Macroeconomics Assignment

Industry Analysis Report

On

IRON & STEEL INDUSTRY – TATA STEEL

submitted to

Alliance School of Business

Alliance University, Bangalore

for the partial fulfilment of

Master of Business Administration (MBA)

in Marketing

2021-23 Batch

Submitted to: Submitted by:

Dr. Sunil Kumar Name of Student: Saranya
Bhattacharjee
Professor Registration No.: 2021MMBA
Department of Economics

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 Macroeconomics Assignment

Declaration

I, Saranya Bhattacharjee solemnly declare that the report of the project work entitled-
Industry Analysis Report on Tata Steel is based my own work carried out during the course
of my MBA study under the supervision of Dr. Sunil Kumar. I assert that the statements
made and conclusions drawn are an outcome of the project work. I further declare that to the
best of my knowledge and belief that the project report does not contain any part of any work
which has been submitted for the award of any other degree/diploma/certificate in this
University (Alliance University) or any other University.

___________________

(Signature of the Candidate)

Name of the Candidate: Saranya Bhattacharjee

Roll No.: 2021MMBA

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 Macroeconomics Assignment

Acknowledgement

I am using this opportunity to express my gratitude to everyone who supported me

throughout the course of this Macroeconomics project. I am thankful for their aspiring
guidance, invaluably constructive criticism and friendly advice during the project work. I am
sincerely grateful to them for sharing their truthful and illuminating views on a number of
issues related to the project.

I would also like to thank my Macroeconomics Professor Dr. Sunil Kumar for his guidance
and help. And also, for his feedback and suggestions. Lastly, I would like to thank my parents
and friends for their constant support during the tenure of this project. Without their support
this project wouldn’t have been possible.

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Table of Contents

• Introduction

– Background

– Objectives of the study

– Industry overview

– Company profile

• Methodology

– Scope of study

– Source of data collection

– Tools for analysis

• SWOT Analysis

• PESTLE Analysis

• Impact of Business Cycles on Industry/Company

• Marketing Strategies of Company to Enhance Sales/Revenue

• Conclusion

• References

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Macroeconomics Assignment

INTRODUCTION

Background
The Tata group is built on a foundation of trust and transparency. Founded by
Jamshetji Nusserwanji Tata in 1868 and headquartered in India, the Tata group is a
global business conglomerate, operating in over 100 countries across 6 continents.
From an early foray into steel and automobiles to staying abreast of the latest
technologies, The Tata group today has a strong presence across diverse industries
such as construction, automobiles, finance, consumer products etc.

There are 29 publicly listed Tata enterprises, which include Tata Steel, Tata Motors,
Tata Consultancy Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata
Teleservices, Titan, Tata Communications and Indian Hotels. The group has a
combined market capitalisation of around $123 bn (as on March 31, 2020).

Tata companies have made significant investments in different geographies. With

their ever-increasing global footprint, they are now reaching out to customers in the
farthest corners of the world. They touch upon lives across the globe and have an
employee strength of over 750,000, representing the rock-solid company that they are.
Several Tata group companies have achieved leadership positions globally in their
areas of operation.

The Tata group's value system directs the growth and business of all sectors they
operate in. Two-thirds of the equity of Tata Sons, the Tata group holding company, is
held by philanthropic Trusts that have created national institutions for science and
technology, medical research, social studies, and the performing arts. Cutting-edge
innovation, a stringent focus on quality, sustainable operations and business
excellence are the hallmarks of the trust the Tata name is best recognised for.

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Objective of Study
Marketing Objectives are goals set by business houses to promote its goods and
services to its consumers within a specific time frame. Marketing objectives are
strategies set to attain the overall growth of the organisation. When it comes to a
particular product, a company’s marketing strategy may include increasing product
awareness, providing information about product features, and reducing consumer
resistance. A marketing audit is performed, which lets a business firm to establish its
strengths, weaknesses, opportunities, and goals, after which the organisation may
redefine its objectives. The marketing objectives are significant as they assist us in
realising how effective we are and they help us stay focused. Objectives are useful
only if they are grounded and realistic. The objective of my study is find out the
profitability and growth opportunities of Tata Steel.

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Industry overview
The iron and steel industry in India is among the most important industries within the
country. India surpassed Japan as the second top steel producer in January 2019.As
per world steel, India's crude steel production in 2018 was at 106.5 tonnes (MT),
4.9% increase from 101.5 MT in 2017, means that India overtook Japan as the world's
second largest steel production country. Japan produced 104.3 MT in year 2018,
decrease of 0.3% compared to year 2017. Industry produced 82.68 million tons of
total finished steel and 9.7 million tons of raw iron. Most iron and steel in India is
produced from the iron ore.Policy for the sector is governed by the Indian Ministry of
Steel, which concerns itself with coordinating and planning the growth and
development of the iron and steel industry, both in the public and private sectors;
formulation of policies concerning production, pricing, distribution, import and export
of iron and steel, ferro alloys and refractories; and the development of input industries
relating to iron ore, manganese ore, chrome ore and refractories, etc., required mainly
by the steel industry. Most of the public sector undertakings market their steel through
the Steel Authority of India (SAIL). The Indian steel industry was de-licensed and de-
controlled in 1991 and 1992 respectively.

India's iron and steel industry is organized into three categories: main producers, other
major producers, and secondary producers. In 2004-05, the main producers i.e., SAIL,
TISCO, and RINL had a combined capacity of around 50% of India’s total steel
production capacity and production. The other major producers — ESSAR, ISPAT,
and JVSL — account for around 20% of the total steel production capacity.

National steel policy – 2005 has the long-term goal of having a modern and efficient
steel industry of world standards in India. The focus is to achieve global
competitiveness not only in terms of cost, quality, and product mix but also in terms
of global benchmarks of efficiency and productivity. The Policy aims to achieve over
100 million metric tonnes of steel per year by 2019-20 from the 2004-05 level of 38
mt. This implies annual growth of around 7.3% per year from 2004-5 onward.

The strategic goal above is justified because steel consumption in the world, around
1000 million metric tonnes in 2004, is expected to grow at 3.0% per annum to reach
1,395 million metric tonnes in 2015, compared to 2% per annum in the past fifteen
years. China will continue to have a dominant share of the demand for world steel.
Domestically, the growth rate of steel production over the past fifteen years was 7.0%
per annum. The projected rate of 7.3% per annum in India compares well with the
projected national income growth rate of 7-8% per annum, given an income elasticity
of steel consumption of around 1.

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Macroeconomics Assignment

Subsequent steel policies have been drafted each year. The Indian Ministry of Steel
has released a draft National Steel Policy (NSP), 2017. The problems identified in this
sector include:

 Steel companies are plagued with huge debts.

 Lack of domestic demand. This is a major concern
 Low quality of metallurgical coke for blast furnace iron making.
 High input costs.
 Cheap imports from China, Korea, and other countries are also a matter of concern for
domestic producers.

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Macroeconomics Assignment

Company Profile

According to the company, “The world of Tata Steel is one without boundaries-
growing, changing and challenging. A world that embraces different skills,
continuous innovation, sustainable growth and better quality of life”.

Tata Steel has touched the lives of millions of people across the world every day with
the steel that they produce. And it is highly likely that Tata Steel has affected your life
today, though you may not know it. From the vehicle you drive, to the house you live
in; from the bridges you cross, to the hand tools that you use, they strive to deliver
unparalleled quality through their customised value-added solutions to make your life
easier. This is made possible by their commitment to a culture of continuous
improvement, through which they drive operational excellence in processes, products
and people.

Tata Steel, with an annual crude steel capacity of 34 million tonnes per annum
(MnTPA), is one of the world’s most geographically diversified steel producers. They
are one of the few steel operations that are fully integrated – from mining to the
manufacturing and marketing of finished products. Continuous improvement in their
product and service portfolio, along with success in value creating initiatives for
customers, has allowed them to serve global growth markets. Today, they have their
operations and commercial presence across the world. A Great Place to Work-
Certified organisation, Tata Steel, together with its subsidiaries, associates, and joint
ventures, is spread across five continents with an employee base of over 65,000. The
group recorded a consolidated turnover of INR 1,56,294 crore in the financial year
ending March 31, 2021.Tata Steel’s Raw Material operations are spread across India
and Canada which helps them to be self-sufficient in steel production. Key
manufacturing functions are performed by the raw materials and iron-making groups,
while Shared Services provides maintenance support for a smooth production. In
India, their downstream business activities are structured into strategic business units

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Macroeconomics Assignment

such as Ferro-Alloys and Minerals, Tubes, Wires, Bearings, Agrico, Industrial By-
products Management & Tata Growth Shop.

Vision
“We aspire to be the global steel industry benchmark for Value Creation and
Corporate Citizenship”.

Mission
“Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives
to strengthen India’s industrial base through effective utilisation of staff and materials.
The means envisaged to achieve this are cutting-edge technology and high
productivity, consistent with modern management practices. Tata Steel recognises
that while honesty and integrity are essential ingredients of a strong and stable
enterprise, profitability provides the main spark for economic activity. Overall, the
Company seeks to scale the heights of excellence in all it does in an atmosphere free
from fear, and thereby reaffirms its faith in democratic values”.

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Values
• Integrity
• Excellence
• Unity
• Responsibility
• Pioneering

Business Model & Strategy

Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives
to strengthen India’s industrial base through effective utilisation of staff and materials.
The means envisaged to achieve this are cutting-edge technology and high
productivity, consistent with modern management practices. Tata Steel recognises
that while honesty and integrity are essential ingredients of a strong and stable
enterprise, profitability provides the main spark for economic activity. Overall, the
Company seeks to scale the heights of excellence in all it does in an atmosphere free
from fear, and thereby reaffirms its faith in democratic values.

Products by Tata Steel

Following are among the few and major products manufactured and sold by Tata
Steel

 Steel
 Long steel products
 Structural steel
 Wire products
 Steel casing pipes
 Household goods

Competitors of Tata Steel

There are various organisations built to cater to social needs for steel. Here are
the top 5 of Tata Steel’s competitors –
 ArcelorMittal
 Jindal Steel and Power
 JSW Steel
 SAIL
 VISA Steel

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Methodology

Scope of study
The scope of the following study is to ascertain the Net profit of Tata Steel over the years and
also to compare the income and revenue over the years to see whether the company is in a
stage of growth or decline and hence to suggest strategies based on those analysis.

Source of data collection

The data thus collected for the project work is completely secondary in nature. There are
various articles and websites which have been referred to and books by different authors also
have been consulted.

 Textbooks
 Biographies
 Newspaper
 Websites

Tools for data analysis

In the following study, the various tools used for data analysis are:

 Charts
 Pie Charts
 SWOT Analysis
 PESTLE Analysis

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PROFIT COMPARISON
16000

14000 13606.62
12000
10533.19
10000

8000
6743.8
6000

4000 4169.55

2000

0
YEAR 21 YEAR 20 YEAR 19 YEAR 18

PROFIT FOR THE YEAR

Sales over the quarters for the year 2021

4.67

7.82

5.12

7.8

March-May June-August September-November December-February

SWOT Analysis

Strengths
o Integrated operations in India:

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Although it is a technical aspect, the entire process of extraction from mines and ores
to producing finished steel material is integrated in India. The combined operations
save you a lot of time and money while maintaining the required quality.
o Market Position:
Tata Steel is one of the world's most important steel producers, and the world's
second-most geographically diverse steel producer. It has a significant presence in
both Asia and Europe.
o Product Portfolio:
As you can see, Tata Steel offers a diverse range of products, including flat steel,
agricultural equipment, building materials, and more. A varied product range ensures
revenue from a variety of global markets.
o Capability and Adaptability:
This company raises more than 14 million tonnes of ores each year from its captive
collieries, iron ore mines, and quarries. The company's major flexibility is to a rapidly
changing environment. There are operations in 26 nations and over 50 countries with
billboards.
o Global Footprint:
Tata Steel has a global footprint of over 50 nations and activities in over 26 countries,
increasing its penetration and market share.
o TATA's Trust:
Because of their quality, Tata is one of the most trusted and well-known brands not
only in India but also across the world. At the same time, the name's affiliation gives
the company a lot of brand equity.

Weakness
o Functional Issues:
The operational efficiency of the company is not as high as that of worldwide leaders.
On the technology front, it's a little behind.
o Fragmented operations in Europe:
While Tata Steel's operations in India are integrated, its operations in Europe are
disintegrated, requiring them to rely on a variety of other nations' suppliers. As a
result, quality control is compromised, and expenses rise.
o Mistry's saga:
The feud between Ratan Tata and Cyrus Mistry has harmed the Tata group's
reputation, which includes Tata Steel.
o Overdependence on Europe:
Despite being an Indian company, Tata Steel gets over half of its income from
Europe, therefore any economic slowdown there has an impact on Tata Steel's sales.

Opportunities
o Global Development:
Future growth in the industrial, construction, and automotive industries will drive
industry expansion, and Tata Steel will gain from it. Collaboration between the public

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and private sectors. Coal blocks are being purchased throughout Asia, Africa, and
other parts of the world.
o Adapt newer technologies: Tata Steel trails behind its competitors in terms of
technology, thus it has the potential to adapt modern technologies such as the Cortex
process, Hismelt process, and direct iron ore smelting, among others.
o Increasing steel demand in India: The steel market in India is expected to rise over
the next four years as the housing sector and manufacturing facilities in the country
expand. Tata Steel will undoubtedly gain from this.

Threats
o Environmental restrictions and government regulations: Increases the expense of
compliance for the corporate reason In both mining and production, Tata Steel is
bound by strict regulatory and environmental laws.
o Global steel prices are falling: Due to China's excess production, it was able to
supply steel at a lower cost to the rest of the world, forcing the method to be lowered
all over the world. Coking coal costs are on the rise.
o Environmental restrictions and government regulations: Increases the expense of
compliance for the corporate reason in both mining and production, Tata Steel is
bound by strict regulatory and environmental laws.

PESTLE Analysis

Political Factors:
 Effects of Liberalization: The many liberalisation plans undertaken by the
government after the Indian economy opened up to the rest of the world in
1991 are responsible for significant growth in a variety of sectors, but notably
in this one. The following are some of the aspects that can be discussed:
1. The capacity creation requires licence, which has been abolished.
2. Up to 74 percent of foreign equity participation was permitted.
3. Import and tariff reductions were cut from 105 percent in 1992-1993 to
30 percent in 1996-1997.
4. Aside from that, import and export restrictions have been eased.
5. These are some of the key characteristics of the liberalisation policies
that have led to Tata Steel's growth.

 India’s infrastructural development: The Indian government is now

introducing different programmes for the development of road and
transportation infrastructure. Every year, Tata Steel and other steel
manufacturers in India spend a significant amount on freight and
transportation. With the implementation of different infrastructure

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programmes, the firm may be able to save part of the freight and transportation
costs.
 Investment in unstable political nations: Though Tata Steel made many
acquisitions for the sake of the company's development and expansion, they
accepted a significant degree of risk by investing in countries such as
Bangladesh, Iran, and Thailand. For example, the plan put up in Bangladesh is
being delayed by the issue of gas supply, whilst the issue of leases for iron ore
mining in Iran is causing the cost of production to rise.

Economic Factors:
Two years ago, the United States economy was hit by the SUBPRIME
CRISIS, which had a detrimental impact on every strong economy. During
this time, there was a very significant danger of liquidity in the international
capital markets. Many foreign investments and equities were depressed in
2007 due to a loss of faith in liquidity and investment returns. Due to the
subprime crisis in the United States, European markets are experiencing
recessionary challenges, which has a negative influence on Tata Steel, whose
primary markets are the Netherlands, the United Kingdom, and Germany. The
steel sector may be impacted by the cyclical economic situation since many
industries, such as autos, appliances, and construction, are cyclical.

Socio-cultural Factors:
TATA STEEL was recognised for its efforts to improve the lives of employees
and their families via corporate ethics. The GOLDEN PEACOCK GLOBAL
AWARD was given to Tata Steel for this achievement. TATA STEEL also
put a strong emphasis on fostering a positive social atmosphere. They were
always striving to better the nation's health, economic well-being, and
educational facilities. In the state of Jharkhand, this programme is
implemented in over 800 villages. Chhattisgarh and Orissa are two states in
India. Tata's primary idea is a hospital on wheels, and the company is also
responsible for slum housing in emerging towns.

Technological Factors:
Technological aspects should constantly be in the state of flux, adapting to
changing situations. In the middle of the year 2000, Tata Steel and the SAIL
(Indian Steel Authority) launched the E-PORTAL system. This technique is
also known as METAL JUNCTION, and it benefits not only Tata Steel but
the whole industry. With the use of this technology, the e market has become
the world's largest market for acquiring and selling steel. Tata Steel is working
on developing ultra-low carbon steel in order to minimise CO2 emissions in
the environment. Tata is also working on energy conservation plans, in which
it is doing research to cut energy usage in the manufacturing process.

Legal Factors:

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The safety of employees at work is given the highest priority. Tata Steel
adheres to the EHS (Environmental Health and Security) framework, which
regulates each and every employee's activity. In addition to this beneficial
element, the organisation is also dealing with legal issues. Though Tata Steel
is unconcerned about the issue of land purchases in West Bengal, it is
damaging the company's reputation. Jharkhand's unstable administration and
different tribal demonstrators are causing legal problems for Tata Steel. It
should be highlighted that the company's operations have not been disrupted
by strikes or internal difficulties over the previous 100 years. The Tata Group
is the first to implement a provident fund

Environmental Factors:
The emersion of carbon dioxide gas during the manufacturing process is a
serious concern in the steel business, and it is exceedingly destructive to both
nature and humans. Tata Steel is developing a scheme that will allow the
company to cut CO2 emissions by 20%. The DHAMRA port is a joint venture
between TATA STEEL and LASRSEN AND TOURBO. The Olive Ridley
Sea Turtles were the reason for the formation of this cooperative enterprise.
These projects are located near the state of Orissa. DHAMRA port also
supports the conservation of saltwater crocodiles and contributes to the
conservation of wildlife in India. It also serves as a breeding site for horse
shoe crabs.

Impact of Business Cycles on Industry/Company:

 According to the Profit & Loss statement of TATA Steel, in the year 2021 there has
been a huge growth i.e., Rs. 13606.62 Crore has been the net profit. Whereas it was
Rs. 6743.80 Crore during the year 2020. That means this period was a Boom/Peak for
the company.
 During the year 2017 the company had a net profit of Rs.3444.55 Crore which was a
phase of Depression/Trough, whereas in the year 2018 the company had a net profit
of Rs.4169.55 Crore which was recovery phase.

Steel sales volume from Tata Steel Limited from financial year 2013 to
2021(in 1000 metric tons)

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Marketing Strategies of Company to Enhance Sales/Revenue

 In B2B Marketing, promotion and advertisement play a very important role. Hence,
the focus should be laid on Branding to reach more customers.
 The pricing of any particular product is very important aspect. Tata Steel should keep
their prices on the lower end.
 We see an increase in demand for steel, so Tata Steel should make proper use of this
opportunity to increase the demand furthermore.
 Latest technologies should be used to maintain or increase the quality of products.

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Conclusion
Tata Steel consistently redefined performance parameters on its way to become the
global steel industry benchmark for value generation and corporate citizenship.
They're now among the few steel companies in the world that has fully integrated
their operations, from mining through final product manufacturing and marketing.
The safety of raw materials has always been at the forefront of their industrial
processes. Tata Steel is now Asia's lowest-cost stainless steel producer, enabling cost
competitiveness and efficiency. Tata Steel has been effective in increasing its sales
and skills over time with the support of its well-known marketing plans, ad
campaigns, and marketing mix methods. We hope they continue to do so.

References
 https://www.statista.com/statistics/754887/india-steel-division-sales-
volume-of-tata-steels/
 https://www.moneycontrol.com/stocksmarketsindia/
 https://www.economictimes.com
 https://www.tatasteel.com/

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