116341794 TISCO Ratio Analysis

8/12/2019 116341794 TISCO Ratio Analysis

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KIRLOSKAR INSTITUTE OF ADVANCED MAANGEMENT STUDIES

TATA STEEL

CORPORATE FINANCE

12/20/2011

Submitted To Submitted By:-

Prof . T Vishvanathan Akash Jain 5

AnandMurarka 7

AnishWadhwa 10

ChandrachurPalchaudhri

30

KhushbooVijayvargiya

47


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TATA GROUP

It was when Jamsetji Tata gave shape to his vision of nation building by

forming what was to become the Tata Group in 1868, he had envisaged India

as an independent strength politically, economically and socially. In order

to become a force that the world has to reckon with, the Tata Group has

always ventured into path breaking territory and pioneered developments in

industries of national importance. The Tata name has been respected in India

for 140 years for its adherence to strong values and business ethics.

The Tata Group of Companies has always believed strongly in the concept of

collaborative growth, and this vision has seen it emerge as one of India's and

the world's most respected and successful business conglomerates. The Tata

Group has traced a route of growth that spans through six continents and

embraces diverse cultures. The total revenue of Tata companies, taken

together, was 67.4 billion USD (around Rs319, 534 crore) in 2009-10, with

57 per cent of this coming from business outside India. In the face of trying

economic challenges in recent times, the Tata Group has steered Indias

ascent in the global map through its unwavering focus on sustainable

development. Over 395,000 people worldwide are currently employed in the

seven business sectors in which the Tata Group Companies operate. It is the

largest employer in India in the Private Sector and continues to lead with thesame commitment towards social and community responsibilities that it has

shown in the past.

The Tata Group of Companies has business operations (114 companies and


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subsidiaries) in seven defined sectors Materials, Engineering, Information

Technology and Communications, Energy, Services, Consumer Products and

Chemicals. Tata Steel with its acquisition of Corus has secured a place among

the top ten steel manufacturers in the world and it is the Tata Groups flagship

Company. Other Group Companies in the different sectors areTata Motors,

Tata Consultancy Services (TCS), Tata Communications, Tata Power, Indian

Hotels, Tata Global Beverages and Tata Chemicals.

Tata Motors is Indias largest automobile company by revenue and is among

the top five commercial vehicle manufacturers in the world. Jaguar and

Landrover are now part of Tata Motors portfolio.

Tata Consultancy Services (TCS) is an integrated software solutions

provider with delivery centres in more than 18 countries. It ranked fifth

overall, and topped the list for IT services.

Tata Powerhas pioneered hydro-power generation in India and is the largest

power generator (production capacity of 2300 MW) in India in the private

sector.

Indian Hotels Company (Taj Hotels, resorts and palaces) happens to be the

leading chain of hotels in India and one of the largest hospitality groups in

Asia. It has a presence in 12 countries in 5 continents.

Tata Global Beverages (formerly Tata Tea),with its major acquisitions like

Tetley and Good Earth is at present the second largest global branded tea

operation.

Business excellence involves a journey where the experience itself is the


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destination. Just 13 of the 100-odd Tata companies have made this journey

their own and gone on to win the coveted JRD QV Award.

Our Values

The Tata Group has always been driven by five core values:

Integrity. We must conduct our business fairly, with honesty and

transparency. Everything we do must stand the test of public scrutiny.

Understanding. We must be caring, show respect, compassion and

humanity for our colleagues and customers around the world, and

always work for the benefit of the communities we serve.

Excellence. We must constantly strive to achieve the highest possible

standards in our day-to-day work and in the quality of the goods and

services we provide.

Unity. We must work cohesively with our colleagues across the groupand with our customers and partners around the world, building strong

relationships based on tolerance, understanding and mutual

cooperation.

Responsibility. We must be responsible and responsive to the countries,

communities and environments in which we work, always ensuring that

what comes from the people goes back to the people many times over.


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TATA IRON & STEEL COMPANY LIMITED (TISCO)

VISION

Our vision is to be the global steel industry benchmark for value creation andcorporate citizenship.

We will achieve our vision through:

Our PeopleBy fostering teamwork, nurturing talent, enhancing leadership capability and

acting with pace, pride and passion.

Our OfferBy becoming the supplier of choice, delivering premium products andservices and creating value for our customers.

Our Innovative ApproachBy developing leading edge solutions in technology, processes and products.

Our ConductBy providing a safe workplace, respecting the environment, caring for ourcommunities and demonstrating high ethical standards.

Goals

The Tata Steel Group is proud of its performance culture. We are committedto the pursuit of challenging targets, and to safety, environmental protection,continuous improvement, openness and social responsibility in every aspectof our business around the world.


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TISCO has set for itself four key corporate goals to be achieved by 2012:

Value creation: Deliver a 30% return on invested capital (ROIC)

Safety: Achieve an industry leadership position by driving down our

lost time injury frequency rate (LTIF) to a maximum of 0.4 incidents

per million hours worked

Environment: Reduce carbon dioxide (CO2) emissions to less than 1.9

tonnes per tonne of crude steel (t/tls)1

People: Rank as an employer of choice in the top quartile across all

industries

The company was established in Jamshedpur, India, in 1907. Tata Steel is

headquartered at Jamshedpur in Jharkhand, India. In the past few years, Tata

Steel has invested in Corus (UK, renamed Tata Steel Europe), Millennium

Steel (renamed Tata Steel Thailand) and NatSteel Holdings (Singapore). With

these, the company has created a manufacturing and marketing network inEurope, South East Asia and the Pacific-rim countries. It has the capacity to

produce over 30 million tonnes of crude steel every year.

Tata Steel has also set up joint ventures for the development of limestone

mines in Thailand, the procurement of low-ash coal from Australia and

coking coal from Mozambique, and the setting up of a deep-sea port in Orissa

in India. The company is exploring opportunities in the titanium dioxide

business in Tamil Nadu, India, and will soon be producing high carbon

ferrochrome from its plant in South Africa.


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The company produces crude steel and basic steel products, and makes steel

for building and construction applications through Tata BlueScope Steel, its

joint venture with Australia's BlueScope Steel.

RECENT UPDATE

Mr Cyrus P Mistry has been appointed as deputy chairman of Tata sons, who

will work with Mr Ratan N Tata over the next year and take over from

him when Mr. Tata retires in December 2012.


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ACHIEVEMENTS

Tata Steel has received the Thomson Reuters Innovation Awardin the hi-

tech corporate category. Since 2007, Thomson Reuters has been presenting

the Thomson Reuters Innovation Awards to recognise innovation and

entrepreneurship in India. The award recognises the most innovative

academic institutions and commercial enterprises headquartered in India for

their spirit of innovation in R&D as it relates to all aspects of patent

publications in India.

The Ministry of Labour and Employment, Government of India, conferred

the prestigious PrimeMinisters Shram Awardsfor the years 2008, 2009

and 2010, on twenty-one employees of Tata Steel at VigyanBhavan, New

Delhi, on October 13, 2011. The Prime Ministers Shram Awards were

instituted in the year 1985 for the public sector. Its objective is to recognise

outstanding contributions made by workmen as defined in the Industrial

Dispute Act, 1947. This award was extended to the private sector in 2004.

Tata Steel, in a move to reaffirm its commitment to its longstanding values,

collaborated with the OVAL Trust to formally dedicate the Charkha to the

nation, on the occasion of the birth anniversary of Mahatma Gandhi, October

2, 2011.


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Tata Steel bagged the first prize in heavy industry category at UdyogMela

2011, Ranchi. It has bagged this prize consecutively for the second time.

Tata steel bagged the two most prestigious awards at theMMMM exhibition

2011(Minerals Metals Metallurgy and Materials ) held at New Delhi between

February 11thto 14th2011.

Tata Steel has been named in Fortune magazine's 2011 list of Worlds

Most Admired Companies for the third consecutive year.The annual

survey, conducted by Fortune magazine and Hay Group, a global

management consulting firm, is given to top executives, directors and

financial analysts, to identify the companies that enjoy the strongest

reputations within their industries and across industries. Tata Steel has been

ranked sixth in the Industry-Metals category; the only company from India

to have achieved this prestigious feat.

Tata Steel was conferred the Good Corporate Citizen Awardfor the year

2011 by the Bombay Chamber of Commerce and Industry (BCCI) in a

ceremony at Mumbai, yesterday as part its 176th Foundation Day. The award

was presented to Tata Steel for its outstanding service to the civic community

and contribution towards the betterment of the society in the 'large corporate'

category. This is the first time that Tata Steel has won this prestigious award

from BCCI.


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Subsidiaries of TISCO

Tata Steel Europe: Europes second largest steel maker with major

operations in the UK and continental Europe, Tata Steel Europeproduces long and strip products for the construction, automotive,

packaging, engineering and other markets

worldwide. (www.tatasteeleurope.com/en/)

NatSteel Holdings: A leading supplier of premium steel products for

the construction industry, NatSteel has operations in seven countries in

Asia. (www.natsteel.com.sg)

Tata Steel Thailand: A major steel producer in Thailand, the company

produces steel for the construction industry.

Tinplate Company of India: Industry leader in India in the

manufacture of tinning line products, including electrolytic tinplate, tin-

free steel and cold-rolled products. (www.tatatinplate.com/)

Tayo Rolls: Indias leading roll manufacturer and supplier, the

company produces rolls for integrated steel plants, power plants, the

paper, textile and food processing sectors, and the government mint.

(www.tayo.co.in/)

Tata Ryerson: Offers hot- and cold-rolled flat steel products in

customised sizes and quantities.

Tata Refractories: Produces high-alumina, basic, dolomite, silica and

monolithic refractories and offers design, procurement and re-lining

services. (www.tataref.com)
http://www.tatasteeleurope.com/en/http://www.natsteel.com.sg/http://www.tatatinplate.com/http://www.tayo.co.in/http://www.tataref.com/http://www.tataref.com/http://www.tayo.co.in/http://www.tatatinplate.com/http://www.natsteel.com.sg/http://www.tatasteeleurope.com/en/


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Tata Sponge Iron: Produces sponge iron lumps and fines.

(www.tatasponge.com/)

Tata Metaliks: Manufactures and sells foundry-grade pig iron.

(www.tatametaliks.com)

Tata Pigments: Produces oxides of iron, dry cement paint, exterior

emulsion paint and distemper. Its products are used in paints,

emulsions, cement floors and plastics.

Jamshedpur Injection Powder: Manufactures carbide de-sulphurising

compounds used for the production of low-sulphur, high-quality steel.

(www.jamipol.com)

TM International Logistics: Provides material handling and port

operation services at the Haldia and Paradip ports in India; also has

freight-forwarding and chartering services. (www.tmilltd.com)

mjunction services: A 50:50 joint venture involving Steel Authority of

India and Tata Steel, it is India's largest e-commerce company and the

world's largest e-marketplace for steel. (www.mjunction.in)

TRF: In the business of design, manufacture, supply, installation and

commissioning of engineered-to-order equipment and systems in the

areas of bulk material handling, processing, reclaiming and blending.

(www.trfltd.com)

Jamshedpur Utility and Service Company: Re-engineered out of Tata

Steel's town services, JUSCO provides municipal and civic services for

townships. (www.juscoltd.com)
http://www.tatasponge.com/http://www.tatametaliks.com/http://www.jamipol.com/http://www.tmilltd.com/http://www.mjunction.in/http://www.trfltd.com/http://www.juscoltd.com/http://www.juscoltd.com/http://www.trfltd.com/http://www.mjunction.in/http://www.tmilltd.com/http://www.jamipol.com/http://www.tatametaliks.com/http://www.tatasponge.com/


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Indian Steel and Wire Products: Recently acquired by Tata Steel,

ISWP has a wire unit and a steel roll manufacturing unit.

Tata BlueScope Steel: A joint venture with BlueScope Steel, Australia,

the company offers a comprehensive range of branded steel products

for building and construction applications.

(www.tatabluescopesteel.com)

Dhamra Port Company: A joint venture between Larsen & Toubro

and Tata Steel to build a deep-draft (18 metres) all-weather port in

Orissa on the east coast of India.(www.dhamraport.com)

Hooghly Met Coke & Power Company: A joint venture with the West

Bengal Industrial Development Corporation, producing met coke and

electric power.

(www.hooghlymetcoke.com)

Lanka Special Steel: A Sri Lankan unit that manufactures galvanised

wires.

Sila Eastern Company: Established to develop limestone mines in

Thailand, mainly for captive use.

Tata Steel KZN: Setting up a high carbon ferrochrome plant in South

Africa with an annual production capacity of 135,000 tonnes.

Tata NYK: A 50:50 joint venture with Nippon Yusen Kabushiki Kaisha

(NYK Line) to set up a shipping company to handle dry-bulk and

break-bulk cargo.
http://www.tatabluescopesteel.com/http://www.dhamraport.com/http://www.hooghlymetcoke.com/http://www.hooghlymetcoke.com/http://www.dhamraport.com/http://www.tatabluescopesteel.com/


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Tata Steel, a company synonymous with valuestrust, transparency and

total community caretoday, announced the launch of a corporate

campaign 'Values stronger than steel' (VSTS).The campaign is aimed at

reaching out to the Indian citizen to reinforce the image of the company as a

cutting-edge, global steel major which is dedicated towards social and

economic sustainability, green technology and community empowerment.

The core of the campaign is to showcase the organisations involvement and

commitment beyond steel making, while embodying its overarching 'value

system'.

The campaign presents the companys veryown achievers who have paved

their own way to success and recognition, such as Mark Denys, chief, R&D;

Bachendri Pal, head, Tata Steel Adventure Foundation; DeepikaKumari, the

young talent in archery; empowered members of the Tejaswini project like

AshaHansda, amongst others. Everyone has a story to tell and they are thebrand ambassadors for the campaign


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CAPACITY EXPANSION

TATA STEEL has set up an ambitious target to achieve a capacity of

100million tonnes by 2015. Director BalasubramanianMuthuraman stated

that of the 100million tonnes, TATA Steel is planning a 50-50 balance

between greenfield facilities and acquisitions.

The series of acquisitions have already added upto a 21.4million tonne, which

includes Corus production at 18.2million tonne, Natsteel production at

2million tonne and Millennium Steel production at 1.2million tonne. Tata islooking to add another 29million tonnes through the acquisition route.

Tata Steel has lined up a series of greenfield projects in India and Outside

which includes:

6 million tonnes plant in Orissa (India).12 million tonnes plant in Jharkhand (India).

5 million tonnes plant in Chhattisghar (India).

3 million tonnes plant in Iran.

2.4 million tonnes plant in Bangladesh.

5 million tonnes capacity expansion in Jamshedpur (India).

4.5 million tonnes plant in Vietnam.


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STEEL SECTOR IN INDIA and its GROWTH PROSPECTS

Background

The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the

starting point of modern Indian steel industry. Afterwards a few more steel

companies were established namely Mysore Iron and Steel Company, (later

renamed Vivesvaraya Iron & Steel Ltd) in 1923; Steel Corporation of Bengal

(later renamed Martin Burn Ltd and Indian Iron & Steel Ltd) in 1923; and

Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron

and Steel Co) in 1939. All these companies were in the private sector.

Till early 1990s, when economic liberalization reforms were introduced, the

steel industry continued to be under controlled regime, which largely

constituted regulations such as large plant capacities were reserved only for

public sector under capacity control measures; price regulation; for additional

capacity creation producers had to take license from the government; foreigninvestment was restricted; and there were restrictions on imports as well as

exports.

Steel production in India has increased by a compounded annual growth rate

(CAGR) of 8 percent over the period 2002-03 to 2006-07. Going forward,

growth in India is projected to be higher than the world average, as the per

capita consumption of steel in India, at around 46 kg, is well below the world

average (150 kg) and that of developed countries (400 kg). Indian demand is

projected to rise to 200 million tonnes by 2015. Given the strong demand

scenario, most global steel players are into a massive capacity expansion


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mode, either through brownfield or greenfield route. By 2012, the steel

production capacity in India is expected to touch 124 million tonnes and 275

million tonnes by 2020. While greenfield projects are slated to add 28.7

million tonnes, brownfield expansions are estimated to add 40.5 million

tonnes to the existing capacity of 55 million tonnes.

Broadly there are two types of producers in India viz. integrated producers

and secondaryproducers. Integrated steel producers have traditionally

integrated steel units have captive plants for iron ore and coke, which are

main inputs to these units. Currently there are three main integrated

producers of steel namely Steel Authority of India Limited (SAIL), Tata Iron

and Steel Co Ltd (TISCO) and RashtriyaIspat Nigam Ltd (RINL). SAIL

dominates amongst the three owing to its large steel production capacity plant

size.

Secondary producers use steel scrap or sponge iron/direct reduced iron (DRI)

or hot briquetted iron (HBI). It comprises mainly of Electric Arc Furnace(EAF) and Induction Furnace (IF) units, apart from other manufacturing units

like the independent hot and cold rolling units, rerolling units, galvanizing

and tin plating units, sponge iron producers, pig iron producers, etc.

Secondary producers include Essar Steel Ltd., Ispat Industries Ltd., and JSW

Steel Ltd. There are 120 sponge iron producers; 650 mini blast furnaces,

electric arc furnaces, induction furnaces and energy optimizing furnaces; and

1,200 re-rollers in India.

India is currently the fifth largest steel-producing nation in the world with

production of over 54 million tonnes (MT). However, it has a very low


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per capita consumption of steel of around 46 kgs as against an average of

198 kgs of the world. This wide gap in relative steel consumption

indicates that the potential ahead for India to raise its steel consumption is

high.

Being a core sector, steel industry tracks the overall economic growth in

the long term. Also, steel demand, being derived from other sectors like

automobiles, consumer durables and infrastructure, its fortune is

dependent on the growth of these user industries.

The Indian steel sector enjoys advantages of domestic availability of rawmaterials and cheap labour. Iron ore is also available in abundant quantities. This

provides major cost advantage to the domestic steel industry, with companies like

Tata Steel being one of the lowest cost producers in the world

However, Indian steel companies have to bear additional costs pertaining to

capital equipment, power and inefficiencies (low per employee productivity). This

has resulted in the erosion of the edge they would have otherwise enjoyed due to

availability of cheap labour and raw materials.

The government has reinstated basic customs duty on steel imports in order to

protect India from dumping of cheap steel products. It has also provided series of

benefits to auto, housing and real estate sector in order to counter the slowdown in

the economy.


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BUSINESS RISK ANALYSIS

Strong Position In the Indian Market

Capacity expansion is a key strategy for Tata Steel in India, where it derives much of its

competitive advantage as a low cost producer from its access to raw materials and a

skilled workforce at a relatively low cost of labour.

Work is currently under way to increase steelmaking capacity at Jamshedpur to 9.7mtpa

by 2012.

Looking further into the future, the Company plans to continue to increase its capacity

significantly through greenfield developments.

Enhanced Competitiveness through Continuous Improvement.

The Company undertook a series of measures to counter recessionary pressures inFY09 and FY10 to reduce cost


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KEY INITIATIVES

One Company Operating Model

In the process of transforming its operations to directly align its marketing,sales and distribution teams with major industries and sectors

Transforming its supply chain in Europe

Product Development and Marketing

Through research and development initiatives working to capture marketshare in a number of potential high growth areas

Customer First strategy

Cost Saving Initiatives

Implemented, and plans to continue to implement, strategic cost-savingmeasures to improve the long-term competitiveness of its business.

Fit for the Future initiatives for its European operations.

Strong Retail Management

Works closely with retail and wholesale customers to ensure value byscheduling deliveries on a just-in-time basis.

Been able to reduce customers inventory stock and increase their margins.

Raw Material Security

Investments In Mineral Assets Improving Raw Material Security

India: Captive mines

_ Significant amounts of raw material requirements for FY10 sourced from leased

captive mines


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_ Iron Ore: 100%

_ Coal: 49%

_ Significant amount of ferro alloy requirements

NML (Holdco)

_ Canada

_ TS Equity Stake: 27%

NML JV (iron ore)


_ Status: Initiated project development

_ Offtake rights: 100%

_ TSL has an exclusive right to negotiate and settle a proposed transaction in

respect of NMLs LabMag Project

TSCI

_ Ivory Coast

_ Partner: Sodemi


_ Status: Pre-feasibility

RML (Holdco)

_ Australia


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_ TS Equity Stake: ~24%

RivMoz

_ Partner: RML


_ Status: Project development commenced

_ Coking coal

_ Offtake rights: 40% of the coking

Coal

CDJV

_ Australia

_ Partners: Vale, JFE, NSC,Posco

_ TS Equity Stake: 5%_ Offtake rights: 5 to 20%

_ Coking coal


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Diversified Product Offering: Branding and Positioning

Control over Logistics

100% subsidiary of Tata Steel since July 2009.

Five processing units located across India with a processing

capacity of ~2 million tonnes per annum.


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Also engaged in the business of high-end plate fabrication for major equipment

manufacturers including Caterpillar and JBP Group.

Tata Bluescope Steel Limited (TBSL) a 50:50 JV with

Bluescope Steel Limited

Engaged in the business of manufacturing building products

& solutions from metal & color coated steel.

Existing operations include three facilities with a total

installed capacity of 136,000 TPA in Pune, Bhiwandi

and Chennai, to manufactureproducts for the Indian

construction industry

Presently implementing a Greenfield project for setting up of a

metal coating (capacity of 250,000 tpa) and color coating

(150,000 tpa) facilities at Jamshedpur, to be operational by

April 2011.

The project involves capacity expansion to 390,000

Tata Steel holds ~45% equity.

TCIL is commissioning Cold Roll Mill in 2011.


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Steelworks facility in Tarapur, Maharashtra

Wire drawing plants at Indore and Bengaluru

Caters to the Indian construction and automotive segments for

products such as springs, pre-stressed concrete and conductor

Control over Logistics

A 50:50 JV between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK

Line), Japan, currently operating 12 chartered and 2 owned vessels.

Focused on shipping dry bulk and break bulk cargo Trial operations

commenced in September 2010.

Expected to be capable of handling 13 mtpa of coking coal and 6 mtpa of

iron ore.

Partnership between Tata Steel, NYK and Martrade.

Engaged in the business of port operations, cargo handling and other related

Services.


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SWOT ANALYSIS

Strengths

Strong market position

Tata Steel Group, an integrated steel company, is the world's tenth largest steel

company with

capacity of 27.2 million tonnes per annum. It is the world's second most

geographically diversifiedsteel producer, with operations in 26 countries and

commercial presence in more than 50 countries.

Tata Steel India is the largest producer of manganese alloys in India with a market

share of approximately 14%. Tata Steel Europe is Europe's second largest steel

producer with a crude steel productionof more than 14 million tonnes. The group'sstrong market position gives it advantage of scale and increases its bargaining

power.


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Diversified end markets

Tata Steel Group offers a diversified product portfolio comprising flat and long

steel products, agricultural implements, bearings and auto assemblies, tubes, and

wires.

The steel products manufactured by them are used by companies operating in the

following industries: aerospace, automotive, construction, consumer goods, energy

and power, packaging, rail, security and defense, shipbuilding, and engineering.

Diversified end markets avoid dependence of the company on a single segment for

revenues, and shield the company from downturn in one or few segments.

Integrated steel operations in India

The steel business of Tata Steel Group in India is integrated. Majority of its raw

material requirementsare provided through its mining operations in the country.

The iron ore units owned by Tata Steel India are located in Noamundi, Joda,

Katamandi, and

Khondbond in the states of Jharkhand and Orissa.Thecompany owns two collieries

in West Bokaro and Jharia.

These captive mines shield the group from fluctuations in raw material prices. The

integrated steel

operations in India made the group one of the cost-effective steel manufacturers in

the country.The Indian operations being one of the most competitive assets in the

groups business portfolio offer a competitive advantage with a leading market

position in the country.


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Strong research and development (R&D) capabilities

Tata Steel Group operates five research centers : the Ijmuiden Technology Centre(the Netherlands), the SwindonTechnology Centre (the UK), the Teesside

Technology Centre (the UK), the Automotive Engineering Group (the UK), and

the Jamshedpur R&D Centre (India).they are currently workingon various projects

that include economic mineral beneficiation ,new generation high strength steels,

advanced coatings developments, production of Ferro-chrome with less energy,

hydrogen harvesting, developing state-of-the-art thin film photovoltaic systems,

and development of efficient coolants and lubricants for rolling. The group is also

working on reducing CO2emissions across its operations. The company's strong

R&D capabilities provide it with a competitive advantage and help it to improve

the efficiency of its products and processes.

Weaknesses

Dependence on third party suppliers for raw material in Europe

The raw material self-sufficiency for the Tata Steel Group is currently at 25%. The

group plans toincrease self-sufficiency of to 50% in the medium to long term. The

iron ore is imported mainly from Australia, Canada, South Africa, and South

America, and the coal from Australia, Canada, and the US. The European business

is susceptible to the fluctuations in the iron and coal prices.Therefore, dependence

on third party suppliers for raw material in Europe increases the business risk for

the group.


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Dependence on Europe

Europe is the key market for Tata Steel Group. In FY2010, the company generated

about 64% of its revenues from Europe. Minor changes in price levels, periodic

demand growth, or currency rates in specific market areas and regions can affect

their competitive position and financial performance. The companys business is

also exposed to many adverse changes in the policies and regulations related to the

steel sector in the region. Therefore, dependence on Europe for majority of its

revenues increases business risk for the company.

Opportunities

Expansion in India

Indian operations are one of the most competitive assets in the global steel

industry. The group is focusing on to expand the Jamshedpur works capacity to

9.7 million tonnes per annum (mtpa) of crude steel by 201112.This additionalcapacity will allow the company to use its existing resources more efficiently. The

expansion at Jamshedpur will enable Tata Steel Group to reduce the operating

costs over a large volume of production and strengthen its market share in the flat

products segment.The group's expansion of Indian operations would help it to

generate incremental revenues and reduce its dependence on Europe.

Increasing raw material security

The steel production in India is expected to grow to over 120 million tonnes by

2015.


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In January 2010, Tata Steel Group signed a memorandum of understanding with

NMDC for exploring possibilities of a strategic alliance to enhance iron ore

resources. The two companies will ensure smooth supply of raw materials for

future capacity additions explore possibilities of entering into joint ventures for the

purpose of acquisition, exploration, and development of mines, extraction and

processing of minerals, setting up integrated steel plants, and any other business of

mutual interest. These joint ventures will strengthen the long-term raw material

security for Tata Steel India. The joint venture with Nippon Steel Corporation will

address the localization needs of Indian automotive customers for high-grade cold-

rolled steel sheet and meet the needs of thegrowing Indian automotive industry..

According to the Society of Indian Automobile Manufacturers, annual car sales are

projected to increase up to five million vehicles by 2015 and more than nine

million by 2020. The joint venture will enable the Tata Steel Group to capitalize on

this new opportunity of increased demand for automotive in India.

Positive outlook for the global steel market

The global steel market is expected to grow strongly over the next few years.

According to Data monitor, the global steel market had total revenue of $655.6

billion in 2009, representing a compound annual growth rate (CAGR) of 3% for

the period spanning 200509. The European and Asia-Pacific markets will grow

with CAGRs of 20.4% and 13.9%, respectively, over the same period, to reach

respective values of $316.7 billion and $871.3 billion in 2014. Tata Steel Group

being one of the worlds largest steel company is well positioned to benefit fromthe growth in this market.


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Threats

Intense competition

The global steel industry is cyclical, highly competitive, and has historically been

characterized by overcapacity. The company competes with several steel

manufacturers ranging from large diversified enterprises to smaller companies

specializing in particular products in India and internationally. The competition is

based on quality of products, services and delivery capabilities, price,

manufacturing costs, and manufacturing capacity. Its major competitors include

Arcelor Mittal, Nippon Steel, Steel Authority of India, United States Steel, and

ThyssenKrupp. Intense competition in the industry could lead to loss of market

share and put pressure on the group's margins.

Environmental regulations

The business of Tata Steel Group is subject to extensive environmental regulatory

requirements relating to occupational safety and health, environmental protection,

pollution prevention, industrial waste disposal, and management of potentially

toxic substances. With rising awareness of the damage to the environment caused

by industry, especially regarding global warming, regulatory standards have been

continuously tightened in recent years. One of the most important developments in

this area has been the introduction of the Kyoto Protocol for the reduction ofgreenhouse gases. Increasing pressures from the regulatory authorities is expected

to increase the compliance cost of Tata Steel Group.


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Economic or industry downturn

Downturn or weakness in the economy in general or in key industries may

adversely affect Tata Steel Groups customers, which may cause the demand for

the companys products and services to decline Product demand in Tata Steel

Groups customers end markets is based on numerous factors such as interest

rates, general economic conditions, consumer confidence, and other factors beyond

the companys control. Downturn in demand from industries the company serves,

or a decrease in the margins that Tata Steel Group can realize from sales of its

products to customers in any of these industries, could adversely affect the

companys financial results.

TATA STEEL CORPORATE SOCIAL RESPONSIBILITY POLICY

Tata Steel believes that the primary purpose of a business is to improve the

quality of life of people.

Tata Steel will volunteer its resources, to the extent it can reasonably afford, to

sustain and improve a healthy and

prosperous environment and to improve the quality of life of the people of the

areas in which it operates.


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Addressing gender issues

A small percentage of Tata Steels workforce is female at 5%. This rate is higher

among officers. The Company does not differentiate between male and female

employees in terms of remuneration: for the same work or work of similar nature,

male and female employees are paid equally. Remuneration is linked to

responsibility levels and performance. The Company, thus encourages its female

employees to advance their careers with dedicated initiatives both to promote the

personal development and career advancement of female employees and to

facilitate the combination of career with family. For example, 15 days of additional

leave is given to female executives with children aged under five, to enable them to

take care of their children in case of sickness. The Women Empowerment Cell

(WEC) was founded in 2006 in order to examine and address the issues and

concerns of female employees. WEC strives to ensure that female employees in the

Company do not miss out on growth opportunities available. in todays global

scenario.

Tejaswini is one such programme aimed at empowering female employees and

providing development opportunities to them. Women employees who were would

have been declared surplus due to Automation have been trained in skills such as

mobile equipment operation and maintenance, welding and gas cutting, fitting and

rigging and other maintenance related jobs. Continuous support and guidance

from executives and the Union has gradually brought the realisation in these

women that have the power to change their lives.


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Main features of Tejaswini

Today Tejaswinis are working shoulder to shoulder with their male counterparts in

the areas of maintenance and mobile equipment operations; for example,

locomotives are now driven by female operators, a women operator manages one

of the heaviest bulldozers to move raw materials to the steel plant, etc.

This empowerment has lifted the women from the unskilled levels of the

organisation to the core working group of skilled workers.

Tata Steel in the past few years is the introduction of a Female Trade Apprenticecourse. Selected candidates are trained in various trades such as fitter, machinist

(metal cutting) and electrician. On successfully completing the course, these young

women are deputed to the various departments in the Works in Cluster-C, which is

equivalentto a Junior Technician post.

Educational services

A number of Tata Steels activities are designed to support these goals:

- Early Childhood Education: Interventions in early childhood education are vital

preparatory grounds to formal schooling in both rural and urban areas. In the urban

areas, out of about 570 students who were enrolled in 12 centres, Tata Steel

successfully integrated more than 380 students into formal schools. In rural areas

the Company had a 100% success rate last year with 550 children from 22 centres

moving into formal education.


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- Camp School: To help underprivileged girls enter the mainstream, Tata Steel

initiated a camp school programme with the help of Jharkhand Education Project.

The nine-month intensive learning course is offered to students aged 9-14 to

complete their education up to 5th standard and allow them to qualify for

admission to class VI. In 2012-13, 200 girls enrolled in the two camp schools.-

Schools: The Company supports many schools in its areas of operation. For

example twelve primary schools have been identified

for support near Dhamra Port in 2012-13. Twenty-four teachers will provide

academic support to 480 students.

Customer satisfaction and building relationships

The key processes for determining customer satisfaction and building relationships

for retention are undertaken through the Manage Customer Accounts and

Measure Customer Satisfaction processes. The determination of customersatisfaction is established by conducting annual surveys, using a segment-wise

approach, with

products/service attributes as parameters. The surveys are conducted by external

agencies (M/s A C Nielsen, TNS for Year 2008). The overall customer satisfaction

is captured through a designed questionnaire - both quantitative and qualitative -

during the field survey. The satisfaction index is a relative score of the Companysoverall score over the nearest competitor.


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In 2008, the CSI Index got impacted due to lower score in Delivery attributes. Due

to the downturn, customers were more frequentlyrevising their monthly indent and

in turn the Company had to re-schedule its despatch plans more often. Owing to

this, the overalldelivery performance took a hit. In contrast, the score was higher in

earlier years when due to higher demand, availability was an issue mm. at the

market place and Tata Steel held its prices. Further on, corrective action was taken

by launching SFS initiative with importantcustomers for improving the delivery

compliance.

OCIAL RESPONSIBILITY INITIATIVES IN PROCUREMENT

One of the important business drivers is procurement of supplies and services from

local vendors. The proportionspending on locally based vendors (ie vendors with

an address in Jharkhand state) during 2012-13 was approximately 25% of Tata

Steels domestic buy volume. benefit from the economic opportunities that its

activities offer. Therefore local candidates for employment are considered

favourably if they possess the required qualification, skills and talent. The

Company's Affirmative Action Policy helps to ensure that scheduled castes and

tribal communities are given equal opportunity in employment and supply chain


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opportunities. Up-skilling programmes help local communities to increase their

employability.

Social responsibility in procurement

In accordance with its Affirmative Action Policy, Tata Steel encourages business

entrepreneurs from socially disadvantaged communities and includes them in its

supply chain on the basis of equal merit. As a social responsibility initiative, social

organisations and small-scale local industries are given preference when placing

orders, whenever they are able to supply the Company to a standard whichotherwise would be serviced by larger units. For example, many items are sourced

from local NGOs such as AIWC, SevaSadan, School of Hope and BalVihar. In

order to assist social organisations and small-scale industry units to supply the

Company, raw materials are issued oun a conversion basis for the supply o f

finished goods, spares, and consumables. This reduces the burden of working

capital management of these small units.

Only local vendors are engaged for the delivery of services, except for the tasks

requiring a higher degree of specialisation and sophistication and a skill set which

is not available locally.


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TATA STEEL ENVIRONMENTAL POLICY

Tata Steels Environmental responsibilities are driven by our commitment topreserve the environment and areintegral to the way we do business.

1. We are committed to the efficient use of natural resources & energy; reducing

and preventing pollution;promoting waste avoidance and recycling measures and

product stewardship.

We will identify, assess and manage our environmental impact.

We will regularly monitor, review & report publicly our environmental

performance.

We shall develop & rehabilitate abandoned sites through afforestation,

landscaping and shall protect & preservethe biodiversity in the areas of our

operations.

We will enhance awareness, skill and competence of our employees and

contractors so as to enable them todemonstrate their involvement, responsibilityl

and accountability for sound environmental performance.

2. We are committed to continual improvement in our environmental performance.

We will set objectives-targets, develop, implement and maintain management

standards and systems, and gobeyond compliance with relevant industry standards,

legal and othecc7vb.'.pr requirements.

3. We will truly succeed when we sustain our environmental achievement and are

valued by the communities in which we work.


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FINANCIAL OVERVIEW

Quarterly Performance

Indian Operations

Third-quarter deliveries at 1.637 million tonnes were nearly 3% higher compared

to the corresponding period of last year and about 1% lower than the second

(September) quarter of FY11.

The pricing environment in India in the third quarter was mixed, with prices for

flat products being marginally lower compared to the second quarter, while prices

for some long products increased European Operations Production and deliveries

in the third quarter of FY11 were in line with the first half of FY11 Higher raw

material prices and reduced apparent demand due to seasonal slowdown, amongst

other factors, adversely affected margins

Group-wide performance

Volume of steel products sold declined marginally, and net sales expected to be

flat compared to the second quarter. Operating results expected to decline

somewhat in comparison to the second quarter due to increased raw material

prices.


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Accounting quality:

1.1 Basis of preparation of Financial Statements

The Financial Statements have been prepared in accordance with Indian Generally

Accepted Accounting Principles (GAAP) under the historical cost convention on

the accrual basis, except where specified otherwise and in case of significant

uncertainties. GAAP comprises mandatory accounting standards prescribed by

Companies (Accounting Standards) Amendment Rules, 2006, provisions of the

Companies Act, 1956 and the guidelines issued by Securities and Exchange Board

of India.

1.2 Use of Estimates

Estimates and Assumptions used in the preparation of the financial statements are

based on managements evaluation of the relevant facts and circumstances as of

date of the financial Statements, which may differ from the actual results at a

subsequent date.

1.3 Fixed Assets

a. Fixed assets, except leasehold land, are stated at cost of acquisition or

construction less accumulated depreciation. Cost includes the purchase price and

all other attributable costs incurred for bringing the asset to its working condition

for intended use. Leasehold land is valued at cost less amount written off.


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b. Expenditure on New Projects and Expenditure during Construction:

In case of new projects, expenditure incurred including interest on borrowings and

financing costs of specific loans, prior to commencement of commercialproduction is being capitalized to the cost of assets.

1.4 Depreciation and Amortisation

a. Freehold land is not depreciated.

b. Leasehold land is amortised over the period of lease.

c. Depreciation on Electrical Installation and Aircraft has been provided on

written down value basis at the rates and in the manner specified in Schedule

XIV to the Companies Act, 1956 from the beginning of the month in which

addition is made.

1.5 Investments

a. Long term investments are stated at cost less permanent diminution in value,

if any.

b. Current investments mainly comprising investments in mutual funds are

stated at cost, adjusted for diminution, if any.

1.6 Inventories

a. Stores and spares, raw materials and components are valued at cost or net

realizable value whichever is lower. Cost includes all cost of purchase and


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incidental expenses incurred in bringing the inventories to their present

location and condition. Cost is ascertained using weighted average method.

b. Work-in-process including finished components and finished goods are

valued at cost or realizable value whichever is lower. Cost includes direct

materials, labour costs and a proportion of manufacturing overheads based

on the normal operating capacity. Finished goods lying in the factory

premises, branches and depots are valued inclusive of excise duty.

c. Materials-in-transit and materials in bonded warehouse is valued at actual

cost upto the date of balance sheet. Net realizable value is the estimated

selling price in the ordinary course of business, less estimated costs of

completion and the estimated costs necessary to make the sale.


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PROFTABILITY RATIOS

March11 March10 March09

Operating profit

margin

38.11 35.7 37.68

Profit before

Interest and Tax

Margin

33.82 30.95 33.27

Gross profit

Margin

34.2 31.36 33.69

Net profit Margin 23.16 19.96 21.09

Return On Capital

Employed

13.48 13.06 15.01

Return On netWorth

14.22 13.45 21.10

Return On Long

Term funds

13.54 13.06 15.21

1. Operating profit marginFormula: Operating Profit/Sales

Significance: Indicators of operating performance of business

Analysis: In the financial year 2009-10 , there is a decrease in

operating profit margin even though it is evident that there

is an increase in sales. This is because of a significant

increase in total expenses. In the year 08-09 the total

expenses amounted to Rs. 15182.34 Cr whereas in the year09-10 the same thing amounted to Rs.16069.89 Cr, a sale of

Rs.24315.77 Cr and Rs.25021.98 Cr respectively. The

increase in expenditure is proportionately more than sales.

The increase in the operating expenses is basically


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contributed by an increase in power and fuel cost,

employee cost, manufacturing expenses.

In the financial year 10-11 the sales grew with a

considerate amount, pushing the operating profit margin

upto an amount greater than what it was in 08-09. the

expense incurred by the company in operations did not

increase much as compared to the sales. The increase in

raw material cost and other manufacturing expenses was

not as evident as the increase in sales and thus the operating

profit increased.

The operating cost includes the cost of direct material,

direct labor, and other overheads, viz, factory, office or

selling, etc.

2. Gross Profit MarginFormula: Gross Profit/ Sales

Significance: Indicator of basic profitability

Analysis: In the financial year 09-10, the contribution towards gross

profit was mainly due to a phenomenal increase in the other

incomes, from the previous financial year. Even though it

was evident that sales increased but the total expenses

increase was more than increase in sales. This lead to a


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decrease in the gross profit margin.

In the financial year 10-11 the main contributor towards

gross profit was sales. The other incomes decreased but

the decrease was not by a considerable amount, so there

was an increase in gross profit.

3. Net Profit margin

Formula: Net Profit/Sales

Significance: Indicator of overall profitability

This ratio indicates the Net margin on a sale of Rs.100.This

ratio helps in determining theefficiency with which affairs

of the business are being managed. An increase in the ratio

over the previous period indicates improvement in the

operational efficiency of the business. Theratio is thus on

effective measure to check the profitability of business.

However, constantincrease in the above ratio after year is a

definite indication of improving conditions of the business.

Analysis: Decrease in the net profit of the company was due to an

increase in Interest and Depreciation. It was seen that even

after a fall in EBT as compared to the previous financialyear(08-09) the company had to make more payment

towards Income Tax. The increase in depreciation can be

attributed to an increase in the gross block of assets,

whereas the interest increase may be due to pre-payment of


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loans.

In the next financial year 10-11 the, unsecured loans have

risen whereas the secured loans have fallen, which have

attributed to a fall in interest payments, from the previous

financial year.

RATIO Industry

TATA

Steel SAIL JSW

Net Profit

Margin 11.09 23.16 11.03 8.64

4. Return On Capital Employed

Formula: Operating Profit/capital Employed

Significance: Overall profitability of the business on the total funds

employed. If ROCE>Interest Rate, use of debt funds is

justified.

0

5

10

15

20

25

Industry TATA Steel SAIL JSW

Net Profit Margin

Net Profit Margin


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It is also called as Return on Capital Employed. It

indicates the percentage of return on thetotal capital

employed in the business. The term operating profit

means profit before interest and tax and the term capital

employed means sum-total of long term funds employed

in the business. i.e. Share capital +Reserve and surplus +

long term loans[non business assets +fictitious assets]

Analysis: In the financial year 09-10 there was a significant drop inthe Earning per share as compared to the previous year,

whereas in the next financial year there was a jump in the

earnings per share. The company's equity share capital

increased in both the financial years, which lead to a fall in

return on net worth in 09-10 and then an increase in return

on net worth in the next financial year.

RATIO Industry

TATA

Steel SAIL JSW

Return on Capital

Employed 13.35 13.48 13.21 11.73


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5. Return On net Worth

Formula: Equity Earnings/Shareholders funds

Significance: Indicatives profitability of Equity Funds/ Owner funds

invested in the business

Analysis: In the financial year 09-10 there was a significant drop in

the Earning per share as compared to the previous year,

whereas in the next financial year there was a jump in the

earnings per share. The company's equity share capital

increased in both the financial years, which lead to a fall in

return on net worth in 09-10 and then an increase in returnon net worth in the next financial year.

10.5

11

11.5

12

12.5

13

13.5

14


Return on Capital Employed

Return on Capital Employed


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LIQUITDITY AND SOLVENCY RATIO


Current ratio 1.78 1.12 .91

Quick ratio 1.45 .76 .57Debt Equity ratio .59 .68 1.34

Long Term debt

Equity Ratio

.58 .68 1.31

6. Current ratio

Formula: Current Assets/Current Liabilities

Significance: Ability to repay short term commitments promptly. (i.e.

Ideal Ratio 2:1). High ratio indicates existence of idle

current assets.

An indication of a company's ability to meet short-term

debt obligations; the higher the ratio, the more liquid the

company is. Current ratio is equal to current assets divided

by current liabilities. If the current assets of a company are

more than twice the current liabilities, then that company is

generally considered to have good short-term financial

strength. If current liabilities exceed current assets, then the

company may have problems meeting its short-termobligations.

Analysis: There is a constant increase in the current ratio, which can

be attributed to a constant increase in current assets.


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Although the current liabilities have also been increasing

but the amount is not that considerable as compared to an

increase in current assets. The bases for the increase in

current assets have been formed by an increase in loans and

advances made by the company and the fixed deposits by

the company. In the financial year 09-10 we have noticed a

fall in the inventory level, whereas in the year 10-11

inventory level has increased, in comparison to the

financial year 08-09.

RATIO Industry

TATA

Steel SAIL JSW

Current

ratio 1.12 1.78 1.21 0.78

0

0.5

1

1.5

2


Current ratio

Current ratio


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I NDUSTRY, TISCO AND COMPETITOR ANALYSIS:

The current ratio of industry is 1.12 i.e. more than 1, thus current assets are

more than the current liabilities , however the TISCO current ratio is 1.78

which is more than the industry ratio .TISCO current ratio is highest among

its competitors.Thus TISCO is in a better position than all its competitors in

current scenario.

7. Quick ratio

Formula: Quick assets/quick liabilities

Significance: Ability to meet immediate liabilities. Ideal ratio is 1.33:1

Liquid ratio is also known as quick or Acid test ratio.

Liquid assets refer to assets which are quickly convertible

into cash. Current Assets other stock and prepaid expenses

are considered as quick assets. The ideal liquid ratio

accepted norm for liquid ratio 1.

Analysis: The pattern shown by quick ratio is same as that shown by

the Current ratio. This is because of a constant increase in

all the current assets other than Inventories. This further

signifies that the assets are as good as cash and can be

converted into the same in a very short span of time.


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8. Debt Equity ratio

Formula: Debt/Equity

Significance: Indicates the relationship between debt and equity. Ideal

ratio is 2:1.

DebtEquity ratio also known as External- Internal Equity

Ratio is calculated to measure the relative claims of

outsiders and the owners against the firms assets.

Outsiders fund includes all debts/liabilities to outsiders,

whether long term or short term or whatever in the form of

debentures bonds, mortgages or bills. The shareholders

fund consist of equity share capital, preference share capital

, capital reserves, revenue reserves, and reserves

representing accumulated profits and surpluses.

Analysis: There is a constant decrease in the debt equity ratio. This is

basically attributed because of an increase in the equity.

Too much of debt was ruled out and therefore the debt

equity ratio kept falling. There was also a marginal increase

in equity.

RATIO Industry

TATA

Steel SAIL JSW

Debt

Equity

Ratio 0.86 0.59 0.54 0.74


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Industry: 0.86The trend in industry says that ratio should be approximately 86% or

debts should be 86% of the equity. The ratio for TISCO is 59% which

is safe as compared to that of the industry .

DEBT COVERAGE RATIO


Interest Coverage

ratio

8.52 5.78 7.35

9. Interest Coverage ratio

Formula: PBIT/ Interest

Significance: Indicates ability to meet interest obligation of the currentyear, should generally be greater than 1.

This ratio is used to test the debt servicing capacity of afirm.

0

0.2

0.4

0.6

0.8

1


Debt Equity Ratio

Debt Equity Ratio


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RATIO Industry

TATA

Steel SAIL JSW

Interest Coverage

Ratio 7.42 6.14 15.93 4.44

1.I nterest MANAGEMENT coverage Ratio (TISCO) 6.14The TISCO is in position to give interest as much as 6.14 times. It does

not mean the company is given the interest 6.14 times, but the

profitability is so high that TISCO can give interest 6.14 times than

they what actual interest is.

Industry: 7.42

The trend of the industry is about 7.42 times, whereas the position of

company is 17.25% less than the capacity of the industry. The TISCO

is having capacity of 6.14 times whereas the capacity of the industry is

7.42 times.

0

5

10

15

20


Interest Coverage Ratio

Interest Coverage Ratio


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2. EFFICIENY RATIO


Inventory

Turnover Ratio

9.85 10.90 9.36

Debtor Turnover

Ratio

67.93 46.58 41.29

Investments

Turnover Ratio

9.85 10.90 9.36

Fixed Assets

Turnover Ratio

1.29 1.12 1.22

Total AssetTurnover Ratio .38 .40 .43

10. Inventory Turnover Ratio

Formula: Cost of Goods Sold/ Average Stock

Significance: Indicates how fast inventory is used/sold. High T/O Ratio

indicates fast moving material while low ratio may mean

dead or excessive stock.

RATIO IndustryTATASteel SAIL JSW

Inventory Turnover

Ratio 7.45 9.85 4.16 7.1


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I NVENTORY TURNOVER RATIO

TATA IRON AND STEEL COMPANY Ltd. 9.85%The latest data shows the current inventory turnover ratio to be 9.85 whichmeans that the inventory is replaced with new supply about 9.85 times in ayear.

I ndustry 7.45%

The inventory turnover ratio for the whole of engine producing industry is7.45. So we can see that in comparison to TISCO the ratio is low and theinventory is replaced 7.45 times a year.

11. Debtor Turnover Ratio

Formula: Credit Sales/average accounts receivable.

Significance: Indicates the speed of collection of credit sales/debtors.

RATIO Industry

TATA

Steel SAIL JSW

Debtors

Turnover 35.58 67.93 11.13 32.95

0

5

10

15


Inventory Turnover Ratio

Inventory Turnover Ratio


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Ratio

TISCO

The data for TISCO shows the debtors turnover ratio to be 67.93. This shows

that whatever debt the company gives is recovered in nearly 5 days.

Industry

The debtors turnover ratio for the industry producing engines is pegged at

35.58 which mean that to recover a debt the company takes nearly 10 days. If

we compare this to TISCO, TISCO takes 5 days to do so.

0

10

20

30

40

50

60

70

80


Debtors Turnover Ratio

Debtors Turnover Ratio


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12. Fixed assets Turnover Ratio

Formula: Turnover/Net Fixed Assets

Significance: Ability to generate sales per rupee of Fixed Assets.

Analysis: In the financial year 09-10 there was a fall in the ratio which

affects the profitability of the company in a negative way. The

sharp increase in the ratio in the financial year 10-11 has

contributed to the jump in the profit of the company.

13. Total Asset Turnover Ratio

Formula: Turnover/Total Assets

Significance: Ability to generate sales per rupee of Total Assets.

Analysis: There is a constant decrease, this effects the profitability of the

company as the company is not able to utilize its assets to the

best possible manner.

CASH FLOW INDICATOR RATIO


Dividend yield

ratio

19.04 16.64 27.15

Cash Earning

Retention ratio

81.05 83.92 76.03

Price Earnings

Ratio

8.2 10.5 2.97


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company. A comparison of earning per share of the

company with another will also help in deciding whether

the equity share capital is being effectively used or not. It

also helps in estimating the companys capacity to pay

dividend to its equity shareholders.

RATIO Industry

TATA

Steel SAIL JSW

Earnings Per

Share 43.09 71.58 11.87 88.87

EPS of TISCO: 71.58

EPS of a company represents that how much profit was generated on a

per share basis which is 71 .58. this can be interpreted as comparatively

higher return on per share. As the peer group company, SAIL provided

much lower earnings per share this annual year.

0

20

40

60

80

100


Earning Per Share

Earning Per Share


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COST OF EQUITY BY CAPM APPROACH

Ke= Risk Free return+ (Beta(Market Return-Risk

Free Return))

Risk free return is 8.33%1Beta 0.72%2And return of the company 30.89%3

So ke= 8.33 + (0.72(30.89-8.33))The cost of capital is = 24.57%Book value of the company is crores

2.COST OF DEBTS

Total Debt= Rs. 30674.48 (in Crores)

Total Interest Payment = Rs. 1686.27 (in Crores)

Tax Rate= 30%

1www.rbi.org.in

2www.tatasteel.com

3Drawn from the data of 5last years


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Total Interest Payment = Rs. 1686.27 (in Crores)

Total Debt= Rs.30674.48 (in Crores)

Therefore, Ki = 5.50%

Tax Rate= 30%

Kd = 3.85%

COST OF RETAINED EARNING

The cost of retained earnings is same as of cost of equity.

This is 16.5%

Retained earnings is equal to Rs. 47307.02crore

So KRis 47307.02* 0.1645 = 7782.03

TOTAL COST OF CAPITAL

Cost of equity = 16.45Cost of Debt = 3.85Cost of Retained = 16.45

Total = 11.55%


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BIBLIOGRAPHY

1. http://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balance

2. http://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflow

3. http://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearly

4. http://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profit

5. http://finance.yahoo.com/q?s=TATASTEEL.NS6. http://www.moneycontrol.com/news/results/tata-steel-q1-net-

triplesriversdale-stake-sale_576029.html

7. http://www.moneycontrol.com/financials/jswsteel/ratios/JSW018. http://www.moneycontrol.com/financials/steelauthorityindia/ratios/SAI9. http://www.moneycontrol.com/competition/tatasteel/comparison/TIS
http://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://finance.yahoo.com/q?s=TATASTEEL.NShttp://finance.yahoo.com/q?s=TATASTEEL.NShttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/financials/jswsteel/ratios/JSW01http://www.moneycontrol.com/financials/jswsteel/ratios/JSW01http://www.moneycontrol.com/financials/steelauthorityindia/ratios/SAIhttp://www.moneycontrol.com/financials/steelauthorityindia/ratios/SAIhttp://www.moneycontrol.com/competition/tatasteel/comparison/TIShttp://www.moneycontrol.com/competition/tatasteel/comparison/TIShttp://www.moneycontrol.com/competition/tatasteel/comparison/TIShttp://www.moneycontrol.com/financials/steelauthorityindia/ratios/SAIhttp://www.moneycontrol.com/financials/jswsteel/ratios/JSW01http://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://www.moneycontrol.com/news/results/tata-steel-q1-net-triplesriversdale-stake-sale_576029.htmlhttp://finance.yahoo.com/q?s=TATASTEEL.NShttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=profithttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=yearlyhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=cashflowhttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balancehttp://indiaearnings.moneycontrol.com/sub_india/financialreports.php?sc_did=TIS&type=balance

116341794 TISCO Ratio Analysis

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