SAIL ppt

A STUDY ONFUND MANAGEMENT

IN STEEL AUTHORITY OF INDIA LTD.

Under Guidance of:Mr. B.M. Moharkar

AGM (Finance), SAIL

Internship Project Report

Presented by:Aman Bachhraj

Enrolment No.-112162678

Global Steel Scenario• Globally Steel is considered as a cyclic industry.• After last recession, Global Steel Industry has been consolidating its position and

has been marked by many mergers and acquisitions.• 1518 million tonnes Crude Steel Production in 2011, registering a growth of

6.2% over 2010. China accounted for most of the incremental production.• Appetite for steel by China has been the driving force of the growth in

production/consumption of Steel.• Region wise crude steel production (in Million Tonnes) is as under:

Overview of Indian Steel Industry• 4th largest steel producing nation in the world with crude steel production of

68.62 million tonnes in 2010-11 (as per Ministry of Steel)• Apparent consumption of finished steel in 2010-11 - approx. 67.8 million

tonnes, up from 64.8 million tonnes in 2009-10 showing a growth of 4.62 %.• Per capita steel consumption: approx. 57 kg• Finished steel exports in 2010-11: approx. 3.64 million tonnes.• India is a net exporter with imports of approx. 6.66 million tonnes in 2010-11.

Indian steel industry : Production for Sale (in million tonnes)

Category 2007-08 2008-09 2009-10 2010-11

Pig Iron 5.28 6.21 5.88 5.68

Sponge Iron 20.37 21.09 24.33 25.08

Total Finished Steel (Alloy + Non Alloy)

56.07 57.16 60.62 68.62

Indian Steel Industry• Steadily increasing production of steel in the country

Finished Steel Production

Overview of SAIL

• Formed in 1973 as a holding company with the objective: Of bringing in companies producing steel and related inputs under one

umbrella.

• Leading steel producer in India: around 23% share of crude steel

production.

• Turnover of Rs.47040.50 crore in the financial year 2010-11.

• The Government of India owns about 86% of SAIL's equity.

• The company owns and operates five integrated steel plants.

Overview of SAIL• Production Facilities:

5 Integrated Steel Plants 3 Special Steel Plants 1 Subsidiary - Ferro Alloy Plant

• Marketing Network: 34 Branch Sales office 27 Customer Contact Office (CCO) 54 Warehouses

• Captive Mines: 9 Iron Ore Mines 5 limestone mines 2 Dolomite Mines 3 Collieries

Shareholding Pattern

Category of Shareholders

% age Holding

Government of India 85.82

Domestic Financial Institution

4.73

Foreign Institutional Investors

5.08

Individuals (Incl. Employees, NRI, GDRs)

3.16

Others 1.21

TOTAL 100.00

Fund Management Overview

• Procurement of Funds• Utilization of Funds• Objectives

Efficiency and effectivenessTransparency and accountability

• Fund Management StrategiesActivePassive

Objectives of the Study• Primarily to understand the basic concepts of Fund Management.• Secondly, to understand and evaluate the various sources of funds at the Steel

Authority of India Ltd.• Thirdly, to locate areas of weakness, if any.

Research MethodologyData Collection

•PRIMARY DATAMeetings and Interviews with various Mangers.

•SECONDARY DATABalance Sheet, P & L a/c, Annual Reports, Financial Year Book, Web Sites

Analysis

Sources of Funds• Secured Loans

• Unsecured Loans

2010-11 2009-10 2008-09 2007-08 2006-07

11813 7755 1473 926 1556

2010-11 2009-10 2008-09 2007-08 2006-07

8352 8756 6065 2119 2625

(Rs.in crore)

(Rs.in crore)

Analysis (Cont.)

Deployment of Funds2010-11 2009-10 2008-09 2007-08 2006-07

Total Fixed Assets

37992 29309 19466 14499 13348

Total Current Assets

39119 40112 35666 27308 21674

Capital StructureYEAR OUTSIDER’S FUND SHAREHOLDER’S

FUNDDEBT EQUITY

RATIO

2007 4155 17313 0.242008 2988 23063 0.132009 7555 27984 0.272010 16511 33316 0.502011 20165 37069 0.54

(Rs.in crore)

(Rs.in crore)

Analysis (Cont.)

Management of Working CapitalYear Current

Assets/Gross Working Capital

Current Liabilities

Net Working Capital

Trend (%) % change over 2006-

07

2006-07 21673 13657 8016 100 -

2007-08 27309 15759 11550 144.08 44.08

2008-09 35666 19610 16056 200.29 100.29

2009-10 40113 19595 20518 255.96 155.96

2010-11 39119 19876 19243 240.05 140.05

(Rs.in crore)

Loans and AdvancesYear Total Current

AssetsLoans and Advances

Trend (%) % change over 2006-07

% of total Current Assets

2006-07 21673 3098 100 - 14.29

2007-08 27309 3644 117.61 17.61 13.34

2008-09 35666 4292 138.54 38.54 12.03

2009-10 40113 5155 166.39 66.39 12.85

2010-11 39119 6176 199.35 99.35 15.78

Year Net Working Capital

Cash and Bank Balance

Trend (%)

% change over 2006-07

% of Net Working capital

2006-07 8016 9610 100 - 119.88

2007-08 11550 13759 143.17 17.61 119.12

2008-09 16056 18229 189.68 38.54 113.53

2009-10 20518 22436 233.46 66.39 109.34

2010-11 19243 17479 181.88 99.35 90.83

Cash and Bank Balance(Rs.in crore)

(Rs.in crore)

Findings and Suggestions• The company must maintain a reasonable level of absolute liquid assets in

order to meet short-term commitments and emergency requirements.

 • The management of SAIL should also try to maintain a definite proportion

among various components of working capital in relation to overall current assets to keep an adequate quantum of liquidity all the times.

• The company is more traditionally financed with low debt and more of equity financing, so in future debt should be preferred for financing to bring the ratio close to the ideal ratio of 1:1.

• The overall state of liquidity should be improved so as to put a favourable impact on the profitability of SAIL.

Conclusion• In the globalized competitive scenario, it is not enough to scout for available

ways of raising finance but resources mobilizations has to be undertaken through innovative ways or financial products which ensure the need of investors.

• In an efficient organization funds should come from diverse sources and no part of funds should be kept idle.

• In SAIL, it is found that company is banking upon only one source of finances i.e. long- term debt from government and banks.

• Working capital position presents a depressing trend where inventories are mounting and liquidity has incurred heavy losses during later years of study.

• The obvious reasons responsible for declining operating profits are increase in costs and declining sales.

Thank You