Summer Training Research Project Report

on
Critical skill mapping of employee based on 4Q
Toyota model at TATA STEEL ltd. jamshedpur

For the partial fulfillment of the requirement of

MASTER OF BUSINESS ADMINISTRATION

Affiliated to Mahamaya Technical University, Noida (U.P.)

(2010-2012)

Under The Guidance of:

Under the Supervision of:

Ms.Alka

Mr. Bhavuk Gupta

(Manager IR CSI)

Submitted By:
SUDHIR SINGH
Roll No.1068470104

GNIT Management School

6-C, Knowledge Park-II, Greater Noida ( G. B. Nagar)

GNIT Management School

6-C, Knowledge Park-II, Greater Noida (G. B. Nagar

Date:11.11.2011

To Whom It May Concern

This is to certify that Mr.

SUDHIR SINGH

student of

M.B.A. course (2010-12) at GNIT Management School with dual specialization in

Marketing

&

HR

has satisfactorily completed the summer

Research project on Critical skill mapping of employees based on 4Q toyota

model TATA STEEL Ltd. jamshedpur
This study is done under the guidance of the undersigned by partial fulfillment for the
award of M.B.A. I wish him/her all the best for bright future ahead.

Faculty Supervisor
Ms. Alka

Director
Dr. Savita Mohan

DECLARATION

sudhir singh

declare that the project entitled critical skill mapping of employees

based on 4Q Toyota model at TATA STEEL LTD.jamshedpur is my original work

being submitted to the MAHAMAYA.TECHNICAL UNIVERSITY for the partial fulfillment
of the requirement for the degree of the Master of Business Administration is my own
endeavors and it has not being submitted earlier to any institute/university for any degree.

PLACE: Greater Noida

NAME-SUDHIR SINGH

DATE: 11-11 2011

ROLL NO-1068470104
I.D. NO.-684067

ACKNOWLEDGEMENT

This project is a team project, while my name is on the cover page

of this project, literally many of the people have contributed to
this research report. Every work requires commitment, but this
commitment goes in vein when there is no guidance.
I am short of words in expressing my sincere thanks to respected Mr.
Bhavuk gupta (manager IR CSI) for his encouragement and support
for the fulfillment of my project.
Last but not the least I also acknowledge with
thanks director mam Ms. Savita Mohan and under the
guidance of Ms. Alka for his valuable suggestions and
I am also indebted to the faculty of GNITMS for making
me worth this work.

Preface
The research is on the basis of A STUDY ON SKILL MAPPING OF
EMPLOYEES WITH 4Q MODEL OF PELLET PLANT EMPLOYEES IN
TATA STEEL LTD. JAMSHEDPUR.

It is used to study the skill level of employees in their job level.

Skill matrix is a tool to assess training needs.
It is a table that shows skills of individuals in a team and any
gaps between the skills of employees and the job roles they
have.
It is also known as a competency framework. If behind the
maximum level, retrain and evaluate.
The study was based on the descriptive research design. The
sampling design being used here is Simple Random Sampling
Thus this report seeks to utilize primary research,
t h r o u g h questionnaires, Observation and secondary method
involves data collection through magazines and websites.
The tools being used for analysis and interpretation is Percentage
analysis.
The Suggestion made by the employees where mostly implemented
whenever they were applicable.

Index
Sl.no.

Topics

Page Number

Institutes certificate

Companys certificate
Acknowledgement
Declaration
Preface
From

To

Introduction

17
About the topic
Objective of the study
Methods employed
Significance of the study

2
18
31

96

Company

Profile

52
Financial

53
5

Profile

30

3
4

Industry

analysis

of

the

company

95
Data

analysis

and

interpretation

102

findings

103
7

Conclusion
6

104

105

Suggestion

106
9

108
Limitation

of

the

study

109
10
110

Appendices
118
Questionnaires
Organizational Structure

12

Bibliography

119

INTRODUCTION
7

INTRODUCTION

In todays competitive business scenario and era of flatter organization,

structures enabling high quality performance/contribution from each
individual have become essential because skill level of employees is
critical to the performance of any organization.
The leaders role in motivating, guiding and facilitating employees
in raising their performance and realizing their potential has assumed
greater significance. Further, managers are called upon to develop the
softer skill, attitudes and behaviours so as to ensure that each
individual integrates well with the team and the overall organization
culture. Also, employees today expect their manager to play an active
and effective role in their career planning and professional development.

Thus for knowing the needs of the training and development of

the employees, Toyota Motor, Japan has introduced the concept of
Critical Skill Mapping by Four-Quadrant Model. By the use of model
managers are able to evaluate and analyze the progress of skill index of a
group of employees of same profile. In order to improve the skill level of
employees, the Toyota model (4 quadrant) model of skill assessment
has been adopted. This help in identifying the gaps and the training
the Critical skills are those minimum skills required to successfully
accomplish the assigned work/job. If skill of worker or employees lies
below the critical skill, then the productivity of workers is hampered
and the organizational output will be affected.

Non-critical skills are those skills, which help in enhancing the

efficiency and effectiveness of an organization. It helps in achieving the
benchmark of productivity of an organizational output.

10

ABOUT THE TOPIC

QUADRANT MODEL OF CRITICAL SKILL MAPPING
Toyota Motor, Japan recently developed the four-quadrant model of
critical skill mapping. The skill of workers is mapped on quadrant of a
circle from 0 to 4. Each quadrant defines the level of skills of a
worker. The specification of each quadrant is given below:

Definition of Quadrants
No of
quadran
ts to be
filled

Symbo
Definition
l

Is not trained on the subject

Has been given basic training on the subject.

Has the working knowledge of the subject and can

work under supervision.

Has adequate knowledge of the subject and can

work independently on the job.

Is an expert of the subject and can give training

to others.

11

THE TOYOTA MODEL (4 QUADRANT PROCESS)

Identifying skills required for each position.

Assign desired level of proficiency against each position and skill.
Assess each employees proficiency against this skills.
Identify gaps based on assessment of proficiency.
Identify training need for each employees based on the gap
Prepare training plan, imparting training and assess
improvement.

Critical skill are those minimum skill required to successfully

accomplish the assigned work / job. So this is known as critical skill.
If skill of workers/employees lies below the critical skill, then the
productivity of work and workers hampered and the organizational
output will be affected.

12

Non critical skill are those skill which help in enhancing the efficiency
and effectiveness of an organization . It help in achieving the
benchmarking of productivity of an organizational output.

13

Skill Matrix Template of Toyota 4Q

model.

Skill matrix is a tool to assess training needs. It is a table

that shows skills of individuals in a team and any gaps
between the skills of employees and the job roles they have. It
is also known as a competency framework. If behind the
maximum level, retrain and evaluate. Skill matrix is nothing but
the competencies you want to rate your employees. They
include like communication, leadership, job knowledge,
organizational culture, self development, critical thinking,
decision making , initiations etc....we have to provide ratings for
each competency starting from 1 to 10 (low to high). This
competency helps the organization to understand the areas of
improvement for the employee and also identifies the training
needs required for the employee. This helps and encourages
employee to improve along with team spirit. This skill matrix is
one of the tools to understand whether employee is able to
think out of box or not. Skill matrix is a simple and visual tool
to show who has training and experience in what skill. Here is
an example of a skill matrix that is used in office, and here is a

skill matrix template.

Here is a skill matrix template in Microsoft Excel format. We The
skill matrix is a very broadly useful visual management tool for
people development.

14

At industry we are using this new format to track the personal

development goals for knowledge and skills in the Tata steel
Production System, project management, assessments, facilitation,
simulations, business software, and problem solving charts, as well
as others. The Job Instruction method and job breakdown method
explained in the Toyota Talent book has helped us take use of the

skill matrix at tata to a higher level.

We have used squares instead of circles since we do not know how
to make circles appear in Microsoft Excel. In our format for
consulting skills there are levels 0 through 4 starting with a blank
(white) matrix, levels 1 through 4 being blue.

Here is a sample of what this skill matrix template looks like.

15

This free skill matrix template is easy to edit and easy to fill in. There are
no macros and no automated features, you simply enter the values for
Name and Skill and color in the matrix section as you like. It is formatted
to 11 inches by 17 inches size paper for printing purposes. This
accommodates a large number (thirty) of skills and competencies.
You can format this sheet smaller or larger to suit your needs.

Hopefully the more prominent positioning and titling of this free skill
matrix template will make it easier for people to find, reducing the
muda of searching. Other articles we have written about the skill matrix
now also include a link to this free skill matrix template.

16

Process For The 4 Quadrant Skill

Assessment:

17

identify function and

sub function related
to job

list down the KPIs

related to each of this
sub function

identify position for

which skills are
requried

find out the desired

4Q scores of various
skill at different
position

identify skills that

may prevent these
errors

actual 4 Q score for

all the worker in the
department

identify human error

that may lead to
deviation from KPIs

based on actual 4Q
score and desired
4Qscore identity the
various trining to be
imparted to each
employee

18

OBJECTIVE OF THE STUDY:

Setting an Objective is the first and one of the most important
stages of any
report. This is because poorly defined problem will not yield useful
results and
causes confusion. Theme of our study is to study and analyze the Debt
and Capital
Structure of Orient Paper and Industries Ltd. And find out its financial
position.
The objectives of our study are strengths and weaknesses.

Critical skill mapping of a (executive) employee of operation of

pellet plant

Preparation of quadrant chart for every employee working in

operation section
A Mechanical Department.
B Electrical Department
C Operation Department
Analysis of quadrant chart

19

METHODS EMPLOYED
RESEARCH METHODLOGY:
Definition of research:
Research means scientific and systematic search for pertinent information
on a specific topic. According to CLIFFORD WOODY research comprises
defining and redefining problem, formulation hypothesis or suggest
solution, collecting, organizing and evaluation data; making deductions
and reaching conclusion; and at last carefully testing the conclusions to
determine whether they fit the formulation hypothesis.

Objectives of a Research:

To gain familiarity with a phenomenon or to achieve new insights

into it.

To portray accurately the characteristics of a particular indivisual ,

situation or group.

To determine the frequently with which sometime occurs or

with which it is associated with something else.

To test a hypothesis of a casual relationship between variables.

Research Methodology is a way to systematically solve the

research problem. It may be understood as a science of studying
how research is done scientifically. In it we study the various
steps that are generally adopted by researcher in studying his
20

research problem along with the logic behind them. It is

necessary for the researcher to know not only the research
methods/ techniques but also the methodology.

Data Collection Method:

For the survey I have taken the help of primary and secondary data.

Primary Data:
For primary data collection I have used the following methods:
1.Questinnaire in form of job modules:
I have developed a questionnaire for section head and supervisor for job
module evaluation of worker critical skill .The number of modules to

21

successfully accomplish the jobs is same for similar designation or group

of similar kind of jobs.

The evaluation was done from zero to four quadrants. The specification of
quadrant is as;

No of
quadrent
s to be
filled

Symbol

Definition

Is not trained on the subject

Has been given basic training on the

subject.

Has the working knowledge of the

subject and can work under
supervision.

Has adequate knowledge of the subject

and can work independently on the job.

Is an expert of the subject and can give

training to others.

2.Observation Method:

22

Observation and scaling (from 0 to 4) of critical skill

on quadrant was given by the sectional head and supervisors of
workers .The scale defines the competency of employee in particular job
modules .For examples A.K.Tiwary ,Foreman of mechanical department ,GBlast furnace got second quadrant scale in MS-Word ,MS Power point, SAP
Module it means that he have working knowledge of this module ,but they
cant work independently .they need supervision for working on this
module

The procedure for scaling is given below:

Procedure:

Given the names of all employees to be covered

under Positional Training in column "B" under the
heading "Names".

Written the topics of all the "Training Modules /

Topics" to be covered under Positional Training in
row "9" under the heading "Training Modules /
Topics".

Selected the cell to be filled e.g. "H11" for 'PLC

drives' for 'Ram'.

Decided the competency of the person (Ram) on

the subject (PLC Drives). The above said matrix to
be used for this.

Based on the above, click on the appropriate

'Quadrant Button' given on the top of the 'Data'
sheet.
23

Selected next cell and continued.

6

Secondary Data:

For secondary data I referred to the company profiles ,previous year

report, literatures, journal, periodicals, internet, interanet, etc.

Sample size:

The sample size of my survey consisted of 47 employees of pellet plant.

Number of supervisors & workers surveyed in internal

= 15

Number of supervisors &workers surveyed in external

= 26

Number of supervisors & workers surveyed in JET&TA = 6

This sample size consists of 100%of the total employees of pellet plant

24

25

SIGNIFICANCE OF THE STUDY:

Skill matrix is a tool to assess training needs. The study also analysis
the performance level of each employees. It helps the company to
access where the Operators are lacking .

It is a table that shows skills of individuals in a team and any gaps

between the skills of employees and the job roles they have. It is also
known as a competency framework. If behind the maximum level,
retrain and evaluate.

Critical skills are those minimum skills required to successfully

accomplish the assigned work/job. If skill of worker or employees lies
below the critical skill, then the productivity of workers is hampered and
the organizational output will be affected.

During the study the researcher was directly in contact with the
Operators and Supervisors and has got a remarkable practical
experience in this period of 30 days

26

INDUSTRY
PROFILE

27

What are Pellets ?

Pellets are approximately spherical lumps formed by
agglomeration of crushed iron ore fines in presence of
moisture and binder, on subsequent induration at
around 1300C, which suit the requirements of downstream processes
e .g. Blast Furnaces & Direct Reduction.

28

Need of Pellet Plant for Tata Steel:

To increase hot metal output to meet 10 MTPA Crude Steel Production

To improve blast furnace performance

a. Increase in blast furnace productivity

b. Decrease in blast furnace fuel rate
c. Decrease in hot metal quality
d. Decrease in Slag Rate

Extending the life of iron Ore Reserves.

29

Detail of facility, input and output requirement:

INPUT
iron ore fines
Limestone
Anthracite Coal

Anthracite Coal
Bentonite
CO Gas
BF Gas
Coal Tar
Power
Process Water
Grinding media

MAJOR UNIT
FACILITIES
2 impact mill (30tph)
2 Dryers (5 m X 35 m)
2 Grinding Mills (6 m X
12 m)
2 ROKSH Separators
2 Process Bag Houses
2 Mixers (620 tph
each)
10 Disc Pelletizers (156
tph each)
Single deck Roller
Screen
Induration Machine
Single deck Roller
Screen
Induration Machine
Hood
6 Process Gas Fans
3 Process ESPs & 1
Plant DedusESP
2 Product Screens

30

OUTPUT
product pellet
pellet fines

Pellet

v/s sinter

Advantages of Four Quadrant skill mapping over Spider Chart.:

Spider chart shows only one employees skill level at a time, whereas
four quadrant skill mapping shows the skill level of a group of
employees of same profile.

The complexity regarding depiction of a spider chart is reduced in

four quadrant skill mapping.

Evaluating and analyzing the progress of skill index of a group of

employees of same profile becomes easier.

We can analyse the status of each module for a group through four
quadrant skill mapping.

31

Since it is a software based module updating it becomes simpler

Four quadrant skill mapping is very useful tool for employees as job
rotation is ensured

32

33

Pellet plant structure:

34

Process flow:

35

Process stage of pellet plant :

Three process stages are involved to produce pellets from raw

materials:

1. Raw material preparation

2. Formation of green pellets

3. Induration of green pellets

Successful pellet production calls for an optimum efficiency and

harmony between all above three stages with preceding stage highly
influencing the subsequent one.

36

Stage 1: Raw Material Preparation

A. Raw Materials Receiving Circuit

B. Additives (Limestone & Coal)Crushing Circuit.

C. Drying Circuit

D. Grinding Circuit

37

Stage: 2 Formation of green pellet

The purpose of the green ball formation is to
obtain pellets of the desired size range ( 9 -16 mm)
and having a mechanical strength which enable
them to be safely transported from the balling
equipment to the induration machine

38

Stage:3 Induration of green pellet

Green pellets have low mechanical strength

hence need for hardening for further processes

Method for hardening pellets is Induration in

which pellets are heated to 1300-1350C in
controlled manner.

39

Evaluation of pellet plant:

Tests for physical properties

Crushing Strength: 250 kg/pellet

Tumble & Abrasion Index
Tumble Index (TI) >92% for the fraction +6 3
mm
Tumble Index (TI) >92% for the fraction +6.3
mm
Abrasion Index (AI) <5% for the fraction -0.5
mm

Size Distribution
+16 mm < 3 %
+6 mm to -16 mm >90 %
-6mm < 3 %
Tests for metallurgical properties

40

Reduction Degradation Index (RDI), <12 % for

-3.15 mm fraction
Reducibility Index (RI), >65 %
Swelling Index (SI), <18 %

COMPANY
PROFILE

41

TATA STEEL-AN INTRODUCTION

FOUNDER: JAMSHETJI NUSSERWANJI TATA

(1839-1904)

Jamshetji Nusserwanji Tata ranks among

the greatest visionaries of industrial enterprise of all time. Gifted with
the most extraordinary imagination and prescience helaid the
foundations of Indian industry, contributed to its consolidation and
became a key figure in Indias industrial renaissance. Born on
3rd March 1839, in a family descended from Parsi priests in Navsari,

42

a centre for age-old Parsi culture, he was educated in Elphinstone

College, Bombay (now as Mumbai).
Initiated early into the techniques of trade by his father, he
traveled wide, gained a scientific outlook and first set up textile
business in India, introducing new machinery that vastly improved
the production of cotton yarn in the country. He however realized
that Indias real freedom depend upon her self-sufficiency in
scientific knowledge, power and steel and thus devoted the major parts of
his life and fortune to three great enterprises- Indian Institute of Science
at Bangalore, Hydro-electric schemes and the iron and steel work at
Jamshedpur.
Wealth to him was not the end, but the means to an endthe increased prosperity of India. His attitude to labour was
remarkably ahead of his times, constantly reinforcing the norms that
the success of the industry depended upon sound and
straightforward business principles, the interest of the shareholders, the
health and welfare of the employees. As early as 1892, he established
J.N. Tata endowment for higher education abroad of outstanding
Indian students.
A pioneer in town planning, he was mainly responsible for
modernizing Bombay (now as Mumbai);he envisaged and conceived a
steel town to the very last detail, the town that was later to be
named Jamshedpur after him.
The first stake for the steel plant was driven on a forestcovered plateau in Sakchi on 27th February 1908. The dream had

43

come alive, but the dreamer himself was no more for. Jamshetji had
died at Nauheim in Germany in 1904 after his successors to
preserve the family name. His spirit continued to inspire his sons to
carry their fathers dreams to fruition well after his death.
He is one of the most widely traveled Indians of his time,
said to possess knowledge that was encyclopedia. Not only did he have
a great love for it, he also had a passion to impart it to others, for, as
early as 1892, he established the J.N. Tata endowment for higher
education abroad of outstanding Indian students.

Jamshetji Tata won himself an enduring place in Indias history with his
unique
courage, commitment and vision.

44

TATA STEEL was established in

1907 by its founder JN Tata, Asias first and Indias largest integrated
private sector steel company. The companys four- phase modernization
programme has enabled it to acquire the most modern steel making
facilities in the world. The highly productive blast furnaces along with the
LD converters and its downstream continuous casting facilities provide a
distinct edge that will enable Tata Steel to achieve its vision of becoming
the worlds lowest cost producer of steel .The coke ovens with stamp
charging technology have helped it to produce coke at the least cost in
the world and drastically reduce wastage and also emission of pollutants.

As Tata Steel commissioned its 1.2 million tonne cold rolling mill
complex at Global Speed and Cost in April 2000 it re-christened the
future as Steelenniumreiterated its belief in- Steel is the essence of
life. The tie-up with Nippon Steel Posdata, Flour Daniel etc. To establish
the mill is a reaffirmation of the immense faiththat the international
partners repose in Tata Steel. The fifth phase of the modernization
programme launched recently seeks to leverage the intellectual
capabilities of the employees. Thus Tata Steel by better knowledge
management initiatives hopes to shift focus of its employees from
45

creating new physical assets to utilizing them with ingenuity and a sturdy
business sense.

As a web enabled enterprise, Tata Steel is rapidly linking up with its

customers and suppliers. The implementation of SAP, an enterprise
resource planning software package, has changed the process of
conducting the business. It will ensure better customer order
management and fulfilment .

At Tata Steel the internet is the opportunity to enhance productivity

and improve business effectiveness. This is being done through robust
B2B market places and has among others, created one for Steel, jointly
with SAIL and Kalyani Steels.

The companys community based activities far exceed its business

mandate. Its numerous socially responsible activities are aimed at those
living in and around the vicinity of its area of operations, including the ore
mines and collieries. The companys community development and social
welfare, rural and tribal services, centre for family initiatives and sports
departments run programmes, which are designed to improve the living
conditions of the socially and economically under privileged. The
initiatives taken by the company are self-sustaining and involve the
maximum participation of the total population.

46

The balance between growth and sustainable development of the

environment at the Tata Steel is manifest in ISO-14000 certification to the
four critical units of the company- the Sukinda Chromite Mines, Noramundi
and Joda Iron Ore Mines and West Bokaro Collieries and the steel works
in division.

Envisioned by the great patriot, Jamshetji Nusserwanji Tata,

founded in 1907,
Tata Steel has played a pioneering role in integrating sound professional
business practice with exemplary corporate citizenship programmes in
India.

The companys steel works, located in Jamshedpur is Asias first and

the largest integrated private sector steel plant in the country. Set up
with an initial capacity of 200-tonne blast furnaces, four 4- tonne
steam driven blooming mills and a rail and structural mill, it is now a
state-of-the-art plant with a rated capacity of 3 million tones of crude
steel. At present it produces steel mainly in the form of flats, wire rods
and bars. In addition to steel, the company is in the business of diverse
products, such as bearings, capital steel plant equipment and spares,
cement, tubes etc. The captive mines and collieries located mainly in
Bihar and Orissa, supply the finest grades of feedstock to the steel plant.
Customer satisfaction of Tata Steel begins with raw material preparations
and is meticulously interlinked by a quality chain at every stage of its
operations. The on going fourth phase of modernization programme and

47

the 1.2 million tonne world class cold rolling mill project, scheduled to be
completed by June 2000 will add value to the present product mix,
strengthen market leadership and enable it to penetrate new markets by
constantly upgrading, improving and fine tuning its marketing, sales
global network, Tata Steel strives to meet its customer requirements and
expectations, in the country and overseas. Its sales of product and
services stood at Rs.64, 334.9 million in 1997-98. The total export
turnover, in spite of the financial crisis in South East Asia and
sluggish demand in national as well as international market, at Rs.7,
220 million was higher by 9%than the previous year.
For a company fully mindful of its social responsibilities the universe
of stakeholders extends beyond the realm of customers, shareholders
and employees.

48

Backed by 100 glorious years of experience in steel making, Tata Steel is

among the top ten steel producers in the world with an existing annual
crude steel production capacity of 30 Million Tonnes Per Annum (MTPA).
Established in 1907, it is the first integrated steel plant in Asia and is now
the world`s second most geographically diversified steel producer and a
Fortune 500 Company.
Tata Steel has a balanced global presence in over 50 developed European
and fast growing Asian markets, with manufacturing units in 26 countries.
It was the vision of the founder; Jamsetji Nusserwanji Tata., that on 27th
February, 1908, the first stake was driven into the soil of Sakchi. His
vision helped Tata Steel overcome several
periods of adversity and strive to improve
against all odds.
Tata Steel`s Jamshedpur (India) Works has
a crude steel production capacity of 6.8
MTPA which is slated to increase to 10
MTPA by 2010.
The Company also has proposed three Greenfield steel projects in the
states of Jharkhand, Orissa and Chhattisgarh in India with additional
capacity of 23 MTPA and a Greenfield project in Vietnam.

49

Through investments in Corus, Millennium Steel (renamed Tata Steel

Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a
manufacturing and marketing network in Europe, South East Asia and the
pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in
2008, has operations in the UK, the Netherlands, Germany, France,
Norway and Belgium.
Tata Steel Thailand is the largest producer of long steel products in
Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel has
proposed a 0.5 MTPA mini blast furnace project in Thailand. NatSteel
Holdings produces about 2 MTPA of steel products across its regional
operations in seven countries.
Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has
also entered the steel building and construction applications market.
The iron ore mines and collieries in India give the Company a distinct
advantage in raw material sourcing. Tata Steel is also striving towards raw
materials security through joint ventures in Thailand, Australia,
Mozambique, Ivory Coast (West Africa) and Oman.
Tata Steel has signed an agreement with Steel Authority of India Limited
to establish a 50:50 joint venture company for coal mining in India. Also,
Tata Steel has bought 19.9% stake in New Millennium Capital Corporation,
Canada for iron ore mining.
Exploration of opportunities in titanium dioxide business in Tamil Nadu,
ferro-chrome plant in South Africa and setting up of a deep-sea port in

50

coastal Orissa are integral to the Growth and Globalisation objective of

Tata Steel.
Tata Steels vision is to be the global steel industry benchmark for Value
Creation and Corporate Citizenship.
Tata Steel India is the first integrated steel company in the world, outside
Japan, to be awarded the Deming Application Prize 2008 for excellence
in Total Quality management.

In tune with the vision of its founder, Tata Steel is a role model in
fulfilling corporate social responsibilities. Tata Steel is also committed
to sustainable development and recognizes the need to pursue
progressive environment management policies to preserve ecological
balance a biodiversity in areas in the vicinity of its operations. A
recent and unique initiative in this direction was the launch of the
green millennium countdown programme, which seeks to ensure that
a million healthy new trees survive in the next millennium by
planting 1000 trees each for the next 1000 days.
The quest for scaling new heights of excellence in the area
of its key business responsibilities has yielded rich dividends for Tata
Steel. The National Energy Conservation Award from the ministry of
Steel, CSI National Award for best usage of information technology,
SAIL Gold Medal, Coal India Productivity Award. The Economic Times
outstanding corporate citizen, etc point in this direction. Over the
years the company has transited seamlessly as a globally competitive
51

enterprise by a constantly benchmarking against the best operating

practices, adopting cutting-edge technologies and implementing
modern and innovative management practices. More recently Tata
Steel has sought to accelerate the pace of transformation through
the TOP (Total Operating Programme) which recognizes and
addresses the attributes of judicious anticipation of rapid
adaptability to market forces in the emerging connected economy

Mission

Consistent with the vision and values of the founder Jamshetji

Tata, Tata Steel strives to strengthen Indias industrial base through
the effective utilization of men and matters. The means envisaged to
achieve this are high technology and productivity consistent with
modern management practices.
Tata Steel recognizes that while honesty and integrity are the
essential ingredients of a strong and stable enterprise and profitability
provides the main spark for economic activity. Overall, the company
seeks to scale the heights of excellence in all that it does in an
atmosphere free from fear and thereby reaffirms its faith in
democratic values

52

Values

1.Respect for individuals

2. Integrity
3. Credibility
4. Trusteeship
5. Excellence

53

THE TATA GROUP

Before we discuss at the length of the company, we would like to throw
some light on the Tata Group of companies in present day India.

Tata Steel is one of the ventures of the Tata Group but it has many
successful companies under one umbrella. Some of the other notable Tata
concerns and their lines of businesses are shown below.

VISION OF THE COMPANY:

54

55

COMPETITION
Tata Steel is undoubtedly the best steelmaker in the wrold. It produces the
cheapest and best quality of steel in the world. In the last seven years the
position of Tata Steel has reduced drastically because of Corus acquisition.
The results of the acquistion will be profitable after 2010.

56

MAJOR LOCAL STEEL PLAYERS:

57

MANAGEMENT

EFFICIENCY:

The structure of the Board was recently modified in 2007 post the
acquisition of Corus acquisition to suitable incorporate changes
which will lead to the adequate realization of synergies from the

deal within the given stipulated time frame to reap the benefits
from the much talked about and criticized deal.
BOARD OF DIRECTORS

58

 14 Board of Directors
8 independent, 6 non
independent
No of independent
directors is more than
one third of total
number of directors.

LEGAL

ENVIRONMENT

Global operations require compliance with multiple and complex laws and
regulations. In countries where the political systems are still evolving,
frequent changes in economic policy are common, investment guarantees
and property rights are secured, any unforeseen changes can expose the
Groups businesses to uncertainties. The Group operations are primarily in
countries where investment flows are freer and where there are
established political, business and legal frameworks in place. There is an
established due process to independently evaluate country risk exposures
for investments in emerging economies

59

TATA STEEL PRODUCTS

60

Financing

and Liquidity Strategy of the Tata

Steel Group in response to the global

economic crisis:

They have responded by increasing production post commissioning of the

1.8 mtpa programme and focusing on performance improvement to
neutralise the effect of reduced realizations, whereas in South East Asia,
the focus is on working capital management and cost reduction. In Europe
we have cut production by idling blast furnaces at three sites in order to
align production with demand as a part of the Weathering the Storm
initiative which resulted in cash savings of 712 million (US$1.02 billion)
in the second half of the financial year 2008-09. Further, these efforts
have been supplemented by a strategic restructuring initiative launched
as Fit for Future programme which when completed, will result in
improvement of the operating profit of around 200 million annually. In all
sites across the Group, the journey of Continuous Improvement stays on
course
Recognizing the uncertain financing environment and the fragile state of
the global banking industry, they focussed on both internal and external
levers. Internally as an organisation, the company placed primary
importance on conserving liquidity through reduced spend management
and sharp reduction in working capital levels. They also focussed on
improvement in the productivity levels and reduction in overheads. On
61

capital expenditure, they have re-prioritised on the most value creating

and critical projects and reworked the capital planning strategy.
On the external front, the company raised long term capital which acted
as a liquidity buffer in the current circumstance and would be deployed in
value creating long term assets. The above actions ensured that the Tata
Steel Group had adequate liquidity and also financial flexibility for growth
and exigencies. The liquidity position of the Group at the year end was
approximately US$1.9 billion of cash and cash equivalents and undrawn
lines.

THE

EIC APPROACH:

1. ECONOMY
The steel industry has traditionally been very sensitive to the changing
economic conditions. The recent economic meltdown has created several
challenges which when addressed appropriately, can be countered to
positive eff ect. However, unlike the previous global recessions, this time
around, all the countries have come together and taken action.
Additionally, there has been a tremendous amount of governmental
response to the global depression which is helping to bring about a
possible easing of the situation.
The global downturn also had a major effect on various industries
dependant on steel. Major contraction in the construction projects,
automobiles, white goods demand from the third quarter of 2008-09
resulted in the global demand for steel dropping by 21% compared to the
level consumed in the same quarter of the previous year.
62

The demand for steel declined by 26% in the UK and Europe in the third
quarter compared to a year earlier and after a further contraction in the
fourth quarter, demand had fallen by 57% in the UK and 44% in Europe
compared with a year ago. This reflected in a sharp downturn in private
construction projects, as well as large falls in automotive and mechanical
engineering, amplified by severe destocking by both end users and
service centers.

2.INDUSTRY
Some of the major sectors are:

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

63

particular. Steel industry has been removed from the list of industries
reserved for the public sector.
Automatic approval of foreign equity investment up to 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.

Company :

The year 2008-09 was a historical one epitomised by the acute global
financial imbalance which initially appeared to have spared India only to
impact the markets adversely as the year rolled on. The global economic
slowdown has impacted the steel sector as well. Amidst the turmoil in the
global marketplace, Jamshedpur Works performed remarkably creating
many records on the way.
Indian operations witnessed a less pronounced drop in demand of 11% in
the third quarter, reflecting the reduced activity in infrastructure and
commercial vehicles. Steel is required by various industries as an
important raw material constituent.
Tata Steel has taken aggressive steps to meet the challenges of these
difficult times through major initiatives in cost reduction, process
improvement and production rationalisation. The highest priority is being
64

given to expanding steel producing capacity in Jamshedpur, and ensuring

raw material security for the European operations which do not have
captive iron ore and coal resources. The Tata Steel Group has developed a
pipeline of high quality projects, which will be executed, though we will rephase the sequence. Projects like the 3 million tone expansion in
Jamshedpur, the proposed steel plant in Orissa and raw material projects
in Mozambique, South Africa and Canada are key drivers of our future
value creation.

65

FINANCIAL
ANALYSIS OF THE
COMPANY

66

Financial analysis of a company:

It was started in the year 1908. The company's steelmaking
and finishing facilities have the capacity to produce more than 30
million tons of crude steel.
Backed by 100 glorious years of experience in steel making, Tata Steel is
the worlds 6th largest steel company
Tata Steel has a balanced global presence in over 50
developed European and fast growing Asian markets, with
manufacturing units in 26 countries.

67

68

69

Balance Sheet Analysis:

ASSET SIDE

Tata Steel
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2006-07

2007-08

2008- 09

Capital budgeting
The ratio required to calculate capital budgeting is mainly Debt-Equity
ratio. Tata steel has increasing debts. So the company has gone in for debt
financing and thus, the company is having a comparatively higher
borrowing from the market. Basically the Debt-Equity ratio has to be as
high as possible so that the company has lower borrowings and has to pay
less interest.

70

Tata steel has increasing debts. So the company has gone in for debt
financing and thus, the company is having a comparatively higher
borrowing from the market. Basically the Debt-Equity ratio has to be as
low as possible so that the company has lower borrowings and has to pay
less interest.

INVESTMENTS:
It can be seen that investments in the last year has increased drastically
from negative cash flows to positive cash flows in investment. This was
result of investing subsidiary companies especially Tata Steel Holdings
PTE. It made an investment of about Rs 35,633 crores against Rs 72 lakhs.
This has lead to increase in investments.

71

Tata Steel
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2005-06

2006-07

2007-08

-5000

72

2008- 09

73

Tata Steel
0.3
0.25
0.2
0.15
0.1
0.05
0
2006-07

2007-08

2008- 09

Cash management:

This requires cash ratio, which includes cash and cash equivalent / current
liabilities. Over years this company has managed to keep up their cash
management at par with other companies. In recent times this company
has raised their cash ratio as compared to previous years.

Debtors Management:

Tata Steel
40
35
30
25
20
15
10
5
0
2006-07

2007-08

2008- 09

74

This requires Debtors turnover ratio which is calculated by, Debtors/Sales.

This ratio has to be as low as possible so as to gain maximum liquidity for
the company. This means that the debtors will return money in these
many days.
Tata steel took over Corus in recent past and had taken a loan for that
purpose and due to this loan their Debtors turnover ratio just shot up
from 29.81 to 33.45.

Tata Steel
12
10
8
6
4
2
0
2006-07

2007-08

2008- 09

Inventory

Management:
We get inventory turnover ratio by, Cost of Goods Sold/Average or Current
Period Inventory. High turnover ratio is usually beneficial for any company
as products tend to deteriorate as they are kept in a warehouse.
Tata steel has managed to keep their inventory management very
efficient during these years as we can see below that it keeps on

75

increasing and that is what every company needs, a very efficient

inventory management system.

LIABILITIES:
1.SHARE CAPITAL
EQUITY CAPITAL

76

In the current year the company issues equity capital of Rs 4881

cr as against 1393 crores, this led to the sharp increase in equity
capital. The company has a mix of debt and equity for fund raising.
In last four years company raised money through right s and
debentures but this year they preferred equity capital.

PREFERNCE CAPITAL

In 2007-08 the company issued preference shares of Rs 5472

crores and issued 60, 00,000 2% Cumulative Convertible
Preference Shares. Also, 2,85,00,000 shares of face value of Rs. 10
per share allotted to Tata Sons Limited on a preferential basis
during the year 2007-08.

77

 RESERVES AND SURPLUS

There was a steep increase in reserves in 2008-09 due to
increase in foreign currency translation reserve, but in 2008-09, the
company gained Rs 40 crores in foreign exchange fluctuation
reserve. On the other side the company faced losses of Rs 5496
crores as actual loss.

Reserves & Surplus

25000

20000

15000

10000

5000

0
2004

2005

2006

78

2007

2008

Over the years the company has been increasing its income in share
premium account, through conversion of warrants and preference
shares.
SECURED LOANS
Debentures
Tata Steel placed Non-Convertible Debentures totaling upto Rs.
2,000 crore in May 2008 comprising of 3 series having phased
maturities. The Company further raised a 2-year term loan of Rs.
2,000 crore in May 2008. In November 2008, the Company raised
Rs. 1,250 crore through Non-Convertible Debentures privately
placed with the Life Insurance Corporation of India, repayable in
equal installments at the end of the 6th, 7th and 8th years.

In April 2009, the Company further raised Rs. 2,000 crore from a
term loan and in May 2009, it privately placed Rs. 2,150 crore of
Non-Convertible Debentures repayable after 10 years. Thus the
Company raised Rs. 9,400 crore in a year marked by tight liquidity.
One important thing to note is that the interest on
debentures is increasing every year even though the amount
of debentures has reduced considerably.

79

LOANS and ADVANCES

BORROWINGS
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
2003

2004

2005

2006

2007

2008

T
he debt in the Companys consolidated balance sheet has increased
considerably after the Corus acquisition. The gross debt in the Tata Steel

80

Group was US$10.54 billion in March 2008 which increased to US$11.78

billion as at the end of March 2009. Tata Steel has about $9 billion of debt
in its books and has to repay $795 million in 2009-10 and $1.3 billion in
2010-11; however, the company is free from repayment until December
2009. It has $1.9 billion cash and cash equivalents in its books, and
requires $1.2 billion for its capital expenditure during this fiscal.

The increase was primarily on account of raising of new loans to the tune
of US$2.07 billion, during the year in Tata Steel India, to fund growth
projects and to ensure an adequate liquidity buffer in the wake of global
liquidity crisis.

During the year, the company repaid debts to the extent of US$ 1.66
billion including a prepayment of debt in Tata Steel Europe of around 150
m (US$215 million). The entire foreign currency term debt in Tata Steel
India is hedged into rupees at acceptable levels. Therefore the company
was unaffected by the volatile movement of the rupee on account of the
above loans.
The gross debt as on March 2009, showed an increase of US$830 million,
which was primarily on account of revaluation, due to currency
movements. Taking into account the liquid equivalents of US$1.9 billion,
the net consolidated debt as at March 31, 2009 was US$9.9 billion.

81

LOANS AND ADVANCES

25000

20000

15000

10000

5000

0
2004

2005

2006

2007

2008

If the performance of previous years is compared it can be seen that the

loans and advances reduced substantially as the advance against equity
was converted into investments during the

82

financial year and accordingly there was an increase in the investments.

The Company entered into a loan agreement with the State Bank of India
and other banks for Rs. 9,500 crores. In January 2008 Rs. 9,000 crores was
repaid with proceeds from the Companys Rights Issue and Rs. 500 crores
was repaid on 28th February, 2008. In November 2007, the Company
made a rights issue offering to shareholders in India, (i) 1 ordinary share
for every five ordinary shares at a price of Rs. 300 per share and (ii) 9
cumulative compulsorily convertible preference shares (CCPS) for every
10 ordinary shares at a price of Rs. 100 each.

83

Unsecured Loans:
In the year 2008, Tata Steel raised $500 million equivalent seven-year
senior unsecured bank loan facility in yen to fund production capacity
expansion and also acquisitions.

Unsecured Loans
25000

20000

15000

In crores
10000

5000

2008

2007

2006

2005

2004

The Company issued USD 0.875 billion of 1% Foreign Currency Convertible

Alternative Reference Securities (CARS). The CARS accrue interest on

84

the outstanding principal amount at a rate equal to 1% per annum and are
classified as unsecured debt on the balance sheet of the Company.

During the current fiscal year, the secured and unsecured loans increased
by Rs. 8,924 crore as compared to the balances as on 31st March, 2008
mainly due to issue of privately placed non-convertible debentures, term
loans taken from Banks and other short term borrowings.

In 2007 the loans increased from Rs 324 crores to Rs 5562 crores due
to new syndicate foreign currency loans drawn for funding the acquisition
of Corus Group plc. The Company has drawn foreign currency syndicate
loans of Rs. 7,225 crores (USD 1.65 billion) during the year as per details
given below:

1. JPY Syndicated External Commercial Borrowings of USD 495 million

equivalent: Rs.
2,162.66 crores (unsecured loan)

2. External Commercial Borrowings of USD 5 million equivalent: Rs. 21.77

crores (unsecured loan)

3. JPY Syndicated External Commercial Borrowings of USD 750 million

equivalent: Rs. 3,298.88 crores (unsecured loan)

85

4. International Finance Corporation, Washington - A Loan USD 100 million

equivalent: Rs. 435.35 crores (secured loan)

86

CURRENT LIABILITIES:

CURRENT LIABILITIES
7000

6000

5000

4000

In crores
3000

2000

1000

2008

2007

2006

87

2005

2004

The current liabilities increased by Rs. 577 crores from a level of Rs. 3,523
crores as on 31st March, 2007 to Rs, 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.

88

I.

PROFIT AND LOSS A/C:

Increase in Profits
50
45
40
35
30
49.74

25
42.03

20
15
10

16.95
9.92

5
0

0.91

2003

2004

2005

2006

Increase in Profit % from 2003 to 2008.

Tata steel showed steady rate in profit.

89

2007

2008

Its profit increased by 1012.31 to 4687.03 from 2003 to 2008 i.e.

by Rs 3674.72 crores.

From the above table TATA STEEL has given good profits in the

year 2004 and 2005.

Due to deal with CORUS and NATSTEEL companys profits declined

sharply but after 2006 the profit rate increased gradually.

Decline in profits in year 2007 to 2008 is because of Recession hit

the market.

Gross Profit
Year

2008-09

2008-07

2007-06

Amount (Rs in

9778.51

8830.00

1497.81

Crs)

90

8400

8289.01

8200
7900.97

8000
7800
7600

Amount (Rs in Crs)

7400
7080.94

7200
7000
6800
6600
6400
2008-09

2008-07

2007-06

The Gross Profit has increased over the period of 3 years however the
change in Gross Profit from 2008-09 and 2007-08 was less as compared to
2006-07 and 2007-08. The Graph shows the increase in Gross Profit 200607 to 2008-09.
Profit before Depreciation & Tax
Year

2008-09

2008-07

2007-06

Amount (Rs in

8289.01

7900.97

7080.94

Crs)

The Profit before depreciation and Tax increased at a rate of 11.84% from
2006-07 to 2007-08 and 4.91% from 2007-08 to 2008-09. The fall in the
PBDT was mainly due to the market crunch and global recession which left
its a mark on the companys Financial Statements. However it was

91

observed that the companys Profits after depreciation and tax followed a
stable increase i.e. an average increase of 11%.

Gross Profit Margin:

8400

8289.01

8200
7900.97

8000
7800
7600

Amount (Rs in Crs)

7400
7080.94

7200
7000
6800
6600
6400
2008-09

2008-07

2007-06

The GP
Margin for 2006-07 was 7.58% followed by 39.79% in 2007-08 and
36.43% in 2008-09.

92

Depreciation:
Capital Assets whose ownership does not west in the company is
depreciated over the estimated useful; life or five years whichever is less.
In respect of other assets depreciation is provided on a straight line basis
applying the rate specified in Schedule 14 to the Companies Act 1956 or
based on estimated useful life whichever is higher. However, asset value
up to Rs 25000 is fully depreciated in the year of acquisition. The details
of estimated life of each category of assets are as under:
Building 30 60 years.
Plant & Machinery 6 21 years.
Railway Sidings 21 years.
Vehicles and Aircrafts 5 18 years.
Furniture, Fixture & Office Equipments 5 years.
Intangibles (computer software) 5 10 years.
Development of property for development of mines and
collieries are depreciated over the useful life of the mine or
lease period whichever is less, subject to a maximum of 10

years.
Blast furnace relining is depreciated over a period of 10 years
(average expected Life).

93

Total depreciation for the Financial Year 2006-07 accounted to

Rs. 819.29 crs followed by Rs. 834.61 crs in 2007-08 and Rs.
973.40 crs in 2008-09.

Detail of profit and loss account:

Net Sales
Crores

RS. in

2009
2010

24,348.52
24,940.85

Total Income
2009
2010

25,289.30
26,093.79

Total Expenditure
2009
2010

15,510.79
15,948.12

94

Detail of profit and loss account:

Operating Profitb

Rs. in Crores

2009
2010

9,778.51
10,145.67

Gross Profit

2009
2010

8,289.01
8,297.48

Net profit

2009
2010

4,981.50
4,421.95

95

Detail of balance sheet:

Total Shareholders Fund

Rs. in Crores

2009
2010

Total Debt

30,176.26
36,961.80

2009
2010

26,946.18
25,239.20

Total Liabilities

2009
2010

57,122.44
62,201.00

96

Detail of balance sheet:

Net Block

Rs. in Crores

2009
2010

Total Current Assets

10,994.54
12,162.44

2009
2010

Total Current Liabilities

10,739.75
12,246.69

2009
2010

9,990.41
10,163.58

97

Dividend and capital structure:

Dividend
2009
2010

Capital Structure

Dividend Per Share

8.0
16

Year Authorized Issued Subscribed CalledPaidUp Face

Capital
Up
Value
2010

1750

888.13

887.41

Rs. In Crores

98

887.21

10

II.

FINANCIAL RISK:
TAX AND INTEREST RATE ANYALSIS

From the above balance sheet Interest charged in 2008 is 41,493

(Rs mn) and in 2009 it decrease to 38,283 (Rs mn) i.e. Change of
-8.4%.
Tax charged in 2008 was 40,493 (Rs mn) and in 2009 it decrease to
39,751 (Rs mn) due to decrease in gross profit.
Finance for the Corus acquisition was raised through bridge loans
and later refinanced by Tata Steel which has led to a dramatic
increase in the interest outflow; in the April-June quarter the interest
99

outflow was Rs241.7 crore compared to Rs41.6 crore for the same
quarter last year.

Dividend Policy:
Tata Steel has been continuously providing dividend to its shareholders to
maximize its wealth. In the year 2008-09 the company paid a dividend of
Rs 1168.95 crores. The payment of dividend is always fixed by the
company irrespective of profits or losses.
Tata Steel is giving a significant higher rate of dividend year after year in
comparison to its nearest competitors.
In 2006-07 the year the company completed 100 years a dividend of 25%
was issued to the shareholders.

Tata Steel
180
160
140
120
100
80
60
40
20
0
2003

2004

2005

2006

100

2007

2008

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 putting
back all its earnings on development of the company.

101

Dividend

Year

Month

Dividend (%)

2011

May

120

2010

May

80

2009

Jun

160

2008

Jun

160

2007

May

155

2006

May

130

2005

May

130

2004

May

100

2003

May

80

2002

May

2002

Apr

40

2001

May

50

2000

Mar

40

1999

May

40

1998

May

40

1997

May

45

102

Fund Flow & Cash Flow Statements:

103

Analysis of Funds Flow and Cash Flow Statements:

SOURCES OF FUNDS
The profit after taxes has been consistently increasing in the past five
years despite the global crisis and acquisition of Corus in 2007.So the total
PAT available in 2009 is Rs 21091 crores. Since Tata Steel has a lot of fixed
assets in terms of plants and machinery the depreciation is also increasing
at a slower rate, one more reason is that they introduced two blast
furnaces in Jamshedpur this year, which led ot increase In depreciation
this year.
In the last 5 years the share capital of the company was very good, but
due to issuing of new shares the share capital is now negative.
Borrowings have been consistent. The way the company managed its
borrowings was amazing. From negative balances, they turned into Rs
5000 crores positive balances; this was as a result of loans taken to
finance Corus deal. Some installments are to be paid after 2011, so there
is not too much burden on Balance Sheet.
APPLICATION OF FUNDS
The capital expenditure was normal in all the years, not much
movement is seen in terms of investment in plant and machinery.
Investments increased significantly. It can be seen that investments in
the last year has increased drastically from negative cash flows to positive
cash flows in investment. This was result of investing subsidiary

104

companies especially Tata Steel Holdings PTE. It made an investment of

about Rs 35,633 crores against Rs 72 lakhs.
The company also announces dividends to the shareholders. Every year it
gives dividends in the range of 100 to 160 %. This year they gave a
dividend of 13 Rs per share, due to which the total outlay was Rs 5632 cr.
The biggest contributor in Utilization of Funds was because of increase in
working capital expenses. In early 2008, the unprecedented increase in
the prices of input costs, particularly raw materials, substantially
increased the working capital requirements. The change in working
capital, during the financial year, was mainly due to increase in
inventories on account of volumes and prices partly offset by an increase
in creditors. The working capital during FY 09 reduced by Rs. 225 crore,
mainly due to a reduction in Inventory (with reduction in finished and
semi-finished inventory and increase in raw materials inventory) and
Debtors.

105

FINANCIAL RATIOS:

106

Ratio Analysis:
Operating expenses are expected to increase marginally resulting in
increase of EBITDA margin of 38.7%.But compared to previous year the
EBITDA/Turnover has reduced because the profits were higher than last
years.
ROCE over the years has reduced because of slowdown as well as huge
inventories of stock and new plants introduced in Jamshedpur.
Asset Turnover is very good In last four years the assets were utilized to
the fullest but in the last year due to less demand, it reduced by 1%, but
in overall terms it is optimally used all resources.
Debt Equity Ratio:

Debt Equity Ratio

45
40 42.43
35
30
Debt Equity Ratio

27.28

25
20
15

15.34
12.71

10

11.43

5
0

2004

2005

2006

2007

2008

107

Tata Steel over the years has been increasing its debt in order to finance
the Corus deal. They took a loan of $ 8 Billion from the bank to acquire
Corus.

Current Ratio:

108

Current Ratio
45
40
35
30
25
Tata Steel

20
15
10
5
0
2004

2005

2006

2007

2008

The current ratio is a financial ratio that measures whether or not the firm
has enough resources to pay its debts over the next 12 months. It
compares a firms current assets to its current liabilities. Tata Steel has a
high amount of unutilized current assets. The company has high level of
inventory or WIP. Since the demand for steel has reduced drastically the
company is having huge inventory and because of this the liquid ratio is
low.

Debtors Turnover Ratio

Financial ratio analysis of tata steel:
Ratios

Year
2009
109

2010

1) Current Ratio

0.94

2)Quick Ratio

0.57

1.1
0.76

3)Gross Profit Ratio

33.69%

31.36%

4)Operating Profit Margin

37.68%

35.70 %

5) Net Profit Ratio

21.09%

19.96 %

6) Fixed Asset turnover Ratio

1.22%

1.12 %

7) Total asset Turnover Ratio

0.43%

0.40 %

41.29

46.58

9)Debt Equity Ratio

1.34

0.68

10)Price Earning Ratio

2.97

9.36

11)Earnings Per Share

66.80

56.37

8)Debtor Turnover Ratio

110

DEBTORS/CREDITORS TURNOVER Ratio

120

100

80

60

40

20

Year

2003

2004

2005

2006

2007

2008

The stakeholders of the company like distributors and suppliers

have a lot of confidence in the company. This shows the
creditworthiness and brand value of the company. Since debtors are
paying back in comparatively less number of days shows faster
movement of goods in the market.
EBITDA/TURNOVER RATIO
The EBITDA for the Group at Rs. 18,495 crores (US$ 3,636 mn) for
the financial year 2008-09 was1% higher than the EBITDA of Rs.18,
287 Crores (US$ 3,595 mn) recorded during the financial year 200708.
EPS RATIO

111

EPS is the reported profit over the number of shareholders in the

company. In the last 5 years EPS has doubled from 31 to 66 and it is
expected to reach 104 in FY10.
P/E RATIO
P/E RATIO IS expected to double in 2010 because of higher
profitability and dividend payouts in the previous years.

112

Future Prospects:

The Company has embarked upon setting up three green field steel plants
in eastern India:
12 MTPA* plant in Jharkhand
6 MTPA plant in Orissa
5 MTPA plant in Chhattisgarh
Jamshedpur Steel Works will become a 10 MTPA unit by 2010.
*MTPA = million tonnes per annum
Solution for Sales (SFS) offers based on the Theory of Constraints (TOC)
concept saw stabilisation in the steel division. The replenishment module
was extended to cover 100% of the retail channel of TATA TISCON,
achieved 90% coverage in TATA SHAKTEE and 60% in TATA Steelium. This
resulted in a reduction of stock outs in retail shops and more significantly,
a reduction in channel stocks. Reliability solutions were extended to

113

direct customers in the Steelium distribution. For the Construction

Projects segment, an S-DBR (Simplified Drum Buff er Rope) mechanism
was implemented under the Theory of strains supply chain
improvement initiative which improved the availability of rebars at the
warehouses, thereby reducing instances of delays and loss of orders.
The term focus is on the implementation of the Fit for Future
restructuring in Europe, to continue with the 3 mtpa expansion project in
Jamshedpur and overseas raw material projects, to increase production
volume in India and optimise working capital management across the
Group to preserve liquidity

Looking towards the future, the steel industrys main contribution to the
reduction of CO2 emissions should be to further develop the use of byproducts and to work with its customers to help design well, long lasting,
more energy and material efficient products. Additionally, improvements
in areas other than primary steel production may offer further
opportunities for CO2 reduction

114

Shareholding:
Holding in%
:

Indian Promoters

31

Banks Fin. Inst. and Insurance

FII's

Private Corporate Bodies

20.69
18.97

3.40

NRI's/OCB's/ForeignOthers

0.17

Govt

others

0.59

General public

20.81

Total

0.01

100

115

Current market position:

Market Capital is Rs. 47,311.73 Crores.

Current share price is Rs. 533.15

Allotted of 150 lakh ordinary shares and 120 lakh

Warrants at

a price of Rs. 594 per share/warrant to

Tata Sons.

116

117

DATA ANALYSIS
AND
INTERPRETATION

118

DATA ANALYSIS AND INTERPRETATION

There are 47 employees in the Operation Section of pellet plant

structure with different designations. The HR department has identified
different modules or critical skills for each designation. The designations
and the respective number of modules are given below:

DESIGNATION

NO. OF EMPLOYEES

NO.OF

MODULES

Foreman

Technician

02

10

Jr, executive

27

Sr. executive
Operator

18

23

10

According to the above data we have analyzed the skills of the

employees of the Operation Section by Four Quadrant Model which are
given in the following tables. We have mapped the critical skills of the
employees according to modules identified by the HR Department. These

119

data, when analyzed, provide clearly the skill levels of the employees, the
modules in which they are lacking or they are good in.

120

Designation wise training:

ms word/excel

gas safety
leadership

0
foremen

Sr.associate

Jr.associate

121

office associate

Foreman module wise training index:

4.5

3.5

2.5

2
Column1
1.5

0.5

122

Sr. associate module wise training:

Chart Title
5
4.5
4
3.5
3
2.5
Series 3

2
1.5
1
0.5
0

123

Jr. Associate module wise training:

Chart Title
5
4.5
4
3.5
3
2.5

Series 3

2
1.5
1
0.5
0

124

FOUR QUADRANT CRITICAL SKILL MAPPING OF

PELLET PLANT EMPLOYEES:

FOR EEI
P
E
L
L

125

FINDINGS
1.The critical skill mapping study reveals the various skills of workers in
which they are expert or they are lacking.
2.. We have found from our study that HR executive operators are
lacking in positive isolation and gas safety process and shut down
operation process
3.There should be no provision for sending the operators outside the
company for training program
4. the prior information about the technology change and should provide
prior information
5.advance technical program for personnel should be conducted.

126

CONCLUSION
Tata Iron & Steel Co. Ltd., today stands proud as a modern integrated
steel producing company. It is more than a company; it is an institution
concerned with the interest of its all stakeholders as well as its employees.

The future of an organization largely depends upon its

productivity; productivity depends upon its employees. Thus employees
should be trained in best possible way to increase the productivity.
For this purpose, Tata Steel possesses an effective training center that
takes the responsibility of training the employees. The responsibility of a
training organization does not end at imparting training but also it is
extended to the evaluation of the training program, which is most
neglected factor in every organization. So every organization should
conduct the training effectiveness survey like critical skill mapping each
time.

Critical skill mapping helps to indicate the image of management

in the mind of employees as well as their capabilities and attitudes. As it
has been found out from the survey and its analysis that the training
programme in this department is effective, still some weaknesses have
been discovered for which some suggestions have been given. But
127

most of the employees demand that they should be given more

technical training, which can be applied in a more practical way in
their work. They also demand training programmes from national and
international companies. So step should be taken towards it fulfilment
.

One of the reasons for our project was to discover the skills
possessed by the employees. The evaluation of these data would help
the company to critically analyze the skills in their employees and
recognize the need of training. Research into all these factors would
provide clues to improve the quality of work.

128

SUGGESTIONS
After critical skill mapping of the employees of operation section of the
TATA STEEL Ltd. department, the following are our recommendations
to this department:

1.The critical skill mapping study reveals the various skills of workers in
which they are expert or they are lacking. Special training program
should be arranged for those employees who are lacking in their
respective modules.

2.. We have found from our study that HR executive operators are
lacking in positive isolation and gas safety process and shut down
operation process. Thus special attention must be given in this
process training.

3 The mapping is done by the supervision of the department.HR

.senior executive manager. Thus it should be shared with all the

129

operators so that they come to know about their skill level and try to
improve it.

4.There should be no provision for sending the operators outside the

company for training program because tata steel is a big organization
and can provide such training with in the premises of working by
appointing some expert.

5. All training modules should be evaluated at proper time and this

activity should be carried out regularly.

6. Training should be as per work requirement and should be given at

the right time.

7.The prior information for the training programs should be given to the
workers. So care must be taken in this matter and prior notice that is
before 2-3 days should be given to all the operators for training.

8.There should be transparency in organizing training program and should

be arranged for operators according to the work requirement.

9.More emphasis on ON-THE-JOB training should be given.

10.The selection criteria for training should be suitable. It should match

with the qualification of the employees. For example if he is less qualified

130

and sent to higher technical training program, it will prove ineffective.

Hence, training should be provided by taking into account the platform
and background of the employee.

11.Many a times workers are given training on a particular module; later

on they are transferred to other job, which does not have any relation to
the training attended by them. They dont even get a chance to perform
what they have learnt from previous training program.

12.Training schedules should be prepared according to the availability of

candidate.

13.Advance skill program for personnel should be conducted.

14.The concerned faculty should come and understand the working

condition and

environment before the program

15.It must have equal proportion of technical and managerial inputs

131

LIMITATION OF THE STUDY

Time is the most important constraints in carrying out this project.

The busy schedule of Operators and supervisors is also a

limitation.

The supervisors are uncomfortable in assessing skill level of

some employees.
Personnel bias can one of the limitation of study because manager
or supervisor can provide a wrong profile of employee due to some
bias
The section-heads and supervisors are uncomfortable in assessing
skill level of
some employees.
Problem in skill mapping of worker arises due to inter-departmental
transfer of

workers

132

APPENDICES

133

Questionnaires

A training questionnaire is a written document created by organisations or

companies so as to analyse the progress made by a trainee during the
training program. This type of a questionnaire deals with basic questions
that are simple to answer and is aimed at getting a clear response from
the trainee.

A training questionnaire should be framed with precision as it is important

that the questions are clear and do not confuse the person answering the
paper. Such a questionnaire must start with extracting basic information
about the trainee such as the name and address. Proceed onto asking for
the details of the job and department that the trainee has worked for. The
last few questions must focus upon what the trainee has learnt so far and
if he would like to continue or not.

A training questionnaire can be of multiple kinds depending upon the kind

of training. The following are a few examples:

Marketing training questionnaire

Clerical training questionnaire

Media training questionnaire

Etc

These questionnaires are basically the analysis of the persons training

experience and are focussed at achieving an over view of the kind of
training that is being provided by the various trainers. The language of
134

these questionnaires must be kept easy and writing long questions should
be avoided.

Annexure:

Questionnaire

Name.
Designation
Department..

Objective
This is sent to you as a part of my MBA project I am undertaking in this
organization on the topic

Criticall skill mapping with 4Q model

from Human Resource perspective.

From the organizational point of view this questionnaire is a part of

development exercise to know the strength and the areas needing
improvements (possible blind spots) in terms of various competencies at
various levels of the Manufacturing department, namely top level,
managerial level, executive level, and staff level.

135

(Please return the completed questionnaire to me on or before)

Please rate each competency using the 5-point rating scale 0 to 4

No of
quadrant

Symbo
Definition

s to be

filled
0

Is not trained on the subject

Has been given basic training on the subject.

Has the working knowledge of the subject and

2
can work under supervision.
Has adequate knowledge of the subject and can
3
work independently on the job.
Is an expert of the subject and can give training
4
to others.

136

Questionnaire use for both self and other rating:

Please ( tick) what you fill most appropriate
Competence at executive level
technical expertise :know in detail about the
technology used in production
product knowledge: know the physical structure of

5 4 3 2 1

each product and its part

knowledge on the latest design
stress tolerance : cop up with the situation of

5 4 3 2 1
5 4 3 2 1

breakdown , work load and pressure.

knowledge on production concept SOP
knowledge on product standerd and specification
positive isolation\
detail knowledge of material and tools used in

5
5
5
5

4
4
4
4

3
3
3
3

2
2
2
2

1
1
1
1

production
operational of machine
work always with quality awareness
iso 140000 awareness program
HGG operation
co and bf gas line maintainence
coal tar tank line maintanence
green pelletizing operation
repairing inside HGG
operation of impact mill
reciveing storage and supply of coal tar
operation of compressor
TPM horizon workshop
inspection/checking in process plan
gas safety
ms word/excel
maintainence of contrifugal pump
burner operation
operation of padle feeder
operation of dryer
cogas/coal tal filter changing

5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5

4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4

3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3

2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2

1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

137

safe working
maintenance of air pump

5 4 3 2 1
5 4 3 2 1

138

STEEL

ORGANISATIONAL STRUCTURE OF TATA

The entire structure of the organization of Tata Steel can be broadly

divided into 3 levels, each level having separate roles and
responsibilities. These 3 levels are upper management, senior
management and the middle management. Each of these lower levels
is responsible to perform Its functions and there by report to the
next higher level in the organization on a periodic basis. Overall, we
can say that the company has a flat structure, beginning from the
top management to the lowest level of management. The Upper
Management of the company has designation like the Managing
Director of the entire company and the Group Executive officer. The
Senior Management has the various Vice Presidents of the different
departments which come directly under the Managing Director.
Under the Vice Presidents we have the Chiefs of the various
functions who coordinate the activities of its function along with the
other departments. There can be more than one chief in a
department depending upon the number of line of the products.
This is seen in the Long Products Departments. The Chiefs are also
accompanied by the Heads in some of the departments. Under these
Chiefs and Heads, we have the various Sectional Heads who are the
Unit Leaders, the Managers or the Officers. This structure is prevalent
in the entire organization on a national scale. In the Finance and
Accounts Department of Tata Center, Kolkata, the functions are

139

handled by the Head of Marketing and Finance. Then, there are the
various Manager Accounts who handle the different aspects of the
department. Under these Managers are the officers who carry out
the actual accounting work of the department.

- Tata Steel Group has announced a new organization structure effective

from January 01, 2008 as follows:

Tata Steel Group comprises of two entities, namely, Tata Steel (including
Tata Steel Thailand and NatSteel Asia) and Corus Group Ltd. In order to
realise this ambition, a new organisation is announced on November 28,
2007, which is effective from January 01, 2008.

* The Chairman of Tata Steel, Mr. Ratan Tata will continue to chair the
Strategy and
Integration Committee. Mr. Jim Leng, Mr. B Muthuraman, Mr. Philippe Varin,
Dr. Tridibesh Mukherjee, Mr. Rauke Henstra, Mr. Hemant Nerurkar, Mr.
Koushik Chatterjee and Mr. Jean-Sebastien Jacques are members of this
Committee.

* A Group Centre is created for functions that are to be performed with a

common approach across the Tata Steel Group. These functions are
Technology & Integration, Finance, Strategy, Corporate Relations &
Communications and Global Minerals. The executives responsible for

140

these functions will report to the MD of Tata Steel and the CEO of Corus:

- Dr. Tridibesh Mukherjee is appointed as Group Director, Technology &

Integration

- Mr. Koushik Chatterjee is appointed as Group Chief Financial Officer

- Mr. Jean-Sebastien Jacques is appointed as Group Director, Strategy

- Mr. Manzer Hussain is appointed as Group Director, Communications

- Mr. Arun D Baijal is appointed as Group Director Global Minerals

* Both Tata Steel and Corus entities will have Executive Committees
chaired by the MD, Mr. B Muthuraman and the CEO, Mr. Philippe Varin
respectively.

* A Joint Executive Committee for Tata Steel Group will meet quarterly to
review overall performance against the Group ambition. This committee
will be co-chaired by the MD of Tata Steel and the CEO of Corus.

141

BIBLIOGRAPHY

Human Resource Management

-Gary Dessler, Prentice Hall EEE

142

Human Behaviour at Work

-David K, Tata McGraw Hill

TMDC Library, jamshedpur

www.tatasteel.com

143