Introduction

Backed by 100 glorious

steel making, Tata
top ten steel producers
an existing annual

years of experience in
Steel is among the
in the world with
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 steel producer and a Fortune 500
Company.
Tata Steel has a balanced global presence in over 50 developed European
and fast growing Asian markets, with manufacturing units in 26 countries.
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`s Jamshedpur (India) Works has a
crude steel production capacity of 6.8 MTPA
which is slated to increase to 10 MTPA by
2010.
The Company also has proposed three
Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh
in India with additional capacity of 23 MTPA and a Greenfield project in
Vietnam.

Through investments in Corus, Millennium Steel (renamed Tata Steel

Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a

manufacturing and marketing network in Europe, South East Asia and the
pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in
2008, has operations in the UK, the Netherlands, Germany, France, Norway
and Belgium.
Tata Steel Thailand is the largest producer of long steel products in Thailand,
with a manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5
MTPA mini blast furnace project in Thailand. NatSteel Holdings produces
about 2 MTPA of steel products across its regional operations in seven
countries.
Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has
also entered the steel building and construction applications market.
The iron ore mines and collieries in India give the Company a distinct
advantage in raw material sourcing. Tata Steel is also striving towards raw
materials security through joint ventures in Thailand, Australia, Mozambique,
Ivory Coast (West Africa) and Oman. Tata Steel has signed an agreement
with Steel Authority of India Limited to establish a 50:50 joint venture
company for coal mining in India. Also, Tata Steel has bought 19.9% stake in
New Millennium Capital Corporation, Canada for iron ore mining.
Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferrochrome plant in South Africa and setting up of a deep-sea port in coastal
Orissa are integral to the Growth and Globalisation objective of Tata Steel.
Tata Steels vision is to be the global steel industry benchmark for Value
Creation and Corporate Citizenship.
Tata Steel India is the first integrated steel company in the world, outside
Japan, to be awarded the Deming Application Prize 2008 for excellence in
Total Quality Management.

THE TATA GROUP

Before we discuss at the length of the company, we would like to throw
some light on the Tata Group of companies in present day India.

Tata Steel is one of the ventures of the Tat Group but it has many successful
companies under one umbrella. Some of the other notable Tata concerns and
their lines of businesses are shown below.

VISION OF THE COMPANY

COMPETITION
Tata Steel is undoubtedly the best steelmaker in the wrold. It produces the
cheapest and best quality of steel in the world. In the last seven years the
position of Tata Steel has reduced drastically because of Corus acquisition.
The results of the acquistion will be profitable after 2010.

MAJOR LOCAL STEEL PLAYERS

MANAGEMENT EFFICIENCY
The structure of the Board was recently modified in 2007 post the acquisition
of Corus acquisition to suitable incorporate changes which will lead to the
adequate realization of synergies from the deal within the given stipulated
time frame to reap the benefits from the much talked about and criticized
deal.

BOARD
DIRECTORS

OF

14 Board of Directors
8 independent, 6 non independent
No of independent directors is more than one third of total number of
directors.

LEGAL ENVIRONMENT
Global operations require compliance with multiple and complex laws and
regulations. In countries where the political systems are still evolving,
frequent changes in economic policy are common, investment guarantees
and property rights are secured, any unforeseen changes can expose the

Groups businesses to uncertainties. The Group operations are primarily in

countries where investment flows are freer and where there are established
political, business and legal frameworks in place. There is an established due
process to independently evaluate country risk exposures for investments in
emerging economies

TATA STEEL PRODUCTS

Financing and Liquidity Strategy of the Tata Steel Group in

response to the global economic crisis.
They have responded by increasing production post commissioning of the
1.8 mtpa programme and focusing on performance improvement to
neutralise the effect of reduced realisations, whereas in South East Asia, the
focus is on working capital management and cost reduction. In Europe we
have cut production by idling blast furnaces at three sites in order to align
production with demand as a part of the Weathering the Storm initiative
which resulted in cash savings of 712 million (US$1.02 billion) in the second
half of the financial year 2008-09. Further, these efforts have been
supplemented by a strategic restructuring initiative launched as Fit for
Future programme which when completed, will result in improvement of the
operating profit of around 200 million annually. In all sites across the Group,
the journey of Continuous Improvement stays on course
Recognizing the uncertain financing environment and the fragile state of the
global banking industry, they focussed on both internal and external levers.
Internally as an organisation, the company placed primary importance on
conserving liquidity through reduced spend management and sharp
reduction in working capital levels. They also focussed on improvement in
the productivity levels and reduction in overheads. On capital expenditure,
they have re-prioritised on the most value creating and critical projects and
reworked the capital planning strategy.
On the external front, the company 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 year end was
approximately US$1.9 billion of cash and cash equivalents and undrawn
lines.

THE EIC APPROACH

1. ECONOMY
The steel industry has traditionally been very sensitive to the changing
economic conditions. The recent economic meltdown has created several
challenges which when addressed appropriately, can be countered to
positive eff ect. However, unlike the previous global recessions, this time
around, all the countries have come together and taken action. Additionally,
there has been a tremendous amount of governmental response to the
global depression which is helping to bring about a possible easing of the
situation.
The global downturn also had a major effect on various industries dependant
on steel. Major contraction in the construction projects, automobiles, white
goods demand from the third quarter of 2008-09 resulted in the global
demand for steel dropping by 21% compared to the level consumed in the
same quarter of the previous year.
The demand for steel declined by 26% in the UK and Europe in the third
quarter compared to a year earlier and after a further contraction in the
fourth quarter, demand had fallen by 57% in the UK and 44% in Europe
compared with a year ago. 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.
2. INDUSTRY
Some of the major sectors are:

Indian

steel

production has increased by 5 million tones every year. The economic

reforms initiated by the government since 1991 have added new dimensions
to industrial growth in general and steel industry in particular. Steel industry
has been removed from the list of industries reserved for the public sector.
Automatic approval of foreign equity investment up to 100% is now
available. Price and distribution controls have been removed from January
1992, with a view to make the steel industry efficient and competitive.
Company
The year 2008-09 was a historical one epitomised by the acute global
financial imbalance which initially appeared to have spared India only to
impact the markets adversely as the year rolled on. The global economic
slowdown has impacted the steel sector as well. Amidst the turmoil in the
global marketplace, Jamshedpur Works performed remarkably creating many
records on the way.
Indian operations witnessed a less pronounced drop in demand of 11% in the
third quarter, reflecting the reduced activity in infrastructure and commercial
vehicles. Steel is required by various industries as an important raw material
constituent.
Tata Steel has taken aggressive steps to meet the challenges of these
difficult times through major initiatives in cost reduction, process
improvement and production rationalisation. The highest priority is being
given to expanding steel producing capacity in Jamshedpur, and ensuring
raw material security for the European operations which do not have captive

iron ore and coal resources. The Tata Steel Group has developed a pipeline of
high quality projects, which will be executed, though we will re-phase the
sequence. Projects like the 3 million tone expansion in Jamshedpur, the
proposed steel plant in Orissa and raw material projects in Mozambique,
South Africa and Canada are key drivers of our future value creation.

FinancialAna
lysis

Balance Sheet Analysis

ASSET SIDE

Tata Steel
1
0.8
0.6
0.4
0.2
0
2006-07

2007-08

2008- 09

Capital budgeting
The ratio required to calculate capital budgeting is mainly Debt-Equity ratio.
Tata steel has increasing debts. So the company has gone in for debt
financing and thus, the company is having a comparatively higher borrowing
from the market. Basically the Debt-Equity ratio has to be as high as possible
so that the company has lower borrowings and has to pay less interest.
Tata steel has increasing debts. So the company has gone in for debt
financing and thus, the company is having a comparatively higher borrowing
from the market. Basically the Debt-Equity ratio has to be as low as possible
so that the company has lower borrowings and has to pay less interest.
INVESTMENTS

Tata Steel
50000
40000
30000
20000
10000
0
2005-06
-10000

2006-07

2007-08

2008- 09

It can be seen
that investments in the last year has increased drastically from negative
cash flows to positive cash flows in investment. This was result of investing
subsidiary companies especially Tata Steel Holdings PTE. It made an
investment of about Rs 35,633 crores against Rs 72 lakhs. This has lead to
increase in investments.

Tata Steel
0.3
0.25
0.2
0.15
0.1
0.05
0
2006-07

2007-08

2008- 09

Cash management
This requires cash ratio, which includes cash and cash equivalent / current
liabilities. Over years this company has managed to keep up their cash
management at par with other companies. In recent times this company has
raised their cash ratio as compared to previous years.
Debtors Management

Tata Steel
40
30
20
10
0
2006-07

2007-08

2008- 09

This requires Debtors turnover ratio

which is calculated by, Debtors/Sales. This ratio has to be as low as possible
so as to gain maximum liquidity for the company. This means that the
debtors will return money in these many days.
Tata steel took over Corus in recent past and had taken a loan for that
purpose and due to this loan their Debtors turnover ratio just shot up from
29.81 to 33.45.

Tata Steel
12
10
8
6
4
2
0
2006-07

2007-08

2008- 09

Inventory Management
We get inventory turnover ratio by, Cost of Goods Sold/Average or Current
Period Inventory. High turnover ratio is usually beneficial for any company as
products tend to deteriorate as they are kept in a warehouse.
Tata steel has managed to keep their inventory management very efficient
during these years as we can see below that it keeps on increasing and that
is what every company needs, a very efficient inventory management
system.

LIABILITIES
1.SHARE CAPITAL
EQUITY CAPITAL

In the current year the company issues equity capital of Rs 4881 cr

as against 1393 crores, this led to the sharp increase in equity capital.
The company has a mix of debt and equity for fund raising. In last four
years company raised money through right s and debentures but this
year they preferred equity capital.

 PREFERNCE CAPITAL
In 2007-08 the company issued preference shares of Rs 5472 crores
and issued 60, 00,000 2% Cumulative Convertible Preference Shares.
Also, 2,85,00,000 shares of face value of Rs. 10 per share allotted to
Tata Sons Limited on a preferential basis during the year 2007-08.

 RESERVES AND SURPLUS

There was a steep increase in reserves in 2008-09 due to increase
in foreign currency translation reserve, but in 2008-09, the company
gained Rs 40 crores in foreign exchange fluctuation reserve. On the
other side the company faced losses of Rs 5496 crores as actual loss.

Reserves & Surplus

25000
20000
15000
10000
5000
0
2004

2005

2006

2007

2008

Over the years the company has been increasing its income in share
premium account, through conversion of warrants and preference
shares.
SECURED LOANS

Debentures
Tata Steel placed Non-Convertible Debentures totaling upto Rs. 2,000
crore in May 2008 comprising of 3 series having phased maturities.
The Company further raised a 2-year term loan of Rs. 2,000 crore in
May 2008. In November 2008, the Company raised Rs. 1,250 crore
through Non-Convertible Debentures privately placed with the Life
Insurance Corporation of India, repayable in equal installments at the
end of the 6th, 7th and 8th years.
In April 2009, the Company further raised Rs. 2,000 crore from a term
loan and in May 2009, it privately placed Rs. 2,150 crore of NonConvertible Debentures repayable after 10 years. Thus the Company
raised Rs. 9,400 crore in a year marked by tight liquidity.
One important thing to note is that the interest on debentures
is increasing every year even though the amount of
debentures has reduced considerably.
LOANS and ADVANCES

BORROWINGS
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
2003

2004

2005

2006

2007

2008

The
debt in the Companys consolidated balance sheet has increased
considerably after the Corus acquisition. The gross debt in the Tata Steel
Group was US$10.54 billion in March 2008 which increased to US$11.78
billion as at the end of March 2009. Tata Steel has about $9 billion of debt in
its books and has to repay $795 million in 2009-10 and $1.3 billion in 201011; however, the company is free from repayment until December 2009. It
has $1.9 billion cash and cash equivalents in its books, and requires $1.2
billion for its capital expenditure during this fiscal.

The increase was primarily on account of raising of new loans to the tune of
US$2.07 billion, during the year in Tata Steel India, to fund growth projects
and to ensure an adequate liquidity buffer in the wake of global liquidity
crisis.
During the year, the company repaid debts to the extent of US$ 1.66 billion
including a prepayment of debt in Tata Steel Europe of around 150 m
(US$215 million). The entire foreign currency term debt in Tata Steel India is
hedged into rupees at acceptable levels. Therefore the company was
unaffected by the volatile movement of the rupee on account of the above
loans.
The gross debt as on March 2009, showed an increase of US$830 million,
which was primarily on account of revaluation, due to currency movements.
Taking into account the liquid equivalents of US$1.9 billion, the net
consolidated debt as at March 31, 2009 was US$9.9 billion.

LOANS AND ADVANCES

25000
20000
15000
10000
5000
0
2004

2005

2006

2007

2008

If the performance of previous years is compared it can be seen that 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.

The
Company entered into a loan agreement with the State Bank of India and
other banks for Rs. 9,500 crores. In January 2008 Rs. 9,000 crores was repaid
with proceeds from the Companys Rights Issue and Rs. 500 crores was
repaid on 28th February, 2008. In November 2007, the Company made a
rights issue offering to shareholders in India, (i) 1 ordinary share for every
five ordinary shares at a price of Rs. 300 per share and (ii) 9 cumulative
compulsorily convertible preference shares (CCPS) for every 10 ordinary
shares at a price of Rs. 100 each.

Unsecured Loans
In the year 2008, Tata Steel raised $500 million equivalent seven-year senior
unsecured bank loan facility in yen to fund production capacity expansion
and also acquisitions.

Unsecured Loans
25000
20000
15000

In crores

10000
5000
0

2008

2007

2006

2005

2004

The Company issued USD 0.875 billion of 1% Foreign Currency Convertible

Alternative Reference Securities (CARS). The CARS accrue interest on the
outstanding principal amount at a rate equal to 1% per annum and are
classified as unsecured debt on the balance sheet of the Company.
During the current fiscal year, the secured and unsecured loans increased by
Rs. 8,924 crore as compared to the balances as on 31st March, 2008 mainly
due to issue of privately placed non-convertible debentures, term loans
taken from Banks and other short term borrowings.
In 2007 the loans increased from Rs 324 crores to Rs 5562 crores due to
new syndicate foreign currency loans drawn for funding the acquisition of
Corus Group plc. The Company has drawn foreign currency syndicate loans
of Rs. 7,225 crores (USD 1.65 billion) during the year as per details given
below:
1. JPY Syndicated External Commercial Borrowings of USD 495 million
equivalent: Rs. 2,162.66 crores (unsecured loan)
2. External Commercial Borrowings of USD 5 million equivalent: Rs. 21.77
crores (unsecured loan)
3. JPY Syndicated External Commercial Borrowings of USD 750 million
equivalent: Rs. 3,298.88 crores (unsecured loan)
4. International Finance Corporation, Washington - A Loan USD 100 million
equivalent: Rs. 435.35 crores (secured loan)

CURRENT LIABILITIES

CURRENT LIABILITIES
7000
6000
5000
4000

In crores 3000
2000
1000
0

2008

2007

2006

2005

2004

The current liabilities increased by Rs. 577 crores from a level of Rs. 3,523
crores as on 31st March, 2007 to Rs, 855 crores as on 31st March, 2008. The
increase was mainly due to increase in the value of purchases/services on
account of expansion projects.

I.

PROFIT AND LOSS A/C

Increase in Profit % from 2003 to 2008.

Increase in Profits
50
45
40
35
30
25
20
15
10
5
0

49.74
42.03

16.95
0

2003

9.92

0.91

2004

2005

2006

2007

2008

Tata steel showed steady rate in profit.

Its profit increased by 1012.31 to 4687.03 from 2003 to 2008 i.e. by

Rs 3674.72 crores.

From the above table TATA STEEL has given good profits in the year
2004 and 2005.

Due to deal with CORUS and NATSTEEL companys profits declined

sharply but after 2006 the profit rate increased gradually.

Decline in profits in year 2007 to 2008 is because of Recession hit

the market.

Gross Profit
Year

2008-09

2008-07

2007-06

Amount (Rs in
Crs)

9778.51

8830.00

1497.81

8500

8289.01
7900.97

8000
7080.94

7500

Amount (Rs in Crs)

7000
6500
6000
2008-09

2008-07

2007-06

The Gross Profit has increased over the period of 3 years however the
change in Gross Profit from 2008-09 and 2007-08 was less as compared to
2006-07 and 2007-08. The Graph shows the increase in Gross Profit 2006-07
to 2008-09.

Profit before Depreciation & Tax

Year
Amount (Rs in
Crs)

2008-09

2008-07

2007-06

8289.01

7900.97

7080.94

The Profit before depreciation and Tax increased at a rate of 11.84% from
2006-07 to 2007-08 and 4.91% from 2007-08 to 2008-09. The fall in the
PBDT was mainly due to the market crunch and global recession which left
its a mark on the companys Financial Statements. However it was
observed that the companys Profits after depreciation and tax followed a
stable increase i.e. an average increase of 11%.
Gross Profit Margin

The GP Margin for 2006-07 was 7.58% followed by 39.79% in 2007-08 and
36.43% in 2008-09.

8400
8200
8000
7800
7600
7400
7200
7000
6800
6600
6400

8289.01
7900.97

7080.94

2008-09

2008-07

Amount (Rs in Crs)

2007-06

Depreciation:
Capital Assets whose ownership does not west in the company is
depreciated over the estimated useful; life or five years whichever is less.
In respect of other assets depreciation is provided on a straight line basis
applying the rate specified in Schedule 14 to the Companies Act 1956 or
based on estimated useful life whichever is higher. However, asset value up
to Rs 25000 is fully depreciated in the year of acquisition. The details of
estimated life of each category of assets are as under:
Building 30 60 years.

Plant & Machinery 6 21 years.

Railway Sidings 21 years.
Vehicles and Aircrafts 5 18 years.
Furniture, Fixture & Office Equipments 5 years.
Intangibles (computer software) 5 10 years.
Development of property for development of mines and collieries
are depreciated over the useful life of the mine or lease period
whichever is less, subject to a maximum of 10 years.
Blast furnace relining is depreciated over a period of 10 years
(average expected Life).

Total depreciation for the Financial Year 2006-07 accounted to Rs. 819.29 crs
followed by Rs. 834.61 crs in 2007-08 and Rs. 973.40 crs in 2008-09.

II.

FINANCIAL RISK
TAX AND INTEREST RATE ANYALSIS

From the above balance sheet Interest charged in 2008 is 41,493 (Rs
mn) and in 2009 it decrease to 38,283 (Rs mn) i.e. Change of -8.4%.
Tax charged in 2008 was 40,493 (Rs mn) and in 2009 it decrease to
39,751 (Rs mn) due to decrease in gross profit.
Finance for the Corus acquisition was raised through bridge loans and
later refinanced by Tata Steel which has led to a dramatic increase in
the interest outflow; in the April-June quarter the interest outflow was
Rs241.7 crore compared to Rs41.6 crore for the same quarter last year.

Dividend Policy
Tata Steel has been continuously providing dividend to its shareholders to
maximize its wealth. In the year 2008-09 the company paid a dividend of Rs
1168.95 crores. The payment of dividend is always fixed by the company
irrespective of profits or losses.
Tata Steel is giving a significant higher rate of dividend year after year in
comparison to its nearest competitors.
In 2006-07 the year the company completed 100 years a dividend of 25%
was issued to the shareholders.

Tata Steel
180
160
140
120
100
80
60
40
20
0
2003

2004

2005

2006

2007

2008

Tata Steel was initially giving higher amount of dividend initially on its PAT.
But over a period of time, it decided to change its strategy and putting back
all its earnings on development of the company.

Fund Flow & Cash Flow Statements

Analysis of Funds Flow and Cash Flow Statements

SOURCES OF FUNDS
The profit after taxes has been consistently increasing in the past five
years despite the global crisis and acquisition of Corus in 2007.So the total
PAT available in 2009 is Rs 21091 crores. Since Tata Steel has a lot of fixed
assets in terms of plants and machinery the depreciation is also increasing
at a slower rate, one more reason is that they introduced two blast furnaces
in Jamshedpur this year, which led ot increase In depreciation this year.
In the last 5 years the share capital of the company was very good, but
due to issuing of new shares the share capital is now negative.
Borrowings have been consistent. The way the company managed its
borrowings was amazing. From negative balances, they turned into Rs 5000
crores positive balances; this was as a result of loans taken to finance Corus
deal. Some installments are to be paid after 2011, so there is not too much
burden on Balance Sheet.
APPLICATION OF FUNDS
The capital expenditure was normal in all the years, not much movement
is seen in terms of investment in plant and machinery.
Investments increased significantly. It can be seen that investments in the
last year has increased drastically from negative cash flows to positive cash
flows in investment. This was result of investing subsidiary companies
especially Tata Steel Holdings PTE. It made an investment of about Rs
35,633 crores against Rs 72 lakhs.
The company also announces dividends to the shareholders. Every year it
gives dividends in the range of 100 to 160 %. This year they gave a dividend
of 13 Rs per share, due to which the total outlay was Rs 5632 cr.
The biggest contributor in Utilization of Funds was because of increase in
working capital expenses. In early 2008, the unprecedented increase in the
prices of input costs, particularly raw materials, substantially increased the
working capital requirements. The change in working capital, during the
financial year, was mainly due to increase in inventories on account of
volumes and prices partly offset by an increase in creditors. The working
capital during FY 09 reduced by Rs. 225 crore, mainly due to a reduction in

Inventory (with reduction in finished and semi-finished inventory and

increase in raw materials inventory) and Debtors.

FINANCIAL RATIOS

Ratio Analysis
Operating expenses are expected to increase marginally resulting in increase
of EBITDA margin of 38.7%.But compared to previous year the
EBITDA/Turnover has reduced because the profits were higher than last
years.
ROCE over the years has reduced because of slowdown as well as huge
inventories of stock and new plants introduced in Jamshedpur.
Asset Turnover is very good In last four years the assets were utilized to the
fullest but in the last year due to less demand, it reduced by 1%, but in
overall terms it is optimally used all resources.

Debt Equity Ratio

Debt Equity Ratio

45
40 42.43
35
30
25

Debt Equity Ratio

27.28

20
15

15.34

10

12.71

11.43

2007

2008

5
0

2004

2005

2006

Tata Steel over the years has been increasing its debt in order to
finance the Corus deal. They took a loan of $ 8 Billion from the bank to
acquire Corus.

Current Ratio

Current Ratio
50
40
30
Tata Steel

20
10
0
2004

2005

2006

2007

2008

The current ratio is a financial ratio that measures whether or not the
firm has enough resources to pay its debts over the next 12 months. It
compares a firms current assets to its current liabilities. Tata Steel has
a high amount of unutilized current assets. The company has high
level of inventory or WIP. Since the demand for steel has reduced
drastically the company is having huge inventory and because of this
the liquid ratio is low.

Debtors Turnover Ratio

DEBTORS/CREDITORS TURNOVER Ratio

120
100
80
60
40
20
0

Year

2003

2004

2005

2006

2007

2008

The stakeholders of the company like distributors and suppliers have a

lot of confidence in the company. This shows the creditworthiness and
brand value of the company. Since debtors are paying back in
comparatively less number of days shows faster movement of goods in
the market.

EBITDA/TURNOVER RATIO
The EBITDA for the Group at Rs. 18,495 crores (US$ 3,636 mn) for the
financial year 2008-09 was1% higher than the EBITDA of Rs.18, 287
Crores (US$ 3,595 mn) recorded during the financial year 2007-08.
EPS RATIO
EPS is the reported profit over the number of shareholders in the
company. In the last 5 years EPS has doubled from 31 to 66 and it is
expected to reach 104 in FY10.
P/E RATIO
P/E RATIO IS expected to double in 2010 because of higher profitability
and dividend payouts in the previous years.

Future Prospects
The Company has embarked upon setting up three green field steel plants in
eastern India:
12 MTPA* plant in Jharkhand
6 MTPA plant in Orissa
5 MTPA plant in Chhattisgarh
Jamshedpur Steel Works will become
*MTPA = million tonnes per annum

10

MTPA

unit

by

2010.

Solution for Sales (SFS) offers based on the Theory of Constraints (TOC)
concept saw stabilisation in the steel division. The replenishment module
was extended to cover 100% of the retail channel of TATA TISCON, achieved
90% coverage in TATA SHAKTEE and 60% in TATA Steelium. This resulted in
a reduction of stock outs in retail shops and more significantly, a reduction
in channel stocks. Reliability solutions were extended to direct customers in
the Steelium distribution. For the Construction Projects segment, an S-DBR
(Simplified Drum Buff er Rope) mechanism was implemented under the
Theory of strains supply chain improvement initiative which improved the
availability of rebars at the warehouses, thereby reducing instances of
delays and loss of orders.
The term focus is on the implementation of the Fit for Future restructuring
in Europe, to continue with the 3 mtpa expansion project in Jamshedpur and
overseas raw material projects, to increase production volume in India and
optimise working capital management across the Group to preserve liquidity
Looking towards the future, the steel industrys main contribution to the
reduction of CO2 emissions should be to further develop the use of byproducts and to work with its customers to help design well, long lasting,
more energy and material efficient products. Additionally, improvements in
areas other than primary steel production may offer further opportunities for
CO2 reduction