Tata Steel Final

8/9/2019 Tata Steel Final

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INTRODUCTION:

Backed by 100 glorious years of experience in

steel making, Tata Steel is among the top ten steel

producers in the world with an existing annual crude steel

production capacity of 30 Million Tonnes Per Annum (MTPA).

Established in 1907, it is the first integrated steel plant in

Asia and is now the world’s second most geographically

diversified private steel producer and is ranked 315th on the

Fortune 500 Company’s list. It is the world's sixth largest

steel company.

Tata Steel is also India's second-largest and

second-most profitable company in private sector with

consolidated revenues of Rs 1,32,110 crore and net profit of

over Rs 12,350 crore during the year ended March 31, 2008.

Tata Steel has a balanced global presence in over 50

developed European and fast growing Asian markets, with

manufacturing units in 26 countries.

Its main plant is located in Jamshedpur,

Jharkhand, with its recent acquisitions; the company has

become a multinational with operations in various countries.

The Jamshedpur plant contains the DCS supplied by

Honeywell.The registered office of Tata Steel is in Mumbai.

The company was also recognized as the world's best steel

producer by World Steel Dynamics in 2005. The company is



listed on Bombay Stock Exchange and National Stock

Exchange of India, and employs about 82,700 people

A brief history:

It was the vision of the founder; Jamsetji

Nusserwanji Tata., that on 27th February, 1908, the first

stake was driven into the soil of Sakchi. His vision helped

Tata Steel overcome several periods of adversity and strive

to improve against all odds. Tata Steel introduced an 8-hour

work day as early as in 1912 when only a 12-hour work day

was the legal requirement in Britain. It introduced leave-

with-pay in 1920, a practice that became legally binding

upon employers in India only in 1945. Similarly, Tata Steel

started a Provident Fund for its employees as early as in

1920, which became a law for all employers under the

Provident Fund Act only in 1952. Tata Steel's furnaces have

never been disrupted on account of a labour strike and this

is an enviable record.

Primary product line:

• In 1903 iron mines were discovered in Jharia since

then Tata Steel is in the business of iron mining.

• Hot and cold rolled coils and sheets, galvanized

sheets, tubes, wire rods, construction rebars and

bearings.



• Produces Galvano plain steel offering available in

sheet & coil forms for all customer segments like

white goods, panels, bus bodies etc.

• Launched brand steel as “Steelennium” in the new

millennium.

• TATA TISCON Aimed at urban and semi-urban

sectors, the brand

Promises trusted steel for your home’.

• TATA SHAKTEE G C SHEET this product offers high

durability to consumer.• TATA AGRICO the most sought after hand tools in the

country.

• TATA BEARINGS a leader in the auto ancillary two-

wheeler market segment. It has firm foothold in a

fiercely competitive market.

• TATA PIPES a new dimension in Steel Tube

Technology opened up in India in the early 50’s with

the establishment of the Indian Tube Company Ltd.

(ITC).

Change in Product Line:

Tata Steels were into production of steels which was

their primary product, but the product diversified into

production of wires. It is focusing on construction industry,

high carbon steel and low carbon electrodes.



Tata steel has also ventured in retail management, IT to add

profitability during the downturn.

Recent mergers & acquisitions:

• In February 2005, the company completed the

acquisition of Singapore's largest steel company,

NatSteel Asia, for an amount of 1313 crore. It has a

two-million tonne steel capacity with presence across

Singapore, Thailand, China, Malaysia, Vietnam, the

Philippines and Australia.• Tata Steel bought out Rawmet Ferrous Industries, an

unlisted Kolkata-based ferro alloys player, for an

undisclosed amount.

• On April 2, 2007, Tata Steel Ltd. (Tata Steel)

completed its acquisition of the Corus Group (Corus),

an Indonesian firm for US$ 12.1 billion. The combined

company went on to become the fifth largest steel

producer in the world and had a crude steel

production of 27 million tonnes in 2007.

• In addition to it, is in talks with Anglo-American of

South Africa for Highveld, the largest vanadium

producer in the world, manufactures steel, vanadium

products, ferro-alloys, carbonaceous products and

metal containers and closures. Bottom of Form



Board of directors:

Mr R N Tata(Chairman)

Mr Nusli N WadiaMr S M PaliaMr Suresh KrishnaMr Ishaat HussainDr Jamshed J IraniNotMr SubodhBhargavaMr JacobusSchraven

Dr AnthonyHaywardMr Andrew RobbMr B Muthuraman(MD)Mr Philippe VarineMr T Mukherjee(Resigned w.e.f 31-03-09)

Mr James Leng.

Not Independent, Non – ExecutiveIndependent, Non - Executive

DirectorIndependent, Non - ExecutiveDirectorIndependent, Non - ExecutiveDirectorNot Independent, Non - ExecutiveDirectorIndependent, Non - ExecutiveDirectorIndependent, Non - Executive

DirectorIndependent, Non - ExecutiveDirectorIndependent, Non - ExecutiveDirectorIndependent, Non - ExecutiveDirectorNot Independent, ExecutiveDirector

Not Independent, Non - ExecutiveDirector

Not Independent, ExecutiveDirector

Independent, non-executivedirector.

MANAGEMENT:





Sales turnover

SAIL

Tata steel

JSW Steel

Visa Steel

Share Holding pattern of share holders:

% Holding No. of Shares

Indian Promoters 33.95 248025857

Banks Fin. Inst. AndInsurance

19.84 144917005

FII's 14.54 106209766

Private CorporateBodies

3.5 25558918

NRI's/OCB's/ForeignOthers

0 6225

Govt 0.02 120633

Others 0.73 5314080

General public 23.82 174002527



% Holding Indian

Promoters

Banks Fin.

Inst. and

Insurance

FII's

Private

Corporate

Bodies

NRI's/OCB's/Fo

reign Others

Govt

Quality Management:

BL reported that Series of TQM initiatives over the past few

years have helped TATA Steel reduce production cost so

much that the cost of production of a tonne of saleable steel

has dropped by an estimated 2.5%.

The initiatives, as the sources point out, were launched right

at the raw material stage. Thus, the improvement of the

working of the coal washeries has brought down ash content

in domestic coal, sourced from the company’s own West

Bokaro and Jharia collieries from 17% to 13% (West Bokaro)

and from around 18% to 15% (Jharia).

It has benefited the company in two ways. First, the

company’s dependence on imported coal has declined.

Earlier, the company used about 55% domestic coal, now up



to 70%. Second, it has helped improve productivity of blast

furnaces. 1% drop in clean coal ash leads to a cost saving of

about 5% in the production of hot metal and overall

productivity improvement of about 2%.

As per report, another innovation has been introduced in the

use of coal. Instead of lumpy coal, middling and coal in small

particles are being injected into blast furnaces as a result the

costlier coke route has been dispensed with wherever

possible.

In iron ore, TATA Steel is 100% self reliant. However, the

quality, particularly, the high alumina content as high as

2.5% or 2.6% has often been a matter of concern. It has

been possible to bring down the alumina content to two per

cent by introducing the jigging process. All these exercises

have been undertaken with one major objective to achieve

stability in the operations of the blast furnaces requiring

consistently good supply of raw materials.

The sources said that TATA Steel is modernizing its blast

furnaces largely with the help of in house expertise and the

H furnace is considered the most modern in India. In fact, if

the capacity of the Jamshedpur plant increased by about 1.8

million tonne in the past one and half years, it is due to

modernization of the furnaces.



The sources added that the company’s TQM initiatives are

not limited to manufacturing processes only but also extend

to selling finished products in a competitive environment.

Meanwhile, the flat products account for 70% of the

production of Jamshedpur plant and the company, it is

claimed, is the single largest supplier of skin panels for the

automobile sector, accounting for an estimated 40% of the

market.

GROWTH AND EXPANSION PLAN:

Tata Steel made two major acquisitions namely, Singapore

based NatSteel in 2004 and Thailand based Millennium Steel

in 2005. In October 2006, Tata Steel made a bid to acquire

the world's 9th largest steel company, UK-based Corus

Group. The deal has made Tata steel the world's fifth-largest

steel firm and the largest Indian takeover of a foreign

company. Besides, Tata Steel had plans of capacity

expansion in various countries through various projects. Tata

Steel also has a Joint Venture with New Millennium Capital

Corp (“NML”) in Canada, with an option to acquire 80% in

the Direct Shipping Ore (“DSO”) project. This has estimated

reserves of around 100 million tonnes of iron ore. They also

have an option in a South African iron ore mine, to enter into

a Joint Venture with the promoters. This project is currently

under evaluation. It is expected that iron ore from both the



DSO project and the South African mines will service part

requirement of the European operations starting from mid

2011. In July, Tata Steel Global Minerals Holdings Pte Ltd, a

wholly-owned subsidiary, bought additional shares in

Australia-based Riversdale Mining Ltd (RML) through market

purchases, increasing its holding to 19.38%. Undeterred by

the global economic downturn, Tata Steel today announced

expansion plans worth Rs 40,000 crore to ramp up its

production capacity to 16 million tonnes (MT) within five

years. The world’s fifth largest steel manufacturer hasdecided to go full throttle on greenfield projects by pledging

to invest Rs 15,000 crore each on its proposed plants in

Chhattisgarh and Orissa, besides investing Rs 10,000 crore

to enhance its capacity in Jamshedpur plant to 10 MT by the

last quarter of the next fiscal from the current 6.8 MT.

The strategic levers of the Group have remained the same

over the last few years. The current global economic

scenario has only rephased some of these strategies in

terms of timing and speed. The four levers are

(a) Making our European operations competitive by

hastening the speed of the “Weathering the Storm” and “Fit

for the Future” programme.

(b) Quick completion of our expansion plans in India. The 3

mtpa project will be commissioned by 2011 and will add



significant value to the Group. Further expansion in India

through the Greenfield project in Orissa and Chhattisgarh

are ongoing and their commencing will depend on ground

realities and iron ore allocation.

(c) Investment in raw material assets to provide better raw

material security especially to our European operations.

(d) Vigorous pursuit of continuous improvement

Given the unprecedented scale of the global financial crisis,

the company responded very quickly on many fronts andfinancing was certainly one of them. Recognising the

uncertain financing environment and the fragile state of the

global banking industry, we focused on both internal and

external levers. Internally as an organization, we placed

primary importance on conserving liquidity through reduced

spend management and sharp reduction in working capital

levels. We also focused on improvement in the productivity

levels and reduction in overheads. On capital expenditure,

we have re-prioritized on the most value creating and critical

projects and reworked the capital planning strategy. On the

external front, we raised long term capital which acted as a

liquidity buffer in the current circumstance and would be

deployed in value creating long term assets. The above

actions ensured that the Tata Steel Group had adequate

liquidity and also financial flexibility for growth and

exigencies. The liquidity position of the Group at the yearend



was approximately US$1.9 billion of cash and cash

equivalents and undrawn lines.

PROCUREMENT OF RAW MATERIAL:

The Tata Steel Group is strongly pursuing its longterm

strategy of acquiring and developing mining projects for its

raw material security for iron ore and coking coal. The Group

has been concentrating on the geographies that are

logistically favorable with respect to its plants in Europe and

Asia. Tata Steel in India is an integrated player, for the

majority of its raw material requirements. However, raw

material self-sufficiency for the consolidated entity is at 25%

post the Corus acquisition. It has been the stated objective

of the company to increase self-sufficiency of raw materials

to 50%.The move to secure supply of raw materials will help

the company lower risks from price volatility. Typically, raw

materials such as iron ore and coal, among others, account

for 40% of a steel manufacturer’s revenue from sales. While

it will make marginal difference in the price of these raw

materials when demand is sluggish, as demand picks and

raw material prices harden, the savings for the company

would be significant. Tata Steel focused not only on tapping

into new raw material opportunities in the fiscal year ended

31 March but also fortified its presence in existing ventures.

RML has acquired coal exploration tenements in the Tete-



Moatize area of Mozambique, whose combined size is now in

excess of 250,000ha.

In Tete province, the Benga coal project is being developed

as a 65:35 joint venture between RML and Tata Steel Global

Minerals Holdings. Tata Steel had secured rights over 40% of

the output to feed its Corus factories in the UK and Europe.

Raw MaterialIngredien

ts%usednow

% used earlier

Manganese Ore

Manganes

e 47.50% 47.50%Iron (Fe) 6.90% 6.90%

Silica(SiO2)

4.93% 6.90%

Coke Ash 20.70% 20.70%Fixed

carbon78.00% 78%

CaO 39.10% 30-32%Limestone

(dolomitic)/MgO 13.30% 19-21%

Dolomite SiO2 3.60% 3-4%

ANALYSIS

1. We see that raw material consumed increased by Rs753.16 crores to Rs 3121.46 from Rs 2368.3 crores. Thusthere was an increase of 31.80% over last year.

2. In comparison to increase in raw material consumed(31.8%) sale of products has increased just by 15.11%over last year. Thus raw material consumed has increasedmuch more than increase in sales of products. We canthus come to conclusion that either there wasn’t effectiveutilization of raw materials (may be due to carelessness)



or there is an increase in price of raw materials purchasedin market.

BALANCE SHEET AS AT 31st MARCH, 2009

2008-09 2007-08

FUNDS EMPLOYED :

SHARE CAPITAL 6,203.45 6,203.30

RESERVES AND SURPLUS 23,972.81 21,097.43

TOTAL SHAREHOLDERS'FUNDS

30,176.26 27,300.73

LOANS

Secured 3,913.05 3,520.58

Unsecured 23,033.13 14,501.11

Total Loans 26,946.18 18,021.69

DEFERRED TAX LIABILITY

(NET) 585.73 681.8PROVISION FOR

EMPLOYEE SEPARATIONCOMPENSATION

1,033.60 1,071.30

TOTAL FUNDS EMPLOYED 58,741.77 47,075.52

APPLICATION OFFUNDS :

FIXED ASSETS

Gross Block 23,544.69 20,847.04

Less — Impairment 100.47 100.47



Less — Depreciation 8,962.00 8,123.01

Net Block 14,482.22 12,623.56

INVESTMENTS 14,482.22 12,623.56

FOREIGN CURRENCYMONETARY ITEM TRANSLATION

DIFFERENCE ACCOUNT

471.66 0

CURRENT ASSETS

Stores and spare parts 612.19 557.67

Stock-in-trade 2,868.28 2,047.31

Sundry debtors 635.98 543.48Interest accrued on

investments0.2

Cash and Bank balances 1,590.60 465.04

Total 5,707.05 3,613.70

LOANS AND ADVANCES 4,578.04 33,348.74

Total 10,285.09 36,962.44

Less : CURRENTLIABILITIES AND

PROVISIONS

Current Liabilities 6,039.86 3,855.26

Provisions 2,934.19 2,913.52

Total 8,974.05 6,768.78

NET CURRENT ASSETS 1,311.04 30,193.66

TOTAL ASSETS (Net) 58,741.77 47,075.52



PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED31st MARCH, 2009

2008-09 2007-08

INCOME :

SALES AND OTHER OPERATINGINCOME

26,843.73 22,189.55

Less — Excise Duty 2,527.96 2,498.52 TOTAL 24,315.77 19,691.03

OTHER INCOME 308.27 242.8

TOTAL 24,624.04 19,933.83

EXPENDITURE :

MANUFACTURING AND OTHEREXPENSES

15,525.99 11,852.75

DEPRECIATION 973.4 834.61

Less — EXPENDITURE (OTHER THAN INTEREST)

16,499.39 12,687.36

NET FINANCE CHARGES 1,152.69 786.5

TOTAL EXPENDITURE 17,308.43 13,298.36

PROFIT BEFORE TAXES ANDEXCEPTIONAL ITEMS

CONTRIBUTION FOR SPORTSINFRASTRUCTURE

(150.00)

EXCHANGE GAIN/(LOSS) 580.89



PROFIT BEFORE TAXES 7,315.61 7,066.36

TAXES

CURRENT TAX 2,173.00 2,252.00

DEFERRED TAX (75.13) 108.33

FRINGE BENEFIT TAX 16 19

TOTAL 2,113.87 2,379.33

PROFIT AFTER TAXES 5,201.74 4,687.03

BALANCE BROUGHT FORWARDFROM LAST YEAR

6,387.46 4,593.98

AMOUNT AVAILABLE FORAPPROPRIATIONS 11,589.20 9,281.01

APPROPRIATIONS :

PROPOSED DIVIDENDS 1,168.95 1,168.93

DIVIDEND ON CUMULATIVECONVERTIBLE PREFERENCE

SHARES109.45 22.19

TAX ON DIVIDENDS 214.1 202.43

TOTAL 1,492.50 1,393.55

GENERAL RESERVE 600 1,500.00

TOTAL 2,092.50 2,893.55

BALANCE CARRIED TOBALANCE SHEET

9,496.70 6,387.46

Basic Earnings per Share Rs. 69.45 66.8

Diluted Earnings per Share Rs. 61.78 61.29

SALES MIX AND TREND ANALYSIS

Trend in overall sales



Year Sales (in Rs Crore)2004-2005 144992005-2006 15215

2006-2007 175522007-2008 196912008-2009 24316



Steel Division

Tubes Division

year Sales (million tonnes)2004-2005 0.22

year Sales(million tonnes)

2004-2005 3.7

2005-2006 4.05

2006-2007 4.79

2007-2008 4.78

2008-2009 5.23



2005-2006 0.262006-2007 0.3032007-2008 0.3232008-2009 0.318

Bearings division

yearSales (million

tonnes)

2004-2005 25.3

2005-2006 27.38

2006-2007 28.97

2007-2008 27.61

2008-2009 26.34



TRENDS IN SALES:

➢ Steel division: Increased due to new machineriesbeing commissioned.

➢ Tubes division: Increased due to an acquiring of anew mill with newly commissioned hydroformingfacility. Also, sales went up because parts were beingsupplied for Tata Nano cars and other new orders.

➢ Bearings division: Performance of the division isstrongly linked to performance of the automobilesector. As the automobile sector saw a decline, it led toa decline in sales for bearings.

Division2005-2006

2006-2007

2007-2008

2008-2009

Steel 11648 14997 16539 20456

Tubes 1006 1272 1217 1410

Famd 2309 2380 1808 2324

Bearings 154 163 127 127

In Percentage Terms:

Division 2005-06 2006-07 2007-08 2008-09

Steel 77.05 79.72 83.99 84.12

Tubes 6.65 6.76 6.18 5.8



FAMD 15.27 12.65 9.18 9.56

Bearings 1.02 0.87 0.65 0.52

SALES AND SALES MIX:

Steel continues to be the greatest revenue generator for the

company and seems to comprise more or less a constant

proportion to the sales. Though there are divisions that have

witnessed a declining contribution to sales over a period of 4

years. The reasons for the declining sales for those divisions

are as stated in the trend analysis. Also, why their overall

contribution is declining is due to superior performance of

the steel division. Thus, there is a twofold impact on the

contribution:

➢ Declining sales of the particular division

➢ Growth of the steel division that is making their

contribution look even smaller.



Raw Material Consumption

Year Consumption(in Rs. Crore)2004-2005 1715

2005-2006 2368

2006-2007 3121

2007-2008 3355

2008-2009 5710

Raw material sourcing pattern:

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Direct imports 925 1067 1673 1950 4267Indigenously

obtained 1000 1572 1746 1817 1930

In percentage terms:

Year 200

4-2005

2005-

2006

2006-

2007

2007-

2008

2008-

2009

Directlyimports

48.05

40.43 48.94 51.76 68.85



Indigenouslyobtained

51.95

59.57 51.06 48.24 31.15

CONSUMPTION AND SOURCING OF RAW MATERIALS:

Raw Materials consumption showed significant increase over

the previous year mainly due to higher prices of Coal and

Coke and also due to higher production resulting from the

commissioning of ‘H’ Blast Furnace as well as other facilities

and operational improvements. Increase in the prices of

Ferroalloys also contributed to the increase in raw materials

consumed.

Again, the imports this year are higher due to prices being

high. The imports account for 69% this year as compared to

52% last year. The reason is that that prices of coal and coke

have gone up and 48% of total coal consumed was imported.

Thus due high dependence on imports for an important raw

material, which saw an increase in prices, is responsible for

such a large increase in imports figure.



TIME SERIES ANALYSIS

Balance Sheet

* Rs in Crores

2008-092007-

082006-

072005-

062004

05

Total CurrentLiabilities

10007.41

7834.436560.7

35197.4

35214.

5

Total term Liabilities3781.22 3305.45

3391.66

1672.74 1792.

Total Net Worth30176.2

627300.7

313949.

09 9755.37059.

Total Liabilities58,741.7

745322.4

223594.

4212271.

459799.



Total Current Assets10756.7

536962.4

413701.

894237.6

4083.8

Total Fixed Assets

20057.0

1

16479.5

9

16029.

49

15407.

17

13179

26

Net Block10994.5

48256.11

8543.12

8707.32

7239.8

Total Assets58,741.7

7

45328.07

23741.49

12271.45

9799.2

➢ Tata Steel has been showing similar trend in both TotalAssets and Total Liabilities.

➢ The Net Block increased during the year primarily on

account of the 1.8 million tonne steel expansionprogramme and the 3 million tonne steel expansion

programme (commenced in the last quarter of FY 09) at

Jamshedpur.

➢ The Significant change in 75% increase in the current

asset which is in turn due to almost 90% increase in

Loans & Advances during the year 2006-07 and 2007-

08.



➢ But in the year 2008-09 Loans and Advances has

decreased significantly from 33348.94 crores by 84.8%

to 5049.7 crores this year. The loans and advances

reduced substantially as the advance against equity

was converted into investments during the financial

year and accordingly there was an increase in the

investments.

➢ There is a 48.6% increase in “Balance From Profit and

Loss account”. This signifies the increase profitability of the company.

➢ In the year 2007-08 Tata Steel completes its acquisition

of Corus for US $12.1 billion. Probably this has led to

the following :

○ During the years 2007-08, 2008-09 it has issued a

Preference Share capital of Rs 5472.66 crores

which was NIL in the previous year. This signifies

the requirement of capital of TATA STEEL due to

the acquisition of CORUS.

○ There is almost 300% increased in Unsecured

Loans from year 2006-07 to 2008-09



○ There is a 950% increase in Share Capital from

year 2006-07 to 2008-09.

○ There is a 1376% increase in Unquoted Equity

share from 2590.43 crores to 38229.63 crores.

This is because Tata Steel Holdings Pte. Ltd has

increased its holding of share from .72 crores to

35663.38 crore.

Profit & Loss Account* Rs in Crores

2008-09

2007-08 2006-07 2005-06 2004-05

Net Sales24,315.77

19652.53

17458.39

15135.41

14493.16

Cost of Production15510

.7911827.48

10776.98

9406.99 8943.04

Operating ProfitBefore Interest

9778.51

8830 7332.19 6189.57 6144.86

Operating Profit AfterInterest

8289.01

7900.97

7080.94 6015.06 5916.06

Profit Before Tax7315.

617066.

366261.65 5239.96 5297.28

Profit After Tax5201.

744687.

034222.15 3506.38 3474.16

Dividend payout1168.

951168.

93943.91 719.51 719.51



Retained Profit4032.

793518.

13278.24 2786.87 2754.65

➢ The net sales increased by 23% during FY 09 over FY 08

mainly due to higher prices realized on Steel as well as

other products during the first half of the financial year.

➢ Operating Profit has been increased continuously with

an increasing rate. This is a good sign for the financial

health.

➢ Net Profit has been increased over the year but as

compare to the Operating Profit, the trend is lower.

Receivable Period

2008-09 2007-08 2006-07 2005-06 20040

Credit Sales24348.5

219652.5

317458.

3915135.

4114493

1

Sales per day 66.71 53.84 47.83 41.47 39.7

Debtors635.98 543.48 631.63 539.4 581.8

Debtors

outstanding days 9.53 10.09 13.21 13.01 14.6



➢ Receivable period has been brought down continuously

over the year which shows efficiency of debtors’

management.

Payables Period

2008-09 2007-08 2006-07 2005-06 20040

Credit Purchase 6600.48 3924.18 3585.043128.2

23331

Purchase per Day18.08 10.75 9.82 8.57 9.1

Creditors 2230.41 2182.52 1093.1 814.88778.

Creditorsoutstanding days

123.34 203.00 111.29 95.08 85.3

➢ There is a increasing trend in the payables period

except during year 2007-08. This signifies increasing

confidence of the creditors.

Raw Material Holding Period



2008

-092007

-082006

-072005

-062004

-05Raw Materials

Consumption

6068.

78

3743.

14

3572.

06

3024.

38

3020.

42Raw MaterialsConsumption per

Day16.63 10.26 9.79 8.29 8.28

Raw MaterialsInventory

1433.26

901.56

720.52

707.54

603.7

Raw MaterialInventory Holding

Days86.20 87.91 73.62 85.39 72.95

➢ The raw materials inventory was higher than last year

for the steel works and at the Ferro Alloys and Minerals

Division due to a significant increase in the prices of

imported coal and coke as on 31st March, 2009 as

compared to prices as on 31st March, 2008. The

increase was also partly due to increase in the stock

level to support higher volume of operations.

➢ Raw material holding days has been almost constant

throughout these years.

Work-In-Progress Holding Period

2008- 2007- 2006- 2005- 2004-



09 08 07 06 05

Cost Of Production15510.7

911827.

4810776.

989406.9

98943.0

4

Cost Of Productionper day

42.50 32.40 29.53 25.77 24.50

Work In ProgressInventory

73.17 71.48 28.94 23.93 32.42

Work In ProgressHolding Days

1.72 2.21 0.98 0.93 1.32

Contribution to Current Assets

2008-

092007-

082006-

072005-

062004-

05

Raw Materials toCurrent Assets

0.13 0.02 0.05 0.17 0.15

Work-in Progress toCurrent Assets

0.01 0.001 0.002 0.01 0.01

Finished Goods toCurrent Assets

0.13 0.03 0.08 0.24 0.22

Stores and Spares toCurrent Assets

0.06 0.02 0.04 0.10 0.09

Sundry Debtors toCurrent Assets

0.06 0.01 0.05 0.13 0.14

Total Inventory toCurrent Assets

0.32 0.07 0.17 0.51 0.46



➢ Debtors have decreased over the year.

➢ Raw Materials consumption showed significant increase

over the previous year mainly due to higher prices of

Coal and Coke and also due to higher production

resulting from the commissioning of ‘H’ Blast Furnace

as well as other facilities and operational

improvements. Increase in the prices of Ferroalloys also

contributed to the increase in raw materials consumed.

Percentage Analysis of Different Cost ComponentsVis-à-vis Net Sales

2008-

092007-

082006-

072005-

062004-

05

Raw Materials 24.92 19.05 20.46 19.98 20.84

Power & Fuel Cost 5.02 5.33 5.89 5.93 5.37

Other ManufacturingExpenses

13.13 13.29 14.32 13.81 13.44

Depreciation for thecurrent year

4.00 4.25 4.69 5.12 4.27

Selling and AdministrationExpenses

7.51 8.14 8.54 9.08 9.00

Interest 6.12 4.73 1.44 1.15 1.58



➢ There is not much changes in the various cost

components other than Interest.

➢ This is because there is a almost 60% increase in

Debenture Interest during the year 2007-08 and 2008-

09.

Profitability Analysis (as % of Net Sales)

2008-09 2007-082006-

07

2005

-06

2004-

05PBDIT 40.16 44.93 42.00 40.89 42.40

PBDT 34.04 40.20 40.56 39.74 40.82

PBT 30.05 35.96 35.87 34.62 36.55

PAT 21.36 23.85 24.18 23.17 23.97

➢ There has been an increasing trend up to the year

2007-08, but in the year 2008-09 there is slight

downward trend.

➢ The downward trend is mainly due to the worldwide

economic slowdown. This reflected in a sharp downturn

in private construction projects, as well as large falls in

automotive and mechanical engineering, amplified by



severe destocking by both end users and service

centers. Indian operations

witnessed a drop in demand of 11% in the third quarter,

reflecting the reduced activity in infrastructure and

commercial vehicles.

COMPARATIVE ANALYSIS



Profit & Loss A/C

*For year 2008

* Rs in Crores

TATA JSW SAIL

Net Sales 24,315.7714006.5

943700.80

Cost of Production 15510.7912249.2

337181.87

Operating Profit BeforeInterest

9778.51 2341.71 10941.81

Operating Profit AfterInterest

8289.01 1504.89 10688.57

Profit Before Tax 7315.61 677.23 9403.45

Profit After Tax 5201.74 458.5 6174.81

Dividend payout 1168.95 47.71 1073.90

Retained Profit 4032.79 410.94 5100.91

➢ Although Net Sales of SAIL is almost double that of

TATA Steel, PAT of these two companies does not show

significant difference. This implies the operating

efficiencies of TATA Steel.



➢ Also the TATA Steel has paid more dividend than SAIL.

Balance Sheet

*For year 2008-09* Rs in Crores

TATA JSW SAIL

Total Current Liabilities 10007.41 7476.287713.3

9

Total term Liabilities 3781.22 7163.91 800

Total Net Worth 30176.26 7959.25 27984.1

Total Liabilities 58,741.7719231.8

835522.

89

Total Current Assets 10756.75 4631.6434663.

16

Net Block 10994.5413086.4

412268.

83

Total Assets 58,741.77

19231.8

8

35522.

89



➢ Total assets of Tata Steel is almost double to that of

SAIL this signifies the robustness of the company.

Percentage Analysis of Different Cost ComponentsVis-à-vis Net Sales

TATA JSW SAIL

Raw Materials 24.92 45.6 62.4

Power & Fuel Cost 5.02 7.25 4.81

Other Manufacturing

Expenses13.13 11.05 10.29

Depreciation for the currentyear

4 2.94 9.18

Selling and AdministrationExpenses

7.51 3.64 11.46

Interest 6.12 0.58 5.97

➢ Raw material consumption of TATA STEEL is much less

than the other two companies.

➢ Interest is higher than other two showing high

borrowing from outside.

➢ Depreciation of TATA STEEL higher than JSW but lower

than SAIL because of high fixed assets.



CASH FLOW STATEMENT FOR THE YEAR ENDED 31stMARCH, 2009

2008-09 2007-08Cash Flow from Operating

Activities

Net Profit before tax 7315.61 7066.36

Adjustments for :

Depreciation 973.40 834.61

(Profi t)/Loss on sale of Assets/Discarded Assets written off

6.43 (28.26)

(Profi t)/Loss on sale of otherinvestments

(186.46) (0.03)

Impairment of Assets 0.06

(Gain)/Loss on cancellation of forward

covers/options (26.62) (124.30)Provision for diminution in value of

investments0.10

Interest and income from currentinvestment

(336.81) (142.53)

Income from other investments (101.62) (88.42)

Interest charged to Profit and LossAccount

1489.50 929.03

Amortisation of employee separation

compensation 222.34 226.18

Provision for Wealth Tax 1.00 0.95

Contribution for sports infrastructurewritten off

150.00

Exchange (Gain)/Loss on revaluation of foreign currency loans

67.91 (743.60)



Amortisation of long term loanexpenses

32.71 57.99

TOTAL 2141.88 1071.68

Operating Profit before Working

Capital Changes 9457.49 8138.04

Adjustments for :

Trade and Other Receivables (159.25) (143.44)

Inventories (875.49) (272.00)

Trade Payables and Other Liabilities 1772.03 591.80

TOTAL 737.29 176.36

Cash Generated from Operations 10194.78 8314.40

Direct Taxes paid(2797.56

)(2060.2

0)

Net Cash from Operating Activities 7397.22 6254.20

Cash Flow from Investing Activities :

Purchase of fixed assets (2786.29) (2458.97)

Sale of fixed assets 15.18 63.88

Purchase of investments(59903.2

5)(31605.

12)

Purchase of investments in Subsidiaries(4439.80

)(29587.

40)

Sale of investments 57181.6134110.4

6

Inter-corporate deposits 90.73 (85.80)

Interest and income from currentinvestments received

312.12 155.95

Dividend received 101.62 88.42



Net Cash used in Investing Activities(9428.08

)(29318.

58)

Cash Flow from Financing Activities

:Issue of Equity Capital 0.25 4881.45

Issue of Cumulative ConvertiblePreference Shares

0.14 5472.52

Proceeds from borrowings 6494.4317632.7

0

Repayment of borrowings (894.39)(10386.

61)Amount received on cancellation of

forward covers/options(10.17) 134.41

Long term loan expenses (32.51) (202.38)

Interest paid(1213.96

)(746.07)

Dividends paid(1187.37

)(937.95)

Net Cash from Financing Activities 3156.4215848.0

7

Net increase/(decrease) in Cash or

Cash equivalents (A+B+C) 1125.56

(7216.3

1)

Opening Cash and Cash equivalents 465.04 7681.35

Closing Cash and Cash equivalents 1590.60 465.04

➢ There is a significant increase in Net Cash/cash

Equivalent as compare to previous year. Mainly

because there is a decrease in Purchase of Investment

specially Purchase of Investment in Subsidiaries. And



also there is increase (67.63%) in cash inflow from

selling of investment this year.

➢ Also there is less payment of borrowing and also

decrease in Long Term Loan Expense than previous

year.

➢ But there is 63.16% decrease in Proceeds From

Borrowing, increase in Interest Paid and Dividend Paid.

This reflected in almost 80% decrease in Net Cash

From Financing Activities.

RATIO ANALYSIS



Liquidity ratios

They provide a measure of a company’s ability to generate

cash to meet its immediate needs. There are three

commonly used liquidity ratios current ratio, quick ratio and

net working capital to sales ratio. Generally, the larger these

liquidity ratios the better the ability of the company to

satisfy its immediate obligations.

COMPARATIVE ANALYSIS:Ideally the CR of a company should have been to around

1.5-2.0 : 1. For tata steel the current ratio is increasing overthe years. Which is not a healthy sign. Good amount of cashis locked in the form of debtors, inventory and loans and

advances. Its competitor SAIL and Jindal steel maintainshealthy current ratio.

Quick ratio = Current assets – Inventory / Current liabilities

The quick ratio is the ratio of quick assets (generally currentassets less inventory) to current liabilities. Indicates a

company's ability to satisfy current liabilities with its mostliquid assets

COMPARATIVE ANALYSIS:



Ideally the quick ratio should have been to around 1: 1. Tatasteel QR for FY08 was 3.52 which was again very high.

Net working capital to sales ratio : The net working capital to sales ratio is the ratio of net

working capital (current assets minus current liabilities) to

sales. Indicates a company's liquid assets (after meeting

short−term obligations) relative to its need for liquidity

(represented by sales). Bankers look at Net Working Capital

over time to determine a company's ability to weather

financial crises. Loans are often tied to minimum working

capital requirements.

COMPARATIVE ANALYSIS:For Mar08 the ratio comes out to be -0.16. Current liabilitiesfor the Tata Steel is more than its current assets. The

company should re examine its credit policy.

Profitability ratios:

Gross profit margin = Gross income / Sales The gross profit margin is the ratio of gross income or profitto sales. This ratio indicates how much of every rupee of sales is left after costs of goods sold.




For Tata Steel the gross profit margin ratio for the year 08was 37.7%. For SAIL it is 25.10 and for Jindal steel it is 34.35.Hence Tata Steel enjoys high gross profit margin ratio overits competitor.

Operating profit margin = Operating income/ Sales The operating profit margin is the ratio of operating profit(a.k.a. EBIT, operating income, income before interest andtaxes) to sales. This is a ratio that indicates how much of each rupee of sales is left over after operating expenses:


For the FY08, Operating profit margin ratio for Tata Steel is41.94%, for SAIL it is 28.19% and for Jindal it is 42.76 %.

Net profit margin = Net income/ Sales The net profit margin is the ratio of net income (a.k.a. netprofit) to sales, and indicates how much of each rupee of sales is left over after all expenses

COMPARATIVE ANALYSIS:For the FY08, net profit margin ratio for Tata Steel is 23.43%, for SAIL it is 18.16% and for Jindal it is 22.79 %.

Activity ratiosActivity ratios are measures of how well assets are used.Activity ratios which are, for the most part, turnover ratios,can be used to evaluate the benefits produced by specificassets, such as inventory or accounts receivable. Or theycan be use to evaluate the benefits produced by all acompany's assets collectively. These measures help usgauge how effectively the company is at putting itsinvestment to work. A company will invest in assets – e.g.,inventory or plant and equipment – and then use theseassets to generate revenues. The greater the turnover, the



more effectively the company is at producing a benefit fromits investment in assets.

The most common turnover ratios are the following:

Inventory turnover ratio = Cost of goods sold/ Inventory This ratio reveals how well inventory is being managed. It isimportant because the more times inventory can be turnedin a given operating cycle, the greater the profit.


For the FY08, net inventory turnover ratio for Tata Steel is

10.84, for SAIL it is 8.62 and for Jindal it is 7.01. Here also Tata steel manages its inventory better than its competitor.

Total asset turnover ratio: Total asset turnover is the ratio of sales to total assets. Thisratio indicates the extent that the investment in total assetsresults in sales. The higher the number the better it is for thecompany.

Total asset turnover = Sales / Total assets


For the FY08, total assets turnover ratio for Tata Steel is0.43, for SAIL it is 1.55 and for Jindal it is 0.70.This indicates

Tata steel have more nonperforming assets than itscompetitors.

Fixed asset turnover is the ratio of sales to fixed assets. Thisratio indicates the ability of the company’s management toput the fixed assets to work to generate sales Fixed assetturnover = Sales/Fixed assets



Financial leverage ratiosA company can finance its assets either with equity or debt.Financing through debt involves risk because debt legally

obligates the company to pay interest and to repay theprincipal as promised. Equity financing does not obligate thecompany to pay anything -- dividends are paid at thediscretion of the board of directors. There is always somerisk, which we refer to as business risk, inherent in anyoperating segment of a business. But how a companychooses to finance its operations -- the particular mix of debtand equity -- may add financial risk on top of business risk.Financial risk is the extent that debt financing is usedrelative to equity.

Financial leverage ratios are used to assess how muchfinancial risk the company has taken on.

The total debt to assets ratio indicates the proportion of assets that are financed with debt (both short−term andlong−term debt).

Total debt to assets ratio =Total debt/Total assetsA ratio under 1 means a majority of assets are financed

through equity, above 1 means they are financed more bydebt. Furthermore we can interpret a high ratio as a "highlydebt leveraged firm.

.

Total debt to equity ratio = Total debt/ Total shareholders'equity

The debt to equity ratio (a.k.a. debt-equity ratio) indicatesthe relative uses of debt and equity as sources of capital tofinance the company's assets, evaluated using book valuesof the capital sources Ideally it should be around 1.5-2.0 to 1




For the FY08, D/E ratio for Tata Steel is 1.08, for SAIL it is0.13 and for Jindal it is 1.03.This indicates Tata steel havemore nonperforming assets than its competitors.With low D/E ratio the company can go for more debt to

raise funds in future.

Earnings per share = Net income available to shareholders/Number of shares outstandingEarnings per share (EPS) is the amount of income earnedduring a period per share of common stock.


For the FY08, EPS for Tata Steel is 63.85, for SAIL it is 18.25and for Jindal it is 80.34.

KEY RISKS FOR THE INDUSTRY



➢ A slower-than-expected recovery of the global

economy. Steel demand has increased after falling to

record levels, as dealers restock steel, which may be a

short term phenomenon. Steel demand and prices are

expected to remain subdued in the existing global

scenario. Continued depression in global steel prices

and higher raw material costs will affect profitability

further.

➢ Any delay in the commissioning of new capacities and

further downgrade of company’s debt ratings will leadto rating downgrade.

➢ Company has USD 875 million of FCCB convertible at

Rs.785. Rupee depreciation is hurting the company in

terms of interest and debt payment and in MTM losses

as well. However we expect limited loss as the debt

matures in 2012. Recent downgrades by Moody’s for

the group will make raising fresh debt more difficult.

➢ Increase in Raw Material Costs: Captive iron ore

provides only 20% and captive coal mines provides for

only 14% of total steel production for Tata Steel( Group)

on a consolidated basis. Raw material costs are 50% of

net sales for the group, in case raw material prices

increase or do not drop in line with steel price. It could

lead to further pressure on company’s profitability.



INDUSTRY TREND

According to recent report on steel sector 'Indian Steel

Industry 2009: squeezed, but strong' by Ernst and Young

India has the potential to grow at double digit rates and

should target a production of 125 mn tonnes in the medium

term. Report mentions, China example from 1998-2003,

when world steel production grew by 1.6%, china doubled its

steel production growing by 18%. According to the report,

the near-term outlook for the industry is challenging as the

growth in key end-user industries such as construction,

automobiles and manufacturing has taken a backseat.

The downturn has also led to a decline in the prices for raw

materials such as iron ore and coking coal, albeit at a lower

rate than the dip in steel prices. Further, prices are expected

to decline in 2009 as consumption levels are projected to

continue plummeting. To avoid large-scale dumping and

protect domestic players, the government, has taken

following steps:

1. Removal of export duty

2. Restored DEPB (Duty exemption pass book) to promoteexports.

3. Imposed 5% import duty on steel to check cheap imports

from china

4. Cut in excise duty from 14% to 10%



5. Customs duty of 5%

International steel prices rose sharply by 50-60% in the first

half of 2008 but prices in the domestic market was reigned

in by the government in an attempt to check inflationary

pressures and ensure adequate supply. As a result, domestic

steel prices went up by around 25% only in the

corresponding period. Therefore, as we witness steep

correction in international steel prices by 25% (from $1200

to $900), we do not expect similar declines in domestic

prices that have fallen by 16% to $750 but rather stabilize inthe coming quarters.

It is expected that the Q3FY09E and Q4FY09E results will be

better as raw material prices will come down further and

long term contracts will be re-negotiated at lower rates in

December. While rupee depreciation in Q2FY09 has resulted

in increasing import cost and negative MTM provisioning on

un hedged foreign currency exposures, falling freight rates

and expected rupee appreciation will positively impact the

bottom line in the coming quarters.



SWOT ANALYSIS

Strengths

1. Financials :

Domestic sales growth: 20.97%, operating profits:

23.52%, profit before tax: 3.53%, profit after tax:

10.98%, best financial performance in its industry

group. Improvement in both net profit margin as well

as RONW turnover. A very strong financial health. A

reasonably high NAV despite a liberal dividend policy.

Absolutely no solvency or default risks. No short term

liquidity risks. Suppliers preferred choice. High &

improved fixed assets efficiency. High quality of

debtors & advances. Clean audit report.

Implementation of key accounting standards in

advance. Very high quality of earnings.

2. Sixth largest steel manufacturer in the world



3. Tata Steel is the lowest cost steel producer in the

world.

4. Tata Steel enhanced its presence on the international

steel scene with the acquisition of the U.K. based

company, Corus Group plc. Corus acquisition brings

Tata Steel 19 million tonne of capacity at once and at

a cost, which is roughly little more than half the cost

of the Greenfield site.

5. Jamshedpur Plant became the first plant in India to

produce more than 5 million tonnes of crude steel in

a year.

6. The Company has continued to scale up its safety

performance at all locations with the help from M/s.

Dupont Safety Resources.

7. A matching performance by the operating

departments including the raw materials division.

8. The Company is relatively protected from increases

in the prices of key raw materials since it meets

100% of iron ore and around 70% of coal

requirements from its captive mines.

9. . Tata had a strong retail and distribution network in

India and SE Asia. Tata was a major supplier to the

Indian auto industry and the demand for value added

steel products was growing in this market



10.The Company has in place adequate internal control

systems and procedures commensurate with the size

and nature of its business. The effectiveness of the

internal controls is continuously monitored by the

Corporate Audit Division of the Company. Corporate

Audit‘s main objective is to provide to the Audit

Committee and the Board of Directors, an

independent, objective and reasonable assurance of

the adequacy and effectiveness of the organisation‘s

risk management, control and governance processes.

11.Tata Steel now is in the process of implementing a

structured approach in risk management called

Enterprise Risk Management (ERM).

Weaknesses

1. Financials : Tata is following very liberal dividend policy

as it has proposed dividend @160% this year and last

year it was @ 155%. We see that 29% of current profits

are distributed as dividend. This is the wrong policy

chosen by the management as it is giving away much of

the funds available which could be used for further

investment in the business and thus would lead to much

higher growth in future.

2. Endemic Deficiencies:

These are inherent in the quality and availability of some

of the essential raw materials available in India, ex., high



ash content of indigenous coking coal adversely affects

the productive efficiency of iron-making and is generally

imported. Advantages of high Fe content in indigenous ore

are often neutralized by high basicity index. Besides,

certain key ingredients of steel making, ex., nickel, Ferro-

molybdenum are also unavailable indigenously.

3. Raw materials for steel production are rapidly depleting

and are non renewable, company has to come up with

sustainable methods in steel production.

4. Steel production in India is also hampered by power

shortages.

5. Low Labour Productivity:

In India the advantages of cheap labour get offset by low

labour productivity; ex., at comparable capacities labour

productivity of SAIL and TISCO are 75 t/manyear and 100

t/manyear, for POSCO, Korea and NIPPON, Japan the

values are 1345 t/man year and 980 t/manyear.

6. High Cost of Basic Inputs and Services:

High administered price of essential inputs like electricity

puts Indian steel industry at a disadvantage; about 45% of

the input costs can be attributed to the administered costs

of coal, fuel and electricity, eg, cost of electricity is 3 cents

in the USA as compared to 10 cents in India; and freight



cost from Jamshedpur to Mumbai is $50/tonne compared

to only $34 from Rotterdam to Mumbai.

Opportunities

1. The biggest opportunity before Indian steel sector is

that there is enormous scope for increasing

consumption of steel in almost all sectors in India.

2. The Tata Steel Group is leveraging the Group‘s

collective Research and Development experience in

the Group‘s various geographies to further enhance

the Group‘s performance and also the integration

process.

3. Corus acquisition brings in a tremendous

technological advantage by access to best practices in

global steel industry.

4. The main drivers of this growth are the expected large

investments in infrastructure, large-scale construction

activities and the sustained rise in demand for auto

and white goods from a burgeoning middle class in

the country.

5. The planned Brownfield expansion in Jamshedpur and

the long-term Greenfield projects in Orissa,

Chhattisgarh and Jharkhand.

6. Unexplored Rural Market:



The Indian rural sector remains fairly unexposed to

their multi-faceted use of steel. The rural market was

identified as a potential area of significant steel

consumption way back in the year 1976 itself.

However, forceful steps were not taken to penetrate

this segment. Enhancing applications in rural areas

assumes a much greater significance now for

increasing per capital consumption of steel.

7. It is estimated that world steel consumption willdouble in next 25 years.

Quality improvement of Indian steel combined with its

low cost advantages will definitely help in substantial

gain in export market.

8. Excellent potential exist for enhancing steel

consumption in other sectors such as automobiles,

packaging, engineering industries, irrigation and

water supply in India. New steel products developed

to improve performance simplify

manufacturing/installation and reliability is needed to

enhance steel consumption in these sectors

Threats

1. Tata Steel has huge resources in form of unsecured

loans. Though their financial position is strong it is not



advisable to have such a big amount of 23,033.13

crores as unsecured.

2. In the developed world, industries have been facing

rising environmental costs due to the increased

concerns on Global Warming. It is, therefore, a

challenge and responsibility for the Steel industry to be

the trustee in conservation of nature for future

generations

3. It is recognised that the steel and aluminium industries

are significant contributors to man-made greenhouse

gas emissions as the manufacture of steel produces

carbon dioxide (CO2), and the manufacture of primary

aluminium generates both CO2 and per fluorocarbons

(PFCs).

4. High raw material input cost and scarcity of non

renewable raw materials are a threat to the industry.

( e.g. Coal, limestone etc)

5. Threat of Substitutes:

Plastics and composites pose a threat to Indian steel in

one of its biggest markets automotive manufacture. For

the automobile industry, the other material at present

with the potential to upstage steel is aluminium.

However, at present the high cost of electricity for

extraction and purification of aluminium in India weighs



against viable use of aluminium for the automobile

industry. Steel has already been replaced in some large

volume applications large diameter water pipes (RCC

pipes), small diameter pipes (PVC pipes).

6. There has been significant pressure on margins from

increased raw material prices on non-integrated steel

players.

7. The steel industry is still highly fragmented and cyclical

in nature as well as demand for steel products is

generally affected by macroeconomic fluctuations in

the global markets.

8. Important factors that could make a difference to the

Company’s operations include economic

9. Conditions affecting demand/supply and price

conditions in the domestic and overseas markets inwhich the Company operates, changes in the

Government regulations, tax laws and other statutes

and incidental factors.



FUTURE PROSPECTS OF TATA STEEL

Tata Iron & Steel Co, the largest and oldest private sector

steel company in the country, is aiming to become a major

player in the domestic steel industry. It also wants to be a

global player while keeping its roots deep in domestic soil.

According to the managing director of the company, B

Muthuraman, Tata Steel plans to increase hot metal

production from 4.47 million tonnes (MT) in 2003-04 to 15MT

by 2010. "It would be done through capacity expansion at

the Jamshedpur plant, acquisition of other plants, and setting

up of new plants," he said.

Why this growth plan by Tata Steel, which reported over

Rs1,746 crore net profit in 2003-04, on a turnover of

Rs10,843 crore? Observes Tata group chairman Ratan Tata,

who is also the chairman of Tata Steel: India presently is

going through an economic up-turn, and at this particular

time in the nation's development, considerable attention isbeing paid to the creation of adequate infrastructure to meet

the country's development needs.

Industry is also experiencing robust growth in several



sectors and India's agricultural sector has continued to show

growth with improved productivity and product quality. It

can therefore be assumed that if these trends continue, India

will continue to enjoy healthy economic growth for some

years to come.

The Centre for Policy Research (CPR) released in November

2002 a report dealing with the perspectives up to 2025. It

indicated that the construction, cold-reducing and

transportation of oil and gas segments are poised for major

growth in India. Thermo-mechanically treated (TMT) bars and

rods, structurals, hot rolled (HR) and cold rolled (CR) coils,

plates and pipes have been identified as the key growth

products. So, Mr Tata believes that the demand for steel in

India should continue to rise, both in construction steel and

in flat products used in automotive and consumer product

sectors.

India also has a specific advantage in that as its iron ore and

related mineral resources are plentiful, which will provide the

Indian steel industry with a particular global advantage. Mr

Tata has laid a clear vision for the Tata Steel management in

this change scenario: It must explore ways of enhancing its

capacity domestically, as also establishing finishing facilities

in strategic locations internationally, leveraging its low cost

Indian base and the availability of domestic iron ore.



As estimated by the Union Steel Ministry, the country will

require 60MT of steel against the present capacity of 36MT.

And Tisco wants to contribute as much as possible. So, it has

drawn up a five-pronged strategy:

• Maximise the potential at Jamshedpur

• Move up the value chain with strong brands

• Establish alternative locations in India

• Establish global presence

•

Connect domestic and global operations

Mr Tata believes that the company needs to evaluate and

invest in new emerging steel making technologies, so as to

enable it to be state-of-the-art steel making facility. The

company has framed a growth and globalisation plan. This

includes:

• 2.4MT expansion at Jamshedpur. It has entered into a

limestone joint venture in Thailand for establishing low

cost material sources globally. It is making a plan to set

up a disintegrated production facility in Orissa

• It is setting up a coke plant at Haldia in West Bengal

• It has taken up the Dhamra port project in Orissa

• It is looking for acquisitions in India and overseas.

• It has already signed an agreement with NatSteel in

Singapore to acquire steel business interests in



Singapore, China, Malaysia, Thailand, Australia,

Vietnam and the Philippines.

India is now going to be a country where the demand for

steel is going to be very high. India is at the trigger point in

terms of potential for growth in steel consumption in

comparison with China being at the point of inflection,

Singapore being at peak point and USA being at point of

saturation.

The industries which are on a growing trend are Construction

and Automobile. These industries definitely need steel for

development and so prospects are very high.

Many countries including India are going into faster

urbanisation and with Tata Steel being one of the top Steelmanufacturing units in the country also elsewhere where it

has its subsidiary units that include 359 units inside and

outside the country.

Tata Steel has huge amounts in their pockets in terms of

Reserves & Surplus. This is good for the company in the

future as it can use these funds to invest in other projects

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