ratio analysis - mining industries
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Ratio Analysis - Mining IndustriesTRANSCRIPT
MINING AND MINERALS INDUSTRY
.
Group 5 Aditya Mehta Devang Kamdar Kaustubh Tiwary Neha Kedia Rishav Patawari Shone Thattil V. Vinod Kumar
OVERVIEW OF MINING AND MINERALS INDUSTRY Important for economic development of the country India produces 89 minerals out of which 4 are fuel minerals, 4
metallic and 52 non-metallic and 22 minor minerals India has about 7% of the world’s proven coal Reserves Coal supplies almost 50% of the country’s requirements Reserves are enough for meeting India’s needs for the next
hundred years Mines and Minerals industry is contributing around 3% to the
country’s GDP. It provides employment to 1.1 million people with 16% share
in exports Largest producer of Mica in the world Third in production of coal, lignite and barites Governed by central and State government
KEY MINING POLICIES
Two major laws governing the sector are
1. Mines and Minerals Development and Regulation
Act, 1957
2. Mines Act, 1952
Further the government has formulated National
Mineral Policy to permit the investment in
exploration and exploitation of Minerals.
FDI – MINING AND MINERALS INDUSTRY
In 1999, Foreign Investment Policy was liberalized to
promote Foreign Direct Investment in the Mining sector
74% is permitted under automatic route for exploration
and mining of diamonds and precious stone.
100% is allowed for the exploration and mining of gold
and silver and minerals other than diamonds and
precious stone.
100% under automatic route for metallurgy and
processing
FDI - MINING AND MINERALS INDUSTRY
100 percent in Private Indian companies setting
up/operating power projects as well as coal and
lignite mines for captive consumption.
100 percent FDI is allowed for setting up coal
processing plants with certain restriction
MAJOR PLAYERS IN THE INDUSTRY
20 MICRONS LIMITED
Market Capitalization – Rs. 59.24 crores
Net Profits – Rs. 1.34 crores
SESA GOA LIMITED
Market Capitalization – Rs. 21751.84 crores
Net Profits – Rs. 1942.49 crores
GUJARAT MINERAL DEVELOPMENT CORPORATION
Market Capitalization – Rs. 3424.86 crores
Net Profits- Rs. 231.42 crores
VARIOUS MINING AND MINERALS INDUSTRIES
NATIONAL MINERAL DEVELOPMENT
CORPORATION
Market Capitalization- Rs. 141402.02 crores
Net Profits- Rs. 4372.38 crores
HIMADRI CHEMICALS AND INDUSTRIES LIMITED
Market Capitalization- Rs. 1148.61 crores
Net Profits- Rs. 46.78 crores
LIQUIDITY RATIO
CURRENT RATIOCOMPANY 2008-09 2007-08 2006-07
20 MICRONS 3.28 3.08 3.14
SESA GOA 2.89 2.26 2.23
GMDC 1.57 1.63 1.70
NMDC 10.10 10.69 13.24
HIMADRI IND. 4.78 7.03 5.90
• Inter-corporate Deposits of Rs.1000 cr (SESA GOA)
• NMDC has huge cash (Rs.9,700cr) reserves
deposited in banks as term deposits
QUICK RATIOCOMPANY 2008-09 2007-08 2006-07
20 MICRONS 2.30 2.16 2.15
SESA GOA 2.47 1.49 1.15
GMDC 1.51 1.57 1.65
NMDC 9.84 10.47 12.93
HIMADRI IND.
3.21 4.10 4.15
2008-09 2007-08 2006-070
2
4
6
8
10
12
14
20 Microns ltd.Sesa goa ltd.Gmdc ltd.Nmdc ltd.Himadri ltd.
EARNING RATIO
RETURN ON EQUITYCOMPANY 2008-09 2007-08 2006-07
20 MICRONS 3.75 16.27 15.03
SESA GOA 42.99 53.45 40.25
GMDC 18.99 24.86 11.26
NMDC 37.57 39.21 39.99
HIMADRI IND. 12.18 24.32 25.70
• Decline in demand in last 2 years due to Recession
• Decrease in Profitability – Decrease in ROE
RETURN ON ASSETSCOMPANY 2008-09 2007-08 2006-07
20 MICRONS 0.084 0.11 0.104
SESA GOA 0.51 0.70 0.50
GMDC 0.14 0.17 0.09
NMDC 0.51 0.54 0.56
HIMADRI IND. 0.10 0.19 0.19
• SESA GOA and NMDC has increased its Total Assets
TURNOVER RATIO
FIXED ASSETS TURNOVER RATIO
COMPANY 2008-09 2007-08 2006-07
20 MICRONS 1.85 1.56 1.34
SESA GOA 7.38 5.84 3.79
GMDC 0.53 0.54 0.34
NMDC 4.89 4.19 3.27
HIMADRI IND.
1.39 1.66 2.11
INVENTORY TURNOVER RATIO
COMPANY 2008-09 2007-08 2006-07
20 MICRONS 9.11 10.49 12.21
SESA GOA 20.53 13.89 7.57
GMDC 18.27 25.28 13.97
NMDC 32.28 39 33.05
HIMADRI IND.
3.89 4.08 6.02
• Larger the ratio better for the
company
AVERAGE COLLECTION PERIOD
COMPANY 2008-09 2007-08 2006-07
20 MICRONS 54 53 48
SESA GOA 25 33 40
GMDC 32 32 49
NMDC 36 24 26
HIMADRI IND.
60 47 30
• Average collection Period for Industry is 30 days.
• Only SESA GOA has been able to reduce its collection
period
COVERAGE RATIO
INTEREST COVERAGE RATIO
COMPANY 2008-09 2007-08 2006-07
20 MICRONS 1.78 2.10 2.12
SESA GOA 779.31 1482.42 415.68
GMDC 7.86 6.81 3.28
NMDC N/A N/A N/A
HIMADRI IND.
4.32 10.51 8.10
• Sesa Goa has secured loan of Rs.1.91 cr
TAX BURDEN RATIO
COMPANY 2008-09 2007-08 2006-07
20 MICRONS 0.54 0.74 0.77
SESA GOA 0.74 0.67 0.67
GMDC 0.63 0.65 0.56
NMDC 0.66 0.66 0.66
HIMADRI IND.
0.74 0.78 0.75
LEVERAGE RATIO
DEBT EQUITY RATIOCOMPANY 2008-09 2007-08 2006-07
20 MICRONS 1.64 1.71 1.88
SESA GOA 0 0 0
GMDC 0.50 0.85 1.26
NMDC 0 0 0
HIMADRI IND.
0.77 0.68 1.05
• Sesa Goa and NMDC are the Debt free companies
• Debt free companies are performing better than
companies having debt
• Rest of the companies are paying off their debt to
release interest burden
Ratios 20 Microns
Sesa Goa
GMDC NMDC Himadri Chemicals
Industry Average
Debt Equity
1.64 0 0.50 0 0.77 0.49
Current 3.28 2.89 1.57 10.10 4.78 1.16
Quick 2.30 2.47 1.51 9.84 3.21 -
FAT 1.85 7.38 0.53 4.89 1.39 1.17
Invent. Turnover
9.11 20.53 18.27 32.28 3.89 11.48
Interest coverage
1.78 0 7.86 0 4.32 17.87
Tax Burden
0.54 0.74 0.63 0.66 0.74 -
ROE 3.75 42.99 18.99 37.57 12.18 -
ACP 55 26 33 37 60 29
ROA 0.084 0.51 0.14 0.51 0.10 -
FUTURE OUTLOOK
Demand in this sector is expected to increase several
folds within next 5-10 years due to completion of
ongoing coal based power projects and demand from
metallurgical and other industries
New mining policy to attract Rs. 5 trillion within 5-6
years
Government seeking a phased withdrawal of its
participation from non-strategic metal sector in order
to encourage private players to take the centre stage
FUTURE OUTLOOK
Potential Areas for exploration ventures
including Gold, Diamond, Copper, Zinc, Lead,
Nickel, etc.,
Development and production of surplus
commodities such as Iron ore, Bauxite, Mica,
etc.,
Strengthening of Logistics in coal distribution
Focusing on technology in future
2007 2008 20090
20
40
60
80
100
120
140
160
NET SALESNET PROFIT
20 MICRONS LIMITED
2007 2008 20090
1000
2000
3000
4000
5000
6000
NET SALESNET PROFIT
SESA GOA LIMITED
2007 2008 20090
200
400
600
800
1000
1200
NET SALESNET PROFIT
GMDC LIMITED
2007 2008 20090
1000
2000
3000
4000
5000
6000
7000
8000
NET SALESNET PROFIT
NMDC LIMITED
CONCLUSION
Analyzing the five different companies of mining
industries we inferred that Sesa Goa and NMDC are the
top performing companies in this sector. One of the
main reasons for their top performance is that they are
debt free companies. They are performing efficiently
and giving good returns to their shareholders. They have
stable ‘Return on Equity’ throughout the considered
period despite weak global cues in the later FY’08. While
in case of other companies Return on Equity is declining.
Sesa Goa is the company which shows the positive
growth in almost all the considered ratios.
CONCLUSION (CONTD..) The low performance of other companies can be justified
by unskilled labor force and lack of proper infrastructural
facilities. Poor logistics leads to lot of wastage of minerals
and hinder the progress of the company. Tax Burden faced
by the company is also very high which restricts the
industry to initiate new activities for its growth.
The Mining Industry has a greater opportunity for further
growth. There are several areas of potential exploration
which includes Gold, Diamond, Copper, Lead, Zinc, Nickel
etc., and other rare metals and fertilizer minerals.
Developing R&D would also help the industry to identify
new opportunities and help in overall development of the
country.
REFERENCES www.capitaline.com www.investopedia.com www.nmdc.co.in www.sesagoa.com www.gmdcltd.com www.wikipedia.com www.fdimagazine.com