STEEL

Presented By:-CHANDERSHEKHARNew Delhi Institute Of Management Studies, New DelhiChandershekhar56@gmail.com

PROJECT REPORT ON

Introduction:

Tata Steel Limited, incorporated in 1907 by Shri Dorabji Tata, is India's largest private sector steel company belonging to the Tata Group.

The company manufactures finished steel, both long and flat products like hot and cold rolled coils and sheets, tubes, wire rods, construction re-bars, rings and bearings.

Its main plant is located in Jamshedpur, having manufacturing capacity of 5 MTPA (million tonne per annum) while its processing units, captive iron ore and coal mines are located in the states of Orissa, Jharkhand, Maharashtra, Gujarat and West Bengal.

The company markets its products in brands like "Tata Steelium, Tata Tiscon, Tata Pipes, etc.

The company is among the lowest cost producers of steel in the world.

With its head office located in Mumbai, the company functions through a network consisting of trading arms and operation and projects sites spread across countries in the continents of Asia, Europe and America.

Tata Steel has lined up a series of Greenfield projects in India and outside which includes :

6 million tonne plant in Orissa (India).

12 million tonne plant in Jharkhand (India).

5 million tonne plant in Chhattisgarh (India).

3 million tonne plant in Iran.

5 million tonne capacity expansion at

Jamshedpur (India).

4.5 million Plant in Vietnam (feasibility study

underway).

TATA STEEL VISION AND MISSION STATEMENT

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 and services, and creating value with 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 statement

Achieve sustainable, profitable growth in steel and related businesses.

Create differential value for our customers through innovative offerings.

Continuous improvement of business processes and technologies.

Foster partnership with key stake holders.

Enhance employees' competencies to create a high performing and innovative organization. Be a responsible corporate citizen and enhance the quality of life of employees and key community.

Branded products of tata :

TATA STEELIUM (Cold Rolled Steel), TATA SHAKTI (Galvanised Corrugated Sheet), TATA BEARINGS, TATA PIPES, TATA TISCON (Reinforced bars), TATA AGRICO (Agricultural Implements).

FINANCIAL ANALYSIS

Return on equity

Return on equity is been arrived at by dividing net profit with total share holder‘s fund. This ratio tells that how much profit is been earned by each share of a company. If we look at the graph of ROE we will find that the return for the year 1999, 2000, 2001 has been showing a steady increase but in the year 2002 we see a small dip and this is because the expenditure has increased by around 5%. Then in the year 2003 we see a big jump. This jump is because the revenue has increased by around 30%. Then we can see that there is a sudden dip in the year 2006. This is because there was a bumper profits in the year 2005 and that was used for purchasing gross block which has resulted into increasing the reserves and in turn increasing the shareholders fund hence the dip.

Asset turnover ratio :-

Asset turnover ratio tells that how much is the profit earned on every 1 rupee spent on asset. It is been arrived at by dividing the total profit with the total asset. If we take a closer look at the ratio we will find that the ratio starts with .61. it shows a steady increase. It goes more than 1 then it again dips back. This dip is happening because the company has purchased a lot of fixed assets recently and the profits on the other hand has not increased proportionately. The ideal asset turnover ratio is 1:1.

Current ratio :-

This ratio is arrived at by dividing current assets with current liabilities. The ideal current ratio is 2:1. If we look at the current ratio graph closely we will find that in the year 1999 and 2000 the ratio was more than 1 and it keeps on dipping and in the year 03 it goes below 1 which is certainly not a sign of a sound company. This ratio of less 1 continues till 2006 and it improves in the year 2007 and 2008. The improvement is substantial as it is around 4.75 in the year 2008.

Net profit margin ratio:

This is one of the most important ratios as it tells us what percentage of the total revenue is net profit. Generally we only look at the total revenue but it may be misleading as most of the revenues may be absorbed by the expenditure. If we look at the ratio since 1999 we can see the ratio is improving almost every year.

Debt service ratio :-

Debt service ratio or interest coverage ratio is a ratio which tells us that how many times is my total net profit of my total interest. The ratio has to be more than 1. In the case of TATA steel they have always been more than 1 with an exception of the year 1999 and 2002. If we look at the graph we‘ll find that in the year 2008 the ratio has dipped to around 5%. This has happened because they have increased their debt by around 100% which has resulted into increase in the total interest payment and hence the ratio has dipped.

TATA STEEL SWOT ANALYSIS

STRENGTHS

Tata Steel‘s Indian operations are self-sufficient in the case of its major raw material iron ore through its captive mines.

Very advanced Research and Development wing which is carrying out researches and experiments in the areas of raw materials, blast furnace productivity, steel making, product development, process improvement etc.

Tata had a strong retail and distribution network in India and SE Asia. Tata was a major supplier to the Indian auto industry and the demand for value added steel products was growing in this market.

The Company is on its way to reach a crude steel capacity of 10 million tonnes

Tata Steel has been on a path of accelerated growth with foray into several geographies and markets through aggressive mergers and acquisitions.

It gives the steel major access to very matured and developed markets in Europe where it can go downstream much more than in a developing country like India and even to some extent China.

WEAKNESS

Endemic Deficiencies

These are inherent in the quality and availability of some of the essential raw materials available in India, ex., high ash content of indigenous coking coal adversely affects the productive efficiency of iron-making and is generally imported. Advantages of high Fe content in indigenous ore are often neutralized by high basicity index. Besides, certain key ingredients of steel making, ex., nickel, Ferro-molybdenum are also unavailable indigenously.

India is deficient in raw materials required by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India's hard coal deposits are of low quality and the prices of coking and non-coking coal are ever increasing

Raw materials for steel production are rapidly depleting and are non renewable, company has to come up with sustainable methods in steel production.

Steel production in India is also hampered by power shortages.

Insufficient freight capacity and transport infrastructure impediments too hamper the growth of Indian steel industry.

Low Labour Productivity

OPPORTUNITIES

The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India.

Unexplored Rural Market

The Indian rural sector remains fairly unexposed to their multi-faceted use of steel. The rural market was identified as a potential area of significant steel consumption way back in the year 1976 itself. However, forceful steps were not taken to penetrate this segment. Enhancing applications in rural areas assumes a much greater significance now for increasing per capital consumption of steel. The usage of steel in cost effective manner is possible in the area of housing, fencing, structures and other possible applications where steel can substitute other materials which not only could bring about advantages to users but is also desirable for conservation of forest resources.

Excellent potential exist for enhancing steel consumption in other sectors such as automobiles, packaging, engineering industries, irrigation and water supply in India. New steel products developed to improve performance simplify manufacturing/installation and reliability is needed to enhance steel consumption in these sectors

THREATS In the developed world, industries have been facing rising environmental costs

due to the increased concerns on Global Warming. It is, therefore, a challenge and responsibility for the Steel industry to be the trustee in conservation of nature for future generations

It is recognised that the steel and aluminium industries are significant contributors to man-made greenhouse gas emissions as the manufacture of steel produces carbon dioxide

(CO2), and the manufacture of primary aluminium generates both CO2 and perfluorocarbons (PFCs).

High raw material input cost and scarcity of non renewable raw materials are a threat to the industry.( eg: Coal, limestone etc)

Threat of Substitutes

Plastics and composites pose a threat to Indian steel in one of its biggest markets automotive manufacture. For the automobile industry, the other material at present with the potential to upstage steel is aluminium. However, at present the high cost of electricity for extraction and purification of aluminium in India weighs against viable use of aluminium for the automobile industry. Steel has already been replaced in some large volume applications large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes).