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CHAPTER-1

INTRODUCTION

The net working capital of a business is its current assets less its current liabilities.
Current Assets include:
- Stocks of raw materials
- Work-in-progress
- Finished goods
- Trade debtors
- Prepayments
- Cash balances
Current Liabilities include:
- Trade creditors
- Accruals
- Taxation payable
- Dividends payable
- Short term loans
Every business needs adequate liquid resources in order to maintain day-to-day cash flow. It
needs enough cash to pay wages and salaries as they fall due and to pay creditors if it is to keep
its workforce and ensure its supplies.
Maintaining adequate working capital is not just important in the short-term. Sufficient liquidity
must be maintained in order to ensure the survival of the business in the long-term as well.
Even a profitable business may fail if it does not have adequate cash flow to meet its liabilities
as they fall due.
Therefore, when businesses make investment decisions they must not only consider the financial
outlay involved with acquiring the new machine or the new building, etc, but must also take
account of the additional current assets that are usually involved with any expansion of activity.
Increased production tends to engender a need to hold additional stocks of raw materials and
work in progress. Increased sales usually mean that the level of debtors will increase. A general
increase in the firm’s scale of operations tends to imply a need for greater levels of cash.
Then we should know, why should the managers of a business pay special attention to working
capital?
Management must ensure that a business has sufficient working capital. Too little will result in
cash flow problems highlighted by an organization exceeding its agreed overdraft limit, failing
to
pay suppliers on time and being unable to claim discounts for prompt payment. In the long run, a
business with insufficient working capital will be unable to meet its current obligations and will
be forced to cease trading even if it remains profitable on paper.

On the other hand, if an organization ties up too much of its resources in working capital it will

earn a lower than expected rate of return on capital employed. Again this is not a desirable
situation.
The three components, which put affects on working capital, are as:
1. Inventory
2. Receivable
3. Cash
Operating cycle

For a manufacturing company like; steel industry; cement industry and many other
manufacturing companies, Inventory management is the most crucial part for the organization.
Inventories which may classified as:
1. Raw material
2. Work-in-progress
3. Finished goods
Whereas receivable and cash management can be done after sales but inventory management
must be done before sale. It requires appropriate forecasting of production and sales. As it is
based on forecasting, so it becomes difficult task for any financial manager for any organization.

Inventory Management must be designed to meet the dictates of market place and support the
company’s Strategic Plan. The many changes in the market demand, new opportunities due to
worldwide marketing, global sourcing of materials and new manufacturing technology means
many companies need to change their Inventory Management approach and change the process
for Inventory Control.

Inventory Management system provides information to efficiently manage the flow of materials,
effectively utilize people and equipment, coordinate internal activities and communicate with
customers. Inventory Management does not make decisions or manage operations; they provide

CHAPTER-2 MAJOR TYPES OF INVENTORY 2. the purchaser may classify it as a raw material if his or her firm had no input into its production. . Inventory Management and the activities of Inventory Control do not make decisions or manage operations.the information to managers who make more accurate and timely decisions to manage their operations. and communicate with customers. The basic building blocks for the Inventory Management system and Inventory Control activities are: 1) Sales Forecasting or Demand Management 2) Sales and Operations Planning 3)Production Planning 4)Material Requirements Planning 5)Inventory Reduction If we see for TATA STEEL. So inventory management is one of the essential for the organization. These inventory items may be commodities or extracted materials that the firm or its subsidiary has produced or extracted. effectively utilize people and equipment. They also may be objects or elements that the firm has purchased from outside the organization. coordinate internal activities. Even if the item is partially assembled or is considered a finished good to the supplier.1>Raw material Raw materials are inventory items that are used in the manufacturer's conversion process to produce components. subassemblies. company is maintaining more than 5% inventories in their hand. they provide the information to Managers who make more accurate and timely decisions to manage their operations. or finished products. Also the company consuming raw material more than 20% of sale value in the last year. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials.

2. and casters. chemicals. Any item that has a parent but is not a raw material is considered to be work-in-process. ball bearings. 2. parts (components). axles. ball bearings.Typically. costs of conversion and other costs incurred in bringing the inventories to their present location and condition. sold to wholesalers. This generally includes all material—from raw material that has been released for initial processing up to material that has been completely processed and is awaiting final inspection and acceptance before inclusion in finished goods. A glance at the rolling cart product structure tree example reveals that work-in-process in this situation consists of tops.3>Finished goods A finished good is a completed part that is ready for a customer order. These goods have been inspected and have passed final inspection requirements so that they can be transferred out of work-in-process and into finished goods inventory. sold to retailers. frames. sent to distribution centers. paper. and subassemblies that are being processed or are waiting to be processed within the system. steel. However. and even engines may be regarded as raw materials if they are purchased from outside the firm. key stock. CHAPTER-3 ACCOUNTING POLICY FOR VALUATION OF INVENTORY(as per IAS-2) 3. Therefore. Actually. wheels. or held in anticipation of a customer order. and food items. seats.2>Work-in-process Work-in-process (WIP) is made up of all the materials.1>Measurement of Inventories Inventories should be valued at the lower of cost and net realizable value. petroleum. wood.2>Cost of Inventories The cost of inventories should comprise all costs of purchase. finished goods inventory is the stock of completed products. raw materials are commodities such as ore. assemblies. minerals. From this point. grain. leg assemblies. legs. and caster frames. the leg assembly and casters are labeled as subassemblies because the leg assembly consists of legs and casters and the casters are assembled from wheels. casters. items such as nuts and bolts. finished goods can be sold directly to their final user. . 3. paint.

such as direct labor. A production process may result in more than one product being produced simultaneously. In periods of abnormally high production. Fixed production overheads are those indirect costs of production that remain relatively constant regardless of the volume of production. Unallocated overheads are recognized as an expense in the period in which they are incurred. or nearly directly. The allocation may be based. with the volume of production. Most by-products as well as scrap or waste materials. such as depreciation and maintenance of factory buildings and the cost of factory management and administration. Trade discounts. This is the case. When this is the case. the amount of fixed production overheads allocated to each unit of production is decreased so that inventories are not measured above cost. When the costs of conversion of each product are not separately identifiable. freight inwards and other expenditure directly attributable to the acquisition.3>Costs of Purchase The costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable by the enterprise from the taxing authorities). are immaterial. duty drawbacks and Other similar items are deducted in determining the costs of purchase. on the relative sales value of each product either at the stage in the production process when the products become separately identifiable. when joint products are produced or when there is a main product and a by-product. for example. rebates.3. The allocation of fixed production overheads for the purpose of their inclusion in the costs of conversion is based on the normal capacity of the production facilities. Normal capacity is the production expected to be achieved on an average over a number of periods or seasons under normal circumstances. they are often measured at net realizable value and this value is deducted from the . Variable production overheads are those indirect costs of production that vary directly. 3. for example. Variable production overheads are assigned to each unit of production on the basis of the actual use of the production facilities. by their nature. The actual level of production may be used if it approximates normal capacity. they are allocated between the products on a rational and consistent basis. The amount of fixed production overheads allocated to each unit of production is not increased as a consequence of low production or idle plant. or at the completion of production. such as indirect materials and indirect labour.4>Costs of Conversion The costs of conversion of inventories include costs directly related to the units of production. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. taking into account the loss of capacity resulting from planned maintenance.

6>Cost Formulas The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects should be assigned by specific identification of their individual costs. The FIFO formula assumes that the items of inventory which were purchased or produced first are consumed or sold first. The formula used in determining the cost of an item of inventory needs to be selected with a view to providing the fairest possible approximation to the cost incurred in bringing the item to its present location and condition. the carrying amount of the main product is not materially different from its cost. and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. other than those dealt with in paragraph 14 of IAS-2. The formula used should reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition. However. A variety of cost formulas is used to determine the cost of inventories other than those for which specific identification of individual costs is appropriate. regardless of whether they have been purchased or produced. in such circumstances.cost of the main product. The average may be calculated on a periodic basis. This is an appropriate treatment for items that are segregated for a specific project.5>Other Costs Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. should be assigned by using the first-in. 3. first-out (FIFO). For example. depending upon the circumstances of the enterprise. or weighted average cost formula. . an enterprise could obtain predetermined effects on the net profit or loss for the period by selecting a particular method of ascertaining the items that remain in inventories. specific identification of Costs are inappropriate since. The cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. when there are large numbers of items of inventory which are ordinarily interchangeable. it may be appropriate to include overheads other than production overheads or the costs of designing products for specific customers in the cost of inventories. 3. As a result. The cost of inventories. Under the weighted average cost formula. Specific identification of cost means that specific costs are attributed to identified items of inventory. or as each additional shipment is received.

The percentage used takes into consideration inventory which has been marked down to below its original selling price. efficiency and capacity utilization. It is not appropriate to write down inventories based on a classification of inventory. The practice of writing down inventories below cost to net realisable value is consistent with the view that assets should not be carried in excess of amounts expected to be realised from their sale or use. The retail method is often used in the retail trade for measuring inventories of large numbers of rapidly changing items that have similar margins and for which it is impracticable to use other costing methods. Standard costs take into account normal levels of consumption of materials and supplies. If the sales contracts are for less than the inventory quantities held. if necessary. For example. An average percentage for each retail department is often used. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date. Inventories are usually written down to net realisable value on an item by item basis. The cost of inventories may also not be recoverable if the estimated costs of completion or the estimated costs necessary to make the sale have increased. may be used for convenience if the results approximate the actual cost.8>Net Realizable Value The cost of inventories may not be recoverable if those inventories are damaged. if they have become wholly or partially obsolete. the net realisable value of the excess inventory is based . or if their selling prices have declined. revised in the light of current conditions. In some circumstances. This may be the case with items of inventory relating to the same product line that have similar purposes or end uses and are produced and marketed in the same geographical area and cannot be practicably evaluated separately from other items in that product line. labour. The cost of the inventory is determined by reducing from the sales value of the inventory the appropriate percentage gross margin. the net realisable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. Estimates of net realisable value also take into consideration the purpose for which the inventory is held.3. Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made as to the amount the inventories are expected to realise. such as the standard cost method or the retail method.7>Techniques for the Measurement of Cost Techniques for the measurement of the cost of inventories. for example. finished goods. however. 3. They are regularly reviewed and. or all the inventories in a particular business segment. it may be appropriate to group similar or related items.

3. (b) The total carrying amount of inventories and its classification appropriate to the enterprise. In such circumstances. stores and spares. Common classifications of inventories are raw materials and components. and. CHAPTER-4 HISTORY OF INDIAN STEEL SECTOR . work in progress. and loose tools. the materials are written down to net realisable value. Contingent losses on firm sales contracts in excess of inventory quantities held and contingent losses on firm purchase contracts are dealt with in accordance with the principles enunciated in Accounting Standard (AS) 4. An assessment is made of net realisable value as at each balance sheet date. the replacement cost of the materials may be the best available measure of their net realisable value. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.9>Disclosure The financial statements should disclose: (a) The accounting policies adopted in measuring inventories. including the cost formula used. when there has been a decline in the price of materials and it is estimated value. finished goods.on general selling prices. However. Information about the carrying amounts held in different classifications of inventories and the extent of the changes in these assets is useful to financial statement users. Contingencies and Events Occurring after the Balance Sheet Date.

1>Indian Steel Industry 4.1. One of the most important landmarks in the history of Indian steel industry was the commencement of the Tata Iron and Steel Company at Jamshedpur in the state of Bihar in 1907. It dates to 480 BC when archers in India used arrows tipped with steel.Mysore Iron and Steel Works(1923) and Steel Corporation of Bengal (1937). Some of the salient features are: • The need for license for increasing capacity has been abolished. 4. freedom to mobilize resources from overseas financial markets and restructuring of existing tax structure have immensely benefited the industry. These pillars are a testimony to ancient India's expertise in the making of steel. The high cost of developing technology in this sector proved to be a major hindrance. • In January 1992 the price and distribution controls were removed. Some of the prominent steel plant set up then was in Rourkela in collaboration with West Germany and in Bokaro in collaboration with Russia.1>During Ancient Period The history of iron and steel making in India goes back by several centuries.2>Milestone The Indian steel industry has come a long way since its humble beginnings. 4. the iron pillar of Kutab Minar near Delhi dates back to about 400 AD and the iron beams of Sun temple of Konark in Orissa dates back to 13th century.1.1.4>Post Liberalization The post liberalization scenario in the Indian Steel industry has witnessed a monumental shift. • Policies like convertibility of rupee on trade account. The takeover of the .The other prominent steel manufacturers before independence were Indian Iron and Steel Company (1922).Steel is an important indicator to analyze the economic development of a country. The iron pillar of Dhar near Indore in Madhya Pradesh dates back to about 321 AD. 4. 4.2>Before Independence The roots of the Indian Steel industry in modern times can be traced to the year 1874. • Steel industry has been removed from the list of Industries under the control of state sector. • Foreign equity investment in steel has gone up to 74%. That's when the government decided to go for synergy with other countries for technology transfer. The steel industry is highly scientific and technology oriented. 4. when a company called Bengal Iron works at Kulti near Asansol in West Bengal produced iron. These steel plants came under the purview of public sector enterprises.1.3>After Independence India found it difficult to sustain development in steel sector after independence on its own due to the lack of technological development. Technological advancement is very important for the overall health of the steel industry.

These events signify the fact that the Indian steel industry has acquired a global identity and are today extremely competitive globally.British steel giant Corus steel by Tata Steel and the acquisition of Arcelor by Mittal Steel herald a new beginning for the Indian steel industry. Ispat. Essar. • India is the only country globally to record a positive overall growth in crude steel production at 1.3>Future trends • It has to be said that the global recession has affected the Indian steel industry especially stainless steel. • The National Steel Policy has forecasted the demand for steel would reach 110 million tons by 2019-2020.01 per cent for the period January -March 2009. 4. Some of the prominent steel producers today are Posco. . Tata Steel. Sail and Rinl. but the steel industry is trying to offset the negative effect of the recession by focusing on transportation and construction projects which are usually funded by the government. • It is estimated that India's steel consumption will grow at nearly 16% annually till 2012.

Availability Projection • Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually. • Interface helps in redressing availability problems. • It has been estimated by certain major investment houses. However.02 million tonnes. given that per capita steel consumption is only 40 kg – compared to 150 kg across the world and 250 kg in China. complaints related to quality.299 Million Tonnes. CHAPTER-5 SCENARIO OF PRESENT STEEL INDUSTRY IN INDIA • The Indian steel industry have entered into a new development stage from 2005-06.228 4. • Last 5 year's production of pig iron and finished (carbon) steel is given below: (in million tonnes) Category 2004-05 2005-06 2006-07 2007-08 2010-09 Pig Iron 3. Ministry of Steel has projected that the steel capacity in the county is likely to be 124. such as Credit Suisse that. • Production of Pig Iron in 2010-09 was 5. • Today. fuelled by demand for construction projects worth US$ 1 trillion. India’s steel consumption will continue to grow at nearly 16% rate annually. which is conducted on regular basis. • Gaps in Availability are met mostly through imports. The scope for raising the total consumption of steel is huge.695 4. Further.02 (Source: Joint Plant Committee) 5. • The National Steel Policy has envisaged steel production to reach 110 million tonnes by 2019-20.314 5. based on the assessment of the current ongoing projects.993 5. it is expected that India’s steel capacity would be nearly 293 million tonne by 2020.1>Production • Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. riding high on the resurgent economy and rising demand for steel. both in Greenfield and Brownfield.544 55. • Interface with consumers by way of a Steel Consumer Council exists. . • In 2010-09. India is the 7th largest crude steel producer of steel in the world.233 59. Rapid rise in production has resulted in India becoming the 5th largest producer of steel. production of Finished (Carbon) Steel was 59.06 million tonnes by 2011-12.055 44. till 2012. based on the status of MOUs signed by the private producers with the various State Governments.289 Finished Carbon Steel 40.2>Demand . 5.416 58.

POSCO. • In May 2010. • The mismatch in demand and supply is considered to be the main reason on the demand side for the rise in steel prices.581 2010-2009 5149 (Partly estimated) (Source: Joint Plant Committee) . 5. • The Government also took various fiscal and other measures for stabilizing the steel prices like exempting pig iron. Since then steel prices are determined by the interplay of market forces. and hot rolled coils/sheet.3>Steel Prices • Price regulation of iron & steel was abolished on 16.4>Imports of Iron & Steel • Iron & Steel are freely importable as per the extant policy.850 2006-2007 4. (In Million Tonnes) 2004-2005 2.109 2005-2006 3. strong demand in the international and domestic market and up-trend in the global steel prices have been some of the reasons cited by the industry for increase in the steel prices in the domestic market. the Government imposed 15% export duty on semi-finished products. withdrawing DEPB benefits on export of various categories of steel products and bringing back railway freight on iron ore from classification 180 to 170 for domestic steel producers. • There has been an up-trend in the domestic steel prices since 2006-07 and the trend accentuated since January this year. Ispat and also SAIL. Essar. ferro- alloys and met coke from customs duty.436 (Partly estimated) 2007-08 6. RINL to explore the possibility of expediting the ongoing as well as envisaged steel projects. • Rise in raw material prices.1992. • Last five years import of Finished (Carbon) Steel is given below:- Year Qty. 10% export duty on cold rolled coils/sheets and pipes and tubes and 5% export duty on galvanized steel in coil/sheet form in order to further curtail rising prices and increase supply of steel in the domestic market. Honorable Steel Minister has held discussion with all major steel investors including Arcellor-Mittal.1. non alloy steel and steel making inputs like zinc.5. Tata Steel.

478 0. Under this scheme exporters on the basis of notified entitlement rates.350 (Prov. in Million Tonnes) Year Finished (Carbon) Steel Pig Iron 2004-2005 4. are granted due credits which would entitle them to import duty free goods.750 0.estimated) (Source: Joint Plant Committee) .estimated) 2007-2010 4.560 2010-2009 3.482 0.5>Exports of Iron & Steel • Iron & Steel are freely exportable. • Advance Licensing Scheme allows duty free import of raw materials for exports. • Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports.350 (Prov. to increase availability in the domestic market.381 0.627 0. • Exports of finished carbon steel and pig iron during the last five years and the current year is as : Exports (Qty. The DEPB benefit on export of various categories of steel items scheme has been temporarily withdrawn from 27th March 2010.5.393 2005-2006 4.440 2006-2007 4.

In a process of inclusive growth. The long-term strategy is to continue to pursue capacity expansion in India through Greenfield projects as well. every person contributes to the blueprint of the future and is truly committed to the stated objectives. corporations and communities is the most effective route to growth. In the financial year 2010-09. Tata Steel has not limited its operations and businesses within India but has built an imposing presence around the globe as well. The Indian operations draws its greatest strength and its competitive position as one of the lowest cost producers of steel in the world from the quality and yield of its raw material units.147. therefore.1>Company profile Managing a global workforce and setting global benchmarks is primarily about managing diversity.2>Present scenario of TATA steel The Tata Steel Group has always believed that mutual benefit of countries. the Company commissioned its 1. capacity expansion in India is one of the key strategies for Tata Steel. The Group recorded a turnover of Rs. . With the acquisition of Corus in 2007 leading to commencement of Tata Steel's European operations. 329 Crores (US$ 28. Tata Steel’s Indian operations are one of the most competitive assets in the global steel industry and therefore. 6.8 million tonnes of crude steel making capacity at Jamshedpur. by 2011.2009. continuously modernized and expanded its raw material facilities right from the 1950s. is among the top ten steel producers in the world with an existing annual crude steel production capacity of around 30 million tonnes per annum and employee strength of above 80. The Company has always had significant impact on the economic development in India and now seeks to strengthen its position of pre-eminence in international domain by continuing to lead by example of responsibility and trust. which will be further augmented by 3 million tonnes through the ongoing brown field expansion. CHAPTER-6 ABOUT TATA STEEL 6. 6. the Company today.962 million) in 2010 .000 across five continents.3>Projects and operations: India The Tata Steel Group’s growth and globalization strategy is driven by its business expansion while maintaining profitability and mitigating risks. The mines have successfully offered raw material security and have partially insulated Tata Steel from the volatility of the global markets. The Company has. The 3-mtpa expansion at Jamshedpur will enable Tata Steel to strengthen its market share in the Flat Products segment and simultaneously reduce the operating costs over a large volume of production. The Tata Steel Group over the years has focused on enhancing raw material security and announced major joint ventures in various parts of the globe. And one of the key requisites for successful diversity management is a shared vision. when it had launched its two million tonne expansion programme.

• The project includes the development of iron ore mines and other raw materials sources including coal and logistic linkages for this plant. Project Update: The first phase which entails reaching a crude steel capacity of 6. • The Greenfield project is to be set up in two phases. Press Releases • Telemedicine centre inaugurated at Tata Main Hospital. • Co-operation in the area of Human Resource Development through Industrial Training Institutes. Tata Steel organized the award ceremony for Jyoti Fellowship and Moodie Endowment. Project Update: Tata Steel is awaiting the R&R Policy from the State Government for its Greenfield project. Commissioning of Coated Steel Manufacturing Plant . • Tribal cultural centre. 1. The capacity of the Jamshedpur plant is expected to become 10 mtpa by December 2011. Seraikela Plant Greenfield Project Project Highlights: • Setting up a 12 million tonnes per annum Greenfield integrated steel plant in the state. Capacity: 12 mtpa integrated steel plant.Therefore the India growth strategy remains a fundamental part of the long-term strategy of the Tata Steel Group. • Graduation ceremony of trainees at Tata Steel’s technical training centre in Seraikela. • Jharkhand honors Tata Steel Sports Persons.8 mtpa has essentially been completed. Jamshedpur Plant Brownfield Project Project Highlights MoUs with the Government of Jharkhand was signed in 2005 for:- • Expansion of Tata Steel's existing plant at Jamshedpur from 5 mtpa to 10 mtpa. The first phase of 6 mtpa is likely to be set up within 36 months to 54 months from the date of obtaining all statutory clearances. Jharkhand 1.

and Larsen and Toubro for the development of a deep water port in Dhamra. is a 50:50 joint venture between Tata Steel Ltd. West Bengal 1. 2005. rehabilitation and resettlement work is in progress. • The project also includes development of captive iron ore mines to meet the iron ore requirements of this plant. A grant for the mining lease of iron ore has been sought. and BlueScope Steel Australia. Jagdalpur Plant (Bastar) Project Highlights • MoUs with the Chhattisgarh government was signed on June 04. Tata BlueScope Steel Ltd. Greenfield Project at Kalinganagar Project Update: Preliminary work focusing on land acquisition. Port Project at Dhamra The Dhamra Port Company Ltd. Project Highlights: The manufacturing facility for coated steel of Tata BlueScope Steel Ltd. The Company has also applied for environmental clearances and other licenses. • The integrated steel plant will have an ultimate capacity of 5 mtpa of steel with 2 mtpa in the first phase. Project Updates: The process of acquiring land is under progress. Orissa. Haldia Plant . Capacity: 5 mtpa Greenfield integrated steel plant. is a 50:50 joint venture between Tata Steel Ltd. Capacity: Greenfield Steel Plant of capacity 6mtpa. 2. The order for equipment and services has been placed in accordance to the stipulations in the MoUs signed with the Orissa State Government. Chhattisgarh 1. is under construction at Jamshedpur and is expected to be completed by March 2010. Orissa 1.

e. (incorporated in 2005). • Titania project involves mining. The Company was set up to produce low ash metallurgical coke primarily to meet Tata Steel’s requirement at its Jamshedpur plant and also to supply hot gases to Tata Power for electricity generation by adopting heat recovery route. • “TATA COLONY” at Koottappanai Village. a resource and mining consulting company and L&T. Germany. Outokumpu-Lurgi. 2002.2 mpta of coke.km area granted by the Government of Tamil Nadu in the districts of Tirunelveli and Tuticorin with due approval from Government of India. Press Releases • Tata Steel committed to its Titanium-dioxide project in Tuticorin and Tirunelveli. Tata Relief Committee initiative for Tsunami affected victims of Tamil Nadu. 6.economic viability. Tuticorin Mines Project Highlights • MoUs with the Government of Tamil Nadu signed on June 27. Capacity: 1. Pincock Allen and Holt. Tirunelveli.Project Highlights: Hoogly Met Coke and Power Company Ltd. Project Update: Capacity of plant is likely to be increased to 1. Capacity: 60. pigments production in phases subject to techno. The Tata Steel Group over the years has . mineral separation and value addition i. Tamil Nadu 1. is a 100% subsidiary of Tata Steel.4>Projects and operations: International The Tata Steel Group’s growth and globalization strategy is driven by its business expansion while maintaining profitability and mitigating risks. • Prospecting license over 80 sq. • Environmental Impact Assessment of the project carried out and Environmental Management Plan drawn with the assistance of MIN-MEC Consultancy. • The feasibility study conducted with the help of Consortium Partners comprising Outokumpu Finland's physical separation division based in USA.000 tonnes per annum of titanium di-oxide. USA.6 mtpa in 2009. • Tata Steel signs MoUs with Tamil Nadu Government for its Titanium Oxide project. inaugurated.

Press Releases • Tata Steel's investment for the expansion of production at Carborough downs coal mine in Australia. Australia. • The project life is currently estimated to be 14 years and approximately 58 million tonnes of raw coal is expected to be mined during this period. highly suitable for steel making. • Tata Steel on December 14. JFE and POSCO) have undertaken a large scale expansion of the Carborough Downs Coal Mine near Moranbah in Central Queensland in Australia. • The clean coal envisaged to be produced would be low-ash coking coal and PCI coal. Bowen Basin Project Location: Bowen Basin in Central Queensland. • Tata Steel acquires stake in Australian coal mines. • The first raw coal production started in August 2006 and the mine is currently producing around 1 mtpa. • There is a further potential resource of 100 million tonnes of raw coal in the unexplored areas and deeper seams.7mtpa of coking coal and PCI coal. . Project Highlights • Tata Steel has a joint venture with Vale in Australia for a Coking Coal Mine. 2005 signed agreements to buy a 5% interest in the Carborough Downs Coal Project located in Queensland. along with other joint venture partners (Nippon steel. • The Carborough Downs coal project is majority owned and operated by a subsidiary of AMCI Holdings Australia Pty Ltd. • Tata Steel also signed an off take agreement for a proportion of the production over life of the project. which will be one of the largest in Australia. Project Updates • Commissioning of the large scale and new mining equipment (Long wall). • The second phase of expansion has been undertaken. Australia 1. • Tata Steel and Vale. at the end of which the company is expected to produce 3.focused on enhancing raw material security and announced major joint ventures in various parts of the globe. Capacity: Mining capacity of 58 million tonnes of raw coal for 14 years. is expected by mid 2009.

These reserves are contained in the 4. Project Highlights: • Tata Steel Limited and SODEMI (State Owned Company for Mineral Development).2 billion tonnes of inferred resources. Nimba Iron ore Project Location: Nimba Iron ore deposits in Ivory Coast. • The aim was to develop iron ore projects in the region.Canada 1. Project Update: Tata Steel.5 billion tonnes of proven and potential mineral reserves. on December 11. Nimba deposit spread over 3 countries – Liberia. wherein Tata Steel will have a major shareholding (75%). Capacity: The DSO resource is estimated to be approximately 100 million tonnes.6 billion tonnes of measured and indicated resources and 1. . • The project will be implemented by a joint venture company – Tata Steel Cote d’ivoire. 2007 entered into Joint Venture agreement for the development of Mount Nimba Iron ore deposits in Ivory Coast (West Africa). signed a Heads of Agreement memorandum with New Millennium Capital Corporation. Guinea and Ivory Coast is one of the biggest iron ore deposits in West Africa. through its subsidiaries. The LabMag deposit consists of 3. • The agreement also provides exclusivity to Tata Steel in the Labmag taconite iron ore property. • Tata Steel holds a 19. • The Mt. The feasibility study for the DSO project is progressing and production is expected to commence in 2011. • Tata Steel will have 100% off take rights to the produce of the mine at the time of production commencement. Iron ore project Location: Northern Quebec. along with NML is trying to work out an economically viable solution to advance the project. • The initial phase will involve exploration and detailed feasibility assessments followed by construction of the mine and beneficiation facilities.9% stake in NML with an option to acquire an 80% equity interest in NML’s Direct Shipping Ore project. Project highlights: • Tata Steel. • The iron ore from this project will serve Tata Steel’s European facilities. Canada. Labrador and Newfoundland provinces. Ivory Coast 1.

Project Highlights • Tata Steel and Riversdale Mining Ltd. Tata Steel will pay AUD100 million (approximately 88. Australia signed a joint venture agreement on November 30. Capacity: To be assessed. Capacity: Potential to extract 720 million tonnes by open-cut methods from a major coal resource in the Benga License. Project Update: The feasibility study for the project is in progress. • The Government of Mozambique has approved the mining contract for the tenements. • The coking coal derived from this project will be supplied to the Tata Steel Group's facilities in Europe. which is a signal for the Benga Coal project to commence. Press Releases: Tata Steel’s joint venture in Ivory Coast for Mount Nimba Iron Ore.960 hectares (approximately 96.2 million USD) to acquire 35% of Riversdale's Benga and Tete licenses. • Tata Steel signs JV with Riversdale Mining for Mozambique Coal Project The Netherlands .7 square miles). Press Releases • Tata Steel Signs MoUs with Riversdale Mining Limited. • Under the terms of agreement. Asia and elsewhere. 2007. Mozambique 1. • The iron ore from this project will be supplied to Tata Steel Group facilities especially those located in the United Kingdom and The Netherlands. • The JV comprises two licenses (the Benga and Tete licenses) and covers an area of 24. Key coal exploration tenements Location: Key coal exploration tenements (the Benga and Tete licensees) held by Riversdale in Mozambique. Project Update: The project is in its initial phase that involves exploration and detailed feasibility assessments followed by construction of the mine and beneficiation facilities.

Oman 1. 2010 – Tata Steel has a 70% stake in the joint venture.000tpa pilot plant is intended to prove the commercial and technical viability of a new iron making process called Hisarna. which lies in the Salalah province of Oman and has large deposits of limestone. • Tata NYK has entered into a long term charter for 8 Supramax / Panamax vessels. • The project envisages mining of limestone in the Uyun region (limestone is the key raw material for producing good quality steel). the European Commission and the Dutch government. Hisarna would also be more energy efficient than existing technology and use cheaper and more abundant raw materials. Singapore 1. iron ore and steel. • Capacity: To be assessed. Projects: A number of capital expenditure schemes are in progress at IJmuiden. Press Releases: Tata Steel’s joint venture in the Sultanate of Oman for Uyun limestone. the project will considerably reduce the carbon dioxide emissions of the existing integrated steelmaking process. Among them is a €20m pilot plant that is being jointly funded with ULCOS. a leading business house of Oman signed a Joint Venture Agreement on January 16. • Orders have been placed for building two new Supramax vessels. Updates: Exploration and feasibility studies are in progress. • The Company would ensure a strategic control over logistics in the future. Project Update: . If successful. Project Highlights • The JV was set up to cater to ship bulk cargo such as coal. Project Highlights • Tata Steel Limited and the members of the Al Bahja Group. The 60.48 million tonnes of cargo in FY 09. with a production capacity of 7. Limestone Project Location: Uyun region in the Salalah province. • The Company handled a total of 4. • The shipping firm would handle the Tata Steel Group’s requirements for moving raw materials and steel. Tata NYK Shipping Pte Limited is a Singapore based 50:50 joint ventures between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK line). Japanese shipping major.6mtpa. Tata NYK Shipping Pvt Ltd. Operations: The IJmuiden Steelworks is Corus’ largest and most cost-efficient steel making facility.

The downstream business comprising direct sales to contractors uses 45 knowledge-centric services and consists of a cut and bend facility and products like mesh. The Singapore operations comprise steel making and rolling operations of capacity 7. and the annual production capacity will be 134. . converting it into Ferro Chrome in Richards Bay. • The business model of the plant includes taking high quality Chrome Ore from India and elsewhere. NatSteel Holdings NatSteel. Of the two units operating in China. TSKZN is a South Africa based subsidiary of Tata Steel. for global consumers.500 Metric Tonnes Per Annum (mtpa) in Phase I. the Company plans to enter into a long term charter for capsize vessels in 2009. one is a rolling mill at Xiamen producing about 5. and is the largest single location facility in the world.000 tonnes of bars and rods and the other is a wire drawing plant at Wuxi.00. Tata Steel (KZN) (PTY) Ltd. pre-cages. 2006. cages and couplers which benefits the customers in terms of higher yields. • A Ferro Chrome Plant was commissioned at Richards Bay in 2010 to produce High Carbon Ferro Chrome. 1.. and lesser space requirement and just in time steel in desired sizes. • The briquette technology being used by the company is environment friendly and relatively new to South Africa. TSKZN is one of the most environment compliant plants globally. As part of its long-term strategy.000 tonnes per year. in the business of producing Ferro Chrome and Charge Chrome. • The proposed plant in South Africa will manufacture High Carbon Ferro Chrome with a Chrome content of +64%.000 tonnes per annum of cut and bends bars. China. Malaysia. bore pile cages etc. produces over 4. In the Xiamen city. South Africa 1.00. mesh. Philippines and Singapore. Thailand. and exporting the finished product to various customer destinations. 00. Australia. a 100% subsidiary of the Tata Steel Group. with a capacity of 1. higher productivity. the market share is about 25%.000 tonnes per annum and have a well-established downstream business. is headquartered in Singapore and has presence in Vietnam. 50. Location: Richards Bay (in uMhlathuze Municipality) Project Highlights • The ground-breaking ceremony of Ferro Chrome Project was held at Richards Bay on August 21. The downstream facility in Singapore.

the USA and in other parts of the world. Capacity: 1. Thailand Tata Steel Group’s equity in Tata Steel Thailand is 67. coating and processing facilities. Corus Corus. Europe. Operations: Corus produces carbon steel by the basic oxygen steel making method at three integrated steelworks in the UK at Port Talbot. Production during FY 09 was at 1. the European arm of the Tata Steel Group. • TSKZN commenced commercial production on 1st July. The Company also has been improving continuously in the past few years with its various initiatives focused on reducing cost. Turnover for the period was Rs. The Company’s predominant market is in Thailand and its market share in 2010 was 31% in the long products business. Performance: Liquid steel production in 2010-09 at 16 million tonnes was 20% lower than that of 2007-08. its three main subsidiaries are SISCO. Corus’ crude steel capacity in the UK is in the region of 13mtpa. 51. In addition.09. there are a number of downstream rolling. Headquartered in Bangkok. Scunthorpe and Teesside (currently mothballed).4 million tonnes.479 mtpa of saleable grade Charge Chrome. Tata Steel Thailand is committed to moving forward in the journey for excellence and social accountability. . • Nine ex-cadets of TFA to represent India in South Africa.000 tonnes per annum.1%. 2010 and in the first year it has achieved a production of 63. United Kingdom 1.1 million tonnes. is headquartered in London in the United Kingdom.1. NTS and SCSC. The Company continuously improves its business processes and systems in accordance with its commitment to environmental responsibilities. In the year 2010. Press Release • Tata Steel steps into South Africa.570 crore (US$ 21.539m). Project Update: The Ferro Chrome used in the manufacture of stainless steel will be exported to Tata Steel’s customers in Asia. and special and alloy steels through the electric arc furnace method in Rotherham. Tata Steel Thailand registered sales of 1.07 million tonnes while sales at 1. improving productivity and quality.

2010 to develop a steel complex in Ha Tinh. Capacity: A proposed steel complex with an estimated capacity of 4. • Tata Steel will also have a stake of 30% in Thach Khe Iron Ore Joint Stock Company. Project Updates: The Company has completed the feasibility study for the steel complex. The total capacity of VNSteel including that of its joint ventures is around 2. in collaboration with VNSteel and VICEM has also completed the detailed project report for Phase1. Among them is the £60m BOS gas recovery plant at Port Talbot.5 million tonnes per year. • Tata Steel is partnering with VSC in establishing a steel complex in Ha Tinh province. • Vietnam Steel Corporation and Tata Steel sign a MoUs. which is the cold rolling mill. On the successful completion of the study and financial closure.2 million tonnes with a product mix ranging from crude steel.Projects: A number of capital expenditure schemes are in progress in the UK. which is expected to significantly reduce natural gas and electricity purchases and materially reduce carbon dioxide emissions at the site through the utilization of gas generated inside the Basic Oxygen Steel plant. VNSteel Overview: Established in 995 by a merger of Metal Corporation and Steel Corporation. high quality construction steel to sheet and plate products serving other economic sectors. VNSteel is Vietnam’s largest steel company and has various manufacturing plants and a distribution system across the country. 1. Tata Steel will have a stake of minimum 65% and VSC will have a stake of 35% in the Steel complex. Press Releases • JV between Tata Steel. . Ha Tinh Project Location: Ha Tinh province. • Vietnam Steel Corporation and Tata Steel sign a Memorandum of Cooperation. Vietnam Steel Corporation and Vietnam Cement Industries. Project Highlights • A proposed steel complex with an estimated capacity of 4. Tata Steel. Vietnam 1. Another MOU was signed to set up a cold rolling mill in Ha Tinh province.5 million tonnes per year. which would undertake mining in the Thach Khe iron ore mine. to be developed in 3 phases. • Tata Steel signed a MoUs with Vietnam Steel Corporation (VSC) on May 29. which will be phased over 10 years.

was amalgamated with the company.78 crores was commissioned under the second phase of modernization. 1917 During the year 1.250 deferred shares were issued at a premium of Rs. Indian Tube co ltd. 1907 The Tata iron and steel company was formed at Mumbai. approval were received for investment of Rs.370 per share. 1987 On 2nd March. the wholly owned subsidiary. . was amalgamated with the company. During the year Tata steel agreed to purchase the bearing manufacturing plant of Metal box India of Kharagpur. a company promoted by Tata steel. CHAPTER-7 HISTORICAL ACHIEVEMENT OF TATA STEEL Below is a chronological list of major business decisions in the history of Tata Steel ltd. 16 crores in the capital of Tata Timken ltd. 1985 With the effect from 1st October. 1988 . • Vietnam Prime Minister visits Tata Steel. 1983 During the year Indian tube company Ltd. On 11th August. 300000 tonnes capacity bar and rod mill costing about Rs.000 equity shares were issued at par and 26. 50. was amalgamated with TISCO. West Bokaro Ltd. 1973 With the effect from 1st April.

installed a new sinter plant with a capacity of 1.018.During the period the company.2 million tones cold rolling in Jamshedpur. has entered into understanding with Tata International to export 30% of production at Tata steel major’s new 1. following a successful open offer to the shareholder of TSSL.246 no. Tata Tiscon. 1992 During the year company privately placed with UTI.584 ordinary shares of the company have been dematerialized.. 1998 As of March 31. LIC. Army group insurance fund and GIC and its subsidiaries 17. which will be available in the retail market. Tisco acquired the cold rolled steel unit of Rs 776 crore named as Tata SSL ltd in Tarapur. Tata steel has tied up with the POSCO-Hyundai steel processing venture located in Chennai for getting its cold rolled coil process. 7.5% non-convertible debenture worth Rs. 2000 Tata steel. 1997 Tata steel’s international trading division was awarded the prestigious ISO-9002 certification by the Indian Register Quality System (IQRS).185 crores. and their associate companies on exercise of warrant held by them. the flagship of Tata group. 1995 30. 2002 . Tata steel has launched its largest branded steel product.37.99. Maharashtra. 2001 Tata SSL has become a subsidiary of Tata Iron and steel company. a specially construction grade steel.3 million tones per annum.1998. of equity shares allotted to Tata sons ltd.

named Steel Junction.2 billion. 2004 Tata steel started METAL JUNCTION-the online trading and procurement with the joint venture of SAIL. a branded galvanized brand. Tata steel and L&T signs definitive agreement to form a 50:50 joint venture for setting up a port at Dhamra in Orissa on 29th October. 2006 Tata steel sets up Jiggling and Hydro-cyclone plant. Acquisition of Millennium steel. Tata steel launched “WIRON”. had created the world’s fifth largest steel . TISCO establishes processing unit at Noamundi Mine. 2007 Tata steel’s hard-fought.TISCO entered into a power distribution business. 2005 TISCO signs joint venture agreement with Iranian Mines and Mining Industries Development and Renovation Organization to join them in proposed steel making projects and mining operations in Iran. Tata steel has signed a memorandum of understanding with Nippon steel. Corporation of Japan for its proposed 6 million tones per annum steel plant in Kalinga Nagar in Orissa. Tata steel launched India’s first steel retail store. Tata steel bought Singapore’s NatSteel. Tata steel ranked among global companies in the world’s most respected companies survey.pound acquisition of Corus. TISCO has began distribution power in Jamshedpur. 6. aiming at sales target of three lakh tons.year old Anglo- Dutch company formerly known as the British steel. the seven. Thailand.

2010-09 Jamshedpur plant’s crude steel making capacity from 6. the second most global steel company and dramatically put India on the corporate world’s take over map.900 crore. The scheduled date for completion of the project is April 2011.maker.7 mtpa. Tata steel completed 100 years of glorious existence on August 26th.13.8 mtpa to 9. at an estimated cost of Rs. CHAPTER-7 LEGENDARY HEROES OF THE TATA STEEL .

. He was the first chairman of gigantic Tata.Here is the story of some heroes/ tycoons who thought to build India. Ratan N Tata is the present chairman of TATA group of sons. which gave him the idea of giving India a steel plant. N. SIR DORABJI TATA J. It is the story of struggle. from Corus take over to brands like Jaguar and Land Rover. anxiety. Tata had exhorted to his sons to pursue and develop his life’s work his elder son. RATAN NAVAL TATA Mr. information technology etc. with his efficient leadership TATA group is soaring new heights. Under his control. through his endeavors in setting up TATA steel and TATA power. hotel. adventure and achievement. Sir Dorabji Tata was instrumental in transforming his father’s grand vision into reality. encompassing steel. now known as Air India. Jamsetji read a report by a German Geologist Ritter Von Schwartz on the availability of iron ore in Chanda district in central provinces. JEHANGIR RATANJI DADABHAI TATA The late chairman of the TATA group pioneered civil aviation on the subcontinent in 1932 by launching TATA airlines. the number of TATA venture grew from 13 to 80. power generation. At the age of 43. JAMSHETJI NUSSERWANJI TATA The founder of TATA Steel began with a textile mill in central India in 1870’s. They believe building India means not only earning money but also to increase the wealth o the country’s people. consultancy services.

Andrew Robb • Mr. Nusli N. Muthuraman (Vice Chairman) • Mr. Irani • Mr. Jacobus Schraven • Dr.M. S. Ratan N. Subodh Bhargava • Mr.BOARD OF DIRECTORS AS ON 25 JUNE 2009 • MR. James Leng • Mr. Nerurkar SENIOR MANAGEMENT . Anthony Hayward • Mr. Wadia • Mr. H. Jamshed J. Palia • Mr. M. Kirby Adams • Mr. B. Suresh Krishna • Mr. Tata (Chairman) • Mr. Ishaat Hussain • Dr.

• Mr. K. P. Narendran • V. Misra • Binay Kumar Singh • Santi Charnkolrawee • T. N. Misra • Frank Royle • Om Narayan • Tor Farquhar • Radhakrishnan Nair • Partha Sengupta • Hridayeshwar Jha • N. S. Muthuraman(Managing Director) • Kirby Adams (Chief executive officer) • H. Singh • Marjan Oudeman • Anand Sen • Scott MacDonald • Varun Jha • Phil Dryden • Abanindra M. V. Debashish Bhattacharjee CHAPTER-8 TOP COMPETITORS OF TATA STEEL . B.M Nerurkar • Kaushik Chatterjee • Jean-Sebastien Jacques • Arun Baijal • Manzer Hussain • Avneesh Gupta • R. Murty • Helen Matheson • Sandip Biswas • Lim Say Yan • Bimlendra Jha • Dr.

• Jindal Steel
• SAIL
• Essar steel

SOME OTHER MAJOR PLAYER IN THIS INDUSTRY

• Saw pipes
• Uttam steel ltd
• Ispat industry ltd
• Mukand ltd
• Mahindra Ugine steel co.ltd
• Usha ispat ltd
• Kalyani steel ltd
• Electro steel casting ltd
• Sesa Goa ltd
• NMDC
• Llyod steel industry ltd

CHAPTER-9
VISION AND MISSION STATEMENT OF TATA STEEL

Vision
We aspire to be the global steel industry benchmark for
Value Creation and Corporate Citizenship
We make the difference through:
Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting
with pace, pride and passion.
Our offer, by becoming the supplier of choice, delivering premium products and services, and
creating value for our customers.
Our innovative approach, by developing leading edge solutions in technology, processes and
products.
Our conduct, by providing a safe working place, respecting the environment, caring for our
communities and demonstrating high ethical standards.

Mission
Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to
strengthen India’s industrial base through the effective utilization of staff and materials. The
means envisaged to achieve this are high technology and productivity, consistent with modern
management practices.

CHAPTER-10
MAJOR BRANDs OF TATA STEEL

Brands
The Tata Steel Group’s Brand building endeavors have always been directed at building
assurance, reliability and superior product quality in every segment. Outstanding performance
by the Company’s different divisions have surpassed their own brand standards and created
higher quality parameters for each other.

Galvano™ is Galvanized Plain (GP) steel offering available in sheet and coil
forms for all customer segments like white goods, panels, bus bodies etc. Galvano™ meets the
diverse and specific needs of the general engineering segment. Unlike the ordinary spangled and
crushed spangled products available in the market, Galvano™ is a Zero spangled product with
unmatched surface finish and mechanical properties.

Tata Agrico, a division of Tata Steel is the pioneer manufacturer of superior
quality agricultural implements in the country under the brand name 'Agrico'. Since 1925, it has
been the leading brand in shovels, powrahs, crowbars, kudalies, pickaxe and hammers. These
implements cater to the needs of Agricultural, Horticulture Industry, maintenance of roads,
dams, railway- tracks, collieries etc. in India and abroad. The Agrico products are the first in
India to be manufactured with ISO: 9002 Certification. All Tata Agrico implements are
guaranteed against manufacturing defects and are distributed all over the country through a
network of consignment agents and distributors. The Agrico division recently expanded its
product offerings by launching three new products and many more variants in the existing
category.

Tata Bearings manufactures a wide variety of bearings and auto assemblies, like
Ball Bearings, Tapered Roller Bearings, Magneto Bearings, Double Row Angular Contact
Bearings, Clutch Release Assemblies, Fan Support Assemblies and Cylindrical Roller Bearings.
It is the only Bearings Manufacturer in India to win TPM Award from Japan Institute of Plant
Maintenance, Tokyo and is amongst the largest bearing manufacturers in India.

Tata Pipes has matured into a fully bloomed brand since 1996. A deeply thought
out branding exercise was undertaken in order to unleash the power of the ‘Tata Pipes' Brand.
Tata Pipes are manufactured with the HFIW process in the Long Products Division's high-tech
facility at Jamshedpur.

Tata Shaktee is Tata Steel’s flagship brand in the field of galvanised corrugated
sheets. Since Tata Shaktee was launched in Feb 2000, the brand has been consistently delivering
on its promises of longevity and strength. Tata Shaktee is the only brand, which produces 4 ft
wide GC sheets called "Tata Shaktee Wider GC Sheets".

Tata Steelium is another brand of the Flat Products Division of Tata Steel. Apart
from providing a certain level of quality the name also assures the customer of the genuineness
of the product. It goes a long way in meeting the challenge of gaining a sustainable competitive
edge in the marketplace. The brand has acquired new customers in retail untapped areas and
made an aggressive entry into the retail segment through exclusive shops called Steelium zones.
Customer relationship building programmes are undertaken with a view to increasing market
share.

Tata Tiscon is the first Thermo Mechanically Treated (TMT) rebar in the
country. Every Tata Tiscon rebar is made from pure steel, with the most advanced TMT
technology from Tempcore, Belgium. Tata Tiscon is available for both residential and project
applications. It has the best combination of strength, ductility and unparalleled quality
consistency. Tata Tiscon forms an unbreakable and unshakeable bond with cement (atoot jod),
and together they lend a strong foundation for building construction.

Tata Tiscon became the first rebar in India to be awarded the ‘Superbrand' status in the
construction rebar category. Retail sales have received a boost through new marketing initiatives
and consumer schemes launched as a result of continuous monitoring of consumer sales.

Tata Steel Wire Division is the leading producer of steel wires under the brand
name Tata Wiron, with a 30% market share of the organized wire market in India. It
manufactures a wide range of wires catering to the needs of the various industry segments such
as automobile, infrastructure, power and general engineering. The products are well established
across the markets of Europe, USA, Middle East Asia, Australasia, South Asia and Far East
Asia. Tata Wiron GI wires have a distinct brand identity of being a valued business partner for
its consumers.

CHAPTER-11
RESEARCH METHODOLOGY

• Ratio alone cannot show whether performance is good or bad. Secondary source • Concern data • Website • Annual report • Company records • Intranet of company Presentation of data • Data is presented in the form of tables. Limitation of the studies • The study is based on the comparison across companies. Data collection method I. This company follows various accounting policies. • The data analysis has been done using various inventory ratios. • Data analysis and interpretation.The study is based on descriptive and applied research. diagram and trend lines. The accounting is as well as in planning the control of inventory is thoroughly studied by ratio analysis. The study is limited CHAPTER-12 12. Primary source • Personal interview • Finance and Accounts department • Purchase department • Plant visit I. • The data is pertaining up to the year 2009. • Ratio does not take into account the impact of certain non-financial parameters.1>INVENTORY MANAGEMENT IN TATA STEEL . The efficiency of inventory management model at TATA Steel requires a thorough knowledge of iron making process and expertise in identifying the materials. Hence the choice of accounting for the companies to an extent distort the inter company comparison.

raw material. For any item of goods.e. Any change in one or more of them will change the EOQ of that item. TATA steel has its own mines and querries in India and also in some other countries. For valuation of inventory TATA Steel generally uses FIFO method and for ordering. To maintain the minimum required inventory is not an easy task. buffer inventory. O= ordering cost. There are many reasons for each different organization as to what the quantity should be maintained. WIP. annual requirement in units. transit inventory.Inventory management is one of the most important managerial activities. but there are many other things included in it in small quantities. finished goods. Each types of production department maintain separate inventory level. the formula is= √2AO/C Where. the aggregate order placing cost and the aggregate inventory carrying cost will be equal and economical. There will not be any loss by either way. Economic Ordering Quantity (EOQ): It is the optimum quantity of goods for which if orders are placed. by which the cost are allocated on the assumption that goods are consumed or sold in the order in which they are received and taken in to stock. cost of carrying one unit in inventory for one year are the influencing factors. First in first out (FIFO): A method of valuation of inventory. they use EOQ method. These are transported to works both by road and rail. cost of placing one order. The raw material inventory includes materials from its own source as well as purchased from others. TATA STEEL has its transportation system which helps in carrying the materials from different locations to Jamshedpur works. C= carrying cost Channels of ordering raw material: . To find out EOQ. TATA STEEL’s raw material inventory consist of mainly coal and iron ore. A= Annual consumption. anticipation inventory and cycle inventory. Raw material inventory. therefore lies both at works and its place of extraction. TATA steel maintains different types of inventory i.

iron ore and other raw materials produced and purchased by the Company are carried at lower of cost and net realizable value. Dimna lake is one of the advance point for Jamshedpur plant. • Work-in-progress is carried at lower of cost and net realizable value. water preserver and gas preserver for regular production. • Stores and spare parts are carried at cost.3>Balance sheet of TATA Steel . • Coal. Necessary provision is made and charged to revenue in case of identified obsolete and non-moving items. 12. TATA STEEL has own electric plant. • Cost of inventories is generally ascertained on the ‘weighted average’ basis.2>Policies maintained by TATA STEEL for inventories • Finished and semi-finished products produced and purchased by the Company are carried at lower of cost and net realizable Value.12. Work-in- progress and finished and semi-finished products are valued on full absorption cost basis.

7 Deferred tax liabilities 585. Rs in Crores 31st MAR 31st MAR 31st MAR 31st MAR 31st MAR Particulars 09 08 07 06 05 Share capital 6203.82 Total assets 58741.42 9201.16 12143.04 30193.73 14096.23 428.72 -3699.14 Loans and advances 4578.66 8248.44 (-) Current liabilities and -8974.94 957 829.7 10646.59 Miscellaneous expenditure 105.52 25597.78 4103.22 12623.45 6203.26 21097.52 25597.3 1107.53 253.43 13368.99 provisions Net current assets 1311.15 2739.96 2432.74 3055.18 18021.67 553.05 3613.67 Reserve and Surplus 23176.6 1071.16 12143.66 -3808.56 11040.74 2701.42 Provision for employee separation 1033.3 7059.3 .73 681.77 47075.3 727.15 9755.73 553.25 Total share holder's fund 30176.07 155.56 9865.05 9112.11 202.5 14617.18 4069.33 2516.04 33348.16 3002.86 1382.65 Foreign currency translation diff 471.78 -5453.8 748.88 383.26 Total funds employed 58741.05 -6768.77 47075.27 214.92 Loans 26946.24 Investments 42371.08 1388.63 6506.5 14617.73 1234.19 6106.69 9645.26 27300.66 a/c Current assets 5707.71 1541.3 Application of funds Fixed asset 14482.

12.4>Profit & Loss a/c of TATA Steel .

03 17551.87 -2379.75 10813.81 Profit before taxes 7315.03 Total Income 24624.98 Expenditure Manufacturing and other expenses 15525.15 3506.16 .5 -236.74 4687.12 Profit after tax 5201.04 19933.27 242.44 186.96 5297.62 -204.36 6261.77 19691.5 8658.01 10101.9 118.61 6635.1 618.95 Other income 308.73 5387.28 (-) Taxes -2113.03 4222.09 15139.43 13298.02 -112.29 775.84 9320.15 14646.39 14498.67 254.69 786.17 Profit before taxes and exceptional items 7315.4 834.38 3474.8 Total expenditure 17308.58 -1823. Rs in Crore Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Sales and other operating expenses 24315.82 Net financial charges 1152.76 15394.33 -2039.78 (-)Expenditure transferred to capital a/c -343.99 11852.47 6413.5 -1733.65 5239.61 819.83 17984.76 148.36 11571.61 7066.65 -175.5 173.42 9259.75 5292.8 433.41 Depreciation 973.

62 -887.28 (-)Closing stock of finished goods -1361.95 450.42 9.28 4038.85 -1074.82 COST OF GOODS SOLD 18989 14874.32 936.1 618.61 819.31 12012.23 13673.22 620.53 -64.95 -0.39 10555.58 5068.49 -52.62 887.08 -1000.19 1117.8 -0.3 1715.48 -28.7 Freight and handling charges 1251.68 Excise duty 2527.77 1454.93 -32.96 2498.81 (+) Purchase of finished goods 358.24 .71 14423.46 2368.78 Adjustment of WIP (+) Opening stock of WIP 71.81 1589.83 1351.94 23.42 COST OF PRODUCTION 18917.48 28. Rs in 12.71 -80.91 3429.27 -1078.55 2004.83 1377.5>COST SHEET OF TATA STEEL crore Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Raw material consumed 5709.97 Adjustment of finished goods (+)Opening stock of finished goods 1074.29 775.28 (-) Closing stock of WIP -73.27 1078.45 1004.71 3687.08 1305.17 (-)Commission -61.18 (-)Provision for wealth tax -1 -0.71 9516.52 3121.17 -71.52 2210.75 -86.88 4647.97 -0.17 11469.08 1000.87 446.47 13300.51 1291 Operation and other expenses 6213.23 1098.94 -23.92 Depreciation 973.6 656.4 834.44 Payment and provision for employee 2305.93 32.

CHAPTER-13 .

FINANACIAL ANALYSIS OF TATA STEEL RELATED TO INVENTORY Ratio analysis is the major and efficient tool for management to analyze the data.1>Raw material conversion period This ratio shows in how many day raw materials is used to manufacturing. So here some ratios are given which are related to inventories and with analysis. 13. To find this ratio. the formula is. Average stock of raw material x 365 Total raw material consumed .

+ Cl.42 13.52 707. 13. stock of raw mat. To find out this ratio. If we measure this chart.325 50.04 714. This trend is showing that the period for conversion of raw material is decreasing year by year.71 14423.41 811.14 If we look towards for the year 2004-05. the raw material conversion period is too high than the year 2010-09.44 28.3 1715.62 445.71 9516.54 603.42 Average stock of WIP 72.21 26.36 Total raw material consumed 5709. Stock of raw mat.)/2 Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Opening stock of raw material 901.17 11469. in how many days the WIP converted into finished products. .56 720.48 28.26 901.09 Cost of production 18917.93 32. So this chart is showing how efficiently TATA steel is reducing it’s storing cost and how fast raw material is used for production.91 3429.2>WIP conversion period This ratio shows.52 3121.7 287.94 23.54 603. Average stock of work-in-process x 365 Cost of production Where average stock of WIP = (Op.94 23. then we can easily observe that. the formula is.17 71.02 Closing stock of raw material 1433.Where average stock of raw material = (Op.18 23. But in recent year it is taking more than one day.97 As we can see in the chart that WIP converted into finished product within a day in the year 2004-05 to 2006-07.48 28. stock of WIP+ Cl. Because as soon as raw material is used for production the storing cost will be less.56 720.46 2368.93 32. Stock of WIP)/2 Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Opening stock of WIP 71. It very good sign for the company.7 Average stock of raw material 1167.03 655.52 707.76 Closing stock of WIP 73.47 13300.

08 1000. Stock of finished goods)/2 Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Opening stock of finished goods 1074.85 1074.82 622. Average stock of finished goods x 365 Cost of goods sold Where average stock of finished goods = (Op.3>Finished goods conversion period It refers to the time in which the finished goods are converted into sales or in other way we can say that the time period between production and sales when the finished goods kept in the ware house before the actual sale is made.27 1078.we can say that the efficiency level of TATA steel is reducing year by year to convert WIP to finished goods.08 1000.27 1078.82 .62 887. So formula for FGCP is.62 887. 13.13 Closing stock of finished goods 1361. stock of finished goods +Cl.

56 720.6 4083. To find out this. though in the year 2005-06 the conversion period increased than the year 2004-05.35 944.54 603.22 754.4>Raw material to current asset It indicates the percentage of raw materials in the current asset of the company.58 .975 Cost of goods sold 18989 14874. Raw material(closing) x 100 Current asset Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Raw material(Closing) 1433.23 13673.7 Current asset 10047.89 4237. 13.28 13701.18 1039.48 6636. The finished goods were converted into sales even less than only 25 days in the year 2010-09.06 1076.52 707. It shows the efficiency of not only quality of the steel but also the efficiency of marketing department of TATA steel.24 From the table and the chart we can easily observed that. But fortunately the recession period couldn’t hit the sales for the year 2006-07 to 2010-09.26 901. Average stock of finished goods 1218.31 12012.39 10555.

So the formula is. in the year 2006-07. which is less than 6%. the raw material trend is nearly same to other years. If we observe carefully then we can see that.This chart and table can show the one unexpected downfall in the year 2006-07. Which reduce the percentage of raw material to current asset. Finished goods are such a component of the current assets which can be easily converted into cash. Finished goods(closing) x 100 Current asset Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 . but due to huge cash in hand increase the current asset. 13.5>Finished goods to current asset It indicates the percentage of finished goods in the current assets of the company.

08 1000. the percentage of finished goods is lesser than the other years.27 1078.89 4237. inventory+ Cl.58 As we saw in the raw material to current assets. which is same as finished goods to current assets.28 13701. Inventory)/2 .85 1074. The formula is. Average inventory x 100 Gross sales Where average inventory = (Op.6>Average inventory turnover ratio It indicates the percentages of inventory with gross sales.6 4083.62 887. which is less than 15%. But in the year 2005-06 it is near to 25%. Due to huge amount of cash held in the year 2006-07. But the percentage is going downwards in the year 2010-09. 13.22 Current asset 10047. Finished goods(Closing) 1361.48 6636.

54 1732. It shows the constant growth of sales and inventory.57 17144.87 As we can observed that.34 Average inventory 2457.7>Stock turnover ratio Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business.09 1532.31 1827. But the level of inventory should neither be too high nor too low.22 15876.31 1827.34 922. 13.54 1732.82 1632. except the year 2004-05.09 1532.43 1779.28 2047. . The inventory level is increasing as well as the gross sales.80 1937. the trend is showing nearly constant.22 1227.8 19762. Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Opening inventory 2047.63 Gross sales 26843 22191.91 Closing inventory 2868.

. In the year 2005-06 it is even less than 7.22 1227. inventory+ Cl.8 1937.43 1779.39 10555. Cost of goods sold Average stock Where average stock = (Op.23 13673.5. but after that TATA steel maintained the consistency on its growth.8>Average age of stock This ratio shows how many days stock are kept as inventory in the company before sales. 13.63 As we can find out that in the year 2004-05 the ratio was very high as compare to other years.24 Average stock 2457.31 12012.The stock turnover ratio measures the number of times a company sells its inventory during the year.82 1632. Inventory)/2 Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Cost of goods sold 18989 14874. The formula for stock turnover ratio is.

67 7. But in year 2004-05 it is near to 40 days where.To find out the average age of stock is. in the year 2005-06 it is near to 50 days. But in the recent year it is near to 48 day. TATA steel needs to reduce the day. 365 Stock turnover ratio Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Stock turnover ratio 7.37 8. we can see that average age of stock is not more than 50 day in any of the year.63 From the chart as given below. .68 7.72 7. through its sale with the help of marketing department.

13.66 349. So TATA steel should try to reduce this index.56 9865.06 Net block of fixed assets 11040. the formula is.56 9865.44 442. And in the year 2006-07 it is more than 4. Stores and spares parts(closing) x 100 Net block of fixed asset Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Stores and spares parts(closing) 505.66 505.05 11040. But in the year 2004-05 it is less than 4.24 This index is showing downwards in recent years.05 9112. But the chart is showing very impressive that index is reducing year by year. .44 442. To find out spare parts index.9>Spare parts index It shows the index of spare parts. which are used to fixed asset.5.

34 Sales 24315. So it shows the inefficiency for the company. .28 17551. The formula is.13.54 1732.31 1827.77 19693.10>Inventory conversion period This ratio shows in how many days inventories are converted into sales.95 From this chart we can observed that in the year 2007-08 and 2006-07.39 14498.28 2047.09 1523. But unfortunately it is very high in the year 2010-09. the inventory was most efficiently converted into sales. Inventories(closing) Sales/365 Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Inventories(Closing) 2868.09 15139. It is major ratio analysis for cash conversion period. Because it is the first component of the cash conversion period.

From here we can say that company has huge liquidity but in other sense we can say that company blocked this huge amount of cash without investing. the formula is.11>Current ratio This ratio is used to judge the short term solvency of a company and is worked out by dividing the aggregate Current Assets by its aggregate Current Liabilities. Current asset Current liabilities Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Current asset 10047. Rest of the year maintained the consistency.28 13701.6 4083.13. because the recession hit the world in the year 2007-08 and company has huge amount of liquidity to face the crisis moment. To find out the current ratio.89 4237.99 In the year 2006-07 this ratio is too high due to huge amount cash held in the company.78 5453.05 6768.58 Current liability 8974.48 6636. which is just above 1. Again it is very good sign for the company. So 2006-07 heavy cash amount saved in the year 2007-08.72 3699. . Again we can see that the in the year 2007-08 the ratio is even less than 1.66 3808.

. So it indicates the coverage of current liabilities with quick realizable assets. And it is slowly moving upwards in the year 2010-09. The formula to find acid test ratio. Here we exclude the inventory from the current asset.Inventories Current liabilities Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Current assets 10047. But due to less inventory percentage in current assets the acid test ratio is higher than the year 2005-06.66 3808. Because inventory is less liquidity than other current assets.54 1732.48 6636. So for the year 2007-08 liquidity is little bit better than 2005-06.28 2047.09 1523.78 5453.13.72 3699. Current assets. which shows the most liquidity.99 As we have seen in the current ratio.12>Acid test ratio It measures the company’s most liquidity against the current liability.58 Inventories 2868.31 1827.28 13701. in the year 2006-07 is highest than the others. Here we can see that the current ratio of the year 2005-06 and 2010-09 was same. 2005-06 ratio is even less than the year 2007-08.05 6768.6 4083.89 4237.34 Current liability 8974. after facing the crisis period. Here also this ratio is highest than the other due to heavy amount of cash.

5 14617.16 12143. it is very low because of recession period to increase the liquidity percentage.31 1827.52 25597.34 Total Assets 58741.09 1523. Total Inventories(closing) x 100 Total assets Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Total inventory 2868.28 2047.77 47075. The formula is. .13>Total inventories to total assets This ratio shows the percentage level of inventories in compare to total asset. But in the year 2007-08.13.3 The percentage level is decreasing year by year to increase the liquidity level.54 1732.

CHAPTER-14 RAW MATERIAL CONSUMPTION OF TATA STEEL .

Australia is major supplier of coal. Same way. Below all the details of raw material is given.e. That may be steel industry or may be cement industry or any kind of manufacturing industry. 14. Major part of raw material is taken from its own mines and some from various country i. TATA steel is also consuming raw material from various sources. value of raw material and price per tonne of raw material are given with charts and analysis. Here all the details of amount of raw material consumption. Australia.Raw material is important for any kind of manufacturing industry.1>RAW MATERIAL CONSUMPTION Tonnes Types of raw material 2010-09 2007-08 2006-07 2005-06 2004-05 Iron ore 9545665 8681492 8724458 8486755 5986753 Coal 751972 706076 713982 1019483 841649 Coke 3315206 3088582 3133450 2773807 2422875 Limestone and Dolomite 1949523 1865223 1729070 1863757 1464970 Ferro Manganese 18895 16165 15824 16516 16844 Zinc and Zinc Alloys 22137 22325 19299 20692 21327 Spelter. Sulphur and 1200105 1157095 784802 798141 487102 Others .

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3 327 159.79 362.72 1093. sulpphur are required mostly.45 316.84 513. coke and ferro manganese are purchased more than the others.87 Ferro Manganese 62.99 48.6 1510. coke.32 206. raw material consumption is more than others. coal. Whereas. In year 2010-09 iron ore and spelters.47 Zinc and Zinc Alloys 210.85 287.56 92.89 318. zinc and alloys are purchased more in the year 2007-08.03 345.84 102.91 226. In the last year due to heavy production.65 Limestone and Dolomite 391.48 557.3 529.29 273.78 Coal 455.94 71.52 50.35 368. ferro manganese. All these raw material are required to produce in a systematic manner.76 300. Total cost of Rs in Crore raw material Types of raw material 2010-09 2007-08 2006-07 2005-06 2004-05 Iron ore 504. sulphurs.1 Coke 3695 1873.To produce steel iron ore.71 834. Sulphur and 877. zinc alloys and spelters.03 Others *Pie charts are showing the percentage of expenses .63 Spelter.52 445.48 217.53 181.36 134.

Whereas.From the above chart we can see that the expenses percentage on coke is reducing year by year. limestone and dolomite expenses percentage is increasing. Price per Tonnes Types of raw material 2010-09 2007-08 2006-07 2005-06 2004-05 .

61 6066.45 2222.57 4032.63 Coal 6055.94 7108.22 1487.21 4821.3 1831.18 1707.14 322.03 6437.18 Others *values are in rupees .2 4575.3 303.97 1612. Sulphur and 7310.55 Spelter.71 Zinc and Zinc Alloys 94877.94 63126.65 169438.28 Coke 11145.98 422.21 60834.87 Limestone and Dolomite 2010.01 2929.2 Ferro Manganese 33336.99 3444.5 32191.33 7423.86 30015.53 512.83 75966.35 154669.61 43497.27 3942. Iron ore 528.3 1094.

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Iron ore is cheapest raw material for TATA STEEL.2>Raw material imported crore 2010-09 2007-08 2006-07 2005-06 2004-05 4146.8 878.7 1592.2 1226. coke is prepared. The entire raw material price is increasing except ferro manganese and zinc and alloys. It is becoming cheaper year by year. 14. importing raw material is increasing year by year. Rs in 14. But coal is near to half price than coke.7 1542.In the year 2006-07 the entire material rate is hiked.3>Comparison of various segment related to inventory . But the ferro manganese price per tonne is showing downwards. From coal. Even in the year 2010-09 more than two times than the last year.12 5 9 5 2 Here we can observe that.

15 3506. 14. Geographically Revenue generated by geographical market Regio 2006- 2010-09 2007-08 2005-06 2004-05 n 07 20914. So here we can observed that as raw material consumption price increasing more than 35%. For this calculation we have taken the last 5 year data of each segment.75 2201.77 19693.813% Current asset 10047. Cost of production and cost of goods sold is compare to same with each other.140% Sales 24315.46 2368.14 35.31 1827. Comparing details 2010-09 2007-08 2006-07 2005-06 2004-05 CGPA Total raw material 5709.09 1523.91 3429.47 13300.799% Profit after tax 5201.24 15.38 3474.17 11469.54 1732.4>Revenue generated by TATA Steel.0 3401.13 s 9 *The rupee values are in crore .23 13673.16 10.39 14498.74 4687.28 13701. This CGPA shows compounded growth or average growth.58 25.71 9516.31 12012.243% Inventories(Closing) 2868.6 4083.739% Cost of goods sold 18989 14874.48 6636. but compare to sales and profit after tax is very high.077% consumed Cost of production 18917.9 13160.09 15139.95 13.89 4237.71 14423.52 3121.03 4222.3 12187.97 18.28 17551.34 17.3 1715.8 India 15506 2 7 5 2 Other 2045.04 2311.39 10555.0 17491.31 1979.28 2047.618% Here we have calculated the CGPA (compounded growth per annum).

It shows not only the improvement of TATA STEEL’s sales but also it is showing how Indian people per capita consumption on steel is increasing. I personally prey that this should increase year after year. Even in the year 2010-09 it crossed Rs 3000cr. Here we can see in a regular basis the revenue in other country is increasing year by year. It is a very good sign for TATA STEEL. CHAPTER-15 .TATA STEEL is one of the biggest importers but this company is big seller in international market. It crossed more than Rs 20000cr. Here we can see that revenue in Indian market.

set up in 1970 by the steel visionary Mr.P. Jindal Organization. the Group today is a US $10 Billion conglomerate.. but the Jindal motto remains the . Haryana to the present multi-billion. we should understand about that company in brief.. integrating. Jindal. new objectives. The organization is still expanding. JINDAL STEEL In the world of business. amalgamating and growing. multi-locational and multiproduct steel conglomerate. the Jindal Organization is a celebrity. they are • JINDAL STEEL • ESSAR STEEL • SAIL So first of all. COMPARISON WITH OTHER COMPANIES Here I am doing comparison with three other major players in this sector. Ranked sixth amongst the top Indian Business Houses in terms of assets. O. has grown from an indigenous single-unit steel plant in Hisar. As per me. New directions.

Jindal has a pre-eminent position in the flat steel segment in India and is on its way to be a major global player. . the focus at Jindal has always been steel. with its overseas manufacturing facilities and strategic manufacturing and marketing alliances with other world leaders. competitive price and excellent after sales service. Yet. In pursuance of its objectives. efficient delivery schedules. it is committed to maintain world-class quality standards. Jindal Organization aims to be a global player."We are the Future of Steel ". From mining of iron-ore to the manufacturing of value added steel products.same. The group has been technology-driven and has a broad product portfolio.

loans & advances 5.97 7.53 Capital work-in-progress 2.233.004.362.184.178.45 4.617.077.619.783.28 3.590. .90 4.02 3.66 1.47 15.105.4 15.40 1.111.036.57 1.64 2.147.74 1.01 Total 10.62 Miscellaneous expenses not written 3.16 2.19 709.73 6.39 1.67 Total net current assets 1.64 1.14 3.83 4.530.00 1.4 15.4 Preference share capital .50 1.35 Total 10.08 2.377.619.51 Unsecured loans 2.168.45 769.75 542.72 2.801.189.61 1.302.815.48 1.595.38 Net current assets Current assets.6 336.490.97 7.98 Loan funds Secured loans 2.740.7 Investments 1.735.815. .299.76 Net block 5.857.243. In crore 31st MAR 31st MAR 31st MAR 31st MAR 31st MAR Particulars 09 08 07 06 05 Sources of funds Owner's fund Equity share capital 15. 1 Reserves & surplus 5.146.159.183.377.31 1.004.28 Less : accumulated depreciation 1.05 2.96 1.24 .45 4.24 Uses of funds Fixed assets Gross block 7.09 206.39 2.49 1.745.33 361.929.115.30 Less : current liabilities & provisions 4.94 4.98 2.3 33.05 266.28 2.780.590.84 1.82 430.Financial data of Jindal steel Balance sheet Rs.392.399.11 781.481.08 2.33 1.918.24 0.11 964.03 3.079.48 937.27 345.700.85 3.318.73 6. .036.77 1.115.01 660.4 15.27 312.829.90 5.

2 Manufacturing expenses 773.476.51 336.113.37 690.89 243.536.7 4.068.392.4 265.46 132.15 Other recurring income 199.02 92.2 90.17 152.02 173.49 277.19 Dividend tax .9 3.78 -144.33 62.74 50.71 528.2 0.85 Selling expenses 327.8 1.48 -3.33 Profit carried to balance sheet 4.8 2.1 3.658.6 Operating income 3 4 8 4 0 Expenses 3.87 6.08 26.55 241.8 Adjusted PAT 0 7 694.637.409.2 3.8 1.0 1.498.4 Cost of sales 7 3 7 3 6 2.94 515.51 Depreciation 433.005. Profit and loss account Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Income 7.48 Other non cash adjustments 10.5 Material consumed 2 0 0 536.08 Non recurring items -144.136.1 8.2 1.337.9 3.253.34 2.2 1.48 Other write offs 0.8 Adjusted PBDIT 2 2 9 3 935. 10.99 572.8 Operating profit 6 1 1 1 916.0 5 7 5 0 8 .8 1.057.032.4 1.48 6.6 Earnigs before appropriation 8 4 5 7 0 Equity dividend 85.55 8.27 0.0 2.7 1.136.445.16 72.47 219.46 532.670.73 276.84 670.9 2.11 1.44 514.295.19 108.02 19.1 1.49 Financial expenses 267.071.584.9 1.87 Adminstrative expenses 337.058.3 2.42 5.02 55.13 Personnel expenses 181.46 -11.528.03 167.96 731.34 1.18 Tax charges 465.57 7.14 79.2 1.2 1.31 36.236.96 545.5 2.0 2.46 57.2 2.27 0.91 158.19 46.419.677.7 1.532.9 Reported net profit 8 6 702.27 0.2 148.072.4 1.85 154.11 576.43 46.31 2.76 264.8 5.166.78 -12 -12.239.47 222.727.565.87 510.368.18 171.03 451.9 1.837.523.4 Adjusted PBT 0 2 935.4 1.353.039.

Hyundai. ESSAR STEEL Essar Steel is one of India's largest exporters of flat products. a township and a captive port capable of handling up to 8 MTPA of cargo with modern handling equipment like barges and floating cranes. The iron ore slurry is pumped through a 267 km pipeline (the second longest in the world) to the pellet plant. This plant is fed with inputs from four electric arc furnaces and three casters. which has a capacity of 8 MTPA. and Maruti Suzuki. and to the growing markets of South East Asia and the Middle East. we have set up a beneficiation plant of 8 MTPA capacity. oxygen and lime plants. . yielding advantages in quality. Essar Steel has acquired extensive quality accreditations.6 MTPA hot rolled coil (HRC) plant. We are totally integrated . Hazira facility Our steel complex at Hazira.0 MTPA sponge iron plant. exporting to the highly demanding US and European markets. Visakhapatnam facility: Pelletization The slurry is received at our pellet plant at Visakhapatnam. A number of major client companies have approved our steel for their use. the Konkan Railway. The complex's sophisticated infrastructure includes independent water supply and power. providing vital raw material for the steel plant at Hazira. the world's largest gas-based sponge iron plant in single location. Gujarat. The plant provides raw materials for our state-of-the-art 4. adding value at every stage of the manufacturing process. Swaraj Mazda. Our lean team gives us one of the highest productivities and lowest manpower costs among steel plants internationally. Seamless integration A major strategic advantage is our high level of forward and backward integration. including Caterpillar.from raw material to finished products. where some of the world's richest and finest ore is available. cost and real time inventory management. which ensures the highest quality iron ore. Bailadilla facility: Iron ore beneficiation At Bailadilla. the first and largest of India's new generation steel mills. houses a 5.

42 5.87 13.83 Capital work-in-progress 549. 0.54 6.32 Unsecured loans 993.19 12.049.78 2.6 43. loans & advances 5.27 Total net current assets 1.27 Reserves & surplus 3.126.140.52 2.32 7.661.928.75 10.940.447.03 5.61 575.89 8.01 383.98 Preference share capital 43.47 409.80 Less : current liabilities & provisions 3.317.107. .248.38 Uses of funds Fixed assets Gross block 15.20 4.34 Net block 9.12 1.355.229.204.6 246.580.829.62 5.48 1.64 Investments 791.080.46 684.45 3.664.95 1.19 12.28 3.554.75 10.36 589.140.48 1.27 Total 12.23 4.398.383.54 Loan funds Secured loans 6.60 4.049.17 507.689.66 5.411.535.07 Less : accumulated depreciation 6.68 980.85 14.48 581.09 3.533.35 1.77 733.747.22 433.18 686.887.612.128. .59 6.445.43 182.31 515.43 1.592.535.568.246.98 4.19 10.889.447. .414.27 2.049.691.91 11.239.885.367.97 768.91 11.53 Total 12.92 650.38 Net current assets Current assets.761.554.12 530.74 4.037.273.38 .747.24 Less : revaluation reserve .39 2.688.13 6.Financial data Balance sheet 31st 31st 31st 31st 31st Particulars MAR 09 MAR 08 MAR 07 MAR 06 MAR 05 Sources of funds Owner's fund Equity share capital 1.25 3.22 4.82 9.11 6.140.78 3.037.411.13 6.465.

48 6.721.717.65 1.96 .763.04 482.983.401.01 84.64 Administrative expenses 269.149.005. 11.98 Other non cash adjustments 55.087.03 1.03 -88.062.1 394.32 383.09 Adjusted PAT 837. Profit and loss account Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Income 11.19 165.39 Expenses Material consumed 3.10 1.11 766.9 244.673.5 .56 1.04 440.02 -14.49 436.78 .09 Selling expenses 291.78 Preference dividend .66 6.02 1.874.07 362.512.17 4.48 985.14 -16.54 781.3 Operating income 0 5 8.18 -874.72 Personnel expenses 233. 1.65 2.36 Adjusted PBDIT 2.49 530.16 39.95 2.32 436.360.73 Tax charges 110.8 99.950.722.18 599.14 Other recurring income 124.75 76. - Profit carried to balance sheet 1.56 2.085.01 772.949.35 410.95 2. .49 530.75 8.12 337.13 Cost of sales 9.098.29 4.31 -184.07 225.10 1.859.495.55 6. - Dividend tax .02 2.2 430.9 Earnings before appropriation 1.13 234.637.94 204.57 2.64 Nonrecurring items -707.07 248.48 Depreciation 828.77 172.50 Financial expenses 861.4 10.72 Reported net profit 185.75 445.83 38.80 3. .5 151.13 2.587.70 2.249.52 631.42 658.04 1.168.48 41.15 59.8 152.002.63 4.67 Manufacturing expenses 4.94 611.39 745.859.918.29 Adjusted PBT 947.108.18 -874.98 265.78 436.59 1.24 317.80 2.533.19 1.505.25 Operating profit 2.49 530.01 570.402.861.426.204.73 215.69 171.63 890.

SAIL produces iron and steel at five integrated plants and three special steel plants. automotive and defense industries and for sale in export markets. SAIL manufactures and sells a broad range of steel products. power. structural. electrical sheets. producing both basic and special steels for domestic construction. Ranked amongst the top ten public sector companies in India in terms of turnover. SAIL's wide range of long and flat steel products are much in demand in the domestic as well as the international market. limestone and dolomite mines. CMO’s domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest . plates. It is a fully integrated iron and steel maker. stainless steel and other alloy steels. railway. STEEL AUTHORITY OF INDIA Steel Authority of India Limited (SAIL) is the leading steel-making company in India. limestone. galvanised sheets. The company has the distinction of being India’s second largest producer of iron ore and of having the country’s second largest mines network. bars and rods. located principally in the eastern and central regions of India and situated close to domestic sources of raw materials. engineering. and dolomite which are inputs for steel making. railway products. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions. including hot and cold rolled sheets and coils. including the Company's iron ore. 25 Departmental Warehouses. 42 Consignment Agents and 27 Customer Contact Offices. This gives SAIL a competitive edge in terms of captive availability of iron ore.

912.122.130.558. Our captive mines are under the control of the Raw Materials Division in Kolkata.076.42 18.46 28.522.108. Management Training Institute (MTI) and Safety Organization at Ranchi. With technical and managerial expertise and know-how in steel making gained over four decades. Almost all our plants and major units are ISO Certified. Financial data Balance sheet 31st MAR 31st MAR 31st MAR 31st MAR 31 st MAR Particulars 09 08 07 06 05 Sources of funds Owner's fund Equity share capital 4.043.471. undertakes exports of Mild Steel products and Pig Iron from SAIL’s five integrated steel plants.60 925.473. With the total number of dealers over 2000 .13 3.922.933. SAIL has its own in-house Centre for Engineering and Technology (CET).899. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. SAIL's International Trade Division ( ITD).624.360.32 15. SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country.70 18.119. in New Delhi.40 4. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.89 26.19 2.01 6.86 19.130.73 29.165.customers in the remotest corners of the country.39 1.67 16.853.25 Loan funds Secured loans 1.93 2.130.98 Unsecured loans 6.459.315.75 8.603.493.40 Reserves & surplus 23.175.16 1.198. Besides.40 4.00 17.71 29.065.182.31 1.40 4.556.728.48 Less : accumulated depreciation 20.130.130.81 21.46 4.an ISO 9001:2000 accredited unit of CMO.40 4.351.03 16.176.44 Uses of funds Fixed assets Gross block 32.81 Total 35.41 .17 13.69 30.

521.857.447.7 18.44 Profit and loss account Particulars 2010-09 2007-08 2006-07 2005-06 2004-05 Income 43.05 -921.74 13.75 18.76 4.544.087.793.108.609.81 21.143.67 16.27 8.08 -1.5 16.798.7 538.4 11. 59.55 1.200.788.83 11.Net block 12.68 1.806.1 13.2 11.98 3.108.01 21.999.31 11.13 467.821.3 15.644.3 Operating income 8 7 7 8 0 Expenses 22.691.925.930.958.899.28 5.07 2 Financial expenses 253.71 Net current assets Current assets.539.9 Adjusted PBDIT 3 3 7 7.12 Total net current assets 16.236.77 15.035.762.832.714.77 7 Other recurring income 2.321.042.82 294.03 16.684.37 Less : current liabilities & provisions 19.51 6.93 Total 35.78 1.1 10.328.267.73 1.29 1.72 15.4 28.554.7 28.471.43 2.89 26.94 366.90 1.645.064.74 2.24 250.550.758.427.12 971.44 1.941.67 13.5 39.3 12.67 Expenses capitalized -1.48 Investments 652.155.12 11.55 11.198.057.3 676.04 757.71 12.485.89 1.77 3.14 12.323.597.811.963.79 292 606.05 .493.80 15.99 780.25 Miscellaneous expenses not written .22 -1.96 892.97 3.69 1.389.24 2.268.15 215.354.317.75 Selling expenses 935.673.48 129.279.317.162.76 605.73 7.44 4 9.11 Personnel expenses 8.40 -1.1 28.016.156.07 Capital work-in-progress 6.352.78 Administrative expenses 1.9 Cost of sales 4 3 6 1 3 11.8 10.165.423.13 2.919.5 24.94 332.571.45 2.2 21. loans & advances 35.066.076.656.221.224.903.489.666.522.309.644.401.2 513.84 27.3 Material consumed 8 9 3 3 3 Manufacturing expenses 3.6 34.3 Operating profit 8.71 34.

592.95 Other write offs 128.47 6.244.47 3.253.012.35 Other non cash adjustments 181.235. 7.052.79 4.12 161.90 1.36 2.66 Nonrecurring items -277.2 . JI T ES N S Ratio A S D AI analysis T A A L A R L Raw 14 material to 17 5.694.80 1.126.4 current 5 2 8 5 asset Stock 7.073.2 current .66 Equity dividend 1.6 appropriation 7 3 3 7.554.073.97 Earnings before 22.0 . 8.528.207.1> Here for comparison the best method is the comparison is ratio analysis of these company and TATA Steel ltd.98 115.64 -14.285.78 6.03 Tax charges 3.536.187.291.270.91 197.08 1. Depreciation 1.65 3.211.30 1.12 174.590.67 7.9 Adjusted PBT 9.363.95 2 9. 5.57 71.9 53.27 5.656.3 16.42 826. .5 5.89 11.57 9.348.934.797.861.408.5 .02 75.310.284.37 Adjusted PAT 6.24 Profit carried to balance sheet 20.4 15.896.280.59 181.816.03 Dividend tax 181.28 3.174.86 185.3 72 83 6 asset Finished 13 17 12 33 goods to .44 184.97 6.839.75 45.81 7.48 1.327.26 258.61 60.26 64.3 11.2 6.21 6.4 12.49 128.919. .886.25 1.561.48 1.66 Reported net profit 6. 5.4 18.249.12 1.27 6.

89 1.498.93% 17.77 14001.85 Inventory conversion period 39 53. then we can see that TATA STEEL’s raw material to current asset is neither too high nor too low.01 Acid test ratio 0. It is maintaining a required amount of raw material in hand.74 4. all the necessary charts are given below.6 71.797.3 43150.95 1859. If we compare for TATA STEEL with other companies.38 85. So.25 11688.42 Total inventories to total asset 5% 9.12 0.61 Current ratio 1.49 67.79 0.3 It will easy to understand when it will put into chart. .46% Sales 24315. Where ESSAR STEEL is maintaining very low amount of raw material in hand.68 2.44% 27.97 66.28 46.08 Profit after tax 5201.1 20. turnover ratio 72 77 48 08 Average age of stock 47.61 1.34 0.

. Both TATA STEEL and JINDAL STEEL have the good stock turnover ratio.Here we can see that SAIL is playing a defensive role in case of finished goods. In this case TATA STEEL is far ahead than ESSAR STEEL and SAIL. But still TATA steel has limited finished goods to sell. TATA STEEL never tried to block its capital.

Where SAIL and ESSAR age of stock is too high. So from here we can conclude TATA STEEL is the fastest converter company for Inventory. .As the stock turnover ratio is too high. Inventory conversion period is lowest than other company for TATA STEEL. so the average age of stock is less than 50 days. Even SAIL age of stock is more than 70 days.

. Where JINDAL steel’s current ratio is less than 1 and SAIL’s current ratio is more than 2. Where SAIL is blocking its working capital there TATA STEEL is keeping appropriate coverage for current liability.Current ratio of TATA STEEL is in standard position.

where SAIL maintained huge amount of highly liquid money. This company never tried to block its current money. So in this case TATA STEEL is good enough to maintain the highly liquid money. . It is a good sign for TATA STEEL. From this chart it is clearly shown that SAIL is always maintaining a defensive position.TATA STEEL maintained exact amount of highly liquid money in hand. TATA STEEL has less inventories percentage to total asset than other companies.

But if we see TATA STEEL and JINDAL steel. It is very less than the others. • TATA STEEL has prepared high quality inventory storing house to minimize the cost relating to it. . These are as follows: My observations: • TATA STEEL is maintaining three major types of inventories i. It never tried to block its money unnecessarily. So. As SAIL is Government undertaking organization. how TATA STEEL is working in case production. CHAPTER-16 Conclusion During my project. TATA STEEL is maintaining an appropriate amount of liquidity to cover its current liability while we see its current ratio and acid test ratio. I personally learned a lot of things i. But still TATA STEEL is in second position.e. raw material. • As per my concern. raw material consumption etc. work-in- process and finished goods. • TATA STEEL’s inventory conversation period is too efficient than its competitors. I also learned about inventory management in TATA STEEL. It gave me nice experience as well as a value addition to my carrier. During this period I found some good points and some which I think will help in improving the performance of the company. it is getting lot of subsidiaries and also other facilities from Government. It is keeping only 5% of its total asset. It shows its aggressiveness. But the sale price of TATA STEEL is less than JINDAL Steel.Here it is clear that SAIL’s sale and profit is higher than other companies. It shows efficiency level of TATA STEEL. which is lesser than other competitors. • TATA STEEL is managing its inventory very cleverly. I am happy to work here for last two months. • The raw material inventory of SAIL is very low in percentage in comparison to TATA STEEL. • Cost of inventories is valued under ‘weighted average method’. that the sale is higher than JINDAL steel and ESSAR Steel. the percentage of profit against sale is high for JINDAL Steel than TATA STEEL.e.

It shows its efficiency level. E=Essential. D=Desirable. lower value occupying more space and others. • Import of raw material is the maximum in the year 2010-09. My suggestion: • For better inventory control TATA STEEL must apply VED analysis or ABC analysis. • Raw material conversion period is decreasing year by year. But it is far efficient than the others. * ABC Analysis: It is a part of inventory management in which. • Inside the plant one quotation is there ‘work must but safety first’. Because PAT CGPA is still 5% less than Inventory CGPA. • Where finished goods conversion period and raw material conversion period is decreasing. Where in rest of the year TATA STEEL was using own mines for raw material. It should be obeyed by all the employees at least who are working in production and inventory maintenance departments. Where percentage of expenses on ferro manganese is decreasing. • The Compounded Annual Growth Per Annum of the value of raw material consumed is more than 35% but sales value is not increasing that much. • Expenses on coke are increasing year by year. *VED Analysis: V=Vital. the items included in the inventory are classified into different categories as items of higher value occupying lesser space. It is the one of the major part of inventory management. • Try to make same CGPA of closing stock of inventory and profit after tax. • As sale price per unit is lesser than the competitors it must keep trend increasing mode of sales to reduce the blockage of its price in its inventory. • TATA STEEL should try to minimize its inventory conversion period and also try to minimize the average age of stock to reduce the cost of inventories. • All the raw material price is increasing except ferro manganese and zinc alloys. • TATA STEEL should try for acquisition of more mines in India to reduce the raw material outsourcing or import cost. . • TATA STEEL must keep eye on its WIP conversion period. Because cost of goods sold CGPA is still less than 3% than Cost of production CGPA. • Try to generate more revenue from other country. • Cost of production and Cost of goods sold CGPA should tally. there work in process conversion period is increasing. Inventories should divide according to their importance.

2006-07.steel. 2007-08.co.com • www.wikipedia.economywatch.sail.com • www.jindalsteel.com Other references • Annual report of TATA STEEL for the year 2004-05. .nic.essarsteel.tatasteel.com • www. Bibliography Books • Financial management by Prasanna Chandra • Fundamental Financial management by Bringham & Houston Websites • www.com • www. 2010-09.in • www. 2005-06.in • www.

JINDAL. ----------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- . ESSAR steel for the year 2010-09. • Annual report of SAIL.