Company : Tata Steel Ltd

History

Company History

Company History

Tata Steel Ltd is the world's 10th largest steel company and the world's 2nd most
geographically diversified steel producer. The company is a diversified steel producer with
major operations in India, Europe and South East Asia. They have manufacturing units in
26 countries and a presence in 50 European and Asian markets. The company together with
their subsidiaries, engages in the manufacture and sale of steel products in India and
internationally. They offer hot and cold rolled coils and sheets, galvanized sheets, tubes,
wire rods, construction rebars and bearings.

The company also involves in prospecting, discovering, and mining iron ore, coal, ferro
alloys, and other minerals; designing and manufacturing plants and equipment for steel, oil
and natural gas, energy and power, mining, railways, ports, aviation, and space industries;
and agricultural implements. Further, they offers alumina, dolomite, and monolithic
refractories, as well as silica refractories for coke ovens and the glass industry; manufactures
bricks; sponge iron lumps and fines; and rolls for applications in integrated steel plants,
power plants, and government mint, as well as paper, textile, and food processing sectors.

Tata Steel's operations are grouped under six Strategic Business Units include Bearings
Division, Ferro Alloys and Minerals Division, Agrico Division, Tata Growth Shop (TGS),
Tubes Division and Wire Division. They have introduced several branded steel products,
including Tata Steelium (the world's first branded Cold Rolled Steel), Tata Shaktee
(Galvanised Corrugated Sheets), Tata Tiscon (rebars), Tata Pipes, Tata Bearings, Tata
Structural, Tata Agrico (hand tools and implements) and Tata Wiron (galvanised wire
products).

Tata Steel Ltd was incorporated in the year 1907 with the name Tata Iron & Steel Company
Ltd. In the year 1911, the company commenced the operations of the first Blast Furnace or
the 'A' Blast Furnace. In December 2, 1911, the fist collieries were obtained and the first
cast of pig iron was produced. In they ear 1912, the first ingot of steel rolled out of the
Sakchi Plant and in October 1912, the Bar Mills started their commercial production. Also,
the B Blast Furnace became operational during the year. In the year 1918, India's first steel
(coke) plant was established in Jamshedpur.

In the year 1925, the New Rail Mill, Merchant Mill and Sheet Mill went into operation. In
the year 1931, they opened a apprentice shop. In the year 1941, they started manufacture of
special steel for war purpose. They produced a wide variety of special steels required for
defense purposes including armoured cars called 'Tatanagars'. In the year 1943, Howrah
Bridge was constructed from steel supplied by the company. In the year 1955, the company
signed an agreement with Kaiser Engineers for two million tonne expansion programme. In
the year 1980, they started the first phase of the four-phased modernisation programme.

In the year 1984, the company introduced BOF steelmaking, which could produce liquid
steel in forty five minutes when it took the old open hearth furnaces, close to five hundred
under the first phase of modernisation. During the year 1984-85, Indian Tubes Company
Ltd was amalgamated with the company. The second phase of modernisation was in the
year 1988, which concentrated largely on the iron-making area. During the year 1993-94,
the company commissioned the Hot Strip Mill with the capacity of one million tonne per
annum which was the company's third modernisation programme. In the year 2000, the
company inaugurated the 1.2 million tonnes Cold Rolling Mill Complex as a first step
towards expansion and modernisation.

In January 2, 2004, The Indian Steel Wire Products Company was acquired at Jamshedpur.
In June 4, 2005, the company signed an MoU for setting up a five-million tonne per annum
Greenfield integrated steel plant in the Jagdalpur district of Chhattisgarh. In July 2005, they
formed a joint venture with Blue Scope Steel Ltd, Australia for quoted steel manufacturing
facility. In July 21, 2005, the company acquired stakes in the Australian coal mines. In
August 2005, the company set up Met coke manufacturing facility in West Bengal.

In September 19, 2005, the company signed an MoU with the Government of Jharkhand for
setting up a 12-million tonnes per annum Greenfield integrated steel plant in the
Manoharpur and Chandil areas of Jharkhand. In December 14, 2005, they signed definite
agreement with Cementhai Holding Company to acquire shares and invest equity in the
Milennium Steel, Thailand. Also, the name of the company was changed from Tata Iron &
Steel Company Ltd to Tata Steel Ltd with effect from May 19, 2005.

In the year 2006, the company inaugurated India's first automated Jigging and Hydrocyclone
Plant, with a 1.6 MTPA throughput, at Noamundi Iron Mines. They commenced the work
on Ferro Chrome Plant by acquiring Rawnet Ferrous Industries Pvt Ltd, in Orissa, a Ferro
Alloys plant with a capacity of 50,000 tpa of high carbon chrome. They set up a Joint
Venture Company with Larsen and Toubro Ltd for developing an all weather modern deep
water port in the state of Orissa on the Eastern Coast of India. Tata NYK Shipping Pte Ltd,
a joint venture shipping company between the company and Nippon Yusen Kabushiki
Kaisha was set up to cater to dry and break bulk cargo and also the shipping activities. In
August 7, 2006, the company inaugurated the Roll Forming and Pre-Engineered Building
Facilities of Tata Bluescope Ltd at Pune.

In April 2, 2007, the company acquired Corus Europe's second largest steel producer for
consideration of USD 12 Billion, which made Tata Steel the sixth largest steel producer
globally and the second-most geographically diversified steel producer in the world. They
also entered into an agreement for acquiring controlling equity stake in two rolling mills
located in Haiphorg, Vietnam. Also, they signed a joint venture agreement with Riversdale
Mining for Mozambique coal project. In December 2007, the company and SODEMI (state
owned company for mineral development) entered into joint venture agreement for the
development of Mount Nimba Iron ore deposits in Ivory Coast (West Africa).

In January 2008, the company and the members of the Al Bahja Group, a leading business
house of Oman entered into a Joint Venture Agreement for the development of the Uyun
Limestone deposits at Salalah in the Sultanate of Oman. Also, they entered an agreement
with Steel Authority of India Ltd (SAIL) to establish a 50:50 joint venture company for coal
mining in India. In February 2008, they opened their fourth retail outlet, 'steeljunction' at
Behala.

During the year 2008-09, the company completed the expansion of crude steel capacity to
6.8 mtpa as part of their expansion programme. Also, they commissioned Sinter Plant No.
4, the 'H' Blast Furnace and the Continuous Caster No. 3 at LD Shop-1 during this expansion
phase. In June 16, 2008, the company and their wholly owned subsidiary, Rawmet Ferrous
Industries Ltd entered into an agreement with Jasper Industries Pvt Ltd for set up a coal
based power plant of 2 X 67.5 MW capacity in Orissa.

In September 2008, the company through their subsidiaries signed a Heads of Agreement
memorandum with New Millennium Capital Corporation (NML), a Canadian listed mining
company aiming to develop iron ore projects in Northern Quebec, Labrador and
Newfoundland provinces. As part of the restructuring of the overseas holdings, the company
transferred their stake in Tata Steel (Thailand) Public Company Ltd to Tata Steel Global
Holdings Pte Ltd. The company subscribed 35,88,022 rights shares of Tayo Rolls Ltd and
consequently, Tayo Rolls Ltd has become a subsidiary of the Company with effect from
December 01, 2008.

In October 22, 2009, the company and Mineral and Metal Trading Company Ltd signed an
agreement to establish a 74:26 joint venture company for acquiring, development and
operation of mines and processing of minerals and metals.

During the financial year 2009-10, Hooghly Met Coke and Power Company Ltd was
amalgamated with the company with effect from April 1, 2009. The construction of a
warehousing shed and a building for a power receiving sub-station had started at one corner
of the plant area. They increased the production capacity of Crude Steel from 61,10,000
tonnes to 68,00,000 tonnes, Saleable Steel from 58,40,000 tonnes to 65,00,000 tonnes and
Welded Steel Tubes from 2,84,000 tonnes to 2,88,000 tonnes.

In October 2009, the company entered into agreement with MMTC Limited, a Central
Government undertaking and established a joint venture company for acquiring, developing
and operating mines and processing of minerals and metals. In November 2009, they signed
a Joint Venture Agreement with NML, to advance the development of the DSO Project. In
January 2010, the company entered into an MoU with NMDC Ltd, to explore the possibility
of acquisition, exploration and development of mines, extraction and processing of
minerals, setting up integrated steel plants and other businesses of mutual interest.
In April 6, 2010, the company entered in an MoU with Nippon Steel Corporation (NSC),
Japan for setting up a Continuous Annealing and Processing Line at Jamshedpur, India with
0.6 mtpa capacity. In June 2010, the company subscribed to a private placement of Canadian
$20 million by NML pursuant to which Tata Steel Global Minerals Holding Pte Ltd holds
a 27.4% stake in NML.

In June 2010, the company and Tata Metaliks Ltd entered into an MoU with the Government
of Karnataka in June 2010 for setting up an integrated steel plant of 3 mtpa in Agadi and
Boodagatti villages of Haveri District, Karnataka. In August 2010, the company's subsidiary
Corus UK Ltd and Sahaviriya Steel Industries Public Company Ltd (SSI) signed an MOU
which sets out the scope of a potential transaction whereby SSI would acquire from Corus
the Teesside Cast Products (TCP) business in a transaction valued at approximately USD
500 million.

Tinplate Company of India Ltd became a subsidiary of the company with effect from April
01, 2011, consequent to increase in the company's shareholding in the Tinplate Company of
India Ltd from 42.88% to 59.45%. This increase is due to automatic and compulsory
conversion of 3% fully convertible debentures of Rs 100 each held by the company into
equity shares on April 01, 2011.

In April 2011, the company and Krosaki Harima Corporation (KHC) signed definitive
agreements to induct KHC as a strategic partner in Tata Refractories Ltd (TRL). Under this
arrangement, KHC will acquire 51% equity stake out of TSL's current 77.46% stake in TRL.
As per the scheme of amalgamation, Centennial Steel Company Ltd, a wholly owned
subsidiary company was amalgamated with the Company with effect from September 27,
2011.

In January 2012, the company secured a contract from Siemens Wind Power to supply
25,000 tones of profiled steel plate for wind towers. Tata Steel will deliver 25,000 tones of
profiled plate (cut into the desired shape) between April and September 2012.

The company is implementing an expansion project at Jamshedpur Works to increase its

The company is also setting up a Continuous Annealing and Processing Line at Jamshedpur
with a capacity of 0.6 mtpa under a joint venture company with Nippon Steel Corporation
(NSC), Japan. The line will produce automotive cold rolled fl at products and address the
needs of Indian automotive customers for highgrade cold rolled steel sheets.

The preliminary work on the 6 mtpa greenfield steel plant at Kalinganagar, Odisha is in
progress.
Ratio Analysis

Ratio analysis is the process of examining and comparing financial information by calculating
meaningful financial statement figure percentages instead of comparing line items from each
financial statement.

The various ratios that are evaluated are as follows:

 Liquidity
 Financial leverage
 Profitability (sales)
 Profitability (Total investment)
 Profitability (Equity funds)
 Turnover

COMMENTS:

1. Liquidity Ratio- The current ratio, quick ratio and cash ratio greater in the year 2015 as
compared to 2014 and 2016. So, from all the three ratios it can be observed that the
liquidity of the company has been reduced with respect to the previous years.

2. Financial Leverage Ratio- The debt-equity ratio and debt-total asset ratio has is the
same of the year 2015 and 2016 0.42 which is not more than in the year 2014(0.46)
which indicates that the lower proportion of company’s debt or equity is used to finance
company’s assets. But the other 3 ratios have decreased by huge margin because the
operating profit of company has decreased in the last year and loss is acquired after the
deduction of interest and tax.

3. Profitability Ratio- It can be observed that the overall profitability has tremendously
reduced in FY 2016 because of the increase in total expenditure with respect to that of the
total income which leads the company to acquire loses in the year 2016..

4. Turnover Ratio- The inventory holding period of the company is decreasing consistently
which indicates the sale of the company is increasing. Also the average receivables that
are to be incurred by the company are decreasing and the receivable period is increasing
 which indicates that the performance of the company is getting deteriorating. The total
asset turnover ratio is the highest in 2015 as compared to Fy 2014 and FY 2016.

Interpretation:

 We can say that the Current Ratio of Videocon is in Fluctuating trend. The
highest current ratio of Videocon was 7.10 in the year 2014-15 which shows
good position of the company and the lowest ratio was 6.24 in 2013-2014.
Overall performance of current ratio shows that company position is good.
 It can be said that the overall performance of absolute liquid ratio shows that
company position is not in a good position.
 The highest debtor’s turnover ratio of Videocon was 4.45 in the year 2014-15
and the lowest debtor’s turnover ratio was 4.36,3.47 in 2013-14 and 2015-16.
 We can say that debtor’s turnover ratio was in fluctuating trend. The overall
performance of the debtor’s turnover ratio was excellent.
 We can say that the ratio is in decreasing trend.
 The company position is not good at all.
 The highest net profit ratio of Videocon was 0.02 in the year 2014-15 and the
lowest net profit ratio is -0.45 in 2015-16. This ratio is also in decreasing trend.
Net profit of the company is goes down, so it is not good for the company.
 So, it can be observed that the overall performance of the company is
deteriorating in the year 2016.