essar steel finance report

8/6/2019 Essar Steel Finance Report

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Industry Profile

Steel Sector

Steel is an alloy that consists mostly of iron and has a carbon content

between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most

common alloying material for iron, but various other alloying elements are used,

such as manganese, chromium, vanadium, and tungsten. Carbon and other

elements act as a hardening agent, preventing dislocations in the iron atom crystal

latticefrom sliding past one another. Varying the amount of alloying elements and

the form of their presence in the steel (solute elements, precipitated phase) controls

qualities such as the hardness, ductility, and tensile strength of the resulting steel.

Steel with increased carbon content can be made harder and stronger than iron, but

is also less ductile.

Alloys with a higher carbon content are known as cast iron because of theirlower melting point and castability. Steel is also distinguishable from wrought iron,

which can contain a small amount of carbon, but it is included in the form

of slag inclusions. Two distinguishing factors are steel's increased rust resistance

and better weldability.

Though steel had been produced by various inefficient methods long before

the Renaissance, its use became more common after more-efficient production

methods were devised in the 17th century. With the invention of the Bessemer

process in the mid-19th century, steel became an inexpensive mass-

produced material. Further refinements in the process, such as basic oxygen

steelmaking, further lowered the cost of production while increasing the quality of

the metal. Today, steel is one of the most common materials in the world, with

more than 1300 million tons produced annually. It is a major component in


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buildings, infrastructure, tools, ships, automobiles, machines, appliances, and

weapons. Modern steel is generally identified by various grades defined by

assorted standards organizations.

Following are the major competitors of steel sector:

y Tata Steely Steel Authority of India Limited (SAIL)y Bhushan Power & Steel Ltd.y Jindal Steel & Power Limited (JSPL)y Essar Steely ISPAT Industry Ltd.

Steel Industry Trends

Steel Industry Trends are not at all static in this industry and is a very

dynamic. The country that is producing the maximum amount of steel may not be

in the first position in the coming years. Analysis of the Steel Industry Trends

show that from the period starting from 1910 till the year 1960, the first position in

terms of producing the largest amount of steel in the whole world was captured by

United States of America. During this period it was observed that almost half of

the total steel production around the globe was produced by USA. But the scenario

started to change after the countries like Japan and China came to the fore. Again,

in the recent years, India as well as Brazil has shown tremendous performance in

the steel production side. According to the recent Steel Industry Trends, China is

the largest steel producing nation. But it has also been seen that the production of

quality steel in China is very low. Thus, they have to import large quantities of thesame from the foreign countries, especially Brazil. The rising of India as a key

player in the world steel industry scenario is also evident from Steel Industry

Trends. Very recently, the Indian Steel company called TATA Steel has acquired

the fifth largest steel company of the world called Corus and consequently came up

from 65th to 5th position.


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Merger and acquisition is becoming the Steel Industry Trends in the recent

times. The biggest M&A venture that took place recently was the one where the

Rotterdam (Netherlands) based steel company called Mittal Steels bought theerstwhile steel giant Arcelor. This acquisition has led to the formation of the

largest steel company of the recent times called Arcelor-Mittal Steel company.

Steel Industry Trends also show that a downsizing in the steel industry is a

common phenomenon all round the globe. This phenomenon has arisen due to the

fact that this industry has shifted from its earlier stance of being a labor intensive

one to a capital intensive one. The recent trend of M&A has enhanced its pace.

Steel Industry Trends in case of prices have also shown high rate of growth

and the main factor acting behind it is excess demand for steel generated by the

construction, automobile and infrastructure industries. This increase in the price of

steel can be observed along all the categories. The different categories of steel are

Hot as well as Cold Rolled Coil of steel, Hot rolled plate of steel and rod made up

of steel wire. The price of medium steel type has increased from US $ 666 to US $

815 between May 2006 and May 2007.

The Indian steel industry have entered into a new development stage from2005-06, riding high on the resurgent economy and rising demand for steel. Rapidrise in production has resulted in India becoming the 5th largest producer of steel.

It has been estimated by certain major investment houses, such as Credit

Suisse that, Indias steel consumption will continue to grow at nearly 16% rateannually, till 2012, fuelled by demand for construction projects worth US$ 1

trillion. The scope for raising the total consumption of steel is huge, given that percapita steel consumption is only 40 kg compared to 150 kg across the world and250 kg in China.


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The National Steel Policy has envisaged steel production to reach 110million tonnes by 2019-20. However, based on the assessment of the currentongoing projects, both in greenfield and brownfield, Ministry of Steel has

projected that the steel capacity in the county is likely to be 124.06 million tonnesby 2011-12. Further, based on the status of MOUs signed by the private producerswith the various State Governments, it is expected that Indias steel capacity would

be nearly 293 million tonne by 2020.

Production

y Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.y Today, India is the 7th largest crude steel producer of steel in the world.y In 2008-09, production of Finished (Carbon) Steel was 59.02 million tonnes.y Production of Pig Iron in 2008-09 was 5.299 Million Tonnes .y Last 5 year's production of pig iron and finished (carbon) steel is given

below:

(in million tonnes)Category 2004-05 2005-06 2006-07 2007-08 2008-09

Pig Iron 3.228 4.695 4.993 5.314 5.289

FinishedCarbon Steel

40.055 44.544 55.416 58.233 59.02


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Growth of Steel Industry In India

Steel industry reforms - particularly in 1991 and 1992 - have led to

strong and sustainable growth in Indias steel industry.

Since its independence, India has experienced steady growth in the steel

industry, thanks in part to the successive governments that have supported the

industry and pushed for its robust development.

Further illustrating this plan is the fact that a number of steel plants were

established in India, with technological assistance and investments by foreign

countries.

In 1991, a substantial number of economic reforms were introduced by

the Indian government. These reforms boosted the development process of anumber of industries - the steel industry in India in particular - which has

subsequently developed quite rapidly.

The 1991 reforms allowed for no licenses to be required for capacity

creation, except for some locations. Also, once Indias steel industry was moved

from the listing of the industries that were reserved exclusively for the public

sector, huge foreign investments were made in this industry.

Yet another reform for Indias steel industry came in 1992, when every type

of control over the pricing and distribution system was removed, making the

modern Indian Steel Industry extremely efficient, as well as competitive.


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Additionally, a number of other government measures have stimulated the

growth of the steel industry, coming in the form of an unrestricted external trade,

low import duties, and an easy tax structure.

India continually posts phenomenal growth records in steel production. In

1992, India produced 14.33 million tones of finished carbon steels and 1.59 million

tones of pig iron. Furthermore, the steel production capacity of the country has

increased rapidly since 1991 - in 2008, India produced nearly 46.575 million tones

of finished steels and 4.393 million tones of pig iron.

Both primary and secondary producers contributed their share to this phenomenal development, while these increases have pushed up the demand for

finished steel at a very stable rate.

In 1992, the total consumption of finished steel was 14.84 million tones. In

2008, the total amount of domestic steel consumption was 43.925 million tones.

With the increased demand in the national market, a huge part of the international

market is also served by this industry. Today, India is in seventh position amongall the crude steel producing countries.


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Investments in Steel Sector

Steel sector in India is likely to see an investment of Rs 8,70,640 crore by

2020 to reach over 290 million tonne capacity, Steel Minister Ram Vilas Paswan

said.

The likely capacity achievable by 2019-20 will be over 290 million tonnes. Going

by estimate of Rs4,000 crore investment per million tonne of additional capacity,

the sector is likely to see an investment of Rs2,76,880 crore by 2012 andRs8,70,640 crore by 2020, the minister told

The current steel production capacity is over 53 million tonnes.

The National Steel Policy had envisaged countrys total steel production to

reach 110 million tonnes (MT) by 2020. A buoyed Paswan said the production islikely to reach 124 MT by 2012 on the back of expansion plans of the steel

companies and a few greenfield projects in the pipeline.

He said the additional capacity enhancement in the sector would generate

employment for around 40 lakh people.

As of now, both domestic and foreign steel players have signed 193

memoranda of understanding with states for setting up new units with a total

planned capacity of around 243 MT and a total proposed investment of over

Rs5,14,000 crore.


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Paswan said private and public sector steel companies have embarked on

capacity expansion. State-run SAILs crude steel production is expected to touch

24.84 MT by 2011-12 and 60 MT by 2020 from the present 12.84 MT, he added.

Similarly, RINLs crude steel production capacity will be enhanced from the

present 2.90 MT to 6.80 MT by 2011-12 and 10 MT by 2020.

Private steel majors including Tata Steel, Essar Steel, JSPL, Ispat and JSW

Steel have also lined up expansion of their existing production capacities.

Government Policies

Industrial and Trade Policy Resolutions in 1991 with regards to the Steel Industry:

y Licensing requirement for capacity creation has been abolished.y Steel Industry has been removed from the list of industries reserved for the

state sector.

y Automatic approval granted for foreign equity investment in steel has beenincreased up to 74%.

y Price and distribution controls were removed from January 1992.y Restrictions on external trade, both in import and export, have been

removed.

y Import tariff reduced from 105% in 1992-93, to 30% in 1996-97.y Other policy measure like convertibility of rupee on trade account,

permission to mobilize resources from overseas financial markets, and

rationalization of existing tax structure.


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Company Profile

NAME: ESSAR STEELLTD.

TYPE: Corporate

LOCATION: ESSAR STEELLTD.

27th

K.M

Hazira Road, Surat-394270

Dist.-Surat

Gujarat

India.

CORPORATE OFFICE: Essar House,

11 Keshavrao Khadye Marg,

Mahalaxmi,

Mumbai,

India.


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1

KEY PEOPLE:

Mr. Shashi Ruia Chairman

Mr. Ravi Ruia Vice Chairman

Mr. Prashant Ruia Director

Mr. Anshuman Ruia Director

Ms. Smiti Kanodia Director

Mr. Rewant Ruia Director

INDUSTRY: Steel, Energy, Power, Communications, Shipping Ports & Logistics,

Construction and Mining & Minerals.

PRODUCTS: Steel, Oil, Power, Mobile, Engineering Procurement &

Construction Etc..

REVENUE: USD 15 billion.


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1

Essar Group

he Essar Group is a multinational conglomerate and a leading player in the

sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports &

Logistics, Construction and Minerals. With operations in more than 20

countries across five continents, the group employs 60,000 people, with

revenues of about USD 15 billion.

Essar began as a construction company in 1969 and diversified intomanufacturing, services and retail. Over the last decade, it has grown through

strategic global acquisitions and partnerships, or through Greenfield and

Brownfield development projects, capturing new markets and discovering new raw

material sources.

Today, the Group continues to expand its global footprint, focusing on

markets in Asia, Africa, Europe, the Americas and Australia. Essar investssignificantly in the latest technology to drive forward and backward integration in

its businesses, and on leveraging synergies between these businesses. It also

focuses on in-house research and innovation to be a low-cost manufacturer with

high quality products and innovative customer offerings.

T


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1

Alongside its ambitious business pursuits, Essar has been committed to its

social responsibility. The Group runs community outreach initiatives in all its plant

locations, with a focus on education, healthcare, environmental and agriculturaldevelopment, and self-employment. Essar is committed to sustainable business

practices. Our HSE (Health, Safety and Environment) management system is on

par with global standards. We are also taking climate change initiatives to reduce

our carbon footprint. This includes several CDM (Clean Development Mechanism)

projects that can earn the company CER (Certified Emission Reduction) credits.

_A growing number of our businesseswith new businesses joining the list every

yearare certified to international environment standards, like ISO 9001 / 14001,

and health and safety standards, like OHSAS 18001.

The Essar Group is widely regarded as a responsible and conscientious

global employer. It has experience in managing businesses in different geographies

with a culturally diverse workforce. This is why its people practices are sensitive to

cross-cultural nuances. The Groups people strategy is focused on promoting a

learning culture that continually enhances the professional skills of its employees.


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1

STEEL

yA global steel producer with 14 million tonnes per annum of current capacity,with an aim to achieve a global capacity of 20-25 million tonnes

y Presence in key markets in Asia and North Americay Fully integrated from mining to retail: Essar owns a global portfolio of coal

and iron ore mines and has access to all key raw materials, ensuring steady

supply to its plants

y Strong downstream capability with service centres and customer care centres,as well as a global network of retail outlets branded Essar Hypermart

y Specialised plants for value-added steel products, like pipes and platesy Leadership position in the cold rolling, galvanizing and pre-coated segments

CURRENT OPERATIONS:

y Hazira, Gujarat, India: 10-million tonne steel plant at Hazira, largest inWestern India. The plant is supported by a complete infrastructure

setup,_including a captive port, power plant, lime plant and oxygen plant.

o Downstream facilitieso Cold Rolling plant: 1.4 million tonneso Galvanizing plant: 0.5 million tonneso A 1.5-million tonne extra wide plate millo A 600,000-tonne pipe mill


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1

y Visakhapatnam, Andhra Pradesh, India: 8-million tonne pellet planty Bailadila, Chattisgarh, India: 8-million tonne iron ore beneficiation planty Pune, Maharashtra, India:

o 600,000-tonne cold rolling planto 500,000-tonne galvanising planto 400,000-tonne colour coating planto 650,000-tonne pickling line

y Algoma, Ontario, Canada: 4-million tonne steel planty West Java, Jakarta, Indonesia:

o 400,000-tonne cold rolling mill and 150,000-tonne galvanising lineo Steel Service Center: 200,000 tonneso Essar Hypermart

y Retailing (across India): Over 450 steel retail outlets branded EssarHypermart and Essar Expressmart

y Services (across India):Largest Steel Service Center facilities in India withan annual capacity of 2.5 million tonnes located in Pune (Maharashtra),

Hazira (Gujarat), Bahadurgarh (National Capital Region), and Chennai

(Tamil Nadu).

UNDEREXECUTION:

y Paradip, Orissa, India: A 12-million tonne pellet plant at Paradip close tothe port

y Jodha-Barbil area, Orissa, India: A 12-million tonne iron orebeneficiation plant

y Bhuj, Gujarat, India: Steel Service CentreMinnesota, USA: A 6-million tonne pellet plant, a concentration plant and a

direct-reduced iron plant


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1

Steelmaking

Process of Steelmaking

y First of all the iron oxide is collected from Bailadila (MP).y Then it is sent to the pelletisation plant at Vizag through a pipeline.y Now this iron ore is converted into pellets over here, which is in the shape of

round balls.


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1

Ratio Analysis

Ratios 2009 2008 2007

Profitability Ratios

Gross Profit Ratio 27.41% 27.59% 31.40%

Operating Ratio 79.12% 78.52% 76.37%

Expense Ratio 14.94% 14.11% 16.88%

Net Profit Ratio 1.58% 3.99% 5.33%

Profitability Ratios based on Investments

Return on CapitalEmployed

11.17% 15.33% 11.86%

Return onShareholders

Funds

3.88% 9.25% 9.77%

Return on EquityShare Capital

3.80% 9.23% 10.21%

Earning Per Share 1.58 3.71 4.38

Liquidity Ratios

Current Ratio 1.68:1 1.16:1 1.26:1

Liquid Ratio 0.89:1 0.54:1 0.59:1

Acid-test Ratio 0.19:1 0.12:1 0.12:1

Capita Gearing Ratios

Proprietary Ratio 33.49% 33.60% 31.04%Debt-Equity Ratio 1.56 1.35 1.59

Gearing Ratio 3.82% 3.82% 8.02%

Long-Term Fundsto Fixed Assets

115% 102% 110%

Turnover Ratios

Stock Turnover 6.12=6 Times 5.07=5 Times 4.67=5 Times

Debtors Ratio 12.85=13 Days 12.24=12 Days 24.36=24 Days

Debtors Turnover

Ratio

28.08=28 Times 30.42=30 Times 15.21=15 Times

Creditors Ratio 171.99=172 Days 162.75=163 Days 235.23=235 Days

Creditors TurnoverRatio

2.12=2 Times 2.24=2 Times 1.55=2 Times

Total AssetsTurnover

0.82 0.78 0.57


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1

Year Ratio

2007 31.40%

2008 27.59%

2009 27.41%

24.00%

26.00%

28.00%

30.00%

32.00%

2007

2008

31.40%

27.59%

Gross Profit (07-08)

27.30%

27.40%

27.50%

27.60%

2008

2009

27.59%

27.41%

Gross Profit (08-09)

Graph Shows that the Gross Profit Ratio of 2007 is highthan other two years. It means that the Cost of Sales islower for year 2007. And the Cost of Sales for the year

2008 & 2009 are higher.


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2

Year Ratio

2007 76.37%

2008 78.52%

2009 79.12%

75.00%

76.00%

77.00%

78.00%

79.00%

2007

2008

76.37%78.52%

Operating Ratio (07-08)

78.00%

78.50%

79.00%

79.50%

2008

2009

78.52% 79.12%

Operating Ratio (08-09)

Graph Shows that the ratio for the year 2008 & 2009 arehigher than 2007. Its shows that year-by-year the profit isgetting lesser.


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2

Year Ratio

2007 16.88%

2008 14.11%

2009 14.94%

12.00%

14.00%

16.00%

18.00%

2007

2008

16.88%

14.11%

Expenses Ratio (07-08)

13.50%

14.00%

14.50%

15.00%

2008

2009

14.11%14.94%

Expenses Ratio (08-09)

In this graph we can see that the expense ratio is high for

the year 2007. It shows that in the year 2007 the

company had a high than last two year


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2

In 2007, the company gets a nice

profit. But in 2008 it was less, and

in 2009 it was much less. It shows

that the net profit is declining and it

indicates that administrative

expenses are slowly rising

0.00%

2.00%

4.00%

6.00%

2007

2008

5.33%

3.99%

Net Profit (07-08)

0.00%

1.00%

2.00%

3.00%

4.00%

2008

2009

3.99%

1.58%

Net Profit (08-09)

Year Ratio

2007 5.33%

2008 3.99%

2009 1.58%


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2

Year Ratio

2007 11.86%2008 15.33%

2009 11.17%

0.00%

5.00%

10.00%

15.00%

20.00%

2007

2008

11.86%15.33%

Return on Capital Employed (07-08)

0.00%

5.00%

10.00%

15.00%

20.00%

2008

2009

15.33%

11.17%

Return on Capital Employed (08-09)

It shows that how much you get return of your capitalemployed. And 2008 is much better than 2007 &2009. Means in 2008 company got a good return.


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2

Year Ratio

2007 9.77%

2008 9.25%

2009 3.88%

8.80%

9.00%

9.20%

9.40%

9.60%

9.80%

2007

2008

9.77%

9.25%

Return on Shareholder's Funds (07-08)

0.00%

5.00%

10.00%

2008

2009

9.25%

3.88%

Return on Shareholder's Funds (08-09)

The profitability is decreased for the last year(2009),from the viewpoint of equity shareholders, which is notsatisfying for shareholders. But 2007 & 2008 areconstant and they are satisfying shareholders


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2

Year Ratio

2007 10.21%

2008 9.23%

2009 3.80%

8.50%

9.00%

9.50%

10.00%

10.50%

2007

2008

10.21%

9.23%

Return on Equity Share Capital (07-08)

0.00%

5.00%

10.00%

2008

2009

9.23%

3.80%

Return on Equity Share Capital (08-09)

The profitability is decreased for the last year(2009),from the viewpoint of equity shareholders, which is not

satisfying for shareholders. But 2007 & 2008 areconstant and they are satisfying shareholders


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2

Year EPS

2007 4.38

2008 3.71

2009 1.58

3

3.5

4

4.5

2007

2008

4.38

3.71

Earning Per Share (07-08)

0

1

2

3

4

2008

2009

3.71

1.58

Earning Per Share (08-09)

In this graph we can see that the overall financialposition of the company is not satisfactory and shows a

considerable from its position of the last three years.


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2

Year Ratio

2007 1.26

2008 1.16

2009 1.68

1.1

1.15

1.2

1.25

1.3

2007

2008

1.26

1.16

Current Ratio (07-08)

0

0.5

1

1.5

2

2008

2009

1.161.68

Current Ratio (08-09)

Current ratio is nearly constant for last three year. Andit indicates that the liquid position of the company is

very satisfactory.


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2

Year Ratio

2007 0.59

2008 0.54

2009 0.89

0.5

0.52

0.54

0.56

0.58

0.6

2007

2008

0.59

0.54

Liquid Ratio (07-08)

0

0.5

1

2008

2009

0.540.89

Liquid Ratio (08-09)

For the first two year the liquid ratio is constant, but in2009 it has resin. Therefore, the firm is able to pay itsliquid liabilities immediately out of its cash and bank

balance itself.


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2

Year Ratio

2007 0.12

2008 0.12

2009 0.19

0

0.05

0.1

0.15

2007

2008

0.12

0.12

Acid-Test Ratio (07-08)

0

0.05

0.1

0.15

0.2

2008

2009

0.120.19

Acid-Test Ratio (08-09)

For the first two year the acid-test ratio is same, but for2009 it has been raised a little bit. So nothing to do with

it, its good that its not fallen down.


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3

Year Ratio

2007 31.04%

2008 33.60%

2009 33.49%

The ratio indicates that how stronger is the financial position of the company. Thehigher the ratio, the stronger is the financial position of business. 2008 & 2009 isconstant and 2007 is 2% down. Means the financial position of the company wasmuch better in last two years.

29.00%

30.00%

31.00%

32.00%

33.00%

34.00%

2007

2008

31.04% 33.60%

Proprietary Ratio (07-08)

33.40%

33.45%

33.50%

33.55%

33.60%

33.65%

2008

2009

33.60%

33.49%

Proprietary Ratio (08-09)


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3

Year Ratio

2007 1.59

2008 1.35

2009 1.56

1.2

1.3

1.4

1.5

1.6

2007

2008

1.59

1.35

Debt-Equity Ratio (07-08)

1.2

1.3

1.4

1.5

1.6

2008

2009

1.35 1.56

Debt-Equity Ratio (08-09)

Graph shows that the ratio of 2008 was down and thatwas good sign for 2008, because in that year the companyhave depended less upon the outside funds. But 2007 &2008 were up.


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3

Year Ratio

2007 8.02%

2008 3.82%

2009 3.82%

0.00%

5.00%

10.00%

2007

2008

8.02%

3.82%

Gearing Ratio (07-08)

0.00%

1.00%

2.00%

3.00%

4.00%

2008

2009

3.82%

3.82%

Gearing Ratio (08-09)

This ratio shows the capital structure of thecompany. In 2007, the ratio was at high, but in

2008 & 2009 they fell down.


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3

Year Ratio

2007 110%

2008 102%

2009 115%

95%

100%

105%

110%

2007

2008

110%

102%

Long Term Fund to FixedAssets (07-08)

95%

100%

105%

110%

115%

2008

2009

102%115%

Long Term Fund to FixedAssets (08-09)

This ratio should not be less than 100%. We can seethat the ratio for the last three years it is more than

100%. So, it indicates that the company is at thesatisfactory position.


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3

Year Ratio

2007 5

2008 5

2009 6

0

2

4

6

2007

2008

5

5

Stock Turnover Ratio (07-08)

4.5

5

5.5

6

2008

2009

5 6

Stock Turnover Ratio (08-09)

The stock turnover for the year 2007 & 2008 are thesame that means the stock turnover speed is constant.But in 2009 it raises to 1 times.


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3

Year Ratio

2007 15

2008 30

2009 28

0

10

20

30

2007

2008

15 30

Debtors Turnover Ratio (07-08)

27

28

29

30

2008

2009

30

28

Debtors Turnover Ratio (08-09)

In this ratio 2008 & 2009 are constant, and debtorsturnover ratio for 2007 is too low than last two years,

almost half than last two years.


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3

Year Ratio

2007 235

2008 163

2009 172

0

100

200

300

2007

2008

235

163

Creditors Ratio (07-08)

155

160

165

170

175

2008

2009

163 172

Creditors Ratio (08-09)

This ratio helps us to know the average period withinwhich we make payment for credit purchase. Here 2007

got more time to pay their credit purchase.


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3

Year Ratio

2007 2

2008 2

2009 2

0

0.5

1

1.5

2

2007

2008

2

2

Creditors Turnover Ratio (07-08)

0

0.5

1

1.5

2

2008

2009

2

2

Creditors Turnover Ratio (08-09)

This ratio helps us to know the average period withinwhich we make payment for credit purchase. Here

2007,08&09 are constant.


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4

Sources of Long Term Finance

2007 2008 2009

Rs. In Crores

Shares:

Equity Share 1,140.48 1,140.48 1,140.48

Pref. Share 43.60 43.60 43.60

Debentures 18.41 4.18 -

Terms loans from Banks 4,451.42 3,686.87 4,031.55Loan from Financial Institutions 666.09 541.41 695.57

Sources of Short Term Finance

2007 2008 2009

Rs. In Crores

Loans

Secured Loans 6,533.32 5,383.11 6,317.62

Unsecured Loan 409.92 733.47 993.77

Discounting ofBill 48.69 59.66 14.29

Customers Advances 282.88 131.05 791.31


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4

Changes in Working Capital

Schedule ofChanges in Working Capital

2007

2006 2007 Increase Decrease

Rs. In Crores Rs. In Crores

Current Assets

Interest accrued onInvestment

4.51 4.51 - -

Inventories 1,485.34 2,328.77 843.43 -Sundry Debtors 540.16 546.85 6.69 -Cash and BankBalance

725.79 432.86 - 292.93

Loans and Advances 1,117.71 1,084.42 - 33.293,873.51 4,397.41

Less: Current Liabilities

Liabilities 2,487.69 3,453.27 - 965.58Provisions 9.07 35.56 - 26.49

2,496.76 3,488.83

Working Capital 1,376.75 908.58

Decrease inWorking

Capital468.17 468.17

1,376.75 1,376.75 1,318.29 1,318.29


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2008



Current Assets

Interest accrued on

Investment

4.51 4.51 - -

Inventories 2,328.77 2,108.11 - 220.66Sundry Debtors 546.85 360.40 - 186.45Cash and BankBalance

432.86 399.49 - 33.37

Loans and Advances 1,084.42 1062.68 - 21.744,397.41 3,935.19


Liabilities 3,453.27 3,240.89 212.38 -

Provisions 35.56 136.32 - 100.763,488.83 3,377.21

Working Capital 908.58 557.98

Decrease inWorking

Capital350.60 350.60

908.58 908.58 562.98 562.98


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2009



Current Assets

Interest accrued on

Investment4.51 - - 4.51

Inventories 2,108.11 2,157.52 49.41 -Sundry Debtors 360.40 411.63 51.23 -Cash and BankBalance

399.49 508.16 108.67 -

Other Current Assets - 121.62 121.62 -Loans and Advances 1062.68 1,381.19 318.51 -

3,935.19 4,580.12


Liabilities 3,240.89 2,545.82 695.07 -

Provisions 136.32 175.54 - 39.223,377.21 2,721.36

Working Capital 557.98 1,858.76

Increase inWorking

Capital1,300.78 1,300.78

1,858.76 1,858.76 1,344.51 1.344.51


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4

Pvt. Ltd.(@Rs. 26,000)

50,000 equity shares of Rs. 10 each ofSteelscape Consultancy Pvt. Ltd. 0.05 ---

20 equity shares of Rs. 10 each of Essar

CommvisionL

td. (# Rs. 200) # #12.93 12.88

Investment in Subsidiary Companies-Unquoted

49,940 equity shares of Rs. 10 each ofEssar Steel (Jharkhand) Ltd. 0.05 0.05

49,940 equity shares of Rs. 10 each ofEssar Steel (Orissa) Ltd. 0.05 0.05

1 equity shares of AED 3 million of EssarSteel Trading FZE Dubai 3.77 3.77

3.87 3.87Current Investments

Quoted

54,076.21 units ofLICMF floating ratefund of Rs. 13.04 each 0.07 -

Unquoted

643 units of US 1964 Scheme of Rs. 10each of Unit Trust of India (* Rs. 8,314) * *

0.07 -

515.22 432.37

After comparing year 2008 with 2007, we found that in 2008 the company hadinvested their more money in Essar Steel(Hazira) Ltd., and they also bought 50,000Equity Shares of 10 each of Steelscape Consultancy Pvt. Ltd., and 54,076.21 units

in LICMF.


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4

Investments(2008-2009)

Investments2009 (Rs. In

Crores)

2008 (Rs. In

Crores)

Long Term Investments

Trade-Quoted

1,64,000 Equity Shares of Rs. 10 each ofRemi Metal Guj. Ltd. 0.16 0.16

Trade-Unquoted

2,50,000 Equity Shares of Rs.10 each ofFrontline Roll Forms Pvt. Ltd. 0.25 0.25

21,70,00,000 Equity Shares of Rs. 4(Prev.Yr. Rs. 10) each of Essar PowerLtd. 163.36 217

9,65,00,000 Equity Share of Rs 10 each ofBhander PowerLtd. 100.19 100.19

41,91,52,500 (Prev. Yr. 14,69,42,500)Equity Shares of Rs 10 each of Essar Steel(Hazira) Ltd. 419.16 146.95

13,002 Equity Shares of Rs 10 Each ofEssar Bulk Terminal Ltd. 0.01 0.01

1,15,70,000 0.01% Optionally ConvertibleRedeemable Cumulative Pref. Share of Rs.

10 each of Essar Bulk Terminal Ltd. 11.57 11.572,13,24,000 0.01% fully convertiblecumulative pref. shares of Rs. 10 each ofEssar Bulk Terminal Ltd. 21.32 21.32

715.86 497.29

Other than Trade-Quoted

2,11,000 Equity Shares of Rs. 10 each ofEssar Oil Ltd. 0.90 0.90

Other than Trade-Unquoted

12,26,300 fully paid 14% SecuredRedeemable Non Convertible of Rs. 105each of Essar Oil Ltd. 12.88 12.88

86,80,001(Prev. Yr. Nill) Equity Shares ofRs. 10 each of Teletech Investment Ltd. 53.64 ---

50,000 Equity Shares of Rs. 10 each ofSteelscape Consultancy Pvt. Ltd. 0.05 0.05


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4

20 Equity Shares of Rs. 10 each of EssarCommvision Ltd. (# Rs. 200) # #

66.57 12.93

Trade Investment in Subsidiary Companies

Unquoted49,940 equity shares of Rs. 10 each ofEssar Steel (Jharkhand) Ltd. 0.5 0.5

49,940 equity shares of Rs. 10 each ofEssar Steel (Orissa) Ltd. 0.5 0.5

1 equity shares of AED 6 million (Prev.Yr. AED 3 million) of Essar Steel TradingFZE Dubai 7.72 3.77

7.82 3.87

Current Investments

QuotedNil (Prev. Yr. 54,076.21) units ofLICMFfloating rate fund of Rs. 13.04 each --- 0.07

Unquoted

643 Units of US 1964 Scheme of Rs. 10

each of Unit Trust of India (@Rs. 8,314) @ @

--- 0.07

791.31 515.22

After comparing 2009 with 2008, we assumed that in 2009 the company hadinvested their more money in Essar Steel (Hazira), Teletech Investment Ltd., andthey also bought 1 Equity share of AED 6 Million, previous year(2008) it was ofAED 3 Million.


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4

Proprietary Funds Information

Proprietary Funds (2007-2008)

Share Capital2008 (Rs. In

Crores)

2007 (Rs.

In Crores)

Authorised

3,52,00,00,000 Equity Shares of Rs. 10 each 3,520.00 3,520.00

6,00,00,000 0.01% Cumulative Convertible PreferenceShares of Rs. 90 each 540.00 540.00

6,00,00,000 1% Cumulative Redeemable Preference

Shares of Rs. 90 each 540.00 540.0010,00,00,000 10% Cumulative Redeemable PreferenceShares of Rs. 10 each 100.00 100.00

30,00,00,000 0.01% Cumulative RedeemablePreference Shares of Rs. 10 each 300.00 300.00

6,50,00,000 7% Compulsory Convertible PreferenceShares of Rs. 350 each 2,275.00 2,275.00

7,275.00 7,275.00

Issued, Subscribed and Paid-up

1,13,98,10,888 (Previous year 1,13,98,10,888) EquityShares of Rs. 10 each 1,139.81 1,139.81

Add : 45,20,703 (Previous year 45,20,703) shareForfeited 0.67 0.67

1,140.48 1,140.48

Nil (Prev. Yr. 20,29,24,832) 0.01% CumulativeRedeemable Preference shares of Rs.10 each 202.92

4,35,98,951 10% Cumulative Redeemable PreferenceShares 43.60 43.60

1,184.08 1,184.08


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4

Reserves and Surplus2008 (Rs. In

Crores)

2007 (Rs. In

Crores)

Capital Reserve 12.73 12.73

Securities Premium Account

Balance as per last Balance Sheet 1,490.05 91.77

Less: Premium on redemption ofPreference Shares (50.73) ---

Add: Additions during the year 1,398.28

1,439.32 1,490.05

Debenture Redemption Reserve

Balance as per last Balance Sheet 15.50 15.00

Less: Transferred to Profit andLoss Account (15.50) (7.25)

Add: Transferred from Profit andLoss Account 7.75

---- 15.50

Capital Redemption Reserve

Balance as per last Balance Sheet ---

Add: Transferred from Profit andLoss Account 202.92 ---

202.92 ---

General Reserve

Balance as per last Balance Sheet 118.38 118.38

Profit and Loss Account 1,673.90 1,444.29

3,447.25 3,080.95


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5

Proprietary Funds (2008-2009)

Share Capital2009 (Rs. In

Crores)

2008 (Rs. In

Crores)

Authorised

3,52,00,00,000 Equity Shares of Rs. 10 each 3,520.00 3,520.00

6,00,00,000 0.01% Cumulative ConvertiblePreference Shares of Rs. 90 each

540.00 540.00

6,00,00,000 1% Cumulative RedeemablePreference Shares of Rs. 90 each

540.00 540.00

10,00,00,000 10% Cumulative RedeemablePreference Shares of Rs. 10 each

100.00 100.00

30,00,00,000 0.01% Cumulative RedeemablePreference Shares of Rs. 10 each

300.00 300.00

6,50,00,000 7% Compulsory ConvertiblePreference Shares of Rs. 350 each

2,275.00 2,275.00

7,275.00 7,275.00

Issued, Subscribed and Paid-up

1,13,98,10,888 (Previous Year 1,13,98,10,888)Equity Shares of Rs. 10 each

1,139.81 1,139.81

Add: 45,20,703 (Previous Year 45,20,703)shares Forfeited

0.67 0.67

1,140.48 1,140.48

4,35,98,951 (Previous Year 4,35,98,951) 10%Cumulative Redeemable PreferenceShares (CRPS) of Rs. 10 each (Refer Note 28 ofschedule 25)

43.60 43.60

1,184.08 1,184.08


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Reserves and Surplus2009 (Rs. In

Crores)

2008 (Rs. In

Crores)

Capital Reserve 12.73 12.73Securities Premium Account

Balance as per last BalanceSheet 1,439.32 1,490.05

Less: Premium on redemption ofPreference Shares --- (50.73)

1,439.32 1,439.32

Debenture Redemption Reserve

Balance as per last BalanceSheet --- 15.50

Less: Transferred to Profi t andLoss Account --- (15.50)

--- ---

Capital Redemption Reserve

Balance as per last BalanceSheet 202.92 ---

Add: Transferred from Profi tand Loss Account --- 202.2

202.92 202.92

General ReserveBalance as per last BalanceSheet 118.38 118.38

Less: Exchange difference Gainof earlier year capitalised to fixed assets (38.68) ---

Less: Exchange difference Gainof earlier year transferred to theForeign Currency Monetary

Items Translation differenceaccount (2.19) ---

77.51 118.38

Profi t and Loss Account 1,859.10 1,673.90

3,591.58 3,447.25


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5

Essar Share Information

Essar Steel StockChart

Share Price for the Year 2000 to 2010

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Rs. 12.6 6.65 2.95 9.45 25.6 38.9 40.15 34.55 51.8 51.8 51.8

12.6

6.65

2.95

9.45

25.6

38.9 40.15

34.55

51.8 51.8 51.8

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ESSAR

ESSAR

Industry: Steel

Business

Group:

Essar

Chairman: Mr. S N Ruia

BSECode: 500627

ISIN No.: INE127A01021

Market Lot: 1

Face Value: 10.00

BookClosure: 28-09-2007

Highest Price: 78.20

Lowest Price: 2.10

Essar Steel took their

share out ofBSE on

the 13th

-dec-2007


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Essar Steel Share Holding Pattern

Share Holders

Ruias 36.69%

Public 40.58%

Institutions 13.28%

Others 3.98%NRI OCBs 5.47%

36.69%

40.58%

13.28%

3.98%

5.47%

Ruia's Public Institutions Others NRI OCBs

essar steel finance report

Documents