A COMPARATIVE STUDY ON WORKING CAPITAL MANAGEMENT IN STEEL AUTHORITY
A Comparative Study on Working Capital Management in Steel Authority research focuses on five different steel producers, including Steel Authority of India Ltd., Companies like The Big Four Steel Giants: Tata, Essar, Jindal, and JSW are doing well. The research budgeted properly and used size-wise, ratio, and business cycle analyses to evaluate steel makers’ strengths and shortcomings.
According to the data, Tata Steel Ltd. has the fastest expanding net working capital. Throughout the holding time, Jindal Steel & Ltd. performed the best, while JSW Steel performed the worst. The longest gross operating cycle is 92.36 days for Essar Steel Ltd. then SAIL (88.38 days) and Jindal Steel (69.50 days). Positive production cycle net of Jindal Steel and Tata Steel have yearly losses, suggesting a large market.
THE EFFECTIVENESS OF THE WORKING CAPITAL MANAGEMENT
These companies expertly manage their working capital. Profitability may be impacted by managing working capital efficiently. Finding the optimal balance between profit and liquidity is the focus of effective capital management. Cash, marketable securities, debtors, and creditors are the shareholders and debtors that must be managed while overseeing a company’s working capital. Working capital is an effective economic indicator.
The purpose of managing working capital is to balance the company’s short-term assets and obligations so that. The amount of available operating capital is sufficient. There are several units of is sufficient working capital, but inefficient management costs more and generates less profit. Effectiveness is Working capital management reduces expenses and enables additional uses for the benefit of the company as a whole.
This study analyzes many firms’ working capital management strategies and draws conclusions about Tata Steel Ltd.’s use of financial and statistical techniques, which include companies heavily invested in the steel industry’s capital-intensive liquid resources like money on hand, receivables, and stock on hand.
Keywords: Search for: Working capital, operating cycle, size-wise analysis, and similar terms.
The steel industry may be directly responsible for the growth of the Indian economy. One of those Steel is still used in industries that have been important for a long time, like building and construction, cars, transportation, industry, and so on. Even though India’s steel industry is rising faster than those of many other developing countries, the global economic slowdown can be seen in the slower growth of a number of economic measures, like growth.
Increasing prices and loan rates are also hurting the building and car industries, which is likely to hurt local demand in the near future. Indian steel makers are making both new and brownfield developments to boost their production abilities. One example of a niche market that smaller businesses are trying to fill is the market for sponge iron.
INDIA IN STEEL PRODUCTION
In April 2017, the association said that India was the fourth largest steel producer in the world. India became the third-largest steel production in 2015, surpassing Brazil. on track to become the second-largest producer behind China. Despite India’s low per capita steel consumption of 61 kg, compared to 208 kg globally, there remains a lot of untapped potential for growth. The working capital management of government owned organizations is the primary topic of this study conducted by researchers.
STEEL AUTOMATION IN INDIA (SAIL)
SAIL is the sixth biggest firm in India and is a genuinely global steel corporation. In India, the most well-known steel manufacturer is Steel Authority of India Ltd (SAIL). It is a vertically integrated company that produces specialty steels for use in domestic building, engineering, power, railway, automotive, and military applications and for export.
SAIL is one of the top 10 public sector companies in India with the most money coming in each year. SAIL is a company that makes steel and also sells the steel it makes. The Indian government owns more than 86% of SAIL’s stock and also keeps its vote rights. Five combined units and three separate plants are used by SAIL to make iron and steel.
Most of India’s steel mills are in the eastern and central areas, near the company’s domestic iron ore, limestone, and dolomite mines. The corporation manages India’s second-largest mines and tunnels and employs the most iron ore workers. SAIL can use more readily available raw materials such iron ore, limestone, and dolomite to create steel, giving it an advantage over its competitors.
- To investigate the effectiveness of large steel companies’ working capital via the use of financial ratios.
- To compare the management of working capital at sail and tata steel ltd and provide suggestions for improving the existing situation.
- To provide recommendations in order to enhance the management of working capital in such a cash-intensive industry
The steel industry may be directly responsible for the growth of the Indian economy. The first comment draws the reader’s attention to the fact that steel is still the market leader in traditional areas like building and infrastructure, transportation, industry, and so on. Both the government’s reform of industrial policy and the other steps it has taken have given the steel industry a big boost in terms of access, role, and growth in the private sector. As the current units are being updated and made bigger, a lot of new steel plants have been built in different parts of the country. These plants use modern, cost-effective technologies that are both effective and cutting-edge.
Raw steel India is the fourth-largest manufacturer in the world, with 84 metric tons of production capacity and the world’s largest crude steel reserves. It can create a broad variety of grades that are globally competitive. Bringing brand new green field projects in various locations around the nation up to specifications.
Managing a company’s working capital well is an important part of corporate finance management because it has a direct effect on how much money the company can make. One way to measure liquidity is by looking at the trend. The examination of trends in net working capital is very important since it gives a comprehensive representation of the trend analysis of current assets as well as existing obligations.
WORKING CAPITAL OF BUSINESSES IN INDIA’S STEEL INDUSTRY
Throughout the course of a span of six years, beginning and continuing through, there were five steel firms in India. It’s possible that the amount of the company’s working capital is just right for maximizing their worth. Large. Inventory and a strategy of providing liberal trade credit might lead to increased sales. The increased quantity of goods also cuts down on the possibility of running out of supplies. Trade credit lets companies buy on credit, which may enhance sales. Before buying, inspect the product.
By postponing supplier payments, corporations may access financing markets. The net operational cycle measures the duration between an organization’s purchase of raw materials and its sales of produced goods. It is used to assess working capital management.
The more time that goes by between two events, the more money that has to be invested to keep daily activities going. There is a chance that a longer time between net working cycles could make a business more profitable. Earnings went up. There is a chance, though, that the company’s profits will go down along with the net operating cycle if: the costs of keeping more working capital outweigh the benefits of keeping more working capital. For business deals, consumers’ lines of credit are either made longer or made bigger. The goal of this project is to find out how companies in India’s steel industry handle their working capital.
The test result demonstrates that Tata Steel Company is not comparable to SAIL despite its low fixed-assets ratio. Except for one or two years, most ratios for both firms are below industry standards and negative throughout the research. Since excess money are invested in fixed assets, both firms’ working capital turnover ratios are too low.
Thus, the management may resort to effectively using cash and available funds in profitable ventures or meeting immediate financial commitments. Working capital is the difference between the value of a company’s current assets and the value of its current liabilities. The working capital ratio compares percentages when both numbers can help show how well a business is doing financially.
|Project Name||: A Comparative Study On Working Capital Management In Steel Authority|
|Project Category||: MBA Finance|
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