Electrosteel Steels Ltd - NSE · Electrosteel Integrated Ltd is a subsidiary company of...

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1 | P A G E

SECTOR: STEEL REPORTING DATE: 1ST JUNE, 2016

ELECTROSTEEL STEELS LIMITED www.electrosteels.com

Electrosteel Steels Ltd 1st June, 2016 TABLE 1 - MARKET DATA (STANDALONE) (As on 31st May, 2016)

NSE Code - ESL NSE Market Price (₹) 2.95 NSE Market Cap. (₹Cr.) 717.95

Sector - Steel Face Value (₹) 10.00 Equity (₹Cr.) 2,409.24

52-week High/Low (₹) 4.55/2.05 Net worth (₹Cr.) 1,092.84

Business Group-Indian Private TTM P/E N.A. Traded Volume (Shares) 2,74,721

Year of Incorporation - 2006 TTM P/BV 0.00 Traded Volume (lacs) 8.10

Source - Capitaline

Corporate Office: COMPANY BACKGROUND

801 Uma Shanthi Apartments, Electrosteel Integrated Ltd is a subsidiary company of Electrosteel Castings Ltd. The

company is pioneer in DI Pipes market. The company was set up as a part of backward

integration strategy by their promoter, which is in the manufacturing of DI and CI spun

pipes. The company was incorporated on 20th December, 2006 as a public limited company.

They commenced business on 5th January, 2007.

The company has made a tie up with Chinese Consultancy Agency for Technology transfer

based on successfully operating Integrated Steel Plant in various locations in China.

In May 2010, the company changed the name of the company from Electrosteel Integrated

Ltd to Electrosteel Steels Ltd. The main reason for the name change was that the new name

would convey the business of the company in a better manner, which would help the

company enjoy better market reputation and customer's reliance.

Kanke Road,

Ranchi, 834008, Jharkhand

Company Website:

www.electrosteels.com

TABLE 2 - PRICE PERFORMANCE

31st May,

2016

29th May,

2015

30th May,

2014

% Change CAGR for 2

years 2016 vs 2015 2015 vs 2014

Price (₹) 2.95 4.05 5.90 -27.16% -31.36% -29.29%

Trading Volume (Shares)

(yearly avg.) 11,09,733 9,47,666 4,35,724 17.10% 117.49% -

NSE Market Cap. (in ₹Cr.) 710.72 975.74 1290.18 -27.16% -24.37% -25.78%

Source - Money Control

TABLE 3 - FINANCIALS

(₹Cr.) 2015 2014 2013 % Change CAGR for 2

years 2015 vs 2014 2014 vs 2013

Net Worth 1,092.84 1,499.57 1,790.7 -27.12% -16.26% -21.88%

Current Assets 1,759.39 803.58 484.78 118.94% 65.76% 90.51%

Non-Current Assets 11,631.81 10,597.47 9,776.35 9.76% 8.40% 9.08%

Total Assets 13,391.2 11,401.05 10,261.14 17.46% 11.11% 14.24%

Investments 287.53 272.51 309.09 5.51% -11.83% -3.55%

Finance Cost 451.73 177.31 134.41 154.77% 31.92% 83.33%

Long Term Liabilities 8,902.27 8,331.1 6,116.17 6.86% 36.21% 20.65%

Current Liabilities 3,396.08 1,570.38 2,354.26 116.26% -33.30% 20.11%

Turnover 1,831.24 513.22 163.11 256.81% 214.65% 235.07%

Profit After Tax (PAT, ₹Cr.) -624.04 -291.13 -280.01 N.A. N.A. N.A.

EPS (₹) -3.00 -1.00 -1.00 N.A. N.A. N.A.

Source - Money Control/Annual Report

http://www.electrosteels.com/




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AUDIT QUALIFICATIONS

Audit Qualifications in last years: The Auditors have not raised qualifications in last three years. However, in the latest Annual

Report for FY 2014-15 they have emphasised on the following matters:

Without qualifying their opinion, they have drawn attention to Note 40 to the financial statements (Read more detail in Annual

report on page number 66), regarding the preparation of the same on a going concern basis. The Company incurred a net loss

of ₹ 624.04 crores during the year ended 31st March, 2015 and, as of that date, the Company's current liabilities exceeded its

current assets by ₹ 1,636.69 crores, further the Company's net worth has also been substantially eroded as at the balance

sheet date. However, in view of operationalisation of the other project facilities together with the increase in release of the

working capital limits and the committed infusion of funds, these financial statement have been prepared on a going concern

basis and no adjustment has been made to the carrying value of the assets and liabilities.

Response Comment

Frequency of Qualifications - Auditors have not made raised any qualification in last three

years.

Have the auditors made any adverse

remark in last 3 years? No -

TABLE 4: BOARD PROFILE (As on 31st March, 2015)

Regulatory Norms Company

% of Independent Directors on the Board 33% 44.45%

% of Promoter Directors on the Board - 22.22%

Number of Women Directors on the Board At least 1 1

Classification of Chairman of the Board -

Non-Executive Independent

Director

Is the post of Chairman and MD/CEO held by the same person? - No

Average attendance of Directors in the Board meetings (%) - 81.25%

Source - Money Control/Annual Report

Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 33%

Independent Directors as the Chairman of the Board is a Non-Executive Director. The Company as on 31st march, 2015 has

44.45% of Independent Directors and hence, it meets the regulatory requirements.

Board Diversity: The Company has 9 directors out of which 8 are male and 1 is female.


https://www1.nseindia.com/annual_reports/AR_7224_ESL_2014_2015_26082015124117.zip

https://www1.nseindia.com/annual_reports/AR_7224_ESL_2014_2015_26082015124117.zip



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TABLE 5 - FINANCIAL RATIOS

Ratios 2015 2014 2013 % Change

2015 vs 2014 2014 vs 2013

Turn

ove

r

Rat

ios

Inventory Turnover 2.24 1.40 0.72 59.53% 94.14%

Debtors Turnover 12.64 23.31 27.83 -45.78% -16.27%

Fixed asset Turnover 0.16 0.05 0.02 225.08% 190.27%

Current Asset Turnover 1.04 0.64 0.34 62.97% 89.82%

Ret

urn

Rat

ios Operating Profit Margin -34.08% -56.72% -170.25% N.A. N.A.

Net Profit Margin -34.08% -56.73% -171.67% N.A. N.A.

Return on Assets (ROA) -4.66% -2.55% -2.73% N.A. N.A.

Return on Equity (ROE) -57.10% -19.41% -15.64% N.A. N.A.

Return on Capital Employed (ROCE) N.A. N.A. N.A. N.A. N.A.

Liq

uid

ity

Rat

ios

Current Ratio 0.52 0.51 0.21 1.24% 148.50%

Quick Ratio 0.28 0.28 0.11 -0.59% 153.33%

Cash Ratio 0.23 0.26 0.11 -11.45% 146.15%

Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A.

Solv

ency

Rat

ios Debt to equity ratio 8.69 5.56 3.28 56.29% 69.35%

Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A.

Trad

ing

Rat

ios

Market Cap / Sales 0.45 1.59 5.01 -71.97% -68.22%

Market Cap/ Net Worth 0.75 0.54 0.46 37.22% 19.41%

Market Cap/PAT N.A. N.A. N.A. N.A. N.A.

Market Cap/EBITDA 449.80 N.A. N.A. N.A. N.A.

Trading Volume (shares) (avg. of 1 year) 11,77,051 838,291 363,679 40.41% 130.50%

Trading Volume (shares) (high in 1 year) 1,12,85,256 68,91,196 22,33,511 63.76% 208.54%

Trading Volume (shares) (low in 1 year) 1,11,505 71,133 28,975 56.76% 145.50%

Ratio - High/low trading volume 101.21 96.88 77.08 4.47% 25.68%

Ratio - High/average trading volume 9.59 8.22 6.14 16.63% 33.85%

Source - Money Control




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TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS

Dec' 2015 Dec' 2014 Dec' 2013 Comments

Shar

eho

ldin

g

Promoter shareholding 45.23% 45.23% 39.64% No new equity shares were issued

during the period from Dec’2014 to

Dec’2015. There was no change in

shareholding of promoters during the

said period. The shareholding of public

institution increased from 1.48% to

29.65% and that of public others

decreased from 53.29% to 25.12%

during the same period. The promoters

have pledged 79.53% of their

shareholding.

Public - Institutional

shareholding 29.65% 1.48% 1.58%

Public - Others

shareholding 25.12% 53.29% 58.78%

Non Promoter Non Public

Shareholding 0.00% 0.00% 0.00%

TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS

Market Activity of Promoters The promoters have not sold/bought any shares in last fiscal year.

Preferential issue to promoters

The Company issued ₹ 22, 25, 00 ,000 of face value ₹10 each to the promoters of

the Company in October 2014 through preferential offering, thus increasing the

shareholding of promoters 45.23%.

Preferential issue to others No preferential issue of shares was made to other shareholders in last fiscal year.

GDRs issued by the Company The Company did not issue and GDRs during last three years

Issue of ESOPs/Issue of shares other than

Preferential allotment The Company does not have any ESOP Scheme.

Source - Annual Report




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Glossary

Equity: The equity shares capital of the Company

Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company

Turnover: The revenue earned from the operations of the Company

EPS: Earning Per Share is net profit earned by the Company per share

𝐸𝑃𝑆 =Profit After Tax

Number of outstanding shares

P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company

𝑃/𝐸 𝑟𝑎𝑡𝑖𝑜 =Price of each share

Earnings per share

Current Assets: Cash and other assets that are expected to be converted to cash in one year

Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land,

buildings, and equipment

Total Assets: Current Assets + Fixed Assets

Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the

future.

Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges

incurred during the year in relation to borrowed money.

Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year.

Current Liabilities: A company's debts or obligations that are due within one year.

Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over

a period.

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Inventory

Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business

can turn its accounts receivable into cash during a period

𝐷𝑒𝑏𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Accounts recievables

Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets

𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Fixed Assets

Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover

Current Assets




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Operating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after

paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating

income (also known as “operating profit”) during a given period by its sales during the same period.

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Operating profit

Sales Turnover

Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Net profit

Sales Turnover

Return on Assets: ROA tells you what earnings were generated from invested capital (assets)

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 =Net profit

Total Assets

Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’

equity.

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 =Net profit

Net worth

Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability

and the efficiency with which its capital is employed.

𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 =Net profit

Total Debt + Equity share capital

Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts

over the next 12 months. It compares a firm's current assets to its current liabilities.

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =Current Assets

Current Liabilities

Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities.

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories

Current Liabilities

Cash ratio: The ratio of the liquid assets of a Company to its current liabilities.

𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories − Account Recievables

Current Liabilities

Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a

Company's effectiveness in using its working capital.

𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

Current Assets − Current Liabilities

Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of

shareholders' equity and debt used to finance a company's assets.

𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =𝑆ℎ𝑜𝑟𝑡 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 + 𝐿𝑜𝑛𝑔 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡

𝑁𝑒𝑡 𝑊𝑜𝑟𝑡ℎ

Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a

Company can pay interest on outstanding debt.

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 =𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥

𝐹𝑖𝑛𝑎𝑛𝑐𝑒 𝐶𝑜𝑠𝑡


http://www.investopedia.com/terms/i/invested-capital.asp

http://www.investopedia.com/articles/stocks/05/04405.asp



7 | P A G E



Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated

by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-share stock price by

the per-share revenue.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑆𝑎𝑙𝑒𝑠 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ

Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑃𝐴𝑇 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡

Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA.

𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝐸𝐵𝐼𝑇𝐷𝐴 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝

𝐸𝐵𝐼𝑇𝐷𝐴

Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year

Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year

Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year


https://en.wikipedia.org/wiki/Stock

https://en.wikipedia.org/wiki/Market_cap

https://en.wikipedia.org/wiki/Stock



8 | P A G E



DISCLAIMER

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