TATA Iron & Steel Co Ltd.

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A PROJECT REPORT ON Steel Industry OF Tata Iron & Steel Co.

Submitted To : MR V. DHANRAJ. (REGNO: 10301138) (REGNO: 10301127) (REGNO: 10301120) (REGNO: 10301101) (REGNO: 10301141) (REGNO: 10301107) (REGNO: 10301154) (REGNO: 10301137) (REGNO: 10301140)

Group Members: 1. RAKESH ROY. 2. MOHAMMED MUZAMMIL M 3. JEMY JOHN. 4. ABDUL HAKKIM R 5. SAMSUDEEN A.M 6. ASHWIN KUMAR M.S 7. VIJENDAR KUMAR SINGH 8. RAJESH T 9. RATHANA SABAPATHY
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INTRODUCTION
TATA IRON AND STEEL COMPANY:


Tata Steel, formerly known as TISCO (Tata Iron and Steel Company Limited), is the world's fifth largest and India's largest steel company, with an annual crude steel capacity of 28 million tones. Ranked 315th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable company in private sector with consolidated revenues of Rs 1, 32,110 crores and net profit of over Rs 12,350 crores during the year ended March 31, 2008. Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions; the company has become a multinational with operations in various countries. In 2000, the company was recognized as the world's lowest-cost producer of steel.

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The company was also recognized as the world's best steel producer by World Steel Dynamics in 2005. The company is listed on Bombay Stock Exchange and National Stock Exchange of India, and employs about 82,700 people (as of 2010). Tata Steel Group is now the worlds 6th largest steel company with current steel deliveries of 32 million tones and as Asias first integrated steel plant and Indias largest integrated private sector steel company. It is now the worlds second most geographically diversified steel producer, with operations in 24 countries and commercial presence in over 50 countries. The Jamshedpur operations in India is increasing its capacity from 5 mtpa to 10 mtpa by end 2010 and the Company has also signed MoUs to set up four Greenfield steel.

Vision:


We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship
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INTRODUCTION:

IRON AND STEEL INDUSTRY:

 

They encompass iron-ore, coking coal and limestone. The chota Nagpur plateau bordering west Bengal, Bihar, Orissa and Madhya Pradesh therefore has been the natural nerve centre of this industry. small and cottage industries depend on it, as a result of modernization and industrialization of a country. As compared to China, India had an excellent beginning, with over 7.2 million tones. The social reforms introduced by the government improved the development process of iron and steel industries in India. It was only in the last decade that the production had really gained vigor. Some of the measures include low import duties, simple tax structure and unrestricted external trade.

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RATIO ANALYSIS OF TISCO:

FY 2006
Quick Ratio Inventory Turnover Ratio Gross profit ratio Dividend payout Interest cover ratio Net profit ratio Return on total assets Debt Equity Ratio Financial Expenses Ratio
0.65 7.00 53.56 23.4 30.02 23.04 23.99 0.26 1.11

FY 2007
2.17 7.52 52.60 26.15 24.92 24.06 16.49 0.68 1.44 0.43

FY 2008
5.15 7.56 55.64 29.73 7.60 23.80 9.96 0.66 4.73 0.27

FY 2009
0.82 6.99 52.23 28.69 4.91 21.39 8.85 0.89 6.17 0.24

FY 2010
1.08 8.13 50.70 17.4 3.90 20.17 7.86 0.68 7.41 0.25

Fixed Asset Ratio 0.67

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FY 2006
Working capital turn over ratio Administrative expenses
35.30

FY 2007
2.13

FY 2008
0.65

FY 2009
18.55

FY 2010
7.70

5.53

5.36

6.40

6.06

6.46

Operating profit ratio Return on share holder funds Debtor turn over ratio Stock turn over period Debtors collection period Price earning profit Current Ratio Capital turn over ratio

41.03

42.64 29.95 27.79 49 13 6.89

42.65 17.17

40.21

40.55 13.65

35.94 28.20 52 13 8.47

17.24

36.23 48 10 10.38

38.23 52 10 2.97 1.15 0.41

57.54 45 6 10.50

1.11 1.03

2.51 0.68

5.46 0.42

1.36 0.39

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PEST ANALYSIS OF TATA STEEL

POLITICAL ECONOMIC SOCIAL TECHNOLOGY

POLITICAL:
Tata committed a huge amount of investment in politically unstable country like Bangladesh, Iran, Mozambique and Thailand.


 The entire process of setting up plan is getting delayed in question of gas supply (in Bangladesh), Iron ore mine lease in Iran is escalating the Project cost.  Increased infrastructure spending by the Government of India and development of roads could generate significant savings in freight and transportation cost, making Indian steel companies and other industries globally competitive.

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Impact of Liberalization


Steel industry has been removed from the list of industries reserved for the state sector. Automatic approval granted for foreign equity investment in steel has been increased up to 74% Price and distribution controls were removed from January 1992 Restrictions on external trade, both in import and export, have been removed. Tata Steel is the second largest steel producer in terms of Geographical spread of its facilities.

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ECONOMIC:


The Financial market in the last 12 months has been volatile triggered by the subprime mortgage crisis in the US. This has adversely affected the liquidity and the risk perception of the international capital markets. The real effective exchange rate for the US dollar has declined since mid-2007 as foreign investment in US bonds and equities has been dampened by reduced confidence in both the liquidity he returns on such assets, weakening of US growth prospects and interest rate cuts. The main counterpart to the decline of the dollar has been appreciation of the euro, the yen, and other floating currencies such as the Canadian dollar and some emerging economy currencies.

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SOCIAL:


Tata Steel Ltd has been awarded the Golden Peacock Global Award for Corporate Social Responsibility (CSR) for the year 2009. Some of the Tata Welfare program's elements are prenatal and postnatal care, child health and immunization, free IUDs and sterilizations, sterilization "camps" for city residents conducted by top Bombay gynaecologists. Tata holds motivation meetings during worker management councils, trains rural opinion leaders as family planning motivators, and innovated peer motivation for youths as well as discussion sessions for young married women with their mothers-in-law. Hundreds of people born with cleft lips or cleft palates have been operated on, for free, through 'Operation Muskaan' a project initiated by steel giant Tata Steel. It's a small operation that has made a huge difference to people's lives.

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TECHNOLOGY:

A technology strategy is concerned with a firm`s approach towards the development and use of the technology. This strategy plays a key role in developing an overall competitive strategy and hence needs to be consistent with the other value activities of an organization. So in the same way TATA Steel also made a technological strategy by making use of E portal with the collaboration of SAIL. So TATA Steel forged new business strategies using the Web i.e. metaljunction.com, a 50:50 joint venture of Tata Steel and Steel Authority of India Ltd.

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SWOT ANALYSIS (COMPANY):

STRENGTH:


Tata Steels Indian operations are self-sufficient in the case of its major raw material iron ore through its captive mines. Tata had a strong retail and distribution network in India and SE Asia. Tata was a major supplier to the Indian auto industry and the demand for value added steel products was growing in this market. The Company is on its way to reach a crude steel capacity of 10 million tones per annum by FY 2011. The first phase of reaching the crude steel capacity of 6.8 million tones per annum, Brown field projects, is nearing completion. Tata Steel has been on a path of accelerated growth with foray into several geographies and markets through aggressive mergers and acquisitions.
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WEAKNESS:


Raw materials for steel production are rapidly depleting and are non renewable, company has to come up with sustainable methods in steel production. Steel production in India is also hampered by power shortages. Insufficient freight capacity and transport infrastructure impediments too hamper the growth of Indian steel industry. Low Labour Productivity. High Cost of Basic Inputs and Services.

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OPPORTUNITIES:


The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India. Unexplored Rural Market The Indian rural sector remains fairly unexposed to their multi-faceted use of steel. Excellent potential exist for enhancing steel consumption in other sectors such as automobiles, packaging, engineering industries, irrigation and water supply in India. Booming infrastructure has opened up high demand for steel worldwide.

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THREAT:


In the developed world, industries have been facing rising environmental costs due to the increased concerns on Global Warming. It is recognized that the steel and aluminum industries are significant contributors to man-made greenhouse gas emissions as the manufacture of steel produces carbon dioxide (CO2), and the manufacture of primary aluminum generates both CO2 and per fluorocarbons (PFCs). High raw material input cost and scarcity of non renewable raw materials are a threat to the industry.( e.g.: Coal, limestone etc) Threat of Substitutes Plastics and composites pose a threat to Indian steel in one of its biggest markets automotive manufacture.

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The

SWOT Analysis ( Industry)

Weakness
    Endemic Deficiencies Systemic Deficiencies High Cost of Capital Low Labor Productivity

Strengths  Availability of iron ore

 Availability of labor at low  wage rates

 High Cost of Basic Inputs and Services

Opportunities    Unexplored rural market Other sectors Export penetration

Threats   Slow Industry Growth Technological Change

 Price Sensitivity and Demand Volatility

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FUTURE STRATERGIES:


The steel demand is strong with over 6% growth year on year over the last seven years unseen in the last several decades. The Company has co-created a shared Vision with its employees of becoming a global benchmark in Value Creation and Corporate Citizenship. Company has set goals for2012 in terms of Returns on Invested Capital, Safety, Carbon dioxide emissions and of becoming the employer of choice in the industry. The integration with Corus is proceeding smoothly and is yielding better than the predicted results. Greenfield projects in India are progressing, though somewhat slower than planned. Companys effort to enhance their raw material security has yielded positive results in Ivory Coast for iron ore, in Mozambique for coal and in Oman for limestone.
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The Group is expanding its capacity in India through the expansion of its operations in Jamshedpur to 10 million tons per annum and through the construction of a 6 million tons per annum Greenfield site in Orissa. Other Greenfield opportunities in India and across Asia are being assessed. The Group is also looking at further integration upstream in raw materials with an ambition to achieve 100%selfsufficiency in India and around 50% self-sufficiency in Europe over time. It has a goal to reduce its CO2 footprint by at least20% by 2020 compared to 1990. To improve its processes, priority is given to energy conservation schemes; in technology break-through such as Ultra Low Carbon Steel making and in other innovative projects where the Group has proprietary technology.
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Thank You
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