JSW Group is one of the fastest growing business conglomerates with a strong presence in the core economic sector.

This Sajjan Jindal led enterprise

has grown from a steel rolling mill in 1982 to a multi business conglomerate worth US $ 3.7 billion within a short span of time.

As part of the US $ 8 billion O. P. Jindal Group, JSW Group has diversified interests in Steel, Energy, Minerals and Mining, Aluminium, Infrastructure and
Logistic, Cement and Information Technology. 

On its road to growth and expansion, the Group is also conscious about its responsibility towards environment and social development. Eco-efficiency is a
matter of principle. Preventive measures for damage to the environment are taken into account at the planning stage of production and growth.

JSW Foundation, an integral part of the Group, is the CSR wing, with a vision to create socio economic difference in the fields of Education, Health and
Sports, Community Relationship/Propagation as well as Art, Culture and Heritage. 

Forging ahead, JSW Steel Ltd. is one among the largest Indian Steel Companies in India today.

India’s third largest steelmaker, JSW Steel Ltd. consists of the most modern, eco-friendly steel plants with the latest technologies for both upstream &
downstream processes, which make it a technically advanced company

Working Capital Analysis of JSW Steels

 Rs. (In Crores)
Avg.
2005 2006 2007 2008 2009 Growth
Inventories 743.41   924.23 124.32 1,011.35 136.04 1,549.16 208.39 2,051.42 275.95 35.19
Sundry Debtors 266.6   229.19 85.97 245.16 91.96 337.39 126.55 398.14 149.34 9.87
Cash and Bank Balance 44.79   55.77 124.51 165.96 370.53 205.78 459.43 207.91 464.19 72.84
Total Current Assets 1,054.80   1,209.19 114.64 1,422.47 134.86 2,092.33 198.36 2,657.47 251.94 30.39

Loans and Advances 661.5   493.12 74.55 1,008.75 152.49 997.26 150.76 1,980.02 299.32 39.86
Fixed Deposits 77.7   43.1 55.47 171.84 221.16 133.44 171.74 212.05 272.91 34.58
Provisions 232.31   393.26 169.28 75.22 32.38 436.01 187.68 80.93 34.84 -13.03
Current Liabilities 971.51   929.48 95.67 1,255.81 129.26 1,566.71 161.27 2,273.00 233.97 26.79
Working Capital 83.29   279.71 335.83 166.66 200.10 525.62 631.07 384.47 461.60 72.32
6,092.3
Net Sales 6,675.14   9 91.27 8,595.03 128.76 11,391.05 170.65 14,006.59 209.83

PBT 1,453.54   1,294.13 89.03 1,931.33 132.87 2,450.96 168.62 765.02 52.63 -9.47
Tax 603.02   437.6 72.57 639.33 106.02 722.77 119.86 306.52 50.83 -9.83
PAT 870.11   864.29 99.33 1,292.00 148.49 1,728.19 198.62 458.5 52.69 -9.46

Current Ratio 0.67   0.68   0.64   0.51   0.44

Quick Ratio 0.6   0.59   0.43   0.28   0.28
Debt Equity Ratio 1.43   1.07   0.84   1.06   1.51
Long Term Debt Equity Ratio 1.3   0.97   0.79   1.01   1.34
Inventory Turnover Ratio 9   6.61   8.52   9.26   8.75
Avg. Period 40.6 55.2 42.8 39.4 41.7
Debtors Turnover Ratio 19.83   24.58   36.24   39.11   38.09
Avg. Colllection Period 18.4 14.8 10.1 9.3 9.6
Creditor Turnover Ratio Turnover
Ratio 10.9   12.1   9.9   10.2   11.4
Avg. Payment Period 33.5 30.2 36.9 35.8 32.0

Current Assets:-
 1) During the 5 years, inventories of the company have been increased with an average growth of 35% annually. In 2005 it was at 743.41 crore rupees
and in 2009, it reached at 2051.42 crore. It seems that increasing Inventories are showing an inefficient Inventory management. But it is not. The
increase in the inventories is due to a big increase in production in the production plants. Increase in 2009 is maximum, which shows that in 2009, an
actual inefficient inventory management came into picture. But this was just a shock of Recession to the company, from which it escaped in 2008 as
being a Steel company. No such big thing to worry is there as per the increase in the Inventories is concern.
2) If we compare the Inventories to Net Sales , we see that sales do not increase in the same percentage. The sales has been increased from 6675.14
crore (when Inventories were 743.41) to 14006.59 crore (when Inventories are at 2051.42). thus we see that company succeed increasing the
production, but not to increase the sales in the same percentage. No doubt the sales increased, but it was less in comparison to the increase in
inventories.
3) Increasing Inventories and less effective sales did not affect the Profits of the company as the increasing pries of the steel helped the company
maintaining the Profits. The years of 2000 to 2007 were the development era of the infrastructure and price of the steel helped all the companies. In
2009, profits went down very badly. It become the 52.6% of the profits of the profits of base year 2005. Again, here the company failed to adjust with
the Recession. It keeps on increasing the Investment and the Production, but demand fell down and sales and price were affected. Thus the company
had to bear a shock on its back.
4) Debtors of the company have been increased by an average annual growth of 9.87%. The debtors of the company have increased from 266.6 crore to
398.14 crore. It means the company has approximately 400 crore rupees running in the market. Out of a net sales of 14000 crore, only 400 sales are
on credit. It means the company is able to recover the money fast. Being in a sector like Steel, if the company is able to recover its money so fast, the
company should be considered as a very good company.
5) Cash and bank balance of the company has increased by 72%, which is a big number. Company holds 207.91 Crore rupees with it. As it has
suffered from Recession, this money will help the company getting out of the shocks. Secondly, as the company has loans of more than 2000 crore, it
need to carry such amount with it to meet these current Liabilities.

Current Liabilities:-
 1) Company has increased its Loans and advances year by year. But the highest loan taken is in year 2009. It has been doubled almost. In 2006 also,
it was same condition with the company that it had doubled the Loans and advanced. It was concerned with the increased in production. But in 2009,
company might have some expansion plans, which might have been sacrificed over the recession.
2) As far as the current liabilities are concerned, Short term Borrowings do not pay a big role in the company as the amount is very negligible. But
as it has increased very fast in year 2007, 08 & 09, it seems that company somewhere needed that fund to fulfil a gap in the capital investment in the
company.
3) Company has decreased the proportion of Provisions as it has very negligible bad debts in its accounts. In 2009, the Provisions remained just 34%
approximately of that of 2005.
4) An average increase of 30% is visible in the total current assets of the company, where Increase in current Liabilities is 26% only, which
shows the signs of a developing company. We can see that the company is much concern about the current assets so that there should be no treble to
meet the current liabilities. The company goes very safe side. It keeps sufficient tools with it to meet any kind of problem which may occur in future.

Working Capital:-
1) The Working Capital of the company does not follows any Trend. It keeps on Increasing and decreasing year by year. Working Capital in 2005
was just 83.29 Crore Rupees, when even the proportion Short Term Borrowings was near to this amount. Then without having any new Current
Asset, company increased its Working capital to a huge amount of 279.48 crore through the Long Term loans in 2006. In 2007, again it came down to
166 crore. In 2008, company increased working capital with a surprising amount of 525.62 crore. Then again, it came down to Rs. 384. 47. Simply,
company fluctuates its working capital as the requirement.

Working Capital
Working Capital

525.62

279.71 384.47

83.29 166.66

2005
2006
2007
2008
2009

2) If we compare the increase trend of Working Capital with that of Net Sales , we see that from the base year, that increase did not show any
immediate reaction as the Net Sales did not increased. But as a long term effect, it almost doubled the sales from the base year (from 6675.14 in 2005
to 14006.59 in 2009). The increase trend has crossed 200 in 2009. But still it is not clear that why company employed that huge amount of 525 crore
 as Working capital, as it gets highest operational efficiency with 384 crore only. It seems that the company is making some experimental decisions
with the working capital decisions. It does not shows the Wise Working Capital Decisions.

Increase in Sales V/S Working Capital

200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
1
2
3
4

Working Capital Net Sales PAT

3) Pat is decreasing due to the shock of the recession over the economy.
4)
Finical Ratios:-
1) Current Ratio:- Current ratio of the company is 0.67. it shows that company has sufficient Current Assets to meet the current Liabilities, as we have
seen above. It follows same trend in all years expect 2009. It is as we have seen the effects of Recession on the company.

2) Quick Ratio:- Quick Ratio follows the trend to stay near 0.5. in year 2008 & 2009 it is near 0.3. it shows that company has reliable assets to meet its
Liabilities. Even in the time of recession, company holds a good hold of assets over its Liabilities.

3) Inventory Turnover Ratio:- The Inventory Management of the company seems to be much efficient as the Inventory Turnover Ratio of the
company follows a trend of somewhere around 9 each year. However company deals in steel, where other companies have to hold big Inventories
with them, JSW convert its Inventories into sales very Fast.

4) Debtor Turnover Ratio:- Debtor Turnover Ratio is quit high as it is more than 35% in 2009. At the average collection period of 10 days, company
has an excellent Debtor Turnover. As we see that the company has very few debtors and the collection of debt is very fast, the company has kept the
PROVISIONS very less.
Cash Conversion Cycle=
Year + Avg. Inventory Conversion Period + Avg. Collection Period - Avg. Payment Period=No. Of Days in Working Capital

2005  41.7+9.6-32= 19.3

2006  39.4+9.3-35.8= 12.9

2007  42.8+10.1-36.9=16
Cash Conversion Cycle of
2008  55.2+14.8-30.2=39.8 2009
2009  40.6+18.4-33.5=25.5 Conversion of Inventory into Sales 40.6

Total Cycle of 25.5

Days

Payment to Creditors 33.5

Conversion of Debtors into Cash 18.4 days
Analysis of Cash Conversion Cycle:-
 Average Conversion Period: - JSW has a trend of Average Conversion Period of Inventories of 40 to 50 days. Being a steel company, Company can
convert its inventories into sales very fast. Such effective operations for a steel company are very good, where other companies have to keep their
Inventories with their self.

 Average Collection Period:- JSW has a very good collection routine from its debtors. However, the days in average collection period has increased
to double by five years, still the numbers of days in just 18.4 at max. Little sales, which company has made over the credit are easily convertible into
cash.

 Average Payment Period:- the Company pays its debt in at least 30 days, where it collects its money in 19 days. Thus, company has tried making an
optimum use of the time available for the money available. This longer period helps the company reducing the average process time of the working
capital.

 Number of days in Working Capital:- JSW has numbers of days in working capital at least 16 and at most 39.8. such a short duration to make the
working ready for the reprocessing for a steel company is very big thing. In year 2009, employing a working capital of 384.47 crore, company has
earned a profit of 458.5 crore and working capital was ready for the next operation after every 26 days.