KIRLOSKAR INSTITUTE OF ADVANCED MAANGEMENT STUDIES

TATA STEEL
CORPORATE FINANCE
12/20/2011

Submitted To Prof. T Vishvanathan

Submitted By:Akash Jain Anand Murarka Anish Wadhwa 5 7 10

Chandrachur Palchaudhri 30 Khushboo Vijayvargiya 47

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 India‘s 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 the same commitment towards social and community responsibilities that it has shown in the past. The Tata Group of Companies has business operations (114 companies and 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 Group‘s flagship Company. Other Group Companies in the different sectors are – Tata Motors, Tata Consultancy Services (TCS), Tata Communications, Tata Power, Indian Hotels, Tata Global Beverages and Tata Chemicals. Tata Motors is India‘s 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 Motor‘s 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 Power has 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 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.

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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 group and 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 and corporate citizenship. We will achieve our vision through: Our People By fostering teamwork, nurturing talent, enhancing leadership capability and acting with pace, pride and passion. Our Offer By becoming the supplier of choice, delivering premium products and services and creating value for our customers. Our Innovative Approach By developing leading edge solutions in technology, processes and products. Our Conduct By providing a safe workplace, respecting the environment, caring for our communities and demonstrating high ethical standards.

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

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and will soon be producing high carbon ferrochrome from its plant in South Africa. India. in 1907. renamed Tata Steel Europe). It has the capacity to produce over 30 million tonnes of crude steel every year. and makes steel for building and construction applications through Tata BlueScope Steel. Tata Steel is headquartered at Jamshedpur in Jharkhand. the procurement of low-ash coal from Australia and coking coal from Mozambique. Millennium Steel (renamed Tata Steel Thailand) and NatSteel Holdings (Singapore). the company has created a manufacturing and marketing network in Europe. South East Asia and the Pacific-rim countries. 4 . The company produces crude steel and basic steel products. India. and the setting up of a deep-sea port in Orissa in India. its joint venture with Australia's BlueScope Steel. who will work with Mr Ratan N Tata over the next year and take over from him when Mr. Tata Steel has also set up joint ventures for the development of limestone mines in Thailand. With these. India. Tata retires in December 2012. Tata Steel has invested in Corus (UK.The company was established in Jamshedpur. In the past few years. The company is exploring opportunities in the titanium dioxide business in Tamil Nadu. RECENT UPDATE Mr Cyrus P Mistry has been appointed as deputy chairman of Tata sons.

It has bagged this prize consecutively for the second time. Tata Steel bagged the first prize in ―heavy industry‖ category at Udyog Mela 2011. the only company from India to have achieved this prestigious feat. directors and financial analysts. conferred the prestigious Prime Minister’s Shram Awards for the years 2008. Tata Steel was conferred the ‘Good Corporate Citizen Award’ for the year 2011 by the Bombay Chamber of Commerce and Industry (BCCI) in a ceremony at Mumbai. conducted by Fortune magazine and Hay Group. 2011. Government of India. to identify the companies that enjoy the strongest reputations within their industries and across industries. Tata steel bagged the two most prestigious awards at the MMMM exhibition 2011 (Minerals Metals Metallurgy and Materials ) held at New Delhi between February 11th to 14th 2011. The annual survey. Tata Steel has been named in Fortune magazine's 2011 list of World’s Most Admired Companies for the third consecutive year. 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. is given to top executives. New Delhi. 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. on October 13. October 2. on twenty-one employees of Tata Steel at Vigyan Bhavan. Since 2007. 1947. The Ministry of Labour and Employment. 2011. 2009 and 2010. Tata Steel has been ranked sixth in the ‗Industry-Metals‘ category. The Prime Minister‘s 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. in a move to reaffirm its commitment to its longstanding values.ACHIEVEMENTS Tata Steel has received the Thomson Reuters Innovation Award in the ‗hi-tech corporate‘ category. This is the first time that Tata Steel has won this prestigious award from BCCI. Thomson Reuters has been presenting the Thomson Reuters Innovation Awards to recognise innovation and entrepreneurship in India. Tata Steel. on the occasion of the birth anniversary of Mahatma Gandhi. 5 . This award was extended to the private sector in 2004. yesterday as part its 176th Foundation Day. Ranchi. collaborated with the OVAL Trust to formally dedicate the ‘Charkha’ to the nation. a global management consulting firm.

(www. cement floors and plastics. automotive.in) • TRF: In the business of design.tataref. installation and commissioning of engineered-to-order equipment and systems in the areas of bulk material handling. the company produces steel for the construction industry. reclaiming and blending.co. also has freight-forwarding and chartering services.in/) • Tata Ryerson: Offers hot. including electrolytic tinplate.mjunction.com/en/) • NatSteel Holdings: A leading supplier of premium steel products for the construction industry. • Tata Refractories: Produces high-alumina. (www.com) 6 .tatabluescopesteel. exterior emulsion paint and distemper. JUSCO provides municipal and civic services for townships.tayo. tin-free steel and cold-rolled products. (www.sg) • Tata Steel Thailand: A major steel producer in Thailand. supply. • Tinplate Company of India: Industry leader in India in the manufacture of tinning line products. the paper.jamipol. engineering and other markets worldwide. the company produces rolls for integrated steel plants. textile and food processing sectors.natsteel.tmilltd. procurement and re-lining services.and cold-rolled flat steel products in customised sizes and quantities. dolomite. the company offers a comprehensive range of branded steel products for building and construction applications. manufacture. (www. (www. (www. Australia.com/) • Tata Metaliks: Manufactures and sells foundry-grade pig iron.com. it is India's largest e-commerce company and the world's largest e-marketplace for steel. high-quality steel.tatatinplate. (www.com) • mjunction services: A 50:50 joint venture involving Steel Authority of India and Tata Steel. (www. and the government mint. • Jamshedpur Injection Powder: Manufactures carbide de-sulphurising compounds used for the production of low-sulphur. (www.trfltd.juscoltd.tatasponge. power plants. (www. Tata Steel Europe produces long and strip products for the construction. ISWP has a wire unit and a steel roll manufacturing unit.com) • TM International Logistics: Provides material handling and port operation services at the Haldia and Paradip ports in India.tatametaliks. silica and monolithic refractories and offers design.com) • Tata Pigments: Produces oxides of iron.com) • Indian Steel and Wire Products: Recently acquired by Tata Steel. basic.com) • Tata Sponge Iron: Produces sponge iron lumps and fines.tatasteeleurope. NatSteel has operations in seven countries in Asia. • Tata BlueScope Steel: A joint venture with BlueScope Steel. Its products are used in paints.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. processing.dhamraport. (www.Subsidiaries of TISCO • Tata Steel Europe: Europe‘s second largest steel maker with major operations in the UK and continental Europe. packaging. dry cement paint.com/) • Tayo Rolls: India‘s leading roll manufacturer and supplier.com) • Jamshedpur Utility and Service Company: Re-engineered out of Tata Steel's town services. (www. (www. emulsions. (www.

hooghlymetcoke. Deepika Kumari. 4. Director Balasubramanian Muthuraman stated that of the 100million tonnes. 5 million tonnes plant in Chhattisghar (India). 7 . The campaign presents the company‘s very own achievers who have paved their own way to success and recognition. a company synonymous with values — trust. global steel major which is dedicated towards social and economic sustainability. such as Mark Denys. • Sila Eastern Company: Established to develop limestone mines in Thailand. 5 million tonnes capacity expansion in Jamshedpur (India).000 tonnes. producing met coke and electric power. Tata is looking to add another 29million tonnes through the acquisition route.• Hooghly Met Coke & Power Company: A joint venture with the West Bengal Industrial Development Corporation. 3 million tonnes plant in Iran. 2.2million tonne. Tata Steel Adventure Foundation. TATA Steel is planning a 50-50 balance between greenfield facilities and acquisitions. green technology and community empowerment.4million tonne. announced the launch of a corporate campaign 'Values stronger than steel' (VSTS). The series of acquisitions have already added upto a 21. Tata Steel has lined up a series of greenfield projects in India and Outside which includes: 6 million tonnes plant in Orissa (India). Everyone has a story to tell and they are the brand ambassadors for the campaign CAPACITY EXPANSION TATA STEEL has set up an ambitious target to achieve a capacity of 100million tonnes by 2015.com) • Lanka Special Steel: A Sri Lankan unit that manufactures galvanised wires. amongst others. The campaign is aimed at reaching out to the Indian citizen to reinforce the image of the company as a cutting-edge. • Tata Steel KZN: Setting up a high carbon ferrochrome plant in South Africa with an annual production capacity of 135. • 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. chief. Bachendri Pal. 12 million tonnes plant in Jharkhand (India). Natsteel production at 2million tonne and Millennium Steel production at 1. the young talent in archery. The core of the campaign is to showcase the organisation‘s involvement and commitment beyond steel making. R&D. empowered members of the Tejaswini project like Asha Hansda. transparency and total community care — today. which includes Corus production at 18.4 million tonnes plant in Bangladesh. (www.5 million tonnes plant in Vietnam. mainly for captive use. while embodying its overarching 'value system'. Tata Steel.2million tonne. head.

Secondary producers include Essar Steel Ltd. and 1. This wide gap in relative steel 8 . price regulation.7 million tonnes. and JSW Steel Ltd. Tata Iron and Steel Co Ltd (TISCO) and Rashtriya Ispat Nigam Ltd (RINL). growth in India is projected to be higher than the world average. (later renamed Vivesvaraya Iron & Steel Ltd) in 1923.. Integrated steel producers have traditionally integrated steel units have captive plants for iron ore and coke. as the per capita consumption of steel in India. which largely constituted regulations such as large plant capacities were reserved only for public sector under capacity control measures. sponge iron producers. at around 46 kg. when economic liberalization reforms were introduced. for additional capacity creation producers had to take license from the government. Currently there are three main integrated producers of steel namely Steel Authority of India Limited (SAIL). pig iron producers. most global steel players are into a massive capacity expansion mode. Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron & Steel Ltd) in 1923. All these companies were in the private sector.5 million tonnes to the existing capacity of 55 million tonnes. Secondary producers use steel scrap or sponge iron/direct reduced iron (DRI) or hot briquetted iron (HBI). the steel industry continued to be under controlled regime. and Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron and Steel Co) in 1939. There are 120 sponge iron producers.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. it has a very low per capita consumption of steel of around 46 kgs as against an average of 198 kgs of the world. integrated producers and secondary producers.. which are main inputs to these units. Going forward. induction furnaces and energy optimizing furnaces. and there were restrictions on imports as well as exports. Broadly there are two types of producers in India viz.200 re-rollers in India. SAIL dominates amongst the three owing to its large steel production capacity plant size. Indian demand is projected to rise to 200 million tonnes by 2015. apart from other manufacturing units like the independent hot and cold rolling units. It comprises mainly of Electric Arc Furnace (EAF) and Induction Furnace (IF) units. the steel production capacity in India is expected to touch 124 million tonnes and 275 million tonnes by 2020. Ispat Industries Ltd. is well below the world average (150 kg) and that of developed countries (400 kg). While greenfield projects are slated to add 28. either through brownfield or greenfield route. etc. Steel production in India has increased by a compounded annual growth rate (CAGR) of 8 percent over the period 2002-03 to 2006-07. rerolling units. electric arc furnaces. Given the strong demand scenario. Afterwards a few more steel companies were established namely Mysore Iron and Steel Company. foreign investment was restricted. Till early 1990s. galvanizing and tin plating units. By 2012. However. brownfield expansions are estimated to add 40.  India is currently the fifth largest steel-producing nation in the world with production of over 54 million tonnes (MT). 650 mini blast furnaces.

being derived from other sectors like automobiles. Indian steel companies have to bear additional costs pertaining to capital equipment. housing and real estate sector in order to counter the slowdown in the economy. with companies like Tata Steel being one of the lowest cost producers in the world However. its fortune is dependent on the growth of these user industries. This provides major cost advantage to the domestic steel industry. Iron ore is also available in abundant quantities. The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. power and inefficiencies (low per employee productivity). consumer durables and infrastructure. This has resulted in the erosion of the edge they would have otherwise enjoyed due to availability of cheap labour and raw materials. Also.    9 . The government has reinstated basic customs duty on steel imports in order to protect India from dumping of cheap steel products.  Being a core sector.consumption indicates that the potential ahead for India to raise its steel consumption is high. It has also provided series of benefits to auto. steel demand. steel industry tracks the overall economic growth in the long term.

 The Company undertook a series of measures to counter recessionary pressures in FY09 and FY10 to reduce cost KEY INITIATIVES One Company Operating Model  In the process of transforming its operations to directly align its marketing. the Company plans to continue to increase its capacity significantly through greenfield developments.7mtpa by 2012. sales and distribution teams with major industries and sectors 10 . Work is currently under way to increase steelmaking capacity at Jamshedpur to 9.BUSINESS RISK ANALYSIS Strong Position In the Indian Market Capacity expansion is a key strategy for Tata Steel in India. Enhanced Competitiveness through Continuous Improvement. Looking further into the future. 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.

―Fit for the Future‖ initiatives for its European operations. strategic cost-saving measures to improve the long-term competitiveness of its business. Transforming its supply chain in Europe Product Development and Marketing   Through research and development initiatives working to capture market share in a number of potential high growth areas ―Customer First‖ strategy Cost Saving Initiatives   Implemented. Been able to reduce customers ‗inventory stock and increase their margins. and plans to continue to implement. 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 _ Iron Ore: 100% _ Coal: 49% _ Significant amount of ferro alloy requirements NML (Holdco) _ Canada _ TS Equity Stake: 27% 11 . Strong Retail Management   Works closely with retail and wholesale customers to ensure value by scheduling deliveries on a just-in-time basis.

NML JV (iron ore) _ TS Equity Stake: 80% _ Status: Initiated project development _ Offtake rights: 100% _ TSL has an exclusive right to negotiate and settle a proposed transaction in respect of NML‘s LabMag Project TSCI _ Ivory Coast _ Partner: Sodemi _ TS Equity Stake: 85% _ Status: Pre-feasibility RML (Holdco) _ Australia _ TS Equity Stake: ~24% RivMoz _ Partner: RML _ TS Equity Stake: 35% _ Status: Project development commenced _ Coking coal _ Offtake rights: 40% of the coking Coal CDJV _ Australia 12 .

_ Partners: Vale.Posco _ TS Equity Stake: 5% _ Offtake rights: 5 to 20% _ Coking coal Diversified Product Offering: Branding and Positioning 13 . JFE. NSC.

Bhiwandi and Chennai. Five processing units located across India with a processing capacity of ~2 million tonnes per annum.000 Tata Steel holds ~45% equity. Maharashtra 14 . TCIL is commissioning Cold Roll Mill in 2011.000 tpa) facilities at Jamshedpur. to manufactureproducts for the Indian construction industry Presently implementing a Greenfield project for setting up of a metal coating (capacity of 250.000 TPA in Pune. Existing operations include three facilities with a total installed capacity of 136.000 tpa) and color coating (150.Control over Logistics 100% subsidiary of Tata Steel since July 2009. Steelworks facility in Tarapur. 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. to be operational by April 2011. The project involves capacity expansion to 390. Also engaged in the business of high-end plate fabrication for major equipment manufacturers including Caterpillar and JBP Group.

Expected to be capable of handling 13 mtpa of coking coal and 6 mtpa of iron ore.Wire drawing plants at Indore and Bengaluru Caters to the Indian construction and automotive segments for products such as springs. currently operating 12 chartered and 2 owned vessels. Focused on shipping dry bulk and break bulk cargo Trial operations commenced in September 2010. cargo handling and other related Services. NYK and Martrade. Japan. 15 . Partnership between Tata Steel. pre-stressed concrete and conductor Control over Logistics       A 50:50 JV between Tata Steel and Nippon Yusen Kabushiki Kaisha (―NYK Line‖). Engaged in the business of port operations.

SWOT ANALYSIS Strengths Strong market position Tata Steel Group. agricultural implements. tubes. an integrated steel company. and wires. The group's strong market position gives it advantage of scale and increases its bargaining power. Tata Steel Europe is Europe's second largest steel producer with a crude steel production of more than 14 million tonnes. Diversified end markets Tata Steel Group offers a diversified product portfolio comprising flat and long steel products. It is the world's second most geographically diversified steel producer. 16 .2 million tonnes per annum. Tata Steel India is the largest producer of manganese alloys in India with a market share of approximately 14%. with operations in 26 countries and commercial presence in more than 50 countries. bearings and auto assemblies. is the world's tenth largest steel company with capacity of 27.

The Indian operations being one of the most competitive assets in the group‘s business portfolio offer a competitive advantage with a leading market position in the country. The European business is susceptible to the fluctuations in the iron and coal prices. the Teesside Technology Centre (the UK). 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%. and the coal from Australia. Majority of its raw material requirements are provided through its mining operations in the country. automotive. hydrogen harvesting. Integrated steel operations in India The steel business of Tata Steel Group in India is integrated. production of Ferro-chrome with less energy. security and defense. energy and power. and development of efficient coolants and lubricants for rolling. packaging. Katamandi. 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. construction. advanced coatings developments.The company owns two collieries in West Bokaro and Jharia. Therefore. and shield the company from downturn in one or few segments. and the Jamshedpur R&D Centre (India). Canada. Diversified end markets avoid dependence of the company on a single segment for revenues. developing state-of-the-art thin film photovoltaic systems. The group plans to increase self-sufficiency of to 50% in the medium to long term. and Khondbond in the states of Jharkhand and Orissa.new generation high strength steels. South Africa. 17 . Strong research and development (R&D) capabilities Tata Steel Group operates five research centers : the Ijmuiden Technology Centre (the Netherlands). rail. The iron ore units owned by Tata Steel India are located in Noamundi. dependence on third party suppliers for raw material in Europe increases the business risk for the group. Canada. the Swindon Technology Centre (the UK). and engineering. The iron ore is imported mainly from Australia. and South America.The steel products manufactured by them are used by companies operating in the following industries: aerospace. consumer goods. the Automotive Engineering Group (the UK). and the US. The group is also working on reducing CO2 emissions across its operations. shipbuilding. Joda.they are currently working on various projects that include economic mineral beneficiation . The integrated steel operations in India made the group one of the cost-effective steel manufacturers in the country. These captive mines shield the group from fluctuations in raw material prices.

annual car sales are projected to increase up to five million vehicles by 2015 and more than nine million by 2020.. In January 2010. These joint ventures will strengthen the long-term raw material security for Tata Steel India. In FY2010. According to the Society of Indian Automobile Manufacturers. or currency rates in specific market areas and regions can affect their competitive position and financial performance. Increasing raw material security The steel production in India is expected to grow to over 120 million tonnes by 2015.6 billion in 2009. The company‘s business is also exposed to many adverse changes in the policies and regulations related to the steel sector in the region.7 million tonnes per annum (mtpa) of crude steel by 2011–12. extraction and processing of minerals. Tata Steel Group signed a memorandum of understanding with NMDC for exploring possibilities of a strategic alliance to enhance iron ore resources.The group's expansion of Indian operations would help it to generate incremental revenues and reduce its dependence on Europe. the company generated about 64% of its revenues from Europe. The joint venture will enable the Tata Steel Group to capitalize on this new opportunity of increased demand for automotive in India. and development of mines. representing a compound annual growth rate (CAGR) of 3% for the period spanning 2005–09. Therefore. setting up integrated steel plants. 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. The group is focusing on to expand the Jamshedpur works‘ capacity to 9. periodic demand growth. Minor changes in price levels. According to Data monitor. The European and Asia-Pacific markets will 18 . dependence on Europe for majority of its revenues increases business risk for the company. and any other business of mutual interest. The joint venture with Nippon Steel Corporation will address the localization needs of Indian automotive customers for high-grade coldrolled steel sheet and meet the needs of the growing Indian automotive industry.Dependence on Europe Europe is the key market for Tata Steel Group.This additional capacity will allow the company to use its existing resources more efficiently. the global steel market had total revenue of $655. 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. exploration. Opportunities Expansion in India Indian operations are one of the most competitive assets in the global steel industry. Positive outlook for the global steel market The global steel market is expected to grow strongly over the next few years.

over the same period. Environmental regulations The business of Tata Steel Group is subject to extensive environmental regulatory requirements relating to occupational safety and health. consumer confidence. services and delivery capabilities. general economic conditions. Tata Steel Group being one of the world‘s largest steel company is well positioned to benefit from the growth in this market. and ThyssenKrupp.grow with CAGRs of 20. industrial waste disposal. The competition is based on quality of products. Economic or industry downturn Downturn or weakness in the economy in general or in key industries may adversely affect Tata Steel Group‘s customers. highly competitive. The company competes with several steel manufacturers ranging from large diversified enterprises to smaller companies specializing in particular products in India and internationally. and has historically been characterized by over capacity. Steel Authority of India. regulatory standards have been continuously tightened in recent years. especially regarding global warming. United States Steel. 19 . Threats Intense competition The global steel industry is cyclical. Downturn in demand from industries the company serves. Nippon Steel. which may cause the demand for the company‘s products and services to decline Product demand in Tata Steel Group‘s customers‘ end markets is based on numerous factors such as interest rates.4% and 13. price.7 billion and $871. or a decrease in the margins that Tata Steel Group can realize from sales of its products to customers in any of these industries. Increasing pressures from the regulatory authorities is expected to increase the compliance cost of Tata Steel Group. and manufacturing capacity. to reach respective values of $316. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. Its major competitors include Arcelor Mittal. and other factors beyond the company‘s control. and management of potentially toxic substances. Intense competition in the industry could lead to loss of market share and put pressure on the group's margins.9%. respectively. pollution prevention. With rising awareness of the damage to the environment caused by industry.3 billion in 2014. could adversely affect the company‘s financial results. environmental protection. manufacturing costs.

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. to enable them to take care of their children in case of sickness. WEC strives to ensure that female employees in the Company do not miss out on growth opportunities available. This rate is higher among officers.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. For example. 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. 15 days of additional leave is given to female executives with children aged under five. in today‘s global scenario. The Company. Remuneration is linked to responsibility levels and performance. Tata Steel will volunteer its resources. The Women Empowerment Cell (WEC) was founded in 2006 in order to examine and address the issues and concerns of female employees. for example. locomotives are now driven by female 20 . 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. fitting and rigging and other maintenance related jobs. The Company does not differentiate between male and female employees in terms of remuneration: for the same work or work of similar nature. welding and gas cutting. ― Addressing gender issues A small percentage of Tata Steel‘s workforce is female at 5%. Tejaswini is one such programme aimed at empowering female employees and providing development opportunities to them. male and female employees are paid equally. to the extent it can reasonably afford. Main features of Tejaswini Today Tejaswinis are working shoulder to shoulder with their male counterparts in the areas of maintenance and mobile equipment operations. Women employees who were would have been declared surplus due to Automation have been trained in skills such as mobile equipment operation and maintenance.

Camp School: To help underprivileged girls enter the mainstream.operators. machinist (metal cutting) and electrician. The determination of customer satisfaction is established by conducting annual surveys. with products/service attributes as parameters. The overall customer satisfaction is captured through a designed 21 . 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. Tata Steel in the past few years is the introduction of a Female Trade Apprentice course. Twenty-four teachers will provide academic support to 480 students. Tata Steel successfully integrated more than 380 students into formal schools. The surveys are conducted by external agencies (M/s A C Nielsen.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. Selected candidates are trained in various trades such as fitter. TNS for Year 2008). . For example twelve primary schools have been identified for support near Dhamra Port in 2008-09. In 2008-09. Tata Steel initiated a camp school programme with the help of Jharkhand Education Project. On successfully completing the course. etc. 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. This empowerment has lifted the women from the unskilled levels of the organisation to the core working group of skilled workers. 200 girls enrolled in the two camp schools. a women operator manages one of the heaviest bulldozers to move raw materials to the steel plant.. In rural areas the Company had a 100% success rate last year with 550 children from 22 centres moving into formal education. which is equivalent to a Junior Technician post. Educational services A number of Tata Steel‘s activities are designed to support these goals: . these young women are deputed to the various departments in the Works in Cluster-C. using a segmentwise approach.Schools: The Company supports many schools in its areas of operation.

corrective action was taken by launching SFS initiative with important customers for improving the delivery compliance. In contrast. at the market place and Tata Steel held its prices. Therefore local candidates for employment are considered favourably if they possess the required qualification. As a social responsibility initiative. Tata Steel encourages business entrepreneurs from socially disadvantaged communities and includes them in its supply chain on the basis of equal merit. In 2008. Up-skilling programmes help local communities to increase their employability. Owing to this. the overall delivery performance took a hit. Social responsibility in procurement In accordance with its Affirmative Action Policy. The satisfaction index is a relative score of the Company‘s overall score over the nearest competitor.both quantitative and qualitative . customers were more frequently revising their monthly indent and in turn the Company had to reschedule its despatch plans more often. SOCIAL RESPONSIBILITY INITIATIVES IN PROCUREMENT One of the important business drivers is procurement of supplies and services from local vendors.during the field survey. social organisations and small-scale local industries are given preference when placing orders. Due to the downturn. Further on. The proportionspending on locally based vendors (ie vendors with an address in Jharkhand state) during 200809 was approximately 25% of Tata Steel‘s domestic buy volume. whenever they are able to supply the Company to a standard which otherwise would 22 . 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 opportunities. the score was higher in earlier years when due to higher demand.questionnaire . availability was an issue mm. the CSI Index got impacted due to lower score in Delivery attributes. benefit from the economic opportunities that its activities offer.

'. 23 .pr requirements. except for the tasks requiring a higher degree of specialisation and sophistication and a skill set which is not available locally. raw materials are issued oun a ‗conversion‘ basis for the supply of finished goods.  We shall develop & rehabilitate abandoned sites through afforestation. We will truly succeed when we sustain our environmental achievement and are valued by the communities in which we work. We are committed to continual improvement in our environmental performance. responsibilityl and accountability for sound environmental performance. implement and maintain management standards and systems.  We will identify. and consumables. promoting waste avoidance and recycling measures and product stewardship. reducing and preventing pollution. School of Hope and Bal Vihar. In order to assist social organisations and small-scale industry units to supply the Company. 1. landscaping and shall protect & preserve the biodiversity in the areas of our operations. 3. This reduces the burden of ‗working capital‘ management of these small units. spares. skill and competence of our employees and contractors so as to enable them to demonstrate their involvement.be serviced by larger units. many items are sourced from local NGOs such as AIWC.  We will enhance awareness.  We will regularly monitor. develop. 2. and go beyond compliance with relevant industry standards. TATA STEEL ENVIRONMENTAL POLICY Tata Steel‘s Environmental responsibilities are driven by our commitment to preserve the environment and are integral to the way we do business. Only local vendors are engaged for the delivery of services. Seva Sadan. assess and manage our environmental impact. We are committed to the efficient use of natural resources & energy. legal and othecc7vb. For example. review & report publicly our environmental performance.  We will set objectives-targets.

Operating results expected to decline somewhat in comparison to the second quarter due to increased raw material prices. amongst other factors. with prices for flat products being marginally lower compared to the second quarter. The pricing environment in India in the third quarter was mixed. except where specified otherwise and in case of significant uncertainties. adversely affected margins Group-wide performance Volume of steel products sold declined marginally. Accounting quality: 1. while prices for some long products increased European Operations Production and deliveries in the third quarter of FY‘11 were in line with the first half of FY‘11 Higher raw material prices and reduced apparent demand due to seasonal slowdown. provisions of the Companies Act. and net sales expected to be flat compared to the second quarter.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.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 FY‘11. GAAP comprises mandatory accounting standards prescribed by Companies (Accounting Standards) Amendment Rules. 2006. 24 . 1956 and the guidelines issued by Securities and Exchange Board of India.

1. c. b. 1. Expenditure on New Projects and Expenditure during Construction: In case of new projects. Fixed assets.1. Cost includes the purchase price and all other attributable costs incurred for bringing the asset to its working condition for intended use. 1.5 Investments a.4 Depreciation and Amortisation a. Leasehold land is amortised over the period of lease. if any. are stated at cost of acquisition or construction less accumulated depreciation.3 Fixed Assets a. Long term investments are stated at cost less permanent diminution in value.6 Inventories 25 . adjusted for diminution. if any. 1956 from the beginning of the month in which addition is made. b. Current investments mainly comprising investments in mutual funds are stated at cost. which may differ from the actual results at a subsequent date. Freehold land is not depreciated. expenditure incurred including interest on borrowings and financing costs of specific loans.2 Use of Estimates Estimates and Assumptions used in the preparation of the financial statements are based on management‘s evaluation of the relevant facts and circumstances as of date of the financial Statements. 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. 1. except leasehold land. b. Leasehold land is valued at cost less amount written off. prior to commencement of commercial production is being capitalized to the cost of assets.

c. less estimated costs of completion and the estimated costs necessary to make the sale. Net realizable value is the estimated selling price in the ordinary course of business. 26 . Finished goods lying in the factory premises. branches and depots are valued inclusive of excise duty. raw materials and components are valued at cost or net realizable value whichever is lower. Cost includes all cost of purchase and incidental expenses incurred in bringing the inventories to their present location and condition. Work-in-process including finished components and finished goods are valued at cost or realizable value whichever is lower.a. Materials-in-transit and materials in bonded warehouse is valued at actual cost upto the date of balance sheet. Cost includes direct materials. b. Cost is ascertained using weighted average method. labour costs and a proportion of manufacturing overheads based on the normal operating capacity. Stores and spares.

16 13.34 Cr whereas in the year 09-10 the same thing amounted to Rs. viz.89 Cr.09 15.24315.16069.21 Operating profit margin Profit before Interest and Tax Margin Gross profit Margin Net profit Margin Return On Capital Employed Return On net Worth Return On Long Term funds 1. the expense incurred by the company in operations did not increase much as compared to the sales.01 21. Operating profit margin Formula: Significance: Analysis: Operating Profit/Sales Indicators of operating performance of business In the financial year 2009-10 .06 March’09 37.77 Cr and Rs. In the year 08-09 the total expenses amounted to Rs.54 March’10 35. factory. and other overheads.22 13. employee cost.06 13.95 31. manufacturing expenses. direct labor. In the financial year 10-11 the sales grew with a considerate amount. The operating cost includes the cost of direct material.82 34.27 33. 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. a sale of Rs.11 33. office or selling. The increase in expenditure is proportionately more than sales.PROFTABILITY RATIOS March’11 38. there is a decrease in operating profit margin even though it is evident that there is an increase in sales. 15182.96 13. pushing the operating profit margin upto an amount greater than what it was in 08-09.10 15. etc.48 14.7 30.68 33. 2.36 19.25021.98 Cr respectively.45 13. Gross Profit Margin Formula: Significance: Gross Profit/ Sales Indicator of basic profitability 27 .69 21. This is because of a significant increase in total expenses. The increase in the operating expenses is basically contributed by an increase in power and fuel cost.2 23.

03 JSW 8. whereas the interest increase may be due to pre-payment of loans. An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business. The increase in depreciation can be attributed to an increase in the gross block of assets. constant increase in the above ratio after year is a definite indication of improving conditions of the business. 3.16 RATIO Net Profit Margin Industry 11. TATA Steel 23. In the next financial year 10-11 the. The ratio is thus on effective measure to check the profitability of business. which have attributed to a fall in interest payments. the contribution towards gross profit was mainly due to a phenomenal increase in the other incomes. from the previous financial year.Analysis: In the financial year 09-10. so there was an increase in gross profit. from the previous financial year.64 28 . However. unsecured loans have risen whereas the secured loans have fallen. In the financial year 10-11 the main contributor towards gross profit was sales. This lead to a decrease in the gross profit margin.09 SAIL 11. The other incomes decreased but the decrease was not by a considerable amount. Net Profit margin Formula: Significance: Net Profit/Sales Indicator of overall profitability This ratio indicates the Net margin on a sale of Rs.This ratio helps in determining the efficiency with which affairs of the business are being managed. Analysis: Decrease in the net profit of the company was due to an increase in Interest and Depreciation.100. Even though it was evident that sales increased but the total expenses increase was more than increase in sales. It was seen that even after a fall in EBT as compared to the previous financial year(08-09) the company had to make more payment towards Income Tax.

If ROCE>Interest Rate. whereas in the next financial year there was a jump in the earnings per share. use of debt funds is justified. 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 in the Earning per share as compared to the previous year. 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.73 29 .e. It is also called as ―Return on Capital Employed‖. 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. It indicates the percentage of return on the total capital employed in the business.35 TATA Steel 13.48 SAIL 13. Return On Capital Employed Formula: Operating Profit/capital Employed Significance: Overall profitability of the business on the total funds employed.21 JSW 11. RATIO Return on Capital Employed Industry 13.Net Profit Margin 25 20 15 10 5 0 Industry TATA Steel SAIL JSW Net Profit Margin 4. i. The company's equity share capital increased in both the financial years.

5 12 11.12 . LIQUITDITY AND SOLVENCY RATIO March’11 1. Return On net Worth Formula: Significance: Analysis: Equity Earnings/Shareholder‘s funds Indicatives profitability of Equity Funds/ Owner funds invested in the business In the financial year 09-10 there was a significant drop in the Earning per share as compared to the previous year.76 .5 Industry TATA Steel SAIL JSW Return on Capital Employed 5. The company's equity share capital increased in both the financial years.Return on Capital Employed 14 13.68 March’09 .58 March’10 1.91 .31 Current ratio Quick ratio Debt Equity ratio Long Term debt Equity Ratio 30 .5 13 12.59 .45 .5 11 10. 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.34 1. whereas in the next financial year there was a jump in the earnings per share.57 1.68 .78 1.

then the company may have problems meeting its short-term obligations. which can be attributed to a constant increase in current assets. in comparison to the financial year 08-09.78 SAIL 1. Analysis: There is a constant increase in the current ratio.12 TATA Steel 1.5 0 Industry TATA Steel SAIL JSW Current ratio 31 . In the financial year 0910 we have noticed a fall in the inventory level.e. 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. Ideal Ratio 2:1). If current liabilities exceed current assets. 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. RATIO Current ratio Industry 1. Current ratio Formula: Significance: Current Assets/Current Liabilities Ability to repay short term commitments promptly.6. then that company is generally considered to have good short-term financial strength. the more liquid the company is. Although the current liabilities have also been increasing but the amount is not that considerable as compared to an increase in current assets.21 JSW 0. the higher the ratio. An indication of a company's ability to meet short-term debt obligations.5 1 0. whereas in the year 10-11 inventory level has increased. High ratio indicates existence of idle current assets.78 Current ratio 2 1. (i.

more than 1. Quick ratio Formula: Significance: Quick assets/quick liabilities Ability to meet immediate liabilities. however the TISCO current ratio is 1. and reserves representing accumulated profits and surpluses. Debt Equity ratio Formula: Significance: Debt/Equity Indicates the relationship between debt and equity. This is because of a constant increase in all the current assets other than Inventories. whether long term or short term or whatever in the form of debentures bonds.INDUSTRY. Debt –Equity ratio also known as External.12 i.Internal Equity Ratio is calculated to measure the relative claims of outsiders and the owners against the firm‘s assets. Analysis: There is a constant decrease in the debt equity ratio. revenue reserves. 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. This is basically attributed because of an increase in the equity. The shareholders fund consist of equity share capital. There was also a marginal increase in equity. Outsiders fund includes all debts/liabilities to outsiders. Current Assets other stock and prepaid expenses are considered as quick assets.Thus TISCO is in a better position than all its competitors in current scenario. thus current assets are more than the current liabilities .TISCO current ratio is highest among its competitors . Liquid assets refer to assets which are quickly convertible into cash. 7. The ideal liquid ratio accepted ‗norm‘ for liquid ratio ‗1‘. 32 .33:1 Liquid ratio is also known as ‗quick‘ or ‗Acid test ‗ratio. 8. Analysis: The pattern shown by quick ratio is same as that shown by the Current ratio.e. Ideal ratio is 2:1.78 which is more than the industry ratio . Too much of debt was ruled out and therefore the debt equity ratio kept falling. capital reserves. Ideal ratio is 1. preference share capital . TISCO AND COMPETITOR ANALYSIS: The current ratio of industry is 1. mortgages or bills.

59 SAIL 0. Interest Coverage ratio Formula: Significance: PBIT/ Interest Indicates ability to meet interest obligation of the current year.RATIO Debt Equity Ratio Industry 0. DEBT COVERAGE RATIO March’11 8.35 Interest Coverage ratio 9. The ratio for TISCO is 59% which is safe as compared to that of the industry . This ratio is used to test the debt servicing capacity of a firm.74 Debt Equity Ratio 1 0.86 The trend in industry says that ratio should be approximately 86% or debts should be 86% of the equity.86 TATA Steel 0.52 March’10 5.4 0.6 0.78 March’09 7. should generally be greater than 1. 33 .2 0 Industry TATA Steel SAIL JSW Debt Equity Ratio Industry: 0.8 0.54 JSW 0.

12 .14 times.40 March’09 9.36 1.14 SAIL 15.42 times.14 times than they what actual interest is.42 TATA Steel 6.43 Inventory Turnover Ratio Debtor Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Asset Turnover Ratio 34 .42 The trend of the industry is about 7.22 .85 67.38 March’10 10.44 Interest Coverage Ratio 20 15 10 5 0 Industry TATA Steel SAIL JSW Interest Coverage Ratio 1.14 times.14 times whereas the capacity of the industry is 7.29 .93 9. but the profitability is so high that TISCO can give interest 6.85 1. Industry: 7.90 1.42 times.90 46.29 9.RATIO Industry Interest Coverage Ratio 7.25% less than the capacity of the industry. whereas the position of company is 17.36 41. The TISCO is having capacity of 6. MANAGEMENT EFFICIENY RATIO March’11 9. It does not mean the company is given the interest 6.93 JSW 4.14 The TISCO is in position to give interest as much as 6. Interest coverage Ratio (TISCO) 6.58 10.

Indicates the speed of collection of credit sales/debtors. 11.85% The latest data shows the current inventory turnover ratio to be 9.45% The inventory turnover ratio for the whole of engine producing industry is 7.85 which means that the inventory is replaced with new supply about 9. Debtor Turnover Ratio Formula: Significance: Credit Sales/average accounts receivable. High T/O Ratio indicates fast moving material while low ratio may mean dead or excessive stock. Industry 7.10.85 SAIL 4.45 times a year. 35 .16 JSW 7.45 TATA Steel 9.85 times in a year. RATIO Industry Inventory Turnover Ratio 7. So we can see that in comparison to TISCO the ratio is low and the inventory is replaced 7.45. Inventory Turnover Ratio Formula: Significance: Cost of Goods Sold/ Average Stock Indicates how fast inventory is used/sold.1 Inventory Turnover Ratio 15 10 5 0 Industry TATA Steel SAIL JSW Inventory Turnover Ratio INVENTORY TURNOVER RATIO TATA IRON AND STEEL COMPANY Ltd. 9.

13 32. Fixed assets Turnover Ratio Formula: Significance: Analysis: Turnover/Net Fixed Assets Ability to generate sales per rupee of Fixed Assets.95 Debtors Turnover Ratio 80 70 60 50 40 30 20 10 0 Industry TATA Steel SAIL JSW Debtors Turnover Ratio TISCO The data for TISCO shows the debtors turnover ratio to be 67. If we compare this to TISCO.93. 36 .93 11.58 67. TISCO takes 5 days to do so. In the financial year 09-10 there was a fall in the ratio which affects the profitability of the company in a negative way.RATIO Industry TATA Steel SAIL JSW Debtors Turnover Ratio 35. Industry The debtors‘ turnover ratio for the industry producing engines is pegged at 35. 12. The sharp increase in the ratio in the financial year 10-11 has contributed to the jump in the profit of the company. This shows that whatever debt the company gives is recovered in nearly 5 days.58 which mean that to recover a debt the company takes nearly 10 days.

03 2. This ratio is particularly useful for those investors who are interested only in dividend income.64 83.15 76. There is a constant decrease.5 March’09 27. Dividend yield ratio Formula: Significance: Analysis: Total Equity Dividend/No. As here we can see there is a prenominal increase followed not a huge decrease this shows a positive growth of the company in the future. Earnings Per Share Formula: Significance: PAFESH/No.13.04 81. It actually denotes the company‘s future prospect. whether or not distributed as dividend.97 Dividend yield ratio Cash Earning Retention ratio Price Earnings Ratio 14. Total Asset Turnover Ratio Formula: Significance: Analysis: Turnover/Total Assets Ability to generate sales per rupee of Total Assets. The ratio is calculated by comparing the ratio of dividend per share with its market value.05 8. A comparison of earning per share of the company with another will also help in deciding whether the 37 . The earnings per share of the company helps in determining the market price of the equity shares of the company.92 10. 16. CASH FLOW INDICATOR RATIO March’11 19.2 March’10 16. of equity Shares Amount of profits distributed per share. of Equity Shares Return or income per share. 15. Price Earnings Ratio Formula: Significance: Analysis: Market Price per Share/Earning per Share Indicates the relationship between Market Price and EPS and the shareholders perception of the company. this effects the profitability of the company as the company is not able to utilize its assets to the best possible manner.

87 JSW 88. 38 .09 The earning per share of the industry as a whole is Rs43. SAIL provided much lower earnings per share this annual year.09 per share and we can say.equity share capital is being effectively used or not. EPS of INDUSTRY: 43. that TISCO is giving high earnings per share.58 SAIL 11.87 Earning Per Share 100 80 60 40 20 0 Industry TATA Steel SAIL JSW Earning Per Share EPS of TISCO: 71. As the peer group company.58 EPS of a company represents that how much profit was generated on a per share basis which is 71 . this can be interpreted as comparatively higher return on per share. RATIO Earnings Per Share Industry 43.58. It also helps in estimating the company‘s capacity to pay dividend to its equity shareholders.09 TATA Steel 71.

in 39 . Retained Earnings 1.rbi.5 Growth Rate :12.5% Face Value: 344. And the formula for finding this is Cost of Equity by Dividend approach + Growth Rate Expected Dividend per share: 13. COST OF EQUITY The paid up capital is 959.20 Cost Of Equity Ke: 16. 45% COST OF EQUITY BY CAPM APPROACH Ke= Risk Free return+ (Beta(Market Return-Risk Free Return)) Risk free return is 1 8. Equity Shares 2.33%1 www.COST OF CAPITAL There are 3 kinds of capital in the TISCO 1. Debts 3.41crores.org.

Beta And return of the company 0.85% 2 www.com Drawn from the data of 5last years 3 40 .50% Tax Rate= 30% Kd = 3.tatasteel.27 (in Crores) Total Debt = Rs. 30674.33)) The cost of capital is = 24. 1686.33 + (0.48 (in Crores) Total Interest Payment = Rs.72%2 30. COST OF DEBTS Total Debt = Rs.89%3 So ke = 8.48 (in Crores) Therefore.89-8. 1686. Ki = 5.57% Book value of the company is crores 2. 30674.27 (in Crores) Tax Rate= 30% Total Interest Payment = Rs.72(30.

55% = = = 16.45 41 .02* 0. 47307.COST OF RETAINED EARNING The cost of retained earnings is same as of cost of equity.45 3.5% Retained earnings is equal to Rs.85 16.02crore So KR is 47307.1645 = 7782.03 TOTAL COST OF CAPITAL Cost of equity Cost of Debt Cost of Retained Total = 11. This is 16.

NS 6.moneycontrol.moneycontrol. http://indiaearnings. http://www.moneycontrol.moneycontrol.com/competition/tatasteel/comparison/TIS 42 .moneycontrol.moneycontrol.com/sub_india/financialreports.com/news/results/tata-steel-q1-net-triplesriversdale-stakesale_576029.BIBLIOGRAPHY 1.php?sc_did=TIS&type=balan ce 2.php?sc_did=TIS&type=profit 5. http://indiaearnings. http://www.com/q?s=TATASTEEL.com/financials/jswsteel/ratios/JSW01 8.moneycontrol.com/sub_india/financialreports.yahoo. http://www. http://www. http://indiaearnings.html 7.com/financials/steelauthorityindia/ratios/SAI 9.php?sc_did=TIS&type=yearl y 4.com/sub_india/financialreports. http://finance.php?sc_did=TIS&type=cashfl ow 3.moneycontrol. http://indiaearnings.com/sub_india/financialreports.

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