Final Project Report (2nd Sem)

Company taken- NMDC Steel Ltd.

BY , R A J D E E P S A H A
UID- 2023-2405-0001-0020
F I N T E C H S P E C I A L I Z AT I O N
B ATC H - 2 0 2 3 - 2 0 2 5
Executive Summary
Operational Growth  Strategic Disinvestment and Focus
Investment in Expansion  Raw Material Security
Increased Financial Leverage  Strengthened Equity Base

Enhanced Liquidity  Unqualified Auditor's Opinion

 Credit Rating Risks
Contingent Liabilities Growth
Company Information
Company Information
Company Information
CIN U27310CT2015GOI001618

Company Name NMDC STEEL LIMITED

ROC Name ROC Chhattisgarh

Registration Number 001618

Date of Incorporation 02/01/2015

Email Id *****dc.co.in

Registered Address C/O NMDC IRON & STEEL PLANT, Bastar, NAGARNAR, Chattisgarh, India, 494001

Listed in Stock Exchange(s) (Y/N) No

Category of Company Company limited by shares

Subcategory of the Company Union government company

Class of Company Public

ACTIVE compliance ACTIVE Compliant

Authorised Capital (Rs) 30,00,00,00,000

Paid up Capital (Rs) 29,30,60,58,500

Date of last AGM 07/09/2023

Date of Balance Sheet 31/03/2023

Company Status Active

Jurisdiction

ROC (name and office) ROC Chhattisgarh

RD (name and Region) RD, Northwestern Region

RoC Details for NMDC Steel
Director/Signatory Details

Sr. No DIN/PAN Name Designation Date of Appointment Cessation Date Signatory

1 08265207 AMITAVA MUKHERJEE Whole-time director 06/03/2019 - Yes

2 09296720 DILIP KUMAR MOHANTY Whole-time director 16/12/2021 - Yes

3 01825997 SUKRITI LIKHI Nominee Director 08/11/2022 - Yes

4 *****4461G ANIKET KULSHRESHTHA Company Secretary 11/08/2023 - Yes

5 10172521 VINAY KUMAR Whole-time director 19/05/2023 - Yes

6 07851224 ABHIJIT NARENDRA Nominee Director 20/03/2023 - Yes

7 10059734 VISHWANATH SURESH Whole-time director 20/03/2023 - Yes

Strategic Framework of NMDC Steel Ltd
Demerger and Disinvestment: The Cabinet Committee on Economic Affairs has approved
the separation of NMDC Steel Ltd. from NMDC, allowing NMDC to focus on mining and NMDC
to focus on steel production, as part of a strategic disinvestment strategy.

Steel Production Capacity and Technology: NMDC Steel, a leading steel producer in
Chhattisgarh, utilizes advanced European technology and equipment at its state-of-the-art
plant in Nagarnar, Chhattisgarh.

Product Mix and Market Focus: NMDC Steel Ltd. offers a diverse product mix, catering to
construction, transportation, and manufacturing industries, focusing on establishing a strong
presence in the hot-rolled steel market.

Strategic Advantages: The Nagarnar steel plant, strategically located near Bailadila iron ore
mines and Vizag port, began commercial production of hot-rolled coils on August 31, 2023.

Demerger Benefits: The demerger of NMDC and NMDC Steel offers shareholders clearer
accountability and strengthens the balance sheet by transferring debt and reducing cash burn.
Shareholding Pattern
Chart Title

2,000,000,000

1,800,000,000

1,600,000,000

1,400,000,000

1,200,000,000

1,000,000,000

800,000,000

600,000,000

400,000,000

200,000,000

0
Promoter Holding Institutional Holding Public (Non-Institutional)
Holdings

Mar-24 Dec-2023 Mar-23

Market Share in Sector
SL. No Category Company Name 2022 2023

1 Metal Products Tata Steel Ltd 6.70% 7.00%

2 Metal Products JSW Steel Ltd 6.50% 6.90%

3 Metal Products Steel Authority of India Ltd (SAIL) 4.80% 5.00%

4 Metal Products Worldwide Iron and Steels Plt Ltd 2.80% 3.00%

5 Metal Products Vendata Resources Ltd 2.70% 2.60%

6 Metal Products ArcelorMittal SA 2.20% 2.30%

7 Metal Products Aditya Birla Group 1.90% 1.80%

8 Metal Products Sterlite Industries (India) Ltd 1.30% 1.30%

9 Metal Products PAMP SA 0.90% 0.80%

10 Metal Products Vedanta Ltd 0.60% 0.60%

11 Metal Products National Aluminium Co Ltd 0.40% 0.40%

12 Metal Products NMDC Ltd 0.30% 0.30%

Company overall CAGR
Compound Annual Growth Rate

Sales (in Cr)

Year Sales (in Cr) CAGR
₹ 30,000.00

₹ 25,000.00
2018-19 ₹ 12,152.67 -
₹ 20,000.00

2019-20 ₹ 11,699.22 -0.76%

₹ 15,000.00

₹ 10,000.00
2020-21 ₹ 15,370.06 4.81%
₹ 5,000.00

2021-22 ₹ 25,881.73 16.32% ₹ 0.00

2018-19 2019-20 2020-21 2021-22 2022-23

2022-23 ₹ 17,666.88 7.77%

2019-23 CAGR 7.04%

Sector Information
The Indian iron and steel sector is a significant contributor to the country's
infrastructure development and industrial growth. As the world's second-largest
producer of crude steel, India is expected to generate a market size of USD 150.2
billion by 2025. Key domestic steel producers include SAIL, Tata Steel, JSW Steel,
AMNS India, and NMDC Steel. Demand drivers include increased infrastructure
initiatives, rising demand from building and automotive industries, and growing
urbanization.
Contribution to GDP and
employment generation
According to R Settu and Dr. K Padhmanaban's study paper, "The role of the iron
and steel industry in promoting the Indian economy," According to a 2016
research that was published in the International Journal of Commerce and
Management Research and an IBEF report, India's iron and steel sector
contributes around 2% of the country's GDP. There are 20,000 000 employment in
the steel industry in the nation.
Porter’s 5 force analysis
PESTLE Analysis of Iron and Steel
Sector
SWOT Analysis of Iron and Steel
Sector
Growth Drivers for the Iron and Steel
Sector
Risin
g • Crucial in buildings, bridges, transportation networks.
Infras • Rising global government spending, especially in developing economies, boosts steel demand.
truct
ure
Devel
opme
nt

Urban • Rapid urbanization drives demand for steel.

izatio
n and • New buildings and infrastructure create significant steel market.
Const
ructio
n
Boom

Growt • Crucial in car bodies, chassis, engine components.

h in
Auto • Global automobile sector growth, especially in electric vehicles, driving steel demand.
mobil
e
Indus
try

• Mini-mills and continuous casting enhance efficiency.

Techn
ologic
• Reduced costs and improved product quality.
al • Research on high-strength, lightweight steels open new construction and transportation applications
Adva
ncem
ents

• Adopting greener practices.

• Developing cleaner steel technologies.
Focus
on • Reducing carbon emissions.
Susta • Increased use of recycled scrap steel.
inabil
ity
Financial Information of Iron &
Steel Sector
The government prioritizes capital expenditure (CAPEX) to revitalize the economy
and mitigate the effects of COVID-19. CPSEs, including those under the Ministry of
Steel, are financed entirely through their resources, Internal and Extra Budgetary
Resources (IEBR). The current CAPEX target is Rs. 13,156.46 crore (BE) for FY
2022-23 and Rs. 10300.85 crore for 2023-24. The Ministry is monitoring CAPEX
with CPSEs to strengthen infrastructure and production capacity post-pandemic.
The Ministry is also addressing inter-ministerial issues for faster implementation
of CAPEX projects by CPSEs.
Financial Information of Top 5
Companies
Gross Profit Margin Asset Turnover Ratio
Particulars 2023
Particulars 2023
Revenue from Operations ₹ 61,004.98

Cost of Materials Consumed ₹ 22,388.31

Revenue from Operations ₹ 61,004.98
Purchases of Stock-in-Trade: ₹ 2,453.95

Changes in Inventories -₹ 144.61 Total Asset ₹ 11,24,575.91

Revenue - (Cost of Materials +

Revenue from Operations /
Purchases of Stock-in-Trade +
Gross Profit Total Assets
Changes in Inventories) Asset Turnover Ratio

₹ 36,307.33 0.05

Gross Profit / Revenue

Gross Profit Margin
59.52% The Asset Turnover Ratio
was less 1.0, indicating less
The Gross Profit Margin Interpretation
efficient in utilization of
Interpretation indicating efficiency in
assets.
production or sales.
Profit & Loss Statement of JSL
Gross Profit Margin Asset Turnover Ratio
Particulars 2023

Revenue from Operations ₹ 35,697.03 Particulars 2023

Cost of Materials
Revenue from Operations ₹ 35,697.03
Consumed ₹ 24,882.03
Purchases of Stock-in- Total Asset ₹ 27,140.23
Trade: ₹ 444.28

Changes in Inventories -₹ 854.19 Revenue from Operations /

Total Assets
Revenue - (Cost of Materials Asset Turnover Ratio
+ Purchases of Stock-in-Trade
Gross Profit
+ Changes in Inventories) 1.32

₹ 11,224.91
The Asset Turnover Ratio is
Gross Profit / Revenue greater than 1.0, indicating
Gross Profit Margin Interpretation
31.44% more efficient in utilization of

The Gross Profit Margin assets.

Interpretation indicating efficiency in

production or sales.
Profit & Loss Statement of ESL
Gross Profit Margin

Particulars 2023

Revenue from Operations ₹ 7,97,757.92

Cost of Materials Consumed ₹ 5,02,260.08

Changes in Inventories of Finished/Semi-Finished Goods and

-₹ 40,542.28
Stock-in-Trade

Revenue - (Cost of Materials + Purchases of Stock-in-Trade +

Gross Profit Changes in Inventories)

₹ 3,36,040.12

Gross Profit / Revenue

Gross Profit Margin
42.12%

Interpretation The Gross Profit Margin indicating efficiency in production or sales.

Profit & Loss Statement of JSW
Gross Profit Margin Asset Turnover Ratio

Particulars 2023
Particulars 2023

Revenue from Operations ₹ 1,65,960.00

Revenue from Operations ₹ 1,65,960.00
Cost of Materials Consumed ₹ 94,456.00
Total Asset ₹ 2,11,078.00
Changes in Inventories of
Finished/Semi-Finished Goods and -₹ 2,636.00
Stock-in-Trade Revenue from Operations /
Total Assets
Revenue - (Cost of Asset Turnover Ratio
Materials + Purchases of
Gross Profit Stock-in-Trade +
0.79
Changes in Inventories)
₹ 74,140.00 The Asset Turnover Ratio was
Gross Profit / Revenue less 1.0, indicating less
Gross Profit Margin Interpretation
44.67% efficient in utilization of
The Gross Profit Margin assets.
Interpretation indicating efficiency in
production or sales.
Profit and Loss Statement of
KIOCL
Gross Profit Margin
Asset Turnover Ratio
Particulars 2023

Revenue from Operations ₹ 1,54,341.60 Particulars 2023

Cost of Materials Consumed ₹ 1,13,178.75

Revenue from Operations ₹ 1,54,341.60
Changes in Inventories of
Finished/Semi-Finished Goods and -₹ 983.91
Total Asset ₹ 2,93,804.53
Stock-in-Trade
Revenue from Operations / Total
Revenue - (Cost of Materials +
Assets
Purchases of Stock-in-Trade + Asset Turnover Ratio
Gross Profit
Changes in Inventories)
0.53

₹ 42,146.76

Gross Profit / Revenue The Asset Turnover Ratio was

Gross Profit Margin
27.31% Interpretation less 1.0, indicating less efficient
in utilization of assets.
The Gross Profit Margin indicating
Interpretation
efficiency in production or sales.
 Key ratios OF NMDC Steel
Quick Ratio Current Ratio
Formula (Current Assets - Inventories) / Current Liabilities Formula Current Assets / Current Liabilities
- March 31, - March 31,
2023 (2,698.78 - 859.54) / 2,199.46 = 0.84 2023 2,698.78 / 2,199.46 = 1.23
- March 31, - March 31,
2022 (1,302.36 - 39.68) / 3,455.92 = 0.37 2022 1,302.36 / 3,455.92 = 0.38
A quick ratio below 1 could indicate potential A higher current ratio is generally better,
liquidity issues. The ratio for 2023 is much better indicating the company can meet its short-term
Analysis than 2022, indicating a more robust financial position Analysis obligations. The current ratio increased from 0.38
when excluding inventory. Debt-to-Equity Ratio to 1.23, indicating improved liquidity.

Formula Total Liabilities / Total Equity

- March 31, 2023 8,519.63 / 17,048.58 = 0.50

- March 31, 2022 4,526.38 / 17,048.58 = 0.27

A lower debt-to-equity ratio indicates less financial risk.
The increase in the ratio suggests the company took on
Analysis more debt relative to its equity base, indicating an
increase in leverage.
Domain Analysis(Banking and
Financial Services)
The NMDC Board approved borrowing up to Rs. 5,000 crores for capex
requirements by raising terms loans from banks and financial institutions. A
Rupee term Loan facility (RTL) of Rs. 4476.20 crores was availed from the State
Bank of India (SBI) for part funding of Nagarnar Integrated Steel Plant (NISP). The
loan has a fixed interest rate of 7.10% p.a. and is repayable in 30 quarterly
instalments. The loan has been transferred to NMDC Steel Limited's books of
accounts during the demerger of NISP from NMDC. A common loan agreement
was entered with SBI for the RTL, with a drawdown of Rs. 3294.50 crores made
until 31.03.2023.
Conclusion
NMDC Steel's operational performance has improved significantly in 2023, with a significant increase
in operating cash flow. The company's strong investment activity and reliance on financing have also
contributed to growth. However, the company's debt-to-equity ratio has risen, indicating a higher
reliance on debt. NMDC Steel's contingent liabilities have also increased, indicating potential risks.
The company's unqualified auditor's opinion on its financial statements reassures investors about its
adherence to Indian Accounting Standards and the Companies Act, 2013. The strategic disinvestment
from NMDC Steel allows it to focus on its steel manufacturing operations, with the Indian government
aiming to divest a majority stake. The company's high capital expenditure has led to a significant
increase in non-current assets. NMDC Steel is on 'Rating Watch with Developing Implications' due to
CRISIL Ratings' concern over the steel plant's stabilization risk. The company's strategic location in
Nagarnar, Chhattisgarh offers competitive advantages due to its proximity to iron ore mines and
ports. The company's increased inventories suggest increased production, suggesting demand
growth or potential overstocking. However, the company's increased debt levels may suggest
greater financial risk if not managed properly. NMDC Steel's product mix caters to various industries,
allowing diversification and reduced market risk. The company's demerger and strategic
disinvestment position it for potential growth.