A STUDY OF THE STEEL INDUSTRY WITH SPECIAL REFERENCE TO TATA STEEL Course Details Course Semester Course Code

: : : Industry Project VI MGT/IP1/324070

Submitted by Name : Noopur Enroll No. : CUJ/I/2009/MBA/19

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DECLARATION
I Noopur hereby declare that this Industry project titled A STUDY OF THE STEEL INDUSTRY INDUSTRYWITH SPECIAL REFERENCE TO TATA STEEL is a bona fide work out by me. I state that no portion of this project report is published or submitted to any other organization. This study is the work of my own, for the fulfillment of my Semester VI Industry project. I hereby acknowledge that the information is genuine to the best of my knowledge and has been collected from reliable sources, the Internet, and the annual reports and corporate sustainability reports of the TATA STEEL.

Noopur CUJ/01/2009/MBA/19 Central University of Jharkhand Brambe, Ranchi

Certificate of Guide

This is to certify that Miss Noopur, Enroll No: CUJ/01/2009/MBA/19,

student of

Semester VI of the IMBA Program has undertaken the project titled A STUDY OF THE STEEL INDUSTRY INDUSTRYWITH SPECIAL REFERENCE TO TATA STEEL under my guidance. No portion of this project report is published or submitted to any other University or organization. This study was done for the fulfillment of the requirements of Industry Project during the Semester VI of the IMBA Program. The information in the report is genuine to the best of my knowledge and has been collected been collected from reliable sources, the Internet, and the annual reports and corporate sustainability reports of the Tata STEEL. The analysis and compilation was the original work of the student based on secondary data. She has completed his project satisfactorily. This certificate is being issued for academic purpose.

DR. TAPAS GHOSAL HEAD Centre Administration for Business

Acknowledgement
There are times when one feels a sense of accomplishment combined with a sense of gratitude. Writing the acknowledgement page in this project is one among them. I would like to thank Prof. Tapas Ghoshal (Dean, School of Management Sciences) who provided us a golden chance for working on any industry of my choice and. He was a constant help throughout the project and his guidance was a key reason for the success of this project. . I am also very grateful to all the faculty members whose constant motivation and support has helped me to complete this project. Last but not the least I thank all my team members whose constant hard work and brainstorming sessions has led to the successful completion of this project work. My project has become a reality only because of cooperation of these among many other people who had helped me in successfully completing this project.

Noopur CUJ/01/2009/MBA/19 Central University of Jharkhand

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Brambe, Ranchi

Table of contents
S.No. 1. 2. Topic Executive Summary Overview Of Steel Industry 3. Introduction Growth Of Indian Steel Industry Division Of Indian Steel Demand And Supply Market Analysis Mergers/Acquisitions Subsidies and Competitiveness SWOT Drawbacks Growth Parameters Future Projections Summary 9 10 12 13 14 14 15 16 17 18 19 20 Page No. 7

Profile Of Tata Steel Introduction Company History Capacity Expansion Acquisition Operations 22 23 24 25 26

4. 5. 6. 7.

Vision/Mission Policies Profile Of Founders Board Of Directors Key Enterprise Process Strategic Business Units Joint Ventures, Subsidiaries and Associates

27 28 32 34 37 37 39 45 50 54

SWOT Analysis Environmental Analysis Customer, Competitor and Product Analysis Marketing Strategy And Implementation BCG Matrix Porters 5 Forces Model

59 60 63 73 77 78 79

8. 9. 10. 11. 12.

Financial Analysis Corporate Social Responsibility Future Outlook Conclusion and Findings Bibliography

EXECUTIVE SUMMARY
The Indian steel industry is more than 100 years old now. The first steel ingot was rolled on 16th February 1912 - a momentous day in the history of industrial India. Steel is crucial to the development of any modern economy and is considered to be the backbone of the human civilization. The level of per capita consumption of steel is treated as one of the important indicators of socio-economic development and living standard of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development India is the 7th largest steel producer in the world, employing over 1/2 million people directly with a cumulative capital investment of around Rs.1 lakh crore. It is a core sector essential for economic and social development of the country and crucial for its defense. The Indian iron and steel industry contributes about Rs.8,000 crore to the national exchequer in the form of excise and custom duties, apart from earning foreign exchange of approximately Rs. 3,000 crore through exports. Consumption of finished steel grew by 5.9 % and increased to 24.9 million tones. steel consumption is likely to increase at a rapid pace in future due to large investments planned in infrastructure development, increase urbanization and growth in key steel sectors i.e. automobile, construction and capital goods. The Indian steel industry has emerged as one of the core sectors in the Indian economy with a very significant impact on economic growth. India with its abundant availability of high grade iron ore, the requisite technical base and cheap skilled labor is thus well placed for the development of steel industry and to provide a strong manufacturing base for the metallurgical industries. The deregulated Indian steel industry is performing at its peak level in almost all spheres. The total production of finished steel from April 2004 to March 2005 has been estimated to be about 383.25 lakh tones as against the production of 369.57 lakh tones during the same period last year showing an increase of 3.7 %. The most spectacular achievement has, however, been recorded in export performance. Steel has so far proved to be the single key factor responsible for industrial production and thereby, for economic growth. And it is growing from strength to strength with newer developments- both within steel making practice as well as engineering developments,
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which ask for more usage of steel. So much so, that economic development has become almost synonymous with steel.

OVERVIEW OF STEEL INDUSTRY

INTRODUCTION

Steel is crucial to the development of any modern economy and is considered to be the backbone of human civilisation. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flows and income generation.

Stages in Global Production of Steel

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Steel industry reforms particularly in 1991 and 1992 have led to strong and sustainable growth in Indias steel industry. Since its independence, India has experienced steady growth in the steel industry, thanks in part to the successive governments that have supported the industry and pushed for its robust development.

40 35 30 25 20 15 12.02 10 5 0 1.1 1.1 1.62 5.05 6.75 9.36 3.23 14.3 26.2 24.2 36.5

1981

1991

2001

2012

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The graph indicating an upward movement which shows the rising demand for Steel in the following years.

OWNERSHIP OF INDIAN STEEL INDUSTRY

PUBLIC SAIL VISAKHAPATNAM STEEL PLANT FERRO SCRAP NIGAM LIMITED BIRD GROUP OF COMPANIES SPONGE IRON INDIA LIMITED MECON LIMITED BHARAT REFRACTORIES LIMITED

PRIVATE TATA-CORUS ESSAR ISPAT JSW STEEL LIMITED MUKAND LIMITED

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 Indian steel industry is poised for rapid growth. Indias share in world production of crude steel increased from 1.5% in 1981 to around 7.3% in 2008. The private sector is considered engine of growth in the steel industry and technological changes and modernization are taking place in both the public and the private sector integrated steel plants in India.

DEMAND OF STEEL
Driven by a booming economy and concomitant demand levels, demand of steel has grown by 12.5 per cent during the last three years, well above the 6.9 percent envisaged in the National Steel Policy. Demand of Steel amounted to 53.10 mt in 2009-10 compared to 49.50 mt in 2007-08, recording a growth rate of 7.3 per cent, which is higher than the world average.

SUPPLY OF STEEL
India is the worlds fifth largest steel producer and its share is 3% plus in global steel output which is still very low. China, the worlds biggest steelmaker, produces nearly ten times as much as India. Over the past ten years Indias crude steel output rose nearly 7%per year to 55.3 million tons , while global crude steel output increased by 4% .

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DEMAND SUPPLY MISMATCH

India is one of the worlds top ten steelmakers its domestic output is insufficient to meet the demand in all segments. Consumption of steel is very fast and as a consequence of the prospective dynamic economic growth.

Secondly, there is demand for high-quality products which India will not be able to supply in sufficient quantities for the foreseeable future.

MARKET ANALYSIS
Concentration ratio of an industry is an indicator of the relative size of firms in relation to the industry as a whole. The 4 firm concentration ratio of the Iron and Steel Industry is 71%. Both homogenous product or product differentiation are possible There is a price war and price rigidity Price output decisions are very difficult and indeterminate. This implies that there is oligopoly in the industry as it is dominated by few major players.

MERGERS & ACQUISITIONS

Some important mergers and acquisition Arcelor - Mittal

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o 32.2bn$ deal o Mittal pips Severstal Tata-Corus o 11.3bn$ deal o Tatas pip CSN

SUBSIDIES AND ISSUES OF COMPETITIVENESS

The income-tax benefits-related export activities are incorporated in sections 80HHC, 10A and 10B of the Income Tax Act. The reserve bank of India has accordingly issued directions to commercial Banks to provide export credit both at pre- and postshipment stages. India also administers a number of duty drawback schemes that allow for the remission or drawback of import charges levied on inputs that are consumed in the production of an exported product. Schemes such as duty Entitlement pass book Scheme (DEPB) and Duty free Replenishment certificate (DFRC) fall under this category. The income-tax benefits-related export activities are incorporated in sections 80HHC, 10A and 10B of the Income Tax Act. The reserve bank of India has accordingly issued directions to commercial Banks to provide export credit both at pre- and postshipment stages.
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 India also administers a number of duty drawback schemes that allow for the remission or drawback of import charges levied on inputs that are consumed in the production of an exported product. Schemes such as duty Entitlement pass book Scheme (DEPB) and Duty free Replenishment certificate (DFRC) fall under this category.

SWOT ANALYSIS

SWOT Analysis of the Indian steel Industry:-

Strengths 1. Availability of iron ore and coal 2. Low labour wage rates 3. Abundance of quality manpower 4. Mature production base

Weaknesses 1. Unscientific mining 2. Coking coal import dependence 3. Low R&D investment 4. Inadequate infrastructure

Opportunities

Threats

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1. Unexplored rural market 2. Growing domestic demand 3. Exports 4. Consolidation

1. China becoming net exporter 2. Protectionism in the West 3. Dumping by competitors 4. Global economic slowdown

FACTORS HOLDING BACK THE INDIAN STEEL INDUSTRY

Energy supply Problems procuring raw material inputs OTHERS

4% ISPAT system Inefficient transport

Recent financial crisis and Indian Steel Industry

12%

SAIL 38% JSW 13%

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ESSAR 15%

TATA STEEL 18%

PLAYERS IN INDIAN STEEL

INDIAN STEEL INDUSTRY A BRIGHT FUTURE

RESOURCES

Abundant Iron Ore reserves Strong Managerial skills in Iron and Steel making Large pool of skilled Man-power Established steel players with strong skills in steel making

OPPORTUNITIES

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 High economic growth driven increasingly by industry Faster Urbanization Increased Fixed Asset Building Automobiles and component industry growth

POLICY

Pro-active stance of Govt. Encouragement for overseas investments

Growth in key sectors will drive the steel demand

Apparent Steel consumption of countries

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Key Sectors driving growth:Infrastructure development. Housing and urban development High degree of urbanizations High demand in the auto sector Capacity building in steel making These sectors in India are growing at an increasing rate.

IN SUMMARY..

Indian steel industry exudes optimism but crisis should get soon as possible.

over as

Investment in infrastructure is crucial to step up demand for steel. Supply may have to be rationalized in line with the demand (Dom + exports Integrated Mills would hold the key in future growth of Indian Steel supplies. New technologies to use indigenous natural resources would have to be developed

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Steel Production
150 125

110

100 75 50

70 50 29 31 34 36

25 0

2000-01

2001-02

2002-03

2003-04
Year

2006-07

2011-12

2020

Thus it is being predicted that the Indian steel would double its Steel Production in the coming years.

PROFILE OF
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TATA STEEL

Tata Steel moves into its next target to become the worlds second largest steel company by 2012 with the help of its most expensive between worth $12.9 billions on Corus groups. BUSINESS STANDRAD

INTRODUCTION

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Tata Steel (BSE: 500470), formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's sixth largest steel company, with an annual crude steel capacity of 31 million tones. It is the largest private sector steel company in India in terms of domestic production. Ranked 258th on Fortune Global 500, it is based in 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 crore and net profit of over Rs 12,350 crore 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. The Jamshedpur plant contains the DCS supplied by Honeywell .The registered office of Tata Steel is in Mumbai. 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 2007).

COMPANY HISTORY
Tata Iron & Steel Company Ltd. (TISCO) is the iron and steel production company associated with the Tata group of some 80 different industrial and other business enterprises in India, founded by members of the Tata family. TISCO operates as India's largest integrated steel works in the private sector with a market share of nearly 13 percent and is the second largest steel company in the entire industry.

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Its products and services include hot and cold rolled coils and sheets, tubes, construction bars, forging quality steel, rods, structural, strips and bearings, steel plant and material handling equipment, Ferro alloys and other minerals, software for process controls, and cargo handling services. Through its subsidiaries, TISCO also offers tinplate, wires, rolls, refractorys, and project management services. Tata's Early Beginnings in the 1800s Jamsetji Nusserwanji Tata was born into a well-to-do family of Bombay Parsees in 1839. Tata Steel was established by Indian Parse businessman Jamsetji Nusserwanji Tata in 1907 (he died in 1904, before the project was completed). Tata Steel introduced an 8-hour work day as early as in 1912 when only a 12-hour work day was the legal requirement in Britain. It introduced leave-with-pay in 1920, a practice that became legally binding upon employers in India only in 1945. Similarly, Tata Steel started a Provident Fund for its employees as early as in 1920, which became a law for all employers under the Provident Fund Act only in 1952. Tata Steel's furnaces have never been disrupted on account of a labor strike and this is an enviable record.

Capacity Expansion

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Tata Steel has set an ambitious target to achieve a capacity of 100 million tone by 2015. Former Managing Director B. Muthuraman stated that of the 100 million tone, Tata Steel has lined up a series of Greenfield projects in India and outside which includes1. 6 million tone plant in Orissa (India) 2. 12 million tone in Jharkhand (India) 3. 5 million tone in Chhattisgarh (India) 4. 3-million tone plant in Iran 5. 2.4-million tone plant in Bangladesh 6. 5 million tone capacity expansion at Jamshedpur (India)
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4.5 million tone plant in Vietnam (feasibility studies underway)

Acquisitions
Some of the major acquisitions in rcent years.

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Corus is Europes second largest steel producer. With main steelmaking operations in the UK and the Netherlands, Corus supplies steel and related services to the construction, automotive, packaging, mechanical engineering and other markets worldwide. (www.corusgroup.com) NatSteel Holdings is headquartered in Singapore and is a leading supplier of premium steel products for the construction industry. It became a 100% subsidiary of Tata Steel in February 2004. NSH produces about 2 MT of steel products annually across its regional operations. (www.natsteel.com.sg)

Headquartered in Bangkok, Tata Steel Thailand is a major steel producer in Thailand and is the largest producer of long steel products with a manufacturing capacity of 1.7 mtpa. ( www.tatasteelthailand.com)

OPERATIONS OF TATA STEEL

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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 line of business is as follows:-

VISION AND MISSION

Vision

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We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship We make the difference through:-

Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting with pace, pride and passion. Our offer, by becoming the supplier of choice, delivering premium products and services, and creating value for our customers.
Our innovative approach, by developing leading edge solutions in

technology, processes and products. Mission Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen Indias industrial base through the effective utilization of staff and materials.

Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, 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.

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POLICY OF TATA STEEL

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. Corporate social responsibility Tata Steel believes that the primary purpose of a business is to improve the quality of life of people. Tata Steel shall conduct its business ever mindful of its social accountability, respecting applicable laws and with regard for human dignity.

Tata Steel shall positively impact and influence its partners in fostering a sense of social commitment for their stakeholders.

Date:1stOctober2011 HM Nerurkar ( Managing Director)

Quality policy
Consistent with the group purpose, Tata Steel constantly strives to improve the quality of life of the communities it serves through excellence in all facets of its activities. We are committed to create value for all our customers and key stakeholders by continually standardizing, improving and innovating our offerings, systems and processes involving all our employees.

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 This policy shall form the basis of establishing and reviewing the Business Objectives and Strategies and shall be communicated across the organization. The policy will be reviewed to align with business direction and to comply with all the requirements of TQM Principles.

Date: 1st October 2011

HM Nerurkar ( Managing Director )

Human Resource Policy

Tata Steel is an equal opportunity employer. Tata Steel recognizes that its people are the primary source of its competitiveness. It will pursue management practices designed to enrich the quality of life of its employees, develop their potential and maximize their productivity. It will aim at ensuring transparency, fairness and equality in all its dealings with its employees. Tata Steel shall strive continuously to foster a climate of openness, mutual trust and teamwork. In the process Tata Steel shall strive to be the employer of choice by attracting the best available talent and ensuring a cosmopolitan workforce. Date: 1st October 2011

HM Nerurkar ( Managing Director)

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Safety Policy Tata Steels safety and occupational responsibilities are driven by our commitment to ensure zero harm to people we work with and society at large and are integral to the way we do business. Safety Principles
Safety is a line management responsibility. All injuries can be prevented. Felt concern and care for the employee on 24 hours safety shall be demonstrated by Leaders. Employees shall be trained to work safely. Working safely shall be condition of employment. Every job shall be assessed for the risk involved and shall be carried out as per authorized procedures/checklist/necessary work permit and using necessary work permit and using necessary personal protective equipment. We are committed to continual improvement in our S&OH performance. We shall set objective-targets, develop, implement and maintain management standards and systems, and go beyond compliance of the relevant industry standards, legal and other requirements.

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Date: 1st October 2011

HM Nerurkar ( Managing Director) .

Environment policy Well shall develop & rehabilitate abandoned sites through a forestation and landscaping and shall protect and preserve the bio-diversity in the areas of our operations. We shall enhance awareness, skill and competence of our employees and contractors so as to enable them to demonstrate their involvement, responsibility and accountability for sound environmental performance. We are committed to continual improvement in our environmental performance. We shall set objectives, targets, develop, implement and maintain management standards and system, and go beyond compliance of the relevant industry standards legal and other requirements. We will truly succeed when we sustain our environmental achievement and are valued by the communities in which we work.

Date: 1st October 2011

HM Nerurkar ( Managing Director )

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PROFILE PROFILE OF OF FOUNDERS FOUNDERS

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Jamsetji Nusserji Tata(1839-1904) ranks among the greatest

visionaries enterprises of All time. Gifted with the most extraordinary imagination and Prescience, he laid the foundations of Indian industry, contributed to Its consolidation, and became a key figure in Indias industrial renaissance.

Sir Dorabji Tata (1859-1933)

J N Tata had exhorted to his sons to pursue and develop his lifes work; His elder son, Dorabji Tata carried out the bequest with scrupulous zeal, and distinction.

Jehangir Ratanji Dadabhai Tata (1904-1993)

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JRD Tata has been one of the greatest builders and personalities of modern India in the twentieth century. He assumed Chairmanship of Tata Sons Limited at the young age of 34, but his charismatic, disciplined and forward-looking leadership over the next 50 years and more, led the Tata Group to new heights of modernization. achievement, expansion and

Board of Director

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Senior Management People

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Ratan Naval Tata

Ratan Naval Tata, the chairman of the Tata Group, India's most respected conglomerate. He was born in Mumbai on December 28, 1937. Ratan Tata holds a degree in Architecture and Structural Engineering from Cornell University. He has also done the Advanced Management Program from Harvard Business School in 1974-1975. He is also chairman of other Tata companies of other Tata companies, including Tata Motors, Tata Consultancy Services, Tata Power, Tata Tea, Tata Chemicals, Indian hotels and Tata Teleservices.
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Mr. Tata joined Tata Steel in December 1962. After serving in various other Tata companies, he was appointed director-in-charge of National Radio & Electronics Company Limited (NELCO) in 1971. In 1981, he was named chairman of Tata Industries, the second Tata promoter company. Mr. Tata is also the chairman of two of the largest philanthropic trust in the private sector in India. Mr. Tata is associated with various organizations in India and abroad. He is chairman of the Government of Indians Investment Commission and a member of the prime ministers Council on Trade and industry, the National Hydrogen Energy Board and the National Manufacturing Competitiveness Council. The Government of India honored Mr. Tata with its second highest civilian award, the Padma Vibhushan, in 2008.Earlier, in 2000; he had been awarded the Padma Bhushan. He has also been conferred an honorary doctorate in Business administration by the Ohio State University, an honorary doctorate in technology by the Asian Institute of Technology, Bangkok, an honorary doctorate in science by the university of Warwick, and an honorary fellowship by the London School of Economics.

KEY ENTERPRISE PROCESS

Leadership Strategic planning and risk management

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 Market Development Investment Management Human Resource Improvement & change management Order Generation Operation and fulfillment Supply Management Research & Development Information Management

Strategic Business Units of Tata Steel

A part from main steel division, Tata Steel operation is grouped under the following strategic Business Units: Bearing division: manufactures ball bearing, double row self-aligning bearing, magneto, bearing, clutch release bearing and tapered roller bearing for two wheelers, fans, water, and pumps.

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Ferro alloys and Minerals Division: operates chrome mines and has units for making Ferro chrome and Ferro- manganese. It is one of the largest players in the global Ferro chrome market.

Agrico Division: Tata Agrico is the first organized manufacturer in the India of hand tools and implements for application in agriculture.

Tube Division: The biggest steel tube manufacturer with the largest market share in India, it aspires to strengthen it market presences by expending and modernizing its commercial and precision tube manufacturing capacity.

Wire Division:

A pioneer in the manufacture of steel wire in India, it

produces coated and uncoated wires, branded as Tata wiring. The division also operates a wholly owned subsidiary in Sri Lanka.

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Joint venture, Associates and Subsidiaries

Tata steel has numerous joint ventures and subsidiaries. Among them are:

Jamshedpur injection powder ltd. JAMIPOL manufactures carbide de-sulphurising compounds which are used for de-sulphurising hot metal for the production of low-sulphur, high-quality steel. Website:- www.jamipol.com Jamshedpur utility and service company Re-engineered out of Tata Steel's town services, JUSCO is a wholly owned subsidiary of Tata Steel and is the country's first enterprise that provides municipal and civic services for townships. JUSCO is the only EMS 14001 civic services provider in the country. Website:- www.juscoltd.com

Lanka Special Steel Ltd. The only unit in Sri Lanka manufacturing galvanized wires.

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 Sila Eastern Company Limited

Established to develop limestone mines in Thailand, mainly for the captive use of Tata Steel

Tata Steel KZN Proposes to set up high carbon ferrochrome plant in South Africa. The plant is slated to be commissioned by October 2007 with an annual production capacity of 135,000 tons .

Tata Metallics Limited

Tata Metallics is recognized as Indias number one pig iron manufacturing and selling company. Promoted by Tata Steel Limited and assisted by The West Bengal Industrial Tata Pigments Limited

TPL's range of products includes oxides of iron, dry cement paint, exterior emulsion paint and distemper. Its products are used in paints, emulsion, cement floors, plastic etc

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 Tata Refractorys Limited (TRL)

It produces High Alumina, Basic, Dolomite, Silica and Monolithic Refractorys and offers design, procurement and re-lining applications services. It is one of the few companies worldwide to produce silica refractory for coke

ovens and the glass industry. The Company has a basic bricks manufacturing unit in China. Tata Steel Processing and Distribution Limited (TSPDL)

Tata Steel Processing and Distribution Limited is wholly owned subsidiary of Tata Steel. With 8 large processing units, 17 sales locations and a host of partners like external processing agencies, suppliers, retailers and other stakeholders, today TSPDL is Indias largest steel service organization

Tata Sponge Iron Limited (TSIL)

TSIL is the first Indian sponge iron plant based on Tata Steel's Direct Reduction Technology. Its major product lines are sponge iron lumps and fines.

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 Tayo Rolls Limited

India's leading roll manufacturer and supplier, the company produces rolls which find application in integrated steel plants, power plants, the paper, textile and food processing sectors, and the government mint

Tinplate Company of India Limited (TCIL)

With a market share of over 35%, it is the industry leader in India. It has the capability to supply all tinning line products including electrolytic tinplate / tin-free steel and cold-rolled products.

TRF Limited

TRF, one of India's leading companies in the business of design, manufacture, supply, installation and commissioning of engineered-to-order equipment and systems in the areas of bulk material handling, processing, reclaiming and blending.

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Joint Ventures
A JV between Larsen & Toubro Ltd. and Tata Steel Ltd., the company will build a deep draft (18 meters) all weather port on the east coast of India. The port will handle 80 million tons per annum of cargo. www.dhamraport.com

mjunction services limited

mjunction, operating at the cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is India's largest eCommerce company and the world's largest e-marketplace for steel. mjunction offers a wide range of selling, sourcing and knowledge services that empower businesses with greater process efficiencies
Tata BlueScope Steel Limited

A joint venture with BlueScope Steel Limited, Australia, Tata BlueScope Steel Limited offers a comprehensive range of branded steel products for building and construction applications. The Company is constructing a state-of-the-art metallic coating and painting facility at Jamshedpur

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Some of the major sectors for the Steel requirement are:

Fuelling Economic Growth

Huge Demand potential Over 1 bn. Population. Booming middle class. 100mn. population earning more than US$ 3000 per annum Increasing consumerism Urbanization on fast track Housing demand boom Strong Banking & Judicial System Large English speaking population 150 mn, powering Services sector Skilled labor and managerial work force Growing IT sector

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 Large pool of skilled Technical work force

SWOT ANALYSIS

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SWOT analysis is done for a company to find out its overall Strengths, Weaknesses, threats and opportunities leading to gauging to gauging the competitive potential of the company. The SWOT analysis enables a company to recognize its market standing and adopt strategies accordingly.

STRENGHTS Tata Steel Indian operations are self sufficient in the case of its major raw material iron ore through its captive mines advanced. Very advanced research and development wing which is carrying out researches and experiments in the areas of raw materials, blast furnace productivity ,steel making, product development, process improvement etc. Tata had a strong retail and distribution network in India and south east 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 tons per annum by FY 2011 .The first phase of reaching the crude steel capacity of 6.8 million tons per annum ,Brown field projects. The company has in place adequate internal control systems and procedure commensurate with the size and nature of its business. The effectiveness of the internal controls is continuously monitored by the Corporate Audit Division of the company.

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 Tata Steel has been on a path of accelerated growth with foray into several geographies and markets through aggressive mergers and acquisitions. Tata Steel now is in the process of implementing a structured approach in risk management called Enterprise Risk Management (ERM). Tata Steel addresses the risk of cyclicality of the Steel industry by maintaining rich product mix and higher value added products whose vitality is lower .Moreover the industry itself has been undergoing some structural changes with consolidations. These changes are expected to bring in greater stability to prices. Tata Steel with its modernization plans has ensured that it deploys the best technologies to ensure quality, cost efficiency and environmentfriendly processes. Through acquisition of Corus and with new Greenfield ventures Tata Steel has ensured that it has diversified the concentration risk in single technology of Iron and Steel making.

WEAKNESSES Endemic deficiencies, these are inherent in the quality and availability of some of the essential raw materials available in India, eg, high ash content. India is deficient in raw materials required by the steel industry .Iron ore deposits are finite and there are problems in mining sufficient amounts of it.
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 Raw materials for steel industry are depleting fast which are non renewable, so 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 to hamper the growth of Indian steel industry. Low Labor Productivity, in India the advantages of cheap labor get offset by low labor productivity. High cost of basic inputs and services high administered price of essential inputs like electricity puts in Indian steel industry in a disadvantage.

OPPORUNITIES 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 multifaceted 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.
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 It is estimated that world steel consumption will double in next 25 years. Quality improvement of Indian steel combined with its low cost advantages will definitely help in substantial gain in export market. Corus acquisition brings in a tremendous technological advantage by access to best practices in global steel industry. Booming infrastructure has opened up high demand for steel worldwide.

THREATS In the developed world, industries have been facing rising environmental costs due to the increased concerns in global warming. It is recognized that the steel and aluminum industries are significant contributors to manmade green house gas emissions. High raw material input cost and scarcity of nonrenewable raw materials are a threat to the industry. Threat of substitutes; plastics and composites pose a threat to Indian steel is one of its biggest markets automotive manufacture.

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ENVIRONMENTAL ANALYSIS

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ENVIRONMENTAL ANALYSIS
We can also call it as SLEPT ANALYSIS of TATA STEEL

ECONOMIC Tata Steel became 6 Th biggest steel producers in the world after acquiring Corus, but the cost of the integration goes much more beyond the financial aspect. There are other factors which will add to overall integration costs such as: - Cross Cultural integration - Employer-employee relationship Steel production processes are energy dependant and price movements in the energy market would accordingly affect Tata Steels bottom line. The steel industry is highly cyclical receptive to general economic conditions including the automotive, appliance, and energy industries.If these industries face a downturn Tata Steel would definitely take a hit.

POLITICAL
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 Tata invested a huge amount in politically unstable countries like Bangladesh, Iran, Thailand, and Mozambique. The entire process of setting plan is getting delayed in gas supply in Bangladesh; Iron ore mine lease is escalating the project cost in Iran. Increased infrastructure spending by the Government of India and development of roads could generate significant savings in freight and transportation cost making steel companies globally competitive.

SOCIAL Tata Steel was awarded the Golden Peacock Award for Corporate Social Responsibility for the year 2009. From policies on corporate accountability, drugs and alcohol and HIV prevention, to a Code of Conduct extends to its share holders, ethics and responsibility are interwoven in the daily course. Hundreds of people born with cleft lips or cleft palates are operated on free through a project operation muskan. Tata being socially responsible in the deployment of companys mobile medical unit and treating more than 1456660 urban slum and remote rural areas.

LEGAL Tata Steel requires huge chunk of land. Sudden spree of big corporate houses for grabbing the land makes the situation even more competitive.
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 Police firing in Kalinganagar and sudden death of protestors makes the situation more complex. Unstable Jharkhand government and the local tribals at an increase is worsening the situation. Representatives of environmental activitist group Greenpeace stormed into the AGM in the guise of share holders of Tata Steel got on the podium and alleged that the proposed port at dharma on the Orissa coast will kill the migratory Olive Ridley turtles.

TECHNOLOGICAL

A technological analysis is based on the companys approach towards the development and use of the technology. This strategy plays an important key role in overall developing a competitive strategy and hence needs to be consistent with the other value activities of the organization. So in the same way Tata Steel 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. metal.junction.com, a 50:50 joint venture of Tata Steel and Steel Authority of India Limited. This is a dotcom story with a difference. Tata Steel made a transformational change through process innovation www.metaljunction.com, which accounts for about 14 million tones of saleable steel annually.

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CUSTOMERS, COMPETITORS AND PRODUCTS

COMPETITORS
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COMPETITORS OF TATA STEEL

Name Tata Steel SAIL JSW Steel Visa Steel

Last Price 465.50 99.40 687.85 53.05

Market Cap.
(Rs. cr.)

45,210.03 41,057.42 15,347.12 583.55

Sales Turnover 29,073.50 42,720.19 23,368.86 1,332.88

Net Profit 6,865.69 4,881.25 2,010.67 51.38

Total Assets 76,745.77 57,234.96 29,176.61 1,761.41

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Balance Sheet Tata Steel

------------------- in Rs. Cr. ------------------SAIL JSW Steel Visa Steel Steel Exchange

Mar '11

Mar '11

Mar '11

Mar '11

Mar '11

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 959.41 959.41 178.20 0.00 47,307.02 0.00 48,444.63 2,009.20 26,291.94 28,301.14 76,745.77 Tata Steel 4,130.40 4,130.40 0.00 0.00 32,939.07 0.00 37,069.47 11,813.91 8,351.58 20,165.49 57,234.96 SAIL 563.18 284.15 529.38 279.03 16,132.71 0.00 17,225.27 7,675.82 4,275.52 11,951.34 29,176.61 JSW Steel 110.00 110.00 0.00 0.00 243.29 0.00 353.29 1,373.24 34.88 1,408.12 1,761.41 Visa Steel 43.40 42.85 38.15 0.55 118.06 0.00 199.61 333.38 5.62 339.00 538.61 Steel Exchange

Mar '11

Mar '11

Mar '11

Mar '11

Mar '11

Application Of Funds Gross Block Less: Acumen. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities 22,846.26 11,041.16 11,805.10 6,969.38 46,564.94 3,953.76 428.03 512.76 4,894.55 16,814.04 3,628.78 25,337.37 0.00 10,383.04 38,260.60 23,180.54 15,080.06 22,228.43 684.14 11,302.79 4,161.30 143.99 15,608.08 6,175.81 17,334.87 39,118.76 0.00 13,994.33 27,407.35 6,305.20 21,102.15 6,169.05 4,098.81 4,138.41 838.65 136.26 5,113.32 3,324.43 1,750.62 10,188.37 0.00 11,984.37 931.99 161.08 770.91 1,390.54 61.04 395.68 47.99 2.01 445.68 180.02 86.50 712.20 0.00 1,159.16 211.41 28.74 182.67 116.36 16.69 208.51 169.88 6.46 384.85 131.34 20.29 536.48 0.00 308.37

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MAJOR LOCAL STEEL PLAYERS

CUSTOMERS OF TATA STEEL

Tata steel serves Customers in these market sectors globally;

Automotive Construction Consumer goods Engineering Packaging Lifting and Excavation Energy and Power Aerospace Shipbuilding Rail

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Defense and Security

TATA STEEL PRODUCTS

MARKETING STRATEGY AND IMPLEMENTATIO N

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MARKETING STRATEGY AND IMPLEMENTATION

BCG PRODUCT PORTFOLIO MATRIX

Tata Steel has stable market growth but has a relatively high market share so it comes under cash cow. This implies that it is generating enough revenue that can be pooled into stars and question marks.

HIGH

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STAR Automobile, Tea , Chemicals

QUESTION MARK Technology Consultancy Engineering Services Composites

CASH COWS Power, Steel, Oil And Gas LOW HIGH

DOGS Information Systems And Communication LOW

The relative market share and the relative market growth of TATA STEEL.

PORTERS FIVE FORCES MODEL

THREAT OF NEW ENTRANTS

BARGAINING POWER OF BUYERS

RIVALRY AMONG EXISTING COMPETITORS

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THREAT OF SUBSTITUTE

BARGAINING POWER OF SUPPLIERS

ENTRY BARRIERS: High

Capital Requirement: Steel industry is a capital intensive business. Tata Steel has made sufficient efforts in this regard. Economies of Scale: Tata Steel being an integrated steel plant has its own mines for key raw materials such as iron ore,coal and this protects them from the potential threat for new entrants to a significant extent. Government Policy: the govt has favorable policy for steel manufacturers and Tata Steel being a century old company under the flagship of Tata Sons famous for its Corporate Social Responsibility enjoys a respectable position in front of the Indian Govt. Product Differentiation: Steel doesnt fall in luxury or specialty good thus does not have price difference. Steel does enjoys a premium for its products because of its quality and its brand value. Currently two majors Steel players Arcelor-Mittal and POSCO are the biggest threat for Tata Steel.

COMPETITION: High
The Steel industry is truly global in terms of competition with large producing countries like China significantly influencing global prices through aggressive exports. Steel being a commodity, its branding is not common as there is little differentiation between competing products.

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 The four major domestic steel rivals SAIL, JSW, ISPAT And ESSAR STEEL. Rest are all smallish mills which together accounts for 30% of the total market share.

BARGAINING POWER OF SUPPLIERS: High

The bargaining power of suppliers is low as Tata Steel plant is fully integrated. Since domestic raw material sources are insufficient to supply the Indian steel industry, a considerable amount of raw materials has to be imported. Tata Steel in order to safeguard itself from the high bargaining power, Tata Steel has forayed itself into the concept of BACKWARD INTEGRATION. It is also evaluating several other mineral projects in Australia and Brazil. To achieve coal security by way of imports, the company has formed a joint venture with an Australian company for producing coal in Mozambique. For limestone Tata Steel has entered into a joint venture with the AL Bahja Group of Oman.

THREATS OF SUBSTITUTES: LOW

Plastics and Composites pose a threat to Indian steel is one of its biggest marketsautomotive manufacture. Steel has already been replaced in some large volume applications, Railway sleepers(RCC sleepers),large diameter water pipes(RCC pipes)etc.The substitution is more prevalent in the manufacture of automobiles and consumer goods industry.

BARGAINING POWER OF CONSUMER: MIXED

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Some of the major steel consumption sectors like automobiles, oil and gas, shipping, consumer durables and power generation enjoy high bargaining power ang get favorable deals.

FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
The principal contents of the modern approach to financial management can be said to be. How large should an enterprise be, and how fast should it grow? In what form should it hold assets? What should be the composition of its liabilities? This financial management in the modern sense of the term can be categories into three major decisions as function of finance.

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 The investment decision The finance decision The dividend policy decision

Financial analysis follows a comprehensive framework Of looking at various parameters, the ratios play a very dominant role: Current Ratio Interest Coverage Ratio Earnings Per Share Profit after paying Tax Per Share Earning Total/ Debt Net Worth Ratio

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 An indication of a company's ability to meet short-term debt obligations CURRENT RATIO= current assets/current liabilities If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations higher the ratio-more liquid the company In case of TATA Steel , CR was very high as their inventory was high.

A calculation of a company's ability to meet its interest payments on outstanding debt. Interest coverage ratio is equal to earnings before interest and taxes for a time period.

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The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability.

A financial performance ratio, calculated by dividing net income after taxes by net sales. A company's after-tax profit margin is important because it tells investors the percentage of money a company actually earns per dollar of sales.

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A valuation ratio of a company's current share price compared to its per-share earnings. In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.

This ratio shows the extent to which the company is dependent on Outside Interest bearing funds compared to shareholders funds. The ratio should ideally be less than 1 i.e. the amt of funds contributed by outside loans should be less than the shareholders funds.

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ANALYSIS OF THE CAPITAL STRUCTURE:

Seeing the trend in the change of capital structure of tata steel for the last ten years, we can say that the share of institutional (non promoters) are increasing and the holding of promoters (non institutional are decreasing. This is because the foreign money flowing in the Indian market. The cost of capital is a term used in the field of financial investment to refer to the cost of a company's funds (both debt and equity), or, from an investor's point of view "the shareholder's required return on a portfolio of all the company's existing securities. The cost of debt is relatively simple to calculate, as it is composed of the rate of interest paid. In practice, the interest-rate paid by the company can be modeled as the risk-free rate plus a risk component (risk premium), which itself incorporates a probable rate of default (and amount of recovery given default). The cost of equity is the minimum rate of return a firm must offer shareholders to compensate for waiting for their returns, and for bearing some
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risk. The return consists both of dividend and capital gains, e.g. increases in the share price. Under the Capital Asset Pricing Model Approach, the cost of equity is defined as, re = rf + (rm rf)* Where, rf = Risk free return (Obtained from 364 days Treasury bills of Government) rm = Average return of market = Risk Factor The risk factor is calculated by using the Sensex as the standard and calculating the slope of the company price with that of the Sensex. Risk free rate of return is the government security Treasury bill rate and is obtained from the site of government of India. Market risk rate is calculated from the change in the sensex price.

The obtained values are shown below:

Year Beta risk free rate (Rf) market return rate (Rm)
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2010 1.51 7.81 14.32

2009 1.71 6.74 81.03

2008 1.92 8.12 -52.44

2007 1.39 7.91 47.14

2006 1.25 7.77 46.7

cost of equity (Re)

24.2803

198.4082

-136.0128

91.8622

90.3016

Cost of Preference Shares

Preference capital, payment of dividends is not legally binding on the firm & even if the dividends are paid, it is not a charge on earnings, rather it is a distribution or appropriation of earnings to preference share holders. Cost of Preference share is not adjusted for taxes because preference dividend is paid after corporate taxes have been paid. Preference dividends do not save any taxes. Cost of Irredeemable Preference Shares The preference share may be treated as a perpetual security if it is irredeemable Thus, its cost is given by following equation:-

Kp = Dp/P0(1-f)
Where ; kp = Cost of Preference Capital d = Constant Annual Dividend Payment P0 = Expected Sales Price of Preference Shares F = Flotation Costs as a percentage of Sales Price

Redeemable Preference Share The cost of redeemable preference shares is given as follows: P0(1-f) = nt=1 Dpt/(1+kp)t + Pn/(1+kp) Where; P0 = Expected Sales Price of Preference Shares
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F = Floatation Cost a percentage of Preference Shares D = Dividends paid on Preference Shares P n = Repayment of Preference Capital Amount

A GRAPHICAL PRESENTATION OF THE SHARE CAPITAL

RESERVES AND SURPLUS AT AN INCREASING RATE

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Reservesand surplus
25000 20000 15000 10000 5000 0 2007 2008 2009 2010 Reservesand surplus

2011

Financial Data of TATA Steel:

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TATA STEEL Year

Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus

2010
887.41 36,281.34

2009
730.79 5,472.66 23,501.15

2008
730.78 5,472.52 21,097.43

2007
580.67 147.06 13,368.42

2006
553.67 9,201.63

Loan funds
Secured loans Unsecured loans Total 2,259.32 22,979.88 62,407.95 3,913.05 23,033.13 56,650.78 3,520.58 14,501.11 45,322.42 3,758.92 5,886.41 23,741.48 2,191.74 324.41 12,271.45

total debt total equity d/v e/v

Interest Rate of Interest(Rd)

25,239. 20 37168. 75 0.4044 23 0.5955 77

1,848.19 7.32

26,946. 18 29704. 6 0.4756 54 0.5243 46

1,489.50 5.53

18,021.69 27300.73 0.397633 004 0.602366 996

929.03 5.16

9,645. 33 14096. 15 0.4062 65 0.5937 35

251.25 2.60

2,516.1 5 9755.3 0.2050 41 0.7949 59

168.44 6.69

Beta risk free rate (Rf) market return rate (Rm) cost of equity (Re) Assuming Tax Rate to be 33%

1.7 7.81 14.32 18.877

1.65 6.74 81.03 129.31 85

1.44 8.12 -52.44 -79.0864

1.49 7.91 47.14 66.362 7

1.57 7.77 46.7 68.890 1

WACC

13.226 89

69.569 22

46.26565 49

40.110 91

55.684 46

CORPORATE SOCIAL RESPONSIBILITY

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A Century of Trust

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In a free enterprise, the community is not just another stake holder in the business but in fact the very purpose of its existence. - JAMSETJI TATA
At the Tata Group our purpose is to improve the quality of life of the communities we serve. We do this through leadership in sectors of national economic significance, to which the group brings a unique set of capabilities. This requires us to grow aggressively in focused area of business. Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage will be continuously enriched by formalizing the high standards of behaviors expected from employees and companies. The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance group synergy and becoming globally competitive is the route to sustained growth and long-term success.

Empowering Communities
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Inclusive Growth the touchstone of sustainability Land & Water Management Rural Livelihood Health & Sanitation Education & Skill Development Sports Infrastructure Development Advocacy Right To Information, Training of PRI members

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DISASTER RELIEF

Tata Relief Committee - has sent immediate relief in times of natural calamities 1 Million Families Long-term assistance offered - Tata Relief Committee is serving in 15 districts - 435 houses and 31 school-cum-cyclone shelter

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FUTURE OUTLOOK OF TATA STEEL

Currently the global steel industry is going through unprecedented times. The steel industry is growing at the rate of 6% for the last seven years. The iron ore and coking coal pieces are at a record high both due to insufficient capacity creation for these and the heavy consolidation of minerals companies. Oil prices and freight rates are at an all time high. The combined effect of all these have driven steel prices at a level higher than ever before. The new scenario both external due to high raw material and freight cost called for a new vision, strategies and action plans. The company has co-created a shared vision with its employees of becoming a global framework in value creation and corporate citizenship. Company has set goals for 2012 in terms of Returns on Capital Invested, 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. Continues improvement projects are being given focus in all companies sites and businesses. There is greater emphasis on safety. They have well laid out plans to reduce CO2 emissions to benchmark levels atleast down by 20% by 2020 as compared to 1999. The Tata Steel group will pursue strategic growth through capacity expansion and access to raw materials. The group is expanding its capacity in India through expansion of its operations in Jamshedpur to 10 million tones per annum and through the construction of a 6 million tones per annum Greenfield site in Orissa.Tata group will be a part of the solution and is committed to minimize the environmental impact of its operations and its products.

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CONCLUSION AND FINDINGS

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). Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian markets, with manufacturing units in 26 countries. 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. 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 Globalization is very relevant to Tata Steels growth trajectory because the steel market is increasingly becoming global. "A global market is one where a single price holds and all customers can buy that product at this price excluding the transaction and transportation costs. In the steel industry, in every region the regional prices are increasingly being set by global trends. Tata Steels Purpose: To add economic value Tata steels product Improve the quality of life for its employees and communities the company serves

BIBLIOGRAPHY
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 Journal & publications :-Available from Tata steel BD & S department. Marketing Management by Philip Kotler (Eleventh edition) Research Methodology by C R Kothari (Second edition)

Websites:
(1) http://steel.nic.in/Perfomance%20budget%20(2005-06)Englishchap2.pdf (2) http://www.ieIndia.orgpdf8989MM104.pdf (3) http://article.wn.com (4) http://steel.nic.in/ (5) http://www.tatasteel.com

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THANK YOU!!!!!

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