TATA STEEL

FINANCIAL ANALYSIS ON TATA STEEL

Presented by
Sanjay Mangunde
 ACKNOWLEDGEMENTS

We would like to express our heartfelt gratitude and immense

respect to MAM. SAJIDA (Faculty, Financial management). We
wish to thank her for making us understand the financial
concepts in a lucid and simple manner and for her patience in
clearing all our doubts.
SUMMARY OF TATA STEEL

•The project assigned to us was to perform

the financial analysis of TATA STEEL and study
the environment in which it operates.

• A comparative study of various players was

made to understand the actual dynamics of
the working of the steel sector in INDIA.
HISTORY OF INDIAN STEEL SECTOR

• Steel role plays a vital role in the development of the any

modern economy.

• The per capita consumption of steel is generally accepted of

a yardstick to measure the level of socio- economic
development and living a standards of the people .

•As such, no developing country can afford to ignore the steel

industry.
 TATA STEEL -THE COMPANY

•Tata Steel Limited, incorporated in 1907 by Shri Dorabji Tata, is

India's largest private sector steel company belonging to the
Tata Group.

•The company manufactures finished steel, both long and flat

products like hot and cold rolled coils and sheets, tubes, wire
rods, construction re-bars, rings and bearings.
 •Its main plant is located in Jamshedpur,
having manufacturing capacity of 5 MTPA
(million tonne per annum) while its
processing units, captive iron ore and coal
mines are located in the states of Orissa,
Jharkhand, Maharashtra, Gujarat and West
Bengal.

•The company markets its products in

brands like "Tata Steelium, Tata Tiscon,
Tata Pipes, etc.
•The company is among the lowest cost producers of
steel in the world.

• With its head office located in Mumbai, the company

functions through a network consisting of trading
arms and operation and projects sites spread across
countries in the continents of Asia, Europe and
America.
 BALANCE SHEET AS ON MAR 2004,05,06,07

BALANCE SHEET TATA STEEL

2006-2007 2005-2006 2004-2005

Capital 7277.30 5536.70 5543.70

Reserve 133684.20 92016.30 68763.10
LTL 115013.50 48618.60 56967.70
CL 54536.60 38087.20 45752.30
TOTAL 310511.60 184258.80 177026.80
Fixed assets 110405.60 98650.50 98189.20
Investment 61061.80 40699.60 25941.80
CA 139644.20 44908.70 52902.10
Total 310511.60 184258.80 177033.10
 INCOME STATEMENT

INCOME STATEMENT TATA STEEL

2007-2006 2005-2006 2004-2005

SALES 175520.20 202444.20 159986

COGS 91713.90 67057.60 41648.30

Operating Expense 10606.90 69770.509 55413.80

Deprecation 8843.90 8910.10 6518.30

PBIT 64355.50 56705.10 56405.70

Interest 1739.00 1555.30 1981.30

PBT 62616.50 55149.80 54424.40

TAX 20395.00 17939.10 18712.40

 Ratio Analysis of TATA STEEL

Liquidity Ratios

Ability of the firm to meet short term obligation comes from holding of liquid
assets which are readily convertible into cash. It is the responsibility of the
treasury manager to maintain the right balance between investments and
liabilities to get the maximum liquidity. It involves constant monitoring of
cash flow position. We will analyze the two popular measures of the liquidity
of the company.

Current Ratio:

Current Ratio = Current Assets / Current Liabilities

Quick ratio:

Quick ratio = (Current assets - Inventories) / Current

Liabilities.

It s more reliable then current ratio because it considers

only the most liquid assets and does not include the hidden
factors like window dressing that may skew the actual
scenario.
 2007 2006 2005

CA 139044.20 44908.70 52902.10

CL 54536.60 38087.20 45752.30

Debtor 6316.30 12187.20 13240.70

Inventories 38881.30 27733.10 24899.00

Current ratio 2.55 1.18 1.16

Liquid ratio 1.84 0.45 0.61

Absolute cash 1.72 0.13 0.32

ratio

There has been a substantial increase in cash items in Current Assets

for the year 2006-2007. This accounts for almost 80% of the increase in
Current Assets. This has led to the substantial increase in Liquidity
ratios for the year 2006-2007
Working Capital:

Working Capital = Current Assets – Current Liabilities

2007 2006 2005

CA 139044.20 44908.70 52902.10

CL 54536.60 38087.20 45752.30

WC 84507.60 6821.50 7149.80

Working Capital is showing a significant rise during the year

due to borrowings to the tune of Rs. 80436 million.
 Profitability Ratio

Profitability Ratios show how successful a company is in terms

of generating returns or profits on the Investment that it has
made in the business i.e. the Profitability ratios speak about the
profitability of the company. The higher these ratios the better it
is for the company.

There are two types of profitability ratios:

profit Margin ratios
o Operating Profit Margin ratio
o Net Profit Margin ratio
Rate of Return ratios
o Return on Total Assets (ROTA)
o Return on Capital Employed (ROCE)
o Return on Net Worth (RONW)
CONCLUSION

The acquisition of Corus was a significant

event, a long term and strategic
investment decision which has affected
the financial position of the company for
the year 2006-2007