International Journal of Research Publication and Reviews, Vol 4, no 5, pp 536-550 May 2023

International Journal of Research Publication and Reviews

Journal homepage: www.ijrpr.com ISSN 2582-7421

A B S T R A C T

Cash flow analysis helps you understand how much cash a business generated or used during a specific accounting period. The main objective of this paper is to

find the solvency position of top five iron and steel companies in India. The study uses Mean, Standard Deviation, Co efficient of Variation, Trend Analysis. The

study reveals the cash flow analysis of selected Iron and Steel companies in India.

Keywords: Cash flow, Iron and steel industries, Operating activities, Investing activities and Financing activities.

1. Introduction

Cash flow analysis helps you understand how much cash a business generated or used during a specific accounting period. This study makes complete

Cash flow problems happen when a business does not have enough liquid cash to cover its liabilities. When cash outflows exceed cash inflows, businesses

may struggle to pay debts and other expenses.

Net cash outflows don’t necessarily indicate that a business has a cash flow problem. It’s common for businesses to experience a net cash outflow when

making large payments or experiencing seasonal business fluctuations. Cash flow only becomes a problem when outflows exceed inflows. At that point,

the business uses up its cash reserve and can no longer meet its liabilities.

Cash flow issues can arise from low-profit margins, problems invoicing and collecting payments, and over-investing in inventory or capacity. When cash

2. Review of Literature

1. (Pinku Paul, 2018), “Analysis of the Effect of Working Capital Management on Profitability of the Firm: Evidence from Indian Steel Industry”. The

broad objective of the study was to identify the Effect of working capital management on firm’s profitability in steel industry, especially in the Indian

context. The study has taken into consideration four independent variables, that is, Current ratio, Quick ratio, Debtors Turnover ratio and Finished goods

turnover ratio which act as the indicators of working capital use in the industry. Return on total Assets represents the profitability of the industry and acts

as a dependent variable to develop an empirical model in order to establish Relationship between working capital management and profitability of the

steel industry in India by using panel data regression. The Period of study was 17 years, that is, 2000–2016. Hence, the study clearly asserted that Sample

companies of the steel industry have enough scope to enhance their profitability by the use of working capital in a more efficient way.

2. (R. Kogila, 2019), “A STUDY ON ANALYSING FINANCIAL POSITION OF SELECTED STEEL COMPANIES IN INDIA – USING ALTMAN

companies in industrial sector and to predict the future trends in the share prices through Technical Analysis. To assist the investors in making investment

decisions in Indian industrial Sector. The study concentrated on the growth profile of the industrial sector. The various possibilities of Investment and

their impact on the gain or loss resulting from such investment have been taken up. The study was carried on short-term analysis on investment for a

period of 2014 to 2018. , the researcher were selected the two iron and steel companies such as Steel Authority of India (SAIL) and Jindal Steel Work

(JSW).The Study concluded that the percentage of gain in the investment of SAIL share was fluctuated from 16.48 to 24.71 during 2014 –2018 the

percentage of gain in the investment of JSW share was fluctuated from 16.29 to 25.23 during 2014 –2018 .According to the World Steel Dynamics in

report in the year of 2017 Jindal steel works occupied 1St Rank in the share market; Steel Authority of India occupied 2nd rank in the share market.

4. (Ahmed Mahdi Abdulkareem, 2021), “Review of Cash Flow Statement of Selected Companies of Steel Industry (Tata Steel and Sail)”. The main

objective of the study was to assess the ability of the enterprise to generate cash and cash equivalents of the industry. For the study researcher has used

secondary data as a source of information and tools for the study were mean, trend analysis and pair “t” test. Data were collected by the researcher on the

was to examine the impact of working capital on the profitability of Indian companies. The study selected a Sample of 5 Indian companies listed on the

National Stock Exchange (NSE) over a 5-year period from 2017-2021.The data which was collected were analysed and used as per the requirement of

the analysis. The Sample size for the study was five firms. The samples were chosen on convenience sampling method, and the data collected for 2015-

2019 period. The Study used descriptive statistics, Mean, Standard Deviation, Minimum, Maximum, Correlation, regression. Findings explain model,

relationship between working capital management and profitability and working capital management and its impact on Profitability. The result concluded

that’s a firm is needed to take care of a balance between liquidity and gain whereas conducting its every day operations.

6. (Dr. S. Ranjithkumar, 2021), “Evaluating Financial Strengths of Selected PSU Steel Companies”. To analyse the fiscal performance of the selected

PSU steel companies in India. The data collected from the past five years annual reports published by the selected Companies in their websites,

government websites, journals and internet sources. The Study mainly aimed at measuring the performance of seven steel producers under public Sector

in India. Z-score was applied as model to interpret the result. Out of seven public sector companies, 5 Companies RINL, MSTC, MECON, KIOCL &EIL

had a threat of financial distress during the study period. Two companies had the immune to bankruptcy as its score had between 1.81 and 2.99. In general,

strength of selected steel companies in India. All data collected for the study was secondary in nature. It was collected from C.M.I.E, for a period of 5

years ranging from 2015–2016 to 2019–2020. Tools used for analysis Statistical Tools, Mean, Standard Deviation, Coefficient of variation, AJSW Steel

has been in Sound position in proprietary level from other selected steel companies. Debt equity ratio of Bhushan was more than 2:1 ratio it shows that

restriction to borrowing funds and total debt ratio of SAIL, TATA, BHUSHAN and JSP is much lower than the accepted standard norm 1:1 so it clearly

indicated that claims of the Owners were higher than those of outside owners.

8. (Dr. Ashok Kumar, 2022), The study “A comparative study of Financial Performance with Special Reference to JSW Steel Ltd., Jindal Steel & Power

Ltd. (JSPL) And SAIL”. The Study covered a period of five years from 2014-15 to 2018-19. The ratio analysis tools being utilized to analyses the

performance of steel industry in India and can be Utilized to find out the strength and weakness of the selected companies and their position in the market.

The research used, current Ratio., Quick Ratio, Inventory Turnover Ratio, Fixed Assets Turnover Ratio, Gross Profit Ratio, Debt Equity Ratio, Return

on Capital Employed., Dividend Payout Ratio. Dividend Payout Ratio. Efficient management of finance was very Important for the success of an

enterprise. The study attempted to compare the financial performance of the selected units i.e., JSW Steel Ltd., Jindal Steel & Power Ltd. (JSPL) and

SAIL while analyzing the financial performance of the selected units, it can be concluded that JSW Steel Ltd is performing good in terms of better

inventory Management, Gross Profit Ratio, return on capital Employed and Dividend Payout Ratio when Compared with JSPL and SAIL. These factors

highlighted the importance and direct impact of operating Profit on the net profit of the iron and steel Companies of India and the importance of a good

debtor turnover period i.e., the collection period of debtors to maintain the liquidity of the company. The study provided useful insights of the iron and

steel industry of India which would help government and investors for making informed decisions, this would also help the company to formulate and

reframe their corporate and functional policies and lastly would also be a useful addition to the treasure of literature on the subject matter.

10. (Charmy R. Gandhia, 2022), “An Analysis of Financial Health of Selected Steel Companies Listed In BSE”, The study’s objective was to examine a

company’s financial health using the Altman Z score methodology. Data collected for Five-year period from 2016-17 to 2020-21. The Altman Z Score

approach was used to analyse data. The Altman Z score was determined by five financial ratios: profitability, leverage, liquidity solvency, and activity

ratio. In the study, the Z score model for manufacturing enterprises was applied. According to the findings of the investigation, each firm, namely Jindal

stainless, Usha Martin Ltd, and Technocraft, was in a state of difficulty. The result disclosed that a financially unhealthy situation and predicted that these

firms would go bankrupt in the near future. Companies must enhance their liquidity and profitability positions, as well as endeavoured to raise their Sales

Secondary data:

Secondary data is the data which is already in exist. The study uses the secondary data for analysis purposes. The cash flow details from the balance sheet

of the selected companies are taken from the Money control.com.

The period of the study is between 2018 and 2022.

MEAN

The arithmetic mean is the simplest and most widely used measure of a mean, or average. It simply involves taking the sum of a group of numbers, then

dividing that sum by the count of the numbers used in the series.

σ = STANDARD DEVIATION

µ = MEAN

TREND ANALYSIS

Trend analysis is a technique used in technical analysis that attempts to predict future stock price movements based on recently observed trend data. Trend

analysis uses historical data, such as price movements and trade volume, to forecast the long-term direction of market sentiment.

APL Apollo Tubes Limited has got more volatility as far as Investing Activity is concerned, because of highest Coefficient of Variation (COV) of -

INTERPRETATION:

From the above chart 4.4.1 the trend analysis shows that the net operating cash flow of TATA Steel was increasing during study period. The net operating

cash flow was ₹ 11791.45 Cr in 2018 and it is increased to ₹ 41986.12 Cr in 2022. The above chart shows the upward trend line and the company will

reach the net operating cash flow value of ₹ 50000 Cr in next 2 to 3 years approximately. TATA Steel plans to double its capacity to 40 million tonnes

(MT) is entitled an investment around ₹1 lakh crore.

Chart 4.4.2 – Trend analysis of Operating activities of JSW steel limited

INTERPRETATION:

Chart 4.4.3 – Trend analysis of Operating activities of Jindal steel and power limited

INTERPRETATION:

From the above chart 4.4.3 the trend analysis shows that the net operating cash flow of JINDAL STEEL AND POWER was increasing during study

period. The net operating cash flow was ₹ 4860.19 Cr in 2018 and it is increased to ₹ 14185.27 Cr in 2022. The above chart shows the upward trend line

and the company will reach the net operating cash flow value of ₹ 20000 Cr in next 2 to 3 years approximately. The High-Level Clearance Authority of

Odisha, headed by Chief Minister Naveen Patnaik, had approved JSPL's proposal to expand the capacity of its steel plant to 25.2 MTPA at Angul by

2030. This would be the world largest and greenest single-location steel plant, thus pitching Odisha's USP on the global steel map.

Chart 4.4.4 – Trend analysis of Operating activities of Steel authority of India limited

INTERPRETATION:

From the above chart 4.4.4 the trend analysis shows that the net operating cash flow of SAIL was increasing during study period. The net operating cash

flow was ₹ 6157.81 Cr in 2018 and it is increased to ₹ 30963.6 Cr in 2022. The above chart shows the upward trend line and the company will reach the

INTERPRETATION:

From the above chart 4.4.5 the trend analysis shows that the net operating cash flow of APL APOLLO was increasing during study period. The net

operating cash flow was ₹ -59.93 Cr in 2018 and it is increased to ₹ 160.28 Cr in 2022. The above chart shows the upward trend line and the company

will reach the net operating cash flow value of ₹ 600 Cr in next 2 to 3 years approximately. By 2030-31, 300 million tonnes of production capacity will

be available, according to the 2017 National Steel Policy. Steel tube usage per capita has risen from 57.6 kg to 74.1 kg over the last five years.

Chart 4.5.1 – Trend analysis of Investing activities of Tata steel limited

INTERPRETATION:

From the above chart 4.5.1 the trend analysis shows that the net investing cash flow of TATA STEEL was decreasing during the study period. The net

investing cash flow was ₹ -12273.35 Cr in 2018 and it is decreased to ₹ -34167.79 Cr in 2022. The above chart shows the downward trend line and the

trend line indicates that the net investing cash flow value will tumble to ₹ -40000 Cr in next 2 to 3 years approximately.

Chart 4.5.2 – Trend analysis of Investing activities of JSW steel limited