G.kritika - A Summer Internship Project PDF

Summer Internship Project - G.
Kritika
A SUMMER INTERNSHIP PROJECT

ON
“WORKING CAPITAL MANAGEMENT OF TATA STEEL” AND
COMPARATIVE “ANALYSIS OF TATA STEEL WITH SAIL & JINDAL”
FOR
BY
GOPI KRITIKA
Regd. No. - ESCI/PGDM-GEN/16/641
Under the guidance of

Mr. Pranav Mishra
Sr. Manager
Tata Steel - Tubes Division.
In partial fulfilment of
POST GRADUATE DIPLOMA IN MANAGEMENT
ENGINEERING STAFF COLLEGE OF INDIA

HYDERABAD-500038.
TELANGANA.
(2016-18)
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Summer Internship Project - G. Kritika
DECLARATION
I hereby declare that the summer internship project entitled “Working Capital Management of Tata Steel
and Comparative analysis of Tata Steel with Sail and Jindal,” is a bonafide work duly completed by me.
The project duration was of 45 days.
It does not contain any part of summer internship project or thesis submitted by any other candidate to
this or any other institute of the university.
The findings and conclusions of this report are based on the personal study and experience. All such
materials that have been obtained from other sources have been duly acknowledged.
GOPI KRITIKA
Regd. No. - ESCI/PGDM-GEN/16/641
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CERTIFICATE
This is to certify that the Summer Internship Project Report entitled “Working capital management of
Tata Steel and Comparative analysis of Tata Steel with Sail and Jindal,” submitted by Gopi Kritika
(Reg.no. ESCI/PGDM-GEN/16/641) in partial fulfilment of Post Graduate Diploma in Management at
Engineering Staff college of India, Hyderabad, is a record of bonafide work carried out by her under my
guidance and supervision.
Mr. Pranav Mishra

Sr. Manager
Tata Steel - Tubes Division.
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ACKNOWLEDGEMENTS
It was indeed a great privilege for gaining a Summer Internship Training (May-June‟17) experience with
TATA STEEL, Jamshedpur. However, it would not have been possible without the kind support and help
of many individuals and organizations. I would like to extend my sincere thanks to all of them. I am also
grateful to Tata Steel Limited for providing me expertise, and technical support in completion of my
project. Without their superior knowledge and experience, this Project would have not been possible, and
thus their support has been essential.
I would like to thank my Project guide, Mr. Pranav Mishra for guiding me on various aspects, adding
valuable inputs and leading me to the right path to the completion of my project during my internship.
I would also like to express my heartfelt regards to my parents, my college mentors, my friends, company
mentor & staff of Tata Steel Ltd and others who directly or indirectly helped me for the successful
completion of my project report on “Working Capital Management.”
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CONTENTS
S.N PAGE
NAME OF THE TOPIC
O. NO.
ABSTRACT 7
EXECUTIVE SUMMARY 8
LITERATURE REVIEW 9
1 INTRODUCTION 10-11
1.1. PURPOSE OF THE TSUDY
1.2. SCOPE OF THE STUDY
2 RESEARCH DESIGN 12-13
2.1. SATEMENT Of PROBLEM
2.2. OBJECTIVES OF RESEARCH
2.3. METHODOLGY – DESCRIPTIVE
2.4. TOOLS AND TECHNIQUES FOR COLLECTION OF DATA
2.5. ANALYSIS AND INTERPRETATION
2.6. LIMITATIONS
3 TATA STEEL- AN OVERVIEW 14-20
3.1. GROWTH OF IRON AND STEEL INDUSTRIES IN INDIA
3.2. ABOUT TATA STEEL
3.3. VISION, MISSION AND CORE VALUES
3.4. MAJOR PLAYERS OF STEEL AND TUBE INDUSTRIES TAKEN IN THIS
PROJECT
3.5. SWOT ANALYSIS
3.6. MICHAEL PORTER'S FIVE FORCES ANALYSIS
4 CONCEPTUAL FRAMEWORK 21-28
4.1. INTRODUCTION TO WORKING CAPITAL MANAGEMENT
4.2. OBJECTIVES
4.3. SIGNIFICANCE
4.4. CLASSIFICATION
4.5. TYPES OF WORKING CAPITAL NEEDS
4.6. FINANCING OF WORKING CAPITAL
4.7. FACTORS DETERMINING WORKING CAPITAL REQUIREMENT
4.8. WORKING CAPITAL CYCLE
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4.9. SOURCES OF WORKING CAPITAL
4.10. LIQUIDITY VS. PROFITABILTY
5 WORKING CAPITAL OF TATA STEEL 29-50
5.1. ESTIMATION OF WORKING CAPITAL OF TATA STEEL (2013-2016)
5.2. GROSS AND NET WORKING CAPITAL OF TATA STEEL
5.3. RATIOS WORKED IN THIS PROJECT (THEORY)
I. LIQUIDITY RATIOS
II. MANAGEMENT EFFICIENCY RATIOS
III. SOLVENCY RATIOS
IV. PROFITABILITY RATIOS
RATIOS WORKED IN THIS PROJECT (PRACTICAL)
5.4. COMPARATIVE ANALYSIS OF TATA STEEL, SAIL AND JINDAL.
6 COST SHEET OF TATA STEEL 21
7 AN OVERVIEW OF TATA STEEL'S FINANCIAL RATIOS 23-53
8 TATA STEEL- TUBES SBU (STRATEGIC BUSINESS UNIT) 54-59
8.1 ABOUT
8.2 STRUCTURE OF TATA STEEL- TUBES SBU
8.3 TUBES MANUFACTURING PROCESS IN TATA STEEL- TUBES SBU
8.4 PRODUCTION AND SALES OF TATA STEEL- TUBES SBU
8.5 COMPARISION OF PRODUCTION AND SALES OF TATA STEEL- TUBES
SBU WITH APL APOLLO TUBES.
FINDINGS OF THIS REPORT

CONCLUSION
SUGGESTIONS
ANNEXURES - APL APOLLO TUBES AND TUBE PRODUCTS OF INDIA
64-69
LTD.(DATA)
ANNEXURE 1 - APL APOLLO TUBES (CHARTS)
ANNEXURE 2 - TUBE PRODUCTS OF INDIA LTD (CHARTS)
BIBLIOGRAPHY & REFERENCES 70
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ABSTRACT
Working capital management refers to the administration of all components of working capital-cash,
marketable securities, debtors and stock and creditors. Working capital is one of the powerful
measurements of the financial position. The words of H. G. Guthmann, clearly explains the importance of
working capital. “Working Capital is the life-blood and nerve centre of the business”. The goal of
working capital management is to manage the firm‟s current assets and current liabilities in such a way
that a satisfactory level of working capital is maintained. In several units there is adequate working
capital but the mismanagement of working capital increases the costs and reduces the rate of return. The
efficient management of working capital minimizes the cost and can do much more for the success of the
business.
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EXECUTIVE SUMMARY
As a part of the curriculum, every student undergoing the PGDM(post graduate diploma in management)
program, has to undertake a project on a particular subject assigned to him/her. Accordingly I have been
assigned the project work on the study of WORKING CAPITAL MANAGEMENT in TATA STEEL
Pvt. Ltd.
Decisions relating to working capital (current assets and current liabilities) and short term financing are
known as working capital management. A business uses working capital in its day to day operations. It
serves as a metric for how efficiently a company is operating and how it is financially stable in the short
term.
A proper management of working capital is essential to a company‟s fundamental financial health and
operational success of a business. A hallmark of a good business management is the ability to utilize
working capital management to main a solid balance between growth, profitability and liquidity. The
main indication of working capital management is whether a company is able to cover short term debts
and expenses.
Working capital is used in Tata Steel for the following purpose:
i. Raw materials
ii. Work in progress
iii. Finished goods
iv. Inventory
v. Sundry debtors
vi. Day to day cash requirements.
Ratio analysis has been carried out using annual reports for last 3 accounting years i.e., 2013-14, 2014-15,
2015-16. Various ratio analysis have been taken out on the basis of the data provided so as to find out the
trends of working capital requirements in TATA STEEL LIMITED, a leading manufacturer of the steel
in the world. A brief study of Indian steel has carried out a comparative analysis of TATA STEEL
LIMITED (TSL) AND JINDAL STEEL AND POWER LTD (JSPL) AND SAIL. Thus this analysis
studies the different techniques used by different companies and how effective those prove in this
competitive environment.
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LITERATURE REVIEW
Many researchers have studied working capital from different views and in different environments. The
following study was very interesting and useful for our research:
 Mr. N.Suresh Babu and Prof. G.V.Chalam (2014) Suggest that managers can create value for
their shareholders by reducing the number of day‟s accounts receivable and increasing the account
payment period and inventories to a reasonable maximum and also suggests that managers of
these firms should spend more time to manage cash conversion cycle of their firms and make
strategies of efficient management of working capital.
 Daniel Mogaka Makori and Ambrose Jagongo (2013) Suggest that the management of a firm
can create value for their shareholders by reducing the number of day‟s accounts receivable. The
management can also create value for their shareholders by increasing their inventories to a
reasonable level. Firms can also take long to pay their creditors in as far as they do not strain their
relationships with these creditors. Firms are capable of gaining sustainable competitive advantage
by means of effective and efficient utilization of the resources of the organization through a
careful reduction of the cash conversion cycle to its minimum. In so doing, the profitability of the
firms is expected to increase.
 Bhunia Amalendu (2007) analyses the working capital management of public sector iron and
steel enterprises. The level of working capital is found to be lower. Liquidity position was poor
and the management of inventory and accounts receivable was found to be inefficient. It has been
suggested that steps should be taken for the improvement of the same.
 Patra Santimoy (2005) analyses the impact of liquidity on profitability considering the case of
Tata Iron and Steel Company Ltd liquidity and profitability are two important dimensions in
determining the soundness of an enterprise. The paper has covered the following objectives:
1. To examine the impact of liquidity on profitability between ROI and each of the selected
ratios.
2. To assess the joint effect of the above ratios upon the profitability. The study of the impact of
liquidity ratios on profitability showed both positive and negative association. The hypothesis
that there is an adverse effect of liquidity on profitability is true in case of TISCO Ltd. Now
regarding profitability of the company under the study, though there is no standard norm of
profitability which depends upon the management policy of the company, still it appears to be
too little.
Hyderabad R. L. (1999) focuses on current assets financing policies. He further states that a proper
evaluation of the assets - liquidity and financial structure liquidity is „quiet essence‟ for sound working
capital. The author firmly believes that the considerations of working capital investment and financing are
very crucial and should be given due significance by the management for framing the overall working
capital policy.
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1. INTRODUCTION
The project undertaken is on “WORKING CAPITAL MANAGEMENT IN TATA STEEL”.
It describes about how the company manages its working capital and the various steps that are required in
the management of working capital.
Cash is the lifeline of a company. If this lifeline deteriorates, so does the company‟s ability to fund
operations, reinvest and meet capital requirements and payments. Understanding a company‟s cash flow
health is essential in making investment decisions. Hence the good way to judge a company‟s cash flow
prospects is to look at its “Working Capital Management.”
Working capital refers to the cash a business requires for day-to-day operations or, more specifically, for
financing the conversion of raw materials into finished goods, which the company sells for payment.
Among the most important items of working capital, are the levels of inventory, accounts receivable, and
accounts payable. Analysts look at these items for signs of a company's efficiency and financial strength.
The working capital is an important yardstick to measure the company‟s operational and financial
efficiency. Any company should have a right amount of cash and lines of credit for its business needs at
all times.
This project describes how the management of working capital takes place at TATA STEEL.
1.1 Purpose Of Study:
The objectives of this project were mainly to study the inventory, cash and receivables at Tata Steel but
there are some more and they are -
The main purpose of our study is to render a better understanding of the concept “Working Capital
Management”.
 To understand the planning and management of working capital at TATA STEEL.

 To measure the financial soundness of the company by analyzing various ratios.
 To suggest ways for better management and control of working capital at the concern.
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1.2 Scope Of The Study:
This project is vital to me in a significant way. It does have some importance for the company too. These
are as follows –
 This project will be a learning device for the finance student.

 Through this project I would study the various methods of the working capital management.
 The project will be a learning of planning and financing working capital.
 The project would also be an effective tool for credit policies of the companies.
 This will show different methods of holding inventory and dealing with cash and receivables.
 This will show the liquidity position of the company and also how do they maintain a particular
liquidity position.
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2. RESEARCH DESIGN
 This project requires a detailed understanding of the concept – “Working Capital Management”.
Therefore, firstly we need to have a clear idea of what is working capital, how it is managed in
Tata Steel and what are the different ways in which the financing of working capital is done in the
company.
 The management of working capital involves managing inventories, accounts receivable and
payable and cash. Therefore one also needs to have a sound knowledge about cash management,
inventory management and receivables management.
 Then comes the financing of working capital requirement, i.e. how the working capital is
financed, what are the various sources through which it is done.
 And, in the end, suggestions and recommendations on ways for better management and control of
working capital are provided.
2.1 Statement of the problem:
 To analyze the working capital and financial position of the company.

 Understanding the company‟s balance sheet, ratios, cost sheet of the Tata Steel ltd and
comparative analysis between the Tata Steel, Sail and Jindal.
2.2 Objectives of research problem:
 To study the concept and importance of working capital management.

 To study the methods and modes of analysis of working capital management.
 To analyze and interpret the existing situation of the working capital management.
 To compare the position of TATA STEEL LTD with the major steel players of the world.
 To appreciate the areas of achievement and analyze the areas of weakness.
2.3 Methodology:
 The project is based on descriptive research. The project deals with working capital of Tata Steel
and there has been a lot of research already been done on the topic. I have tried to understand the
functioning of working capital and its impact on the company. The research also includes
comparison between Tata Steel companies and which one of these is better in its operations with
research to working capital.
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2.4 Tools and Techniques for Collection Of Data:
Data collection method can be broadly classified into:

 Primary data
 Secondary data
Data collected from primary methods or which is the first hand information is known as primary data.
Data collected from secondary methods or which is already available, second hand data is known as
secondary data.
Secondary Sources of Data:
 Annual report
 Study of files and other documents.
 Different records by the accounts and bill section.
 Web sites of Tata Steel Ltd.
 Web sites of SEBI, other Steel companies.
 Review of previous reports related to the topic.
 Study about the topic „Working Capital‟ from books.
2.5 Analysis and Interpretation:
 Detailed Analysis of working capital of Tata Steel and other companies have been done.
 Along with the interpretation of the calculated Data have also been done. Interpretation of all the
ratios calculated related to working capital has been stated in the project. Relationship between
Net Working Capital has been interpreted. Detailed description is in the further pages.
2.6 Limitations:
 The biggest limitation with respect to the topic was that the internship is based on secondary data.
 The study is limitation to the scope of data provided publically.
 The terms of credit policies have not been revealed due to the company rule and regulations
 The information available was drafted from the annual report. The analysed data would have been
more accurate if more data was available.
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3. TATA STEEL – AN OVERVIEW
3.1 Growth Of Iron And Steel Industries In India:
 We live essentially in an age of iron and steel. “Because of its hardness, strength and durability,
because of the ease with which it can be cast and worked into any desired shape and because of its
remarkable cheapness under modem methods of production, iron is the most important and widely
used metal in the service of man”.
 Iron and steel were the harbinger of industrial revolution in late 18th and early 19th century.
Today this industry has proved to be the harbinger of globalisation. It is one of the very few
industries that have assumed a global character with developments in one region affecting the
industry almost everywhere else; and India is no exception.
 The proud machine civilization of modem age would not have existed without iron. The sturdy
structure of modem industrial world i made of steel. Iron and steel is the basic or key industry and
lays the foundation of a vibrant industrial economy.
 Most of the subsidiary industries such as automobiles, locomotives, rail tracks, shipbuilding,
machine building, bridges,
dams and a host of other
industrial and commercial
activities depend upon iron
and steel industry. No wonder,
per capita consumption of iron
and steel is one of the most
significant measures of the
level of industrialisation and
economic growth of a country.
 Although Indians are known
for their technique of smelting
iron since early time, the first iron and steel unit on modem lines was established in 1830 at Porto
Nova in Tamil Nadu. However it could not succeed and was closed down in 1866. The other
efforts made during the second half of the 19th century also met with the same fate.
 The real beginning of modem iron and steel industry was made in 1907 only when Tata Iron and
Steel Company (TISCO) were set up at Jamshedpur (Sakchi at that time). The Indian Iron and
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Steel Company (IISCO) were set up in 1919 at Bumpur followed by the setting up of Mysore
Steel Works at Bhadravati (now Visveswaraya Iron and Steel Works) in 1923.
 Iron and steel Industry witnessed rapid growth after Independence. India produced 16.9 lakh
tonnes of pig iron in. 1950-51. The development of iron and steel industry was envisaged during
the first Five-Year Plan, but it was during the Second Five-Year Plan that the three integrated steel
projects were started at Bhilai, Rourkela and Durgapur.
 India is now the eighth largest producer of steel in the world. Recent developments have amply
demonstrated the mettle of Indian steel industry to rise even further and become a major player in
the world. However steel is known to be an industry witnessing periodic business cycles of
upswings an downswings.
 Steel Authority of India (SAIL) Established in 1973, SAIL is a government undertaking and is
responsible for the management of steel plants at Bhilai, Durgapur, Rourkela, Bokaro and Bumpur
and also the Alloy Steel Plant at Durgapur and Salem Steel Plant. The management of Indian Iron
and Steel was taken over by Government on 14th July, 1976. SAIL also took over Maharashtra
Elektrosmelt Limited, a mini steel plant, in January 1986. Visweswaraya Iron and Steel Limited
were also taken over by SAIL in August 1989.
 With the introduction of new liberalised industrial policy in 1991, some changes were visualised
in the functioning of SAIL which had great impact on the performance of steel industry in the
country. Over a period of five years it brought down its manpower by around 40,000 and
substantially improved its techno-economic parameters to contain its cost of operation in spite of a
steady rise in input price

 
3.2 About TATA STEEL:
 Tata Steel, formerly known as TISCO (Tata Iron and Steel Company Limited), is the world's
sixth largest steel company. It is the second largest private sector steel company in India in
terms of domestic production.
 The company has commenced its operations in 1907 and today they are the world‟s second
most diversified steel producer with operations in 26 countries and commercial presence in
over 50 countries. They are the 11th largest steel player globally, producing 25.9 MnT of
finished steel and employing 77,000 people.
 In India, they are one of the largest private sector integrated steel producers with a turnover of
`38,000 crores. Their value chain extends from mining to the steel finished goods in the metal
industry.
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 Over the years they have enriched the glorious legacy handed over by the Founder J.N. Tata,
by placing equal emphasis on value creation and corporate citizenship. Underpinning this
vision is a performance culture committed to aspirational targets, safety and social
responsibility, continuous improvement, openness and transparency. What binds together
every member of their global family today is a shared corporate culture, shaped by value-
based guiding principles and the lineage of one of the world‟s most pioneering and respected
entities – the Tata Group itself.
Ownership Structure:
They are headquartered in Mumbai. Their ownership (as of March 31, 2016) is diversely held
as depicted below:
3.3 Vision, Mission And Core Values:
Vision:
Aspire to be the global steel industry benchmark for Value Creation and Corporate
Citizenship.
Mission:
Consistent with the vision and values of the Founder Jamsetji Tata, Tata Steel strives to
strengthen India‟s industrial base through the effective utilisation of staff and materials.
The means envisaged to achieve this are high technology and productivity, consistent with
modern management practices. Tata Steel recognises that while honesty and integrity are
the essential ingredients of a strong and stable enterprise, profitability provides the main
spark for economic activity. Overall, the Company seeks to scale the heights of excellence
in all that it does in an atmosphere free from fear and thereby reaffirms its faith in
democratic values.
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Core Values:
Integrity, Understanding, Excellence, Unity and Responsibility.
3.4 Major players Of Steel Industries and Tubes Industries taken in this
Project:
Tata Steel was founded in 1907 by Mr. J N Tata. It the flagship company of the Tata
group is the first integrated steel plant in Asia and is now the world`s second most geographically
diversified steel producer and a Fortune 500 Company. Backed by 100 glorious years of
experience in steel making, Tata Steel is the world‟s 6th largest steel company with an existing
annual crude steel production capacity of 30 Million Tonnes Per Annum (MTPA). Tata Steel has a
balanced global presence in over 50 developed European and fast growing Asian markets, with
manufacturing units in 26 countries.
Steel Authority of India Ltd (SAIL) is the leading steel-making company in the
country. It is fully integrated iron and steel maker, producing both basic and special steels for
domestic construction, engineering, power, railway, automotive and defense industries and for
sale in export markets. SAIL is also among the seven Maharatnas of the country.
Jindal Steel and Power Ltd (JSPL) is one of India's major steel producers with a
significant presence in sectors like mining, power generation and infrastructure. With an annual
turnover of over US$ 3.6 billion, JSPL is a part of the US$ 18 billion diversified O P Jindal
Group.
It is Led by Mr Naveen Jindal, the youngest son of the legendary Shri O.P. Jindal, the company
produces economical and efficient steel and power through backward and forward integration.
JSPL operates the largest coal-based sponge iron plant in the world and has an installed capacity
of 3 MTPA (million tonnes per annum) of steel at Raigarh in Chhattisgarh. Also, it has set up a
0.6 MTPA wire rod mill and a 1 MTPA capacity bar mill at Patratu, Jharkhand, a medium and
light structural mill at Raigarh, Chhattisgarh and a 2.5 MTPA steel melting shop and a plate mill
to produce up to 5.00-meter-wide plates at Angul, Odisha.
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Tata Steel- Tubes Division, Indian Operations today is a leading manufacturer of

welded pipes and tubes in the Country with an annual production capacity of around 4,00,000
tonnes, with expansion plans for the future. The tubes main works is situated at Jamshedpur and
its three main lines of business are Commercial Tubes for the conveyance segments (Tata Pipes),
Structural Tubes
for the construction segment (Tata Structura), and Precision Tubes for the Auto, Boiler and
Engineering segments.
Established in 1986, APL Apollo is the fastest growing steel tube manufacturer in
India, and has attained pole position in this category. The company is headquartered in Delhi
NCR, and has six manufacturing facilities that are located inSikandrabad(3 units) (Uttar Pradesh),
Bangalore (Karnataka), Hosur (Tamil Nadu) and Murbad (Maharashtra). The Company‟s vast
distribution network is spread all across India, with warehouses cum- branch offices in 20 cities.
Tube Products of India (TPI), a Unit of Tube Investments of India Ltd., is a steel
tubes manufacturer based in India.[3] Tube Investments of India is a flagship company
of Murugappa Group. Tube Products of India established in the year 1955 in collaboration with
Tube Products (Old Bury) Limited, UK to produce Electric resistance welding (ERW) and Cold
Drawn Welded (CDW) tubes also called as Drawn Over Mandrel tubes.
3.5 Swot Analysis:
Strengths
 Access to Raw Materials

 Strong Brand Value
 Access to Corus talent pool
 Risk Mitigation
 Good Corporate Governance.
Weakness
 High debt loads

 Operational Inefficiencies
 Low demand for existing products
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 Less product innovations

 High attrition rate
Opportunities
 Competitive advantage by value of size

 Growth of Infra Sector in India
 Higher pricing opportunities in foreign markets
 Movement along Value chain front
Threats
 Socio Political Scenario/ Cap on mining activity

 Advancing technology
 International Competition
 Regulatory requirements
 Rising prices of Coal
3.6 Michael Porter’s Five Forces Analysis:
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. Below is the analysis of Tata Steel‟s Michael Porter's five force model so as to
understand the competitiveness of the sector.
Barriers to entry: The barriers to entry are medium. Following are the factors :
1. 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.
2. 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. It may be noted that those steel companies,
which are integrated, have their 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.
3. 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
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acquisitions. Furthermore, the regulatory clearances and other issues are some of the major
problems for the new entrants.
4. 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, companies like Tata Steel still enjoy a premium for their products
because of its quality and its brand value created more than 100 years back.
Bargaining power of buyers: Unlike the FMCG or retail sectors, the buyers have a low bargaining
power. However, the government may curb or put a ceiling on prices if it feels the need to do so. The
steel companies either sell the steel directly to the user
industries or through their own distribution networks.
Some companies also do exports.
Bargaining power of suppliers: 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 as 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.
Competition: It is medium in the domestic steel industry as demand still exceeds the supply. India is
a net importer of steel. However, a threat from dumping of cheaper products does exist.
Threat of substitutes: It is medium to low. Although usage of aluminum has been rising
continuously in the automobile and consumer durables sectors, it still does not pose any significant
threat to steel as the latter cannot be replaced completely and the cost differential is also very high.
Conclusion: After understanding all the above view points and the current global scenario, one
should believe that the domestic steel industry will likely to maintain its momentum in the long term.
However, the growth may get affected in short run. Investors need to focus on companies that are
integrated, have economies of scale and sell premium quality products.
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4. CONCEPTUAL FRAMEWORK
4.1INTRODUCTION TO WORKING CAPITAL MANAGEMENT
Working capital management refers to a company's managerial accounting strategy designed to

monitor and utilize the two components of working capital, current assets and current liabilities,
to ensure the most financially efficient operation of the company. The primary purpose of
working capital management is to make sure the company always maintains sufficient cash flow
to meet its short-term operating costs and short-term debt obligations.
Working capital management commonly involves monitoring cash flow, assets and liabilities
through ratio analysis of key elements of operating expenses, including the working capital ratio,
collection ratio and the inventory turnover ratio. Efficient working capital management helps with
a company's smooth financial operation, and can also help to improve the company's earnings and
profitability. Management of working capital includes inventory management and management of
accounts receivables and accounts payables
4.2 OBJECTIVES
The primary objective of working capital management is to ensure smooth operating cycle of the
business. Secondary objectives are to optimize the level of working capital and minimize the cost
of such funds.
 To ensure smooth working capital operating cycle
 To minimise rate of interest or cost of capital
 Lowest working capital
 Optimal return on current asset investment
4.3 SIGNIFICANCE
Working capital is backbone of the enterprise, as it provides number of services, some of them are
mentioned below as significance of W.C. ;
 It required for uninterrupted business operation.
 It is essential to run day to day activities.
 To ensure maximizing the wealth of the firm.
 To meet short term obligation of enterprise.
 To earn considerable profit.
21
4.4CLASSIFICATION
Working capital can be classified as follows:
 On the basis of time
 On the basis of concept
4.5 TYPES OF WORKING CAPITAL NEEDS:
Another important aspect of working capital management is to analyze the total working capital
needs of the firm in order to find out the permanent and temporary working capital. Working
capital is required because of existence of operating cycle. The lengthier the operating cycle,
greater would be the need for working capital. The operating cycle is a continuous process and
therefore, the working capital is needed constantly and regularly. However, the magnitude and
quantum of working capital required will not be same all the times, rather it will fluctuate.
The need for current assets tends to shift over time. Some of these changes reflect permanent
changes in the firm as is the case when the inventory and receivables increases as the firm grows
and the sales become higher and higher. Other changes are seasonal, as is the case with increased
inventory required for a particular festival season. Still others are random reflecting the
uncertainty associated with growth in sales due to firm's specific or general economic factors.
The working capital needs can be bifurcated as:
Permanent working capital

Temporary working capital
22
Permanent working capital:
There is always a minimum level of working capital, which is continuously required by a

firm in order to maintain its activities. Every firm must have a minimum of cash, stock and
other current assets, this minimum level of current assets, which must be maintained by any
firm all the times, is known as permanent working capital for that firm. This amount of
working capital is constantly and regularly required in the same way as fixed assets are
required. So, it may also be called fixed working capital.
Temporary working capital:
Any amount over and above the permanent level of working capital is temporary, fluctuating
or variable working capital. The position of the required working capital is needed to meet
fluctuations in demand consequent upon changes in production and sales as a result of
seasonal changes.
The permanent level is constant while the temporary working capital is fluctuating increasing
and decreasing in accordance with seasonal demands as shown in the figure.
In the case of an expanding firm, the permanent working capital line may not be horizontal.
This is because the demand for permanent current assets might be increasing (or decreasing) to
support a rising level of activity. In that case line would be rising.
23
4.6FINANCING OF WORKING CAPITAL
There are two types of working capital requirements as discussed above. They are:
 Permanent or Fixed Working Capital requirements

 Temporary or Variable Working Capital requirements
Therefore, to finance either of these two working capital requirements, we have long-term as well
as short-term sources.
4.7FACTORS DETERMINING WORKING CAPITAL REQUIREMENT
The firm must estimate its working capital very accurately because excessive working capital
results in unnecessary accumulation of inventory and wastage of capital whereas shortage of
working capital affects the smooth flow of operating cycle and business fails to meet its
commitment.
So finance manager must estimate right amount of working capital. The finance manager must
keep in mind following factors before estimating the amount of working capital.
a) Length of Operating Cycle:

The amount of working capital directly depends upon the length of operating cycle.
Operating cycle refers to the time period involved in production. It starts right from
acquisition of raw material and ends till payment is received after sale.
The working capital is very important for the smooth flow of operating cycle. If operating
cycle is long, then more working capital is required whereas for companies having short
operating cycle, the working capital requirement is less.
b) Nature of Business:
The type of business, firm is involved in, is the next consideration while deciding the
working capital. In case of trading concern or retail shop the requirement of working
capital is less because length of operating cycle is small.
The wholesalers as compared to retail shop require more working capital as they have to
maintain large stock and generally sell goods on credit which increases the length of
operating cycle. The manufacturing company requires huge amount of working capital
because they have to convert raw material into finished goods, sell on credit, maintain the
inventory of raw material as well as finished goods.
24
c) Scale of Operation:
The firms operating at large scale need to maintain more inventory, debtors, etc. So they
generally require large working capital whereas firms operating at small scale require less
working capital.
d) Business Cycle Fluctuation:
During boom period the market is flourishing so more demand, more production, more
stock, and more debtors which mean more amount of working capital is required.
Whereas during depression period low demand less inventories to be maintained, less
debtors, so less working capital will be required.
e) Seasonal Factors:
The working capital requirement is constant for the companies which are selling goods
throughout the season whereas the companies which are selling seasonal goods require
huge amount during season as more demand, more stock has to be maintained and fast
supply is needed whereas during off season or slack season demand is very low so less
working capital is needed.
f) Technology and Production Cycle:
If a company is using labour intensive technique of production then more working capital
is required because company needs to maintain enough cash flow for making payments to
labour whereas if company is using machine-intensive technique of production then less
working capital is required because investment in machinery is fixed capital requirement
and there will be less operative expenses. In case of production cycle, if production cycle
is long then more working capital will be required because it will take long time for
converting raw material into finished goods whereas when production cycle is small lesser
funds are tied up in inventory and raw materials so less working capital is required.
g) Credit Allowed:
Credit policy refers to average period for collection of sale proceeds. It depends on
number of factors such as creditworthiness, of clients, industry norms etc. If company is
following liberal credit policy then it will require more working capital whereas if
company is following strict or short term credit policy, then it can manage with less
working capital also.
h) Credit Avail:
Another factor related to credit policy is how much and for how long period company is
getting credit from its suppliers. If suppliers of raw materials are giving long term credit
then company can manage with less amount of working capital whereas if suppliers are
giving only short period credit then company will require more working capital to make
payments to creditors.
25
i) Operating Efficiency:
The firm having high degree of operating efficiency requires less amount of working
capital as compared to firm having low degree of efficiency which requires more working
capital.Firms with high degree of efficiency have low wastage and can manage with low
level of inventory also and during operating cycle also these firms bear less expense so
they can manage with less working capital also.
j) Availability of Raw Materials:
If raw materials are easily available and there is ready supply of raw materials and inputs
then firms can manage with less amount of working capital also as they need not maintain
any stock of raw materials or they can manage with very less stock.
Whereas, if the supply of raw materials is not smooth, then firms need to maintain large
inventory to carry on operating cycle smoothly. So they require more working capital.
k) Level of Competition:
If the market is competitive then company will have to adopt liberal credit policy and to
supply goods on time. Higher inventories have to be maintained so more working capital
is required. A business with less competition or with monopoly position will require less
working capital as it can dictate terms according to its own requirements.
l) Inflation:
If there is increase or rise in price then the price of raw materials and cost of labour will
rise, it will result in an increase in working capital requirement.
But if company is able to increase the price of its own goods as well, then there will be
less problem of working capital. The effect of rise in price on working capital will be
different for different businessmen.
m) Growth Prospects:
Firms planning to expand their activities will require more amount of working capital as
for expansion they need to increase scale of production which means more raw materials,
more inputs etc. so more working capital also.
26
4.8WORKING CAPITAL CYCLE
The operating cycle is also known as the cash conversion cycle. In the context of a manufacturer
the operating cycle has been described as the amount of time that it takes for a manufacturer's cash
to be converted into products plus the time it takes for those products to be sold and turned back
into cash. In other words, the manufacturer's operating cycle involves:
 paying for the raw materials needed in its products
 paying for the labor and overhead costs needed to convert the raw materials into products
 holding the finished products in inventory until they are sold
 waiting for the customers' cash payments for the products that have been sold
4.9 SOURCES OF WORKING CAPITAL

Sources of finance for working capital include bank loans, retained earnings, credit from
suppliers, long-term loans from financial institutions, or proceeds from sale of assets.
Short Term Sources Long Term Sources

Spontaneous sources
Internal Sources External Sources Internal Sources External Sources
Trade Credit Tax Provisions Bank Overdraft Retained Profits Share Capital
Sundry Creditors Dividend Provisions Trade Deposits Depreciation Provision Long Term Loans
Bills Payable Public Deposits Debentures
Notes Payable Bills Discounting
Accrued Expenses Short Term Loans
27
4.10 LIQUIDITY VS. PROFITABILITY
Another important aspect of a working capital policy is to maintain and provide sufficient
liquidity to the firm. Like the most corporate financial decisions, the decision on how much
working capital be maintained involves a trade off- having a large net working capital may
reduce the liquidity risk faced by a firm, but it can have a negative effect on the cash flows.
Therefore, the net effect on the value of the firm should be used to determine the optimal
amount of working capital.
Sound working capital involves two fundamental decisions for the firm. They are the
determination of:
 The optimal level of investments in current assets.

 The appropriate mix of short-term and long-term financing used to support this investment in
current assets, a firm should decide whether or not it should use short-term financing. If
short-term financing has to be used, the firm must determine its portion in total financing.
Short-term financing may be preferred over long-term financing for two reasons:
 The cost advantage
 Flexibility
 But short-term financing is more risky than long-term financing. Following table will summarize our
discussion of short-term versus long-term financing.
28
5. WORKING CAPITAL OF TATA STEEL
5.1ESTIMATION OF WORKING CAPITAL OF TATA STEEL LTD FOR

THE FINANCIAL YEARS 2013-2016
ESTIMATION OF WORKING CAPITAL (₹ in crores)
A. CURRENT ASSETS FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Current Investments 1204.17 434 2343.24 1000.08 4320.17
Inventories 4858.99 5257.94 6007.81 8042 7083.81
Trade Receivable 904.08 796.92 770.81 491.46 632.8
Cash in hand & at Bank 3946.99 2192.36 961.16 478.59 1014.67
Short term loans and Advances 1828.09 2207.83 1299.2 1781.77 1243.48
Other Current Assets 122.18 615.8 182.38 55.27 126.56
TOTAL CURRENT ASSETS/GROSS 11849.1
12864.5 11504.85 11564.6 14421.49
WORKING CAPITAL (A) 7
CURRENT
B.
LIABILITIES&PROVISIONS
Trade Payable 5973.23 6363.66 8263.61 5801.98 7706.13
Other Current Liabilities 2066.24 8509.79 8671.67 9256.91 6115.81

Short Term Provisions 8798.55 1544.26 1902.81 1675.41 2005.03
TOTAL 16838.02 16417.71 18838.09 16734.3 15826.97

LESS-Current maturity for Long Term
4753.43 3871.28 4065.48 4263.19 924.37
Borrowing
12471.1
TOTAL CURRENT LIABILITIES (B) 12084.59 12546.43 14772.61 14902.6
1
C. WORKING CAPITAL(A-B) 779.91 -1041.58 -3208.01 -621.94 -481.11
29
16000 14773 14903

14421.49
14000 12864.5 12546 12471
12085 11504.85 11564.60 11849.17
12000
10000
8000
CURRENT ASSETS
6000
CURRENT LIABILITIES
4000
NET WORKING CAPITAL
2000 779.91
0
-2000 2011-2012 2012-2013 2013-2014 2014-2015
-621.94 2015-2016
-481.11
-1041.58
-4000 -3208.01
-6000
INTERPRETATION:
The above graph shows the decreasing trend of working capital which is bad for the company.
As we can see in the year 2011-2012, there is a positive working capital that means the
company has ability to pay its short term obligations i.e., current liabilities. But from the year
2013 to 2016 the graph shows negative working capital, which is bad for the company because
company‟s current liabilities are more than its current assets and it is in a position where
cannot meet its short term repayments.
This means that the liabilities that need to be paid within one year exceed the current assets.
30
5.2 GROSS AND NET WORKING CAPITAL
GROSS WORKING CAPITAL (₹ in NET WORKING CAPITAL (₹ in

Years
crores) Crores)
2015-2016 14421.49 -481.11
2014-2015 11849.17 -621.94
2013-2014 11564.6 -3208.01
2012-2013 11504.85 -1041.58
2011-2012 12864.5 779.91
31
5.3 RATIOS ANALYSED AND INTERPRETED IN THIS REPORT
I. LIQUIDITY RATIO
Liquidity ratio explains the ability to meet short term or long term financial commitments. It is
also known as Working capital ratio.
Net Working Capital Formula
 Net Working Capital =Current Assets –Current Liabilities
a. Current Ratio: Current ratio is nothing but current assets divided by the current
liabilities of the company. If there is higher current ratio then the company is able to pay
more of its obligations.
If the ratio is under 1, it means that the company has more of liabilities than its assets and
is not in good financial health. The company may be unable to pay-off its obligations if
they came due at that time. This may not necessarily be said that the company can go
bankrupt.
If the ratio is above 3, it means that the company is not using its current assets efficiently,
not securing financially well and not managing its working capital well.
A company is said to have positive working capital if, current assets > current liabilities
and if it has current assets < current liabilities, it is said to have negative working capital.
Current ratio = Current assets
Current liabilities
b. Quick ratio: Quick ratio is the indicator of company‟s short term liquidity. The ideal
ratio is 2:1.
Quick ratio = Current assets - Inventory
Current liabilities
Higher the quick ratio, better the liquidity position of the company. This ratio deals with cash
and marketable securities which are the quick sources of cash. Inventory generally takes time
to be converted and if they want to convert quickly, the company may have to accept lower
price than book value of these inventories. So it is the reason why inventory is excluded while
calculating the quick ratio. The standard ratio is 1:1
32
c. Absolute liquidity ratio: This ratio deals with the relationship between absolute
current assets and current liabilities. Absolute assets include cash in hand and cash at bank.
The standard ratio is 0.5:1.
Absolute liquidity ratio = Cash and bank balance
Current liabilities
II. MANAGEMENT EFFICIENCY RATIO
Activity ratio deals in finding the efficiency in utilisation of assets. Companies usually try to
convert their production into cash or sales as fast as possible. This results in higher revenues.
This ratio measures the amount of resources invested in a company‟s collection and inventory
management.
Activity ratio mainly focuses on:

i. Materials
ii. Inventory and
iii. Debtors
This ratio studies how well an organisation manages in the areas mentioned above.
a. Accounts receivable turnover ratio: Accounts receivable is the total amount of

money due to a company for products or services sold on an open credit account.
The accounts receivable turnover shows how quickly a company collects that is owed to it
and indicates the liquidity of the receivables.
Accounts Receivable Turnover = Total Credit Sales

Accounts Receivable
In days = 365
Accounts receivable turnover
33
b. Inventory turnover ratio: For any company to be profitable, it must be able to

manage its inventory, because it is the money invested which does not get any return until
the asset is sold. A higher turnover ratio indicates more effective cash management and
reduces the incidence of inventory obsolescence. Hence inventory turnover ratio is the best
measure of inventory utilization. This is also known as inventory utilisation ratio.
Inventory Turnover = Total Annual Sales or Cost of Goods Sold
Inventory Cost
Days in Inventory = 365 Days
Inventory Turnover
c. Total assets turnover ratio: It measures the return on each rupee invested in asset
and is equal to the net sales, which is total sales minus returns and allowances, divided by
the average total assets.
Total Asset Turnover = Net Sales

Average Total Assets
III. SOLVENCY RATIO:
The amount of a company‟s debt affects its profitability and ability to grow. Debt also incurs
risk for both creditors and stakeholders. A high debt load can also increase the future cost of
credit for the company since it will be less creditworthy. The amount of debt by itself is not a
useful guide in selecting companies, since it must be compared to the company's profit and
stockholders' equity to be a meaningful gauge of a company's solvency.
This ratio measures the company‟s solvency, because they measure the ability of a company to
meet its long term obligations, so they are often called as solvency ratios.
34
a. Debt-equity ratio: This measures the proportion of funds provided by creditors and
stockholders. Higher values,of any of the following ratios indicates greater risk for the
company and its stockholders.
Debt Ratio = Total liabilities
Stockholder’s Equity
b. Long term debt equity ratio or leverage: Another debt-to-equity ratio that is commonly
used divides long-term debt by stockholders' equity, which is a measure of the leverage of
a company. This ratio disregards current liabilities, since such liabilities are short-term and
involve day-to-day operations, such as payroll and interest payments. Long-term debt is
used to finance major capital expenditures, such as equipment or buildings, to hopefully
increase future revenues and profits, which will increase the return on stockholders' equity.
Long term debt equity ratio or leverage= long term debt
Stockholder’s equity
Debt to equity ratio: Another debt-to-equity ratio compares the amount of securities
where interest or dividends are paid to common stock, the ratio of short-term and long-
term debt plus preferred stock over total equity:
Debt to equity ratio = Total debt + Preferred stock
Total equity
35
IV. PROFITABILITY RATIOS
The best measure of a company is its profitability, for without it, it cannot grow, and if does
not grow, then its stock will trend downward. Increasing profits are the best indication that a
company can pay dividends and that the share price will trend upward.
o Creditors will loan for lower interest rates

o Profitable companies can use leverage to increase stockholders equity even more.
The common profitability measure compare profits with sales, assets or equity: net profit
margin, return on assets and return on equity.
Net profit margin: Net profit after tax

Total revenues
a. Return on Assets (ROA): it is also known as return on total assets, return on

average assets and return on investment. This is widely used financial ratio because it
is related to both profit margin and asset turnover. It also shows the rate of return for
both creditors and investors of the company. ROA shows how well a company controls
its costs and utilises its resources.
Return on Assets= Net profit
Average total assets
b. Return on equity (ROE): it is also known as return on investment. It is the best

way to measure the return. Return on equity measures a corporation's profitability by
revealing how much profit a company generates with the money shareholders have
invested.
Return on equity = Net profit
Shareholders Equity
36
5.4 COMPARATIVE ANALYSIS AND INTERPRETATION OF TATA STEEL,

SAIL AND JINDAL
(2013-14, 2014-15, 2015-16) ` [₹ in Crores]
1. LIQUIDITY RATIO:
Tata Tata Tata
LIQUIDITY RATIO Steel Sail Jindal Steel Sail Jindal Steel Sail Jindal
Mar' Mar'1 Mar'1
Mar'16 16 Mar'16 Mar'15 5 Mar'15 Mar'14 4 Mar'14
CURRENT RATIO 0.68 0.59 0.57 0.71 0.59 0.88 0.61 0.95 0.66
QUICK RATIO 0.35 0.19 0.42 0.23 0.22 0.59 0.29 0.42 0.4
ABSOLUTE
LIQUIDITY RATIO 0.05 0.02 0.02 0.03 0.05 0.02 0.05 0.11 0.05
As we know that the ideal ratio current ratio of steel and metal manufacturing industries is
1.54:1,
In 2014, Tata steel has the ratio 0.61, whereas Sail and Jindal has 0.95 and 0.67 respectively.
Even the ratios are below 1, i.e., the companies are unable to meet the short term obligations,
Sail was better compared to the other two companies in that year.
In 2015, Tata steel has the ratio 0.71, whereas Sail and Jindal has 0.59 and 0.88 respectively.
In that year, Jindal had a high current ratio compared to the two companies and it is a situation
where a company is able to repay its short term loans and debts.
In 2016, Tata Steel has the ratio of 0.68, whereas Sail and Jindal has 0.59 and 0.57. As we
know that the Tata steel is the major player in the steel industry, it has the ability to repay its
short term obligations and sustain in the market. In this year Tata steel had a high repayable
power compared to other two companies.
37
The ideal quick ratio of metal and steel manufacturing industries is 0.75:1,
In 2014, the ratio of Tata steel was 0.29, whereas Sail and Jindal was 0.42 and 0.40
respectively. In this year, the liquidity position of Sail is good compared to the other two
companies. This ratio deals with the quick sources of cash. Sail has quick cash resources more
than Tata steel and Jindal and it had the ability to meet its short term debts. In this year Tata
Steel is highly leveraged.
In 2015, the ratio of Tata Steel was 0.23, whereas Sail and Jindal was 0.22 and 0.59
respectively. Jindal has the better quick ratio compared to the other two companies. In this
year, sail and Tata steel were highly leveraged and Jindal has a good liquidity position. In this
situation we can also say that Jindal is managing its inventory well.
In 2016, the ratio of Tata steel was 0.35, whereas Sail and Jindal had 0.19 and 0.42
respectively. We can say that Jindal has a better liquidity position. It means that Jindal has
more cash and cash equivalents compared to Sail and Tata steel. Tata steel is in the second
position, next to Jindal and hence Sail‟s liquidity position is very low and it is not managing
its inventory properly.
38
The absolute liquidity ratio deals with the cash and bank balances.
In 2014, Tata Steel had the ratio of 0.05, whereas Sail and Jindal had the ratios 0.11 and 0.05
respectively. Sail had the high cash reserves which can be used in repaying its short term
loans. Both Tata steel and Jindal are in the second position in its absolute liquidity ratio next to
Sail.
In 2015, Tata steel had the ratio of 0.03, whereas Sail and Jindal had 0.05 and 0.02
respectively. Sail again had the high absolute liquidity ratio compared to the other two
companies.
In 2016, Tata Steel had the ratio of 0.05, whereas Sail and Jindal had 0.02 and 0.02
respectively. The reason why Tata steel has high liquidity ratio in 2016 is because of its
 Good Margin
 Good Brand Image
 High quality with premium charges.
39
II. MANAGEMENT EFFICIENCY RATIOS:
MANAGEMENT
Tata Tata
EFFICIENCY Tata Steel Sail Jindal Sail Jindal Sail Jindal
Steel Steel
RATIOS:
Mar' Mar'1 Mar'
Mar'16 Mar'16 Mar'16 Mar'15 Mar'15 Mar'14
15 4 14
average collection
39 28 24 37 35 36 39 39 39
period
accounts receivable 10.5
66.53 12.97 11.66 66.21 9.63 53.21 9.43 10.08
Turnover ratio 4
days in inventory 71 126 64 67 127 93 62 119 88
inventory turnover
6.7 2.89 5.73 7.9 2.87 3.94 10.3 3.07 4.15
ratio
total assets turnover 74.14
57.44% 57% 36% 66.67% 64% 35% 71% 41%
ratio %
INTERPRETATION:
The average collection period is the approximate amount of time that it takes for a business to
receive payments owed in terms of accounts receivable.
In 2014, the average collection period of Tata steel was 7 days whereas, for Sail and Jindal it
was 41and 39 days respectively. Tata steel has is the most efficient in collecting the payment
faster compared to other two companies. This may be an indication that its credit terms are too
strict, and customers may seek suppliers or service providers with more lenient payment
terms.
In 2015 and 2016, Tata steel is in the most efficient position in collecting the payments faster
than Sail and Jindal. Hence we can say that Tata Steel is stagnant throughout the years and is
the bench mark for its competitors.
40
Accounts receivable turnover ratio is an activity ratio which measures how efficiently a firm
uses its assets.
From the above graph, we can say that Tata steel is the most efficient and has a better liquidity
position throughout the years 2014, 2015 and 2016. It is using its assets efficiently. When
compared to Sail and Jindal, Tata steel has a very high accounts receivable turnover ratio
which shows Tata steel is the bench mark for its players in the market.
No. of days in inventory is one measure of inventory effectiveness. It is the number of days
that a company holds onto inventory before selling, the efficiency ratio measures the average
length of time that a company‟s cash is tied up in inventory. It may be in Raw materials, work
in progress or the finished goods.
From the above graph, we can see that in all the three years i.e., from 2014 to 2016, Tata steel
has the less holding period of inventory. It is a good indicator to the company whereas, Sail
and Jindal has very high period of holding inventory with it. The lesser the holding period the
higher will be the company‟s efficiency in management as well as generating sales.
41
Inventory turnover ratio is the ratio showing how many times a company‟s inventory is sold
and replaced over a period of time.
In 2014, we can see here that Tata steel has the ratio 10.30, whereas Sail and Jindal has the
ratios 3.07 and 4.15 respectively. By the graph itself we can determine that Tata steel efficient
in generating sales and also better at profits.
In 2015, Tata steel has high ratio, compared to Sail and Jindal. Jindal is in the second position
with the satisfactory sales whereas Sail is very weak at sales and has high inventory.
In 2016, Tata steel has the ratio of 6.70, whereas Sail and Jindal has the ratios 2.89 and 5.73
respectively. By the above graph we can see that, Tata steel has the highest ratio, this means
they have strong sales compared to Sail and Jindal. We can also see that Tata steel has
consistently maintaining its inventory turnover ratio and has been a benchmark of its
competitors.
42
Total assets turnover ratio is the ratio of the value of a company‟s sales or revenues generated
related to the value of its assets. Higher the turnover ratio better the company is performing.
In 2014, Tata steel has the ratio of 0.74, whereas Sail and Jindal has the ratio of 0.71 and 0.41.
In this year, by the above graph we can say that Tata Steel‟s assets turnover ratio is very high
and it implies that the company is performing better by deploying its assets in generating
revenue. Sail is in the second position which is better and whereas Jindal, it has the lowest
ratio, which shows its inefficiency in generating revenue.
In 2016 and 2015, we can see again Tata Steel has the better efficiency in generating revenue
from deploying assets. Sail is again in the second position, which is not a bad indicator.
Hence, Tata steel‟s efficiency is very much satisfactory than Sail and Jindal.
43
III. SOLVENCY RATIO
Solvency TATA TATA TATA

SAIL JINDAL SAIL JINDAL SAIL JINDAL
Ratio STEEL STEEL STEEL
Mar' Mar' Mar'
Mar'16 Mar'16 Mar'15 Mar'15 Mar'14 Mar'14
16 15 14
Debt-equity
2.32 0.82 2.09 1.84 0.65 2.09 1.42 0.58 1.74
ratio
longterm debt
0.37 0.41 1.43 0.39 0.32 1.48 0.43 0.32 1.03
equity ratio
Return On
Capital 9.03 2.79 -7.25 9.25 5.73 5.43 13.37 7.51 4.6
Employed(%)
Return on
7.25 1.25 9.51 6.86 1.36 1.05 6.29 1.42 1.03
Assets
Debt equity ratio usually measures the company‟s debt which it is borrowing in order to fund
various projects.
In 2014, Tata steel debt equity ratio is 1.42, whereas Sail and Jindal has 0.58 and 1.74
respectively. The above graph shows that Jindal has very high debt equity ratio, this implies
that the company has been aggressively financing its growth with debt. This also means that
the company may be using long term borrowings in short term measures, which involves high
risk. Jindal is highly leveraged which is not at all a good sign.
In 2015, again from the above graph we can observe that Tata steel has maintained its debt
equity ratio throughout the years mentioned above. Tata steel has a conservative leveraging
practices and it is at lower risk compared to Sail and Jindal.
In 2016, Tata steel has the highest debt equity ratio than Sail and Jindal which means Tata
Steel has financed its growth with debt.
44
The greater a company's leverage, the higher the ratio. Generally, companies with higher
ratios are thought to be more risky. At the same time, leverage is an important tool that
companies use to grow, and many businesses find sustainable uses for debt.
From the above graph we can say that a Jindal has very much high long term debt equity
ratio compared to other companies Tata Steel and Sail consistently for 3 years. And it has
very high degree of business risk.
In 2014 and 2015, Sail is in no riskier position. Whereas Tata Steel‟s long term debt equity
ratio is also satisfactory.
In 2016, Tata Steel is in a better position compared to Sail and Jindal, having the ratio 0.37.
This shows that Tata steel is has less financial risk.
45
Return on capital employed measures the company‟s profitability and the efficiency with
which its capital is employed. Higher the return on capital, more efficient is the use of capital.
In 2014, Tata steel return on capital employed is 13.37, whereas Sail and Jindal has the ratios
7.51 and 4.60 respectively. As observed from the graph above Tata steel has the high returns,
which is provides a better indicator of financial performance for companies with significant
debt.
In 2015, Tata steel has high returns compared to Sail and Jindal. Tata steel is good in its
financial performance compared to Sail and Jindal.
In 2016, Tata steel has high returns, which is a good indicator that the company is performing
better throughout the years. Jindal sustaining loss in this year, it means the company is not
employing its capital effectively and is not generating shareholder value.
46
Return on assets ratio is an indicator of profitable a company is relative to its total assets. It
gives an idea as to how efficient management is at using its assets to generate earnings.
In 2014, Tata steel‟s return on assets ratio is 6.29, whereas Sail and Jindal has the ratios 1.42
and 1.03 respectively. Tata steel has the highest ROA (return on assets). It indicates that the
company is effectively converting the money it has to invest into net income. Tata steel,
hence, is better because it is earning more money with less investment.
In 2015, Tata steel‟s return on assets is higher than Sail and Jindal.
In 2016, Jindal has the high return on assets this may be because it has earned a large amount
of money. Tata steel stands in the second position. It is consistent through years, which is a
good indicator for the company‟s earnings.
47
IV. PROFITABILITY RATIO :
Tata Tata Tata

Profitability Ratio steel Sail Jindal Steel Sail Jindal Steel Sail Jindal
Mar Mar Mar Mar
Mar '16 Mar '16 Mar '16 '15 Mar '15 Mar '15 '14 '14 '14
Return on Assets 322.7 417.3 104.
(₹in crores) 293.58 96.67 198.35 9 106.33 229.99 3 3 247.14
Net Profit Margin -2.6 -10.58 -9.9 -2.8 4.57 -6.58 2.41 5.6 9.54
The ROA figure gives investors an idea of how effectively the company is converting the
money it has to invest into net income. The higher the ROA number, the better, because the
company is earning more money on less investment.
From the above graph, we can easily interpret that Tata steel‟s return on assets is consistently
high compared to Sail and Jindal for 2014, 2015 and 2016. Jindal is in the second position,
whereas Sail has very low returns from assets which can be said that it‟s earnings are low.
Hence Tata Steel is efficient in managing its assets to produce profits during a period. We can
say that it is the bench mark for its competitors.
48
The net profit margin, also known as net margin, indicates how much net income a company
makes with total sales achieved. A higher net profit margin means that a company is more
efficient at converting sales into actual profit.
From the above graph, in 2014, all the companies viz., Tata Steel, Sail and Jindal have the
profit margin in positive. But Jindal has the high Net Margin which means it is more efficient
in converting sales into actual profit.
In 2015, Sail has the net margin 4.57, and both Tata Steel and Jindal have the negative
margins. Sail was better is converting its sales into actual profit in this year.
Economic downturns, unfortunate ventures and expansion expenditures can contribute to

negative net profit margins, which occur when a business spends more than its earnings
during a particular period. If a company recently took a long-term loan to increase its
production capacity, the net profit margin will significantly be reduced. That does not mean,
necessarily, that the company is less efficient than other competitors.
In 2016, Tata steel has the negative net margin of -2.6, whereas Sail and Jindal has the net
margins -10.58 and -9.9 respectively which is very high. Tata steel is still in a better position
compared to both the companies.
49
V. OPERATING CASH FLOW MARGIN RATIO:
An operating cash flow margin is a measure of the money a company generates from its
core operations per Rupee of sales. The operating cash flow can be found on the
company's cash flow statement, and the revenue can be found on the income statement.
A high operating cash flow margin can indicate that a company is efficient at converting
sales to cash, and may also be an indication of high earnings quality.
Tata steel Sail Jindal Tata Steel Sail Jindal Tata Steel Sail Jindal
Mar '16 Mar '16 Mar '16 Mar '15 Mar '15 Mar '15 Mar '14 Mar '14 Mar '14
Operating Cash flow margin 9.88% 8.72% 22.07% 8.47% 5.48% 5.04% 8.82% 13.22% 23.67%
In 2014, Jindal has the highest operating cash flow margin followed by Sail and Jindal.
This means that Jindal is more efficient at converting sales to cash and it can also be
said that it has high earnings than Tata steel and Sail.
In 2015, Tata steel has the high operating cash flow margin which is a good indicator
than its competitors.
In 2016, Jindal has the highest operation cash flow margin followed by Tata steel and
Sail. Tata steel is in the second position in the operating cash flow margin comparison
with its competitors. If we can see from above graph, Tata steel‟s margin is almost
consistent throughout 3 financial years.
50
6. COST SHEET OF TATA STEEL
COST SHEET FOR 5 FINANCIAL YEARS I.E., FROM 2011-12 TO 2015-16

( (₹ IN CRORES)
2011- 2012- 2013- 2014-
Particulars 2015-2016
2012 2013 2014 2015
Raw Material Consumed 8014.37 9877.4 9678 11707.83 9700
Wages 3047.26 3608.52 3673 4601.92 4324.9
Prime Cost(A) 11061.63 13485.92 13351.00 16309.75 14024.90
Manufacturing Overhead
Conversion Charges 1513.97 1955.19 2004 1886 2204.43
Fuel oil consumed 186.44 189.06 207.7 134.26 138.07
Repairs to building 61.08 85.42 74.46 76.51 57.41
Factory rent 30.88 33.63 46.04 75.34 73.53
Relining exp 28.87 38.49 44.6 45.48 43.1
Purchase of power 1803.72 2321.11 2564.61 2750.16 2743.1
Insurance 36.48 41.77 44.06 57.18 56.82
Freight and handling 1703.98 2260.76 2755.08 2883.32 2994.88
Repairs to machinery 1162.95 1381.08 1733.92 1864.44 2025.3
Consumption of stores and spares 1693.48 2090.89 2611.23 2305.47 2425.11
Depreciation and Amortization 1151.44 1640.38 1928.7 1997.59 1933.11
Manufacturing Cost 9373.29 12037.78 14014.4 14075.75 14694.86
Opening stock of WIP 81.19 53.83 65.88 35.99 44.32
Less: Closing stock of WIP 53.83 65.88 35.99 44.32 18.3
Total Manufacturing Cost 9400.65 12025.73 14044.29 14067.42 14720.88
Administration overhead:
Rates & Taxes 371.71 423.18 508.61 684.85 752.83
Royalties 912.43 1152.43 1129.8 807.22 938.62
Excise duty 94.95 134.94 2345.78 106.93 -47.18
Other expenses 2098.84 2150.86 2345.78 2420.35 1826.77
Less: Transfer to Cap Exp A/C 478.23 876.13 1029.92 586.69 598.89
Administration Cost 2999.70 2985.28 5300.05 3432.66 2872.15
Cost of Production 23461.98 28496.93 32695.34 33809.83 31617.93
Purchase of semi-Finished goods 209.52 453.34 352.63 688.32 991.54
Opening Stock of finished goods 1392.51 1639.83 2032.34 2216.14 2888.47
Less: Closing stock of finished goods 1639.83 2032.34 2216.14 2917.7 2739.12
Cost of Good Sold 23424.18 28557.76 32864.17 33796.59 32758.82
Commission/Discount/Rebate 128.42 142.67 163.98 164.35 182.78
Cost of Sales 23552.60 28700.43 33028.15 33960.94 32941.60
Profit 10380.86 9499 8682.48 7824.06 5268.4
Net Sales 33933.46 38199.43 41710.63 41785.00 38210.00
Calculation of Net Sales
Revenue from operation 37005.71 42317.24 46309.34 46577.26 42686.29
Less: Excise duty 3072.25 4118 4598.31 4792.26 4475.95
Net Sales. 33933.46 38199.24 41711.03 41785.00 38210.34
51
7. A QUICK OVERVIEW OF FINANCIAL RATIOS OF TATA STEEL
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Investment Valuation Ratios

Face Value 10 10 10 10 10
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Rs) 78.2 129.07 168.97 126.86 127.85
Net Operating Profit Per Share (Rs) 1,207.69 1,436.38 1,530.18 1,387.04 1,368.39
Free Reserves Per Share (Rs) -- -- -- -- --

Bonus in Equity Capital 26.07 26.04 26.04 26.04 26.04
Profitability Ratios
Operating Profit Margin(%) 6.47 8.98 11.04 9.14 9.34
Profit Before Interest And Tax 2.06 4.69 7.08 4.98 5.87
Margin(%)
Gross Profit Margin(%) 2.13 4.72 7.11 5 5.94
Cash Profit Margin(%) 4.85 4.21 6.39 4.14 4.53
Adjusted Cash Margin(%) 4.85 4.21 6.39 4.14 4.53
Net Profit Margin(%) -2.6 -2.81 2.41 -5.23 4.05
Adjusted Net Profit Margin(%) -2.51 -2.79 2.41 -5.22 4
Return On Capital Employed(%) 5.61 7.17 9.96 7.9 9.98
Return On Net Worth(%) -10.7 -12.52 8.86 -20.65 12.64

Adjusted Return on Net Worth(%) 2.79 -0.08 9.1 0.07 3.72
Return on Assets Excluding 293.58 322.79 417.33 351.85 438.79

Revaluations
Return on Assets Including 293.58 322.79 417.33 351.85 438.79
Revaluations
Return on Long Term Funds(%) 6.48 7.43 11.64 8.67 10.5
Liquidity And Solvency Ratios

Current Ratio 0.87 1.01 0.86 0.99 1.13
Quick Ratio 0.85 0.62 0.65 0.69 0.74
Debt Equity Ratio 3.02 2.28 1.74 1.68 1.23
Long Term Debt Equity Ratio 2.48 2.17 1.35 1.44 1.12
Debt Coverage Ratios
Interest Cover 1.56 1.52 2.56 1.82 2.23
Total Debt to Owners Fund 3.02 2.28 1.74 1.68 1.23
Financial Charges Coverage Ratio 2.79 2.75 3.9 3.23 3.29
52
Financial Charges Coverage Ratio 1.49 1.42 3.18 0.63 3.33
Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio 5.97 5.74 5.7 5.76 5.31
Debtors Turnover Ratio 9.37 9.52 9.91 9.33 8.95
Investments Turnover Ratio 5.97 5.74 5.7 5.76 5.31
Fixed Assets Turnover Ratio 0.81 0.97 0.99 1.04 1.22
Total Assets Turnover Ratio 1.16 1.59 1.59 1.75 1.75
Asset Turnover Ratio 1.06 1.28 1.44 1.42 1.42
Average Raw Material Holding -- -- -- -- --

Average Finished Goods Held -- -- -- -- --
Number of Days In Working Capital 44.68 14.31 18.1 22.92 36.9
Profit & Loss Account Ratios

Material Cost Composition 45.26 47.63 50.63 51.18 56.09
Imported Composition of Raw -- -- -- -- --
Materials Consumed
Selling Distribution Cost Composition -- -- -- -- --
Expenses as Composition of Total -- -- -- -- --

Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit -- -- 29.24 -- 25.07
Dividend Payout Ratio Cash Profit 46.24 46.63 11.14 -67.68 13.63
Earning Retention Ratio -- -- 71.52 -- 14.83

Cash Earning Retention Ratio 84.01 84.1 88.98 82.1 77.87
AdjustedCash Flow Times 14.64 12.1 7.41 10.22 8.55
53
8. TATA STEEL - TUBES SBU (STRATEGIC BUSINESS

UNIT)
8.1 ABOUT
A new dimension in steel tube technology opened up in India in the early 50‟s – with the
establishment of the Indian Tube Company (ITC), on 17th December 1954. It was the
outcome of a joint venture between Tata Steel Ltd. and Stewarts & Lloyds of UK. In 1985, the
Indian Tube Company merged with Tata Steel Ltd. to form Tata Steel -Tubes SBU (Strategic
Business Unit). The Tubes SBU today is a leading manufacturer of welded pipes and tubes in
the country with an annual production capacity of around 4,00,000 tonnes and expansion plans
on the anvil.
Tata Steel – Tubes SBU, the largest domestic manufacturer of steel tubes in India, has been
and independent Profit Centre of Tata Steel since August 1993. The SBU has its own
marketing set up head-quartered at Kolkata, along with a network of sales offices across the
country.
Tubes for all applications:

The three lines of business of Tubes SBU are:
 Conveyance Tubes – For the Plumbing, Irrigation and Process segment,
clubbed under the brand name of "Tata Pipes".
 Structural Tubes - (http://www.tatastructura.com) – For the construction
segment, clubbed under the brand name of “Tata Structura”
 Precision Tubes - (http://www.tataprecisiontubes.com) – For the Auto, Boiler
and Engineering segment under brand name of "Tata Precision"
Tata Steel – Tubes SBU is the only tube company in India, which has established
these three lines of business and having a pan-India presence. We have a very
comprehensive distribution and sales network across the country. Tubes SBU operates
through two business models- B2B and B2C. The conveyance tubes business is
predominantly B2C where more than 80% of the tubes are sold through the Distributor
and Dealer network. For Tata Structura, it is a combination of both direct sales and sales
through the business development partners. The Precision Tubes business is
predominantly B2B and through direct marketing.
54
8.2 STRUCTURE OF TATA STEEL – TUBES SBU
55
8.3. TUBES MANUFACTURING PROCESS IN TATA STEEL- TUBES

SBU
56
8.4. PRODUCTION AND SALES OF TATA STEEL – TATA TUBES

SBU
PRODUCTION AND SALES OF TATA STEEL - TATA TUBES SBU

2016 2015 2014 2013 2012 2011
Production (LTPA) 4.6 4.4 4.2 3.9 3.8 3.7
Sales (in crores) 1907 2167 1937 1790 1783 1616
57
8.5. COMPARISON OF PRODUCTION AND SALES OF TATA STEEL –

TATA TUBES SBU WITH APL APOLLO TUBES.
PRODUCTION (LTPA)
2016 2015 2014 2013 2012 2011
TATA STEEL- TATA TUBES SBU 4.6 4.4 4.2 3.9 3.8 3.7
APL APOLLO TUBES 9 7 5.7 4.6 2.9 2
The production of APL Apollo Tubes is high as compared to Tata Steel - Tata Tubes SBU.
This is because The APL Apollo tubes has a wider range of productions and part of
productions in construction of buildings, aeroplanes, buses, trains, solar energy sheets etc., But
Tata Tubes has specialised only in three segments viz. Tata Structura, Tata Precision tubes and
Tata Pipes.
The production has raised in both the companies but APL Apollo‟s is more than Tata Steel –
Tubes Division SBU.
58
SALES (₹ IN CRORES)
2016 2015 2014 2013 2012 2011
TATA STEEL- TATA TUBES SBU 1907 2167 1937 1790 1783 1616
APL APOLLO TUBES 4214 3138 2569 2008 1392 905
From the above graph, sales of APL Apollo has been increased consistently for 5 financial
years i.e., from 2011-12 to 2015-16. Whereas, Tata Steel‟s sales have been fluctuating
throughout the years which shows there is not proper consistency in sales.
59
FINDINGS OF THIS REPORT
 The liquidity or short term solvency position has been analyzed by calculating current ratio, quick
ratio and cash ratio.
 The company‟s current ratio for all the years is satisfactory than its competitors. It is near to the
ideal ratio (1.54:1) of a manufacturing company.
 The company‟s quick ratio is also satisfactory and within the expectations. It is as per ideal ratio
(0.75:1)
 The ideal cash ratio is 0.5:1. But here the company ratio is less than the required. This may be
because Tata Steel has a good brand image and charges premium for high quality.
 The collection period of Tata Steel is better compared to its competitors Sail and Jindal.
 The long term solvency position has been evaluated by calculation of debt equity ratio.
 In the case of debt equity ratio, even though there is no any rule of thumb or ideal ratio, the
acceptable limit for this ratio is between 50 to 55%.
 A high fixed assets turnover ratio indicates better utilization of the firms fixed assets. The
company should maintain its assets more than 5 always.
 Higher the total assets turnover ratio greater is the ability of the firm to utilize the investments in
the business. It should be as more as possible.
 There is no standard norm for gross profit ratio and it may vary from business to business but the
gross profit should be adequate to cover the operating administrative and office expenses, selling
and distribution expenses) and to provide for fixed charges, dividends and accumulation of
reserves. The company‟s gross profit is increasing year by year.
 The operating cash flow ratio, expresses the relationship between total operating profit for running
the business, and the resultant net sales. A low operating ratio is an indication of operating
efficiency of the business.
60
CONCLUSION
Working capital analysis study completed with a feeling of satisfaction leaving behind. The company
can achieve great or success in terms of increase in sales and profitability and continuity of growth
and build stronger equity than ever.
 The company should utilize the operating activities, investing activities and financial activities in
manufacturing industry properly to get benefit from the customers satisfaction.
 It has been a great opportunity for me to carry out the study on working capital management at
Tata Steel Ltd, Jamshedpur. It has helped me to a great extent to have an insight into practical
realities of subject. I have been able to study and suggest to the best of my knowledge. I tried my
best for the completion of my project study.
 According to me Tata Steel is managing their working capital quite well. The Finance Department
is carrying out its responsibilities efficiently. All the major departments are cooperating and
synchronizing their efforts for the progress of Tata Steel, Jamshedpur.
 A Firm should always invest in current assets for smooth & uninterrupted production & sale.
 The concept of working capital is used in two ways; gross working capital refers to the firms
investment in current assets. Net working capital occurs the difference between current assets and
current liabilities.
 And finally, I want to Thank each and everyone who have helped me in the completion of my
summer internship training at Tata Steel, Jamshedpur (Jharkhand)
61
SUGGESTIONS
1.) It can be said that overall financial position of the company is normal but it is required to be
improved from the point of view of profitability.
2.) Net operating ratio is negative that means there is a need to make improvements in
receivables/debtors management.
3.) Company should stretch the credit period given by the suppliers.
4.) Company should not rely on Long-term debts.
5.) Company should try to increase Volume based sales as analysed for Tata Steel – Tata Tubes
SBU so as to stand in the competition.
6.) Company should raise funds through short term sources for short term requirement of funds,
which comparatively economical as compared to long term funds
7.) The company should maintain its inventory properly following the 80/20 rule.
8.) Net margin is negative throughout the years, which should be a major control to be taken.
62
ANNEXURES
Data has been analysed for the competitors of Tata Steel – Tata Tubes SBU viz. APL
Apollo Tubes and Tube Products Of India (Tube Investments Of India):
APL APOLLO TUBES (₹ in crores)

2016 2015 2014 2013 2012
Working Capital 76.56 -5.27 94.84 85.34 85.05
Working Capital Turnover 55.17 -596.35 27.11 23.55 16.38
Accounts payable Turnover 12.28 16.28 20.12 25.89 34.72
Day's payable 30 22 18 14 11
Accounts receivable Turnover 21.38 14.80 10.97 10.23 10.14
Days's Receivables 17 25 33 36 36
Inventory Turnover 5.25 5.16 5.98 4.31 4.99
Day's Inventory 69 71 61 85 73
Tubes Investments Of India (₹ in crores)

2016 2015 2014 2013 2012
Working Capital -44.63 -366.91 -533.11 -441.05 -88.1
Working Capital Turnover -89.07 -10.53 -6.70 -7.82 -39.96
Accounts payable Turnover 3.82 3.94 3.98 3.76 3.78
Day's payable 95.57 92.61 91.75 97.18 96.64
Accounts receivable Turnover 8.21 8.37 8.50 8.31 8.70
Days's Receivables 44.47 43.63 42.93 43.95 41.95
Inventory Turnover 5.13 5.46 5.82 5.21 4.99
Day's Inventory 71.21 66.90 62.74 70.02 73.11
63
CHARTS (APL APOLLO TUBES & TUBE PROFUCTS OF INDIA)
I. APL APOLLO TUBES
64
65
66
II. TUBE PRODUCTS OF INDIA- TUBE INVESTMENTS OF INDIA
67
68
69
BIBLIOGRAPHY AND REFERENCES
BOOKS:
 Financial Management - I M Pandey
ARTICLES:
 http://www.investopedia.com/terms/w/workingcapitalmanagement.as
 http://www.managementstudyguide.com/financial-management.htm
 http://www.moneycontrol.com/competition/tatasteel/comparison/TIS
 https://efinancemanagement.com/working-capital-financing/importance-of-
working-capital-management
 http://ww2.cfo.com/accounting-tax/2015/06/five-working-capital-management-
strategies/
 http://www.indianjournaloffinance.co.in/index.php/IJF/article/view/72432
 http://www.ijirst.org/articles/IJIRSTV2I11198.pdf
 http://www.thehindubusinessline.com
 https://www.equitymaster.com
 http://www.studyfinance.com/lessons/workcap/
 https://www.econjournals.com/index.php/ijefi/article/download/312/pdf
---THANK YOU---
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Summer Internship Project - G.

A SUMMER INTERNSHIP PROJECT

Under the guidance of

ENGINEERING STAFF COLLEGE OF INDIA

Mr. Pranav Mishra

FINDINGS OF THIS REPORT

Working capital is used in Tata Steel for the following purpose:

The project undertaken is on “WORKING CAPITAL MANAGEMENT IN TATA STEEL”.

1.1 Purpose Of Study:

 To understand the planning and management of working capital at TATA STEEL.

1.2 Scope Of The Study:

 This project will be a learning device for the finance student.

2.1 Statement of the problem:

 To analyze the working capital and financial position of the company.

2.2 Objectives of research problem:

 To study the concept and importance of working capital management.

2.4 Tools and Techniques for Collection Of Data:

Data collection method can be broadly classified into:

Secondary Sources of Data:

2.5 Analysis and Interpretation:

3. TATA STEEL – AN OVERVIEW

3.1 Growth Of Iron And Steel Industries In India:

3.2 About TATA STEEL:

3.3 Vision, Mission And Core Values:

Tata Steel- Tubes Division, Indian Operations today is a leading manufacturer of

3.5 Swot Analysis:

 Access to Raw Materials

 High debt loads

 Less product innovations

 Competitive advantage by value of size

 Socio Political Scenario/ Cap on mining activity

3.6 Michael Porter’s Five Forces Analysis:

Bargaining power of suppliers: The bargaining power

4.1INTRODUCTION TO WORKING CAPITAL MANAGEMENT

Working capital management refers to a company's managerial accounting strategy designed to

4.5 TYPES OF WORKING CAPITAL NEEDS:

The working capital needs can be bifurcated as:

Permanent working capital

Permanent working capital:

There is always a minimum level of working capital, which is continuously required by a

Temporary working capital:

4.6FINANCING OF WORKING CAPITAL

 Permanent or Fixed Working Capital requirements

4.7FACTORS DETERMINING WORKING CAPITAL REQUIREMENT

a) Length of Operating Cycle:

4.8WORKING CAPITAL CYCLE

4.9 SOURCES OF WORKING CAPITAL

Short Term Sources Long Term Sources

4.10 LIQUIDITY VS. PROFITABILITY

 The optimal level of investments in current assets.

5. WORKING CAPITAL OF TATA STEEL

5.1ESTIMATION OF WORKING CAPITAL OF TATA STEEL LTD FOR

ESTIMATION OF WORKING CAPITAL (₹ in crores)

A. CURRENT ASSETS FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Other Current Liabilities 2066.24 8509.79 8671.67 9256.91 6115.81

TOTAL 16838.02 16417.71 18838.09 16734.3 15826.97

C. WORKING CAPITAL(A-B) 779.91 -1041.58 -3208.01 -621.94 -481.11

16000 14773 14903

5.2 GROSS AND NET WORKING CAPITAL

GROSS WORKING CAPITAL (₹ in NET WORKING CAPITAL (₹ in

5.3 RATIOS ANALYSED AND INTERPRETED IN THIS REPORT

Net Working Capital Formula

 Net Working Capital =Current Assets –Current Liabilities