards at the work
place for all employees. In the company at every where we could find safety instruction for
employees as well as for out side people, and employees always suggests outside people to
follow the safety standards. TSL provides positional training, it means, on the job training
Standard Operating Procedure (SOP) for safety purposes. There is a Toxic Detected Machine,
if the machine gives a positive isolation, then employee should be implemented. Last but not
the list, safety is a man made function.
7.Are you satisfied with your team members at your work place ?

PERCENTAGE
SATISFIED
NOT SATISFIED

The team work exaggerates the morale of the employees and they puts heir best effort. The
employees of TSL, Joda are very much satisfied with there team members, all the employees
are co-operative with each other. All the employees at here shares there information relating
30

their work, divides there work properly. They gives respect to each other and they makes fun
with each other also. All the employees are very much co-operative with the outside people
also.

8.Are you satisfied with the training and development programs which are
provided by the company ?

PERCENTAGE

SATISFIED
NOT SATISFIED

Training and development program this is one of the factor which every employee needs at
the very first time in an organization and this is a continuous process. The employees of TSL
are not fully not satisfied with this factor. There are 20% employees are satisfied and 80% are
not. The unsatisfied employees says that, this is not a continuous process at TSL, Joda. Some
of them complains that the training and development programs which are provided by the
company are not enough for them.

31

9. Are you satisfied with the welfare facilities which are provided to you at the
working area ? (eg. Canteen, ACS ,Etc.)
The employees of Joda are satisfied with the welfare facilities which are provided to them.
Every rooms of the office are AC(air condition) fitted, well furnished rooms with good
lighting facility, the cost of the foods in the canteen are very low, such as,
Lunch (veg)=Rs.3
Lunch (non-veg,egg)=Rs.4
Breakfast or evening food items =0.40 paise(samosha,bara,piazi,etc)
Tea=0.40 paise
Etc..
There is no charges for accommodation, electricity and water for employees.
TSL, Joda employees are satisfied with the welfare facilities.

PERCENTAGE

SATISFIED
NOT SATISFIED

32

10. Are you satisfied with your salary package?

PERCENTAGE

SATISFIED
NOT SATISFIED

This is the question on which no one will give true answer. Because every person wants more
and more money than he/she gets and thats why everyone mustn't satisfied with their salary
packages. But when I ask the employees of TSL about their salary package according to their
performance, and performance wise they are satisfied with the salary package. But there are a
few young employees are working there, who are not satisfied with the salary package which
they are getting. When I ask about those unsatisfied employees to employees who spends
their long period of time in TSL said that, if they (unsatisfied employees) are not satisfied,
then why do they working at here. They must work at there where they gets the right salary
according to there performance and should leave TSL.
11. Does the company co-operates and helps you at any emergency time ?

33

PERCENTAGE

YES
NO

TSL co-operates with there employees in an emergency time. All the employees are very
much satisfied with the emergency helping facility. The facilities are like, if one of the
employees family member or the employee itself suddenly suffers from a measure disease,
company helps them by providing sufficient money.

12. Do you get recognition for your individual/group performance?

PERCENTAGE

YES
NO

Near about 85% TSL employees of the survey gets recognition for their individual/group
performance. The rest employees dont get any recognition because they are new. This is
another motivational factor which motivates the employees to give their best again and again
towards the company.

34

13. Are you associated with any social activity ?If yes then, what is that ?

PERCENTAGE

YES
NO

There are a less number of employees who are associated with any social activity, near about
30% of employees are associated. Some are associated with temple committee, and organizes
festivals. Some are associated with the community centre and organizes occasional festivals
(new year parties), etc.
14. Are you maintaining your family comfortably with the salary you have ?

PERCENTAGE

YES
NO

All the employees of survey said yes on this question, because company fulfills all the needs
of employees, starting from well facilitate accommodation, provides grocery items through
store with less price than market, medicines from companys hospital, etc. On for the rest
items the employees have to spent as per the need.

15. Which one you possess in life style?


35

PERCENTAGE

OWN HOUSE
OWN CAR
OWN LAPTOP

This question reflects the quality of life of the employees of TSL, Joda. Above 90% of
employees has their own house, own car, own ACs, own computer/laptop, and all those
necessary items which are needed in todays life style. The rest of employees has their own
house.
16. How much you spent and how much you save in a month?

36

PERCENTAGE

SAVINGS
SPEND

All the employees spent above Rs.5000 and saves according to their capacity starting from
Rs1000 to Rs10,000.

37

LITERATURE
REVIEW

38

WORKING CAPITAL MANAGEMENT


WHAT IS WORKING CAPITAL?
Working capital is the cash needed to pay for the day to day operation of the business.
Working capital is a financial metric which represents operating liquidity available to a
business, organization or other entity, including governmental entity. Along with fixed assets
such as plant and equipment, working capital is considered a part of operating capital. Net
working capital is calculated as current assets minus current liabilities.. It is a derivation of
working capital that is commonly used in valuation techniques such as DCFs (Discounted
cash flows). If current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its
assets cannot readily be converted into cash. Positive working capital is required to ensure
that a firm is able to continue its operations and that it has sufficient funds to satisfy both
maturing short-term debt and upcoming operational expenses. The management of working
capital involves managing inventories, accounts receivable and payable, and cash.
Working capital management is a very important component of corporate finance
because it directly affects the liquidity and profitability of the company. It involves the
decision of the amount and composition of current assets and the financing of these assets.
Efficient working capital management involves planning and controlling current assets and
current liabilities in a manner that eliminates the risk of inability to meet due short term
obligations on the one hand and avoid excessive investment in these assets on the other hand.
39

Working capital means that part of the total assets of the business that change
from one form to another form in the ordinary course of business operations. Also known as
revolving or circulating capital or short-term financial management it is nothing but the
difference between current assets and current liabilities. The word working capital is made
of two words- Working & Capital. The word working means day to day operation of the
business, whereas the word capital means monetary value of all assets of the business.
Working capital is of major importance to internal and external analysis because of its close
relationship with the current day-to- day operations of a business.
Every business needs funds for two purposes.
Long term funds are required to create production facilities through purchase of fixed
assets such as plants, machineries, lands, building, etc.

Short term funds are required for the purchase of raw materials, payment of wages,
and other day-to-day expenses.

Working capital management deals with the management of these short term funds.
The constituents of current assets & current liabilities is as follows-

CURRENT ASSETS

CURRENT LIABILITIES

1. INVENTORY
a) RAW MATERIAL
b)WORK-IN-PROGRESS
c) FINISHED GOODS
d) OTHERS
2. TRADE CREDITORS
3. LOANS AND ADVANCES

1. SUNDRY CREDITORS
2. TRADE ADVANCES
3. BORROWINGS (short term)
a) COMMERCIAL BANKS
b) OTHERS
4. PROVISIONS

4.CASH AND BANK BALANCE

WORKING CAPITAL COMPRISES OF THE FOLLOWING:1. Cash and cash equivalents: - This most liquid form of working capital requires
constant supervision. A good cash budgeting and forecasting system provides answers
to key questions such as:
40

Is the cash level adequate to meet current expenses as they come due?
What is the timing relationship between cash inflow and outflow?
When would cash need occur?
When and how much bank borrowing will be needed to meet any cash shortfalls?
When will repayment be expected and will the cash flow cover it?

2. Accounts receivables: - Many businesses extend credit to their customers.


If you do, is the amount of accounts receivable reasonable relative to sales?
How rapidly are receivables being collected?
Which customers are slow to pay and what should be done about them?

3.

Inventory: - Inventory is often as much as 50 percent of a firm's current assets, so


naturally it requires continual scrutiny.
Is the inventory level reasonable compared with sales and the nature of your
business?
What's the rate of inventory turnover compared with other companies in your type
of business?

4. Accounts payable: - Financing by suppliers is common in small business; it is one of


the major sources of funds for entrepreneurs.
Is the amount of money owed suppliers reasonable relative to what you purchase?
What is your firm's payment policy doing to enhance or detract from your credit
rating?
5. Accrued expenses and taxes payable: - These are obligations of your company at
any given time and represent a future outflow of cash.

41

THERE ARE TWO DIFFERENT CONCEPTS OF WORKING


CAPITAL:1. Balance sheet or Traditional concept - It shows the position of the firm at certain point of
time. It is calculated in the basis of balance sheet prepared at a specific date. In this method
there are two types of working capital:a) Gross working capital - It refers to the firms investment in current assets. The sum of the
current assets is the working capital of the business. The sum of the current assets is a
quantitative aspect of working capital. Which emphasizes more on quantity than its quality,
but it fails to reveal the true financial position of the firm because every increase in current
liabilities will decrease the gross working capital.
b) Net working capital - It is the difference between current assets and current liabilities or
the excess of total current assets over total current liabilities. It is also can defined as that part
of a firms current assets which is financed with long term funds. It may be either positive or
negative. When the current assets exceed the current liability, the working capital is positive
and vice versa.
2. Operating cycle concept - The duration or time required to complete the sequence of
events right from purchase of raw material for cash to the realization of sales in cash is called
the operating cycle or working capital cycle

42

Debtors and bills


recievable
Cash

Sales

Operating cycle

Raw material

Finished goods

Work-in-progress

43

The investment in working capital is influenced by four key events in the production & sales
cycle of the firm:
Purchase of raw materials.
Payment of raw materials.
Sale of finished goods.
Collection of cash for sales.
The firm begins with the purchase of raw materials which are paid after a delay which
represents the accounts payable period. The raw materials are then converted into
finished goods which are then sold. The time lag between the purchase of raw materials and
the sale of finished goods is called the inventory period. The time lag between the date of
sales & the date of collection of receivables is the accounts receivable period. The time
lag between purchase of raw materials & the collection of cash for sales is referred to as
operating cycle. The time lag between payment for raw material purchases & the
collection of cash for sales is referred to as cash cycle.

IMPORTANCE OF WORKING CAPITAL

44

The advantages of working capital or adequate working capital may be enumerated as below:
1. Cash Discount:
If a proper cash balance is maintained, the business can avail the advantage of cash
discount by paying cash for the purchase of raw materials and merchandise. It will
result in reducing the cost of production.
2. It creates a Feeling of Security and Confidence:
The proprietor or officials or management of a concern are quite carefree, if they have
proper working capital arrangements because they need not worry for the payment of
business expenditure or creditors. Adequate working capital creates a sense of
security, confidence and loyalty, not only throughout the business itself, but also
among its customers, creditors and business associates.
3. Must for Maintaining Solvency and Continuing Production:
In order to maintain the solvency of the business, it is but essential that the sufficient
amount t of fund is available to make all the payments in time as and when they are
due. Without ample working capital, production will suffer, particularly in the era of
cut throat competition, and a business can never flourish in the absence of adequate
working capital.
4. Sound Goodwill and Debt Capacity:
It is common experience of all prudent businessmen that promptness of payment in
business creates goodwill and increases the debt of the capacity of the business. A
firm can raise funds from the market, purchase goods on credit and borrow short-term
funds from bank, etc. If the investor and borrowers are confident that they will get
their due interest and payment of principal in time.
5. Easy Loans from the Banks:
An adequate working capital i.e. excess of current assets over current liabilities helps
the company to borrow unsecured loans from the bank because the excess provides a
good security to the unsecured loans, Banks favour in granting seasonal loans, if
business has a good credit standing and trade reputation.
6.

Distribution of Dividend:

45

If company is short of working capital, it cannot distribute the good dividend to its
shareholders in spite of sufficient profits. Profits are to be retained in the business to
make up the deficiency of working capital. On the other contrary, if working capital is
sufficient, ample dividend can be declared and distributed. It increases the market
value of shares.
7. Exploitation of Good Opportunity:
In case of adequacy of capital in a concern, good opportunities can be exploited e.g.,
company may make off-season purchases resulting in substantial savings or it can
fetch big supply orders resulting in good profits.
8. Meeting Unseen Contingency:
Depression shoots the demand of working capital because sock piling of finished
goods become necessary. Certain other unseen contingencies e.g., financial crisis due
to heavy losses, business oscillations, etc. can easily be overcome, if company
maintains adequate working capital.
9. High Morale:
The provision of adequate working capital improves the morale of the executive
because they have an environment of certainty, security and confidence, which is a
great psychological, factor in improving the overall efficiency of the business and of
the person who is at the hell of fairs in the company.
10. Increased Production Efficiency:
A continuous supply of raw material, research programme, innovations and technical
development and expansion programmes can successfully be carried out if adequate
working capital is maintained in the business. It will increase the production
efficiency, which will, in turn increases the efficiency and morale of the employees
and lower costs and create image among the community.

DISADVANTAGES OF EXCESSIVE WORKING CAPITAL

Every business concern should have adequate working capital to run its
business operations. It should have neither redundant or excessive working capital
nor inadequate nor shortage of working capital. Both excessive as well as short
working capital positions are bad for any business.
46

1. Excessive working capital means idle funds which earn no profits for the business and
hence the business cannot earn a proper rate of return on its investments.
2. When there is redundant working capital, it may lead to unnecessary purchasing and
accumulation of inventories causing more chances of theft waste and losses.
3. Excessive working capital implies excessive debtors and defective credit Policy which may
cause higher incidence of bad debts.
4. It may result into overall inefficiency in the organization.
5. When there is an excessive working capital relation with the banks and other financial
institutions may not be maintained.
6. Due to low rate of return on investments the value of shares may also fall

DISADVANTAGES OF INADEQUATE WORKING CAPITAL


1) A concern, which has inadequate working capital, canno t pay its short-term
liabilities in time. Thus it will loose its reputation and shall not be able to get good credit
facilities.
2) The firm cannot pay day-to-day expenses of its operations
c r e a t e s inefficiencies, increases costs and reduces the profits of the business.

and it

3) It becomes impossible to utilize efficiently the fixed assets


d u e t o n o n - availability of liquid funds.
4) The
rate
of return
s h o r t a g e o f w o r k i n g capital.

on investments

47

also falls

with the

NET WORKING CAPITAL

CURRENT ASSETS
STORES AND SPARE
PARTS
STOCK-IN-TRADE
SUNDRY DEBTORS
INTREST ACCRUED
AND INVESTMENTS
CASH AND BANK
LOANS AND
ADVANCES
TOTAL(A)

2009-10
505.44

2013-2014 2011-2012
557.67
612.19

2012-2013 2013-2014
623.76
716.18

1827.54
631.63
0.20

2047.31
543.48
0.20

2868.28
635.98
0.00

2453.99
434.83
0.29

3237.58
428.03
0.00

455.41
3055.73

465.04
2452.78

1590.60
4330.43

3234.14
3628.28

4141.54
9553.19

6475.95

6066.28

10037.48

10375.29

18076.52

CURRENT
LIABILITIES
SUNDRY
CREDITORS
SUBSIDIARY
COMPANIES
INTEREST ACCRUED
BUT NOT DUE
ADVANCE
RECEIVED FROM
THE CUSTOMER
UNCLAIMED
MATURED
DEPOSITS(DUE)
INTEREST ACCRUED

2009-10

2013-2014 2011-2012

2012-2013 2013-2014

3145.99

3243.42

3842.78

4086.65

4721.07

102.61

115.74

1358.12

1514.30

1711.07

47.11

231.05

506.68

676.66

679.31

198.28

226.03

297.37

334.99

293.84

0.00

0.02

0.01

0.00

0.00

0.03

0.08

0.07

0.00

0.00

48

ON UNPAID
DIVIDENDS AND
UNCLAIMED
MATURED
DIVIDENDS(DUE)
UNPAID DIVIDENDS
APPLICATION
MONEY PENDING
REFUND
UNPAID MATURED
DIVIDENDS
UNPAID MATURED
DEPOSITS
UNPAID MATURED
DEBENTURES
INTEREST ACCRUED
ON UNPAID
DIVIDENDS AND
MATURED
DIVIDENDS
PROVISION FOR
RETIRING
GRATUITIES
PROVISION FOR
EMPLOYEE
BENEFITS
PROVISION FOR
TAXATION
PROVISION FOR
FRINGE BENEFITS
PROPOSED
DIVIDEND
TOTAL(B)
NET WORKING
CAPITAL

23.37
0.01

29.33
5.65

33.08
0.24

39.44
0.14

41.26
0.61

0.00

0.00

0.00

0.73

0.54

2.59

1.73

1.03

0.00

0.00

1.76

1.79

0.14

0.00

0.00

1.45

0.42

0.34

0.18

0.13

49.31

0.00

0.00

0.00

0.00

470.19

848.54

1143.08

1127.50

1601.75

448.68

854.74

493.59

507.13

791.29

18.37

19.12

19.12

2.12

3.88

943.91

1278.40

1278.40

709.77

1151.06

5453.66

6768.78

8974.05

8999.61

10995.81

1022.29

(702.5)

49

1063.43

1375.68

7080.71

PERCENTAGE CHANGE IN NET WORKING CAPITAL


CURRENT ASSETS
STORES AND
SPARE PARTS
STOCK-IN-TRADE
SUNDRY DEBTORS
CASH AND BANK
LOANS AND
ADVANCES
TOTAL(A)

2009-10
14.18

2013-2014 2011-2012
10.33
9.78

2012-2013 2013-2014
1.89
14.81

5.51
17.10
57.91
147.46

12.03
-13.96
2.11
-19.73

40.10
17.02
242.04
76.55

-14.44
-31.63
103.33
-16.21

31.93
-1.56
28.06
163.30

242.16

-9.22

385.49

42.98

236.54

CURRENT
LIABILITIES
SUNDRY
CREDITORS
SUBSIDIARY
COMPANIES
INTEREST
ACCRUED BUT NOT
DUE
ADVANCE
RECEIVED FROM
THE CUSTOMER
PROVISION FOR
RETIRING
GRATUITIES

2009-10

2013-2014 2011-2012

2012-2013 2013-2014

24.15

3.10

18.48

6.35

15.52

64.52

12.80

1073.42

11.50

12.99

93.95

390.45

119.29

33.55

0.39

7.14

14.00

31.56

12.65

-12.28

5987.65

0.00

0.00

0.00

0.00

50

PROVISION FOR
EMPLOYEE
BENEFITS
PROVISION FOR
TAXATION
PROVISION FOR
FRINGE BENEFITS
PROPOSED
DIVIDEND
TOTAL(B)

0.00

63.34

34.71

0.014

42.06

79.44

90.50

-42.25

2.74

56.03

675.11

4.08

0.00

-88.91

83.01

31.19

26.19

7.33

-44.48

62.17

6959.78

638.04

1232.01

-50.61

264.96

PERCENTAGE
CHANGE OF NET
WORKING
CAPITAL
(A-B)

-6717.62

-647.26

-846.52

93.59

-28.42

FINANCIAL RATIOS
1. WORKING CAPITAL TURNOVER RATIO
It is a ratio that reflects the amount of working capital needed to maintain a
given level of sales. A high ratio indicates the firm is in a good liquidity
position and vice-versa.
FORMULA =

PARTICULARS
NET SALES
NET WORKING
CAPITAL
WORKING
CAPITAL
TUNRNOVER
RATIO

NET SALES
NET WORKING CAPITAL

2009-10
17551.09
1022.29

2013-2014 2011-2012
19693.28
24315.77
(702.5)
1063.43

2012-2013 2013-2014
25021.98
29396.35
1375.68
7080.71

17.17

-28.03

18.19

51

22.87

4.15

working capital turnover ratio


40
22.87

20 17.17
0
2009-2010
-20
-40

18.19
4.15

2010-2011
-28.03

2011-2012

2012-2013

2013-2014

INTERPRETATION:
The net working capital of TATA STEEL Ltd. has been fluctuating over the years. A sharp
decrease in the working capital in the year 2013-2014, where the working capital was
negative was mainly because of a decrease in current assets.
As compared to the year 2012-2013 where the working capital ratio was 18.19, the ratio this
year has fallen down to 4.15. The reason for decrease can be accredited to the increase in the
current assets such as inventory, cash & bank balances and loans and advances that has
increased tremendously this year. There has been an increase in the sales and the production
capacity this year. The raw materials consumption has also increased by 13.64%.

2. CURRENT RATIO
The current ratio is used to evaluate a companys overall short term
liquidity position. It tells us whether a company is in a position to meet its
obligations.
FORMULA = CURRENT ASSETS
CURRENT LIABILITIES

PARTICULARS
CURRENT
ASSESTS
CURRENT
LIABILITIES
CURRENT RATIO

2009-10
6475.95

2010-2011
6066.28

2011-2012
10037.48

2012-2013
10375.29

2013-2014
18076.52

5453.66

6768.78

8974.05

8999.61

10995.81

1.19

0.90

1.12

1.15

1.64

52

current ratio
1.8
1.64
1.6
1.4
1.2 1.19
1.15
1.12
1
0.9
0.8
0.6
0.4
0.2
0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

current ratio

INTERPRETATION:
The ideal current ratio is considered to be 2:1. The current ratio has been increasing steadily
over the years. As compared to the previous year in 2012-2013 the ratio has increased to 1.64
in the year 2013-2014. The reason for increase might be continuous investments in the
current assets over the years.

3. QUICK RATIO
Quick ratio / Liquid ratio is an indicator of a companys short term solvency or
liquidity position. It is the relationship between liquid assets and liabilities. An asset is said to
be liquid if it can be converted into cash within a short period without loss of value.
FORMULA = CURRENT ASSETS INVENTORY
CURRENT LIABILITIES
PARTICULARS
CURRENT
ASSETS
INVENTORY
CURRENT
ASSETS-

2009-10
6475.95

2010-2011
6066.28

2011-2012
10037.48

2012-2013
10375.29

2013-2014
18076.52

1827.54
4648.41

2047.31
4018.97

2868.28
7169.2

2453.99
7921.3

3237.58
14838.94

53

INVENTORY
CURRENT
LIABILTY
QUICK RATIO

5453.66

6768.78

8957.05

8999.61

10995.81

0.85

0.59

0.80

0.88

1.34

QUICK RATIO
1.34

20
13
-

20
13

QUICK RATIO

20
14

0.88

0.8

20
12
-

20
12

0.59

20
11
-

20
11
20
10
-

20
09
-

20
10

1.6
1.4
1.2
1
0.8 0.85
0.6
0.4
0.2
0

INTERPRETATION:
The ideal standard in case of quick ratio is 1:1. And if it is more it is considered to be better.
The idea behind this is that for every rupee of current liabilities, there should be at least one
rupee of liquid asset.
Quick ratio is thus a rigorous test of liquidity and gives a better picture of short term
financial position of the firm. As shown in the graph above, we can see that after a steep fall
in the quick ratio from the year 2009-10 to 2013-2014 there has been a steady increase in the
quick ratio and for the year 2013-2014 the ratio is 1.34 which signifies that the liquidity
position of the firm has improved and this is because of increase in the cash that is lying with
the firm.

4. DEBTORS TURNOVER RATIO


Debtors Turnover Ratio or Receivables Turnover Ratio indicates the
relationship between net sales and average debtors. It shows the rate at which cash is
generated by the turnover of debtors.

FORMULA = AVERAGE DEBTORS


NET SALES
54

AVERAGE DEBTORS= (OPENING DEBTORS + CLOSING DEBTORS) / 2

PARTICULARS
AVERAGE
DEBTORS
NET SALES
DEBTORS
TURNOVER
RATIO

2009-10
585.515

2010-2011
587.55

2011-2012
589.73

2012-2013
535.40

2013-2014
431.43

17551.09
29.98

19693.28
33.52

24315.77
41.23

25021.98
46.73

29396.35
68.13

DEBTORS TURNOVER RATIO


68.13

20
14

DEBTORS TURNOVER
RATIO

20
13
-

20
13

20
12
-

20
12

20
11
-

46.73

41.23

33.52

20
11

20
10
-

20
09
-

20
10

80
70
60
50
40
30 29.98
20
10
0

INTERPRETATION:
Debtors turnover ratio indicates the speed with which the amount is being collected
from the debtors. The higher the ratio the better it is, since it indicates the amount from the
debtors is being collected more quickly. The more quickly the debtors pay, the less risk from
bad debts, and so lower is the expenses of collection and increase in the liquidity of the firm.
By comparing the debtors turnover ratio of the current year with the previous year, it may be
assessed whether the sales policy of the management is efficient or not.
As shown in the graph above, there has been an increase in the ratio from
2009-10 to 2013-2014from 29.98 to 68.13 which shows that the sales management of the
firm is quite efficient.

55

5. DEBT COLLECTION PERIOD


Days Sales Outstanding is a short term (operating) Activity ratio which tells us
about the debtors holding time. The more the holding period the more risky it becomes for
the company. A high debt collection period indicates that the company is taking time to
collect cash from its debtors. The cash is not being collected on time which is not a good sign
for the company, it is a red flag.

FORMULA = 365/ DEBTORS TURNOVER RATIO

PARTICULARS
DEBTORS
TURNOVER
RATIO
NO. OF DAYS
DEBT
COLLECTION
PERIOD

2009-10
29.98

2010-2011
33.52

2011-2012
41.23

2012-2013
46.73

2013-2014
68.13

365
12

365
11

365
9

365
8

365
5

DEBT COLLECTION PERIOD

DEBT COLLECTION
PERIOD

20
14

20
13
-

20
13

20
12
-

20
11
-

20
11

11

20
10
-

20
09
-

20
10

12

20
12

12
10
8
6
4
2
0

INTERPRETATION:

56

Debt collection period means the average number of days that the debtors take to get
converted to cash. In other words, credit sales are locked up in debtors for the number of
days.
As we can see here, the debt collection period has come down from 12 days to 5 days
which means that the debtors get converted to cash in 5 days. An increase in the ratio
indicates excessive blockage of funds with the debtors which increases the chances of bad
debts. In this case as we can see that there is a decrease in the average collection period
which indicates prompt payment by debtors which reduces the chances of bad debts.
Therefore, from the above data it can be concluded that the company is in a better position
and is improving as compared to its previous years.

6. STOCK TURNOVER RATIO


The Inventory Turnover Ratio measures the efficiency of the firms
inventory management. A higher ratio indicates that inventory does not remain in warehouses
or on the shelves but rather turns over rapidly from the time of acquisition to sales. A lower
inventory turnover ratio means accumulation of inventories, over investment in inventory or
unsalable goods.

FORMULA = COST OF GOODS SOLD


AVERAGE STOCK
AVERAGE STOCK= (OPENING STOCK+CLOSING STOCK)/2
PARTICULARS
COST OF
GOODS SOLD
AVERAGE
STOCK
STOCK
TURNOVER
RATIO

2009-10
10174.97

2010-2011
11155.5

2011-2012
14928.65

2012-2013
15730.67

2013-2014
17471.83

1779.82

1937.43

2457.8

2661.14

2845.78

5.72

5.76

6.07

5.91

6.13

57

STOCK TURNOVER RATIO


6.2
6.1

6.13

6.07

5.91

5.9
5.8

STOCK TURNOVER RATIO

5.76

5.7 5.72
5.6

20
14
20
13
-

20
13
20
12
-

20
12
20
11
-

20
11
20
10
-

20
09
-

20
10

5.5

INTERPRETATION:
This ratio indicates the relationship between the cost of goods sold during the year and
average stock kept during that year. The ratio indicates whether the stock has been efficiently
used or not. It shows the speed with which the stock is turned into sales during the year.
The graph above shows that after an increase in the ratio from the year 2013-2014 to 20112012 (5.76-6.07) there in the year 2012-2013(5.91) after which again a rise in the ratio in the
year 2013-2014(6.13). A high ratio is indicative that the stock is selling quickly.
7. PAYABLES TURNOVER RATIO
Although accounts payable are liabilities rather than assets, their trend is significant as they
represent an important source of financing for operating activities. The creditors turnover
ratio is an important tool of analysis as a firm can reduce its requirement of current assets by
relying on suppliers credit. This shows the relationship between credit purchases and average
accounts payable. Higher ratio shows that accounts are to be settled rapidly whereas, low
ratio reflects liberal credit terms granted by suppliers.
FORMULA- NET CREDIT PURCHASE
AVERAGE CREDITORS
AVERAGE CREDITORS= (OPENING CREDITORS+CLOSING
CREDITORS)/2
PARTICULARS
NET CREDIT
PURCHASE

2009-10
2263.01

2010-2011
2353.80

58

2011-2012
6241.61

2012-2013 2013-2014
5215.42
6853.95

AVERAGE
CREDITORS
PAYABLES
TURNOVER
RATIO

2840.01

3194.70

3543.10

3964.72

4383.86

0.79

0.73

1.76

1.31

1.56

PAYABLES TURNOVER RATIO

20
14

PAYABLES
TURNOVER RATIO

20
13
-

20
13

1.56

20
12
-

20
12

20
11
-

20
11

1.31

1.76

0.73

20
10
-

20
09
-

20
10

2
1.5
10.79
0.5
0

INTERPRETATION:
The ratio indicates the speed with which the amount is being paid to the creditors. A higher
ratio is better since it would indicate that the creditors are being paid more quickly and this
increases the credit worthiness of the firm.
Here, the graph above shows a steep fall in the ratio from the year 2011-2012(1.76) to 20122013(1.31) and then again a rise to the year 2013-2014(1.56). The reason for the fall can be
attributed to a decrease in the net credit purchases in the year 2012-2013.

59

COMPARITIVE ANALYSIS
OF
TATA STEEL,

SAIL JSWSAIL

60

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. SAIL is also among the five Maharatnas of the country's Central Public
Sector Enterprises.

61

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled
sheets and coils, galvanised sheets, electrical sheets, structural, 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 Indias second largest producer of iron ore and of having the countrys second largest
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) that
transacts business through its network of 37
Branch Sales Offices spread across the four
regions, 25 Departmental Warehouses, 42
Consignment Agents and 27 Customer Contact Offices. CMOs domestic marketing effort
is supplemented by its ever widening network of rural dealers who meet the demands of
the smallest customers in the remotest corners of the country. With the total number of
dealers over 2000 , SAIL's wide marketing spread ensures availability of quality steel in
virtually all the districts of the country.
SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited
unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five
integrated steel plants.
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.

BACKGROUND & HISTORY

The Precursor
62

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.
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.
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. A new steel company, Bokaro Steel Limited, was
incorporated in January 1964 to construct and operate the steel plant at Bokaro.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 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.

63

JSW
JSW Group is one of the fastest growing business conglomerates with a strong presence in
the core economic sector. This Sajjan Jindal led enterprise has grown from a steel rolling mill
in 1982 to a multi business conglomerate worth US $ 9 billion within a short span of time.
As part of the US $ 15 billion O. P. Jindal Group, JSW Group has diversified interests in
Steel, Energy, Minerals and Mining, Aluminium, Infrastructure and Logistics, Cement and
Information
Technology.
On its road to growth and expansion, the Group is also conscious about its responsibility
towards environment and social development. Eco-efficiency is a matter of principle.
Preventive measures for damage to the environment are taken into account at the planning
stage of production and growth.
JSW Foundation, an integral part of the Group, is the CSR wing, with a
vision to create socio economic difference in the fields of Education, Health and Sports,
Community Relationship/Propagation as well as Art, Culture and Heritage.
JSW Foundation plans and implements social development activities of the JSW group of
companies. It is an independent institution and is governed by a Board of Trustees who is
drawn from the senior management of the JSW group of companies. The Foundation is
headed by Mrs Sangita Jindal while the executive is headed by Shri Jugal Tandon in his
capacity as CEO, Corporate Sustainability. A team of social development professionals is
based in Mumbai and at every location where JSW has its operations and undertake
community based activity in consultation with their respective managements. An Advisory
Board comprising of eminent NGO leaders has been constituted recently to render advice on
social processes and participatory planning and execution of projects.
A social development policy has been accepted by the group. JSW cherishes people and
believes in inclusive growth to facilitate creation of a value based and empowered society
through continuous and purposeful engagement of all stakeholders. In partnership with
external development agencies, JSW would strive toachieve sustainable development in all
spheres of life including integrated community development, promotion of arts and culture,
environment protection and sports .
As a responsible corporate, JSW would integrate its environment, HR and ethical business
policies with appropriate community engagement and gender equity. JSW is committed to
allocation of 1.5% of its PAT to pursue its CSR policy. In tune with this, JSW Foundation
works closely with village communities and creates synergies with other verticals of the JSW
group to assimilate their intervention in a social development framework.

64

1. WORKING CAPITAL RATIO


It is a ratio that reflects the amount of working capital needed to maintain a given
level of sales. A high ratio indicates the firm is in a good liquidity position and vice-versa.

FORMULA =

PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-2010
17.17
3.63
42.79

NET SALES
NET WORKING CAPITAL
2010-2011
-28.03
3.01
-10.49

2011-2012
22.87
2.48
-4.78

2012-2013
18.19
1.85
-8.82

2013-2014
4.15
2.06
187.34

200
150
100

TATA STEEL
SAIL

50

JINDAL

20
14
20
13
-

20
13
20
12
-

20
11

20
12
20
11
-

20
09
-

-50

20
10
-

20
10

INTERPRETATION:
The working capital ratio of TATA STEEL has been fluctuating over the years. The reason for
negative working capital for the year 2013-2014 can be attributed to the decrease in current
assets whereas a sharp decrease in working capital for the year 2013-2014 is because of the
increase in current assets such as cash and bank balances, loans and advances and also
because of an increase in the raw material consumption.
The working capital ratio of SAIL Ltd. has been falling constantly from the
year 2009-10 to the year 2012-2013 after which there was an increase in the ratio.
The working capital of JSW has shown a sharp decrease from the year
2009-10 to 2013-2014 where the working capital ratio remained constantly negative for three
65

consecutive years and after that there was an increase in the ratio. The reason for the increase
in the ratio is an increase in the current assets, loans and advances.
2. CURRENT RATIO
The current ratio is used to evaluate a companys overall short term
liquidity position. It tells us whether a company is in a position to meet its obligations.

FORMULA = CURRENT ASSETS


CURRENT LIABILITIES
PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
1.19
1.86
1.08

2010-2011
0.90
1.99
0.74

2011-2012
1.12
2.02
0.61

2012-2013
1.15
1.78
0.73

2013-2014
1.64
1.84
1.01

2.5
2
1.5
1

2.02

1.99
1.19
1.08

0.5

1.15

1.12

0.9
0.74

1.84
1.64

1.78

1.64

1.01

SAIL

0.73

0.61

TATA STEEL
JINDAL

20
14
20
13
-

20
13
20
12
-

20
12
20
11
-

20
11
20
10
-

20
09
-

20
10

INTERPRETATION:
The current ratio of TATA STEEL has been rising from the year 2013-2014and it has shown a
positive graph. The reason for the constantly rising graph since 2013-2014 has been
investment in the current assets, i.e. inventories, debtors, loans and advances and the liquid
cash and bank balances.
SAIL has a fluctuating current ratio over the years with various rises
and falls over the time. The reason for the fall in the ratio from the year 2011-2012 to the year
2012-2013 was the decrease in the current assets.
JSW had witnessed a steep downfall till the year 2011-2012 after
which there was a rise in the ratio till 2013-2014. The reason for decrease in the ratio from
the year 2013-2014 to the year 2011-2012 was because of the increase in current liabilities
and again a rise in the year 2012-2013 was because of the increase in the current assets.
66

Current ratio should therefore be maintained around its ideal standard


and for achieving this the companys should therefore maintain its current assets and current
liabilities in the right proportion.
3. QUICK RATIO
Quick ratio OR Liquid ratio is an indicator of a companys short term
solvency or liquidity position. It is the relationship between liquid assets and liabilities. An
asset is said to be liquid if it can be converted into cash within a short period without loss of
value.
FORMULA = CURRENT ASSETS INVENTORY
CURRENT LIABILITIES

PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
0.85
1.25
0.64

2010-2011
0.59
1.47
0.36

2011-2012
0.80
1.42
0.34

2012-2013
0.88
1.37
0.39

2013-2014
1.34
1.29
0.60

3
2.5

2.4

0.59
0.36
20
12
20
11
-

20
11
20
10
-

20
09
-

20
10

1.37

0.8

0.88

0.34

0.39

1.29
1.34
0.6

TATA STEEL
SAIL
JINDAL

20
14

0.85
0.64

1.42

20
13
-

0.5

1.47

20
13

20
12
-

1.5

INTERPRETATION:
The quick ratio of TATA STEEL has been rising since 2013-2014 and the investments should
be made enough in the current assets so as to maintain the ratio of current assets and current
liabilities as 1:1.
The quick ratio of SAIL had declined from 2009-10(2.4) to 2013-2014(1.47)
and thereafter the ratio has been declining throughout but the company has maintained the
ratio above the ideal standard.
67

The ratio of JSW had fallen from the year 2013-2014(0.36) to 20112012(0.34) negligibly and thereafter it rose to 0.39 in 2011-2012 and finally to 0.60 in 20132014. The reason for the increase in the ratio in 2013-2014 was increase in the cash and bank
balances maintained with the company.

4. DEBTORS TURNOVER RATIO


Debtors Turnover Ratio or Receivables Turnover Ratio indicates the
relationship between net sales and average debtors. It shows the rate at which cash is
generated by the turnover of debtors

FORMULA = AVERAGE DEBTORS


NET SALES
AVERAGE DEBTORS= (OPENING DEBTORS + CLOSING DEBTORS)
/2

PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
29.98
16.31
-

2010-2011
33.52
14.73
33.83

20
14
20
13
-

20
13
20
12
-

20
12
20
11
-

20
11
20
10
-

20
09
-

20
10

80
70
60
50
46.73
41.23
40
33.52
30 29.98 38.07
33.8
33.05
20 16.31
14.73
14.21
12.44
10
0
7.87

INTERPRETATION:

68

2011-2012
41.23
14.21
38.07

68.13

TATA STEEL
11.16

SAIL
JSW

2012-2013
46.73
12.44
37.87

2013-2014
68.13
11.16
33.05

The debtors turnover ratio has shown a positive rising graph throughout which is very good
for the company since it shows the speed with which the money is being recovered from the
debtors. And rising graph throughout shows that the sales management is quite efficient in
recovering the money from the debtors.
SAIL has a declining graph throughout which is not a good sign and
therefore it means that credit sales have been made to the debtors who do not deserve so
much of credit and therefore the company must revise its sales policy.
JSW has a fluctuating graph and after a steep fall in the year 20122013 the ratio rose to 33.5 in the year 2013-2014. The debtors and the sales figures have risen
for the year 2013-2014 and the reason for the rise in the ratio can be efficient sales
management and a sound sales policy.

5. DEBT COLLECTION PERIOD


Days Sales Outstanding is a short term (operating) Activity ratio which
tells us about the debtors holding time. The more the holding period the more risky it
becomes for the company. A high debt collection period indicates that the company is taking
time to collect cash from its debtors. The cash is not being collected on time which is not a
good sign for the company, it is a red flag.
FORMULA = 365/ DEBTORS TURNOVER RATIO

PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
12
22

2010-2011
11
24
10

2011-2012
9
26
9

2012-2013
8
29
9

35
30
25
20
15

TATA STEEL

10

SAIL

JSW
20
14

20
13
-

20
13

20
12
-

20
12

20
11
-

20
11

20
10
-

20
09
-

20
10

69

2013-2014
5
33
11

INTERPRETATION:
The lower the debt collection period the lesser the chances of bad debts and thus is better for
the firm. TATA STEEL has a sound sale policy and the average collection period has been
decreasing over the years and finally the debtors are converted to cash in 5 days as in the year
2013-2014 and lesser is the collection period shorter is the operating cycle.
SAILs average collection period has been increasing in the number of days
which means that they have a liberal sales policy and the credit period is thus extended for
the debtors. A higher debt collection period generally increases the chances of bad debts and
reduces the chances of recovery of money from the debtors.
JSW has maintained its collection period at more or less a constant
platform. The debtors are converted to cash in 11 days (2013-2014). Here we can conclude
that TATA STEEL is in a better position as compared to the other two firms. SAIL should
make some serious efforts to reduce its debt collection period

6. STOCK TURNOVER RATIO


The Inventory Turnover Ratio measures the efficiency of the firms
inventory management. A higher ratio indicates that inventory does not remain in warehouses
or on the shelves but rather turns over rapidly from the time of acquisition to sales. A lower
inventory turnover ratio means accumulation of inventories, over investment in inventory or
unsalable goods.

FORMULA = COST OF GOODS SOLD


AVERAGE STOCK
AVERAGE STOCK= (OPENING STOCK+CLOSING STOCK)/2
PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
5.72
4.22

2010-2011
5.76
4.68
5.87

70

2011-2012
6.07
4.68
5.89

2012-2013
5.91
3.62
5.74

2013-2014
6.13
4.09
5.29

7
5.72
6
55.87
4 4.22

6.07

5.89
5.76
4.68

5.74
4.68

3
2
1
0

5.29
3.62

4.09
TATA STEEL
SAIL

20
14
20
13
-

20
13
20
12
-

20
12
20
11
-

20
10
-

20
11

JSW

20
10
20
09
-

6.13

5.91

INTERPRETATION:

The stock turnover ratio of TATA STEEL has been rising throughout and the cost of goods
sold has also been rising with a rise in the average stock maintained with the company. A
higher stock ratio turnover is indicative that the stock is selling quickly, that is reflected with
the higher sales.
SAIL has fluctuating ratio throughout.
JSW has a declining ratio, though the cost of goods sold and the average
debtors has been rising but certain items which have to be excluded from the cost of goods
sold have been rising over the time.

7. PAYABLES TURNOVER RATIO


Although accounts payable are liabilities rather than assets, their
trend is significant as they represent an important source of financing for operating activities.
The creditors turnover ratio is an important tool of analysis as a firm can reduce its
requirement of current assets by relying on suppliers credit. This shows the relationship
between credit purchases and average accounts payable. Higher ratio shows that accounts are
to be settled rapidly whereas, low ratio reflects liberal credit terms granted by suppliers.

FORMULA- NET CREDIT PURCHASE


AVERAGE CREDITORS
AVERAGE CREDITORS= (OPENING CREDITORS+CLOSING
CREDITORS)/2
71

PARTICULARS
TATA STEEL
SAIL
JINDAL

2009-10
0.79
5.46

2010-2011
0.73
5.21
7.17

2011-2012
1.76
6.14
6.28

2012-2013
1.31
3.13
6.51

2013-2014
1.56
3.82
8.57

8.57

9
87.17
7
6
5

6.28

6.51
6.14

5.46

5.21

TATA STEEL

3.82
3.13

3
2

1.76

1.31

SAIL
JSW

1.56

0.79
0.73
0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

INTERPRETATION:

The payables turnover ratio means the speed with which the creditors are being paid. TATA
STEEL has a rising graph which indicates that the creditors of the firm are being paid on time
and quite frequently and this helps in increasing the credit worthiness of the firm.
SAIL has had a fall in the ratio drastically from the year 2011-2012
to the year 2012-2013.
JSW is quite efficient in paying off its creditors. A ratio of 8.57 times
mans that the speed with which the company pays to its creditors is quite high.

72

RATIO ANALYSIS
WHAT IS RATIO ANALYSIS?
A tool used by individuals to conduct a quantitative analysis of information in a company's
financial statements. Ratios are calculated from current year numbers and are then compared
to previous years, other companies, the industry, or even the economy to judge the
performance of the company. Ratio analysis is predominately used by proponents of
fundamental analysis.
Single most important technique of financial analysis in which quantities are converted into
ratios for meaningful comparisons, with past ratios and ratios of other firms in the same or
different industries. Ratio analysis determines trends and exposes strengths or weaknesses of
a firm.

Ratios can be found out by dividing one number by another number. Ratios show how one
number is related to another. It may be expressed in the form of co-efficient, percentage,
proportion, or rate. For example the current assets and current liabilities of a business on a
particular date are $200,000 and $100,000 respectively. The ratio of current assets and current
liabilities could be expressed as 2 (i.e. 200,000 / 100,000) or 200 percent or it can be
expressed as 2:1 i.e., the current assets are two times the current liabilities. Ratio sometimes
is expressed in the form of rate. For instance, the ratio between two numerical facts, usually
over a period of time, e.g. stock turnover is three times a year.

Classification of Accounting Ratios:


Ratios may be classified in a number of ways to suit any particular purpose. Different kinds
of ratios are selected for different types of situations. Mostly, the purpose for which the ratios
are used and the kind of data available determine the nature of analysis. The various
accounting ratios can be classified as follows:

73

Classification of Accounting Ratios / Financial Ratios


(A)
Traditional Classification or
Statement Ratios

Profit and loss account


ratios or
revenue/income
statement ratios
Balance sheet ratios or
position statement
ratios
Composite/mixed
ratios
or inter statement
ratios

(B)
Functional Classification or
Classification According to
Tests

(C)
Significance Ratios or Ratios
According to Importance

Profitability ratios

Primary ratios

Liquidity ratios

Secondary ratios

Activity ratios

Leverage ratios or
long term solvency
ratios

Advantages of Ratios Analysis:


Ratio analysis is an important and age-old technique of financial analysis. The following are
some of the advantages / Benefits of ratio analysis:
1. Simplifies financial statements: It simplifies the comprehension of financial
statements. Ratios tell the whole story of changes in the financial condition of the
business
2. Facilitates inter-firm comparison: It provides data for inter-firm comparison. Ratios
highlight the factors associated with successful and unsuccessful firm. They also
reveal strong firms and weak firms, overvalued and undervalued firms.
3. Helps in planning: It helps in planning and forecasting. Ratios can assist management,
in its basic functions of forecasting. Planning, co-ordination, control and
communications.
4. Makes inter-firm comparison possible: Ratios analysis also makes possible
comparison of the performance of different divisions of the firm. The ratios are
helpful in deciding about their efficiency or otherwise in the past and likely
performance in the future.

74

5. Help in investment decisions: It helps in investment decisions in the case of investors


and lending decisions in the case of bankers etc.
Limitations of Ratios Analysis:
The ratios analysis is one of the most powerful tools of financial management. Though ratios
are simple to calculate and easy to understand, they suffer from serious limitations.
1.

Ratios are based only on the information which has been recorded in the financial
statements. Financial statements themselves are subject to several limitations. Thus
ratios derived, there from, are also subject to those limitations. For example, nonfinancial changes though important for the business are not relevant by the financial
statements. Financial statements are affected to a very great extent
by accounting conventions and concepts. Personal judgment plays a great part in
determining the figures for financial statements.
2. Comparative study required: Ratios are useful in judging the efficiency of the
business only when they are compared with past results of the business. However,
such a comparison only provide glimpse of the past performance and forecasts for
future may not prove correct since several other factors like market conditions,
management policies, etc. may affect the future operations.
3. Ratios alone are not adequate: Ratios are only indicators, they cannot be taken as final
regarding good or bad financial position of the business. Other things have also to be
seen.
4. Problems of price level changes: A change in price level can affect the validity of
ratios calculated for different time periods. In such a case the ratio analysis may not
clearly indicate the trend in solvency and profitability of the company. The financial
statements, therefore, be adjusted keeping in view the price level changes if a
meaningful comparison is to be made through accounting ratios.
5. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There
are no well accepted standards or rule of thumb for all ratios which can be accepted as
norm. It renders interpretation of the ratios difficult.
6. Limited use of single ratios: A single ratio, usually, does not convey much of a sense.
To make a better interpretation, a number of ratios have to be calculated which is
likely to confuse the analyst than help him in making any good decision.
7. Personal bias: Ratios are only means of financial analysis and not an end in itself.
Ratios have to interpreted and different people may interpret the same ratio in
different way.
8. Incomparable: Not only industries differ in their nature, but also the firms of the
similar business widely differ in their size and accounting procedures etc. It makes
comparison of ratios difficult and misleading.

FINANCIAL RATIOS
75

1. NET DEBT TO EQUITY


Debt is the borrowed funds and Equity is the owned funds of an organization. This ratio is
calculated to measure the extent to which debt financing has been used in a business. A
ratio of 1:1 is considered to be satisfactory. This ratio is also known as External-Internal
ratio as it indicates the relationship between the external equities or the outsiders funds
and the internal equities or the shareholders funds.
FORMULA =

NET DEBT
SHAREHOLDERS FUND

NET DEBT= SECURED LOANS+ UNSECURED LOANS- CASH AND BANK


BALANCE- CURRENT INVESTMENTS
EQUITY= SHAREHOLDERS FUND- MISCELLANOUS EXPENSES

FINANCIAL YEAR 2009-10


COMPANY

NET DEBT
(1728.55)

SHAREHOLDERS
FUND
15108.68

DEBT- EQUITY
RATIO
(0.12)

TATA STEEL
SAIL
JSW

(5454.57)
3642.29

17184
5788.92

(0.32)
0.63

FINANCIAL YEAR 2010-2011


COMPANY

NET DEBT

TATA STEEL
SAIL
JSW

16519.85
(10737.77)
6283.78

SHAREHOLDERS
FUND
27455.84
23004.09
7677.25

DEBT- EQUITY
RATIO
0.61
(0.47)
0.82

SHAREHOLDERS
FUND
30281.33
0.79841
7959.25

DEBT-EQUITY
RATIO
0.73
(0.38)
1.21

SHAREHOLDERS
FUND

DEBT- EQUITY
RATIO

FINANCIAL YEAR 2011-2012


COMPANY

NET DEBT

TATA STEEL
SAIL
JSW

22086.25
(10714.20)
9602.56

FINANCIAL YEAR 2012-2013


COMPANY

NET DEBT
76

TATA STEEL
SAIL
JSW

20285.83
(5925.12)
9529.64

36961.80
33316.70
9706.34

0.55
(0.18)
0.98

SHAREHOLDERS
FUND
46944.63
37069.47
17225.27

DEBT-EQUITY
RATIO
0.45
0.07
0.35

FINANCIAL YEAR 2013-2014


COMPANY

NET DEBT

TATA STEEL
SAIL
JSW

21159.81
2638.56
5965.65

1.4

1.21

1.2

0.98

0.82

0.8

0.63

0.6

0.61

0.73
0.55

TATA STEEL

0.4

SAIL

0.2

0.45
0.35
JSW
0.07

0
-0.2
-0.4

2009-2010

-0.12

2010-2011

2012-2013

2013-2014

-0.18

-0.32

-0.6

2011-2012

-0.47

-0.38

INTERPRETATION:

The debt-equity ratio is calculated to assess the firms ability to meet its long term liabilities.
Generally, a ratio of 2:1 is considered to be safe for the long term lenders and a ratio below
2:1 provides sufficient protection to the long term lenders and thus they are more secure and a
higher ratio thus would indicate a more risky financial position of the firm.
The debt- equity ratio for all the year and of all the three companies has been
less than 2:1 and this is indicative of a sound financial position of the firm.

77

2. SHAREHOLDERS EQUITY RATIO


This ratio helps to determine how much shareholders would receive in the event of a
company-wide liquidation. It represents the amount of assets on which shareholders have a
residual claim. The higher the ratio the more shareholders may receive and vice-versa.

FORMULA= SHAREHOLDRES EQUITY


TOTAL ASSETS

FINANCIAL YEAR 2009-10


COMPANY
TATA STEEL
SAIL
JSW

SHAREHOLDERS
EQUITY
580.67
4130.40
525.80

TOTAL
ASSETS(TANGIBLE)
25597.50
22906.33
10779.74

SHAREHOLDERS
EQUITY RATIO
0.023
0.18
0.049

TOTAL
ASSETS(TANGIBLE)
47075.52
27677.41
16475.62

SHAREHOLDERS
EQUITY RATIO
0.132
0.15
0.032

TOTAL
ASSETS(TANGIBLE)
58741.77
36855.04
20653.04

SHAREHOLDERS
EQUITY RATIO
0.11
0.11
0.03

TOTAL
ASSETS(TANGIBLE)
64232.78
51242.87

SHAREHOLDERS
EQUITY RATIO
0.014
0.08

FINANCIAL YEAR 2013-2014


COMPANY
TATA STEEL
SAIL
JSW

SHAREHOLDERS
EQUITY
6203.30
4130.40
537.01

FINANCIAL YEAR 2011-2012


COMPANY
TATA STEEL
SAIL
JSW

SHAREHOLDERS
EQUITY
6203.45
4130.40
537.01

FINANCIAL YEAR 2012-2013


COMAPNY
TATA STEEL
SAIL

SHAREHOLDERS
EQUITY
887.41
4130.40
78

JSW

527.11

23256.39

0.023

TOTAL
ASSETS(TANGIBLE)
78555.91
58726.03
31493.65

SHAREHOLDERS
EQUITY RATIO
0.012
0.07
0.018

FINANCIAL YEAR 2013-2014


COMPANY

SHAREHOLDERS
EQUITY
959.41
4130.40
563.18

TATA STEEL
SAIL
JSW

0.2
0.18

0.18

0.16

0.15

0.14

0.13

0.12

0.11
0.11

TATA STEEL

0.1

SAIL

0.08

0.08

0.07

0.06

JSW

0.05

0.04

0.03

0.03

0.02

0.02
0.01

0.02

0.01

0.02

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:

A ratio used to help determine how much shareholders would receive in the event of a
company-wide liquidation. The ratio is calculated by dividing total shareholders' equity by
total assets of the firm, and it represents the amount of assets on which shareholders have
a residual claim.
If we consider as in the case of TATA STEEL, the ratio for the year
2009-10 is 0.023 so this means that the shareholders would have a claim of 2.3% on the
assets in the event of the wind up of the company.
The lower the ratio, the better it is for the company since the company
would be then able to pay off to its shareholders in case of liquidation without any burden.

79

TATA STEEL has made efforts to lower the ratio and finally succeeded
to do so. If we consider the ratios for the year 2013-2014, we can see that TATA ATEEL is in
a better position than the other two companies.

3. DEBT TO NET WORTH RATIO - The net debt to net worth ratio has significance to
lenders, analysts and business managers. If affects the ability of a company to borrow
money and to finance its growth. A business owner needs to know the optimal debt to net
worth ratio for the benefit of its company. The net debt should never be higher than the
net worth; it is a bad sign for the company.
FORMULA = LONG TERM DEBT
NET WORTH
LONG TERM DEBT = SECURED LOANS + UNSECURED LOANS CASH &
BANK CURRENT INVESTMENTS
NET WORTH= EQUITY SHARE CAPITAL + PREFERENCE SHARE CAPITAL+
RESERVES & SURPLUS MISCELLANOUS EXPENSES TO THE EXTENT
NOT WRITTEN OFF.
FINANCIAL YEAR 2009-10
COMPANY
TATA STEEL
SAIL
JSW

LONG TERM
DEBT
(1728.55)
(5454.57)
3642.29

NET WORTH
13893.62
17184
5399.18

DEBT- NET
WORTH RATIO
(0.125)
(0.32)
0.67

FINANCIAL YEAR 2010-2011


COMPANY
TATA STEEL
SAIL
JSW

LONG TERM
DEBT
16519.85
(10737.77)
6283.78

NET WORTH
27145.62
23004.09
7677.25

FINANCIAL YEAR 2011-2012


80

DEBT- NET
WORTH RATIO
0.61
(0.47)
0.82

COMPANY

LONG TERM
DEBT
22086.25
(10714.20)
9602.56

TATA STEEL
SAIL
JSW

NET WORTH

DEBT- NET
WORTH RATIO
0.73
(0.38)
1.21

30071.19
27984.10
7959.25

FINANCIAL YEAR 2012-2013


COMPANY

LONG TERM
DEBT
20285.83
(5925.12)
9529.64

TATA STEEL
SAIL
JSW

NET WORTH

DEBT- NET
WORTH RATIO
0.55
(0.18)
0.98

36961.80
33316.70
9706.34

FINANCIAL YEAR 2013-2014


COMPANY

LONG TERM
DEBT
21159.81
2638.56
5965.65

TATA STEEL
SAIL
JSW

NET WORTH

DEBT- NET
WORTH RATIO
0.45
0.07
0.36

46944.63
37069.47
16695.89

1.4
1.21

1.2

0.98

1
0.8

0.82
0.67

0.6

0.73
0.61

0.55
0.45

TATA S TEEL
0.36

0.4

S AIL
JS W

0.2

0.07

0
-0.2

2009-2010
-0.13

-0.4

-0.32

-0.6

2010-2011

2011-2012

2012-2013
-0.18

-0.38
-0.47

INTERPRETATION:

81

2013-2014

This ratio is used in the analysis of financial statements to show the amount of
protection available to creditors. A high ratio usually indicates that the business has a
lot of risk because it must meet principal and interest on its obligations.
TATA STEEL has a fluctuating ratio throughout the five years. But anyhow it
has tried to maintain its position by reducing the debts and increasing the net worth of
the company.
SAIL has a negative ratio but in the year 2013-2014 it has finally achieved a
positive ratio.
JSW has a fluctuating graph throughout the five years but in the year 20132014, it has been able to lower the ratio and thus reduce the risk involved in the
business.

4. FIXED ASSETS TO LONG TERM RATIO - This ratio indicates the proportion of longterm funds deployed in fixed assets. The higher the ratio, the safer will be the funds
available in case of liquidation. It also indicates the proportion of funds that is invested in
working capital.
It indicates the level of fixed assets owned by a company in relation to the long-term
debts of the company. The higher the ratio the better it is for a company and the assets
which are debt free and fully owned by the company.
FORMULA =

FIXED ASSETS
LONG TERM LOANS

FIXED ASSETS = GROSS FIXED ASSETS DEPRICIATION


LONG TERM LOANS = SHARE CAPITAL+ RESERVES+ LONG TERM LOANS
FINANCIAL YEAR 2009-10
COMPANY

FIXED ASSETS

LONG TERM
FUNDS

TATA STEEL
SAIL
JSW

11040.56
11597.71
8189.10

23594.42
21493.67
9767.08

FIXED ASSTES TO
LONG TERM
RATIO
0.47
0.54
0.84

FINANCIAL YEAR 2010-2011


COMPANY

FIXED ASSETS

LONG TERM
FUNDS

TATA STEEL

12623.56

45322.42
82

FIXED ASSTES TO
LONG TERM
RATIO
0.28

SAIL
JSW

11571.31
10955.49

26108.81
15223.78

0.44
0.72

FIXED ASSTES TO
LONG TERM
RATIO
0.25
0.35
0.68

FINANCIAL YEAR 2011-2012


COMPANY

FIXED ASSETS

LONG TERM
FUNDS

TATA STEEL
SAIL
JSW

14482.22
12268.83
13086.44

57122.44
35522.89
19231.88

FINANCIAL YEAR 2012-2013


COMPANY

FIXED ASSETS

LONG TERM
FUNDS

TATA STEEL
SAIL
JSW

16006.03
13615.28
16866.14

62201
49827.95
21291.44

FIXED ASSTES TO
LONG TERM
RATIO
0.26
0.27
0.79

FINANCIAL YEAR 2013-2014


COMPANY

FIXED ASSETS

LONG TERM
FUNDS

TATA STEEL
SAIL
JSW

18774.48
15082.66
21102.15

75067.57
57234.96
28647.23

83

FIXED ASSTES TO
LONG TERM
RATIO
0.25
0.26
0.74

0.9

0.84
0.79

0.8

0.74

0.72

0.68

0.7
0.6
0.5

0.54
0.47

TATA STEEL

0.44

0.4

SAIL

0.35
0.28

0.3

0.25

0.27
0.26

0.26
0.25

2011-2012

2002-2013

2013-2014

JSW

0.2
0.1
0
2009-2010

2010-2011

INTERPRETATION:
This is a difficult set of ratios to interpret as asset values are based on the historical
cost. An increase in the fixed asset figure may result from the replacement of an asset
at an increased price or the purchase of an additional asset intended to increase the
production capacity.
A latter transaction might be expected to result in increased sales.

5. PROPERITARY RATIO - This ratio indicates the proportion of long-term funds


deployed in fixed assets. The higher the ratio, the safer will be the funds available in case
of liquidation. It also indicates the proportion of funds that is invested in working capital.
It indicates the level of fixed assets owned by a company in relation to the long-term
debts of the company. The higher the ratio the better it is for a company and the assets
which are debt free and fully owned by the company.
FORMULA =

NET WORTH
TOTAL ASSETS

NET WORTH = EQUITY SHARE CAPITAL + PREFERENCE SHARE CAPITAL+


RESERVES & SURPLUS MISCELLANOUS EXPENSES TO THE EXTENT
NOT WRITTEN OFF.
TOTAL ASSETS = FIXED ASSETS + CURRENT ASSETS
FINANCIAL YEAR 2009-10

84

COMPANY

NET WORTH

TOTAL ASSETS

TATA STEEL
SAIL
JSW

13893.62
17184
5399.18

25597.50
22906.33
10779.74

PROPERITARY
RATIO
0.54
0.75
0.50

FINANCIAL YEAR 2010-2011


COMPANY

NET WORTH

TOTAL ASSETS

TATA STEEL
SAIL
JSW

27145.62
23004.09
7677.25

47075.52
27677.41
16475.62

PROPERITARY
RATIO
0.57
0.83
0.47

FINANCIAL YEAR 2011-2012


COMPANY

NET WORTH

TOTAL ASSETS

TATA STEEL
SAIL
JSW

30071.19
27984.10
7959.25

58741.77
36855.04
20653.04

PROPERITARY
RATIO
0.52
0.76
0.39

FINANCIAL YEAR 2012-2013


COMPANY

NET WORTH

TOTAL ASSETS

TATA STEEL
SAIL
JSW

36961.80
33316.70
9706.34

64232.78
51242.87
23256.39

PROPERITARY
RATIO
0.58
0.65
0.42

FIANANCIAL YEAR 2013-2014


COMPANY

NET WORTH

TOTAL ASSETS

TATA STEEL
SAIL
JSW

46944.63
37069.47
17225.27

78555.91
58726.03
31493.65

85

PROPERITARY
RATIO
0.60
0.63
0.55

0.9
0.8

0.83
0.76

0.75

0.7
0.6
0.5

0.65
0.54

0.58

0.57
0.52

0.5

0.63
0.6
0.55

0.47
0.39

0.4

TATA S TEEL

0.42

S AIL
JS W

0.3
0.2
0.1
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:
Proprietary ratio indicates the proportion of total assets funded by owners or
shareholders. A higher proprietary ratio is an indicator of sound financial position
from the long term point of view because it means a large proportion of total assets
are provided by equity and hence the firm is thus less dependent on the external
sources of finance. A lower proprietary ratio is a danger signal for l.ong term lenders
as it indicates a lower margin of safety available to them.
TATA STEEL has maintained an overall consistent ratio
throughout as in the five year time.
The proprietary ratio of SAIL has been declining since the
year 2013-2014. The proprietary ratio of JSW has been increasing since 2011-2012.
TATA STEEL has been improving over the years and though
SAIL has a declining ratio throughout but anyhow it is in a better position than the
other companies.
6. INTEREST COVER - This ratio is also known as time interest - earned ratio. It
measures the firms ability to make contractual interest payments. This ratio measures the
debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned.
It indicates the extent to which a fall in EBIT is tolerable in that the ability of the firm to
service its interest payments would not be adversely affected. For instance, coverage of
five times would indicate that a fall in operating earnings only to up to one-fifth level can
be tolerated.
The higher the ratio the greater is the ability of the firm to handle fixed
charge liabilities and the more assured is the payment of interest to them. However, too high a
ratio would imply unused debt capacity. A low ratio is danger signal that the firm is using
86

excessive debt and does not have the ability to offer assured payment of interest to the
lenders.
FORMULA = PBIT
INTEREST
FINANCIAL YEAR 2009-10
COMPANY

PBIT

INTEREST

TATA STEEL
6435.55
SAIL
9754.75
JSW
2314.72
FINANCIAL YEAR 2010-2011

173.90
332.13
399.54

COMPANY

INTEREST

PBIT

TATA STEEL
7945.06
SAIL
11719.67
JSW
2924.56
FINANCIAL YEAR 2011-2012

878.70
250.94
440.44

COMPANY

INTEREST

PBIT

TATA STEEL
8468.30
SAIL
9656.69
JSW
1474.88
FINANCIAL YEAR 2012-2013

1152.69
253.24
797.25

COMPANY

PBIT

INTEREST

TATA STEEL
SAIL
JSW

8722.70
10534.04
3678.57

1508.40
402.01
858.92

INTEREST
COVER
37.01
29.37
5.79
INTEREST
COVER
9.04
46.70
6.64
INTEREST
COVER
7.35
38.13
1.85
INTEREST
COVER
5.78
26.20
4.28

FINANCIAL YEAR 2013-2014


COMPANY

PBIT

INTEREST

TATA STEEL
SAIL
JSW

11077.34
7669.26
3477.46

1300.49
474.95
695.18

87

INTEREST
COVER
8.52
16.15
5.00

46.7

50
45
40
35

38.13

37.01
29.37

26.2

30

TATA S TEEL

25

S AIL
16.15

20
15
10

9.04
5.79

6.64

8.52

7.35

5.78
1.85

JS W

4.28

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:

The interest cover ratio is used to determine how easily a company can be relieved of its
burden to pay interest expenses on outstanding debt. The lower the ratio, the more the
company is burdened by debt expense. When a company's interest coverage ratio is only 1.5
or lower, its ability to meet interest expenses may be questionable.
TATA STEEL has had a steep fall in the ratio from the year 2009-10(37.01) to
the year 2013-2014(9.04) and this was mainly because the interest expenses had risen by
leaps and bounds. And thereafter the interest expenses continued to rise.
SAIL has a fluctuating ratio. The rise in the ratio was because of the reduction
in the interest expenses and a sudden fall was when the interest expenses were high.
JSW has witnessed a ratio of 1.85 for the year 2011-2012 because this year
the profit before interest and tax was 1474.88 which was quite less as compared to the
previous year and the interest expenses were 797.25 which had risen by 1.8 times as compare
to
the
previous
year.

7. DIVIDEND COVER RATIO - It measures the ability of a firm to pay dividend on


preference shares which carry a stated rate of return. This ratio is the ratio of net profits
after taxes (EAT) and the amount of preference dividend. The higher the coverage the
better it is and vice versa
FORMULA = NET PROFIT AFTER TAX
88

DIVIDEND
FINANCIAL YEAR 2009-10
COMPANY
TATA STEEL
SAIL
JSW

PROFIT AFTER
TAX
4222.15
6202.29
1292

DIVIDEND

DIVIDEND COVER

1104.33
1478.40
199.39

3.82
4.20
6.48

DIVIDEND

DIVIDEND COVER

1393.55
1787.16
241.49

3.36
4.22
7.16

DIVIDEND

DIVIDEND COVER

1492.5
1255.16
55.41

3.49
4.92
17.30

DIVIDEND

DIVIDEND COVER

878.45
1590.55
240.93

5.75
4.25
8.40

DIVIDEND

DIVIDEND COVER

1307.77
1152.45
350.09

5.25
4.26
5.74

FINANCIAL YEAR 2010-2011


COMPANY
TATA STEEL
SAIL
JSW

PROFIT AFTER
TAX
4687.03
7536.78
1728.19

FINANCIAL YEAR 2011-2012


COMPANY
TATA STEEL
SAIL
JSW

PROFIT AFTER
TAX
5201.74
6174.81
958.50

FINANCIAL YEAR 2012-2013


COMPANY
TATA STEEL
SAIL
JSW

PROFIT AFTER
TAX
5046.80
6754.37
2022.74

FINANCIAL YEAR 2013-2014


COMPANY
TATA STEEL
SAIL
JSW

PROFIT AFTER
TAX
6865.69
4904.74
2010.67

89

20
17.3

18
16
14
12

TATA S TEEL

10
8

6.48

JS W

7.16

6
4

S AIL

8.4

4.92

4.2
3.82

4.22
3.36

3.49

2009-2010

2010-2011

2011-2012

5.75
4.25

5.74
5.25
4.26

2012-2013

2013-2014

2
0

INTERPRETATION:

The dividend cover ratio means that how easily the company can be relieved of its burden of
paying the dividends to the company.
TATA STEEL has been paying off its dividends at a consistent rate. And it seems that it
has been following a conservative approach.
JSW had paid a very high dividend for the year 2011-2012, which means that the
company had declared ala large part of its profit as dividend and thus following a liberal
approach for paying the dividends.

90

8. EBIDTA TO TURNOVER RATIO - This ratio is used to assess a companys profitability


by comparing its turnover and earnings. Since EBITDA is derived from revenue this
would indicate the percentage of a company remaining after operating expenses.
Generally a higher ratio would indicate that the
company is able to keep its earnings at a good level through efficient processes that have kept
certain expenses low.

FORMULA = EARNING BEFORE INTEREST, TAX AND DEPRICIATION


TURNOVER
FINANCIAL YEAR 2009-10
COMPANY

EBIDTA

TURNOVER

TATA STEEL
SAIL
JSW

7254.84
10966.23
2812.95

17984.76
35924.07
8699.59

EBIDTA TO
TURNOVER RATIO
0.40
0.31
0.32

FINANCIAL YEAR 2010-2011


COMPANY

EBIDTA

TURNOVER

TATA STEEL
SAIL
JSW

8779.67
12955.15
3611.74

20028.28
41890.91
11677.14

EBIDTA TO
TURNOVER RATIO
0.44
0.31
0.31

FINANCIAL YEAR 2011-2012


COMPANY

EBIDTA

TURNOVER

TATA STEEL
SAIL
JSW

9441.70
10941.81
2302.54

24624.04
46248.61
14260.81

EBIDTA TO
TURNOVER RATIO
0.38
0.24
0.16

FINANCIAL YEAR 2012-2013


COMPANY

EBIDTA

TURNOVER

TATA STEEL
SAIL
JSW

9805.88
11871.28
4801.98

25875.77
43319.61
18735.32

FINANCIAL YEAR 2013-2014


91

EBIDTA TO
TURNOVER RATIO
0.38
0.27
0.26

COMPANY

EBIDTA

TURNOVER

TATA STEEL
SAIL
JSW

12223.53
9155.06
4856.17

30187.02
44918.67
23445.88

EBIDTA TO
TURNOVER RATIO
0.40
0.20
0.21

0.5
0.44

0.45
0.4
0.35

0.4

0.38

0.32
0.31

0.38

0.4

0.31
0.31

0.3

0.27

TATA S TEEL

0.24

0.25

0.20.21

0.2

0.16

S AIL
JS W

0.15
0.1
0.05
0
2009-2010

2010-2011

2011-2012

0.26
2012-2013

2013-2014

INTERPRETATION:
EBIDTA to turnover ratio signifies that higher the ratio the better it is. Since it means
that earnings before interest, depreciation and taxation.
TATA STEEL has maintained a positive rising graph throughout. And it has a
ratio better than the other two companies.

9. EARNING PER SHARE - This ratio measures the profitability on a per share basis i.e.
the amount that they can get on every share held. The higher the ratio the more amount
the equity shareholders receive.
92

FORMULA =
PROFIT ATTRIBUTABLE TO SHAREHOLDERS
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES FOR
BASIC EPS
FINANCIAL YEAR 2009-10
COMPANY

TATA STEEL
SAIL
JSW

PROFIT O
ATTRIBUTABLE
SHAREHOLDERS
4222.15
6202.29
1259.35

WEIGHTED
AVERAGE NO. OF
ORDINARY SHARES
646823122
4130400545
157208820

EARNING PER
SHARE

WEIGHTED
AVEARGE NO. OF
ORDINARY SHARES
697748601
4130400545
177855318

EARNING PER
SHARE

WEIGHTED
AVEARGE NO. OF
ORDINARY SHARES
730584834
4130400545
187048666

EARNING PER
SHARE

WEIGHTED
AVEARGE NO. OF
ORDINARY SHARES
828550811
4130400545
187048682

EARNING PER
SHARE

WEIGHTED
AVEARGE NO. OF
ORDINARY SHARES

EARNING PER
SHARE

73.76
15.02
80.11

FINANCIAL YEAR 2010-2011


COMPANY

TATA STEEL
SAIL
JSW

PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS
4687.03
7536.78
1694.19

67.17
18.25
95.26

FINANCIAL YEAR 2011-2012


COMPANY

TATA STEEL
SAIL
JSW

PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS
5073.69
6174.81
424.58

69.45
14.95
22.70

FINANCIAL YEAR 2012-2013


COMPANY

TATA STEEL
SAIL
JSW

PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS
4993.12
6754.37
1989.01

60.26
16.35
106.34

FINANCIAL YEAR 2013-2014


COMPANY

PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS
93

TATA STEEL
SAIL
JSW

2013-2014

6861.15
4904.74
1978.24

907252572
4130400545
203595864

97.17

11.87

2012-2013

75.63
106.34

16.35

60.26

22.7
14.95

2011-2012

2010-2011

TATA S TEEL

20

JS W

95.26
67.17
80.11

15.02

S AIL

69.45

18.25

2009-2010

75.63
11.87
97.17

73.76
40

60

80

100

120

INTERPRETATION:

The ratio is helpful in the determination of the market price of the equity share of the
company. The ratio is also helpful in estimating the capacity of company to declare dividends
on equity shares.
Higher the EPS the better is the capital productivity. It is an important measure of the
economic performance of a corporate entity.
JSW has the highest EPS as compared to the other two firms. And TATA STEEL has
been quite consistent in maintaining its ratio throughout.

94

10. GROSS PROFIT MARGIN - The ratio measures the margin of profit available on sales.
The higher the ratio the better it is for the company. It reflects the efficiency with which a
firm produces its products.
FORMULA = GROSS PROFIT * 100
SALES
FINANCIAL YEAR 2009-10
COMPANY

GROSS PROFIT

SALES

TATA STEEL
SAIL
JSW

6153.98
8656.19
2169.49

17551.09
34223.92
8554.36

GROSS PROFIT
MARGIN
35.06
25.29
25.36

FINANCIAL YEAR 2010-2011


COMPANY

GROSS PROFIT

SALES

TATA STEEL
SAIL
JSW

7388.93
10057.87
2667.42

19693.28
39508.45
11420.00

GROSS PROFIT
MARGIN
37.52
25.46
23.35

FINANCIAL YEAR 2011-2012


COMPANY

GROSS PROFIT

SALES

TATA STEEL
SAIL
JSW

8160.03
8040.59
2005.45

24315.77
43150.08
14001.25

GROSS PROFIT
MARGIN
33.55
18.63
14.32

FINANCIAL YEAR 2012-2013


COMPANY

GROSS PROFIT

SALES

TATA STEEL
SAIL
JSW

7868.91
8190.83
3149.49

25021.98
40551.38
18202.48

GROSS PROFIT
MARGIN
31.44
20.20
17.30

FINANCIAL YEAR 2013-2014


COMPANY

GROSS PROFIT

SALES

TATA STEEL
SAIL
JSW

10286.67
5304.80
3194.82

29396.35
42718.71
23163.24

95

GROSS PROFIT
MARGIN
34.99
12.42
13.79

40
35

37.52
35.06

34.99

33.55
31.44

30
25.46
23.35

25.36
25.29
25

18.63

20

20.2

14.32

15

TATA S TEEL

17.3

S AIL
13.79
12.42

JS W

10
5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTEPRETATION:

The ratio measures the margin of profit available on sales. The higher the ratio the better it is.
The ratio of TATA STEEL has been fluctuating but it has been on a constant platform. The
sales figures have been rising so the fluctuations in the ratio can be attributed to the
difference in the prices of the raw materials, freights and wages.
The gross profit ratio of SAIL has been falling and which is
again because of the rise in the prices of the raw materials, wages and freight which have
ultimately reduced the margin of the gross profit.
The gross profit margin of JSW has also decreased since the
selling prices have not risen in the same proportion to the increase in the cost of the raw
materials and other expenses.
TATA STEEL has a much favourable ratio as compared to the
other two companies. SAIL can take some measures such as procure raw materials at a
cheaper price or to increase the selling price in order to improve its gross profit margin.

96

11. NET PROFIT MARGIN - This ratio measures the relationship between EBIT to sales. It
indicates the efficiency of the management in manufacturing, selling, administration and
other activities of the firm. It is the overall measure of a firms profitability. It is
represented as a percentage.
A high net profit margin would ensure adequate
returns to the owners as well as enable a firm to withstand adverse economic
conditions when selling price is declining, cost of production is rising and demand
for product id falling. A low net profit margin has the opposite implication.
FORMULA = NET PROFIT BEFORE INTEREST AND TAX * 100
SALES
FINANCIAL YEAR 2009-10
COMPANY

NPBIT

SALES

TATA STEEL
SAIL
JSW

6435.55
9754.75
2314.72

17551.09
34223.92
8554.36

NET PROFIT
MARGIN
36.67
28.50
27.06

FINANCIAL YEAR 2010-2011


COMPANY

NPBIT

SALES

TATA STEEL
SAIL
JSW

7945.06
11719.67
2924.56

19693.28
39508.45
11420.00

NET PROFIT
MARGIN
40.34
29.66
25.60

FINANCIAL YEAR 2011-2012


COMPANY

NPBIT

SALES

TATA STEEL
SAIL
JSW

8468.30
9656.69
1474.88

24315.77
43150.08
14001.25

NET PROFIT
MARGIN
34.82
22.38
10.53

FINANCIAL YEAR 2012-2013


COMPANY

NPBIT

SALES

TATA STEEL
SAIL
JSW

8722.70
10534.04
3678.57

25021.98
40551.38
18202.48

FINANCIAL YEAR 2013-2014


97

NET PROFIT
MARGIN
34.86
25.98
20.21

COMPANY

NPBIT

SALES

TATA STEEL
SAIL
JSW

11077.34
7669.26
3477.46

29396.35
42718.71
23163.248

45
40

40.34
37.82

36.67

35
30

NET PROFIT
MARGIN
37.68
17.95
15.01

28.5
27.06

34.86

34.82
29.66

25.98

25.6
22.38

25

20.21

20
15

TATA S TEEL
17.95
15.01

S AIL
JS W

10.53

10
5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:
Net profit ratio reflects the net profit margin on the total sales after deducting all the expenses
but before deducting the interest and taxation. This ratio measures the efficiency of the
operation of the company.
The trend of the graph of the net profit ratio is quite similar to that of the
gross profit margin ratio. Higher the ratio the better it is. TATA STEEL has been quite
efficient in managing the operating expenses of the firm.

12. CASH PROFIT RATIO - The Cash Ratio is the most conservative of all these measures
of cash resources, as only actual cash and securities easily convertible to cash are used to
measure cash resources. The short-term liquidity of a company may be measured through
cash ratio.
FORMULA = CASH PROFIT
SALES
98

CASH PROFIT= NET PROFIT+ DEPRICIATION


FINANCIAL YEAR 2009-10
COMPANY

CASH PROFIT

SALES

TATA STEEL
SAIL
JSW

5041.44
7413.77
1790.23

17551.09
34223.92
8554.36

CASH PROFIT
RATIO
28.72
21.85
20.93

FINANCIAL YEAR 2010-2011


COMPANY

CASH PROFIT

SALES

TATA STEEL
SAIL
JSW

5521.64
8772.26
2415.37

19693.28
39508.45
11420.00

CASH PROFIT
RATIO
28.38
22.20
21.15

FINANCIAL YEAR 2011-2012


COMPANY

CASH PROFIT

SALES

TATA STEEL
SAIL
JSW

6175.14
7459.93
1313.16

24315.77
43150.08
14001.25

CASH PROFIT
RATIO
25.40
17.29
9.38

FINANCIAL YEAR 2012-2013


COMPANY

CASH PROFIT

SALES

TATA STEEL
SAIL
JSW

6129.98
8091.61
3146.15

25021.98
40551.38
18202.48

CASH PROFIT
RATIO
24.50
19.95
17.28

FINANCIAL YEAR 2013-2014


COMPANY

CASH PROFIT

SALES

TATA STEEL
SAIL
JSW

8011.88
6890.54
3389.38

29396.35
42718.71
23163.25

99

CASH PROFIT
RATIO
27.25
14.95
14.63

30

28.72

28.38

27.25
25.4

25

24.5

22.2
21.15

21.85
20.93

19.95
17.29

20

17.28
14.95
14.63

15

TATA S TEEL
S AIL
JS W

9.38
10

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:
The ratio measures the cash generation in the business as a result of the operation
expressed in terms of sales. The cash profit ratio is more reliable indicator of
performance where there are sharp fluctuations in profit before tax and the net profit
from year to year owing to the difference in depreciation.
It facilitates the inter firm comparison of performance since different methods of
depreciation may be adopted by different companies.
TATA STEEL is ahead of the other two companies and has a better graph as
compared to SAIL and JSW.

13. RETURN ON ASSETS - Here the profitability is measured in terms of the relationship
between net profits and assets. The ROA may be also called as profit-to-asset ratio. It can
be interpreted in two ways. First, it measures managements ability and efficiency in
using the firms assets to generate (operating) profits. Second, it reports the total return
accruing to all providers of capital (debt and equity), independent of the source of capital.

FORMULA =
EBIT
AVERAGE TOTAL ASSETS
FINANCIAL YEAR 2009-10
100

COMPANY

EBIT

TATA STEEL
6435.55
SAIL
9754.75
JSW
2314.72
FINANCILA YEAR 2010-2011
COMPANY

EBIT

TATA STEEL
7945.06
SAIL
11719.67
JSW
2924.56
FINANCIAL YEAR 2011-2012
COMPANY

EBIT

TATA STEEL
8468.30
SAIL
9656.69
JSW
1474.88
FINANCIAL YEAR 2012-2013
COMPANY

EBIT

TATA STEEL
8722.70
SAIL
10534.04
JSW
3678.57
FINANCIAL YEAR 2013-2014
COMPANY

EBIT

TATA STEEL
SAIL
JSW

11077.34
7669.26
3477.46

101

AVERAGE TOTAL
ASSETS
20107.33
20644.91

RETURN ON
ASSETS
0.32
0.47

AVERAGE TOTAL
ASSETS
36336.51
25291.87
13627.68

RETURN ON
ASSETS
0.22
0.46
0.21

AVERAGE TOTAL
ASSETS
52908.65
32266.23
18564.33

RETURN ON
ASSETS
0.16
0.30
0.08

AVERAGE TOTAL
ASSETS
61487.28
44143.57
21954.72

RETURN ON
ASSETS
0.14
0.24
0.17

AVERAGE TOTAL
ASSETS
71394.35
54984.45
27375.02

RETURN ON
ASSETS
0.11
0.14
0.13

0.5

0.47

0.46

0.45
0.4
0.35

0.32

0.3

0.3
0.25

TATA S TEEL

0.24
0.21

S AIL

0.21

0.2

0.16 0.17

0.15

JS W
0.14 0.13

0.15
0.14

2012-2013

2013-2014

0.08

0.1
0.05
0
2009-2010

2010-2011

2011-2012

INTERPRETATION:

The ratio indicates how profitable a company is relative to its total assets. The ratio
illustrates how well management is employing companys total assets to make a profit.
The higher the return, the more efficient management is in utilizing the assets base.
Here we can conclude that SAIL has not been utilizing its asset base efficiently and so
the graph has taken a downward trend.
TATA STEEL has also not been very efficient in utilizing the asset base of the company.

102

14. RETURN ON AVERAGE NET WORTH - This ratio measures the return on the total
equity funds of ordinary shares. From this ratio it can be judged whether the firm has
earned a satisfactory return for its shareholders or not. The higher the ratio, the better it is
for the shareholders.
FORMULA= PROFIT AFTER TAX
AVERAGE NET WORTH
FINANCIAL YEAR 2009-10
COMPANY

PROFIT AFTER
TAX

AVERAGE NET
WORTH

TATA STEEL
SAIL
JSW

4222.15
6202.29
1292

11697.83
14784.80

RETURN ON
AVEARGE NET
WORTH
0.36
0.42

FINANCIAL YEAR 2010-2011


COMPANY

PROFIT AFTER
TAX

AVERAGE NET
WORTH

TATA STEEL
SAIL
JSW

4687.03
7536.78
1728.19

20519.62
20094.05
6538.22

RETURN ON
AVEARGE NET
WORTH
0.23
0.38
0.26

FINANCIAL YEAR 2011-2012


COMPANY

PROFIT AFTER
TAX

AVERAGE NET
WORTH

TATA STEEL
SAIL
JSW

5201.74
6174.81
958.50

28608.41
25494.10
7827.25

RETURN ON
AVEARGE NET
WORTH
0.18
0.24
0.12

FINANCIAL YEAR 2012-2013


COMPANY

PROFIT AFTER
TAX

AVERAGE NET
WORTH

TATA STEEL
SAIL
JSW

5046.80
6754.37
2022.74

33516.50
30650.40
8832.80

103

RETURN ON
AVEARGE NET
WORTH
0.15
0.22
0.23

FIANANCIAL YEAR 2013-2014


COMPANY

PROFIT AFTER
TAX

AVERAGE NET
WORTH

TATA STEEL
SAIL
JSW

6865.69
4904.74
2010.67

41953.22
35193.09
13465.81

0.45
0.4

RETURN ON
AVEARGE NET
WORTH
0.16
0.14
0.15

0.42
0.38

0.36

0.35
0.3

0.26

0.24
0.23

0.23

0.25

0.22

0.18

0.2

0.15 0.15
0.12

0.15

TATA S TEEL
0.16
0.14

S AIL
JS W

0.1
0.05
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:

It expresses the net profit in terms of equity shareholders fund. It is an important yardstick of
performance for equity shareholders since it indicates the return on funds employed by them.
However this measure is based on the historical net worth and will be high for old plants and
low for new plants.
The factor which motivates the shareholders to invest in a company is
the expectations of an adequate rate of return on their funds, they will want to assess the rate
of return in order to decide whether to continue their investments or not.

104

15. RETURN ON AVERAGE CAPITAL EMPLOYED - Return on average capital employed


is a profitability ratio. The term capital employed refers to long-term funds supplied by
the lenders and owners of the firm. Capital employed basis provides a test of profitability
related to the sources of long-term funds. It is an insight into how efficiently the longterm funds of owners and lenders are being used. The higher the ratio, the more efficient
is the use of capital employed.

CAPITAL EMPLOYED = TOTAL FUNDS EMPLOYED MISCELLANOUS


EXPENSES TO THE EXTENT NOT WRITTEN OFF
COMPANY

EBIT

AVERAGE CAPITAL
EMPLOYED

TATA STEEL
SAIL
JSW

6435.55
9754.75
2314.72

19879.43
20601.58

COMPANY

EBIT

AVERAGE CAPITAL
EMPLOYED

TATA STEEL
SAIL
JSW

7945.06
11719.67
2924.56

36157.69
25326.71
13530.25

COMPANY

EBIT

AVERAGE CAPITAL
EMPLOYED

TATA STEEL
SAIL
JSW

8468.30
9656.69
1474.88

52778.56
32236.49
18564.33

COMPANY

EBIT

AVERAGE CAPITAL
EMPLOYED

TATA STEEL
SAIL
JSW

8722.70
10534.04
3678.57

61434.74
44048.96
21954.72

105

RETURN ON
AVERAGE CAPITAL
EMPLOYED
0.32
0.47

RETURN ON
AVERAGE CAPITAL
EMPLOYED
0.22
0.46
0.22
RETURN ON
AVERAGE CAPITAL
EMPLOYED
0.16
0.30
0.08
RETURN ON
AVERAGE CAPITAL
EMPLOYED
0.14
0.24
0.17

COMPANY

EBIT

AVERAGE CAPITAL
EMPLOYED

TATA STEEL
SAIL
JSW

11077.34
7669.26
3477.46

71394.35
54984.45
27375.02

0.5

0.47

RETURN ON
AVERAGE CAPITAL
EMPLOYED
0.16
0.14
0.13

0.46

0.45
0.4
0.35

0.32

0.3

0.3
0.25

0.22

S AIL

0.2

0.16

0.17

0.15
0.1

TATA S TEEL

0.24

0.22

0.14 0.13

0.16
0.14

2012-2013

2013-2014

JS W

0.08

0.05
0
2009-2010

2010-2011

2011-2012

INTERPRETATION:

Return on average capital employed ratio narrows the focus to gain a better understanding of
a company's ability to generate returns from its available capital base.
By comparing net income to the sum of a company's debt
and equity capital, investors can get a clear picture of how the use of leverage impacts a
company's profitability. Financial analysts consider the ROCE measurement to be a more
comprehensive profitability indicator because it gauges management's ability to generate
earnings from a company's total pool of capital.

106

16. DIVIDEND PAYOUT RATIO - This ratio indicates the percentage PAT distributed as
dividends to equity shareholders. It is also known as pay-out ratio. For instance PAT are
Rs. 500000 and the dividend is Rs. 300000 then the dividend pay -out ratio would be
60%. This implies that 40% of the profits of the firm are retained (retention ratio) and
60% distributed as dividends. Therefore, the higher the ratio the more dividends can be
received.
= DIVIDEND (EQUITY)/ PROFIT AFTER TAX
FINANCIAL YEAR 2009-10
COMPANY

DIVIDEND(EQUITY)

TATA STEEL
SAIL
JSW

1104.33
1478.40
199.39

PROFIT AFTER
TAX
4222.15
6202.29
1292

DIVIDEND PAYOUT
RATIO
26.16
23.89
15.43

PROFIT AFTER
TAX
4687.03
7536.78
1728.19

DIVIDEND PAYOUT
RATIO
29.73
23.71
13.97

PROFIT AFTER
TAX
5201.74
6174.81
958.50

DIVIDEND PAYOUT
RATIO
28.69
20.33
5.78

PROFIT AFTER
TAX
5046.80
6754.37
2022.74

DIVIDEND PAYOUT
RATIO
17.41
23.55
11.91

FINANCIAL YEAR 2010-2011


COMPANY

DIVIDEND(EQUITY)

TATA STEEL
SAIL
JSW

1393.55
1787.16
241.49

FINANCIAL YEAR 2011-2012


COMPANY

DIVIDEND(EQUITY)

TATA STEEL
SAIL
JSW

1492.5
1255.16
55.41

FINANCIAL YEAR 2012-2013


COMPANY

DIVIDEND(EQUITY)

TATA STEEL
SAIL
JSW

878.45
1590.55
240.93

FINANCIAL YEAR 2013-2014


107

COMPANY

DIVIDEND(EQUITY)

TATA STEEL
SAIL
JSW

1307.77
1152.45
350.09

PROFIT AFTER
TAX
6865.69
4904.74
2010.67

DIVIDEND PAYOUT
RATIO
19.05
23.50
17.41

35
29.73

30

28.69

26.16
25

23.89

23.71

23.55
20.3

20

19.05

17.41
15.43

15

23.5

17.41

TATA S TEEL
S AIL

13.97

JS W

11.97

10
5.78
5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INTERPRETATION:

This ratio identifies the percentage of earnings (net income) per common share allocated to
paying cash dividends to shareholders. The dividend payout ratio is an indicator of how well
earnings support the dividend payment.
It indicates the extent to the net profit distributed to the shareholders as dividend.
A high payout signifies a liberal distribution policy and a low payout reflects conservative
distribution policy,

108

RECOMMENDATION
Tata steel should try to improve its solvency so that at the time of crisis they dont

have to sell of their inventory to pay off debts.


They should maintain quick ratio above or equal to 1.0.
Fluctuations in operating cycle should be reduced.
TATA STEEL must keep eye on its WIP conversion period.
TATA STEEL should try to minimize its inventory conversion period and also try to

minimize the average age of stock to reduce the cost of inventories.


As sale price per unit is lesser than the competitors it must keep trend increasing
mode of sales to reduce the blockage of its price in its inventory.
Try to generate more revenue from other country.
TATA STEEL should try for acquisition of more mines in India to reduce the raw
material outsourcing or import cost.
There should be a proper balance between the current assets and the currents
liabilities. The working capital became negative due to an improper balance.
It should not allow its net debt to become negative. A negative net debt indicates more
cash and less debt which means that the company is not investing enough in its
growth.
New and advanced concept must be introduced in inventory control management.
Adequate planning is required for procurement of store items.
Advance payments should be avoided. If at all advance payments are required, it
should be against securities like bank guarantees etc.
The essence of effective working capital management is proper cash flow forecasting.
This should take into account the unforeseen events, market cycles, sudden fall in
demand, fall in selling price, loss in prime customers etc. This is a very important
factor that has to be taken into account.

109

CONCLUSION
Tata Steel has been analyzed in terms of financial aspects especially working capital and
financial ratios. A comparison has been made with JSW and SAIL to see the position of Tata
Steel Ltd. in the industry.
Working capital management is a very crucial part of any organization. It needs to maintain
its working capital efficiently for its day to day operations to take place. An organization
needs proper liquidity to meet its obligations on time.
Ratio analysis is also a very important part of a business. It is a platform to judge a company
based on liquidity, profitability etc. It is very crucial for banks, investors, creditors etc. It also
makes comparisons easier.
Tata Steel has been able to maintain a good liquidity position throughout. It has been able to
pay back its liabilities on time and also has been able to give dividends on time to its
shareholders. It has also maintained a good level of EPS. The inventory turnover has been
maintained efficiently which we can see from the high inventory turnover ratio.

BIBLIOGRAPHY
110

Gerald I. White, Ashwinpaul C. Sondhi & Dov Fried (2011). The Analysis And Use Of
Financial Statements- Third edition.

M Y Khan & P K Jain (2010). Management Accounting- Fifth Edition.

http://www.tatasteel.com/about-us/company-profile.asp

http://www.ey.com/Publication/vwLUAssets/Global_Steel_Report_20132014/$FILE/Global%20Steel%20Report%202013-2014%20FULL%20REPORT.pdf

zenithresearch.org.in/images/stories/pdf/2012/Jan/ZIJMR/13 SURESH VADDE


Steel_paper.pdf

http://www.zacks.com/stock/news/49743/steel-industry-outlook-%96-march-2011

Research and Markets: Analyzing the Indian Steel Industry 2012 Edition is Completed
with An Analysis of the Major Players in the Indian Steel Sector | Japan Metal Bulletin

Top Indian Steel Companies Performance | News From Business, Finance, Share Market
Real Estate

ANNEXURE
QUESTIONNAIRE
111

1. Are you satisfied with the accommodation facility, provided by the company?
[ a] YES

[ b] NO

2. Are you satisfied with the health care facility?


[a] YES

[b] NO

3. Are you felling secure about your job?


[a]Secured

[b] Not secured

4. Are you satisfied with the educational facilities available at Joda for your children?
[a] Satisfied

[b] Not satisfied

5. Does the company provide you the standard safety appliances?


[a] yes

[b] No

6. Are you felling safe at your work place with the safety standard maintained at present?
[a] yes

[b] No

112

7. Are you satisfied with your team members at your work place ?

[a] YES

[b]NO

8. Are you satisfied with the training and development programs which are
provided by the company ?
[a] Satisfied

[b] Not satisfied

9. Are you satisfied with the welfare facilities which are provided to you at the
working area ? (eg. Canteen, ACS ,Etc.)
[a] Satisfied

[b] Not satisfied

10. Are you satisfied with your salary package?


[a] Satisfied

[b] Not satisfied

11. Does the company co-operates and helps you at any emergency time?
[a] YES

[b] NO

12. Do you get recognition for your individual/group performance?


[a] Yes

[b] No
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13. Are you associated with any social activity?


[a] Yes

[b] NO

14. Are you maintaining your family comfortably with the salary you have?
[a] Yes

[b] No

15. Which one you possess in life style?


[a] own house

[b] own car

[c] own laptop

16. How much you spend and how much you save in a month?
[a] Saving

[b] Spend

114