Security Analysis of TATA STEEL

Security Analysis of
Submitted To:- Prof Satya Acharya

Prepared By:- Pranav J Chokshi
AMA PGP-IBM
(2008-2010)
AMA-PGPIBM (2008-2010)
Indian Economy Overview

The Indian economy is set to grow between 7 per cent and 7.5 per cent in the current fiscal,
according to Dr C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council
(PMEAC). The mid-year review has projected a growth rate of 7.75 per cent for the fiscal.
India's gross domestic product (GDP) grew by 7.9 per cent during July-September 2009, up from
6.1 per cent in the previous quarter, as per data released by the Central Statistical Organisation
(CSO). According to the latest estimates available on the Index of Industrial Production (IIP), the
index of mining, manufacturing and electricity, registered growth rates of 9.5 per cent, 9.2 per cent
and 7.5 per cent, respectively in Q2 of 2009-10, as compared to the growth rates of 3.8 per cent,
4.9 per cent and 3.2 per cent in these industries in Q2 of 2008-09. The key indicators of
construction sector, namely, cement and finished steel registered growth rates of 12.6 per cent and
2.1 per cent, respectively in Q2 of 2009-10, as against the growth rates of 5.2 per cent and 3.8 per
cent, respectively in Q2 of 2008-09.
The Economic scenario

Overseas investors have infused US$ 816.69 million into the stock market in the first trading week
of 2010, reflecting a positive start for the year after record inflows in the last year. FIIs were net
investors of US$ 973.22 million in debt instruments in the first trading week of the year, according
to the data released by Securities and Exchange Board of India (SEBI). The wealth of foreign
institutional investors (FIIs) in leading Indian companies now stands at more than double the level
a year ago, vindicating India’s image of being a safe and lucrative investment destination.
Consumers in India continued to be optimistic slightly more than what they were six months ago,
as per a latest MasterCard Worldwide Index of Consumer Confidence survey. "In India
consumers are more optimistic than six months ago (68.0) and a year ago (63.9)," said the study.
Additionally, India ranks second with 117 points in consumer confidence in the fourth quarter of
2009, according to the Nielsen Global Consumer Confidence survey. The survey results indicate
that the recovery from the global economic downturn is faster in India as compared with other
countries in the world.
Global ratings firm Moody's has upgraded long-term foreign currency (FC) deposit ratings of 14
Indian banks, including the country's largest bank. State Bank of India (SBI), by one notch to Ba1
from Ba2 with a stable outlook. This reflects a slight improvement in the credit quality of the rated
entities. This move has come in wake of the revision in India’s sovereign outlook by the ratings
firm. Among the banks which would be benefited by the ratings decision include Axis Bank, Bank
of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India,
HDFC Bank, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Punjab National Bank,
State Bank of India, Syndicate Bank and Union Bank of India.
Security Analysis of TATA Steel Page 2

India's local currency rating outlook has been raised to ‘positive' from ‘stable' by Moody's Investors
Service on the back of the country's demonstrated resilience to the global crisis and expectation
that it will resume its high growth path. The global credit rating major also held out the possibility
of upgrade of the local currency bond rating.
Of the more than 200 companies from over 50 countries that form part of the World Economic
Forum’s Global Growth Companies (GGC) Community, India today has the second largest
representation, with a total of 18 GGCs. Indian GGCs come from every sector, with a strong
representation in information technology and electronics, retail, consumer goods and banking.
The GGC Community was formed to engage high-growth companies with the potential to be
tomorrow’s industry leaders and drive economic and social change.
India ranks 49 among 133 countries in 2009-10 in the global competitiveness index (GCI)
prepared by the World Economic Forum (WEF), an improvement of one position from last year.
India’s position is a result of mixed performance across 12 categories covered by the GCI.
India’s trade confidence remains higher than the regional average as small and mid-market
business in India continue to be optimistic about their trade outlook, as indicated by the latest
HSBC Trade Confidence Index, which covers a total of 12 markets, including key economies in
the Asia-Pacific region. The businesses surveyed continued to be confident with an Index of 117,
an increase over the second quarter index of 115.
The prospect of a global economy recovery has driven confidence across the board, supported by
a sustained confidence in the domestic economy, says a survey conducted in September by JP
Morgan Asset Management, in association with ValueNotes, a market research company.
 Net capital inflows into India during the current fiscal will be about US$ 50 billion, said Dr
C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council (PMEAC),
on the sidelines of an OECD-India symposium co-hosted by the Organisation for
Economic Cooperation and Development and ICRIER. The year 2008-09 saw a net
capital outflow from the economy.
 After purchasing 200 tonne gold from IMF, India has now the highest gold reserves as a
percentage of total forex reserves, among the BRIC nations. India has US$ 17.5-billion
worth gold reserves, which is 6.66 per cent of its total forex reserves estimated at US$ 262.9
billion as on November 13, 2009.
 According to data released by the market regulator SEBI, FIIs transferred a record US$
17.46 billion in domestic equities during the calendar year 2009. This FII investment in
2009 proved to be the highest ever inflow in the country in rupee terms in a single year,
breaking the previous high of US$ 14.96 billion parked by foreign fund houses in domestic
equities in 2007.
 During the October-December period in 2009-10, FIIs made a net buy of shares worth
US$ 5.19 billion, according to data compiled from market regulator, SEBI. In the quarter,
December attracted the highest inflow of US$ 2.2 billion, followed by October US$ 1.95
billion and November US$ 1.18 billion. FIIs poured a net US$ 1.26 billion in debt
instruments during the said period.
 Indian companies have raised about US$ 2.6 billion from the international market through
external commercial borrowings and foreign currency convertible bonds (FCCBs) in
October to fund overseas acquisitions and import capital goods and modernisation and
lending. This is highest amount raised in a month by Indian companies through
ECB\FCCB route after the financial crisis intensified on collapse of Lehman Brothers in
September 2008.
 Exports from India are estimated at US$ 14.6 billion in December 2009, 9.4 per cent
higher than the level in November 2009, according to Mr Anand Sharma, Union
Commerce and Industry Minister. Export growth in December was driven by sectors such
as pharmaceuticals, engineering and auto components he added.
 In November 2009, India’s containerised volume reported a double-digit growth of 15 per
cent year-on-year, according to a report by the domestic brokerage India Capital Markets
Pvt. Ltd.
 India's logistics sector is witnessing increased activity—the country's major ports have posted
a 12.8 percent year-on-year (y-o-y) rise in cargo volumes in November 2009. The Public
Private Partnership Appraisal Committee (PPAC) has approved four projects worth over
US$ 897.7 million to be developed through the public-private partnership (PPP) mode in a
move to boost capacity at the major ports in the country.
 Foreign tourist arrivals in India in the peak tourism season of 2009-10 is set to witness a
growth of 25 per cent over the same period of 2008-09, according to Mr Vijay Thakur,
President, Indian Association of Tour Operators (IATO).
 The recovery of the Indian economy, as was broadly expected, worked well for the
advance tax figures for the third installment that was payable by December 15, 2009. The
all India direct tax collection between April and December 2009, which includes corporate
and personal taxes, increased 8.1 per cent to US$ 48.39 billion, according to figures that
are currently with the income-tax (I-T) department.
 The domestic mutual fund (MF) sector registered positive growth in November 2009.
According to the latest statistics from the Association of Mutual Funds in India (AMFI), the
assets under management (AUM) of top fund houses have increased by two to 10 per cent.
 Independent investment bank Rothschild sees potential for M&A activity in banking,
telecom and aviation in India driven by consolidation in these sectors.
 India is likely to emerge as a major hub for production of quality steel products, as per
Ratan Jindal, vice-chairman, managing director and CEO of Jindal Stainless Steel (JSL).
The International Steel Exhibition ‘Indinox’, to be held at Ahmedabad in January, will
portray India as a major destination for manufacturing steel products.
 The Indian drug retail market grew by a 29.24 per cent in value terms in October 2009
over the year ago period, more than double the average monthly revenue growth rate of 13-
14 per cent in the recent past, as per market research firm ORG IMS.
 The country's IT exports under the Software Technology Parks of India (STPI) scheme
logged an estimated US$ 46.25 billion in the first half of the current financial year, with
Bangalore accounting for over 30 per cent of the total export basket.
 India's iron ore exports more than doubled to 9.3 million tonne in October 2009 as
compared to 4.4 million tonne in the same month a year ago on the back of increase in
demand from Chinese steel producers, as per a joint study by a group of iron ore
exporters.

 India's pharmaceutical industry is the third largest in terms of volume. The Indian US$ 20
billion pharmaceutical industry has shown tremendous progress in terms of infrastructure
development, technology base creation and a wide range of products, as per the Ministry of
Chemicals and Fertilisers.
 India has joined an elite group of six countries which have successfully decoded the human
genome indigenously. The discovery, which was announced by the Council of Scientific
and Industrial Research (CSIR), will bring pharmaceutical companies a step closer to
designing drugs accounting for the specific characteristics of the Indian physiology.
 India leads the top real estate investment markets in Asia for 2010, according to a study by
PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education
and research institute.
 A new survey undertaken by Manpower Inc, a world leader in the employment services
industry, found that Indian employers are most optimistic about adding staff.
 India’s life insurance sector is expected to grow by almost 15 per cent in the current
financial year and touch a total premium income of US$ 50 billion, according to Life
Insurance Council secretary general S B Mathur.
 India which retained its numero uno position in world milk production this year as well, is
estimated to have produced 110 million tonnes of milk in 2008-09.
 The mobile subscriber base in the country crossed the 500-million mark to touch 506
million in November 2009, according to the figures released by the Telecom Regulatory
Authority of India (TRAI).
 The country’s infrastructure sector accelerated by 5.3 per cent in November 2009, backed
primarily by growth in steel and cement production in the month. The six core sectors,
which contribute 26.7 per cent to the overall Index for Industrial Production (IIP), had
grown 0.8 per cent in the corresponding month of 2008.
 According to data released by Society of Indian Automobile Manufacturers, car sales in
November stood at 1.33 lakh units in the domestic market, up from 83,121 in the same
month last year.
 According to the Gem and Jeweler Export Promotion Council, the exports of gems and
jewellery from India, the world’s largest supplier, rose 45 per cent over December 2008 to
touch US$ 1.89 billion in December 2009.
 Merger and acquisition (M&A) volumes have touched US$ 74.5 billion till January 13,
2010—the next highest Year To Date (YTD) level in ten years since 2000.
The Rural India growth story

 Estimated at close to 350 million, the bottom-of-pyramid (BOP) consumer segment is the
biggest and perhaps the fastest growing in the country with about 40 million families
making the jump from poverty to the BOP club every year. Consumer product makers
such as GlaxoSmithKline, Nestle, Coca-Cola, PepsiCo, Hindustan Unilever, Marico,
Godrej and Dabur are rushing to the bottom-of-the-pyramid market with custom-made
products six years after management guru CK Prahalad said consumers with incomes less
than $2 a day can be a profitable segment for marketers.

 Major fast moving consumer goods (FMCG) companies like Hindustan Unilever (HUL),
Marico, Godrej Consumer Products, Dabur and even brewers like Sab Miller have stepped
up hiring in small towns and rural India—primarily appointing sales staff to increase
visibility and connect, and simultaneously boost sales.
Growth potential story

 A report from the Automotive Component Manufacturers Association of India (ACMA)
estimates the turnover of the auto component industry in India will touch US$ 40 billion by
2015-16. By then India’s share in the global auto component market is likely to grow from
the current per cent to nearly per cent.
 Ernst and Young has forecast the passenger car market in India to grow by 12 per cent
annually over the next five years from the present figure of 1.89 million units to reach 3.75
million units by 2014.
 Small and medium enterprises (SMEs) are expected to contribute 22 per cent to India's
Gross Domestic Product (GDP) by 2012, up from about 17 per cent at present, according
to a survey by the Associated Chambers of Commerce and Industry of India
(ASSOCHAM).
 The healthcare industry in the country, which comprises hospital and allied sectors, is
projected to grow 23 per cent per annum to touch US$ 77-billion mark by 2012 from the
current estimated size of US$ 35 billion, according to a Yes Bank and ASSOCHAM
report.
 India’s domestic business processing outsourcing (BPO) market, that has close to 500
players, will grow at a compound annual growth rate (CAGR) of 33.3 per cent, to reach
revenues of US$ 6.82 billion by 2013, up from US$ 1.62 billion in 2008, according to a
report by information technology research firm IDC India.
 India is targeting annual foreign direct investments worth US$ 50 billion by 2012 and
would double the inflows by 2017.
 As per a study conducted by the Indian Council for Research on International Economic
Relations (ICRIER), the retail sector is expected to contribute to 22 per cent of India's
GDP by 2010.

GDP GROWTH
The India GDP is a combination of all the differential factors, contributing to the welfare of the
India economy. India GDP gives us a combined report of the performance of the Indian
economy. 'Cost factor' or 'Actual price' method - these are the two methods to calculate Indian
Gross Domestic Product. The main factor that contributed to the growth of India GDP post 1990s
was the opening-up of the Indian economy.
The balance-of-payments crisis of 80s of the Indian economy led to the paradigm shift of the
Indian Economy. The markets were opened up, the Government leveraged the entry of private
investments. As a result of this, more investments flowed into the markets. More so by the Foreign
direct investments (FDIs) and foreign institutional investors (FIIs), the India GDP growth saw a
phenomenal increase. Bulk of the Government undertakings were divested into lots of private
business houses.
Gauging the health of the India economy - India GDP is the best tool! Going by figures, India
GDP has already crossed the trillion-dollar mark, other peers in this sphere being US, Japan,
Germany, China, UK, France, Italy, Spain, Canada, Brazil and Russia.
After the liberalization era of the India economy, the growth story of the India GDP was driven by
the following sectors of Indian industry -
 Information Technology
 Information Technology Enabled Services
 Telecommunications
 Electronics and hardware
 Automobiles
 Pharmaceuticals and biotechnology
 Consumer durables
 Retail
 Textiles
 Infrastructure
 Construction
 Airlines
 Hospitality
 Power
 Oil and natural gas
 Fertilizers and chemical
The GDP of India, even after the opening up of the economy and other relaxed norms couldn't
survive the aftermath of the global financial crisis. The GDP of India over the past two fiscals
(2008-09 and 2009-10) experienced considerable slowdown.
This moderate growth of the India economy has given rise to moderate expectations with
respect of India GDP. Though various rating agencies, economists, business houses predict a

healthy growth in India GDP in the next two years, yet skepticism is still the order of the day.
Achieving a 9% GDP growth by 2012 is immensely impractical, looking at the rate at which
things are improving.
Due to the change in the economic policy of India, more foreign direct investments (FDIs) and
foreign institutional investors (FIIs) came into the country. This, in a way, strengthened the
foundation the Indian economy the confidence index of overseas investors was at a high.
With the stupendous growth of Indian Information Technology sector, Indian service industry and
the Indian BPO sector, the Indian GDP shot up to 6% during the period from 1988 to 2003. It
was after 2004, that the growth of the gross domestic product of India showed considerable
improvements, mainly geared by the growth in the Indian service and manufacturing industry. The
Indian GDP figure stood at an extraordinary 8.5% during the period thereafter. But thereafter,
what hit us was the global meltdown and its after impacts. India got swayed off; the immediate
repercussion fell on the growth pattern of the India economy. The GDP growth rate started getting
a setback and from then on it had only experienced a downward pattern.
India’s real GDP statistics –
Indicator 2005 2006 2007 2008 2009

Real GDP growth
9.21 9.82 9.37 7.35 5.36
(% growth)
Sectoral Contribution in GDP

Unemployment Rate:-
The government expected to remain steady with the GDP growth figure, but economic factors and
external situations didn’t help to maintain the figure. As of now, the GDP forecasted figure by the
Government is hovering around 9% - that is to be achieved by 2012. Does that sound a bit of an
over-estimation? Or will it be easily achieved, taking into consideration the improvement in terms
of the IIP figures, business confidence index, inflation and other allied factors?
Few snapshots of the India GDP statistics –

1. The growth rate of Indian GDP fell from 7.35% in 2008-09 to 5.36% till the end of 3rd
quarter of the 2009-10.
2. The cumulative FDI Equity inflows (from August 1991 – August 2009) stood at Rs.
5,20,589 crore.
3. Budgetary support for National Highway Development Programme (NHDP) has gone by
23% on y-o-y basis for 2009-10.
4. Expenses for the Commonwealth Games 2010, went up from Rs.2,112 crore in Interim
Budget to Rs.3,472 crore for 2009-10 fiscal.
5. Allocation to railways have gone up from Rs.10,800 crore in interim budget toRs.15,800
crore for FY 2009-10.
6. Allocation under National Rural Health Mission (NRHM) has gone up by Rs.2,057 crore
over Interim Budget estimate in 2009-10 of Rs.12,070 crore.
7. Rs.2,113 crore has been allocated for IITs and NITs, comprising of a provision of Rs.450
crore for new upcoming IITs and NITs.
8. Minimum Alternate Tax (MAT) to go up to 15% from 10%.

STEEL INDUSTRY
Sector structure/Market size
The steel industry in India has been moving from strength to strength and according to the year-
end review by the Press Information Bureau, India has emerged as the fourth largest producer of
steel in the world and the second largest producer of crude steel.
Significantly, state-owned steel maker, Steel Authority of India (SAIL), which reported a net profit
of US$ 571 million in January-June 2009, has become the most profitable steel company globally,
beating steel majors such as ArcelorMittal, Posco, Bao Steel and Nippon in the half yearly profits.
Production
Steel production reached 28.49 million tonne (MT) in April-September 2009.
The National Steel Policy has a target for taking steel production up to 110 MT by 2019–20.
Nonetheless, with the current rate of ongoing greenfield and brownfield projects, the Ministry of
Steel has projected India's steel capacity is expected to touch 124.06 MT by 2011–12. In fact,
based on the status of memoranda of understanding (MoUs) signed by the private producers with
the various state governments, India's steel capacity is likely to be 293 MT by 2020.
Consumption
India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of the
total steel used is for kitchenware. However, its use in railway coaches, wagons, airports, hotels and
retail stores is growing immensely.
India's steel consumption rose by 6.8 per cent during April-November 2009 over the same period
a year ago on account of improved demand from sectors like automobile and consumer durables.
A Credit Suisse Group study states that India's steel consumption will continue to grow by 16 per
cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.
The scope for raising the total consumption of steel is huge, given that per capita steel
consumption is only 35 kg – compared to 150 kg across the world and 250 kg in China.
Steel players like JSW Steel and Essar Steel are increasing their focus on opening up more retail
outlets pan India with growth in domestic demand. JSW Steel currently has 50 such steel retail
outlets called JSW Shoppe and is targeting to increase it to 200 by March 2010. They expect at
least 10-15 per cent of their total production to be sold by their retail outlets.
Essar Steel which currently has over 300 retail outlets across the country, plans to set up 5,000

outlets of various formats soon. It expects to sell 3MT of steel through the retail route in two years.
Exports
Out of India's annual iron ore production of more than 200 MT, about 50 per cent is exported.
India's iron ore exports more than doubled to 9.3 million tonne in October 2009 as compared to
4.4 million tonne in the same month a year ago on the back of increase in demand from Chinese
steel producers, as per a joint study by a group of iron ore exporters.
Iron ore is a key input in steel making. The country’s iron ore exports during April-October 2009
period grew 20 per cent over the year ago period to 53 million tonne, as per the study.
Investments
A host of steel companies have lined up major investment proposals. Furthermore, with an
expanding consumer market, the Indian steel industry is likely to receive huge domestic and
foreign investments.
The domestic steel sector has attracted a staggering investment of about US$ 236 billion, according
to the Minister of State for Steel A Sai Prathap.
GLOBAL STEEL INDUSTRY

The biggest boom in history of steel industry is that of the 1950s and 1960s, when the steel
industry was driven by the post-War boom in the developed world. Whereas the current boom is
being led by growth in the developing world, particularly China, India and Brazil. China is clearly
the engine that has driven steel consumption in the Asian region.. Steel prices, primarily buoyed by
the Chinese boom, hit their peak between 2002 and 2004. This ensured high profits from
investments in steel. Despite the moves towards consolidation, steel capacities are still fragmented.
The gap between Arcelor-Mittal and Nippon Steel, the second biggest producer, highlights this.
Nippon produced 32 million tons of steel in 2005 - less than one- third that of the industry leader.
More significantly, although the Tata-Corus combine will be placed at number five in the global
steel pecking order.

600
489
500
400
300
200
120
97.2
100 72.2 53.1 51.4 48.5 42.8 33.8 32
0
China Japan US Russia India South Germany Ukraine Brazil Italy
Korea
Production in MTPA
The point about consolidation is that it is only happening at the top. The top 10 companies
produce about 25 per cent of the global steel output. The rest of the steel - about 75 per cent of
the global capacity - is still widely dispersed over 62 countries around the world, in plants with
much smaller capacities. Industry sources say that consolidation needs to happen at the bottom
end of the steel.
In the year 2004, the global steel production has made a record level by crossing the 1000 million
tons. Among the top producers in the steel production, China ranked 1 in the world. Production
of steel in the 25 European Union countries was at 16.3 mmt in January 2005. Production in Italy
increased by 11.5 per cent in comparison to the same month in 2004. Italy produced 2.5 mmt of
crude steel in January 2005. Austria produced 646,000 metric tons. In Russia it increased by 4.0
per cent to reach at 5.5 mmt in January. In case of the North America region particularly in
Mexico it was 1.5 mmt of crude steel in January 2005, up by 8.0 per cent compared to the same
month in 2004.

TATA Steel- Company Analysis

Introduction:
Tata Steel, formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's
sixth largest steel company, with an annual crude steel capacity of 31 million tones. It is the largest
private sector steel company in India in terms of domestic production. Ranked 258th on Fortune
Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies.
Tata Steel is also India's second-largest and second-most profitable company in private sector with
consolidated revenues of Rs 1,32,110 crore and net profit of over Rs 12,350 crore during the year
ended March 31, 2008.
Backed by 100 glorious years of experience in steel making, Tata Steel is among the top ten steel
producers in the world with an existing annual crude steel production capacity of 30 Million
Tonnes Per Annum (MTPA). Established in 1907, it is the first integrated steel plant in Asia and is
now the world`s second most geographically diversified steel producer and a Fortune 500
Company.
Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions; the company has
become a multinational with operations in various countries. The Jamshedpur plant contains the
DCS supplied by Honeywell. The registered office of Tata Steel is in Mumbai. The company was
also recognized as the world's best steel producer by World Steel Dynamics in 2005. The
company is listed on Bombay Stock Exchange and National Stock Exchange of India, and employs
about 82,700 people (as of 2007).
Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian
markets, with manufacturing units in 26 countries. It was the vision of the founder; Jamsetji
Nusserwanji Tata., that on 27th February, 1908, the first stake was driven into the soil of Sakchi.
His vision helped Tata Steel overcome several periods of adversity and strive to improve against all
odds.
Tata Steel`s Jamshedpur (India) Works has a crude steel production capacity of 6.8 MTPA which
is slated to increase to 10 MTPA by 2010. The Company also has proposed three Greenfield steel
projects in the states of Jharkhand, Orissa and Chhattisgarh in India with additional capacity of 23
MTPA and a Greenfield project in Vietnam.
The TATA Steel story is a classic example of synergy leveraged through the inorganic route. In
2005, Tata Steel acquired NatSteel Asia. This helped the company not only to establish a
beachhead in seven countries across the region, namely Singapore, Thailand, China, Malaysia,
Vietnam, the Philippines and Australia, but also provided it with a customer base for close to two
million tones of steel. As a brand, NatSteel's strong equity in the region was yet another strategic
gain for Tata Steel. The company's strong human resources and management effectiveness is also
an inheritance of immense value. Operationally, NatSteel's finishing facilities across the region
provided Tata Steel with the necessary support for upstream capacity expansions in India, as well

as access to knowledge and expertise in downstream processing of bars and wire rods. The
acquisition of Millennium Steel in 2005, Thailand's dominant steel producer, still consolidated
Tata Steel's gains from the NatSteel deal. Millennium's three operating units gave the company a
cumulative capacity to produce 1.2 million tonnes of steel per annum through the electric arc
furnace route along with a long products rolling capacity of 1.7 million tonnes a year. Geared
towards the construction and automotive sector, Millennium provided Tata Steel strategic space in
the heart of the ASEAN region, enhancing its market position in South East Asia.
Apart from the existing backward integration with its own iron ore mines and collieries, the
company has enhanced its competitive advantage in raw materials further, buying a five per cent
interest in the Carborough Downs coal project located in Queensland, Australia. Its backward and
forward integration plans include the development of a deep-sea port in Orissa. Through
investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Holdings,
Singapore, Tata Steel has created a manufacturing and marketing network in Europe, South East
Asia and the pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in 2008,
has operations in the UK, the Netherlands, Germany, France, Norway and Belgium.
Tata Steel Thailand is the largest producer of long steel products in Thailand, with a
manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5 MTPA mini blast furnace
project in Thailand. NatSteel Holdings produces about 2 MTPA of steel products across its
regional operations in seven countries. Tata Steel, through its joint venture with Tata BlueScope
Steel Limited, has also entered the steel building and construction applications market.
The iron ore mines and collieries in India give the Company a distinct advantage in raw material
sourcing. Tata Steel is also striving towards raw materials security through joint ventures in
Thailand, Australia, Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed an
agreement with Steel Authority of India Limited to establish a 50:50 joint venture company for
coal mining in India. Also, Tata Steel has bought 19.9% stake in New Millennium Capital
Corporation, Canada for iron ore mining.
Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferro-chrome plant in

South Africa and setting up of a deep-sea port in coastal Orissa are integral to the Growth and
Globalizations 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. The Tata Group made a huge acquisition in 2006 when it acquired the
Dutch company Corus for more than USD12 billion, making Tata-Corus one of the world's largest
steelmakers.

SWOT Analysis
STRENGTHS
 Tata Steel’s Indian operations are self-sufficient in the case of its major raw material iron
ore through its captive mines.
 Very advanced Research and Development wing which is carrying out researches and
experiments in the areas of raw materials, blast furnace productivity, steel making, product
development, process improvement etc. Several thrust area projects were taken up
 Tata had a strong retail and distribution network in India and SE Asia. Tata was a major
supplier to the Indian auto industry and the demand for value added steel products was
growing in this market.
 The Company is on its way to reach a crude steel capacity of 10 million tones per annum
by FY 2011. The first phase of reaching the crude steel capacity of 6.8 million tones per
annum, Brown field projects, is nearing completion
 The Company has in place adequate internal control systems and procedures
commensurate with the size and nature of its business. The effectiveness of the internal
controls is continuously monitored by the Corporate Audit Division of the Company.
Corporate Audit’s main objective is to provide to the Audit Committee and the Board of
Directors, an independent, objective and reasonable assurance of the adequacy and
effectiveness of the organization’s risk management, control and governance processes.
Corporate Audit also assesses opportunities for improvement in business processes,
systems & controls and may provide recommendations, designed to add-value to the
organization. It also follows up on the implementation of corrective actions and
improvements in business processes after review by the Audit Committee and Senior
Management
 Tata Steel has been on a path of accelerated growth with foray into several geographies and
markets through aggressive mergers and acquisitions.
 Tata Steel addresses the risk of cyclicality of the Steel industry by marinating rich product
mix and higher value added products whose volatility is lower. Moreover, the industry itself
has been undergoing some structural changes with Consolidations. These changes are
expected to bring in greater stability to prices.
 Tata Steel with its modernization plans has ensured that it deploys the best technologies to
ensure quality, cost-efficiency and environment-friendly processes. Through acquisition of
Corus and with new Greenfield ventures, Tata Steel has ensured that it has diversified the
concentration risk in single technology of Iron & Steel making

Weakness
 Endemic Deficiencies: These are inherent in the quality and availability of some of the
essential raw materials available in India, eg, high ash content of indigenous coking coal
adversely affecting the productive efficiency of iron-making and is generally imported.
Advantages of high Fe content of indigenous ore are often neutralized by high basicity
index. Besides, certain key ingredients of steel making, eg, nickel, Ferro-molybdenum are
also unavailable indigenously.
 India is deficient in raw materials required by the steel industry. Iron ore deposits are finite
and there are problems in mining sufficient amounts of it. India's hard coal deposits are of
low quality and the prices of coking and non-coking coal are ever increasing
 Raw materials for steel production are rapidly depleting and are nonrenewable; company
has to come up with sustainable methods in steel production.
 Steel production in India is also hampered by power shortages.
 Insufficient freight capacity and transport infrastructure impediments to hamper the growth
of Indian steel industry.
 Low Labour Productivity: In India the advantages of cheap labour get offset by low labour
productivity; eg, at comparable capacities labour productivity of SAIL and TISCO are 75
t/manyear and 100 t/manyear, for POSCO, Korea and NIPPON, Japan the values are
1345 t/man year and 980 t/manyear.
 High Cost of Basic Inputs and Services: High administered price of essential inputs like
electricity puts Indian steel industry at a disadvantage; about 45% of the input costs can be
attributed to the administered costs of coal, fuel and electricity, eg, cost of electricity is 3
cents in the USA as compared to 10 cents in India; and freight cost from Jamshedpur to
Mumbai is $50/tonne compared to only $34 from Rotterdam to Mumbai.
OPPURTUNITIES
 The biggest opportunity before Indian steel sector is that there is enormous scope for
increasing consumption of steel in almost all sectors in India.
 Unexplored Rural Market: The Indian rural sector remains fairly unexposed to their multi-
faceted use of steel. The rural market was identified as a potential area of significant steel
consumption way back in the year 1976 itself. However, forceful steps were not taken to
penetrate this segment. Enhancing applications in rural areas assumes a much greater
significance now for increasing per capital consumption of steel. The usage of steel in cost
effective manner is possible in the area of housing, fencing, structures and other possible

applications where steel can substitute other materials which not only could bring about
advantages to users but is also desirable for conservation of forest resources.
 Excellent potential exist for enhancing steel consumption in other sectors such as
automobiles, packaging, engineering industries, irrigation and water supply in India. New
steel products developed to improve performance simplify manufacturing/installation and
reliability is needed to enhance steel consumption in these sectors.
 It is estimated that world steel consumption will double in next 25 years. Quality
improvement of Indian steel combined with its low cost advantages will definitely help in
substantial gain in export market.
 The Tata Steel Group is leveraging the Group’s collective Research and Development
experience in the Group’s various geographies to further enhance the Group’s
performance and also the integration process.
 Corus acquisition bring in a tremendous technological advantage by access to best practices

in global steel industry
 Global M&A brought in following synergies

• Greater productivity leading to increased output and market size.
• Greater economies of scale leading to cost reduction through combined buying
• Cross fertilization of Research and Development capabilities and operational best
practices, leading to greater innovation and operational efficiencies.
 Booming infrastructure has opened up high demand for steel worldwide
THREATS
 In the developed world, industries have been facing rising environmental costs due to the
increased concerns on Global Warming. It is, therefore, a challenge and responsibility for
the Steel industry to be the trustee in conservation of nature for future generations
 It is recognized that the steel and aluminum industries are significant contributors to man-
made greenhouse gas emissions as the manufacture of steel produces carbon dioxide
(CO2), and the manufacture of primary aluminum generates both CO2 and per
fluorocarbons (PFCs).
 High raw material input cost and scarcity of nonrenewable raw materials are a threat to the
industry.( eg: Coal, limestone etc)

 Threat of Substitutes: Plastics and composites pose a threat to Indian steel in one of its
biggest markets automotive manufacture. For the automobile industry, the other material at
present with the potential to upstage steel is aluminum. However, at present the high cost
of electricity for extraction and purification of aluminum in India weighs against viable use
of aluminum for the automobile industry. Steel has already been replaced in some large
volume applications large diameter water pipes (RCC pipes), small diameter pipes (PVC
pipes).
Porter Five Forces Model

Backed by robust volumes as well as realizations, steel Industry has registered a phenomenal
growth across the world over the past few years. The situation in the domestic industry was no
exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy.
However, the current liquidity crisis seems to have created medium term hiccups. In this case we
have analyzed the domestic steel sector through Michael Porter’s five force model so as to
understand the competitiveness of the sector as well as pointed out the initiatives taken by Tata
Steel to safeguard its position from all the five forces of threats, namely:

Entry barriers: High
Capital Requirement: Steel industry is a capital intensive business. It is estimated that to set up 1
mtpa capacity of integrated steel plant, it requires between Rs 25 bn to Rs 30 bn depending upon
the location of the plant and technology used.
Tata Steel has already made sufficient efforts to safeguard itself in this regard. Its has a lineup of
Greenfield projects which it plans to establish not only in domestic markets( Jharkhand, Orissa &
Chhattisgarh but also internationally( Bangladesh , Iran & Vietnam). Besides, it has already
completed its expansion capacity of its existing plant from 5 mtpa to 6.8 mtpa at Jamshedpur with
an investment of Rs 5,000 crore, while it is in the process of expanding the capacity from 6.8 mtpa
to 10 mtpa with an estimated investment of Rs 15,000 crore. The company has invested Rs 8,000
crore out it and it expects to achieve 10 mtpa capacity by 2011-12. It would prove to be very
difficult for any new entrant to come up with such huge investment outlays.
Economies of scale: As far as the sector forces go, scale of operation does matter. Benefits of
economies of scale are derived in the form of lower costs, R& D expenses and better bargaining
power while sourcing raw materials.
Tata Steel being an integrated steel company has its own mines for key raw materials such as iron
ore and coal and this protects them for the potential threat for new entrants to a significant extent.
Tata Steel owns raw material assets such as coal and limestone mines through joint ventures or
completely, with the assets spread across countries such as Australia, Oman and Mozambique.
Government Policy: The government has a favorable policy for steel manufacturers. However,
there are certain discrepancies involved in allocation of iron ore mines and land acquisitions.
Furthermore, the regulatory clearances and other issues are some of the major problems for the
new entrants.
Tata Steel being a century old company under the flagship Tata Sons which is known for its
Corporate Social Responsibility already enjoys a respectable position in front of the Indian
Government. The Jharkhand government on May,24th 2009, has granted a prospecting licence
(PL) to Tata Steel for the Ankua iron ore mines. A senior company official said that Tata Steel has
been allocated 1,800 hectares for prospecting in the Ankua area. Another 10,000 acres of land will
be allocated to them for their project in Ranchi.
Product differentiation: Steel has very low barriers in terms of product differentiation as it doesn’t
fall into the luxury or specialty goods and thus does not have any substantial price difference.
However, Tata Steel still enjoy a premium for their products because of its quality and its brand
value created more than 100 years back. Tata Steel has introduced brands like Tata Steelium (the
world's first branded Cold Rolled Steel), Tata Shaktee (Galvanized Corrugated Sheets), Tata
Tiscon (re-bars), Tata Bearings, Tata Agrico (hand tools and implements), Tata Wiron (galvanized

wire products), Tata Pipes (pipes for construction) and Tata Structura (contemporary construction
material).Apart from these product brands, the company also has in its folds a service brand called
“steeljunction”.
Currently two Global Steel majors namely Arcelor- Mittal, which is the world’s largest I and
POSCO, are posed to be the biggest threat as they plan to enter the Indian Steel Industry very
soon.
Competition: High
The steel industry is truly global in terms of competition with large producing countries like China
significantly influencing global prices through aggressive exports.
Steel, being a commodity it is, branding is not common and there is little differentiation between
competing products.
The 4 major domestic rivals are SAIL, JSW, ISPAT & ESSAR STEEL. Rest are all smallish mills
which together accounts for 30 % of the total market share. The market shares of the 5 major
players in the Indian Steel Industry are :
COMPETITION ANALYSIS
I. Concentration Ratio:
In Economics the concentration ratio of an industry is used as an indicator of the relative size of
firms in relation to the industry as a whole. This may also assist in determining the market form of
the industry. One commonly used concentration ratio is the four-firm concentration ratio, which
consists of the market share, as a percentage, of the four largest firms in the industry. In general,
the N-firm concentration ratio is the percentage of market output generated by the N largest firms
in the industry
The 4 firm concentration ratio of the Iron and Steel Industry is 71%.This implies that there is
oligopoly in the industry as it is dominated my few major players. Major percentage of market
output is generated by the 4 Largest firms in the industry.
All the major domestic competitors like SAIL, ESSAR, JSW, JSPL have announced massive
expansion plans recently:
 SAIL has announced that it will achieve production capacity of 40 Million Tons by 2020.
 JSW plans to expand its production to 32 Million Tons by 2020
 Other players such as JSPL, ESSAR have similar production expansion plans which will
contribute in overall achievement of 200 Million Tons steel production by the year 2020.

Bargaining power of suppliers: High
 The bargaining power of suppliers is low for the fully integrated steel plants as they have
their own mines of key raw material like iron ore coal for example Tata Steel. However,
those who are non-integrated or semi integrated has to depend on suppliers. An example
could be SAIL, which imports coking coal.
 Since domestic raw material sources are insufficient to supply the Indian steel industry, a
considerable amount of raw materials has to be imported. For example, iron ore deposits
are finite and there are problems in mining sufficient amounts of it. India’s hard coal
deposits are of low quality. For this reason hard coal imports have increased in the last five
years by a total of 40% to nearly 30 million tons. Almost half of this is coking coal (the
remainder is power station coal). India is the world’s sixth biggest coal importer. The rising
output of electric steel is also leading to a sharp increase in demand for steel scrap. Some
3.5 million tons of scrap have already been imported in 2006, compared with just 1 million
tons in 2000. In the coming years imports are likely to continue to increase thanks to
capacity increases.
 Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto supply nearly
two-thirds of the processed iron ore to steel mills and command very high bargaining
power. In India too, NMDC is a major supplier to standalone and non–integrated steel
mills.
 In order to safeguard itself from the high bargaining power of the buyers, Tata Steel has
forayed much earlier into the strategy of ‘Backward Integration’.
Threat of substitutes: Low

 Plastics and composites pose a threat to Indian steel in one of its biggest markets —
automotive manufacture. For the automobile industry, the other material at present with
the potential to upstage steel is aluminium. Perhaps the most attractive alternative to
stainless is aluminium. Stainless producers themselves are offering their customers a range
of alternatives in an effort to prevent business being lost to non-ferrous or carbon steel
materials. Such options include lower-nickel duplex grades and ferritic types. In the
meantime, nickel’s fluctuations will continue to create problems for the stainless industry
worldwide.
 However, at present in India the high cost of electricity for extraction and purification of

aluminum weighs against viable use of aluminium for the automobile industry. Steel has
already been replaced in some large volume applications: railway sleepers (RCC sleepers),
large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and domestic
water tanks (PVC tanks). The substitution is more prevalent in the manufacture of
automobiles and consumer durables
Bargaining power of Consumers: Mixed
 Some of the major steel consumption sectors like automobiles, oil & gas, shipping,
consumer durables and power generation enjoy high bargaining power and get favorable
deals.
 However, small and retail consumers who are scattered and consume a significant part do
not enjoy these benefits.

FINANCIAL RATIO ANALYSIS OF TATA

STEEL
Liquidity Ratios:
Liquidity Ratios measures the ability of the firm to meet its short term obligations. They also reflect
the firm's ability to meet financial contingencies that might arise.
 Current Ratio: - This ratio indicates the firm's ability to meet its current liabilities. This
ratio is of very high importance to the suppliers of short term funds like the bankers and trade
creditors.
As per Balance sheet 31st March 2008-2009 All figures in

crores
Year Current Assets Current Liabilities Current Ratio
2008 3613.70 3855.26 0.94
2009 5707.05 6039.86 0.94
Analysis: The industry norm value of current ratio is 2:1. However it does not mean so that
higher current ratio means good company profile. It may signify higher unused cash, inventory
which again may result in inventory carrying cost.
In both the years the Current ratio for Tata Steel is same. However it does not mean any
increase or decrease in current ratio of any company gives the growth profile of the company.
Quick Ratio: This ratio is calculated on pre assumption that all the current assets are of same
level of liquidity. But this is not the reality. Cash in Hand is more liquid that the same cash
equivalent of inventory. So to get a real picture of liquidity we calculate Liquid Ratio. It is
calculated by (Current Asset-Inventory — Prepaid Expense / Current Liability).


crores
Current Assets-
Inventory-Prepaid
Year Expenses Current Liabilities Quick Ratio
2008 13570.52 3855.26 3.52
2009 3442.72 6039.86 0.57
Analysis: - As per the industry norms the Quick Ratio should be 1:1. There is a huge
difference between the Quick Ratios of the company. It also shows the decreasing trend. In
the year 2008 there was high unutilized cash. But for the current year the situation is more
balanced.
Profitability Ratios: - This ratio shows a company's effectiveness on generating profit.

In other words the profitability ratio reflects a company's operating performance.
 Gross Profit Ratio: - Gross Profit is defined as Sales/ Cost of Goods Sold.Now the
Gross Profit Ratio is a ratio of Gross Profit to the Sales. We express it in terms of Gross
Profit Margin. It is the amount of each rupee of sale that letf over atfer repaying the Cost of
Goods Sold.

crores
Gross profit
Year Gross Profit Sales Margin
2008 7515.05 19933.83 37.70
2009 8295.84 24624.04 33.69

Analysis: - It indicates the Gross Profit over sales of any company. This ratio can be changed by
1. Change in Sales Volume. 2. Changes in sales price 3. Change incost of production.
According to the data of 2007 and 2008 there is a decrease of Tata Steel in earningthe Gross profit
which we can find out form the above table.
Operating Profit Margin: - This ratio signifies the operational efficiency of any business entity. In
this case alower ratio indicates the higher efficiency.

crores
Operating Profit Operating profit
Year (EBIT) Sales Margin
2008 8306.25 19933.83 41.94%
2009 9278.34 24624.04 37.68%
Analysis: - There is a decrease in Operating Profit Ratio for Tata Steel. According to the sales
figure the EBIT value in 2009 in comparatively less than that of 2008. As we know a lower
operating profit ratio indicates higher efficiencyof the firm. So, on the basis of the calculated data
we can say that the operatingefficiency of Tata Steel has actually increased for the current year
with acomparison between 2008 and 2009.
Net Profit Ratio: - It relates the firms Net Profit and the firm's Sales level. It indicates what
percentage of every rupee of sales the firm was able to transform into the Net Profit. The net profit
margin measures the profit that is available from each rupee of sales after all expenses have been
paid, including cost of goods sold, selling, general and administrative expenses, depreciation, interest
and taxes.


crores
Year PAT Sales Net profit Margin
2008 4670.49 19933.83 23.43%
2009 5193.21 24624.04 21.09%
Analysis:- We can see that there is a decrease in the Net Profit Margin. Actually it indicates
the firm's ability to transfer its sales into the netprofit. So, here analyzing the consecutive two
years data we can see thatthe profitability of Tata Steel has actually decreased in 2009 than of
theyear 2008.
 Return On Total Assets :- It relates the profit of the firm to its tangible assets.
In other words it indicates the how much profit the firm has gained by utilizing
its resources.

crores
Return on Total
Year PAT Total Assets Assets
2008 4670.49 47075.52 9.92%
2009 5193.21 58714.77 8.84%
Analysis: - Again we can see that there is reduction in the return to total asset ratio. The
retunr Tata Steel earned over their Total Asset in 2008the value reduced in the year 2009. It
also means to achieve a certainamount of revenue Tata Steel has used more amount of its
capital.

LEVERAGE RATIOS:-
Leverage ratios indicate the extent to which the firm has financed its assets by borrowing. The use of
debt financing increases the risk of the firm. The leverage ratios reflect the financial risk posture of the
firm. The more extensive the use of debt, the higher would the firm's leverage ratios and more risk
present in the firm. Some of the leverages ratios are explained below.
Debt Equity Ratio:- Though it doesn't signify anything related to meeting short term liability it
is otfen discussed under this topic. A firm has two optionswhen going for expansion one is raising
debt and other going for public issue.Generally very high debt is not preferred by the investors
because it signifies therisk and high form of equity has threat of hostile bid and acquisition.
Year Debt equity Ratio Long Term Debt to Equity Ratio

2008 1.08 1.07
2009 1.34 1.31
Analysis :- - Here we can see that in both Debt Equity Ratio and in Long Term Debt Equity
Ratio has increase for both of the years. Logically speaking that when this ratio for any company
increase it does not show good performance of thecompany.
Interest Coverage Ratio: - This ratio is the sum of the net earnings before taxes and interest
charge divided by the interest expenditure.
Year Interest Coverage Ratio

2008 8.35
2009 5.71
Analysis: - It actually measures the firm's ability to meet the interest obligations. Here in this case we
can see that the interest coverage ratio is decreasing, it means the firm's ability is reducing.

Market Value Ratios
Price Earning Ratio:- - This ratio highlights the relationship between the market price of a share
and the current earnings per share. The market value, on theother hand is the value of equity as
perceived by investors.
Year Price Earing Ratio

2008 10.83
2009 2.97
Analysis:- It actually denotes the company's future prospect. As here we can see that there is
decrease in the price earnings ratio it show's a decrease in company's growth profile.
Earning Per Share :- The shareholders invest their money with theexpectation of getting
dividends and capital appreciation on the shares. . Since theearnings form the basis for dividend
payments as well as a basis for any futureincrease in the market price of the shares, investors are
always extremely interestedin knowing the earnings per share.
Year Earning Per Share

2008 60.45
2009 66.80
Analysis: -Here it shows that for Tata Steel the earning per share increasing. It is good symbol form
the company prospective as well as from the Share Holder's prospective also. Seeing more earning
there is a chance for share holders to invest on the company.

Rs. In
Crore
Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Net Profit 4,904.03 4,447.90 4,287.88 3,463.25 3,441.17
NP Growth 0.10 0.04 0.24 0.01
Equity Share capital 730.79 730.78 580.67 553.67 553.67
Preference Share Capital 5,472.66 5,472.52
Reserve and Surplus 23,501.15 21,097.43 13,368.42 9,201.63 6,506.25
Share holder's Equity 29704.6 27300.73 13949.09 9755.3 7059.92
ROE 0.17 0.16 0.31 0.36 0.49
Average ROE 0.296
Rs. In
Crore
Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
EPS 69.7 63.85 72.74 63.35 62.77
EPS growth 0.09 -0.12 0.15 0.01
Average EPS Growth 0.03
Market Price 205.9 694.35 449.65 521.75 409.25

P/E ratio 2.95 10.87 6.18 8.24 6.52
Average P/E ratio 6.95
Expected EPS on 31st March 2010 71.910694
Expected Mkt Price on 31st March 2010 500.01269
The Current Market Price of TATA Steel is 673 while our expectation
was to be near 500. Hence the stock is overvalued and the investors
should not invest in the stock. And if the investors are having the stock
they should sell it off.

BIBLIOGRAPHY
 Karvy Research Report
 Angel Broking Report
 www.moneycontrol.com
 www.cygnus.com
 Jaypee Research Desk
 www.economictimes.com

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Security Analysis of

Submitted To:- Prof Satya Acharya

Indian Economy Overview

The Economic scenario

Security Analysis of TATA Steel Page 2

Security Analysis of TATA Steel Page 4

The Rural India growth story

Security Analysis of TATA Steel Page 5

Growth potential story

Security Analysis of TATA Steel Page 6

Security Analysis of TATA Steel Page 7

India’s real GDP statistics –

Indicator 2005 2006 2007 2008 2009

Sectoral Contribution in GDP

Security Analysis of TATA Steel Page 8

Few snapshots of the India GDP statistics –

Security Analysis of TATA Steel Page 9

Security Analysis of TATA Steel Page 10

GLOBAL STEEL INDUSTRY

Security Analysis of TATA Steel Page 11

Security Analysis of TATA Steel Page 12

TATA Steel- Company Analysis

Security Analysis of TATA Steel Page 13

Exploration of opportunities in titanium dioxide business in Tamil Nadu, ferro-chrome plant in

Security Analysis of TATA Steel Page 14

Security Analysis of TATA Steel Page 15

 Steel production in India is also hampered by power shortages.

Security Analysis of TATA Steel Page 16

 Corus acquisition bring in a tremendous technological advantage by access to best practices

 Global M&A brought in following synergies

 Booming infrastructure has opened up high demand for steel worldwide

Security Analysis of TATA Steel Page 17

Porter Five Forces Model

Security Analysis of TATA Steel Page 18

Entry barriers: High

Security Analysis of TATA Steel Page 19

Security Analysis of TATA Steel Page 20

Bargaining power of suppliers: High

Threat of substitutes: Low

Security Analysis of TATA Steel Page 21

Bargaining power of Consumers: Mixed

Security Analysis of TATA Steel Page 22

FINANCIAL RATIO ANALYSIS OF TATA

As per Balance sheet 31st March 2008-2009 All figures in

Security Analysis of TATA Steel Page 23

As per Balance sheet 31st March 2008-2009 All figures in

Profitability Ratios: - This ratio shows a company's effectiveness on generating profit.

As per Balance sheet 31st March 2008-2009 All figures in

Security Analysis of TATA Steel Page 24

As per Balance sheet 31st March 2008-2009 All figures in

Security Analysis of TATA Steel Page 25

As per Balance sheet 31st March 2008-2009 All figures in

As per Balance sheet 31st March 2008-2009 All figures in

Security Analysis of TATA Steel Page 26

Year Debt equity Ratio Long Term Debt to Equity Ratio

Year Interest Coverage Ratio

Security Analysis of TATA Steel Page 27

Market Value Ratios

Year Price Earing Ratio

Year Earning Per Share

Security Analysis of TATA Steel Page 28

Market Price 205.9 694.35 449.65 521.75 409.25

Expected Mkt Price on 31st March 2010 500.01269