Accounts For Managers Term Paper

MBA-General(2012-14) Amity Business School, Noida

Financial Report Of Tata Steel

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CERTIFICATE
This is to certify that the term paper entitled Financial Report of Tata Steel is being submitted by Priya Shandilya(B5) Vikram Singh(B27) Akshay Kaushal(B35) Anil Yaswanth (B40) Makrand Agrawal(B43) Mitali Chopra(B49)

Of MBA-General, 2012-14, Amity Business School, Amity University, Noida. They have completed their Accounts For Managers Term Paper under my guidance and supervision. The result embodied in this term paper report has not been submitted to any other university for the award of any degree. I hereby certify that this project confirms to the guidelines issued by the Amity Business School.

Mrs Bhavana Ranjan

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ACKNOWLEDGEMENT
We take immense pleasure in expressing our heartfelt gratitude towards ourAFM teacher Mrs Bhavana Ranjan for giving us the opportunity to work on the project. It was truly knowledgeable and enriching experience. Thank you once again maam for entrusting us with the project and for all the help and support throughout the project. We would also like to thank Amity Business School, Amity University,Noida for giving us this platform to showcase our talent and express our views through this term paper. Words are inadequate in offering our heart-full gratitude to all the people who are behind our success. We have taken efforts in this project. However, it would not have been possible without the kind support and help of our Professor. We would like to extend our sincere thanks to her. The satisfaction of completion of the project is incomplete without the mention of the people behind the screen. In this context, we would like thank all the other staff members, both teaching and non-teaching, who have extended their timely help and eased our task.

Priya Shandilya (B6) Akshay Kaushal(B33) Makrand Agrawal(B43)

Vikram Singh(B27) Anil Yaswanth( B40) Mitali Chopra(B49)

Table of Content
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Sr.no 1. 2. 3. 4. 5. 6. 7.

Company Analysis Introduction Vision and Mission of Company Advisors Joint Ventures Subsidiaries Product Line SWOT analysis Steel Industry Analysis

Page no 5 5 6 6 8 10 10

1. 2. 3. 4. 5. 6.

Past , Present and Future Domestic Scenario and Production Steel Industry Reforms Imports and Exports Industry Structure Profile Of Other Major Player Financial Statements

16 17 18 19 20 21

1. 2. 3. 4. 5.

Profit and Loss Statement Balance Sheet Cash Flow Statement Comparative Statement Common Size Statement

22 23 24 25 27

Company Analysis
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1.Introduction
Tata Steel has in its lineage in some of the worlds most pioneering and respected entities the Tata Group itself, British Steel, and Natsteel. What binds together every member of the global Tata Steel family is a shared corporate culture, shaped by value-based guiding principles that underpin every business decision. Tata Steel Today The Tata Steel Group has always believed that mutual benefit of countries, corporations and communities is the most effective route to growth. Tata Steel has not limited its operations and businesses within India but has built an imposing presence around the globe as well. With the acquisition of Corus (now Tata Steel Europe) in 2007 leading to commencement of Tata Steel's European operations, the Company today is one of the largest steel producers in the world with employee strength of above 81,000 across five continents. During the financial year 2011-2012, the Group recorded deliveries of 24.22 million tonnes, which was marginally less than the previous year. The Group recorded a turnover of Rs.1, 32, 900 Crores in 2011 - 2012. The Company has always had significant impact on the economic development in India and now example of responsibility and trust. Tata Steels overseas ventures and investments in global companies have helped the Company create a manufacturing and marketing network in Europe, South East Asia and the Pacific-rim countries. The Groups South East Asian operations comprise Tata Steel Thailand, in which it has 67.1% equity and Nat Steel Holdings, which is one of the largest steel producers in the Asia Pacific with presence across seven countries.

2.Vision And Mission of the Company

Vision In a free enterprise, the community is not just another stakeholder, but is, in fact, the very purpose of its existence. It is these words of Jamsetji Tata, Founder of Tata Steel that have shaped the Companys culture of social responsibility. At Tata Steel, the benefits of wealth creation extend beyond the business, flowing into the communities in which the Company operates. Tata Steels approach to business has evolved from the concept that the wealth created must be continuously returned to society.

Mission

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Tata Steel by 2014,would have a global steel capacity of 33.5 million tonnes, and will add a further 3 million tonnes on the full implementation of the Odisha project.

3.Advisors
Lead Bankers: State Bank of India Legal Advisors AZB&Partners, Amarchand & Mangaldas& Suresh. A. Shroff &Co., Mulla& Mulla and Craigie Blunt & Caroe, Herbert Smith LLP, Cleary Gottlieb Steen & Hamilton LLP, Linklaters LLP, Allen &Gladhill LLP Auditors Messrs Deloitte Haskins & Sells Share Registrars TSR Darashaw Limited (Formerly: Tata Share Registry Limited), 6-10, Haji MoosaPatrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011.Tel : (022) 6656 8484 Fax : (022) 6656 8494 / 6656 8496 E-mail : csg-unit@tsrdarashaw.com Website: http://www.tsrdarashaw.com

4.Joint Ventures
Tata Steel is a global player with a balanced presence in developed European and fast growing Asian markets. The Company has set itself the objective of expanding its capacities and becoming globally competitive in its businesses. Dhamra Port Company Ltd. A JV between Larsen & Toubro Ltd. and Tata Steel Ltd., the Company has built a deep draft (18 metres) all weather port on the east coast of India. The port will handle 80 million tonnes per annum of cargo. The bulk cargo berths are being designed to accommodate up to 180,000 DWT vessels. A 62.7 km (route distance) rail link connecting the Port to the nearest railway station at Bhadrak on Chennai-Howrah line is included in the project scope.

Mjunction services limited Mjunction, operating at the cutting edge of Information Technology, is a 50:50 venture of SAIL and TataSteel. It is India's largest eCommerce company and the world's largest e-marketplace for
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steel. mjunction offers a wide range of selling, sourcing and knowledge services that empower businesses with greater process efficiencies. Tata BlueScope Steel Limited The 50:50 Joint Venture agreement with BlueScope Steel Limited to form Tata BlueScope Steel Limited became effective from May 30, 2006. It offers a comprehensive range of branded steel products for building and construction applications. The Building Solutions facilities at Pune, Bhiwadi and Chennai have been operational since 2006-07. The Company's state-of-the-art metallic coating and painting facility is operational at Jamshedpur. TM International Logistics Limited (TMILL) TMILL provides material handling and port operation services at Haldia and Paradip Ports in addition to providing freight forwarding and chartering services. Tata NYK This is a joint venture between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK Line) for setting up a shipping company to cater to dry bulk and break-bulk cargo. Tata Steel and NYK will each hold 50% stake in the joint venture company. The Company has commenced shipping activities for Tata Group companies and other clients with five ships. Tata NYK handled around 2.4 million tonnes of dry cargo and projects, to service more than 20 million tonnes per year within five years through a fleet of owned and chartered ships. S&T Mining Company Pvt Ltd Tata Steel imports about half of its coal requirements from overseas. As the countrys steel consumption enters a high and sustainable growth phase, the company is undertaking massive expansion plans. It has become imperative to ensure raw material security for the company. With this in mind, the company entered into a strategic alliance with the largest steel making company of India, SAIL. Accordingly, a new JV company, S&T Mining Co Private Limited was incorporated in September 2008 with its registered office in Kolkata. The Chairman of S&T Mining is Mr. S. N. Singh (Managing Director, Rourkela Steel Plant) while the MD of the company is Mr. SandeepKumar from Tata Steel. Vietnam Steel Project Tata Steel signed a Joint Venture Agreement on August 13, 2008 with Vietnam Steel Corporation (Vietnams largest steel company) and Vietnam Cement Industries Corporation (Vicem) for a 4.5 million tonne per year steel complex to be set up in Ha Tinh Province. The first phase of the complex will be a Cold Rolling Mill. Tata Steel will have a stake of 65% in the Steel project. JV with SODEMI in Ivory Coast
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Tata Steel and SODEMI entered into an agreement in December 2007 for the development of Mount Nimba iron ore deposits. JV with Riversdale Mining Limited Tata Steel entered into a Joint Venture (JV) with Riversdale Mining Limited, Australia in 2007 for a 35% stake in two coal tenements in Mozambique at Benga and Tete. The agreement gives the Company off-take rights to 40% of the coking coal produced from these mines. JV with Al Bahja Group In January 2008 a joint venture was agreed with members of the Al Bahja Group for mining limestone in Salalah province of Oman. JV with Vale This is a joint project with Vale and other partners, for expanding a coking coal mine (Carborough Downs) in Central Queensland.

5.Subsidiaries
Tata Steel's position has been strengthened over the years through meaningful acquisitions of enterprises across the globe. These enterprises have individually emerged as leaders in their respective industry segments leading to judicious investments, therefore facilitating growth. Jamshedpur Injection Powder Limited (Jamipol) JAMIPOL manufactures carbide de-sulphurising compounds which are used for de-sulphurising hot metal for the production of low-sulphur, high-quality steel. Jamshedpur Utility and Services Company Limited (JUSCO) 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. Lanka Special Steel Limited The only unit in Sri Lanka manufacturing galvanised wires. Rawmet Ferrous Industries Tata Steel acquired 100% equity stake in Rawmet Ferrous Industries on January 15, 2007. Currently, the Company is based out of Kolkata and operates as a subsidiary of Tata Steel. Rawmet has a Ferro Alloy Plant near Cuttack, with a capacity of 50,000 tonnes production per annum of High Carbon Ferro Chrome.
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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 TSKZN is a South Africa based subsidiary of Tata Steel, in the business of producing Ferro Chrome and Charge Chrome. It has moved on from the project phase and become operational since 3rd April 2008 with the switching on of Furnace . Tata Metaliks Limited Tata Metaliks is recognised as Indias number one pig iron manufacturing and selling company. Promoted by Tata Steel Limited and assisted by The West Bengal Industrial Development Corporation, the pig iron produced by the Company is rated as the best in the country for years now. 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. TRL Krosaki Refractories Limited It produces High Alumina, Basic, Dolomite, Silica and Monolithic Refractories and offers design, procurement and re-lining applications services. It is one of the few companies worldwide to produce silica refractories 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 organisation. 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. 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.
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 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. TRF has also made its mark in the fields of coke oven equipment, coal dust injection systems for blast furnaces and coal beneficiation systems. The Indian Steel and Wire Products Limited (ISWP) ISWP has two units - a wire unit comprising wire drawing mills, wire rod mills and a fastener division and a steel roll manufacturing unit named Jamshedpur Engineering and Machining Company - JEMCO.

6.Product Line
Different varieties of steel are produced in all the plants of the Tata Steel . These can however be classified into two broad categories Flat Products - Flat products include plates and hot rolled sheets such as coils and sheets. Flat products are derived from slabs. One of the major uses of steel plates is in ship building. Long Products - Long products include bars, rods, wires, ropes and piers. These are called long products due to their shapes. Long products are made from billets and blooms. Long products are mostly used in housing and construction and also in rail tracks.

7. SWOT Analysis Of Tata Steel

Strengths of TATA STEEL: 1. Mineral Reserves Tata Steel has two collieries in West Bokaro and Jharia, inthe state of Jharkhand. The iron ore units are located in Noamundi, Joda and Katamandi in the states of Jharkhand and Orissa. Tata Steel Limited also has a manganese mines and dolomite quarries in Orissa. These mines are located at an approximate distance of 150 kms from Jamshedpur, home to the steel company's manufacturing facility. The Steel Company's iron ore units produce 9 million tons per annum of various grades of high quality iron ore including rich blue dust ore. The company in India is having mines of 281 million tones reserves in its mines in Jharkhand and thus having minerals to cater its needs for more than 20 years. The company has also been acquiring stake overseas in
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Canada, Mozambique, Australia etc. to boast its reserves for clean coking coal which is rarely available in India. 2. Management Team Tata Steel has a highly credible management team who has displayed their skills in expanding the company through inorganic route. The company has successfully acquired Nat Steel of Indonesia, Millennium Steel of Thailand and more importantly Corus. The companys virtuosos of finance have been able to find innovative ways to tackle the companys burgeoning debt and keep the bottom line in the green zone despite lowering demand and huge debts accumulated.

3. Information Technology The entire mining operation of the Company is safeguarded against accident occurrence. Proactive measures are undertaken to ensure the employee's health and productivity through ergonomically designed work stations and by protecting them from occupational hazards. All its mines are ISO-14001 -Environmental Management System Certified. Tata Steel's collieries use 'Surpac', a state-of-the-art mine planning software that estimates the volume of coal in every seam. This software is coupled with qualitative detailing that focuses on output consistency. To maximize productivity and utilization, a voice and data equipped Global Positioning System is used, which helps to supervise mining activity for machine movement and engine status. 4. Innovativeness of TATA Steel with respect to its competitors TataSteel has the lowest operating cost for steel manufacture in the world. Further it has displayed effective means in adopting an eco-friendly andsustainable approach towards the manufacture of steel thus proactivemeasures are undertaken to ensure the employee's health and productivity throughergonomically designed work stations and by protecting them from occupationalhazards. 5. Adaptability of the company in the fast change of the environment Tata Steel has displayed immense agility in the recent past during the globalfinancial tsunami. Its virtuosos of various fields have adopted variousmethods like lowering of production and even shutting down of steel plantsowing to the lack of demand, managing the balance sheet efficiently etc. Thecompany has 70% of its procurement of raw materials for its operations inAsia through long term contracts and so its margins can be shielded from thenuances of the volatility of the financial markets. 6.Brand value

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The TATA brand owing to its highly ethical and a socialisticapproach to business have made its name synonymous to trust. After theacquisition of Corus another powerful brand, the brand value of the companyhas enhanced further. 7. Corporate governance Tata Steel has had an impeccable record forcorporate governance. It has set the benchmark in global corporategovernance principles of transparency, accountability and equity for others tofollow. Tata Steel has been consistently receiving prestigious awards at boththe national and the international arena. Recently it bagged the BestGoverned Company Award for corporate practices presented by Asian Centrefor Corporate Governance. Weakness of TATA STEEL: Huge debt burden Tata Steel is having a total debt of 10.2 billion USD in its books. It has a debt equity ratio 0f 1.6 which means that the assets of thecompany is largely financed through debt. With the inflation on a rise thecentral banks of most all the countries are intending to tighten in the liquidityin the money markets. As a result of which the interest rates are on a rise. InIndia the banks are mulling the option of a rate hike and most analysts feelthat the RBI is going to increase the repo rate by almost 100 bps further aftera CRR hike of 75 bps in late February this year. Thus it would add to theinterest burden of the company which would further increase the liabilities of the company and thus degrade the quality of its balance sheet further. High attrition rate Tata Steel has traditionally faced the brunt of highattrition rate. In its Jamshedpur plant many engineers constantly change their jobs to SAIL in Bokaro and vice-versa. Thus the formation of a core team of capable individuals across all departments is very difficult as the size of the team is ever changing. Products in the portfolio lacking demand The company has certainproducts in its portfolio like aerospace steel which lacked demand in therecent past. Primarily due to the slowdown of the aviation sector which led todelay in the delivery of aircrafts as a result of cutting of capacity by airlines. The company also had certain Cast products largely marketing in the UK which has been witnessing slowdown in demand since 2001. Hence thecompany had to close down its Tee Side plant.

Degradation in brand value owing to job losses-

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TATA group has made its name synonymous to job security of it employees. But the shutdown of itsplants in the UK and The Netherlands will dent its image to a certain extent. As a result of which around 1600 employees would lose their daily livelihood. Low cost recovery There are specific products like the aerospace steel and cast products which has received feeble response in the past. Thec ompany has failed to recover costs in this business front. Laggard in technological front Companies like SAIL has efficiently introduced the XRF (X-Ray Fluorescence) in its plants at Durgapur and Bokaro over 12 months back which the Tata Steel has failed to do. Bad raw material procurement philosophy of its subsidiariesThe largest subsidiary of Tata Steel, Corus has high exposure to spot prices and a higher operational gearing among the larger European steel companies. Hence it has the risk of volatilityassociated with pricing, one of the key elements in determining profitability of a commoditycompany. Opportunities for Tata Steel: Competitive position of the company Tata Steel is the second largestproducer of steel in India and the sixth largest producer in the world. Newer technologies i)The Corex process combines an iron melter/coal gasifier vessel witha pre-reduction shaft to produce a liquid product that is very similar toblast furnace hot metal. Coal, oxygen, and pre-reduced iron are fedinto the melter/gasifier to melt the iron and produce a highly reducingoff-gas. ii) The HIsmelt process Iron reduction and coal gasification take placein a liquid metal bath. The fundamental processes of HIsmelt beganwith early experiments in Germany with bottom-blown oxygensteelmaking converters (LD, LD-AC, KMS, among others) to allow forcoal, lime, and/or iron ore injection through the bottom nozzles. iii)Direct Iron Ore Smelting

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(DIOS) process in Japan and the AISI directsteelmaking process in North America produced two similar routes tohot metal production. Both processes utilize a smelting reactor wherethe primary reactions occur in a deep slag bath as opposed to in themetal phase.3. Opportunities in the field India has geared up for rapid expansion in thefield of infrastructure. The Government of India (GoI) has earmarked Rs.1,70,000 crore forinfrastructural spending for the fiscal year 2010- 2011 and the trend is set toescalate up to the fiscal year 2025 when India is slated to become the thirdlargest economy in the world. Further many private players eitherindependently or by undergoing public private partnerships (PPP) has alsocome into the fray. The consumption of steel has been steadily increasingwith the rapid investment in the infrastructure and real estate projects. Theannual steel production of India has touched 200MT and according togovernments steel policy is expected to touch around 250 MT by 2013-2014. The demand for Indian made steel is escalating overseas out of the 200 MT of steel currently produced in India around 50% of it is exported. In the first sixmonths of the fiscal year 2009-2010 the Indian steel export almost doubledto 9.3MT from 4.4MT in the same period the previous fiscal year. Thecountrys iron ore exports during April-October 2009 period grew 20 per centover the year ago period to 53 million tons. Acquisition opportunities In the aftermath of the financial tsunamivarious mineral assets are available globally at a price which is just a shadeof their prime valuations. The government of various countries has beenputting up coal blocks under the hammer. Tata Steel has been very active in the asset acquisition space and has bagged various coal blocks in Asia, Africaetc. which is essential for its security of raw materials. Opportunities for demand of higher prices The demand for steel is on arise both domestically and internationally as a result of the enhanced focus uponinfrastructural development. Secondly with other steel projects of internationalgiants POSCO, ARCELOR MITTAL stalled due to land acquisition problems the pricesof steel are slated to soar. In the month of April 2010 the steel prices wereincreased by Rs.2500/ton and this is just the brink of the U-Shaped economicrecovery and the prices are slated to rise further in the near future. Threats faced by Tata Steel: 1. Resources to cushion the from business environmental change Tata Steel is a company floated by Tata Sons whose assets are valued ataround 108 billion USD and thus the company has enough reserves tocushion itself from market fluctuations.

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2. International competition Companies like the Indian Steel magnateLakshmi Mittals Arcelor Mittal, Posco has landed in the shores of India andhave proposed to set up 8 MT and 12 MT respectively. These are amongstthe largest steel producers in the world and have a high chance of eatinginto the market share of Tata Steel. Indian market is also plagued withcheaper Chinese made steel which is ubiquitously available and issignificantly munching through the pie of all Indian steel makers including Tata Steel. 3. Financial Crises Tata Steel is having a huge debt of 10.2 billion USD inits books and hence a huge interest burden. With the volatility of thefinancial markets and the tightening of the liquidity by the central banksthis rate is slated to go up and hence would further increase the interestburden of the company. 4. Adoptability of the company to technological changes Tata Steelhas shown immense integration abilities in the past. With the acquisitionof it has been able to imbibe the high end technological knowledge to itsproduction facilities and hence has been able to produce high quality steelat least prices and significantly bettered its operating margins. 5. Regulatory norms The government of India has chalked a strict normfor the clearance of a plant through environmental impact assessment(EIA). To get clearance from the concerned authority demands more thaneight months thus leads to delay and project cost escalation. Albeit thegovernments steel policy has been pro industry in order to increase thesteel capacity at a brisk pace. 6. Adverse effects of land acquisition picketing India is plagued withviolent agitation against land acquisition. The land acquisition process of the companys plant in Orissa has been stalled primarily due to theuprising of the land losers in the concerned area. Albeit the company isproviding with attractive compensation packages, the uprising is primarilydue to the cheap politics of the local leaders to come into the limelight. This will severely dent the companys expansion plans of the future. 7. Decrement in the sales volumes Some of the Tata Steel products(likeaerospace steel) have witnessed a severe reduction in sales and as aresult of which the production facilities of the company in the UK and TheNetherlands is facing the brunt of shut down. 8. Brand equity of the products
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Tata Steel brand is a very powerful one,can only take a product very far. Beyond that it will be necessary for the product to strike ahead with its own brand. He says, "A villager who goesto buy steel in the marketplace does not know what Tata Steel is bringingto this steel. All he knows is that it is a Tata product." That villager needsto be told about the superiority of Tata Steels product over others. This isthe work of the brand. Branding has begun to yield rich dividends. Lastyear Tata Steel sold about 345,000 tons of branded steel, whichrepresented about 12 per cent of its total steel sales, as against 265,000tons, representing 9 per cent of total steel sales, the previous year. Thisyear the company plans to more than double its volume of branded steel.Although the resultant increase in turnover of branded products will beenormous, there are miles to go before Tata Steel can rest on its laurels.

Steel Industry Analysis 1.Past , Present And Future

India's Steel Industry is more than a century old with Tata Iron & Steel Co (TataSteel) as the first integrated steel plant to be set up in 1907. Before the economic reforms of the early 1990s the Indian steel industry was a predominantly regulated one with the public sector dominating the industry. Tata Steel was the only major private sector company involved the production of steel in India. Sail and Tata Steel have traditionally been the major steel producers of India. In 1992, the liberalization of the India economy led to the opening up of various industries including the steel industry. This led to the increase in the number of producers, increased investments in the steel industry and increased production capacity. Since 1990, more than Rs 19,000 crores (US$ 4470.58 million) has been invested in the steel industry of India. India's steel industry went through a rough phase between 1997 and 2001 when the overall global steel was facing a downturn and recovered after 2002. The major factors that led to the revival of the steel industry in India after 2002 was the rise in global demand for steel and the domestic economic growth in India. India has now emerged as the fifth largest producer of steel in the world. Almost all varieties of steel is now produced in India. India has also emerged as a net exporter of steel which shows that Indian steel is being increasingly accepted in the global market. The growth of the steel industry in India is also dependant, to a large extent, on the level of consumption of steel in the domestic market. Steel consumption is significant in housing and infrastructure. In recent years the surge in housing industry of India has led to increase in the domestic demand for steel.

2.Domestic Scenario and Production

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Domestic Scenario The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 4th largest producer of crude steel and the largest producer of sponge iron or DRI in the world. As per the report of the Working Group on Steel for the 12 th Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others. At the time of its release, the National Steel Policy 2005 had envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, the Working Group on Steel for the 12 th Plan has projected that the crude steel steel capacity in the county is likely to be 140 mt by 2016-17 and has the potential to reach 149 mt if all requirements are adequately met. The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid developments in the domestic steel industry (both on the supply and demand sides) as well as the stable growth of the Indian economy since the release of the Policy in 2005. Production Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. Today, India is the 4th largest crude steel producer of steel in the world. In 2011-12 (prov), production for sale of total finished steel (alloy + non alloy) was 73.42 mt. Production for sale of Pig Iron in 2011-12 (prov), was 5.78 mt. India is the largest producer of sponge iron in the world with the coal based route accounting for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.):

Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + nonalloy) are given below: Indian steel industry : Production for Sale (in million tonnes) Category 2007-08 2008-09 2009-10 2010-11 2011-12*

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Pig Iron Sponge Iron Total Finished Steel (alloy + non alloy) Source: Joint Plant Committee; *provisional

5.28 20.37 56.07

6.21 21.09 57.16

5.88 24.33 60.62

5.68 25.08 68.62

5.78 20.37 73.42

3. Steel Industry Reforms

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. Further illustrating this plan is the fact that a number of steel plants were established in India, with technological assistance and investments by foreign countries. In 1991, a substantial number of economic reforms were introduced by the Indian government. These reforms boosted the development process of a number of industries - the steel industry in India in particular - which has subsequently developed quite rapidly. The 1991 reforms allowed for no licenses to be required for capacity creation, except for some locations. Also, once Indias steel industry was moved from the listing of the industries that were reserved exclusively for the public sector, huge foreign investments were made in this industry. Yet another reform for Indias steel industry came in 1992, when every type of control over the pricing and distribution system was removed, making the modern Indian Steel Industry extremely efficient, as well as competitive. Additionally, a number of other government measures have stimulated the growth of the steel industry, coming in the form of an unrestricted external trade, low import duties, and an easy tax structure. India continually posts phenomenal growth records in steel production. In 1992, India produced 14.33 million tonnes of finished carbon steels and 1.59 million tonnes of pig iron. Furthermore, the steel production capacity of the country has increased rapidly since 1991 - in 2008, India produced nearly 46.575 million tonnes of finished steels and 4.393 million tonnes of pig iron. Both primary and secondary producers contributed their share to this phenomenal development, while these increases have pushed up the demand for finished steel at a very stable rate. In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the total amount of domestic steel consumption was 43.925 million tones. With the increased demand in the national market, a huge part of the international market is also served by this industry. Today, India is in seventh position among all the crude steel producing countries. The following are the premier steel plants operating in India:

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1. 2. 3. 4. 5. 6. 7.

Salem Steel Plant at Tamil Nadu Bhilai Steel Plant at Chattisgarh Durgapur Steel Plant at West Bengal Alloy Steel Plants at West Bengal Visvesvaraya Iron and Steel Plant in Karnataka Rourkela Steel Plant at Orissa Bokaro Steel Plant at Jharkhand

4.Import and Export

Imports Iron & steel are freely importable as per the extant policy. Last five years import of total finished steel (alloy + non alloy) is given below:Indian steel industry : Imports (in million tonnes) Category Total Finished Steel (alloy + non alloy) Source: Joint Plant Committee; *provisional 2007-08 7.03 2008-09 5.84 2009-10 7.38 2010-11 2011-12* 6.66 6.83

Exports Iron & steel are freely exportable. Advance Licensing Scheme allows duty free import of raw materials for exports. Duty Entitlement Pass Book Scheme (DEPB) was introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB benefit on export of various categories of steel items scheme is currently applicable for steel exports. Last five years export of total finished steel (alloy + non alloy) is given below:Indian steel industry : Exports (in million tonnes) Category Total Finished Steel (alloy + non alloy) Source: Joint Plant Committee; *provisional 2007-08 5.08 2008-09 4.44 2009-10 3.25 3.64 2010-11 2011-12* 4.04

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5.Industry Structure
Indian Iron and steel Industry can be divided into two main sectors Public sector and Private sector. Further on the basis of routes of production, the Indian steel industry can be divided into two types of producers.

Integrated producers Those that convert iron ore into steel. There are three major integrated steel players in India, namely Steel Authority of India Limited (SAIL), Tata Iron and Steel Company Limited(TISCO) and Rashtriya Ispat Nigam Limited (RINL). Secondary producers These are the mini steel plants (MSPs), which make steel by melting scrap or sponge iron or a mixture of the two. Essar Steel, Ispat Industries and Lloyds steel are the largest producers of steel through the secondary route.

6. Profile of Other Major Players

Steel Authority of India Limited (SAIL) Steel Authority of India Limited (SAIL) is a leading Public Sector Undertaking (PSU) in which the Government of India owns about 86 per cent of equity. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power,
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railway, automotive and defence industries and for sale in export markets. It is ranked amongst the top ten public sector companies in India in terms of turnover. They manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL have five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias largest producer of iron ore and of having the countrys second largest mines network. This gives them a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. Bhushan Power & Steel Ltd Bhushan Power & Steel Ltd., an ISO 9002 certified company, is a merged entity of Bhushan Industries Ltd., Bhushan Metallics Ltd. and Decor Steel Ltd. Bhushan Steel has a turnover of more than USD 540 Million and is a leading manufacturer of Flat, Round and value added products in Steel. Bhushan have 7 World class and state of art plants at Chandigarh, Derabassi, Kolkata and Orissa in India. A completely integrated plant is commissioned under Phase I in Orissa and Phase II is all set for take off. In Orissa plant, technology and equipments are procured from world-renowned Companies like Luirgi from Germany, ABB Ltd., SMS Demag, Siemens etc. It is selling its Value added range of products in Secondary Steel through a large distribution network in India (comprising more than 25 sales offices) and Abroad. Jindal Steel & Power Limited (JSPL) Jindal Steel and Power (JSPL), part of the US$4 billion Jindal Organisation has business interests in steel production, power generation, mining iron ore, coal and diamond exploration/mining. The current turnover of the company is over Rs. 30 billion and on a path of catalyzing economic development of the country through its contribution to the infrastructure sector. JSPL with its obsession for excellence, is increasing its portfolio of value-added products, bringing the world's best to India and making an international mark. Production Capabilities expanded to serve the infrastructure sector, catalysing economic, development and growth. JSPL has the integrated steel plant (as approved by Joint Plant Committee) at Raigarh in the state of Chhattisgarh, India. The facilities include world's largest coal-based Sponge Iron Plant with a capacity of 1.37 million TPA using ten indigenously developed rotary kilns. A report on Indian Iron and Steel Industry integration with its captive iron & coal mines making it one of the lowest-cost producers of sponge iron The steel making capacity has been expanded from 400,000TPA to 1.15 million TPA. JSPL today is the largest private sector investor in Chhattisgarh with a total investment ofRs.100 billion. JSPL has recently signed an MoU with the State Government of Orissa to set up a 2 million tonne steel plant with an investment of Rs.13.5 billion which would be expanded to 6 million tonne and another MoU has been signed with the

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State Government of Jharkhand to set up a 5 million steel plant with an investment of Rs.120 billion. ESSAR Steel Essar Steel Limited (the "Company") is the flagship Company of the Essar Group and looks after the Groups interest in the steel business. The Company was incorporated in June 1976 under the name of Essar Construction Limited and was engaged primarily in core sector activities, including marine construction, pipeline laying, dredging and other port-related activities. In 1984, the Company ventured further into other core sectors mainly the field of exploration and development, drilling onshore and offshore oil and gas wells for Indian Public Sector oil exploration companies. In view of this the Companys name was then changed to Essar Offshore and Exploration Limited in May 1987. In August 1987, the Companys name was changed to Essar Gujarat Limited, to reflect its highly diversified business interest. In 1988, the Company made an initial public offer for its shares, which are now listed on Bombay Stock Exchange, National Stock Exchange of India and 2 other Indian Stock Exchanges. The Company diversified into the steel business in late 1980s with the purchase of an HBI manufacturing plant in Emden, Germany, which was dismantled and relocated to Hazira on the west coast of India. The HBI plant with a capacity of 0.88 MPTA was completed in March 1990 and commenced commercial production in August 1990. As part of its business strategy of focusing on the iron and steel sector, the Company hived of its unrelated businesses to a series of different companies (each of which form a part of the Group and operate at arms length relationship) - Offshore and energy operations weretransferred to Essar Oil Limited in May 1992, Civil and mechanical construction businesseswere transferred to Essar Projects Limited in March 1993.The Company with a vertical integration program in mind, commenced construction of world-class state-of-the-art technology Hot Rolled (HR) sheets and coil plant in 1992. The plant commenced trial production in April 1995 and commenced commercial production in April 1996. To reflect its business strategy of focusing on steelmaking operations, the name of the Company was changed from Essar Gujarat Limited to Essar Steel Limited in December 1995. A report on Indian Iron and Steel Industry The Company operates the following facilities at Hazira, Gujarat State: 3.4 MMTPA gas based Hot Briquetted Iron (HBI) plant; 2.4 MMTPA Hot Rolled Coils (HRC) plant

Financial Statements

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1. Profit and Loss Statement

Tata Steel Profit & Loss account ------------------- in Rs. Cr. ------------------Mar '08 Mar '09 Mar '10 Mar '11 12 mths 12 mths 12 mths 12 mths 22191.43 2537.02 19654.41 586.41 38.73 20279.55 26843.53 2495.21 24348.32 603.07 289.27 25240.66 26757.6 1816.95 24940.65 1241.08 -134.97 26046.76 31901.94 2594.59 29307.35 1435.8 173.65 30916.8

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

6063.53 8568.71 8356.45 9395.92 1038.77 1222.48 1383.44 1558.49 1589.77 2305.81 2361.48 2618.27 1654.96 2127.48 2419.89 2905.16 247.77 400.24 417.9 574.86 1029.3 1180.08 1287.04 1456.83 -175.5 -343.65 -326.11 -198.78 11448.6 15461.15 15900.09 18310.75 Mar '08 Mar '09 Mar '10 Mar '11 12 mths 12 mths 12 mths 12 mths 8244.54 9176.44 8905.59 11170.25 8830.95 9779.51 10146.67 12606.05 929.03 1489.5 1848.19 1686.27 7901.92 8290.01 8298.48 10919.78 834.61 973.4 1083.18 1146.19 0 0 0 0 7067.31 7316.61 7215.3 9773.59 0 0 0 0 7067.31 7316.61 7215.3 9773.59 2380.28 2114.87 2168.5 2912.44 4687.03 5201.74 5046.8 6865.69 5385.07 6892.44 7543.64 8914.83 22.19 109.45 45.88 0 1168.93 1168.95 709.77 1151.06 202.43 214.1 122.8 156.71 7305.84 63.85 160 298.78 7305.92 69.7 160 331.68 8872.14 56.37 80 418.94 9592.14 71.58 120 503.19

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2. Balance Sheet

Balance Sheet of Tata Steel Mar '08 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 6203.3 730.78 0 5472.52 21097.43 0 27300.73 3520.58 14501.11 18021.69 45322.42 Mar '08 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Net Fixed assets Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 16479.59 8223.48 8256.11 4367.45 12623.56 4103.19 2604.98 543.48 465 3613.46 34582.84 0.04 38196.34 0 6842.26 2913.52 9755.78 28440.56 155.11 45322.42 9250.08 298.78 ------------------- in Rs. Cr. ------------------Mar '09 Mar '10 Mar '11 12 mths 12 mths 12 mths 6203.45 730.79 0 5472.66 23501.15 0 29704.6 3913.05 23033.13 26946.18 56650.78 Mar '09 12 mths 20057.01 9062.47 10994.54 3487.68 14482.22 42371.78 3480.47 635.98 463.58 4580.03 5884.61 1127.02 11591.66 0 8965.76 2934.19 11899.95 -308.29 105.07 56650.78 12188.55 331.68 887.41 887.41 0 0 36281.34 0 37168.75 2259.32 22979.88 25239.2 62407.95 Mar '10 12 mths 22306.07 10143.63 12162.44 3843.59 16006.03 44979.67 3077.75 434.83 500.3 4012.88 6678.55 2733.84 13425.27 0 8699.34 3303.68 12003.02 1422.25 0 62407.95 13184.61 418.94 959.41 959.41 178.2 0 47307.02 0 48444.63 2013 26288.14 28301.14 76745.77 Mar '11 12 mths 22846.26 11041.16 11805.1 6969.38 18774.48 46564.94 3953.76 428.03 512.76 4894.55 16814.04 3628.78 25337.37 0 10383.04 3547.98 13931.02 11406.35 0 76745.77 12582.24 503.19

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TATA STEEL year ended HUNDRED AND FOURTH ANNUAL REPORT 2009-10 3/31/2011 crores Cash Flow Statement For The Year Ended 31st March,2010 A. cash flow form operating activities: Net profit before tax Adjustments for: Depreciation 1,146.19 (profit/loss on sale of assets/ discarded assets written off 0.62 (profit/loss on sale of other investments (648.09) impairment of assets 20.23 (Gain/loss on cancellation of forward covers/swaps/options (50.54) provision for durreinution in value of investments intrest income interest and income from current investments (385.78) income from other investments (92.66) interest charged to profit and loss account 1,686.27 Amortisation of employee separation compensation Provision for wealth tax 1.28 contribution for sporits infrestructure written off Exchange (gain/loss on revaluation of foreign currency loans (275.05) Amortisation of long term loan expenses 49.43 Operating profit before working capital changes Adjustments for : Trade and other Receivables inventories Trade Payables and other liabilites Cash generated from Operations Direct Taxes paid cash flow begore exceptional ltem Employee separation compensation paid Net cash from operating Activities B. Cash flow from investing activities: Purchase of fixed assets (4,321.85) Sale of fixed assets 387.42 Purchase of investments (97,469.30) Purchase of investments in subsidiaries (5,312.05) sale of investments 96,878.80 intercorporate deposites inter-corporate deposits/shareholder Loan (net) (3,707.39) interest received interest and income from current investments received 163.58 Dividend received 92.66 net cash used in investing Activites C. Cash flow from financing Activities: Issue of Equity Capital 4,368.01 issue of share warrants 178.20 issue of cumulative corvertible preference shares Capital contribution received 0.33 Proceeds from Hybrid perpetual securities 1,500.00 Proceeds from borrowings 6,412.04 Repayment of borrowings (4,257.64) Amount received/paid on cancellation of forward covers/swaps/options 34.61 Long term loan expenses (264.84) Interest paid (1,609.95) Dividend paid (707.95) Net cash from finaacling Activities Net increase/decrease in cash or cash equivalents(A+B+C) Opening cash and cash equivalents closing cash and cash equivalents 8,542.72

year ended 3/31/2010 crores

year ended 3/31/2009 crores

year ended 3/31/2008 crores

9,776.85 1,083.18 (7.75) (628.39) 5.60 31.03 (1,489.50) (339.79) (248.68) 1,848.19 217.53 1.00

7,214.30 973.40 6.43 (186.46) 9.98 (26.62) 0.10 (336.81) (101.62) 1,489.50 222.34 1.00 67.91 32.71 2,052.57 9,266.87 438.22 413.42 330.20 (159.25) (875.49) 1,772.03 1,181.84 10,448.71 2,079.49

7,315.61 834.61 (28.26) (9.98) 0.06 (124.30) (50.33) (170.67) 929.03 226.18 0.95 150.00 (743.60) 57.99 2,141.88 9,457.49 (143.44) (272.00) 806.34 737.29 ####### #######

7,066.36

11.13 79.52 1,451.90 11,228.75

1,071.68 8,138.04

(103.01) (876.01) 1,163.27 184.25 11,413.00 (2,870.28)

390.90 8,528.94 2,060.20 6,468.74 (214.54) 6,254.20 (2,458.97) 63.88 (31,595.17) (29,587.40) 34,110.46 (85.80) 63.75

8,369.22 (2,102.04) 78.34 (189,929.81) (5,811.84) 192,326.96 (121.68) 56.55 248.68 (2,786.29) 15.18 (59,903.25) (4,439.80) 57,181.61 90.73 312.12 101.62 5,254.84

7,397.22

170.67 9,428.08 (29,318.58)

(13,288.13)

2,421.50
-

0.25 0.14

4,881.45 5,472.52

1.76
-

6,457.36 (7,047.78) (30.82) (278.79) (1,678.44) (1,317.92) 5,652.81 907.40 3,234.14 (iv) 4141.54 1,473.13 1,641.25 (V) 1592.89 (iv) 3234.14

6,494.43 (894.39) (10.17) (32.51) (1,213.96) (1,187.37) 3,156.42 1,125.56 465.04 (v) 1590.60

17,632.70 (10,386.61) 134.41 (202.38) (746.07) (937.95) 15,848.07 (7,216.31) (v) 7681.35 (vi) 465.04

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4.Comparative Balance Sheet

Comparative Balance Sheets of Tata Steel Ltd. as on 31st march,2010 and 31st march,2011 ------------------- in Rs. Cr. ------------------A P articulars B C D = C-B E = D 100/ B P ercentage Increase/ Decrease

P revio us Current Year Abso lute Year Increase/ 2010 2011 Decrease

A. Fixed Assets: B. Investments: C. Working Capital: Current Assets (i) Less: Current Liabilities (ii) (i)-(ii) D. Capital Employed: (A+B+C) E Less: Long-term Debts F. Share-holders Funds: (D-E) Represented by:

16,006.03 18,774.48 44,979.67 46,564.94

2768.45 1585.27 0 11912.1 0 1928 9984.1 14337.82

17.30 3.52

13,425.27 25,337.37 12,003.02 13,931.02 1,422.25 11,406.35 62,407.95 76,745.77

88.73 16.06 701.99 22.97

25,239.20 28,301.14 37,168.75 48,444.63

3061.94 11275.88 0 0 0 250.2

12.13 30.34

Equity share 887.41 capital & Share Application Money Pref. Share Capital 0 Net Res. & Surplus 36,281.34

1137.61

28.19

0 47,307.02

0 11025.68 0 11275.88 0

30.39

G. Shareholder's Funds

37168.75 TRUE

48444.63 TRUE

30.34

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5.Common size Balance Sheet

Common Size Balance Sheet Of Tata Steel Limited as at 31st March,2011

------------------- in Rs. Cr. ------------------Particulars Assets: Fixed Assets Investments Current Assets Total Assets Liabilities: Equity Share Capital Pref. Share Capital Reserves and Surplus (Less Misc. Exp.) Secured Loans Unsecured Loans Current Liabilities Provisions Capital & Liabilities 16,006.03 44,979.67 13,425.27 74,410.97 18,774.48 46,564.94 25,337.37 90,676.79 21.5103096 60.4476329 18.0420575 100 20.7048353 51.352656 27.9425088 100 Previous Year 2010 (Rs) Current Year 2011(Rs) Previous Year Current Year (%) (%)

887.41 0 36,281.34 2,259.32 22,979.88 8,699.34 3,303.68 74410.97

1137.61 0 47,307.02 2,013.00 26,288.14 10,383.04 3,547.98 90676.79

1.19257953 0 48.7580527 3.03627274 30.882382 11.6909375 4.43977548 100

1.25457683 0 52.1710352 2.21997272 28.9910351 11.4506038 3.91277636 100

Datamatched Datamatched

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