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Statement of Balance Sheet of the company as at the close of the last threes years together with the estimated Balance Sheet for current year ended March ‘13 is attached as annexure. The net worth in the company is steadily improving from that of INR 1896 million three years ago to INR 2286 million in the year and is expected to further go up to INR 3158 million in the next two years which indicates that a major portion of the earnings are ploughed back. The gross block value of fixed assets has also gone up from that of INR 3892 million in 2009-10 to INR 5098 million in the year 2011-12 indicating substantial investments (INR 1206 million) into the fixed assets. The fixed assets are expected to further go up to Rs.7804 million a substantial increase of Rs.3912 million from 2009-10 level. Although a major portion of this investment is by means of long term debt, yet the debt has gone up only by INR 1545.7 million (i.e. from INR 1321 million in 2009-10 to INR 2866.7 million in 2013-14) which goes to show that SIL is utilizing major portion of the ploughed back profits for investment into fixed assets apart from regularly meeting the repayment obligations of long term debt. In consequence, the debt-equity ratio has increased from 0.70 in 2009-10 to 1.29:1 (increased due to borrowal for Integrated project) in 2012-13 and the same is expected to come down to 0.90:1 in 2013-14 year, which, all through the years, is well within the permissible bank financing norms.
The book value of the share which was INR 56.77 in 2009-10 is expected to be INR 72.78 by end 2012-13 and is further expected to go up to INR 82.22 towards end March 2014. The present book value is after continuous dividend payment during the last three years during which period an aggregate of 48% dividend, free of tax, was paid to the equity holders. The company has been declaring dividend continuously for the last one decade.
On the working capital front, SIL has high discipline in financial management. The current ratio is always maintained at above the efficiency norm of 1.33 times despite the fact of deploying substantial internal accruals into the project investment. The current ratio which was at 1.73 during the year end March 31, 20010 is at 1.44 times by end March 2013 and targeted to be maintained at 1.36 by end 2013-14.
An analysis of the Balance Sheet shows that the overall financial health of SIL is not only sound but also improved consistently and maintained over the years. The financial strength of the company is expected to improve significantly by virtue of its strategic decisions like implementation of Integrated project- a backward and forward integration to the existing Pig Iron making operations, by financing the same with a combination of internal accruals and long term debt. As there is no dilution of equity for implementing the project and since the benefits of the project starts flowing in, the financial strength of the company is expected to improve significantly in the coming years. The proposed expansions will further improve the financial strength of the company.
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