ECONOMIC ANALYSIS
GDP
Inflation
Fiscal Deficit
Interest Rates
Monetary Policy
INDUSTRY ANALYSIS
Banking
Demand ProspectsUntapped Rural Market Strong Village Loan Demand Congresses Pledge for Development
Policy of GovernmentRs 100 cr one-time grant to expand
banks in unbanked areas Banks and insurance firms to remain in public sector IIFCL to re-finance commercial bank loans up to 60 per cent in critical objects through PPP to tune of Rs 1,00,000 cr
Product Differentiation Central Bank Public Sector Banks Private Sector BanksOld generation private banks New generation private banks Foreign banks operating in India Scheduled co-operative banks Non-scheduled banks
Co-Operative BanksState co-operative Banks Central co-operative banks Primary Agriculture Credit Societies
Development Banks/ Financial Institutions
Competition
IDFC Industrial Development Finance Company
COMPANY ANALYSIS
Growth Of The Company
Financial Ratios
Quality of Management
Share Price Trend
INDUSTRY ANAYLYSIS
STEEL
PURPOSEThe purpose of industry analysis is to review
prevailing conditions within specific industry and its segments.The company's industry obviously influences
the outlook for the company.
It is often said that a weak stock in a strong industry is preferable to a strong stock in a weak industry.
Market ScenarioAfter liberalization, there have been no
shortages of iron and steel materials in the country. Apparent consumption of finished (carbon) steel increased from 14.84 Million Tonnes in 1991-92 to 43.471 million tonnes in 200607. China has been an important export destination for Indian steel. The steel industry is buoyant due to strong growth in demand particularly by the demand for steel in China.
Government Policy on Steel IndustryNew Industrial Policy, July1991 - Iron and
Steel industry, removed from the public sector and exempted from the provisions of compulsory licensing.From 24.5.92, Iron and Steel industry has
been included in the list of `high priority' industries for automatic approval for foreign equity investment upto 51%. This limit has been recently increased to 74%.
Iron & Steel are freely exportable
Budget MeasuresSteel melting scrap will be exempt from
customs dutyExcise duty reduction in select segments of
automobile manufacturingContinuation of power sector reforms Dividend tax paid by parent company
allowed to be set off against the same paid by its subsidiary
Budget ImpactReduction in customs duty on scrap will help
steel manufacturers that use the electric arc furnace route for steel manufacturing lower their costs.auto manufacturers pass on the reduced
excise benefits in the form of lower prices, it helps spur demand for automobiles, which in turn will drive steel demand.
Increased investment in the power sector
will also help boost demand for steel
Company ImpactReduction in excise duties on automobiles
will help companies that supply steel to auto makers. Key beneficiary would be Tata Steel.Players that supply steel to the power
equipment companies like SAIL and JSW Steel will benefit from increased investments in the power sector.
Better access to coal mines will be a positive
for all the players that do not have their own captive mines
SWOT AnalysisStrengths Availability of iron ore and coal Low labour wage rates Abundance of quality manpower Mature production base Weaknesses Unscientific mining Low productivity Coking coal import dependence Low R&D investments High cost of debt Inadequate infrastructure
SWOT AnalysisOpportunities Unexplored rural market Growing domestic demand Exports Consolidation Threats China becoming net exporter Protectionism in the West Dumping by competitors
ROBUST SECTOR WISE GROWTHAUTOMOBILE CAPITAL GOODS
CONSUMER DURABLES
CONSTRUCTION
Source: Tata Steel
INCREASE INVESTMENT IN INFRASTRUCTURE SEGMENT India has potential to absorb US $ 150 billion in next five years in the infrastructure sector.
28
Source: Ministry of Commerce, Govt. of India
6 MAJOR PRODUCERS ACCOUNT FOR 66% OF TOTAL FINISHED PRODUCTION
29
All fig in million tonnes Source : JPC, Team Analysis
INDIA WOULD EMERGE AS A GLOBAL HUB
India to play the Key role in Steel Market dynamics30
COMPANY ANALYSIS TATA STEAL
Profit & Loss A/C
Balance Sheet
Ratios
Share Price Trend
Key Management Personnel
BackgroundTata Steel was earlier known as Tata Iron &
Steel Company or TISCO.It was established in 1907. It represents the country's single largest, integrated steel plant in the private sector.Company has a wide product portfolio, which
includes flat and long steel, tubes, bearings, Ferro-alloys and minerals as well as cargo handling services. Tata Steel ranks 34th in the world in size.
Turnover for 2007Tata Steel India
- Rs 472 crore Tata Steel UK - Rs 23,867 crore Tata Steel Thailand - Rs 554 crore Group turnover registered an increase of Rs 2,157 crore.The increase in Tata Steels India operations
was primarily due to increase in prices , whereas the rise in Natsteel and Tata Steel Thailand was attributed to increase in price
How fast is the company growing ?Companies are judged by their sales and
earnings growth rates than on the absolute value of their sales and earnings.Profit 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1 ,500.00 1 ,000.00 500.00 0.00 4,222.1 5 3,474.1 3,506.38 6
1 ,746.22 1 2.31 ,01
2003
2004
2005
2006
2007
Sales Chart25,000.00 20,000.00 1 5,000.00 1 0,000.00 5,000.00 0.00 2003 2004 2005 Y ear 2006 2007 9,793.27 1 ,920.96 1 7,1 1 5,871 .08 1 40.24
1 9,757.80
Share Holding
26%
18%
Foreign Holdings Govt. / Financial Institutions Corporate Bodies(not covered above) Directors and their Relatives Other including Indian Public
22%
30%
4%
CONCLUSION Sales, EPS, Book value, Net Profit Ratio are
increased in 2007 as compared to 2006 and 2005. BUT Company should concentrate on PE Ratio because it has decreased in 2007. The debt-equity ratio is decreased which is good
sign and under controlled which is good sign.
The investor of this company should buy and hold
the shares of this company for long period because this company can give good dividend and investor can get arbitrage profit for short period of time.
