JSW Steel

Total Equity:
Over the years we can observe that total equity has steadily increased from 123480.70 in 2013 to 217662
in 2017. This can be attributed to the increase in reserves of the company. Reserves have increased from
122545.90 in 2013 to 216747 in 2017. The capital has remained constant at 914. Debt Equity Ratio has
reduced from 3.22 to 2.9, which indicates that the company is increasingly relying on equity instruments
rather than debt instruments to finance its business.

Analysis of different cash flows

The company shows signs of growing business in the form of consistently positive cash flow from
operations. The CFF has been fluctuating from positive to negative. The CFI has fluctuated from negative
to positive.
1. CFO- a positive cash flow from operations signifies that the sales of stocks and collections from
debtors as compared to payment to creditors and other expenses. For JSW it shows that there
has been a decrease in CFO from 2016 to 2017 which shows there is decrease in sale of stocks
due to demonetization and pre-GST effects
2. CFF- a negative CFF signifies that loans and capitals are being repaid and dividends and interests
are also being paid. Whereas, a positive CFF signifies that loans have been received and capital
has been raised.
In case of JSW last two years have been -ve CFF which shows that the company is now more stable
and repaying its debts.
3. CFI- a negative CFI indicates that company is spending more on acquiring more plants, property
and equipment and a positive CFI signifies that there has been sale of bonds, sale of property,
plant and equipment, dividend received and interest received. JSWs CFI has been in -ve side most
of the time signifying that its more interested in investment activities.

Analysis of Ratios

Liquidity ratios
1. Current Ratio-The current ratio has decreased from 0.84 in 2013 to 0.67 in 2017. It shows a
companys ability to pay short term and long-term obligations. The decrease shows that there is
no additional cushion against unforeseeable obligations that may arise in the short term.
2. Liquid Ratio- Liquid Ratio has fallen in the last 5 years. It has fallen from 0.58 to 0.57 which
reflects that most of the companys current assets is stock and it is not that difficult for the
company to convert it into cash to cover up the short-term obligations.
3. Absolute Cash Ratio- Absolute Cash Ratio has increased in the last 5 years from 0.00 to 0.01

Solvency position
1. DER- is the ratio of debt to equity indicates that the company sources more of its funds from
equity (capital and profits) and a very small part through loans. For the company, it has
decreased from 3.22 to 2.9 which shows that it is now more focused on taking less debt.
2. The companys ICR has decreased drastically which signifies that the company holds a very weak
position in covering its interest payments through its profits.
DuPont Analysis
1. ROCE- There has been a drastic decrease in ROCE which indicates that the company has not
made efficient use of the capital. This shows the company is weak at this moment of time.
2. PBIT/Sales- Constant decrease in value showing that sales have increased but profit has not
which means the sales are on terms of credits.

Z Score
The Z Score has increased from 0.837 to 1.08 which shows that the company is in distress zones. During
the past 12 years, Jindal Steel & Power Ltd.s highest Altman Z-Score was 2.11. The lowest was 0.00. & the
median was 0.62.