INSTITUTE OF MANAGEMENT TECHNOLOGY

NAGPUR
CFM PROJECT
ON

“TATA IRON AND STEEL COMPANY LIMITED (TISCO)”

SUBMITTEDBY: SUBMITTEDTO:
Aswaria Shaw(202121014) Dr. Gajavelli V.S.
Priya Agarwal (202121027)
Abhijit Bhoskar (202121022)
 ACKNOWLEDGEMENT

It gives us immense pleasure in presenting the project report on TATA STEEL under Iron and steel
industry analysis. It has been our privilege to have our esteemed professor Dr. Gajavelli V.S as our
project guide. His profound Knowledge, support and commitment to high standards inspired and
motivated us.
Without his Insight, support, and energy this wouldn’t be possible.
This project helped us to do a lot of research and during that process we came across so many new
things and we were able to cope with them because of the classroom learnings.
In every phase of the project his supervision and guidance shaped this project to be completed
perfectly. With the help of guidelines provided by you we worked on the project by following the
guidelines provided by you in a step-by-step manner.
The flipped classroom approach helped us immensely in this project as we had a wider perspective
to things.
Lastly, we would like to acknowledge the sincere efforts of the teammates without whom this project
would have never seen its completion.
 INTRODUCTION

PROJECT OBJECTIVE
The key objectives of this assignment are:
• To study and understand the strategy of TISCO.
• To analyze the current positioning of the company as per Consumer firm market
perceptions.
• To understand the decision-making process under different constraints in the
industry.

BACKGROUND
Tata Iron and Steel Company (TISCO) was founded by Jamsetji Nusserwanji Tata and established by
Sir Dorabji Tata on 26 August 1907. TISCO started pig iron production in 1911 and began
producing steel in 1912 as a branch of Jamsetji's Tata Group. The first steel ingot was manufactured
on 16 February 1912. During the First World War (1914-1918), the company made rapid progress.
By 1939, it operated the largest steel plant in the British Empire. The company launched a major
modernization and expansion program in 1951. Later, in 1958, the program was upgraded to a 2
million metric tons per annum (MTPA) project. By 1970, the company employed around 40,000
people at Jamshedpur, and a further 20,000 in the neighboring coal mines.
Industry Background: Steel production in India started with Bengal Iron works which was founded
in the year 1874 and was followed by Tata Iron and Steel Company Limited. With an annual output
of 111.2 Metric Tons, India is currently the second largest steel producer in the world after China
and the largest steel iron producer in the world.
The Indian economy, especially the steel industry is characterized by the cheap availability of raw
material and availability of labor at a low cost which are two of the greatest drivers of an industry
especially the manufacturing industry.

INDUSTRY PROFILE
Tata Steel Limited is an Indian multinational steel-making company based in Jamshedpur,
Jharkhand, and is headquartered in Mumbai, Maharashtra, India. It is a subsidiary of the Tata Group.
Formerly known as Tata Iron and Steel Company Limited (TISCO), Tata Steel is among the top
steel producing companies in the world with an annual crude steel capacity of 34 million tons per
annum.
It is one of the world's most geographically diversified steel producers, with operations and
commercial presence across the world.
It is the second largest steel company in India with an annual capacity of 13 million tons. Tata Steel
operates in 26 countries with key operations in India, Netherlands and United Kingdom, and
employs around 80,500 people.
 DEMAND AND SUPPLY SIDE OF THE MARKETS

The Demand Conditions of the market are

The demand function for Tata Steel India can be defined as:
Qd: -F(Px,Dx,Ox,Yy,Py,Dy,Oy,G) where
Qd: -quantity demanded of steel product
Px: -price of steel product
Dx: -quality of steel product X
Ox: -outlets for distribution of steel product X
Yy: - Income of consumer
Py: - price of steel product (supplementary or complimentary)
Dy: - quality of steel product Y
G: -Government policy

Quantity demanded of steel

The demand for steel products for financial year 2020 was increasing for domestic as well as global
steel markets but the demand in quarter 2 fall due to covid 1stwave and now we saw the recovery in
quarter 3and 4.

QUARTERS SALE (RS

in Crore)

Q1 36009

Q2 25475

Q3 37154

Q4 41902

Price of steel products

The price of steel is another driver of the quantity demanded of steel. In FY2019 price of steel was
RS44000/MT and IN FY 2020 Price of steel was RS47000/MT. Price increases because there is a
demand in market for steel.

Government Policy
The ministry of steel controls the various government policies regarding the entire iron and steel
sector. The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as
it intend to create a globally competitive steel industry in India. In September 2020, the Ministry of
Steel prepared a draft framework policy for development of steel clusters in the country.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology
Mission of India (SRTMI) in association with the public and private sector steel companies to
spearhead research and development activities in the iron and steel industry at an initial corpus of
Rs. 200 crore (US$ 30 million)
The Supply Conditions of the market

The supply conditions of Tata Steel can be defined as:

SX = f (PX, PF, T, TS, O) where,
SX = Quantity supplied for Tata Steel Products
PX = Quantity supplied of competitor firms
PF = Price of factor inputs
T = Technology
TS = Taxes/Subsidy
O = Others
Supply Capacity of Tata steel
FY20 Consolidated steel production increased by 5%YoY to 28.46 Mn tons and deliveries stood at
26.68 Mn tons. It indicates they are ready to cop up industrial steel demand.
Technology:
HIsarna is a completely new technology in the steelmaking process which combines Tata Steel’s
cyclone converter furnace with Rio Tinto’s smelter. Now, Tata Steel has acquired the Rio Tinto’s
smelter technology and intellectual property rights required to operate the HIsarna process.

Price of factors Inputs

India has a great advantage because of the high availability of Iron ore and at a cheap cost. This is
one of the greatest reasons to drive the growth of Tata steel vis a vis the entire Iron and Steel
Industry.

Technology
The advancement of technology especially for the iron and steel industry is one of the main reasons
for the high production level of steel in India.

Others: Labor
The cheap availability of labor in India is another major contributor to the supply side of the Tata
Steel and the Iron and Steel industry.

Revenue Analysis: Price sensitivity, pricing, sales volumes and Revenue Analysis
Production Costs – How company managing costs to be competitive within industry?
 Market Structure & Porters’ Five Forces Analysis – business volumes, cash flows & market
performance of TISCO

Porters Five Forces

Porter's Five Forces is a framework for analyzing a company's competitive environment.
The number and power of a company's competitive rivals, potential new market entrants, suppliers,
customers, and substitute products influence a company's profitability.
Five Forces analysis can be used to guide business strategy to increase competitive advantage ,make
decisions and also to improve the performance of Tata Steel. It will further help us to understand the
Tata steels position in the market.
Threats of New Entrants
Entry barriers is relatively high as no other firm can compete with Tata Steel as in terms of
investment, growth or expansion at financial inputs are substantially high as compared to other
rivalry firms.
• Tata steel is confident enough with the quality of steel they produce and the technology along
with cost efficiencies.
• Tata steel enjoys economies of scale as it owns mines for vital raw material required for
production process.
• There exist a lot of government clearances to enter which Tata steels enjoy as it is more than
100 years of age and have gained respectability and reorganization from government of
India.
Rivalry among existing firms
• Rivalry among existing firms highlights the number of firms competing for market share. As
this is a case of oligopoly market large chunk of market share is in the name of Tata steel.
• All the major domestic competitors like SAIL, ESSAR, JSW, and JSPL have presented
strategically huge expansion plans in the recent times.
• According to data available SAIL has publicly stated that it will reach a target capacity
production of 35 Million Tons by 2015.
• Also JSW has strategies to expand its production to 35 Million Tons by 2015
• Other firms such as JSPL, ESSAR have alike production expansion plans which would
contribute in total achievement of 200 Million Tons steel manufacture by the year 2025.

Bargaining Power of Suppliers

• In Steel Industry, Tata Steel is one of the least cost markers of steel
• The bargaining power of suppliers is relatively low for fully integrated steel plants as they
have their own mines of raw material.
• NMDC is a major supplier. In order to protect itself from high bargaining power of buyers.
Tata steel has forayed much earlier in it the strategy of ‘backward integration’

Bargaining Powers of Buyers

• Buyers are often a demanding lot. They want to buy the best offerings available by paying
the minimum price as possible.
 • Some of the Steel consumption sectors like automobiles, oil and gas, shipping consumers
durable to name a few, these enjoy the high gaining power and get favorable deals.
• Tata Steel can avoid this problem by building a large base of customers. This will be helpful
in two ways. It will reduce the bargaining power of the buyers plus it will provide an
opportunity to the firm to streamline its sales and production process.

Threats of Substitutes
• It is high time for Tata Steel develop a greater sense of responsibility as the raw materials
for production of steel are extracted because of increasing global warming has led to
greater environmental costs and the threat to the environment.
• Scarcity of raw materials and high input costs will threaten the very existence of the
industry.
• There is a growing threat of substitutes. Plastic and composites are replacing steel in the
spare parts industry of automobiles.
• Aluminum is another metal which is creating a threat to the existence of steel but at the
moment the high cost of aluminum extraction in terms of electricity charges has brought
the threat under control.
• Steel pipes have been replaced by PVC pipes and RCC pipes in many applications
causing huge revenue losses especially to Tata Steel.

C-I-E framework (Company-Industry-Economy) for Tata Steel & company’s stock market
performance

Company
Through considerable initiatives in cost reduction, process improvement, and production
rationalisation, Tata Steel has taken bold steps to tackle the difficulties of these challenging times.
The expansion of steel-making capacity and providing raw material security for European
enterprises without captive ore and coal resources are given top emphasis.
Industry
Every year, India's steel production increases by 5 million tons. The government's economic reforms
have given industrial growth in general and the steel industry in particular a new dimension. The
steel industry has been removed from the list of public-sector sectors. To make the sector more
efficient and competitive, price and distribution constraints have been lifted. The environment in
which they operate should also be examined to gain a better understanding of the industry. This
environment offers both opportunities and risks to businesses. There's a lot of danger here. It is
critical for any company to assess external risk because they have less influence over it than they do
over internal risk.
Economy
The steel industry has been very sensitive to the changing economic conditions. The recent
economic meltdown has created several challenges which can be countered to positive effect. There
has been a tremendous amount of govt. Response to the global depression which is helping to bring
about a possible easing of the situation.
 VALUE LESSONS
The key managerial learning from this project
• Market and Unsystematic risk analysis: There were a few points that were highlighted
after doing the project evaluations and analyses. For example, the supply side of the Tata
steel industry's supply and demand study found that the supply side is particularly price
sensitive and controlling the demand side of the market would provide a corporation a
significant edge over its competitors.
• Profit Maximization and Positive Cash flow: Tata Steel, the behemoth, has seen
remarkable expansion in terms of market capitalization and share value. Share prices have
fallen because of recent setbacks, but business executives remain upbeat, and building and
industrial activities have increased.
• Tata Steel's Vision: Like the rest of the Tata Group, Tata Steel is supposedly committed to a
triple bottom line strategy that priorities people and the environment. Every employee and
customer is treated with the utmost respect, and the company's philanthropy and managerial
initiatives to lessen the company's environmental effect demonstrate Tata Steel's dedication
to sustainability.

Summary and Analysis

The high availability of raw material at a low price along with the high availability of labor at a low
cost is a contributing factor to the supply side. With the technological advancement tata steel is
ready to supply the demanded steel quantity in the competitive market which leads to attain
equilibrium of prices. They are minimizing the wastage and using waste part of steel to make by
product and generating revenue from them. They are using low energy intensive equipment to keep
the cost of production of steel low.

REFERENCE
• Integrated-report-and-annual-accounts-2016-17.pdf
• Tata Steel Ltd financial results and price chart - Screener
• Financial Management-IM Pandey
• www.moneycontrol.com
• www.tatasteel.com
• Economictimes.com