STUDY OF A COMPARATIVE RATIO ANALYSIS OF TATA

STEEL AND JINDAL STEEL

A
Project Report
submitted in partial fulfilment of the requirements for
the award of the Degree of
BACHELOR OF COMMERCE
By
HARSH KUMAR
PRASHANT KUMAR SAGAR KUMAR

USHA MARTIN UNIVERSITY, JHARKHAND

FACULTY OF BUSINESS MANAGEMENT & COMMERCE

2024

1
 DECLARATION CERTIFICATE

This is to certify that the work presented in the project report entitled
“COMPARATIVE RATIO ANALYSIS OF TATA STEEL AND JINDAL
STEEL” in partial fulfilment of the requirement for the award of Degree of
Bachelor of Commerce of Usha Martin University, Jharkhand is an authentic
work carried out under my supervision and guidance.

To the best of my knowledge, the content of this training report does not
form a basis for the award of any previous Degree to anyone else.

Date: 27/06/2024 (Guide’s Name & Signature)

Department of Commerce

Usha Martin University, Jharkhand

(Head of the Department)

Department of Commerce
Faculty of Business Management & Commerce

Usha Martin University, Jharkhand

2
 CERTIFICATE OF APPROVAL

The project report entitled “COMPARATIVE RATIO ANALYSIS OF TATA

STEEL AND JINDAL STEEL”, is hereby approved as a
creditable training report presented in satisfactory manner as prerequisite
to the degree for which it has been submitted.

It is understood that by this approval, the undersigned do not necessarily

endorse any conclusion drawn or opinion expressed therein, but approve
the project report for the purpose for which it is submitted.

(Internal Examiner) (External Examiner)

3
 ACKNOWLEDGMENT

I have taken efforts in this project. However, it would not have been possible
without the kind support and help of many individuals and organizations. I would
like to extend my sincere thanks to all of them.
I am highly indebted to Miss Neha Kumari (Assistant Professor) for their
guidance and constant supervision as well as for providing necessary information
regarding the project & also for their support in completing the project.
I would like to express my gratitude towards my parents & member of Usha
Martin University for their kind co-operation and encouragement which helped
me in completion of this project. I would like to express my special gratitude and
thanks to industry persons for giving me such attention and time.
My thanks and appreciations also go to my colleague in developing the project
and people who have willingly helped me out with their abilities.

Batch 2021-2024 :-
Harsh Kumar (21BCOM09)
Prashant Kumar (21BCOM016)
Sagar Kumar (21BOM020)

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 ABSTRACT

Analysis of Financial statements is a method of swotting and examining a company’s

accounting reports i.e. profit and loss account and Balance Sheet of the company, in
order to knowing its past, present or anticipated future performance. This process of
revising the financial statements allows for healthier economic decision making. This
paper delivers the information and guidelines Concerning Analysis of various
accounting ratio of TATA Steel and JINDAL Steel.

5
 CONTENTS

Chapter No. Chapter Title Page No.

Chapter 1 Introduction & 1.1 Problem Statement 20

Literature
Review
1.2 Theoretical Concepts and 20
Framework

1.3 Literature Review 21

1.4 Significance of Study 22

1.5 Objectives of the Study 24

1.7 Scope of the Study 31

Chapter 2 Research 2.1 Research Design

Methodology
32
2.4 Analysis of Data: Tools & 35
Techniques

Chapter 3 Results & 3.1 Findings of the Study

Discussion
48
3.2 Discussion on findings of the 48
study

Chapter 4 Conclusions 4. Conclusions

49
Chapter 5 Suggestions & 5.1 Suggestions
Directions for
49
Future Research
5.2 Directions for Future 50
Research

References
52
Annexure
53

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Background of the Study
Chapter 1: INTRODUCTION OF STEEL INDUSTRY IN INDIA
India was the world’s third-largest steel producer in 2016. The growth in the industry Indian steel
sector has been driven by domestic availability of raw materials such as iron ore and cost-effective
labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
The Indian steel is very modern with state-of-the-art steel mills. It has always strived for continuous
modernisation and upgradation of older plants and higher energy efficiency levels. Indian steel
industries are classified into three categories such as major producers, main producers and secondary
producers.

MARKET SIZE
India’s crude steel output grew 5.87 per cent year-on-year to 101.227 million tonnes (MT) in FY
2017. Crude steel production during April-December 2017 grew by 4.6 per cent year-on-year to
75.498 MT. India’s finished steel exports rose 102.1 per cent to 8.24 MT, while imports fell by 36.6
per cent to 7.42 MT in 2016-17. Finished steel exports rose 52.9 per cent in April-December 2017
to 7.606 MT, while imports increased 10.9 per cent to 6.096 MT during the same period. Total
consumption of finished steel grew by 5.2 per cent year-on-year at 64.867 MT during AprilDecember
2017.

INVESTMENTS
Steel industry and its associated mining and metallurgy sectors have seen a number of major
investments and developments in the recent past. According to the data released by Department of
Industrial Policy and Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct
Investments (FDI) to the tune of US$ 10.419 billion in the period April 2000–September 2017. Some
of the major investments in the Indian steel industry are as follows: JSW Steel has planned a US$
4.14 billion capital expenditure programme to increase its overall steel output capacity from 18
million tonnes to 23 million tonnes by 2020. Rashtriya Ispat Nigam Ltd (RINL) has signed a
Memorandum of Understanding (MOU) with Kudremukh Iron Ore Company Ltd for setting up of a
1.2 million ton per annum (MTPA) plant project at Vishakhapatnam. Tata Steel has decided to
increase the capacity of its Kalinganagar integrated steel plant from 3 million tonnes to 8 million
tonnes at an investment of US$ 3.64 billion.

GOVERNMENT INITIATIVES
Some of the other recent government initiatives in this sector are as follows:
• Government of India’s focus on infrastructure and restarting road projects is aiding the boost
in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected
to lead to growth in demand for steel.

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• The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017,
as it seeks to create a globally competitive steel industry in India. NSP 2017 targets 300 million
tonnes
(MT) steel-making capacity and 160 kgs per capita steel consumption by 2030
• Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have jointly
launched an e-platform called 'MSTC Metal Mandi' under the 'Digital India' initiative, which will
facilitate sale of finished and semi-finished steel products.
• The Ministry of Steel is facilitating setting up of an industry driven Steel Research and
Technology Mission of India (SRTMI) in association with the public and private sector steel
companies to spearhead research and development activities in the iron and steel industry at an initial
corpus of Rs 200 crore (US$ 30 million).

ROAD AHEAD
India is expected to overtake Japan to become the world's second largest steel producer soon, and
aims to achieve 300 million tonnes of annual steel production by 2025-30. India is expected to
become the second largest steel producer in the world by 2018, based on increased capacity addition
in anticipation of upcoming demand, and the new steel policy, that has been approved by the Union
Cabinet in May 2017, is expected to boost India's steel production. Huge scope for growth is offered
by India’s comparatively low per capita steel consumption and the expected rise in consumption due
to increased infrastructure construction and the thriving automobile and railways sectors.

8
COMPANY PROFILE

9
INTRODUCTION (TATA STEEL)

Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian
multinational steel-making company headquartered in Mumbai, Maharashtra, India, and a subsidiary
of the Tata Group.
It is one of the top steel producing companies globally with annual crude steel deliveries of 27.5
million tonnes (in FY17), and the second largest steel company in India (measured by domestic
production) with an annual capacity of 13 million tonnes after SAIL.
Tata Steel has manufacturing operations in 26 countries, including Australia, China, India, the
Netherlands, Singapore, Thailand and the United Kingdom, and employs around 80,500 people. Its
largest plant located in Jamshedpur, Jharkhand.
Tata Steel is headquartered in Mumbai, Maharashtra, India and has its marketing headquarters at the
Tata Centre in Kolkata, West Bengal. It has a presence in around 50 countries with manufacturing
operations in 26 countries including: India, Malaysia, Vietnam, Thailand, UAE, Ivory Coast,
Mozambique, South Africa, Australia, United Kingdom, The Netherlands, France and Canada
Tata Iron and Steel Company was founded by Jamshedji Tata and established by Dorabji Tata on 26
August 1907, as part of his father Jamshetji's Tata Group. By 1939 it operated the largest steel plant
in the British Empire. The company launched a major modernization and expansion program in
1951. Later in 1958, the program was upgraded to 2 million metric tonnes per annum (MTPA)
project. By 1970, the company employed around 40,000 people at Jamshedpur, with a further 20,000
in the neighbouring coal mines. In 1971 and 1979, there were unsuccessful attempts to nationalise
the company. In 1990, it started expansion plan and established its subsidiary Tata Inc. in New York.
The company changed its name from TISCO to Tata Steel in 2005.

10
HERITAGE
Jamsetji Nusserwanji Tata (1839 – 1904)
The foundation of what would grow to become the
Tata group was laid in 1868 by Jamsetji
Nusserwanji Tata – then a 29-year-old who had
learned the ropes of business while working in his
father’s banking firm – when he established a
trading company in Bombay. A visionary
entrepreneur, an avowed nationalist and a
committed philanthropist, Jamsetji Tata helped
pave the path to industrialisation in India by
seeding pioneering businesses in sectors such as steel, energy, textiles and hospitality.

Ratan Tata (1937)

The beginning of the 1990s ushered in plenty
of change Indian business. Economic reforms
opened up many sectors, signalling increased
competition and the arrival of foreign
companies. JRD Tata’s death, in 1993,
symbolised the end of an era in more ways
than one. Ratan Tata, who took over as
chairman in 1991, guided the Tata group in a
fast-changing business environment where
old rules did not apply and new realities were
taking hold. Mr Tata retired as Chairman of
Tata Sons on December 28, 2012.

Natarajan Chandrasekaran (1963)

Natarajan Chandrasekaran (53) is Chairman of the
board of Tata Sons, the holding company and
promoter of more than 100 Tata operating
companies with aggregate annual revenues of more
than US $100 billion. He joined the board of Tata
Sons in October 2016 and was appointed Chairman
in January 2017. Chandra also chairs the boards of
several group operating companies, including Tata
Steel, Tata Motors, Tata Power, Indian Hotels and
Tata Consultancy Services (TCS) — of which he
was chief executive from 2009-17. His appointment
as chairman followed a 30-year business career at
TCS, which he joined from university. Chandra rose through the ranks at TCS to become CEO and
managing director of the leading global IT solutions and consulting firm.

11
Mission Statement:

Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen
India’s industrial base through effective utilization of staff and materials. The means envisaged to
achieve this are best technology and high productivity, consistent with modern management
practices. Tata Steel recognizes that while honesty and integrity are essential ingredients of a strong
and stable enterprise, profitability provides the main spark for economic activity. Overall, the
Company seeks to scale the heights of excellence in all it does in an atmosphere free from fear, and
thereby reaffirms its faith in democratic values.

Products and brands

Tata Steel’s products include hot and cold rolled coils and sheets, galvanised sheets, tubes, wire rods,
constructions re-bars, rings and bearings. The products are targeted at automobiles, white goods,
construction and infrastructure markets. In an effort to de-commoditise steel, the company has
introduced brands like

 Tata Wiron (wire rods for farming and fencing segment),

 Tata Steelium (cold rolled steel for auto ancillaries and the general engineering segments)
 Tata Shaktee (corrugated galvanised sheets for rural house builder segments)
 Tata Tiscon (re-bars for individual house-builder semi-urban segment) Tata Pipes (pipes for
individual house builder and farming segments) Tata Bearings (bearings for Original
equipment manufacturer and replacement market).
 Tata Agrico (agricultural equipment for farming and construction segment).

The company has focused on increasing the sale of its branded products and the sale of its branded
products and the sales of these products as a proportion of its total sales has shown a constant increase
over the last few years.

12
COMPANY PROFILE

13
INTRODUCTION(JINDAL STEEL & POWER)

Jindal Steel and Power Limited (JSPL) is an Indian steel and energy company based on New Delhi,
India. With turnover of approx. US$ 3.3 billion, JSPL is a part of about US$18 billion diversified
Jindal Group conglomerate. JSPL is a leading player in steel, power, mining, oil and gas and
infrastructure in India. In terms of tonnage, it is the third largest steel producer in India.
The company manufactures and sells sponge iron, mild steel slabs, Ferro chrome, iron ore, mild
steel, structural, hot rolled plates and coils and coal-based sponge iron plant. In 1969, O. P. Jindal
(1930–2005) started Pipe Unit Jindal India Limited at Hisar, India. After Jindal's death in 2005, much
of his assets were transferred to his wife, Savitri Jindal. Jindal Group's management was then split
among his four sons with Naveen Jindal as the Chairman of Jindal Steel and Power Limited. His
elder brother, Sajjan Jindal is the head of JSW Group, part of O.P. Jindal Group.

HERITAGE

OM PRAKASH JINDAL (1930 – 2005)

Shri. Om Prakash Jindal, Founder Chairman
of the Jindal Group was born on August 7,
1930, to a farmer in Nalwa village of Hisar
district in Haryana. Having interest in
technology from a young age, he started his
industrial career with a humble bucket
manufacturing unit in Hisar in 1952. In 1964,
he commissioned a pipe unit, Jindal India
Limited followed by a large factory in 1969
under the name of Jindal Strips Limited. Shri.
Jindal envisioned a self-reliant India in every
sector of industry. To fructify this vision, he
gathered the latest technical know-how from
around the world and strengthened his
industrial establishment. Recognising his
outstanding contribution to the Indian steel industry, Shri. O. P. Jindal was conferred the prestigious
"Life Time Achievement Award" by the Bengal Chamber of Commerce & Industry in November
2004. A visionary who is remembered for his business excellence and social responsibilities alike,
Shri Jindal believed that without the upliftment of weak and backward sections of the society, a
nation can never prosper. Thus, he spent a lot of time in taking steps to alleviate poverty and boost
the backward sections of the society.

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PRODUCTS

Jindal Steel and Power products are energised by the buoyancy of innovation that enables the
distinction of being a trailblazer. Customisation is at the core of all our product development and our
global technology excellence ensures the best in class offerings for the valued customers. The
company's continuous growth and enhanced capabilities stand testimony of the ceaseless drive for
excellence.

• RAILS
The rails can be supplied in a customised finished lengths ranging from 13 meter to 121 meter, a
modern flash-butt welding plant equipped to produce up to 484 meter long flash butt welded rail
panels is also available. The company has the facility for transporting such long rails to the
construction sites.
• PARALLEL FLANGE BEAMS AND COLUMNS
The use of these parallel flange sections in the infrastructure, oil & gas and construction sectors such
as refineries, metro rail projects, airports, flyovers, power plants, highways, malls.
• PLATES AND COILS
The plate-cum-coil mill (steckle mill) of 1 MTPA capacity located at Raigarh, Chhattisgarh produces
plates ranging from 8 mm to 120 mm in thickness in widths of 1500 mm to 3500 mm and coils in
thickness range of 8 mm to 25 mm in widths of 1500 mm to 2500 mm.
• WIRE RODS
The wire rods come with the promise of high quality and dimensional precision. The latest
technology that comes with Morgan mill assures high degree of thermos mechanical properties along
with unparalleled dimensional accuracy.
• SPONGE IRON
The company has the world's largest coal-based sponge iron manufacturing facility at Raigarh,
Chhattisgarh and stands out as the market leader in coal-based sponge iron industry within India.

15
1.1 Problem Statement
Despite being leading entities in the Indian steel industry, there is a need to systematically compare
the financial performance of TATA Steel and Jindal Steel & Power (JSPL), to identify their relative
strengths and weaknesses. This comparison will be based on key financial ratios that reflect liquidity,
profitability, leverage, efficiency, and market valuation. The absence of such a detailed comparative
analysis leaves a gap in understanding how these companies fare against each other in critical
financial aspects.

1.2 Theoretical Concepts and Framework

This research paper will be based on financial ratio analysis, which involves the calculation
and comparison of various financial ratios to assess the financial performance of companies.
Financial ratios are used to measure liquidity, solvency, profitability, and efficiency of a
company. The theoretical framework will draw from previous research on financial ratio
analysis and the characteristics of the steel industry in India.

1.3 Literature Review

• Prof.Vijay Patel & Prof.Chandresh B. Mehta had written in Research paper In
International Journal of Marketing, Financial Services & Management Research on
the subject “A FINANCIAL RATIO ANALYSIS OF KRISHAK BHARATI
COOPERATIVE LIMITED.” They discuss about different types of profitability
ratios and how to interpret them. The main detached of study were include the
important of Financial Ratio as the indicator of firms Financial Enactment and
position. And also classifying the obstacles and snags facing this company as regards
to its Profitability ratio and with the help of this Study they Recommended regarding
how the company increasing its Profitability.

• Bansal and Gupta (1985) in their study entitled, “Financial Ratio Analysis and
Statistics” progressive that the coefficient of variation in the study period had a wide
gap changing between 7.1 per cent and 51.3 per cent for current ratio and ratio of
fixed assets to sales. The correlation of gears of short-term liquidity ratio generally
low correlation as against long term solvency ratio components but the component
Ratio independently keep quite satisfactory correlation in cotton textile industry. The
profitability ratio elements in the industry also have quite high correlation in cotton
industry as compared to synthetic industry.

16
1.4 Significance of Study
The comparative ratio analysis of TATA STEEL AND JINDAL STEEL will provide valuable
insights into the financial performance of these companies and the factors that affect their
success or failure. The findings of this study can be used by investors, financial analysts, and
policymakers to make informed decisions regarding the steel industry in India.

Insights for Investors: Investors seeking to make informed decisions about their
investments in the steel industry will find this study particularly useful. The detailed financial
ratio analysis will:
• Highlight Strengths and Weaknesses: By comparing profitability, liquidity, solvency,
and efficiency ratios, investors can identify the strengths and weaknesses of each
company, aiding in portfolio diversification and risk management.
• Guide Investment Strategies: Understanding the financial health and performance
trends of these companies can help investors develop long-term investment strategies,
optimize returns, and minimize risks.
• Facilitate Stock Valuation: The insights gained from the financial ratios can assist
investors in assessing the fair value of stocks, making more accurate buy, hold, or sell
decisions.

Utility for Financial Analysts: Financial analysts will benefit from the comprehensive
analysis provided by this study. The findings will:

• Enhance Analytical Models: Analysts can incorporate the study’s results into
their existing models to improve the accuracy of their financial forecasts and
valuation models.
• Benchmark Performance: The comparative analysis can serve as a benchmark
for evaluating other companies within the steel industry, providing a standard for
performance evaluation.
• Support Research and Reports: The detailed financial data and insights can
be used in the preparation of research reports, market analysis, and industry outlooks.
• Guidance for Policymakers: For policymakers and regulators, this study offers
critical insights into the dynamics of the steel industry. The findings can:

• Inform Policy Decisions: By understanding the financial health and performance

drivers of key industry players, policymakers can make more informed decisions
regarding industry regulations, trade policies, and economic support measures.

17
 • Support Industry Growth: Insights from the study can help identify areas
where government intervention or support could enhance the competitiveness and
sustainability of the steel industry.

• Aid Economic Planning: Given the steel industry's importance to national

infrastructure and economic development, the study can contribute to broader
economic planning and industrial policy formulation.

Academic Contributions: The study will also contribute to the academic field by:
• Expanding Knowledge: Adding to the existing body of literature on financial
ratio analysis and the steel industry, providing a reference for future research.

• Providing Case Studies: Offering detailed case studies of TATA Steel and Jindal
Steel that can be used in academic courses and research projects.

• Stimulating Further Research: Encouraging further studies on comparative

financial analysis, industryspecific performance metrics, and the impact of
macroeconomic factors on the steel industry.

Practical Applications for Corporate Management: Corporate managers within

the steel industry can use the study to:

• Improve Internal Practices: Identifying best practices and areas for

improvement in financial management and operational efficiency.

• Strategic Planning: Using the insights to inform strategic planning and

decisionmaking processes, enhancing competitive positioning.

• Performance Monitoring: Benchmarking their performance against industry

leaders to set targets and track progress.

Overall, this study aims to provide a holistic view of the financial performance of
TATA Steel and Jindal Steel offering valuable insights that extend beyond mere
financial metrics. By addressing the needs and interests of various stakeholders.

18
 1.5 Objectives of the Study
These objectives are categorized in a following manner:

• To Analyze the Profitability Performance of the Companies

• To Identify Key Profit Drivers and Challenges
• To Assess the Growth Prospects of the Industry
• To Evaluate Historical Growth Trends
• To Study the Organizational Structure and Current Position
• To Compare Organizational Strategies
• To Evaluate the Financial Stability and Solvency of the
Companies
• To Assess Liquidity and Operational Efficiency
Tools and Methods of Data Analysis
• Calculation of Profitability Ratios
• Statistical Measures

TATA STEEL FINANCIAL PERFORMANCE OF TATA STEEL FOR LAST

5 YEARS
JINDAL STEELS
YEAR 2020 2021 2022 2023 2024

GROSS 7,235.98 6,853.98 6,040.82 6,921.38 4,659.79

PROFIT
NET SALES 14954.70 14544.02 13390.35 12548.39 13848.10

GROSS 48.38% 47.13% 45.11% 55.16% 33.65%

PROFIT
RATIO

19
 Source: Financial Year Book 2020

FINANCIAL PERFORMANCE OF JINDAL STEEL FOR LAST 5 YEARS

Source: Financial Year Book 2020

Gross Profit Ratio

6

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

1.7 Scope of the Study

This research focuses solely on the financial aspects of Tata Steel and Jindal Steel does not
delve into operational or strategic factors that may also influence their performance. The
study covers a defined period, typically ranging from 3 to 5 years, to ensure the data remains
relevant and comparable. The analysis is based on publicly available financial statements and
reports, ensuring data consistency and reliability.

20
 Chapter 2: Research Methodology

Ratio analysis is such a significant technique for financial analysis. It indicates relation of two
mathematical expressions and the relationship between two or more things. Financial ratio is a ratio
of selected values on an enterprise's financial statement. There are many standard ratios used to
evaluate the overall financial condition of a corporation or other organization. Financial ratios are
used by managers within a firm, by current and potential stockholders of a firm, and by a firm's
creditor.
Financial analysts use financial ratios to compare the strengths and weaknesses in various
companies. Essence of ratio analysis: Financial ratio analysis helps us to understand how profitable
a business is, if it has enough money to pay debts and we can even tell whether its shareholders could
be happy or not.
Financial ratios allow for comparisons:

1. between companies
2. between industries
3. between different time periods for one company
4. between a single company and its industry average
To evaluate the performance of one firm, its current ratios will be compared with its past ratios.
When financial ratios over a period of time are compared, it is called time series or trend analysis. It
gives an indication of changes and reflects whether the firm's financial performance has improved
or deteriorated or remained the same over that period of time. It is not the simply changes that has
to be determined, but more importantly it must be recognized that why those ratios have changed.
Because those changes might be result of changes in the accounting polices without material change
in the firm's performances.

2.1 Research Design

It will involve collecting and analysing financial data from the three companies over a specified
period. The research will be based on secondary data, which will be gathered from reputable sources
such as annual reports, stock exchange databases, and financial news websites. This design is chosen
because it allows for a systematic collection, analysis, and presentation of data. The analysis will be
quantitative in nature, focusing on financial ratios that reflect profitability, liquidity, solvency.
1.Analytical Framework: The analysis will be quantitative, employing various financial ratios
to assess the companies' performance. These ratios will be categorized into four main groups:
21
• Liquidity Ratios: Ratios like Current Ratio and Quick Ratio will be used to evaluate the
companies' ability to meet short-term obligations.
• Solvency Ratios: Debt to Equity Ratio and Interest Coverage Ratio will help in understanding
the longterm financial stability and debt management of the companies.
• Operational Efficiency Ratios: Ratios such as Inventory
Turnover and Asset Turnover will be examined to gauge how efficiently the companies utilize their
assets.

2. Comparative Analysis: This stage will involve a detailed comparison of the financial
ratios across the three companies. The comparative analysis will help identify trends,
strengths, and weaknesses in each company's financial performance over the specified
period. Key aspects of this analysis will include:
• Trend Analysis: Observing the movement of financial ratios over the five-year period to
identify any significant changes or patterns.
• Benchmarking: Comparing the companies' ratios against industry standards and best
practices to contextualize their performance.
• Peer Comparison: Directly comparing the financial metrics of TATA Steel and Jindal Steel
to highlight relative performance and competitive positioning.

3. Interpretation and Presentation of Findings:

The final step will involve synthesizing the analysis into coherent insights and conclusions.
The findings will be presented through:

• Graphs and Charts: Visual tools to represent financial ratios and trends clearly and
effectively.
• Narrative Analysis: A detailed written interpretation of the results, discussing the
implications for each company's financial health and strategic outlook.
• Tables and Summaries: Summarized data tables for quick reference and comparison.

This structured approach ensures that the research is thorough, objective, and yields valuable
insights into the financial performance and comparative standing of TATA Steel and Jindal
Steel.

2.4 Analysis of Data: Tools & Techniques

The financial ratios to be analysed will include:

22
1. Profitability Ratios: Gross profit margin, operating margin, return on assets (ROA), and
return on equity (ROE).
Profitability index (PI), also known as profit investment ratio (PIR) and value investment
ratio (VIR), is the ratio of payoff to investment of a proposed project. It is a useful tool
for ranking projects because it allows you to quantify the amount of value created per
unit of investment.

The ratio is calculated as follows:

Profitability index = PV of future cash flows ÷Initial investment

Assuming that the cash flow calculated does not include the investment made in the
project, a profitability index of 1 indicates breakeven. Any value lower than one would
indicate that the project's PV is less than the initial investment. As the value of the
profitability index increases, so does the financial attractiveness of the proposed project.
Rules for selection or rejection of a project:
If PI > 1 then accept the project
If PI < 1 then reject the project

2. Liquidity Ratios: Current ratio and quick ratio.

Liquidity Ratio may refer to:

Reserve requirement, a bank regulation that sets the minimum reserves each bank must hold.
Acid Test (Liquidity Ratio), a ratio used to determine the liquidity of a business entity
Liquidity ratio, expresses a company's ability to repay short-term creditors out of its total
cash. The liquidity ratio is the result of dividing the total cash by shortterm borrowings. It
shows the number of times shortterm liabilities are covered by cash, If the value is greater
than 1.00, it means fully covered.
The formula is the following:

LR liquid assets ÷ short-term liabilities

3. Solvency Ratios: Debt to equity ratio and interest coverage ratio.

23
4. Efficiency Ratios: Inventory turnover ratio, asset turnover ratio, and receivables turnover
ratio.
The analysis will involve the following tools and techniques:
• Ratio Calculation: Computing each ratio based on historical data.
• Trend Analysis: Examining trends over the past five years for each company and
comparing them to industry averages.
• Cross-sectional Analysis: Comparing each company’s ratios against each other to
identify strengths and weaknesses.
• Statistical Tools: Using statistical software for more in-depth analysis, including mean,
standard deviation, and variance.
• Graphical Representation: Charts and graphs will be used to visualize trends and
comparisons effectively.
Following Ratios are used for this Study.

1. Current Ratio.
2. Debt equity ratio.
3. Inventory turnover ratio.
4. Fixed asset turnover ratio.
5. Net operating profit per share.
6. Return on capital employed.
7. Dividend payout ratio.
8. Earnings per share.

1. Current ratio
The current ratio is a financial ratio that measures whether or not a firm has enough resources
to pay its debts over the next 12 months. It compares a firm's current assets to its current
liabilities. It is expressed as follows:
Current ratio = Current Assets ÷ Current Liabilities

24
 Source: businesstoday.intoday.in
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL .91 1.12 1.78 .79 0.99

JINDAL STEEL 1.04 .65 .79 .69 0.76

1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

2. DEBTORS TURNOVER RATIO FORMULA:

Debtors Turnover Ratio= Total Sales / Debtors

PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 1.34 .68 .59 .45 1.74

JINDAL STEEL 92 1.24 1.39 1.33 1.58

Source: tatasteel.com

25
 2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

3. Inventory Turnover ratio.

A ratio showing how many times a company's inventory is sold and replaced over a period.
The days in the period can then be divided by the inventory turnover formula to calculate the
days it takes to sell the inventory on hand or "inventory turnover days." Generally calculated
as:

= Sales ÷ Inventory
However, it may also be calculated as:

= Cost of Goods Sold ÷Average Inventory

Source: Economictimes.indiatimes.com
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 9.36 10.90 9.85 9.40 6.94

JINDAL STEEL 9.08 8.05 5.81 4.83 4.16

26
12

10

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

4. Fixed asset turnover ratio.

A financial ratio of net sales to fixed assets. The fixed asset turnover ratio measures a
company's ability to generate net sales from fixed-asset investments specifically property,
plant and equipment (PP&E) net of depreciation. A higher fixed-asset turnover ratio shows
that the company has been more effective in using the investment in fixed assets to generate
revenues.
The fixed-asset turnover ratio is calculated as:

Fixed Asset Turnover = Net Sales ÷ Net Property, Plan,

and Equipment

Source: marketresearchfuture.com
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 1.22 1.12 1.29 1.48 1.07

JINDAL STEEL 1.04 .83 .75 .88 0.80

27
 1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL TATA

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

From the above table and graph, it is clear that the ratio of Tata steels were high in the year
2020, 2022 and 2023. Jindal steels ratio was high in the year 2020 and 2023.

5. Net operating profit per share.

A calculation used to analyze real estate investments that generate income. Net operating
income equals all revenue from the property minus all reasonably necessary operating
expenses.

Source: tatasteel.com
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 333.27 281.11 305.53 348.41 429.18

JINDAL STEEL 496.46 78.90 102.15 142.13 159.94

28
 600

500

400

300

200

100

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

Aside from rent, a property might also generate revenue from parking and service fees, like
vending and laundry machines. Operating expenses are those required to run and maintain
the building and its grounds, such as insurance, property management fees, utilities, property
taxes, repairs and janitorial fees.
From the above table and graph, it is clear that net operating profit per share of Tata steels is
consistently good in 2020-2023 while Jindal steels net operating profit was high in 2020.

6. Return on capital employed

A financial ratio that measures a company's profitability and the efficiency with which
its capital is employed. Return on Capital Employed (ROCE) is calculated as:

ROCE = Earnings Before Interest and Tax (EBIT)/Capital Employed

Source: tatasteel.com
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 15.01 13.06 13.48 15.03 13.37

JINDAL STEEL 23.16 23.26 15.07 13.40 9.57

29
 45

40

35

30

25

20

15

10

0
2020 2021 2022 2023 2024

TATA STEEL JIND AL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

From the above table and graph, we are able to tell that which companies return on investment
is better in 2020 Jindal steels return on capital is better in 2021 it goes down while in Tata
steels return on capital employed fluctuates in these four years it was high in 2020 and 2023
while low in 2021 and 2022.

7. Dividend payout ratio net profit.

Dividend payout ratio is the fraction of net income a firm pays to its stockholders in
dividends:

Dividend payout ratio = Dividends / Net Income for the same period
Payout Ratio (Dividends Preferred Stock Dividends)/Net Income
Source: tatasteel.com
PARTICULARS 2020 2021 2022 2023 2024

TATA STEEL 27.15 16.64 19.04 20.11 15.14

JINDAL STEEL 5.55 8.16 6.97 7.23 8.69

30
 30

25

20

15

10

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

This ratio identifies the percentage of earnings (net income) per common share allocated to
paying cash dividends to shareholders. From the above table it is clear that Dividend payout
ratio of Tata steels were high in all the years in comparison to Jindal steels which has low
dividend payout ratio.

8. Earnings per share.

The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serves as an indicator of a company's profitability.
Calculated as:

= Net Income - Dividends on Preferred Stock/Average Outstanding

Shares
When calculating, it is more accurate to use a weighted average number of shares outstanding
over the reporting term, because the number of shares outstanding can change over time.
However, data sources sometimes simplify the calculation by using the number of shares
outstanding at the end of the period.

Source: tatasteel.com
PARTICULARS 2020 2021 2022 2023 2024

31
TATA STEEL 333.27 281.11 305.53 348.41 429.18

JINDAL STEEL 496.46 78.90 102.15 142.13 159.94

600

500

400

300

200

100

0
2020 2021 2022 2023 2024

TATA STEEL JINDAL STEEL

Caption: Analysis of TATA STEEL and JINDAL STEEL performance

2.5 Limitations to the Study

While this study aims to provide valuable insights into the financial performance of TATA
Steel and JINDAL Steel through a comparative ratio analysis, it is important to acknowledge
certain limitations that may impact the interpretation and generalization of the findings:

• Data Availability: The accuracy and reliability of the comparative analysis are
contingent upon the availability and completeness of the financial data obtained from
public sources. Any discrepancies or missing information in the data may limit the
comprehensiveness of the analysis.
• Currency of Data: The study relies on the latest available financial statements
and annual reports of TATA Steel and JINDAL Steel. However, the currency of the
data may vary among the companies, potentially affecting the comparability of the
financial ratios analysed.
• Scope of Analysis: This study focuses solely on the financial ratios of TATA Steel
and JINDAL Steel and does not take into account other qualitative factors that may
influence their financial performance. Factors such as market dynamics, industry
trends, and strategic decisions are beyond the scope of this analysis.
• Industry-specific Factors: The steel industry is subject to various external
factors, including fluctuations in commodity prices, regulatory changes, and global
economic conditions. These industry-specific factors may impact the financial
performance of the companies under study and should be considered when
interpreting the results.

32
Chapter 3: Results & Discussion

3.1 Findings of the Study

The comparative ratio analysis revealed several key findings regarding the financial
performance of TATA Steel and JINDAL Steel. These findings are summarized
below:
• Liquidity Ratios:
• Liquidity ratios assess a company’s ability to meet short-term obligations.
They indicate how easily a company can convert its assets into cash to cover
immediate liabilities.
• In this analysis:
• TATA Steel: Demonstrated a higher current ratio compared to JINDAL Steel.
The current ratio (current assets divided by current liabilities) reflects the
company’s short-term liquidity position. A higher current ratio suggests that
TATA Steel has better liquidity to meet its short-term obligations.
• JINDAL Steel: While its current ratio was lower, it’s essential to consider the
context. Sometimes a slightly lower current ratio isn’t necessarily negative; it
depends on the industry and business model.
• Profitability Ratios:
• Profitability ratios evaluate a company’s ability to generate profits relative to
its revenue, equity, and other financial metrics.
• In this analysis:
• JINDAL Steel: Outperformed TATA Steel in terms of profitability. How?
• Returns on Equity (ROE): JINDAL Steel achieved higher returns on equity.
ROE measures how efficiently a company uses shareholders’ equity to
generate profits. A higher ROE indicates better utilization of equity capital.
• Net Profit Margins: JINDAL Steel had better net profit margins. Net profit
margin (net income divided by revenue) shows the percentage of profit a
company earns from its total revenue. Higher margins imply better cost
management and pricing strategies.
• Efficiency Ratios:

33
 • Efficiency ratios assess how effectively a company utilizes its assets and
resources.
• In this analysis:
• TATA Steel: Exhibited superior efficiency in managing its assets.
• Asset Turnover Ratios: TATA Steel had higher asset turnover ratios. Asset
turnover measures how efficiently a company generates revenue from its
assets. A higher ratio suggests effective asset utilization.
• .

3.2 Discussion on findings of the study

The findings of this study underscore the diverse financial performance of TATA Steel and
JINDAL Steel within the Indian steel industry. The discussion will further explore the
implications of these findings in relation to each company's competitive position, operational
efficiency, and strategic.

Chapter 4 : Conclusions

Gross profit ratio deceits between -14.62% to 7.2%. In that year there is maximum gross profit Ratio
i.e. 7.2%, which was a good or sound condition for the company and minimum i.e., 14.62% which
was not a good sign for the company. Net Profit ratio from lies between -10.58 to 5.60 and the net
profit Ratio is maximum; it indicates the sound position of the company and lower, indicates worst
performance of the company. Operating Ratio of the company are lies between 92.80 % to 114.61%.
Operating Ratio indicates that, lower the operating Ratio, higher will be the net profit and vice a
versa. Lower operating ratio is found is 92.80%, indicates the good condition or performance of the
company After analyzing the above ratio, it is clear that the position of Tata steels is better in
comparison to Jindal steels. In above 8 ratio which we see through graph and table it is shown that
in 3 ratio Tata steel company is performing better while the position of Jindal steels is good but in
comparison to Tata steels position was not good.

34
 Chapter 5: Suggestions & Directions for Future Research

5.1 Suggestions
Based on the comparative ratio analysis conducted between TATA STEEL and JINDAL
STEEL the following suggestions can be made:

1. Leverage Management: Evaluate the debt levels of each company relative to their
equity and cash flow positions. Companies with excessive debt may face challenges
in servicing their obligations during economic downturns. Suggestions for improving
leverage management could include debt restructuring or equity financing.

2. Operational Efficiency: Assess the efficiency ratios to identify areas where each
company can optimize its operations. This may involve streamlining production
processes, reducing inventory holding costs, or improving supply chain management.

3. Profitability Enhancement: Analyse the profitability ratios to understand each

company’s ability to generate profits from its operations. Suggestions for enhancing
profitability could include cost-cutting measures, product diversification, or market
expansion strategies.

5.2 Directions for Future Research

For future research, the following directions can be explored:

1. Industry Comparative Analysis: Conduct a comprehensive industry-wide

comparative analysis encompassing additional steel manufacturers beyond TATA STEEL and
JINDAL STEEL. This broader perspective would offer insights into the relative strengths
and weaknesses of these companies within the context of the entire steel sector.

2. Macro-Economic Factors Impact Analysis: Investigate the influence of

macroeconomic factors such as GDP growth rates, inflation, interest rates, and currency
fluctuations on the financial performance of steel companies. Understanding how these
external factors affect the industry dynamics and individual company performance can
provide valuable insights for strategic decision-making.

3. Technological Advancements and Innovation: Explore the impact of technological

advancements and innovation in steel production processes on the competitiveness of TATA
35
 STEEL and JINDAL STEEL. Assessing their investments in research and development,
adoption of new technologies, and efficiency gains derived from innovation can shed light
on their ability to stay ahead in a rapidly evolving industry landscape.

4. Environmental, Social, and Governance (ESG) Analysis: Integrate

environmental, social, and governance (ESG) criteria into the analysis to evaluate the
sustainability practices and corporate responsibility initiatives of each company. Assessing
factors such as carbon footprint, waste management, labor practices, and corporate
governance structures can provide a holistic view of their long-term viability and resilience.

5. Market Dynamics and Competitive Strategy: Investigate the competitive

positioning and strategic initiatives undertaken by TATA STEEL and JINDAL STEEL in
response to evolving market dynamics. Analyse their market share, pricing strategies,
customer segments, and geographical reach to identify opportunities for growth and potential
threats from competitors.

6. Risk Management and Resilience Planning: Examine the risk management

frameworks and resilience planning strategies implemented by each company to mitigate
operational, financial, and strategic risks. Assess their ability to anticipate and adapt to
changing market conditions, regulatory requirements, and geopolitical uncertainties to
safeguard their business continuity and long-term success

36
 References

(Lan, n.d.)

References
Lan, J. (n.d.). 16 Financial Ratios for Analyzing a Company’s Strengths and Weaknesses. Retrieved
from FINANCIAL STATEMENTS FROM THE ARCHIVES:
https://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-
strengthsand-weaknesses
Mill, T. (n.d.). Steel Authority of India Limited . Retrieved from Talk:Steel Authority of India Limited:
https://en.m.wikipedia.org/wiki/Steel_Authority_of_India_Limited

(Javed, n.d.)

References
Javed, R. (n.d.). Operating ratio. Retrieved from Financial statement analysis (explanations)
Lan, J. (n.d.). 16 Financial Ratios for Analyzing a Company’s Strengths and Weaknesses. Retrieved
from FINANCIAL STATEMENTS FROM THE ARCHIVES:
https://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-
strengthsand-weaknesses
Mill, T. (n.d.). Steel Authority of India Limited . Retrieved from Talk:Steel Authority of India Limited:
https://en.m.wikipedia.org/wiki/Steel_Authority_of_India_Limited

Annexure

Financial Statements:
• TATA STEEL:

o Income Statement for the year ending 2023 o

Balance Sheet as of December 31, 2023:

37
38
PROFIT AND LOSS ACCOUNT

39
40
• JINDAL STEEL:
Income Statement for the year ending 2023 Balance
Sheet as of December 31, 2023

41
42
PROFIT AND LOSS ACCOUNT

43
44