Financial Accounting Project

Sagar PatelMMM 1st year, batch-2ndRoll. No- 14 M 508

Contents

1) About The JSW Steel 1-22) Overall what is JSW Steel is doing 2-33) Key financial analysis 3-64) Future Potential and Project 6-85) Corporate Social Responsibility 96) Environment and its related responsibility 10-12

About JSW Steel

JSW Steel is India’s leading private sector steel producer and among the world’s most

illustrious steel companies.

JSW Steel is around $9 billion global conglomerate spread over six locations in India and a footprint that extends to the US, South America and Africa.

The flagship company of around $11 billion JSW Group, JSW Steel is testament to decades of experience and a dynamic culture that have culminated in the company becoming the leading provider of specialized steels in India.

JSW Steel’s business vision is centered on sustainability. JSW realize that only by creating a sustainable future can pave the way for their goal of a self-reliant India. This belief has always stood JSW in good stead. With a conviction in their values, JSW have grown from a single steel mill in 1982 to the large operations that define JSW today.

Company has Deloitte Haskins & Sells as its auditors. As on 30-Sep-2014, the company has a total of 241,722,044 shares outstanding.

Category No. of Shares Percentage

Promoters 89,307,481 36.95

Foreign Institutions 49,365,292 20.42

Foreign - OCB 43,592,825 18.03

General Public 23,611,696 9.77

Other Companies 15,035,804 6.22

Foreign Promoters 5,715,711 2.36

Financial Institutions 3,874,339 1.60

NBFC and Mutual Funds 3,869,877 1.60

Foreign - NRI 3,256,315 1.35

Others 2,855,204 1.18

Central Government 1,237,500 0.51

The company’s management includes Dr. S K Gupta, Dr. Vijay Kelkar, Dr. Vinod Nowal, Mr. Hiromu Oka, Mr. Jayant Acharya, Mr. Kannan Vijayaraghavan, Mr. Lancy Varghese, Mr. Rajeev Pai, Mr. Sajjan Jindal, Mr. Seshagiri Rao M V S, Mr. Sudipto

Sarkar, Mr. Uday M Chitale, Mr. V P Baligar, Mrs. Punita Kumar Sinha, Mrs. Savitri Devi Jindal, Mr. Lancy Varghese.

JSW Steel Ltd. key Products/Revenue Segments include Hot Rolled Steel Plates which contributed Rs 33466.07 Cr to Sales Value (67.88% of Total Sales), Rolled Product which contributed Rs 7492.24 Cr to Sales Value (15.19% of Total Sales), Coils (Cold Rolled) which contributed Rs 3709.49 Cr to Sales Value (7.52% of Total Sales), Others which contributed Rs 2241.19 Cr to Sales Value (4.54% of Total Sales), Billets & Blooms which contributed Rs 1052.15 Cr to Sales Value (2.13% of Total Sales), Other Operating Revenue which contributed Rs 768.24 Cr to Sales Value (1.55% of Total Sales), Coils & Sheets (Galvanized) which contributed Rs 342.11 Cr to Sales Value (0.69% of Total Sales), M S/S S Slabs which contributed Rs 223.94 Cr to Sales Value (0.45% of Total Sales), for the year ending 31-Mar-2014.

For the quarter ended 30-Sep-2014, the company has reported Standalone sales of Rs. 11885.79 Cr., up 4.53% from last quarter Sales of Rs. 11370.42 Cr. and up 5.11% from last year same quarter Sales of Rs. 11308.25 Cr. Company has reported net profit after tax of Rs. 761.69 Cr. in latest quarter.

History of JSW Steel

Shri OM PRAKASH JINDAL is founder of JSW Group Company. The JSW Group’s foray into steel manufacturing began in 1982, when it set up the Jindal Iron and Steel Company with its first steel plant at Vasind near Mumbai. The next two decades saw significant expansion and several acquisitions, following the merger of Jindal Iron and Steel Co (JISCO) and Jindal Vijayanagar Steel Ltd (JVSL) in 2005. Today JSW Steel has plants in six locations in India — Vijayanagar in Karnataka, Salem in Tamil Nadu, and Tarapur, Vasind, Kalmeshwar and Dolvi in Maharashtra.

JSW Steel’s global operations include a plate and pipe mill in the US. In order to securities resources, the company has acquired mining assets in Chile, USA and Mozambique.

Overall what is JSW Steel Doing

JSW Steel is a pioneer in the use of innovative technology that keeps them ahead of the curve. Not only does JSW Steel offer the widest product portfolio in India, they also further leverage their capability to customize offerings to match customer expectations.

JSW Steel strategy of always staying on the leading edge of technical advancement has led to partnerships with global sector leaders such as JFE Steel, Marubeni Itochu Steel, Praxair and Sever field Rowena Plc. This technological edge has helped their plants rank among the lowest-cost steel producers in the world.

The strong focus on innovation and R&D has led to JSW Steel being recognized worldwide as a purveyor of high-end, value-added steel. Nearly 40 percent of JSW Steel’s products today are high value steels; they intend to take this figure up to 50 percent. Nearly one fifth of their products are exported and JSW are India’s largest exporter of coated products with a presence in over 100 countries.

JSW strategic approach to growth has driven the Company’s forward and backward integration initiatives. Their steel plants in Karnataka, Tamil Nadu and Maharashtra have a combined installed capacity of 14.3 million tons per annum. With the objective of touching 40 million tons in the next decade, they are expanding capacities at their existing sites and setting up plants in new locations. On the anvil, are two 10 million tons Greenfield facilities in West Bengal and Jharkhand.

At JSW, sustainability is the touchstone on which they have evolved their operational processes. Their systems for governance, manufacturing, supply chain management, human resource management, community engagement, mitigation of carbon footprint and customer engagement, among others, are benchmarked against global best-in-class standards.

JSW Steel deeply held beliefs on doing business the sustainable way have led to strong partnerships among the communities where they operate. The success of their models for land acquisition and community engagement make them torchbearers for Indian industry. The canopy of their CSR (corporate social responsibility) initiative covers micro-level engagements as well as macro development programs that leave a measurable positive impact in every location where JSW have a presence.

Key Financial Analysis of JSW Steel’s

A) Key points form Balance Sheet as at March 2014(Standalone)

1) Share Holders funds in 2014 is Rs 24284/-Cr vs. 2013 Rs 19937/-Cr i.e. 21.8% increase in 2014.

2) Non-Current liabilities in 2014 is Rs 23469/-Cr vs. 2013 Rs 19118/-Cr i.e. 22.76% increase in 2014.

3) Current liabilities in 2014 is Rs 20671/-Cr vs. 2013 Rs 15559/-Cr i.e. 32.85% increase in 2014.

4) Non-Current assets in 2014 is Rs 53426/-Cr vs. 2013 Rs 40293/-Cr i.e. 32.59% increase in 2014.

5) Current assets in 2014 is Rs 14998/-Cr vs. 2013 Rs 14322/-Cr i.e. 4.72% increase in 2014.

B) Key points from Consolidated Balance Sheet as at March 2014

1) Share Holders funds in 2014 is Rs 21938/-Cr vs. 2013 was Rs 17343/-Cr i.e. 26.49% increases in 2014.

2) Non-Current liabilities in 2014 is Rs 29795/-Cr vs. 2013 was Rs 21521/-Cr i.e. 38.44% increases in 2014.

3) Current liabilities in 2014 is Rs 25738/-Cr vs. 2013 was Rs 18665/-Cr i.e. 37.89% increases in 2014.

4) Non-Current assets in 2014 is Rs 62189/-Cr vs. 2013 was Rs 45794/-Cr i.e. 35.80% increases in 2014.

5) Current assets in 2014 are Rs 15450/-Cr vs. 2013 was Rs 11933/-Cr i.e.29.47% increases in 2014.

C) Key points from Profit and Loss statement as at March 2014(Standalone)

1) Revenue form operation in 2014 is Rs 45297/-Cr vs. 2013 Rs 35491/-Cr i.e. 27.63% increase in 2014.

2) Total expenses in 2014 is Rs 41981/-Cr vs. 2013 Rs 32881/-Cr i.e. 27.67% increase in 2014.

3) Profit after tax and other expenses in 2014 is Rs 1334/-Cr vs. 2013 Rs 1801/-Cr i.e.25.93% decrease in 2014.

D) Key points from Consolidated Profit and Loss statement as at March 2014

1) Revenue from operation in 2014 is Rs 51305/-Cr vs. 2013 was Rs 38279/-Cr i.e. 34% increases in 2014.

2) Total expenses in 2014 is Rs 48284/-Cr vs. 2013 was Rs 35910/-Cr i.e. 34.46% increases in 2014.

3) Profit after tax and other expenses in 2014 is Rs 451/-Cr vs. 2013 was Rs 963/-Cr i.e. 53.17% decreases in 2014.

E) Key points form Share Capital sheets as at March 2014

1) Authorized equity share in 2014 is 6,0150,00,000 unit of the value is Rs-10/- for each shares i.e. Rs-6015/-Cr. wherein in 2013 it was 2,00,00,00,000 unit of the value was Rs-10/- for each equity share i.e. Rs-2000/-Cr.

2) Authorized preference share in 2014 is 3,00,00,00,000 unit of the value is Rs-10/- for each share i.e. Rs-3000/-Cr. wherein in 2013 it was 1,00,00,00,000 unit of the value was Rs-10/- for each share i.e. Rs-1000/-Cr.

F) Key points from Cash flow statement as at March 2014(Standalone)

1) Net profit before tax in 2014 is Rs-1955/-Cr vs. 2013 Rs-2504/-Cr i.e. 21.92% decreases in 2014.

2) Net cash generated from operating activities in 2014 is Rs-5274/-Cr vs. 2013 Rs-3924/-Cr i.e. 34.40% increases in 2014.

3) Net cash used in investing activities in 2014 is Rs-4737/-Cr vs. 2013 was Rs-4451/-Cr i.e. 6.42% increases in 2014.

G) Key points from consolidated Cash flow statement as at March 2014

1) Net profit before tax in 2014 is Rs 1308/-Cr vs. 2013 was Rs 1999/-Cr i.e. 34.57% decreases in 2014.

2) Net cash generated from operating activities in 2014 is Rs 2593/-Cr vs. 2013 was Rs 5844/-Cr i.e. 55.63% decreases in 2014.

3) Net cash used in investing activities in 2014 is Rs 5671/-Cr vs. 2013 was Rs 5433/-Cr i.e. 4.38% increases in 2014.

H) Key points from Ratio sheet as at March 2014(Standalone)

1) Book value per share in 2014 is Rs 973/- vs. 2013 was Rs 881/- i.e. 10.44% increases in 2014.

2) Market price per share is Rs 1036/- vs. 2013 was Rs 672/- i.e. 54.16% increases in 2014.

3) Earnings per share (diluted) are Rs 53/- vs. 2013 was Rs 79/- i.e. 32.91% decreases in 2014.

4) Market capitalization in 2014 is Rs 25043/-Cr vs. 2013 was Rs 15001/-Cr i.e. 66.94% increases in 2014.

5) Equity dividend per share in 2014 is Rs 11/- vs. 2013 was Rs 10/- i.e. 10% increases in 2014.

6) Fixed assets turnover ratio in 2014 is 1.19% vs. 2013 was 1.28% i.e. 7% decreases in 2014.

7) Operating EBIDTA margin in 2014 is 19.4% vs. 2013 was 17.8% i.e. 8.99% increases in 2014.

8) Net debt equity ratio in 2014 is 1.10 vs. 2013 was 0.82 i.e. 34.15% increases in 2014.

9) Net debt to EBIDTA in 2014 is 3.03 vs. 2013 was 2.59 i.e. 16.98% increases in 2014.

I) Key points from consolidated Ratio sheet as at March 2014

10) Book value per share in 2014 is Rs 875/- vs. 2013 was Rs 764/- i.e. 14.53% increases in 2014.

11) Market price per share is Rs 1036/- vs. 2013 was Rs 672/- i.e. 54.16% increases in 2014.

12) Earnings per share (diluted) are Rs 17/- vs. 2013 was Rs 41/- i.e. 58.53% decreases in 2014.

13) Market capitalization in 2014 is Rs 25043/-Cr vs. 2013 was Rs 15001/-Cr i.e. 66.94% increases in 2014.

14) Equity dividend per share in 2014 is Rs 11/- vs. 2013 was Rs 10/- i.e. 10% increases in 2014.

15) Fixed assets turnover ratio in 2014 is 1.11% vs. 2013 was 1.14% i.e. 2.63% decreases in 2014.

16) Operating EBIDTA margin in 2014 is 17.9% vs. 2013 was 17.0% i.e. 5.23% increases in 2014.

17) Net debt equity ratio in 2014 is 1.54 vs. 2013 was 1.11 i.e. 38.74% increases in 2014.

18) Net debt to EBIDTA in 2014 is 3.71 vs. 2013 was 3.00 i.e. 23.66% increases in 2014.

Future Potential and how its foresee with changes

To continuously challenge every frontier and create a self-reliant India, it is imperative

that JSW Steel keeps diversifying and growing. The Company is in constant pursuit of

innovation and development projects at every existing unit as well as undertaking

expansions in new locations. The Company aims to achieve 40 MTPA production

capacities in the next decade, which will garner a 15-20% share of India’s steel basket.

Projects under development

Vijayanagar

The existing complex has the infrastructural capability to handle up to 16 million tons projects. The new projects include

Electrical Steel Facility of 0.2 MTPA capacity

Salem

The Salem plant aims to develop the Kanjamalai, Kavuthimalai and Vediappanmalai iron ore mines in Tamil Nadu on receipt of requisite approvals to improve raw material security. This will facilitate expansion of production capacity to 2 MTPA. It will also allow the unit to diversify into the production of value-added products such as annealed, drawn and peeled steel. The plant is continuously working to develop special grades for critical automotive applications.

Dolvi

The Dolvi unit aims to increase its upstream capacities. Expansion projects include a 1 million tons coke oven plant and, 4 million tons pellet plant. In the second phase, the unit will be expanded by an additional 4 million tons capacity, which will include a sinter plant, a blast furnace, slab caster, a hot strip mill, a coke oven and two power plants of 300 MW each.

Kalmeshwar

A new cold rolling mill is being added to raise the existing production level to 0.60 MTPA.

Salboni

JSW Steel signed a development arrangement with Government of West Bengal, WBIDCL and WBMDTC to build a 10 MTPA steel plant in phases at Salboni, West Midnapur District. The Environment clearance for the project has been obtained. Along with this, a 1620 MW power plant is also being envisioned at the location that will cater to the steel unit.

Jharkhand

The company also plans to build a steel plant in Jharkhand. The Company is currently pursuing various approvals and clearances to obtain captive mines that will ensure raw material security. A MoU was signed with the Government of Jharkhand for setting up a 10 MTPA integrated steel plant and 800 MW captive power plants at the location.

Corporate Citizenship at JSW Steel"The commitment to be a responsible corporate citizen decides all JSW actions in the

way we conduct our business."

Regular engagement with different stakeholder groups forms an integral part of JSW Steel’s business strategy. With best of their efforts, they strive towards transforming stakeholder engagement into an active two-way dialogue.

JSW Steel strives to be a responsible corporate citizen and conduct their business with this aim in mind. Their policies are based on the ideology of maintaining transparency and openness in the Management and Board dealings. Their executives contribute to the ideologies and work towards embedding robust corporate governance principles in their practices. Cutting edge technology combined with their application and customer service skills help them to create value for all stakeholders.

With growing scarcity of primary and non-renewable sources of energy, JSW Steel is striving to minimize their energy consumption through process optimization and energy conservation initiatives while deploying new technologies.

Since inception, they have consistently aggregated competencies from diverse cultures, educational backgrounds and domain experience with a singular objective to accelerate growth. They reinforced this focus through an institutionalized multi-hierarchical training extending from steel manufacturing to holistic personality development which commences from day one of employment, followed by specialized trainings at regular intervals.

JSW Steel strives to maintain the highest standards for the safety and wellbeing of their employees which minimize injuries and casualties during day-to-day operations. Their safety team conducts regular training programs to instill the concept of maintaining safe operations among their employees and to educate them on the safety norms and procedures to be followed in case of any incident.

The JSW group believes in the policy of ‘People First’ and the objective of their activities is to make a tangible difference in the lives of the people in the areas surrounding their operations. As a responsible organization, they are committed to investing a minimum of 2 percent of their PAT towards community development. Employees are encouraged to contribute up to 40 hours towards community development activities per employee per year.

Promoting on a wider platform The JSW Earth Care Awards is aimed at highlighting action of direct relevance to tackle challenges posed by climate change. The award extending over SAARC region is for excellence in climate change mitigation and adaptation.

JSW is fundamentally committed to sustainable business and the 9 principles of National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) it has been pursuing in spirit while at JSW Steel Limited reporting on GRI framework assured by third party independently (since FY 2005) on International Standards for Assurance Engagements (ISAE) 3000. The policies in the context of these principles are Board approved and a Committee of Board comprising 3 Independent and

3 Executive Directors is overseeing the same, quarterly. CSO structure implements the sustainability oversight reporting.

Corporate Social Responsibility of JSW steel

A) CSR Vision of JSW steel:

“Empower Communities with Sustainable Livelihood”.

B) CSR Mission of JSW Steel:

1) Outreach of government programs in the health and employment generation through gap filling support.

2) JSW Steels Township and communities to move towards carbon efficient management system.

3) In-suit conservation of at least one major monument at project location and promote national cooperation for conservation of all monuments.

4) Collaborative Earth care initiatives.5) Need based social development intervention in JSW steel mining location.6) JSW Steel has initiated “Janam se Janani Tak…..JSW aap ke saath”.7) Promoting efficient maternal and child healthcare services.8) Enhancing access to improved nutrition services.9) Early childhood education/Pre-primary education.10) Access to adolescent reproductive and sexual health and rights.11) Enhancing the output of present occupation.12) Employability and vocational education.13) Promoting responsible parenthood.

C) JSW Steel’s commitment:

1) Advocating the cause of women empowerment, the marginalizing and those with disability.

2) Adhering to the millennium development goals framework with special emphasis on- universalizing primary education, Mitigating infant mortality and Nurturing maternal health.

3) Safeguarding the environment through water conservation, renewable energy and sanitation activities.

4) Addressing the specific need of the community and create viable working models through engaged social processes and infrastructure oriented development.

5) Supporting arts, sports and conserving cultural heritage.6) Promoting the culture of social responsibility through employee volunteerism.

Environment and its related Responsibility of JSW Steel

1) Water Treatment Technology

JSW Steel approaches towards achieving environmental excellence based on maximizing positive impact and minimizing negative impact that the operation have on surrounding environment.

Water is increasingly become a scarce resources.it is one the most vital ingredient for steel plant, given the fact that significant quantities of water and stem is required for their operation. JSW Steel’s endeavor is to ensure minimization of fresh water consumption by increasing efficiency of operation while at the same time ensuring maximum reutilization treated wastewater. The specific water consumption for FY 2013-14 was 4.89 kl/ton crude steel; this is almost the same as previous year, despite an increase in steel production.

Minimization of waste generation and responsible disposal of generated waste are the basic operational requirement at all the site. JSW Steel operation further reduces the environmental burden by utilizing waste from external sources as well. Nearly 2.2million ton of waste scrap were reprocessed at the site during year 2013-14. Innovative technology have been implemented to recover iron from waste slime being generated, thereby reducing consumption of precious iron ore.

The various steel making process lead to the generation of air pollutants. Monitoring of stacks on periodic basis to ensure that they remain within permissible limit is done at all the location. In most of cases stack emission are maintained well below the permissible limit.

Preservation of biodiversity is also important attribute in JSW steel’s quest to achieve environmental excellence. The vijaynagar plan is located near biodiversity sensitive zone. Precautions are taken to ensure there are no negative impacts due to operation on the native ecosystem. There are physical barrier to prevent the entry of animal into the plant area, least they should be harmed.

2) Energy and Climate Change:

Despite the economic slowdown, India’s consumption on energy is on the rise, and to meet the energy demand of an overpopulated nation, India makes uses of fossils based energy sources which, apart from being limited in supply, are also polluting.

JSW Steel has been at the forefront in the use of technology to optimize energy consumption in the steel industry. All plants monitor their specific energy consumption as a key performance indicator.

The total energy consumption using primary fuel sources during the year 2013-14 at the plants was 185.47 million GJ.

The inherent linkage of climate change and energy is highly pronounced in the steel industry. With a high dependence on coal, the mitigation of GHG emission is extensively linked to the energy management. The company’s efforts to optimize energy consumption have also led to the better GHG performance over the year.

The total GHG emission during the year 2013-14 was 32.72 million tCO2e, which include direct and indirect GHG emission.

JSW steel organizes the Earth Care Award in association with the TOI. These awards are an effort to recognize excellence in initiative to counter the ill effect of climate changes and showcase efforts towards mitigation and adaption by industry, communities and individuals.

3) Product Responsibility and Innovation:

The ever increasing pressure on the naturally occurring raw material reserve of the earth is significant sustainability challenges for JSW steel. With this in mind, significant efforts are being made to ensure the highest possible level of operational efficiency. Replacement of virgin raw material is high on the agenda. A lot of impetus is being given to the recycling of waste. This is in turn, has an impact on amount of raw material consumed per unit of steel produced. During FY 2013-14, specific raw material consumption in the operation was 3.56tonnes/tons of crude steel production as compared to 3.92tonnes/tons of crude steel production during FY 2013-14, an improvement of 9.18%.

Product innovation at JSW steel hinges on the fact that end use impact of product as well as demand of sustainable product are presenting a significant risk as well as a big opportunity for all steel manufacturer. There is an increase in demand for value added as well as ecofriendly product in the market.

JSW steel is focusing on creating durable product that will help to harness solar energy, develop low thickness and higher strength CRCA product to reduce vehicle weight thereby increasing fuel efficiency, and contributing to creation of steel structure like multi-level parking and public transportation, thereby reducing traffic congestion and reducing pollution.

4) Waste to Wealth:

In the FY 2013-14, JSW steel Vijayanagar plant has introduced and innovative new technology called Mills Scale Briquetting. This not only reduces iron ore consumption but also help in reducing amount of waste generated. The Mills Scale Briquettes produced contain high iron content, which can be directly used in LD converter as a coolant, there by replacing equivalent amount of iron ore. It also helps in the reduction in lime consumption.

The site has also developed a method to recover iron from slime dump. Beneficiation of slime waste is done using dual extraction column floating technology to recover finer iron value. This has further helped to site in reducing consumption of iron ore while at the same time creating wealth from waste.