INTRODUCTION

We begin our journey from the small town of Jamshedpur in Jharkhand. Where every
child grows up to a dream and to a reality – both leading to one organization. An
organization which defined the lives of the people of this small township. One power,
One Force – The dream of One man which shapes the realities of millions world over
today. We bring to you the story of one of the oldest and most successful organizations
of our times and celebrate the true spirit of steel with Tata Steel Limited.

The reasons for picking TSL for our study are simple –

• It is Asia‟s First and India‟s largest steel company in the private Sector

• It is India‟s 2nd largest and 2nd most profitable company in private sector

• It is one of the most admired companies in terms of HR Practices and

Sustainable growth and Corporate Social Responsibility

• And the most important reason was to study the history of this glorious
organization which celebrated its centenary year of foundation on the year 2007.

The Tata Group

Before we discuss at length the Company, we would lie to throw some light on the Tata
Group of companies in Present day India.
TSL is one of the first ventures of the Tata Group but it has many other successful
companies under its umbrella. Some of the other notable Tata concerns and their lines
of business are shown below:

Tata Steel Limited – An overview:

• Established in 1907 by Jamshetji N Tata in Jamshedpur

• Formerly known as Tata Iron and Steel Company Limited (TISCO)

• 28.1 million tonnes per annum of crude steel production capacity

• With Corus acquisition, TSL is world‟s 6th largest steel producer

• Ranked “ Best Steel Maker” by World Steel Dynamics in 2006, 2005 and 2001

• Ranked 315th on Fortune Global 500 (post the Corus acquisition

• 82,700 employees (2007)

• Listen on BSE and NSE

• Headquartered in Jamshedpur, Jharkhand and registered office in Mumbai

The vision that the company has set for itself to achieve by 2012 is:

Some important financial highlights of the company over the past five years are
shown below:

1. The following graph shows the rising income and expenditures of the
company over the years.

2. The nest graph shows the change in the net sales and the Profits after Tax
over the years
The Composition of the Board and the Board of Directors
The structure of the board was recently modified in the year 2007 post the Corus UK
acquisition to suitably incorporate changes which will lead to the adequate realization of
synergies from the deal within the given stipulated time fame to reap the maximum
benefits from the much talked about and criticized deal.

The figure above represents the structure of the Board. The block marked in yellow
represents the strategy and integration committee which was formed post the Corus
acquisition to realize the synergies from the deal. The following figure shows the
organization structure in TSL.

There are two points to be highlighted from the above organization structure.

1. The organization is divided into various levels in which the management is

divided into. These levels are called impact levels (IL). The structure ranges from
IL1, IL2, and IL3 and so on. The new IL6 was introduced in the year 2007.
2. The presence of an Ethics Counsellor at the IL3 position must be noted. This
position was introduced when the company adopted the Whistle Blower Policy in
2005. However we were unable to find any cases which were reported as an
actionary response by this ethics counselor.
 CORPORATE GOVERNANCE

• The Board is Trustee of its Shareholders

• Adopting the „best practices‟
• Need for full transparency and accountability in all its transactions
• Responsibilities creation and safeguarding shareholders wealth
• Tata Steel Group vision whereby the Tata Steel Group aspires to be the global
steel industry benchmark for value creation and corporate citizenship

• Non executive chairman, Mr Ratan Tata

• 14 Directors on Board (as on 31st March 2008) – 8 independent, 6 not

independent

• Number of independent directors is more than one third of total number of

directors
Adherence to Clause 49 of Listing Agreement –
1. No. of NEDs is more than 50% of total no of directors

2. None of the board member is a member on more than 10 committees

3. None of the board member is a Chairman of more than 5 committees

The age composition of the Board is given below:

80
70 72 71
70 64 66 66 65 65 64
61 60
60 54
50
50

40

30 Average Age
63.69
20

10

0
Age

Tata Leng Palia Krishna Wadia

Hussain Irani Bhargava Schvaren Hayward
Robb Mukherjee Varin Muthuraman Singh

The attendance of the members of the board at the board meetings during the year
2007-2008 was as follows:

Attendance at Board Meetings

2
3
0% 7
7% 1
7% 7 6
4 36% 5
14% 4
5 3
14% 6 2
22%
1
 From the above graph we see that while 36 % of the Directors (which included Mr.
Ratan Tata) attended all 7 meetings another 22% attended 6.

There are various other committees in TSL which are headed by the different
member of the Board. Some of them are:
Name of Committee No. of Members No. of Meetings

Audit Committee 5 11

Remuneration
Committee 3 2

Investor Grievance
Committee 2 1

Ethics and Compliance

Committee 2 1

We look at one committee in particular which is the investor grievance committee.

1. During the period 1st April, 2007 to 31st March, 2008, complaints identified and
reported under Clause 41 of the Listing Agreements : 4656

2. Complaints disposed off during the year ended 31st March, 2008 : 4265

3. Complaints unresolved to the satisfaction of shareholders as on 31st March, 2008

: 391

4. Complaints unresolved to the satisfaction of shareholders as on 24th June, 2008.

: 57

Though the number of complaints received seems to be extremely high, research h

shows that they were mostly over trivial matters like the receipt of the annual report
and the dematerialization of shares. What we intend to highlight here is that the
resolution of the grievances has been pretty consistent and on time.
Whistle Blower Policy
 The Whistle Blower Policy - extension of the Tata Code of Conduct – adopted on
25th October 2005

 Make protective disclosures about the unethical behaviour, actual or suspected

fraud or violation of the Company‟s Code of Conduct

 Formal mechanism for all employees of the Company to approach the Ethics
Counsellor/Chairman of the Audit Committee

SHARE HOLDING PATTERN

Ordinary Shares
501 to 1000, 4.53 1001 to or
10000 10000, 3.76
above, 0.24

101 to
500,
31.06 1 to 100,
60.41

1 to 100 101 to 500 501 to 1000 1001 to 10000 10000 or above

The graph above shows that 60% of the shares belong to small retail investors who
hold 1 to 100 shares followed by 31% of investors who hold 101 to 500 shares.

If we look at the change in this retail shareholding pattern over 2007 and 2008 we
note that there has not been any substantial change in this pattern.
 70

60

50

40

30

20

10

0
1 to 100 101 to 500 501 to 1000 1001 to 10000 10000 or above

% as on 31.03.2008 % as on 31.03.2007

A look at the top 10 equity shareholder though tells us that the Tata group together
holds about 32 % of the total equity of TSL followed by other financial institutions.
Name of the Shareholder %age holding

Tata Sons Limited 27.9

Life Insurance Corporation of India 10.15

Tata Motors Limited 4.3

Deutsche Securities Mauritius Limited 1.97

HSBC Global Investment Funds A/c HSBC Global

Investment Funds Mauritius Limited 1.78

The New India Assurance Company Limited 1.23

National Insurance Company Limited 1.17

Morgan Stanley Mauritius Company Limited 1.05

The Oriental Insurance Company Limited 0.91

Macquarie Bank Limited 0.75

A graphical representation of the following is as follows:

Morgan Stanley Mauritius The Oriental

Company Limited, 1.05 Percentage Holding Insurance
Company
The New India Limited, 0.91
Macquarie Bank Limited,
Assurance
N ational Insurance 0.75
Company
Limited, 1.23 Company Limited, 1.17
HSBC Global Investment
Funds A/c HSBC Global
Investment Funds
Mauritius Limited, 1.78

Deutsche Securities
Mauritius Limited, 1.97
Tata Motors
Limited, 4.3

Life Insurance Corporation Tata Sons Limited, 27.9

of India, 10.15
WORLD STEEL CONSUMPTION PATTERN

The above exhibit gives one very important indication – the share of developing
economies to the consumption of Steel has been on the rise and is expected to rise
further. This coupled with India‟s unique location as it is surrounded by Steel
importing nations can have very important implications on the export and domestic
consumption of steel.
This exhibit clearly shows that India is surrounded by net exporters of steel. This
strategic geographical location must be utilized by all Indian steel producers.

Also, a look at the global steel prices shows an interesting trend:

There are various reasons for these price fluctuations:

INTERNATIONAL COMPETITOR COMPARISON
Post the Corus acquisition, TSL has emerged as the 6th largest steel producer in the
world.

But TSL‟s performance has been extremely well in the past years and it has always
ranked amongst the top 4 steel makers in the world ranging over a period of 2001
to 2006.
There has been a sudden drop in its position post the Corus deal, the dynamics of
which are discussed further in the report.
 INDIAN STEEL MARKET
Steel is required by various industries as an important raw material constituent.
Some of the major sectors are:

Indian Steel Industry

50
Quantity (in million tonnes)

45
40
35
30
25
20
15
10
5
0
2003-04 2004-05 2005-06 2006-07

YEAR

From the above graph we can see that Indian steel production has increased by 5
million tones every year. The economic reforms initiated by the Government since 1991
have added new dimensions to industrial growth in general and steel industry in
particular. Licensing requirement for capacity creation has been abolished, except
for certain locational restrictions. Steel industry has been removed from the list of
industries reserved for the public sector. Automatic approval of foreign equity
investment upto 100% is now available. Price and distribution controls have been
removed from January, 1992, with a view to make the steel industry efficient and
competitive. Restrictions on external trade, both in import and export have been
removed. Import duty rates have been reduced drastically. Certain other policy
measures such as reduction in import duty of capital goods, convertibility of rupee
on trade account, permission to mobilise resources from overseas financial markets and
rationalisation of existing tax structure for a period of time have also benefited the
Indian Steel Industry.

The following graph shows the export vis a vis the imports of steel in the Indian
market. From the graph we see that there has been a constant increase both in the
export as well as the import market for steel:

5
4.5
4
Quantity (in million tonnes)

3.5
3
2.5
IMPORTS
2
1.5 EXPORTS
1
0.5
0
2003-04 2004-05 2005-06 2006-07

YEAR

Production of Iron & Steel

(a)Finished Carbon Steel Production

The total production of finished carbon steel in the country has been 30.11 million
tonnes in 2001-02 as compared to 14.33 million tonnes in 1991-92, indicating an
increase of 110.12%. Producer-wise production of finished steel. The high share of the
secondary sector in finished steel production is largely due to substantial supplies of
semis, the basic feed material from the main producers for conversion to needed
shapes by rolling.

b) Pig Iron Production

The total production of Pig Iron was 3.946 million tonnes in 2001-02 as compared to
1.59 million tonnes in 1991-92 registering an increase of 148.18% during the
considered period. Earlier Pig Iron was produced primarily by the integrated steel plant
of SAIL and RINL. Of late, the share of stand-alone pig iron units has increased
significantly.

Major Steel Producers

Some of the National players are :

Some of the leading global players:

Comparison between Indian Leading Players

Player TATA Steel SAIL JSW Essar

Year of
1907 1954 2003(1984) 1975(as Essar Gujarat)
Establishment
Cold Rolled Sheets and
Construction Bars Rods Cold Rolled Sheets and Coils
Coils
Hot Rolled Sheets
Pipes Hot Rolled Sheets and Coils Hot Rolled Sheets and Coils
and Coils
Cold Rolled Sheets
Rails Galvanized Sheets and Coils Galvanized Sheets and Coils
and Coils
Products
Cold Rolled
Wires, Tubes Sheets and Iron Ore Pellets
Coils
Hot Rolled
Sheets and
Coils
Production (in
3.8 9.15 3.5 3.3
mt)
Percentage of
9 22 8 8
Production (%)

The respective market shares of the major Indian players is shown in the graph below

SAIL
22%

SAIL
OTHERS
Tata Steel
40%
RINL

Tata Steel ESSAR

9% ISPAT
JSWL
OTHERS
RINL
7%

ESSAR
JSWL ISPAT 8%
8% 6%
BRAND PROFILE

Strategic Business Units

Apart from the main steel division, Tata Steel's operations are grouped under the
following strategic business units.
• Bearings Divisions: Manufactures ball bearings, double row self-aligning bearings,
clutch release bearings and tapped roller bearing for two wheelers, fans, water
pumps, etc.
• Ferro Alloys and Minerals Division: Operates chrome mines and has unit for
making ferro chrome and ferro manganese. Its one of the largest players in the
global ferro chrome market.
• Rings and Agrico Division: The ring plant manufactures forged and rolled rings
for bearings and automotive components.
• Tata Agrico is the first organized manufacturer in India of hand tools and
implements for application in agriculture.
• Tata Growth Shop (TGS): Has designed, developed, manufactured, erected and
commissioned thousands of tonnes of equipments ranging from overhead cranes
 to high precision components, including a rocket launch pad for the Indian Space
and Research Organization.
• Tubes Division: The biggest steel tube manufacturer with the largest market
share in the country, it aspires to strengthen its market presence by expanding
and modernizing its commercial and precision tube manufacturing capacity.
• Wire Division: A pioneer in the manufacture of steel wires in India, it produces
coated and uncoated wires, branded as Tata Wiron. The division also operates a
wholly owned subsidiary in Sri Lanka.

MARKET INITIATIVES IN INDIA

o Introduction of TISCON Fe 500 grade was highly successful
o Regional Customisation : Super Ductile Tiscon launched for earthquake prone NE
India
o Segment Customisation : Retail Identity Programme (RIP) launched
o Tata Steelium launched in Sri Lanka and Tata Agrico in Dubai & Qatar

New Initiatives 2008-09 - Product Launches

 Long Products
 Long Rails 120mm
 Rod Freecutting Steels
 Engineering Steels for drill collar sector
 Pipeplate for sour applications
 Interstitial free steel for safety critical
 EH46 plate grade for Aircraft Carrier contra
GROWTH AND GLOBALIZATION PLANS
 2.4 mtpa expansion at Jamshedpur : to be commissioned by 2008
 Limestone JV in Thailand for establishing globally low cost raw
material sources
 1 mtpa expansion at Jamshedpur
 Mascons
 Deintegrated Production facility at Orissa : at the planning stage
 Ferro Chrome Project in South Africa by 2006
 Coke plant at Haldia
 Dhamra Project
 Looking for Acquisitions in India and Overseas

New Ventures – Growth through Collaboration

 Vietnam Steel Project - two Memorandums of Understanding (MoU) with Vietnam

Steel Corporation
 Iron Ore Project in Ivory Coast – JV with SODEMI (State Owned Company for
Mineral Development in Ivory Coast) in December for the development of Mount
Nimba Iron ore deposits in Ivory
 VN Coking Coal Project in Mozambique (Riversdale) JV with Riversdale in
November for coal tenements held by Riversdale in Mozambique.
 Limestone Project in Oman : JV with the members of the Al Bahja Group. Tata
Steel has a 70% stake in the Joint Venture.
 Coal Mining Project in Australia - JV with Vale in Australia for a Coking Coal mine
 Tata Steel – SAIL Joint Venture for coking coal properties
Tata Steel has signed an equal stakes Joint Venture agreement with Steel
Authority of India (SAIL), for coal mining activities in India.
Summary of Progress on Major Projects
Ongoing 1.8 mtpa expansion at Jamshedpur as per schedule (June 2008)
o mtpa steel capacity expansion at Jamshedpur(Flat Products)
Technical and commercial discussions with suppliers of LD-3 and TSCR in progress
Haldia Coke Project (1.6 mtpa coke plant) as per schedule (March 2008)
Kalinganagar Steel Project, Orissa
Land lease deed executed
Final Environmental clearance for the plant received Contracts signed for iron and
steel making facilities and slab caster

Dhamra Port Project, Orissa

Financial closure for Rupee Term Loan achieved; financial closure for ECA funding
expected by August 2007
Tata Bluescope JV
Building Solutions - Pune, Bhiwadi and Chennai plants in operation Coated Steel

SALES AND DISTRIBUTION

Approximately 91% of all saleable steel from TSL are to the Indian Market. The Company
has a very strong sales and distribution channel as shown below:
Since most of TSL‟s products are to the Indian market, we look at some accolades won
by them from leading Auto manufacturers from India and abroad

GROWTH STRATEGY - NEW PROJECTS

 2.9 mtpa expansion at Jamshedpur

 6.0 mtpa greenfield project at Orissa
 0.5 MTPA Mini Blast Furnace Project in Thailand

Orissa Project – Kalinganagar

 6 mtpa integrated steel making facility to be completed in two phases of 3mtpa
each
 Orders placed for Steel Melting Shop, Blast Furnace, Sinter Plant, Coke Plant
  Orders for Hot Strip Mill, Raw Material Handling System, Water System, Oxygen
Plant

Thailand - 0.5 mtpa Mini Blast Furnace Project

 Tentative completion Sep 2009
 Signed contract for machinery supply and contractor employment
 Entitlement of tax incentives from Board of Investments, Thailand

MERGERS AND ACQUISITIONS

 In August 2004, Tata Steel entered into definitive agreements with Singapore
based NatSteel Ltd to acquire its steel business for Singapore $486.4 million
(approximately Rs 1,313 crore) in an all cash transaction.
 In 2005, Tata Steel acquired 40% Stake in Millennium Steel based in Thailand for
$130 million (approx. Rs 600 crore)
 In 2007 Tata Steel through its wholly owned Singapore subsidiary, NatSteel Asia
Pte Ltd acquired controlling stake in two rolling mills: SSE Steel Ltd, Vinausteel
Ltd located in Vietnam.
 On 31 January 2007 Tata Steel won their bid for Corus after offering 608 pence
per share, valuing Corus at £6.7 billion; as a result and pending acceptance and
completion of the takeover, the joining of the two will create the fifth largest
steel company in the world.
Some of these acquisitions are tabulated below:
Company Location Year % Stake Value

NatSteel Ltd Singapore Aug-04 100 Rs 1313 Cr

Millenium Steel Thailand 2005 40 Rs 600 Cr

SSE Steel Ltd * Vietnam 2007 Controlling Stake ----

VinauSteel Ltd * Vietnam 2007 Controlling Stake -----

 Corus United Kingdom 31-Jan-07 100 £ 6.7 bn

* through its wholly owned subsidiary in Singapore, NatSteel Asia Pte

Tata Steel & Corus – A Compelling Vision

 Global player with a balanced presence in developed European and fast

growing Asian markets

 Strong positions in construction, automotive and packaging market sectors

 Significant raw material security & greenfield / brownfield developments

  Lowest cost position in Europe and South East Asia

Enhanced Product Portfolio

The enlarged entity would have Tata Steel‟s low cost and highly efficient upstream
operations and the Corus‟ value-added downstream products.

Access to New Markets

After acquiring CORUS Tata has got access to huge customer base

Enhanced Customer Reach

Enhancing Competitiveness

 Transfer of technology from Europe to India to develop new products

 capture growth in India and Asia - allows for technology transfer and

 cross-fertilization of R&D capabilities in the automotive, packaging and

construction sectors

 Benefit from high growth in emerging markets and pricing stability in

developed markets
 Sharing of best practices

Strong Cultural Fit

 Long-standing relationship between Tata Steel and Corus

 Tata Steel engaged Ijmuiden operations of Corus in 1992 to help it in coke

making and blast furnace facilities improvement

 Strategic commercial relationship

 Management at both Tata Steel and Corus highly focused on improving

operating efficiency and productivity
 Financial Analysis

Comparison : Total Income and Total Expenditure

2003 2004 2005 2006 2007 2008

TATA STEEL income 9956.24 12238.63 16203.61 17496.48 20344.09 23184.26
TATA STEEL Expenses 8958.96 10572.72 13019 14095.01 16204.41 18535.96
SAIL Income 19867.58 24908.99 32863.42 33415.79 40822.07 47454.82
Sail Expenses 19738.89 21911.07 26414.17 30534.13 34904.99 40354.32

50000
45000
40000
35000
TATA STEEL income
30000
25000 TATA STEEL Expenses
20000 SAIL Income
15000
Sail Expenses
10000
5000
0
2003 2004 2005 2006 2007 2008

Here we see that the sales of TATA steel has been increasing over the years , which is a good
sign for the company . However , when comparing it with its nearest competitor – SAIL ; we see
that SAIL has always had a much higher income .

Percentage Growth in Total Income :

% Growth in Total income 2003 2004 2005 2006 2007 2008

TATA Steel Ltd. 28.45750 22.92422 32.39725 7.97890 16.27533 13.96066
Jindal Steel -7.50478 -21.47486 -45.96770 -18.72950 -91.35347 40.93333
SAIL 19.36115 25.37506 31.93397 1.68080 22.16401 16.24795
 60

40

20

0 Tata Steel Ltd.

-202002 2003 2004 2005 2006 2007 2008 2009 Jindal Steel

-40 SAIL

-60

-80

-100

The percentage growth of Total Income of SAIL and TATA Steel's has been more or less similar
. But there has been a significant growth in the Total Income of Jindal Steel .

Borrowings , Loans and Advances :

Total Borrowings 2003 2004 2005 2006 2007 2008

TATA STEEL 4225.4 3382.12 2739.68 2516.15 9792.39 18021.69
SAIL 12387.67 8014.29 4959.11 3388.45 3291.52 2137.29

20000
18000
16000
14000
12000
10000 TATA STEEL
8000
SAIL
6000
4000
2000
0
2002 2003 2004 2005 2006 2007 2008 2009
Loans and
Advances 2003 2004 2005 2006 2007 2008
TATA Steel 602.03 489.51 1082.44 894.09 2751.26 3012.41
SAIL 263 395.74 327.83 285.75 323.92 403.28

3500

3000

2500

2000
Tata Steel
1500
SAIL
1000

500

0
2002 2003 2004 2005 2006 2007 2008 2009

The sharp increase in the loans and borrowings was mainly due to the advance made against
equity to Tata Steel Asia Holdings Pte. Ltd and also the acquisition of Corus .

Reserves and Surplus :

Reserves 2004 2005 2006 2007 2008

TATA Steel 4,146.68 6,506.25 9,201.63 13,368.42 21,097.43
Jindal Steel 839.8 1,302.98 1,828.31 2,480.33 3,739.98
SAIL 907.27 6,176.25 8,471.01 13,182.75 18,933.17

25,000.00

20,000.00

15,000.00 TATA Steel

10,000.00 Jindal Steel

5,000.00 SAIL

0.00
2003 2004 2005 2006 2007 2008 2009

The graph shows that TATA steel’s Reserves & surplus is increasing. This will be of use to the
company in future in time of need.
 Investments :

Investments 2003 2004 2005 2006 2007 2008

TATA Steel Ltd 1201.56 2201.42 2463.25 4069.96 6106.18 4103.19
Jindal Steel 41.12 41.09 41.09 41.09 38.84 38.84
SAIL 543.17 543.17 606.71 292 513.79 557.13

7000
6000
5000
4000 Tata Steel Ltd
3000 Jindal Steel & Alloys Ltd.
2000
SAIL
1000
0
2002 2003 2004 2005 2006 2007 2008 2009

The investments of the company reduced by Rs. 2,003 crores from Rs. 6,106 crores as on 31st
March, 2007 to Rs. 4,103 crores as on 31st March, 2008. The main reason for such decrease was
use of the liquid funds for funding the acquisition of Corus.

Net Sales :

2004 2005 2006 2007 2008

TATA Steel 10,699.31 14,489.70 15,132.09 17,551.66 19,693.41
Jindal Steel 1,419.17 2,253.60 2,565.04 3,523.08 5,368.14
SAIL 21,669.54 28,714.30 28,200.48 34,328.77 39,958.67

40,000.00
35,000.00
30,000.00
25,000.00 Tata Steel
20,000.00
Jindal Steel
15,000.00
SAIL
10,000.00
5,000.00
0.00
2004 2005 2006 2007 2008

TATA Steel sales been growing , but the sales of SAIL are doing much better in comparison .
 Raw Materials Consumed :

TATA Steel 2008 2007 Change Change %

Raw Materials Consumed 3430 3121 308 10%

The raw materials consumption of the company increased by 10% from Rs. 3,121 crores in FY
2006-07 to Rs. 3,430 crores in FY 2007-08. The increases were primarily due to higher use of
coke imported at high prices during FY 2007-08, mainly to make up for shortfall during
refurbishment of the Coke Plant of the company.

Current Liabilities :

TATA Steel 2008 2007 Change Change %

Current Liabilities 3855 3523 332 9
The current liabilities increased by Rs. 577 crores from a level of Rs. 3,523 crores as on 31st
March, 2007 to Rs. 3,855 crores as on 31st March, 2008. The increase was mainly due to
increase in the value of purchases/services on account of expansion projects.

Dividend Rate % :
Tata Steel Ltd Jindal Steel SAIL
1989 30 0 0
1990 30 0 0
1991 31 0 0
1992 35 0 2
1993 25 0 2
1994 30 0 4
1995 35 0 6
1996 45 0 6.6
1997 45 0 2.5
1998 40 0 1
1999 40 0 0
2000 40 0 0
2001 50 0 0
2002 40 0 0
2003 80 0 0
2004 100 0 0
2005 130 0 33
2006 130 0 20
2007 155 0 31
2008 160 0 37
 180
160
140
120
100 Tata Steel Ltd
80 Jindal Steel
60 SAIL
40
20
0
1985 1990 1995 2000 2005 2010

TATA Steel is giving a significantly higher rate of dividend year after year in comparison to its
nearest competitors. In 2006-07 centenary year dividend of 25% was issued to the shareholders,
hence the sharp rise.

Percentage change in dividends issued compared to Percentage change in PAT :

PAT/Dividend 2003 2004 2005 2006 2007 2008

TATA Steel 0.07902718 0.057266553 0.03741912 0.03707527 0.03671115 0.034136756
Jindal Steel 0 0 0 0 0 0
SAIL 0 0 0.00484086 0.00498384 0.00499815 0.004909258

Change % 2004 2005 2006 2007 2008

TATA Steel -0.2754 -0.3466 -0.0092 -0.0098 -0.0701
Jindal Steel 0.0000 0.0000 0.0000 0.0000 0.0000
SAIL 0.0000 0.0000 0.0295 0.0029 -0.0178
 0.05
0
-0.052003 2004 2005 2006 2007 2008 2009
-0.1
TATA Steel
-0.15
Jindal Steel
-0.2
SAIL
-0.25
-0.3
-0.35
-0.4

This shows that TATA Steel was initially giving higher amount of dividend initially on its PAT .
But over a period of time , it decided to change its strategy and is putting back all its earnings on
development of the company . So for short term investment , TATA Steel is a good company .

Profitability :

PBDITA/Sales 2003 2004 2005 2006 2007 2008

Tata Steel 0.22484 0.29681 0.38718 0.35913 0.37094 0.39845
SAIL 0.11786 0.20438 0.35412 0.22722 0.27950 0.28337

0.45000
0.40000
0.35000
0.30000
0.25000
Tata Steel
0.20000
0.15000 SAIL
0.10000
0.05000
0.00000
2002 2003 2004 2005 2006 2007 2008 2009

The profitability of TATA Steel is more than that of SAIL .

 PAT :

PAT 2003 2004 2005 2006 2007 2008

TATA Steel 1012.31 1746.22 3474.16 3506.38 4222.15 4687.03
Jindal Steel 1.1 0.54 0.71 0.67 1.69 4.76
SAIL -304.31 2512.08 6816.97 4012.97 6202.29 7536.78

8000
7000
6000
5000
TATA Steel
4000
3000 Jindal
2000 SAIL
1000
0
-10002002 2003 2004 2005 2006 2007 2008 2009

TATA Steel is showing a steady growth in its Profit After Tax .

Price Earning Ratio :

P/E
Ratio 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
TATA
Steel 13.51 10.3 8.36 17.72 4.88 12.16 6.39 8.47 6.89 10.32

20
18
16
14
12
10
8 Tata Steel
6
4
2
0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

The P/E ratio is a measure of the profit earned by the firm per share. A higher P/E ratio means
that investors are paying more for each unit of income. In the case of TATA Steel, the P/E ratio
is very unstable.
 Interest Cover :

Interest Cover 2004 2005 2006 2007 2008

TATA Steel 22.82 29.36 43.08 37.01 9.04
Jindal Steel 7.37 11.35 8.87 6.97 8.45
SAIL 3.73 17.64 14.1 30.64 48.48

60
50
40
TATA Steel
30
Jindal Steel
20
10 SAIL
0
2003 2004 2005 2006 2007 2008 2009

Tata Steel has had a steep fall in Gross Profit over the last 3 years .For the last 3 years , SAIL can
pay much efficiently the interest amount . The steep fall in Tata Steel’s Interest cover is mainly
due to the acquisition of Corus.

Return on Capital Employed :

Return On Capital Employed(%) 2004 2005 2006 2007 2008

TATA Steel 28.1 49.69 40.81 32.37 21.97
Jindal Steel 23.7 27.8 18.28 18.47 24.95
SAIL 24.98 61.29 35.85 44.94 44.03

70
60
50
40 TATA Steel
30 Jindal Steel
20 SAIL
10
0
2003 2004 2005 2006 2007 2008 2009

Return on Capital Employed is generally used as a measure for assessing whether a business
generates enough returns to pay for its cost of capital. For every rupee of capital employed by
TATA Steel, you are generating 43.22% return on average , whereas for SAIL the figure is
52.77% and for Jindal it is 28.3% . From the graph it is evident that for TATA Steel , the Return
on Capital Employed is decreasing , whereas for SAIL it is rising , and same is the case for
Jindal Steel . TATA Steel is thus not using its capital in ventures to earn sufficient return .

Debt Equity Ratio :

Debt Equity Ratio 2004 2005 2006 2007 2008

TATA Steel 0.99 0.53 0.31 0.51 0.67
Jindal Steel 1.33 1.16 1.34 1.45 1.19
SAIL 2.86 0.94 0.44 0.28 0.18

3.5
3
2.5
2 Tata Steel
1.5 Jindal Steel
1
0.5 Sail
0
2003 2004 2005 2006 2007 2008 2009

Equity : Shares , Debt : Loan borrowed from the market . SAIL over the years is having lower
debts. The company has basically repaid off its debts . Whereas TATA steel has increasing debts.
So the company has gone in for debt financing and thus , as discussed earlier the company is
comparatively having a higher borrowing from the market, They had to take 8 billion$ from the
bank to acquire corus, hence their debt equity ratio has increased. Jindal here has a mixed trend .

Current Ratio :

Current Ratio 2004 2005 2006 2007 2008

TATA Steel 0.67 0.65 0.71 1.26 2.86
Jindal Steel 1.03 1.1 1.03 0.88 1.11
SAIL 0.75 0.99 1.18 1.36 1.6

3
Tata
2
Jindal
1
SAIL
0
2003 2004 2005 2006 2007 2008 2009
 The Current Ratio is a financial ratio that measures whether or not a firm has enough resources
to pay its debts over the next 12 months. It compares a firm's current assets to its current
liabilities. TATA steel has a high amount of un-utilized current assets . The company has high
level of inventory or WIP . But Through the Investments graph , we can see that Investments has
decreased substantially . Also the liquidity ratio is low for Tata Steel . Thus we can say that the
company is having more inventory left as the demand in the domestic market is falling now as
this is the recession period .

Earnings Per Share :

2004 2005 2006 2007 2008

TATA Steel 47.48 62.77 63.35 72.74 63.85
SAIL 6.08 16.5 9.72 15.02 18.25

80
60
40 TATA Steel

20 SAIL
0
2004 2005 2006 2007 2008

Tata Steel is giving much higher return per share compared to SAIL, However, we should also
note that SAIL has much fewer shares compared to Tata Steel .

Debtors Turnover Ratio / Creditors Turnover Ratio :

2003 2004 2005 2006 2007 2008

Debtors (days) TATA Steel 42.4357 27.2843 15.3417 12.7105 11.4391 10.2358
Creditors (days) TATA Steel 88.1444 89.1041 90.7097 88.6083 95.4208 92.1872
Debtors (days) SAIL 32.0525 26.9191 22.0337 23.6186 21.3893 23.0970
Creditors (days) SAIL 75.9398 67.7849 71.1949 63.2105 61.3324 63.2890

120
100
80 Debtors (days) TATA Steel
60 Creditors (days) TATA Steel
40
Debtors (days) SAIL
20
0 Creditors (days) SAIL
2002 2003 2004 2005 2006 2007 2008 2009
The stakeholders like distributors & suppliers of TATA steel have a lot of confidence on the
liquidity of the Company . This also shows the credit worthiness and brand value of the
company. Since debtors are paying back in comparatively lesser number of days shows faster
movement of goods in the market. SAIL has got relatively less time to pay back to its suppliers .

% Change in Stock Compared to % Change in Index :

RESEARCH AND DEVELOPMENT
1. 1937 - R & D laboratory set up

2. 1952 – Applied Statistical Quality Control

3. 2003 – RD Tata Educational Centre established

4. 1st in India to develop gal annealed skin panels

5. Only Indian supplier of bake hardening steel for body panels

The R & D laboratory was set up in 1937. Today, Tata Steel is the first in India to
develop gal annealed skin panels. It is the only Indian supplier of bake hardening steel
for body panels.

In 1952, Tata Steel applied Statistical Quality Control to improve its products to suit
customers‟ requirements more effectively.

The R.D. Tata Educational Centre was established in 2003 to improve the quality of
technical education in India and to fulfill the industry need for trained professionals.

Though TSL‟s R&D has often been criticized and is considered to be one of the major
weaknesses of the company, it has shown significant contributions towards the steel
industry which is visible through the number of patents that have been filed by TSL
over the years and they sound
Intellectual Property Claims. Some of
the highlights of the TSL IP are:

1947 - First patent filled

2001 – Creation of Patent Cell

2008 – 70th year of Inception of R&D

493 patents as of date – 133

granted, rest in different stages of
approval

For these efforts, TSL was awarded

the Deming Award in Total quality
Management in 2008.
HUMAN RESOURCES MANAGEMENT

Tata Steel recognizes that its people are the primary source of its competitiveness and
is committed to equal employment opportunities for attracting the best available talent
and ensuring a cosmopolitan workforce.

TSL aims to pursue management practices designed to enrich the quality of life of its
employees, develop their potential and maximize their productivity. It also aims at
ensuring transparency, fairness and equity in all its dealing with its employees.

TSL has been in pioneer in its HR Policy over the years with the basic underlying
principle of Sharing and Caring and a Sense of Belonging amongst all employees who
are considered to be a part of the TSL family.

The company has been known as a leader in introducing various HR practices and
setting benchmarks in the global as well as Indian industry. Some of these initiatives
include:

• 1920: Tata Steel introduced initiatives like leave with pay (enforced by law in
1948), Workers‟ Provident Fund Scheme (enforced by law in 1952) and
Workmens‟ Accident Compensation Scheme (enforced by law in 1924).
• Tata Steel introduced eight-hour working days in 1912, much before such a
system was implemented by law even in most western countries.
• Free medical aid was introduced in 1915 (enforced by law in 1948).
• Maternity benefits were introduced by Tata Steel in 1928 (implemented by law in
1946)
• Profit Sharing Bonus was granted for the fi rst time in India by Tata Steel as
early as in 1934 (enforced by law in 1965).
• A scheme of retiring gratuity was introduced by Tata Steel in 1937 (enforced by
law in 1972).
• Tejaswini, launched in 2003, is a women empowerment programme – the first of
its kind - that trains women to take up unconventional jobs in the steel works.
• Shabash – a weekly scheme launched in 2002 – offers instant rewards and
recognition to employees for exemplary behaviour.
Some of these initiatives which were introduced way before enforced upon by the
legislation are tabulated below:

Initiative TSL Government

not known (but not implemented even

8 hour Working Day 1912
in western coutries at that time)

Free Medical Aid 1915 1948

Leave without Pay 1920 1948

Workers' Provident Fund Scheme 1920 1952

Workmens' Accident compensation 1920 1924

Maternity Benefits 1928 1946

Profit Sharing Bonus 1934 1965

Retiring Gratuity 1937 1972

Sub Department Human Resources Policy

Recruitment

• Campus recruitment

• Tata Steel‟s Management Trainee programme - one year development

programme

• Employee surveys

Leadership development

• Formal programmes, coaching and on the job training

• Leadership Appreciation Process and subsequently conduct „Development

Centres‟

• IL2 IL3
Training and Development

• e-learning facilities available on the Company‟s Intranet which was facilitated by

Computer Literacy training

• Computer Based Training packages and

Multimedia training materials

• Safety training received special attention based

on the DuPont Guidelines identification of skill
gaps, there is a plan in place to introduce a
technical competency assessment system

• Faculty support

• Up-skilling employees through process based,

on the job training and diploma courses
through premium engineering institutes

• Directed Learning - strengthening the leadership pipeline coupled with emerging

needs of growth projects across geographies

Industrial Relations

“The welfare of the labouring class must be one

of the first cares of the employer.”

– Sir Dorab Tata

• IL6 formed in 2008

• Only one recognized union – INTUC

• Affiliation of employees to these unions has been on a constant decline over the
years and stood at ----------- in the year 2008.

• A market based benchmarking of compensation is undertaken

• Inclusive growth – Sports days, social events, contests for children, education
opportunities, celebrating festivals together

Talent Planning and Management

• International exposure and exchange learning missions.

 • High Potential officers and Research and Development professionals are
selected for short-term assignments in Corus, UK

• Performance Improvement Teams, focused on technical best practice transfer,

have continued to show the value of knowledge networks within the company to
drive performance improvement

CORPORATE SOCIAL RESPONSIBILITY

The CSR initiatives of TSL are much talked about and even in this field TSL has been
one of the pioneers in setting standards. Their CSR policy is as follows:

Tat Steel believes that the primary purpose of the business is to improve the quality of
life of people.

Tata Steel will volunteer its resources to the

extent it can reasonable afford, to sustain and
improve healthy and prosperous environment and
to improve the quality of life of the people of the
area in which it operates.

TSL improves the economic and social status of

the community in over 800 villages in Jharkhand, Orissa, Chattisgarh and affects lives of
over 8 lakh people.

The Company‟s CSR initiatives are broadly categorized into the following divisions:

• Health Care Initiatives

• HIV/AIDS Prevention camps

• Responding to the challenge of Global

warming – Corus Climate Task Force

• Pollution Control

• Afforestation

• Energy Saving Solutions

• Literacy and Education

Some of its notable CSR initiatives are:

• The Tata Steel Rural Development Society

was set up in 1979 with the objective of
taking affirmative action in areas
surrounding the works, mines and
collieries.
• A Critical Care Unit, in the 850-bed Tata
Main Hospital, was inaugurated in 2002.
• Tata Steel was conferred the prestigious Global Business Coalition Award for
Business Excellence in the Community in recognition of its pioneering work in the
field of HIV/ AIDS awareness in 2003.
• The Tribal Culture Society endeavours to find sustainable solutions to the
concerns of the indigenous people and preserve as well as promote tribal art and
culture.
• The first batch of 30 professionals completed their training in welding technology
in 2006. This initiative is part of the Tata Steel Parivar programme for the
displaced families in greenfield steel plant site.
• A night school was started at Golmuri in 1936 with the objective of imparting
literacy.
• In 1916, Social Welfare Scheme was formed by Tata Steel to provide assistance
in the fields of education, vocational
training, self-employment and family
welfare.
• The JRD Sports Complex, an international
stadium with an 8-lane polyurethane
track, was inaugurated in 1991. The
complex also houses facilities for handball,
tennis, volleyball, hockey, basketball,
boxing, table tennis and a modern gymnasium.
ENVIRONMENT MANAGEMENT

TSL is also aware that it is involved in an industry that heavily pollutes the environment
and uses up immense amount of natural resources in the form of coal and coke. It
therefore takes various initiatives for
Environment Management. Some of them
are:

• Low specific energy consumption

• Reduced carbon dioxide emission rate

• Use of alternative energy sources

• Decreased use of refrigerants

• Handling hazardous wastes as per Hazardous Waste Management and Handling Rules
1989/2000 requirements

• Stack emissions well below the Indian and international standards

• Solid waste recycled or reused

• Waste water from the steel making process treated with best available physio-
chemical methods

The team at Corus has also been involved in the development of the ULCOS (Ultra Low
CO2 Steel Making) technology for steel making which also reduces the amount of CO2
resulting from the production units. TSL is investing heavily in this technology.

The environment management policy taken up by the Company is summarized as given

below:

Tata Steel environmental responsibilities are driven by their commitment to

preservation the environment and are integral to the way business is conducted. The
following policies of the Company guide its environmental management policy:
 1. TSL is committed to the efficient use of natural resources and energy; reducing
and preventing pollution; promoting waste avoidance and recycling measures
and product stewardship.

The Company identifies, assesses and manages their environmental

impact.
They regularly monitor review and report publicity their environmental
performance.
They develop & rehabilitate abandoned sites through afforestation and
landscaping and protect & preserve the biodiversity in the areas of our
operations.
They enhance awareness, skill and competence of all employees and
contactors so as to enable them to demonstrate their involvement,
responsibility and accountability for sound environmental performance.

2. TSL is committed to continual improvement in their environmental performance.

They set objectives targets, develop, implement and maintain

management standards and system, and go beyond compliance of the
relevant industry standards legal and other requirements.

3. TSL believes that they will truly succeed when they sustain their environmental
achievement and are valued by the communities in which they work.

AWARDS AND RECOGNITION

• Prime Minister of India's Trophy for the Best Integrated Steel Plant five times

• Asia's Most Admired Knowledge Enterprise award five times in 2003, 2004,
2006, 2007 and 2008
 • Global Business Coalition Award for Business Excellence in the Community in
recognition of its pioneering work in the field of HIV/ AIDS awareness.

• Social Accountability (SA) 8000 certification by Social Accountability International

(SAI), USA

• Corporate Sustainability Report of Tata Steel hailed by United Nation's

Environment Programme (UNEP)

• Best governed company Award 2006 for setting high standards in governance
practices

• Tata Steel won "Award for Corporate Social Responsibility in Public health" by
US- Indian Business Council (USIBC), Population Services International (PSI) and
the center for Strategic and International Studies (CSIS) in 2007

• Tata Steel wins the ET Award for the Company of the Year
Jamshedpur, January 20, 2009

• Tata Steel wins Golden Peacock Award for Corporate Social Responsibility
Jamshedpur, March 4, 2009

SWOT ANALYSIS
STRENGTH

• Strong Brand name of TSL and Tata Group

• India operations capable of meeting its own iron ore requirements

• Raw material security building through global operations

• Leading Sales and Distribution capability

• Low wage labor availability

WEAKNESS

• Low R&D Investment

• Unscientific Mining

• Low Productivity

OPPURTUNITY

1. Unexplored rural markets

2. Growing domestic markets

3. Growing global demands

4. Developing countries not restrained under the Kyoto Protocol

5. Carbon credits trading on the rise

6. High investment in infrastructure development

THREATS

1. World‟s big producers entering Indian markets

2. China set to becoming a net exporter

3. High duties and taxes by the Government

4. Global laws relating to pollution control and high energy cost

5. Global economic slowdown

PROPOSED STRATEGY

 Strengthen Indian Operation

 Realize Synergies from the Corus Acquisition

  Seek and Maintain control over Raw Material

 Focus on High Growth in Emerging Markets and Pricing Stability in Developed

Markets

 Increasing Focus on High Value Added Steel Products

 Encourage cashing on the carbon market/ CDM projects

CONCLUSION

After conducting an in depth study of one of India‟s most admired companies, we find
that the company has many strengths and opportunities which it may capitalize on to
truly become a world leader in steel making along with setting high standards for
Corporate Citizenship and Social Responsibility towards a long term sustainable growth.
Though some of its projects and acquisitions have met with widespread criticism, it is
up to the Company to realize the synergies from the deals to raise the bar for its own
performance. Because as the saying goes – the leader can not achieve any
benchmarks, it sets them!