On

“Financial Statement Analysis and Valuation of Tata

Steel Ltd”
At

“TATA STEEL LTD.”

Submitted in the partial fulfillment of the degree

of Master of Business Administration
At
School of Commerce and Management

Corporate Guide: Faculty Guide:

Name Ms. Neha Chhapolia Mr. Rajeev Sinha
Designation Sr. Manager Cost Research. Assistant professor
Organization Tata Steel Ltd. Arka Jain University

Submitted by:
HARSH HARNATHKA
Enrollment Number: AJU/200061
2020-22

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Working on this project report, which was completed with the contribution of
many, I would like to thank all who have given me their valuable suggestions,
motivation, patience, knowledge and skillset to complete the report promptly and
within the right time. The heartfelt support or cooperation that I have received
while doing the internship and preparing the report is unforgettable and very
appreciable.
I would like to thank my parents, professors and friends who helped me directly
and indirectly in finishing the report as per the instruction of my honorable
mentor. I would like to mention the name of some persons, whose contribution in
completing my internship and report are highly obvious from all aspects. Firstly, I
would like to express my heartfelt gratitude towards my honorable academic
mentor Mr. Rajeev Sinha who has directed, monitored and helped me
continuously.
Secondly, the support and compliment that I have received from my corporate
mentor during internship; Ms. Neha Chhapolia, Sr. Manager Cost Research
(Manager of Finance), has increased my motivation, confidence level and has
eased the path of collecting data because she permitted me for doing analysis.
The outstanding support and time; provided by Ms. Neha Chhapolia, regarding my
quarries about financial performance analysis and course related data
contributing deeply at each step of this analysis, I acknowledge my indebtedness
and deep sense of gratitude for supervising throughout the internship and making
of this project report.

Signature of the Student with Date

NAME: HARSH HARNATHKA

Enrollment No.: AJU/200061

ROLL NO.: 08

M.B.A. Batch 2020-2022

Page 2 of 60
Page 3 of 60
 School of Commerce and Management

Certificate by the Faculty Mentor

This is to certify that Mr. HARSH HARNATHKA, Enrollment Number: 200061,

a student of Master of Business Administration (M.B.A.) (2020-22), has
undertaken the ‘Corporate Internship Project titled “Financial Statement Analysis
and Valuation of Tata Steel Ltd”, from the Organization TATA STEEL LTD. The
Project report is hereby submitted by the student for the partial fulfillment of
requirement for the award of Master of Business Administration, under my
supervision. To the best of my knowledge, this project is the record of authentic
work carried out during the academic year (2020-21) and has not been submitted
anywhere else for the award of any Certificate/Degree/Diploma, etc.

Signature with date

Name of the Faculty Mentor

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 School of Commerce and Management

Declaration by the Student

I HARSH HARNATHKA, hereby declare that the Project titled, “Financial

Statement Analysis and Valuation of Tata Steel Ltd” has been carried out by me
during my ‘Corporate Internship Project Training’ at TATA STEEL LTD.,
JAMSHEDPUR during the months of August & September i.e. from 30/07/2021 to
27/09/2021 and is hereby submitted for the partial fulfillment of the requirement
for the award of degree of Master of Business Administration. To the best of my
knowledge, the project undertaken, has been carried out by me, and is my own
work. The contents of this report are original and this report has been submitted to
the said organization and to the ‘ARKA JAIN University’, Jharkhand and it has not
been submitted elsewhere, for the award of any Certificate/Diploma/Degree etc.

Signature of the Student with Date

Name of the Student HARSH HARNATHKA

Roll No 08
Enrollment No. AJU/200061
Batch M.B.A. Batch 2020-22

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In this project report, under the field of finance, Analysis and valuation through
financial statements of Tata steel ltd has been shown and interpreted. 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.
The report is entirely based on secondary data obtained from company’s website,
financial sites, financial magazines and international journals. The balance sheet
and profit and loss statements have been used to analyze and evaluate for the
purpose of interpretation.
Financial ratios were used which helped in understanding the financial health of a
company. The ratios provide the overview performance of a company through
which comparison tests can be made.
For the completion of project report, liquidity ratios, profitability ratios, solvency
ratios, activity ratios and valuation ratios have been taken.
Valuation of the company is made from the analysis of financial statements,
Market capitalization and comparable comparison using valuation ratio
(Horizontal) methods in this report.
It was found out that both financial and valuation analysis show a good sign with
improvement and growth from the past figures. It can be ascertained that the
company will continue to grow and perform better after understanding and
analyzing the financial statements, ratios and market capitalization.
It can be seen that after the pandemic the performance of the company grew
rapidly and both the financial health and valuation improved.

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 TABLE OF CONTENTS:

Chapter No. Chapter Name Page No.

1 Introduction 8 - 15
2 Industry Profile
2.1 Introduction 16
2.2 Market Size 16 - 17
2.3 Current Steel Plants 17 - 19
3 Company Profile
3.1 About 20 - 23
3.2 History 24
3.3 Shareholding 24 - 25
3.4 Subsidiaries 25 - 27
Objective Of The Study
4 28 - 31
Research Methodology
5 Analysis
Extracts From
5.1 32 - 38
Financial
Statement
5.2 Financial Analysis Of Tata Steel Ltd. 39 - 45

5.3 Valuation Analysis Of Tata Steel Ltd. 46 - 51

Findings And
6 52
Recommendation

Conclusion 53
Limitation 54
Bibliography 55

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Financial Statement Analysis is the process of analyzing a company’s financial
statements for decision making purposes. It helps in examining the performance
of a company in the context of industry or past performance. These statements
include the income statement, balance sheet, statement of cash flows, notes to
accounts. Financial statement analysis is a method or process involving specific
techniques for evaluating risks, performance, financial health, and future
prospects of an organization.
Common methods of financial statement analysis include fundamental analysis,
horizontal and vertical analysis and the use of financial ratios. Historical
information combined with a series of assumptions and adjustments to the
financial information may be used to project future performance.
Often the interpreted data is used by both internal and external stakeholders such
as investors, creditors, banks, customers, employees, managers, directors, etc.
For example:-
 An investor in debt securities is concerned about the company’s ability to
pay interest and to repay the principal lent.
 An investor in equity securities is an owner with a residual interest in the
company and is concerned about the company’s ability to pay dividends
and the likelihood that its share price will increase.

The tool that is being used here for the analysis of financial statement is financial
ratios.

Valuation is a quantitative process of determining the fair value of an asset or a

firm. It is the analytical process of determining the current (or projected) worth of
an asset or a company. There are many techniques used for doing a valuation. An
analyst placing a value on a company looks at the business’s management, the

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composition of its capital structure, the prospect of future earnings, and the
market value of its assets, among other metrics.
Business valuation is a process and a set of procedures used to estimate the
economic value of an owner’s interest in a business. Various valuation techniques
are used by financial market participants to determine the price they are willing to
pay or receive to effect a sale of the business. In addition to estimating the selling
price of a business, the same valuation tools are often used by business appraisers
to resolve disputes related to estate and gift taxation, divorce litigation, allocate
business purchase price among business assets, establish a formula for estimating
the value of partners’ ownership interest for buy-sell agreements, and many other
business and legal purposes.
Valuations are needed for many reasons such as investment analysis, capital
budgeting, merger and acquisition transactions, financial reporting, and taxable
events to determine the proper tax liability.
There are several methods and techniques for arriving at a valuation—each of
which may produce a different value. The methods that are being used here are
Financial Statement Analysis, Market Capitalization and Comparing Valuation
Ratios.

Financial Performance Analysis: Financial performance analysis includes analysis

and interpretation of financial statements in such a way that it undertakes a full
diagnosis of the profitability and financial soundness of the business financial
analysis involves the use of financial statements. A financial statement is a
collection of data that is organized according to logical and consistent accounting
procedures. Its purpose is to convey an understanding of some financial aspects
of a business firm

Financial Statement Analysis: Financial Statement Analysis is the process of

reviewing key financial documents to gain a better understanding of how the
company is performing. While there are many different types of financial
statements that can be analyzed as part of this process, some of the most
important include the:

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 I. BALANCE SHEET - A statement that lists a business’s assets, liabilities,
and owners’ equity at a specific point in time.
II. INCOME STATEMENT- A statement that summarizes a
business’s revenues, expenses, and profits over a period
III. CASH FLOW STATEMENT- A statement that captures how cash
flow is affected by activities from the balance sheet and income statement,
categorized into operating, investing, and financing activities

FINANCIAL KPIs

Financial Key Performance Indicators (KPIS) are metrics organizations use to track,
measure, and analyze the financial health of the company. These financial KPIs fall
under a variety of categories, including profitability, liquidity, solvency, efficiency,
and valuation. By understanding these metrics, we can be better positioned to
know how the business is performing from a financial perspective. These metrics
and KPIs should be made available internally and distributed on a weekly or
monthly basis in the form of email updates, dashboards, or reports. The metrics
below are used in this study to analyze financial soundness of the three
mentioned companies. These are typically found in the financial statements and
most important for managers and other key stakeholders within an organization.
The ratios used in this study to analyze and interpret the financial statements are:

CURRENT RATIO is a liquidity ratio that helps you understand whether the
business can pay its short-term obligations—that is, obligations due within one
year— with its current assets and liabilities.
Current ratio = Current assets / Current liabilities

QUICK RATIO, also known as an acid test ratio, is another type of liquidity ratio
that measures a business’s ability to handle short-term obligations. The quick
ratio uses only highly liquid current assets, such as cash, marketable securities,
and accounts
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receivables, in its numerator. The assumption is that certain current assets, like
inventory, are not necessarily easy to turn into cash.
Quick ratio = Quick assets / Current liabilities

GROSS PROFIT MARGIN is a profitability ratio that measures what percentage of

revenue is left after subtracting the cost of goods sold. The cost of goods sold
refers to the direct cost of production and does not include operating expenses,
interest, or taxes. In other words, gross profit margin is a measure of profitability,
specifically for a product or item line, without accounting for overheads.
Gross profit margin = (Revenue – Cost of Goods Sold) / Revenue x 100

RETURN ON CAPITAL EMPLOYED is a metric for analyzing profitability, and

potentially comparing profitability levels across companies in terms of capital. In
other words, this ratio can help to understand how well a company is generating
profits from its capital as it is put to use. There are two components required to
calculate return on capital employed: earnings before interest and tax and capital
employed.
Return on capital employed = net operating profit or earnings before interest and
taxes (EBIT)/capital employed

INVENTORY TURNOVER RATIO is an efficiency ratio that is used to measure the

number of times a company sells its average inventory in a fiscal year. It gives
insight into whether a company has excessive inventory relative to its sales levels.
Inventory turnover ratio = Cost of goods sold / Average inventory

TOTAL ASSET TURNOVER is an efficiency ratio that measures how efficiently a

company uses its assets to generate revenue. The higher the turnover ratio, the
better the performance of the company.
Total assets turnover ratio = Net Sales / Total Assets.

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DEBT-TO-EQUITY RATIO is a solvency ratio that measures how much a company
finances itself using equity versus debt. This ratio provides insight into the
solvency of the business by reflecting the ability of shareholder equity to cover all
debt in the event of a business downturn. DIVIDEND PAYOUT RATIO (DPR)
determines the amount of dividend paid to shareholders in relation to the total
amount of net income the company generates. In other words, the dividend pay-
out ratio measures the percentage of net income that is distributed to
shareholders in the form of dividends.
Debt to equity ratio = Total liabilities / Shareholder’s equity

A better way to understand these ratios is to prepare horizontal analysis of

financial statements. In brief, Horizontal analysis is used in financial statement
analysis to compare historical data, such as ratios, or line items, over a number of
accounting periods. Horizontal analysis can either use absolute comparisons or
percentage comparisons.
The primary aim of horizontal analysis is to compare line items in order to
ascertain the changes in trend over time. As against, the aim of vertical analysis is
to ascertain the proportion of item, in relation to a common item in percentage
terms. The two analyses are helpful in getting a clear picture of the financial
health and performance of the company.

Business Valuation
A business valuation is a general process of determining the economic value of a
whole business or company unit. Business valuation can be used to determine the
fair value of a business for a variety of reasons, including sale value, establishing
partner ownership, taxation etc.. Owners will often turn to professional business
evaluators for an objective estimate of the value of the business.
The valuation of a business is the process of determining the current worth of a
business, using objective measures, and evaluating all aspects of the business.

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A business valuation might include an analysis of the company's management, its
capital structure, its future earnings prospects or the market value of its assets.
The tools used for valuation can vary among evaluators, businesses, and
industries. Common approaches to business valuation include
1) Valuation through review of financial statements,
The shareholders’ equity, or net worth, of a company equals the total assets
(what the company owns) minus the total liabilities (what the company owes). If
your company does well, its profits increase and its net worth increases too. Net
worth serves as an on-going measurement of the company’s health, analogous to
a blood- pressure measurement of an individual. Management and investors
watch this figure closely. It is also of great interest to potential lenders to the
company (along with other measures). Companies with high net worth relative to
sales and good cash flow histories have the most success in attracting lenders.
Book Value is the value of shareholders’ equity of a business as shown on the
balance sheet statement. The book value is derived by subtracting the total
liabilities of a company from its total assets.
In the usual case, Net Worth is made up of two figures. One is labeled “capital,”
“owner’s equity,” “partner’s equity,” or “shareholder equity.” This line is the
equivalent to the money initially received for shares sold in the company to all
investors (or paid in by partners); in a privately held company it includes the
owner’s initial capital contributions along with that paid in by other investors. The
second line is labeled “retained earnings.” This represents profits (net income
after tax) retained by the company for future investment or debt retirement after
deducting dividends paid out (if any). Capital and retained earnings together are
Net Worth.
Value of a company = net worth= capital+ retained earning= Assets – external
liabilities
2)Comparing valuation ratios
Comparable valuation ratio analysis is the process of comparing valuation ratios
from past 5 years to analyze their enterprise value. A company’s valuation ratio
determines whether it is overvalued or undervalued. It aids in understanding the
growth and past performances.

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3) Market Capitalization value
Market value is the amount of money a knowledgeable buyer of the company is
likely to pay for it. Market value is based on a company's projected future
earnings as an "on-going" business. A profitable company with low debt, a well-
established history of steady earnings, and good cash flow will fetch the highest
price. Other factors play a role, including its technological know-how, market
share, and the presence or absence of competing buyers. In the case of a service
business where the most important asset is represented by individuals with
special skills and knowledge, the willingness of such people to continue on with
the business will play a major role.
Market capitalization refers to how much a company is worth as determined by
the stock market. Market capitalization is the simplest method of business
valuation. It is calculated by multiplying the company’s share price by its total
number of shares outstanding. For example, as of January 3, 2018, Microsoft Inc.
traded at $86.35.1 with a total number of shares outstanding of 7.715 billion, the
company could then be valued at $86.35 x 7.715 billion = $666.19 billion.

Special Considerations: Methods of Valuation

There are numerous ways a company can be valued. Here are several of these
methods below.
Times Revenue Method
Under the times revenue business valuation method, a stream of revenues
generated over a certain period of time is applied to a multiplier which depends
on the industry and economic environment. For example, a tech company may be
valued at 3x revenue, while a service firm may be valued at 0.5x revenue.
Earnings Multiplier
Instead of the times revenue method, the earnings multiplier may be used to get
a more accurate picture of the real value of a company, since a company’s profits
are a more reliable indicator of its financial success than sales revenue is. The
earnings

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multiplier adjusts future profits against cash flow that could be invested at the
current interest rate over the same period of time. In other words, it adjusts the
current P/E ratio to account for current interest rates.
Discounted Cash Flow (DCF) Method
The DCF method of business valuation is similar to the earnings multiplier. This
method is based on projections of future cash flows, which are adjusted to get the
current market value of the company. The main difference between the
discounted cash flow method and the profit multiplier method is that it takes
inflation into consideration to calculate the present value.
Liquidation Value
Liquidation value is the net cash that a business will receive if its assets were
liquidated and liabilities were paid off today.

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2.1 INTRODUCTION

The iron and steel industry in India is among the most important industries within
the country. India surpassed Japan as second top steel producer with production
standing at 111.2 million tons (MT) in 2019. As per world steel, India's crude steel
production in 2018 was at 106.5 tons (MT), 4.9% increase from 101.5 MT in 2017,
means that India overtook Japan as the world's second largest steel production
country. Japan produced 104.3 MT in year 2018, decrease of 0.3% compared to
year 2017. Industry produced 82.68 million tons of total finished steel and 9.7
million tons of raw iron. Most iron and steel in India is produced from the iron
ore.
The growth in the Indian steel sector has been driven by domestic availability of
raw materials such as iron ore and cost-effective labor. Consequently, the steel
sector has been a major contributor to India’s manufacturing output. The Indian
steel industry is modern with state-of-the-art steel mills. It has always strived for
continuous modernization of older plants and up-gradation to higher energy
efficiency levels.
Indian steel industry is classified into three categories - major producers, main
producers and secondary producers.

2.2 MARKET SIZE

In FY21, the production of crude steel and finished steel stood a 102.49 MT and
94.66 MT, respectively. According to CARE Ratings, crude steel production is
expected to reach 112-114 MT (million tons), an increase of 8-9% YoY in FY22. The
consumption of finished steel stood at 93.43 MT in FY21.
In May 2021, finished steel production stood at 7.8 MT. In June 2021, SAIL’s crude
steel production stood at 1.30 MT and saleable steel production was 1.27 MT.

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Exports and imports of finished steel stood at 10.79 MT and 4.75 MT, respectively,
in FY21. In April 2021, India’s export rose by 121.6% YoY, compared with 2020. In
FY20, India exported 8.24 MT of finished steel.
In 2019, the Government introduced Steel Scrap Recycling Policy with an aim to
reduce import.
The industry is also benefitting from the developments happening across various
industries. The new Vehicle Scrappage policy will help in reducing the steel prices
since the policy enables recycling the materials used in old vehicles. In 2021,
Indian Railways is planning to procure over 11 lakh tons of steel from Steel
Authority of India Limited (SAIL) for the track renewal and laying new lines across
the country.
In June 2021, Mr. T.V. Narendran, the newly elected CII president and MD of Tata
Steel, in an interview with The Telegraph, stated that steel companies have firmed
their plans to invest Rs. 60,000 crore (US$ 8.09 billion) over the next three years—
this is was the biggest private sector investment plan announced in recent times.
Under the Union Budget 2021-22, the government allocated Rs. 39.25 crore (US$
5.4 million) to the Ministry of Steel.

2.3 CURRENT STEEL PLANTS

There are more than 50 iron and steel industries in India. Given
below are some of the major steel plants:

NAME LOCATION OPERATOR

Alloy Steel Plant Durgapur, West Bengal SAIL

Bhilai Steel Plant Bhilai, Chhattisgarh SAIL

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Bokaro Steel Plant Bokaro, Jharkhand SAIL

Chandrapur Ferro Alloy Plant Chandrapur, Maharashtra SAIL

Durgapur Steel Plant Durgapur, West Bengal SAIL

Essar Steel India Limited Hazira, Gujarat ArcelorMittal

IISCO Steel Plant Asansol, West Bengal SAIL

Jindal Steel and Power Raigarh, Chhattisgarh Jindal Steel and Power
Limited

Jindal Steel and Power Angul, Odisha Jindal Steel and Power
Limited

JSW Steel Hospet, Bellary, Karnataka JSW Steel

JSW Steel Tarapur, Boisar, Maharashtra JSW Steel

JSW Steel Dharamtar, Maharashtra JSW Steel

Rourkela Steel Plant Rourkela, Odisha SAIL

Salem Steel Plant Salem, Tamil Nadu SAIL

Tata Steel Limited Jamshedpur, Jharkhand Tata Steel

Tata Steel Limited Kalinganagar, Odisha Tata Steel

Visakhapatnam, Andhra Rashtriya Ispat

Visakhapatnam Steel Plant
Pradesh Nigam Limited

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 Visvesvaraya Iron and Steel
Bhadravati, Karnataka SAIL
Plant

The iron and steel industry in India is organized into three categories: main
producers, other major producers, and secondary producers. In 2019-2 the main
producers i.e. SAIL, TISCO and RINL had a combined capacity of around 50% of
India’s total steel production capacity and production. The other major producers
— ESSAR, ISPAT and JVSL — account for around 20% of the total steel production
capacity.

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3.1 ABOUT
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 tons 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 tons after Steel Authority of
India Ltd. (SAIL).
Tata Steel 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 defense and security sectors,
and employs around 80,500 people. Its largest plant (11 MnTPA 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.

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Despite the pandemic-induced Challenges, our crude steel production Stood 9.34
MnT. We achieved the best Ever Pulverized Coal Injection (PCI) rate, reduced
waste generation, improved Waste utilization, and maximized Energy and
material efficiency. Our Consistent focus on asset management Using data
analytics and predictive Modelling resulted in more than 92% overall average
plant availability of key Manufacturing units at Jamshedpur.
Established in India as Asia’s first integrated private steel Company in 1907, Tata
Steel today is one of the most Profitable and lowest cost producers of steel in the
world, with captive iron ore mines and collieries located near our Manufacturing
facilities in Jamshedpur and Kalinganagar. Our comprehensive portfolio of
products and brands caters to multiple industries and segments, making the steel
we produce an integral part of everyday life.
At Tata Steel, innovation and responsibility have been at the core of building a
sustainable Enterprise and exploring possibilities towards creating a better future.
Whether by developing High-strength steel or offering new solutions for
construction and mobility, they relentlessly focused on delivering world-class
products that are synonymous with quality and durability. They also deploy best
available technologies and processes to drive resource efficiency and develop
materials of the future which are Superior, sustainable and affordable. The ebbs
and flows of business cycles notwithstanding, company have focused on
strengthening the balance sheet, upholding the highest standards in ethical and
responsible Business practices and striving towards a shared Future of prosperity.
Even when faced with a Once-in-a-century global crisis that tested their
Resilience, company stayed true to the core values and worked together with
their stakeholders to embrace a new normal.

Tata Steel’s Four Pillars of Transformation

• Resilience and Agility
• Simplification and Scale
• Technology and Digital Leadership
• Enabling Planet Resilience

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In FY 2018-19, Tata Steel updated its Environmental, Social and Governance (ESG)
material issues and incorporated them in its long-term plans.

Vision
We 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 effective utilization of staff And
materials. The means envisaged to achieve this are Cutting-edge technology and
high productivity, consistent with modern management practices. Tata Steel
recognizes that while honesty and integrity are 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 it does in an
atmosphere free from fear, and thereby reaffirms its faith in democratic values.

Human capital
Company invests in employee welfare and happiness to drive performance
excellence. The work culture ensures Safety, health, competency enhancement
and overall well-being of our people.

Natural capital
Company depends on natural resources such as iron ore, coal and other minerals,
which constitute our key raw materials. At the same time, land and water are
indispensable for our operations. Company strives for excellence in environmental
performance, climate change mitigation and adaptation, and resource efficiency
to reduce the ecological footprint.

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Social and Relationship capital
Company’s communities, customers and suppliers are critical to their business
Continuity and social license to operate. It believes in building long-term,
Transparent and trust-based relationships with them through continuous
Stakeholder engagement and innovation.

Tata Steel Jamshedpur (TSJ)

The Jamshedpur plant is the Flagship facility. The continuous Improvement efforts
over the years have helped sustain Production levels and deliver Operational
excellence. It is among the first steel Plants in Asia. It is also the only facility In
India to produce steel at the same Site continuously for over 100 years. Its
sustainable growth has been driven by operational excellence and Culture of
continuous improvement. In FY 2019-20, Tata Steel’s subsidiary, Tata Steel Long
Products Limited, (TSLP) acquired the steel business of Usha Martin Limited with
specialised~1 MnTPA alloy-based manufacturing Capacity in long products at
Jamshedpur.

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3.2 HISTORY

Tata Iron and Steel Company (TISCO) was founded by Jamsetji Nusserwanji Tata
and established by Sir Dorabji Tata on 26 August 1907. TISCO started pig iron
production in 1911 and began producing steel in 1912 as a branch of Jamsetji's
Tata Group. The first steel ingot was manufactured on 16 February 1912. During
the First World War (1914-1918), the company made rapid progress.
In 1920, The Tata Iron & Steel Company also incorporated The Tinplate Company
of India Ltd (TCIL), as a joint venture with then Burmah Shell to manufacture
Tinplate. TCIL is now Tata Tinplate.
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, and a
further 20,000 in the neighboring coal mines.
In 1990, the company began to expand, and established its subsidiary, Tata Inc., in
New York. The company changed its name from TISCO to Tata Steel Ltd. In 2005.

3.3 SHAREHOLDING

As on 31 March 2018, Tata Group held 31.64% shares in Tata Steel. Over 1 million
individual shareholders hold approx. 21% of its shares. Life Insurance Corporation
of India is the largest non-promoter shareholder in the company with 14.88%
shareholding.

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 SHAREHOLDERS SHAREHOLDING

Promoters: Tata Group 31.64%

companies
Insurance Companies 21.81%

Individual shareholders 22.03%

Foreign Institutional 15.35%
Investors
GDRs 02.41%
Others 07.05%
Total 100.0%

The equity shares of Tata Steel are listed on the Bombay Stock Exchange, where it
is a constituent of the BSE SENSEX index, and the National Stock Exchange of
India, where it is a constituent of the S&P CNX Nifty, the Global Depository
Receipts (GDRs) are listed on the London Stock Exchange and the Luxembourg
Stock Exchange.
Dividend For financial year 2020-21, the Board has recommended a Dividend of
`25/- per fully paid-up Ordinary (equity) Share (previous year: `10/- per fully paid-
up Ordinary (equity) Share) And in respect of the outstanding partly paid-up
Ordinary (equity) Shares of the Company on which call money remains Unpaid as
on the date of book closure for the dividend payment, The dividend will be paid in
proportion to the amount paid-up On such shares i.e. ₹6.25 per partly paid-up
Ordinary (equity) Share of ₹10/- each (paid-up ₹2.504 per share) [previous
year:`2.504 per partly paid-up Ordinary (equity) Share].

3.4 SUBSIDIARIES
SUBSIDIARY COMPANIES
Tata Steel Europe

Tata Steel BSL

Tata Steel Long Products

Page 25 of 60
 Tata Steel Thailand

NatSteel

Tata Tinplate

Tayo Rolls

Jamshedpur FC

ACQUISITIONS

NatSteel in 2004: In August 2004, Tata Steel agreed to acquire the steelmaking
operations of the Singapore-based NatSteel for $486.4 million in cash. NatSteel
had ended 2003 with turnover of $1.4 billion and a profit before tax of
$47 million. The steel businesses of NatSteel would be run by the company
through a wholly owned subsidiary called NatSteel Asia Pvt. Ltd. The acquisition
was completed in February 2005. At the time of acquisition, NatSteel had a
capacity of about 2 million tonnes per annum of finished steel.

Millennium Steel in 2005: Tata Steel acquired a majority stake in the Thailand-
based steelmaker Millennium Steel for a total cost of $130 million. It paid
US$73 million to Siam Cement for a 40% stake and offered to pay 1.13 baht per
share for another 25% of the shares of other shareholders. Millennium Steel has
now been renamed to Tata Steel Thailand and is headquartered Bangkok. 31
March 2013, it held approx. 68% shares in the acquired company.

Corus in 2007: On 20 October 2006, Tata Steel signed a deal with Anglo-Dutch
Company, Corus to buy 100% stake at £4.3 billion ($8.1 billion) at 455 pence per
share. On 19 November 2006, the Brazilian steel company Companhia Siderúrgica
Nacional (CSN) launched a counter offer for Corus at 475 pence per share, valuing
it at £4.5 billion. On 11 December 2006, Tata pre-emptively upped its offer to 500
pence per share, which was within hours trumped by CSN's offer of 515 pence per
share, valuing the deal at £4.9 billion. The Corus board promptly recommended
both the revised offers to its shareholders. On 31 January 2007, Tata Steel won
their bid for Corus after offering 608 pence per share, valuing Corus at £6.7 billion

Page 26 of 60
($12 billion).
In 2005, Corus employed around 47,300 people worldwide, including 24,000 in
the UK. At the time of acquisition, Corus was four times larger than Tata Steel,
in terms of annual steel production. Corus was the world's 9th largest producer
of Steel, whereas Tata Steel was at 56th position. The acquisition made Tata
Steel world's 5th largest producer of Steel.

Tayo Rolls in 2008, formerly Tata-Yodogawa Limited is a metal fabrication and

processing company headquartered in Jamshedpur, India. It was founded in 1968
as a joint venture between Tata Steel and the Japan-based Yodogawa Steels. In
2008, the company made the rights issue which was subscribed for only about
50% of its total value - Rs 60-crore. Due to under subscription, the promoters
acquired them, as result Tayo Rolls became a Tata Steel Subsidiary. Tata Steel
owns 55.24% of the Tayo Rolls.

Steel Engineering and Vinausteel in 2007: Tata Steel through its wholly owned
Singapore subsidiary, NatSteel Asia Pvt. Ltd, acquired controlling stake in both
rolling mill companies located in Vietnam: Structure Steel Engineering Pvt. Ltd
(100% stake) and Vinausteel Ltd (70% stake). The enterprise value for the
acquisition was $41 million. With this acquisition, Tata Steel got hold of two
rolling mills, a 250,000 tons per year bar/wire rod mill operated by SSE Steel
Ltd. and a 180,000 tons per year reinforcing bar mill operated by Vinausteel Ltd.

Bhushan Steel in 2018: Tata Steel acquired the entire company in 2017–18, when
Insolvency proceedings were initiated against the former company on 26 July
2017 under IBC. Tata steel emerged as the highest bidder and took over the
company through its wholly owned subsidiary Bamnipal Steel Ltd. The company
was renamed as Tata Steel BSL. Later in 2021 Tata Steel amalgamated Bamnipal
Steel Ltd. and Tata Steel BSL thereby the latter became a direct subsidiary of Tata
Steel (72.65%).

Page 27 of 60
 To know the current position and stability of the company.

 To detect and analyze changes in the performance of the company.

 To evaluate the true valuation of the company.

Page 28 of 60
Data collection - Main data for the project is the annual financial reports of each year
in Tata steel included in our studies. As the nature of the study relates to financial
performance and valuation, the data used was secondary data. For the
measurement of financial ratios of the company, annual financial report of the
company must be used. For the valuation of company the data for market
capitalization was collected. Four main financial statements were used such as
Balance sheets, Income statement, Cash flow statement, statement of
shareholder’s equity.

Sample Size- The sample size consists of the private company Tata steel 5 year
annual report. Last five years data has been collected i.e. from 2019 to 2024.

Data analysis- The research design applicable for the proposal study is of analytical
nature. As the use of facts information are already available and analysing these
to make a critical evaluation of the material. Quantitative technique is employed
to analyze the data. We used the model for performance evaluation of Tata steel.
In this work by using the data from financial report such as balance sheet, income
statement and cash flow statement of the respected private company and using
ratio analysis method we investigated the performance of Tata steel.
Formula and Basic Concepts
Ratio analysis -Ratio analysis involves the methods of calculating and interpreting
financial ratios to assess the firm’s performance and status. It is a widely used tool
of financial analysis. It can be used to compare the risk and return relationships of
firms of different sizes. Ratio analysis is defined as the systematic use of ratio to
interpret the financial statements so that the strengths and weaknesses of a firm
as well as its historical performance and current financial condition can be
determined. Ratio analysis studies levels and changes of relative measurements of
financial performance. This method is the most commonly used in the world
practices of financial analysis because of its relative simplicity and availability of

Page 29 of 60
data sources. When using the ratio analysis one can tell how profitable a business
is to show if it has enough capital to meet its obligations and even suggest
whether its shareholders are satisfied by an increasing value of the company or
not. Ratio analysis can also help to confirm whether a company is doing better this
year than it was last year.
Financial ratios that are being analyzed are as follows:
 Gross profit margin = (Revenue – Cost of Goods Sold) / Revenue x 100
 Return on capital employed = net operating profit or earnings before
interest and taxes (EBIT)/capital employed
 Current ratio = Current assets / Current liabilities
 Quick ratio = Quick assets / Current liabilities
 Debt to equity ratio = Total liabilities / Shareholder’s equity
 Inventory turnover ratio = Cost of goods sold / Average inventory
 Total assets turnover ratio = Net Sales / Total Assets.

For business valuation data was analyzed by reviewing financial statements,

comparing the valuation ratios and analyzing market capitalization from past 5
years.

 Valuation through review of financial statements the method used was:-

Value of a company = net worth= capital+ retained earning= Assets – external

liabilities

 Comparing the valuation ratios

 Dividend per Share= (total dividends paid out over a period - any special
dividends) ÷ (shares outstanding)
 Operating Profit per Share = Consolidated Net Earnings divided by
the number of shares of Common Stock outstanding

Page 30 of 60
  Net Operating Profit per Share = net income + net after-tax interest
expense (or net income plus net interest expense) multiplied by 1,
minus the tax rate/ no. of shares outstanding

 Market capitalization

It is calculated by multiplying the company’s share price by its total number of

shares outstanding. For example, as of January 3, 2022 Microsoft Inc. traded at
$86.35.1 with a total number of shares outstanding of 7.715 billion, the company could
then be valued at $86.35 x 7.715 billion = $666.19 billion.

Page 31 of 60
BALANCE SHEET OF MAR 24 MAR 23 MAR 22 MAR 21 MAR 20
TATA STEEL (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 1,198.7 1,146.13 1,146.12 1,146.12 971.41

8

TOTAL SHARE CAPITAL 1,198.78 1,146.13 1,146.12 1,146.12 971.41

Reserves and Surplus 90068.33 73,416.99 69,308.59 60,368.70 48,687.59

TOTAL RESERVES AND 90068.33 73,416.99 69,308.59 60,368.70 48,687.59

SURPLUS

TOTAL 91267.11 74,563.12 70,454.71 61,514.82 49,659.00

SHAREHOLDERS
FUNDS

NON-CURRENT
LIABILITIES

Long Term Borrowings 27,313.8 31,381.96 26,651.19 24,568.95 24,694.37

0

Deferred Tax 6,111.7 5,862.28 7,807.00 6,259.09 6,111.27

Liabilities [Net] 0

Other Long 8,486.1 3,325.34 2,798.63 2,927.91 3,644.69

Term Liabilities 2

Long Term Provisions 2,543.9 2,113.56 1,918.18 1,961.21 2,024.74

4

TOTAL NON-CURRENT 44,455.56 42,683.14 39,175.00 35,717.16 36,475.07

LIABILITIES

Page 32 of 60
CURRENT LIABILITIES

Short Term Borrowings 0.00 7,857.27 8.09 669.88 3,239.67

Trade Payables 10,638.59 10,600.96 10,969.56 11,242.75 10,717.44

Other Current Liabilities 17,600.30 11,749.21 13,837.77 12,959.43 8,398.62

Short Term Provisions 1,074.43 663.86 778.23 735.28 700.60

TOTAL CURRENT 29,313.32 30,871.30 25,593.65 25,607.34 23,056.33

LIABILITIES

TOTAL CAPITAL 165,035.99 150,392.56 137,498.36 125,114.34 111,465.41

AND LIABILITIES

ASSETS

NON-CURRENT ASSETS

Tangible Assets 67,938.29 70,505.66 70,416.82 70,942.90 71,778.97

Intangible Assets 839.33 727.72 805.20 786.18 788.18

Capital Work-In-Progress 10,057.18 8,070.41 5,686.02 5,641.50 6,125.35

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 79,243.59 79,480.43 77,018.31 77,402.35 78,731.11

Non-Current 51,066.27 46,860.91 38,929.25 9,636.56 8,355.90

Investments

Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00

[Net]

Long Term Loans And 7,509.33 199.26 231.16 213.50 211.97

Advances

Other Non-Current 3,460.50 3,842.77 4,284.06 3,218.02 4,056.03

Assets

TOTAL NON-CURRENT 141,279.69 130,383.37 120,462.78 90,470.43 91,355.01

ASSETS

Page 33 of 60
CURRENT ASSETS

Current Investments 6,404.46 3,235.16 477.47 14,640.37 5,309.81

Inventories 8,603.79 10,716.66 11,255.34 11,023.41 10,236.85

Trade Receivables 3,863.31 1,016.73 1,363.04 1,875.63 2,006.52

Cash And 1,671.71 1,226.87 718.11 4,696.74 970.31

Cash
Equivalents

Short Term Loans And 1,555.95 1,607.32 55.92 74.13 27.14

Advances

Other Current Assets 1,657.08 2,206.45 3,165.70 2,333.63 1,559.77

TOTAL CURRENT 23,756.30 20,009.19 17,035.58 34,643.91 20,110.40

ASSETS

TOTAL ASSETS 165,035.99 150,392.56 137,498.36 125,114.34 111,465.41

OTHER ADDITIONAL
INFORMATION

CONTINGENT
LIABILITIES,
COMMITMENTS

Contingent Liabilities 33,058.37 32,650.32 34,622.43 28,359.61 25,991.16

CIF VALUE OF IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And 8,902.53 12,381.28 14,519.26 13,355.43 10,298.00

Loose Tools

Trade/Other Goods 8,902.53 12,381.28 14,519.26 13,355.43 10,298.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN
FOREIGN EXCHANGE

Page 34 of 60
Expenditure In 365.71 509.47 450.04 334.94 447.38
Foreign Currency

REMITTANCES IN
FOREIGN CURRENCIES
FOR DIVIDENDS

Dividend Remittance In -- -- -- -- --
Foreign Currency

EARNINGS IN FOREIGN
EXCHANGE

FOB Value Of Goods -- -- -- 5,898.19 3,996.55

Other Earnings 9,241.88 6,314.97 6,497.94 -- --

BONUS DETAILS

Bonus Equity 252.97 252.97 252.97 252.97 252.97

Share Capital

NON-CURRENT
INVESTMENTS

Non-Current 537.85 204.31 448.61 497.21 4,422.17

Investments Quoted
Market Value

Non-Current 27,950.42 20,078.19 34,042.88 5,473.11 535.90

Investments Unquoted
Book Value

CURRENT
INVESTMENTS

Current -- -- -- -- --
Investments
Quoted Market
Value

Current 6,404.46 3,235.16 477.47 14,640.37 5,309.81

Investments
Unquoted Book
Value

Page 35 of 60
 Tata Steel
Standalone Profit & Loss account ------------------- in Rs. Cr. -------------------
Mar 24 Mar 23 Mar 22 Mar 21 Mar 20

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME
Revenue From Operations [Gross] 63,743.40 58,815.57 68,923.36 59,453.23 52,564.93
Less: Excise/Service Tax/Other 0.00 0.00 0.21 902.55 5,267.94
Levies Revenue From Operations 63,743.40 58,815.57 68,923.15 58,550.68 47,296.99
[Net] Other Operating Revenues 1,125.60 1,620.40 1,687.56 1,066.14 696.03
Total Operating Revenues 64,869.00 60,435.97 70,610.71 59,616.82 47,993.02
Other Income 637.89 404.12 2,405.08 763.66 414.46
Total Revenue 65,506.89 60,840.09 73,015.79 60,380.48 48,407.48
EXPENSES
Cost Of Materials 13,868.6 17,407.03 19,840.29 16,877.63 12,496.78
0
Consumed Purchase Of
1,146.05 1,563.10 1,807.85 647.21 881.18
Stock-In Trade
Changes In Inventories Of FG,WIP 1,464.12 -564.40 -554.33 545.36 -1,329.65
And Stock-In Trade
5,198.82 5,036.62 5,131.06 4,828.85 4,605.13
Employee Benefit Expenses
3,393.84 3,031.01 2,823.58 2,810.62 2,688.55
Finance Costs
3,987.32 3,920.12 3,802.96 3,727.46 3,541.55
Depreciation And Amortization
22,747.3 23,803.18 24,622.60 21,275.47 19,681.15
Expenses Other Expenses 0
Less: Amounts Transfer To Capital 1,321.24 1,671.13 799.70 336.66 217.52
Accounts
Total Expenses 50,484.81 52,525.53 56,674.31 50,375.94 42,347.17
Mar 21 Mar 20 Mar 19 Mar 18 Mar 17

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss Before Exceptional, 15,022.08 8,314.56 16,341.48 10,004.54 6,060.31

Extraordinary Items And Tax
Exceptional Items 2,773.05 -1,703.58 -114.23 -3,366.29 -703.38
Profit/Loss Before Tax 17,795.13 6,610.98 16,227.25 6,638.25 5,356.93
Tax Expenses-Continued Operations
Current Tax 3,949.05 1,787.95 6,297.11 1,586.78 1,400.54
Deferred Tax 239.46 -1,920.77 -603.05 881.92 511.84
Total Tax Expenses 4,188.51 -132.82 5,694.06 2,468.70 1,912.38
Profit/Loss After Tax And Before 13,606.62 6,743.80 10,533.19 4,169.55 3,444.55
Extraordinary Items
Profit/Loss From Continuing Operations 13,606.62 6,743.80 10,533.19 4,169.55 3,444.55
Profit/Loss For The Period 13,606.62 6,743.80 10,533.19 4,169.55 3,444.55

Page 36 of 60
 12 mths 12 mths 12 mths 12 mths 12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE
Basic EPS (Rs.) 117.04 57.11 90.41 38.57 31.74
Diluted EPS (Rs.) 117.03 57.11 90.40 38.56 31.74
VALUE OF IMPORTED AND INDIGENIOUS RAW
MATERIALS
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 1,145.93 1,489.67 1,145.92 1,237.35 1,043.07
Tax On Dividend 242.34 297.71 224.86 95.71 55.65
Equity Dividend Rate (%) 250.00 100.00 130.00 100.00 100.00

Tata Steel
Cash Flow ------------------- in Rs. Cr. -------------------
Mar 24 Mar 23 Mar 22 Mar 21 Mar 20

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit/Loss Before

Extraordinary Items And Tax 17,795.13 0.00 6,610.98 0.00 16,227.25

Net CashFlow From Operating 29,368.56 0.00 13,453.66 0.00 15,193.11

Activities
Net Cash Used In Investing -13,008.46 0.00 -17,634.66 0.00 -16,349.98
Activities
Net Cash Used From Financing Activities -15,852.03 0.00 4,629.79 0.00 -2,887.17
Net Inc/Dec In Cash And Cash
Equivalents 508.07 0.00 448.79 0.00 -4,044.04

Cash And Cash Equivalents Begin of 993.64 0.00 544.85 0.00 4,588.89
Year
Cash And Cash Equivalents End Of Year 1,501.71 0.00 993.64 0.00 544.85

Page 37 of 60
Tata Steel
Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar
Mar '23 Mar '22 Mar '21 Mar '20
'24

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 25.00 10.00 13.00 10.00 10.00
Operating Profit Per Share (Rs) 180.7 123.42 170.77 131.04 122.28
6
Net Operating Profit Per Share (Rs) 538.7 501.91 586.41 495.11 494.15
2
Bonus in Equity Capital 21.10 22.07 22.07 22.07 26.04
Profitability Ratios
Operating Profit Margin(%) 33.55 24.59 29.12 26.46 24.74
Profit Before Interest And Tax 27.13 17.98 22.95 19.95 17.21
Margin(%)
Gross Profit Margin(%) 27.40 18.10 23.73 20.21 17.36
Cash Profit Margin(%) 22.62 20.32 19.79 18.65 15.88
Adjusted Cash Margin(%) 22.62 20.32 19.79 18.65 15.88
Net Profit Margin(%) 20.97 11.15 14.91 6.99 7.17
Adjusted Net Profit Margin(%) 20.77 11.08 14.42 6.90 7.11
Return On Capital Employed(%) 15.53 9.77 19.28 14.39 10.95
Return On Net Worth(%) 15.03 9.04 14.95 6.77 6.93
Adjusted Return on Net Worth(%) 11.97 11.32 15.11 12.25 8.35
Return on Long Term Funds(%) 15.53 10.48 19.28 14.50 11.41
Liquidity And Solvency Ratios
Current Ratio 0.61 0.42 0.55 0.64 0.55
Quick Ratio 0.42 0.29 0.26 0.34 0.28
Debt Equity Ratio 0.31 0.56 0.41 0.45 0.61
Long Term Debt Equity Ratio 0.31 0.45 0.41 0.44 0.54
Management Efficiency Ratios
Inventory Turnover Ratio 7.54 5.64 6.27 5.49 5.20
Debtors Turnover Ratio 26.59 50.79 43.60 30.71 36.37
Investments Turnover Ratio 0.55 0.52 0.71 5.49 5.20
Fixed Assets Turnover Ratio 0.71 0.67 0.82 0.72 0.60
Total Assets Turnover Ratio 0.55 0.52 0.72 0.68 0.61
Asset Turnover Ratio 0.55 0.56 0.75 0.71 0.53
Number of Days In Working Capital -96.43 -82.64 -86.21 -73.11 -91.51

*ratios highlighted are taken for further analyses

Page 38 of 60
FINANCIAL RATIOS HORIZONTAL ANALYSIS
Chart 1

Gross Profit Margin(%)

30

25

20

15

10

0
2017 2018 2019 2020 2021

Gross Profit Margin(%)

Year Gross Profit Margin (%)

2017 17.36
2018 20.21
2019 23.73
2020 18.1
2021 27.4

INTERPRETATION:
 It can be seen that the Gross Profit Margin was on an increase from 2023 to 2024.
 In 2020 there was a massive decrease in the gross profit margin to 18.1%. for which
the appropriated reason that can be ascertained is country facing Pandemic.
 The GPM% rose back to 27.4% in 2021 which shows the company’s good
financial health.

Page 39 of 60
Chart 2

Return On Capital Employed(%)

25

20

15

10

0
2017 2018 2019 2020 2021

Return On Capital Employed(%)

Return
Y on Capital Employed (%)

10.95
2

14.39
2

19.28
2

9.77
2

15.53
2

INTERPRETATION:

A good rule of thumb is that a ROCE of 15% or more is reflective of a decent business operations
and ascertains that it is generating a return well above its WACC.
 It can be seen that the ROCE % IS IN CONTINOUS RISE4 FROM 2023 to 2024.
 In 2019 it was more then 15% therefore showing strong and growing profitability.
 In 2020 due to the Pandemic the return decreased to mere 9.77%. which is
acceptable considering the abnormal external environment which affected every
aspect at large.
 It can be seen that in 2021 the ROCE is again recovering rapidly and is on a rise. It

Page 40 of 60
reached 15.53% ROCE.

Page 41 of 60
Chart 3

Current Ratio
0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017 2018 2019 2020 2021

Current Ratio

Current
Y Ratio

0.55
2

0.64
2

0.55
2

0.42
2

0.61
2

INTERPRETATION:
A good current ratio is anything over 1, which shows the company has more than enough cash to
meet its liabilities while using its capital effectively.
 It can be seen that the current ratio of Tata Steel is below 1. In 2017 it was 0.55 then
it rose to 0.64 in 2018 but fallen again to 0.55 in 2019.
 In 2020 it again fell to 0.42 but in 2021 it recovered back rapidly to .61 which shows
that the liquidity of the company is not sufficient.

Page 42 of 60
Chart 4

Quick Ratio
0.45
0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
2017 2018 2019 2020 2021

Quick Ratio

Quick
Y Ratio

0.28
2

0.34
2

0.26
2

0.29
2

0.42
2

INTERPRETATION:
This ratio helps in understanding whether the company is able to pay off its current debts
without selling its long term assets. A quick ratio of 1:1 is preferable.
 It can be seen that the quick ratio from 2017 to 2020 was within 0.25 to 0.30 which
is very less.
 In 2021 it rose to 0.42 which shows improvement from past but is still not a good ratio.

Page 43 of 60
Chart 5

Debt Equity Ratio

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017 2018 2019 2020 2021

Debt Equity Ratio

Debt
Y Equity Ratio

0.61
2

0.45
2

0.41
2

0.56
2

0.31
2

INTERPRETATION:
It tells how much debt the co. has for every 1 Rs of equity. In general the ratio of less than 0.6 is
acceptable but is considered when it’s below 0.4.
 Here it can be seen that in 2017 debt to equity ratio was at 0.61 which is very high
showing unhealthy leveraging.
 Then onwards from 2018 it started to improve till 2019. In 2020 it rose back to
0.56 which is again considered high and not good for a company.

Page 44 of 60
 But it can be seen that in 2021 it came to 0.31 which is an acceptable leverage and is
good for the company. Risk analysts like investors and lenders can ascertain trust
when the ratio is around 0.30.

Page 45 of 60
Chart 6

Inventory Turnover Ratio

8

0
2017 20182019 2020 2021

Inventory Turnover Ratio

Inventory
Y Turnover Ratio

5.20
2

5.49
2

6.27
2

5.64
2

7.54
2

INTERPRETATION:
Inventory turnover is the rate that inventory stock is sold, or used, and replaced. A higher ratio
tends to point to strong sales and a lower one to weak sales. A low turnover implies weak sales
and possibly excess inventory, also known as overstocking. A high ratio, on the other hand,
implies either strong sales or insufficient inventory. For most industries, the best inventory
turnover ratio falls between 5 and 10.
 Here it can be seen that the inventory turnover ratio of Tata steel is between 5 to 8
which is acceptable as per industry standards.
 It can be seen that the turnover is continuously rising from 2017 to 2021 showing
better and strong sales.

Page 46 of 60
 In 2020 the ratio was seen dropped a little to 5.64 but is acceptable still knowing
that the challenges that were faced during the pandemic.

Page 47 of 60
Chart 7

Assets
T Turnover Ratio

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017 0182 2019 2020 2021

Total Assets Turnover Ratio

Total
Y Assets Turnover Ratio

0.61
2

0.68
2

0.72
2

0.52
2

0.55
2

INTERPRETATION:
The asset turnover ratio measures the efficiency of a company's assets in generating revenue or
sales. It compares the amount of sales (revenues) to its total assets as an annualized
percentage. The higher the asset turnover ratio, the more efficient a company is at generating
revenue from its assets. Conversely, if a company has a low asset turnover ratio, it indicates it is
not efficiently using its assets to generate sales. Asset turnover ratio that's above 0.5. Is
considered acceptable as per the industry standards.
 Here it can be seen that ratio is above 0.5 from 2017 to 2021 showing good
Page 48 of 60
 asset management.
 In 2020 there was a decline to 0.52 but it is again on the path to recover by showing
a ratio of 0.61 in 2021.

Page 49 of 60
  BY ANALYSIS FROM FINANCIAL STATEMENT

BALANCE SHEET OF TATA STEEL (in Rs. Cr.)

PARTICULARS MAR 21(in Rs. Cr.)
TOTAL NON-CURRENT LIABILITIES 44,455.56
TOTAL CURRENT LIABILITIES 29,313.32
TOTAL ASSETS 165,035.99
CAPITAL 1,198.78
RESERVES AND SURPLUS (RETAINED EARNING) 90068.33

Value of A Company = Net Worth= Capital+ Retained Earning= Assets – External

Liabilities

 TOTAL ASSETS- (TOTAL CURRENT LIABILITIES + TOTAL NON-CURRENT

LIABILITIES) 165,035.99 – (29,313.32 + 44,455.56)

= 91267.11
 CAPITAL + RETAINED EARNING

1,198.78 + 90068.33

=91267.11

As per the calculation of VALUATION of Tata steel ltd using Book Value from the financial
statements (Balance sheet), the value of Tata steel on March 2021 is determined to be
91267.11 Cr.

Page 50 of 60
  BY VALUATION RATIOS COMPARISON (HORIZONTAL)

DIVIDEND PER SHARE

YEAR Dividend per Share
2017 10
2018 10
2019 13

2020 10
2021 25

Dividend Per Share

30

25

20

15

10

0
2017 2018 2019 2020 2021

Dividend Per Share

Chart 8

INTERPRETATION:
It can be seen that the dividend per share is on a continuous rise from past 5 years.
In 2021 there was a sudden jump from 10 to 25. Which is a good sign for the company, and
shows good overall performance.

Page 51 of 60
OPERATING PROFIT PER SHARE

Year Operating Profit per Share

2017 122.28
2018 131.04
2019 170.77
2020 123.42
2021 180.76

Operating Profit Per Share

200
180
160
140
120
100
80
60
40
20
0
2017 2018 2019 2020 2021

Operating Profit Per Share

Chart 9
INTERPRETATION:
In 2017 operating profit was at 122 from there company was giving continuous improvement
till 2019 to 170.
In 2020 it saw a downfall to 123 again.
In 2021 it recovered and jumped to 180.76 showing good stability of the company.

Page 52 of 60
NET OPERATING PROFIT PER SHARE

YEAR Net Operating Profit per Share

2017 494.15
2018 495.11
2019 586.41
2020 501.91
2021 538.72

Net Operating Profit Per Share

600

580

560

540

520

500

480

460

440
2017 2018 2019 2020 2021

Net Operating Profit Per Share

Chart 10

INTERPRETATION:
In 2017 the net operating profit was at 494 per share. Showing no growth it was same in 2018.
In 2019 it rose massively to 586.
But in 2020 as the pandemic effected, the net operating profit fell back to 501.
In 2021 showing path to recovery the net operating profit rose to 538.72.

Page 53 of 60
  BY MARKET CAPITALIZATION
Total No of Share 1204126999

Market Value As On 29.10.2021 1,315.95

Total Market Cap As On 29.10.2021 1584570924330 (One Trillion Five Hundred Eighty-Four
Billion Five Hundred Seventy Million Nine Hundred Twenty-Four Thousand Three Hundred Thirty)

Total No of Share 1204126999

Market Value As On 30.03.2021 Rs. 800.00

Total Market Cap As On 30.03.2021 963301599200 (Nine Hundred Sixty-Three Billion Three
Hundred One Million Five Hundred Ninety-Nine
Thousand Two Hundred)

Total No of Share 1204126999

Market Value As On 30.03.2020 254.05

Total Market Cap As On 30.03.2020 305908464096 (Three Hundred Five Billion Nine
Hundred Eight Million Four Hundred Sixty-Four
Thousand Ninety-Six)

Total No of Share 1204126999

Market Value As On 27.03.2019 515.80

Total Market Cap As On 27.03.2019 621088706084 (Six Hundred Twenty-One Billion Eighty-
Eight Million Seven Hundred Six Thousand Eighty-Four)

Total No of Share 1204126999

Market Value As On 27.03.2018 590.00

Total Market Cap As On 27.03.2018 710434929410 (Seven Hundred Ten Billion Four Hundred
Thirty-Four Million Nine Hundred Twenty-Nine Thousand
Four Hundred Ten)

Total No of Share 1204126999

Market Value As On 27.03.2017 590.00

Total Market Cap As On 27.03.2017 710434929410 (Seven Hundred Ten Billion Four Hundred
Thirty-Four Million Nine Hundred Twenty-Nine Thousand
Four Hundred Ten)

Page 54 of 60
 MARKET SHARE PRICE
1400
1,315.95
1200

1000

800 800

600 590 590

515.8
400
254.05
200

0
MAR'17 MAR'18 MAR'19 MAR'20 MAR'21 OCT'21

MARKET SHARE PRICE

Chart 11

It can be seen that the market cap grew tremendously from 2017 with the share
Value of 590.00 to in the year 2021 with the share value of 1315.95 which counts
For almost 125% growth over a period of 5 years.

Page 55 of 60
From the above work It have examined that the company is at good pace and with
good profits the company is at good financial position .Financial analysis
determines a company’s health and stability, providing an understanding of how
the company conducts its business.
It was found that the ratios like gross profit margin (%), return on capital
employed, debt equity ratio, and inventory turnover ratio showed good figure
while ratios like current ratio and quick ratio were not according to the company
standards.
While calculating the value and analyzing it can be made out that the company
was undervalued in the market before but with the management performing
better after the pandemic the value of the company rose tremendously.
The valuation ratios too show a good sign with improved and growth from the
past figures. It can be ascertained that the company will continue to grow and
perform better after understanding and analyzing the financial statements, ratios
and market capitalization.

Page 56 of 60
With the above analyses and findings it is concluded that
 Current position of the company is in a past 5 year high with share value at
1315 Rs.
 Stability of the company is also considerable as the debt to equity ratio,
gross profit margin and ROCE are as per industry standards showing good
figures.
 It can be seen that the performance of the company was increasing and
getting better slowly before pandemic but after the pandemic the
performance grew rapidly and both the financial health and valuation
improved.
 Investment in the company can be said preferable as the ROCE of the
company matches the ideal for the industry. The debt to equity ratio also
shows a very good figure. How ever it can be seen that the current ratio
and quick ratio are not up to the mark.
 The calculation of valuation and analysis from all the three methods used
Asset pricing, comparable comparison and market capitalization shows an
observation that the company’s value is increasing which is a good sign for
a company.

Page 57 of 60
Like any other study, this study also undergoes various limitations. It is important to
know that financial statement analysis has its limitations as well. Different
accounting methods adopted by different firms’ changes the visible health and
profit levels for either better or worse. Different analysts may get different results
from the same information. Hence, we must conclude that financial statement
analysis is only one of the tools (although a major one) while taking an investment
decision.
This report is entirely based on secondary data as reference, considering the
ongoing COVID-19 pandemic. So, this analysis was subject to all limitations of
primary data. The quality of secondary research is scrutinized closely but there
may be chances of bias that might have crept in since the origins of the
information may be questionable. The validity and reliability of the information
obtained has been critically evaluated. The source of data has been checked
though some data may be old and out of date offering little value in present
scenario. Also, there were many malicious websites offering incorrect information
but the authenticity of this research was maintained by taking proper action.
The researcher encountered certain other difficulties in obtaining the exact figures
and up to date data required to analyze the financial data. The researcher
resorted to different other methods of carving out the required information to
overcome this difficulty.

Page 58 of 60
www.tatasteel.com
www.moneycontrol.com
mbfi.org
Wikipedia
Investopedia.org
Google scholar
Tradingeconomics.in

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