FINANCIAL ANALYSIS OF Tata Steel

By
Shubhank Shukla

A3104616062
B.COM (Hons)

IN PARTIAL FULFILMENTS OF THE REQUIREMENTS FOR

B.com (H) THREE YEAR DEGREE COURSE.

FACULTY GUIDE - Dr. SHUBHANGI SINGH

 INDEX

1. Title Page

2. Declaration Form

3. Certificate

4. Acknowledgement

5. Executive Summary

6. Introduction to Company

7. Research Objective

8. Financial Tools and Techniques

9. Analysis of Financial Statements

10. Conclusion

11. References.
 DECLARATION FORM

Topic: Financial Trend Analysis of Tata Steel ltd

I declare:

(a)That the work introduced in this NTCC Report is my own, it has

not beforehand been exhibited for another appraisal and that my
obligations (for words, information, contentions and thoughts)
have been properly recognized

(b)That the work adjusts to the rules for introduction and style set
out in the pertinent documentation.

Date: 3 / 07 / 2017

Shubhank Shukla A3104616062

B.Com (Hons.)Semester |||

 Certificate

I Dr. SHUBHANGI SINGH thusly guarantee that Shubhank

understudy of B.Com (H) at Amity College of Commerce and
Finance, Amity University Uttar Pradesh has finished the NTCC
Report on "Budgetary Trend Analysis On Tata Steel ltd", under
my direction.

He has put every one of the endeavors with so much

commitment and diligent work to finish this venture inside the
constrained time.

Dr. SHUBHANGI SINGH

Department of Amity College Of Commerce and Finance
EXECUTIVE SUMMARY

I have done my mid-year temporary job at Tata Steel ltd. The entry
level position was for term of 3 weeks and it included a great deal
of learning exercises all around. The examination includes, get
ready monetary articulation, gathering money related exchange
from the yearly report.

The following is the official rundown of my report which proceeded

with every one of the subtle elements of what contained every one
of the points of interest of what whatever I did and a couple of
suggestion toward the end.

TATA Steel Limited (once in the past Tata Iron and Steel Company
Limited (TISCO)) is an Indian multinational steel-production
organization headquartered in Mumbai, Maharashtra, India, and a
backup of the Tata Group.

It is one of the best steel delivering organizations all around with a

yearly unrefined steel limit of 23.88 million tons (in FY17), and the
second biggest steel organization in India (measured by local
generation) with a yearly limit of 9.7 million tons after SAIL

TATA Steel has producing operations in 26 nations, including

Australia, China, India, the Netherlands, Singapore, Thailand and
the United Kingdom, and utilizes around 80,500 people. Its biggest
plant is situated in Jamshedpur, Jharkhand. In 2007 Tata Steel
procured the UK-based steel creator Corus.

It was positioned 486th in the 2014 Fortune Global 500 positioning

of the world's greatest corporations. It was the seventh most
profitable Indian brand of 2013 according to Brand Finance.
 Introduction

Tata Iron and Steel Company was founded by Jamshetji Tata and
established by Dorabji Tata on 26 August 1907, as part of his
father Jamshetji's Tata Group. By 1939 it operated the largest
steel plant in the British Empire. The company launched a major
modernization and expansion program in 1951. Later in 1958, the
program was upgraded to 2 million metric tonnes per annum
(MTPA) project. By 1970, the company employed around 40,000
people at Jamshedpur, with a further 20,000 in the neighbouring
coal mines. In 1971 and 1979, there were unsuccessful attempts to
nationalise the company. In 1990, it started expansion plan and
established its subsidiary Tata Inc. in New York. The company
changed its name from TISCO to Tata Steel in 2005. Tata Steel on
Thursday, 12 February 2015 announced buying three strip
product services centers in Sweden, Finland and Norway from
SSAB to strengthen its offering in Nordic region. The company,
however, did not disclose value of the transactions.

Operations

Tata Steel is headquartered in Mumbai, Maharashtra, India and

has its marketing headquarters at the Tata Centre in Kolkata,
West Bengal. It has a presence in around 50 countries with
manufacturing operations in 26 countries including: India,
Malaysia, Vietnam, Thailand, UAE, Ivory Coast, Mozambique,
South Africa, Australia, United Kingdom, The Netherlands,
France and Canada.
Tata Steel primarily serves customers in the automotive,
construction, consumer goods, engineering, packaging, lifting and
excavating, energy and power, aerospace, shipbuilding, rail and
defence and security sectors.
Expansion Plans

Tata Steel has set a target of achieving an annual production

capacity of 100 million tons by 2015; it is planning for capacity
expansion to be balanced roughly 50:50 between Greenfield
developments and acquisitions. Overseas acquisitions have
already added an additional 21.4 million tons of capacity,
including Corus (18.2 million tons), NatSteel (2 million tons) and
Millennium Steel (1.2 million tons). Tata plans to add another 29
million tons of capacity through acquisitions.
Major greenfield steel plant expansion projects planned by Tata
Steel include: 1. A 6 million tons per annum capacity plant in
Kalinganagar, Odisha, India; 2. An expansion of the capacity of
its plant in Jharkhand, India from 6.8 to 10 million tons per
annum; 3. A 5 million tons per annum capacity plant in
Chhattisgarh, India (Tata Steel signed a memorandum of
understanding with the Chhattisgarh government in 2005; the
plant is facing strong protest from tribal people); 4. A 3 million
tons per annum capacity plant in Iran; 5. A 2.4 million tons per
annum capacity plant in Bangladesh; 6. A 10.5 million tons per
annum capacity plant in Vietnam (feasibility studies are
underway); and 7. A 6 million tons per annum capacity plant in
Havier, Karnataka.
 Research Objective

The goal of our examination is to comprehend and take in the

money related investigation instruments for computing the
budgetary proportions from the monetary proclamations of the
organization. This exploration will uncover us to think about
the organization's money related wellbeing and the proportion
examination which gives us a summation about the
organization with respect to their budgetary proclamations.
This examination has many learning's and goals which are
extremely useful for the general population of business and
back as it must be use in corporate world.

Another goal of this money related research is to speak to the

monetary proportions in graphical frame so it can be
effortlessly comprehended by the general population
associated with the business. The graphical portrayals will be
spoken to through the discoveries from the money related
proportions. The charts are to be classified or masterminded
by the proportions discovered. The goal of our exploration
was to utilize and comprehend the different pieces of
proportion investigation. This incorporates choosing right
proportions for investigation, computing these proportions
and translating these proportions accurately in order to draw
future projections for the same.
These proportions are to be utilized as a part of corporate
world likewise, so this examination will help us in deciding
the proportions of the organization for discovering the money
related execution in the individual years. This examination
depends on the most recent three years money related
articulations. By applying the suitable equation, we become
more acquainted with about the diverse proportions of the
organization.

Budgetary proportions of the organization are discovered to

know the organization gainfulness and for the future
projection. So this examination fundamental enlightens us
concerning the future outline.
 Chapter-2

Financial Tools and Techniques

1) LIQUIDITY RATIOS
Liquidity ratios analyze the ability of a company to pay off both
its current liabilities as they become due as well as their long-term
liabilities as they become current. In other words, these ratios
show the cash levels of a company and the ability to turn other
assets into cash to pay off liabilities and other current obligations.

Liquidity is not only a measure of how much cash a business has.

It is also a measure of how easy it will be for the company to raise
enough cash or convert assets into cash. Assets like accounts
receivable, trading securities, and inventory are relatively easy
for many companies to convert into cash in the short term. Thus,
all of these assets go into the liquidity calculation of a company.

a) Current Ratio

Current ratio establishes the relationship between current assets

and current liabilities.

> It indicates the ability of the firm to meet its short-term

financial obligations.

The ratio is calculated as follows:-

Current Ratio = Current Assets / Current Liabilities

b) Liquid Ratio or Quick Ratio or Acid Test Ratio

Liquid Ratio establishes the relationship between liquid assets

and current liabilities.

> It is computed to assess the short-term liability of the firm.

The ratio is calculated as follows:

Liquid Ratio = Liquid Assets / Current Liabilities

2). Solvency Ratios (Long – Term Solvency)

Solvency Ratios are calculated to determine the ability of the

business to meet its long –term debt.

The following ratios are normally computed for evaluating

solvency of the business.

(I) Debt to Equity Ratio (Debt –Equity Ratio)

Debt to Equity Ratio establishes the relationship between

external equities (i.e. external debts) and internal equities (i.e.
Shareholders fund) of the enterprise.

> The ratio is calculated to assess the long – term financial

soundness of the enterprise.

The ratio is calculated as follows:-

Debt to Equity Ratio = Debt/ Equity

(ii) Total Assets to Debt Ratio

Total Assets to Debt Ratio establishes the relationship between

total assets and total long –term debts.

> It indicates the extent to which debt is being covered by the

assets.

The ratio is calculated as follows:-

Total Assets to Debt Ratio = Total Assets / Debt

(iii) Proprietary Ratio

Proprietary Ratio establishes the relationship between

Proprietors Fund (or Shareholders Fund) and Total Assets.

> It indicates the extent to which total assets have been funded by
the owners or shareholders.

The ratio is calculated as follows: -

Proprietors Fund = Proprietors Funds / Total Assets

3). Activity Ratios or Turnover Ratios

These ratios are calculated to measure how efficiently a company

is using its resources.
> These ratios are generally calculated on the basis of “Revenue
from Operations” (i.e. Net Sales) or ‘Cost of Revenue from
Operations’ (i.e. Cost of sales).

> These ratios are known as Turnover Ratios as they indicate the
speed with which the resources are being turned (or converted)
into revenue from operations or cost of revenue from operations.

The important activity ratios calculated under this category are:

(I) Inventory Turnover Ratio (or Stock Turnover Ratio)

Inventory (or Stock) Turnover Ratios establishes the relationship

between Cost of Revenue from Operations (i.e. Cost of Goods
Sold) and average inventory kept during that year.

> It aims to determine the efficiency with which the inventory is

being used.

The ratio is calculated as follows:

Inventory Turnover Ratio = Cost of Revenue from Operations /

Average Inventory

(ii) Working Capital Turnover Ratio

Working Capital Turnover Ratio establishes the relationship

between Working Capital and Revenue from Operations.

> It aims to determine the efficiency in the use of working capital

of the enterprise.

The ratio is calculated as follows:-

Working Capital Turnover Ratio = Revenue from Operations /
Working Capital

4). Profitability Ratios

The efficiency of a business is measured by the profit earned by it.

> The accounting ratios which measure the profitability of a

business are known as Profitability Ratios

The Important Profitability Ratios are:

(I) Gross Profit Ratio

Gross Profit Ratio establishes the relationship between Gross

Profit and Revenue from Operations.

> It aims to determine the profit margin available on Revenue

from Operations.

> This ratio is expressed in percentage.

The Ratio is calculated as follows:-

Gross Profit Ratio = Gross profit / X 100

Revenue from Operations

(ii) Operating Ratio

Operating Ratio establishes the relationship between Operating

Cost (i.e. Cost of Revenue from Operations + Operating
Expenses) and Revenue from Operations.
> It aims to determine the operational efficiency of the business.

> The ratio is expressed in percentage.

The ratio is calculated as follows: -

Operating ratio = Operating Cost/ X 100

Revenue from Operations

(iii) Operating Profit Ratio

Operating Profit Ratio establishes the relationship between

Operating Profit and Revenue from Operations.

> It also aims to determine the operational efficiency of the

business.

> The ratio is expressed in percentage.

The ratio is calculated as follows:-

Operating Profit Ratio = Operating Profit / X 100

Revenue from Operations

(iv) Net Profit Ratio

Net Profit Ratio establishes the relationship between Net Profit

and Revenue from Operations.

> This ratio is expressed in percentage.

The ratio is calculated as follows: -

Net Profit Ratio = Net Profit before Tax / X 100
Revenue from Operations

(v) Return on Investment or Return on Capital Employed Ratio

Return on Capital Employed Ratio establishes the relationship

between Net Profit before Interest, Tax and Dividend and Capital
Employed.

> It also determines the overall performance of the enterprise.

> The ratio is also is expressed in percentage.

The ratio is calculated as follows:-

Return on Investment = Net Profit before Interest / X 100

Capital Employed
 Chapter-3

Analysis and
Findings of
Financial
Statements
Ratio Analysis of Tata Steel Ltd.

For The Year Ended 31st March 2016

1. Current ratio = current assets ÷ current liability

Current assets = investment + inventory + trade receivables + cash
& bank balance + short term loan & advance + other currently assets.
Current assets = 8730 +31,321 + 12, 986 + 391 + 15, 565 + 25, 021
= 71,495.
Current liability = short term borrowing + trade payable+ other
current lab. + Short term provision.
= 774 + 23,648 + 70,133 + 18, 345
= 391956
Current ratio = 71495 ÷ 391956
= 0.18

2. Liquid ratio = liquid assets ÷ current lab.

Liquid assets= current assets - inventory
= 71,495 - 31,321
= 40,174
Liquid ratio = 40,174 ÷ 3, 91,956
= 0.10
3. Debt equity ratio. = long term debt ÷ share holder fund

Long term debt = long term borrowing + deferred tax + other

long term lab. + Long term provision
= 0 + 4,741 + 1,224 + 3,020 + 8,985
= 8,985
Shareholder fund = 1,510 + 2, 68, 561
= 2, 70,071
Debt equity ratio = 8,985 ÷ 2, 70,071
= 0.03

4. Total assets to debt ratio = total assets ÷ long term debt

Total assets = noncurrent assets+ current assets
= 3, 20,461+ 71, 495
= 3, 91,956
Long term debt =long term borrowing + deferred tax + other
long term lab. + Long term provision
= 0 + 4,741 + 1,224 + 3,020 + 8,985 = 8995
= 3, 91,956 ÷ 8,995
=43.57 approx.
5. Prosperity ratio = shareholders fund ÷ total assets

Shareholder fund = 1,510 + 2, 68, 561

= 2, 70,071

Total assets = noncurrent assets+ current assets

= 3, 20,461+ 71, 495

= 3, 91,956

Proprietary ratio = 2, 70,071 ÷ 3, 91,956

=0.689 approx.

6. Stock turnover ratio = net sales ÷ average stock

Average stock = 31, 321 + 26, 859 = 58,180 ÷ 2 = 29, 090

Stock turnover ratio = 5, 70,615 ÷ 29, 090

= 19.6155036

7. Working turnover ratio = net sales ÷ working capital

Working capital = current assets - current lab.

= 71, 495 - 3, 91,956

= (360,635)

Working capital ratio = 5, 70,615 ÷ (360,635)

= 1.58225075
8. Gross profit ratio = gross profit ÷ net sales × 100

=646759 ÷5, 70,615 ×100

=113.34 %

9. Net profit ratio = net profit after tax ÷ net sale × 100

Net sales before tax = 48, 682

(+) tax expenses

Current tax = 13026

(-) credit available = (1456)

_________

Net profit after tax 37,112

Net profit ratio = 37,112 ÷ 4, 99,706 × 100

= 7.42%

10. Operating profit ratio = operating profit ÷ net sales ×100

Operating profit = gross profit + operating income - operating expenses

= 508,022 - 459,340

= 48,682

= 48,682 ÷ 486,055 ×100

=10%
11. Return on capital employed ratio = net profit before interest, tax and
dividend ÷ capital employed × 100

Capital employed = total assets - current lab

= 335510 - 88230

= 2, 47,280

ROI = 48,682 ÷ 2, 47280 × 100

= 19.68%

12. Operating ratio = operating cost ÷ net sales × 100

Operating cost = cost of goods sold + operating expense

= 328678 + 130,662

= 459340 ÷ 4, 26, 448 × 100

= 107.7 %
Ratio Analysis of Tata Steel Ltd.

For the year ended on 31st March 2015

1. Current ratio = current assets ÷ current liability

Current assets = investment + inventory + trade receivables + cash & bank

balance + short term loan & advance + other currently assets.

= 29,964 + 26,150 + 10, 698 + 183 + 11,728 + 3,256

= 81,979

Current liability = short term borrowing + trade payable+ other current lab. +
Short term provision.

= 354 + 55, 614 + 18,658 + 13, 604

= 3, 35,510

Current ratio. = 81,979 ÷ 3, 35,510

= 0.24

2. Liquid ratio = liquid assets ÷ current lab.

Liquid assets = current assets - inventory

= 81,979 - 26,150

= 55, 829

Liquid ratio. = 55,829 ÷ 3, 35,510

= 0.16

3. Debt equity ratio. = long term debt ÷ share holder fund

= 10,238 ÷ 2, 37,042

= 0.043
4. Total assets to debt ratio = total assets ÷ long term debt

Total assets = noncurrent assets+ current assets

= 253,531 + 81, 978

= 335,510

Total assets to debt ratio = 335,510 ÷ 10,238

= 32.77

5. Prosperity ratio = shareholders fund ÷ total assets

= 2, 37,042 ÷ 3, 35,510

= 0.70

6. Stock turnover ratio = net sales ÷ average stock

Average stock = 26,150 + 17,059 = 21, 604.5

= 486,055 ÷ 21,604.5

= 22 times

7. Working turnover ratio = net sales ÷ working capital

Working capital = current assets - current lab.

= 81,979 - 88,230

= (6,251)

= 486,055 ÷ (6,251)

= 7 7times (approx.).
8. Gross profit ratio = gross profit ÷ net sales × 100

= 537,685 ÷ 486,055 × 100

= 110%

9. Net profit ratio = net profit after tax ÷ net sale × 100

Net sales before tax = 48, 682

(+) tax expenses

Current tax = 13026

(-) credit available = (1456)

_________

Net profit after tax 37,112

Net profit ratio = 37,112 ÷ 4, 99,706 × 100

= 7.42%

10. Operating profit ratio = operating profit ÷ net sales ×100

Operating profit = gross profit + operating income - operating expenses

= 508,022 - 459,340

= 48,682

= 48,682 ÷ 486,055 ×100

=10%
11. Return on capital employed ratio = net profit before interest, tax and
dividend ÷ capital employed × 100

Capital employed = total assets - current lab

= 335510 - 88230

= 2, 47,280

ROI = 48,682 ÷ 2, 47280 × 100

= 19.68%

12. Operating ratio = operating cost ÷ net sales × 100

Operating cost = cost of goods sold + operating expense

= 328678 + 130,662

= 459340 ÷ 4, 26, 448 × 100

= 107.7 %
Ratio Analysis of TATA Steel

For the year ended on 31st March 2014

1. Current ratio = current assets ÷ current liability

Current assets = investment + inventory + trade receivables + cash & bank

balance + short term loan & advance + other currently assets.

= 88131+ 17,059+ 14,137 +6,297+ 12,511+ 3,582

= 1, 41,717

Current liability = short term borrowing + trade payable+ other current lab. +
Short term provision.

= 12,247 + 48, 975 + 12,742 +6777

= 80,741

Current ratio = 141717 ÷ 80741

=1.75520491

2. Liquid ratio = liquid assets ÷ current lab.

Liquid assets= current assets - inventory

= 141717 - 17059

= 1, 24,658

Liquid ratio = 1, 24,658÷ 80,741

= 1.54

3. Debt equity ratio. = long term debt ÷ share holder fund

= 14,836 ÷ 2, 0 9,780

= 0.070
4. Total assets to debt ratio = total assets ÷ long term debt

Total assets = noncurrent assets+ current assets

= 1, 63,640 + 1, 41,717

= 3, 05,357

Total assets to debt ratio = 3, 05,357 ÷ 14,836

= 20.5

5. Prosperity ratio = shareholders fund ÷ total assets

= 2, 09,780 ÷ 3, 05,357

= 0.68

6. Stock turnover ratio = net sales ÷ average stock

Average stock = 17059 + 18407 = 35,466 ÷ 2 = 17,733

= 4, 26,448 ÷ 17,733

= 24 times

7. Working turnover ratio = net sales ÷ working capital

Working capital = current assets - current lab.

= 141717 - 80,741

= 4, 26, 448 ÷ 60, 976

= 7 times (approx.).
8. Gross profit ratio = gross profit ÷ net sales × 100

= 478228 ÷ 426448 ×100

= 112%.

9. Net profit ratio = net profit after tax ÷ net sale × 100

Net sales before tax = 36,585

(+) tax expenses

Current tax = 7,479

Deferred tax = 1,276

_________

Net profit after tax 45,340

Net profit ratio = 45, 340 ÷ 4, 26, 448 × 100

= 10.6 %

10. Operating profit ratio = operating profit ÷ net sales ×100

Operating profit = gross profit + operating income - operating expenses

= 4, 78,228 + 4, 06,448 + 10, 558 - 4, 08,650

= 4, 86, 584

= 4, 86,584 ÷ 4, 26,448 ×100

=114 %.
11. Return on capital employed ratio = net profit before interest, tax and
dividend ÷ capital employed × 100

Capital employee = total assets - current lab

= 3, 05,357 - 80, 741

= 2, 24,616

ROI = 36, 585 ÷ 2, 24,616 × 100

= 16. 28
INTERPRETATION

1) Liquid ratio

Ratio 2014 2015 2016

Current Ratio 1.75 0.24 0.18

Liquid Ratio 1.54 0.16 0.10

2) Solvency Ratio

RATIO 2014 2015 2016

 Debt –Equity 0.07 0.04 0.03

Total Asset To 20.5 32.77 43.57

Debt

Proprietor’s Ratio 0.68 0.70 0.68

3. Activity Ratio
RATIOS 2013 2014 2015

Stock 24 22 19.6
Turnover
Ratio

Debtor 1.152 1.086 1.05

Turnover
Ratio

Creditor 0.934 1.08 1.09

Turnover
Ratio

Working 7 7.7 1.58

Capital
Turnover
Ratio
 Conclusion

From the above investigation I contemplated the money related position of the
organization. How the organization has been functioning in its most recent 3
years and feeling about its working for the same.

To the extent the conclusion goes this organization has dependably been in the
ascent in the past and ideally will do likewise in the coming future. There are
numerous things that make any association a win and toward the finish of the
day achievement is the only thing that is in any way important

TATA Steel Ltd. is a worldwide association in the ascent and in the event that
we go to see the association has taken after an exceptionally straightforward
framework or method to substantiate themselves in the globalized world
printing achieved pay of `17,156.49 centers in the budgetary year 2013-14 when
appeared differently in relation to `12,896.66 centers in the budgetary year
2013-14 enrolling an improvement of 33.03% and the advantage for the cash
related year 2013-14 is `5,984.62 centers in examination to `3,704.72 crores in
cash related year 2012-13 selecting an advancement of 61.54%.

Well at first these figures look great and shocking however the exertion the
organization has set up to reach to this level is incredible. In TATA Steel Ltd.
each worker is treated with poise and regard since organization trusts that regard
and nobility are two critical things that a representative need to give his or hers
greatest for the association and to the extent the achievement the figures
expressed above demonstrates it without questions

The money related Ratios ascertained above demonstrates a radical increment in

the organization's budgetary execution. There is a planned development in the
gainfulness proportions and on the whole. The Gross Profit edge has been
expanded to cover the most recent three years. The Company is monetarily
exceptionally solid as their ventures are going admirably. Before I expressed
that TATA Steel Ltd utilizes diverse ways to deal with get to the level of
accomplishment that they have today and one among them is the market
associations that they keep up, TATA Steel Ltd. continuously has confidence in
knowing its market well, its rivals well or more all the economy of the country
that they perform in. TATA Steel Ltd. has additionally been perceived by
Forbes for its extraordinary execution in the market structure.
 References
1. Analysis of financial Statements – Sandeep Garg
2. Analysis of financial Statements – T.S. Grewal
3. Analysis of financial Statements – V. Wason
4. www.tatasteel.com
5. www.moneycontrol.com