An Assignment Submitted By:

Annamalai N,
23PBA104
A REPORT ON FINANCIAL RATIO & STATEMENT ANALYSIS OF
TATA STEEL
The Secret Weapon of Successful Investors
 Table of Content

S.no Topics Pg.no.

1 About Tata Steel 3-5

Concepts & Theories of Ratio

2 analysis and Comparative 6-10
Statement
Analysis of Tata Steel Ratio and
3 11-26
Financial Statements

Findings & Suggestions to

4 27-29
investors

5 Conclusion & Opinion 30

1
 Executive Summary

Tata Steel's financial ratios show that the company is facing some short-term
challenges, but that it is well-positioned for long-term growth.

Short-Term Challenges:

 Current ratio is below industry average

 Quick ratio is below ideal ratio
 Gross profit margin has fallen in 2023
 Net profits have fallen in 2023
 Inventory turnover ratio is low
 Asset turnover ratio is low

Long-Term Opportunities:

 Reducing debt
 Doubling plant capacity by 2030
 Investing in cutting-edge technologies
 Consistent dividend payout record
 Low PE compared to peers

Recommendations:

 Invest in Tata Steel for the long term

 Average investments over time to reduce risk

Prediction:

Tata Steel will face short-term financial challenges until 2025, but is well-
positioned for long-term growth and has the potential to deliver rocket-like
returns for investors.

2
 Chapter: 1 About Tata Steel

TISCO popularly Known as Tata Steel Ltd. One of the Worlds most
Geographical Diversified steel producer with operating and commercial Prescence across the
world.

Established by Jamsetji Nusserwanji Tata in

Jamshedpure (Jharkhand, India) at 1907.

Tata steel has a proud legacy of pioneering

positive change within the communities where it
operates and its commitment.

It has widened its operation from time to time and now has a Manufacturing Plants in India,
UK, Netherlands and Thailand, while has Mining in India and Canada.

The company is committed to sustainability and the environment. In alignment with Tata
group sustainability initiative. It is in the path of achieving Net Zero emission by 2045 and is
working on a decarbonization road map that combines short medium and long-term goals.

It is focusing on reducing the outstanding debt, which will further strengthen their financial
position and provide a solid foundation to accelerate growth to Double their production
capacity by 2030.

It believes in continuous stakeholder engagement for business growth and sustenance. Their
long-term relationships with customers, suppliers and communities are key factor to their
business sustainability and integral factor to their Strategy.

In recent years the company made substantial progress in its amalgamation of seven
subsidiaries and one associate company into Tata steel.

3
Innovation has been a driving force for Tata Steel, It is eyed on embracing digitalization and
Industrial Revolution4.0, Integrating tools such as narrow AI, They are redefining steel
production, enabling real time data analysis and process.

The company is Consistently driving optimal capital allocation to drive for long-term
sustainable returns for their stakeholders.

1.1 Brands Offered under Tata Steel:

 Tata Astrum
 Tata Structura
 Tata Pipes
 Tata Wiron
 Tata Steelium
 Galvanova
 Tata Tiscon
 Tata Shaktee
 Tata Pravesh

1.2 Product Line

1.2.1 Long Products:

1. Sections
2. Special Profiles
3. Rail
4. Wires
5. Wire Rods
6. Specialty Steels and Bar
7. Plates
8. Rebars

4
 1.2.2 Flat Products:

1. Hot Rolled
2. Cold Rolled
3. Metallic Coated
4. Direct Rolled
5. Tubes
6. Pre-Finished Steels
7. Packaging Steels
8. Electro Plated Steels
9. Electrical Steels
10. Narrow Strip

1.2.3 Construction Products:

1. Structural Steel
2. Floors
3. Walls
4. Roofs
5. Modular
6. Building Components
7. Bearings
8. Agricultural Implements

5
 Chapter: 2 Concepts & Theories

2.1 Ratio Analysis

2.1.1 Current Ratio:

Current Assets
Current Liablities

This ratio is the indicator of the firms commitment to meet its short-term liabilities.
An ideal current ratio is 2:1. The ratio of 2 is considered as a safe margin of solvency due to
the facts that if the current assets are reduced to half. However, a business having seasonal
trading activity may show a lower current ratio at certain period in the year. A very high
current ratio is also not desirable since it means less efficient use of funds.

2.1.2 Liquid Ratio:

Liquid Assets
Current Liablities

This ratio is also termed as acid test ratio or quick ratio. This ratio is ascertained by
comparing the liquid assets (i.e. assets which are immediately convertible into cash without
much loss) Prepaid expenses and stock are not taken.

A comparison of the current ratio to quick ratio shall indicate the inventory hold-ups.

2.1.3 Debt-equity Ratio:

External Equities
internal Equities
The ratio indicates the proportion of owners stake in the business. Excessive liabilities trend
to cause insolvency. The ratio indicates the extent to which the firm depends upon outsider

6
for its existence. This ratio provides a margin of safety to its creditors. An ideal debt to equity
ratio is 1:1.

2.1.4 Fixed assets Turnover ratio:

Net sales
¿ Assets (net)

This ratio indicates the extent to which the investments in fixed assets contribute towards
sales.

2.1.5 Gross Profit Ratio:

Gross Profit
∗100
Net Sales

This Ratio express the relationship between the gross profit and net-sales. It indicates the
degree to which the selling price of goods per unit may decline without resulting in losses
from operations to the firm. It also helps to ascertaining whether the average percentage of
markup on the goods is maintained

2.1.6 Net Profit Ratio:

Net Profit
∗100
Net Sales

The ratio helps in determining the efficiency with which affairs of the business are being
managed. An increase in the ratio over the Previous period indicates improvement in the
operational efficiency of the business, provided the gross profit ratio is constant. The ratio is
thus an effective measure to check the profitability of a business.

An investor has to judge the adequacy or otherwise of this ratio by taking into account the
cost of capital, the return in the industry as a whole and market conditions such as boom or
depression period.

7
2.1.7 Operating Profit Ratio:
Operating Profit
∗100
Net Sales

This ratio differs across industries and is often used as a metric for benchmarking one
company against similar companies with in the same industry. It can reveal the top
performers within an industry and indicate the need for further research regarding why a
particular company is outperforming or falling behind its peers.

This ratio is also called as performance ratio that reflects the percentage of profit a company
produces from its operations before subtracting taxes and interest charges.

2.1.8 Inventory Turnover Ratio:

Cost of Goods Sold during the Year

Average Inventory

Openning Inventory +Closing Inventory

Average Inventory=
2

This ratio indicates whether investment in inventories is efficiently used or not. It therefore,
explains weather investment in inventories are within proper limits or not. In simple terms the
ratio expresses the liquidity of the inventory. A high inventory turnover ratio indicates brisk
sales.

2.1.9 Price to Earnings Ratio:

Market price per Equity Share
Earnings Per share

8
This ratio indicates the number of times the earnings per share is covered by its market price.
PE Ratio helps the investors in deciding whether to buy or not to buy the shares of a company
at a particular market price.

2.1.10 Earnings Per Share:

Market price per Equity Share
Earnings Per share

The Earnings Per Share helps in determining the market price of the equity share of the
company. A comparison of earnings per share of the company with another will also help in
deciding whether the equity share capital is being effectively to pay dividend to its equity
shareholders.

2.1.11 Return on equity:

Profit after Tax( PAT )
Net Worth

Net Worth = Equity capital + Reserves & Surplus

Return on Equity, called Return on Net Worth, shows a company’s profitability by calculating
how much shareholders earn for their investment in the firm.

For instance, ROE shows you how companies utilize shareholders’ money. It is determined
by measuring a company’s net profit by its net worth. ROE varies depending on the sector the
company operates.

ROE measures the company’s operating efficiency. It shows how the company uses its assets
and financial leverage to generate revenue for the business.

9
2.2 Comparative Financial Statements:

Comparative Financial Statements are those statements which have been designed in a way
so as to provide time perspective to the consideration of various elements of financial
position embodied in such statements.

Both the income statement and Balance sheet can be prepared in the form of Comparative
Financial statements.

2.2.1 Comparative Income Statement: A comparative income Statement will show

the absolute figures for two or more periods, The absolute change from one
period to another and if desired the changes in terms of percentage. Since the
figures for two or more periods are shown by side, the reader can quickly
ascertain whether sales have increased or decreased, Weather cost of sales has
increased or decreased etc.

2.2.2 Comparative Balance sheet: As like Comparative income statement, the

Comparative balance sheet as on two or more different dates can be used for
comparing assets and liabilities and finding out any increase or decrease in
those items. This type of balance sheet is very useful in studying the trends in
an Enterprise.

10
 Chapter: 3 Analysis of Tata Steel Ratios & Statements

3.1 Ratio Analysis

3.1.1 Current Ratio:

1.2
1.09
1 0.95 0.94
0.97 0.98
1.02 0.89
0.85 0.91
0.8
0.85

0.6

0.4

0.2

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

From the analysis of table 3.1 Current ratio, the company's ratio declined from the industry
average by 10%, 7%, and 9% in 2021, 2022, and 2023, respectively. This suggests that the
company's short-term liquidity is weakening and is below the ideal level of 2:1. While the
11
company's peer ratios are also below the ideal level, some companies, such as Jindal Steel &
Power Ltd. and APL Apollo Tubes Ltd., have managed to exceed the industry average.

3.1.2 Liquidity Ratio:

0.6
0.56
0.5 0.51
0.48
0.45 0.46
0.45
0.43
0.4 0.41
0.38
0.33
0.3

0.2

0.1

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

Tata Steel's liquidity ratio, also known as the quick ratio or acid ratio, has declined in recent
years compared to its industry average. In 2019, the company's liquidity ratio was above the
industry average, but it fell by 25% and 23% in 2021 and 2023, respectively. This suggests
that the company's ability to meet its short-term obligations has weakened.

While Tata Steel's liquidity ratio is below the ideal level of 1:1, it is important to note that the
company's peers are also struggling in this area. However, some companies, such as Jsw Steel

12
Ltd., Jindal Steel & Power Ltd., and APL Apollo Tubes Ltd., have managed to maintain their
liquidity ratios above the industry average.

3.1.3 Gross profit Margin Ratio:

30

26.34
25
22.50 22.70
20 19.53 20.06

16.89
15 15.19
13.19 13.69
11.93
10

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

The ideal percentage of gross profits is not fixed, but the industry average can be used as a
benchmark to measure the performance of a particular company. In the Iron and Steel
industry, the average gross profit ratio was 16.89% in 2019, 15.19% in 2020, 22.50% in
2021, 22.70% in 2022, and 11.93% in 2023.

13
Tata Steel's gross profit performance has been mixed over the past five years. In 2019, the
company's gross profit ratio was 19%, which was more than 2% above the industry average.
However, the company's gross profit ratio fell sharply in 2020 and 2021, to 13% and 17%,
respectively. In 2022 and 2023, Tata Steel's gross profit ratio recovered to 23% and 27%,
respectively with compared to industry average of 22.7% and 11.93%.

3.1.4 Operating Profit Margin Ratio:

25
22.61
20
19.32
16.95
15 14.88
14.16

11.03
10 9.86
9.30
8.12
7.34
5

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

The chart above represents the operating profits of Tata Steel from 2019 to 2023. Since there
is no prescribed yard scale for measuring a company's performance in terms of operating
profit, we can use the industry average.

14
The industry average operating profit for the years 2019 to 2023 is 11.03%, 9.30%, 16.95%,
19.32%, and 8.12%, respectively. Tata Steel's operating profit for the same years is 14.88%,
7.34%, 14.16%, 22.61%, and 9.86%, respectively.

As you can see, Tata Steel outperformed the industry average in 2019 by more than 35%.
However, in 2020 and 2021, Tata Steel's operating profit fell below the industry average by
21% and 16%, respectively. In 2022, Tata Steel's operating profit recovered to above the
industry average,

It is important to note that Tata Steel's peers, such as JSW Steel Ltd, Jindal Steel and Power
Ltd, and SAIL, performed better than Tata Steel in 2020 and 2021 in nexus with their
operational Profit ratio compared to industry average.

3.1.5 Net Profit Margin ratio:

18
16.84
16

14

12 11.98

10

8
7.18
6 5.62
5.02
4 3.73
2.73 3.14
2 2.29
0.66
0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

Similar to the gross profit ratio and operating profit ratio, the net profit ratio (NPM) does not
have a set range to measure performance. Therefore, we can use the industry average as a
benchmark.

15
The industry average NPM for the iron and steel industry for the years 2019 to 2023 is
2.73%, 2.29%, 7.18%, 11.98%, and 3.73%, respectively. It is important to note that the
industry average for 2022 spiked to 11.98% due to the impact of an upswing in NPM in four
out of five companies.

Tata Steel's NPM for the years 2019, 2020, 2021, 2022, and 2023 is 5.62%, 0.66%, 5.02%,
16.84%, and 3.14%, respectively. The company performed well in 2019, with its NPM 106%
higher than the industry average. It also performed normally in 2022. However, its NPM
declined in 2020 and 2021 compared to the industry average.

Tata Steel's peer, Jindal Steel and Power Ltd (JSPL), performed better in 2021 and 2022. It is
important to highlight that JSPL was in a net loss in 2020, but it pulled back to profits in
2021, 2022, and 2023. Consistently, JSPL's NPM has been higher than the industry average.

3.1.6.Asset turnover Ratio:

120.00

100.00 99.96
88.26
80.00 82.46

67.5
60.00 59.48

40.00

20.00

0.00 0.39 1.11

0.55 1.19
0.5
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

Tata Steel's asset turnover ratio (ATR) has been consistently lower than the iron and steel
industry average since 2019. This suggests that the company is not managing its assets as

16
efficiently as its peers APL Apollo Tubes Ltd., which has efficiently managed its ATR over
the past five years.

In 2023, Tata Steel's ATR was 58% lower than the industry average. This is a significant
decline, and it is concerning that the companies ATR has been consistently below the
industry average for several years. The overall trend in the ATR for the iron and steel
industry is downward, but Tata Steel's ATR has declined more than the industry average.
This suggests that Tata Steel is facing specific challenges in managing its assets.

3.1.7. Inventory Turnover Ratio:

6 5.88
5.67 5.57
5 4.98
4.79
4.48
4
3.77

2
1.55
1.32
1 0.95

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

17
Tata Steel's inventory turnover ratio (ITR) has declined significantly over the past five years.
In 2019, ITR was 4.98 times, but it fell to 1.55 times in 2023. This represents a decline of
65% over the five-year period.

The industry average ITR for the iron and steel sector has also declined over the past five
years, but at a slower rate than Tata Steel. In 2019, the industry average ITR was 5.88 times,
and it fell to 4.48 times in 2023. This represents a decline of 24% over the five-year period.

This suggests that the company is not managing its inventory as efficiently as its peers, the
companies like JSW Steel Ltd., Jindal Steel Ltd., and APL Apollo Tubes Ltd. are managing
better than the industry average.

Tata Steel's ITR has been consistently below the industry average for the past five years, and
the gap has widened in recent years.

3.1.8. Debt to Equity Ratio:

1.8

1.6 1.59

1.4 1.37
1.2
1.15
1.1
1.05
1

0.8 0.79 0.76

0.6 0.6 0.61
0.50
0.4

0.2

0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

18
The debt-to-equity ratio Plays a vital Role in a company’s financial performance. In other
words, it is one of the financial KPI. The ideal D2E Ratio is 1:1. It is always better to have
the owners fund than the outsider’s fund.
The above chart shows the Debt-to-Equity ratio of the Tata steel and Average Ratio of Iron
and steel sector, for the period of five years from 2019 to 2023. The industry average for the
year 2019, 2020, 2021, 2022 and 2023 are rages 1.05 times, 1.15 times, 0.79 times, 0.50
times and 0.76 times. The companies Ratio is 1.37 times, 1.59 times, 1.10 times, 0.60 times
and 0.76 times.
The Company Tata steel has gradually reduced its debt from 2019 to 2022 and there is a
slight up in the ratio in 2023 from 0.60 in 2022 to 0.76 precisely an increase of 0.16 times.
With comparing to the industry average the Tata steel has performed better than others.

3.1.9. Interest coverage ratio:

14
12.68
12 11.77

10

8
7.08
6
5.29
4.91
4 4.13
3.06
2.56
2 2.04
1.44
0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

19
Another important Financial Matric is Interest coverage Ratio. The above chart puts into
picture of the Tata steels Interest coverage ratio and iron and steels Industry Average Interest
coverage ratio from the period ranges from 2019 to 2023. The ideal limit of interest coverage
ratio is between 2.5 to 3 which indicates that the Companies current earnings is able to meet
its interest payments. The Limit can change from industry to industry for example Natural
gas, Power & Electricity industries are advisable to have low Interest coverage and the
Industries like Manufacturing can have high Interest coverage.
The interest coverage for 2019, 2020, 2021, 2022 and 2023 for the Company is 3.06 times,
1.44 times, 4.13 times, 11.77 times and 5.29 time and the industry average is 2.56 times, 2.04
times, 4.91 times 12.68 times and 7.08 times. It shows that the company tata steel is
preforming closer to its industry average likely in the years 2020, 2021, 2022 and 2023 the is
a difference of 29%, 16%, 7% and 25% from the industry average. But with the industry ideal
it is in a better position.

3.1.10. Price to earnings:

60

50

40

30

20

10

0
2019 2020 2021 2022 2023

TSL JSW JINDAL APL SAIL IA

Price to earnings ratio is an important number for an investor in his span of investment
journey, it will vary from day to day, the above chart represents the PE ratio of Tata steel,
JSW Steel Ltd, Jindal Steel Ltd, APL Apollo Steel Ltd. and SAIL. From 2019 to 2023.

Since the volatility of PE, we will have for the year 2023 only. The PE of Tata Steel for the
year 2023 is 14.57 and the industry average PE is 27.91. there is no ideal Price to earnings
ratio since, for calculation low Price to earnings is considered.
20
Under the Ground of Price to earnings the Tata Steels Pe is Low that the industry average for
the year 2023.

It to be noted that the companies pe has surged to 14.57 times from 0.39 times in the year
2023.

3.1.11. Earnings Per Share (EPS):

Earnings Per Share

350
332.35
300

250

200

150
87.75 105.33
100 63.78
10.42 16.88
50
34.14
34.25
0 7.17
2019 202011.86 2021 2022 2023

Tata Steel Ltd. Industry Average

Like PE, The Earnings Per Share popularly known as EPS has Important role in Stock
Market. There is no Ideal Ratio for Eps. Since for the purpose of Comparison the ideal is by
comparing with peers and Industry average.

The Above chart Shows the Eps Data of Tata Steel and Iron & Steel Average from 2019 to
2023. The EPS for Tata steel for 2019, 2020, 2021, 2022 and 2023 are Rs. 87.75, Rs. 11.86,

21
Rs. 63.78, Rs. 332.35 and 7.17. On the other side the Industrial average is Rs. 34.14, Rs.
10.42, 29.53, Rs. 227.02 and Rs. 16.88.

The company tata steel has performed 157%, 14% 86% and 216% better than industry
average in the years 2019, 2020, 2021 and 2022. But last year 2023 it is lower than the
industry average.

It to be noted that there is a sudden surge in the EPS on the year 2022 and suddenly tanks in
2023.

3.1.12. Return on Equity:

40

35 35.08

30

25 25.82

20

15 15.33
13.78
9.66
10 10.70 10.19
8.49
7.10
5
2.18
0
2019 2020 2021 2022 2023

Tata Steel Ltd. Industry Average

The above chart represents the Return on Equity of Tata Steel and The Industrial Average of
Iron & Steel Industry for the period of five years from 2019 to 2023. The Industrial Asverage
for 2019, 2020, 2021, 2022 and 2023 are 10.70%, 7.10%, 13.78%, 25.82% and 9.66%. on the
other side the tata steels RoE is 15.33%, 2.18%, 10.19%, 35.08% and 8.49%

22
Which puts into the picture, The company has outperformed in 2015 with a difference of 4.63
from its industrial average precisely 43% and on 2022 it has outperformed with a difference
of 9.26 in terms of percentage 36%.

On the years of 2020, 2021 and 2023, It has not performed up to the bench mark of industrial
average. It to be considered that the peers of tata steel like, JSW Steel Ltd. and APL Apollo
Tubes Ltd. has given a better ROE consistently

31st March 31st March Percentage

Particulars Change
2022 2023 Change
Revenue From Operations 129021.35 129006.62 -14.73 0%
other incomes 1452.02 3325.48 1873.46 129%
total Income 130473.37 132332.10 1858.73 1%
Expenses:
(a) Cost of matrials Consumed 35256.98 54011.5 18754.52 53%
(b) Purchases of Stock in trade 4089.03 7467.3 3378.27 83%
(c) changes in inventory of
finished goods, Stock in trade -1820.87 -1142.06 678.81 -37%
and Work in Progress
(d) Employee benefits expense 6365.80 6616.29 250.49 4%
(e) financial cost 2792.08 3792.14 1000.06 36%
(f) Depreciation and
5463.69 5434.61 -29.08 -1%
Amortization Expenses
(g) other Expenses 36458.65 38870.96 2412.31 7%

23
total Expenses 88605.36 115050.74 26445.38 30%
Less: Expenditure 2458.09 4519.34 2061.25 84%
Net Expenses 86147.27 110531.40 24384.13 28%
PBT (Before Exceptional
44326.10 21800.70 -22525.40 -51%
Items)
Exceptional items -235.45 -778.78 -543.33 231%
PBT 44090.65 21021.92 -23068.73 -52%
Tax Expenditure
(a) Current Tax 11611.94 4928.05 -6683.89 -58%
(b)Deferred Tax -532.47 598.76 1131.23 -212%
Total Tax Expenditure 11079.47 5526.81 -5552.66 -50%
PAT 33011.18 15495.11 -17516.07 -53%

3.2.1 Comparative Profit and Loss Statement of M\S Tata Steel Ltd. For the
period of March 2022 and March 2023

24
3.2.2 Comparative balance Sheet of M\s Tata Steel Ltd. as at March 2022 and March 2023

Particulars 31st March 31st March change Percentage

2022 2023 Change
Assets
I Non-Current asset
(a) Property, Plant & 87946.22 84942.31 -3003.91 -3%
Equipment
(b) Capital work in 14159.32 21091.92 6932.60 49%
Progress
(c) Right of use assets 5538.18 5480.11 -58.07 -1%
(d) Goodwill 0.00 3.22 3.22 100%
(e) Other intangable assets 806.03 760.65 -45.38 -6%
(d) Intangable asset under 382.64 514.96 132.32 35%
Development
(g) Financial Assets
(i) Investments 43401.43 44138.9 737.47 2%
(ii) Loans 30195.27 32779.08 2583.81 9%
(iii) Derivative Asset 133.21 403.4 270.19 203%
(iiii) Other Financial 1211.81 2263.36 1051.55 87%
Asset
(h) Non-current assets (net) 3620.76 4145.27 524.51 14%
(i) Other assets 3301.78 3318.72 16.94 1%
Total non-Current asset 190696.65 199841.90 9145.25 5%
II Current asset 0.00
(a) inventories 19942.94 20795.56 852.62 4%
(b) Financial assets 0.00
(i) investments 96.11 2050.4 1954.29 2033%
(ii) Trade receivables 3280.3 3351.72 71.42 2%
(iii) Cash and Cash 2671.59 858.98 -1812.61 -68%
Equivalents
(iiii) Other balances with 183.7 218.35 34.65 19%
banks

25
 (v) Loans 2368.01 3191.21 823.20 35%
(vi) Derivative Assets 89.54 82.21 -7.33 -8%
(vii) Other Financial 718.3 760.96 42.66 6%
Assets
(c) Other assets 1939.08 2640.13 701.05 36%
Total Current assets 31289.57 33949.52 2659.95 9%
Total Assets 221986.22 233791.42 11805.20 5%
Equity & Liabilities
III Equity
(a) Equity & Share Capital 1222.37 1222.4 0.03 0%
(b) Other Equity 124211.39 133575.11 9363.72 8%
Total Equity 125433.76 134797.51 9363.75 7%
IV Non-current Liabilities
(a) Financial Liabilities
(i) Borrowings 20290.81 30880.89 10590.08 52%
(ii) Lease liabilities 3726.9 3649.33 -77.57 -2%
(iii) Derivative Liablities 10.18 0 -10.18 -100%
(iiii) Other Financial 883.23 928.81 45.58 5%
Liablities
(b) Provisions 2685 2555.25 -129.75 -5%
(c) Retirement Benefit 2315.91 1979.33 -336.58 -15%
Obligation
(d) Defered income 0.74 0.35 -0.39 -53%
(e) Defered tax Liablities 8087.57 8684.15 596.58 7%
(net)
(f) Other liabilities 4887.57 3878.5 -1009.07 -21%
Total non-Current 42887.91 52556.61 9668.70 23%
Liabilities
V Current Liabilities
(a) Financial Liabilities
(i) Borrowings 11984.66 7298.12 -4686.54 -39%
(ii) Lease Borrowings 522.14 544.05 21.91 4%
(iii) Trade Payables

26
 (a) Total Outstanding 678.2 791.87 113.67 17%
dues MSE
(b) Total outstanding 20412.94 17290.53 -3122.41 -15%
Creditors
(iv) Derivative Liablities 81.48 65.58 -15.90 -20%
(v) Other Financial 5137.54 5806.15 668.61 13%
Liabilities
(b) Provisions 1082.42 1080.94 -1.48 0%
(c) Retirement benefit 114.99 109.51 -5.48 -5%
obligations
(d) Defered Income 67.84 9.81 -58.03 -86%
(e) Current tax liabilities 1079.69 1714.98 635.29 59%
(net)
(f) Other Liabilities 12502.93 11725.76 -777.17 -6%
Total Liabilities 53664.83 46437.3 -7227.53 -13%
Total Equities & Liabilities 221986.5 233791.42 11804.92 5%

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 Chapter: 4 Findings from Analysis

1. The current ratio of the company is not up-to its industrial mark it could be
due to poor Collection period, and not maintaining its Operating cycle
(cash & Bank). Tata steels current ratio is less than 1, the ideal ratio is 2:1.
Since the industry average is 1 we can accept, but still the company need
to maintain its operating cycle and manage its short term liquidity.

2. On the part of Quick ratio the company is trying to achieve the bench mark
of its industrial average. Since the ideal ratio is 1:1, but the industrial
average is less than 1 it is accepted. The company should focus on
managing its cash and short-term investments to improve its quick or acid
ratio.

3. On part of the gross profit ratio the company is playing quit, better but stilt
her is a fall in its gross profit ratio of 10.77% on the year of 2023
compared with 2022. Since the company is directly engaged with its raw
material (iron ore) the cost of procurement has been increased and the
volatility of steel price has impacted in its gross profit margin

[source for the article:

https://economictimes.indiatimes.com/industry/indl-goods/svs/steel
/volatility-in-steel-prices-to-continue-in-medium-term-steelmint/
articleshow/98492346.cms]

4. Tata steel has an edge over its peer and the industry in the grounds of
operating profit margin. Since by adopting Cutting edge technology for
manufacturing iron and allied products the company can manage its
Operating cost efficiently which impact in its operating profit margins. But
on the other hand, the operating margins are not consistent it spikes in the

28
 year 2022 and falls in the year 2023, this might be due to spike in the raw
material, Coal & fuel cost which contribute to the operating cost.

[source for the article:

https://economictimes.indiatimes.com/industry/indl-goods/svs/steel
/steel-industry-seeks-government-intervention-to-check-coking-
coal-price/articleshow/92157330.cms?from=mdr]

5. The company has given consistent net profits, in the year 2019, 2020,
2021. But there is a sudden rise and fall in the year 2022 and 2023. This
might happen due to poor sales, high inventory holdings (might affect the
cogs and it led to dip) in the last year. The indirect cost to the company is
rising YoY. It is advisable to the company to closely watch the
procurement process. It should be noted that the company can changed its
inventory valuation method to control its cogs.

6. The Asset Turnover Ratio of Tata Steel puts into picture that the company
is not using its asset efficient compared to its Industry. The fall in asset
turnover ratio might due to fall in its sales. (the fall is between the year
2021 and 2022 Which is considered as Pandemic year and all the sector
faced stinks in their revenue)

7. As detailed in point no.5, the inventory turnover ratio of the company is

low compared to its industry average in the recent two years 2022 and
2023. For improving its inventory, the company can also refine its pricing-
strategy. Since, the India is focusing on infrastructural development part
the company has a high possibility to enter into the ground by making
influence through their brand what they carry. So, the company can think
of its pricing point because the Peers products are, much lesser than tata
steel.

For example, the price of 10mm One-Tone Steel bar offered by

JSW IS Rs.79,146.00 but the Same offered by Tata Steel under
29
 TISCON is Rs. 85,264.00 [the prices are approximate vary from
geography to geography]

8. As the impact of massive debt reduction, of the company its Debt-to-

Equity ratio is under Control and better than its industry average.by
reducing the debt the company is focusing on scaling its operations for
doubling its capacity. Which will pathway for their future revenues. It also
impacted in the ratting of the company by global rating agencies.

[source for the article:

https://www.fortuneindia.com/enterprise/tata-steel-in-massive-
debt-reduction-cuts-50000-crore-in-2-years/109124]

9. Tata Steel has a better ICR compared to its peers, it is sufficient enough to
manage its debts and quite competent. Therefor the volatility of interest
rates might not affect the companies interest payments. The reason for
falling in its ICR might due to shrink in its operations (sales). It should
also be highlighted hat the industry average also has a down trend in its
ICR.

10. The price to earnings ratio of tata steel communicates that the stock is
undervalued, compared to its earnings with its peer and the industry. Since
all the Iron and steel companies has a high PE. Therefore, tata steel has an
edge over others in this ground. It to be noted that the sudden fall in the PE
Ratio of Tata Steel in the year 2022 is due to the Share split of 1:10.

11. The reason for the earnings is due to its high earnings per share, since the
company is focused in reducing its financial cost, it can give a high EPS to
its Share-holders compared to the industry Average EPS. This also
supports to point no.4, The Company can Give high earnings, which shows
that that the company is able to manage its operations optimally but fails to
source Revenue Generation.

30
 12. The Return on Equity ratio of tata steel puts into the picture that the
company is predominant in giving consistent return to its share-holders.
With comparing to the industry average it is better. The different might be
because of fall in its net-incomes.

Chapter: 5 Conclusion & Opinion

T ata Steel is a company with high long-term potential, despite its current short-term

financial challenges. The company is reducing its debt, doubling its plant capacity by 2030,
and investing in cutting-edge technologies to meet the demands of Industry 4.0. Additionally,
the company has a consistent dividend payout record and a low PE compared to its peers.

However, investors should be aware that Tata Steel absorbed 7 companies in the last financial
year, which may have affected its liquidity position. Additionally, the company's profits have
fallen due to high insurance costs at its European plant. This could also lead to liquidity
constraints.

Overall, Tata Steel's short-term financial parameters are not strong, but its long-term
parameters are very strong. This suggests that the company will be resilient in the coming
years.

My analysis and predictions suggest that Tata Steel will face short-term financial challenges
until 2025, but that it is well-positioned for long-term growth. The company is working to
create a strong foundation for its future, and I believe that it has the potential to deliver
rocket-like returns for investors.

Therefore, I recommend investing in Tata Steel for the long term. Investors can average their
investments over time to reduce risk.

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 Sources & References

1. https://www.tatasteel.com/investors/integrated-reportannual-report/integrated-
report-annual-accounts-2022-23-116th-year-and-related-documents/

2. https://www.livemint.com/companies/news/steel-demand-in-india-to-remain-
robust-chandrasekaran-11688575554951.html

3. https://groww.in/p/return-on-equity

4. https://www.business-standard.com/companies/news/moody-s-upgrade-tata-steel-
to-investment-grade-on-debt-reduction-efforts-123092500935_1.html

5. https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/india-
scraps-export-tax-on-low-grade-iron-ore-some-steel-intermediates/articleshow/
95614228.cms

6. https://www.moneycontrol.com/india/stockpricequote/ironsteel/tatasteel/TIS

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