• India is the world’s third-largest producer of crude steel (up from eighth in 2003) and is expected to become the second-largest producer very soon

• India’s crude steel production grew by 4.9 per cent year-on-year to at 8 Million Tones (MT) in May 2016. ! Total steel production in the country is expected to increase by 7 per cent in 2016.

Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO) is an Indian Multinational steel-making company headquartered in MUMBAI,MAHARASHTRA , India, and a subsidiary of the TATA GROUP

STEEL INDUSTRYTATA STEEL

ADITYAACHYUTANWESHACHYUTANANDAAJITANUSHAADVENTANANDAKASHABHISHEK

Growth Rate KEY PLAYERS

Growth rates refer to the percentage change of a specific variable within a specific time period, given a certain context.

TURNOVERTotal Assets is the sum of all assets, current and fixed. The asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales. The higher the ratio indicates that the company is utilizing all its assets efficiently to generate sales. Companies with low profit margins tend to have high asset turnover.

EBITAEBITDA is an acronym for Earnings Before Interest, Taxes,

Depreciation, and Amortization.It gives an indication of the current operational profitability

of the business and allows a comparison of profitability between different companies after removing out expenses that can obscure how the company is really performing.

ROI

PRODUCTS

Tata Steel’s branded products and solutions touch 2.5 million consumers and 5,000 customers every year. By actively responding to changing customer demands and expectations, the Company has expanded its distribution network, strengthened existing brands and won several brand awards.

HR CONTACTS

• India is the 1st largest producer of sponge iron and 3rd largest producer of crude steel.

35

50

• Per capita steel consumption also improved from 35 kgs in 2005 to 59 kgs in 2014.

• Indian steel demand is expected to reflect improving macro-economic environment.

Financial Year 2014-15 has been a year of achievements despite the severe impact of externalities.

The Company was severely impacted in 2014-15 by the raw material (RM) crisis.

FY 15 FY 14 Change % Hot Metal 10.16 9.90 2.6Crude Steel 9.33 9.16 1.9Saleable Steel 9.07 8.93 1.6Sales 8.75 8.52 2.7

(in million tons)

Understanding The Presence Of Different Elasticity

Price Elasticity: A measure of the effect of a price change or a change in the quantity supplied on the demand for a product or service.

Income Elasticity: In economics, income elasticity of demand measures the responsiveness of the quantity demanded for a good or service to a change in the income of the people demanding the good ceteris paribus.

Cross Elasticity: In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good, ceteris paribus.

Presence Of Different Elasticity Of TATA STEEL

Price Elasticity

FY14 FY15 FY160

8,400

16,800

25,200

33,600

42,000

Income Elasticity: Year2Year

Cross Elasticity• Substitute Effect:-• A good’s demand is increased when the price of another good is increased• Steel & Aluminum, Margarine & Butter• More the availability of substitute, more is the cross elasticity of demand

• Complementary Effect:-• The demand for a good is decreased when the price of another good is increased• Computer hardware and computer software, Printer & Cartridge• Demand is more closely related

Marginal ConceptMarginal Cost:-

In economics, marginal cost is the change in the total cost that arises whenthe quantity produced is incremented byone unit. That is, it is the cost of producingone more unit of a good is. In general terms,marginal cost at each level of productionincludes any additional costs required toproduce the next unit.

TATA STEEL INDIA MARGINAL CONCEPT

Market Share Analysis 2014-2015

Others

Percentages Of INDIAN steel INDUSTRY

PRODUCTION FORECASTING OF TATA STEEL INDIA

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2,982,772 3,123,528 3,233,561 3,072,651

760,735 911,574 831,744 698,864

799,553 877,711 839,742 830,120

13,349,349

15,453,619 15,721,18016,879,891

Others JSW steel

2016-2017 2017-2018 2018-2019 2019-2020

BAJAJ STEEL TATA Steel

Production Analysis of Tata steela) Steel Division

www.tatasteel.com/investors/annual-report-2014-15/annual-report-2014-15.pdf

b) Ferro Alloys and Minerals Division c) Tubes Division

d) Bearings Division

Cost analysis of Tata steelA-Purchase of finished, semi-finished and other products

B-Raw materials consumed

C-Employee benefits expense

D-Purchase of power

Source-Management Discussion and Analysis 2014-15

E-Freight and handling charges

 

F- Other expenditure

G-Finance costs and Net finance cost

H-Exceptional items

I- Stores and spares stock

J- Stock-in-trade

Source-Management Discussion and Analysis 2014-15

Tata Steel productivity

http://www.tatasteel.com/investors/pdf/Q4-results-presentation_FY15.pdfhttp://www.business-standard.com/article/reuters/tata-steel-aims-to-double-indian-workforce-s-productivity-source-116072001184_1.html

 

capacity utilization

http://www.tatasteel.com/investors/pdf/Q4-results-presentation_FY15.pdf 

http://www.tatasteel.com/investors/pdf/Q4-results-presentation_FY15.pdf

STRUCTURE OF INDIAN STEEL INDUSTRY 

• India is the world’s third-largest producer of steel (up from eighth in 2003) and is expected to become the second-largest producer by 2016

• The industry produced 91.46 million tons of total finished steel and 9.7 million tons of pig iron in FY2015

• Total finished steel production in India has increased at a CAGR of 7.45 per cent over FY11–15

• The steel sector contribute 2% to the GDP of the nation and provides 6 lakh jobs in the country

• Oligopoly in the Steel Industry

PRICING POLICY AND PRACTICES OF STEEL INDUSTRY

• PRICE REGULATION OF IRON AND STEEL WAS ABOLISHED ON 16 JANUARY 1992. • STEEL PRICES ARE INFLUENCED BY TRENDS IN RAW MATERIAL PRICES, DEMAND –

SUPPLY CONDITIONS IN THE MARKET, INTERNATIONAL PRICE TRENDS AMONG OTHERS.

• GOVERNMENT MONITORS THE STEEL MARKET CONDITIONS AND ADOPTS FISCAL AND OTHER POLICY MEASURES.

• AN IMG IS FUNCTIONING IN THE MINISTRY OF STEEL, UNDER THE CHAIRMANSHIP OF SECRETARY (STEEL) TO MONITOR AND COORDINATE MAJOR STEEL INVESTMENTS IN THE COUNTRY.

• CURRENTLY, BASIC EXCISE DUTY FOR STEEL IS SET AT 12.5% AND THERE IS NO EXPORT DUTY ON STEEL ITEMS. GOVERNMENT HAS ALSO IMPOSED AN EXPORT DUTY OF 30% ON ALL FORMS OF IRON ORE EXCEPT LOW GRADES WHICH CARRY A DUTY OF 10% WHILE IRON ORE PELLETS HAVE AN EXPORT DUTY OF 5%.

• RAISED THE IMPORT DUTY ON MOST STEEL IMPORTS BY 2.5%, TAKING THE IMPORT DUTY ON CARBON STEEL FLAT PRODUCTS TO 10% AND THAT ON LONG PRODUCTS TO 7.5%

PRICING POLICY AND PRACTICES OF STEEL INDUSTRY

• NATIONAL STEEL POLICY – 2005 HAS THE LONG TERM GOAL OF HAVING A MODERN AND EFFICIENT STEEL INDUSTRY.

• THE POLICY AIMS TO ACHIEVE OVER 100 MILLION METRIC TONNES OF STEEL PER YEAR BY 2019-20 FROM THE 2004-05 LEVEL OF 38 MT. THIS IMPLIES AN ANNUAL GROWTH OF AROUND 7.3% PER YEAR SINCE 2004-05.

• STEEL CONSUMPTION IN 2004 IS 1000 MILLION METRIC TONNES AND IS EXPECTED TO GROW AT 3.0 PERCENT PER ANNUM TO REACH 1,395 MILLION METRIC TONNES IN 2015.

• A POLICY PAPER ON R&D HAS ALSO BEEN PREPARED WITH SPECIAL FOCUS ON BENEFICIATION, COAL ASH REDUCTION AND PROMOTION OF PRODUCTION OF HIGH GRADE VALUE ADDED STEEL.

• INTERNATIONAL COAL VENTURES LIMITED, A SPECIAL PURPOSE VEHICLE WITH EQUITY PARTICIPATION TO AN EXTENT OF 3500 CRORE BY SAIL, RINL, COAL INDIA LTD,NMDC AND NTPC FOR ACQUISITION OF METALLURICAL THERMAL COAL ASSETS ABROAD HAS BEEN INCORPORATED.

PRICING POLICY AND PRACTICES OF TATA STEEL

• TATA STEEL IS CONSCIOUS TO THE IMPERATIVE TO PROTECT THE CONSUMERS OF THE STEEL FROM STEEPER PRICE INCREASES. WITH THE HIGH INCREASE OF THE BASIC INPUTS SUCH AS COAL, IRON ORE, SCRAP AND PETROLEUM PRODUCTS, THERE HAS BEEN A FOCUS ON ACHIEVING COST EFFECIENCIES.

• COMPANY HAS BEEN ESPECIALLY CONSIDERATE TO ITS BONAFIDE CUSTOMERS FOR WHOM THE PRICES ARE OFFERED AT AROUND RS. 5000 PER TONNE LOWER THAN MARKET PRICES.

• WITH THE 70% OF PRODUCTS GOING DIRECTLY TO CUSTOMERS, THIS LARGE SECTION OF CONSUMERS IS TREATED WITH SPECIAL CONCERN.

• TO SERVE THE DOMESTIC CONSUMER BETTER, TATA STEEL DECIDED TO LIMIT EXPORTS LAST YEAR TO 15 % OF TOTAL SALES.

• IN EARLY 1980, ANNUAL PROFITS WERE IN THE REGION OF RS. 6 CRORE. BUT THE COSTS OF EXPANSION AND MODERNISATION HAVE BEEN SHOOTING UP.

• SINCE 1992, WHEN THE COMPANY STARTED ITS EXPANSION AND MODERNISATION, IT HAS SPENT OVER RS. 10,000 CRORE.

Objectives of Steel IndustryIndia should have efficient and modern steel industry of

world Standards.Focus of the policy must be in terms of global benchmark

of efficiency & productivity.Indian growth rate of Steel Production over 15 Years was

7% and projected steel growth rate is 7.3%.Increase the Steel Consumption in the world to around

1395 MT from 1000 MT.To increase the Steel Consumption in the world at 3% per

annum.

Objectives of Tata Steel • Customer Focus

A major 'Supply Chain Transformation' project aimed at improving customer service levels.

Invested in projects to improve product mix and service offering• Innovation

14 new products launched in the Financial Year 2012-13, with the majority in automotive.

A new chair for research into low carbon materials technology at the University of Warwick, jointly funded with the Royal Academy of Engineering.

• Operational Excellence The No. 4 Blast Furnace at the Port Talbot steelworks in the UK has been restarted

following the completion of the rebuild project. The restructuring of the Scunthorpe works, announced in May 2011, was implemented

according to plan over the following 10 month period.

Objectives of Tata Steel

• Responsible Behavior Commissioning of a new cooling system in the Port Talbot plant,

reducing the site’s need for external power by about 15%. Leading role in the European Ultra Low CO2 Steelmaking ('ULCOS')

collaborative project.• People

Engaging employees at all levels of the organisation. Managing the employment cost base in a responsible manner.

GOVERNMENT POLICY ON STEEL INDUSTRY

Steel industry : Important Policy Measures

In the new Industrial Policy announced in July, 1991 Iron and Steel industry, among others, was removed from the list of industries reserved for the public sector under the Industries ( Development and Regulation) Act, 1951.

Iron and Steel industry has been included in the list of `high priority' industries for automatic approval for foreign equity investment upto 51%. This limit has been recently increased to 74%.

The trade policy has been liberalised and import and export of iron and steel is freely allowed. There are no quantitative restrictions on import of iron and steel items, covered under Chapter No. 72 of the ITC(HS) Code

Role of Iron and Steel Industry in India GDP-Consumption

• The domestic steel consumption in the year 2006-07 was 41.14 million tonnes• The average growth rate of the Indian Iron and Steel Industry is 11.36%• The construction projects all over India are major consumer of steel• The per capita consumption of steel in India is 35kgs• As the per capita consumption of steel is lower than other countries, so the steel industry has huge opportunities in the future

MACRO ECONOMIC SCENARIO WHICH IMPACT THE BUSINESS

Articles On Steel Industry

1. Demand supply gap resulting in increased imports:• India was a net importer of steel till FY13• In 2015 India imported 9.32 MT of steel,

exports declined to 5.59 MT in FY15 from 5.98 MT in FY14.

• During FY11-15, import of steel grew at a CAGR(compounded annual rate) of 9.01 per cent whereas exports increased at a CAGR of 11.32 percent.

• Total domestic demand for steel is estimated at 113.3 MTPA by 2016-17.

Dt: July-2016Source: http://www.ibef.org/industry/steel.aspx

2. Steel demand in India to outpace regional average– steel demand in India will outpace the regional average as the country’s GDP growth

of around 7.5 per cent in 2016 and 2017and remains among the highest in Asia as per Moody’s Investors Services.

– India's reform and policy support for infrastructure and manufacturing, as well as increasing urbanization, will drive steel consumption.

Dt: July-2016

Source: http://www.firstpost.com/business/steel-demand-in-india-to-outpace-regional-average-moodys-2961492.html

3. India's Steel Exports Fall 32 Percent in 2015-16– India's steel exports fell 32 percent while imports rose 20.2 percent in fiscal 2015-

16 compared to the previous year.– "Export of total finished steel was down in 2015-16 at 3.80 million tonnes

compared to the last year. Import of total finished steel at 11.20 million tonnes in 2015-16 compared to the last year.

– India's consumption of finished steel at 80.27 million tonnes saw a growth of 4.3 percent in 2015-16 compared to the previous year.

Dt: April- 2016Source: http://www.newindianexpress.com/business/news/Indias-Steel-Exports-Fall-32-Percent-in-2015-16/2016/04/08/article3370063.ece

4. Management buyout group Excalibur says still open to buying Tata's UK steel business:– Management buyout group Excalibur, one of the bidders for Tata's British steelmaking business, despite Tata pausing

to explore joint ventures.– Tata Steel put the process of selling its major British assets on hold because of the uncertainty caused by the Brexit

vote and surrounding pension liabilities and said it would also look at forming a joint venture.Dt: July-2016Source:http://www.firstpost.com/business/management-buyout-group-excalibur-says-still-open-to-buying-tatas-uk-steel-business-2919028.html

5. Centre's forest panel gives nod to Tata Steel's Odisha mining project:– The Centre's green panel has given clearance to Tata Steel for diversion of forest land for expansion of its iron ore

mining project in Keonjhar district, Odisha.

– the company has sought permission for diversion of 199.1 hectare of forest land, including 2.2 hectare for safety zone, for iron ore mining and allied activities in Katamani mines in Deojhar and Thakurani Reserved Forest, Keonjhar district.

– Out of the total forest 57.55 hectare is a reserved forest land proposed to be diverted. As many as 49,600 trees are required to be felled in the virgin forest land.

– Total cost of expansion of Katamani iron ore mine project is estimated at Rs 45 crore up to production level of 5 million tonnes per annum.

• Dt: April-2016• Source: http://www.firstpost.com/business/centres-forest-panel-gives-nod-to-tata-steels-odisha-mining-project-2715466.html

6. Tata Steel declared global industry leader in the steel sector by Dow Jones Sustainability Index:

– Tata Steel has been declared as the global industry leader in the steel sector by the Dow Jones Sustainability Index (DJSI) assessment for the year 2016. This year, more than 20 global steel majors participated in the DJSI assessment.

– Tata Steel scored 81 per cent in the assessment, an improvement from last year’s score of 80 per cent

– It moved from Bronze in the first year to Silver last year and has emerged as Industry Leader, Gold category, this year

– Out of a total of 23 criterion, Tata Steel achieved 100 percentile in seven criterion – Customer Relationship Management, Supply Chain Management, Materiality, Payment Transparency, Operational Eco-efficiency, Social Reporting and Talent Attraction & Retention.

– The DJSI assessment was created by the investor community in the year 1999 to evaluate large companies based on economic, environmental and social criteria.

• Dt: September-2016• Source:http://www.tatasteel.com/UserNewsRoom/usershowcontent.asp?id=21390&type=PressRelease&REFERER=http://www.tatasteel.com/media/press-release.asp