Tata Steel

Tata Steel Limited is an Indian multinational steel-making company based in Jamshedpur,

Jharkhand, and is headquartered in Mumbai, Maharashtra, India. It is a subsidiary of the Tata
Group.
Formerly known as Tata Iron and Steel Company Limited (TISCO), Tata Steel is among the
top steel producing companies in the world with an annual crude steel capacity of 34 million
tonnes per annum. It is one of the world's most geographically-diversified steel producers,
with operations and commercial presence across the world. The group (excluding SEA
operations) recorded a consolidated turnover of US$19.7 billion in the financial year ending
31 March 2020. It is the second largest steel company in India (measured by domestic
production) with an annual capacity of 13 million tonnes after SAIL.
Tata Steel operates in 26 countries with key operations in India, Netherlands and United
Kingdom, and employs around 80,500 people.] Its largest plant (10 MTPA capacity) is
located in Jamshedpur, Jharkhand. In 2007, Tata Steel acquired the UK-based steel
maker Corus. It was ranked 486th in the 2014 Fortune Global 500 ranking of the world's
biggest corporations. It was the seventh most valuable Indian brand of 2013 according to
Brand Finance.
In July 2019 Tata Steel Kalinganagar (TSK) was included in the list of the World Economic
Forum's (WEF's) Global Lighthouse Network, showing leadership in applying Fourth
Industrial Revolution technologies to drive financial and operational impact
the Company took shape from the vision of founder Jamsetji N Tata and is today one of the
world's most geographically-diversified steel producers with operations and commercial
presence across the world. Tata Steel group is spread across five continents with an employee
base of over 65,000.
Focusing on Innovation, Technology, Sustainability & People, the Company strives to be the
global steel industry benchmark for value creation and corporate citizenship and become the
most admired brand in metals and minerals space.  
Currently, Tata Steel's consolidated India crude steel production capacity stands at 19.6
MnTPA with manufacturing facilities in Jamshedpur in Jharkhand, Kalinganagar and
Dhenkanal in Odisha, Sahibabad in Uttar Pradesh and Khopoli in Maharashtra. Recently,
Tata Steel has commenced the phase 2 expansion of its Kalinganagar steel plant to 8 MnTPA.
In addition, the Company has several downstream product extensions with manufacturing
facilities for Wires, Tubes, Bearings, Agriculture Equipment and Industrial By-products. It
also has a Ferro-alloys and Minerals division and a heavy-duty engineering and fabrication
unit, Tata Growth Shop.
Tata Steel successfully delivered 16.26 MnTPA of steel to the Indian market in FY 2019,
recording an increase of 34% over the previous year due to the acquisition of Bhushan Steel
(now renamed as TSBSL) and a ramp up at both Kalinganagar and Tata Steel BSL.
In India, Tata Steel operates an end-to-end value chain that extends from mining to finished
steel goods, catering to an array of market segments such as automotive, construction, general
engineering etc.
The Company possesses and operates captive mines that ensure cost-competitiveness and
production efficiencies through an uninterrupted supply of raw material. Tata Steel’s iron ore
mines in Jharkhand and Odisha enable 100% captive iron ore usage and the coal mines in
West Bokaro & Jharia ensure ~30% captive coal usage in operations. Tata Steel additionally
has a dolomite mine, a chromite mine and manganese mines that ensures steady and cost-
efficient supply of raw materials to its ferro alloy plants. A robust presence across the value
chain helps the Company achieve higher economic efficiencies and customer satisfaction
standards which is one of the best in the industry.
In Europe, Tata Steel is amongst the largest steel producers with a crude steel production
capacity of over 12.3 MnTPA. It established its presence in the European continent after
acquiring Corus in 2007. With steelmaking facilities in the UK and Netherlands and
downstream plants across Europe, it supplies high quality strip steel products to demanding
markets such as automotive, construction, packaging and engineering.
In South-East Asia, Tata Steel operations began in 2004 with the acquisition of NatSteel,
Singapore. In 2005, it acquired a majority stake in Thailand-based steelmaker Millennium
Steel, which further strengthened its South-East Asian operations.

A.-IMPACT OF COVID-19 Members are aware of the novel coronavirus (COVID-19) outbreak which

was declared a pandemic by the World Health Organization in February 2020. The outbreak of the

COVID-19 pandemic has led to an unprecedented health crisis and has disrupted economic activities

and trade globally. As the outbreak spread in India, the Company initiated measures to closely

monitor the situation to safeguard the health, welfare and safety of all its employees across

locations. In mid-March 2020, the Company started advising its employees to work from home

wherever feasible. Policies and directives related to working from home and IT infrastructure

support were implemented almost on a real-time basis to enable our employees to shift seamlessly

to this new method of working. The Government of India had imposed a stringent nationwide

lockdown with effect from March 25, 2020 which severely impacted manufacturing activities.

Pursuant to the announcement of the nationwide lockdown and the directives issued by the Central

and the various state governments, the Company suspended operations at its downstream facilities

and service centres at Khopoli, Chakan and Aurangabad in Maharashtra, Sahibabad in Uttar Pradesh,
Manesar in Haryana and Ludhiana in Punjab. Though the Steel sector was exempt from the

lockdown measures, demand was affected as key steel consuming sectors struggled to operate due

to working capital constraints, shortage of manpower and logistical issues. As a result, the steel

making facilities at Angul continued to operate albeit significantly below capacity and with minimum

number of workforce. The health and safety of the workforce (including contract labour) being the

topmost priority, the Company is focusing on running its operations safely and efficiently so it can

continue to serve its customers. Majority of our offices continue to operate with minimal or no staff.

The Company has put in place measures to ensure the well-being of its employees by re-enforcing

the importance of social distancing, safe working practices across our plants and general personal

hygiene. The Company is also focused on conserving cash and managing liquidity to face any future

disruption in business conditions. Continuous communication to spread awareness about the

pandemic is being ensured. The Company is also providing necessary support to all employees

affected by the pandemic. The Company will implement a phased and safe return-to-work plan as

and when lockdown restrictions are completely relaxed and taking into account the situation

B. FINANCIAL PERFORMANCE AND STATE OF AFFAIRS During the year, the total turnover from

operations was `18,199.14 crore (previous year: `20,891.60 crore). The decrease in turnover was

mainly due to an unfavourable rate and sales mix variance amounting to `2,601 crore and `433 crore

respectively. Such unfavourable variance is partly offset by a favourable quantity variance amounting

to `423 crore (approx.). During the year, the Company recorded a net loss of `(649.17) crore

(previous year: Net Profit `1,713.09 crore). This is primarily due to the reduction in finance cost in

FY20 and effects of the approved resolution . plan under exceptional items taken in last year against

exceptional income booked in the previous year. The basic and diluted earnings per share stood at

`(5.94) for FY20. There was no change in the nature of business during FY2019-20.

CAPEX AND LIQUIDITY During the year, the Company has repaid `382 crore to capital creditors

(operational creditors covered under the approved resolution plan). Further, the Company spent

`238 crore on capital projects, largely towards balancing facilities and essential sustenance capital

projects. As on March 31, 2020, the liquidity position of the Company was `724 crore [excluding
Fixed Deposit(s) (‘FD’) under Lien of `129 crore for opening of Letters of Credit with Banks] as against

`1,872 crore as on March 31, 2019 (excluding FDs under Lien of `157 crore). Further, the Company

has undrawn borrowing facilities amounting to `954 crore, at the end of the reporting year to which

the Company had access.

DIVIDEND The Company has incurred a net (loss) of `(649.17) crore during the financial year ended

March 31, 2020. The Board of Directors (‘Board’) does not recommend any dividend to the

preference and equity shareholders of the Company for the financial year ended March 31, 2020.

TRANSFER TO RESERVES In view of the losses incurred during the year under review, no amount has

been transferred to General Reserve. However, the losses have been carried forward to Reserves

and Surplus account.

FINANCIAL PERFORMANCE The Company is engaged in Steel business. Brief performance of the
The cash operating profit before working capital changes and direct taxes in FY20 was `2,171 crore

as compared to `3,900 crore during FY19. The cash inflow from Investing activities was `728 crore as

compared to a cash outflow of `1,617 crore during the FY19. The inflow during the year broadly

represents sale of current investments. The net cash outflow from financing activities was `2,000

crore as compared to `4,500 crore during FY19. The outflow is broadly due to repayment of

borrowings and interest paid in FY20.

TATA STEEL has announced its results for the year ended March 2020. Let us have a
look at the detailed performance review of the company during FY19-20.
TATA STEEL Income Statement Analysis
 Operating income during the year fell 11.3% on a year-on-year (YoY)
basis.
 The company's operating profit increased by 1.8% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 21.7% in FY20 as
against 18.9% in FY19.
 Depreciation charges increased by 15.0% and finance costs decreased
by 1.7% YoY, respectively.
 Other income grew by 29.8% YoY.
 Net profit for the year grew by 58.6% YoY.
 Net profit margins during the year grew from 6.0% in FY19 to 10.7% in
FY20.

TATA STEEL Income Statement 2019-20

No. of MThs’ Year Ending 12 Mar-19* 12 Mar-20* % Change

Net Sales Rs m 1,576,690 1,398,167 -11.3%

Other income Rs m 14,206 18,435 29.8%

Total Revenues Rs m 1,590,896 1,416,601 -11.0%

Gross profit Rs m 297,880 303,374 1.8%

Depreciation Rs m 73,418 84,407 15.0%

Interest Rs m 76,601 75,335 -1.7%

Profit before tax Rs m 162,067 162,067 0.0%

Tax Rs m 67,184 -25,684 -138.2%

Profit after tax Rs m 95,920 152,110 58.6%

Gross profit margin % 18.9 21.7

Effective tax rate % 41.5 -15.8

Net profit margin % 6.0 10.7

TATA STEEL Balance Sheet Analysis

  The company's current liabilities during FY20 stood at Rs 603 billion as
compared to Rs 596 billion in FY19, thereby witnessing an increase of
1.2%.
 Long-term debt stood at Rs 941 billion as compared to Rs 803 billion
during FY19, a growth of 17.1%.
 Current assets rose 2% and stood at Rs 559 billion, while fixed assets
rose 8% and stood at Rs 1,562 billion in FY20.
 Overall, the total assets and liabilities for FY20 stood at Rs 2,504 billion
as against Rs 2,336 billion during FY19, thereby witnessing a growth of
7%.

TATA STEEL Balance Sheet as on March 2020

No. of MThs Year Ending 12 Mar-19* 12 Mar-20* % Change

Net worth Rs m 666,501 713,013 7.0

Current Liabilities Rs m 596,080 603,126 1.2

Long-term Debt Rs m 803,427 941,050 17.1

Total Liabilities Rs m 2,335,824 2,504,195 7.2

Current assets Rs m 548,487 559,093 1.9

Fixed Assets Rs m 1,450,061 1,562,160 7.7

Total Assets Rs m 2,335,824 2,504,195 7.2

TATA STEEL Cash Flow Statement Analysis

 TATA STEEL's cash flow from operating activities (CFO) during FY21 stood at
Rs 443 billion, an improvement of 119.8% on a YoY basis.
 Cash flow from investing activities (CFI) during FY21 stood at Rs -93 billion on
a YoY basis.
 Cash flow from financial activities (CFF) during FY21 stood at Rs -371 billion
on a YoY basis.
 Overall, net cash flows for the company during FY21 stood at Rs -22 billion
from the Rs 45 billion net cash flows seen during FY20.

TATA STEEL Cash Flow Statement 2020-21

Particulars No. of 12 12 %
months Change
 Year Ending Mar-20 Mar-21

Cash Flow from Operating

Rs m 201,687 443,267 119.8%
Activities

Cash Flow from Investing -

Rs m -93,229 -
Activities 145,304

Cash Flow from Financing -

Rs m -16,946 -
Activities 370,897

Net Cash Flow Rs m 44,620 -22,003 -

* Results Consolidated
Interim results exclude extraordinary / exceptional items

Current Valuations for TATA STEEL

 The trailing twelve-month earnings per share (EPS) of the company stands at
Rs 65.2, an improvement from the EPS of Rs 8.2 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 1,199.4, stands at
18.4 times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 0.9 times,
while the price to sales ratio stands at 0.4 times.
 The company's price to cash flow (P/CF) ratio stood at 8.4 times its end-of-
year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-20* 12 Mar-21*

Sales per share (Unadj.) Rs 1,236.1 1,296.8

TTM Earnings per share Rs 8.2 65.2

Diluted earnings per share Rs 8.2 65.3

Price to Cash Flow x 14.9 8.4

TTM P/E ratio x 18.4 18.4

Price / Book Value ratio x 0.7 0.9

Market Cap Rs m 1,445,478 1,444,161

Dividends per share (Unadj.) Rs 10.0 25.0

Ratio Analysis for TATA STEEL

 Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x

during FY21, from 1.0x during FY20. The current ratio measures the
company's ability to pay short-term and long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and
stood at 2.8x during FY21, from 0.8x during FY20. The interest coverage ratio
of a company states how easily a company can pay its interest expense on
outstanding debt. A higher ratio is preferable.
 Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at
10.6% during FY21, from 1.3% during FY21. The ROE measures the ability of a
firm to generate profits from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company improved
and stood at 14.4% during FY21, from 3.6% during FY20. The ROCE measures
the ability of a firm to generate profits from its total capital (shareholder
capital plus debt capital) employed in the company.
Return on Assets (ROA): The ROA of the company improved and stood at
6.3% during FY21, from 3.4% during FY20. The ROA measures how efficiently
the company uses its assets to generate earnings
Key Ratio Analysis
No. of Mths Year Ending 12 Mar-20* 12 Mar-21*

Current ratio x 1.0 0.8

Debtors’ Days Days 19 22

Interest coverage x 0.8 2.8

Debt to equity ratio x 1.3 1.0

Return on assets % 3.4 6.3

Return on equity % 1.3 10.6

Return on capital employed % 3.6 14.4

TATA STEEL Share Price Performance

Over the last one year, TATA STEEL share price has moved up from Rs 334.2 to Rs
1,199.4, registering a gain of Rs 865.2 or around 258.9%.
Meanwhile, the S&P BSE METAL Index is trading at Rs 18,694.0 (down 1.8%). Over
the last one year it has moved up from 7,434.3 to 18,694.0, a gain of 11,260 points
(up 151.5%).
Overall, the S&P BSE SENSEX is up 44.5% over the year.