Comparative Analysis of Indian Private and Public Sectors With Special Reference To TATA Steel and SAIL

Comparative financial analysis of Indian private and public sectors with special reference to Tata steel
and SAIL
1.1 INTRODUCTION
Indian steel industry is one of the fastest growing industries in the whole
world. Steel is the backbone of any modern human civilization or it can be
said steel is essential for the development of any economy. Consumption of
volume of steel is the barometer for measuring the economic growth and
progress of the country. Driven by rising infrastructure development and
growing demand for automotive, steel consumption is expected to reach 104
MT by 2017. It is expected that consumption per capita would increase
supported by rapid growth in the industrial sector, and rising infra expenditure
projects in railways, roads & highways, etc. It is expected that consumption
per capita would increase supported by rapid growth in the industrial sector,
and rising infra expenditure projects in railways, roads & highways, etc.
During the worldwide financial turmoil, Indian steel industry also faced
certain problems but unexpectedly domestic steel demand was unaffected due
to growth in semi-urban and rural areas. The exorbitant rise of Indian steel
industry across all verticals has facilitated the growth of Indian economy. The
scope of Indian steel industry is huge and continues to grow reasonably in the
near future.
India is the world’s third-largest producer of crude steel (up from eighth in
2003) and is expected to become the second-largest producer by the end of
2016. The growth in the Indian steel sector has been driven by domestic
availability of raw materials such as iron ore and cost-effective labour.
Consequently, the steel sector has been a major contributor to India’s
manufacturing output.
The Indian steel industry is very modern with state-of-the-art steel mills. It has
always strived for continuous modernisation and up-gradation of older plants
and higher energy efficiency levels.
Market Size
India’s crude steel production grew by 9.4 per cent year-on-year to
at8.1Million Tonnes (MT) in August 2016. During April-August 2016, crude
steel production in the country grew by 7 per cent year-on-year to 39.98 MT.
Over April-August 2016, steel imports fell 34.5 per cent year-on-year to 3.01
MT, while steel exports rose 23.6 per cent year-on-year to 2.38 MT.
St. Thomas’ college, Thrissur (Autonomous) 1 Department of commerce

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Steel consumption in the country is expected to grow 5.3 per cent year-on-year
to 85.8 MT during FY2016-17, led by growth in the construction and capital
goods sector.
Steel industry and its associated mining and metallurgy sectors have seen a
number of major investments and developments in the recent past.
According to the data released by Department of Industrial Policy and
Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct
Investments (FDI) to the tune of US$ 8.89 billion, respectively, in the period
April 2000–March2016.
Some of the major investments in the Indian steel industry are as follows:
Tidfore Heavy Equipment Group, the China-based infrastructure giant, is
looking to enter the Indian market by signing an investment agreement worth
US$ 150 million with Uttam Galva Metallics, to expand its Wardha unit along
with South Korean steel major Posco.
ArcelorMittal SA is looking to set up a joint venture (JV) factory in India with
state-owned Steel Authority of India Ltd (SAIL), to manufacture high-end
steel products which could be used in defence and satellite industries.
JSW Group plans to invest around Rs. 10,000 crore (US$ 1.49 billion) at
Salboni in West Bengal to set up 1,320 Megawatt (MW) coal-based power
plant, 4.8 million tonne cement plant and paints factory over a period of next
five to seven years.
National Mineral Development Corporation (NMDC) has planned to invest Rs
40,000 crore (US$ 5.96 billion) in the next eight years to achieve mining
capacity of 75 Million Tonnes Per Annum (MTPA) by FY2018-19 and 100
MTPA by FY2021-22, compared to 48 MTPA current capacity.
Posco Korea, the multinational Korean steel company, has signed an
agreement with Shree Uttam Steel and Power (part of Uttam Galva Group) to
set up a steel plant at Satarda in Maharashtra.
ArcelorMittal, world’s leading steel maker, has agreed a joint venture with
Steel Authority of India Ltd (SAIL) to set up an automotive steel
manufacturing facility in India.
Iran has evinced interest in strengthening ties with India in the steel and mines
sector, said ambassador of the Islamic Republic of Iran, Mr Gholamreza
Ansari in his conversation with Minister of Steel and Mines, Mr Narendra
Singh Tomar.
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Public sector mining giant NMDC Ltd will set up a greenfield 3-million tonne
per annum steel mill in Karnataka jointly with the state government at an
estimated investment of Rs 18,000 crore (US$ 2.67 billion).
JSW Steel has announced to add capacity to make its plant in Karnataka the
largest at 20 MT by 2022.
1.2 OBJECTIVES
a. To compare private and public steel sector with reference to TATA
Steel and Steel Authority Of India.
b. To analyse potential of both the companies i.e. TATA Steel and SAIL
c. To analyse measures taken by Indian government to improve the

industry and study the National Steel Policy 2017
d. To analyse the future of Indian steel industry.

1.3 SCOPE/SIGNIFICANCE OF STUDY
The main aim of the research is to compare public and private sector steel
companies. TATA steel and Steel Authority of India limited are the two
companies selected for the same. 2016 data’s collected through various
sources are used. It is also aimed to analyse potential of both the companies.
Another significance is to undertake a study on measures taken by Indian
government to improve the industry and also study the national steel policy
2016. The scope of the research is to analyse the future of Indian steel
industry.
1.4 RESEARCH METHODOLOGY
1.4.1 Research design:

In case of my research “Comparative analysis of Indian private and Public
sectors with special reference to TATA Steel and SAIL” the descriptive
research is found to be more appropriate.
Descriptive research studies are those studies, which are concerned with
describing the characteristics of a particular individual, or a group. This study
is concerned with specific prediction, narration of facts and characteristics
concerning individual, group of situation are all examples of descriptive
research studies.
1.4.2 Sources of data:

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According to my topic of research I found that the use of secondary data is the
only right choice. For that I mainly used Internet and collective various data
from government and private websites.
I visited to the library and went through various books and journals for
collection of the relevant data for the research.
1.4.3 Tools of study:
The main tool of data is administrative data, data collected as a result of an
organisations day to day operations. That is annual accounts and reports of
SAIL (steel authority of India limited) and TATA steel. Then internet is used as
a tool to collect various data required for the research.
1.4.4 Period of study:

The period of study taken to undertake the research is 21 days.
1.4.5 Limitations of study:

There are various limitations which are as follows:
A. The main source of information is annual reports. They represent
financial information/position on particular date. What happened
between such two dates cannot easily be presumed or predicted.
B. The annual reports mostly contain quantitative and financial
information and as regards to qualitative aspect of financial
performance, my source was limited due to far away location of head
offices of the selected units.
C. Limited access to the companies selected for study is an important
limitation to the authenticity of the study.
D. Lack of time is another prospect of limits set for the study.
E. Authenticity of data collected is another limitation for the research.
The data of production and profits mentioned in the reports have
authenticity only up to the data published, which cannot be ensured
properly due lack of contact with the two firms.

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2.1 INDUSTRY PROFILE
The Indian steel industry has entered into a new development stage from
2007-08, riding high on the resurgent economy and rising demand for steel.
Rapid rise in production has resulted in India becoming the 3rd largest
producer of crude steel in 2015 and the country continues to be the largest
producer of sponge iron or DRI in the world.
As per the report of the Working Group on Steel for the 12th Five Year Plan,
there exist many factors which carry the potential of raising the per capita steel
consumption in the country. These include among others, an estimated
infrastructure investment of nearly a trillion dollars, a projected growth of
manufacturing from current 8% to 11-12%, increase in urban population to
600 million by 2030 from the current level of 400 million, emergence of the
rural market for steel currently consuming around 10 kg per annum buoyed by
projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv
Gandhi Awaas Yojana among others.
At the time of its release, the National Steel Policy 2005 had envisaged steel
production to reach 110 million tonnes (mt) by 2019-20. However, based on
the assessment of the current ongoing projects, both in greenfield and
brownfield, the Working Group on Steel for the 12 th Five Year Plan has
projected that domestic crude steel capacity in the county is likely to be 140
mt by 2016-17 and has the potential to reach 149 mt if all requirements are
adequately met.
The National Steel Policy 2005 is currently being reviewed keeping in mind
the rapid developments in the domestic steel industry (both on the supply and
demand sides) as well as the stable growth of the Indian economy since the
release of the Policy in 2005.
Production
Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.
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Today, India is the rd largest producer of crude steel in the world.

In 2014-15, production for sale of total finished steel (alloy + non alloy) was
91.46 mt, a growth of 4.3% over 2013-14.
Production for sale of Pig Iron in 2014-15 was 9.7 mt, a growth of 22% over
2013-14.
India is the largest producer of sponge iron in the world with the coal based
route accounting for 90% of total sponge iron production in the country.
Data on production for sale of pig iron, sponge iron and total finished steel
(alloy + non-alloy) are given below for last five years:
Indian steel industry : Production for Sale (in million tonnes)
Category 2010-11 2011-12 2012-13 2013-14 2014-15
Pig Iron 5.68 5.371 6.870 7.950 9.694
Sponge 20.38
Iron 25.08 19.63 14.33 18.20
Total 68.62 75.70 81.68 87.67 91.46

Finished
Steel
(alloy +

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non alloy)
Source: Joint Plant Committee
Demand - Availability Projection

Demand – availability of iron and steel in the country is projected by Ministry
of Steel in its Five Yearly Plan documents.
Gaps in availability are met mostly through imports.
Interface with consumers by way of a Steel Consumers’ Council exists, which
is conducted on regular basis.
Interface helps in redressing availability problems, complaints related to
quality.
Steel Prices
Price regulation of iron & steel was abolished on 16.1.1992. Since then steel
prices are determined by the interplay of market forces.
Domestic steel prices are influenced by trends in raw material prices, demand
– supply conditions in the market, international price trends among others.
An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel,
under the Chairmanship of Secretary (Steel) to monitor and coordinate major
steel investments in the country.
As a facilitator, the Government monitors the steel market conditions and

adopts fiscal and other policy measures based on its assessment. Currently,
basic excise duty for steel is set at 12.5% and there is no export duty on steel
items. The government has also imposed export duty of 30% on all forms of
iron ore except low grades which carry a duty of 10% while iron ore pellets
have a export duty of 5% in order to control ad-hoc exports of the items and
conserve them for long term requirement of the domestic steel industry. It has
also raised import duty on most steel imports by 2.5%, taking the import duty
on carbon steel flat products to 10% and that on long products to 7.5%.
For ensuring quality of steel several items have been brought under a quality
control order issued by the Government.
Imports
Iron & steel are freely importable as per the extant policy.
Data on import of total finished steel (alloy + non alloy) is given below for last
five years:

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Indian steel industry : Imports (in million tonnes)
Category 2010-11 2011-12 2012-13 2013-14 2014-15
Total Finished Steel

(alloy + non alloy)
6.66 6.86 7.93 5.45 9.32
Exports
Iron & steel are freely exportable.
Data on export of total finished steel (alloy + non alloy) is given below for last
five years:
Indian steel industry : Exports (in million tonnes)
Category 2010-11 2011-12 2012-13 2013-14 2014-15
Total Finished
Steel (alloy +
non alloy)
3.64 4.59 5.37 5.98 5.59
Levies on Iron & Steel

SDF levy
This was a levy started for funding modernisation, expansion and development
of steel sector. The Fund, inter-alia, supports:
Capital expenditure for modernisation, rehabilitation, diversification, renewal
& replacement of Integrated Steel Plants.
Research & Development
Rebates to SSI Corporations
Expenditure on ERU of JPC
The SDF levy was abolished on 21.4.94
Cabinet decided that corpus could be recycled for loans to Main Producers
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Interest on loans to Main Producers is set aside for promotion of R&D on steel
etc.
An Empowered Committee has been set up to guide the R&D effort in this
sector.
EGEAF – Was a levy started for reimbursing the price differential cost of
inputs used for engineering exporters. Fund was discontinued on 19.2.96.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy opened up the Indian iron and steel industry for
private investment by (a) removing it from the list of industries reserved for
public sector and (b) exempting it from compulsory licensing. Imports of
foreign technology as well as foreign direct investment are now freely
permitted up to certain limits under an automatic route. Ministry of Steel plays
the role of a facilitator, providing broad directions and assistance to new and
existing steel plants, in the liberalized scenario.
The Growth Profile
(i) Steel: The liberalization of industrial policy and other initiatives taken by
the Government have given a definite impetus for entry, participation and
growth of the private sector in the steel industry. While the existing units are
being modernized/expanded, a large number of new steel plants have also
come up in different parts of the country based on modern, cost effective, state
of-the-art technologies. In the last few years, the rapid and stable growth of the
demand side has also prompted domestic entrepreneurs to set up fresh
Greenfield projects in different states of the country.
Crude steel capacity was 109.85 mt in 2014-15 and India, which emerged as
the 3rd largest producer of crude steel in the world in 2015 as per ranking
released by the WSA, has to its credit, the capability to produce a variety of
grades and that too, of international quality standards. The country is expected
to become the 2nd largest producer of crude steel in the world soon, provided
all requirements for creation of fresh capacity are adequately met.
(ii) Pig Iron: India is also an important producer of pig iron. Post-
liberalization, with setting up several units in the private sector, not only
imports have drastically reduced but also India has turned out to be a net
exporter of pig iron. The private sector accounted for 91% of total production
for sale of pig iron in the country in 2014-15. The production for sale of pig
iron has increased from 1.6 mt in 1991-92 to 9.7 mt in 2014-15.

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(iii) Sponge Iron: India is the world’s largest producer of sponge iron with a
host of coal based units, located in the mineral-rich states of the country. Over
the years, the coal based route has emerged as a key contributor and accounted
for 90% of total sponge iron production in the country. Capacity in sponge
iron making too has increased over the years and stood at 46.23 mt in 2014-15.
2.2 COMPANY PROFILE

Steel Authority of India
Steel Authority of India Limited (SAIL) is one of the largest state-owned
steel making company based in New Delhi, India and one of the top steel
makers in world. With an annual turnover of ₹43,370 crore (US$6.4 billion)
(FY 2015-16). It is a public sector undertaking which trades publicly in the
market is largely owned by Government of India and acts like an operating
company. Incorporated on 24 January 1973, SAIL has 85,145 employees (as
of 01-Oct-2016). With an annual production of 13.9 million metric tons, SAIL
is the 24th largest steel producer in the world. The Hot Metal capacity of the
Company will further increase and is expected to reach a level of 23.5 million
tons per annum by the end of the Financial Year 2015-16. Shri P.K Singh is the
current Chairman of SAIL.
SAIL operates and owns 5 integrated steel plants at Bhilai, Rourkela,
Durgapur, Bokaro and Burnpur and 3 special steel plants at Salem, Durgapur
and Bhadravathi. It also owns a Ferro Alloy plant at Chandrapur. As part of its
global ambition, the company is undergoing a massive expansion and
modernization programme involving upgrading and building new facilities
with emphasis on state of the art green technology. SAIL is a public sector
company, owned and operated by the Government of India. According to a
recent survey, SAIL is one of India's fastest growing Public Sector Units.
Besides, it has R&D Centre for Iron & Steel (RDCIS), Centre for Engineering
and Technology (CET), Management Training Institute (MTI) and SAIL
Safety Organization (SSO) located at Ranchi capital of Jharkhand.
History
1959-1973

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SAIL traces its origin to the Hindustan Steel Limited (HSL) which was set up
on 19th January 1954. HSL was initially designed to manage only one plant
that was coming up at Rourkela.
For Bhilai and Durgapur Steel Plants, the preliminary work was done by the
Iron and Steel Ministry. From April 1957, the supervision and control of these
two steel plants were also transferred to Hindustan Steel. The registered office
was originally in New Delhi. It moved to Calcutta in July 1956, and ultimately
to Ranchi in December 1959.
A new steel company, Bokaro Steel Limited (Bokaro Steel Plant), was
incorporated on 29 January 1964 to construct and operate the steel plant at
Bokaro. The 1 MT phases of Bhilai and Rourkela Steel Plants were completed
by the end of December 1961. The 1 MT phase of Durgapur Steel Plant was
completed in January 1962 after commissioning of the Wheel and Axle plant.
The crude steel production of HSL went up from 1.58 MT (1959–60) to 1.6
MT. The second phase of Bhilai Steel Plant was completed in September 1967
after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase
of Rourkela – the Tandem Mill – was commissioned in February 1968, and the
1.6 MT stage of Durgapur Steel Plant was completed in August 1969 after
commissioning of the Furnace in SMS. Thus, with the completion of the 2.5
MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total
crude steel production capacity of HSL was raised to 3.7 MT in 1968–69 and
subsequently to 4 MT in 1972–73. IISCO was taken over as a subsidiary in
1978 and later merged in 2006.
Holding company
The Ministry of Steel and Mines drafted a policy statement to evolve a new
model for managing industry. The policy statement was presented to the
Parliament on 2 December 1972. On this basis the concept of creating a
holding company to manage inputs and outputs under one umbrella was
mooted. This led to the formation of Steel Authority of India Ltd. The
company, incorporated on 24 January 1973 with an authorized capital of
₹2,000 crore (US$300 million), was made responsible for managing five
integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the
Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as
an operating company
Major units
Durgapur Steel plant
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Rourkela Steel Plant (RSP) in Odisha set up with German collaboration (The
first integrated steel plant in the Public Sector in India, 1959)
Bhilai Steel Plant (BSP) in Chhattisgarh set up with Soviet collaboration
(1959)
Durgapur Steel Plant (DSP) at Durgapur, West Bengal set up with British
collaboration (1965)
Bokaro Steel Plant (BSL) in Jharkhand (1965) set up with Soviet collaboration
(The Plant is hailed as the country’s first Swadeshi steel plant, built with
maximum indigenous content in terms of equipment, material and know-how)
IISCO Steel Plant (ISP) at Burnpur in Asansol, West Bengal
Special Steel Plants
Alloy Steels Plants (ASP), Durgapur, West Bengal
Salem Steel Plant (SSP), Tamil Nadu
Visvesvaraya Iron and Steel Limited (VISL), at Bhadravathi, Karnataka
Ferro Alloy Plant
Chandrapur Ferro Alloy Plant (CFP) in Maharashtra
Refractory Plants - SAIL Refractory Unit (SRU)
SAIL Refractory Unit, Bhandaridah in Jharkhand
SAIL Refractory Unit, Bhilai in Chattisgarh
SAIL Refractory Unit, IFICO, Ramgarh in Jharkhand
SAIL Refractory Unit, Ranchi Road in Jharkhand
Central units
Centre for Engineering and Technology
Research and Development Centre for Iron and Steel
SAIL Consultancy Organization.
Environment Management Division
Ownership and management
The Government of India owns about 75% of SAIL's equity and retains voting
control of the Company. However, SAIL, by virtue of its Maharatna status,
enjoys significant operational and financial autonomy.
Mr. P.K Singh is the current chairman of SAIL. Prior to this, P.K Singh took
over as the Chief Executive Officer (CEO) of Durgapur Steel Plant in 2012.
Earlier in July 2015, he was given the additional charge of CEO of IISCO
Steel Plant, Burnpur (West Bengal). An alumnus of IIT-Rookie, he started his
career in SAIL at its Bokaro Steel Plant in 1980. Singh also worked in IISCO
Steel Plant, Durgapur Steel Plant, Bokaro Steel Plant and Bhilai Steel Plant.
Operations
As of 31-Mar-2015, SAIL has 93,352 employees, as compared to 170,368 (as
of 31-Mar-2002). There has been a continuous reduction of headcount over the
past few years due to enhanced productivity and rationalized manpower.
The total requirement of its main raw material, iron ore, is met through its
captive mines. To meet its growing requirement, capacities of existing iron ore

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mines are being expanded and new iron ore mines are being developed. In
addition, new iron ore deposits in the states of Rajasthan, Chhattisgarh,
Madhya Pradesh, Maharashtra, Odisha and Karnataka are being explored.
Around 24% of its coking coal requirements are met from domestic sources,
the remaining through imports. For improving coking coal security, the
Company is also making efforts for development of new coking coal blocks at
Tasra and Sitanalla.
SAIL produced 13.9 million tonnes of crude steel by operating at 103% of its
installed capacity, which is an increase of 1% over the previous year. It also
generated 710 MW of electricity during FY2014-15.
Tata steel
Tata Steel Limited (formerly Tata Iron and Steel Company Limited
(TISCO)) is
an Indian multinational steel-making company headquartered in Mumbai,
Maharashtra, India, and a subsidiary of the Tata Group. It was the 10th largest
steel producing company in the world in 2015, with an annual crude steel
capacity of 25.3 million tonnes, and the second largest steel company in India
(measured by domestic production) with an annual capacity of 9.7 million
tonnes after SAIL
Tata Steel has manufacturing operations in 26 countries, including Australia,
China, India, the Netherlands, Singapore, Thailand and the United Kingdom,
and employs around 80,500 people. Its largest plant is located in Jamshedpur,
Jharkhand. In 2007 Tata Steel acquired the UK-based steel maker Corus.
It was ranked 486th in the 2014 Fortune Global 500 ranking of the world's
biggest corporations. It was the seventh most valuable Indian brand of 2013 as
per Brand Finance.
History
Tata Iron and Steel Company was founded by Jamshetji Tata and established
by Dorabji Tata on 26 August 1907, as part of his father Jamshetji's Tata
Group. By 1939 it operated the largest steel plant in the British Empire. The
company launched a major modernization and expansion program in 1951.
Later in 1958, the program was upgraded to 2 million metric tonnes per annum
(MTPA) project. By 1970, the company employed around 40,000 people at
Jamshedpur, with a further 20,000 in the neighboring coal mines. In 1971 and
1979, there were unsuccessful attempts to nationalize the company. In 1990, it
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started expansion plan and established its subsidiary Tata Inc. in New York.
The company changed its name from TISCO to Tata Steel in 2005. Tata Steel
on Thursday (12 Feb 2015) announced buying three strip product services
centers in Sweden, Finland and Norway from SSAB to strengthen its offering
in Nordic region. The company, however, did not disclose value of the
transactions.
Operations
Tata Steel is headquartered in Mumbai, Maharashtra, India and has its
marketing headquarters at the Tata Centre in Kolkata, West Bengal. It has a
presence in around 50 countries with manufacturing operations in 26 countries
including: India, Malaysia, Vietnam, Thailand, UAE, Ivory Coast,
Mozambique, South Africa, Australia, United Kingdom, The Netherlands,
France and Canada.
Tata Steel primarily serves customers in the automotive, construction,
consumer goods, engineering, packaging, lifting and excavating, energy and
power, aerospace, shipbuilding, rail and defense and security sectors.
Shareholding
As on 31 March 2013, Tata Group held 31.35% shares in Tata Steel. Over 1
million individual shareholders hold approx. 21% of its shares. Life Insurance
Corporation of India is the largest non-promoter shareholder in the company
with 14.88% shareholding.
Shareholders Shareholding
Promoters: Tata Group companies 31.35%
Insurance Companies 21.81%
Individual shareholders 22.03%
Foreign Institutional Investors 15.35%
GDRs 02.41%
Others 07.05%
Total 100.0%
The equity shares of Tata Steel are listed on the Bombay Stock Exchange, where it is
a constituent of the BSE SENSEX index, and the National Stock Exchange of India,
where it is a constituent of the S&P CNX Nifty.

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Its Global Depository Receipts (GDRs) are listed on the London Stock Exchange and
the Luxembourg Stock Exchange.
The public sector steel companies in India are doing extremely well. And, therefore,
they will have a decisive role to play. In fact, SAIL and RINL [Rashtriya Ispat
NigamLtd.], which has the Vizag steel plant, have undertaken massive expansion
plans. Between 1992-93 and now, the share of the public sector in steel production
had gone down. Today, its share is 41 per cent while that of the private sector is 59 per
cent. In1992-93, the private sector had a share of only 37 per cent. In terms of
finished steel, the private sector, even in 1992-93, had a 67 per cent share and this has
now grown to 71 per cent. But the public sector units are growing, even if the private
sector is growing faster.
During 2006, SAIL and RINL decided on major capacity expansion plans. SAIL is
going to increase its capacity from the current 13 million tons of hot metal to
22.5million tons in just four years. RINL is set to expand its capacity from three
million tons to 6.3 million tons in the next three years. So that is a major expansion
of capacity for the PSUs.

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The public sector should be encouraged all the more. Let there be a healthy
competition between public and private sector producers. The question of exit comes
when they do not perform. Look at the stock prices of SAIL. A few years ago, the
scrip was at below Rs.10 per share. Today, it is more than Rs.130, and the
expectations are that it will go up even higher.
When talked about the labour productivity he says, Yes, labour productivity is low, in
SAIL in particular. But it is improving. The steel major is going to adjust much of its
existing manpower in the expansion phase when its capacity is going to almost
double. The management had also undertaken a massive VRS [voluntary retirement
scheme]. In RINL, labour productivity is not all that bad.
Besides, SAIL has done very well in various other techno-economic parameters in the
last two and a half years. In 2003-04, SAIL's manpower productivity was 127 tons per
man per year. In 2005-06, it went up to 150 tons per man per year, an Improvement of
20 per cent. In blast furnace productivity also, there has been an improvement, as also
in the production of high-end special steels and capacity utilization.
With the improved turnover, which comes from higher capacity use and
higher manpower productivity, SAIL's profits have surged. Its gross profit more than
doubled between 2003-04 and 2005-06. The general presumption was that the spurt in
profits was largely due to the high prices of steel. An analysis has shown that as far as
SAIL is concerned, the higher profit is 29 per cent owing to the price factor in steel
and other input costs, and 71 per cent owing to improvement in capacity use and
other factors that are just mentioned.
Dr. S.K. khartik titto Varghese, (2011) they found the profitability more or less
depends upon the better utilization of resources and to manpower. It is worthwhile to
increase production capacity and use advance technology to cut down cost of
production and wage cost in order to increase profitability, not only against the
investment, but also for investor‟s return points of view.
Vijayakumar and Venkatachalan (2003) In their study indicated a moderate trend in

the financial position and the utilization of working capital, variations in working
capital size should be avoided attempts should also be made to use funds more
effectively, by keeping an optimum level of working capital. Because, keeping more

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current assets cause a reduction in profitability. Hence, efforts should be made to

ensure a positive trend in the estimation and maintenance of the working capital.
Saravanan (2001) made a study on working capital management in ten selected non-
banking financial companies. For this study the employed several statistical tools on
different ratio is to examine the effective management of working capital.
Marc Deloof (2003) stated that the companies have large amount of cash invested in
working capital. It can therefore be expected that the way in which working capital is
managed will have a significant impact on the profitability of companies.
B. Nimalathasan and Valeriu Brabete (2010) pointed out capital structure and its
impact on profitability: a study of listed manufacturing companies in Sri Lanka. The
analysis of listed manufacturing companies shows that Debt equity ratio is positively
and strongly associated to all profitability ratios (Gross Profit, Operating Profit and
Net Profit Ratios).
Hurdle (1973) revealed that financial leverage effects negatively with profitability in
accordance with two stage least squares (2SLS) and positively according to ordinary
least squares(OLS).
Mc Connell and Servaes (1995) and Agarwal and Zhao (2007) presented additional
evidence on how the growth of the firm may effect on the relationship between capital
structure and performance. High growth firms effect negatively between financial
leverage and firm value, while low growth firms effect positively.
Choudhury (1993) mentioned that the decreased use of debt tends to decrease
profitability of a company. Because due to lack of adequate finances it has to give up
some of the profitable opportunities and vice-versa.
Banu (1990) stated that the capital structure of a firm has a direct impact on its
profitability. She suggested that the concerned financial executives should put
emphasis on various aspects of capital structure. Otherwise the capital structure of the
enterprise will be unsound producing adverse impact on its profitability.
T. Venkatesan & Dr. S. K. Nagarajan (2012) studied An Empirical Study of

Profitability Analysis of Selected Steel Companies in India. It is observed that the

and SAIL
overall earning power of Sail, Tata, Bhushan and JSW Company is positive and Visa’s
financial position has a negative result of the study period.
Mills (1996) has explored the question of the impact of inflation on the capital
budgeting process. The study reveals that it is reasonable to expect that the cost of
capital will increase at the same rate as the rate of inflation on an ex-ante basis, and
that this increase will be a multiplicative relationship. It also reveals that the higher
the net working capital the greater is the impact of inflation on capital spending.
Bhunia (2007) made an assessment of management of working capital of Steel

Authority of India Limited and Indian Iron and Steel Company Limited from 1991-92
to 2002-03 with the help of financial tools and statistical techniques. Finding reveals
that both the Companies have maintained inadequate working capital, poor liquidity,
and managed Inventory & receivables inefficiently during the period of study.
Though there are innumerable literatures available on the subject, the most
appropriate studies have been reviewed.Dr. Promod Kumar published a book in 1991
“Analysis of financial statement of Indian Industries” The study covered the 17
private sector, 5 state owned public sector and 1 central public sector companies. He
studied analysis of activities, assessment of profitability, return on capital investment,
analysis of financial structure, analysis of fixed assets and working capital. In his
research he revealed various problems of industries and suggested remedies for the
problems. He also suggested for the improvement of profitability and techniques of
cost control.
Ahindra Chakrabati published an articles “Performance of public sector enterprises a

Case study on fertilizers” in “The Indian journal of public enterprise” in the year
1988-89. He made analysis of consumption and production of fertilizer by public
sector; he also made analysis of profit and loss statement. He gave suggestion to
improve the overall performance of public enterprise.
In the year of 2002, Dr. Sugan C. Jain has written a book on “Performance appraisal
automobile industry” In his study he has analyses the performance of the automobile
industry and presented comparative study of some national and international units.
The operational efficiency and profitability had been analysed using the composite
index approach. He made several suggestions from the strengthening the financial
soundness improving profitability, working capital the performance of fixed assets.
and SAIL
Comparison between TATA Steel and Steel Authority of India
The public sector undertaking (PSUs) under ministry of steel had been showing
improvements in the previous years but has failed miserably during 2015-16. The
combined profit before tax of 15 PSUs has come down from 9133.72 crores in fiscal
2015 to a loss of 1560 crores in financial year 2016. The percentage change of profit
before tax from financial year 2015 is a huge 117% which shows the massive
downward movement of the graph.
The Steel Authority of India Limited (SAIL) is a company registered under the Indian
Companies Act, and is a Central Public Sector Enterprise (CPSE). It has five
integrated steel plants at Bhilai (Chhattisgarh), Rourkela (Odisha), Durgapur (West
Bengal), Bokaro (Jharkhand) and Burnpur (West Bengal). SAIL has three special and
alloy steels plants viz. Alloy Steels Plant at Durgapur (West Bengal), Salem Steel
Plant at Salem (Tamil Nadu) and Visvesvaraya Iron and Steel Plant at Bhadravati
(Karnataka). SAIL has also several units viz. Research and Development Centre for
Iron and Steel (RDCIS), Centre for Engineering and Technology (CET), Management
and SAIL
Training Institute (MTI) and SAIL Safety Organisation (SSO) all located at Ranchi,
Central Coal Supply Organisation (CCSO) located at Dhanbad, Raw Materials
Division (RMD), Environment Management Division (EMD) and Growth Division
(GD) all located at Kolkata, and SAIL Refractory Unit at Bokaro. Chandrapur Ferro
Alloy Plant, (CFP) is located at Maharashtra. The Central Marketing Organisation
(CMO), with its headquarters at Kolkata, coordinates the countrywide marketing and
distribution network of the Company. The SAIL Consultancy Division (SAILCON)
functions from New Delhi. When looked into the production performance of SAIL, it
can be seen that the saleable steel produced during April-march in the year 2014-2015
amounted to 12.8 (mts) which was reduced to 8.8 (mts) during april-december of
2015-2016 which is lesser by 3%. The saleable steel production was at a lower level
during the period April-December 2015-16 (8.8 MMT) compared to the
corresponding period last year (12.8 MMT).
In India TATA steel is one of the largest private sector integrated steel producer with a
turnover of 38000 crores. Tata Steel Limited (formerly Tata Iron and Steel Company
Limited (TISCO)) is an Indian multinational steel-making company headquartered in
Mumbai, Maharashtra, India, and a subsidiary of the Tata Group. It was the 10th
largest steel producing company in the world in 2015, with an annual crude steel
capacity of 25.3 million tonnes, and the second largest steel company in India
(measured by domestic production) with an annual capacity of 9.7 million tonnes after
SAIL. Tata Steel has manufacturing operations in 26 countries, including Australia,
China, India, the Netherlands, Singapore, Thailand and the United Kingdom, and
employs around 80,500 people. Its largest plant is located in Jamshedpur, Jharkhand.
In 2007 Tata Steel acquired the UK-based steel maker Corus. It was the seventh most
valuable Indian brand of 2013 as per Brand Finance. The profit after tax of Tata steel
for the year 2014-15 was 6439 crores which was reduced to 4901 crores in 2015-16.
Even though the profit after tax has reduced compared to previous year the saleable
steel production of Tata steel has increased from 9.07(mts) during 2014-15 to
9.70(mts) in 2015-2016.
Comparing private and public sector steel companies according to the following
categories:

and SAIL
PRODUCTION
World crude steel production stood at 1622.8 million tonnes during 2015, a decrease
of 2.8% over 2014 based on provisional data released by World Steel Association
(WSA). During 2015, Chinese crude steel production reached 804 million tonnes,
registering a decline of 2.3% over the previous year. China remained the largest crude
steel producer in the world, accounting for 73% of Asian and 50% of world crude
steel production during 2015. India was the 3rd largest crude steel producer during
2015 and recorded a growth of 2.6% over 2014.
The following table highlights the total as also the contribution of the private and
public sector in crude steel production in the country during the last five years and
April-December 2015-16:
Indian Crude Steel Production

Sector Unit 2010- 2011- 2012- 2013- 2014- April-
11 12 13 14 15 December
2015-16*
Public Sector mt 16.99 16.48 16.48 16.77 17.21 13.34
Private mt 53.68 57.81 61.94 64.92 71.77 53.74
Sector
Total mt 70.67 74.29 78.42 81.69 88.98 67.08
Production
Share of % 24 22 21 21 19 20
Public
Sector
Source: JPC; *provisional; mt= million tonnes
The production of both public sector (SAIL) and private sector (Tata steel) steel
company are mentioned below:

and SAIL
Tata steel
PRODUCION (MNT) FY12 FY13 FY14 FY15 FY16
Hot metal 7.75 8.86 9.90 10.17 10.68
Crude steel 7.13 8.13 9.16 9.33 9.96
Saleable steel production 6.97 7.94 8.93 9.07 9.70
It can be noticed that the production in Tata steel has grown compared to the previous
year (9.07 mnt) to 9.70 mnt. It was noted that there was a change of 6.9% in
production compared to previous year production.
SAIL
PRODUCTION 2011 2012 - 2013 - 2014- 2015-16

(MNT) -12 13 14 15 (Apr-
Dec'15)
Hot Metal 14.1 14.3 14.4 15.4 11.8
Crude Steel 13.4 13.4 13.6 13.9 10.6
Saleable Steel 12.4 12.4 12.8 12.8 8.8

production
It can be noticed that the saleable steel production has reduced from 12.8mnt of
previous year to 8.8 mnt in the current fiscal year.
FINANCIALS
Tata steel
STATEMENT OF PROFIT AND LOSS ( IN RS. CRORES )
Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

INCOME
Revenue From 42,290.64 46,226.08 45,869.55 41,843.27 36,687.13
Operations [Gross]

and SAIL
Less: Excise/Service 4,475.95 4,792.26 4,598.31 4,117.81 3,072.25

Tax/Other Levies
Revenue From 37,814.69 41,433.82 41,271.24 37,725.46 33,614.88
Operations [Net]
Other Operating 395.65 351.18 439.79 473.97 318.58
Revenues
Total Operating 38,210.34 41,785.00 41,711.03 38,199.43 33,933.46
Revenues
Other Income 3,890.70 582.78 787.64 902.04 886.43
Total Revenue 42,101.04 42,367.78 42,498.67 39,101.47 34,819.89
EXPENSES
Cost Of Materials 9,700.01 11,707.83 9,677.71 9,877.40 8,014.37
Consumed
Purchase Of Stock- 991.54 688.32 352.63 453.34 209.52
In Trade
Changes In 142.97 (745.17) (155.18) (404.60) (220.72)
Inventories Of
FG,WIP And Stock-
In Trade
Employee Benefit 4,324.90 4,601.92 3,673.08 3,608.52 3,047.26
Expenses
Finance Costs 1,460.27 1,975.95 1,820.58 1,876.77 1,925.42
Depreciation And 1,933.11 1,997.59 1,928.70 1,640.38 1,151.44
Amortisation
Expenses
Other Expenses 16,438.06 16,109.99 16,375.81 14,414.66 11,824.49
Less: Amounts 598.89 586.69 1,029.92 876.13 478.23
Transfer To Capital
Accounts
Total Expenses 34,391.97 35,749.74 32,643.41 30,590.34 25,473.55
Profit/Loss Before 7,709.07 6,618.04 9,855.26 8,511.13 9,346.34
Exceptional,
extraordinary Items
And Tax
Exceptional Items (1,582.55) 1,890.85 (141.76) (674.53) 511.01
Profit/Loss Before 6,126.52 8,508.89 9,713.50 7,836.60 9,857.35
Tax
Tax Expenses-Continued
Operations
Current Tax 1,433.06 1,908.60 3,098.02 1,770.54 3,115.11
and SAIL
Less: MAT Credit 152.17 117.21 0.00 399.84 0.00

Entitlement
Deferred Tax (55.32) 278.38 203.29 1,402.93 45.82
Total Tax Expenses 1,225.57 2,069.77 3,301.31 2,773.63 3,160.93
Profit/Loss After Tax 4,900.95 6,439.12 6,412.19 5,062.97 6,696.42
And Before
extraordinary Items
Profit/Loss From 4,900.95 6,439.12 6,412.19 5,062.97 6,696.42
Continuing
Operations
Profit/Loss For The 4,900.95 6,439.12 6,412.19 5,062.97 6,696.42
Period
OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 48.67 64.49 64.21 50.28 67.84
Diluted EPS (Rs.) 48.67 64.49 64.21 50.28 66.62
VALUE OF IMPORTED AND
INDIGENIOUS RAW
MATERIALS
Imported Raw 7,194.82 8,163.97 6,539.93 7,035.83 6,116.87
Materials
Indigenous Raw 5,477.23 5,704.96 5,682.45 5,143.43 3,984.42
Materials
STORES, SPARES AND LOOSE
TOOLS
Imported Stores And 661.94 817.19 1,589.20 830.52 497.36
Spares
Indigenous Stores 3,685.78 3,384.85 3,101.48 1,637.65 1,511.98
And Spares
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share 776.97 776.97 971.21 776.97 1,165.46
Dividend
Tax On Dividend 149.30 153.02 66.19 128.73 181.57
Equity Dividend 80.00 80.00 100.00 80.00 120.00
Rate (%)

and SAIL
The year 2015-16 has shown a turnover of 4900.95 crores which is average but
has been lesser than the previous years huge turnover of Rs. 6439.12 crores. The
turnover had been reduced due to unhealthy Indian economy, changes in steel prices ,
lower volumes and lesser improvements made by the company. . Finished steel sales
were lower by 8.7% at Rs.37814.89 over the previous year.
SAIL
STATEMENT OF PROFIT AND LOSS (IN RS. CRORES)

INCOME
Revenue From 43,370.89 50,650.76 51,891.90 49,384.57 50,375.02
Operations
[Gross]
Less: 4,823.29 5,418.60 5,677.29 5,388.64 4,694.37
Excise/Service
Tax/Other Levies
Revenue From 38,547.60 45,232.16 46,214.61 43,995.93 45,680.65
Operations [Net]
Other Operating 538.64 478.62 483.80 602.33 661.14
Revenues
Total Operating 39,086.24 45,710.78 46,698.41 44,598.26 46,341.79
Revenues
Other Income 580.60 1,020.78 881.41 964.44 1,622.98
Total Revenue 39,666.84 46,731.56 47,579.82 45,562.70 47,964.77
EXPENSES
Cost Of Materials 17,150.61 18,522.90 19,271.16 21,198.48 23,020.82
Consumed
Purchase Of 0.00 0.48 0.78 3.21 4.88
Stock-In Trade
Changes In 540.61 (1,408.12) 894.63 (2,016.09) (1,368.51)
Inventories Of
FG,WIP And
Stock-In Trade
Employee Benefit 9,893.81 9,736.33 9,578.51 8,637.20 7,932.05
Expenses
Finance Costs 2,046.75 1,454.23 967.64 747.66 677.70
Depreciation And 2,099.54 1,773.28 1,716.69 1,402.98 1,567.03
and SAIL
Amortisation
Expenses
Other Expenses 15,118.45 14,205.32 13,035.06 12,160.81 10,707.37
Total Expenses 46,849.77 44,284.42 45,464.47 42,134.25 42,541.34
Profit/Loss (7,182.93) 2,447.14 2,115.35 3,428.45 5,423.43
Before
Exceptional,
Extraordinary
Items And Tax
Exceptional Items 0.00 0.00 959.12 -229.32 -262.02
Profit/Loss (7,182.93) 2,447.14 3,074.47 3,199.13 5,161.41
Before Tax
Tax Expenses-Continued
Operations
Current Tax 0.00 499.15 683.26 1,057.96 1,501.03
Less: MAT Credit 0.00 499.15 520.11 0.00 0.00
Entitlement
Deferred Tax (2,984.67) 282.76 331.97 12.44 113.42
Tax For Earlier (76.51) (16.53) 112.95 (0.09) (6.30)
Years
Total Tax (3,061.18) 266.23 608.07 1,070.31 1,608.15
Expenses
Profit/Loss After (4,121.75) 2,180.91 2,466.40 2,128.82 3,553.26
Tax And Before
extraordinary
Prior Period Items (15.51) (88.23) 150.08 41.53 (10.54)
Extraordinary 0.00 0.00 0.00 0.00 139.17
Items
Profit/Loss From (4,137.26) 2,092.68 2,616.48 2,170.35 3,681.89
Continuing
Operations
Profit/Loss For (4,137.26) 2,092.68 2,616.48 2,170.35 3,681.89
The Period
OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) (10.02) 5.07 6.33 5.25 8.58
Diluted EPS (Rs.) (10.02) 5.07 6.33 5.25 8.58
VALUE OF IMPORTED AND
INDIGENIOUS RAW

and SAIL
MATERIALS
Imported Raw 11,456.19 10,555.91 13,333.85 12,692.19 15,169.03
Materials
Indigenous Raw 9,417.91 7,966.99 5,937.31 11,542.03 10,389.60
Materials
STORES, SPARES AND
LOOSE TOOLS
Imported Stores 378.36 416.88 397.98 393.15 407.05
And Spares
Indigenous Stores 3,824.80 2,217.30 1,673.18 3,610.31 3,448.63
And Spares
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share 0.00 826.10 834.35 826.10 826.10
Dividend
Tax On Dividend 0.00 164.79 141.67 135.19 134.02
Equity Dividend 0.00 20.00 20.00 20.00 20.00
Rate (%)
SAIL achieved a turnover of Rs.43,370.89 crore during the Financial Year 2015-16,
which is lower by 14% over previous year, mainly due to decrease in Net Sales
Realisation of Saleable Steel of 5 Integrated Steel Plants by about 20%. The prices of
steel products kept falling throughout the year due to fall in Global Steel Prices
leading to predatory imports from China, Japan, Korea, etc. However, there has been
an increase in price realisation after imposition of Minimum Import Price (MIP) w.e.f.
5th February, 2016. The loss after tax of your Company for the Financial Year 2015-
16 was Rs.4,137 crore compared to net profit after tax of Rs. 2,093 crore in the
previous Financial Year.
The performance of the Company during the year was adversely affected due to lower
Net Sales Realisation, lower saleable steel production, adverse financial impact of on
account of contribution to District Mineral Foundation and National Mineral
Exploration Trust w.e.f. 12th January, 2015, higher usage of relatively expensive
imported coal in the blend due to lower availability of indigenous coal, higher salaries
& wages, higher repairs & maintenance expenditure, higher interest charges and

and SAIL
reduction in interest earnings on term deposits, higher depreciation due to

capitalisation of new facilities and non-availability of gain on sale of investment in
Bokaro Jaypee Cement Limited considered in the previous financial year. However,
the adverse factors have been partially offset by higher sales volume and lower
imported & indigenous coal prices, reduction in coke rate, reduction in demurrage
expenses, reduction in price of Ferro alloys, etc.
RESEARCH AND DEVELOPMENT

TATA STEEL
Year Amount % of
Turnover
Recurring Capital Total Turnover
2010- 75.69 4.88 80.57 29396.35 0.27

11
2011- 52.3 0.68 52.98 33933.46 0.16
12
2012- 55.77 3.96 59.73 38199.43 0.15
13
2013- 68.45 12.06 80.51 41,711.03 0.19
14
2014- 107.87 25.93 130.80 41,785.00 0.32
15
2015- Yet to be published
16

and SAIL
R&D investment chart of Tata steel depicts that 0.32% of its turnover is spent
for the research purposes which is lesser when compared to Steel Authority of
India Limited (SAIL).
SAIL
Year SAIL's R&D Expenditure

Turnover Capital Revenue Total % of
Turnover
2011-12 50348 5.37 129.08 134.45 0.27
2012-13 49350 2.56 145.07 147.63 0.30
2013-14 51866 4.38 106.05 110.43 0.21
2014-15 50627 32.14 232.06 264.20 0.52
In the above chart we can see that R&D investment of SAIL has increased and
is 0.52% of its turnover.
CASH FLOW STATEMENTS (IN RS. CRORES)
TATA STEEL

Net Profit/Loss 6,126.52 8,508.89 9,713.50 7,836.60 9,857.35
Before
Extraordinary Items
And Tax
Net Cash Flow From 7,567.68 4,851.89 12,432.80 11,068.67 10,256.47
Operating Activities
Net Cash Used In (5,405.22) (2,382.10) (9,837.42) (8,522.40) (2,859.11)
Investing Activities
Net Cash Used From (1,631.04) (2,957.21) (3,825.98) (4,281.59) (7,599.35)
Financing Activities
Foreign Exchange (0.12) 0.02 0.00 0.00 0.00
Gains / Losses
Net Inc. /Dec In 531.30 (487.40) (1,230.60) (1,735.32) (201.99)
Cash And Cash
Equivalents
Cash And Cash 421.93 909.33 2,139.93 3,900.53 4,102.52
Equivalents Begin
of Year
Cash And Cash 953.23 421.93 909.33 2,165.21 3,900.53
Equivalents End Of

and SAIL
Year
SAIL

Net Profit/Loss (7,198.44) 2,358.91 3,224.55 3,240.66 5,150.87
Before
Extraordinary Items
And Tax
Net Cash Flow 2,817.87 2,744.12 5,883.09 2,404.48 1,169.68
From Operating
Activities
Net Cash Used In (4,094.98) (5,160.50) (7,192.12) (5,705.13) (7,534.92)
Investing Activities
Net Cash Used 1,258.88 2,361.51 1,246.71 3,247.53 (4,699.15)
From Financing
Activities
Net Inc/Dec In (18.23) (54.87) (62.32) (53.12) (11,064.39)
Cash And Cash
Equivalents
Cash And Cash 160.04 214.91 277.23 330.35 17,480.49
Equivalents Begin
of Year
Cash And Cash 141.81 160.04 214.91 277.23 6,416.10
Equivalents End Of
Year
From the above cash flow statements of Tata steel and SAIL, we can observe
that throughout the previous years SAIL has stayed above Tata steels cash and
cash equivalence and have improved every year step by step. Even though
SAIL have improved in the current year compared to the previous years ,
SAIL has failed to produce increase in cash whereas Tata steel has improved
to an increase in cash compared to the previous years. Hence it can be noted

and SAIL
that in the current year Tata steel has a better cash flow than SAIL. Therefore
the above findings state that SAIL has more cash outflows than cash inflows
and Tata steel has more cash outflows than cash inflows.
KEY FINANCIAL RATIOS (IN RS. CRORES)

Tata steel
TATA STEEL Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

Per Share Ratios
Basic EPS (Rs.) 48.67 64.49 64.21 50.28 67.84
Diluted EPS (Rs.) 48.67 64.49 64.21 50.28 66.62
Cash EPS (Rs.) 70.35 86.85 85.86 69.01 80.79
Dividend / Share(Rs.) 8.00 8.00 10.00 8.00 12.00
Revenue from Operations/Share 393.35 430.15 429.39 393.24 349.32
(Rs.)
PBDIT/Share (Rs.) 114.29 109.03 140.05 123.82 127.89
PBIT/Share (Rs.) 94.39 88.47 120.19 106.94 116.04
PBT/Share (Rs.) 63.07 87.59 99.99 80.67 101.47
Net Profit/Share (Rs.) 50.45 66.29 66.01 52.12 68.94
Profitability Ratios
PBDIT Margin (%) 29.05 25.34 32.61 31.48 36.61
PBIT Margin (%) 23.99 20.56 27.99 27.19 33.21
PBT Margin (%) 16.03 20.36 23.28 20.51 29.04
Net Profit Margin (%) 12.82 15.41 15.37 13.25 19.73
Return on Net worth / Equity 6.95 9.65 10.48 9.17 12.72
(%)
Return on Capital Employed (%) 4.79 6.50 6.95 5.92 8.44
Return on Assets (%) 3.97 5.56 5.77 4.96 6.96
Total Debt/Equity (X) 0.41 0.36 0.39 0.43 0.41
Asset Turnover Ratio (%) 31.01 36.12 37.56 37.49 35.27
Liquidity Ratios
Current Ratio (X) 0.68 0.71 0.61 0.70 0.76
Quick Ratio (X) 0.35 0.23 0.29 0.38 0.47
Inventory Turnover Ratio (X) 5.39 5.20 6.94 7.27 6.98
Dividend Payout Ratio (NP) (%) 15.85 12.06 15.14 15.34 17.40
Dividend payout Ratio (CP) (%) 11.36 9.20 11.64 11.59 14.85
Earnings Retention Ratio (%) 84.15 87.94 84.86 84.66 82.60
Cash Earnings Retention Ratio 88.64 90.80 88.36 88.41 85.15
(%)

and SAIL
SAIL
SAIL Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

Per Share Ratios
Basic EPS (Rs.) (10.02) 5.07 6.33 5.25 8.58
Diluted EPS (Rs.) (10.02) 5.07 6.33 5.25 8.58
Cash EPS (Rs.) (4.93) 9.36 10.49 8.65 12.71
Dividend / Share(Rs.) 0.00 2.00 2.00 2.00 2.00
Revenue from Operations/Share 94.63 110.67 113.06 107.97 112.19
(Rs.)
PBDIT/Share (Rs.) (7.35) 13.74 11.62 13.51 18.56
PBIT/Share (Rs.) (12.43) 9.45 7.46 10.11 14.77
PBT/Share (Rs.) (17.39) 5.92 7.44 7.75 12.50
Net Profit/Share (Rs.) (10.02) 5.07 6.33 5.25 8.91
Profitability Ratios
PBDIT Margin (%) (7.76) 12.41 10.27 12.50 16.54
PBIT Margin (%) (13.14) 8.53 6.60 9.36 13.16
PBT Margin (%) (18.37) 5.35 6.58 7.17 11.13
Net Profit Margin (%) (10.58) 4.57 5.60 4.86 7.94
Return on Networth / Equity (%) (10.53) 4.81 6.13 5.29 9.24
Return on Capital Employed (%) (6.87) 3.22 4.11 3.51 6.38
Return on Assets (%) (4.21) 2.10 2.84 2.57 4.82
Total Debt/Equity (X) 0.80 0.65 0.57 0.52 0.40
Asset Turnover Ratio (%) 39.77 46.02 50.78 52.95 60.70
Liquidity Ratios
Current Ratio (X) 0.58 0.83 0.95 1.23 1.52
Quick Ratio (X) 0.18 0.31 0.41 0.52 0.79
Inventory Turnover Ratio (X) 2.58 2.58 3.07 2.79 3.37
Dividend Payout Ratio (NP) (%) 0.00 39.47 31.88 38.06 22.43
Dividend Payout Ratio (CP) (%) 0.00 21.36 19.25 23.11 15.73
Earnings Retention Ratio (%) 0.00 60.53 68.12 61.94 77.57
Cash Earnings Retention Ratio 0.00 78.64 80.75 76.89 84.27
(%)
Above are the key financial ratios of Tata steel and SAIL. When comparing
both the companies in the current year, Tata steel has failed to perform higher
than its previous year but has hold its ground while SAIL has a negative EPS
and negative profitability ratios , which shows its immense failure to perform
its tasks in the current year. Even comparing the trend of previous five years,

and SAIL
Tata steel has shown more progressive profitability ratios. Profitability ratios
show a company’s overall efficiency and performance. Hence it can be noticed
that Tata steel is more efficient and has performed more I the previous years as
well. Even then liquidity ratios are stronger in case of SAIL when compared to
Tata steel. Liquidity ratios measure a company's liquid assets against its short-
term liabilities. In general, the more liquid assets you have to cover short-term
liabilities, the more likely it is that you'll be able to pay debts as they become
due without running out of funds to support ongoing operations. Hence it
shows that SAIL is more liquid and has more liquidity in assets than Tata steel.
WORKFORCE AND WELFARE OF SOCIETY
TATA steel
TATA steel value for their people has been reciprocated with over 87 years of
industrial harmony and a leadership position in the area of Human Resource
Management (HRM) in India. Its work culture ensures safety, good health,
development of capabilities, quality of life and overall well-being of our employees.
Human Capital comprises full-time employees and contract workforce who are
looked after by the HRM, Safety and Health functions.
In FY16, Tata received the All India Organization of Employers (AIOE-FICCI)

National Award for Outstanding Industrial Relations.
The foundation of long-term value creation rests on the philosophy of participative

management between Management and the Union. Trust is the cornerstone on which
industrial harmony has been built. The three-tier Joint Consultative Process, depicted
on the adjacent page, consisting of Joint Departmental Councils at the departmental

and SAIL
level, allows issues related to collective bargaining, production and productivity to be

addressed effectively.
To drive forth their commitment to labour and human rights, they implemented the
Social Accountability Policy encompassing Human Rights at the Workplace. Since
2004, the HRM has been certified to the Social Accountability 8000 standard and
subsequently, other units have also been certified.
Training and Development led to faster ramp up of new units. Experience gained in
different projects during the expansion of the Jamshedpur Works was leveraged and
used for performance and cycle time improvements in Kalinganagar.
Special focus was placed on Training and Skill Development to enhance employee
productivity by over 12% compared with FY15 to touch 701 tcs/emp/year by the
company.
Tata also introduced an improved approach to Learning & Development using an

academy approach for various functions. Employee Competency Building System, e-
learning and Vendor Capability Development (VCAP), covered the training needs of
the contract workforce as well as distributors. Over 85% of the employees are
involved in improvement activities across the organization.
1. In 1916, Social Welfare Scheme was formed by Tata Steel to provide

assistance in the fields of education, vocational training, self-employment and
family welfare
2. Tata Steel has hosted the Lifeline Express, the world’s first hospital on a train,
12 times. This facility provides on-the-spot diagnostic, medical and advanced
surgical treatment for preventive and curative interventions to people in
inaccessible rural areas.
3. Sir Dorab Tata personally financed four athletes and two wrestlers from India
for the 1920 Antwerp Olympics!
4. The JRD Sports Complex, an international stadium with an 8-lane
polyurethane track, was inaugurated in 1991. The complex also houses
facilities for handball, tennis, volleyball, hockey, basketball, boxing, table
tennis and a modern gymnasium.

and SAIL
5. The Tata Steel Family Initiatives Foundation is engaged in offering health

services for the betterment of the people in and around Jamshedpur.
6. At times of natural calamities, the company has rushe immediate relief and
offered long-term assistance to tsunami-hit Tamil Nadu, earthquake-torn
Gujarat, flood ravaged Orissa and other such affected areas.
7. Horse-riding lessons, the Jubilee Amusement park, the zoological park, etc.
offer a unique environment for the children of Jamshedpur to grow up in.
8. In a recent survey conducted on ‘Quality of Life’ by AC Nielsen ORG-
MARG, Jamshedpur has emerged as the one of the best cities in India.
SAIL
The Manpower Strength of SAIL as on 1st April, 2015 was 93352. The Manpower
strength of SAIL as on 01.01.2016 was 90184 (Executive 14193 / Non-Executive
75991). Achieved a reduction of 3168 manpower during the year 2015-16 (up to
December, 2015). Tata steel achieved the Labour Productivity (LP) of 3I5 TCS/Man/
Year in 20I5-I6. The manpower strength of the Company as on 3Ist March, 20I6 was
88,655 nos. with manpower rationalization of 4,697 nos. achieved during the year.
The enhanced productivity with rationalized manpower could be achieved as a result
of judicious recruitments, building competencies and infusing a sense of commitment
and passion among employees to go beyond and excel.
The company has provided land for construction of school buildings in some of
the steel townships as well as in other places for spreading education among the
masses.
1. The company has constructed roads in remote areas around the steel plants and
also where the captive mines are located to improve communication and also
increase activities such as organisation of health camps, school facilities,
drinking water etc., under the peripheral development schemes.
2. Bhilai Steel Plant has adopted 36 tribal children of Chattisgarh region and
Bokaro Steel Plant has adopted 12 Birhor tribe children. These plants are
providing them with education, boarding and lodging facilities.

and SAIL
3. Construction of bridges, by-pass roads, metal-morum path, waterways,

levelling/dressing area around township, pre-mixed roads. Installation of hand-
pumps, tube wells and wells for villagers.
4. Construction of school buildings (including for mentally retarded, deaf and
dumb children), madarsas, providing school furniture therein and construction
of hostels, women’s college building etc.
5. Fourteen scholarships are awarded to deserving SC/ST undergraduate
engineering students in various disciplines to encourage technical education
among them
6. In many cases, tuition fee in company run schools is exempt for SC/ST
students. Steps are taken to provide education to more and more tribal children
in company schools.
7. The unemployed SC/ST youth are given specialized training in various
technical trades to develop skill and knowledge. Such training is provided free
of cost.
8. Adult literacy campaign is carried out in most of the steel townships. Every
year more and more men and women are being covered in this campaign.
9. Development of fishery and cottage industry, providing sewing machines to
village mahila mandals and promoting other self-employment generation
schemes.
10. SAIL has established a hockey academy with stadium and hostel facilities at
Rourkela to tap and nurture the talent scattered in surrounding tribal area. The
academy was successful in spotting a number of young talented tribal players
and grooms them under expertise of ex-Olympian.
TECHNOLOGY
The growth in Indian steel demand lagged much behind expectations. In the next two
years, India’s steel consumption is forecast to grow annually by about 5%–6%. Indian
steel capacity is also expected to rise from 99 million tonnes (mt) in 2013 to about
125mt in 2016, registering a CAGR of 8.8%. The Government of India has Orated a
target to produce 300mt by 2025–26.
Tata steel
and SAIL
In recent years, the company witnessed growth through Brownfield capacity

expansion at Jamshedpur Works (completed in 2012) and Greenfield steel plant at
Kalinganagar, Odisha. The Kalinganagar Plant comprises of several facilities, many
of which were installed by end of FY15. The Plant was ramped-up during the year for
final commissioning. Some of the key highlights of the year includes Blast Furnace,
Pulverised Coal Injection, Gas Recovery Turbines, Stove Waste Heat Recovery, Cast
House Slag Granulation System for BF – Granshot, Waste recycling/reuse, By-
product gas recovery and utilization. The best technologies adopted by the company
are Large Blast furnace – 4330 cubic meter designed to have minimal water footprint,
Twin Wagon Tipplers for achieving faster turnaround time with unloading capacity of
20 MnTPA of raw materials, 100% by-product gas-based power generation leading to
reduction in carbon footprint, Big LD converter – 310 tonnes., CAS - OB for refining
of steel, Twin Slab Casters, Significant reduction of noise and dust pollution during
production and Zero-effluent discharge.
SAIL
SAIL has undertaken modernization and expansion at five of its steel plants to
augment its crude steel production capacity to 21.4 MTPA. The indicative investment
for the current phase of expansion is estimated at Rs 61,870 crore. The five integrated
steel plants are at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur and a special steel
plant at Salem, Minister of State for Steel and Mines Vishnu Deo Sai said in a written
reply to Rajya Sabha. "Steel Authority of India Ltd (SAIL) has undertaken
modernization and expansion of its five integrated steel plants...to enhance its crude
steel production capacity from 12.8 MTPA to 21.4 MTPA in the current phase," he
said. The objective of modernization drive is to upgrade steel-making technologies
and productive capacity and, in the process, become more energy-efficient and
improve quality.
SAFETY MEASURES
A unique feature of safety management in steel industry is that a bipartite forum

named Joint Committee on Safety, Health and Environment in Steel Industry (JCSSI)
was formed in 1973 at national level having representatives from steel plants in SAIL,

and SAIL
RINL, TISCO and Ispat Group. All the Central Trade Unions are represented on this
Committee. With a view to inculcate safety consciousness, JCSSI organizes seminars,
workshops, training programme, safety competitions for member organizations.
JCSSI with the co-operation and support of Trade Union representatives formulates
policies and guidelines for its member plants and monitors the implementation. Safety
is an important aspect in functioning of any industry. It is important not only for its
employees and workers but also for the environment and the nation. Iron and Steel
production being a complex and hazardous activity, needs to prevent injuries and
accidents, provide a healthy working environment and guard against all possible
hazards and risks to be adequately recognised and taken care of.
Tata steel
Safety has always been a prime focus at Tata Steel. A Safety Committee, a
Safety department and a Safety Trophy helped spread the message all across the
company.
TATA reaffirms its commitment to provide safe working place and clean
environment to its employees and other stakeholders as an integral part of its business
philosophy and values. We will continually enhance our Environmental, Occupational
Health & Safety (EHS) performance in our activities, products and services through a
structured EHS management framework. Towards this commitment, we shall;
 Establish and achieve EHS objectives and targets.

 Ensure compliance with applicable EHS legislation and other requirement and
go beyond.
 Conserve natural resources and energy by constantly seeking to reduce

consumption and promoting waste avoidance and recycling measures.
 Eliminate, minimize and/or control adverse environmental impacts and

occupational health and safety risks by adopting appropriate "state-of-the-art"
technology and best EHS management practices at all levels sand functions.

and SAIL
 Enhance awareness, skill and competence of our employees and contractors so

as to enable them to demonstrate their involvement, responsibility and
accountability for sound EHS performance.
SAIL
SAIL has a separate corporate unit, called the SAIL Safety Organisation to
monitor safety system & activities- SAIL also has a comprehensive safety
policy:
1. Conformance with Management systems like OHSAS-18001:2007 and SA
8000:2008.
2. Safety aspects are incorporated in Standard Operating Procedures (SOPs),
Standard Maintenance Procedures (SMPs) and Safe Work Instructions (SWI)
and adhered.
3. Work permit system followed for safe execution of jobs.
4. Protocols framed and adhered for Capital / Major repair jobs.
5. Unsafe acts and conditions are identified during preventive
inspections/surprise checks and control measures taken and followed up.
6. Joint inspections are conducted for fire prone areas including Cable galleries,
Oil cellars etc and functioning of fire detection & protection systems are
closely monitored. Mock drills are conducted for emergency preparedness.
7. Worker's participation in Safety Management is encouraged through Apex/
Departmental Safety Committees at Plants / Units. Also at National Steel
Industry level through Joint committee on Safety, Health and Envt. in the Steel
Industry (JCSSI), secretarial functions of which is managed by SSO.
8. Specific Medical examination made mandatory for issuance of Height Pass for
Working at Height and also for Crane Operators and Mobile Equipment
Operators.
9. Inter plant networking in Occupational Safety & Health for coordination and
monitoring established by SSO for which NOHSC, BSP is functioning as the
Central agency.
10. A MOU has been signed with NSC India for Safety Audit and Training for
utilizing the expertise of both SAIL & NSC in SHE activities.
Among the identified thrust areas, high priority has been accorded towards
enhancing safety standards at contractor's work areas in view of their
deployment in both Projects & Works related jobs. Concerted efforts are being
made to train and educate the persons coming from different socio economic
background about safe working inside works. Guidelines in vogue in this area

and SAIL
include safety and penalty clause in contracts, system of site inspections and
issue of safety clearance before start of jobs, deployment of safety officers etc.
Reportable Lost Time Injury Frequency Rate (RLTIFR)-For the period April
2015-Dec 2015 : 0.22 (as against MOS target of 0-0.25). All accidents are
investigated, analysed and remedial actions taken to prevent recurrence.
MEASURES TAKEN BY INDIAN GOVERNMENT TO IMPROVE THE

INDUSTRY
Now let’s have a look over what government has done to make the industry
competitive in world market. Government has taken several initiatives in last decade
to improve the steel industry. The main steps taken for this are as follows-
1. In the new Industrial Policy announced in July, 1991 Iron and Steel industry,
among others, was removed from the list of industries reserved for the public
sector and also exempted from the provisions of compulsory licensing under the
Industries (Development and Regulation) Act, 1951.
2. With effect from 24th May 1992, Iron and Steel industry has been included in the
list of `high priority' industries for automatic approval for foreign equity
investment up to 51%. This limit has been recently increased to 100%.
3. Price and distribution of steel were deregulated from January 1992. At the same
time, it was ensured that priority continued to be accorded for meeting the
requirements of small scale industries, exporters of engineering goods and North
Eastern Region of the country, besides strategic sectors such as Defense and
Railways.
4. The trade policy has been liberalized and import and export of iron and steel is
freely allowed. There are no quantitative restrictions on import of iron and steel
items, covered under Chapter No. 72 of the ITC (HS) Code. The only
mechanism regulating the imports is the tariff mechanism. Tariffs on various
items of iron and steel have drastically come down since 1991-92 levels and the
government is committed to bring them down to the international levels. In
Chapter 72 there are two items viz. 72042110 and 72042910, which fall in the
restricted list of imports.
5. Iron & Steel are freely importable as per the Extant Policy.

and SAIL
6. Iron & Steel are freely exportable.
7. Advance Licensing Scheme allows duty free import of raw materials for
exports.
8. The floor price for seconds and defectives continues till date.
9. Imports of seconds and defectives of steel are allowed only through three
designated ports of Mumbai, Calcutta and Chennai.
10. Mandatory pre inspection certificate by a reputed international agency for every
import consignment of seconds and defectives.
11. In budget 2004-05, the customs duty on nonalloy steel was reduced from 15 %
to 10 per cent and on alloy steel from 20 per cent to 15 per cent. In August 2004,
the customs duty on non-alloy steel was further reduced from 10 per cent to 5
per cent; on melting scrap from 5 per cent to 'zero' and on ships for breaking
from 15 per cent to 5 per cent.
12. Further, customs duty on several raw materials used by the steel sector like
noncooking coal, met coke and nickel has been reduced to 5 per cent and on
coking coal to 'zero'.
13. To bring down the prices of steel, the excise duty on steel products was reduced
from 16 per cent to 8 per cent with effect from February 28, 2004 with a caveat
that the duty regime will be reviewed. Budget 2004-05 revised this partially by
increasing the duty from 8 per cent to 12 per cent, as the intended impact of duty
cut on moderating prices was not achieved.
The union Budget 2007-08 the import duty on seconds and defective has been further
reduced from 20% to 10%.
Special assistance being provided by Ministry of Steel to Private Sector
1. Ministry of Steel is extending all possible support, as detailed below, for the
development of Iron and Steel Sector in the country:
2. The Ministry is providing linkage for raw materials, rail movement clearance etc.
for new plants and expansion of existing ones, wherever applied for.

and SAIL
3. To ensure an un-interrupted supply of raw materials to the producers.
4. The Ministry has been interacting with All India Financial institutions to expedite
clearance of projects.
5. Regular interactions with Entrepreneurs, who are proposing to setup Iron and
Steel Plants, are held at the level of Secretary.
6. Ministry of Steel identifies infra-structural and related facilities required by steel

industry so that their absence does not lead to bottlenecks in the future growth of
the Iron and Steel Sector, and takes up these issues with the concerned ministries.
7. The Ministry has encouraged the setting up of "Institute for Steel Development
and Growth (INSDAG)" in Calcutta in August, 1996. The leading steel producers
in the country are members of this Institute, which has been set up with the
objective of promoting, developing and propagating the proper and effective use
of steel.
8. In order to resolve the problems faced by existing & new steel plants & to assist
major steel plants being implemented, Govt. has setup a Project Coordination
Group under the Chairmanship of Steel Minister
NATIONAL STEEL POLICY, 2017
Vision, Mission & Objectives
a) Vision: To create a globally competitive steel industry that promotes inter-

sectoral growth. / OR / To create a self-sufficient steel industry that is
technologically advanced, globally competitive and promotes inclusive growth.

and SAIL
b) Mission: Provide environment for attaining –  Self-sufficiency in steel

production by providing policy support & guidance to private manufacturers,
MSME steel producers, CPSEs & encourage adequate capacity additions. 
Development of globally competitive steel manufacturing capabilities  Cost-
efficient production and domestic availability of iron ore, coking coal and natural
gas  Facilitate investment in overseas asset acquisitions of raw materials. 
Enhance domestic steel demand.
c) Objectives: The National Steel Policy aims at achieving the following

objectives –
 Build a globally competitive industry with a crude steel capacity of 300

MT by 2030-31
 Increase per Capita Steel Consumption to 160 Kgs by 2030-31
 To domestically meet entire demand of high grade automotive steel,
electrical steel, special steels and alloys for strategic applications by 2030-
31
 Increase domestic availability of washed coking coal so as to reduce
import dependence on coking coal to 50% by 2030-31
 To be net exporter of steel by 2025-26
 Encourage industry to be a world leader on energy and raw material
efficient steel production by 2030-31, in a safe and sustainable manner
 Develop and implement quality standards for domestic steel products
The following salient features can be derived after analysing the NSP 2017:
1. The “Make in India” initiative is expected to witness significant investments

in Construction, Infrastructure, Automobile, Shipbuilding and Power sectors,
which will stimulate steel demand. Hence, efforts will be made to pass on
such benefit to the domestic steel producers. Use of cost efficient and
competitive ‘Indian Made steel’ will pave the way for infrastructure
development and construction activities in the country.
2. Creation of additional capacity for fulfilling the anticipated demand will
require significant capital investment of about Rs. 10 lakh Crore by 2030-31
and will also generate significant employment in the range of 36 Lakhs by
2030-31 from the current level of 25 Lakhs depending on degree of
automation resulting from adoption of different technologies.

and SAIL
3. Transportation of iron ore fines to palletization units will be targeted through

slurry pipelines and conveyors as it will reduce pollution and de-congest
transportation infrastructure in mining areas. To encourage this environment
friendly transportation, Ministry of Steel will pursue timely completion of
on-going slurry pipeline projects and their further expansion in the coming
years.
4. About 70% of the coking coal requirement of the domestic steel industry is
presently being met through imports. Ministry of Steel will coordinate with
Ministry of Coal to increase availability of coking coal through overseas
asset acquisition and will also ensure that sufficient number of modern
coking coal Washeries get established. Suitable fiscal measures will also be
taken to support the rising requirement in the steel sector.
5. Many projects have stuck due to delays in acquisition of adequate land at the
preferred locations due to policy and procedural issues. In order to reach
crude steel capacity of about 300 MT, additional land requirement is
estimated to be ~91,000 acres considering green field expansion. It has been
observed that the water allocation for steel industry is generally accorded
low priority. But it is forecast that by 2030-31, the steel industry will
annually require approximately 1500 million cu. meter of water.
6. Since bulk of the capacity additions are likely to come up in the three eastern
states of Odisha, Chhattisgarh and Jharkhand, Ministry of Steel will pursue
for the adequate and timely infrastructure growth in these regions to address
the increased industry requirement in areas such as railways, roadways,
power generation and distribution etc. Government will need to invest
heavily in development of evacuation infrastructure to minimize turn-
around-time as well as to build the necessary linkages to reduce the length of
haulage. Ministry of Steel will also encourage steel players to promote better
plant layout design, engineering, technologies and optimum use of economic
capacity. Increased investment in slurry pipelines.
7. Various measures as mentioned below will be taken to improve the
performance of MSME steel sector and sponge iron industry-
a. Availability of raw materials will be facilitated by providing long term
linkages of non-coking coal to sponge iron industry and increasing the
iron ore availability in the domestic market.

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b. Adoption of energy efficient technologies in the MSME steel sector will

be encouraged to improve the overall productivity & reduce energy
intensity.
c. Small and medium iron and steel making units will be encouraged to be
set up in the proposed industrial corridors and clusters for optimal
utilization of land and reach economies of scale.
8. India has recently signed Paris Declaration (COP 21) under which intends to
reduce the emission intensity of its GDP by 33-35% by 2030 from 2005
levels. Towards this end, Ministry of Steel has already submitted the
Intended Nationally Determined Contributions (INDC) for reducing GHG
emissions in iron & steel sector which inter-alia projects CO2 emission of
2.2 – 2.4 tonnes per tonne of crude steel in BF-BOF route and 2.6 – 2.7
tonnes per tonne of crude steel in DRIEAF route by the terminal year of
2030.
9. Ministry of Steel has taken full cognizance of the technological scenario in
Indian Steel Industry and has initiated a fresh move for preparation of a
comprehensive blue print for promotion of R&D in Iron & steel Sector. To
bring in all the stakeholders into one platform and promote steel research on
themes of critical and vital national importance, an institutional platform
called “Steel Research and Technology Mission of India” has been
established with an objective to spearhead R&D of national importance in
iron & steel, creating state-of-art facilities to conduct cutting-edge research,
develop expertise & skill development, manage human resources and bolster
a tripartite synergy amongst industry, national R&D laboratories and
academic institutes.
10. The NSP acknowledges the important role played by the secondary steel
sector in providing employment, meeting local demand of steel in rural and
semi-urban areas, and meeting the country’s demand of some special
products and seeks to endeavour to provide the necessary feedstock to these
units at reasonable prices from major plants through the existing mechanism
of State Small Industries Corporations.
11. The NSP recognizes the fact that integration of the Indian steel industry with
the global economy requires that the industry should be protected from
unfair trade practices. The NSP, therefore, envisages institution of

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mechanisms for import surveillance, and monitoring export subsidies in

other countries.
As stated earlier, the long-term goal of the National Steel Policy is that India
should have a modern and efficient steel industry of world standards, catering to
a diversified steel demand. The focus of the policy is to achieve global
competitiveness not only in terms of cost, quality and product mix but also in
terms of global benchmarks of efficiency and productivity. The policy envisages
adopting a multi-pronged strategy to achieve these goals. On the demand side,
the strategy would be to create incremental demand through promotional efforts,
creation of awareness and strengthening the delivery chain, particularly in rural
areas. On the supply side, the strategy would be to facilitate creation of
additional capacity, remove procedural and policy bottlenecks in the availability
of inputs such as iron ore and coal, make higher investments in R&D and HRD
and encourage the creation of infrastructure such as roads, railways, and ports.
5.1 FINDINGS
1. It can be noticed that the production in Tata steel has grown compared to
the previous year (9.07 mnt) to 9.70 mnt while it can be noticed that in
case of SAIL the saleable steel production has reduced from 12.8mnt of
previous year to 8.8 mnt in the current fiscal year.

and SAIL
2. The year 2015-16 has shown a turnover of 4900.95 crores in Tata steel
which is average but has been lesser than the previous year’s huge
turnover of Rs. 6439.12 crores while in case of SAIL a turnover of
Rs.43,337 crore was achieved during the Financial Year 2015-16, which
is lower by 14% over previous year
3. The finished steel sales was calculated to be 37814.89 crores in case of
Tata steel while SAIL had finished steel sales of Rs.38513.70 crores.
4. R&D investment chart of Tata steel depicts that 0.32% of its turnover is
spent for the research purposes which is lesser when compared to Steel
Authority of India Limited (SAIL) were we can see that R&D
investment has increased compared to previous year and is 0.52% of its
turnover.
5. The expenses made on employee benefits by SAIL is more than Tata
steel, it shows that employee gets more benefits in public sector steel
companies and Earnings per share of Tata steel is more than SAIL which
states that investors opt to invest in Tata steel over SAIL and when
comparing Interest coverage ratio it can be seen that Tata steel has more
ability to pay interest than SAIL.
6. Findings state that SAIL has more cash outflows than cash inflows and
Tata steel has more cash outflows than cash inflows.
7. SAIL has stronger liquidity ratios which shows that SAIL can be faster
in liquefying its assets and Tata steel has more strong profitability ratios
which shows that Tata is more efficient and has great performance than
SAIL.
8. Even though the finished steel sales and incomes are higher than Tata
steel, the profit and turnover has not been proven to be successful due to
higher expenses. SAIL provides employee benefits more , safety
measures are higher, welfare of the society is higher and even R&D
investment is higher but due to lower turnover than the Tata steel, Tata
steel is more successful than SAIL in case of performance.
5.2 REMEDIES FOR THE FINDINGS

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1. The turnover had been reduced due to unhealthy Indian economy,

changes in steel prices, lower volumes and lesser improvements made by
the companies.
SAIL turnover has decreased mainly due to decrease in Net Sales
Realisation of Saleable Steel of 5 Integrated Steel Plants by about 20%.
The prices of steel products kept falling throughout the year due to fall in
Global Steel Prices leading to predatory imports from China, Japan,
Korea, etc. However, there has been an increase in price realisation after
imposition of Minimum Import Price (MIP) w.e.f. 5th February, 2016.
2. The performance of the Company during the year was adversely affected
due to lower Net Sales Realisation, lower saleable steel production,
adverse financial impact of on account of contribution to District
Mineral Foundation and National Mineral Exploration Trust w.e.f. 12th
January, 2015, higher usage of relatively expensive imported coal in the
blend due to lower availability of indigenous coal, higher salaries &
wages, higher repairs & maintenance expenditure, higher interest charges
and reduction in interest earnings on term deposits, higher depreciation
due to capitalisation of new facilities and non-availability of gain on sale
of investment in Bokaro Jaypee Cement Limited considered in the
previous financial year.
3. Remedies for higher liquidity ratios are to maintain sweep accounts,
reduce overhead costs and unproductive assets, monitor accounts
receivables, negotiate longer payment terms, monitor the money taken in
and out of businessand finally review the profitability of the products
and services.
4. However, the remedies for more turnover is higher sales volume and
lower imported & indigenous coal prices, reduction in coke rate,
reduction in demurrage expenses, reduction in price of ferro alloys, etc.
5. “India's steel exports fell 32 percent while imports rose 20.2 percent in
fiscal 2015-16 compared to the previous year, according to provisional
data released by the government” a reason for lesser performance by the
steel industry in India, hence it is to say that a remedial is to decrease
imported iron and steel raw materials and increase production of iron and
steel in India.

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6. Improving infrastructure, cheaper and quality coking coal, reduction of

input prices of coal and iron ore (especially in the wake of auctioning
prices) are some major remedies.
7. Rising capital and input cost, risk -averse tendencies coupled with
inefficient regulatory environment are major hurdles for private
investors. Real estate sector slow is also a major issue which should be
taken care for better performance of the steel industry.
5.3 SUGGESTION
The performance of steel industry in India was gone down due to lower Net
Sales Realisation, lower saleable steel production, expensive imported coal
to lower availability of indigenous coal, higher salaries & wages, higher
repairs & maintenance expenditure, higher interest charges and reduction in
interest earnings on term deposits, higher depreciation due to capitalisation
of new facilities. Hence, suggestions to the steel industries are higher sales
volume and lower imported & indigenous coal prices, reduction in coke rate,
reduction in demurrage expenses, reduction in price of ferro alloys,
Improving infrastructure, cheaper and quality coking coal, reduction of input
prices of coal and iron ore (especially in the wake of auctioning prices).
Increasing exports of steel and iron and reducing imports for more demand
for local steel should be taken as to improve steel prices which gives more
production as a result overall performance.
5.4 CONCLUSION
The Indian steel industry responded enthusiastically to the liberalization

and large capacities were created in the private sector. The plants which
came up post 1991, like Vizag Steel (RINL) in the public sector and Essar
Steels, Ispat Steels, Jindal Vijayanagar etc. in the private sector used the
modern state-of-the-art technologies. However, because of decontrol,
removal of duty protection, free import, dumping from China and CIS, and,
above all, a global economic melt-down in the latter half of 90s, the industry

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went through a major crisis. The period from 1997-2001 marked the worst
for the industry with price decline, poor capacity utilization, inventory pile
up, dumping through unofficial channels and high interest burden.
Meanwhile, the industry is already into an expansion mode with all steel
majors like SAIL, Tata Steels, RINL, Ispat, Jindals and Essar hiking their
capacities. States like Orissa and Jharkhand, rich in iron ore, are attracting
major investment interest both from domestic and international majors.
There is, however, some concern regarding the differential treatment meted
out to overseas players to attract investment, mainly in respect of export of
iron ore. In the final analysis, the industry scenario is expected to radically
alter in the coming years.
On comparing private and public sector steel companies the following are
the conclusions:
1. It can be observed that Tata steel has earned a profit and SAIL has earned a
loss at the end of the financial year hence it can be concluded that even though
the profit of Tata steel has reduced compared to previous year Tata steel has
performed in the year better than SAIL , which earned a loss.
2. It can be observed that the expenses made on employee benefits are made by
SAIL more than Tata steel, it shows that employee gets more benefits in public
sector steel companies.
3. Earnings per share of Tata steel is more than SAIL which states that investors
opt to invest in Tata steel over SAIL.
4. When comparing Interest coverage ratio it can be seen that Tata steel has more
ability to pay interest than SAIL.
5. SAIL has more cash outflows than cash inflows and Tata steel has more cash
outflows than cash inflows.
6. SAIL has stronger liquidity ratios which shows that SAIL can be faster in
liquefying its assets and Tata steel has more strong profitability ratios which
shows that Tata is more efficient and has greater performance than SAIL.
7. Even though the profits are low for SAIL, pays more tax to government than
Tata steel, which shows that SAIL is more responsible and are more
cooperative to the Government.
8. Against the profits it can be observed that the turnover of SAIL is more than
Tata steel which implies that the company’s returns are good but expenses are
more.

and SAIL
9. The investments made by SAIL on R&D is more than that of Tata steel. It can
be observed that the percentage of turnover on R&D by SAIL is more than
Tata steel.
10. Both Tata steel and SAIL has incredible safety measures, emission systems,
environment management, waste heat recovery and workforce.
BIBLIOGRAPHY
 Annual report (2015-16) published by ministry of steel.
 Annual report (2015-16) published by TATA Steel.
 www.steel.nic.in (Official website of ministry of industry).
 www.tatasteel.com (Official website of TATA Steel).
 www.sail.co.in (Official website of Steel Authority of India).
 www.worldsteel.org (official website of International Iron & Steel Institute).
 www.jpcindiansteel.nic.in (Website of joint planning committee).

and SAIL
 www.ibef.org
 http://www.steel.gov.in/overview.htm
 http://economictimes.indiatimes.com
 www.moneycontrol.com

Comparative financial analysis of Indian private and public sectors with special reference to Tata steel and SAIL

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Comparative financial analysis of Indian private and public sectors with special reference to Tata steel

St. Thomas’ college, Thrissur (Autonomous) 1 Department of commerce

c. To analyse measures taken by Indian government to improve the

d. To analyse the future of Indian steel industry.

1.4 RESEARCH METHODOLOGY

1.4.1 Research design:

1.4.2 Sources of data:

St. Thomas’ college, Thrissur (Autonomous) 3 Department of commerce

1.4.4 Period of study:

1.4.5 Limitations of study:

St. Thomas’ college, Thrissur (Autonomous) 4 Department of commerce

2.1 INDUSTRY PROFILE

Today, India is the rd largest producer of crude steel in the world.

Indian steel industry : Production for Sale (in million tonnes)

Category 2010-11 2011-12 2012-13 2013-14 2014-15

Pig Iron 5.68 5.371 6.870 7.950 9.694

Total 68.62 75.70 81.68 87.67 91.46

St. Thomas’ college, Thrissur (Autonomous) 6 Department of commerce

Source: Joint Plant Committee

Demand - Availability Projection

As a facilitator, the Government monitors the steel market conditions and

St. Thomas’ college, Thrissur (Autonomous) 7 Department of commerce

Indian steel industry : Imports (in million tonnes)

Category 2010-11 2011-12 2012-13 2013-14 2014-15

Total Finished Steel

6.66 6.86 7.93 5.45 9.32

Source: Joint Plant Committee

Indian steel industry : Exports (in million tonnes)

Category 2010-11 2011-12 2012-13 2013-14 2014-15

3.64 4.59 5.37 5.98 5.59

Source: Joint Plant Committee

Levies on Iron & Steel

St. Thomas’ college, Thrissur (Autonomous) 9 Department of commerce

2.2 COMPANY PROFILE

St. Thomas’ college, Thrissur (Autonomous) 10 Department of commerce

St. Thomas’ college, Thrissur (Autonomous) 12 Department of commerce

St. Thomas’ college, Thrissur (Autonomous) 14 Department of commerce

St. Thomas’ college, Thrissur (Autonomous) 15 Department of commerce

Vijayakumar and Venkatachalan (2003) In their study indicated a moderate trend in

St. Thomas’ college, Thrissur (Autonomous) 16 Department of commerce

current assets cause a reduction in profitability. Hence, efforts should be made to

T. Venkatesan & Dr. S. K. Nagarajan (2012) studied An Empirical Study of

St. Thomas’ college, Thrissur (Autonomous) 17 Department of commerce

Bhunia (2007) made an assessment of management of working capital of Steel

Ahindra Chakrabati published an articles “Performance of public sector enterprises a

Comparison between TATA Steel and Steel Authority of India

St. Thomas’ college, Thrissur (Autonomous) 20 Department of commerce

Indian Crude Steel Production

St. Thomas’ college, Thrissur (Autonomous) 21 Department of commerce

PRODUCION (MNT) FY12 FY13 FY14 FY15 FY16

Hot metal 7.75 8.86 9.90 10.17 10.68

Crude steel 7.13 8.13 9.16 9.33 9.96

Saleable steel production 6.97 7.94 8.93 9.07 9.70

PRODUCTION 2011 2012 - 2013 - 2014- 2015-16

Crude Steel 13.4 13.4 13.6 13.9 10.6

Saleable Steel 12.4 12.4 12.8 12.8 8.8

STATEMENT OF PROFIT AND LOSS ( IN RS. CRORES )

Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

St. Thomas’ college, Thrissur (Autonomous) 22 Department of commerce

Less: Excise/Service 4,475.95 4,792.26 4,598.31 4,117.81 3,072.25

Less: MAT Credit 152.17 117.21 0.00 399.84 0.00

St. Thomas’ college, Thrissur (Autonomous) 24 Department of commerce

STATEMENT OF PROFIT AND LOSS (IN RS. CRORES)