CERTIFICATE

This is certify that Mr/ Mrs. Vikas Pathania of Dronacharya P.G College of
Education Rait has successfully completed the project work titled “working
capital management in TATA STEEL LIMITED” in partial fulfilment of
requirement for the award of the bachelors of business administration degree
of finance in HPU.

This project is the record of authentic work carried out during the academic
year 2016-2019.

SINGNATURE: SUPERVISOR’S

DESIGNATION: NAME:

DATE:

PLACE:

1
 DECLERATION
I am Abhishek student of BBA 5th SEM, Dhronacharya PG college of education
Rait hereby declare that I have completed this project on “working capital
management in TATA STEEL LIMITED” is academic year 2019.

This information provides by me is true and original to the best of my

knowledge.

Vikas Pathania

BBA 5th sem

2
 PREFACE
The administration as a teach has pulled in consideration of the academician
and professional to an exceptionally awesome degree. Its significance has been
developing step by step on the grounds the business concerns, which have
created, are vast and complex, with many individuals cooperating.

An extremely basic piece of the administration instruction is work preparing.

The point of job training is presentation of the administration understudy in
the field that is done in test the classroom learning.

Functional preparing is thought to be a fundamental piece of all the

professional institutions and the individuals who are trying for business
management program. This venture is done in the field of promoting.

As part of administration instruction, which is accepting consideration in the

assessment of the viable preparing, is to get genuine condition touch of
business management. It is unbendingly acknowledge that the hypothesis
augments one’s speculation skylines viz. concepts of showcasing methods of
insight, yet rehearse demonstrates the cutting edge advertising and utilized as
a part of wide assortment of settings of items.

The venture works has been done under the kind consent of TECHNOCRAT. It is
attempted in Zirakpur under the direction Of Mr. Sumit Chabra, Marketing
trainer of TECHNOCRAT.

The report gives a genuine photo of the down to earth exercises done by entire
gathering within the purview. The examination territory was constrained to
Zirakpur as it were.

3
 ACKNOWLEDGEMENT
Industrial training is an integral part of any management based program and
for that purpose I had joined TECHNOCRAT, India’s premier information
ambling company.

I take the opportunity to express my gratitude to all of them who in some or

other way helped me to accomplish this challenging project on Hewlett
Packard enterprises. No amount of written expression is sufficient to show my
deepest sense of gratitude to them.

I am very thankful to external Guide, Mr. Sandeep Guleria (regional sale

manager), office frontline Division, TECHNOCRAT, and very grateful to prof.
Mr. Sumit Chabra. TECGNOCRAT Institute of management greater Zirakpur for
their everlasting support and guidance on the ground of which I have acquired
a new field of knowledge. The course structure created for this curriculum has
benefited with the inclusion of recent development in the organisation and
managerial aspects.

I express my sincere thanks to Mr. Sumit Chabra and all the employees of
TECHNOCRAT for their kind co- corporation during my summer project. I am
thankful to all the member of TECHNOCRAT, which has given me valuable
information in the part of my project.

Thanking you

Vikas pathania

4
 CONTENTS
S.NO PARTICULAR PAGE NO.

1. Introduction of Tata Steel 6-8

2. Comapany Profile 9-12

3. Company Mission & Technology 13-15

4. Review of literature 16-17

5. Research methodology 18-22

6. Data analysis of TATA STEEL Ltd. 23-28

7. Findings and Suggestions 29

8. SWOT Analysis of TATA STEEL Ltd. 30-31

9. Conclusion 32

10. Bibliography 33

5
 INTRODUCTION
Working capital management refers to the administration of all components of
working capital-cash, marketable securities, debtors and stock and creditors.
Working capital is one of the powerful measurements of the financial position.
The words of H. G. Guthmann clearly explain the importance of working
capital. “Working Capital is the life-blood and nerve centre of the business. The
goal of working capital management is to manage the firm’s current assets and
current liabilities in such a way that a satisfactory level of working capital is
maintained. In several units there is adequate working capital but the
mismanagement of working capital increases the costs and reduces the rate of
return. The efficient management of working capital minimizes the cost and can
do much more for the success of the business.
KEYWORDS: Working Capital Management, Current Assets, Current
Liabilities, Current Ratio, Quick Ratio, Profitability, Steel Industry

Steel is by far the most important, multi-functional and most adaptable of

materials. The development of mankind would have been impossible but for
steel. The backbone of developed economies was laid on the strength and
inherent uses of steel. The Role of Iron and Steel Industry in India GDP is very
important for the development of the country. In India the visionary Shri
Jamshedji Tata set up the first Iron and Steel manufacturing unit called Tata
Iron and Steel Company, at Jamshedpur in Jharkhand. Iron and steel are among
the most important components required for the infrastructure development in
the country. Tata steel Group established in 1907 as Asia's first integrated

6
private sector steel company, Tata Steel Group is among the top-ten global steel
companies with an annual crude steel capacity of over 29 million tones per
annum. It is now the world's second-most geographically-diversified steel
producer, with operations in 26 countries and a commercial presence in over 50
countries. The Tata Steel Group, with a turnover of Rs. 1, 48,614 crores in FY
14, has over 80,000 employees across five continents and is a Fortune 500
company. The Tata Steel Group’s vision is to be the world’s steel industry
benchmark in “Value Creation” and “Corporate Citizenship” through the
excellence of its people, its innovative approach and overall conduct.
Underpinning this vision is a performance culture committed to aspiration
targets, safety and social responsibility, continuous improvement, openness
and transparency.

Tata Steel, a steel manufacturing company in India, was rated amongst top 3
best steel companies in the world by World Steel Dynamics in the year 2004. It
is one of the few companies that adopts the concept of Economic Value Add
and thereby achieved an incremental EVA of Rs. 516 crores in the year 2004.
The operations of the company have also increased in terms of turnover of its
branded products by 84%. Thus, for a company having a high Net worth of Rs.
4360 crores, it is very essential to possess a safe liquidity position. It should
ensure that its money doesn’t remain blocked in the market and there is constant
flow of funds for operational, investment and financial activities. A company of
a turnover of Rs. 12070 Crores is expected to have a good management of its
Working Capital. Working Capital of a company is the difference between its
current assets and the current liabilities. It includes the company’s debtors,
bank/cash, creditors, inventory, outstanding and other miscellaneous expenses.
Each of these needs to be managed separately so as to have a control over the
liquidity of business. Management of Working Capital includes various sub-
components at the operational level of the company which directly affect the
level of Working Capital. These include study of Letter of Credit, Bill
Discounting, Factoring through Receivable Purchases and O.E. Finance,
Channel Financing, Overdraft management. Proper Working Capital
Management depends on how well these sub-components are handled. The
company needs to overcome the shortcomings in this respect. The customer
base of Tata Steel is found in the construction, auto and auto ancillary, white
good appliance and the general engineering sector. Thus, in order to control the
Working Capital of the company, they need to control their exposure in terms
of extending credit to its customers. They need to reduce the customer’s day’s
sales outstanding and manage the overdue that accrues to them. Over the years,
it has been observed that Tata Steel has shown a positive trend in its Working
Capital. Tata Steel is known for its human resource policies and it also has a
well maintained and very efficient IT infrastructure. The entire functions of the
company are well coordinated on a national scale. The objective of the company

7
now is to increase the scale of its business by increasing its profits and the
turnover and also by venturing into new line of business. It is now targeting to
be the World Class Industrial Enterprise from a World Class Steel Company. It
is striving to have a huge global base.

Major Happening:
Political:
In the 1920s and 1930s, when it was still called Tata Iron and Steel Company,
TISCO'slargely tribal workers fought pitched battles with the European
or Parsi management. Work conditions and the right to organize were
important rallying issues, and over the years, thecompany developed a
reputation for union-busting, often by violent means.The value of Dorabji’s
Expansion Programme came to be appreciated only during
the phasewhen world was reeling under the pressure of the Great
Depression. The Tatas survived thedepression and supplied nearly ¾
of the country’s steel requirements. By the Second World War, Tatas’
production capacities had expanded enough to make their prices lower
thanthose of steel produced in England raising them to an authoritarian
position.By the 1980s, the government was clearly in control of what had come
to be called thecommanding heights of economy. More than 45% of output in
organized industry camefrom the public sector as well as bank and other long-
lending institution.In 1981-82, eight of the largest firms in India were in
the public sector, as were 24 out of thetop 30 in terms of total capital
employee. In this sense it could be said that Nehru’s goalswhen he had
began the planning process had been achieved. But this success has to
be seenin the context of the fact that industrial growth rates had lagged at about
4% per annum between 1964-65 and 1975-76.This rate was in sharp
contrast to what was happening
in theAsian economies and in Southeast Asia. These countries had achieved co
nsistent highgrowth by opening up their markets and by abandoning policies of
import substitution.Indira Gandhi in her second stint as prime minister was not
willing to inaugurate a newindustrial policy that departed from the
socialist pattern put in place by her father. Yet shewas far too astute not
to recognize the signs of crises that were waiting in the wings. She made
the gesture that her government supports the expansion and modernization of
the private sector. The basic elements of the new policy began to emerge against
the backgroundof the India Special Drawing Rights billion-dollar loan
agreement with the InternationalMonetary Fund to cope with the balance of
payment deficits.

8
 Company profile

Established in 1907, Tata Steel, the flagship company of the Tata group 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. Backed
by 100 glorious years of experience in steel making, Tata Steel is the world?s
6th largest steel company 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.
It was the vision of the founder; Jamsetji Nusserwanji Tata, that on February 27,
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.
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.

9
 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 coastal Orissa
are integral to the Growth and Globalisation objective of Tata Steel.
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.
Business divisions of the company:
 Bearings Division : Manufactures ball bearings, double row self–aligning
bearings, magneto bearings, clutch release bearings and tapered roller bearings
for two wheelers, fans, water pumps, etc.
 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 India of
hand tools and implements for application in agriculture.
 Tata Growth Shop (TGS) : Has designed, developed, manufactured, erected
and commissioned thousands of tonnes of equipment ranging from overhead
cranes to high precision components, including a rocket launch pad for the
Indian Space and Research Organization.
 Tubes Division : The biggest steel tube manufacturer with the largest market
share in India, it aspires to strengthen its market presence by expanding and
modernizing its commercial and precision tube manufacturing capacity.
 Wire Division : A pioneer in the manufacture of steel wires in India, it
produces coated and uncoated wires, branded as Tata Wiron. The division also
operates a wholly owned subsidiary in Sri Lanka.
Joint ventures and Associates:
 Corus– Europe?s second largest steel maker with operations in the UK and
mainland Europe
 Tinplate Company of India Limited (TCIL)
 Tayo Rolls Limited
 Tata Ryerson Limited (TRYL)
 Tata Refractories Limited (TRL)
 Tata Sponge Iron Limited (TSIL)
 Tata Metaliks

10
 Tata Pigments Limited
 Jamshedpur Injection Powder Limited (Jamipol)
 TM International Logistics Limited (TMILL)
 mjunction services limited
 TRF Limited
 Jamshedpur Utility and Service Company Limited (JUSCO)
 The Indian Steel and Wire Products Limited (ISWP)
 Tata BlueScope Steel Limited
 Dhamra Port Company, Orissa
 Hooghly Met Coke & Power Company
 Lanka Special Steel Limited
 Sila Eastern Company Limited
 NatSteel Holdings (NSH)
 Tata Steel Thailand
 Tata Steel KZN– South Africa
 Tata NYK : A joint venture with Nippon Yusen Kabushiki Kaisha
Achievements/ recognition:
2014
Tata Steel awarded the prestigious BML Munjal Award
Tata Steel conferred the prestigious Indian MAKE Award 2013
2013
Tata Steel granted Core Supplier status by PSA Peugeot Citroën
CII–ITC Sustainability Prize 2012 for Tata Steel
2012
Mr B Muthuraman conferred with Padma Bhushan Award
Tata Steel tops list of India's 50 most admired companies
Tata Steel bags National Safety Awards for two mines
Tata Steel wins Deming Grand Prize 2012
2011
Tata Steel wins the 'The Businessworld Most Respected Company Award 2011'
Tata Steel bags two prestigious awards at the MMMM Exhibition 2011
TSRDS Jharia receives Best NGO award
Tata Steel conferred with ABCI Awards
 Tata Steel stall bags first prize in 'Heavy Industry' category at Udyog Mela–
2011, Ranchi Ranchi, March 17, 2011
 Tata Steel has won `The Businessworld Most Respected Company Award
2011? in the Metals category.
 2010
Tata Steel proud to receive 6th 'INDIAN MAKE' award
Tata Steel Receives National Energy Conservation Award 2010
Tata Steel's employees awarded the Prime Minister's Shram Awards for 2005–
07

11
 worldsteel' confers Tata Steel the S&H Excellence Recognition Award 2010
CSR Excellence Award to Tata Steel
 TATA Steel received two awards under the?Rashtriya Khel Protsahan
Puraskar? for its remarkable contribution spanning several decades in the field
of sports in 2009.
 Tata Steel India awarded the Deming Application Prize 2008 for excellence in
Total Quality Management. It is the first integrated steel company in the
world, outside Japan to get this award.
 World Steel Dynamics has ranked Tata Steel as the world's best steel maker
(for two consecutive years) in its annual listing in February 2006.
 Tata Steel has been conferred the Prime Minister of India's Trophy for the
Best Integrated Steel Plant five times. It has been awarded Asia's Most
Admired Knowledge Enterprise award five times in 2003, 2004, 2006, 2007
and 2008.
 Conferred the prestigious Global Business Coalition Award for Business
Excellence in the Community in recognition of its pioneering work in the field
of HIV/ AIDS awareness.
 Tata Steel works has been conferred the prestigious social accountability (SA)
8000 certification by social. Accountability international (SAI), USA. It is the
first steel company in the world to receive this certificate.
 Corporate Sustainability Report of Tata Steel hailed by United Nation's
Environment Programme (UNEP) and Standard and poor as strongest,
submitted by any corporate house from emerging economies.
 Best governed company Award 2006 for setting high standards in governance
practices.
 Tata Steel won 'Award for Corporate Social Responsibility in Public health' by
US– Indian Business Council (USIBC), Population Services International
(PSI) and the center for Strategic and International Studies (CSIS) in 2007.

12
 Tata Steel Mini Learning Mission
In order to take forward the agenda of learning and sharing within the Tata
group, Tata Steel shared its best practice on Daily Management in a Mini
Learning Mission held on July 14, 2016. The Mini Learning Mission, facilitated
by the Tata Business Excellence Group (TBExG), saw participation of 41 Tata
executives from 11 Tata companies. The session comprised of a classroom
session on Daily Management, followed by a half-day shop floor visit.

The programme started with a welcome address by NK Sharan, VP, TBExG,

where he spoke about the programme and the objective of organising the Mini
Learning Mission. Anand Sen, President – TQM and Steel Business, Tata Steel,
then addressed the participants and shared his views on the subject of Daily
Management. Next up was Alok Krishna, Chief – TQM, Tata Steel, who threw
light on the subject of TQM and Daily Management and how it is conducted in
the organisation.

Mrityunjay Kumar, Manager – TQM, Tata Steel, then took to the stage to
conduct an interactive session to explain the Standard Do Check Action
(SDCA) concept in Daily Management. As part of the Mini Learning Mission,
in the second half of the day, the participants toured the New Bar Mill (NBM)

13
and I Blast Furnace (BF) of Tata Steel, Jamshedpur plant, to view and
understand the concept in practice.

The Genesis of Learning Missions

TBExG, in its endeavour to assist group companies in achieving their
improvement and overall business excellence goals, plays the crucial role of
facilitating knowledge transfer and learning dissemination across Tata
companies. To accomplish this goal of empowering Tata employees to learn and
share knowledge across the group, TBExG has developed one of the most
advanced digital platforms ‘EDGE’, which promotes best practices sharing
within the Tata group. In order to have a judicious mix of digital avenues as
well as face-to-face sessions, TBExG set up the Learning Missions initiative.
Through this initiative, employees from different group companies can interact
closely with each other through a face-to-face process that makes it simpler to
internalise learning’s and imbibe best practices. This initiative focuses on a few
important but reasonably deployable topics across various functions and
verticals.

About Mini Learning Missions

With a view to benefit more Tata companies and provide impetus to the sharing
and transfer of knowledge and best practices within the Tata group, TBExG has
launched the concept of Mini Learning Missions. An offshoot of the Learning
Missions initiative run by the Best Practices team within TBExG, Mini
Learning Missions have been designed to facilitate the dissemination and
internalisation of best practices across Tata companies. It takes the Learning
Mission initiative a step further, making it more accessible to a larger pool of
group companies, and will be held at shorter intervals, thereby providing a
robust platform for companies to interact with each other and allow for greater
knowledge transfer.

14
 TECHNOLOGICAL FACTORS

Competing technology development

: With globalization and an increasing scale of operations, technological self-
reliance has become a necessity. In keeping with global ethics of Intellectual
Property, it has become necessary for steel companies to have their own
resourcesof Research and Development.
Hence self-reliance in technology has become a virtual pre-requisite to
innovation and growth.

Research funding
A : India’s expenditure on Research and Development has been negligiblenot
only in absolute terms but also as a percentage of GNP at 0.86 percent. In the
case of steelindustry, the ratio of expenditure on R&D as a percentage of
turnover is only 0.26 percent. Inthe five year Plan for steel sector, a new scheme
named ‘Scheme for promotion of R&D in theIron & Steel Sector’ has been
included with a budgetary provision of Rs. 118 crores. SteelTechnology Centre
at IIT, Kharagpur to promote R&D in iron & steel sector was approved, ata cost
of Rs. 22.26 crores for 5 years.

Replacement technology:
Technological developments in core industries like steel consume lot of
resources so theresearchers try and invent technologies which would have a
significant life span. So thereplacement technology is less. For instance, the first
modern plant set up at Jamshedpur byTISCO was setup at cost of Rs 10000
crore

Maturity of technology
B : R&D has not limited itself only towards improvement inproduction process
or capacity. It also aims at sustainable development and incorporates
thefollowing factors:a) Reducing the CO2 intensity of steelb) Enabling transfer
of technology to revamp and improve the energy efficiency of outdated steel
plantsc) Investing in breakthrough technologies for long-term solutionsd)
Working with customers and industry partners to maximize the contribution
of new steels in reducing life cycle CO2 emissions, particularly in high
impactapplications such as transport and construction.

15
 Literature review
Working capital management is the key area of financial management and plays
an important role in any industry. A number of researchers have conducted
research on the subject and its various components. This Chapter is an overview
of the research that has been carried out on the subject. Some of the most
relevant articles have been reviewed here as a part of my research work. As the
title of the thesis broadly deals with working capital management of the selected
pharmaceutical units of Gujarat, the need arises to carry out literature review
under two major headings:

3.1 Working Capital Management

3.2 Components of Working Capital

3.1 Working Capital Management It deals with all the aspects of working
capital of which in depth study has been carried out as discussed below.

1. Bhatt V. V. (1972) widely touches upon a method of appraising working

capital finance applications of large manufacturing concerns. It states that
similar methods need to be devised for other sectors such as agriculture, trade
etc. The author is of the view that banks while providing short-term finance,
concentrate their attention on adequacy of security and repayment capacity. On
being satisfied with these two criteria they do not generally carry out any detail
appraisal of the working of the concerns.

2. Smith Keith V. (1973) believes that Research which concerns shorter range
or working capital decision making would appear to have been less productive.
The inability of financial managers to plan and control properly the current
assets and current liabilities of their respective firms has been the probable
cause of business failure in recent years. Current assets collectively represent
the single largest investment for many firms, while current liabilities account for
a major part of total financing in many instances. This paper covers eight
distinct approaches to working capital management. The first three - aggregate
guidelines, constraints set and cost balancing are partial models; two other
approaches - probability models and portfolio theory, emphasize future
uncertainty and interdepencies while the remaining three approaches -
mathematical programming, multiple goals and financial simulation have a
wider systematic focus.

16
3. Chakraborthy S. K. (1974) tries to distinguish cash working capital v/s
balance sheet working capital. The analysis is based on the following
dimensions:

a) Working capital in common parlance Operating cycle concept

b) Computation of operating cycle period in all the four cases. The purpose of
the analysis is to demonstrate operating cycle concepts based on published
annual reports of the firms.

4. Natarajan Sundar (1980) is of the opinion that working capital is important at

both, the national and the corporate level. Control on working capital at the
national level is exercised primarily through credit controls. The Tandon Study
Group has provided a comprehensive operational framework for the same. In
operational terms, efficient working capital consists of determining the optimum
level of working capital, financing it imaginatively and exercising control over
it. He concludes that at the corporate level investment in working capital is as
important as investment in fixed assets. And especially for a company which is
not growing, survival will be possible only so long as it can match increase in
operational cost with improved operational efficiency, one of the most
important aspects of which is management of working capital.

5. Kaveri V. S. (1985) has based his writing on the RBI‟s studies on finances of
large public limited companies. This review of working capital finance refers to
two points of time i.e., the accounting years ending in 1979 and 1983 and is
based on the data as given in the Reserve Bank of India on studies of these
companies for the respective dates. He observes that the Indian industry has by
and large failed to change its pattern of working capital financing in keeping
with the norms suggested by the Chore Committee. While the position of
working capital management showed some investment between 1975-79 and
1979-83, industries have not succeeded in widening the base of long-term funds
to the desired extent. The author concludes with the observation that despite
giving sufficient time to the industries to readjust the capital structure so as to
shift from the first method to the second method, progress achieved towards this
end fell short of what was desired under the second method of working capital
finance.

17
 Research methodology

An innovative approach is one of the key elements in driving and delivering the
Tata Steel Group (TSG) vision that was formulated early in 2008. Innovation at
Tata Steel means continuously developing cutting-edge solutions in technology,
processes and products. Achieving this calls for substantial efforts in research
and development, for which, to stay ahead of competitors, the Group maintains
its own research centres.
Currently, the TSG operates four research centres: Tata Steel Limited’s (TSL)
laboratories in Jamshedpur and the Tata Steel Europe’s (TSE) technology
centres in IJmuiden, Netherlands and Rotherham and Teesside, United
Kingdom. A total of over 1000 people are involved in R&D within the TSG.
The Group’s research programme is split between programmes funded by the
separate business units, which make up the major part of the work done in the
European research centres and work on a number of identified thrust areas that
receive corporate funding. The thrust areas also incorporate the projects that
were previously a part of Corus’ strategic programme.
Economic Mineral Beneficiation
The research in this area is aimed at identifying ways to maximise use of raw
materials from captive sources and is focussed on three subjects:
8% Ash coal maintaining yield
Here the objective is to develop a cost-effective beneficiation route for
producing clean coal with 8% ash, maintaining current yield from the captive
collieries. A dense medium cyclone that can use coarse coal (2 mm and over) to
produce 12% ash clean coal has been designed and tested on a laboratory scale
in preparation of a plant test. A similar cyclone designed for beneficiating fines
from 0.25 to 2 mm to produce 10% ash clean coal will be tested directly on the
plant.
Complete beneficiation of iron ore
Technologies are being developed and up-scaled to beneficiate high-alumina
fractions and slimes with the aim to reduce alumina content to less than 1.5%.
Efforts are also being made to commercially utilise the rejects.
Technology for cost-effective use of newly acquired raw material sources
A direct reduction method was developed for zinc bearing iron ore that ensures
that zinc is retained in the DRI to avoid problems associated with vapourisation
of zinc. The DRI thus produced can be processed in electric arc furnaces, a well
established route for steel production from scrap with high zinc content. A
feasibility study was successfully carried out.

18
 To Stretch the Raw Materials Envelope
This programme was taken up to improve the process of lowering the
phosphorus content in the converter during oxygen steel making. Themes
addressed are design of a new supersonic lance, improvement in bottom stirring
and assessment of the BOF slag system.
 Trials have been carried out at the LD2 steel plant in Jamshedpur with a new
6+1 hole top lance designed by R&D.
 Implementation of a new way of blowing argon from the vessel bottom called
‘Differential Flow’ at the LD2 plant in Jamshedpur has improved the
phosphorus partition and reduced the argon consumption.

Heavy End of the Future

The work in this area refers to the three main trends that have influenced the
steel industry in recent years: the drive to increase output to follow demand, the
massive increase of the cost of raw materials and energy and the growing
concern over climate change.
For the medium-term, the objective is to develop technology and operational
practices to achieve cost-effective productivity rises with existing installations,
maximise recycling, and reduce the environmental and CO2 footprint. The focus
in this area is on the use of cheaper raw materials without compromising blast
furnace performance and on optimising the burden distribution and pulverised
coal injection rate.
For the long-term, the focus is on the large scale multi-partner project ULCOS
(Ultra Low CO2 Steel making). This is aimed at reducing CO2 emissions per
tonne of steel produced by at least 50% by 2050. Out of four possible
approaches that have been identified for further development, two are of interest
to the Group, i.e. the blast furnace that uses pure oxygen and top gas recycling,
and the process now known as ISARNA.
Pilot trials with the former process carried out in 2008 at the experimental blast
furnace of LKAB in Lulea, Sweden, have shown that with top gas recycling, the
carbon input per tonne of steel can be reduced by 24% and that with the storage
of CO2 gas removed from the top, the CO2 emission to the atmosphere can be
halved. For the ISARNA process, the core of which is the melting and pre-
reduction of ore fines in a cyclone, the engineering of a pilot plant was
completed. A decision is expected at the end of the year regarding the location
of the pilot plant.
New Generation High Strength Steels
This area comprises of projects to develop new metallurgical options to enable
the Group to meet future demands for high strength steels.
Among the multiple approaches, one related work aimed at meeting already
known needs, is the development of high strength and ductility (HSD) steels.
Since 2005, Corus and Salzgitter have been working together on identifying
opportunities for the application of HSD steels in selected market sectors.
19
Advanced Coatings Developments
Work on coatings is aimed at responding to the market drive to reduce coatings
costs and maintain the Group’s position in the market for coated products.
Within this, four work streams have been defined i.e. physical vapour
deposition, development of zinc free coated products for current and future
applications, high speed galvanising and high speed organic coating lines.
The physical vapour deposition (PVD) project is a joint development with
POSCO in Korea. It is based on a PVD process developed by Tata Steel Europe
that uses electromagnetic levitation of the metal(s) to be deposited.
Producing Ferro Chrome with Less Energy
The Group’s R&D centre at Jamshedpur has developed a novel process
technology than can be applied either for the direct production of stainless steel
or for producing ferro chrome in submerged arc furnaces (SAF) with reduced
specific power and coke consumption. In 2008, scale-up trials were carried out
to establish the technical and economical feasibility of the process. The research
team also worked closely with the Institute of Minerals and Materials
Technology (IMMT), Bhubaneswar on a fluidised bed reactor process.
Two variants of this process are being developed for the production of pre-
reduced chrome for use in production of ferro chrome in the existing SAF
process and chrome nuggets that are used as alloying addition in stainless and
alloy steel making. The novel process uses non-coking coal as a reducing agent
and energy source. Thus there is reduced need for low ash, low phosphorus
(imported) coke.
Hydrogen Harvesting
The slag granulation or quenching processes commonly used for slag cooling
are not environmentally friendly and the heat contained in the molten slag is
wasted.
Tata Steel has developed a novel process to generate hydrogen-rich gas by
utilising the heat of molten slag. This process was demonstrated on a pilot
project basis using a set up with 10 tonnes slag capacity, designed and
developed in-house with the help of Tata Growth Shop, producing gas that
contains over 70% hydrogen. International and Indian patent applications have
been filed and work is now in progress to optimise the process for
commercialisation at the Ferro Alloys plant.
This novel process has the potential to generate low cost hydrogen which can
save energy and reduce the consumption of fossil fuels in the steel plant.
Viable Photovoltaic Coating Systems
The work in this area is aimed at developing state-of-the-art thin film
photovoltaic systems that are suitable for integration into the Tata Steel Group
products. Part of the work focusses on the further development of technology
developed by DyeSol, a company specialising in photovoltaics, and is done in
collaboration with that company. A second work stream concentrates on the

20
further development of steel as a substrate for PV systems. In the course of the
financial year, a dedicated facility for the development of PV systems based on
steel substrates, including a pilot line, was set up on the site of Corus Colors in
Shotton. The first coating trials on the pilot line were highly promising.
Energy Efficient Fluids
The research in this area focusses on the development of efficient coolants and
lubricants for rolling.
After laboratory tests had confirmed that suspending nanoparticles in an
aqueous medium result in a higher heat transfer rate, subsequent tests have
shown that the overall heat transfer was between 1.8 (at high temperatures) and
2.5 times (at low temperatures) that of water. For industrial scale use however,
methods for large scale production and safe handling of these fluids were
needed.
As a first step to solve these problems, an effervescent tablet was developed that
would dissolve in water in five seconds. A patent application for this has been
filed. As a second step, a novel concept of a high speed shear mixer for bulk
nanofluid generation was demonstrated in October 2008 for 20,000 litres for use
in wire box cooling in the wire rod mill of Indian Steel and Wire Products
Limited, Jamshedpur. The higher cooling rate compared to normal water
cooling opens up a range of applications in process control and product design.
Other prospective application areas for nano-coolants that have been
investigated include increased cooling rates at the hot strip mill to enable low
cost manufacturing of Dual Phase (DP) steels, stove cooling in blast furnaces,
and heat recovery from waste gases and exhaust pipes.
Process Improvements
Building on the experience gained with Process Improvement Groups in Corus,
the Tata Steel Group Process Improvement Teams have been set up with the
aim to ensure that best practice in process technology is applied throughout the
Group. This involves among other things, transferring technology that has been
proven in one plant to similar other installations. An example of this is an
investment at Port Talbot steelworks in energy management technology similar
to systems that already exist at other plants, including TSL’s Jamshedpur plant.
The Group is continuously working on ways to reduce emissions. It is also
working on the development of measuring techniques so that its operations
comply with pollution reduction regulations. For example, the TSE RD&T has
led a major European project to investigate the sources of fine and ultra fine
particulate matter in the steel industry. The study has identified the major
sources of such particulates as being emitted by a typical integrated steel plant,
and also as effects of long range transport.
These results will help TSE to anticipate future legislation and to take
appropriate measures to reduce any emissions from steel making to lower
levels.

21
In India, experts from TSE RD&T’s environment department have assisted in
assessing ways to maintain emissions from the Jamshedpur works at current
levels when production capacity is increased to 9.7 mtpa from the current 6.8
mtpa.
Tata Steel Chair Professor
Supporting education and research in metallurgy at universities is one way to
secure future resources for industrial research and development in metals. With
this in mind, the Tata Steel Group has endowed a professorship in metallurgy at
the University of Cambridge. The holder of the Chair, inaugurated on 24th
November 2008, will be known as the Tata Steel Professor of Metallurgy and
the first person to hold the chair is Dr. Harry Bhadeshia, a world renowned
expert on the physical metallurgy of steels.
Intellectual Property (IP) Rights
Good IP management can help the translation of the results of creativity and
innovation into profits and valuable business options. The successful
introduction and implementation of IP road mapping at Tata Steel and the
continuous review of IP matters in multi-disciplinary platforms at TSE have
resulted in a global Tata Steel Group portfolio of IP Rights (IPR) that is both
youthful and mature. The patent portfolio currently comprises of over 850
patent applications at various stages between filing and grant and over 850 valid
patents granting national exclusive rights owned by the respective group
companies.

22
Data analysis of tata steel
GENERAL PROFITABILITY RATIOS OF TATA STEEL LIMITED

These ratios are based on the basic idea that a business unit should earn
sufficient profit on each rupee of sales. If adequate profits are not earned on
sales, difficulty will be experienced in meeting the operating expenses and no
returns will be available to the owners. The operating expenses ratio indicated
the proportion that the cost of sales bears to sales. The cost of sales includes the
direct cost of goods sold as well as other operating expenses, administration,
selling and distribution expenses which have matching relationship with sales
and also indicates that the managements’ ability to keep operating expenses
properly controlled for level of sales achieved. The lower ratio indicates a
favorable condition and higher ratio is less favorable as it would have a smaller
margin of operating profit for the payment dividends and the creation of
reserves. The gross profit ratio of the firm indicates the efficiency of the
production or trading operations of the company. A high ratio is better than a
low ratio as it indicates unfavorable trends in the form of reduction in selling
prices not go together with by proportionate decrease in cost of goods or
increase cost of production. This ratio explains per rupee profit generating
capacity of sales. Net profit will be high when the cost of sales is low that is, the
result of sales efficiency. The concern must try to achieve greater sales
efficiency for maximizing the Return on Investment. This ratio is very useful to
the proprietors and prospective investors because it reveals the overall
profitability of the concern. This ratio establishes the relationship between
operating profit and sales. Operating profit is arrived at by eliminating the
operating expenses from the gross profit of the business. A low operating profit
ratio is mostly a test of operational efficiency. In case of a firm whose major
source of income and expenses are non-operating, the operating ratio, however,
cannot be used as a yardstick of profitability.
The total operating costs is increased year by year during the study period. Sales
show an increasing trend except in the years 2001-02 and 2009-10. In the year
2001-02, sales decreased by 151.96 crore as compared to the previous year but
operating costs increased by 315.89 crores, like that in the year 2009-10 sales is
recorded by 85.93 crore as compared to previous year but on the contrary
operating cost has increased by 205.19 crore in the same year. The year 2001-02
has more operating ratio which shows a fluctuating trend during the study
period. Gross profit ratio shows a fluctuating trend. Gross profit ratio is highest
in the year 2004-05 and lowest in the year 2001-02; Gross profit shows an
increasing trend except in the years, 2001-02 and in the year 2014-15. Sales
show an increasing trend except in the years 2001-02 and 2009-10. In the year
2001-02, sales are decreasing corresponding to gross profit. Net profit for the
first two years of the study period is less than the 10 percentage. For the
23
remaining study period, net profit ranges from 10 to 22 percentages. Moreover,
that net profit ratio highly fluctuating. On the contrary sales show an increasing
trend. Sales, operating profit are fluctuating during the study period that is
reflected in operating profit ratios also. It is surprisingly noted that in the year
2014-15 sale is increased by 267.92 crore as compared to the previous year on
the contrary, operating profit is decreased by 2876.99 crore. In the year 2012-13
sales is increased by 5311.53 crore as compared to previous year and profit is
decreased by 899.47 crore.

OVERALL PROFITABILITY OF TATA STEEL LIMITED

Bankers, financial institutions and other creditors look at the profitability ratios
as an indicator whether or not the firm earns substantially more than it pays
interest for the use of borrowed funds and whether the ultimate repayment of
their debt appears reasonable and certain. So, the profitability of the firm can be
measured by investments. Return on Capital Employed (ROCE) is an indicator
of the earning capacity of the capital employed in the business showed as a
percentage of return and gives an idea about the usage of resources employed in
business. It is also termed as Overall Profitability Ratio or Yield on Capital. It is
also called master ratio because it indicates overall profitability of the firm and
financial position of the company is reflected as sound if a company has sound
capital structure. A good capital structure will give good return on capital

24
employed. Return on Net Worth (or) Shareholders’ Fund (RONW), it is desired
to work out the profitability of the company from shareholders’ point of view,
and then it shows the extent to which profitability objectives are being achieved.
Higher the ratio, the better return on net worth. Return on Equity shareholders’
fund takes net profit available to equity holders and equity shareholders fund.
With the help of this ratio, equity shareholders can find the return available for
them. Return on total assets is calculated to measure the profit after tax against
amount invested in total assets to ascertain the utilization of assets.

That return on capital employed ranges from 8.63 per cent to 55.38 per cent.
Return on capital employed is more than 30 percentages in the years 2003-04,
2004-05 and 2005-06. For the remaining periods, it is less than 30 percentages.
Capital employed in the business is increased year-by-year except in the years
2001-02 and 2002-03. But operating profit has fluctuated during the study
period. Usually when the investment is high the return will also be high, but in
the study the return is not increased to the extent of increased in capital
employed into the business. Return on net worthy that the return on net worth
ranges from 5.95 in 2001-02 to 49.21 in 2004-05. Shareholders’ Fund shows a
declining trend for the first three years of the study period and for the remaining
years, it shows an increasing trend and net profit remains fluctuating. The net

25
profit available to equity shareholders, equity shareholders’ fund and ratio of
return to the equity holders’ fund. Equity holders’ fund increases year by year
while the net profit available to equity holders shows a fluctuating trend.
Percentage of return on Equity shareholders ranges from 5.89 in 2001-02 to
49.21 in 2004-05. Return on total assets ratio is ranging from 2.51 per cent in
2001-02 to 35.45 per cent in 2004-05. Return on total assets ratio is in two
digits from 2002-03 to 2007-08 and for the remaining periods it is less than 10
per cent. The company has managed the assets efficiently in the years 2004-05
as it is indicated by the Assets turnover ratio which is 35.45 per cent. Total
assets of the study period increases year by year except in the years 2001- 2002
and 2002-03. But net profit shows a fluctuating trend.

MARKET TEST RATIOS OF TATA STEEL LIMITED

Market test ratios are calculated in respect of those companies whose shares are
traded in stock exchanges. Shareholders are not only interest in the profits of the
company but also in the appreciation of the value of their shares in the stock
market. The value of shares depends upon dividend declared, earning per share,
and the payout policy and so on of the companies besides of the factors. An
earnings per Share, earnings per share helps in determining the market price of
equity shares of the company and in estimating the company to pay dividend to
its equity shareholders. Price Earnings Ratio takes the market price per equity
and earnings per equity share. High ratio indicates that the share is overvalued
and low ratio shows that share is undervalued. Payout and Retention Ratio, This
ratio indicates as to what proportion of earnings per share has been used for
paying dividend and what has been retained for ploughing back. This ratio is
very important from shareholders’ point of view as it tells him that if the
company has used whole or substantially of its earnings for paying dividend and
retained for future growth and expansion purposes, then there will be a very
slim chance for capital appreciation in the price of shares of such company.
Source: Computed from Secondary data, Annual reports of Tata Steel Limited
Dividend yield ratio is important for those investors who are interested in the
dividend income. As the shareholder purchase the shares in the open market, his
yield (rate of return) is not equal to the dividend declared by the company. The
earnings per share with a fluctuating trend and ranging from 5.51 per share to
72.71 per share. For the first three years of study period, the earnings per share
are less than 30 per cent; to the rest of the study period it is more than 50. The
company has sufficient earnings to issue either bonus shares or dividend;

26
eventually it can increase the market value of equity shares.Price earning ranges
from 2.86 times to 11.22 times of market price per equity. In all the years of the
study period, the price earnings ratio is in one digit except for the years 2001-
02, 2007-08 and 2009-10. Market price per equity is highly fluctuating and EPS
is also fluctuating during the study period. It is clear from the above table that in
the year 2001-02, 72.5 per cent of the earnings payout by the company is in the
form of Dividend and in the remaining years 65 per cent to 88 per cent of the
earnings is retained by the company for creating wealth to the Equity
Shareholders. For the remaining years Payout ratio ranges from 12.07 per cent
to 35.43 per cent. Retention ratio ranges from 64.57 per cent to 87.93 per cent
except in the year 2001-02. Divided yield ratio of the company during the study
period is fluctuating in nature and less than the 10 per cent in all the study
period except in the year 2002-03. Market price per share and dividend per
share are fluctuating, which is reflected by Dividend yield ratio.

COVERAGE RATIOS OF TATA STEEL LIMITED

These ratios indicate the extent to which the interest of the person entitled to
get a fixed return or a scheduled payment as per agreed terms is safe. The higher
the coverage, the better is it. Fixed Interest Coverage Ratio, It really measures
the ability of the concern to serve the debt. This ratio is very important from the
27
lenders’ point of view and indicates whether the business would earn sufficient
profits to pay periodically the interest charges.

Table shows that the interest coverage ratio is ranging from 1.68 times the EBIT
in 2001-02 to 45.24 times the EBIT in the year 2005-06. The interest cost for
the first 8 years of the study period is ranging from 118.44 crores in 2005-06 to
878.70 crores in 2007-08 and for the remaining period of the study period, it is
ranging from 1152.69 crores in 2008-09 to 1975.95 crores in 2014-15. In all the
years the company is in a position of returning the interest cost out of the profit
earned during the study period. Table shows the preference dividend, net profit
and the dividend coverage ratios of the study period. Net profit and preference
dividend are fluctuating and the dividend coverage ranges from 1.37 times to
8.29 times the net profit. During the study period, the company was in a
position to pay preference dividend out of the net profit earned during that
period.

28
 Finding and suggession
In the current year overall position of the company is very satisfactory. But
there are some considerable point like average collection had been increased in
current year and last four year it is consonantly decreased. This is due to
providing more credit period to customers. It should be given only according to
credit policy. And company can make payment to creditors on the time without
any short term loan. For fast collection, company may provide trade and cash
discount to customers.

In the current year stock turnover ratio has been increased. It is favorable in the
one way like funds dose not blocked into stock it is easily sell in market but in
another way it is considerable because higher inventory leads to increase in
cost.

Average Fixed assets turnover ratio had gone down during last 4 year this may
be due to underutilization of assets and less increase in sale due to recession .

29
 SWOT analysis of TATA STEEL
Strengths in the SWOT Analysis of Tata Steel :
Market Position: Tata Steel is one of the largest steel manufacturers in the
world and world’s second most geographically diversified steel producer. It has
the strong presence in Asia-pacific and Europe

Diversified Product Portfolio: Tata Steel has a wide range of products ranging
from flat steel products, agricultural implements, construction products and
much more. A diversified product portfolio ensures revenue flow from
different markets around the world.

Trust of TATA: Tata is one of the most trusted and respected brands not only
in India but all over the world. The association of the name provides
immense brand equity to the company.

Integrated operations in India: The whole process of extraction from mines

and ores to producing finished steel material is integrated in India. The
integrated operations save a lot of time and cost and also maintain the required
quality.

Global footprint: Tata Steel has the presence in over 50 countries with
operations in over 26 countries which increase its market penetration and share.

Weaknesses in the SWOT Analysis of Tata Steel :

Mistry fiasco has hurt the image: The fallout between Ratan Tata and Cyrus
Mistry has had an adverse impact on the image of the Tata group which also
translates to Tata Steel.

Over dependence on Europe: Over 50 percent of Tata Steel’s business comes

from Europe and thus any economic slowdown in the Europe affects Tata
Steel’s revenues.

Disintegrated operations in Europe: Although Tata Steel’s operations in India

are integrated; its operations in Europe are disintegrated and hence are
dependent on various other suppliers. This affects control on quality an
increased costs.

30
Opportunity in the SWOT Analysis of Tata Steel :
Increasing demand for steel in India: The steel market in India is expected to
grow in the next 4 years due to the growth in the construction industry and
manufacturing facilities in India. This will certainly benefit Tata Steel.

Adapt newer technologies: Tata Steel lags behind its competitors in

the technology front and has an opportunity to adopt newer technologies such as
the Cortex process, Hismelt process etc.

Growing manufacturing, construction and automotive industry around the

world: Growth in manufacturing, construction and automotive industry in the
future will drive the growth in the steel industry and Tata Steel is set to benefit
from it.

Threat in the SWOT Analysis of Tata Steel :

Intense competition: Tata Steel faces stiff competition from industry giants
such as JSW Steel, Essar Steel, and ArcelorMittal etc. This reduces its market
share around the world.

Government and Environmental regulations: Tata Steel is subjected to

stringent governmental and environmental regulations in mining as well as
production. This increases compliance costs for the company.

Decreasing global steel prices: Excess steel production in China meant that it
supplied steel cheaper to the world which forced the process to lower down
throughout the world.

31
 CONCLUSION
Tata Steel Limited through its Indian operations is a large manufacturer of Ferro
chrome and steel wires in India and a supplier of chrome ore internationally.
The Company’s main markets include the Indian construction, automotive and
general engineering industries. At the international level and on Overall basis
Tata Steel offers their products and services with a lesser cost than others.
Profitability of Tata Steel (stand-alone) is at the appreciable level. Even then, if
it takes some steps by generating internal sources the profitability position will
be increased more than the present level then it can improve its liquidity further.

32
 REFERENCES
1. Annual Reports, Tata Steel Limited, Mumbai, 2000-01 to 2014-15.
http://tatasteel.com/

2. Goswami, Suvarun and Aniruddha Sarkar. “Analyses of Financial

Performance of Tata Steel Limited - A Case Study.” International Journal for
Multidisciplinary Research 1, no.5 (September 2011): 161-174.

3. Gupta K. Shashi and R. K. Sharma. Management Accounting: Ratio

Analysis. New Delhi: Kalyani Publishers, 2011.

4. Khan M. Y. and P. K. Jain, Basic Financial Management: Financial

Statement Analysis. New Delhi: Tata McGraw-Hill Publishing Company
Limited, 2006.

5. Maheshwari, S. N. Financial Management: Ratio Analysis. New Delhi: S.

Chand and & Sons Educational Publishers, 2011.

6. Narware, P. C. “Working Capital and Profitability - An Empirical Analysis

of SAIL.” Management Accountant (June 2003): 491- 497.

7. Venkatesan, T. and S. K. Nagarajan. “An Empirical Study of Profitability

Analysis of Selected Steel Companies in India.” International Journal of
Marketing, Financial Services & Management Research 1, no. 10 (October
2012): 84.

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