STAKEHOLDERS EMPOWERMENT SERVICES Jai Balaji Industries Ltd www.jaibalajigroup.com S ECTOR: STEEL REPORTING DATE: 31ST MAY, 2016

Jai Balaji Industries Ltd 31st May, 2016 TABLE 1 ‐ MARKET DATA (STANDALONE) (As on 31st May, 2016) NSE Code ‐ JAIBALAJI NSE Market Price (₹) 6.95 NSE Market Cap. (₹ Cr.) 51.96 Sector ‐ Steel Face Value (₹) 10.00 Equity (₹ Cr.) 77.78 52‐week High/Low (₹) 14.15/ 4.80 Net worth (₹ Cr.) ‐180.81 Business Group ‐ Indian Private TTM P/E N.A. Traded Volume (Shares) 8,204 Year of Incorporation ‐ 1999 TTM P/BV N.A. Traded Volume (lacs) 0.57 Source ‐ Capitaline Corporate Office: COMPANY BACKGROUND 5th Bentinck Street, 1st Floor, Jai Balaji Industries Ltd, the flagship company of Jai Balaji Group is one of the largest steel – 700 001, producers in the private sector in Eastern India. The Company is an integrated steel manufacturer. Their products include sponge iron, pig iron, reinforcement steel TMT bars, Company Website: alloy and mild steel ingots & wire rod and carbon, alloy & mild steel heavy rounds. The www.jaibalajigroup.com Company are having five manufacturing facilities located at and in West Bengal and Durg in . The Company also manufactures Thermex TMT Bars, under the brand name Balaji Shakti, which is a respected name among civil contractors and real estate developers for quality steel. In addition, they have supplied steel to various projects of National importance undertaken by National Hydro‐Electric Power Corporation Ltd., National Highway Authorities of India, etc. Jai Balaji Industries Ltd was incorporated in the year 1999 as Jai Balaji Sponge Ltd.

TABLE 2 ‐ PRICE PERFORMANCE 30th May, 29th May, 30th May, % Change CAGR for 2016 2015 2014 2016 vs 2015 2015 vs 2014 2 years Price (₹) 6.70 11.30 25.50 ‐40.71% ‐55.69% ‐48.74% Trading Volume (Shares) (yearly avg.) 23,558 20,503 27,165 14.90% ‐24.53% ‐ NSE Market Cap. (in ₹ Cr.) 52.11 83.37 188.14 ‐37.50% ‐55.69% ‐47.37% Source ‐ Money Control

Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory 1 | P AGE STAKEHOLDERS EMPOWERMENT SERVICES Jai Balaji Industries Ltd www.jaibalajigroup.com S ECTOR: STEEL REPORTING DATE: 31ST MAY, 2016 TABLE 3 ‐ FINANCIALS

(₹ Cr.) Mar’ 2015(12) Mar’ 2014(12) Mar’ 2013(9)*

Net Worth ‐180.81 215.92 509.97 Current Assets 1,673.17 1,672.25 1,627.3 Non‐Current Assets 2,301.17 2,335.27 2,373.62 Total Assets 3,974.33 4,007.52 4,000.92 Investments 470.28 407.30 381.93 Finance Cost 375.00 336.36 176.45 Long Term Liabilities 1,964.25 1,596.76 1,728.68 Current Liabilities 2,190.89 2,194.84 1,762.27 Turnover 1,477.74 1,968.10 1,544.84 Profit After Tax (PAT, ₹ Cr.) ‐386.37 ‐318.95 ‐213.13 EPS (₹) ‐53.00 ‐48.00 ‐33.00 Source ‐ Money Control/Annual Report *The Company has changed its financial year from Jun to Mar for a 9 months period, hence, the above numbers are not comparable.

Discussion as per Company: During the FY 2014‐15, the Company has been passing through a challenging phase during the past few years. The challenges continued to hamper the performance of the Company in the year under review. The Company recorded a loss before exceptional and extraordinary items of ₹486.94 crores as compared to ₹418.74 crores in the previous year. This deterioration in the performance of the Company is mainly attributable to the fall in demand in the steel product, high cost of raw material and cost of production, delays in implementation of projects on account of reform measures and the overhauling finance cost. The Net Loss for the year under review was ₹386.37 crores against ₹318.95 crores. The Company is betting upon on the boost in the steel industry coming from the new and developing infrastructural projects and the redefining government reforms. The Company is highly hopeful that it will be able to slowly and steadily climb up the step ladders, to cope with all the existing challenges and to come out with better performance in near future.

During the financial year 2013‐14, the Company incurred loss which can be mainly attributable to raw material price inflation, rising borrowing costs and other global factors. The Loss before exceptional and extraordinary items and tax was ₹418.74 crore as compared to loss of ₹315.98 crore in the previous year. The net loss for the year under review (twelve months) was ₹318.95 crore against loss after tax of ₹213.13 crore in the previous year (nine months).

Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory 2 | P AGE STAKEHOLDERS EMPOWERMENT SERVICES Jai Balaji Industries Ltd www.jaibalajigroup.com S ECTOR: STEEL REPORTING DATE: 31ST MAY, 2016 AUDIT QUALIFICATIONS

Audit Qualifications in last 3 years: The Auditors have not raised any qualification in last three years. Emphasis of Matter for the FY 2014‐15 (Standalone): Auditors have drawn attention to the following matters in the Notes to the financial statements: ‐ Note‐ 31 in the Notes to the financial statements which indicate that the Company has been incurring losses and its net worth is fully eroded, however, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note. Emphasis of Matter for the FY 2014‐15 (Consolidated): Auditors have drawn attention to the following matters in the Notes to the financial statements: ‐ Note‐ 31 in the Notes to the financial statements which indicates that the company has been incurring losses and its net worth is fully eroded; and Note ‐ 41(b) in the Notes to the financial statements which indicates that coal blocks allotted to its joint venture companies have been cancelled pursuant to the order of the Hon’ble Supreme Court; However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note.

Response Comment Frequency of Qualifications None Have the Auditors made any adverse remark in last 3 years? No ‐ Are the material accounts audited by the Principal Auditors? Yes ‐ Do the financial statements include material unaudited financial statements? No ‐

TABLE 4: BOARD PROFILE (As on 31st March, 2015) Regulatory Norms Company % of Independent Directors on the Board 50% 40% % of Promoter Directors on the Board ‐ 40% Number of Women Directors on the Board Atleast 1 1 Classification of Chairman of the Board ‐ Executive Promoter Director Is the post of Chairman and MD/CEO held by the same person? ‐ Yes Average attendance of Directors in the Board meetings (%) ‐ 94% Source ‐ Money Control/Annual Report

Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board is an Executive/Promoter Director. The Company has 40% of Independent Directors and hence, it does not meet the regulatory requirement. Board Diversity: The Company has 10 directors out of which 9 are male and 1 female. The Company is compliant as per Clause 17 of the Listing Regulations, 2015 regarding the requirement of at least one women director. Holding of position of MD/ CEO & Chairman by same person: The Company has appointed Mr. Aditya Jajodia as the Chairman and Managing Director of the Company. Appointment of a single person as the Chairman and Managing Director of the Company is not a good governance practice as this may lead to concentration of power in a single person.

Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory 3 | P AGE STAKEHOLDERS EMPOWERMENT SERVICES Jai Balaji Industries Ltd www.jaibalajigroup.com S ECTOR: STEEL REPORTING DATE: 31ST MAY, 2016 TABLE 5 ‐ FINANCIAL RATIOS % Change Ratios 2015(12) 2014(12) 2013(9) 2015 vs 2014 vs 2014 2013 Inventory Turnover 2.97 3.86 3.47 ‐23.04% 11.50% Debtors Turnover 1.94 2.49 2.98 ‐22.17% ‐16.39% Fixed asset Turnover 0.64 0.84 0.87 ‐23.80% ‐2.88% Ratios Turnover Current Asset Turnover 0.88 1.18 1.27 ‐24.96% ‐7.02% Operating Profit Margin ‐32.95% ‐21.28% ‐20.45% N.A. N.A. Net Profit Margin ‐26.15% ‐16.21% ‐13.80% N.A. N.A. Return on Assets (ROA) ‐9.72% ‐7.96% ‐7.10% N.A. N.A. Return on Equity (ROE) N.A. ‐147.72% ‐55.72% N.A. N.A.

Return Ratios Return on Capital Employed (ROCE) N.A. N.A. N.A. N.A. N.A. Current Ratio 0.76 0.76 0.92 0.24% ‐17.49% Quick Ratio 0.54 0.53 0.59 1.33% ‐9.61% Cash Ratio 0.19 0.17 0.19 11.29% ‐12.38% Ratios Liquidity Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A. Debt to equity ratio N.A. 10.69 4.42 N.A. 141.98%

Ratios Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. Solvency Market Cap / Sales 0.04 0.03 0.03 33.18% 4.66% Market Cap/ Net Worth N.A. 0.28 0.09 N.A. 214.91% Market Cap/PAT N.A. N.A. N.A. N.A. N.A. Market Cap/EBITDA 374.83 336.14 N.A. 11.51% N.A. Trading Volume (shares) (avg. of 1 23,236 23,521 24,425 ‐1.21% ‐3.70% year) Trading Volume (shares) (high in 1 6,22,530 1,93,918 397,493 221.03% ‐51.21% Trading Ratios year) Trading Volume (shares) (low in 1 year) 2 974 34 ‐99.79% 2,764.71% Ratio ‐ High/low trading volume 3,11,265 199.09 11,691 1,56,240% ‐98.30% Ratio ‐ High/average trading volume 26.79 8.24 16.27 224.96% ‐49.34% Source ‐ Money Control Note: ‐ The financial ratios of the Company and percentage change have been calculated considering 12 months period

Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory 4 | P AGE STAKEHOLDERS EMPOWERMENT SERVICES Jai Balaji Industries Ltd www.jaibalajigroup.com S ECTOR: STEEL REPORTING DATE: 31ST MAY, 2016 TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS Mar' 2016 Mar' 2015 Mar' 2014 Comments Promoter shareholding 60.76% 58.64% 54.57% The promoter shareholding increased from Public ‐ Institutional 4.01% 4.23% 4.36% 54.57% as on Mar' 2014 to 60.76% as on Mar' shareholding 2016 due to preferential allotment of equity Public ‐ Others shareholding 35.23% 37.14% 41.07% shares and conversion of warrants. The shareholding of public other, decreased from 41.07% to 35.23% during the same period.

Shareholding Non Promoter Non Public ‐ ‐ ‐ The promoters have pledged 65.13% of their Shareholding shareholding and 39.58% of total shareholding.

TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters The Promoters have not bought/sold any shares in last one year. 1. The Company issued 40,00,000 equity shares of face value ₹10 each to the promoters of the Company during 22nd March, 2016 through preferential offering, thus increasing the shareholding of promoters from 4,32,63,195 to 4,72,63,195. Preferential issue to promoters 2. The Company allotted 65,05,000 equity share at a conversion price of ₹50 per equity share to M/s. Hari Management Limited, on 29th May, 2014 through preferential offerings, thus increase the shareholding of promoters from 3,67,15,395 to 4,32,20,395. Preferential issue to others No preferential issue of shares was made to other shareholders in last three years GDRs issued by the Company The Company did not issue any GDRs in last three years Issue of ESOPs/Issue of shares The Company does not have any ESOP Scheme. other than Preferential allotment Source ‐ Annual Report

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Equity: The equity shares capital of the Company Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company Turnover: The revenue earned from the operations of the Company

EPS: Earning Per Share is net profit earned by the Company per share Profit After Tax Number of outstanding shares P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company Price of each share / Earnings per share Current Assets: Cash and other assets that are expected to be converted to cash in one year Fixed Assets: assets which are purchased for long‐term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment Total Assets: Current Assets + Fixed Assets

Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.

Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges incurred during the year in relation to borrowed money.

Long Term Liabilities: Long‐term liabilities are liabilities with a maturity period of over one year.

Current Liabilities: A company's debts or obligations that are due within one year. Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. Sales Turnover Inventory Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period Sales Turnover Accounts recievables Fixed Asset Turnover: The fixed‐asset turnover ratio is a financial ratio of net sales to fixed assets Sales Turnover Fixed Assets Current Asset Turnover: The current‐asset turnover ratio is a financial ratio of net sales to fixed assets Sales Turnover Current Assets

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Operating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating income (also known as “operating profit”) during a given period by its sales during the same period. Operating profit Sales Turnover Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net profit Sales Turnover Return on Assets: ROA tells you what earnings were generated from invested capital (assets) Net profit Total Assets Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’ equity. Net profit Net worth Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Net profit Total Debt Equity share capital Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. Current Assets Current Liabilities Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities. Current Assets Inventories Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities. Current Assets Inventories Account Recievables Current Liabilities Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a Company's effectiveness in using its working capital. Current Assets Current Liabilities Debt to Equity ratio: The debt‐to‐equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a Company can pay interest on outstanding debt.

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Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per‐share stock price by the per‐share revenue. / Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth. / Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit. / Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA. / Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year

Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year

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