Company Profile Name of the company : JINDAL STEEL & POWER LIMITED Registered Office : O.P. Jindal Marge Hisar – 125005 Haryana Corporate Office : Jindal Center 12, Bhikaiji Cama Place, New Delhi – 110066 India Production Plant : In Global 1) Bolivia ( South America ) 2) Africa 3) Democratic Republic of Congo In India 1) Haryana 2) Chhattisgarh
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Company Profile
Name of the company : JINDAL STEEL & POWER LIMITED
Registered Office : O.P. Jindal Marge
Hisar – 125005
Haryana
Corporate Office : Jindal Center
12, Bhikaiji Cama Place,
New Delhi – 110066
India
Production Plant : In Global
1) Bolivia ( South America )2) Africa3) Democratic Republic of Congo
1998 - The name of the Company has been changed from Orbit Strips Ltd. to Jindal Steel & Power Ltd. on 12th June. 1999 - Shri O.P. Jindal, Shri Ratan Jindal and Shri M.L. Gupta were Appointed as Additional Directors of the Company in terms of Section 260 of the Companies Act, 1956 and Article 117 of Articles of Association of the Company. - Shri M.L. Gupta, appointed as Whole time Director of the Company w.e.f. 1st May for a period of five years. - The Company has joined the Depository System and its securities Can be dematerialized. - The Raigarh and Raipur Divisions of Jindal Strips Limited have been hived off to JINDAL STEEL & POWER LIMITED pursuant to the Scheme of Arrangement approved by Hon'ble High Court of Punjab and Haryana. - The Company has issued 14% 60, 00,000 Cumulative Redeemable Preference Shares of Rs. 100/- each aggregating to Rs. 60 crores on private placement basis. - The Steel Melting Shop of the Company, was shut down in May'98 due to the explosion. It was commissioned in Oct '99.
2007 -Jindal Steel & Power Ltd has appointed Shri A K Purwar, former
Chairman, State Bank of India as an Independent Director on the Board of the Company with immediate effect. - Jindal Steel & Power Ltd has informed that the Board of Directors of the Company has (by circulation) appointed Shri. Ram Vinay Shahi as Additional Director (Independent) and member of the Audit Committee of Directors with effect from October 15, 2007. -Jindal Steel & Power Ltd has appointed Shri. Arun Kumar Mukherji as an Additional Director and Wholetime Director of the Company with effect from April 01, 2008 2008 - The Company has splits its face value from Rs5/- to Rs1/-. -Jindal Steel & Power Ltd has informed that Jindal Power Ltd (JPL), subsidiary of the Company, on September 05, 2008 has commissioned fourth power generating unit of 250 MW. With this, the subsidiary Company has completed the 1000 MW power project and has now the capacity to generate 1000 MW power from this plant.
2009 - Jindal Steel & Power Ltd has informed BSE that the Board of Directors has, vide resolution passed through circulation on January 14, 2009, appointed Shri. Ashok K Mohapatra, Shri. Haigreve Khaitan,
Shri Hardip Singh Wirk and Shri Rahul Mehra as independent directors of the Company with effect from January 14, 2009 - Jindal Steel & Power Ltd has appointed Shri Arun Kumar as independent directors of the Company w.e.f September 16, 2009 - Jindal Steel & Power Ltd has appointed Shri. Arun Kumar as an Additional Director (Independent) from September 16, 2009, to hold
office up to the date of next Annual General Meeting of the Company
Index
Sr.No.
Particular Page No.
1 Organization Structure 2 Company Information
3 Financial result at Glance for 3 years4 Abstract of Balance sheet for 3 years5 Abstract of Profit & Loss Account for 3 years6 Accounting Policies7 Director’s Report8 Auditor’s Report9 Market Value of Equity10 Meaning & Utility of Ratio Analysis11 Ratio with detailed interpretation12 Limitation of Ratio Analysis13 Common size Balance sheet 14 Common size Profit & Loss Account15 Cash flow statement for 3 years 16 Leverage analysis & amount of trade on equity17 Stock market price in comparison with BSE & NSE 18 Social Responsibility of Company19 Product of Company20 Conclusion21 Bibliography22 Declaration
Sales & Operational Income 8,953.77 8,595.67 12,158.73-Less: Inter Division Transfer (519.96) (700.09) (1,698.30)-Less: Excise Duty (780.62) (527.99) (886.80)Net Sale & Operational Income 7,653.19 7,367.59 9,573.63Other Income 146.24 117.31 143.71 Total 7,799.43 7,484.90 9,717.34Expenditure-Material, Manufacturing & Other
-Depreciation 433.03 512.16 687.77 Total (5,797.55) (5,577.40) (6,963.98)Profit before Taxation 2,001.88 1,907.50 2,753.36Less: Provision for Taxation-Income tax (355.93) (312.48) (525.12)-Deferred tax (105.10) (115.23) (163.33)-Wealth tax (0.19) (0.07) (0.42)-Fringe Benefits tax (4.18) (0.04) (0.37)Profit After Tax 1,536.48 1,479.68 2,064.12Add: Surplus Brought forward from previous Year
3,047.80 4,318.95 5,478.83
Balance of Profit Brought Forward
4,584.28 5,798.63 7,542.95
Basic Accounting Policies
Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost convention, ongoing concern basis and in term of the Accounting standards issued by the Institute of Charterd Accountants of India and in compliance with section 211(3c) of companies Act, 1956
The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is a certainty of ultimate realization in respect of incomes.
Fixed Assets: Fixed Assets acquired by the company pursuant to a scheme of arrangement are stated at their transfer values.
Intangible Assets: Intangible assets are recognized on the basis of recognized criteria as set out in accounting standard (AS-26)”Intangible Assets”.
Depreciation: Depreciation on fixed assets is provided on straight-line method (SLM) at the rates and in the manner specified in schedule XIV to the companies Act, 1956 Certain Plant & Machinery have been considered as continuous process plant on the basis of technical assessment and depreciation on the same provided for accordingly.
Investment: Long term Investments are carried at the cost provision is made when in the opinion of the management diminution in the
value of investment is other than temporary in nature. Current investments are carried at the lower of cost or market fair value.
Taxes on Income: Provision for current tax is made considering various allowances and benefits available to the company under the provisions of the Income Tax Act, 1961
Director’s Report Financial Result:
(Rs. in crores)
Particular 31-03-2010 31-03-2011Sales & other income 7,484.90 9,717.34Profit before interest and depreciation 2,612.13 3,726.14Profit before tax 1,907.50 2,753.36Profit after tax 1,479.68 2,064.12Appropriations:Interim dividend - -Final dividend 116.52 140.19Corporate tax on dividend 4.28 3.75General reserve 150.00 210.00
Subsidiary Company: Jindal Power Limited has closed financial year 2010-11 with total income of Rs.3,564.35 crores and earned a profit after tax Rs.2,001.60 crores.
Dividend:
Your Directors recommend a dividend of 150% i.e. Rs. 1.50 per equity share of Re. 1/- each. Stock Options under SeriesIII (Part III) will vest in the employees on 27th April, 2011 and shares will be allotted against these Options in due course. These shares will rank pari-passu with the existing shares in all respects. Accordingly, provision for payment of dividend for the financial year 2010-11 has also been made in respect of 7,40,625 equity shares being the maximum number of shares that may be allotted on exercise of these Options.
Corporate Governance:
The company has implanted the conditions of corporate Governance as contained in Clause 49 of listing agreement. Separate
reports on Corporate Governance and Management Discussion and Analysis along with necessary certificates are given elsewhere in this Annual Report.
Future Issue of Capital: The Company has allotted 30,23,507 equity shares of Re.1/- each on various dates against options granted under the Company’s Employee Stock Option Scheme- 2005 during the period under report.
Auditor’s Report
We have audited the attached balance sheet of Jindal Steel & Power Limited, as at 31st March, 2011, the profit & loss Account and the Cash flow statement for the year ended on that date annexed there at these financial statements are the responsibility of the company’s managements. Our responsibility is to express on opinion these financial statements based on our audit.
As required by the companies (Auditor’s Report) Order, 2003 as amended by the companies Auditor’s report amendment order, 2004 (together the ‘order’) issued by the Central Government of India in terms of sub section (4A) of section 227 of the Annexure, a statements on the matters specified in paragraphs 4 & 5 of the said order.
Annexure to Auditor’s Report:
The company has maintained proper recodes showing fall particulars including quantitative detail and situation of fixed assets.
Fixed assets disposed of during the year were not substantial.
The company has not taken any loans, Secured or Unsecured from companies, firm or other parties listed in the register maintained under section 301 of the companies Act, 1956
In our opinion the company has an internal audit system commensurate with the size and nature if it’s business.
Market Value of Equity as on Date:
Meaning and Importance of Ratio
Meaning: “Ratio analysis is process comparison of one figure against another and the interpretation of ratio to known the strengths and weaknesses of firm and its position”.
Importance:
1. Profitability: Useful information about the trend of profitability is available from ratio. The Gross profit ratio, Net profit ratio, And ratio of return on investment give a good idea of profitability of business.
2. Liquidity: In fact, the use of ratio was made initially to ascertain the liquidity of business. The current ratio, liquid ratio, & acid test ratio will tell whether the business will be able to meats its current liabilities as and when they mature.
3. Efficiency: The turnover ratio are excellent guides to measures the efficiency of manager. For example, the stock turnover ratio will indicates how efficient the sale is being made & assets turnover shows the efficiency with which the assets are used in business.
4. Inter-Firm Comparison:
The absolute ratios of a firm are not much use, unless they are compared with similar ratios of the other firm belonging to the same industry.
5. Useful for budgetary Control: Regularly budgetary reports are prepared in business where the system of budgetary control is in use.
6. Useful for Decision Making: Ratios guide the management in making some of the importance decisions. Supposed, the liquidity ratio shows unsatisfactory positions, the management may decide to get additional liquid funds.
Ratio Analysis
Gross Profit Ratio: It is the basic measure of Profitability of business. It expresses relationship between gross profits earned to net sales.
In the first year Gross Profit Ratio of the company was 34.48 %. It is good in Second year when it increase and become 36.1 % in the third year it increases and become 41.09 % which is satisfactory for company.
Net Profit Ratio: The net profit is obtained after charging operating Expenses, interest, depreciation and taxes to gross profit.
The Net Profit Ratio of first year and second year was 20.60 % and 20.08 % in which it is decreasing but in the third year it was 21.56 % which has been increasing. The profitability ratio of the company is satisfactory
Operating Ratio: It is a ratio showing relationship cost of good sold plus operating expenses & net sales. It shows the efficiency
of the management. The higher the ratio, the less will be the margin available to proprietors. This ratio is also usually expressed as a percentage.
Formula:
Cost of goods Sales+ Operating Expenses × 100 Net Sales
With the increases in Sales, COGS and Operating Exp. in second year comparing to first year, but at same time the operating ratio decreases from 67.39% to 63.90% and in third year it decreases to 58.90%.
Return on Investment: It is an index of profitability of business & is obtained by comparing Profit before Interest & Taxes with
Capital Employed. The ratio is normally expressed in percentage.
This ratio shows how many capitals used in this ratio. It was 26.43% in 2009, 27.61% in 2010 & 18.22% in 2011.
Return on Shareholder’s Fund:
Profit is earned in business for owners and so they are naturally interested in return they get on their money invested in company’s business.Formula: Net Profit × 100
Interpretation: Profit of company decrease in second year but it is increases in third year which may be because of high stock turnover ratio in third year. As a result the company can get higher return on capital provider.
Return on Equity Shareholder’s Funds:
It shows what percentage of profit is earned on the capital invested by ordinary shareholders. The ratio is obtained by dividing net profit after deduction of preference dividend by equity shareholders fund.
Formula: Net Profit-Preference Dividend × 100 Equity Shareholder’s Fund
Interpretation:Here, at glace last three year in 2010, it was
highest & it’s good from shareholder’s point of view as proportion of actual dividend received to earning per share is increasing every year.
Capital Gearing Ratio:
This ratio indicates the ratio between those capital where interest & dividend pay is compulsory with those capital where dividend payment is not compulsory.
Formula: Fixed Interest bearing Capital Equity share Capital
Particular 2009 2010 2011Fixed Interest bearing Capital 4,962.6
58,383.26 12,114.64
Equity share capital 15.47 93.12 93.43Ratio 32.08 9.02 12.97
2009 2010 20110
2000
4000
6000
8000
10000
12000
14000
Fixed Interest bearing CapitalEquity Share Capital
Interpretation:Capital gearing ratio is continuously decreasing
in given years. It shows that the fixed interest bearing capital is more used compared to the ordinary capital.
Proprietary Ratio:
The ratio shows the proportion of proprietary fund to the total assets employed in the business. The proprietors fund or shareholders’ equity consists of share capital & reserves and surpluses. Formula: Proprietary’s Fund × 100
Interpretation: The higher the ratio the stronger the financial position
of the company as it signifies that the proprietors have provided larger funds to purchases the assets.
Long Term Fund to Fixed Assets:
The fixed assets of business must be purchased out of fixed capital only, which includes share capital, reserve & long term liability. This ratio shows the relationship between fixed capital & fixed assets.
Interpretation: Long term funds to fixed assets ratio is continuously decreasing in the given year. It is 66.23% in 2009, 90.14% in 2010 and 77.11% in 2011.
Stock turn Over Ratio:
The number of times the average stock is turned over during the year is known as stock turnover ratio. It is computed by dividing the cost of goods sold by the average stock in the business.
Interpretation: The ideal Current Ratio is 3.47:1. In first year and
second year the ratio is less than ideal ratio but in third year it is more. It seems that the liquid position is good and there is no unproductive investment in current assets.
Debtor’s Ratio:
The debtor’s ratio shows comparison of debtors plus bill receivable of avg. daily sales. It shows the number of days taken to collect the dues of credit sales. Higher ratio indicates unsatisfactory position, it suggest that the credit & collection policy are weak.
Interpretation:Debtor’s ratio is stable in the given years. It is
18days in the 2009, 30days in the 2010 and 28 days in the 2011 respectively. Here company’s credit policy is good for company.
Fixed Assets Turnover Ratio:
The ascertain the efficiency & profitability of business the total fixed assets are compared to sales. The more the sales in relation to amount invested in the fixed assets, the more efficiency is use of fixed assets.
Interpretation: The ratio shows utilization of fixed assets in the
business. The ratio is low, it indicates that investment in the fixed assets is more than what is necessary & must be reduced.
Total Assets Turnover Ratio:
This ratio measures a firm’s efficiency in utilizing its assets. It indicates how many times the assets were turned over a period & there by generated sales. If assets turnover is high, the company is managing its assets efficiently. If it is low, it means the company has more assets than it really needs for its operation.
Interpretation:Average industrial ratio must be 2 so, it’s around
last two years which is good & shows that working capital is being utilized nicely.
Limitation of Ratio Analysis
1) Single year ratio have limited utility: The utility of ratio computed from the financial statement of one year only is obviously limited.
2) Other factor must be considered: While comparing ratio of different firms, it must be remember that different firms follow different accountancy plans and policies.
3) Lack of Standard Ratio: There is practically no standard ratio against which the actual performance can be compared.
4) Other factors Important: Financial result of business depend upon a number of factor such as general economic condition and competition, local factor and the policy adopted by management.
5) Ratio of two irrelevant Figures: Ratio must be established between related matters. It is of no use if ratios are found between two figures.
Common Size Balance Sheet
Particulars (` in crores) Common Size (`)2009 2010 2011 2009 2010 2011
SOURCES OF FUNDS:
Share Capital 867.70 93.12 93.43 15.76 0.62 0.46Reserve and Surplus
Total Income 7,799.43 7,484.90 9,678.60 10.58 10.16 10.15
Total Expense 5,160.52 4,825.20 5,744.39 9.50 7.67 8.89
PBIT 2,638.91 2,659.61 3,790.50 11.5 10.45 12.34
Interest 204.00 239.95 355.02 3.4 5.2 7.8
Depreciation 433.03 512.15 687.77 1.8 2.7 2.5
PBEI 2,001.88 1,907.51 2,753.36 6.3 9.81 12.87
Other none ope. Exp.
- - - - - -
PBT 2,001.88 1,907.51 2,753.36 6.3 9.81 12.87
Provision for Tax
465.40 427.82 689.24 1.5 2.8 4.6
Net Profit 1,536.98 1,479.69 2,064.12 5.67 7.89 8.5
Cash flow Statement for the year ended 31 st March, 2011
Particular 2010 2011NET PROFIT BEFORE TAX 1,907.50 2,753.36A. CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIESAdjustment for:Depreciation 512.16 687.77Premium on Investment written off 0.19 0.07Loss / (Profit) on Sale of Fixed Assets 2.37 0.27Loss / (Profit) on Sale of Investments (0.44) (1.13)Dividend Income (91.90) (117.10)Liability / Provisions no longer required written back
(3.09) (1.79)
Provision for doubtful debts (0.78) (0.61)Provision for doubtful advances 0.60Employees Compensation Expenses under Employees Stock Option Scheme
(4.85) (4.87)
Interest Paid 192.47 285.01Operating Profit before Working Capital Changes
2,514.23 3,600.98
Adjustment for:Inventories (118.54) (875.62)Sundry Debtors (230.12) (114.08)Other Current Assets 82.67 (212.28)Income Tax paid (292.29) (514.78)Other Current Liabilities 447.32 (90.18)Net Cash Inflow/(Outflow) from Operating Activities
2,403.27 1,794.04
B. CASH INFLOW/(OUTFLOW) FROM INVESTMENT ACTIVITIESCapital Expenditure (5,778.54) (4,893.93)Sale Proceeds of Fixed Assets 146.28 354.20Dividend received 87.56 91.09
Loans & Advances (447.36) (398.62)Interest Received 40.31 49.51(Increase) / Decrease in Investments 166.53 (141.76)Share Application Money given (26.66) (24.85)Net Cash Inflow/(Outflow) from Investing Activities
(5,811.88) (4,964.36)
C. CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIESState Sales Tax Subsidy 33.33 32.23Issue of Equity Shares 12.59 11.32Proceeds from Long T erm Borrowings 4,385.11 5,317.19Working Capital Borrowings from Banks 658.64 1,049.92Repayment/Adjustment of Borrowings (1,473.27) (2,469.78)Dividend Paid (including tax thereon) (80.78) (117.59)Interest Paid (375.87) (661.51)Net Cash Inflow/(Outflow) from Financing Activities
3,159.75 3,161.78
Net Cash Inflow/(Outflow) from Financing Activities
Excellence at JSPL is not restricted to our business; it encompasses community partnership and respect for the environment.
JSPL is running co-educational school at Raigarh, Tammar,nalwa, Angul and Potrata where quality education is being imparted to over 10,000 students.
O.P.Jindal Globle University, it is a non-profit globleUniversity establish by the Haryana Private University Act, 2009
JSPL has a mobile wan and Hakeadeepa health center withX-ray and lab facility has been operated and about 12,609 person examined.
Product of Company Steel
Power Mining Infrastructure Sector
Conclusion
The company is committed to the application of best management practices. It is these value and guldens that will give a firm foundation for future growth of company.
elsewhere. This is for the purpose of partial fulfillment of Gujarat University requirement for the award of the degree of Bachelor of Business Administration.
Parmar Bhargav G.Roll No.: 85Class: SY BBADivision: B