my major project in BBA

1. 1
MAJOR PROJECT REPORT
ON
Relationship Of profitability and Capital structure practices
Submitted in partial fulfillment of the requirements of
Bachelor of Business Administration (BBA)
Guru Gobind Singh Indraprastha University
Project guide: Submitted by:
Raghvir Kaur Name: Archit Aggarwal
Roll No. 11121401712
Jagannath International Management School ,
Vasant Kunj, NewDelhi

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BONAFIDE CERTIFICATE
This is to certify that this project report is a bonfire work of Archit Aggarwal Enrolment
number 11121401712 of BBA who carried out the summer training report titled
“Relationship Of profitability and Capital structure practices” .Under the supervision of
Ms. Raghvir Kaur
__________

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ACKNOWLEDGEMENT
It is with this sense of gratitude that I acknowledge the effort of a whole host of well wishers
who have in some way or the other contributed in their own special ways to the success of
this effort.
Individual effort alone I can never contribute in totality, to the successful completion of any
venture. Firstly, I would like to thank JAGANNATH INTERNATIONAL MANAGEMENT
SCHOOL for giving me an opportunity to work on a valuable project and Secondly ,Ms
Raghvir Kaur for allowing me to work on a very intrinsic part “Relationship Of
profitability and Capital structure practices”. I thank her for the ideas and basic concepts
she delivered and shared with me, as they helped me a lot in accomplishing this project of
mine .
_________________

4. 4
CERTIFICATE
This is to certify that Archit Aggarwal have completed the Project titled “Relationship Of
profitability and Capital structure practices” under the guidance of Ms Raghvir Kaur in
partial fulfillment of the requirement for the award of degree of Bachelor of Business
Administration at Jagannanth International Management School (GGSIPU), New Delhi .
This is an original piece of work & I have not submitted it earlier elsewhere.
Raghvir Kaur
________________

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DECLARATION
I hereby declare that the work entitled “Relationship Of profitability and Capital structure
practices” submitted to "Ms. Raghvir Kaur " is a record of an original work done by me
under her guidance of “Jagannath International Management School , Vasant kunj " and this
project work is submitted in the partial fulfillment of the requirement for award of graduate
degree in bachelor of business administration.
Signature
________________

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TABLE OF CONTENTS
S..No Content Page No.
Chapter 1 Introduction
07
Chapter 2 Literature review
22
Chapter 3 Conceptual discussion
34
Chapter 4 Research and Methodology
40
Chapter 5 Data analysis
42
Chapter 6 Findings
53
Chapter 7 Conclusion
55
Chapter 8 Bibliography
57
Chapter 9 Appendix
58

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CHAPTER 1
INTRODUCTION
TO
CAPITAL STRUCTURE

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DEFINITION of 'Capital Structure'
A mix of a company's long-term debt, specific short-term debt, common equity and preferred
equity. The capital structure is how a firm finances its overall operations and growth by using
different sources of funds.
Debt comes in the form of bond issues or long-term notes payable, while equity is classified
as common stock, preferred stock or retained earnings. Short-term debt such as working
capital requirements is also considered to be part of the capital structure.
A company's proportion of short and long-term debt is considered when analyzing capital
structure. When people refer to capital structure they are most likely referring to a firm's
debt-to-equity ratio, which provides insight into how risky a company is. Usually a company
more heavily financed by debt poses greater risk, as this firm is relatively highly levered.
 The term capital structure is used to represent the proportionate relationship between
debt and equity.
 The various means of financing represent the financial structure of an enterprise. The
left-hand side of the balance sheet (liabilities plus equity) represents the financial
structure of a company. Traditionally, short-term borrowings are excluded from the
list of methods of financing the firm’s capital expenditure.

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Important Factors Affecting the Choice of Capital Structure
(1) Cash Flow Position:
While making a choice of the capital structure the future cash flow position should be kept in
mind. Debt capital should be used only if the cash flow position is really good because a lot
of cash is needed in order to make payment of interest and refund of capital.
(2) Interest Coverage Ratio-ICR:
With the help of this ratio an effort is made to find out how many times the EBIT is available
to the payment of interest. The capacity of the company to use debt capital will be in direct
proportion to this ratio.
It is possible that in spite of better ICR the cash flow position of the company may be weak.
Therefore, this ratio is not a proper or appropriate measure of the capacity of the company to
pay interest. It is equally important to take into consideration the cash flow position.
(3) Debt Service Coverage Ratio-DSCR:
This ratio removes the weakness of ICR. This shows the cash flow position of the company.
This ratio tells us about the cash payments to be made (e.g., preference dividend, interest and
debt capital repayment) and the amount of cash available. Better ratio means the better
capacity of the company for debt payment. Consequently, more debt can be utilised in the
capital structure.
(4) Return on Investment-ROI:
The greater return on investment of a company increases its capacity to utilise more debt
capital.
(5) Cost of Debt:
The capacity of a company to take debt depends on the cost of debt. In case the rate of
interest on the debt capital is less, more debt capital can be utilised and vice versa.
(6) Tax Rate:
The rate of tax affects the cost of debt. If the rate of tax is high, the cost of debt decreases.
The reason is the deduction of interest on the debt capital from the profits considering it a
part of expenses and a saving in taxes.
For example, suppose a company takes a loan of 0ppp 100 and the rate of interest on this debt
is 10% and the rate of tax is 30%. By deducting 10/- from the EBIT a saving of in tax will
take place (If 10 on account of interest are not deducted, a tax of @ 30% shall have to be
paid).
(7) Cost of Equity Capital:

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Cost of equity capital (it means the expectations of the equity shareholders from the
company) is affected by the use of debt capital. If the debt capital is utilised more, it will
increase the cost of the equity capital. The simple reason for this is that the greater use of debt
capital increases the risk of the equity shareholders.
Therefore, the use of the debt capital can be made only to a limited level. If even after this
level the debt capital is used further, the cost of equity capital starts increasing rapidly. It
adversely affects the market value of the shares. This is not a good situation. Efforts should
be made to avoid it.
(8) Floatation Costs:
Floatation costs are those expenses which are incurred while issuing securities (e.g., equity
shares, preference shares, debentures, etc.). These include commission of underwriters,
brokerage, stationery expenses, etc. Generally, the cost of issuing debt capital is less than the
share capital. This attracts the company towards debt capital.
(9) Risk Consideration: There are two types of risks in business:
(i) Operating Risk or Business Risk:
This refers to the risk of inability to discharge permanent operating costs (e.g., rent of the
building, payment of salary, insurance installment, etc),
(ii) Financial Risk:
This refers to the risk of inability to pay fixed financial payments (e.g., payment of interest,
preference dividend, return of the debt capital, etc.) as promised by the company.
The total risk of business depends on both these types of risks. If the operating risk in
business is less, the financial risk can be faced which means that more debt capital can be
utilised. On the contrary, if the operating risk is high, the financial risk likely occurring after
the greater use of debt capital should be avoided.
(10) Flexibility:
According to this principle, capital structure should be fairly flexible. Flexibility means that,
if need be, amount of capital in the business could be increased or decreased easily. Reducing
the amount of capital in business is possible only in case of debt capital or preference share
capital.
If at any given time company has more capital than as necessary then both the above-
mentioned capitals can be repaid. On the other hand, repayment of equity share capital is not
possible by the company during its lifetime. Thus, from the viewpoint of flexibility to issue
debt capital and preference share capital is the best.
(11) Control:

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According to this factor, at the time of preparing capital structure, it should be ensured that
the control of the existing shareholders (owners) over the affairs of the company is not
adversely affected.
If funds are raised by issuing equity shares, then the number of company’s shareholders will
increase and it directly affects the control of existing shareholders. In other words, now the
number of owners (shareholders) controlling the company increases.
This situation will not be acceptable to the existing shareholders. On the contrary, when funds
are raised through debt capital, there is no effect on the control of the company because the
debenture holders have no control over the affairs of the company. Thus, for those who
support this principle debt capital is the best.
(12) Regulatory Framework:
Capital structure is also influenced by government regulations. For instance, banking
companies can raise funds by issuing share capital alone, not any other kind of security.
Similarly, it is compulsory for other companies to maintain a given debt-equity ratio while
raising funds.
Different ideal debt-equity ratios such as 2:1; 4:1; 6:1 have been determined for different
industries. The public issue of shares and debentures has to be made under SEBI guidelines.
(13) Stock Market Conditions:
Stock market conditions refer to upward or downward trends in capital market. Both these
conditions have their influence on the selection of sources of finance. When the market is
dull, investors are mostly afraid of investing in the share capital due to high risk.
On the contrary, when conditions in the capital market are cheerful, they treat investment in
the share capital as the best choice to reap profits. Companies should, therefore, make
selection of capital sources keeping in view the conditions prevailing in the capital market.
(14) Capital Structure of Other Companies:
Capital structure is influenced by the industry to which a company is related. All companies
related to a given industry produce almost similar products, their costs of production are
similar, they depend on identical technology, they have similar profitability, and hence the
pattern of their capital structure is almost similar.
Because of this fact, there are different debt- equity ratios prevalent in different industries.
Hence, at the time of raising funds a company must take into consideration debt-equity ratio
prevalent in the related industry.

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Net Profit Ratio
Overview
The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining
profit after all costs of production, administration, and financing have been deducted from
sales, and income taxes recognized. As such, it is one of the best measures of the overall
results of a firm, especially when combined with an evaluation of how well it is using its
working capital. The measure is commonly reported on a trend line, to judge performance
over time. It is also used to compare the results of a business with its competitors.
Net profit is not an indicator of cash flows, since net profit incorporates a number of non-cash
expenses, such as accrued expenses, amortization, and depreciation.
The formula for the net profit ratio is to divide net profit by net sales, and then multiply by
100. The formula is:
(Net profit / Net sales) x 100
The measure could be modified for use by a nonprofit entity, if the change in net assets were
to be used in the formula instead of net profit.
Example of the Net Profit Ratio
For example, the Ottoman Tile Company has $1,000,000 of sales in its most recent month, as
well as sales returns of $40,000, a cost of goods sold (CGS) of $550,000, and administrative
expenses of $360,000. The income tax rate is 35%. The calculation of its net profit
percentage is:
$1,000,000 Sales - $40,000 Sales returns = $960,000 Net sales
$960,000 Net sales - $550,000 CGS - $360,000 Administrative = $50,000 Income before tax
$50,000 Income before tax x (1 - 0.35) = $32,500 Profit after tax
($32,500 profit after tax / $960,000 Net sales) x 100 = 3.4% Net profit ratio
Issues with the Net Profit Ratio
The net profit ratio is really a short-term measurement, because it does not reveal a
company's actions to maintain profitability over the long term, as may be indicated by the
level of capital investment or expenditures for advertising, training, or research and
development. Also, a company may delay a variety of discretionary expenses, such as
maintenance, to make its net profit ratio look better than it normally is. Consequently, you
should evaluate the net profit ratio alongside a variety of other metrics to gain a full picture of
a company's ability to continue as a going concern.

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Another issue with the net profit margin is that a company may intentionally keep it low in
accordance with a low-pricing strategy that aims to grab market share in exchange for low
profitability. In such cases, it may be a mistake to assume that a company is doing poorly,
when in fact it may own the bulk of the market share precisely because of its low margins.
Conversely, the reverse strategy may result in a very high net profit ratio, but at the cost of
only capturing a small market niche.
Another strategy that can artificially drive down the ratio is when a company's owners want
to minimize taxes, and so accelerate the recognition of taxable income into the current
reporting period. This approach is most commonly found in a privately held business, where
there is no need to impress outside investors with the results of operations.
Similar Terms
The net profit ratio is also known as the profit margin.
DEFINITION of 'Gross Profit Margin'
A financial metric used to assess a firm's financial health by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings.
Calculated as:
Where:COGS = Cost of Goods Sold
Also known as "gross margin
The gross margin is not an exact estimate of the company's pricing strategy but it does give a
good indication of financial health. Without an adequate gross margin, a company will be
unable to pay its operating and other expenses and build for the future. In general, a
company's gross profit margin should be stable. It should not fluctuate much from one period
to another, unless the industry it is in has been undergoing drastic changes which will affect

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the costs of goods sold or pricing policies
For example, suppose that ABC Corp. earned $20 million in revenue from producing widgets
and incurred $10 million in COGS-related expense. ABC's gross profit margin would be
50%. This means that for every dollar that ABC earns on widgets, it really has only $0.50 at
the end of the day.
This metric can be used to compare a company with its competitors. More efficient
companies will usually see higher profit margins.
Definition of "Earnings Per Share - EPS"
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:
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.
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants
outstanding in the outstanding shares number.
Earnings per share is generally considered to be the single most important variable in
determining a share's price. It is also a major component used to calculate the price-to-
earnings valuation ratio.
For example, assume that a company has a net income of $25 million. If the company pays
out $1 million in preferred dividends and has 10 million shares for half of the year and 15
million shares for the other half, the EPS would be $1.92 (24/12.5). First, the $1 million is
deducted from the net income to get $24 million, then a weighted average is taken to find the
number of shares outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M).

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An important aspect of EPS that's often ignored is the capital that is required to generate the
earnings (net income) in the calculation. Two companies could generate the same EPS
number, but one could do so with less equity (investment) - that company would be more
efficient at using its capital to generate income and, all other things being equal, would be a
"better" company. Investors also need to be aware of earnings manipulation that will affect
the quality of the earnings number. It is important not to rely on any one financial measure,
but to use it in conjunction with statement analysis and other measures.
DEFINITION OF 'TOTAL DEBT TO TOTAL ASSETS'
Total debt to total assets is a leverage ratio that defines the total amount of debt relative to
assets. This enables comparisons of leverage to be made across different companies. The
higher the ratio, the higher the degree of leverage, and consequently, financial risk. This is a
broad ratio that includes long-term and short-term debt (borrowings maturing within one
year), as well as all assets – tangible and intangible.
For example, assume hypothetical company Levered Co. has $40 million in long-term debt,
$10 million in short-term debt, and $100 million in total assets. Levered Co. would therefore
have a total debt to total assets ratio of 0.5. On the other hand, if rival LowLevered Co. has
$5 million in long-term debt, $5 million in short-term debt, and $50 million in total assets, its
total debt to total assets ratio would be 0.2.
From the above example, 50% of Levered Co.’s assets have been financed by debt, while
only 20% of LowLevered Co.’s assets were. Levered Co. has a much higher degree of
leverage than LowLevered Co., and therefore a lower degree of financial flexibility.
This is because debt servicing payments have to be made under all circumstances, otherwise
the company would breach debt covenants and run the risk of being forced into bankruptcy
by creditors. While other liabilities such as accounts payable and long-term leases can be
negotiated to some extent, there is very little “wiggle room” with debt covenants. Therefore,
a company with a high degree of leverage may find it more difficult during a recession than
one with low leverage. It should be noted that total debt measure does not include short-term
liabilities like accounts payable and long-term liabilities such as capital lease and pension
plan obligations.

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One shortcoming of the total debt to total assets ratio is that it does not provide any indication
of asset quality, since it lumps all tangible and intangible assets together. Continuing from the
above example, assume Levered Co. took on the $40 million of long-term debt to acquire a
competitor, and booked $20 million as goodwill for this acquisition. Let’s say the acquisition
does not perform as expected and results in all the goodwill being written off. In this case, the
ratio of total debt to total assets (which amounts to $80 million) would be 0.63.
Like all other ratios, the trend of the total debt to total assets should also be evaluated over
time. This will help assess whether the company’s financial risk profile is improving or
deteriorating.

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Theories of Capital Structure
The capital structure decision can affect the value of the firm either by changing the expected
earnings or the cost of capital or both.
The objective of the firm should be directed towards the maximization of the value of the
firm the capital structure, or average, decision should be examined from the point of view of
its impact on the value of the firm.
If the value of the firm can be affected by capital structure or financing decision a firm would
like to have a capital structure which maximizes the market value of the firm. The capital
structure decision can affect the value of the firm either by changing the expected earnings or
the cost of capital or both.
If average affects the cost of capital and the value of the firm, an optimum capital structure
would be obtained at that combination of debt and equity that maximizes the total value of
the firm (value of shares plus value of debt) or minimizes the weighted average cost of
capital. For a better understanding of the relationship between financial average and the value
of the firm, assumptions, features and implications of the capital structure theories are given
below.
Assumptions and Definitions:
In order to grasp the capital structure and the cost of capital controversy property, the
following assumptions are made:
Firms employ only two types of capital: debt and equity.
The total assets of the firm are given. The degree of average can be changed by selling debt
to purchase shares or selling shares to retire debt.
The firm has a policy of paying 100 per cent dividends.
The operating earnings of the firm are not expected to grow.
The business risk is assumed to be constant and independent of capital structure and financial
risk. The corporate income taxes do not exist. This assumption is relaxed later on.
The following are the basic definitions:

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The above assumptions and definitions described above are valid under any of the capital
structure theories. David Durand views, Traditional view and MM Hypothesis are tine
important theories on capital structure.
1. David Durand views:
The existence of an optimum capital structure is not accepted by all. There exist two extreme
views and a middle position. David Durand identified the two extreme views – the Net
income and net operating approaches.
a) Net income Approach (Nl):
Under the net income (Nl) approach, the cost of debt and cost of equity are assumed to be
independent of the capital structure. The weighted average cost of capital declines and the
total value of the firm rise with increased use of average.
b) Net Operating income Approach (NOI):
Under the net operating income (NOI) approach, the cost of equity is assumed to increase
linearly with average. As a result, the weighted average cost of capital remains constant and
the total of the firm also remains constant as average changed.
Thus, if the Nl approach is valid, average is a significant variable and financing decisions
have an important effect on the value of the firm, on the other hand, if the NOI approach is
correct, then the financing decision should not be of greater concern to the financial manager,
as it does not matter in the valuation of the firm.
2. Traditional view:

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The traditional view is a compromise between the net income approach and the net operating
approach. According to this view, the value of the firm can be increased or the cost, of capital
can be reduced by the judicious mix of debt and equity capital.
This approach very clearly implies that the cost of capital decreases within the reasonable
limit of debt and then increases with average. Thus an optimum capital structure exists and
occurs when the cost of capital is minimum or the value of the firm is maximum.
The cost of capital declines with leverage because debt capital is chipper than equity capital
within reasonable, or acceptable, limit of debt. The weighted average cost of capital will
decrease with the use of debt. According to the traditional position, the manner in which the
overall cost of capital reacts to changes in capital structure can be divided into three stages
and this can be seen in the following figure.
Criticism:
1. The traditional view is criticised because it implies that totality of risk incurred by all
security-holders of a firm can be altered by changing the way in which this totality of risk is
distributed among the various classes of securities.
2. Modigliani and Miller also do not agree with the traditional view. They criticise the
assumption that the cost of equity remains unaffected by leverage up to some reasonable
limit.
3. MM Hypothesis:
The Modigliani – Miller Hypothesis is identical with the net operating income approach,
Modigliani and Miller (M.M) argue that, in the absence of taxes, a firm’s market value and
the cost of capital remain invariant to the capital structure changes.

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Assumptions:
The M.M. hypothesis can be best explained in terms of two propositions.
It should however, be noticed that their propositions are based on the following
assumptions:
1. The securities are traded in the perfect market situation.
2. Firms can be grouped into homogeneous risk classes.
3. The expected NOI is a random variable
4. Firm distribute all net earnings to the shareholders.
5. No corporate income taxes exist.
Proposition I:
Given the above stated assumptions, M-M argue that, for firms in the same risk class, the
total market value is independent of the debt equity combination and is given by capitalizing
the expected net operating income by the rate appropriate to that risk class.
This is their proposition I and can be expressed as follows:
According to this proposition the average cost of capital is a constant and is not affected by
leverage.
Arbitrary-process:
M-M opinion is that if two identical firms, except for the degree of leverage, have different
market values or the costs of capital, arbitrary will take place to enable investors to engage in
‘personal leverage’ as against the ‘corporate leverage’ to restore equilibrium in the market.
Proposition II: It defines the cost of equity, follows from their proposition, and derived a
formula as follows:
Ke = Ko + (Ko-Kd) D/S
The above equation states that, for any firm in a given risk class, the cost of equity (Ke) is
equal to the constant average cost of capital (Ko) plus a premium for the financial, risk,
which, is equal to debt-equity ratio times the spread between the constant average of ‘capita’
and the cost of debt, (Ko-Kd) D/S.
The crucial part of the M-M hypothesis is that Ke will not rise even if very excessive raise of
leverage is made. This conclusion could be valid if the cost of borrowings, Kd remains

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constant for any degree of leverage. But in practice Kd increases with leverage beyond a
certain acceptable, or reasonable, level of debt.
However, M-M maintain that even if the cost of debt, Kd, is increasing, the weighted average
cost of capital, Ko, will remain constant. They argue that when Kd increases, Ke will increase
at a decreasing rate and may even turn down eventually. This is illustrated in the following
figure.
Criticism:
The shortcoming of the M-M hypothesis lies in the assumption of perfect capital market in
which arbitrage is expected to work. Due to the existence of imperfections in the capital
market/arbitrage will fail to work and will give rise to discrepancy between the market values
of levered and unlevered firms.

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CHAPTER 2: COMPANY PROFILE

23. 23
COMPANY PROFILE
JINDAL STEEL TATA STEEL
JINDAL STEEL
Jindal Steel and Power Limited (JSPL) is an Indian steel and energy company based
in New Delhi, India.[3] With turnover of approx. US$ 3.3 billion,[3] 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. The company produces steel
andpower through backward integration from its own captive coal and iron-ore mines.
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.
Jindal SAW Ltd is a part of O.P. Jindal Group, one of the country's topmost industry and
indigenous steel producers and exporters. It was started in 1984, when it became the first
company in India to manufacture Submerged Arc Welded (SAW) Pipes using the
internationally acclaimed U-O-E technology.
From beginning operations with a single product at a single location in 1984, Jindal SAW
today offers 'Total Pipe Solutions' to the world. As part of the $15 billion O.P. Jindal Group,
the company is firmly on its way to new markets and areas of growth. With its subsidiary,
Jindal ITF, it is powering ahead in its enterprises with respect to water management,
waterborne transportation, waste-to-energy and rail infrastructure. Moreover, its unstinting
support to Svayam, an initiative of S.J. Charitable Trust is making a positive difference in
making public infrastructure accessible to all.
To move ahead of the competition, the need of the hour is to focus on the basics, master it
and then excel in other aspects. Jindal SAW does this all with a promise that meets the most
exacting of international standards and passes stringent quality checks. Thus, reinforcing the
company's commitment to superior levels of excellence.
Every requirement and need of the market is addressed by Jindal SAW's exhaustive range of
products. The latest advances in technology and manufacturing processes ensure that the
product is always there when the need arises. Moreover, the proximity of plants to ports
further ascertains that there is no lag in timelines being met. All leading to a firm relationship
with customers that surpasses commercial transactions, and stands the test of time.

24. 24
Jindal SAW Ltd. is in a commanding position in India’s tubular market, being the leader
with a turnover of Rs. 7500 Crore.
It has diversified from a single product company to a multi-product company, manufacturing
large diameter submerged arc pipes and spiral pipes for the energy transportation sector;
carbon, alloy and stainless steel seamless pipes and tubes manufactured by conical piercing
process used for industrial applications; and Ductile iron (DI) pipes for water and
wastewater transportation. Besides these, the company also provides various value added
products like pipe coatings, bends and connector castings to
its clients.
Jindal SAW has gained the confidence and trust of its stakeholders - from employees,
associates, shareholders and people whose lives have benefitted by the company's endeavors.
With its vision of sustainable development, Jindal SAW has played a leading role in
developing livable cities across the world - that in turn has helped transform the lives of
people staying in them.
Jindal SAW helps residents and organizations in numerous cities by ensuring timely
transportation of oil,gas and water. The pipes produced by the company are energy efficient,
reduce dependence on fossil fuels, and help conserve natural resources like water.
Company
Secretary
Company sectary
Sh. Sunil Jain
Director
Smt. Savitri Devi Jindal Chairperson
Sh. P. R. Jindal Vice Chairman
Sh. Indresh Batra Managing Director
Ms. Sminu Jindal Managing Director
Sh. Devi Dayal Director
Dr. S. K. Gupta Director
Sh. Kuldip Bhargava Director
Dr. Raj Kamal Agarwal Director
Sh. Ravinder Nath Leekha Director
Sh. Girish Sharma Director
Sh. H. S. Chaudhary Whole Time Director

25. 25
Corporate office
Jindal Centre,
12, Bhikaiji Cama Place,
New Delhi - 110066
Rged.office Internal auditor
A1, UPSIDC Industrial Area,
Nandgaon Road, Kosi Kalan
District Mathura, 281403 (U.P.)
Internal
Auditors
Satutory auditor Internal auditor
M/s T. R. Chadha & Co.
Chartered Accountants
M/s Singhi & Co.
Chartered Accountants
Statutory
Auditors
Satutory auditor
M/s N. C. Aggarwal & Co.
Chartered Accountants
Bankers
Bankers
State Bank of Patiala
State Bank of India
Punjab National Bank
Canara Bank
Axis Bank Ltd.
Credit Agricole & Investment Bank Ltd.
HDFC Bank Ltd.
ICICI Bank Ltd.
Ing Vysya Bank Ltd.
Standard Chartered Bank
State Bank of Mysore
State Bank of Travancore
Syndicate Bank
United Bank of India
Karnataka Bank Ltd.

26. 26
Employees
As on 21 January 2014, the company had 7,189 employees, out of which 271 were women
(4%) and 7 were employees with disabilities (0.1%).[2] During the FY 2013-14, it incurred
INR 5.52 billion on employee benefit expenses.[2]
Initiatives
Jindal PantherTM TMT Rebars
JSPL has forayed into construction retail industry with the launch of Jindal PantherTM TMT
Rebars. Panther entry into retail is spurred with an aim to provide quality reinforced bars to
housing segment. These rebars are manufactured in 1.0 MTPA capacity TMT Rebar mill at
Patratu, Jharkhand supplied by Siemens of USA.[10]
Jindal Institute of Power Technology (JIPT)
JIPT was establisghed to develop a pool of technically trained power plant professionals for
power utilities of India and abroad. The course authorizes the pass outs to operate OR
undertake Maintenance of any part or whole of a generating stations of capacity 100 MW &
above together with the associated sub stations. It is recognized by Central Electricity
Authority (CEA), Ministry of Power as Category-l Institute. It is promoted by Jindal
Education & Welfare Society, which is supported by Jindal Power Limited. The Institute
possesses a Simulator of 250 MW/600 MW generating units. JIPT is located inside the
4X250, 4X600 MW Jindal Tamnar Thermal Power Plant in Tamnar, Raigarh, Chhatisgarh.

27. 27
TATA STEEL
Tata Steel is a top ten global steel maker and the world’s second most geographically
diversified steel producer.
Established in 1907 as Asia's first integrated private sector steel company, Tata Steel Group
is among the top-ten global steel companies with an annual crude steel capacity of over 29
million tonnes per annum. It is now the world's second-most geographically-diversified steel
producer, with operations in 26 countries and a commercial presence in over 50 countries.
The Tata Steel Group, with a turnover of Rs. 1, 48,614 crores in FY 14, has over 80,000
employees across five continents and is a Fortune 500 company.
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.[2] Its largest plant is located in Jamshedpur, Jharkhand. In 2007 Tata Steel acquired
the UK-based steel maker Corus which was the largest international acquisition by an Indian
company till that date. It was ranked 486th in the 2014 Fortune Global 500 ranking of the
world's biggest corporations.[5] It was the seventh most valuable Indian brand of 2013 as
per Brand Finance.[6]
Tata Steel is part of the Tata Group, India’s largest industrial conglomerate. Both Tata and
Tata Steel have a long history of charitable donations and social responsibility, with Tata
spending approximately 4% of the Company’s profit after tax on corporate social
responsibility initiatives.
Tata Steel Endeavour’s to improve the quality of life in the communities in which the
Company operates. Tata Steel’s charitable projects have touched the lives of over 800,000
people in India.
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 was the 11th largest steel producing company in the
world in 2013, with an annual crude steel capacity of 25.3 million tonnes, and the second
largest private-sector steel company in India (measured by domestic production) with an
annual capacity of 9.7 million tonnes after SAIL
On 16 February 2012 Tata Steel completed 100 years of steel making in India.
Tata Steel’s larger production facilities comprise those in India, the UK, the Netherlands,
Thailand, Singapore, China and Australia. Operating companies within the Group include
Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), Tata Steel Singapore
and Tata Steel Thailand.
The Tata Steel Group’s vision is to be the world’s steel industry benchmark in “Value
Creation” and “Corporate Citizenship” through the excellence of its people, its innovative
approach and overall conduct. Underpinning this vision is a performance culture committed
to aspiration targets, safety and social responsibility, continuous improvement, openness and
transparency.

28. 28
In 2008, Tata Steel India became the first integrated steel plant in the world, outside Japan, to
be awarded the Deming Application Prize 2008 for excellence in Total Quality Management.
In 2012, Tata Steel became the first integrated steel company in the world, outside Japan, to
win the Deming Grand Prize 2012 instituted by the Japanese Union of Scientists and
Engineers.
Indian Operations
Tata Steel founded India’s first industrial city, now Jamshedpur, where it established India’s
first integrated steel plant in 1907. The Jamshedpur Works currently comprises of a 9.7 mtpa
crude steel production facility and a variety of finishing mills.
Two new Greenfield steel projects are planned in the states of Jharkhand and Chhattisgarh.
Kalinganagar project is underway, it is set to augment production capacity by 3 MnTPA in
the first phase.
Mines and collieries in India give the Company a distinct advantage in raw material sourcing.
Iron Ore mines are located at Noamundi (Jharkhand) and Joda (Odisha) both located within a
distance of 150 km from Jamshedpur. The Company’s captive coal mines are located at
Jharia and West Bokaro (Jharkhand).
European Operations
Tata Steel Europe (erstwhile Corus) has a crude steel production capacity of 18 mtpa. Tata
Steel Europe has manufacturing operations in Western Europe, plants in UK, Netherlands,
Germany, France and Belgium, backed by a sophisticated global network of sales offices and
service centres.
South East Asian Operations
Tata Steel started its operations in SEA in 2004 with investments in NatSteel Singapore (Tata
Steel Singapore) and Millennium Steel (Tata Steel Thailand).
With over 40 years of Steel making experience, Tata Steel Singapore is one of the most
prominent steel producers in the Asia Pacific region. It caters to the growing construction
industry through its manufacturing presence in Singapore, Thailand, China, Malaysia, The
Philippines and Australia.
Tata Steel Thailand is the largest producer of long steel products in Thailand.
Tata Group Profile
 Sustainable development cannot be achieved by a single enterprise or even by the
entire business community in isolation. It is a pervasive philosophy to which every
stakeholder in society and participant in the global economy must willingly subscribe.

29. 29
 The Tata group comprises over 100 operating companies in seven business sectors:
communications and information technology, engineering, materials, services, energy,
consumer products and chemicals. The group has operations in more than 100
countries across six continents, and its companies export products and services to 150
countries.

 The total revenue of Tata companies, taken together, was $96.79 billion (around Rs.
527,047 crore) in 2012-13, with 62.7 percent of this coming from business outside
India. Tata companies employ over 540,000 people worldwide. Brand Finance, a UK-
based consultancy firm, valued the Tata brand at $18.16 billion and ranked it 39th
among the top 500 most valuable global brands in their BrandFinance® Global 500 -
2013 report.

 The Tata name has been respected in India for more than 140 years for its adherence
to strong values and business ethics. The group has always believed in returning
wealth to the society they serve. Two-thirds of the equity of Tata Sons, the Tata
promoter holding company, is held by philanthropic trusts that have created national
institutions for science and technology, medical research, social studies and the
performing arts.

 Anchored in India and wedded to traditional values and strong ethics, Tata companies
are building multinational businesses that will achieve growth through excellence and
innovation, while balancing the interests of shareholders, employees and civil society
Board of Directors
The operations and successes of the Tata Steel Group are taken care of by its capable
management and Board of Directors. At the helm of affairs are the Company’s Directors,
whose profiles offer a brief introduction and help get acquainted with them.
Mr.CyrusPMistry
Chairman, Not- independent, Non-Executive Director
Mr. Cyrus P. Mistry is the Chairman of Tata Sons. He is a graduate of Civil Engineering from
Imperial College, UK, and has a M.Sc. in Management from London Business School.

30. 30
Mr.SubodhBhargava
Independent, Non - Executive Director
Mr. Subodh Bhargava is a Mechanical Engineer from the University of Roorkee. He was the
Group Chairman and Chief Executive Officer and on the Board of Eicher Group of
Companies. He is now the Chairman Emeritus of the same group. He is on the Board of Tata
Steel Limited since 2006.
Mr.O.P.Bhatt
Independent, Non-Executive Director
Mr. O. P. Bhatt is a graduate in Science and a post graduate in English Literature (Gold
Medalist). In his last assignment, from July 1, 2006 to March 31, 2011, he was the Chairman,
State Bank Group, which includes State Bank of India, India’s largest commercial bank; five
associate banks in India; five overseas banks; SBI Life, the country’s largest private life
insurer; SBI Capital Markets, India’s leading investment bank; SBI Fund Management; and
other subsidiaries spanning diverse activities
Mr.KoushikChatterjee
Group Executive Director (Finance and Corporate)
Mr. Koushik Chatterjee is an Honours Graduate in Commerce from Calcutta University and a
Fellow Member of the Institute of Chartered Accountants of India. A Wholetime Director on
the Board, he was appointed as the Group Executive Director (Finance and Corporate) w.e.f.
September 19, 2013.
Mr.IshaatHussain
Not Independent, Non - Executive Director
Mr. Ishaat Hussain graduated in economics from St Stephens College, New Delhi. He is a
fellow of the Institute of Chartered Accountants in England and Wales (FCA). Mr. Hussain
joined the Board of the Indian Tube Company (a Tata Steel associate company) in 1979.
Dr.KarlUlrichKoehler
Not Independent, Non-Executive Director
Dr. Karl-Ulrich Koehler was appointed as a Director of the Company with effect from 12th
November 2010. He has been Chief Executive Officer and Managing Director of Tata Steel
Europe Limited since October 1, 2010. He was appointed Chief Operating Officer of Tata
Steel Europe Limited in February 2010.

31. 31
Mr.D.K.Mehrotra
Independent, Non-Executive Director
Mr. D. K. Mehrotra is an Honours Graduate in Science from the University of Patna. He is
the former Chairman of Life Insurance Corporation of India (LIC). He was appointed a
Director on the Board of Tata Steel Limited with effect from October 22, 2012.
Mr.T.V.Narendran
Managing Director - Tata Steel India and South East Asia
Mr. T.V. Narendran is a Mechanical Engineer from REC (NIT), Trichy. He joined Tata Steel
after completing his MBA from IIM Calcutta in 1988. He is a Chevening Scholar and has
also attended the Advanced Management Programme in CEDEP - INSEAD, Fontainebleau,
France. He became the Managing Director of Tata Steel India and South East Asia on
November 1, 2013.
Mr.AndrewM.Robb
Independent, Non - Executive Director
Mr. Andrew M. Robb is a Fellow Member of the Chartered Institute of Management
Accountants and holds a Joint Diploma in Management Accounting.
Mr.JacobusSchraven
Independent, Non - Executive Director
Mr. Jacobus Schraven was appointed as an Additional Director of the Company with effect
from May 17, 2007. He was appointed a non-executive Director and Deputy Chairman of
Corus Plc. in December 2004. Mr. Schraven, in 2005 was appointed a Member and Chairman
of the Supervisory Board of Corus Nederland BV. Until June 2005 he was President of the
Confederation of The Netherlands Industry and Employers (VNO-NCW).
Ms.MallikaSrinivasan
Independent, Non-Executive Director
Ms. Mallika Srinivasan graduated in management studies from the Wharton School of
Business, University of Pennsylvania, after her post graduate studies in Econometrics from
the University of Madras. She joined Tractors and Farm Equipment Limited (TAFE) in 1985
and is presently its Chairman and Chief Executive Officer. She is also on the Board of AGCO
Corporation, USA, TATA Global Beverages Limited and the Indian School of Business.

32. 32
Mr.NusliNevilleWadia
Independent, Non-Executive Director
Mr. Nusli Neville Wadia is foremost among famous Indian industrialists. He is the Chairman
and Director on the Board of several companies. Taking over responsibilities from his father
Mr. Neville Wadia, he made The Wadia Group and Bombay Dyeing among the most
respected and widely diversified business houses in the corporate world.
Acquisitions
NatSteel in 2004: In August 2004, Tata Steel agreed to acquire the steel making operations of
the Singapore based NatSteel for $486.4 million in cash.[14] NatSteel had ended 2003 with
turnover of $1.4 billion and a profit before tax of $47 million.[14] The steel businesses of
NatSteel would be run by the company through a wholly owned subsidiary called Natsteel
Asia Pte Ltd.[14] The acquisition was completed in February 2005.[15][16] At the time of
acquisition, NatSteel had a capacity of about 2 million tonnes per annum of finished
steel.[16][17]
Millennium Steel in 2005: Tata Steel acquired a majority stake in the Thailand-based
steelmaker Millennium Steel for a total cost of $130 million. It paid US$73 million to Siam
Cement for a 40% stake and offered to pay 1.13 baht per share for another 25% of the shares
of other shareholders.[18][19] For the year 2004, Millennium Steel had revenues of US$406
million and a profit after tax of US$29 million.[17] At the time of acquisition, Millennium
Steel was the largest steel company in Thailand with a capacity of 1.7 million metric tonnes
per annum, producing long products for construction and engineering steel for auto
industries.[17] Millennium Steel has now been renamed to Tata Steel Thailand and is
headquartered in Bangkok.[20] On 31 March 2013, it held approx. 68% shares in the acquired
company.[2]
Corus in 2007: On 20 October 2006, Tata Steel signed a deal with Anglo-Dutch company,
Corus to buy 100% stake at £4.3bn ($8.1 billion) at 455 pence per share.[21] On 19 November
2006, the Brazilian steel company Companhia Siderúrgica Nacional (CSN) launched a
counter offer for Corus at 475 pence per share, valuing it at £4.5 billion. On 11 December
2006, Tata preemptively upped its offer to 500 pence per share, which was within hours
trumped by CSN's offer of 515 pence per share, valuing the deal at £4.9 billion. The Corus
board promptly recommended both the revised offers to its shareholders. On 31 January
2007, Tata Steel won their bid for Corus after offering 608 pence per share, valuing Corus at
£6.7 billion ($12 billion).
In 2005, Corus employed around 47,300 people worldwide, including 24,000 in the
UK.[21] At the time of acquisition, Corus was four times larger than Tata Steel, in terms of
annual steel production.Corus was the world's 9th largest producer of Steel, whereas Tata
Steel was at 56th position. The acquisition made Tata Steel world's 5th largest producer of
Steel.[21]
See also: Tata Corus acquisition
2 Rolling mill companies in Vietnam in 2007: Tata Steel through its wholly owned Singapore
subsidiary, NatSteel Asia Pte Ltd, acquired controlling stake in two rolling mill companies
located in Vietnam: Structure Steel Engineering Pte Ltd (100% stake) and Vinausteel Ltd
(70% stake). The enterprise value for the acquisition was $41 million. With this acquisition,

33. 33
Tata Steel got hold of two rolling mills, a 250k tonnes per year bar/wire rod mill operated by
SSE Steel Ltd and a 180k tonnes per year reinforcing bar mill operated by Vinausteel
Ltd.[22][23]
Operations
The Tata Centre in Kolkata, India
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.[24]
Tata Steel primarily serves customers in the automotive, construction, consumer goods,
engineering, packaging, lifting and excavating, energy and power, aerospace, shipbuilding,
rail and defence and security sectors.[25]

34. 34
CHAPTER 3:
LITERATURE REVIEW

35. 35
The Relationship between Capital Structure & Profitability
By Prof. (Dr). T. Velnampy & J. Aloy Niresh
University of Jaffna, Sri Lanka.
Capital structure decision is the vital one since the profitability of an enterprise is
directly affected by such decision. The successful selection and use of capital is one of the
key elements of the firms’ financial strategy. Hence, proper care and attention need to be
given while determining capital structure decision. The purpose of this study is to investigate
the relationship between capital structure and profitability of ten listed Srilankan banks over
the past 8 year period from 2002 to 2009.The data has been analyzed by using descriptive
statistics and correlation analysis to find out the association between the variables. Results of
the analysis show that there is a negative association between capital structure and
profitability except the association between debt to equity and return on equity. Further the
results suggest that 89% of total assets in the banking sector of Sri Lanka are represented by
debt, confirming the fact that banks are highly geared institutions. The outcomes of the study
may guide banks, loan-creditors and policy planners to formulate better policy decisions as
far as the capital structure is concerned.

36. 36
The Relationship between Capital Structure and Profitability
Dr. Mohammad Fawzi Shubita
Assistant Professor
Department of Accounting
Amman Arab University
Amman – Jordan
Dr. Jaafer Maroof alsawalhah
Assistant Professor
Head of Accounting Department
Philadelphia University
Amman – Jordan
This study seeks to extend Abor’s (2005), and Gill, et al., (2011) findings regarding the effect
of capital structure on profitability by examining the effect of capital structure on profitability
of the industrial companies listed on Amman Stock Exchange during a six-year period (2004-
2009). The problem statement to be analyzed in this study is: Does capital structure affect the
Industrial Jordanian companies? The study sample consists of 39 companies. Applying
correlations and multiple regression analysis, the results reveal significantly negative relation
between debt and profitability. This suggests that profitable firms depend more on equity as
their main financing option. Yet recommendations based on findings are offered to improve
certain factors like the firm must consider using an optimal capital structure and future
research should investigate generalizations of the findings beyond the manufacturing sectors.

37. 37
THE EFFECT OF CAPITAL STRUCTURE ON PROFITABILITY OF FINANCIAL
FIRMS LISTED AT NAIROBI STOCK EXCHANGE
BY SAMUEL KIPKORIR KOECH
Registration No. D53/CTY/PT/23232/2011
A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF BUSINESS IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE
DEGREE OF MASTER OF BUSINESS ADMINISTRATION (FINANCE), IN THE
DEPARTMENT OF BUSINESS ADMINISTRATION, KENYATTA UNIVERSITY
NOVEMBER 2013
Capital is the financing for a business and is made up of, primarily, owners’ funding and
funding from lenders. The combination of the sources of business funding is referred to, as
the capital structure of that business. Capital structure is thus the mix of company’s long term
debt, specific short term debt, common equity and preferred equity; that is, how a firm
finances its overall operations and growth using different sources of funding. This is
composed of equity (rights issue) and debt financing (credit market through corporate bonds
etc). This research sought to investigate the effect of capital structure on profitability of
financial firms listed at Nairobi Stock Exchange during the period 2008-2012. The success of
financial institutions in Kenya’s dynamic business environment depend on their ability to
effectively determine the optimum and appropriate capital mix that is necessary to ensure that
the shareholders get returns. It is worth noting that financial institutions depend on their
ability to identify, assess, monitor and manage risks in a sound and sophisticated way. In
order to assess and manage risks, financial firms must have effective ways of determining the
appropriate amount of capital that is necessary to absorb unexpected losses arising from their
market, credit and operational risk exposures. The sector has recorded double-digit growth in
profits for most of the past decade, when the economic growth has averaged at about five per
cent. Factors such as amount of debt, the risks associated with indebtedness, interest rates and
debt equity combination could affect the financial performance of firms. This research
investigated the effect of capital structure on financial performance in relation to these
factors. In respect of the above objectives of the study, data was collected by a review of
documents, annual reports of the companies and the Nairobi Stock Exchange reports. Data
collected was analysed using Statistical Packages for Social Sciences (SPSS) which gave
descriptive analysis. The data was then be summarised and presented using tables. The study
revealed that capital structure is inversely related to performance as revealed by the
regression results of debt and return on equity. The results show that the mean values of
debt/equity ratio and debt to total funds were 591.52% and 86.9% respectively. The mean
value of debt/equity ratio suggests that debt is 5.915 times higher than equity capital. The
debt/equity ratio is normally safe up to 2. It shows the fact that listed financial institutions in
Kenya depend more on debt rather than equity capital. The mean value of debt to total funds
ratio indicates 86.9% of the total capital of listed banks in Kenya is made up of debt. This has
re-emphasized the fact that banks are highly levered institutions. The co-efficient values were

38. 38
found to be negative for the association between debt to equity and interest. This reveals that
an increase in the level of debt finance increases the interest payments thus resulting in a
decline in profitability. Arising from this observation it can be postulated that capital
structure choice among listed financial firms support the pecking order theory that firms
prefer raising capital, first from retained earnings, second from debt, and third from issuing
new equity. The study noted that banks generally play a crucial role in the economic
development of every country. One critical decision banks face is the debt-equity choice.
Among others, this choice is necessary for the profit determination of firms. What this means
is that banks that are able to make their financing decisions prudently would have a
competitive advantage in the industry and make superior profits. However, it is essential to
recognize that this decision can only be wisely taken if banks know how debt policy
influences their profitability.

39. 39
The Effect of Capital Structure on Profitability of Energy American Firms:
Mohamed M. Khalifa Tailab
(Finance and Investments, Lincoln University, CA, U.S.)
This paper empirically aims to analyze the effect of capital structure on financial
performance. Two main sets of variables were used: For profitability, return on assets (ROA)
as the ratio of net income to total assets, and return on equity (ROE) as the ratio of net
income to total shareholders’ equity were adopted as a proxy for financial performance; and
to indicate capital structure, short-term debt, long-term debt, total debt, debt to equity ratio,
and firm’s size were used. A sample of 30 Energy American firms for a period of nine years
from 2005 – 2013 was considered. Secondary data were collected from financial statements
which were taken from Mergent online. The data were analyzed by using Smart PLS (Partial
Least Square) version 3. Multiple regressions indicated that 10% of ROE and 34% of ROA
were predicted by the independent variables. Findings also presented that the total debt has a
significant negative impact on ROE and ROA, while size in terms of sales has significantly
negative effect only on ROE of the American firms. However, a short debt significantly has a
positive influence on ROE. An insignificant either negative or positive relationship was
observed between long term debt, debt to equity and size in terms of total assets and
profitability. A generalization of the results is limited because of the small sample size. For
future research, the author suggests addressing a longer period of time with a large sample
size of firms. It would be more accurate if future studies included more independent variables
such as taxation and concentration.

40. 40
CHAPTER 4:
RESEARCH OBJECTIVES
AND
METHODOLOGY

41. 41
RESEARCH OBJECTIVES METHODOLOGY
 TO STUDY ABOUT THE CAPITAL STRUCTURE
 TO KNOW THE PROFITABLITY PATTEN OF THE COMPANIES
 TO KNOW THE RELATIONSHIP OF PROFITABLITY AND CAPITAL
STRUCTURE
METHODOLOGY
No of companies – 2 companies are taken for study
JINDAL STEEL TATA STEEL
Period of study-
Last 5 years
That is 2014, 2013, 2012, 2011, 2010
Analytical tool -
Ratio analysis
Presentation methord –
Tables, graphs, shapes, clip art, charts

42. 42
CHAPTER 5 – DATA INTERPRATION

43. 43
Jindal steel
Jindal Steel
Year 2014 2013 2012 2011 2010
Net profit 1,291.95 1,592.55 2,110.65 2,064.12 1,479.68
Gross profit 54568 59,944 67,932 63320 58,616
Earning per
share
14.12 17.04 22.58 22.09 15.89
Debt/assets 63.4 61.1 56.9 56.8 55.4
Jindal Steel
Year Capital structure of Jindal Steel Gross profit ratio
2014 63.4 347.19
2013 61.1 400.83
2012 56.9 509.46
2011 56.8 661.36
2010 55.4 797.77
0
100
200
300
400
500
600
700
800
2010 2011 2012 2013 2014
capital structure of jindal
steel
gross profit

44. 44
Jindal Steel
Year Capital structure of Jindal Steel net profit ratio
2014 63.4 8.88
2013 61.1 10.64
2012 56.9 15.82
2011 56.8 21.55
2010 55.4 20.13
0
10
20
30
40
50
60
70
2010 2011 2012 2013
capital structure
net profit

45. 45
Jindal Steel
Year Capital structure of Jindal Steel Earnings per share
2014 63.4 14.12
2013 61.1 17.04
2012 56.9 22.58
2011 56.8 22.09
2010 55.4 15.89
0
10
20
30
40
50
60
70
2010 2011 2012 2013 2014
capital structure
earning per share

46. 46
Tata steel
Tata Steel
Year 2014 2013 2012 2011 2010
Net profit 6,412.19 5,062.97 6,696.42 6,865.69 5,046.80
Gross profit 164110
123212 126,850 168,130 81,695
Earning per share 66.02 52.13 68.95 71.58 56.37
Debt/assets 0.299 0.319 0.310 0.357 0.404
Tata Steel
Year Capital structure of TATA Steel Gross profit ratio
2014 29.9 195.85
2013 31.9 440.13
2012 31 373.81
2011 35.7 419.14
2010 40.4 658.02
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014
capital structure of tata steel
gross profit

47. 47
Tata Steel
Year Capital structure of TATA Steel Net profit ratio
2014 29.9 15.37
2013 31.9 13.25
2012 31 19.73
2011 35.7 23.35
2010 40.4 20.23
0
5
10
15
20
25
30
35
40
45
2010 2011 2012 2013
capital structure of tata steel
net profit

48. 48
Tata Steel
Year Capital structure of TATA Steel Earnings per share
2014 29.9 66.02
2013 31.9 52.13
2012 31 68.95
2011 35.7 71.58
2010 40.4 56.37
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014
capital structure of tata steel
earning per share

49. 49
COMPARISON
Year capital structure of jindal
steel
capital structure of tata steel
2014 63.4 29.9
2013 61.1 31.9
2012 56.9 31
2011 56.8 35.7
2010 55.4 29.9
0
10
20
30
40
50
60
70
2010 2011 2012 2013 2014
capital structure of jindal
steel
capital structure of tata steel

50. 50
Year net profit ratio of tata steel net profit ratio of jindal steel
2014 15.37 8.88
2013 13.25 10.64
2012 19.25 15.82
2011 23.35 21.55
2010 20.23 20.13
0
5
10
15
20
25
2010 2011 2012 2013
net profit of tata steel
net profit of jindal steel

51. 51
Year gross profit ratio of jindal steel gross profit ratio of Tata steel
2014 403.02 195.85
2013 423.41 440.13
2012 509.46 373.81
2011 626.1 419.14
2010 742.63 658.02
0
100
200
300
400
500
600
700
800
900
2010 2011 2012 2013 2014
gross profit of jindal steel
gross profit of tata steel

52. 52
Year earning per share of tata steel earning per share of Jindal steel
2014 66.02 14.12
2013 52.13 17.04
2012 68.95 22.58
2011 71.58 22.09
2010 56.37 15.89
Jindal Steel
Year 2014 2013 2012 2011 2010
Net profit 1,291.95 1,592.55 2,110.65 2,064.12 1,479.68
Gross profit 54568 59,944 67,932 63320 58,616
Earning per
share
14.12 17.04 22.58 22.09 15.89
Debt/assets 63.4 61.1 56.9 56.8 55.4
Tata Steel
Year 2014 2013 2012 2011 2010
Net profit 6,412.19 5,062.97 6,696.42 6,865.69 5,046.80
Gross profit 164110
123212 126,850 168,130 81,695
Earning per share 66.02 52.13 68.95 71.58 56.37
Debt/assets 0.299 0.319 0.310 0.357 0.404
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014
earning per share of tata
steel
earning per share of jindal
steel

53. 53
Chapter 6:
FINDINGS

54. 54
Jindal Steel
While studying the profitability ratio of Jindal Steel we can say that-
Capital structure has increased rapidly over last 5 years. This means that company has raised
more debt on same assets or has sold out assets
This interne increase the fixed cost that is increase in interest on debt and that reduce profit
that is net profit
As interest paid is being deducted from gross profit to obtain net profit
This might also increase EPS as number of share become less compared to capital and profit
generated.
But during past 5 years both gross profit and EPS have declined.
So by observing this we can say that company is not performing good
As it declining , not even surviving.
TATA Steel
While studying the profitability ratio of Jindal Steel we can say that-
Capital structure has declined rapidly over last 5 years. This means that company has reduced
debt on same assets or has increased assets through owner fund
This interne reduce the fixed cost as it reduce fixed interest on debt and increase profit that is
net profit
As interest paid is being deducted from gross profit to obtain net profit
This might also decrease EPS as number of share become more compared to capital and
profit generated.
But during past 5 years both gross profit and EPS have increased.
So by observing this we can say that company is performing very good
As it not only surviving but also growing and expanding.

55. 55
Chapter 7:
CONCLUSION

56. 56
While we compare profitability ratios of Jindal Steel with TATA Steel we got to a conclusion
that
As we compare capital structure of both the companies we see that Jindal Steel is constantly
increasing debt to total assets while TATA Steel is constantly decreasing there debt to total
assets
By this we can say that Jindal steel is taking more and more risk but on other hand TATA
Steel is playing on a safe side by reducing risk with less return.
But when we compare gross profit, net profit and EPS then we see that
gross profit, net profit and EPS , all of these of TATA Steel are increasing as compared to
Jindal Steel in which all these are rapidly declining
by which we come to a conclusion that TATA Steel is performing very good as compared to
Jindal steel which is actually declining.