An Interim Report

On

Financial and cash growth of IGFL Refractories Ltd. over

the last 4 years(2010-2014) and how the company deals in
B2B MARKET

By

MOUSAM DAS
Enroll. No.: 14BSPHH010394

IFGL REFRACTORIES LIMTED

An Interim Report
On

Financial and cash growth of IGFL Refractories Ltd. over

the last 4 years(2010-2014) and how the company deals in
B2B MARKET

By
MOUSAM DAS
Enroll. No.: 14BSPHH010394

IFGL REFRACTORIES LIMITED

A report submitted in partial fulfilment of the requirements of

MBA Program of
IBS Hyderabad

Submitted to
Dr. Rajdeep Chakraborty

Mr. Kanhaiya Poddar

Faculty Guide

Company Guide

Assistant Professor

General Manager (Finance)

IBS Hyderabad

IFGL Refractories Limited

10th April 2015

Table of Contents
1.

ABSTRACT................................................................................................. 6

2.

INTRODUCTION......................................................................................... 7
2.1. Balance sheet....................................................................................... 7
2.2. The Income Statement.........................................................................8
2.3. The Statement of Cash Flows...............................................................9
2.4. Financial Ratios..................................................................................... 9
2.5. Ratios included in this report..............................................................10

3.

NEED FOR THE STUDY............................................................................. 11

4.

Refractory Industry in India.....................................................................12

4.1. Industry Overview:-............................................................................ 12
4.2. The Scope of the Industry:-.................................................................14
4.3. Business Concerns:-...........................................................................15
4.4. Challenges for Industry:-....................................................................15
4.5 Conclusion:-......................................................................................... 16

5. COMPANY PROFILE IFGL REFRACTORIES LIMTED....................................17

5.1 Growth Story............................................................................................ 19
5.2 Products.................................................................................................... 20
5.2.1. Isostatic Refractories...........................................................................20
5.2.1.3. Monoblock Stopper: It is used to control the flow of metal stream
from tundish to mould during continuous casting of steel.............................21
5.2.2 Ladle Slide Gate Refractories and Systems..........................................23
5.2.3. Gas Purging Refrctories and IPV System..............................................24
5.2.4. Products from Monocon.......................................................................25
5.3 Global Business Presence........................................................................28
6. RESEARCH METHODOLOGY.......................................................................29
6.1. Aims and Objective of the study.............................................................29
6.2. METHODOLOGY...................................................................................... 29
6.2.1. Sources of secondary data:.................................................................29
6.2.2. LIMITATIONS........................................................................................ 29
7. LITERATURE RIVIEW...................................................................................30
7.1. FINANCIAL ANALYSIS.................................................................................. 30
7.1.1. RATIO ANALYSIS...................................................................................30
7.1.2. STEPS IN RATIO ANALYSIS....................................................................30

7.1.3. BASIS OR STANDARDS OF COMPARISON.............................................31

7.1.4. NATURE OF RATIO ANALYSIS................................................................31
7.1.5. INTERPRETATION OF THE RATIOS.........................................................31
7.1.6. GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS............................32
7.1.7. IMPORTANCE OF RATIO ANALYSIS........................................................32
7.1.8. LIMITATIONS OF RATIO ANALYSIS.........................................................32
7.1.9. Ratios included in this report...............................................................33
7.1.10. Description and significance of the above mentioned Ratios............33
7.2. CASH FLOW STATEMENT ANALYSIS............................................................34
7.2.1. Relationship to Other Financial Statements.........................................34
While analyzing the cash flow statement, one must analyze the balance
sheet and income statement for the coinciding period. If the accrual basis of
accounting is being utilized, accounts must be examined for their cash
components. Analysts must focus on changes in account balances on the
balance sheet. General rules for this process are as follows.........................34
7.2.4. Cash Flow from Investing....................................................................34
7.2.5. Cash Flow from Financing....................................................................35
8. RESULTS AND FINDINGS OF RATIO ANALYSIS.............................................36
8.1. Financial Year: 2010-11..............................................................................36
8.2. Financial Year: 2011-12..............................................................................37
8.3. Financial Year: 2012-13..............................................................................38
8.4. Financial Year: 2013-14..............................................................................39
8.5. Graphical representation of the Financial Ratios to visualize the growth
trend................................................................................................................. 40
8.5.1. Interpretation of the graphs:..................................................................42
8.6. Comparative year wise study of the financial ratios over the last 4 years
(2010-2014)...................................................................................................... 43
9. INTERPRETATION OF CASH FLOW STATEMENT ANALYSIS...........................44
9.1. Financial year 2010-11.............................................................................. 44
9.1.2. Cash Flow from Operating Activities....................................................44
9.1.3. Cash Flow from Investing....................................................................44
9.1.4. Cash Flow from Financing....................................................................45
9.1.5. Bottom Line......................................................................................... 45
9.2. Financial year 2011-12.............................................................................. 46
9.2.1. Cash Flow from Operating Activities....................................................46
9.2.2. Cash Flow from Investing....................................................................46
9.2.3. Cash Flow from Financing....................................................................47

9.2.4. Bottom Line......................................................................................... 47

9.3. Financial year 2012-13.............................................................................. 48
9.3.1. Cash Flow from Operating Activities....................................................48
9.3.2. Cash Flow from Investing....................................................................48
9.3.3. Cash Flow from Financing....................................................................49
9.3.4. Bottom Line......................................................................................... 49
9.4. For the year 2013-14.................................................................................50
9.4.1. Cash Flow from Operating Activities....................................................50
9.4.2. Cash Flow From Investing....................................................................50
9.4.3. Cash Flow from Financing....................................................................51
9.4.4. Bottom Line......................................................................................... 51
9.5. Conclusion................................................................................................. 51

1. ABSTRACT
The project is a research based project which deals with the financial and cash
growth of IFGL Refractories Limited over the last four years (2010-2014).
Financial analysis can be defined as a process that evaluates businesses,
budgets, projects, and entities for analysis purpose. This evaluation is done with
the purpose of determining the suitability for investment by a business. Usually,
the main purpose of financial analysis is to analyze the stability, solvency,
liquidity, and profitability of a business. The financial growth of the company is
analyzed solely on the basis of Ratio Analysis which will also gives us a picture of
how the investors look into the prospects of a company through ratio analysis
before investing in it. In order to get the relevant ratios one has to be thoroughly
familiar with the Balance sheet and Income statement in order the extract the
relevant information out of them.
The Cash growth of the company is done by analyzing the cash flow statement of
IFGL Refractories limited. The main factors which are considered in this project
with respect to cash is that: from where the majority of the cash are generated
and where they are invested. The importance of cash flow statement lies in the
fact that it explains the changes in cash and gives insight to the companys
operating, investing and financial activities. Also, cash flow statement will unveil
the companys ability to generate cash to meet its short-term obligations,
thereby assessing if companys liquidity and solvency position is sound.
Finally, the report will give us a insight of how IFGL deals in the B2B market.
Since, IFGL provides a total solution for refractory for flow control in steel
teeming and continuous casting of steel, its major clients are the global steel
manufacturing industries. Hence, all its marketing strategies and operations
deals in the B2B market and it has been a good opportunity in understanding
and familiarizing the B2B market.

2. INTRODUCTION
The manager of a business organization examines data to evaluate the
organizations financial health and performance. The primary source of this type
of data is the companys financial statements. Financial statements are the
equivalent of box scores or statistics sheets, allowing managers to assess the
organizations financial status. The three basic financial statements are the
balance sheet, the income statement, and the statement of cash flows. Each of
these is examined in this chapter. These financial statements are constructed
from the organizations accounting records. Their preparation typically follows
generally accepted accounting principles (GAAP), which are a standard set of
guidelines and procedures for financial reporting. Individuals who wish to better
understand the financial operations of an organization would benefit by obtaining
some accounting background.
Publicly traded companiesthose whose stock is traded on one of the many
stock exchanges that exist in the National Stock Exchange (NSE), Bombay Stock
Exchange (BSE) are required to release their financial statements to the public
regularly. Private firms are generally not required to disclose financial statements
or other related information to the public.

2.1. Balance sheet

The balance sheet is a picture or snapshot of the financial condition of an
organization at a specific point in time. The balance sheet is unique among the
financial statements in that it represents the organizations financial condition on
the date on which it is prepared (thus the reference to the snapshot or picture),
whereas the other two financial statements reflect the organizations financial
performance over a period of time. The balance sheet is organized in three
primary sections: assets, liabilities, and owners equity. A companys assets are
what it owns; including items such as cash, inventory, and accounts receivable,
or the money a company is owed by customers. Liabilities, conversely, are the
organizations financial obligations or debts owed to others. Owners equity,
which is also referred to as shareholders equity or stockholders equity, is an
estimated measure of the ownership value of the company. On the balance
sheet, owners equity is equal to the companys assets minus its liabilities.
Stated differently, the balance sheet is always truly in balance, as the assets
the first half of the statementmust equal the total of the liabilities and owners
equitythe second half of the balance sheet. This balance is assured through the
use under GAAP of double-entry bookkeeping, where each transaction made by
an organization is entered or recorded twice, once on the debit side of the
accounting records and once on the credit side. The result of this accounting
system is a balanced sheet, where the sum of the organizations assets is equal
to the combined sum of its liabilities and owners equity.
Assets on a balance sheet are listed in order of liquidity, or how quickly the asset
can be converted into cash, with the most liquid assets listed first. Hence, cash
will almost always be the first asset listed, at the top of the balance sheet.

Further, assets are typically divided into the categories of current assets and
long- term assets. Current assets are those that are likely to be converted into
cash within one years time. Liabilities are similarly listed according to their
maturity, or when the liability or debt is due to be paid by the organization.
Liabilities with the earliest maturity dates are listed first. Liabilities due within
one year are labelled current liabilities, and those due after one year are labelled
long-term liabilities. Common examples of current liabilities include employee
salaries and accounts payable, or purchases from suppliers on credit, whereas
long-term liabilities include mortgage loans for facility construction or renovation
and employee pension obligations.
Owners equity, or assets minus liabilities, represents an estimate of the value or
ownership stake of the company. First, asset and liability figures represent the
items value at the time of purchase, not necessarily their present value. Land
bought decades ago would be listed as an asset on the balance sheet at the cost
that was paid for the land at that time, even if that land has increased in value
many times since then. Second, the assets listed on the balance sheet do not
include intangible assets such as branding, management expertise, or product
positioning. Third, the balance sheet does not include contingent liabilities,
debts that may or may not occur, such as the result of ongoing litigation against
the company. Contingent liabilities are frequently disclosed in a notes or
footnotes section associated with the balance sheet and other financial
statements.

2.2. The Income Statement

The income statement, also referred to as the statement of earnings or the profit
and loss statement, shows the organizations income over a specified period of
time and is typically issued on an annual or quarterly basis. For the specified
time period, the income statement lists the organizations revenues, or income
generated from business activities, such as the sale of goods or services, and the
organizations expenses, or funds flowing out of the organization as costs of
doing business. When expenses are subtracted from revenues, the resulting
figure is the organizations net income (or net loss, if expenses were greater than
revenues over the period of time). Net income is frequently referred to as profits
or earnings.
An organizations books may be kept on a cash basis or an accrual basis, and it is
important to note the differences between these two methods and the resulting
impact on the income statement. Cash basis accounting recognizes transactions
when money is either received or paid out. Accrual basis accounting, on the
other hand, accounts for income when it is earned and expenses when they are
incurred, rather than when the money is exchanged. Some sole proprietorship
and other businesses utilize cash basis accounting, but most corporations and
partnerships are required by GAAP to follow accrual basis accounting. The
limitation of cash basis accounting, as it pertains to the income statement, is
that sales made during a particular time period cannot be recognized on the
income statement if payment has not yet been received, even if payment is
forthcoming. Under accrual basis accounting, the lag time between when a

transaction is made and when payment is exchanged is acknowledged through

another financial statement, the statement of cash flows.
When firms account for depreciation (the reduction in value of an asset due to
age or use), a number of options are available, and the approach chosen can
greatly influence expenses, and thus net income or loss, on the income
statement. A related issue is taxation. Accounting decisionsparticularly in
regard to depreciation and inventoryare frequently made in an effort to
minimize taxes. This can result in financial statements, especially income
statements that lack objectivity. Another issue is how the company accounts for
expenditures in the areas of research and development (R&D) and advertising.
These two areas represent investments in the future revenues of the company,
yet they are typically accounted as expenditures when spent rather than in the
future, when their benefits are reaped. If a company makes cuts in these areas in
difficult times, the result may be an increased net income (or decreased net loss)
in the short term. Such action could, however, be harmful to the long-term future
of the company.

2.3. The Statement of Cash Flows

For any company to be successful in the long term, it must generate more cash
than it spends, known as a positive cash flow. Negative cash flows may be
sustainable in the short term, but few companies can survive long periods of
spending more than they generate. The income statement and balance sheet,
however, do not provide insight into this simple fact.
The income statement provides information about the revenues and expenses
flowing into and out from an organization, the statement of cash flows tracks
cash in and cash out. The ability to track cash coming into and going out of the
business is of particular importance to an organization that uses accrual basis
accounting. The cash flows statement provides data as to whether the company
has sufficient cash on hand to meet its debts and obligations, which is not
provided by the balance sheet or the income statement of firms utilizing accrual
basis accounting. In addition to revealing differences between accrual basis
accounting and cash transactions, the statement of cash flows is free from the
influence of noncash expenses, such as depreciationunlike the income
statement. On the income statement, the depreciation of an asset such as a
stadium or an office building is listed as an expense, yet depreciation does not
reflect any true monetary expenditure. The statement of cash flows provides a
simpler examination of cash generated and spent.
The balance sheet states the status of the companys assets, liabilities, and
equity at a single point in time, without showing trends over time, the statement
of cash flows examines cash transactions over a period of time and so can
provide additional context for the information in a balance sheet. Cash flow
statements are typically organized in three sections: operations, investing, and
financing. Operations refer to the organizations cash flows from normal business
operations, such as cash flowing in from the sale of products or ser- vices, or
cash flowing out to pay employees salaries. Investing activities include the

buying and selling of fixed assets, such as the purchase of property. Financing
refers to the companys debt and equity financing, such as the sale of stock or
repayment of a loan.

2.4. Financial Ratios

Financial ratios are relationships determined from a company's financial
information and used for comparison purposes. These ratios are the result of
dividing one account balance or financial measurement with another. Usually
these measurements or account balances are found on one of the company's
financial statementsbalance sheet, income statement, cashflow statement,
and/or statement of changes in owner's equity. Financial ratios can provide small
business owners and managers with a valuable tool with which to measure their
progress against predetermined internal goals, a certain competitor, or the
overall industry. In addition, tracking various ratios over time is a powerful means
of identifying trends in their early stages. Ratios are also used by bankers,
investors, and business analysts to assess a company's financial status.
Ratios are calculated by dividing one number by another, total sales divided by
number of employees, for example. Ratios enable business owners to examine
the relationships between items and measure that relationship. They are simple
to calculate, easy to use, and provide business owners with insight into what is
happening within their business, insights that are not always apparent upon
review of the financial statements alone. Ratios are aids to judgment and cannot
take the place of experience. But experience with reading ratios and tracking
them over time will make any manager a better manager. Ratios can help to
pinpoint areas that need attention before the looming problem within the area is
easily visible.
Virtually any financial statistics can be compared using a ratio. In reality,
however, small business owners and managers only need to be concerned with a
small set of ratios in order to identify where improvements are needed.
It is important to keep in mind that financial ratios are time sensitive; they can
only present a picture of the business at the time that the underlying figures
were prepared. For example, a retailer calculating ratios before and after the
Christmas season would get very different results. In addition, ratios can be
misleading when taken singly, though they can be quite valuable when a small
business tracks them over time or uses them as a basis for comparison against
company goals or industry standards.
The best way for small business owners to use financial ratios is to conduct a
formal ratio analysis on a regular basis. The raw data used to compute the ratios
should be recorded on a special form monthly. Then the relevant ratios should be
computed, reviewed, and saved for future comparisons. Determining which ratios
to compute depends on the type of business, the age of the business, the point
in the business cycle, and any specific information sought. For example, if a
small business depends on a large number of fixed assets, ratios that measure
how efficiently these assets are being used may be the most significant.

2.5. Ratios included in this report

1. Liquidity Ratios
a. Current ratio
b. Quick ratio
2. Asset Management Ratios
a. Total asset turnover ratio
b. Inventory turnover ratio
3. Leverage Ratios
a. Debt ratio
b. Interest Coverage ratio
4. Profitability Ratios
a. Net profit margin
b. Return on equity

3. NEED FOR THE STUDY

1. The study has great significance and provides benefits to various parties
whom directly or indirectly interact with the company.
2. It is beneficial to management of the company by providing crystal clear
picture regarding important aspects like liquidity, leverage, activity
and profitability.
3. The study is also beneficial to employees and offers motivation by showing
how actively they are contributing for companys growth.
4. The investors who are interested in investing in the companys shares will
also get benefited by going through the study and can easily take a decision
whether to invest or not to invest in the companys shares.

4. Refractory Industry in India

"Refractory" items according to any Standard English dictionary are materials
which are hard to work with, and are especially resistant to heat and pressure. In
practical terms, refractories are products used for high temperature insulation
and erosion/corrosion and are made mainly from non-metallic minerals. They are
so processed that they become resistant to the corrosive and erosive action of
hot gases, liquids and solids at high temperatures, in various types of kilns and
furnaces.

Some typical specifications of Indian refractories commonly used in the furnaces

and kilns in steel, cement, non-ferrous metals and glass industries are given
below:

High Alumina
Silica
Basic
Castables/Monolithics
Special Products
Insulating Bricks

4.1. Industry Overview:Refractory is a term given to a class of materials which are produced from
nonmetallic minerals and possess capability to withstand heat and pressure.
These are products that confer properties like high temperature to corrosive and
erosive action of hot gases, liquids and solids at high temperatures in various
kilns and furnaces. The fortunes of the Refractory industry are very much
dependant on steel industry as almost 75% of the refractories produced is
consumed in steel industry. Steel consumption in India is expected to grow
significantly in coming years as per capita finished steel consumption is far less
than its regional counterparts. The growth in construction, infrastructure,
automobile and power sector will continue to create significant demand for steel
sector, which in turn will create demand for refractories.

The Indian refractory industry started its journey with first line of production in
Kolkata in 1874. Today, the industry comprises over 100 established units, with
11 large plants, 24 medium-scale units and the rest in the small-scale sector.
However, while the refractory industry in India took off in the late 19th century,
the real growth came in the late 1950s when the public sector steel plants were
set up and Tata Steel embarked upon its expansion plans. Currently, the Indian
refractory industry has an aggregate production capacity of 20 lakh tonnes per
annum. The capacity utilization, however, currently stands at around 60 percent
or 11.5-12 lakh tones per annum.
About 75 per cent of the refractories that are manufactured find
application in the steel industry, 12 percent in the cement industry, 5-6 per cent
in non-ferrous industries, three per cent in the glass industry and the balance in
other industries.

Refractories are used either where high temperature or high rate of

abrasion/corrosion/erosion is involved. Traditionally, refractories are made of
naturally-occurring minerals, such as bauxite, kyanite, magnesite, fireclay,
chrome ore, etc. Lately, however, the industry has been using man-made raw
materials, such as brown-fused alumina, tabular alumina, fused magnesia, silicon
carbide, magnesia alumina, etc. Refractory plays a dynamic role not only for
metallurgical but also for Shaping up chemical and petrochemical, glass,
ceramic, cement and limestone industries. Major research work has so far been
concentrated for the development of new refractory and also for its reduction in
consumption for steel industries. Indian refractory industry, meanwhile, is
required to upgrade their operations with global technologies which need huge
investment.

4.2. The Scope of the Industry:The size of the Indian refractory industry has been pegged at Rs 2,300 crore and
it is stated to be growing at 8-10 per cent per annum. Although the specific
consumption of refractories has gone down from 30 kg per tonne of steel about
20 years ago to 12-13 kg on an average for the steel industry as a whole and as
low as 7-8 kg in the case of some more efficient steel units, the scope for growth
is good in view of the continuing growth in the Indian economy and the
government's focus on infrastructure development. Despite downturn in steel
sector, the domestic refractory industry that supplies raw materials to steel
plants and industries, posted 21 percent growth in turnover at Rs 4,480 crore in
2009-10 against Rs 3,640 crore in 2008-09, when the growth was 16 percent
over 2007-08. The capacity utilization of the industry was 65 percent.

4.3. Business Concerns: Industry dependent on raw material imports from China. Use of synthetic
raw materials is driving prices higher
In the event of continued high prices for crude oil and other petroleum
products, hardening of the coal prices the prices of the inputs of the
refractory industry are increasing
Raw material prices have moved up 80 to 85% but prices of finished
products have just appreciated 18-30% resulting in erosion of the bottom
lines of the refractories companies.

 Affected by the slow down in the economy

In Industries like steel trend towards lower refractories consumption per
tone of steel. Usage of new technology processes leads to reduction in
refractories consumption
The industry is going through an exciting and complex phase. On one
hand, refractory makers are adding capacities with the hope that demand
from the steel sector will rise at a fast pace. On the other hand, none of
the major announced Greenfield steel projects are yet to get off the
ground.

4.4. Challenges for Industry:The Refractory Industry must upgrade itself to take benefit of increased
business from the steel industry stated R K Vijayvergia, Executive DirectorOperations, SAIL, at a recently held conference. In his special address,
Vijayvergia said, Steel industry forms the major end use segment for
refractories consuming around 70 percent of its total annual production. The
Refractory Industry has to keep pace with steel industry with regard to quality
and quantity demands. Meanwhile, with the changed business scenario more and
more customers are looking forward to total refractory management which
encompasses creation of value added service, responsive supply chain network
and understanding of customers' requirement. The major Indian refractory
manufactures need to gear up to cater the need of steel industry.

World leaders in refractories like RHI from Austria, Vesuvius from Belgium,
French giant Calderys, Pohang from South Korea etc have also made their
presence in India, which is a good sign for the industry. Recently SAIL has taken
over Bharat Refractories Ltd which is now named as SAILRefractorry Unit (SRU).
SAIL is in the process of augmenting and upgrading the facilities at SRU for
higher production to meet the quality requirement of SAIL. Refractory producers
in India have to rise to the occasion by providing ready, regular, speedy and
consistent supplies, Irani said. It would also be important for Indian refractory
manufacturers to focus on their raw materials security. Industry insiders do
acknowledge that raw materials security is a concern especially with China
imposing quantitative restrictions on export of raw materials and also jacking up
prices over the last year or so. Cheaper refractory imports from China are also
putting a pressure on the industry's margins. Hiring and retaining skilled
manpower is a major challenge that the Indian refractory industry has to cope
with.

4.5 Conclusion:Refractory business is a capital intensive industry which requires heavy

investment in technology and basic raw materials. The business is heavily
dependent on steel industry (nearly 75%) and on the contrary steel industry is
upgrading technology to reduce its dependence on refractories products. The
other industries where refractories can cater to are cement, sponge iron,
chemical, petrochemical, glass , ceramic and limestone industries. The slowdown
in the Indian economy has affected the steel industry resulting in lower top lines
in refractory industry. Also, the increase in cost of raw materials, coals, petrol
prices, etc. has affected the bottom lines. This is a highly specialized industry
and depending upon the production capacities, plant location, technology
implemented a competitive advantage can be structured and better performance
can be expected in future.

5.

COMPANY PROFILE IFGL REFRACTORIES LIMTED

IFGL Refractories Ltd. is a manufacturer of Specialised Refractories and requisite

Operating Systems for Iron and Steel Industry. It has a large pool of trained
engineers and application specialists to offer customers Total Solution for
Refractory for flow control in Steel Teeming and Continuous Casting of Steel.
The Slide Gate Refractories Plant was started in the year 1984. Indo Flogates was
a joint venture with Flogates Ltd, UK and an exclusive Indian Licensee of Flocon
Slide Gate Systems, developed by US Steel Corporation through their whollyowned subsidiary USS Engineers and Consultants Inc. This plant now
manufacturers Slide Gate Systems and Refractories with the latest know-how
from Krosaki Harima Corporation, Japan, a subsidiary of Nippon Steel
Corporation.
The Continuous Casting Refractories Plant set up in technical collaboration with
Krosaki Harima Corporation, Japan (then known as Harima Ceramics Corporation)
started production in 1993 manufacturing Isostatically Pressed Continuous

Casting
Refractories
and
Magnesia
Carbon
Tap
Hole
Sleeves.
IFGL operates the Quality Management System which complies with the
requirements of BS EN ISO 9001:2008 and ISO 14001:2004.
IFGL acquired Monocon Group in September, 2005, with production facilities for

Tundish Spraying Mass

Refractory Darts

Monolithic Lances

Robotics for EAF, Ladle and Tundish lining maintenance.

Monolithics for EAF, Ladle and Tundish

In December, 2006, Monocon Group acquired Goricon Metallurgical Services Ltd,

Wales (UK) and Goricon LLC, Ohio (USA) engaged in manufacture of Darts,
Lances, Ladle Powders etc used by the Steel Industry.
In July, 2008 Hoffman Group was acquired with manufacturing facilities for

Foundry Ceramics Casting Filters, Feeders, SiC Chill Plates, Pouring

System and Monoblock Stopper

High Grade fire proof refractory shapes

Drawing tools and Tread Guides

In September, 2010 IFGL acquired EI Ceramics LLC and CUSC International

Limited (CUSC), both Cincinnati, Ohio based companies engaged in manufacture
of Isostatically Pressed Continuous Casting Refractories.
IFGLs subsidiary is IFGL Exports Limited - also engaged in manufacture of
Continuous Casting Refractories at new area of Kandla Special Economic Zone, in
the state of Gujarat (India).
IFGL now have manufacturing facilities in China, Germany, India, UK and USA.
IFGL, an Indian Multinational Company from S K Bajoria Group, is listed both on
BSE and NSE in India.

5.1 Growth Story

5.2 Products
IFGL is considered as one of the most reliable suppliers of refractories for the
global steel industry, with exports to more to more than 50 countries in Europe,
Middle East, Africa, South East Asia, Australasia, North and South Americas.
Product Range

Isostatic Refractories
Slide Gate Mechanisms and Refractories
Purging Plug Mechanisms and Refractories
Tundish Nozzles
Monolithics
Precast Refractories
Slag Control Systems
Tube Changer Mechanism (TCM)
Nozzle Changer Mechanism (NCM)
Robotic Gunning for EAF and Ladle
Tundish Lining Refractories
Refractory Lances

5.2.1. Isostatic Refractories

5.2.1.1. Ladle Shroud: Ladle shroud is used to control the flow of liquid steel
from Ladle to Tundish and offers protection to steel stream from reoxidation and
minimises steel splashes. It has excellent thermal shock resistance to withstand
the temperature shock at the start of the cast.
Ladle Shrouds are made in Alumina Graphite (Al 2O3-C)
quality and are isostatically pressed.
Options

Reverse taper for submerged opening

Metal can reinforcement
Argon Gas purging (Porous insert or direct injection
type)
Ceramic fiber wrapping on outer surface
Reinforcement in slag zone
Re-usable type

5.2.1.2. Sub Entry Nozzle/Sub Entry Shroud:

It is used to control the flow of liquid steel from Tundish to Mould. It prevents reoxidation of steel between the tundish and the mould.
It is manufactured in Alumina Graphite (Al 2O3-C) quality and it is isostatically
pressed. Special protective coating is applied to provide resistance to
decarburisation.

Options

Special
reinforcement
with
Zirconia-Graphite (ZrO2-C) at slag
line for excellent slag resistance.
Seating area reinforcement with
high Alumina or Magnesia base
material.
Special design to prevent Aluminaclogging.
Ceramic fibre wrapping on outer surface.
Gas purging facilities.
Special insulating coating.

5.2.1.3. Monoblock Stopper: It is used to

control the flow of metal stream from tundish to
mould during continuous casting of steel.
They are made in Alumina Graphite (Al 2O3-C)
quality and it is isostatically pressed. Special
coating is applied on the surface to provide
oxidation
resistance
and
minimum
decarburisation.
Options

Monoblock Stopper for steel foundry

applications.
Cross pin or screw fastening system.

Argon gas purging.

Special reinforcement in tip either with high Alumina, Magnesia or Spinel
materials.

5.2.1.4

Tundish

Nozzle:

In
combination with Monoblock Stopper,
Tundish Nozzle controls the flow and
protects steel stream before it exists the
tundish.
IFGL supplies tundish nozzles for tube
changer mechanisms and non-tube
changer applications with or without
argon purging facility.

5.2.1.5. Tundish Metering Nozzle: IFGL offers a comprehensive range of

Zirconia (95% ZrO2) and Zircon (60-75% ZrO2) tundish metering nozzles,
including quick change nozzles.

5.2.1.6. Isostatically Pressed Magnesia Carbon Taphole Sleeve:

IFGL manufactures taphole sleeves for BOF, EAF, and EBT furnaces as a single
piece and pressed in a high capacity isostatic press with mix of Fused Magnesia
and Graphite.

Benefits

Single piece is easy to install and maintain.

Improved performance due to elimination of joints.
Uniformly dense body due to isostatic pressing.
Superior erosion and corrosion resistance.
Enhances converter availability by reducing intermittent repairs.

5.2.2 Ladle Slide Gate Refractories and Systems

IFGL is a reputed manufacturer of ladle slide gate refractories and mechanisms
for the following standard international systems;

IFGL FF and YPL systems.

FLocon Systems.
Interstop LS Systems.
Interstop
QC
and
BK
Systems.

Apart from the above, IFGL also

produces slide gate refractories
for non-standard systems which
are unique to the customers.

5.2.2.1. FF-Series Ladle

Slide Gate System: The FF
series ladle slide gate is a two
plate linear, hydraulically driven
gate. The gate valves are
designed for small, medium and large capacity ladles. The characteristic features
of the FF ladle slide gate are as follows:

Safety and reliability.

Simplicity and robustness.
Higher stroke length.
Automatic face pressure loading.
Outboard spring design.
Optical configuration.
Plate crack control.
Higher face pressure.
Lower nitrogen pick-up.
Increased plate life.

5.2.2.2. Flocon Slide Gate Systems: IFGL

was the original licensee of Flogates (UK) in India,
and have completed more than 200 Ladle
installations with Flocon Systems in India & abroad.
IGFL offers complete package for Flocon Slide Gate
Systems, which include design, manufacture,
installation and commissioning of equipment,
hydraulics and slide gate refractories for ladles.

5.2.3. Gas Purging Refrctories and IPV System

IFGL is a leading manufacturer of ladle purging refractories
systems, which include Purge Plugs, Seating Block and Inner
(for IPV System).

and
nozzle

5.2.3.1. Slot Plug

Flexible design with different number of slots

Accurately Formed channels separate print
Slot/channels configuration to suit the customer gas
requirements.
Good gas flow control

5.2.3.2. Segmented Plug

Better plug life

High Purging rate
Easily adjustable gas flow
Improved wear rate
Better availability of gas channels

flow

Regular bubble pattern

5.2.3.3. RCA Plug

Excellent resistance to erosion/corrosion

Channelled tube not wetted by slag
Smooth slot/channel wall prevents metal fins
Improved gas flow control
High Performance

5.2.3.4. IPV System: IFGL had technical tie up with

Flogates LTD, UK for IPV systems (ISID Purgemeister
Valve) since 1980 and have long experience in design, supply, installation,
commissioning and operation of IPV mechanisms with different international
customers.
Benefits

SAFETY: Virtually zero breakout rate

LONGEIVITY: Long life minimizes need
for mid-campaign ladle bottom repair.
FLEXIBILITY: Different gas flow rates are
possible.
RELIABILITY: Performance is repeatable.
No starting failures. No scheduling delay.

5.2.4. Products from Monocon

5.2.4.1. Slag Dart Technology: Darts
float at the metal-slag interface in the BOF
and are designed to block the taphole and
restrict the amount of slag exiting the
vessel. Effective operation is reliant upon the design characteristic of the slag
dart and the accurate calibration of the slag control dart machine.
Dart head and tail are designed to withstand temperature, erosion and thermal
shock.
Design Parameters

Designed shape to suit taphole diameter.

Density to suit preferred run out time and furnace
conditions.
Tail length and diameter to suit taphole and bath depths.

5.2.4.2. Automatic Dart Loading Machine

5.2.4.3. Pre Tap Plug: The objective of the pre tap plug is to temporarily
block the taphole during the turn down and reopen the taphole when steel is
presented
to
the
taphole
orifice.

Thermal Imaging: The Monocon Thermal Image System allows optimization of

slag control with the integration of thermal imaging camera into the slag control
package.

5.2.4.4. Slag Control Systems: MONOCON has more than 3 decades of

experience in BOF Slag Control Systems & Refractories, with 73 machines in
operation at 33 steel plants across the globe.

Benefits

Reduce Slag Carry Over.

Reduce Phosphorous Reversion.
Reduce Aluminium Consumption.
Increase Alloy Yield.
Improve Refractory performance.
Potential for yield improvements.

Key Elements

Slag control dart machine.

Vessel Angle Indicator.
Infra-red imaging camera and applicators.
BOF Taphole repair maintenance.
Pre-Tapping Plugs.
Infrared Slag Control Camera.

Bespoke Slag Control Machine Designs

Roof Mounted.
Pantograph Roof Mounted.
Floor Mounted Side Swipe.
Rail Mounted.
Floor Mounted Turret & Telescopic.

5.2.4.5. Tube Changer Mechanism (TCM): In 2006, IFGL-MONOCON

signed an exclusive manufacturing and marketing license with Alcar International
Ltd for new generation of Tundish Tube Changer Mechanisms for slab casters and
high performance Argon Injection Tundish Nozzles. Since then IFGL have jointly
worked on several successful tube changer projects around the globe.
Benefits

No
patent restrictions on
machines
refractories.
Pneumatic or hydraulic powered.
Easy to install.
Ease of maintenance.
Robust proven design.

or

5.2.4.6. Nozzle Changer Mechanism (NCM): This device is used to

control and shut off the flow of the metal to each strand for billet and beam
blank casters. The system provides continuous casting technique with additional
operational control and flexibility.
Benefits

Extend tundish sequences.

Alternate metering nozzle diameter
to facilitate casting speed changes
as required.
Emergency shut off at the push of a
button.
Hydraulic power for smooth and
rapid response.

5.3 Global Business Presence

6.

RESEARCH METHODOLOGY

6.1. Aims and Objective of the study

Gain an in-depth knowledge about various corporate valuation techniques.
Standardize financial information for comparisons
Evaluate current operations
Study the efficiency of operations
To know the future prospect of business.
To determine if there has been an improvement or deterioration or no change
over time.
To get an overview on Company producing a products.
To know how ratio analysis helps an analyst to make an informed business or
investment decision.
Study the risk of operations

6.2. METHODOLOGY
The information is collected through secondary sources during the project. That
information was utilized for calculating performance evaluation and based on
that, interpretations were made.

6.2.1. Sources of secondary data:

Most of the calculations are made on the financial statements of the company
provided statements.
Referring standard texts and referred books collected some of the information
regarding theoretical aspects.
Method- to assess the performance of the company method of observation of
the work in finance department in followed.

6.2.2. LIMITATIONS
The study provides an insight into the financial, personnel, marketing and
other aspects of IFGL Refractories Ltd. Every study will be bound with certain
limitations.

The below mentioned are the constraints under which the study is carried out.

One of the factors of the study was lack of availability of ample information.
Most of the information has been kept confidential and as such as not assed
as art of policy of company.

Time is an important limitation. The whole study was conducted in a period of

8 weeks (as of now, since it is an Interim Report), which is not sufficient to
carry out proper interpretation and analysis.

7. LITERATURE RIVIEW
7.1. FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm and establishing relationship between the items of the
balance sheet and profit & loss account.
Financial ratio analysis is the calculation and comparison of ratios, which are
derived from the information in a companys financial statements. The level and
historical trends of these ratios can be used to make inferences about a
companys financial condition, its operations and attractiveness as an
investment. The information in the statements is used by

Trade creditors, to identify the firms ability to meet their claims i.e. liquidity
position of the company.
Investors, to know about the present and future profitability of the company
and its financial structure.
Management, in every aspect of the financial analysis. It is the responsibility
of the management to maintain sound financial condition in the company.

7.1.1. RATIO ANALYSIS

The term Ratio refers to the numerical and quantitative relationship between
two items or variables. This relationship can be exposed as:

Percentages
Fractions
Proportion of numbers

Ratio analysis is defined as the systematic use of the ratio to interpret

the financial statements. So that the strengths and weaknesses of a
firm, as well as its historical performance and current financial
condition can be determined. Ratio reflects a quantitative relationship
helps to form a quantitative judgment.

7.1.2. STEPS IN RATIO ANALYSIS

The first task of the financial analysis is to select the information relevant
to the decision under consideration from the statements and calculates
appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating
to the pas6t or with the industry ratios. It facilitates in assessing success
or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing
conclusions are drawn after comparison in the shape of report or
recommended courses of action.

7.1.3. BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They enable
analyst to draw conclusions regarding financial operations. They use of ratios as
a tool of financial analysis involves the comparison with related facts. This is the
basis of ratio analysis. The basis of ratio analysis is of four types.

Past ratios, calculated from past financial statements of the firm.

Competitors ratio, of the some most progressive and successful
competitor firm at the same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or pro
forma financial statements

In the report I have used comparative study of the past ratios, calculated form
past financial statements of the firm.
7.1.4. NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various ratios for
helping in making certain decisions. It is only a means of understanding of
financial strengths and weaknesses of a firm. There are a number of ratios which
can be calculated from the information given in the financial statements, but the
analyst has to select the appropriate data and calculate only a few appropriate
ratios. The following are the four steps involved in the ratio analysis.

Selection of relevant data from the financial statements depending upon

the objective of the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the
past, or the ratios developed from projected financial statements or the
ratios of some other firms or the comparison with ratios of the industry to
which the firm belongs.

7.1.5. INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations of
ratio analysis should be kept in mind while interpreting them. The impact of
factors such as price level changes, change in accounting policies, window
dressing etc., should also be kept in mind when attempting to interpret ratios.
The interpretation of ratios can be made in the following ways.

Single absolute ratio

Group of ratios

Historical comparison

Projected ratios

Inter-firm comparison

7.1.6. GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is not easy.
Following guidelines or factors may be kept in mind while interpreting various
ratios are

Accuracy of financial statements

Objective or purpose of analysis

Selection of ratios

Use of standards

Caliber of the analysis

7.1.7. IMPORTANCE OF RATIO ANALYSIS

Aid to measure general efficiency

Aid to measure financial solvency

Aid in forecasting and planning

Facilitate decision making

Aid in corrective action

Aid in intra-firm comparison

Act as a good communication

Evaluation of efficiency

7.1.8. LIMITATIONS OF RATIO ANALYSIS

Differences in definitions

Limitations of accounting records

Lack of proper standards

No allowances for price level changes

Changes in accounting procedures

Quantitative factors are ignored

Limited use of single ratio

Background is over looked

Limited use

Personal bias

In this project on the basis of the following Ratios I have tried my level
best to analyze the current financial growth of IFGL REFRACTORIES
LIMITED over the last four years (2010-2014):
7.1.9. Ratios included in this report
1. Liquidity Ratios
a. Current ratio
b. Quick ratio
2. Asset Management Ratios
a. Total asset turnover ratio
b. Inventory turnover ratio
3. Leverage Ratios
a. Debt ratio
b. Interest Coverage ratio
4. Profitability Ratios
a. Net profit margin
b. Return on equity

7.1.10. Description and significance of the above mentioned Ratios

Liquidity Ratios
Current Ratio
The organizations ability to meet its
current liabilities (those due within a
year) with its current assets.
Quick Ratio
The organizations ability to meet its
current liabilities with current assets
other than inventory.
Asset Management Ratios
Total Asset turnover
How efficiently the organization is
Ratio
utilizing its assets to make money.
Inventory turnover
Ratio

Debt Ratio
Interest coverage
Ratio
Net Profit Margin

Return on equity

How often the organization sells and

replaces its inventory over a
specified period of time.
Leverage Ratios
How the organization finances its
operation with debt and equity.
The organizations ability to pay the
interest on its debt owned.
Profitability Ratios
The percentage of the organizations
total sales or revenue that was net
profit or income.
The return rate that the
organizations owners or
shareholders are receiving on their
investment.

7.2. CASH FLOW STATEMENT ANALYSIS

A company's statement of cash flows creates a bridge -- or reconciliation -between a company's cash balances from one accounting period to another. The
statement of cash flows is important to investors because it provides insight into
how a company generates and expends cash, and ultimately, its ability to return
value to shareholders.
The cash flow is widely believed to be the most important of the three financial
statements because it is useful in determining whether a company will be able to
pay its bills and make the necessary investments. A company may look really
great based on the balance sheet and income statement, but if it doesn't have
enough cash to pay its suppliers, creditors, and employees, it will go out of
business. A positive cash flow means that more cash is coming into the company
than going out, and a negative cash flow means the opposite.

7.2.1. Relationship to Other Financial Statements

While analyzing the cash flow statement, one must analyze the balance sheet
and income statement for the coinciding period. If the accrual basis of
accounting is being utilized, accounts must be examined for their cash
components. Analysts must focus on changes in account balances on the
balance sheet. General rules for this process are as follows.
Transactions that result in an increase in assets will always result in a
decrease in cash flow.
Transactions that result in a decrease in assets will always result in an
increase in cash flow.
Transactions that result in an increase in liabilities will always result in an
increase in cash flow.
Transactions that result in a decrease in liabilities will always result in a
decrease in cash flow.
Cash flow statements have three distinct sections, each of which relates to a
particular component - operations, investing and financing - of a company's
business
activities.
7.2.3. Cash Flow from Operations
This is the key source of a company's cash generation. It is the cash that the
company produces internally as opposed to funds coming from outside investing
and financing activities. In this section of the cash flow statement, net income
(income statement) is adjusted for non-cash charges and the increases and
decreases to working capital items - operating assets and liabilities in the
balance sheet's current position.
7.2.4. Cash Flow from Investing

For the most part, investing transactions generate cash outflows, such as capital
expenditures for plant, property and equipment, business acquisitions and the
purchase of investment securities. Inflows come from the sale of assets,
businesses and investment securities. For investors, the most important item in
this category is capital expenditures (more on this later). It's generally assumed
that this use of cash is a prime necessity for ensuring the proper maintenance of,
and additions to, a company's physical assets to support its efficient operation
and competitiveness.

7.2.5. Cash Flow from Financing

Debt and equity transactions dominate this category. Companies continuously
borrow and repay debt. The issuance of stock is much less frequent. Here again,
for investors, particularly income investors, the most important item is cash
dividends paid. It's cash, not profits, that is used to pay dividends to
shareholders.
In this report, cash flow statement analysis has been done over a period of four
financial years describing the major elements of cash flow with their description
and analysis and interpretation which will give us an idea about the major cash
generating activities of the company (IFGL Refractories Limited) and how it is
investing and financing its cash.

8. RESULTS AND FINDINGS OF RATIO ANALYSIS

8.1. Financial Year: 2010-11
Important Parameters for Ratio analysis

Rupees in
Lakhs

Current asset
Current Liability
Inventories
Total Sales

11149.13
3652.89
3508.13
22268.09

Average total assets

COGS

14071.32
19787.12

Average Inventory
Total assets
Total Liabilities
EBIT

3066.29
15584.02
9851.74
1096.98

Data taken from

Shareholder's equity

11624.96

Balance sheet
Balance sheet
Balance sheet
Income
statement
Balance sheet
Income
statement
Balance sheet
Balance sheet
Balance sheet
Income
statement
Income
statement
Income
statement
Balance sheet

Assets
Fixed Assets
Current assets
Total assets

2011
4434.89
11149.13
15584.02

2010
3622.9
8935.72
12558.62

Inventories
Inventory

3508.13

2624.45

Liabilities
Secured Loans
Deferred Tax Liabilities
Net current liabilities
Total liabilities

5851
347.85
3652.89
9851.74

3712.66
328.05
4040.71
8081.42

Interest expense

395.04

Net income/PAT

737.18

Liquidity ratios
Current ratio
Quick ratio

Ratio Analysis Dashboard

Profitability ratios(in
Percentage)
3.052139539
Net profit margin
3.31047701
ratio
2.091768435
Return on equity
6.34135515

Asset Management ratios

Total asset turnover
1.582516068
ratio
Inventory Turnover ratio 6.45311435
Leverage ratios
Debt ratio
Interest coverage ratio

0.632169363
2.776883354

8.2. Financial Year: 2011-12

Important Parameters for Ratio analysis

Current asset
Current Liability
Inventories
Total Sales
Average total assets
COGS
Average Inventory
Total assets
Total Liabilities
EBIT
Interest expense
Net income/PAT
Shareholder's equity

Assets
Fixed Assets
Current assets
Total assets
Inventories
Inventory
Liabilities
Non Current liabilities
Current liabilities
Total liabilities

Liquidity ratios
Current ratio
Quick ratio

Rupees in
Lakhs

Data taken from

11918.58
8955.47
3978.21
28740.5
15921.875
25098.02
3743.17
16273.4
10083.83
2622.86
474.77
1742.76
12680.08

Balance sheet
Balance sheet
Balance sheet
Income statement
Balance sheet
Income statement
Balance sheet
Balance sheet
Balance sheet
Income statement
Income statement
Income statement
Balance sheet

2012
4354.82
11918.58
16273.4

2011
4565.98
11004.37
15570.35

3978.21

3508.13

1128.36
8955.47
10083.83

1365.51
8486.23
9851.74

Ratio Analysis Dashboard

Profitability ratios(in
Percentage)
1.33087152 Net profit margin ratio
6.063778
3
0.88665028 Return on equity
13.74408

2
Asset Management ratios
Total asset turnover ratio
1.80509519
1
Inventory Turnover ratio
6.70501740
5
Leverage ratios
Debt ratio
Interest coverage ratio

0.61965108
7
5.52448554

8.3. Financial Year: 2012-13

Important Parameters for Ratio analysis

Current asset
Current Liability
Inventories
Total Sales

Rupees in
Lakhs
11918.58
9633.67
3978.21
32305.04

Data taken from

Shareholder's equity

13694.13

Balance sheet
Balance sheet
Balance sheet
Income
statement
Balance sheet
Income
statement
Balance sheet
Balance sheet
Balance sheet
Income
statement
Income
statement
Income
statement
Balance sheet

Assets
Fixed Assets
Current assets
Total assets

2013
4171.69
13175.76
17347.45

2012
4354.82
11918.58
16273.4

Inventories
Inventory

3870.54

3978.21

Liabilities
Non Current liabilities
Current liabilities

887.15
9633.67

1128.36
8955.47

10520.82

10083.83

Average total assets

COGS

16810.425
28304.5

Average Inventory
Total assets
Total Liabilities
EBIT

3924.375
17347.45
10520.82
2537.96

Interest expense

405.43

Net income/PAT

1706.34

Total liabilities

Liquidity ratios
Current ratio
Quick ratio

Ratio Analysis Dashboard

Profitability ratios(in
Percentage)
1.2371796
Net profit margin ratio 5.281962
0.82423105 Return on equity
12.46038
6

Asset Management ratios

Total asset turnover ratio 1.92172654

Inventory Turnover ratio

Leverage ratios
Debt ratio
Interest coverage ratio

8
7.21248606
5

0.60647645
6
6.25992156
5

8.4. Financial Year: 2013-14

Important Parameters for Ratio analysis

Rupees in
Lakhs

Data taken from

Current asset
Current Liability
Inventories
Total Sales
Average total assets
COGS
Average Inventory
Total assets
Total Liabilities
EBIT
Interest expense
Net income/PAT
Shareholder's equity

14538.76
9218.82
4025.76
34229.26
17762.2
29171.8
3948.15
18176.95
9735.64
3722.72
229.97
2434.71
15335.37

Balance sheet
Balance sheet
Balance sheet
Income statement
Balance sheet
Income statement
Balance sheet
Balance sheet
Balance sheet
Income statement
Income statement
Income statement
Balance sheet

Assets
Fixed Assets
Current assets
Total assets

2014
3638.19
14538.76
18176.95

2013
4171.69
13175.76
17347.45

Inventories
Inventory

4025.76

3870.54

Liabilities
Non Current liabilities
Current liabilities

516.82
9218.82

887.15
9633.67

Total liabilities

9735.64

10520.82

Liquidity ratios
Current ratio
Quick ratio

Ratio Analysis Dashboard

Profitability ratios(in
Percentage)
1.57707385 Net profit margin ratio
5
1.14038456 Return on equity
1

Asset Management ratios

Total asset turnover ratio
1.92708448
3
Inventory Turnover ratio
7.38872636
6

7.11295
15.87643

Leverage ratios
Debt ratio
Interest coverage ratio

0.53560360
8
16.1878505
9

Current ratio
3.5
3
2.5
Current ratio

2
1.5
1
0.5
0
2010-11

2011-12

2012-13

2013-14

8.5.
Graphical representation of the Financial Ratios to visualize
the growth trend

Quick ratio
2.5
2
Quick ratio

1.5
1
0.5
0
2010-11

2011-12

2012-13

2013-14

Total asset turnover ratio

2.5
2
1.5
1
0.5
0

2010-11

2011-12

2012-13

Total assest turnover ratio

2013-14

Inventory turnover ratio

7.6
7.4
7.2
7

Inventory turnover
ratio

6.8
6.6
6.4
6.2
6
5.8
2010-11

2011-12

2012-13

2013-14

Debt ratio
0.64
0.62
0.6
0.58

Debt ratio

0.56
0.54
0.52
0.5
0.48
2010-11

2011-12

2012-13

2013-14

Interest Coverage ratio

18
16
14
12

Interest Coverage
ratio

10
8
6
4
2
0
2010-11

2011-12

2012-13

2013-14

Net profit margin ratio

8

18
16
14
12
10
8
6
4
2
0

6
4
2
0

Return on equity

Return on
equity

2010-11 2011-12 2012-13 2013-14

Net profit margin ratio

8.5.1. Interpretation of the graphs:

Almost every ratio graph shows a positive upward slope except for few (debt
ratio, current ratio and quick ratio) which indicates that the financial growth of
IFGL Refractories Limited has been increasing gradually over the years
sustainably.
Some graphs mentioned above which have a downward negative slope can be
explained as follows:
Debt ratio: It explains how the organization finances its operation with debt
and equity, a decreasing downward slope is favourable for the health of the
company since it signifies that the company is able to finance its operation with
its own retained earnings and does not have to depend on debt/equity finance.
Hence, IFGL Refractories Limited is gradually minimizing the dependency
external finance to carry out its operations.
Current ratio: It explains the organizations ability to meet its current liabilities
with its current assets. As observed from the graph it has a decreasing negative
slope which means that the company is incurring more liabilities than it can meet
them with its current assets. This may be due to its expansion and mergers and
acquisitions. Due to limitations, the actual reasons are unknown.
The significance/remarks of all the ratios have been explained in the next page in
a tabular format.

8.6. Comparative year wise study of the financial ratios over

the last 4 years (2010-2014)
Comparative Study
Key Financial
ratios
Liquidity
Curren
ratio
t ratio

Asset
Managem
ent ratio

Leverage
ratio

Profitabili
ty ratio

of financial ratios
2010201111
12
3.05214 1.3308
72

201213
1.2371
8

2013-14
1.577073
855

0.8866
5
1.8050
95

0.8242
31
1.9217
27

1.140384
561
1.927084
483

Quick
ratio
Total
asset
turnov
er
ratio
Invent
ory
turnov
er
ratio

2.09176
8
1.58251
6

6.45311 6.7050
4
17

7.2124
86

7.388726
366

Debt
ratio

0.63216 0.6196
9
51

0.6064
76

0.535603
608

Interes 2.77688 5.5244

t
3
86
Covera
ge
ratio

6.2599
22

16.18

Net
profit
margin
ratio

5.2819
62

7.11%

3.31047 6.0637
7
78

Significance/Re
marks
Initially the
ability to meet
the short term
liabilities with its
current asset was
3 times but it has
come down to
1.5 times over
the few years

the firm is
consistent
enough in
utilising its assets
to make money
the firms ability
to replenish its
inventory has
increased from 6
times to 7 times
over the last 2
years
debt is almost
the half of the
value of its
assets
the firm can
cover its interest
expense more
than 16 times
over its operating
income in the
last year which
has
comparatively
increased from
the earlier years.
93% of the
money generated
by sales was
spent on various

Return
on
equity

6.34135 13.744
5
08

12.460
38

15.87%

expenses in the
last year which
has gradually
increased from
the preceding
years
nearly 16% of
ownership stake
that company's
ownership
realized as
PROFIT has
gradually
increased from
the preceding
years

9. INTERPRETATION OF CASH FLOW STATEMENT

ANALYSIS
9.1. Financial year 2010-11
9.1.2. Cash Flow from Operating Activities

IFGL started with 2036.80 lakhs of cash in hand before working capital
changes
Receivables in 2011 has decreased from 2010 i.e. it has received
payments against sold products which is a good sign.

Inventories have increased to a great extent in 2011 from 2010 which

means inventories has piled up where a lot of cash of the company is
stuck.
Payables have decreased significantly in 2011 from 2010 which means the
company has decreased its liabilities significantly but it also means
decrease in cash.
Ultimately
the
company
has
much
less
cash(165.43)
than
income(1096.98) which is due to significant decrease in payables and too
much increase in inventories from 2010.

9.1.3. Cash Flow from Investing

2011

2010

Cash generated from operating activities is 165.43 lakhs but it has

invested 2692.98 lakhs of cash in investing activities. The cash flow is
negative in this case which says that the company is growing and it
routinely invests in new assets to expand its capacity, replace old
equipment and to keep up with new technology.

9.1.4. Cash Flow from Financing

IFGL has increased its dividend payout (346.14) in 2011 which is a

significant increase from what it had paid in 2010, it implies that the
number of investors have increased given the good financial health of the
company and its growth prospects.
Long term borrowings has increased in 2011(1000) from 2010(553.52), but
it has paid most of its borrowings which is a good sign for investors.
The short terms borrowings has been taken and repaid in the in the same
accounting year which proves that the liquidity of the company is high
enough to pay its short term liabilities.
Cash credit facilities fulfil the requirement of working capital
which is needed to run daily operation in a business concern. Cash

credit has been significantly increased in 2011 from 2010 which means
that the company needs more financing to run its daily operations. It may
occur due to increase in capacity of the company.
9.1.5. Bottom Line

In 2011 the company started off with 182.15 lakhs of cash and ended
with 333.16 lakhs which is a significant increase and the future looks
promising for the company.

9.2. Financial year 2011-12

9.2.1. Cash Flow from Operating Activities

IFGL started with 2622.86 lakhs of net profit

Receivables in 2012 has significantly decreased from 2011 i.e. it has
received payments against sold products which is a good sign.
Inventories have decreased to a great extent which says that the company
is able to sell what it is producing.
Payables have decreased significantly in 2012 from 2011 which means the
company has decreased its liabilities significantly but it also means
decrease in cash.
Ultimately the net cash generated from operating activities (2610.79)
compared to the net income (2622.86) which means the majority of the
cash is coming from the main operation of the company which is the first
criteria for a healthy business.

9.2.2. Cash Flow from Investing

Cash generated from operating activities is 2610.79 lakhs and it has

invested 884.91 lakhs of cash in investing activities. The cash flow is
negative in this case which says that the company is growing and it

routinely invests in new assets to expand its capacity, replace old

equipment and to keep up with new technology.
Since the difference between cash from operating activities and
investment activities is high, the company is flexible to meet fluctuating
demand.

9.2.3. Cash Flow from Financing

IFGL has decreased its dividend payout (218.69) in 2012 than what it had
paid in 2011, this implies that number of investors have decreased which
is not a good sign.
Long term borrowing is NIL in 2012, it may be because the company may
not want to pile up its borrowings since it has already incurred a huge
amount in 2011. Instead the cleared up the long term borrowings account
which it had borrowed last year which increased the liquidity of the
company.
The short terms borrowings has been incurred but not paid back this year.

9.2.4. Bottom Line

In 2012 the company started off with 333.16 lakhs of cash and ended
up with 1024.97 lakhs which is an increase of 691.81 lakhs of cash, this
amount proves how liquidity the company is.

9.3. Financial year 2012-13

9.3.1. Cash Flow from Operating Activities

IFGL started with 2537.96 lakhs of net profit

Receivables in 2013 has significantly decreased from 2012 i.e. it has
received payments against sold products which is a good sign, infact there
are advance payments.
Inventories have increased which says that some cash is stuck in the form
of inventories.
Payables have increased significantly in 2013 from 2012 which means the
company is pending with its liabilities but it also means increase in cash.
Ultimately the net cash generated from operating activities (1779.26) is
close to net income (2537.96) which means the majority of the cash is
coming from the main operation of the company which is the first criteria
for a healthy business.

9.3.2. Cash Flow from Investing

Cash generated from operating activities is 1779.26 lakhs and it has

invested 907.78 lakhs of cash in investing activities. The cash flow is
negative in this case which says that the company is growing and it

routinely invests in new assets to expand its capacity, replace old

equipment and to keep up with new technology.
Since the difference between cash from operating activities and
investment activities is high, the company is flexible to meet fluctuating
demand.

9.3.3. Cash Flow from Financing

IFGL has increased its dividend payout (588.86) in 2013 than what it had
paid in 2012 (218.69), which implies that number of investors have
increased which will lead to more equity funds.
Long term borrowing is NIL in 2013, it may be because the company may
not want to pile up its borrowings since it has already incurred a huge
amount in 2011. Instead the cleared up the long term borrowings account
which it had borrowed last year which increased the liquidity of the
company.
The short terms borrowings has been incurred and but not paid back this
year.

9.3.4. Bottom Line

In 2013 the company started off with 1024.97 lakhs of cash and ended
up with 628.44 lakhs, the cash has decreased mainly due to repayment
of borrowings and investing activities. The operating activity of the
company continues to generate majority of the revenue for IFGL which
is the ideal case.

9.4. For the year 2013-14

9.4.1. Cash Flow from Operating Activities

IFGL started with 3722.72 lakhs of net profit

Receivables in 2014 has significantly decreased from 2013 i.e. it has
received payments against sold products which is a good sign, infact there
are advance payments.
Inventories have decreased in 2014, there is even increased demand, this
makes the inventory turnover ratio high. This improves the cash health of
the company.
Payables have decreased significantly in 2014 from 2013 which means the
company has paid off its liabilities, infact some advance payments have
been done. But this also means decrease in cash.
Ultimately the net cash generated from operating activities (3026.59) is
close to net income (3722.72) which means the majority of the cash is
coming from the main operation of the company which is the first criteria
for a healthy business.

9.4.2. Cash Flow From Investing

Cash generated from operating activities is 3026.59 lakhs and it has

invested 363.75 lakhs of cash in investing activities. The cash flow is
negative in this case which says that the company is growing and it
routinely invests in new assets to expand its capacity, replace old
equipment and to keep up with new technology.
Some of the fixed assets have been sold in both 2014 and 2013 which
says IFGL is may be upgrading their technology.
Interest received on investments have increased in 2014 than 2013, this
implies that IFGL is investing its money wisely.
Since the difference between cash from operating activities and
investment activities is high, the company is flexible to meet fluctuating
demand.

9.4.3. Cash Flow from Financing

The dividend payout has been more or less constant from the last year
implying that the number of investors is almost same.
Long term borrowing is NIL in 2014, it may be because the company may
not want to pile up its borrowings since it has already incurred a huge
amount in 2011. Instead the company cleared up the long term
borrowings account which it had borrowed during the last few years which
increased the liquidity of the company.
There had been some advance payments on the short term borrowings

9.4.4. Bottom Line

In 2013 the company started off with 600.44 lakhs of cash and ended
up with 1683.03 lakhs, with the majority of the cash inflow coming from
operating activity of the company.

9.5. Conclusion
Over the years IFGL has used minimum of external financing to finance its own
operations with majority of the cash coming from its main operations, this
inference can also be made from the Debt ratio of the company over the years

which is mentioned in the ratio analysis, this is a very healthy sign for the
company. The company invests a heavy amount into its investing activities due
to its expansion and technology up gradation since it makes tailor made
refractory products for the steel making industries. This company is also a
lucrative option for the investors to invest in as it pays out a good dividend
amount consistently over the years.