Management Accounting Project Report

vs

Submitted to
Indian Institute of Management, Kozhikode
Submitted by
Anirban Tewary - ePGP-03-101.
N K Ashok - ePGP-03-105.
Sivakumar Lakshminarayanan - eMEP-10-063.
Soumen Sen -ePGP-03-174.

Objective : Objective of the Project is to do a Financial Statement Analysis between Tata Steel and JSW Steel
and try to conclude about both the Companies. Tata Steel is the Leader in the Steel industry and JSW Steel
is upcoming Steel company.

Balance Sheet

JSW Steel
Mar '09

Tata Steel

Mar '10

Mar '09

Mar '10

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

537.01
248.08
0
288.93
7,422.24
0
7,959.25
8,214.61
3,058.02
11,272.63
19,231.88

527.11
248.08
0
279.03
9,179.23
0
9,706.34
8,987.51
2,597.59
11,585.10
21,291.44

6,203.45
730.79
0
5,472.66
23,501.15
0
29,704.60
3,913.05
23,033.13
26,946.18
56,650.78

887.41
887.41
0
0
36,281.34
0
37,168.75
2,259.32
22,979.88
25,239.20
62,407.95

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets

16,896.75
3,810.31
13,086.44
9,242.06
1,250.11
2,051.42
398.14
207.91
2,657.47
1,980.02
212.05
4,849.54
0
9,115.34
80.93
9,196.27
-4,346.73
0
19,231.88

21,795.58
4,929.44
16,866.14
6,684.27
1,768.35
2,585.77
563.25
117.4
3,266.42
2,216.05
169.71
5,652.18
0
9,415.28
264.22
9,679.50
-4,027.32
0
21,291.44

20,057.01
9,062.47
10,994.54
3,487.68
42,371.78
3,480.47
635.98
463.58
4,580.03
5,884.61
1,127.02
11,591.66
0
8,965.76
2,934.19
11,899.95
-308.29
105.07
56,650.78

22,306.07
10,143.63
12,162.44
3,843.59
44,979.67
3,077.75
434.83
500.3
4,012.88
6,678.55
2,733.84
13,425.27
0
8,699.34
3,303.68
12,003.02
1,422.25
0
62,407.95

12,188.55
331.68

13,184.61
418.94

Contingent Liabilities
Book Value (Rs)

8,170.64
410.07

6,990.48
504

Both the Companies are Fixed Asset intensive.

JSW Inventory level has increased comparing Mar 2009 and also contributed for higher sales
whereas Tata Steel Inventory level has decreased comparing Mar 2009
Tata Steel has more investments than JSW Steel

Profit & Loss account

JSW Steel
Mar '09
Mar '10

Tata Steel
Mar '09
Mar '10

Income
19,456.6
4
1,289.18
18,167.4
6
474.25
64.74
18,706.4
5

26,843.5
3
2,495.21
24,348.3
2
603.07
289.27
25,240.6
6

11,430.64

11,415.8
6
1,014.82
365.2
249.6
724.63
188.53
0
13,958.6
4

8,568.71
1,222.48
2,305.81
2,127.48
400.24
1,180.08
-343.65
15,461.1
5

15,900.09

2,861.17
2,252.70
836.82
1,415.88
827.66
0
588.22
176.8
765.02
306.52
458.5
2,044.17
28.99
18.71
8.11

4,273.56
4,747.81
900.26
3,847.55
1,123.41
0
2,724.14
96.03
2,820.17
797.43
2,022.74
2,542.78
28.92
177.7
34.31

9,176.44
9,779.51
1,489.50
8,290.01
973.4
0
7,316.61
0
7,316.61
2,114.87
5,201.74
6,892.44
109.45
1,168.95
214.1

8,905.59
10,146.67
1,848.19
8,298.48
1,083.18
0
7,215.30
0
7,215.30
2,168.50
5,046.80
7,543.64
45.88
709.77
122.8

1,870.49
22.96
10
410.07

1,870.49
106.59
95
504

7,305.92
69.7
160
331.68

8,872.14
56.37
80
418.94

Sales Turnover
Excise Duty

15,179.29
1,172.70

Net Sales
Other Income
Stock Adjustments

14,006.59
-608.47
285.22

Total Income
Expenditure

13,683.34

Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
Total Value Addition
Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

9,386.47
673.07
288.75
194.03
717.74
170.58
0

26,757.60
1,816.95
24,940.65
1,241.08
-134.97
26,046.76

8,356.45
1,383.44
2,361.48
2,419.89
417.9
1,287.04
-326.11

Horizontal Analysis
JSW Steel : The Operating profit has increased from 2861 Cr to 4273 Cr due to higher Sales
hence JSW has paid more Excise Duty
Tata Steel : The Operating Profit has reduced as the Sales has dropped from 26843 Cr to 26757 Cr
Not a good sign

JSW Steel
Mar '09 Mar '10

Cash Flow

Tata Steel
Mar '09 Mar '10

4056.12

12
mths
2819.6
5
3297.7
6

-5834.9
1848.53

-3147.8
-261.78

-9428.1
3156.42

69.79

-111.8

1125.56

Opening Cash & Cash Equivalents

306.82

376.61

465.04

Closing Cash & Cash Equivalents

376.61

264.81

1590.6

12 mths
Net Profit Before Tax

677.63

Net Cash From Operating Activities

Net Cash (used in)/from
Investing Activities
Net Cash (used in)/from Financing Activities
Net (decrease)/increase In Cash and Cash Equivalents

Profit Margins

JSW Steel
Mar '09

Sales Turnover
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Cost of Goods Sold
Gross Profit

15,179.29
9,386.47
673.07
288.75
194.03
10,542.32
4,636.97

Gross Profit Margin %

Operating Profit

30.55
2,861.17

Operating Profit %
Profit before Interest
Profit before Interest %

18.85
2,252.70
14.84

12 mths
7315.61
7397.22

Tata Steel

Mar '10

Mar '09

Mar '10

19,456.64 26,843.53
11,415.86
8,568.71
1,014.82
1,222.48
365.20
2,305.81
249.60
2,127.48
13,045.48 14,224.48
6,411.16 12,619.05

26,757.60
8,356.45
1,383.44
2,361.48
2,419.89
14,521.26
12,236.34

32.95
4,273.56

47.01
9,176.44

45.73
8,905.59

21.96
4,747.81
24.40

34.18
9,779.51
36.43

33.28
10,146.67
37.92

Gross Profit , Operating Profit , Profit before Interest

JSW Steel Gross profit due a good increase in Sales
Tata Steel Gross profit has decreased due to Decrease in sales and increase in Expenses

12
mths
7214.3
8369.2
2
-5254.8
-1473.1
1641.2
5
1592.8
9
3234.1
4

Return on Operating Asset

Current Assets
Fixed Assets
Total Operating Assets
Operating Profit
Return on Operating Assets
Average of Assets
ROA based on Average of Operating Assets

JSW Steel
Tata Steel
Mar '10
Mar '09
Mar '10
Mar '09
2,657.47
3,266.42
4,580.03
4,012.88
16,896.75 21,795.58 20,057.01 22,306.07
19,554.22 25,062.00 24,637.04 26,318.95
2,861.17
14.63

4,273.56
17.05
22,308.11
19.16

9,176.44
37.25

8,905.59
33.84
25,478.00
34.95

Return on Operating Asset

The Return on Operating Asset is better in Tata Steel than JSW Steel but for Tata Steel
the Operating assets has increased by 1681 Cr but the ROA has dropped comparing Mar2009

Return on Total Assets

Total Assets
Profit After Tax
Return on Total Assets
Average of Total Assets
ROTA Based on Average Total Assets

JSW Steel
Tata Steel
Mar-09
Mar-10
Mar-09
Mar-10
19,231.88 21,291.44 56,650.78 62,407.95
2,022.74
5,201.74
5,046.80
458.50
2.38
9.50
9.18
8.09
20,261.66
59,529.37
9.98
8.48

JSW has used and average of 20,261 Cr to earn a return of 2022 Cr

Tata Steel has used an average of 59,529 Cr to earn a return of 5046 Cr

Return on Equity
Total Equity
Profit After Tax
Return on Equity( %)
Average of Total Equity
ROE based on Average of Total Equity

JSW Steel
Mar-09
Mar-10
248.08
248.08
458.50
2,022.74
184.82
815.36
248.08
815.36

Tata Steel
Mar-09
Mar-10
730.79
887.41
5,201.74
5,046.80
711.80
568.71
809.10
623.75

The ROE of JSW has increased comparing Mar 2009 because it has earned better profits in Mar2010
But both have better ROE and JSW has performed better comparing Tata Steel

Earnings Per Share

Profit After Tax in Cr
Preference Dividend
Profit After Tax in Lakhs
Number of Ordinary Shares
EPS
Market Price Per Share
Price Earnings Ratio

JSW Steel
Mar '09
Mar '10
458.5
2,022.74
28.99
28.92
42951
199382
1,870.49
1,870.49
22.96
106.59
1245
234
10.19
11.68

Tata Steel
Mar '09
Mar '10
5,201.74
5,046.80
109.45
45.88
509229
500092
7,305.92
8,872.14
69.70
56.37
207
636
2.97
11.28

Both JSW and Tata Steel are having more or less same PE ratio for Mar2010 , investors can choose
either one of them based on the PE Ratio

Earnings Per Share

Dividend In Cr
Dividend in Lakhs
Dividend Per Share

JSW Steel
Mar '10
Mar '09
18.71
177.7
1871
17770
1
10

Tata Steel
Mar '09
Mar '10
1,168.95
709.77
116895
70977
16
8

Tata Steel is paying a better dividend comparing JSW at Share value of 636
Considering PE ratio and Dividend Tata Steel is a prefered option for Investment

Return on Total Assets

Total Assets
Profit After Tax
Sales Turnover
Net Income / Sales %
Sales / Assets - Asset Utilization Ratio
Return on Total Assets %

JSW Steel
Mar '10
Mar '09
19231.88 21291.44
458.50
2022.74
15179.29 19456.64
3.02
10.40
0.79
0.91
2.38
9.50

Tata Steel
Mar '09
Mar '10
56650.78 62407.95
5201.74
5046.80
26843.53 26757.60
19.38
18.86
0.47
0.43
9.18
8.09

JSW has shown good ROTA for the year Mar 2010 and Tata Steel has dropped due to Drop in Profit

Operating Asset Turnover

Sales Turnover
Operating Profit
Operating Profit Margin %
Fixed Assets
Total Operating Assets
Operating Asset Turnover
Fixed Asset Turnover
Return on Operating Asstes ( %)
Average of Operating Assets
Avg Operating Asset Turnover
ROA on Avg of Operating Assets

JSW Steel
Mar '09
Mar '10

Tata Steel
Mar '09
Mar '10

15179.29 19456.64 26843.53 26757.60

2861.17
4273.56
9176.44
8905.59
18.85
21.96
34.18
33.28
16896.75 21795.58 20057.01 22306.07
16915.60 21817.54 20091.19 22339.35
1.11
1.12
0.75
0.83
1.11
1.12
0.75
0.83
21.01
24.63
25.59
27.79
19366.57
21215.27
1.00
1.26
22.07
41.98

Tata Steel is showing a better ROA on avg of Operating Assets

Working Capital Turnover

Sales Turnover
Net Working Capital
Working Capital Turnover
Avg of Working Capital
Avg Working Capital Turnover

JSW Steel
Mar '10
Mar '09
15179.29 19456.64
-4346.73
-4027.32
-3.49
-4.83
-4187.03
-4.65

Tata Steel
Mar '09
Mar '10
26843.53 26757.60
-308.29
1422.25
-87.07
18.81
556.98
48.04

Tata steel Working Capital has imporved in Mar2010 but JSW is probabling financing with Long Term funds

Shreholder's Equity Turnover

Sales Turnover
Shareholer's Equity
Shreholder's Equity Turnover
Avergae Share Capital
Average Equity Turnover

JSW Steel
Mar '09
Mar '10
15179.29 19456.64
537.01
527.11
28.27
36.91
532.06
36.57

Tata Steel
Mar '09
Mar '10
26843.53 26757.60
6203.45
887.41
4.33
30.15
3545.43
7.55

ShareHolder's Equity has improved for Tata after Paying the Preferntial Shares

Current Ratio & Quick Ratio

JSW Steel
Tata Steel
Mar '10
Mar '09
Mar '10
Mar '09
4,849.54
5,652.18 11,591.66 13,425.27
9,196.27
9,679.50 11,899.95 12,003.02
-4,346.73
-4,027.32
-308.29
1,422.25
0.53
0.58
0.97
1.12

Total CA, Loans & Advances

Total CL & Provisions
Net Current Working Capital
Current Ratio
Quick Ratio
Inventories
2,051.42
Quick Assets
2,798.12
Quick Ratio
0.30
Tata steel has a better Current Ratio Comparing JSW Steel
Tata steel has a better Quick Ratio Comparing JSW Steel

Accounts Receivable Turnover

Sales Turnover
Sales Per Day
Accounts Receivable
Accounts Receivable Turnover
Average Collection Period( Number of Days )
Average Accounts Receivable
Avg Accounts Receivable Turnover
AvgAverage Collection Period( Number of Days )

2,585.77
3,066.41
0.32

3,480.47
8,111.19
0.68

3,077.75
10,347.52
0.86

JSW Steel
Tata Steel
Mar '09
Mar '10
Mar '09
Mar '10
15,179.29 19,456.64 26,843.53 26,757.60
41.59
53.31
73.54
73.31
398.14
563.25
635.98
434.83
38.13
34.54
42.21
61.54
9.57
10.57
8.65
5.93
480.70
535.41
40.48
49.98
9.02
7.30

Tata Steel has slightly better Avg Collection Period comparing JSW Steel.

Inventory Turnover
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Cost of Goods Sold
Cost of Goods Sold per Day
Inventories
nventory Turnover
Inventory Holding Period
Average Inventory Turnover
Inventory Holding based on Avg Inventory

JSW Steel
Mar '10
Mar '09
9,386.47 11,415.86
673.07
1,014.82
288.75
365.2
194.03
249.6
10,542.32 13,045.48
28.88
35.74
2,051.42
2,585.77
5.14
5.05
71.03
72.35
5.09
71.68

Tata Steel
Mar '09
Mar '10
8,568.71
8,356.45
1,222.48
1,383.44
2,305.81
2,361.48
2,127.48
2,419.89
14,224.48 14,521.26
38.97
39.78
3,480.47
3,077.75
4.09
4.72
89.31
77.36
4.40
82.91

JSW has a better Inventory Holding comparing Tata Steel

Debt-Equity Ratio
Debt-Equity Ratio
Total Debt
Sharholders Equity
Debt-Equity Ratio

JSW Steel
Mar '09
Mar '10
11,272.63
248.08
45.44

11,585.10
248.08
46.70

Tata Steel
Mar '09
Mar '10
26,946.18 25,239.20
730.79
887.41
36.87
28.44

Both have higher Debt comparing Shareholder's Equity. Both have higher Commitment
in terms of interest from the earnings.

Long Term Debt to Total Capital

Long Term Debt
Sharholders Equity
Long Term Debt to Total Capital

JSW Steel
Mar '10
Mar '09
11,272.63 11,585.10
248.08
248.08
45.44
46.70

Tata Steel
Mar '09
Mar '10
26,946.18 25,239.20
730.79
887.41
36.87
28.44

All the Debt is Long Term Debts sor there is no change.

Long Term Debt to Fixed Asset

Long Term Debt
Net Block
Long Term Debt to Fixed Asset

JSW Steel
Mar '09
Mar '10
11,272.63 11,585.10
13,086.44 16,866.14
86.14
68.69

Tata Steel
Mar '09
Mar '10
26,946.18 25,239.20
10,994.54 12,162.44
245.09
207.52

JSW steel has better Asset Value which can cover the Long Term Debt but Tata Steel
has higher debt with regards to Asset Value.

Times Interest Earned

Profit before Interest & Taxes

Interest
Interest Cover

JSW Steel
Mar '09
Mar '10
2,861.17
836.82
3.42

4,273.56
900.26
4.75

Tata Steel
Mar '09
Mar '10
9,176.44
1,489.50
6.16

8,905.59
1,848.19
4.82

Both Companies have good Interest Cover and Interest can be comfortably covered

Conclusion
Conclusion
Parameter
Investments in Cr

Points Value
Points Value
JSW
Tata Steel
Remark
0
1 44,979.67 Tata Steel has better Investments than JSW Steel
1,768.35

Inventory in Cr

2,585.77

Sundry Debtors in Cr
Total Assets in Cr
Sales Turnover in Cr

0
0
1

563.25
21,291.44
19,456.64

1
1
0

Operating Profit in Cr

4,273.56

Profit After Tax in Cr

2,022.74

Cash Flow in Cr
Operating Profit %
Return on Operating Asset %
Return on Equity %
EPS
Price Earnings Ratio

0
0
0
1
1
1

264.81
21.96
19.16
815.36
106.59
11.68

1
1
1
0
0
1

Dividend Per Share

Return on Total Assets %
ROA on Avg of Operating Assets
Avg Working Capital Turnover
Average Equity Turnover
Current Ratio
Quick Ratio

0
1
0
0
1
0
0

9.50
9.50
208.67
-4.65
36.57
0.58
0.32

1
0
1
1
0
1
1

9.02

1
0
1
1
11

71.68
46.70
68.69
4.75

0
1
0
1
16

Average Collection Period(

Number of Days )
Inventory Holding based on Avg
Inventory
Debt-Equity Ratio
Long Term Debt to Fixed Asset
Interest Cover
Total of All Points

Tata Steel Inventory is lower comparing its previous year but

3,077.75 in proportion to Sales Turnover the ratio is better than JSW.
Tata Steel has lesser Receivables, showing better recovery
434.83 strategy.
62,407.95 Better Assets than JSW
26,757.60 Sales has Dropped for Tata Steel
Operating Profit of Tata Steel has dropped on account of
manufacturing expenses and miscellaneous expenses. JSW
8,905.59 has shown good growth mainly pushed by growth in turnover.
JSW has great Profits , Tata steel profits has dropped due to
5,046.80 the above and increase in interest burden
Tata Steel has shown better cash balance but JSW Cash
3,234.14 balance has dropped
33.28 Tata Steel is showing better Operating Profit
34.95 Tata Steel is showing better ROA
623.75 JSW has shown better ROE
56.37 JSW has better EPS
11.28 Both have nearly same PE Ratio
8.00
8.09
269.15
48.04
7.55
1.12
0.86

Tata Steel is paying Rs.8 Dividend for Market share value of

Rs.650 whereas JSW pays Rs.9.5 for Share price of 1250
JSW has better ROTA %
Tata Steel has better ROA
Tata Steel has better Avg Working Capital Turnover
JSW has better Average Equity Turnover
Tata Steel has better Current Ratio
Tata Steel has better Quick Ratio

7.30 Tata steel has better Avg Collection Period

82.91
28.44
207.52
4.82

JSW has better Inventory Turnover

JSW has higher Debt - Equity Ratio
JSW has better Debt to Fixed Asset
Both have nearly same Interest Cover

Conclusion: From the above it is observed that although the turnover & profitability of Tata Steels have reduced as compared to previous year,
the financial disciple is better than JSW Steels