Tata Steel Finanace Presentation

8/4/2019 Tata Steel Finanace Presentation

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Final projectFinal project

Tata steelTata steel


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introductionintroduction

Tata Iron & Steel Company Ltd. (TISCO) is the iron andTata Iron & Steel Company Ltd. (TISCO) is the iron andsteel production company associated with the Tatasteel production company associated with the Tatagroup of some 80 different industrial and other businessgroup of some 80 different industrial and other businessenterprises in India, founded by members of the Tataenterprises in India, founded by members of the Tata

family. TISCO operates as India's largest integrated steelfamily. TISCO operates as India's largest integrated steelworks in the private sector with a market share of nearlyworks in the private sector with a market share of nearly13 percent and is the second largest steel company in13 percent and is the second largest steel company inthe entire industry. Its products and services include hotthe entire industry. Its products and services include hotand cold rolled coils and sheets, tubes, constructionand cold rolled coils and sheets, tubes, constructionbars, forging quality steel, rods, structural's, strips andbars, forging quality steel, rods, structural's, strips and

bearings, steel plant and material handling equipment,bearings, steel plant and material handling equipment,Ferro alloys and other minerals, software for processFerro alloys and other minerals, software for processcontrols, and cargo handling services. Through itscontrols, and cargo handling services. Through itssubsidiaries, TISCO also offers tinplate, wires, rolls andsubsidiaries, TISCO also offers tinplate, wires, rolls andproject management services.project management services.


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SWOT AnalysisSWOT Analysis

StrengthsStrengths ofof TataTata SteelSteel::

pioneer of steel business in India.pioneer of steel business in India.

Enjoys brand equity.Enjoys brand equity.

Has a multiple companies under the sameHas a multiple companies under the samebanner.banner.

Advantage of valueAdvantage of value--chain efficiency.chain efficiency.

Utilize products made in its sisterUtilize products made in its sistercompanies to process raw materials andcompanies to process raw materials andincrease efficiency.increase efficiency.


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Weaknessesof Tata SteelWeaknessesof Tata Steel

Biggest weakness is its increasing debtBiggest weakness is its increasing debt--toto--equity ratio.equity ratio.

largely depends on domestic andlargely depends on domestic andinternational markets .international markets .

overover--dependence can prove to be fatal independence can prove to be fatal intimes of economic crisis.times of economic crisis.


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Opportunitiesfor Tata SteelOpportunitiesfor Tata Steel

Branching out to overseas market.Branching out to overseas market.

Recently signed a deal with Corus group,Recently signed a deal with Corus group,which provides access to Europeanwhich provides access to Europeanmarkets.markets.

Tata Steel will now be in a position toTata Steel will now be in a position toutilize the R&D facility.utilize the R&D facility.

Exposure to new technologies andExposure to new technologies andmarkets.markets.


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Threatsto Tata SteelThreatsto Tata Steel

To maintain the Co2 emission standards.To maintain the Co2 emission standards.

The sudden overseas exposure along withThe sudden overseas exposure along witha possible economic slowdown is thea possible economic slowdown is thebiggest challenge.biggest challenge.


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Ratio analysisRatio analysis

Liquidityratio:Liquidityratio:

CurrentratioCurrentratio::

yearyear Current assetsCurrent assets CurrentCurrentLiabilitiesLiabilities

20082008 3,613.703,613.70 3,855.263,855.26

20092009 5,707.055,707.05 6039.866039.86


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Analysis:Analysis: -- The industry norm value ofThe industry norm value of

current ratio is 2:1. However it does notcurrent ratio is 2:1. However it does notmean so that higher current ratio meansmean so that higher current ratio meansgood company profile. It may signifygood company profile. It may signifyhigher unused cash, inventory which againhigher unused cash, inventory which againmay result in inventory carrying cost.may result in inventory carrying cost.

In both the years the Current ratio forIn both the years the Current ratio forTata Steel is same. However it does notTata Steel is same. However it does not

mean any increase or decrease in currentmean any increase or decrease in currentratio of any company gives the growthratio of any company gives the growthprofile of the company.profile of the company.


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QUICK RATIOQUICK RATIO

Analysis:Analysis:--As per the industry norms the Quick RatioAs per the industry norms the Quick Ratioshould be 1:1. There is a huge difference between theshould be 1:1. There is a huge difference between theQuick Ratios of the company. It also shows theQuick Ratios of the company. It also shows thedecreasing trend. In the year 2008 there was highdecreasing trend. In the year 2008 there was highUNUN--utilized cash. But for the current year the situationutilized cash. But for the current year the situationis more balanced.is more balanced.

YEARYEAR Current AssetsCurrent Assets InventoryInventory-- PrepaidPrepaidExpense)Expense)

CurrentCurrentLiabilitiesLiabilities

20082008 13,570.5213,570.52 3,855.263,855.26

20092009 3,442.723,442.72 6,039.866,039.86


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Gross profitratioGross profitratio

AnalysisAnalysis :It indicates the Gross Profit over:It indicates the Gross Profit oversales of any company. This ratio can besales of any company. This ratio can bechanged by 1. Change in Sales Volume. 2.changed by 1. Change in Sales Volume. 2.

Changes in sales price 3. Change in cost ofChanges in sales price 3. Change in cost ofproduction.production.

yearyear Gross Profit Gross Profit SalesSales

20082008 7515.057515.05 19,933.8319,933.83

20092009 8295.848295.84 24,624.0424,624.04


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Operating profit ratioOperating profit ratio

AnalysisAnalysis::There is a decrease in Operating Profit Ratio for TataThere is a decrease in Operating Profit Ratio for Tata

Steel. According to the sales figure the EBIT value in 2009 inSteel. According to the sales figure the EBIT value in 2009 in

comparatively less than that of 2008. As we know a lowercomparatively less than that of 2008. As we know a loweroperating profit ratio indicates higher efficiency of the firm. So, onoperating profit ratio indicates higher efficiency of the firm. So, onthe basis of the calculated data we can say that the operatingthe basis of the calculated data we can say that the operatingefficiency of Tata Steel has actually increased for the current yearefficiency of Tata Steel has actually increased for the current yearwith a comparison between 2008 and 2009.with a comparison between 2008 and 2009.

YEARYEAR Operating Profit Operating Profit(EBIT)(EBIT)

SalesSales

20082008 8,360.258,360.25 19,933.8319,933.83

20092009 9,278.349,278.34 24,624.0424,624.04


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NetProfit MarginNetProfit Margin

Analysis:Analysis:

We can see that there is a decrease in the NetWe can see that there is a decrease in the NetProfit Margin. Actually it indicates the firms ability toProfit Margin. Actually it indicates the firms ability totransfer its sales into the net profit. So, here analyzingtransfer its sales into the net profit. So, here analyzingthe consecutive two years data we can see that thethe consecutive two years data we can see that theprofitability of Tata Steel has actually decreased inprofitability of Tata Steel has actually decreased in2009 than of the year 2008.2009 than of the year 2008.

YEARYEAR Net Profit afterNet Profit afterTaxTax

SalesSales

20082008 4670.494670.49 19,933.8319,933.83

20092009 5193.215193.21 24,624.0424,624.04


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Returnof Total AssetReturnof Total Asset

AnalysisAnalysis: Again we can see that there is reduction in: Again we can see that there is reduction inthe return to total asset ratio. The return Tata Steelthe return to total asset ratio. The return Tata Steel

earned over their Total Asset in 2008 the value reducedearned over their Total Asset in 2008 the value reducedin the year 2009. It also means to achieve a certainin the year 2009. It also means to achieve a certainamount of revenue Tata Steel has used more amount ofamount of revenue Tata Steel has used more amount ofits capital.its capital.

yearyear Net Profit afterNet Profit afterTaxTax

Total AssetsTotal Assets

20082008 4670.494670.49 47,075.5247,075.52

20092009 5193.215193.21 58,741.7758,741.77


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Fixed Assets Turnover RatioFixed Assets Turnover Ratio

AnalysisAnalysis :For both of the years 2008 and 2009 the:For both of the years 2008 and 2009 thefixed asset turnover ratio of Tata Steel is more than 1.fixed asset turnover ratio of Tata Steel is more than 1.As we know this ratio shows the companys ability toAs we know this ratio shows the companys ability to

turn its fixed assets into the turnover. The turnover hasturn its fixed assets into the turnover. The turnover hasactually increased here. But the turnover is also veryactually increased here. But the turnover is also verygood in the year 2008.good in the year 2008.

yearyear SalesSales Fixed Assets.Fixed Assets.

20082008 19,933.8319,933.83 12,623.5612,623.56

20092009 24,624.0424,624.04 14,482.2214,482.22


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Debtors Equity RatioDebtors Equity Ratio

AnalysisAnalysis; Here we can see that in both Debt Equity; Here we can see that in both Debt Equity

Ratio and in Long Term Debt Equity Ratio hasRatio and in Long Term Debt Equity Ratio hasincrease for both of the years. Logically speaking thatincrease for both of the years. Logically speaking thatwhen this ratio for any company increase it does notwhen this ratio for any company increase it does notshow good performance of the company.show good performance of the company.

yearyear Debt equity ratioDebt equity ratio

20082008 1.081.08

20092009 1.341.34

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Tata Steel Finanace Presentation

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