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FPO Analysis

PF / FPON / 18012011 / 655

18 January 2010

Issue Highlights: About the Issuer
Issue Open: Jan 19th 2011
Brief Introduction:
Issue Close: Jan 21st 2011
Tata Steel was established in 1907 by Jamsetji N.Tata,
Issue Size (Shares): 57,000,000
founder of Tata Group. And is one of the flagship companies
Issue Size (Rs.): Rs 3,385.8 – Rs 3,477 Crores of the group.The company has presence in more than 26
Price Band: Rs.594 - Rs 610 countries. According to WSA, Tata Steel was the seventh
Face Value: Rs. 10 largest steel company in the world in 2009. The Company is
also one of the most geographically diversified steel
Bid Size: 10 Shares
producers, with operations in 26 countries and a commercial
presence in more than 50 countries. As of March 31, 2010,
Issue Allocation: the Company had approximately 81,000 employees. The
Company has grown significantly in recent years with its steel
Employee Reservation portion: 15, 000, 00
production capacity increasing from approximately 5.0 mtpa
QIB (Shares): 27,750,000 in Financial Year 2006 to 27.2 mtpa currently. The Company
Non Institutional (Shares): 8,325,000 offers a broad range of steel products including a portfolio of
Retail (Shares): 19,425,000 high value-added downstream products such as hot rolled
coils, sections, plates and wires. The Company is also a large
producer of ferro chrome in India. The Company’s main
Share Holding Pattern: markets for its products are Europe and India, which
Pre Issue Post Issue accounted for approximately 72.6% of the Company’s net
sales in Financial Year 2010, with the remaining sales
Equity 902,214,196 959,214,196
primarily taking place in other markets in Asia and in North
Shares
America. The Company’s customers primarily comprise the
outstanding
construction, automotive, aerospace, consumer goods and
material handling and general engineering industries.

BRLMs: Investment Rationale:
Kotak Mahindra Capital Company Limited
The company is one of the world’s largest steel companies.
CITIGROUP GLOBAL MARKETS INDIA PVT LTD The company has global presence and it has a strong base in
a growing market like India. As a member company of Tata
DEUTCHE EQUITIES (INDIA) PVT LTD
Group, It also gets benefited with the brand name of Tata
HSBC SECURITIES AND CAPITAL MARKETS (INDIA) Group. The company’s acquision of Corus Group in 2007
PVT LTD contributed to the increase in the capacity of the company.
Company’s presence across the value chain of steel
RBS EQUITIES (INDIA) LIMITED
manufacturing is also a positive factor.
SBI CAPITAL MARKETS LIMITED
Key Strategies:
STANDARD CHARTERED SECURITIES (INDIA)
LIMITED a. Increase capacity in India.
b. Increase Raw Materials Security.
c. Increase sales of High Value-Added Products.
Registrar: d. Enhance Competitiveness through continuous
LINK INTIME INDIA PRIVATE LIMITED improvement.
e. Control over Logistics.
Bankers to the Issue: f. Strategic Alliances with Joint Venture Partners.
Axis Bank Limited
Key Strengths:
HDFC Bank Limited
a. Global Scale.
ICICI Bank Limited b. Strong position in Indian market.
c. Strong position in Western Europe.
d. Cost Competitiveness of the company’s Indian
Listing: Operations.
e. Diversified Product offering.
BSE & NSE
f. Efficient Project implementation.
g. Economies of Scale and Cost Reductions.
h. Experienced Management team.

Call us at 1800 425 8282 Tata Steel 1

67%.9 million in 2006 to 567136.2 Steel Ltd Call us at 1800 425 8282 Tata Steel 2 .1 million in 2010 at a CAGR of 29. Objects of the Issue: The objects of the issue are as below.4 186.583. Part-finance the Company’s share of capital expenditure for expansion of existing works at Jamshedpur.4 Steel JSW Steel 10 10 13. Payment of redemption amounts on maturity of certain redeemable non-convertible debentures issued by the company on a private placement basis.3 million in 2010 at a CAGR of -0.2 80.3 Limited SAIL 10 10 12. Net Profit: Net profit of the company decreased from 37057.3 million in 2006 to -20147.2 28. c. FPO Analysis PF / FPON / 18012011 / 655 18 January 2010 Financial Analysis: Revenue: Revenue of the company increased from 204.0339%. General corporate purposes. Comparison with Industry peers: Company Face EPS P/E Ratio NAV RONW name Value (Rs) (%) (Rs) (%) (Rs) Tata 10 57. a.62%.7 22 Bhushan 10 10 11.5 million in 2006 to 62064. b.9 13.3 418.4 million in 2010 at a CAGR of 0.5 662.3 23. EBITDA: EBITDA of the company decreased from 63753.

750.1 19.1) 34.046.837.4 123.130.3) 6.4 P/(L) After Exceptional Items Before Tax 55.8 74.681.745.867.931.3 21.3 1.5 Net Finance Charges 12.035.6 (106.3 729.219.6 607.499.6 2.6 Less: Excise Duty 12.876.434 P/(L) Before Exceptional Items and Tax 55.9 174.0 Net Income from Operations 558.402.653.1 37.917.403.6 Manufacturing.9 Depreciation 21.995.7 100.145.7 4.0 30.3) 1.376.009.978.6 382.130.492.9 EXPENDITURE Cost of Materials 244.6 Less: Minority Interest (40.286.380.762.8 Provision for Taxes Current Tax 13.9 550.2 1.0 363.0 67.6 32.9 Actuarial Gain 59.7 1.057.455.1 26.367.320.656.042.8 1.4) 48.107.4 Accretion/(Reduction) in Stocks of Finished (17.9 72.183.7 Deferred Tax 3.2 Fringe Benefit Tax 188.068.315.7 20.544.2) (470.109.4 44.123.849.390.650.420.945.9 254.149.7 Total 511.4 204.5 602.6 191.1 41.5 2.720.2 (16.9) 6.2 108.2) 1.9 Profit/(Loss) as Restated after Minority 37.359.6 41.949.7 Adjustments Adjustments (65.789.500.854.6 1.845.584.041.219.9) (1.9 36.5 18.567.6 63.2 1.217.8 1.269.537.094.1 1.5 1.909.5 10.317.377. in million) Period / Year Ended Particulars 6 month 12 month 12 month 12 month 12 month 12 month Sep 30 2010 2010 2009 2008 2007 2006 INCOME Sales and Other Operating Income 570.1 1.018.531.286.5 8.4) (77.9 Net Profit/(Loss) After Tax Before 37.0) Exchange gain 5.5) (386.2 Add: Share of profits of Associates 418.625.571.6 56.171.0 (20.556.647.1 37.613.737.7 203.642.483.147.8 (21.758.375.901.3 42.3 Interest and Share of Profits of Associates Call us at 1800 425 8282 Tata Steel 3 .266.2 33.208.336.4) 129.367.3 440.4 1.769.5) (5.449.1 289.292.187 149.629.6 191.475.2) (40.600.9 (425.369.8 222.136.518. selling and other expenses 173.3 252.038.186.023.149.1 74.220.843.491.359.0 1.6) (16.4 163.583.268.3 63.9 91.147.681.126.735.181.782.915.953.8 40.298.926.8 (155.2 (21. FPO Analysis PF / FPON / 18012011 / 655 18 January 2010 STATEMENT OF RESTATED PROFIT AND LOSS ACCOUNT (Amount Rs.473.1 209.2 331.656.1) (48.3 Total Income 567.0) and Semi Finished Products Payment to and provision for Employees 76.4) 35.1 67.710.6 1.5 310.8 25.3 1.500.9 179.4 19.6 168.453.1 17.522.7) (14.3) Contribution for Sports Infrastructure (1.3 41.0 17.4 22.402.8 321.0 164.340.249.3 11.7 274.6 791.9 41.432.2) (284.7 1.210.220.1) Net Profit/(Loss) after Adjustments 37.2 55.398.8 Exceptional Items Restructuring costs (914.858.603.6 Other Income 8.199.4 671.971.2 16.2 55.3 1.7 19.7 21.

4 8.328.684.465. The information contained herein is based on our analysis and upon sources that we consider reliable.800.097.9 49.789.0 54.9 142.6 33.3 186.583.3 233.740. Liabilities and Provisions: Secured Loans 289.2 90.1 10.8 354.3 18.6 419.865.2 Interest Accrued on Investments 64.264.0 C.086. as they believe necessary.177.0 Less: Impairment 29.0 230.327. Loans and Advances: Inventories 253.6 11.8 68.1 1.4 38.368.830.566.6 174.837.175.8 230.488.643.881 B.1 271.819.9 Net Block (A) 367.424.6 174.946.0 69.2 7.7 9.1 61.058.636.4 100.271.1 92.767.167.7 962.389.3 20.2 153.0 8.418.308.6 Provision for Employee Separation Compensation 9.9 19.2 440.0 34.6 Total (D) 936.2 Cash and Bank Balances 71.4 11.7 9.0 Loans and Advances 83.1 71.187.3 453.566.0 14.7 10.7 Provisions 66.438.6 7.609.4 Deferred Tax Liability 20.196.475.6 174. We.4 216.562.3 155.269.1 908.6 365. in million) Year / Period Ended 6 month 12 month 12 month 12 month 12 month 12 month Particulars Sep 30 31-Mar-10 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 2010 A.4 331.8 NET WORTH (A+B+C+D-E) 277.4 68.733.7 579.584.6 108.574.4 16.941.768.979.151.124.155.943.3 107.3 1.787.754.5 144. however. Goodwill on Consolidation 150.4 18.251. Disclaimer :: Research Team :: The information and views presented in this report are prepared by Karvy Stock Broking Limited.2 180. This material is for personal Neelima Bajaj information and we are not responsible for any loss incurred based upon it.866.974.6 10.6 42.140. ASSETS Fixed Assets: Gross Block 1. FPO Analysis PF / FPON / 18012011 / 655 18 January 2010 STATEMENT OF RESTATED ASSETS AND LIABILITIES (Amount Rs.1 65.3 108.479.449.3 24.6 31.0 IMPORTANT: Please read the Red Herring Prospectus of this issue carefully before investing in the same.6 280.170.2 230.166.074.890.261.371.0 8.6 Current Liabilities 270.6 115.958.021.5 199.025.4 972.483.004.883.006.3 342.717.0 994.5 76.3 27.2 340.9 Unsecured Loans 270.3 16.312.2 182.9 184.706.2 349607 102.633.1 89.674.983.593.187.822.058.3 164.0 D.0 1.s@karvy.1 145.4 129.8 166.205.477.9 54.306.938.340.1 941.5 59.0 33. do not vouch for the accuracy or the completeness thereof.033.489.2 6.613.612. Investments 47.3 250. Pradeep Kumar S.6 Warrants Issued by a Subsidiary Company 174.2 539.975.1 28.9 599.717.029.306.459.028.428.318.5 614. The investments discussed Santosh Rudrabhatla or recommended in this report may not be suitable for all investors.535.881.593.1 Total 489.9 64.5 11.6 11.416.149.0 Minority Interest 9243.110.201.4 88.9 364.7 64.627.6 1.183.1 Sundry Debtors 116.6 2.841. Production: Raju A Call us at 1800 425 8282 Tata Steel 4 .974.5 938.928.3 12.8 Total 526.259.7 13.879.410.6 94.843.649.643.6 1. Investors must make their own investment decisions based on their specific investment objectives and financial position and using E-mail: pradeep.5 Deferred Tax Asset 1.111.7 457.276.586.407.250.8 Less: Depreciation 609.892.2 88.636.3 68. While acting upon any information or analysis Direct Ph: 040 4467 7542 mentioned in this report.342.7 130.9 Capital work in Progress 122.168.0 297. Current Assets.3 185.479.580.8 E.4 31.2 256.4 263.1 71.5 598.6 174. investors may please note that neither Karvy nor Karvy Stock Broking nor Ph: 040 23312454 Ext: 7542 any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document.com such independent advice.662.504.263.9 867.3 25.499.5 200.7 32.393.0 8.293.